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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 [FEE REQUIRED]
For the fiscal year ended December 31, 1996
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
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Common Stock, par value $.01 per share New York Stock Exchange
Depositary Shares, each representing one-
tenth of a share of 7-3/4% Class A
Cumulative Redeemable Preferred Stock,
par value $1.00 per share. New York Stock Exchange
Depositary Shares, each representing one-
tenth of a share of 8-1/2% Class B
Cumulative Redeemable Preferred Stock,
par value $1.00 per share. New York Stock Exchange
Depositary Shares, each representing one-
tenth of a share of 8-3/8% Class C
Cumulative Redeemable Preferred Stock,
par value $1.00 per share. New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
None
(Title of class)
Indicate by check mark 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 (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
The aggregate market value of the voting stock held by nonaffiliates of the
registrant was approximately $947 million based upon the closing price on the
New York Stock Exchange for such stock on February 28, 1997.
(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.
36,232,385 shares as of February 28, 1997.
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DOCUMENTS INCORPORATED BY REFERENCE
Part II incorporates certain information by reference to the following exhibits
to this annual report on Form 10-K: Exhibit 3.4, Articles Supplementary relating
to the Registrant's 8-3/8% Class C Cumulative Redeemable Preferred Stock;
Exhibit 3.3, Articles Supplementary relating to the Registrant's 8 1/2% Class B
Cumulative Redeemable Preferred Stock; Exhibit 4.4, Certificate of Designations
relating to the Registrant's 7 3/4% Class A Cumulative Redeemable Preferred
Stock; Exhibits 4.5, 4.6 and 4.7, Indenture, First Supplemental Indenture and
Second Supplemental Indenture, respectively, each relating to the Registrant's
public bond issues, and Exhibit 10.4, Credit Agreement relating to the
Registrant's revolving credit facility.
Part III incorporates certain information by reference to the Registrant's
definitive proxy statement to be filed with respect to the Annual Meeting of
Stockholders to be held on May 28, 1997.
Index to Exhibits begins on page 29.
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TABLE OF CONTENTS
Form
10-K
Report
Item No. Page
- -------- -------
PART I
1. Business . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2. Properties . . . . . . . . . . . . . . . . . . . . . . . . . 10
3. Legal Proceedings. . . . . . . . . . . . . . . . . . . . . . 12
4. Submission of Matters to a Vote of Security Holders . . . . 12
Executive Officers of the Registrant . . . . . . . . . . . . 20
PART II
5. Market for the Registrant's Common Equity
and Related Shareholder Matters . . . . . . . . . . . . . 21
6. Selected Financial Data . . . . . . . . . . . . . . . . . . 22
7. Management's Discussion and Analysis of Financial
Condition and Results of Operations . . . . . . . . . . . 24
8. Financial Statements and Supplementary Data . . . . . . . . 26
9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure . . . . . . . . . . . 26
PART III
10. Directors and Executive Officers of the Registrant . . . . . 27
11. Executive Compensation . . . . . . . . . . . . . . . . . . . 27
12. Security Ownership of Certain Beneficial Owners and
Management . . . . . . . . . . . . . . . . . . . . . . . . 27
13. Certain Relationships and Related Transactions . . . . . . . 27
PART IV
14. Exhibits, Financial Statements, Schedules and Reports on
Form 8-K . . . . . . . . . . . . . . . . . . . . . . . . . 28
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PART I
Item 1. Business
General Kimco Realty Corporation (the "Company") is one of the nation's largest
owners and operators of neighborhood and community shopping centers. As of
February 28, 1997, the Company's portfolio was comprised of interests in 208
neighborhood and community shopping center properties, 2 regional malls and 57
retail store leases comprising a total of approximately 32.6 million square feet
of leasable space located in 37 states. The Company believes its portfolio of
neighborhood and community shopping center properties is the largest (measured
by gross leasable area, "GLA") currently held by any publicly-traded real estate
investment trust ("REIT"). The Company is a self-administered REIT and manages
its properties through present management which has owned and operated
neighborhood and community shopping centers for over 30 years. The Company has
not engaged, nor does it expect to retain, any REIT advisors in connection with
the operation of its properties.
The Company's executive offices are located at 3333 New Hyde Park Road, New Hyde
Park, New York 11042-0020 and its telephone number is (516)869-9000. Unless the
context indicates otherwise, the term the "Company" as used herein is intended
to include subsidiaries of the Company.
History The Company began operations through its predecessor, The Kimco
Corporation, which was organized in 1966 upon the contribution of several
shopping center properties owned by its principal stockholders. In 1973, these
principals formed the Company as a Delaware corporation, and in 1985, the
operations of The Kimco Corporation were merged into the Company. The Company
completed its initial public stock offering (the "IPO") in November 1991, and
reorganized as a Maryland corporation during 1994.
The Company's growth through its first fifteen years resulted primarily from the
ground-up development and construction of its shopping centers. By 1981, the
Company had assembled a portfolio of 77 properties that provided an established
source of income and positioned the Company for an expansion of its asset base.
At that time, the Company revised its strategy to focus on the acquisition of
existing shopping centers because it believed generally that available financial
returns did not justify the risks of continued ground-up development of
properties. Furthermore, the Company's management believed that existing
properties with below market-rate leases were available in the market at
attractive prices. The Company considers such properties to offer greater
leasing flexibility in the event space becomes available or should there be an
overcapacity of space in the local economy. The Company also believes that
opportunities exist to create value through the redevelopment and re-tenanting
of existing shopping centers. As a result of this change in strategy, the
Company has developed only 2 of the 190 property interests added to its
portfolio since 1981, as compared with 68 of the 77 properties owned prior to
that time.
Investment and Operating Strategy The Company's investment objective has been to
increase cash flow, current income and consequently the value of its existing
portfolio of properties, and to seek continued growth through (i) the strategic
re-tenanting, renovation and expansion of its existing centers, and (ii) the
selective acquisition of established income-producing real estate properties,
and properties requiring significant re-tenanting and redevelopment - all
primarily neighborhood and community shopping centers in geographic regions
where the Company presently operates. The Company intends to consider
investments in other real estate sectors and in geographic markets where it does
not presently operate should suitable opportunities arise.
The Company's neighborhood and community shopping center properties are designed
to attract local area customers and typically are anchored by a supermarket,
discount department store or drugstore tenant offering day-to-day 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. 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
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renovation and capital improvement, it is possible that properties in the
portfolio may be sold, in whole or in part, as circumstances warrant. The
Company emphasizes equity real estate investments but may, in its discretion,
invest in mortgages, other real estate interests and other investments.
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, avoiding dependence on any single property or tenant. At
December 31, 1996, the Company's single largest neighborhood and community
shopping center and tenant accounted for only approximately 2.3% and 4.2%,
respectively, of the Company's annualized base rental revenues.
The Company intends to maintain a conservative debt capitalization with a ratio
of debt to total market capitalization of approximately 50% or less. As of
December 31, 1996, the Company had a debt to total market capitalization ratio
of approximately 20%.
The Company has authority to offer shares of capital stock or other senior
securities in exchange for property and to repurchase or otherwise reacquire its
Common Stock or any other securities and may engage in such activities in the
future. At all times, the Company intends to make investments in such a manner
as to be consistent with the requirements of the Internal Revenue Code of 1986,
as amended (the "Code"), to qualify as a REIT unless, because of circumstances
or changes in the Code (or in Treasury Regulations), the Board of Directors
determines that it is no longer in the best interests of the Company to qualify
as a REIT. The Company's policies with respect to such activities may be
reviewed and modified from time to time by the Company's Board of Directors
without the vote of the stockholders.
Competition As one of the original participants in the growth of the shopping
center industry and one of the nation's largest owners and operators of
neighborhood and community shopping centers, the Company has established close
relationships with a large number of major national and regional retailers and
maintains a broad network of industry contacts. Management is associated with
and/or actively participates in many shopping center and REIT industry
organizations. Notwithstanding these relationships, there are numerous
commercial developers and real estate companies that compete with the Company in
seeking properties for acquisition and tenants who will lease space in these
properties.
Capital Resources Completion of the Company's IPO, which resulted in net cash
proceeds of approximately $116 million, permitted the Company to significantly
deleverage its real estate portfolio and has made available the public debt and
equity markets as the Company's principal source of capital for the future. A
$100 million, unsecured revolving credit facility established in June 1994,
which is scheduled to expire in June 1999, has made available funds to both
finance the purchase of properties and meet any short-term working capital
requirements. The Company has also implemented a $150 million medium-term notes
program pursuant to which it may from time to time offer for sale its senior
unsecured debt for any general corporate purposes, including (i) funding
specific liquidity requirements in its business, including property acquisitions
and redevelopment costs, and (ii) better managing the Company's debt maturities.
(See Note 7 of the Notes to Consolidated Financial Statements included in this
annual report.)
Since the IPO, the Company has completed additional offerings of its public
unsecured debt and equity raising in the aggregate over $900 million for the
purposes of repaying indebtedness, acquiring interests in neighborhood and
community shopping centers and for expanding and improving properties in the
portfolio.
It is management's intention that the Company continually have access to the
capital resources necessary to expand and develop its business. Accordingly, the
Company may seek to obtain funds through additional equity offerings or debt
financing in a manner consistent with its intention to operate with a
conservative debt capitalization policy.
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The Company anticipates that adequate cash will be available from operations 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.
Inflation and Other Business Issues Substantially all 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 are often related to increases in the
consumer price index or similar inflation indices. In addition, many of the
Company's leases are for terms of less than 10 years, which permits the Company
to seek to increase rents upon renewal to market rates. Most of the Company's
leases require the tenant to pay an allocable share of operating expenses,
including common area maintenance costs, real estate taxes and insurance,
thereby reducing the Company's exposure to increases in costs and operating
expenses resulting from inflation. The Company periodically evaluates its
exposure to short-term interest rates and will, from time to time, enter into
interest rate protection agreements which mitigate, but do not eliminate, the
effect of changes in interest rates on its floating-rate loans.
As an owner of real estate, the Company is subject to risks arising in
connection with the underlying real estate, including defaults or nonrenewal of
tenant leases, environmental matters, financing availability and changes in real
estate and zoning laws. The success of the Company also depends upon trends in
the economy, including interest rates, income tax laws, governmental regulations
and legislation and population trends.
Operating Practices Nearly all operating functions, including leasing, legal,
construction, data processing, maintenance, finance and accounting, are
administered by the Company from its executive offices in New Hyde Park, New
York. The Company believes it is critical to have a management presence in its
principal areas of operation; accordingly, the Company also maintains regional
offices in Boca Raton and Orlando, Florida; Philadelphia, Pennsylvania; and
Dayton and Cleveland, Ohio. A total of 91 persons are employed at the Company's
executive and regional offices.
The Company's regional offices are generally staffed by a manager and the
support personnel necessary to both function as local representatives for
leasing and promotional purposes and to complement the corporate office efforts
to ensure that property inspection and maintenance objectives are achieved. The
regional offices are important in reducing the time necessary to respond to the
needs of the Company's tenants. Leasing and maintenance personnel from the
corporate office also conduct regular inspections of each shopping center.
The Company employs a total of 63 persons at several of its larger properties in
order to more effectively administer its maintenance and security
responsibilities.
Management Information Systems Virtually all operating activities are supported
by a sophisticated computer software system designed to provide management with
operating data necessary to make informed business decisions on a timely basis.
These proprietary systems have been developed by the Company over the last
fifteen years and reflect a commitment to quality management and tenant
relations. The Company has integrated an advanced mid-range computer with
personal computer technology, creating a management information system that
facilitates the development of property cash flow budgets, forecasts and related
management information.
Qualification as a REIT The Company has elected, commencing with its taxable
year which began January 1, 1992, to qualify as a REIT under Sections 856
through 860 of the Code. If, as the Company believes, it is organized and
operates in such a manner so as to qualify and remain qualified as a REIT
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under the Code, the Company generally will not be subject to Federal income tax,
provided that distributions to its stockholders equal at least the amount of its
REIT taxable income as defined under the Code.
Recent Developments
Shopping Center Acquisitions -
In January 1996, the Company acquired Vine Street Square shopping center,
located on West Vine Street in Kissimmee, FL for approximately $6.6 million. The
property comprises approximately 134,000 square feet of GLA and has been
redeveloped to accommodate occupancy by Office Max and Kash N' Karry.
In March 1996, the Company acquired the Century Plaza and Oakcreek Village
shopping centers, located in Orlando, FL and Durham, NC, respectively. These
properties were purchased in separate transactions for an aggregate purchase
price of approximately $12.2 million. Century Plaza is a 129,000 square foot
shopping center located on South Semoran Boulevard anchored by Ross Stores and
Big Lots. Tenants at Oakcreek Village, which comprises 116,000 square feet of
GLA on Chapel Hill Boulevard, include TJ Maxx and Durham Sporting Goods.
In April 1996, the Company acquired a free-standing 41,000 square foot facility
occupied by the Kroger Company. This property, located on North Garland Avenue
in Garland, TX, was purchased for approximately $1 million.
In May 1996, the Company joint ventured the acquisition of fee title to Hayden
Plaza, a community shopping center located on North Cave Creek Road in Phoenix,
AZ. The Company's interest in this property, comprising 187,000 square feet of
GLA and anchored by Home Depot, was acquired for $1.7 million. The Company had
previously acquired a leasehold estate in the anchor store premises at this
shopping center.
In August 1996, the Company acquired White Lake Commons shopping center located
in Clarkston, MI. This 157,000 square foot shopping center, located on Dixie
Highway, was acquired for approximately $11.5 million and is anchored by A&P
Supermarkets and Franks Nursery.
Retail Property Acquisitions-
In January 1996, the Company entered into two sale-leaseback transactions
pursuant to which it acquired fee title to 16 retail properties from Venture
Stores ("Seller/Tenant"), a family value department store operator. These
properties, which comprise approximately 1.6 million square feet of GLA in
Texas, Iowa, Oklahoma, Illinois, and Kansas, were acquired by the Company for an
aggregate purchase price of $40 million. Simultaneously, the Company executed
two long-term net leases with the Seller/Tenant covering the 16 locations
pursuant to which this Seller/Tenant may remain in occupancy and continue to
conduct business in these premises.
In August 1996, the Company acquired interests in 16 retail properties,
including 2 properties to which the Company and its affiliates already held fee
title, for an aggregate price of approximately $21.8 million. These property
interests, located in Pennsylvania (12) and New Jersey (4), and aggregating
approximately 1.6 million square feet of GLA, were acquired from a retailer
which had elected to discontinue operations of its discount department store
division. The Company has executed a long-term net lease with Kohl's Department
Stores covering 6 of these locations and has signed leases with Value City and
J.C. Penney for two additional locations. The Company is actively involved in
negotiations concerning the re-tenanting and redevelopment of the remaining
properties.
Other Property Acquisitions-
In December 1996, the Company acquired a joint venture interest in a 53,000
square foot building located on Market Street in Upper Darby, PA for
approximately $.9 million. The upper floors of this multi-story facility will
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be redeveloped for occupancy by Mercy Health Corporation, a leading healthcare
system in the Philadelphia market, while the ground floor will be redesigned for
complementary retail tenants.
The Company, as a regular part of its business operations, will continue to
actively seek properties for acquisition which have below market-rate leases or
other cash flow growth potential.
Property Redevelopments -
The Company has an ongoing program to reformat and re-tenant its properties to
maintain or enhance its competitive position in the marketplace. During 1996,
the Company substantially completed the redevelopment of 7 shopping centers in
its portfolio, including properties located in Great Barrington, MA; Coral
Springs, FL; West Mifflin, PA; Centerville, OH; Jennings, MO; Springfield, MO
and Kissimmee, FL, at a total cost of approximately $15 million. The Company is
currently involved in redeveloping several other shopping centers, most notably
its properties in Charles Town, WV; North Miami, FL; Philadelphia, PA; Richboro,
PA; Westmont, NJ and Plainview, NY. Each redevelopment represents an opportunity
for the Company to capitalize on its leasing, site planning, design and
construction expertise. The Company anticipates its capital commitment toward
these and other redevelopments during 1997 will be approximately $40 million.
These projects, which are currently proceeding on schedule and in line with the
Company's budgeted costs, are expected to contribute to growth in the Company's
funds from operations in the future.
Property Dispositions -
In September 1996, the Company disposed of a property in Watertown, NY. Cash
proceeds from the disposition totaling approximately $1.8 million, together with
an additional $2.2 million cash investment, were used to acquire an exchange
shopping center property located in Lafayette, IN during January 1997.
Financings -
Debt. In June 1996, the Company amended its $100 million, unsecured revolving
credit facility with a group of banks to provide, among other things, for a
reduction in the annual fee payable on that portion of the facility which
remains unused from time to time. The facility term was also extended one year
and is now scheduled to expire on June 30, 1999.
In August 1996, the Company redeemed $50 million unsecured floating-rate bonds
bearing interest at LIBOR plus .50% with the proceeds of a $50 million unsecured
medium-term note priced at LIBOR plus .12%. (See Note 7 of the Notes to
Consolidated Financial Statements included in this annual report.)
Equity. On February 2, 1996 the Company completed a primary public stock
offering of 2,200,000 shares of Common Stock at $26.50 per share. The proceeds
from this sale of Common Stock, net of related transaction costs of
approximately $3.4 million, totaled approximately $55 million. Such proceeds
have been used primarily for the acquisition of neighborhood and community
shopping centers.
On April 10, 1996, the Company completed a public offering of 4,000,000
Depositary Shares, each representing 1/10 of a share of the Company's 8-3/8%
Class C Cumulative Redeemable Preferred Stock, par value $1.00 per share (the
"Depositary Shares"), at $25.00 per Depositary Share. The proceeds from this
sale of Depositary Shares, net of related transaction costs of approximately
$3.6 million, totaled approximately $96.4 million. Such proceeds have been used
primarily for shopping center and retail property acquisitions and the property
redevelopments described above.
See Note 12 of the Notes to Consolidated Financial Statements included in this
annual report.
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KC Holdings, Inc.
To facilitate the Company's November 1991 IPO, forty-six shopping center
properties and certain other assets, together with indebtedness related thereto,
were transferred to subsidiaries of KC Holdings, a newly formed corporation that
is owned by the stockholders of the Company prior to the IPO. The Company,
although having no ownership interest in KC Holdings or its subsidiary
companies, was granted ten-year, fixed-price options to reacquire the real
estate assets owned by KC Holdings' subsidiaries, subject to any liabilities
outstanding with respect to such assets at the time of an option exercise. As of
February 28, 1997, KC Holdings' subsidiaries had conveyed fourteen shopping
center properties back to the Company and had disposed of ten additional centers
in transactions with third parties. The members of the Company's Board of
Directors who are not also shareholders of KC Holdings have unanimously approved
the purchase of each of the fourteen shopping centers that have been reacquired
by the Company from KC Holdings. (See Notes 10 and 14 of the Notes to
Consolidated Financial Statements included in this annual report.)
The Company manages 18 of KC Holdings' 22 shopping center properties pursuant to
a management agreement. KC Holdings' other four shopping center properties are
managed by unaffiliated joint venture partners.
Acquisition Option -
The Company holds 10-year acquisition options which expire in November 2001, to
reacquire interests in the 22 shopping center properties owned by KC Holdings'
subsidiaries. The option exercise prices are fixed and payable in shares of
Common Stock or, in the event payment in the form of Common Stock could
jeopardize the Company's status as a REIT, an equivalent value in cash. If the
Company exercises its options to acquire all the remaining shopping center
properties, the maximum aggregate amount payable to KC Holdings would be
approximately $11.1 million, or approximately 330,000 shares of Common Stock
(assuming shares valued at the closing price on the New York Stock Exchange of
$33.63 per share as of February 28, 1997). The Company would acquire the
properties subject to any existing mortgage indebtedness and other liabilities
on the properties. The acquisition options enable the Company to obtain any
appreciation in the value of these properties over the option exercise prices,
while eliminating the Company's interim exposure to leverage and operating
risks.
The option exercise prices for the shopping center properties are generally
equal to 10% of KC Holdings' share of the mortgage debt which was outstanding on
the properties at the date of the IPO. If, however, the market value of the
Company's Common Stock at the time an option is exercised is less than $13.33
per share (the IPO price), then the option exercise price will decline
proportionately (subject to maximum reduction of 50%).
The 22 shopping center properties subject to the acquisition options are held in
8 subsidiaries of KC Holdings. Thirteen of these properties are subject to a
single lease and/or a single cross-collateralized mortgage and are therefore
held by a single subsidiary. Four of the properties, which are owned in two
separate joint ventures and managed by unaffiliated joint venture partners, are
held by two additional subsidiaries, and the remaining five shopping center
properties are each held by separate subsidiaries. The Company may exercise its
acquisition options separately with respect to each subsidiary.
The acquisition options may be exercised by either (i) a majority of the
Company's directors who are not also stockholders of KC Holdings, provided that
the pro forma annualized net cash flows of the properties to be acquired exceed
the dividend yield on the shares issued to exercise each option, or (ii) a
majority of the Company's stockholders who are not also stockholders of KC
Holdings.
KC Holdings' subsidiaries may sell any of the properties subject to the
acquisition options to any third party unaffiliated with KC Holdings or its
stockholders, provided that KC Holdings provides the Company with a 30-day right
of first refusal notice with regard to such sale. KC Holdings may cause such a
selling subsidiary to distribute any sale proceeds to KC Holdings or
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its stockholders, provided that the option exercise price with respect to such
subsidiary is reduced by the amount that is distributed, and further provided
that no amount may be distributed so as to cause the option exercise price for
any subsidiary to be reduced to less than $1.
Each of KC Holdings' subsidiaries may pay dividends to KC Holdings to the extent
of net operating cash flow. In addition, any KC Holdings subsidiary may make
distributions to KC Holdings in excess of net operating cash flow, provided that
the option exercise price with respect to such subsidiary is reduced by the
amount of such distribution, and further provided that no amount may be
distributed so as to cause the option exercise price for any subsidiary to be
reduced to less than $1. KC Holdings may increase the indebtedness in its
subsidiaries for the purpose of improving, maintaining, refinancing or operating
the related shopping center properties. Such indebtedness may include borrowings
from the stockholders of KC Holdings.
In the event of a complete casualty or a condemnation of a property held by any
of KC Holdings' subsidiaries, the acquisition option will terminate with respect
to such property and the option shall continue to be effective with respect to
any other properties held by such subsidiary.
Each of KC Holdings' subsidiaries has agreed with the Company that it will
engage in no activities other than in connection with the ownership, maintenance
and improvement of the properties that it owns and only to the extent that the
Company could engage in such activities without receiving or earning
non-qualifying income (in excess of certain limits) under the REIT provisions of
the Code or without otherwise impairing the Company's status as a REIT. In
addition, KC Holdings has covenanted not to engage in any other real estate
activity. The Company has agreed not to make loans to KC Holdings or its
subsidiaries.
Exchange Listings
The Company's Common Stock, Class A Depositary Shares, Class B Depositary Shares
and Class C Depositary Shares are traded on the New York Stock Exchange under
the trading symbols "KIM", "KIMprA", "KIMprB" and "KIMprC", respectively.
Item 2. Properties
Real Estate Portfolio As of February 28, 1997 the Company's shopping center
portfolio was comprised of approximately 27.5 million square feet of GLA in 208
neighborhood and community shopping center properties and 2 regional malls,
located in 29 states. Neighborhood and community shopping centers comprise the
primary focus of the Company's current portfolio, representing approximately 96%
of the Company's total shopping center GLA. As of February 28, 1997
approximately 87% of the Company's neighborhood and community shopping center
space was leased, and the average annualized base rent per leased square foot
was $6.21 ($6.42 as adjusted to eliminate the effect of 1996 property
acquisitions). Such occupancy percentage would approximate 90%, as adjusted to
eliminate the effect of the Company's August 1996 retail properties acquisition
as discussed in Recent Developments - Retail Property Acquisitions.
The Company's neighborhood and community shopping center properties, generally
owned and operated through subsidiaries or joint ventures, had an average size
of approximately 126,000 square feet as of February 28, 1997. The Company
retains its shopping centers for long-term investment and consequently pursues a
program of regular physical maintenance together with major renovations and
refurbishing to preserve and increase the value of its properties. These
projects usually include renovating existing facades, installing uniform
signage, resurfacing parking lots and enhancing parking lot lighting.
The Company's neighborhood and community shopping centers are usually "anchored"
by a national or regional discount department store, supermarket or drugstore.
As one of the original participants in the growth of the shopping center
industry and one of the nation's largest owners and operators of shopping
centers, the Company has established close relationships with a large number of
major national and regional retailers. National and regional companies that are
tenants in the Company's shopping center properties include
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Kohls Department Stores, Venture Stores, WalMart, Toys/Kids 'R Us, Hills
Department Stores, TJX Companies, Schottenstein Stores and KMart Corp.
A substantial portion of the Company's income consists of rent received under
long-term leases. Most of the leases provide for the payment of fixed base
rentals monthly in advance and for the payment by tenants of an allocable share
of the real estate taxes, insurance, utilities and common area maintenance
expenses incurred in operating the shopping centers. Although a majority of the
leases require the Company to make roof and structural repairs as needed, a
number of tenant leases place that responsibility on the tenant, and the
Company's standard small store lease provides for roof repairs to be reimbursed
by the tenant as part of common area maintenance. The Company's management
places a strong emphasis on sound construction and safety at its properties.
Approximately 1,000 of the Company's 2,364 leases also contain provisions
requiring the payment of additional "percentage rents" should the tenants' gross
sales levels exceed predetermined thresholds. Percentage rents accounted for
approximately 3% of the Company's revenues from rental property for the year
ended December 31, 1996.
Minimum base rental revenues and operating expense reimbursements accounted for
approximately 97% of the Company's total rental revenues for the year ended
December 31, 1996. The Company's management believes that the average base rent
per square foot for the Company's existing leases is generally lower than the
prevailing market rate base rents in the geographic regions where the Company
operates, reflecting the potential for future growth.
The Company seeks to reduce its operating and leasing risks through geographic
and tenant diversity. No single neighborhood and community shopping center
accounted for more than 1.5% of the Company's total shopping center gross
leasable area or more than 2.3% of total annualized base rental revenues as of
December 31, 1996. No single tenant accounted for more than 4.2% of total
annualized base rental revenues as of December 31, 1996. The Company maintains
an active leasing and capital improvement program that, combined with the high
quality of the locations, has made, in management's opinion, the Company's
properties attractive to tenants.
The Company's management believes its experience in the industry and its
relationships with numerous national and regional tenants gives it an advantage
in an industry where ownership is fragmented among a large number of property
owners.
Given its intention to primarily focus its portfolio on neighborhood and
community shopping centers, the Company may, if suitable opportunities arise,
sell its regional malls or exchange them for a portfolio of neighborhood and
community shopping centers.
Retail Store Leases In addition to its neighborhood and community shopping
center portfolio and two regional malls, the Company holds interests in retail
store leases relating to approximately 5.1 million square feet of anchor store
premises in 57 neighborhood and community shopping centers located in 23 states.
As of February 28, 1997 approximately 99% of these premises had been sublet to
retailers which lease the stores pursuant to net lease agreements providing for
average annualized base rental payments to the Company of $3.84 per square foot.
The Company's average annualized base rental obligation pursuant to its retail
store leases with the fee owners of such subleased premises is approximately
$2.78 per square foot. The average remaining primary term of the Company's
retail store leases (and similarly the remaining primary terms of its sublease
agreements with the tenants currently leasing such space) is approximately 4.3
years, excluding options to renew such leases for terms which generally range
from 10-30 years.
Ground-Leased Properties The Company has 21 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
-11-
<PAGE>
these long-term leases, unless extended, the land together with all improvements
revert to the land owner.
Undeveloped Land Although the Company does not own any unimproved land tracts
that it intends to develop as new shopping centers, the Company does own parcels
of land adjacent to certain of its existing shopping centers that are held for
possible expansion. At times, should circumstances warrant, the Company may
develop or dispose of these parcels.
The table on pages 13 to 19 sets forth more specific information with respect to
each of the Company's shopping center properties as of December 31, 1996.
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
-12-
<PAGE>
Property Chart
<TABLE>
<CAPTION>
Year Ownership Leasable
Developed Interest/ Land Area Area
or Acquired (expiration)(2) (acres) (sq. ft.)
------- --------- ----- -------
<S> <C> <C> <C> <C>
Arizona
- ----
Phoenix 1996 fee,joint venture 18.66 186,575
California
- -----
Anaheim 1995 fee 1.50 15,306
Connecticut
- -------
Waterbury 1993 fee 13.10 136,153
Delaware
- -----
Elsmere 1979 ground lease(2076) 17.14 111,600
Florida
- ----
Orlando -
Sanford 1989 fee 40.90 301,801
Sand Lake 1994 fee 28.00 230,554
Fern Park 1968 fee 12.00 131,894
E. Orlando 1971 fee 11.63 124,798
W. Orlando 1995 fee,joint venture 10.00 114,434
Orlando 1995 fee 9.42 94,193
Orange Ave. 1968 ground lease(2047) 7.75 103,480
joint venture
Lake Barton 1968 fee 4.79 2,800
Kissimmee 1996 fee 13.10 133,583
Century Plaza 1996 fee 12.90 129,036
Dade -
Homestead 1972 fee,joint venture 21.00 140,605
North Miami (3) 1985 fee 15.92 133,340
Grove Gate 1968 fee 8.23 104,968
Miller Road 1986 fee 7.78 81,780
S. Miami 1995 fee 5.44 62,083
Broward -
Margate 1993 fee 33.99 256,110
Lauderhill 1974 fee 15.50 179,726
Lauderdale Lakes 1968 fee 10.04 110,444
Pompano Beach 1968 fee,joint venture 6.55 63,838
Plantation 1974 fee,joint venture 4.59 60,414
Coral Springs 1994 fee 5.90 44,024
Palm Beach-
Boca Raton 1992 fee 9.85 73,549
West Palm Beach 1967 fee,joint venture 7.57 74,326
West Palm Beach 1995 fee 6.99 80,845
Riviera Beach 1968 ground lease(2066) 5.06 46,390
joint venture
Sarasota -
South East 1989 fee 12.00 109,038
Tuttle Bee 1970 fee 10.00 103,085
<CAPTION>
Percent Major Leases
Leased (lease expiration/
(1) option expiration)
---- ----------
<S> <C> <C>
Arizona
- ----
Phoenix 92.90% Home Depot(1998/2018)
California
- -----
Anaheim 100.0
Connecticut
- -------
Waterbury 100.0 Bradlees(2002/2007), Stop & Shop(2013/2043)
Delaware
- -----
Elsmere 98.3 Schottenstein Stores (2008/2038)
Florida
- ----
Orlando -
Sanford 96.2 Wal-Mart(2005/2035),J.Byrons Enterprises(2005/2025),
Publix Supermarkets(2005/2025)
Sand Lake 96.1 Costco(2006/2026),Sports Authority(2011/2031)
Fern Park 98.6 Bed, Bath and Beyond(2002/2012),Office Max(2008/2023),
Books-A-Million(2006/2016)
E. Orlando 98.0 Office Depot(2005/2025),Sports Authority(2000/2020)
W. Orlando 85.6 Bally Fitness(2008/2018),HSN Realty(2000/2009)
Orlando 100.0 Rooms To Go(2001),Thomasville Gallery(2001/2006)
Orange Ave. 100.0 Dorin Distributors(2002),Economy Restaurant(1998/2003)
Lake Barton 100.0
Kissimmee 94.9 Office Max(2012/2027),Kash'N Karry(2006/2036)
Century Plaza 79.9 Ross Stores(2003/2023),Big Lots(1999/2009),White Rose(1997/2012)
Dade -
Homestead 87.6 Publix Supermarkets(2014/2034),Eckerd Drugs(2002/2012)
North Miami (3) 93.4 Walgreens(2024),Publix Supermarkets(2017/2037)
Grove Gate 100.0 Mervyn's(2011/2031)
Miller Road 94.0 Publix Supermarkets(2009/2029),Walgreens(2018)
S. Miami 100.0 Toys R Us(2016/2021)
Broward -
Margate 87.9 Publix Supermarkets(2008/2028), Office Depot(2000/2020),
Bealls Department Stores(1997/2007),Sam Ash(2006/2011)
Lauderhill 95.7 Baby Superstore(2004/2014),Party City(2007/2017)
Lauderdale Lakes 57.4
Pompano Beach 92.3 Consolidated Stores(2001/2011)
Plantation 100.0 Winn Dixie(1999/2024)
Coral Springs 98.4 Linens'N Things(2012/2027),TGI Fridays(2005/2015),Pier 1 Imports(2001/2011)
Palm Beach-
Boca Raton 92.4 Winn Dixie(2008/2033)
West Palm Beach 98.8 Winn Dixie(2010/2030),Rite Aid(2009/2024)
West Palm Beach 90.1 Baby Superstore(2006/2021)
Riviera Beach 97.7 Poston's World(1997)
Sarasota -
South East 97.0 Winn Dixie(1998/2023)
Tuttle Bee 100.0 TJ Maxx(2001/2016),Office Max(2009/2024)
</TABLE>
-13-
<PAGE>
<TABLE>
<CAPTION>
Year Ownership Leasable
Developed Interest/ Land Area Area
or Acquired (expiration)(2) (acres) (sq. ft.)
------- --------- ----- -------
<S> <C> <C> <C> <C>
Pinellas-
Clearwater 1992 fee 29.40 215,436
Jensen Beach 1994 fee 18.00 170,291
N. Melbourne 1994 fee 13.84 131,851
Largo 1968 fee 11.98 150,240
Largo East Bay 1993 fee 6.00 56,630
Pinellas Park 1970 fee 13.70 119,355
St. Petersburg 1968 ground lease(2109) 9.01 119,179
joint venture
Melbourne 1968 ground lease(2071) 11.53 168,797
New Port Richey 1972 fee 1.00 9,000
Ft. Pierce 1970 fee,joint venture 14.83 210,460
Winter Haven 1973 fee,joint venture 13.90 88,400
Palatka 1970 fee 8.90 72,216
Bradenton 1968 fee,joint venture 6.20 24,700
Leesburg 1969 ground lease(2017) 1.25 13,468
Georgia
- -----
Savannah 1993 fee 18.00 189,002
Largo Plaza 1995 fee 8.85 88,480
Atlanta-
Jonesboro Rd. 1988 fee 19.50 165,314
Forest Park 1969 fee 14.21 99,252
Gainesville 1970 fee,joint venture 12.60 142,288
Macon 1969 fee 12.30 127,260
Augusta 1995 fee 11.32 119,930
Illinois
- ----
Chicago-
Elgin 1972 fee 18.69 178,539
Addison 1968 ground lease(2066) 7.99 93,289
Bloomington 1972 fee 16.09 175,530
Ottawa 1970 fee 9.00 60,000
Geneva 1996 fee 10.40 104,000
Bradley 1996 fee 8.03 80,300
Indiana
- -----
Indianapolis-
Route 31 South 1986 fee 20.60 177,558
Greenwood 1970 fee 23.04 157,160
Eagledale 1967 fee 11.92 75,000
Felbram 1970 fee 4.13 27,400
Evansville
East 1995 fee 14.20 194,496
West 1995 fee 11.50 147,775
Lafayette 1971 fee 12.37 90,500
Iowa
- ---
Waterloo 1996 fee 9.60 96,000
Clive 1996 fee 9.04 90,000
Des Moines 1996 fee 9.64 96,400
<CAPTION>
Percent Major Leases
Leased (lease expiration/
(1) option expiration)
---- ----------
<S> <C> <C>
Pinellas-
Clearwater 95.9 Publix Supermarkets(2009/2029),AMC Theatre(2011/2036),
Office Depot(1999/2019)
Jensen Beach 90.0 Service Merchandise(2010/2070),Marshalls(1999/2019)
N. Melbourne 75.3 Winn Dixie(2002/2027)
Largo 98.0 Wal-Mart(2007/2027)
Largo East Bay 95.8
Pinellas Park 1.5
St. Petersburg 99.0 TJ Maxx(2001/2011),Lucky Stores(1999/2009)
Melbourne 57.2 Fabri-Center(2006/2016),Walgreens(2045)
New Port Richey 100.0 Crown Liquors(1998/2013)
Ft. Pierce 96.8 Winn Dixie(2002/2027),L. Luria(2003/2018),
K Mart(2001/2016)
Winter Haven 62.9 Consolidated Stores(2000/2010)
Palatka 93.4 Save-A-Lot(1998),Consolidated Stores(1999/2009)
Bradenton 29.0
Leesburg 88.9 Discount Auto Parts(1999/2004)
Georgia
- -----
Savannah 95.4 Ross Stores(1997),TJ Maxx(2005/2015)
Phar-Mor(1999/2004)
Largo Plaza 100.0 The MusicLand Group(2006/2021),Piggly Wiggly(1999/2004),Revco(2000)
Atlanta-
Jonesboro Rd. 100.0 Georgia Show Promotions(2000/2005)
Forest Park 93.3
Gainesville 98.9 Consolidated Stores(2002),Office Depot(2004/2019),
Hancock Fabrics(2002/2012),Farmers Furniture(2003/2013)
Macon 80.8 Consolidated Stores(1998/2003),Big B, Inc.(2004/2014),
Helig-Meyers(2007/2017)
Augusta 99.1 TJ Maxx(2004/2014),Golds Gym(2004/2009),Phar-Mor(1997/2007)
Illinois
- ----
Chicago-
Elgin 86.9 Eagle Food Centers(1998/2023), Menards(TJX)(2001/2006)
Addison 100.0 Schottenstein Stores(2001/2016)
Bloomington 94.9 Schnucks Markets(2004/2024),Toys R Us(2015/2045)
Ottawa 100.0 Schottenstein Stores(2001/2011)
Geneva 100.0 Venture Stores(2021/2051)
Bradley 100.0 Venture Stores(2021/2051)
Indiana
- -----
Indianapolis-
Route 31 South 97.2 Target (1999/2029)
Greenwood 97.0 Toys R Us(2011/2056),TJ Maxx(2004/2010),Baby Superstore(2006/2021)
Eagledale 6.7
Felbram 91.2 Save A Lot(2001/2016),Blockbuster Video(1999/2009)
Evansville
East 93.4 Venture Stores(2012/2032),Michaels Stores(2004/2019),Office Max(2012/2027)
West 100.0 Venture Stores(2012/2032),Buehler Foods(2003/2013)
Lafayette 100.0 Menards(TJX)(2001/2006)
Iowa
- ---
Waterloo 100.0 Venture Stores(2021/2051)
Clive 100.0 Venture Stores(2021/2051)
Des Moines 100.0 Venture Stores(2021/2051)
</TABLE>
-14-
<PAGE>
<TABLE>
<CAPTION>
Year Ownership Leasable
Developed Interest/ Land Area Area
or Acquired (expiration)(2) (acres) (sq. ft.)
------- --------- ----- -------
<S> <C> <C> <C> <C>
Kansas
- -----
East Wichita 1996 fee 9.61 96,100
West Wichita 1996 fee 9.70 97,000
Kentucky
- ------
Lexington 1993 fee 35.80 260,086
Bellevue 1976 fee 6.04 53,695
Louisiana
- ------
New Orleans 1983 fee,joint venture 1.50 190,000
Shreveport 1975 fee 3.53 27,104
Maryland
- -----
Hagerstown 1973 fee 10.48 115,718
Laurel 1972 fee 10.00 81,550
Laurel 1995 fee 18.00 75,882
Massachusetts
- --------
Leominster 1975 fee 57.00 596,630
Great Barrington 1994 fee 14.13 135,435
Michigan
- -----
Grand Rapids 1993 fee 41.78 284,143
Clarkston 1996 fee 15.69 156,864
Detroit -
Clawson 1993 fee 16.50 177,404
Taylor 1993 fee 13.90 121,364
Farmington 1993 fee 3.00 97,139
Livonia 1968 fee 4.53 44,185
Grand Haven 1976 fee 7.55 88,014
Muskegon 1985 fee 12.20 71,235
Missouri
- -----
Springfield 1994 fee 30.00 271,552
St. Louis -
Gravois 1972 fee 13.11 163,821
Jennings 1971 fee 8.20 155,095
Hazelwood 1970 fee 15.00 130,780
Ellisville 1970 fee 18.37 118,080
Lemay 1974 fee 9.40 73,281
New Hampshire
- ---------
Salem 1994 fee 38.10 330,584
New Jersey
- -------
N. Brunswick 1994 fee 38.12 403,079
Cherry Hill 1985 fee,joint venture 18.58 121,673
Westmont (3) 1994 fee 17.39 195,824
Ridgewood 1993 fee 2.71 24,280
<CAPTION>
Percent Major Leases
Leased (lease expiration/
(1) option expiration)
---- ----------
<S> <C> <C>
Kansas
- -----
East Wichita 100.0 Venture Stores(2021/2051)
West Wichita 100.0 Venture Stores(2021/2051)
Kentucky
- ------
Lexington 97.3 Toys R Us(2013/2038),Hills Dept. Stores(2001/2026),
Kroger(1998/2020),Best Buy(2009/2024)
Bellevue 94.0 Kroger(2005/2035)
Louisiana
- ------
New Orleans 100.0 Maison Blanche(2011/2031)
Shreveport 100.0
Maryland
- -----
Hagerstown 98.2 Ames(TJX)(2007/2017),Discount Drug Center(1997/2012),
H.H. Brown Retail(2006/2016)
Laurel 100.0 Ames(TJX)(2007/2017)
Laurel 95.2 Old Country Buffet(2009/2019),Foodarama(1999/2009),
Factory Card Outlet(2005/2015)
Massachusetts
- --------
Leominster 92.6 Sears(2003/2033),J.C. Penney(2009/2034),Bradlees(2009/2024),
Service Merchandise(2010/2035),Toys R Us(2018/2048)
Great Barrington 82.6 K Mart(2001/2016), Price Chopper(2016/2036)
Michigan
- -----
Grand Rapids 100.0 K Mart(2016/2051), Kohls(2012/2032)
Clarkston 98.7 A & P(2015/2045),Franks Nursery(2011/2031)
Detroit -
Clawson 98.3 A & P(2006/2016),Franks Nursery(1998),Staples(2011/2026)
Taylor 100.0 Kohls(2011/2031), Drug Emporium(2000/2020)
Farmington 91.5 A & P(2001),Damman Hardware(2002/2012)
Livonia 97.3 Damman Hardware(2004/2014)
Grand Haven 100.0 Family Fare(2006/2026)
Muskegon 87.8 Plumb Inc.(2002/2022)
Missouri
- -----
Springfield 94.5 Best Buy(2011/2026),TJ Maxx(2006/2021),PETSsMART(2002)
J.C. Penney(2005/2015),Office Max(2011/2020)
St. Louis -
Gravois 80.7 K Mart(1999/2019), Walgreen(2006)
Jennings 17.9 Walgreen(2056)
Hazelwood 92.5 K Mart(2000/2020)
Ellisville 100.0 Shop N Save(2005/2015)
Lemay 100.0 Shop N Save(1998/2008),Consolidated Stores(1997/2002)
New Hampshire
- ---------
Salem 95.0 Bradlees(1998/2013),TJ Maxx(1998/2013),Christmas Tree(2009/2024),
Shaws Supermarket(2008/2038),Bobs(2011/2021)
New Jersey
- -------
N. Brunswick 98.4 Wal-Mart(2018,2058),Burlington Coat Factory(2008,2013),
Office Depot(2010/2025),Macy's(2000/2015),The Homeplace(2012/2027),
Baby Superstore(2007/2022)
Cherry Hill 79.4 Giant Food(2016/2036)
Westmont (3) 38.6 A & P(2000/2015)
Ridgewood 100.0 Thrift Drug(1997)
</TABLE>
-15-
<PAGE>
<TABLE>
<CAPTION>
Year Ownership Leasable
Developed Interest/ Land Area Area
or Acquired (expiration)(2) (acres) (sq. ft.)
------- --------- ----- -------
<S> <C> <C> <C> <C>
Marlton Pike 1996 ground lease (2035) 12.88 129,809
Camden(3) 1996 ground lease (2032) 9.80 123,970
Cinnaminson(3) 1996 fee 12.30 121,084
New York
- -----
Long Island -
Centereach 1993 fee,joint venture 40.77 371,028
Bridgehampton 1973 fee 30.10 281,632
Carle Place 1993 fee 7.00 132,408
Plainview (3) 1969 fee 6.98 83,678
Hampton Bays 1989 fee 8.17 70,990
Syosset 1967 fee 2.49 32,124
Staten Island 1989 fee 16.70 210,990
Poughkeepsie 1972 fee 20.03 181,434
Rochester -
West Gates 1993 fee 22.90 185,153
Irondequoit 1993 fee 13.10 105,000
Henrietta 1993 fee 10.00 123,000
Nanuet 1984 fee 6.00 70,829
Yonkers 1995 fee 4.13 43,560
North Carolina
- --------
Raleigh 1993 fee 30.00 374,698
Durham 1996 fee 11.62 116,195
Charlotte-
Gastonia 1989 fee 24.85 235,607
Charlotte 1995 fee 13.50 110,300
Tyvola Rd. 1986 ground lease(2098) 18.43 226,295
Charlotte 1993 fee 13.88 135,257
Winston-Salem 1969 fee 13.15 137,829
Ohio
- ---
Cleveland -
Mentor 1988 fee 25.00 271,385
Wickliffe 1995 fee 10.00 128,180
Mentor 1987 fee 20.59 103,871
Elyria 1988 fee 8.30 103,400
Greenlight 1975 ground lease(2035) 9.42 82,411
Columbus -
Westerville 1988/93 fee 35.20 240,224
Morse Rd. 1988 fee 12.40 191,789
Upper Arlington 1969 fee 13.28 149,397
Hamilton Rd. 1988 fee 20.20 140,993
W. Broad St. 1988 fee 12.40 134,644
Olentangy River Rd. 1988 fee 17.90 129,830
Whitehall 1967 fee 13.80 112,813
Brunswick 1975 fee 20.00 168,523
Dayton -
Oak Creek 1984 fee 32.01 215,891
Shiloh Spring Rd. 1969 ground lease(2043) 22.82 163,431
Springfield 1988 fee 14.32 131,628
Salem Ave. 1988 fee 16.90 141,616
Beavercreek (3) 1986 fee 18.19 126,137
Centerville 1988 fee 15.20 115,378
Kettering 1988 fee 11.20 123,098
Springboro Pike 1985 fee 12.96 98,551
<CAPTION>
Percent Major Leases
Leased (lease expiration/
(1) option expiration)
---- ----------
<S> <C> <C>
Marlton Pike 100.0 Kohls(2016/2036),Sears(2003/2013)
Camden(3) 0.0
Cinnaminson(3) 14.0
New York
- -----
Long Island -
Centereach 86.7 Wal-Mart(2015/2044),King Kullen(2003/2033)
Bridgehampton 98.6 Caldor(2009/2039),King Kullen(2015/2035),
TJ Maxx(2007/2017),Gap(2000/2005)
Carle Place 97.3 Harrows Stores(2005/2015),Staples(2010/2025),Sneaker Stadium(2011/2026)
Plainview (3) 91.6 Waldbaums(2017/2037)
Hampton Bays 100.0 Sterns(2005/2025),Genovese Drug Store(2001/2016)
Syosset 64.3 C-Town(2000)
Staten Island 90.0 K Mart(2001/2011),Supermarkets General(2001/2021)
Poughkeepsie 89.7 Caldor(1999/2029),Edwards(1997/2012)
Rochester -
West Gates 41.8 Tops Supermarket(2004/2024)
Irondequoit 0.0 Staples(2010/2022),Michaels(2015/2030)
Henrietta 14.6 Staples(2010/2022)
Nanuet 84.9 RKO Century Theatres(2000/2010)
Yonkers 100.0 Big V Supermarkets, Inc.(2008/2028)
North Carolina
- --------
Raleigh 97.5 General Cinema(2009/2029),Marshalls(1999/2014),Phar-Mor(2010/2025)
Michaels(1999/2009),Best Buy(2005/2020).Office Max(2011/2026)
Durham 87.0 TJ Maxx(2003/2013),Durham Sport(2002/2012)
Charlotte-
Gastonia 96.7 Service Merchandise(1998/2003),Toys R Us(2015/2045),
Winn Dixie(2002)
Charlotte 100.0 The MusicLand Group(2004/2019),TJX Companies(2001/2016)
Tyvola Rd. 96.7 Toys R Us(2012/2042),Office Max(2009/2024),
Food Lion Stores(1997/2007),Drug Emporium(2005/2015)
Charlotte 97.3 Bi-Lo, Inc.(2009/2029), Michaels(2003/2013)
Winston-Salem 62.5 Kroger(2016/2041)
Ohio
- ---
Cleveland -
Mentor 90.9 Burlington Coat Factory(2014),General Cinema(2010/2030),
Rini Supermarket(2009/2019)
Wickliffe 46.3 Consolidated Stores(2000)
Mentor 97.7 Hills Dept. Stores(2020/2045)
Elyria 100.0 K Mart(2010/2030)
Greenlight 74.9 Aldi's(2003/2023)
Columbus -
Westerville 99.0 Kohls(2011/2031),Office Max(2002/2022),Homeplace(2005/2020)
Morse Rd. 100.0 Kohls(2011/2031),Kroger(2031/2071),Kids R Us(2015/2040)
Upper Arlington 85.0 TJ Maxx(2001/2006)
Hamilton Rd. 100.0 Kohls(2011/2031),Staples(2000/2010)
W. Broad St. 100.0 Kohls(2011/2031)
Olentangy River Rd. 95.4 Kohls(2011/2031)
Whitehall 16.1
Brunswick 96.4 K Mart(2000/2050),Fisher Food(2001/2031)
Dayton -
Oak Creek 88.0 Kroger(2012/2037),Victoria's Secret(2004/2019)
Shiloh Spring Rd. 98.9 Burlington Coat Factory(2014/2044),Best Buy(2004/2024)
Springfield 100.0 K Mart(2010/2030),Kroger(2001/2006)
Salem Ave. 100.0 Schottenstein Stores(2000/2020),Circuit City(2017/2037)
Beavercreek (3) 90.3 Kroger(1996/2021),Consolidated Stores(1997)
Centerville 49.6 Waccamaw Corp(2006/2021)
Kettering 87.6 Schottenstein Stores(2000/2015)
Springboro Pike 89.2 The MusicLand Group(2007/2022),Office Max(2002/2022)
</TABLE>
-16-
<PAGE>
<TABLE>
<CAPTION>
Year Ownership Leasable
Developed Interest/ Land Area Area
or Acquired (expiration)(2) (acres) (sq. ft.)
------- --------- ----- -------
<S> <C> <C> <C> <C>
Troy 1986 fee 8.02 87,660
Canton -
Belden Village 1972 fee 19.60 161,675
Canton Hills 1993 fee 7.80 63,712
Cincinatti -
Cincinnati 1992 fee 11.60 139,985
Sharonville 1977 ground lease(2076) 14.99 130,715
joint venture
Springdale 1988 fee 31.00 321,537
Akron -
Barberton 1972 fee 9.97 119,975
Massillon 1988 ground lease(2001) 2.40 102,632
Waterloo Rd. 1975 fee 6.91 56,975
Cambridge 1973 fee 13.08 95,955
Lima 1995 fee 18.10 194,130
Oklahoma
- ------
South Tulsa 1996 fee 9.61 96,100
Pennsylvania
- --------
Philadelphia -
Springfield 1983 fee 19.66 219,083
Bustleton(3) 1995 fee, joint venture 21.00 275,033
Eagleville 1973 fee 15.20 165,410
Norristown (3) 1984 fee 12.52 136,900
Cottman & Castor 1983 fee, joint venture 8.12 214,970
Richboro (3) 1986 fee 14.47 80,737
Frankford 1996 fee 8.65 82,345
Gallery(3) 1996 ground lease (2035) 13.33 133,309
East Stroudsburg 1973 fee 15.33 167,654
Upper Darby(3) 1996 fee, joint venture 52,657
Pittsburgh -
Kennywood 1973 fee 24.62 196,151
Penn Hills 1986 ground lease(2027) 31.06 110,517
New Kensington 1986 fee 12.53 106,624
West Mifflin Century III 1986 fee 8.33 84,279
West Mifflin 1993 fee 8.77 69,733
Harrisburg-
Rt. 22 1972 fee 17.00 175,917
Olmstead 1973 fee 21.86 140,481
Upper Allen 1986 fee 6.00 59,470
Middletown 1986 fee 4.66 35,747
York -
Eastern Blvd. 1986 fee 8.00 61,979
E. Prospect St. 1986 fee 13.65 53,011
W. Market St. 1986 fee 3.32 35,500
Gettysburg 1986 fee 2.25 30,706
Erie 1968 fee 1.96 2,196
Center Square 1996 fee 12.02 116,055
Whitehall 1996 ground lease (2081) 8.66 84,524
Easton(3) 1996 fee 8.52 82,962
Havertown 1996 fee 9.09 80,938
Exton 1996 fee 8.90 85,184
Lansdale(3) 1996 ground lease (2066) 6.90 71,760
<CAPTION>
Percent Major Leases
Leased (lease expiration/
(1) option expiration)
---- ----------
<S> <C> <C>
Troy 59.1 Marsh Supermarkets(2001/2016)
Canton -
Belden Village 83.1 Twin Value(2018/2043),TJ Maxx(2007/2017)
Canton Hills 73.9 Cinemark(1998/2003)
Cincinatti -
Cincinnati 66.9 Circuit City(2008/2031),Office Depot(2004/2024),
Consolidated Stores(1999/2009)
Sharonville 100.0 K Mart(2004/2054),Kroger(1998/2028)
Springdale 100.0 Hechingers(2013/2033),Service Merchandise(2002/2012),
Office Depot(2004/2024),Linens N Things(2005/2015),
Toys R Us(2016/2046)
Akron -
Barberton 100.0
Massillon 100.0 Hills Dept. Stores(2001)
Waterloo Rd. 75.4 Peter J. Schmidt(1999/2024)
Cambridge 100.0 Quality Stores Inc.(TJX)(2000/2020),Kroger(1999/2024)
Lima 98.8 Ray's Supermarket(2011/2026)
Oklahoma
- ------
South Tulsa 100.0 Venture Stores(2021/2051)
Pennsylvania
- --------
Philadelphia -
Springfield 92.8 Schottenstein Stores(2013/2043),Staples(2008/2023)
Bustleton(3) 98.4 PETsMART(2006/2016),Pep Boys(2004/2014),
American Multi Theaters(2003/2023),Super Fresh(2021/2045)
Eagleville 99.0 K Mart(1999/2019)
Norristown (3) 87.6 Giant Food(2017/2037),Staples(2008/2023)
Cottman & Castor 97.5 Toys R Us(2002/2052),J.C. Penney(2012/2037)
Richboro (3) 85.6 A&P (2002/2032)
Frankford 100.0 Kohls(2016/2036)
Gallery(3) 0.0
East Stroudsburg 98.8 K Mart(1997/2022),Weiss Markets(2002/2012)
Upper Darby(3) 52.0 Mercy Health Corporation(2012/2022)
Pittsburgh -
Kennywood 89.6 Hills Dept. Stores(2004/2034),Giant Eagle(2014/2029)
Penn Hills 100.0 Hills Dept. Stores(2017/2026)
New Kensington 98.9 Giant Eagle(2006/2026)
West Mifflin Century III 100.0 Hills Dept. Stores(2007/2032)
West Mifflin 100.0 Pat Catan(2000/2005)
Harrisburg-
Rt. 22 100.0 Hills Dept. Stores(2002/2032),Superpetz, Inc.(2002/2022),
The MusicLand Group(2011/2026)
Olmstead 57.4 Electronics Institute(1999)
Upper Allen 97.5 Giant Food(2010/2030)
Middletown 50.5 U.S. Postal Service(2016/2026)
York -
Eastern Blvd. 98.6 Superpetz, Inc.(2004/2009),Discovery Zone(2005/2015)
E. Prospect St. 100.0 Giant Food(2006/2026)
W. Market St. 100.0 Giant Food(2002/2017)
Gettysburg 100.0 Giant Food(2000/2010)
Erie 100.0 Barron Oil(2016)
Center Square 100.0 Kohls(2016/2036),Sears(2002/2007)
Whitehall 100.0 Kohls(2016/2036)
Easton(3) 0.0
Havertown 100.0 Kohls(2016/2036)
Exton 100.0 Kohls(2016/2036)
Lansdale(3) 0.0
</TABLE>
-17-
<PAGE>
<TABLE>
<CAPTION>
Year Ownership Leasable
Developed Interest/ Land Area Area
or Acquired (expiration)(2) (acres) (sq. ft.)
------- --------- ----- -------
<S> <C> <C> <C> <C>
Bucks -
Morrisville(3) 1996 fee 11.78 117,511
Feasterville 1996 fee 8.69 86,575
Warrington(3) 1996 fee 8.52 82,338
South Carolina
- ---------
Charleston 1995 fee 17.15 188,237
Charleston 1978 fee 17.12 169,227
Aiken 1989 fee 16.60 132,345
Tennessee
- ------
Madison 1978 ground lease(2039) 14.49 176,256
Chattanooga 1973 ground lease(2073) 7.63 44,288
Texas
- ----
Dallas 1969 fee, joint venture 75.00 566,826
Mesquite 1995 fee 9.00 79,550
Houston 1973 fee 4.25 45,494
Garland 1996 fee 4.14 41,364
Plano 1996 fee 9.67 96,700
North Arlington 1996 fee 9.70 97,000
Redbird 1996 fee 9.65 96,500
Garland 1996 fee 10.36 103,600
Hulen 1996 fee 10.60 106,000
West Oaks 1996 fee 9.65 96,500
Sam Houston 1996 fee 10.60 106,000
Baytown 1996 fee 10.38 103,800
Utah
- ---
Ogden 1967 fee 11.36 121,425
Virginia
- ----
Woodbridge 1973 ground lease(2072) 19.63 186,142
joint venture
Richmond 1995 fee 11.47 121,550
West Virginia
- --------
Charles Town (3) 1985 fee 22.00 115,621
Martinsburg 1986 fee 6.04 43,212
Wisconsin
- ------
Racine 1988 fee 14.20 153,530
---------- -------------------
Total 210 property interests 2,909.79 27,360,399
---------- -------------------
Acquisitions subsequent to December 31, 1996
Indiana
- -----
Lafayette 1997 fee 17.69 176,940
Disposition subsequent to December 31, 1996
Louisiana
- ------
Shreveport 1975 fee (3.53) (27,104)
---------- -------------------
Total 210 property interests 2,923.95 27,510,235
==========
Retail Store Leases (4) 1995 leasehold 5,085,738
-------------------
Grand Total 267 property interests 32,595,973
===================
<CAPTION>
Percent Major Leases
Leased (lease expiration/
(1) option expiration)
---- ----------
<S> <C> <C>
Bucks -
Morrisville(3) 24.3 Acme Markets(1997/2022)
Feasterville 100.0 Value City(2011/2025)
Warrington(3) 0.0
South Carolina
- ---------
Charleston 99.2 TJ Maxx(1999/2004),Office Depot(2001/2016),Marshalls(1998/2001)
Charleston 72.8 Kerrisons(1996/2016),Steinmart(2001/2016)
Aiken 95.9 Wal-Mart(2002/2032),Food Lion(1997/2018)
Tennessee
- ------
Madison 96.3 Old Time Pottery(2001/2006),Trade-A-House(2014)
Chattanooga 71.8 Echols Furniture & Leasing Company(1997)
Texas
- ----
Dallas 55.9 Montgomery Ward(2000/2015)
Mesquite 100.0 Kroger(2012/2037)
Houston 100.0 Kroger(1997/2012)
Garland 100.0 Kroger(2000/2025)
Plano 100.0 Venture Stores(2021/2051)
North Arlington 100.0 Venture Stores(2021/2051)
Redbird 100.0 Venture Stores(2021/2051)
Garland 100.0 Venture Stores(2021/2051)
Hulen 100.0 Venture Stores(2021/2051)
West Oaks 100.0 Venture Stores(2021/2051)
Sam Houston 100.0 Venture Stores(2021/2051)
Baytown 100.0 Venture Stores(2021/2051)
Utah
- ---
Ogden 99.7 K Mart(2002)
Virginia
- ----
Woodbridge 59.1 Ames(TJX)(2000/2020)
Richmond 100.0 Burlington Coat Factory(2006/2036)
West Virginia
- --------
Charles Town (3) 43.7 Shop N Save(1999/2009)
Martinsburg 100.0 Martins Food Market(2010/2030)
Wisconsin
- ------
Racine 67.6 Schultz Sav-O-Stores(1999/2009),Consolidated Stores(1997/2002)
Total 210 property interests
Acquisitions subsequent to December 31, 199
Indiana
- -----
Lafayette 1997 94.0 Target(1998/2018),H.H. Gregg(1999/2009),Fabri Centers(1999)
Disposition subsequent to December 31, 1996
Louisiana
- ------
Shreveport 1975 (100.0)
Total 210 property interests
Retail Store Leases (4) 1995 99.0 Various
Grand Total 267 property interests
</TABLE>
-18-
<PAGE>
(1) Percent leased information as of December 31, 1996 or later of
acquisition/disposition.
(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 effect to all renewal
periods.
(3) Denotes redevelopment project.
(4) The Company holds interests in various retail store leases related to the
anchor store premises in neighborhood and community shopping centers.
-19-
<PAGE>
Executive Officers of the Registrant
The following table sets forth information with respect to the seven executive
officers of the Company as of March 17, 1997.
Name Age Position Since
---- --- -------- -----
Milton Cooper 68 Chairman of the Board of 1991
Directors and Chief
Executive Officer
Michael J. Flynn 61 Vice Chairman of the 1996
Board of Directors.
President and Chief 1997
Operating Officer
Joseph V. Denis 45 Vice President - 1993
Construction
Bruce M. Kauderer 50 Vice President - 1995
Legal
Louis J. Petra 43 Chief Financial Officer 1984
and Treasurer
Robert P. Schulman 69 Senior Vice President 1978
and Secretary
Alex Weiss 39 Vice President - 1988
Management Information
Systems
Michael J. Flynn has been President and Chief Operating Officer since January
2, 1997, Vice Chairman of the Board of Directors since January 2, 1996 and a
Director of the Company since December 1, 1991. Mr. Flynn was Chairman of the
Board and President of Slattery Associates, Inc. for more than five years
prior to joining the Company.
Joseph V. Denis has been a Vice President of the Company since October 1993. Mr.
Denis was President and Chief Operating Officer of Konover Construction Company,
and previously held various positions with such company as a project and
construction manager, for more than five years prior to joining the Company in
June 1993.
Bruce M. Kauderer has been a Vice President of the Company since June 1995.
Mr. Kauderer was a founder of and partner with Kauderer & Pack P.C. from 1992
to June 1995 and a Partner with Fink Weinberger, P.C. for more than five years
prior to 1992.
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.
-20-
<PAGE>
PART II
Item 5. Market for the Registrant's Common Equity and Related Shareholder
Matters
Market Information The Company completed its IPO on November 22, 1991. Shares of
Common Stock were sold for cash or exchanged for mortgage debt and equity
interests in certain of the Company's shopping center properties based upon an
initial public offering price of $13.33 per share. Additional primary public
common stock offerings were completed in June 1992, April 1993, January 1995 and
February 1996, wherein shares of Common Stock were sold for cash or exchanged
for equity interests in shopping center properties based upon $16.92, $22.83,
$24.17 and $26.50 per share offering prices, respectively.
The high and low closing sales prices for the Company's Common Stock, which is
currently traded on the New York Stock Exchange under the trading symbol "KIM",
for each quarter during the two years ended December 31, 1996, were as follows:
Stock Price
-----------
Period High Low
------ ---- ---
Jan. 1, 1995 - Mar. 31, 1995 26.00 23.75
Apr. 1, 1995 - June 30, 1995 26.67 24.83
July 1, 1995 - Sept 30, 1995 27.50 25.25
Oct. 1, 1995 - Dec. 31, 1995 28.17 23.92
Jan. 1, 1996 - Mar. 31, 1996 27.88 25.50
Apr. 1, 1996 - June 30, 1996 28.50 25.75
July 1, 1996 - Sept.30, 1996 30.25 26.63
Oct. 1, 1996 - Dec. 31, 1996 34.88 28.38
Holders The approximate number of holders of record of the Company's Common
Stock, par value $.01 per share, was 498 as of February 28, 1997.
Dividends Since the IPO, the Company has paid regular quarterly dividends to its
stockholders.
Quarterly dividends at the rate of $.36 per share were declared and paid on
November 29, 1994 and January 17, 1995, March 15, 1995 and April 17, 1995, June
15, 1995 and July 17, 1995 and September 15, 1995 and October 16, 1995,
respectively. Quarterly dividends at the increased rate of $.39 per share were
declared and paid on November 30, 1995 and January 16, 1996, March 15, 1996 and
April 15, 1996, June 17, 1996 and July 15, 1996 and September 16, 1996 and
October 15, 1996 respectively. On December 2, 1996 the Company declared its
dividend payable during the first quarter of 1997 at the increased rate of $.43
per share payable January 15, 1997 to shareholders of record on January 2, 1997.
This $.43 per share dividend, if annualized, would equal $1.72 per share, or an
annual yield of approximately 5.1% based on the closing price of the Company's
Common Stock on the New York Stock Exchange as of February 28, 1997.
The Company has determined that 100% of the total $1.56 and $1.44 per share in
dividends paid during 1996 and 1995, respectively, represented ordinary dividend
income to its stockholders.
While the Company intends to continue paying regular quarterly dividends, future
dividend declarations will be at the discretion of the Board of Directors and
will depend on the actual cash flow of the Company, its financial condition,
capital requirements, the annual distribution requirements under the REIT
provisions of the Code and such other factors as the Board of Directors deems
relevant. The actual cash flow available to pay dividends will be affected by a
number of factors, including the revenues received from rental properties, the
operating expenses of the Company, the interest expense on its borrowings, the
ability of lessees to meet their obligations to the Company and any
unanticipated capital expenditures.
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 and underwritten bonds and perpetual preferred stock.
Borrowings under the Company's revolving credit facility have also been an
interim source of funds to both finance the purchase of properties and meet any
short-term working capital
-21-
<PAGE>
requirements. The various instruments governing the Company's issuance of its
unsecured public debt, bank debt and preferred stock impose certain restrictions
on the Company with regard to dividends, voting, liquidation and other
preferential rights available to the holders of such instruments. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and Notes 7 and 12 of the Notes to Consolidated Financial Statements
included in this annual report. Reference should also be made to the documents
incorporated by reference into Part II of this annual report listed in
"Documents Incorporated by Reference" above for further information with respect
to such restrictions.
The Company does not believe that the preferential rights available to the
holders of its Class A, Class B and Class C Preferred Stock, the financial
covenants contained in its public bond Indenture or its revolving credit
agreement will have any adverse impact on the Company's ability to pay dividends
in the normal course to its common stockholders or to distribute amounts
necessary to maintain its qualification as a REIT.
The Company maintains a dividend reinvestment program pursuant to which common
and preferred stockholders may elect to automatically reinvest their dividends
to purchase shares of Common Stock. The Company may, from time to time, either
(i) repurchase shares of Common Stock in the open market, or (ii) issue new
shares of Common Stock, for the purpose of fulfilling its obligations under this
dividend reinvestment program.
Item 6. Selected Financial Data
The following table sets forth selected, historical consolidated financial data
for the Company and should be read in conjunction with the Consolidated
Financial Statements of the Company and Notes thereto included elsewhere 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.
-22-
<PAGE>
<TABLE>
<CAPTION>
Years Ended December 31,
------------------------------------------------------
1996 1995 1994 1993 1992
---- ---- ---- ---- ----
(in thousands, except per share data)
<S> <C> <C> <C> <C> <C>
Operating Data:
Revenues from rental property(1) $168,144 $143,132 $125,272 $ 98,854 $ 78,769
Depreciation and amortization $ 27,067 $ 26,188 $ 23,478 $ 19,898 $ 16,829
Income before
extraordinary items $ 73,827 $ 51,922 $ 41,071 $35,159(3) $ 18,964
Income per common share,
before extraordinary items $ 1.61 $ 1.33 $ 1.17 $1.17(3) $ 0.83
Funds from operations (2) $ 85,106 $ 72,128 $ 59,638 $ 50,869 $ 36,625
Interest expense $ 27,019 $ 25,585 $ 20,483 $ 17,203 $ 18,217
Weighted average number of shares
of common stock outstanding 35,906 33,388 30,072 28,657 22,709
Cash dividends per common share $ 1.56 $ 1.44 $ 1.33 $ 1.25 $ 0.99
<CAPTION>
December 31,
-------------------------------------------------------------
1996 1995 1994 1993 1992
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Balance Sheet Data:
Real estate, before accumulated depreciation $1,072,056 $ 932,390 $ 796,611 $ 662,874 $ 490,367
Total assets $1,022,566 $ 884,242 $ 736,709 $ 652,823 $ 453,330
Total debt $ 364,655 $ 389,223 $ 372,999 $ 290,886 $ 278,026
</TABLE>
(1) Does not include revenues from rental property relating to
unconsolidated joint ventures or revenues related to the investment in
retail store leases.
(2) Industry analysts generally consider funds from operations to be an
appropriate measure of the performance of an equity REIT. Funds from
operations is defined as net income applicable to common shares before
depreciation and amortization, extraordinary items, gains or losses on sales
of real estate, plus funds from operations of unconsolidated joint ventures
determined on a consistent basis. Funds from operations does not represent
cash generated from operating activities in accordance with generally
accepted accounting principles and therefore should not be considered a
substitute for net income as a measure of results of operations, or for cash
flows from operations calculated in accordance with generally accepted
accounting principles as a measure of liquidity.
(3) Includes approximately $3.4 million, or $.12 per share, in non-recurring
gains related to the sale of a shopping center and a casualty claim related
to a joint venture property.
-23-
<PAGE>
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 appearing elsewhere in this annual report
on Form 10-K. Historical results and percentage relationships set forth in the
Consolidated Statements of Income contained in the Consolidated Financial
Statements, including trends which might appear, should not be taken as
indicative of future operations.
Results of Operations
Comparison of 1996 to 1995
Revenues from rental property increased approximately $25.0 million, or 17.5% to
$168.1 million for the year ended December 31, 1996, as compared with $143.1
million for the year ended December 31, 1995. This increase resulted primarily
from the combined effect of shopping center acquisitions during the respective
periods (39 property interests in 1996 and 18 property interests in 1995) as
well as new leasing and re-tenanting within the portfolio at improved rental
rates.
Rental property expenses, including depreciation and amortization, increased
approximately $8.1 million, or 9.1%, to $97.0 million for the year ended
December 31, 1996, as compared with $88.9 million for the preceding calendar
year. This increase is primarily due to property acquisitions and renovations
within the existing portfolio during the respective periods which gave rise to
an overall increase in real estate taxes and depreciation and amortization
expenses, as well as increased snow removal costs during 1996. Interest charges
increased approximately $1.4 million between the respective periods reflecting
higher average outstanding borrowings during calendar year 1996 as compared to
the preceding year.
During July 1995, certain subsidiaries of the Company obtained interests in
retail store leases relating to the anchor store premises in neighborhood and
community shopping centers. These premises have been substantially sublet to
retailers which lease the stores pursuant to net lease agreements. Income from
the investment in retail store leases during the years ended December 31, 1996
and 1995 were $3.6 and $1.8 million, respectively.
General and administrative expenses increased approximately $1.5 million to
$10.3 million for the year ended December 31, 1996, as compared to $8.8 million
for the preceding calendar year. This increase is primarily attributable to
increased senior management and staff levels during 1996 and 1995.
Other income, net increased approximately $3.3 million for the year ended
December 31, 1996 as compared with the preceding year. This increase is
primarily attributable to interest earned on funds raised through public equity
offerings during 1996 and held in short-term income producing investments
pending the acquisition of interests in neighborhood and community shopping
center properties.
During September 1996, the Company disposed of a property in Watertown, New
York. Cash proceeds from the disposition totaling $1.8 million, together with an
additional $2.2 million cash investment, were used to acquire an exchange
shopping center property during January 1997.
Net income for the year ended December 31, 1996 of approximately $73.8 million
represented an improvement of approximately $21.9 million, as compared with net
income of approximately $51.9 million for the preceding calendar year. After
adjusting for the gain on the sale of a shopping center property during 1996,
net income for 1996 increased by $21.1 million, or $.26 per share, compared to
1995. This substantially improved performance was primarily attributable to
property acquisitions and redevelopments, the investment in retail store leases
and sustained leasing activity which strengthened operating profitability.
-24-
<PAGE>
Comparison of 1995 to 1994
Revenues from rental property increased approximately $17.8 million, or 14.3% to
$143.1 million for the year ended December 31, 1995, as compared with $125.3
million for the year ended December 31, 1994. This increase resulted primarily
from the combined effect of shopping center acquisitions during the respective
periods (18 property interests in 1995 and 11 property interests in 1994) as
well as new leasing and re-tenanting within the portfolio at improved rental
rates.
Rental property expenses, including depreciation and amortization, increased
approximately $8.4 million, or 10.3% to $88.9 million for the calendar year
ended December 31, 1995, as compared with $80.5 million for the preceding
calendar year. This increase is primarily due to property acquisitions and
renovations within the existing portfolio during the periods which gave rise to
an overall increase in real estate taxes and depreciation and amortization
expenses. Interest charges increased approximately $5.1 million between periods
reflecting the higher average outstanding borrowings and the rise in short-term
interest rates during 1995 as compared with 1994.
During July 1995, certain subsidiaries of the Company obtained interests in
various retail store leases relating to the anchor store premises in
neighborhood and community shopping centers. These premises have been
substantially sublet to retailers which lease the stores pursuant to net lease
agreements. Income from the investment in retail store leases during the year
ended December 31, 1995 was $1.8 million.
During 1994, the Company and certain of its subsidiaries repaid various mortgage
loans outstanding with banks and other financial institutions resulting in an
extraordinary loss of approximately $.8 million. This loss represents the net
amount of discounts received, premiums paid and deferred financing and other
costs written off in connection with the early satisfaction of these mortgage
loans.
Net income for the year ended December 31, 1995 of approximately $51.9 million,
represented an improvement of approximately $11.6 million, as compared with net
income of approximately $40.3 million for the preceding calendar year. Adjusting
for the effect of the extraordinary item during 1994, net income for 1995
increased by $10.8 million, or $.16 per share, compared to 1994. This
substantially improved performance was primarily attributable to property
acquisitions and redevelopments, the investment in retail store leases and
sustained leasing activity which strengthened operating profitability.
Liquidity and Capital Resources Completion of the Company's IPO, which resulted
in net cash proceeds of approximately $116 million, permitted the Company to
significantly deleverage its real estate portfolio and has made available the
public debt and equity markets as the Company's principal source of capital for
the future. A $100 million, unsecured revolving credit facility established in
June 1994, which is scheduled to expire in June 1999, has made available funds
to both finance the purchase of properties and meet any short-term working
capital requirements. As of December 31, 1996 there were no borrowings under
this credit facility. (See Note 7 of the Notes to Consolidated Financial
Statements included in this annual report.) The Company has also implemented a
$150 million medium-term notes program pursuant to which it may from time to
time offer for sale its senior unsecured debt for any general corporate
purposes, including (i) funding specific liquidity requirements in its business,
including property acquisitions and redevelopment costs and (ii) better managing
the Company's debt maturities.
Since the IPO, the Company has completed additional offerings of its public
unsecured debt and equity raising in the aggregate over $900 million for the
purposes of repaying indebtedness, acquiring neighborhood and community shopping
centers and for expanding and improving properties in the portfolio.
In connection with its intention to continue to qualify as a REIT for Federal
income tax purposes, the Company expects to continue paying regular dividends to
its stockholders. These dividends will be paid from operating cash flows which
are
-25-
<PAGE>
expected to increase due to property acquisitions and growth in rental revenues
in the existing portfolio and from other sources. Since cash used to pay
dividends reduces amounts available for capital investment, the Company
generally intends to maintain a conservative dividend payout ratio, reserving
such amounts as it considers necessary for the expansion and renovation of
shopping centers in its portfolio, debt reduction, the acquisition of interests
in new properties as suitable opportunities arise, and such other factors as the
Board of Directors considers appropriate.
Although the Company receives most of its rental payments on a monthly basis, it
intends to continue paying dividends quarterly. Amounts accumulated in advance
of each quarterly distribution will be invested by the Company in short-term
money market or other suitable instruments.
It is management's intention that the Company continually have access to the
capital resources necessary to expand and develop its business. Accordingly, the
Company may seek to obtain funds through additional equity offerings or debt
financing in a manner consistent with its intention to operate with a
conservative debt capitalization policy.
The Company anticipates that adequate cash will be available from operations 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.
Effects of Inflation Substantially all of the Company's leases contain
provisions designed to mitigate the adverse impact of inflation. Such provisions
include clauses enabling the Company to receive percentage rents based on
tenants' gross sales, which generally increase as prices rise, and/or escalation
clauses, which generally increase rental rates during the terms of the leases.
Such escalation clauses are often related to increases in the consumer price
index or similar inflation indices. In addition, many of the Company's leases
are for terms of less than 10 years, which permits the Company to seek to
increase rents upon renewal to market rates. Most of the Company's leases
require the tenant to pay an allocable share of operating expenses, including
common area maintenance, real estate taxes and insurance, thereby reducing the
Company's exposure to increases in costs and operating expenses resulting from
inflation. The Company periodically evaluates its exposure to short-term
interest rates and will, from time to time, enter into interest rate protection
agreements which mitigate, but do not eliminate, the effect of changes in
interest rates on its floating-rate loans.
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.
-26-
<PAGE>
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 to be held on May
28, 1997.
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 to be held on May
28, 1997.
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 to be held on May
28, 1997.
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 to be held on May
28, 1997.
-27-
<PAGE>
PART IV
<TABLE>
<CAPTION>
Item 14. Exhibits, Financial Statements, Schedules and Reports on Form 8-K
(a) 1. Financial Statements - Form 10-K
The following consolidated financial information Report
is included as a separate section of this annual Page
report on Form 10-K. ------------
<S> <C>
Report of Independent Accountants 33
Consolidated Financial Statements
Consolidated Balance Sheets as of December 31, 1996 and 1995 34
Consolidated Statements of Income for the years
ended December 31, 1996, 1995 and 1994 35
Consolidated Statements of Stockholders' Equity
for the years ended December 31, 1996, 1995 and 1994 36
Consolidated Statements of Cash Flows for the years ended
December 31, 1996, 1995 and 1994 37
Notes to Consolidated Financial Statements 38
2. Financial Statement Schedules -
Schedule II - Valuation and Qualifying Accounts 49
Schedule III - Real Estate and Accumulated Depreciation 50
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. 29
(b) Reports on Form 8-K
No reports on Form 8-K were filed by the Company for the quarter ended
December 31, 1996.
</TABLE>
-28-
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Form 10K
Exhibits Page
- ---------- --------
<S> <C>
2.1 -- Form of Plan of Reorganization of Kimco Realty Corporation
[Incorporated by reference to Exhibit 2.1 to the
Company's Registration Statement on Form S-11
No. 33-42588]
2.2 -- Agreement and Plan of Merger dated July 29, 1994 between
Kimco Realty Corporation, a Delaware corporation
and Kimco Realty Corporation of Maryland, a
Maryland corporation [Incorporated by reference to
Exhibit 2.2 to the Company's Annual Report on Form 10-K
for the fiscal year ended December 31, 1994 (the
"1994 10-K")].
3.1 -- Articles of Amendment and Restatement of the Company,
dated August 4, 1994 [Incorporated by reference to
Exhibit 3.1 to the 1994 10-K].
3.2 -- By-laws of the Company, as amended to August 4, 1994.
3.3 -- Articles Supplementary relating to the 8 1/2% Class B
Cumulative Redeemable Preferred Stock, par value $1.00 per
share, of the Company, dated July 25, 1995. [Incorporated
by referenced 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 55
55 Cumulative Redeemable Preferred Stock, par value $1.00
per share, of the Company, dated April 9, 1996.
4.1 -- Agreement of the Company pursuant to Item 601(b)(4)(iii)(A)
of Regulation S-K [Incorporated by reference to
Exhibit 4.1 to Amendment No. 3 to the Company's
Registration Statement on Form S-11) No. 33-42588]
4.2 -- Form of $100 million 6-1/2% Senior Notes due 2003
[Incorporated by reference to Exhibit 4.2 to the Company's
Annual Report on Form 10-K for the year ended December 31,
1993, (file #1-10899) (the "1993 Form 10-K")]
4.3 -- Form of $100 million Floating Rate Senior Notes due 1999
[Incorporated by reference to Exhibit 4.3 to the 1993
Form 10-K]
4.4 -- Certificate of Designations [Incorporated by reference to
Exhibit 4(d) to Amendment No. 1 to the Registration
Statement on Form S-3 dated September 10, 1993 (the
"Registration Statement", Commission File No. 33-67552)].
4.5 -- Indenture dated September 1, 1993 between Kimco Realty
Corporation and IBJ Schroder Bank and Trust Company
[Incorporated by reference to Exhibit 4(a) to the
Registration Statement].
4.6 -- First Supplemental Indenture, dated as of August 4, 1994.
[Incorporated by reference to Exhibit 4.6 to the 1995
Form 10-K.]
4.7 -- Second Supplemental Indenture, dated as of April 7,
1995 [Incorporated by reference to Exhibit 4(a) to the
Company's Current Report on Form 8-K dated April 7, 1995
(the "April 1995 8-K")].
-29-
<PAGE>
INDEX TO EXHIBITS (continued)
Form 10K
Exhibits Page
- ----------- --------
<S> <C>
4.8 -- Form of Medium-Term Note (Fixed Rate) [Incorporated by
reference to Exhibit 4(b) to the April 1995 8-K].
4.9 -- Form of Medium-Term Note (Floating Rate) [Incorporated
by reference to Exhibit 4(c) to the April 1995 8-K].
10.1 -- Form of Acquisition Option Agreement between the Company
and the subsidiary named therein [Incorporated by
reference to Exhibit 10.1 to Amendment No. 3 to the
Company's Registration Statement on Form S-11
No. 33-42588].
10.2 -- Management Agreement between the Company and
KC Holdings, Inc. [Incorporated by reference to
Exhibit 10.2 to the Company's Registration Statement
on Form S-11 No. 33-47915].
10.3 -- Amended and Restated Stock Option Plan [Incorporated by
reference to Exhibit 10.3 to the 1995 Form 10-K.]
10.4 -- Credit Agreement among Kimco Realty Corporation, The
Several Lenders from Time to Time Parties Hereto, Chemical
Bank and The First National Bank of Chicago, as
Co-Managers and Chemical Bank, as Administrative Agent,
dated as of June 30, 1994. [Incorporated by reference to
Exhibit 10.4 to the Company's Quarterly Report on Form
10-Q for the quarterly period ended June 30, 1994.
10.5 -- Employment Agreement, Restricted Equity Agreement,
Non-Qualified and Incentive Stock Option Agreement, and
Price Condition Non-Qualified and Incentive Stock Option
Agreement between Kimco Realty Corporation and Michael J.
Flynn, each dated November 1, 1995. [Incorporated by
reference to Exhibit 10.5 to the 1995 Form 10-K]
*10.6 -- Employment Agreement between Kimco Realty Corporation and 78
Bruce M. Kauderer, dated May 5, 1995.
*12.1 -- Computation of Ratio of Earnings to Combined Fixed 82
Charges and Preferred Stock Dividends.
*12.2 -- Computation of Ratio of Funds from Operations to Combined 83
Fixed Charges and Preferred Stock Dividends.
*21.1 -- Subsidiaries of the Company 84
*23.1 -- Consent of Coopers & Lybrand L.L.P. 89
99.1 -- Prospectus of Kimco Realty Corporation [Incorporated by
reference to the Prospectus dated July 12, 1996,
filed pursuant to Rule 424(b) under the Securities Act
of 1933, as amended].
</TABLE>
* Filed herewith.
-30-
<PAGE>
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 17, 1997
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 17, 1997
- --------------------------- the Board of Directors
Martin S. Kimmel
/s/ Milton Cooper Chairman of the Board March 17, 1997
- -------------------------- of Directors and Chief
Milton Cooper Executive Officer
/s/ Michael J. Flynn Vice Chairman of the March 17, 1997
- -------------------------- Board of Directors,
Michael J. Flynn President and
Chief Operating Officer
/s/ Richard G. Dooley Director March 17, 1997
- --------------------------
Richard G. Dooley
/s/ Joe Grills Director March 17, 1997
- --------------------------
Joe Grills
/s/ Frank Lourenso Director March 17, 1997
- --------------------------
Frank Lourenso
/s/ Louis J. Petra Chief Financial Officer March 17, 1997
- -------------------------- and Treasurer
Louis J. Petra
/s/ Glenn G. Cohen Director of Accounting March 17, 1997
- --------------------------- and Taxation
Glenn G. Cohen
/s/ Toni Calandrino Controller March 17, 1997
- --------------------------
Toni Calandrino
-31-
<PAGE>
ANNUAL REPORT ON FORM 10-K
ITEM 8, ITEM 14 (a) (1) and (2)
INDEX TO FINANCIAL STATEMENTS
AND
FINANCIAL STATEMENT SCHEDULES
-------
<TABLE>
<CAPTION>
FORM 10-K
Page No.
----------
<S> <C>
KIMCO REALTY CORPORATION AND SUBSIDIARIES
Report of Independent Accountants 33
Consolidated Financial Statements and Financial Statement Schedules:
Consolidated Balance Sheets as of December 31, 1996 and 1995 34
Consolidated Statements of Income for the years ended
December 31, 1996, 1995 and 1994 35
Consolidated Statements of Stockholders' Equity
for the years ended December 31, 1996, 1995 and 1994 36
Consolidated Statements of Cash Flows for the years ended
December 31, 1996, 1995 and 1994 37
Notes to Consolidated Financial Statements 38
Financial Statement Schedules:
II. Valuation and Qualifying Accounts 49
III. Real Estate and Accumulated Depreciation 50
</TABLE>
-32-
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholders of
Kimco Realty Corporation:
We have audited the consolidated financial statements and the financial
statement schedules of Kimco Realty Corporation (the "Company") and Subsidiaries
listed in the index on the preceding page of this annual report on Form 10-K.
These financial statements and the financial statement schedules are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements and the financial statement schedules
based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and the significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the consolidated financial position of Kimco
Realty Corporation and Subsidiaries as of December 31, 1996 and 1995, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended December 31, 1996 in conformity with generally
accepted accounting principles. In addition, in our opinion, the financial
statement schedules referred to above, when considered in relation to the basic
financial statements taken as a whole, present fairly, in all material respects,
the information required to be included therein.
COOPERS & LYBRAND L.L.P.
New York, New York
February 28, 1997.
-33-
<PAGE>
KIMCO REALTY CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
December 31, December 31,
1996 1995
--------------------- ------------------
<S> <C> <C>
ASSETS:
Real Estate
Rental property
Land $165,636,244 $143,716,163
Buildings and improvements 905,033,615 787,287,971
--------------------- ------------------
1,070,669,859 931,004,134
Less, accumulated depreciation and amortization 180,552,647 156,131,718
--------------------- ------------------
890,117,212 774,872,416
Undeveloped land 1,386,127 1,386,127
--------------------- ------------------
Real estate, net 891,503,339 776,258,543
Investment in retail store leases 18,994,321 22,127,786
Investments and advances in real estate joint ventures 15,143,222 12,626,831
Cash and cash equivalents 37,425,206 16,164,666
Accounts and notes receivable 13,520,048 16,146,808
Deferred charges and prepaid expenses 17,854,754 17,465,734
Other assets 28,125,581 23,451,766
--------------------- ------------------
$1,022,566,471 $884,242,134
===================== ==================
LIABILITIES & STOCKHOLDERS' EQUITY:
Notes payable $310,250,000 $325,250,000
Mortgages payable 54,404,939 63,972,735
Accounts payable and accrued expenses 21,983,886 19,253,444
Dividends payable 18,720,819 14,217,726
Other liabilities 7,242,868 10,100,578
--------------------- ------------------
412,602,512 432,794,483
--------------------- ------------------
Minority interests in partnerships 4,659,080 4,297,191
--------------------- ------------------
Commitments and contingencies
Stockholders' equity
Preferred Stock, $1 par value, authorized 930,000 shares
Class A Preferred Stock, authorized 345,000 shares
Issued and outstanding 300,000 shares 300,000 300,000
Aggregate liquidation preference $75,000,000
Class B Preferred Stock, authorized 230,000 shares
Issued and outstanding 200,000 shares 200,000 200,000
Aggregate liquidation preference $50,000,000
Class C Preferred Stock, authorized 460,000 shares
Issued and outstanding 400,000 shares 400,000 -
Aggregate liquidation preference $100,000,000
Common stock, $.01 par value,
Authorized 50,000,000 shares
Issued and outstanding 36,215,055 and 33,731,348
shares, respectively 362,151 337,313
Paid-in capital 719,601,956 562,311,822
Cumulative distributions in excess of net income (115,093,138) (114,665,183)
--------------------- ------------------
605,770,969 448,483,952
Notes receivable from officer stockholders (466,090) (1,333,492)
--------------------- ------------------
605,304,879 447,150,460
--------------------- ------------------
$1,022,566,471 $884,242,134
===================== ==================
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
-34-
<PAGE>
KIMCO REALTY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
________________
<TABLE>
<CAPTION>
Year Ended December 31,
---------------------------------------------------------------------
1996 1995 1994
-------------------- -------------------- -------------------
<S> <C> <C> <C>
Revenues from rental property $168,144,419 $143,132,165 $125,272,037
-------------------- -------------------- -------------------
Rental property expenses:
Rent 1,417,263 1,301,340 1,289,777
Real estate taxes 19,815,808 16,869,710 16,214,776
Interest 27,019,283 25,585,063 20,482,687
Operating and maintenance 21,659,620 18,935,374 19,097,677
Depreciation and amortization 27,066,709 26,187,794 23,477,865
-------------------- -------------------- -------------------
96,978,683 88,879,281 80,562,782
-------------------- -------------------- -------------------
Income from rental property 71,165,736 54,252,884 44,709,255
Income from investment in retail store leases 3,631,845 1,810,505 -
-------------------- -------------------- -------------------
74,797,581 56,063,389 44,709,255
Management fee income 3,447,577 3,736,062 2,970,512
General and administrative expenses (10,333,924) (8,831,626) (8,511,622)
Equity in income (losses) of real estate joint
ventures, net 820,083 (288,582) (74,101)
Minority interests in income of partnerships, net (470,441) (215,656) (114,929)
Other income, net 4,764,062 1,458,212 2,092,223
-------------------- -------------------- -------------------
Income before gain on sale of shopping
center and extraordinary item 73,024,938 51,921,799 41,071,338
Gain on sale of shopping center 801,955 - -
-------------------- -------------------- -------------------
Income before extraordinary item 73,826,893 51,921,799 41,071,338
Extraordinary item - - (824,635)
-------------------- -------------------- -------------------
Net income $73,826,893 $51,921,799 $40,246,703
==================== ==================== ===================
Net income applicable to common shares $57,692,418 $44,291,243 $34,434,203
==================== ==================== ===================
Per common share:
Income before extraordinary item $1.61 $1.33 $1.17
===== ===== =====
Net income $1.61 $1.33 $1.15
===== ===== =====
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
-35-
<PAGE>
KIMCO REALTY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
For the Years Ended December 31, 1996, 1995 and 1994
---------------------------------------
<TABLE>
<CAPTION>
Preferred Stock Common Stock Paid-in
---------------------- ---------------------------
Issued Amount Issued Amount Capital
---------- ---------- -------------- ----------- ------------------
<S> <C> <C> <C> <C> <C>
Balance, December 31, 1993 300,000 $300,000 30,043,298 $300,433 $430,097,996
Net income
Dividends ($1.69 per common
share and $1.9375 per Class A Depositary Share)
Exercise of common stock options 54,598 546 837,725
Collection of notes receivable
---------- ---------- -------------- ----------- ------------------
Balance, December 31, 1994 300,000 300,000 30,097,896 300,979 430,935,721
Net income
Dividends ($1.47 per common share; $1.9375 and
$.99757 per Class A and Class B Depositary Shares,
respectively)
Issuance of preferred stock 200,000 200,000 47,975,027
Issuance of common stock 3,592,871 35,929 82,724,947
Exercise of common stock options 40,581 405 676,127
Collection of notes receivable
---------- ---------- -------------- ----------- ------------------
Balance, December 31, 1995 500,000 500,000 33,731,348 337,313 562,311,822
Net income
Dividends ($1.60 per common share; $1.9375, $2.125
and $1.59943 per Class A, Class B and Class C
Depositary Shares, respectively)
Issuance of preferred stock 400,000 400,000 96,037,337
Issuance of common stock 2,320,125 23,201 58,087,001
Exercise of common stock options 163,582 1,637 3,165,796
Collection of notes receivable
---------- ---------- -------------- ----------- ------------------
Balance, December 31, 1996 900,000 $900,000 36,215,055 $362,151 $719,601,956
========== ========== ============== =========== ==================
</TABLE>
<TABLE>
<CAPTION>
Cumulative
Distributions Total
in Excess Notes Stockholders'
of Net Income Receivable Equity
--------------- -------------- ----------------
<S> <C> <C> <C>
Balance, December 31, 1993 ($92,826,297) ($1,659,909) $336,212,223
Net income 40,246,703 40,246,703
Dividends ($1.69 per common
share and $1.9375 per Class A Depositary Share) (56,756,013) (56,756,013)
Exercise of common stock options 838,271
Collection of notes receivable 170,616 170,616
--------------- -------------- ----------------
Balance, December 31, 1994 (109,335,607) (1,489,293) 320,711,800
Net income 51,921,799 51,921,799
Dividends ($1.47 per common share; $1.9375 and
$.99757 per Class A and Class B Depositary Shares,
respectively) (57,251,375) (57,251,375)
Issuance of preferred stock 48,175,027
Issuance of common stock 82,760,876
Exercise of common stock options 676,532
Collection of notes receivable 155,801 155,801
--------------- -------------- ----------------
Balance, December 31, 1995 (114,665,183) (1,333,492) 447,150,460
Net income 73,826,893 73,826,893
Dividends ($1.60 per common share; $1.9375, $2.125
and $1.59943 per Class A, Class B and Class C
Depositary Shares, respectively) (74,254,848) (74,254,848)
Issuance of preferred stock 96,437,337
Issuance of common stock 58,110,202
Exercise of common stock options 3,167,433
Collection of notes receivable 867,402 867,402
--------------- -------------- ----------------
Balance, December 31, 1996 ($115,093,138) ($466,090) $605,304,879
=============== ============== ================
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
-36-
<PAGE>
KIMCO REALTY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
_________________________
<TABLE>
<CAPTION>
Year Ended December 31,
------------------------------------------------
1996 1995 1994
---------------- --------------- --------------
<S> <C> <C> <C>
Cash flow from operating activities:
Net income $73,826,893 $51,921,799 $40,246,703
Adjustments for noncash items -
Depreciation and amortization 27,066,709 26,187,794 23,477,865
Extraordinary item - - 824,635
Gain on sale of shopping center (801,955) - -
Minority interests in income of partnerships, net 470,441 215,656 114,929
Equity in (income) losses of real estate joint ventures, net (820,083) 288,582 74,101
Change in accounts and notes receivable 2,626,760 (940,256) (4,201,513)
Change in accounts payable and accrued expenses 2,730,442 1,162,406 5,137,747
Change in other operating assets and liabilities (3,207,396) (4,602,986) (2,741,867)
---------------- --------------- --------------
Net cash flow provided by operations 101,891,811 74,232,995 62,932,600
---------------- --------------- --------------
Cash flow from investing activities:
Acquisition of and improvements to real estate (140,916,684) (105,139,671) (133,736,793)
Investment in retail store leases - (23,026,673) -
Acquisition of real estate through joint venture investment - (6,523,502) -
Investment in marketable equity securities (4,935,008) (2,470,990) -
Construction advances to real estate joint ventures - (1,870,500) (8,445,819)
Reimbursement of construction advance to real estate joint venture - 6,794,928 -
Proceeds from sale of shopping center 1,825,000 4,975,582 -
---------------- --------------- --------------
Net cash flow used for investing activities (144,026,692) (127,260,826) (142,182,612)
---------------- --------------- --------------
Cash flow from financing activities:
Principal payments on debt, excluding
normal amortization of rental property debt (8,299,980) (29,037,746) (122,138,914)
Principal payments on rental property debt, net (1,267,816) (1,221,912) (948,303)
Change in notes payable (15,000,000) 20,050,000 205,200,000
Dividends paid (69,751,755) (53,885,490) (45,904,172)
Proceeds from issuance of stock 157,714,972 122,343,419 838,271
---------------- --------------- --------------
Net cash flow provided by financing activities 63,395,421 58,248,271 37,046,882
---------------- --------------- --------------
Increase(decrease) in cash and cash equivalents 21,260,540 5,220,440 (42,203,130)
Cash and cash equivalents, beginning of year 16,164,666 10,944,226 53,147,356
---------------- --------------- --------------
Cash and cash equivalents, end of year $37,425,206 $16,164,666 $10,944,226
================ =============== ==============
Supplemental schedule of noncash investing/financing activity:
Acquisition of real estate interests by issuance of common stock and
assumption of debt $38,714,717
================ =============== ==============
Declaration of dividends paid in succeeding year $18,720,819 $14,217,726 $10,851,841
================ =============== ==============
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
-37-
<PAGE>
KIMCO REALTY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
-------
1. Summary of Significant Accounting Policies:
Business
Kimco Realty Corporation (the "Company") its subsidiaries, affiliates
and related real estate joint ventures are engaged principally in
the operation of neighborhood and community shopping centers which
are anchored generally by discount department stores, supermarkets
or drugstores. Additionally, the Company provides management
services for shopping centers owned by affiliated entities and
various real estate joint ventures.
The Company seeks to reduce its operating and leasing risks through
diversification achieved by the geographic distribution of its
properties and a large tenant base, avoiding dependence on any
single property or tenant. At December 31, 1996, the Company's
single largest neighborhood and community shopping center and tenant
accounted for only 2.3% and 4.2%, respectively, of the Company's
annualized base rental revenues.
Principles of Consolidation and Estimates
The accompanying Consolidated Financial Statements include the accounts
of the Company, its subsidiaries, all of which are wholly-owned, and
all majority-owned partnerships. All significant intercompany
balances and transactions have been eliminated in consolidation.
Generally accepted accounting principles require the Company's
management to make estimates and assumptions that affect the
reported amounts of assets and liabilities, the disclosure of
contingent assets and liabilities and the reported amounts of
revenues and expenses during a reporting period. Actual results
may differ from such estimates.
Real Estate
Real estate assets are stated at cost, less accumulated depreciation
and amortization. Such carrying amounts would be adjusted, if
necessary, to reflect an impairment in the value of the assets.
Depreciation and amortization are provided on the straight-line
method over the estimated useful lives of the assets, as follows:
Buildings 15 to 39 years
Fixtures and leasehold improvements Terms of leases or useful
lives, whichever is shorter
Expenditures for maintenance and repairs are charged to operations as
incurred. Significant renovations are capitalized.
Investments in Real Estate Joint Ventures
Investments in real estate joint ventures are accounted for on the
equity method.
Deferred Leasing and Financing Costs
Costs incurred in obtaining tenant leases and long-term financing,
included in deferred charges and prepaid expenses in the
accompanying
-38-
<PAGE>
KIMCO REALTY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
-------
Consolidated Balance Sheets, are amortized over the terms of the
related leases or debt agreements, as applicable.
Revenue Recognition
Minimum revenues from rental property are recognized on a straight-line
basis over the terms of the related leases.
Income Taxes
The Company and its subsidiaries file a consolidated Federal income tax
return. The Company has made an election to qualify, and believes it
is operating so as to qualify, as a Real Estate Investment Trust (a
"REIT") for Federal income tax purposes. Accordingly, the Company
generally will not be subject to Federal income tax, provided that
distributions to its stockholders equal at least the amount of its
REIT taxable income as defined under the Code.
Per Share Data
Income per share of common stock is based upon 35,906,029, 33,388,004
and 30,072,486 weighted average numbers of common shares outstanding
during years 1996, 1995 and 1994, respectively.
2. Shopping Center Acquisitions:
During the years 1996, 1995 and 1994 certain subsidiaries of the
Company acquired real estate interests in various shopping center
properties at aggregate costs of approximately $39 million, $83
million and $89 million, respectively. These acquisitions have been
funded principally through the application of proceeds from the
Company's public unsecured debt and equity offerings. (See Notes 12
and 14.)
3. Retail Property Acquisitions:
During January 1996, certain subsidiaries of the Company entered into
two sale-leaseback transactions pursuant to which it acquired fee
title to 16 retail properties located in Texas, Iowa, Oklahoma,
Illinois and Kansas for a purchase price of $40 million.
Simultaneously, the Company executed two long-term net leases
covering the 16 locations pursuant to which the seller/tenant may
remain in occupancy and continue to conduct business in these
premises.
During August 1996, certain subsidiaries of the Company acquired
interests in 16 retail properties, including 2 properties to which
the Company and its affiliates already held fee title, for $21.8
million in cash. These property interests were acquired from a
retailer which had elected to discontinue operation of its discount
department store division. The Company has executed long-term net
leases with tenants covering 8 of the properties and is actively
involved in negotiations concerning the re-tenanting and
redevelopment of the remaining locations.
These retail property acquisitions have been funded principally through
the the application of proceeds from the Company's 1996 equity
offerings.
(See Note 12.)
-39-
<PAGE>
KIMCO REALTY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
-------
4. Investment in Retail Store Leases:
During July 1995, certain subsidiaries of the Company obtained
interests in various retail store leases relating to the anchor
store premises in neighborhood and community shopping centers. These
premises have been substantially sublet to retailers which lease the
stores pursuant to net lease agreements. Income from the investment
in these retail store leases during the years ended December 31,
1996 and 1995 was approximately $3.6 million and $1.8 million,
respectively. These amounts represent sublease revenues during the
years ended December 31, 1996 and 1995 of approximately $21.0
million and $8.7 million, respectively, less related expenses of
$15.2 million and $6.0 million, respectively, and an amount, which
in management's estimate, reasonably provides for the recovery of
the investment over a ten-year period. The Company's future minimum
revenues under the terms of all noncancellable tenant subleases and
future minimum obligations through the remaining terms of its retail
store leases are as follows (in millions of dollars): 1997, $19.2
and $14.4; 1998, $19.4 and $14.2; 1999, $17.1 and $12.7; 2000, $13.5
and $10.0; 2001, $10.1 and $7.1; and thereafter, $15.6 and $10.6,
respectively.
5. Investments and Advances in Real Estate Joint Ventures:
The Company and its subsidiaries have investments in and advances to
various real estate joint ventures. These joint ventures are engaged
in the operation of shopping centers which are either owned or held
under long-term operating leases. Summarized financial information
for the recurring operations of these real estate joint ventures is
as follows (in millions of dollars):
December 31,
-----------------------
1996 1995
---- ----
Assets:
Real estate, net $41.5 $40.0
Other assets 4.0 5.3
----- -----
$45.5 $45.3
===== =====
Liabilities and Partners'
Capital:
Mortgages payable $30.3 $31.2
Other liabilities 15.1 13.2
Partners' capital .1 .9
----- -----
$45.5 $45.3
===== =====
Years Ended December 31,
1996 1995 1994
---- ---- ----
Revenues from rental
property $11.2 $8.3 $7.5
Operating expenses (2.9) (2.1) (1.7)
Mortgage interest (2.5) (2.4) (1.8)
Depreciation and
amortization (2.2) (2.0) (1.6)
Other, net (1.3) (1.2) (1.3)
----- ----- -----
Net income $2.3 $.6 $1.1
===== ===== ====
-40-
<PAGE>
KIMCO REALTY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
-------
Other liabilities in the accompanying Consolidated Balance Sheets
include accounts with certain real estate joint ventures totaling
approximately $4.1 and $4.7 million at December 31, 1996 and 1995,
respectively. The Company and its subsidiaries have varying equity
interests in these real estate joint ventures which may differ from
their proportionate share of net income or loss recognized in
accordance with generally accepted accounting principles.
6. Cash and Cash Equivalents:
Cash and cash equivalents (demand deposits in banks, commercial paper
and certificates of deposit with original maturities of three months
or less) includes tenants' security deposits, escrowed funds and
other restricted deposits approximating $2.4 million and $.1 million
at December 31, 1996 and 1995, respectively.
Cash and cash equivalent balances may, at a limited number of banks and
financial institutions, exceed insurable amounts. The Company
believes it mitigates its risks by investing in or through major
financial institutions. Recoverability of investments is dependent
upon the performance of the issuers.
7. Notes Payable:
The Company has implemented a $150 million unsecured medium-term notes
("MTN") program pursuant to which it may from time to time offer for
sale its senior unsecured debt for any general corporate purposes,
including (i) funding specific liquidity requirements in its
business, including property acquisition and redevelopment costs,
and (ii) better managing the Company's debt maturities.
During August 1996, the Company redeemed its $50 million unsecured
Floating Rate Senior Notes due in 1998. These Floating Rate Senior
Notes, redeemable at par at the option of the Company after May 11,
1996 and bearing interest at LIBOR plus .50%, were refinanced with a
$50 million floating-rate unsecured medium-term note. This
medium-term note is due in 1998 and bears interest at LIBOR plus
.12% (5.6% at December 31, 1996). Interest on this floating-rate,
senior unsecured medium-term note resets and is payable quarterly in
arrears.
As of December 31, 1996, an additional principal amount of $60.25
million in fixed-rate senior unsecured notes had been issued under
the MTN program for the acquisition of neighborhood and community
shopping centers and the expansion and improvement of properties in
the Company's portfolio. These notes have maturities ranging from
ten to twelve years and bear interest at rates ranging from 6.70% to
7.91%. Interest on these fixed-rate senior unsecured notes is
payable semi-annually in arrears.
As of December 31, 1996, the Company had $100 million in Floating Rate
Senior Notes due 1999 bearing interest at LIBOR plus .50% (6.0% at
December 31, 1996). Interest on these floating-rate, senior
unsecured notes resets and is payable quarterly in arrears.
As of December 31, 1996, the Company had $100 million in 6.5%
fixed-rate unsecured Senior Notes due 2003. Interest on these senior
unsecured notes is paid semi-annually in arrears.
-41-
<PAGE>
KIMCO REALTY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
-------
In accordance with the terms of the Indenture pursuant to which the
Company's senior, unsecured notes have been issued, the Company is
(a) subject to maintaining certain maximum leverage ratios on both
unsecured senior corporate and secured debt, minimum debt service
coverage ratios and minimum equity levels, and (b) restricted from
paying dividends in amounts that exceed by more than $26 million the
funds from operations, as defined, generated through the end of the
calendar quarter most recently completed prior to the declaration of
such dividend; however, this dividend limitation does not apply to
any distributions necessary to maintain the Company's qualification
as a REIT providing the Company is in compliance with its total
leverage limitations.
The Company maintains a $100 million, unsecured revolving credit
agreement with a group of banks. Borrowings under this facility are
available for general corporate purposes, including property
acquisitions and redevelopment. Interest on borrowings accrues at a
spread (currently .75%) to LIBOR which fluctuates in accordance with
changes in the Company's senior debt ratings. A fee approximating
.16% per annum is payable on that portion of the facility which
remains unused. Pursuant to the terms of the agreement, the Company,
among other things, is (a) subject to maintaining certain maximum
leverage ratios on both unsecured senior corporate and secured debt,
a minimum debt service coverage ratio and minimum unencumbered asset
and equity levels, and (b) restricted from paying dividends in
amounts that exceed 90% of funds from operations, as defined, plus
10% of the Company's stockholders' equity determined in accordance
with generally accepted accounting principles. There were no
borrowings outstanding under this facility at December 31, 1996.
This revolving credit facility is scheduled to expire in June 1999.
8. Mortgages Payable:
Mortgages payable, collateralized by certain shopping center properties
and related tenants' leases, are generally due in monthly
installments of principal and/or interest which mature at various
dates through 2007. Interest rates range from approximately 6.8% to
12.9% (weighted average interest rate of 8.7% as of December 31,
1996). The scheduled maturities of all mortgages payable as of
December 31, 1996, are approximately as follows (in millions of
dollars): 1997, $5.6; 1998, $5.3; 1999, $19.6; 2000, $6.9; 2001,
$5.3; and thereafter, $11.7.
Three of the Company's properties are encumbered by approximately $13.8
million in floating-rate, tax-exempt mortgage bond financing. The
rates on the bonds are reset annually, at which time bondholders
have the right to require the Company to repurchase the bonds. The
Company has engaged a remarketing agent for the purpose of offering
for resale those bonds that are tendered to the Company. All bonds
tendered for redemption in the past have been remarketed and the
Company has arrangements, including letters of credit, with banks to
both collateralize the principal amount and accrued interest on such
bonds and to fund any repurchase obligations.
9. Extraordinary Item:
The Consolidated Statement of Income for the calendar year ended 1994
includes approximately $.8 million, or $.02 per share, representing
the net amount of discounts received, premiums paid and deferred
financing and other costs written-off in connection with the early
satisfaction of mortgage debt.
-42-
<PAGE>
KIMCO REALTY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
-------
10. KC Holdings, Inc.:
To facilitate the Company's November 1991 initial public stock offering
(the "IPO"), forty-six shopping center properties and certain other
assets, together with indebtedness related thereto, were transferred
to subsidiaries of KC Holdings, Inc. ("KC Holdings"), a newly-formed
corporation that is owned by the stockholders of the Company prior
to the IPO. The Company continues to manage eighteen of these
shopping center properties and was granted ten-year, fixed-price
options to reacquire the real estate assets owned by KC Holdings'
subsidiaries, subject to any liabilities outstanding with respect to
such assets at the time of an option exercise. As of December 31,
1996, KC Holdings' subsidiaries had conveyed 14 shopping centers
back to the Company and had disposed of ten additional centers in
transactions with third parties. The members of the Company's Board
of Directors who are not also shareholders of KC Holdings have
unanimously approved the purchase of each of the 14 shopping centers
that have been reacquired by the Company from KC Holdings. (See Note
14.)
Selected financial information for the twenty-two properties owned by
KC Holdings' subsidiaries as of and for the year ended December 31,
1996, is as follows: Real estate, net of accumulated depreciation
and amortization, $55.5 million; Notes and mortgages payable, $64.0
million; Revenues from rental property, $11.2 million; Loss from
rental operations, $.3 million, after depreciation and amortization
deductions of $2.1 million; Income adjustment for real estate joint
ventures, net, $.4 million.
11. Fair Value Disclosure of Financial Instruments:
All financial instruments of the Company are reflected in the accompanying
Consolidated Balance Sheets at amounts which, in management's
estimation based upon an interpretation of available market information
and valuation methodologies (including discounted cash flow analyses
with regard to fixed rate debt) considered appropriate, reasonably
approximate their fair values. Such fair value estimates are not
necessarily indicative of the amounts that would be realized upon
disposition of the Company's financial instruments.
12. Preferred and Common Stock:
On April 10, 1996, the Company completed a public offering of 4,000,000
Depositary Shares (the "Class C Depositary Shares") at $25.00 per
share, each such Class C Depositary Share representing 1/10 of a share
of the Company's 8-3/8% Class C Cumulative Redeemable Preferred Stock
(the "Class C Preferred Stock"), par value $1.00 per share. The cash
proceeds to the Company, net of related transaction costs of
approximately $3.6 million, totaling approximately $96.4 million, have
been used for the acquisition of interests in neighborhood and
community shopping centers, and the redevelopment, expansion and
improvement of properties in the Company's portfolio.
Dividends on the Class C Depositary Shares are cumulative and payable
quarterly in arrears at the rate of 8-3/8% per annum based on the $25
per share initial offering price, or $2.0938 per share. The Class C
Depositary Shares are redeemable, in whole or in part, for cash on or
after April 15, 2001 at the option of the Company at a redemption price
of $25 per share, plus any accrued and unpaid dividends thereon. The
redemption price of the Class C Preferred Stock may be paid solely from
the sale proceeds of other capital stock of the Company, which may
include other classes or series of preferred stock. The Class C
Depositary Shares are not convertible or exchangeable for any other
property or securities of the Company. The Class C Preferred Stock
(represented by the Class C Depositary Shares outstanding)
-43-
<PAGE>
KIMCO REALTY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
-------
ranks pari passu with the Company's 7-3/4% Class A Cumulative
Redeemable Preferred Stock and 8-1/2% Class B Cumulative Redeemable
Preferred Stock as to voting rights, priority for receiving dividends
and liquidation preferences as set forth below.
On July 26, 1995, the Company completed a public offering of 2,000,000
Depositary Shares (the "Class B Depositary Shares") at $25.00 per
share, each such Class B Depositary Share representing 1/10 of a share
of the Company's 8-1/2% Class B Cumulative Redeemable Preferred Stock
(the "Class B Preferred Stock"), par value $1.00 per share. The cash
proceeds to the Company, net of related transaction costs of
approximately $1.8 million, totaling approximately $48.2 million, have
been used for the acquisition of interests in neighborhood and
community shopping centers, and the redevelopment, expansion and
improvement of properties in the Company's portfolio.
Dividends on the Class B Depositary Shares are cumulative and payable
quarterly in arrears at the rate of 8-1/2% per annum based on the $25
per share initial offering price, or $2.125 per share. The Class B
Depositary Shares are redeemable for cash, in whole or in part, on or
after July 15, 2000 at the option of the Company at a redemption price
of $25 per share, plus any accrued and unpaid dividends thereon. The
redemption price of the Class B Preferred Stock may be paid solely from
the sale proceeds of other capital stock of the Company, which may
include other classes or series of preferred stock. The Class B
Depositary Shares are not convertible or exchangeable for any other
property or securities of the Company. The Class B Preferred Stock
(represented by the Class B Depositary Shares outstanding) ranks pari
passu with the Company's 7-3/4% Class A Cumulative Redeemable Preferred
Stock and 8-3/8% Class C Cumulative Redeemable Preferred Stock as to
voting rights, priority for receiving dividends and liquidation
preferences as set forth below.
The Company also has outstanding 3,000,000 Depositary Shares (the "Class A
Depositary Shares"), each such Class A Depositary Share representing
1/10 of a share of the Company's 7-3/4% Class A Cumulative Redeemable
Preferred Stock (the "Class A Preferred Stock"), par value $1.00 per
share. Dividends on the Class A Depositary Shares are cumulative and
payable quarterly in arrears at the rate of 7-3/4% per annum based on
the $25 per share initial offering price, or $1.9375 per share. The
Class A Depositary Shares are redeemable for cash, in whole or in part,
on or after September 23, 1998 at the option of the Company, at a
redemption price of $25 per share, plus any accrued and unpaid
dividends thereon. The Class A Depositary Shares are not convertible or
exchangeable for any other property or securities of the Company. The
Class A Preferred Stock (represented by the Class A Depositary Shares
outstanding) ranks pari passu with the Company's Class B Preferred
Stock and Class C Preferred Stock as to voting rights, priority for
receiving dividends and liquidation preferences as set forth below.
Voting Rights - As to any matter on which the Class A Preferred Stock,
Class B Preferred Stock and Class C Preferred Stock (collectively, the
"Preferred Stock") may vote, including any action by written consent,
each share of Preferred Stock shall be entitled to 10 votes, each of
which 10 votes may be directed separately by the holder thereof. With
respect to each share of Preferred Stock, the holder thereof may
designate up to 10 proxies, with each such proxy having the right to
vote a whole number of votes (totaling 10 votes per share of Preferred
Stock). As a result, each Class A, each Class B and each Class C
Depositary Share is entitled to one vote.
-44-
<PAGE>
KIMCO REALTY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
-------
Liquidation Rights - In the event of any liquidation, dissolution or
winding up of the affairs of the Company, the Preferred Stock holders
are entitled to be paid, out of the assets of the Company legally
available for distribution to its stockholders, a liquidation
preference of $250.00 per share ($25 per Class A, Class B and Class C
Depositary Share, respectively), plus an amount equal to any accrued
and unpaid dividends to the date of payment, before any distribution of
assets is made to holders of Common Stock or any other capital stock
that ranks junior to the Preferred Stock as to liquidation rights.
On February 2, 1996, the Company completed a primary public stock offering
of 2,200,000 shares of Common Stock at $26.50 per share. The proceeds
from this sale of Common Stock, net of related transaction costs of
approximately $3.4 million, totaling approximately $55.0 million, have
been used primarily for the acquisition of neighborhood and community
shopping centers.
On January 24, 1995, the Company completed a primary public stock offering
with the sale of 2,700,000 shares of Common Stock at $24.17 per share.
Effective January 31 and February 16, 1995, the Company sold an
additional 225,000 and 129,300 shares, respectively, of Common Stock at
$24.17 per share pursuant to elections by the underwriters to exercise,
in part, their over-allotment option. The cash proceeds to the Company
from these sales of Common Stock, net of related transaction costs of
approximately $4.3 million, totaling approximately $69.5 million, have
been used to (a) repay $20.8 million in debt assumed in connection with
the acquisition of nine shopping centers from a subsidiary of KC
Holdings, (See Note 14.) (b) temporarily repay borrowings under the
Company's revolving credit facility, and (c) expand and improve
properties in the Company's portfolio.
13. Dispositions of Real Estate:
During September 1996, the Company disposed of a property in Watertown,
New York. Proceeds from the disposition totaling approximately $1.8
million in cash, together with an additional $2.2 million cash
investment, were used to acquire an exchange shopping center property
located in Lafayette, IN during January 1997.
During March 1995, a subsidiary of the Company disposed of a property in
Vernon, Connecticut. Cash proceeds from the disposition totaled
approximately $5.0 million, and the purchaser acquired the property
subject to approximately $3.0 million in mortgage debt. The cash
proceeds, together with approximately $4.7 million in cash, have been
used to acquire exchange shopping centers located in Richmond, VA and
South Miami, FL.
14. Transactions with Related Parties:
The Company provides management services for shopping centers owned
principally by affiliated entities and various real estate joint
ventures in which certain stockholders of the Company have economic
interests. Such services are performed pursuant to management
agreements which provide for fees based upon a percentage of gross
revenues from the properties and other direct costs incurred in
connection with management of the centers. The Consolidated Statements
of Income include management fee income from KC Holdings of
approximately $.6 million, $.6 million, and $.8 million during years
1996, 1995, and 1994, respectively.
-45-
<PAGE>
KIMCO REALTY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
-------
During January 1995, the Company exercised its option to acquire nine
shopping center properties from a subsidiary of KC Holdings. These
shopping centers, comprising approximately 1.2 million square feet of
gross leasable area, were acquired for an aggregate option purchase
price of approximately $39 million, paid $9.3 million in shares of the
Company's Common Stock (valued at $24.17 per share) and $29.7 million
through the assumption of debt encumbering the properties.
Approximately $20.8 million of the debt assumed in connection with the
acquisition of these properties was repaid by the Company immediately
following the purchase with proceeds from its January 1995, Common
Stock offering. The members of the Company's Board of Directors who are
not also shareholders of KC Holdings have unanimously approved the
Company's purchase of these nine shopping centers.
Reference should be made to Notes 5 and 10 for further information
regarding transactions with related parties.
15. Commitments and Contingencies:
The Company and its subsidiaries are engaged in the operation of shopping
centers which are either owned or held under long-term leases which
expire at various dates through 2076. The companies 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 97% of total revenues from rental property during years
1996, 1995 and 1994, respectively.
The future minimum revenues from rental property under the terms of all
noncancellable tenant leases, assuming no new or renegotiated leases
are executed for such premises, for future years are approximately as
follows (in millions of dollars): 1997, $130.5; 1998, $122.3; 1999,
$113.7; 2000, $100.1; 2001, $89.2; and thereafter, $708.9.
Minimum rental payments under the terms of all noncancellable operating
leases pertaining to its shopping center portfolio for future years are
approximately as follows (in millions of dollars): 1997, $1.7; 1998,
$1.7; 1999, $1.7; 2000, $1.7; 2001, $1.4; and thereafter, $36.7.
16. Incentive Plans:
The Company maintains a stock option plan (the "Plan") pursuant to which a
maximum 3,000,000 shares of 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.
The Company has extended loans to certain executive officers to supplement
available margin loans and partially fund the purchase of shares of the
Company's Common Stock held be these individuals. These loans bear
interest at 6% per annum, are collateralized by the shares of Common
Stock purchased and, are repayable over an average term of
approximately eight years.
-46-
<PAGE>
KIMCO REALTY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
-------
Information with respect to stock options under the Plan for years 1996,
1995 and 1994 is as follows:
Weighted Average
Exercise Price
Shares Per share
------ --------------
Options outstanding, December 31, 1993 894,742 $18.97
Exercised (54,598) $15.35
Granted 229,125 $22.35
---------
Options outstanding, December 31, 1994 1,069,269 $19.87
Exercised (40,581) $16.67
Granted 423,540 $24.96
---------
Options outstanding, December 31, 1995 1,452,228 $21.44
Exercised (163,582) $19.36
Granted 315,500 $28.32
---------
Options outstanding, December 31, 1996 1,604,146 $23.01
========= ======
Options exercisable -
December 31, 1994 484,968 $18.32
======== ======
December 31, 1995 762,204 $19.45
======== ======
December 31, 1996 954,175 $20.84
======== ======
The exercise prices for options outstanding as of December 31, 1996 range
from $13.33 to $29.75 per share. The weighted average remaining
contractual life for options outstanding as of December 31, 1996 was
approximately 7.8 years. Options to purchase 800,373, 1,115,873, and
39,413, shares of Common Stock were available for issuance under the
Plan at December 31, 1996, 1995 and 1994, respectively.
The Company has elected to adopt the disclosure-only provisions of
Statement of Financial Accounting Standards No. 123 "Accounting for
Stock-Based Compensation". Accordingly, no compensation cost has been
recognized with regard to options granted under the Plan in the
accompanying Consolidated Statements of Income. If stock-based
compensation costs had been recognized based on the estimated fair
values at the dates of grant for options awarded during 1996 and 1995,
net income and net income per common share for these calendar years
would have been reduced by approximately $.4 million, or $.01 per
share, and $.1 million, or less than $.01 per share, respectively.
These pro forma adjustments to net income and net income per common share
assume fair values of each option grant estimated using the
Black-Scholes option pricing formula. The more significant assumptions
underlying the determination of such fair values for options granted
during 1996 and 1995 include: (i) weighted average risk-free interest
rates of 6.24% and 6.02%, respectively; (ii) weighted average expected
option lives of 7.25 and 6.13 years, respectively; (iii) an expected
volatility of 15.79%, and (iv) an expected dividend yield of 6.82%. The
per share weighted average fair value at the dates of grant for options
awarded during 1996 and 1995 was $2.50 and $2.14, respectively.
The Company maintains a 401(k) retirement plan covering substantially all
officers and employees which permits participants to defer up to a
maximum 10% of their compensation. This deferred compensation, together
with Company matching contributions which generally equal employee
deferrals up to a maximum of 5%, is fully vested and funded as of
December 31, 1996. Company contributions to the plan totaled less than
$.3 million for each of years 1996, 1995 and 1994.
-47-
<PAGE>
KIMCO REALTY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
-------
17. Supplemental Financial Information:
The following summary represents the results of operations, expressed in
thousands except per share amounts, for each quarter during years 1996
and 1995.
<TABLE>
<CAPTION>
1996 (Unaudited)
------------------------------------------------------------------
Mar. 31 June 30 Sept. 30 Dec. 31
------- ------- -------- -------
<S> <C> <C> <C> <C>
Revenues from
rental property $41,662 $42,444 $40,837 $43,201
Net income $15,928 $18,439 $19,833 $19,627
Net income, per
common share $.38 $.39 $.42 $.42
1995 (Unaudited)
------------------------------------------------------------------
Mar. 31 June 30 Sept. 30 Dec. 31
------- ------- -------- -------
Revenues from
rental property $34,448 $36,454 $35,958 $36,272
Net income $12,005 $12,860 $13,875 $13,182
Net income, per
common share $.32 $.34 $.35 $.32
</TABLE>
Interest paid during years 1996, 1995 and 1994 approximated $26.9 million,
$25.0 million and $19.3 million, respectively.
Accounts and notes receivable in the accompanying Consolidated Balance
Sheets are net of estimated unrecoverable amounts of approximately $1.4
million at December 31, 1996 and 1995, respectively.
18. Pro Forma Financial Information (Unaudited):
The Company and certain of its subsidiaries acquired and disposed of
interests in shopping center properties during 1996. The pro forma
financial information set forth below is based upon the Company's
historical Consolidated Statements of Income for years 1996 and 1995,
adjusted to give effect to these transactions as of January 1, 1995.
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,
1995, nor does it purport to represent the results of operations for
future periods. (Amounts presented in millions of dollars, except per
share figures.)
Years Ended December 31, 1996 1995
------------------------ ---- ----
Revenues from rental property $170.1 $148.3
Net Income $74.1 $54.7
Net Income, per common share $1.62 $1.38
-48-
<PAGE>
KIMCO REALTY CORPORATION AND SUBSIDIARIES SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS
FOR YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
<TABLE>
<CAPTION>
Balance at Charged to
Beginning Charged to valuation Balance at
of Period expenses accounts Deductions end of period
--------- ------- ---------- ---------- -------------
<S> <C> <C> <C> <C> <C>
Year Ended
December 31, 1996
Allowance for
Uncollectable accounts $1,350,000 $955,000 $ - $955,000 $1,350,000
========== ========= ======== ======== ==========
Year Ended
December 31, 1995
Allowance for
Uncollectable accounts $1,000,000 $1,318,000 $ - $968,000 $1,350,000
========== ========== ======== ======== ==========
Year Ended
December 31, 1994
Allowance for
Uncollectable accounts $1,363,000 $568,000 $ - $931,000 $1,000,000
=========== ========= ======== ======== ==========
</TABLE>
-49-
<PAGE>
<TABLE>
<CAPTION>
KIMCO REALTY CORPORATION AND SUBSIDIARIES SCHEDULE III
REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1996
INITIAL COST TOTAL COST
----------------------------COST-CAPITALIZED---------------------------------------
BUILDINGS AND SUBSEQUENT BUILDINGS AND
PROPERTIES LAND IMPROVEMENTS TO ACQUISITION LAND IMPROVEMENTS TOTAL
--------------- -----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
BOCA RATON $573,875 $2,295,501 $769,416 $573,875 $3,064,917 $3,638,792
WHITEHALL 432,652 770,159.00 170,161 432,652 940,320 1,372,972
OGDEN 213,818 855,275 465,600 213,818 1,320,875 1,534,693
ORLANDO 923,956 3,646,904 1,731,400 1,172,119 5,130,141 6,302,260
PLAINVIEW 263,693 584,031 2,538,642 263,693 3,122,673 3,386,366
POMPANO BEACH 97,169 874,442 1,187,173 97,169 2,061,615 2,158,784
LIVONIA 178,785 925,818 554,997 178,785 1,480,815 1,659,600
LAUDERDALE LAKES 342,420 2,416,645 1,650,422 342,420 4,067,067 4,409,487
FERN PARK 225,000 902,000 2,284,892 225,000 3,186,892 3,411,892
ADDISON 0 753,343 832,627 0 1,585,970 1,585,970
LARGO 293,686 792,119 1,188,727 293,686 1,980,846 2,274,532
WINSTON-SALEM 540,667 719,655 1,144,995 540,667 1,864,650 2,405,317
MELBOURNE 0 1,754,000 2,094,782 0 3,848,782 3,848,782
ST. PETERSBURG 0 917,360 644,264 0 1,561,624 1,561,624
GROVE GATE 365,893 1,049,172 1,048,494 365,893 2,097,666 2,463,559
UPPER ARLINGTON 504,256 2,198,476 3,798,897 504,256 5,997,373 6,501,629
SHILOH SPRING RD. 0 1,735,836 2,206,514 0 3,942,350 3,942,350
FELBRAM 72,971 302,579 331,361 72,971 633,940 706,911
LEESBURG 0 171,636 97,728 0 269,364 269,364
FOREST PARK 141,200 564,800 64,990 141,200 629,790 770,990
LARGO EAST BAY 2,832,296 11,329,185 451,019 2,832,296 11,780,204 14,612,500
LEXINGTON 1,675,031 6,848,209 2,041,790 1,675,031 8,889,999 10,565,030
CLAWSON 1,624,771 6,578,142 1,942,185 1,624,771 8,520,327 10,145,098
CHARLOTTE 919,251 3,570,981 849,293 919,251 4,420,274 5,339,525
LAFAYETTE 230,402 1,305,943 27,247 230,402 1,333,190 1,563,592
FARMINGTON 1,098,426 4,525,723 372,159 1,098,426 4,897,882 5,996,308
WEST MIFFLIN 475,815 1,903,231 555,114 475,815 2,458,345 2,934,160
BRADENTON 125,000 299,253 117,472 125,000 416,725 541,725
GREENWOOD 423,371 1,883,421 1,125,644 423,371 3,009,065 3,432,436
PINELLAS PARK 219,924 870,000 501,212 219,924 1,371,212 1,591,136
GRAVOIS 1,032,416 4,455,514 741,507 1,032,416 5,197,021 6,229,437
JENNINGS 257,782 1,031,128 1,233,616 257,782 2,264,744 2,522,526
DALLAS 1,299,632 5,168,727 5,223,404 1,299,632 10,392,131 11,691,763
TUTTLE BEE SARASOTA 254,961 828,465 1,449,044 254,961 2,277,509 2,532,470
LAUREL 349,562 1,398,250 612,730 349,562 2,010,980 2,360,542
LAUREL 274,580 1,100,968 0 274,580 1,100,968 1,375,548
EAST ORLANDO 491,676 1,440,000 1,840,102 491,676 3,280,102 3,771,778
OTTAWA 137,775 784,269 303,414 137,775 1,087,683 1,225,458
BLOOMINGTON 805,521 2,222,353 2,453,970 805,521 4,676,323 5,481,844
<CAPTION>
TOTAL COST, DATE OF
ACCUMULATED NET OF ACCUMULATED CONSTRUCTION(C)
PROPERTIES DEPRECIATION DEPRECIATION ENCUMBRANCES ACQUISITION(A)
--------------- ------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
BOCA RATON $336,826 $3,301,966 $0 1992(A)
WHITEHALL 629,957 743,015 0 1967(C)
OGDEN 597,825 936,868 0 1967(C)
ORLANDO 264,243 6,038,017 0 1995(A)
PLAINVIEW 1,263,315 2,123,051 0 1969(C)
POMPANO BEACH 863,414 1,295,370 0 1968(C)
LIVONIA 327,423 1,332,177 0 1968(C)
LAUDERDALE LAKES 2,583,043 1,826,444 0 1968(C)
FERN PARK 767,169 2,644,723 0 1968(C)
ADDISON 748,174 837,796 0 1968(C)
LARGO 1,118,738 1,155,794 0 1968(C)
WINSTON-SALEM 862,125 1,543,192 0 1969(C)
MELBOURNE 1,226,996 2,621,786 0 1968(C)
ST. PETERSBURG 596,541 965,083 0 1968(C)
GROVE GATE 899,326 1,564,233 0 1968(C)
UPPER ARLINGTON 3,125,793 3,375,836 0 1969(C)
SHILOH SPRING RD. 2,056,500 1,885,850 0 1969(C)
FELBRAM 394,732 312,179 0 1970(C)
LEESBURG 172,412 96,952 0 1969(C)
FOREST PARK 341,006 429,984 0 1969(C)
LARGO EAST BAY 1,445,118 13,167,382 0 1992(A)
LEXINGTON 827,877 9,737,153 0 1993(A)
CLAWSON 612,039 9,533,059 0 1993(A)
CHARLOTTE 192,878 5,146,647 0 1995(A)
LAFAYETTE 701,826 861,766 0 1971(C)
FARMINGTON 414,776 5,581,532 0 1993(A)
WEST MIFFLIN 159,566 2,774,594 0 1993(A)
BRADENTON 285,791 255,934 0 1968(C)
GREENWOOD 1,074,744 2,357,692 1,295,895 1970(C)
PINELLAS PARK 269,021 1,322,115 0 1970(C)
GRAVOIS 2,564,616 3,664,821 0 1972(C)
JENNINGS 150,032 2,372,494 0 1971(C)
DALLAS 7,373,245 4,318,518 0 1969(C)
TUTTLE BEE SARASOTA 954,052 1,578,418 0 1970(C)
LAUREL 132,571 2,227,971 0 1995(A)
LAUREL 581,266 794,282 0 1972(C)
EAST ORLANDO 1,081,505 2,690,273 0 1971(C)
OTTAWA 821,096 404,362 0 1970(C)
BLOOMINGTON 1,169,034 4,312,810 0 1972(C)
</TABLE>
-50-
<PAGE>
<TABLE>
<CAPTION>
INITIAL COST TOTAL COST
----------------------------COST-CAPITALIZED---------------------------------------
BUILDINGS AND SUBSEQUENT BUILDINGS AND
PROPERTIES LAND IMPROVEMENTS TO ACQUISITION LAND IMPROVEMENTS TOTAL
--------------- -----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
RALEIGH 5,208,885 20,885,792 1,413,280 5,208,885 22,299,072 27,507,957
CANTON HILLS 500,980 2,020,274 758,076 500,980 2,778,350 3,279,330
SAVANNAH 2,052,270 8,232,978 214,271 2,052,270 8,447,249 10,499,519
MACON 262,700 1,487,860 1,366,254 349,326 2,767,488 3,116,814
CANTON 792,985 1,459,031 4,444,406 792,985 5,903,437 6,696,422
CHARLOTTE 1,783,400 7,139,131 0 1,783,400 7,139,131 8,922,531
PALATKA 130,844 556,658 868,138 130,844 1,424,796 1,555,640
EAST STROUDSBURG 1,050,000 2,372,628 289,506 1,050,000 2,662,134 3,712,134
POUGHKEEPSIE 876,548 4,695,659 865,439 876,548 5,561,098 6,437,646
BARBERTON 505,590 1,948,135 107,840 505,590 2,055,975 2,561,565
HAGERSTOWN 541,389 2,165,555 936,929 541,389 3,102,484 3,643,873
ELGIN 842,555 2,108,674 514,589 842,555 2,623,263 3,465,818
GRAND HAVEN 356,800 1,532,689 322,226 356,800 1,854,915 2,211,715
HOUSTON 275,000 507,588 191,639 275,000 699,227 974,227
WICKLIFFE 610,991 2,471,965 0 610,991 2,471,965 3,082,956
LEOMINSTER 3,732,508 6,754,092 28,794,530 4,933,640 34,347,490 39,281,130
LAUDERHILL 1,002,733 2,602,415 8,845,419 1,716,443 10,734,124 12,450,567
CAMBRIDGE 0 1,848,195 271,682 0 2,119,877 2,119,877
OLMSTED 167,337 2,815,856 671,155 167,337 3,487,011 3,654,348
LEMAY 125,879 503,510 127,868 125,879 631,378 757,257
AKRON WATERLOO 437,277 1,912,222 163,558 437,277 2,075,780 2,513,057
BRUNSWICK 771,765 6,058,560 248,131 771,765 6,306,691 7,078,456
WEST MIFFLIN HILLS 654,366 3,199,729 6,030,716 654,366 9,230,445 9,884,811
CHARLESTON 770,000 3,132,092 2,958,034 770,000 6,090,126 6,860,126
MESQUITE 520,340 2,081,356 514,001 520,340 2,595,357 3,115,697
SHREVEPORT 165,271 896,200 0 165,271 896,200 1,061,471
BELLEVUE 405,217 1,743,573 0 405,217 1,743,573 2,148,790
ELSMERE 0 3,185,642 0 0 3,185,642 3,185,642
MADISON 0 4,133,904 1,840,043 0 5,973,947 5,973,947
SPRINGFIELD 919,998 4,981,589 2,037,177 919,998 7,018,766 7,938,764
CHERRY HILL 2,417,583 6,364,094 687,738 2,417,583 7,051,832 9,469,415
NANUET 798,932 2,361,900 1,300,829 798,932 3,662,729 4,461,661
OAKCREEK 1,245,870 4,339,637 3,431,392 1,245,870 7,771,029 9,016,899
NORRISTOWN 686,134 2,664,535 1,806,543 774,084 4,383,128 5,157,212
SPRINGBORO PIKE 1,854,527 2,572,518 2,127,545 1,854,527 4,700,063 6,554,590
LIMA 770,121 3,080,479 426,014 770,121 3,506,493 4,276,614
CHARLES TOWN 602,000 3,725,871 1,120,755 602,000 4,846,626 5,448,626
MUSKEGON 391,500 958,500 635,679 391,500 1,594,179 1,985,679
NORTH MIAMI 732,914 4,080,460 1,016,810 732,914 5,097,270 5,830,184
NEW KENSINGTON 521,945 2,548,322 573,181 521,945 3,121,503 3,643,448
PENN HILLS 0 1,737,289 0 0 1,737,289 1,737,289
BEAVERCREEK 635,228 3,024,722 1,110,321 635,228 4,135,043 4,770,271
HAMPTON BAYS 1,495,105 5,979,320 41,919 1,495,105 6,021,239 7,516,344
BRIDGEHAMPTON 1,811,752 3,107,232 20,395,490 1,811,752 23,502,722 25,314,474
EASTERN BLVD. 412,016 1,876,962 92,641 412,016 1,969,603 2,381,619
E. PROSPECT ST. 604,826 2,755,314 250,000 604,826 3,005,314 3,610,140
W. MARKET ST. 188,562 1,158,307 0 188,562 1,158,307 1,346,869
MIDDLETOWN 207,283 1,174,603 103,060 207,283 1,277,663 1,484,946
<CAPTION>
TOTAL COST, DATE OF
ACCUMULATED NET OF ACCUMULATED CONSTRUCTION(C)
PROPERTIES DEPRECIATION DEPRECIATION ENCUMBRANCES ACQUISITION(A)
--------------- ------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
RALEIGH 1,610,986 25,896,971 0 1993(A)
CANTON HILLS 181,170 3,098,160 0 1993(A)
SAVANNAH 738,760 9,760,759 0 1993(A)
MACON 979,918 2,136,896 0 1969(C)
CANTON 1,860,873 4,835,549 0 1972(C)
CHARLOTTE 610,197 8,312,334 0 1993(A)
PALATKA 676,537 879,103 0 1970(C)
EAST STROUDSBURG 1,313,493 2,398,641 0 1973(C)
POUGHKEEPSIE 2,590,456 3,847,190 0 1972(C)
BARBERTON 1,096,070 1,465,495 0 1972(C)
HAGERSTOWN 1,291,810 2,352,063 0 1973(C)
ELGIN 1,332,858 2,132,960 0 1972(C)
GRAND HAVEN 857,488 1,354,227 0 1976(C)
HOUSTON 500,468 473,759 0 1973(C)
WICKLIFFE 126,753 2,956,203 0 1995(A)
LEOMINSTER 7,980,573 31,300,557 0 1975(A)
LAUDERHILL 3,521,541 8,929,026 0 1974(C)
CAMBRIDGE 1,102,531 1,017,346 0 1973(C)
OLMSTED 2,197,754 1,456,594 0 1973(C)
LEMAY 314,093 443,164 0 1974(C)
AKRON WATERLOO 1,253,003 1,260,054 0 1975(C)
BRUNSWICK 3,634,078 3,444,378 0 1975(C)
WEST MIFFLIN HILLS 3,239,979 6,644,832 0 1973(C)
CHARLESTON 1,024,158 5,835,968 0 1978(C)
MESQUITE 106,973 3,008,724 0 1995(A)
SHREVEPORT 537,599 523,872 0 1975(C)
BELLEVUE 1,193,024 955,766 0 1976(A)
ELSMERE 1,685,694 1,499,948 0 1979(C)
MADISON 2,835,302 3,138,645 0 1978(C)
SPRINGFIELD 3,578,868 4,359,896 3,630,000 1983(A)
CHERRY HILL 2,353,982 7,115,433 5,030,000 1985(C)
NANUET 1,199,563 3,262,098 0 1984(A)
OAKCREEK 2,399,298 6,617,601 5,175,000 1984(A)
NORRISTOWN 2,139,786 3,017,426 0 1984(A)
SPRINGBORO PIKE 1,641,141 4,913,449 0 1985(C)
LIMA 163,231 4,113,383 0 1995(A)
CHARLES TOWN 2,687,585 2,761,041 0 1985(A)
MUSKEGON 774,344 1,211,335 0 1985(A)
NORTH MIAMI 2,752,223 3,077,961 0 1985(A)
NEW KENSINGTON 1,685,244 1,958,204 0 1986(A)
PENN HILLS 934,825 802,464 0 1986(A)
BEAVERCREEK 1,994,397 2,775,874 0 1986(A)
HAMPTON BAYS 1,365,634 6,150,710 0 1989(A)
BRIDGEHAMPTON 4,200,341 21,114,133 0 1972(C)
EASTERN BLVD. 1,051,960 1,329,659 0 1987(A)
E. PROSPECT ST. 1,566,351 2,043,789 0 1986(A)
W. MARKET ST. 645,186 701,683 0 1986(A)
MIDDLETOWN 654,284 830,662 0 1986(A)
</TABLE>
-51-
<PAGE>
<TABLE>
<CAPTION>
INITIAL COST TOTAL COST
----------------------------COST-CAPITALIZED---------------------------------------
BUILDINGS AND SUBSEQUENT BUILDINGS AND
PROPERTIES LAND IMPROVEMENTS TO ACQUISITION LAND IMPROVEMENTS TOTAL
--------------- -----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
UPPER ALLEN 445,743 1,782,972 152,550 445,743 1,935,522 2,381,265
GETTYSBURG 74,626 671,630 101,519 74,626 773,149 847,775
MARTINSBURG 242,634 1,273,828 628,937 242,634 1,902,765 2,145,399
SOUTH EAST SARASOTA 1,283,400 5,133,544 790,210 1,283,400 5,923,754 7,207,154
AIKEN 980,808 3,923,234 31,700 980,808 3,954,934 4,935,742
TYVOLA RD. 0 4,736,345 1,494,281 0 6,230,626 6,230,626
RACINE 1,403,082 5,612,330 772,350 1,403,082 6,384,680 7,787,762
WEST MIFFLIN 1,468,341 0 0 1,468,341 0 1,468,341
TROY 432,000 1,727,790 139,581 432,000 1,867,371 2,299,371
INDIANAPOLIS 447,600 3,607,193 1,861,160 447,600 5,468,353 5,915,953
RICHBORO 788,761 3,155,044 2,705,847 788,761 5,860,891 6,649,652
MILLER ROAD 1,138,082 4,552,327 1,180,551 1,138,082 5,732,878 6,870,960
SANFORD 3,406,565 13,648,041 805,745 3,406,565 14,453,786 17,860,351
CARLE PLACE 1,183,290 4,903,642 10,257,307 1,314,540 15,029,699 16,344,239
PLAZA EAST 1,236,149 4,944,597 1,921,922 1,236,149 6,866,519 8,102,668
PLAZA WEST 808,435 3,210,187 553,057 808,435 3,763,244 4,571,679
MENTOR 503,981 2,455,926 361,206 503,981 2,817,132 3,321,113
MORSE RD. 835,386 2,097,600 2,518,726 835,386 4,616,326 5,451,712
HAMILTON RD. 856,178 2,195,520 3,270,616 856,178 5,466,136 6,322,314
OLENTANGY RIVER RD. 764,517 1,833,600 2,034,000 764,517 3,867,600 4,632,117
SALEM AVE. 665,314 347,818 2,565,023 665,314 2,912,841 3,578,155
KETTERING 1,190,496 4,761,984 383,683 1,190,496 5,145,667 6,336,163
W. BROAD ST. 982,464 3,929,856 1,487,174 982,464 5,417,030 6,399,494
ELYRIA 781,728 3,126,912 52,741 781,728 3,179,653 3,961,381
RIDGE ROAD 1,285,213 4,712,358 485,447 1,285,213 5,197,805 6,483,018
SPRINGFIELD 842,976 3,371,904 120,272 842,976 3,492,176 4,335,152
MENTOR ERIE CMNS. 2,234,474 9,648,000 1,140,994 2,234,474 10,788,994 13,023,468
SPRINGDALE 3,205,653 14,619,732 4,585,837 3,205,653 19,205,569 22,411,222
WESTERVILLE 1,050,431 4,201,616 7,168,063 1,050,431 11,369,679 12,420,110
IRONDEQUOIT 1,234,250 8,190,181 0 1,234,250 8,190,181 9,424,431
WEST GATES 1,784,718 9,721,970 78,077 1,784,718 9,800,047 11,584,765
HENRIETTA 1,075,358 6,635,486 0 1,075,358 6,635,486 7,710,844
JONESBORO RD. &I-285 468,118 1,872,473 53,114 468,118 1,925,587 2,393,705
STATEN ISLAND 2,280,000 9,027,951 3,629,603 2,280,000 12,657,554 14,937,554
GASTONIA 2,467,696 9,870,785 324,583 2,467,696 10,195,368 12,663,064
MARGATE 2,948,530 11,754,120 842,669 2,948,530 12,596,789 15,545,319
CENTEREACH 1,182,650 4,735,779 15,532,149 1,417,098 20,033,480 21,450,578
WALKER 3,682,478 14,730,060 35,709 3,682,478 14,765,769 18,448,247
TAYLOR 1,451,397 5,806,263 0 1,451,397 5,806,263 7,257,660
WATERBURY 2,253,078 9,017,012 59,581 2,253,078 9,076,593 11,329,671
GREAT BARRINGTON 642,170 2,547,830 6,048,177 1,280,713 7,957,464 9,238,177
KISSIMMEE 1,328,536 5,296,652 1,452,115 1,328,536 6,748,767 8,077,303
WESTMONT 601,655 2,404,604 3,439,860 601,655 5,844,464 6,446,119
RIDGEWOOD 450,000 2,106,566 0 450,000 2,106,566 2,556,566
MELBOURNE 715,844 2,878,374 305,858 715,844 3,184,232 3,900,076
NORTH BRUNSWICK 3,204,978 12,819,912 11,429,824 3,204,978 24,249,736 27,454,714
SAND LAKE 3,092,706 12,370,824 552,321 3,092,706 12,923,145 16,015,851
STUART 2,109,677 8,415,323 98,129 2,109,677 8,513,452 10,623,129
<CAPTION>
TOTAL COST, DATE OF
ACCUMULATED NET OF ACCUMULATED CONSTRUCTION(C)
PROPERTIES DEPRECIATION DEPRECIATION ENCUMBRANCES ACQUISITION(A)
--------------- ------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
UPPER ALLEN 1,036,395 1,344,870 0 1986(A)
GETTYSBURG 428,960 418,815 0 1986(A)
MARTINSBURG 930,810 1,214,589 0 1986(A)
SOUTH EAST SARASOTA 1,209,284 5,997,870 0 1989(A)
AIKEN 919,706 4,016,036 0 1989(A)
TYVOLA RD. 2,469,180 3,761,446 0 1986(A)
RACINE 1,492,473 6,295,289 0 1988(A)
WEST MIFFLIN 0 1,468,341 0 1986(A)
TROY 978,544 1,320,827 0 1986(A)
INDIANAPOLIS 2,078,579 3,837,374 0 1986(A)
RICHBORO 2,396,619 4,253,033 0 1986(A)
MILLER ROAD 2,672,831 4,198,129 4,650,000 1986(A)
SANFORD 3,254,788 14,605,563 0 1989(A)
CARLE PLACE 193,130 16,151,109 0 1993(A)
PLAZA EAST 172,251 7,930,417 2,138,328 1995(A)
PLAZA WEST 76,858 4,494,821 2,138,328 1995(A)
MENTOR 836,189 2,484,924 0 1987(A)
MORSE RD. 1,014,222 4,437,490 0 1988(A)
HAMILTON RD. 1,131,215 5,191,099 0 1988(A)
OLENTANGY RIVER RD. 1,039,023 3,593,094 0 1988(A)
SALEM AVE. 853,017 2,725,138 3,734,011 1988(A)
KETTERING 1,265,905 5,070,258 3,537,485 1988(A)
W. BROAD ST. 1,238,616 5,160,878 0 1988(A)
ELYRIA 812,575 3,148,806 3,930,538 1988(A)
RIDGE ROAD 700,686 5,782,332 0 1992(A)
SPRINGFIELD 888,817 3,446,335 4,127,066 1988(A)
MENTOR ERIE CMNS. 2,104,620 10,918,848 4,323,592 1988(A)
SPRINGDALE 2,388,976 20,022,246 0 1992(A)
WESTERVILLE 1,461,652 10,958,458 0 1988(A)
IRONDEQUOIT 944,298 8,480,133 0 1993(A)
WEST GATES 1,109,872 10,474,893 0 1993(A)
HENRIETTA 743,449 6,967,395 0 1993(A)
JONESBORO RD. &I-285 427,781 1,965,924 0 1988(A)
STATEN ISLAND 2,449,411 12,488,143 4,980,406 1989(A)
GASTONIA 1,590,259 11,072,805 0 1989(A)
MARGATE 1,014,116 14,531,203 0 1993(A)
CENTEREACH 912,782 20,537,796 0 1993(A)
WALKER 1,165,037 17,283,210 0 1993(A)
TAYLOR 471,390 6,786,270 0 1993(A)
WATERBURY 735,520 10,594,151 5,714,290 1993(A)
GREAT BARRINGTON 170,428 9,067,749 0 1994(A)
KISSIMMEE 124,905 7,952,398 0 1996(A)
WESTMONT 189,057 6,257,062 0 1994(A)
RIDGEWOOD 162,648 2,393,918 0 1993(A)
MELBOURNE 208,144 3,691,932 0 1994(A)
NORTH BRUNSWICK 905,953 26,548,761 0 1994(A)
SAND LAKE 873,060 15,142,791 0 1994(A)
STUART 531,927 10,091,202 0 1994(A)
</TABLE>
-52-
<PAGE>
<TABLE>
<CAPTION>
INITIAL COST TOTAL COST
----------------------------COST-CAPITALIZED---------------------------------------
BUILDINGS AND SUBSEQUENT BUILDINGS AND
PROPERTIES LAND IMPROVEMENTS TO ACQUISITION LAND IMPROVEMENTS TOTAL
--------------- -----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
ROCKINGHAM 2,660,915 10,643,660 6,632,483 2,660,915 17,276,143 19,937,058
CORAL SPRINGS 710,000 2,842,907 2,293,973 710,000 5,136,880 5,846,880
SPRINGFIELD 2,745,595 10,985,778 3,159,035 2,904,022 13,986,386 16,890,408
CHARLESTON 1,744,430 6,986,094 23,785 1,744,430 7,009,879 8,754,309
SAVANNAH 652,255 2,616,522 0 652,255 2,616,522 3,268,777
WEST PALM BEACH 550,896 2,298,964 219,722 550,896 2,518,686 3,069,582
SOUTH MIAMI 1,280,440 5,133,825 343,282 1,280,440 5,477,107 6,757,547
AUGUSTA 1,482,564 5,928,122 0 1,482,564 5,928,122 7,410,686
ALTAMONTE SPRINGS 770,893 3,083,574 0 770,893 3,083,574 3,854,467
KENT 2,261,530 0 0 2,261,530 0 2,261,530
ORLANDO 560,800 2,268,112 0 560,800 2,268,112 2,828,912
DURHAM 1,882,800 7,551,576 0 1,882,800 7,551,576 9,434,376
PHOENIX 1,430,790 3,348,652 0 1,430,790 3,348,652 4,779,442
GARLAND 210,286 845,845 0 210,286 845,845 1,056,131
MARLTON PIKE 0 4,318,534 0 0 4,318,534 4,318,534
CAMDEN 0 1,000,570 0 0 1,000,570 1,000,570
CINNAMINSON 657,140 2,628,559 0 657,140 2,628,559 3,285,699
MORRISVILLE 627,864 2,511,457 0 627,864 2,511,457 3,139,321
CENTER SQUARE 731,888 2,927,551 0 731,888 2,927,551 3,659,439
PHILADELPHIA 731,888 2,927,551 0 731,888 2,927,551 3,659,439
FEASTERVILLE 520,521 2,082,083 0 520,521 2,082,083 2,602,604
WARRINGTON 268,194 1,072,774 0 268,194 1,072,774 1,340,968
WHITEHALL 0 5,195,577 0 0 5,195,577 5,195,577
EASTON 340,000 1,478,000 0 340,000 1,478,000 1,818,000
HAVERTOWN 731,888 2,927,551 0 731,888 2,927,551 3,659,439
EXTON 731,888 2,927,551 0 731,888 2,927,551 3,659,439
UPPER DARBY 231,821 927,286 0 231,821 927,286 1,159,107
WHITE LAKE 2,300,050 9,249,607 0 2,300,050 9,249,607 11,549,657
RICHMOND 670,500 2,751,375 0 670,500 2,751,375 3,421,875
YONKERS 871,977 3,487,909 0 871,977 3,487,909 4,359,886
TULSA 500,950 2,002,508 0 500,950 2,002,508 2,503,458
WATERLOO 500,525 2,002,101 0 500,525 2,002,101 2,502,626
CLIVE 500,525 2,002,101 0 500,525 2,002,101 2,502,626
DES MOINES 500,525 2,002,101 0 500,525 2,002,101 2,502,626
E. WICHITA 500,414 2,001,656 0 500,414 2,001,656 2,502,070
W. WICHITA 500,414 2,001,656 0 500,414 2,001,656 2,502,070
PLANO 500,414 2,001,656 0 500,414 2,001,656 2,502,070
WEST OAKS 500,422 2,001,687 0 500,422 2,001,687 2,502,109
ARLINGTON 500,414 2,001,656 0 500,414 2,001,656 2,502,070
DUNCANVILLE 500,414 2,001,656 0 500,414 2,001,656 2,502,070
GARLAND 500,414 2,001,656 0 500,414 2,001,656 2,502,070
HOUSTON 500,422 2,001,687 0 500,422 2,001,687 2,502,109
GENEVA 500,422 2,001,687 0 500,422 2,001,687 2,502,109
BAYTOWN 500,422 2,001,687 0 500,422 2,001,687 2,502,109
FT. WORTH 500,414 2,001,656 0 500,414 2,001,656 2,502,070
<CAPTION>
TOTAL COST, DATE OF
ACCUMULATED NET OF ACCUMULATED CONSTRUCTION(C)
PROPERTIES DEPRECIATION DEPRECIATION ENCUMBRANCES ACQUISITION(A)
--------------- ------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
ROCKINGHAM 752,598 19,184,460 0 1994(A)
CORAL SPRINGS 151,700 5,695,180 0 1994(A)
SPRINGFIELD 563,280 16,327,128 0 1994(A)
CHARLESTON 246,015 8,508,294 0 1995(A)
SAVANNAH 89,440 3,179,337 0 1995(A)
WEST PALM BEACH 147,370 2,922,212 0 1995(A)
SOUTH MIAMI 218,900 6,538,647 0 1995(A)
AUGUSTA 159,551 7,251,135 0 1995(A)
ALTAMONTE SPRINGS 79,066 3,775,401 0 1995(A)
KENT 0 2,261,530 0 1995(A)
ORLANDO 45,534 2,783,378 0 1996(A)
DURHAM 144,810 9,289,566 0 1996(A)
PHOENIX 89,558 4,689,884 0 1996(A)
GARLAND 14,376 1,041,755 0 1996(A)
MARLTON PIKE 36,911 4,281,623 0 1996(A)
CAMDEN 0 1,000,570 0 1996(A)
CINNAMINSON 0 3,285,699 0 1996(A)
MORRISVILLE 0 3,139,321 0 1996(A)
CENTER SQUARE 25,022 3,634,417 0 1996(A)
PHILADELPHIA 25,022 3,634,417 0 1996(A)
FEASTERVILLE 0 2,602,604 0 1996(A)
WARRINGTON 0 1,340,968 0 1996(A)
WHITEHALL 44,407 5,151,170 0 1996(A)
EASTON 0 1,818,000 0 1996(A)
HAVERTOWN 25,022 3,634,417 0 1996(A)
EXTON 25,022 3,634,417 0 1996(A)
UPPER DARBY 0 1,159,107 0 1996(A)
WHITE LAKE 78,632 11,471,025 0 1996(A)
RICHMOND 114,920 3,306,955 0 1995(A)
YONKERS 193,778 4,166,108 0 1995(A)
TULSA 47,102 2,456,356 0 1996(A)
WATERLOO 47,058 2,455,568 0 1996(A)
CLIVE 47,058 2,455,568 0 1996(A)
DES MOINES 47,058 2,455,568 0 1996(A)
E. WICHITA 47,047 2,455,023 0 1996(A)
W. WICHITA 47,047 2,455,023 0 1996(A)
PLANO 47,047 2,455,023 0 1996(A)
WEST OAKS 47,047 2,455,062 0 1996(A)
ARLINGTON 47,047 2,455,023 0 1996(A)
DUNCANVILLE 47,047 2,455,023 0 1996(A)
GARLAND 47,047 2,455,023 0 1996(A)
HOUSTON 95,134 2,406,975 0 1996(A)
GENEVA 47,047 2,455,062 0 1996(A)
BAYTOWN 47,047 2,455,062 0 1996(A)
FT. WORTH 47,047 2,455,023 0 1996(A)
</TABLE>
-53-
<PAGE>
<TABLE>
<CAPTION>
INITIAL COST TOTAL COST
----------------------------COST-CAPITALIZED---------------------------------------
BUILDINGS AND SUBSEQUENT BUILDINGS AND
PROPERTIES LAND IMPROVEMENTS TO ACQUISITION LAND IMPROVEMENTS TOTAL
--------------- -----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
BRADLEY 500,422 2,001,687 0 500,422 2,001,687 2,502,109
BALANCE OF PORTFOLIO 2,951,539 4,071,395 5,847,776 3,104,451 9,766,259 12,870,710
----------- ------------ ------------ -------- ------------ -------------
$163,369,210 $650,152,624 $258,534,152 $167,022,371 $905,033,615 $1,072,055,986
============ ============ ============ ============ ============ ============
<CAPTION>
TOTAL COST, DATE OF
ACCUMULATED NET OF ACCUMULATED CONSTRUCTION(C)
PROPERTIES DEPRECIATION DEPRECIATION ENCUMBRANCES ACQUISITION(A)
--------------- ------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
BRADLEY 47,047 2,455,062 0 1996(A)
BALANCE OF PORTFOLIO 5,535,835 7,334,875 0 VARIOUS
--------- ------------ -----------
$180,552,647 $891,503,339 $54,404,939
============ ============ ===========
</TABLE>
Depreciation and amortization of the Company's investment in buildings and
improvements reflected in the statements of income is calculated over the
estimated useful lives of the assets as follows:
Buildings.................15 to 39 years
Improvements..................Terms of leases or useful lives, whichever
is shorter
The aggregate cost for Federal income tax purposes was approximately $1.062
billion at December 31, 1996.
The changes in total real estate assets for the years ended December 31, 1996,
1995 and 1994 are as follows:
<TABLE>
<CAPTION>
Years Ended
December 31,
-------------------------------------------
1996 1995 1994
------ ------ ------
<S> <C> <C> <C>
Balance, beginning of period............ $ 932,390,261 $796,611,263 $662,874,470
Acquisitions............................ 100,808,213 83,267,813 89,405,844
Improvements............................ 40,108,471 60,586,575 44,330,949
Sales................................... (1,250,959) (8,075,390) 0
---------------------------------------------
Balance, end of period.................. $1,072,055,986 $932,390,261 $796,611,263
=============================================
</TABLE>
The changes in accumulated depreciation for the years ended December 31, 1996,
1995 and 1994 are as follows:
<TABLE>
<CAPTION>
Years Ended
December 31,
---------------------------------------------
1996 1995 1994
------ ------ ------
<S> <C> <C> <C>
Balance, beginning of period............ $ 156,131,718 $132,556,084 $112,050,114
Depreciation for year................... 24,963,191 23,608,732 20,505,970
Sales................................... (542,262) (33,098) 0
------------- ------------ ------------
Balance, end of period.................. $ 180,552,647 $156,131,718 $132,556,084
============== ============ ============
</TABLE>
-54-
<PAGE>
ARTICLES SUPPLEMENTARY
OF
KIMCO REALTY CORPORATION
Kimco Realty Corporation, a corporation organized and existing
under the laws of the State of Maryland (the "Corporation"), hereby certifies to
the State Department of Assessments and Taxation of Maryland that:
FIRST: Pursuant to the authority granted to and vested in the
Board of Directors of the Corporation (the "Board of Directors") in accordance
with Article IV.D. of the charter of the Corporation, including these Articles
Supplementary (the "Charter"), the Board of Directors, by unanimous written
consent dated April 1, 1996, adopted resolutions reclassifying 460,000 shares
(the "Shares") of Preferred Stock (as defined in the Charter) as a separate
class of stock, 8 3/8% Class C Cumulative Redeemable Preferred Stock, $1.00 par
value per share ("Class C Preferred Stock"), and reclassifying 460,000 shares
(the "Class C Excess Shares") of Preferred Stock (as defined in the Charter) as
a separate class of stock, Class C Excess Preferred Stock, $1.00 par value per
share ("Class C Excess Preferred Stock"), each with the preferences, conversion
and other rights, voting powers, restrictions, limitations as to dividends or
other distributions, qualifications, and terms and conditions of redemption set
forth below:
8 3/8% Class C Cumulative Redeemable Preferred Stock
A. Certain Definitions.
Unless the context otherwise requires, the terms defined in this
paragraph (A) shall have, for all purposes of the provisions of the Charter in
respect of the Class C Preferred Stock, the meanings herein specified (with
terms defined in the singular having comparable meanings when used in the
plural).
Beneficial Ownership. The term "Beneficial Ownership" shall mean
ownership of Class C Preferred Stock or Class C Excess Preferred Stock by a
Person who is or would be treated as an owner of such Class C Preferred Stock or
Class C Excess Preferred Stock either directly or constructively through the
application of Section 544 of the Code, as modified by Section 856(h)(1)(B) of
the Code. The terms "Beneficial Owner," "Beneficially Owns" and "Beneficially
Owned" shall have the correlative meanings.
<PAGE>
Beneficiary. The term "Beneficiary" shall mean the beneficiary of the
Trust as determined pursuant to subparagraph (11)(d)(1) of paragraph (F) below.
Business Day. The term "Business Day" shall mean any day, other than a
Saturday or Sunday, that is neither a legal holiday nor a day on which banking
institutions in New York City are authorized or required by law, regulation or
executive order to close.
Class A Preferred Stock. The term "Class A Preferred Stock"
shall mean the 7 3/4% Class A Cumulative Redeemable Preferred Stock,
$1.00 par value per share, of the Company.
Class B Preferred Stock. The term "Class B Preferred Stock"
shall mean the 8 1/2% Class B Cumulative Redeemable Preferred Stock,
$1.00 par value per share, of the Company.
Code. The term "Code" shall mean the Internal Revenue Code
of 1986, as amended from time to time.
Common Equity. The term "Common Equity" shall mean all shares now or
hereafter authorized of any class of common stock of the Corporation, including
the Common Stock, and any other stock of the Corporation, howsoever designated,
authorized after the Initial Issue Date, which has the right (subject always to
prior rights of any class or series of preferred stock) to participate in the
distribution of the assets and earnings of the Corporation without limit as to
per share amount.
Common Stock. The term "Common Stock" shall mean the common
stock, $.01 par value per share, of the Corporation.
Constructive Ownership. The term "Constructive Ownership" shall mean
ownership of Class C Preferred Stock or Class C Excess Preferred Stock by a
Person who is or would be treated as an owner of such Class C Preferred Stock or
Class C Excess Preferred Stock either directly or constructively through the
application of Section 318 of the Code, as modified by Section 856(d)(5) of the
Code. The terms "Constructive Owner," "Constructively Owns" and "Constructively
Owned" shall have the correlative meanings.
Depositary Shares. The term "Depositary Shares" shall mean the
Depositary Shares each representing 1/10 of a share of Class C Preferred Stock.
Dividend Payment Date. The term "Dividend Payment Date"
shall have the meaning set forth in subparagraph (2) of paragraph
(B) below.
Dividend Period. The term "Dividend Period" shall mean the
period from, and including, the Initial Issue Date to, but not
including, the first Dividend Payment Date and thereafter, each
<PAGE>
quarterly period from, and including, the Dividend Payment Date to, but not
including, the next Dividend Payment Date.
Initial Issue Date. The term "Initial Issue Date" shall mean the date
that shares of Class C Preferred Stock are first issued by the Corporation.
Junior Stock. The term "Junior Stock" shall mean, as the case may be,
(i) the Common Equity and any other class or series of stock of the Corporation
which is not entitled to receive any dividends in any Dividend Period unless all
dividends required to have been paid or declared and set apart for payment on
the Class C Preferred Stock shall have been so paid or declared and set apart
for payment or (ii) the Common Equity and any other class or series of stock of
the Corporation which is not entitled to receive any assets upon liquidation,
dissolution or winding up of the affairs of the Corporation until the Class C
Preferred Stock shall have received the entire amount to which such Class C
Preferred Stock is entitled upon such liquidation, dissolution or winding up.
IRS. The term "IRS" shall mean the United States Internal
Revenue Service.
Liquidation Preference. The term "Liquidation Preference"
shall mean $250.00 per share.
Parity Stock. The term "Parity Stock" shall mean, as the case may be,
(i) any class or series of stock of the Corporation which is entitled to receive
payment of dividends on a parity with the Class C Preferred Stock or (ii) any
class or series of stock of the Corporation which is entitled to receive assets
upon liquidation, dissolution or winding up of the affairs of the Corporation on
a parity with the Class C Preferred Stock. The term "Parity Stock" shall include
the Class A Preferred Stock and the Class B Preferred Stock.
Market Price. The term "Market Price" shall mean the price of the Class
C Preferred Stock (i) as determined by multiplying by ten the last reported
sales price of the Depositary Shares reported on the New York Stock Exchange on
the trading day immediately preceding the relevant date or, (ii) if the
Depositary Shares are not then traded on the New York Stock Exchange, as
determined by multiplying by ten the last reported sales price of the Depositary
Shares on the trading day immediately preceding the relevant date as reported on
any exchange or quotation system over which the Depositary Shares may be traded
or, (iii) if the Depositary Shares are not then traded over any exchange or
quotation system, as determined in good faith by the Board of Directors of the
Corporation.
Ownership Limit. The term "Ownership Limit" shall mean not
more than 9.8% of the outstanding shares of Preferred Equity
Stock.
<PAGE>
Person. The term "Person" shall mean an individual, corporation,
partnership, estate, trust (including a trust qualified under Section 401(a) or
501(c)(17) of the Code), a portion of a trust permanently set aside for or to be
used exclusively for the purposes described in Section 642(c) of the Code,
association, private foundation within the meaning of Section 509(a) of the
Code, joint stock company or other entity, and also includes a group as that
term is used for purposes of Section 13(d)(3) of the Securities Exchange Act of
1934, as amended; but does not include an underwriter which participates in a
public offering of the Class C Preferred Stock or any interest therein, provided
that such ownership by such underwriter would not result in the Corporation
being "closely held" within the meaning of Section 856(h) of the Code, or
otherwise result in the Corporation failing to qualify as a REIT.
Preferred Equity Stock. The term "Preferred Equity Stock" shall mean
shares of stock that are either Class C Preferred Stock or Class C Excess
Preferred Stock.
Purported Beneficial Transferee. The term "Purported Beneficial
Transferee" shall mean, with respect to any purported Transfer which results in
Class C Excess Preferred Stock, the purported beneficial transferee or owner for
whom the Purported Record Transferee would have acquired or owned shares of
Class C Preferred Stock if such Transfer had been valid under subparagraph (1)
of paragraph (F) below.
Purported Record Transferee. The term "Purported Record Transferee"
shall mean, with respect to any purported Transfer which results in Class C
Excess Preferred Stock, the record holder of the Preferred Equity Stock if such
Transfer had been valid under subparagraph (1) of paragraph (F) below.
Record Date. The term "Record Date" shall mean the date designated by
the Board of Directors of the Corporation at the time a dividend is declared;
provided, however, that such Record Date shall be the first day of the calendar
month in which the applicable Dividend Payment Date falls or such other date
designated by the Board of Directors for the payment of dividends that is not
more than thirty (30) days nor less than ten (10) days prior to such Dividend
Payment Date.
Redemption Date. The term "Redemption Date" shall have the
meaning set forth in subparagraph (2) of paragraph (D) below.
Redemption Price. The term "Redemption Price" shall mean a price per
share equal to $250.00 together with accrued and unpaid dividends, if any,
thereon to the Redemption Date.
Senior Stock. The term "Senior Stock" shall mean, as the case may be,
(i) any class or series of stock of the Corporation created after the Initial
Issue Date in accordance with subparagraph (1) of paragraph (E) ranking senior
to the Class C
<PAGE>
Preferred Stock in respect of the right to receive dividends or (ii) any class
or series of stock of the Corporation created after the Initial Issue Date in
accordance with subparagraph (1) of paragraph (E) ranking senior to the Class C
Preferred Stock in respect of the right to participate in any distribution upon
liquidation, dissolution or winding up of the affairs of the Corporation.
REIT. The term "REIT" shall mean a real estate investment
trust under Section 856 of the Code.
Transfer. The term "Transfer" shall mean any sale, transfer, gift,
assignment, devise or other disposition of Preferred Equity Stock, including (i)
the granting of any option or entering into any agreement for the sale, transfer
or other disposition of Preferred Equity Stock or (ii) the sale, transfer,
assignment or other disposition of any securities (or rights convertible into or
exchangeable for Preferred Equity Stock), whether voluntary or involuntary,
whether of record or beneficially or Beneficially or Constructively (including
but not limited to transfers of interests in other entities which results in
changes in Beneficial or Constructive Ownership of Preferred Equity Stock), and
whether by operation of law or otherwise.
Trust. The term "Trust" shall mean the trust created
pursuant to subparagraph (11)(a) of paragraph (F).
Trustee. The term "Trustee" shall mean the Corporation as
trustee for the Trust, and any successor trustee appointed by the
Corporation.
B. Dividends.
1. The record holders of Class C Preferred Stock shall be entitled to
receive dividends, when and as declared by the Board of Directors of the
Corporation, out of funds legally available for payment of dividends. Such
dividends shall be payable by the Corporation in cash at the rate of $20.938 per
annum per share at the rate of 8 3/8% per annum of the Liquidation Preference.
2. Dividends on shares of Class C Preferred Stock shall accrue and be
cumulative from the Initial Issue Date. Dividends shall be payable quarterly in
arrears when and as declared by the Board of Directors of the Corporation on
January 15, April 15, July 15 and October 15 of each year (each, a "Dividend
Payment Date"), commencing on July 15, 1996. If any Dividend Payment Date occurs
on a day that is not a Business Day, any accrued dividends otherwise payable on
such Dividend Payment Date shall be paid on the next succeeding Business Day.
The amount of dividends payable on Class C Preferred Stock for each full
Dividend Period shall be computed by dividing by four (4) the annual dividend
rate set forth in subparagraph (1) of this paragraph (B) above. Dividends
payable in respect of the first Dividend Period and any subsequent Dividend
Period which is less
<PAGE>
than a full Dividend Period in length will be computed on the basis of a 360-day
year consisting of twelve 30-day months. Dividends shall be paid to the holders
of record of the Class C Preferred Stock as their names shall appear on the
stock transfer records of the Corporation at the close of business on the Record
Date for such dividend. Dividends in respect of any past Dividend Periods that
are in arrears may be declared and paid at any time to holders of record on the
Record Date therefor. Any dividend payment made on shares of Class C Preferred
Stock shall be first credited against the earliest accrued but unpaid dividend
due which remains payable. Upon issuance, the Class C Preferred Stock will rank
on parity as to dividends with the Class A Preferred Stock and the Class B
Preferred Stock.
3. If any shares of Class C Preferred Stock are outstanding, no full
dividends shall be declared or paid or set apart for payment on any other class
or series of Preferred Stock ranking junior to or on a parity with the Class C
Preferred Stock as to dividends for any period unless full cumulative dividends
have been or contemporaneously are declared and paid or declared and a sum
sufficient for the payment thereof set apart for such payment on the Class C
Preferred Stock for all past Dividend Periods and the then current Dividend
Period. When dividends are not paid in full (or a sum sufficient for such full
payment is not so set apart) upon the shares of the Class C Preferred Stock and
any other class or series of Preferred Stock ranking on a parity as to dividends
with the Class C Preferred Stock, all dividends declared upon the shares of the
Class C Preferred Stock and any other such class or series of Preferred Stock
shall be declared pro rata so that the amount of dividends declared per share on
the Class C Preferred Stock and such class or series of Preferred Stock shall in
all cases bear to each other the same ratio that accrued and unpaid dividends
per share on the shares of the Class C Preferred Stock and such class or series
of Preferred Stock bear to each other. No interest, or sum of money in lieu of
interest, shall be payable in respect of any dividend payment or payments on the
Class C Preferred Stock which may be in arrears.
4. Except as provided in subparagraph (3) of this paragraph (B), unless
full cumulative dividends on the Class C Preferred Stock have been or
contemporaneously are declared and paid or declared and a sum sufficient for the
payment thereof set apart for payment for all past Dividend Periods and the then
current Dividend Period, no dividends (other than in common stock or other stock
ranking junior to the Class C Preferred Stock as to dividends and upon
liquidation, dissolution and winding up of the affairs of the Corporation) shall
be declared or paid or set apart for payment or other distribution shall be
declared or made upon any Junior Stock or Parity Stock nor shall any Junior
Stock or Parity Stock be redeemed, purchased or otherwise acquired for any
consideration (or any moneys be paid to or made available for a sinking fund for
the redemption of any shares of any such stock) by the Corporation (except by
conversion into or exchange
<PAGE>
for other stock of the Corporation ranking junior to the Class C Preferred Stock
as to dividends and upon liquidation, dissolution or winding up).
5. Notwithstanding anything contained herein to the contrary, no
dividends on shares of Class C Preferred Stock shall be authorized or declared
by the Board of Directors of the Corporation or paid or set apart for payment by
the Corporation at such time as the terms and provisions of any agreement of the
Corporation, including any agreement relating to its indebtedness, prohibits
such authorization, declaration, payment or setting apart for payment or
provides that such authorization, declaration, payment or setting apart for
payment would constitute a breach thereof or a default thereunder, or to the
extent such declaration or payment shall be restricted or prohibited by law.
6. Notwithstanding anything contained herein to the contrary, dividends
on the Class C Preferred Stock, if not paid on the applicable Dividend Payment
Date, will accrue whether or not dividends are authorized or declared for such
Dividend Payment Date, whether or not the Corporation has earnings and whether
or not there are funds legally available for the payment of such dividends.
7. If, for any taxable year, the Corporation elects to designate as
"capital gain dividends" (as defined in Section 857 of the Code) any portion
(the "Capital Gains Amount") of the dividends paid or made available for the
year to holders of all classes of stock (the "Total Dividends"), then the
portion of the Capital Gains Amount that shall be allocable to holders of the
Class C Preferred Stock shall be the amount that the total dividends paid or
made available to the holders of the Class C Preferred Stock for the year bears
to the Total Dividends.
C. Distributions Upon Liquidation, Dissolution or Winding Up.
1. Upon any voluntary or involuntary liquidation, dissolution or
winding up of the affairs of the Corporation, subject to the prior preferences
and other rights of any class or series of stock ranking senior to the Class C
Preferred Stock as to the distribution of assets upon liquidation, dissolution
or winding up of the affairs of the Corporation, but before any distribution or
payment shall be made to the holders of any class or series of stock ranking
junior to the Class C Preferred Stock as to the distribution of assets upon any
liquidation, dissolution or winding up of the affairs of the Corporation, the
holders of Class C Preferred Stock shall be entitled to receive out of the
assets of the Corporation legally available for distribution to its stockholders
liquidating distributions in cash or property at its fair market value as
determined by the Board of Directors of the Corporation in the amount of the
Liquidation Preference per share plus an amount equal to all dividends accrued
and unpaid thereon to the date of such
<PAGE>
liquidation, dissolution or winding up. After payment of the full amount of the
liquidating distributions to which they are entitled, the holders of Class C
Preferred Stock will have no right or claim to any of the remaining assets of
the Corporation and shall not be entitled to any other distribution in the event
of liquidation, dissolution or winding up of the affairs of the Corporation.
2. In the event that, upon any such voluntary or involuntary
liquidation, dissolution or winding up, the legally available assets of the
Corporation are insufficient to pay the amount of the Liquidation Preference per
share plus an amount equal to all dividends accrued and unpaid on the Class C
Preferred Stock and the corresponding amounts payable on each class or series of
stock ranking on a parity with the Class C Preferred Stock as to the
distribution of assets upon liquidation, dissolution or winding up of the
affairs of the Corporation, then the holders of the Class C Preferred Stock and
all such stock shall share ratably in any such distribution of assets in
proportion to the full liquidating distributions to which they otherwise would
be respectively entitled. Upon issuance, the Class C Preferred Stock will rank
on parity with the Class A Preferred Stock and the Class B Preferred Stock as to
the distribution of assets upon any liquidation, dissolution or winding up of
the affairs of the Corporation. Neither the consolidation or merger of the
Corporation into or with another corporation or corporations nor the sale,
lease, transfer or conveyance of all or substantially all of the assets of the
Corporation to another corporation or any other entity shall be deemed a
liquidation, dissolution or winding up of the affairs of the Corporation within
the meaning of this paragraph (C).
D. Redemption by the Corporation.
1. The Class C Preferred Stock may be redeemed for cash, in whole or
from time to time in part, on any date on or after April 15, 2001 at the option
of the Corporation at the Redemption Price. The Redemption Price of the Class C
Preferred Stock (other than any portion thereof consisting of accrued and unpaid
dividends) may be paid solely from the sale of proceeds of other capital stock
of the Company and not from any other source. For purposes of the preceding
sentence, "capital stock" means any equity securities (including Common Equity
and Preferred Stock), shares, interests, participations or other ownership
interests (however designated) and any rights (other than debt securities
convertible into or exchangeable for equity securities) or options to purchase
any of the foregoing.
2. Each date fixed for redemption pursuant to subparagraph (1) of this
paragraph (D) is called a "Redemption Date". If the Redemption Date is after a
Record Date and before the related Dividend Payment Date, the dividend payable
on such Dividend Payment Date shall be paid to the holder in whose name the
Class C Preferred Stock to be redeemed is registered at the close of
<PAGE>
business on such Record Date notwithstanding the redemption thereof between such
Record Date and the related Dividend Payment Date or the Corporation's default
in the payment of the dividend due.
3. In case of redemption of less than all shares of Class C Preferred
Stock at the time outstanding, the shares to be redeemed shall be selected by
the Corporation pro rata from the holders of record of such shares in proportion
to the number of shares held by such holders (with adjustments to avoid
redemption of fractional shares) or by any other equitable method determined by
the Corporation that will not result in the issuance of any Class C Excess
Preferred Stock.
4. Notice of any redemption will be given by publication in a newspaper
of general circulation in The City of New York, such publication to be made once
a week for two successive weeks commencing not less than 30 nor more than 60
days prior to the Redemption Date. A similar notice will be mailed by the
Corporation, postage prepaid, not less than 30 nor more than 60 days prior to
the Redemption Date, addressed to the respective holders of record of the Class
C Preferred Stock to be redeemed at their respective addressees as they appear
on the stock transfer records of the Corporation. No failure to give such notice
or any defect therein or in the mailing thereof shall affect the validity of the
proceedings for the redemption of any shares of Class C Preferred Stock except
as to any holder to whom the Corporation has failed to give notice or except as
to any holder to whom notice was defective or not given. In addition to any
information required by law or by the applicable rules of any exchange upon
which Class C Preferred Stock may be listed or admitted to trading, such notice
shall state: (i) the Redemption Date; (ii) the Redemption Price; (iii) the
number of shares of Class C Preferred Stock to be redeemed and, if less than all
shares held by the particular holder are to be redeemed, the number of such
shares to be redeemed; (iv) the place or places where certificates for such
shares are to be surrendered for payment of the Redemption Price; and (v) that
dividends on the shares to be redeemed will cease to accrue on the Redemption
Date.
5. If notice has been mailed in accordance with subparagraph (4) of
this paragraph (D) and provided that on or before the Redemption Date specified
in such notice all funds necessary for such redemption shall have been set aside
by the Corporation, separate and apart from its other funds in trust for the pro
rata benefit of the holders of the shares so called for redemption, so as to be,
and to continue to be available therefor, then, from and after the Redemption
Date, dividends on the shares of the Class C Preferred Stock so called for
redemption shall cease to accrue, and said shares shall no longer be deemed to
be outstanding and shall not have the status of shares of Class C Preferred
Stock, and all rights of the holders thereof as shareholders of the Corporation
(except the right to
<PAGE>
receive from the Corporation the Redemption Price) shall cease. Upon surrender,
in accordance with said notice, of the certificates for any shares so redeemed
(properly endorsed or assigned for transfer, if the Corporation shall so require
and the notice shall so state), such shares shall be redeemed by the Corporation
at the Redemption Price. In case fewer than all the shares represented by any
such certificate are redeemed, a new certificate or certificates shall be issued
representing the unredeemed shares without cost to the holder thereof.
6. Any funds deposited with a bank or trust company for the purpose of
redeeming Class C Preferred Stock shall be irrevocable except that:
a. the Corporation shall be entitled to receive from such bank
or trust company the interest or other earnings, if any, earned on any money so
deposited in trust, and the holders of any shares redeemed shall have no claim
to such interest or other earnings; and
b. any balance of monies so deposited by the Corporation and
unclaimed by the holders of the Class C Preferred Stock entitled thereto at the
expiration of two (2) years from the applicable Redemption Date shall be repaid,
together with any interest or other earnings earned thereon, to the Corporation,
and after any such repayment, the holders of the shares entitled to the funds so
repaid to the Corporation shall look only to the Corporation for payment without
interest or other earnings.
7. No Class C Preferred Stock may be redeemed except with
funds legally available for the payment of the Redemption Price.
8. Unless full cumulative dividends on all shares of Class C Preferred
Stock shall have been or contemporaneously are declared and paid or declared and
a sum sufficient for the payment thereof set apart for payment for all past
Dividend Periods and the then current Dividend Period, no shares of any Class C
Preferred Stock shall be redeemed unless all outstanding shares of Class C
Preferred Stock are simultaneously redeemed; provided, however, that the
foregoing shall not prevent the purchase or acquisition of shares of Class C
Preferred Stock pursuant to a purchase or exchange offer made on the same terms
to holders of all outstanding shares of Class C Preferred Stock, and, unless
full cumulative dividends on all outstanding shares of Class C Preferred Stock
have been or contemporaneously are declared and paid or declared and a sum
sufficient for the payment thereof set apart for payment for all past Dividend
Periods and the then current Dividend Period, the Corporation shall not purchase
or otherwise acquire directly or indirectly any shares of Class C Preferred
Stock (except by conversion into or exchange for stock of the Corporation
ranking junior to the Class C Preferred Stock as to dividends and upon
liquidation, dissolution or winding up).
<PAGE>
9. All shares of Class C Preferred Stock redeemed pursuant to this
paragraph (D) shall be retired and shall be reclassified as authorized and
unissued shares of Preferred Stock, without designation as to class or series
and may thereafter be reissued as shares of any class or series of Preferred
Stock.
E. Voting Rights.
1. The holders of record of shares of Class C Preferred Stock shall not
be entitled to any voting rights except as hereinafter provided in this
paragraph (E). The Corporation shall not, without either (a) the affirmative
vote of the holders of at least two-thirds of the shares of the Class C
Preferred Stock outstanding at the time, given in person or by proxy, at a
meeting (such Class C Preferred Stock voting separately as a class) or (b) the
unanimous written consent of all of the holders of shares of Class C Preferred
Stock, (i) authorize or create, or increase the authorized or issued amount of,
any class or series of Senior Stock, or reclassify any authorized stock into
Senior Stock, or create, authorize or issue any obligation or security
convertible into or evidencing the right to purchase any such Senior Stock; or
(ii) amend, alter or repeal the provisions of the Charter in respect of the
Class C Preferred Stock, whether by merger, consolidation or otherwise, so as to
materially and adversely affect any right, preference, privilege or voting power
of the Class C Preferred Stock or the holders thereof; provided, however, that
any increase in the amount of the authorized Preferred Stock or the creation or
issuance of any other class or series of Preferred Stock, or any increase in the
amount of authorized shares of the Class C Preferred Stock, in each case ranking
on a parity with or junior to the Class C Preferred Stock with respect to
payment of dividends and the distribution of assets upon liquidation,
dissolution or winding up, shall not be deemed to materially and adversely
affect such rights, preferences, privileges or voting powers.
2. If and whenever dividends payable on Class C Preferred Stock shall
be in arrears for six (6) or more quarterly periods, regardless of whether such
quarterly periods are consecutive, then the holders of Class C Preferred Stock
(voting separately as a class with such other class or series as provided in
subparagraph (6) of this paragraph (E)) shall be entitled at the next annual
meeting of the stockholders or at any special meeting to elect two (2)
additional directors. Upon election, such directors shall become directors of
the Corporation and the authorized number of directors of the Corporation shall
thereupon be automatically increased by such number of directors.
3. Whenever such voting right shall have vested, such right may be
exercised initially either at a special meeting of the holders of Class C
Preferred Stock, called as hereinafter provided, or at any annual meeting of
stockholders held for the purpose of electing directors, and thereafter at such
annual meetings or by the written consent of the holders of Class C
<PAGE>
Preferred Stock. Such right of the holders of Class C Preferred Stock to elect
directors may be exercised until all dividends to which the holders of Class C
Preferred Stock shall have been entitled for (i) all previous Dividend Periods
and (ii) the current Dividend Period shall have been paid in full or declared
and a sum of money sufficient for the payment thereof set aside for payment, at
which time the right of the holders of Class C Preferred Stock to elect such
number of directors shall cease, the term of such directors previously elected
shall, upon the resignation thereof, thereupon terminate, and the authorized
number of directors of the Corporation shall thereupon return to the number of
authorized directors otherwise in effect, but subject always to the same
provisions for the renewal and divestment of such special voting rights in the
case of any such future dividend default or defaults.
4. At any time when such voting right shall have vested in the holders
of Class C Preferred Stock and if such right shall not already have been
initially exercised, a proper officer of the Corporation shall, upon the written
request of any holder of record of Class C Preferred Stock then outstanding,
addressed to the Secretary of the Corporation, call a special meeting of holders
of Class C Preferred Stock. Such meeting shall be held on the earliest
practicable date upon the notice required for annual meetings of stockholders at
the place for holding annual meetings of stockholders of the Corporation or, if
none, at a place designated by the Secretary of the Corporation. If such meeting
shall not be called by the proper officers of the Corporation within thirty (30)
days after the personal service of such written request upon the Secretary of
the Corporation, or within thirty (30) days after mailing the same within the
United States, by registered mail, addressed to the Secretary of the Corporation
at its principal office (such mailing to be evidenced by the registry receipt
issued by the postal authorities), then the holders of record of ten percent
(10%) of the shares of Class C Preferred Stock then outstanding may designate in
writing a holder of Class C Preferred Stock to call such meeting at the expense
of the Corporation, and such meeting may be called by such person so designated
upon the notice required for annual meetings of stockholders and shall be held
at the place for holding annual meetings of the Corporation or, if none, at a
place designated by such holder. Any holder of Class C Preferred Stock that
would be entitled to vote at such meeting shall have access to the stock
transfer records of the Corporation for the purpose of causing a meeting of
stockholders to be called pursuant to the provisions of this paragraph (E).
Notwithstanding the provisions of this paragraph (E), however, no such special
meeting shall be called if any such request is received less than ninety (90)
days before the date fixed for the next ensuing annual or special meeting of
stockholders.
5. If a director so elected by the holders of Class C Preferred Stock
shall cease to serve as a director before his/her term shall expire, the holders
of Class C Preferred Stock then
<PAGE>
outstanding may, at a special meeting of the holders called as provided above,
elect a successor to hold office for the unexpired term of the director whose
place shall be vacant.
6. If at any time when the holders of Class C Preferred Stock are
entitled to elect directors pursuant to the foregoing provisions of this
paragraph (E) the holders of any one or more classes or series of Preferred
Stock are entitled to elect directors by reason of any default or event
specified in the Charter, as in effect at the time, and if the terms for such
classes or series of Preferred Stock so provide, then the voting rights of the
Class C Preferred Stock and the one or more classes or series of Preferred Stock
then entitled to vote shall be combined (with each having a number of votes
proportional to the aggregate liquidation preference of its outstanding shares).
In such case, the holders of Class C Preferred Stock and of all such classes or
series of Preferred Stock then entitled so to vote, voting together as a class,
shall elect such directors. If the holders of any such classes or series of
Preferred Stock have elected such directors prior to the happening of the
default or event providing for the election of directors by the holders of Class
C Preferred Stock, or prior to a written request for the holding of a special
meeting being received by the Secretary of the Corporation as elsewhere required
in subparagraph (4) of paragraph (E) above, then a new election shall be held
with all such classes or series of Preferred Stock and the Class C Preferred
Stock voting together as a single class for such directors, resulting in the
termination of the term of such previously elected directors upon the election
of such new directors. If the holders of any such classes or series of Preferred
Stock are entitled to elect in excess of two directors, the Class C Preferred
Stock shall not participate in the election of more than two such directors, and
those directors whose terms first expire shall be deemed to be the directors
elected by the holders of Class C Preferred Stock; provided that if at the
expiration of such terms the holders of Class C Preferred Stock are entitled to
vote in the election of directors pursuant to the provisions of this paragraph
(E), then the Secretary of the Corporation shall call a meeting (which meeting
may be the annual meeting or special meeting of stockholders referred to in
subparagraph (3) of this paragraph (E)) of holders of Class C Preferred Stock
for the purpose of electing replacement directors (in accordance with the
provisions of this paragraph (E)) to be held at or prior to the time of
expiration of the expiring terms referred to above.
7. In any matter in which the Class C Preferred Stock is entitled to
vote (as expressly provided herein), including any action by written consent,
each share of Class C Preferred Stock shall be entitled to ten (10) votes, each
of which ten (10) votes may be directed separately by the holder thereof (or by
any proxy or proxies of such holder). With respect to each share of Class C
Preferred Stock, the holder thereof may designate up to ten (10) proxies, with
each such proxy having the right to vote a
<PAGE>
whole number of votes (totalling ten (10) votes per share of Class C Preferred
Stock).
F. Restrictions on Ownership and Transfer to Preserve Tax
Benefit; Conversion and Exchange for Class C Excess Preferred
Stock; and Terms of Class C Excess Preferred Stock.
1. Restriction on Ownership and Transfer.
a. Except as provided in subparagraph (8) of this
paragraph (F), no Person shall Beneficially Own or Constructively
Own Class C Preferred Stock in excess of the Ownership Limit;
b. Except as provided in subparagraph (8) of this paragraph
(F), any Transfer (whether or not such Transfer is the result of a transaction
entered into through the facilities of the New York Stock Exchange ("NYSE"))
that, if effective, would result in any Person Beneficially Owning Class C
Preferred Stock in excess of the Ownership Limit shall be void ab initio as to
the Transfer of such Class C Preferred Stock which would be otherwise
Beneficially Owned by such Person in excess of the Ownership Limit; and the
intended transferee shall acquire no rights in such Class C Preferred Stock;
c. Except as provided in subparagraph (8) of this paragraph
(F), any Transfer (whether or not such Transfer is the result of a transaction
entered into through the facilities of the NYSE) that, if effective, would
result in any Person Constructively Owning Class C Preferred Stock in excess of
the Ownership Limit shall be void ab initio as to the Transfer of such Class C
Preferred Stock which would be otherwise Constructively Owned by such Person in
excess of the Ownership Limit; and the intended transferee shall acquire no
rights in such Class C Preferred Stock; and
d. Notwithstanding any other provisions contained in this
paragraph (F), any Transfer (whether or not such Transfer is the result of a
transaction entered into through the facilities of the NYSE) or other event
that, if effective, would result in the Corporation being "closely held" within
the meaning of Section 856(h) of the Code, or would otherwise result in the
Corporation failing to qualify as a REIT (including, but not limited to, a
Transfer or other event that would result in the Corporation owning (directly or
Constructively) an interest in a tenant that is described in Section
856(d)(2)(B) of the Code if the income derived by the Corporation from such
tenant would cause the Corporation to fail to satisfy any of the gross income
requirements of Section 856(c) of the Code) shall be void ab initio as to the
Transfer of the Class C Preferred Stock or other event which would cause the
Corporation to be "closely held" within the meaning of Section 856(h) of the
Code or would otherwise result in the Corporation failing to qualify as a REIT;
and the intended transferee or owner or Constructive or
<PAGE>
Beneficial Owner shall acquire or retain no rights in such Class C Preferred
Stock.
2. Conversion Into and Exchange For Class C Excess Preferred Stock. If,
notwithstanding the other provisions contained in this paragraph (F), at any
time after the date of the Initial Issue Date, there is a purported Transfer
(whether or not such Transfer is the result of a transaction entered into
through the facilities of the NYSE), change in the capital structure of the
Corporation or other event such that one or more of the restrictions on
ownership and transfers described in subparagraph (1) of this paragraph (F),
above, has been violated, then the Class C Preferred Stock being Transferred (or
in the case of an event other than a Transfer, the Class C Preferred Stock owned
or Constructively Owned or Beneficially Owned or, if the next sentence applies,
the Class C Preferred Stock identified in the next sentence) which would cause
one or more of the restrictions on ownership or transfer to be violated (rounded
up to the nearest whole share) shall be automatically converted into an equal
number of shares of Class C Excess Preferred Stock. If at any time of such
purported Transfer any of the shares of the Class C Preferred Stock are then
owned by a depositary to permit the trading of beneficial interests in
fractional shares of Class C Preferred Stock, then shares of Class C Preferred
Stock that shall be converted to Class C Excess Preferred Stock shall be first
taken from any Class C Preferred Stock that is not in such depositary that is
Beneficially Owned or Constructively Owned by the Person whose Beneficial
Ownership or Constructive Ownership would otherwise violate the restrictions of
subparagraph (1) of this paragraph (F) prior to converting any shares in such
depositary. Any conversion pursuant to this subparagraph shall be effective as
of the close of business on the business day prior to the date of such Transfer
or other event.
3. Remedies For Breach. If the Board of Directors or its designees
shall at any time determine in good faith that a Transfer or other event has
taken place in violation of subparagraph (1) of this paragraph (F) or that a
Person intends to acquire, has attempted to acquire or may acquire direct
ownership, beneficial ownership (determined without reference to any rules of
attribution), Beneficial Ownership or Constructive Ownership of any shares of
the Corporation in violation of subparagraph (1) of this paragraph (F), the
Board of Directors or its designees shall take such action as it deems advisable
to refuse to give effect to or to prevent such Transfer or other event,
including, but not limited to, causing the Corporation to purchase such shares
upon the terms and conditions specified by the Board of Directors in its sole
discretion, refusing to give effect to such Transfer or other event on the books
of the Corporation or instituting proceedings to enjoin such Transfer or other
event; provided, however, that any Transfer (or, in the case of events other
than a Transfer, ownership or Constructive Ownership or Beneficial Ownership) in
violation of subparagraph (1) of this paragraph (F) shall automatically result
in the
<PAGE>
conversion described in subparagraph (ii), irrespective of any
action (or non-action) by the Board of Directors.
4. Notice of Restricted Transfer. Any Person who acquires or attempts
to acquire Class C Preferred Stock or other securities in violation of
subparagraph (1) of this paragraph (F), or any Person who owns or will own Class
C Excess Preferred Stock as a result of an event under subparagraph (2) of this
paragraph (F), shall immediately give written notice to the Corporation of such
event and shall provide to the Corporation such other information as the
Corporation may request in order to determine the effect, if any, of such
Transfer or attempted Transfer or other event on the Corporation's status as a
REIT.
5. Owners Required To Provide Information. From and after the Initial
Issue Date, each Person who is a beneficial owner or Beneficial Owner or
Constructive Owner of Class C Preferred Stock and each Person (including the
stockholder of record) who is holding Class C Preferred Stock for a Beneficial
Owner or Constructive Owner shall provide to the Corporation such information
that the Corporation may request, in good faith, in order to determine the
Corporation's status as a REIT.
6. Remedies Not Limited. Nothing contained in this paragraph (F) (but
subject to subparagraph (12) of this paragraph (F)) shall limit the authority of
the Board of Directors to take such other action as it deems necessary or
advisable to protect the Corporation and the interests of its stockholders by
preservation of the Corporation's status as a REIT.
7. Ambiguity. In the case of an ambiguity in the application of any of
the provisions of this paragraph (F)), including any definition contained in
paragraph (A), the Board of Directors shall have the power to determine the
application of the provisions of this paragraph (F) with respect to any
situation based on the facts known to it (subject, however, to the provisions of
paragraph (12) of this paragraph (F)).
8. Exceptions.
a. Subject to subparagraph (1)(d) of this paragraph (F), the
Board of Directors, in its sole and absolute discretion, with the advice of the
Corporation's tax counsel, may exempt a Person from the limitation on a Person
Beneficially Owning Class C Preferred Stock in excess of the Ownership Limit if
such Person is not an individual for purposes of Section 542(a)(2) of the Code
and the Board of Directors obtains such representations and undertakings from
such Person as are reasonably necessary to ascertain that no individual's
Beneficial Ownership of such Class C Preferred Stock will violate the Ownership
Limit and such Person agrees that any violation of such representations or
undertaking (or other action which is contrary to the restrictions contained in
this paragraph (F)) or attempted violation will result in such Class C Preferred
Stock being
<PAGE>
exchanged for Class C Excess Preferred Stock in accordance with subparagraph (2)
of this paragraph (F).
b. Subject to subparagraph (1)(d) of this paragraph (F), the
Board of Directors, in its sole and absolute discretion, with advice of the
Corporation's tax counsel, may exempt a Person from the limitation on a Person
Constructively Owning Class C Preferred Stock in excess of the Ownership Limit
if such Person does not and represents that it will not own, directly or
constructively (by virtue of the application of Section 318 of the Code, as
modified by Section 856(d)(5) of the Code), more than a 9.8% interest (as set
forth in Section 856(d)(2)(B)) in a tenant of the Corporation and the Board of
Directors obtains such representations and undertakings from such Person as are
reasonably necessary to ascertain this fact and such Person agrees that any
violation or attempted violation will result in such Class C Preferred Stock in
excess of the Ownership Limit being exchanged for Class C Excess Preferred Stock
in accordance with subparagraph (2) of this paragraph (F).
c. Prior to granting any exception pursuant to subparagraph
(8)(a) or (8)(b) of this paragraph (F), the Board of Directors may require a
ruling from the IRS, or an opinion of counsel, in either case in form and
substance satisfactory to the Board of Directors, in its sole discretion as it
may deem necessary or advisable in order to determine or ensure the
Corporation's status as a REIT; provided, however, that obtaining a favorable
ruling or opinion shall not be required for the Board of Directors to grant an
exception hereunder.
9. Legend. Each certificate for Class C Preferred Stock
shall bear substantially the following legend:
"The Corporation will furnish to any stockholder, on request and
without charge, a full statement of the information required by Section 2-211(b)
of the Corporations and Associations Article of the Annotated Code of Maryland
with respect to the designations and any preferences, conversion and other
rights, voting powers, restrictions, limitations as to dividends and other
distributions, qualifications, and terms and conditions of redemptions of the
stock of each class which the Corporation has authority to issue and, if the
Corporation is authorized to issue any preferred or special class in series, (i)
the differences in the relative rights and preferences between the shares of
each series to the extent set, and (ii) the authority of the Board of Directors
to set such rights and preferences of subsequent series. The foregoing summary
does not purport to be complete and is subject to and qualified in its entirety
by reference to the charter of the Corporation (the "Charter"), a copy of which
will be sent without charge to each stockholder who so requests. Such request
must be made to the Secretary of the Corporation at its principal office.
<PAGE>
"The securities represented by this certificate are subject to
restrictions on ownership and transfer for the purpose of the Corporation's
maintenance of its status as a real estate investment trust under the Internal
Revenue Code of 1986, as amended. Except as otherwise provided pursuant to the
Charter of the Corporation, no Person may Beneficially Own or Constructively Own
shares of Class C Preferred Stock in excess of 9.8% of the outstanding Class C
Preferred Stock and any Class C Excess Preferred Stock of the Corporation. Any
Person who attempts to Beneficially Own or Constructively Own shares of Class C
Preferred Stock in excess of the above limitation must immediately notify the
Corporation. All capitalized terms in this legend have the meanings defined in
the Charter of the Corporation, a copy of which, including the restrictions on
transfer, will be sent to any stockholder on request and without charge.
Transfers in violation of the restrictions described above shall be void ab
initio. If the restrictions on ownership and transfer are violated, the
securities represented hereby will be designated and treated as shares of Class
C Excess Preferred Stock which will be held in trust by the Corporation. The
foregoing summary does not purport to be complete and is subject to and
qualified in its entirety by reference to the Charter, a copy of which,
including the restrictions on transfer, will be sent without charge to each
stockholder who so requests. Such request must be made to the Secretary of the
Corporation at its principal office."
10. Severability. If any provision of this paragraph (F) or any
application of any such provision is determined to be invalid by any federal or
state court having jurisdiction, the validity of the remaining provisions shall
not be affected and other applications of such provision shall be affected only
to the extent necessary to comply with the determination of such court.
11. Class C Excess Preferred Stock.
a. Ownership In Trust. Upon any purported Transfer (whether or
not such Transfer is the result of a transaction entered into through the
facilities of the NYSE) that results in the issuance of Class C Excess Preferred
Stock pursuant to subparagraph (2) of this paragraph (F), such Class C Excess
Preferred Stock shall be deemed to have been transferred to the Corporation, as
Trustee of a Trust for the exclusive benefit of such Beneficiary or
Beneficiaries to whom an interest in such Class C Excess Preferred Stock may
later be transferred pursuant to subparagraph (11)(d) of this paragraph (F).
Class C Excess Preferred Stock so held in trust shall be issued and outstanding
shares of stock of the Corporation. The Purported Record Transferee shall have
no rights in such Class C Excess Preferred Stock except the right to designate a
transferee of such Class C Excess Preferred Stock upon the terms specified in
subparagraph (11)(d) of this paragraph (F). The Purported Beneficial Transferee
shall have no rights in such Class C Excess Preferred
<PAGE>
Stock except as provided in subparagraph (11)(d) of this paragraph (F).
b. Dividend Rights. Class C Excess Preferred Stock shall not
be entitled to any dividends or other distribution (except as provided in
subparagraph (11)(c) of this paragraph (F). Any dividend or distribution paid
prior to the discovery by the Corporation that shares of Preferred Stock have
been converted into Class C Excess Preferred Stock shall be repaid to the
Corporation upon demand.
c. Rights Upon Liquidation. In the event of any voluntary or
involuntary liquidation, dissolution or winding up of, or any distribution of
the assets of, the Corporation, each holder of shares of Class C Excess
Preferred Stock shall be entitled to receive, ratably with each other holder of
shares of Preferred Equity Stock, that portion of the assets of the Corporation
available for distribution to the holders of shares of Preferred Stock as the
number shares of Class C Excess Preferred Stock held by such holder bears to the
total number of shares of Preferred Equity Stock then outstanding. The
Corporation, as holder of the Class C Excess Preferred Stock in trust, or if the
Corporation shall have been dissolved, any trustee appointed by the Corporation
prior to its dissolution, shall distribute ratably to the Beneficiaries of the
Trust, when and if determined in accordance with subparagraph (11)(d) of this
paragraph (F), any such assets received in respect of the Class C Excess
Preferred Stock in any liquidation, dissolution or winding up of, or any
distribution of the assets of the Corporation.
d. Restrictions On Transfer;
Designation of Beneficiary.
(1) Shares of Class C Excess Preferred
Stock shall not be transferable. Subject to the last sentence of this clause
(1), the Purported Record Transferee may freely designate a Beneficiary of an
interest in the Trust (representing the number of shares of Class C Excess
Preferred Stock held by the Trust attributable to a purported Transfer that
resulted in the issuance of Class C Excess Preferred Stock), if (i) the Class C
Excess Preferred Stock held in the Trust would not be Class C Excess Preferred
Stock in the hands of such Beneficiary and (ii) the Purported Beneficial
Transferee does not receive a price from such Beneficiary that reflects a price
per share for such Class C Excess Preferred Stock that exceeds (x) the price per
share such
Purported Beneficial Transferee paid for the Class C Preferred Stock in the
purported Transfer that resulted in the issuance of Class C Excess Preferred
Stock, or (y) if the Transfer or other event that resulted in the issuance of
Class C Excess Preferred Stock was not a transaction in which the Purported
Beneficial Transferee gave full value for such Class C Excess Preferred Stock, a
price per share equal to the Market Price on the date of the purported Transfer
or other event that resulted in the issuance of Class C Excess Preferred Stock.
Upon such transfer
<PAGE>
of an interest in the Trust, the corresponding shares of Class C Excess
Preferred Stock in the Trust shall be automatically exchanged for an equal
number of shares of Class C Preferred Stock and such Class C Preferred Stock
shall be transferred of record to the transferee of the interest in the Trust if
such Class C Preferred Stock would not be Class C Excess Preferred Stock in the
hands of such transferee. Prior to any transfer of any interest in the Trust,
the Purported Record Transferee must give advance notice to the Corporation of
the intended transfer and the Corporation must have waived in writing its
purchase rights under subparagraph (11)(f) of this paragraph (F).
(2) Notwithstanding the foregoing, if a
Purported Beneficial Transferee receives a price for designating a Beneficiary
of an interest in the Trust that exceeds the amounts allowable under
subparagraph (11)(d)(1) of this paragraph (F), such Purported Beneficial
Transferee shall pay, or cause such Beneficiary to pay, such excess to the
Corporation.
e. Voting and Notice Rights. The holders of shares
of Class C Excess Preferred Stock shall have no voting rights and
shall have no rights to receive notice of any meetings.
f. Purchase Rights in Class C Excess Preferred Stock.
Notwithstanding the provisions of subparagraph (11)(d) of this paragraph (F),
shares of Class C Excess Preferred Stock shall be deemed to have been offered
for sale to the Corporation, or its designee, at a price per share equal to the
lesser of (i) the price per share in the transaction that required the issuance
of such Class C Excess Preferred Stock (or, if the Transfer or other event that
resulted in the issuance of Class C Excess Preferred Stock was not a transaction
in which the Purported Beneficial Transferee gave full value for such Class C
Excess Preferred Stock, a price per share equal to the Market Price on the date
of the purported Transfer or other event that resulted in the issuance of Class
C Excess Preferred Stock) and (ii) the Market Price on the date the Corporation,
or its designee, accepts such offer. The Corporation shall have the right to
accept such offer for a period of ninety (90) days after the later of (i) the
date of the Transfer or other event which resulted in the issuance of such
shares of Class C Excess Preferred Stock and (ii) the date the Board of
Directors determines in good faith that a Transfer or other event resulting in
the issuance of shares of Class C Excess Preferred Stock has occurred, if the
Corporation does not receive a notice of such Transfer or other event pursuant
to subparagraph (4) of this paragraph (F). The Corporation may appoint a special
trustee of the Trust for the purpose of consummating the purchase of Class C
Excess Preferred Stock by the Corporation. In the event that the Corporation's
actions cause a reduction in the number of shares of Class C Preferred Stock
outstanding and such reduction results in the issuance of Class C Excess
Preferred Stock, the Corporation is required to exercise its option to
repurchase such shares of Class C Excess Preferred Stock if the Beneficial Owner
notifies the Corporation
<PAGE>
that it is unable to sell its rights to such Class C Excess Preferred Stock.
12. Settlement. Nothing in this paragraph (F) shall
preclude the settlement of any transaction entered into through
facilities of the NYSE.
G. Exclusion of Other Rights.
Except as may otherwise be required by law, the shares of Class C
Preferred Stock shall not have any preferences, conversion or other rights,
voting powers, restrictions, limitations as to dividends or other distributions,
qualifications or terms or conditions of redemption other than those
specifically set forth in the Charter. The shares of Class C Preferred Stock and
Class C Excess Preferred Stock shall have no preemptive or subscription rights.
H. Headings of Subdivisions.
The headings of the various subdivisions hereof are for convenience of
reference only and shall not affect the interpretation of any of the provisions
hereof.
I. Severability of Provisions.
If any preferences, conversion or other rights, voting powers,
restrictions, limitations as to dividends or other distributions, qualifications
or terms or conditions of redemption of the Class C Preferred Stock set forth in
the Charter is invalid, unlawful or incapable of being enforced by reason of any
rule of law or public policy, all other preferences, conversion or other rights,
voting powers, restrictions, limitations as to dividends or other distributions,
qualifications or terms or conditions of redemption of Class C Preferred Stock
set forth in the Charter which can be given effect without the invalid, unlawful
or unenforceable provision thereof shall, nevertheless, remain in full force and
effect, and no preferences, conversion or other rights, voting powers,
restrictions, limitations as to dividends or other distributions, qualifications
or terms or conditions of redemption of Class C Preferred Stock herein set forth
shall be deemed dependent upon any other provision thereof unless so expressed
therein.
J. Registration as Depositary Shares.
Shares of Class C Preferred Stock shall be registered in the form of
Depositary Shares representing a one-tenth fractional interest in a share of
Class C Preferred Stock ("Depositary Shares") on such terms and conditions as
may be provided for in any agreement binding upon the Corporation (whether
directly or through merger with any other corporation).
<PAGE>
SECOND: The Shares and the Class C Excess Shares have
been reclassified by the Board of Directors under a power
contained in the Charter.
THIRD: These Articles Supplementary have been approved
by the Board of Directors in the manner and by the vote required
by law.
FOURTH: The undersigned President of the Corporation
acknowledges these Articles Supplementary to be the corporate act of the
Corporation and, as to all matters or facts required to be verified under oath,
the undersigned President acknowledges that to the best of his knowledge,
information and belief, these matters and facts are true in all material
respects and that this statement is made under the penalties for perjury.
<PAGE>
IN WITNESS WHEREOF, the Corporation has caused these Articles
Supplementary to be signed in its name and on its behalf by its President and
attested to by its Secretary on this day of April, 1996.
ATTEST: KIMCO REALTY CORPORATION
/s/Robert P. Schulman /s/David M. Samber (SEAL)
- ------------------------- -----------------------
Robert P. Schulman David M. Samber
Secretary President
<PAGE>
BRUCE M. KAUDERER
6 Georgia Lane
Croton on Hudson, New York 10520
-----------
(914)271-6106
May 5, 1995
Kimco Realty Corporation
3333 New Hyde Park Road - Suite 100
P.O. Box 5020
New Hyde Park, New York 11042-0020
Attention: Mr. Milton Cooper
Chairman of the Board
Dear Milton:
This will serve to confirm my employment by Kimco Realty Corporation
(the "Company") as Vice President-legal or some other title mutually acceptable.
The term of employment shall be from the starting date (which starting date we
currently anticipate would be between June 15 and August 15, 1995, depending on
how soon I am able to wind down my current practice, and with the understanding
I have a vacation scheduled for the last two weeks in July) through December 31,
1996.
The employment shall be under the following conditions:
1. Minimum annual base salary of $175,000, and minimum annual bonus of
$25,000. These amounts (which would be prorated for partial calendar year 1995)
could be increased at the Company's sole discretion, depending upon its view of
my performance.
2. 401K Plan as Company typically provides to senior
executives (subject to any "initial waiting" period in plan).
3. Family medical insurance coverage in accordance with
Company's policy on senior executives (or at my option an increase in salary of
$2,000).
<PAGE>
Kimco Realty Corporation
May 5, 1995
Page 2
4. A grant, on the starting date, of options to purchase 25,000 shares
of the Company's common stock, to vest three years from starting date, expire
ten years from starting date, and be exercisable at market price on the starting
date. Notwithstanding the foregoing, if for any reason my employment with the
Company does not continue until said options have fully vested, then on the date
my employment ends the Company will pay me (in addition to any amounts that may
then be due me under Section 12 or any other section of this Agreement) an
amount equal to the "shadow value" of such options (i.e., the amount by which
the price of the shares if all presumed vested options were exercised would
exceed the price of such shares on the starting date) as if same had vested
ratably over a three year period from the starting date. Additional stock
options may be granted at the Company's discretion depending on its view of my
performance.
5. In view of Company's requirement to have a car available for the
Company's business purposes, Company to provide $800 a month allowance as agreed
reimbursement; and in addition to provide and pay for car phone therein (or
alternatively, Company to reimburse me for car phone charges).
6. Company to pay for and provide life insurance in amount
of not less than $300,000 and disability insurance in an amount
of less then $8,000 per month.
7. Annual vacation to be 4 weeks (not more than two weeks
consecutively).
8. Company to pay for driver back and forth from my home
in Croton to Company offices on a three day a week basis.
9. Company will defend and indemnify me against any legal
malpractice claims arising from Company business.
10. Except for any necessary carry-over from the winding down of my
practice and except for matters involving my family that will not interfere with
my professional activities for the Company, during the term of employment I will
not maintain an outside legal practice other than my activities for and on
behalf of the Company.
11. Company to pay for moving of files and furniture in my current
offices. Any continuing obligations under my current lease after the starting
date shall be sole responsibility of my existing firm.
<PAGE>
Kimco Realty Corporation
May 5, 1995
Page 3
12. In view of your recognition that I must give up my practice to take
this position, and to induce me to accept same, it is agreed that should the
Company discharge me during the term of this Agreement, or if not later than 60
days prior to the end of the term of this Agreement the Company shall not offer
in writing to enter into a one year extension of this Agreement on financial and
all other terms at least as favorable to me as this Agreement (including the
continuing provisions of this Section 12; provided that such extended agreement
need not grant any additional options, which grant of additional options shall
be solely at Company's discretion), the Company shall upon the end of my term of
employment pay me (in addition to any other amounts that may be due me) an
amount equal to my most recent annual base salary plus bonus (i.e., a minimum of
$200,000) as an agreed one-time severance payment.
Notwithstanding the provision of the foregoing
paragraph, however,
(i) if I do not accept the one-year extension prior to
the end of the then current term of employment, no such
severance payment shall be due me;
(ii) there shall be no further obligation to either offer
one-year extension or make a severance payment following the tenth
anniversary of starting date; and
(iii) any excess of the "Value of the Options" (as hereinafter
defined) over the then amount of the severance payment shall be
deducted as a dollar-for-dollar credit from the severance payment that
would otherwise be due until same has been reduced to zero. "Value of
the Options" at any time shall mean the aggregate amount by which the
price of the shares (at such time) if all then vested options were
exercised would exceed the respective prices of all such shares on the
respective grant dates of any options. By way of example and
illustration of the foregoing, if the severance payment was $200,000
and
(x) if such Value of the Options was $200,000 or
less, there would be no reduction in the severance
payment;
(y) if such Value of the Options was $300,000,
there would be a severance payment of only $100,000;
and
(z) if such Value of the Options was $400,000 or
more, there would be no severance payment.
<PAGE>
Kimco Realty Corporation
May 5, 1995
Page 4
If the foregoing meets with your approval, please sign and return to me
a copy of this letter. I am looking forward to our new relationship with great
anticipation, and hope and expect it will be very satisfying for all concerned.
Sincerely,
/s/Bruce M. Kauderer
-------------------------
Bruce M. Kauderer
BMK/jm
ACCEPTED AND AGREED:
KIMCO REALTY CORPORATION
By:/s/David M. Samber
-------------------
<PAGE>
Kimco Realty Corporation and Subsidiaries
Computation of Ratio of Earnings to Combined Fixed Charges and Preferred Stock
Dividends
For the Year Ended December 31, 1996
<TABLE>
<S> <C>
Income before extraordinary items $73,826,893
Add:
Interest on indebtedness 26,039,374
Amortization of debt related expenses 1,303,837
Portion of rents representative of the
interest factor 2,482,917
-------------------
103,653,021
Adjustment for equity share in partnerships (349,642)
-------------------
Income before extraordinary items, as adjusted $103,303,379
===================
Combined fixed charges and preferred stock dividends-
Interest on indebtedness $26,039,374
Preferred stock dividends 16,134,475
Amortization of debt related expenses 1,149,807
Portion of rents representative of the
interest factor 2,482,917
-------------------
Combined fixed charges and preferred stock dividends $45,806,573
===================
Ratio of Earnings to Combined Fixed Charges and
Preferred Stock Dividends 2.3
===================
</TABLE>
<PAGE>
Kimco Realty Corporation and Subsidiaries
Computation of Ratio of Funds from Operations
to Combined Fixed Charges and Preferred Stock Dividends
For the Year Ended December 31, 1996
<TABLE>
<S> <C>
Funds from Operations, Available to Common Stockholders $85,105,975
Add:
Interest on indebtedness 26,039,374
Preferred stock dividends 16,134,475
Portion of rents representative of the
interest factor 2,482,917
----------------
129,762,741
Adjustment for equity share in partnerships (1,498,445)
----------------
Funds from Operations, as adjusted $128,264,296
================
Combined fixed charges and preferred stock dividends-
Interest on indebtedness $26,039,374
Preferred stock dividends 16,134,475
Portion of rents representative of the
interest factor 2,482,917
----------------
Combined fixed charges and preferred stock dividends $44,656,766
================
Ratio of Funds from Operations to Combined Fixed Charges
and Preferred Stock Dividends 2.9
================
</TABLE>
<PAGE>
KIMCO REALTY CORPORATION AND SUBSIDIARIES 13-2744380
PERIOD ENDED DECEMBER 31, 1996
44 PLAZA, INC. 13-2683791
AUK REALTY CORPORATION 11-2612680
BRENDA PROPERTIES 11-2727694
EAST END OPERATING CORP. 11-2498666
FOX HILL II, INC. 11-2671016
FOX HILL POUGHKEEPSIE, INC. 11-2727165
GC ACQUISITION CORP. 11-2928815
HARVEST OF NASHVILLE, INC. 11-2464767
HARVEST OF TEXAS, INC. 11-2330375
HARVEST PROPERTIES, INC. 11-2330376
KCH ACQUISITION, INC. 11-3238575
KIMCADE, INC. 34-1831497
KIMCAL CORPORATION 13-2587851
KIMCO 118 O/P, INC. 65-0471143
KIMCO 120 O/P, INC. 65-0471149
KIMCO 413B, INC. 34-1740528
KIMCO 420, INC. 34-1710200
KIMCO 632, INC. 58-2201467
KIMCO ALTAMONTE SPRINGS 636, INC. 65-0642321
KIMCO ANAHEIM, INC. 93-1222235
KIMCO AUGUSTA 635, INC. 58-2214762
KIMCO BLACKWOOD 644, INC. 23-3469041
KIMCO BT CORP. 11-2465201
KIMCO BUCKS 651, INC. 23-2862081
KIMCO BUSTLETON 612, INC. 13-3867963
KIMCO CAMBRIDGE 242, INC. 31-1497725
KIMCO CANTON 182, INC. 34-1744056
KIMCO CENTEREACH 605, INC. 11-3182994
KIMCO CHARLESTON 631, INC. 57-1030009
KIMCO CHARLOTTE 192, INC. 56-1831137
KIMCO CINNAMINSON 645, INC. 22-3469045
KIMCO CLAWSON 143, INC. 38-3115543
KIMCO COLUMBUS, INC. 13-6206133
KIMCO CORAL SPRINGS 623, INC. 65-0535840
KIMCO COTTMAN 294, INC. 23-2862072
KIMCO CROSS CREEK 607, INC. 38-3141738
KIMCO DEV OF WOOSTER, INC. 11-2959598
KIMCO DEV. OF 31 SOUTH, INC. 11-2845541
KIMCO DEV. OF AIKEN, INC. 11-2978740
KIMCO DEV. OF BRADDOCK HILLS, INC. 11-2776505
KIMCO DEV. OF GASTONIA, INC. 11-2962621
KIMCO DEV. OF GIANTS, INC. 11-2792369
KIMCO DEV. OF GREENWOOD OP, INC. 11-2981360
KIMCO DEV. OF HAMPTON BAYS, INC. 11-2983330
KIMCO DEV. OF KETTERING, INC. 11-2670996
KIMCO DEV. OF MCINTOSH SARASOTA 11-2981378
<PAGE>
KIMCO REALTY CORPORATION AND SUBSIDIARIES 13-2744380
PERIOD ENDED DECEMBER 31, 1996
KIMCO DEV. OF MENTOR, INC. 11-3009184
KIMCO DEV. OF MUSKEGON, INC. 11-2757467
KIMCO DEV. OF NEW KENSINGTON, INC. 11-2776507
KIMCO DEV. OF SEMINOLE SANFORD, INC. 11-2847353
KIMCO DEV. OF TROY, INC. 11-2845542
KIMCO DEV. OF TYVOLA, INC. 11-2805703
KIMCO DEV. OF WATERLOO AKRON, INC. 11-2981359
KIMCO DURHAM 639, INC. 56-1968284
KIMCO EAGLEDALE, INC. 13-2587857
KIMCO ELEVEN MTG. CORP 11-2993846
KIMCO ENFIELD 611, INC. 06-1386487
KIMCO FARMINGTON 146, INC. 38-3115548
KIMCO FT. PIERCE 147, INC. 59-3272388
KIMCO GALLERY 660, INC. 23-2862071
KIMCO GARLAND 642, INC. 75-2650811
KIMCO GATES 149, INC. 13-3717461
KIMCO GREAT BARRINGTON 609, INC. 04-3239597
KIMCO GREEN ORCHARD 606, INC. 11-3182994
KIMCO HAYDEN PLAZA 604, INC. 85-0821811
KIMCO KENT 637, INC. 13-3850824
KIMCO KISSIMMEE 613, INC. 65-0655663
KIMCO KML, INC. 23-2862080
KIMCO LAFAYETTE 671, INC. 35-2001919
KIMCO LARGO 139, INC 65-0406401
KIMCO LARGO 196, INC. 65-0419586
KIMCO LAUREL, INC. 13-2731273
KIMCO LEXINGTON 140, INC. 11-2845537
KIMCO LIVONIA, INC. 13-2587856
KIMCO MELBOURNE 616, INC. 65-0471154
KIMCO MGT OF NEW JERSEY 11-3046314
KIMCO MGT. OF MARYLAND, INC. 52-1844127
KIMCO MORRISVILLE 648, INC. 23-2862079
KIMCO NO. BRUNSWICK 617, INC. 11-3204466
KIMCO OF CHERRY HILL, INC. 11-2641098
KIMCO OF GEORGIA, INC. 13-2697308
KIMCO OF HERMITAGE, INC. 11-2513375
KIMCO OF HICKORY HOLLOW, INC. 11-2464914
KIMCO OF HUNTINGTON, INC. 11-2516647
KIMCO OF ILLINOIS, INC. 13-2731271
KIMCO OF LAKE WORTH, INC. 11-2854691
KIMCO OF MILLERODE, INC. 11-2845539
KIMCO OF MISSOURI, INC. 13-2736629
KIMCO OF NANUET, INC. 11-2669924
KIMCO OF NEW ENGLAND, INC. 13-2731276
KIMCO OF NEW YORK, INC. 11-2845540
KIMCO OF NORTH CAROLINA, INC. 13-2660757
<PAGE>
KIMCO REALTY CORPORATION AND SUBSIDIARIES 13-2744380
PERIOD ENDED DECEMBER 31, 1996
KIMCO OF NORTH MIAMI, INC. 11-2761316
KIMCO OF OAKVIEW, INC. 11-2727695
KIMCO OF OHIO, INC. 13-2587859
KIMCO OF PENNSYLVANIA, INC. 13-2731277
KIMCO OF RACINE, INC. 11-2928818
KIMCO OF SPRINGBORO PIKE, INC. 11-2733483
KIMCO OF SPRINGFIELD, INC. 11-2612681
KIMCO OF SPRINGFIELD 625, INC. 43-1698931
KIMCO OF STUART 619, INC. 11-3205441
KIMCO OF SYOSSET, INC. 13-2660758
KIMCO OF TAMPA, INC. 11-2513372
KIMCO OF TENNESSEE, INC. 62-0813485
KIMCO OF UTAH, INC. 13-2659226
KIMCO OPPORTUNITY, INC. 11-3353009
KIMCO ORLANDO 638, INC. 65-0667618
KIMCO PALMER PARK 654, INC. 23-2862077
KIMCO PEPPERTREE, INC. 65-0433600
KIMCO PHILMED, INC. 52-2016394
KIMCO PROPERTIES, INC. 13-2731270
KIMCO PROPS. NASHVILLE, INC. 11-2464762
KIMCO PURCHASING AGENCY CORPORATION 11-2966000
KIMCO RALEIGH 177, INC. 56-1828155
KIMCO RALPH'S CORNER 659, INC. 23-2862075
KIMCO RICHMOND 800, INC. 52-1925248
KIMCO RIDGEWOOD 615, INC. 11-3183902
KIMCO SAND LAKE 618, INC. 65-0471136
KIMCO SARASOTA 378, INC. 65-0531169
KIMCO SAVANNAH 185, INC. 58-2055982
KIMCO SOUTH MIAMI 634, INC. 65-0559378
KIMCO SOUTHINGTON 610, INC. 11-3193467
KIMCO TOWSON 621, INC. 22-3333299
KIMCO WARRINGTON 652, INC. 23-2862076
KIMCO WATERBURY 608, INC. 06-1382854
KIMCO WEST PALM BEACH 633, INC. 65-0642317
KIMCO WESTERVILLE 178, INC 34-1744144
KIMCO WESTMONT 614, INC. 38-3141736
KIMCO WHITE LAKE 667, INC. 38-3316919
KIMCO WM148, INC. 23-2725735
KIMCO YONKERS 801, INC. 13-3851642
KIMCOAST OF WARREN, INC. 13-2683717
KIMSWORTH, INC. 51-0368319
KIMSWORTH OF ALABAMA, INC. 51-0368373
KIMSWORTH OF ARIZONA, INC. 51-368375
KIMSWORTH OF ARKANSAS, INC. 51-0368374
KIMSWORTH OF COLORADO, INC. 51-0368377
KIMSWORTH OF FLORIDA, INC. 51-0368378
<PAGE>
KIMCO REALTY CORPORATION AND SUBSIDIARIES 13-2744380
PERIOD ENDED DECEMBER 31, 1996
KIMSWORTH OF GEORGIA, INC. 51-0368380
KIMSWORTH OF ILLINOIS, INC. 51-0368382
KIMSWORTH OF INDIANA, INC. 51-0368383
KIMSWORTH OF IOWA, INC. 51-0368381
KIMSWORTH OF KANSAS, INC. 51-03668385
KIMSWORTH OF LOUISIANA, INC 51-03683286
KIMSWORTH OF MARYLAND, INC. 51-0368387
KIMSWORTH OF MICHIGAN, INC. 51-0368388
KIMSWORTH OF MINNESOTA, INC. 51-0368389
KIMSWORTH OF MISSISSIPPI, INC. 51-0368392
KIMSWORTH OF MISSOURI, INC. 51-0368391
KIMSWORTH OF MONTANA, INC. 51-0368393
KIMSWORTH OF NEBRASKA, INC. 51-0368394
KIMSWORTH OF NEW JERSEY, INC. 51-0368398
KIMSWORTH OF NEW MEXICO, INC. 51-0368399
KIMSWORTH OF OHIO, INC. 51-0368400
KIMSWORTH OF PENNSYLVANIA, INC. 51-0368401
KIMSWORTH OF SOUTH CAROLINA, INC. 51-0368402
KIMSWORTH OF TEXAS, INC. 51-0368403
KIMSWORTH OF VIRGINIA, INC. 51-0368405
KIMVEN CORPORATION 75-2630665
KIMVEN II CORPORATION 75-2633956
KIMZADD, INC. 11-3050459
KIMZAY BENTON HARBOR, INC. 11-2964477
KIMZAY BLOOMINGTON, INC. 13-2663111
KIMZAY CORPORATION 13-2587863
KIMZAY GEORGIA, INC. 13-2603693
KIMZAY GREENWOOD, INC. 13-2663112
KIMZAY MISSOURI, INC. 13-2636710
KIMZAY OF CHARLOTTE, INC. 13-2603692
KIMZAY OF FLORIDA, INC. 13-2587853
KIMZAY OF ILLINOIS, INC. 13-2587858
KIMZAY WINSTON-SALEM, INC. 13-2663113
KIMZFERN, INC. 11-3035885
KIMZGATE, INC. 11-3035881
KIMZLAR, INC 11-3050459
KIMZWOOD, INC. 11-3035886
KRC ACQUISITION CORP. 11-2993846
LAUREL 173, INC. 52-1948299
MANETTO HILLS ASSOCIATES, INC. 13-2604645
MILMAR REALTY CORPORATION 13-2671681
NORBER CORP. 11-2691272
PASSIVE INVESTORS, INC. 11-2723241
PERMELYNN CORPORATION 13-2660042
PERMELYNN OF BRIDGEHAMPTON, INC. 13-2690180
PERMELYNN OF GEORGIA, INC. 13-2731264
<PAGE>
KIMCO REALTY CORPORATION AND SUBSIDIARIES 13-2744380
PERIOD ENDED DECEMBER 31, 1996
PERMELYNN OF WESTCHESTER, INC. 13-2702562
REDEL CONSTRUCTION CORP. 13-3793428
RICH HILL, INC. 13-2731275
ROCKINGHAM 620, INC. 02-0471000
SANNDREL INC. 13-2670120
SANNDREL OF HARRISBURG, INC. 13-2684422
SANNDREL OF PENNSYLVANIA, INC. 13-2700618
SANNDREL OF VIRGINIA, INC. 13-2700298
ST. ANDREWS SHOPPING CENTER CORP. OF CHARLESTON 11-2464767
THE KIMCO CORPORATION 13-6115192
WOODSO CORP 11-2964256
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration statement of
Kimco Realty Corporation on Form S-3 (File No. 333-4833) of our report dated
February 28, 1997, on our audits of the consolidated financial statements and
financial statement schedules of Kimco Realty Corporation as of December 31,
1996 and 1995, and for each of the three years in the period ended December 31,
1996, which report is included in this Annual Report of Form 10-K.
Coopers & Lybrand, L.L.P.
New York, New York
March 17, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
Financial Data Schedule information has been extracted from the Registrant's
Consolidated Balance Sheet (non-classified) as of December 31, 1996 and the
Consolidated Statement of Income for the year then ended.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<CASH> 37,425,206
<SECURITIES> 7,778,310
<RECEIVABLES> 14,870,048
<ALLOWANCES> 1,350,000
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 1,072,055,986
<DEPRECIATION> 180,552,647
<TOTAL-ASSETS> 1,022,566,471
<CURRENT-LIABILITIES> 0
<BONDS> 364,654,939
0
900,000
<COMMON> 362,151
<OTHER-SE> 604,042,728
<TOTAL-LIABILITY-AND-EQUITY> 1,022,566,471
<SALES> 168,144,419
<TOTAL-REVENUES> 168,144,419
<CGS> 42,892,691
<TOTAL-COSTS> 42,892,691
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 27,019,283
<INCOME-PRETAX> 73,826,893
<INCOME-TAX> 0
<INCOME-CONTINUING> 73,826,893
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 73,826,893
<EPS-PRIMARY> 1.61
<EPS-DILUTED> 1.61
</TABLE>
