10-K405: Annual report [Sections 13 and 15(d), S-K Item 405]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
- --- EXCHANGE ACT OF 1934 [NO FEE REQUIRED]

For the fiscal year ended December 31, 1999
-----------------

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
- --- EXCHANGE ACT OF 1934 [NO FEE REQUIRED]

For the transition period from to
--------------- ---------------

Commission file number 1-10899
-------

Kimco Realty Corporation
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)

Maryland 13-2744380
- ---------------------------- --------------------------------------------
(State of incorporation) (I.R.S. Employer Identification No.)

3333 New Hyde Park Road, New Hyde Park, NY 11042-0020
- --------------------------------------------------------------------------------
(Address of principal executive offices) Zip Code

Registrant's telephone number, including area code (516) 869-9000
-----------------------------

Securities registered pursuant to Section 12(b) of the Act:


Name of each exchange on
Title of each class which registered
------------------- ----------------

Common Stock, par value $.01 per share. New York Stock Exchange
- --------------------------------------- ------------------------

Depositary Shares, each representing one-
- -----------------------------------------
tenth of a share of 7-3/4% Class A
- ----------------------------------
Cumulative Redeemable Preferred Stock,
- --------------------------------------
par value $1.00 per share. New York Stock Exchange
- -------------------------- ------------------------

Depositary Shares, each representing one-
- -----------------------------------------
tenth of a share of 8-1/2% Class B
- ----------------------------------
Cumulative Redeemable Preferred Stock,
- --------------------------------------
par value $1.00 per share. New York Stock Exchange
- -------------------------- ------------------------

Depositary Shares, each representing one-
- -----------------------------------------
tenth of a share of 8-3/8% Class C
- ----------------------------------
Cumulative Redeemable Preferred Stock,
- --------------------------------------
par value $1.00 per share. New York Stock Exchange
- -------------------------- ------------------------

Depositary Shares, each representing one-
- -----------------------------------------
tenth of a share of 7-1/2% Class D
- ----------------------------------
Cumulative Convertible Preferred
- --------------------------------
Stock, par value $1.00 per share. New York Stock Exchange
- --------------------------------- ------------------------


Securities registered pursuant to Section 12(g) of the Act:
None
- --------------------------------------------------------------------------------
(Title of class)

Indicate by check mark whether the registrant (i) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (ii) has been subject to such
filing requirements for the past 90 days. Yes X No
--- ---

Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. X
---

The aggregate market value of the voting stock held by nonaffiliates of
the registrant was approximately $1.8 billion based upon the closing price on
the New York Stock Exchange for such stock on March 1, 2000.

(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.

60,795,593 shares as of March 1, 2000.


Page 1 of 79

DOCUMENTS INCORPORATED BY REFERENCE


Part III incorporates certain information by reference to the Registrant's
definitive proxy statement to be filed with respect to the Annual Meeting of
Stockholders expected to be held on May 18, 2000.

Index to Exhibits begins on page 34.

2

TABLE OF CONTENTS

Form
10-K
Report
Item No. Page
- -------- ------
PART I

1. Business . . . . . . . . . . . . . . . . . . . . . . . . . . 4

2. Properties . . . . . . . . . . . . . . . . . . . . . . . . . 13

3. Legal Proceedings. . . . . . . . . . . . . . . . . . . . . . 14

4. Submission of Matters to a Vote of Security Holders . . . . 14

Executive Officers of the Registrant . . . . . . . . . . . . 24

PART II

5. Market for the Registrant's Common Equity
and Related Shareholder Matters . . . . . . . . . . . . . 25

6. Selected Financial Data . . . . . . . . . . . . . . . . . . 26

7. Management's Discussion and Analysis of Financial
Condition and Results of Operations . . . . . . . . . . . 28

7A. Quantitative and Qualitative Disclosures About Market Risk. . 31

8. Financial Statements and Supplementary Data . . . . . . . . 31

9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure . . . . . . . . . . . 31

PART III

10. Directors and Executive Officers of the Registrant . . . . . 32

11. Executive Compensation . . . . . . . . . . . . . . . . . . . 32

12. Security Ownership of Certain Beneficial Owners and
Management . . . . . . . . . . . . . . . . . . . . . . . . 32

13. Certain Relationships and Related Transactions . . . . . . . 32

PART IV

14. Exhibits, Financial Statements, Schedules and Reports on
Form 8-K . . . . . . . . . . . . . . . . . . . . . . . . . 33



3

PART I
------

FORWARD-LOOKING STATEMENTS
--------------------------


This annual report on Form 10-K, together with other statements and information
publicly disseminated by Kimco Realty Corporation (the "Company"or "Kimco")
contains certain forward-looking statements within the meaning of Section 27A of
the Securities Act of 1933, as amended, and Section 21E of the Securities
Exchange Act of 1934, as amended. The Company intends such forward-looking
statements to be covered by the safe harbor provisions for forward-looking
statements contained in the Private Securities Litigation Reform Act of 1995 and
include this statement for purposes of complying with these safe harbor
provisions. Forward-looking statements, which are based on certain assumptions
and describe our future plans, strategies and expectations, are generally
identifiable by use of the words "believe," "expect," "intend," "anticipate,"
"estimate," "project" or similar expressions. You should not rely on
forward-looking statements since they involve known and unknown risks,
uncertainties and other factors which are, in some cases, beyond the Company's
control and which could materially affect actual results, performances or
achievements. Factors which may cause actual results to differ materially from
current expectations include, but are not limited to,(i) general economic and
local real estate conditions, (ii) financing risks, such as the inability to
obtain equity or debt financing on favorable terms, (iii) changes in
governmental laws and regulations, (iv) the level and volatility of interest
rates (v) the availability of suitable acquisition opportunities and (vi)
increases in operating costs. Accordingly, there is no assurance that the
Company's expectations will be realized.

Item 1. Business
- -----------------

General Kimco Realty Corporation is one of the nation's largest owners and
operators of neighborhood and community shopping centers. As of March 1, 2000,
the Company's portfolio was comprised of 473 property interests including 405
neighborhood and community shopping center properties, two regional malls, 55
retail store leases, five parcels of undeveloped land, one distribution center
and five projects under development comprising a total of approximately 62.0
million square feet of leasable space located in 41 states. The Company's
portfolio includes 29 shopping center properties comprising 5.4 million square
feet (the "KIR Portfolio") relating to the Kimco Income REIT ("KIR"), a joint
venture arrangement with institutional investors established for the purpose of
investing in high quality retail properties financed primarily with individual
non-recourse mortgage debt (See Recent Developments - Investment in Kimco Income
REIT ("KIR")). The Company believes its portfolio of neighborhood and community
shopping center properties is the largest (measured by gross leasable area,
"GLA") currently held by any publicly-traded real estate investment trust
("REIT"). The Company is a self-administered REIT and manages its properties
through present management, which has owned and operated neighborhood and
community shopping centers for more than 30 years. The Company has not engaged,
nor does it expect to retain, any REIT advisors in connection with the operation
of its properties.

The Company's executive offices are located at 3333 New Hyde Park Road, New Hyde
Park, New York 11042-0020 and its telephone number is (516)869-9000. Unless the
context indicates otherwise, the term the "Company" as used herein is intended
to include subsidiaries of the Company.

History The Company began operations through its predecessor, The Kimco
Corporation, which was organized in 1966 upon the contribution of several
shopping center properties owned by its principal stockholders. In 1973, these
principals formed the Company as a Delaware corporation, and in 1985, the
operations of The Kimco Corporation were merged into the Company. The Company
completed its initial public stock offering (the "IPO") in November 1991, and
reorganized as a Maryland corporation during 1994.

The Company's growth through its first fifteen years resulted primarily from the
ground-up development and construction of its shopping centers. By 1981, the
Company had assembled a portfolio of 77 properties that provided an established
source of income and positioned the Company for an expansion of its asset base.
At that time, the Company revised its growth strategy to focus on the
acquisition of existing shopping centers and creating value through the
redevelopment and re-tenanting of those properties. As a result of this
strategy, substantially all of the shopping centers added to the Company's
portfolio from 1981 through 1998 have been through the acquisition of existing
shopping centers.


4

During 1998, the Company, through a merger transaction, completed the
acquisition of The Price REIT, Inc., a Maryland corporation (the "Price
REIT")(See Note 3 of the Notes to Consolidated Financial Statements included in
this annual report on Form 10-K). Prior to the merger, Price REIT was a
self-administered and self-managed equity REIT that was focused on the
acquisition, development, management and redevelopment of large retail community
shopping center properties concentrated in the western part of the United
States. In connection with the Merger, the Company acquired interests in 43
properties, located in 17 states, consisting of 39 retail community centers, one
stand-alone retail warehouse, one project under development and two undeveloped
land parcels, containing approximately 8.0 million square feet of GLA. The
overall occupancy rate of the retail community centers was approximately 98%.
With the completion of the Price REIT merger, the Company expanded its presence
in certain western states including California, Arizona and Washington. In
addition, Price REIT had strong ground-up development capabilities. These
development capabilities, coupled with the Company's own construction management
expertise, provides the Company, on a selective basis, the ability to pursue
ground-up development opportunities.

During 1998 and 1999, the Company has capitalized on its enhanced ground-up
development capabilities and has commenced ground-up development projects
located in Bridgewater, NJ, Houston, TX, Cedar Hill, TX, San Antonio, TX,
Chandler, AZ, Miamisburg, OH and Dover, DE. During 1999, the Company completed
the Bridgewater, NJ development.

During 1998, the Company formed KIR, an entity in which the Company held a
99.99% limited partnership interest. KIR was established for the purpose of
investing in high quality properties financed primarily with individual
non-recourse mortgages. The Company believes that these properties are
appropriate for financing with greater leverage than the Company traditionally
uses. At the time of formation, the Company contributed 19 properties to KIR,
each encumbered by an individual non-recourse mortgage. During 1999, KIR sold a
significant interest in the partnership to institutional investors. As a result,
the Company holds, as of December 31, 1999, a 43.3% non-controlling limited
partnership interest in KIR and accounts for its investment in KIR under the
equity method of accounting (See Recent Developments - Investment in Kimco
Income REIT ("KIR") and Note 4 of the Notes to Consolidated Financial Statements
included in this annual report on form 10-K).

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, (ii)
the selective acquisition of established income-producing real estate properties
and properties requiring significant re-tenanting and redevelopment, primarily
in neighborhood and community shopping centers and (iii)the selective
acquisition of land parcels for the ground-up development of neighborhood and
community shopping centers in geographic regions in which the Company presently
operates. The Company will consider investments in other real estate sectors and
in geographic markets where it does not presently operate should suitable
opportunities arise.

The Company's neighborhood and community shopping center properties are designed
to attract local area customers and typically are anchored by a discount
department store, a supermarket or drugstore tenant offering day-to-day
necessities rather than high-priced luxury items. The Company may either
purchase or lease income-producing properties in the future, and may also
participate with other entities in property ownership through partnerships,
joint ventures or similar types of co-ownership. Equity investments may be
subject to existing mortgage financing and other indebtedness or such financing
or indebtedness may be incurred in connection with acquiring such investments.
Any such financing or indebtedness will have priority over the Company's equity
interest in such property. The Company may make loans to joint ventures in which
it may or may not participate in the future.

While the Company has historically held its properties for long-term investment,
and accordingly has placed strong emphasis on its ongoing program of regular
maintenance, periodic renovation and capital improvement, it is possible that
properties in the portfolio may be sold, in whole or in part, as circumstances
warrant, subject to REIT qualification rules.

The Company emphasizes equity real estate investments, but may, at its
discretion, invest in mortgages, other real estate interests and other
investments. The mortgages in which the Company may invest may be either first
mortgages, junior mortgages or other mortgage-related securities.



5

The Company may legally invest in the securities of other issuers, for the
purpose, among others, of exercising control over such entities, subject to the
gross income and asset tests necessary for REIT qualification. The Company may,
on a selective basis, acquire all or substantially all securities or assets of
other REITs or similar entities where such investments would be consistent with
the Company's investment policies. In any event, the Company does not intend
that its investments in securities will require it to register as an "investment
company" under the Investment Company Act of 1940.

The Company seeks to reduce its operating and leasing risks through
diversification achieved by the geographic distribution of its properties and a
large tenant base. At December 31, 1999, the Company's single largest
neighborhood and community shopping center, excluding the KIR Portfolio,
accounted for only 1.4% of the Company's annualized base rental revenues and
only 1.0% of the Company's total shopping center GLA. At December 31, 1999, the
Company's five largest tenants, excluding the KIR Portfolio, include Kmart
Corporation, Kohl's, Ames, The Home Depot and TJX Companies, which represent
approximately 13.8%, 2.8%, 2.5%, 2.4% and 1.8%, 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, 1999, the Company had a debt to total market capitalization ratio
of approximately 34%.

The Company has authority to offer shares of capital stock or other senior
securities in exchange for property and to repurchase or otherwise reacquire its
common stock or any other securities and may engage in such activities in the
future. At all times, the Company intends to make investments in such a manner
as to be consistent with the requirements of the Internal Revenue Code of 1986,
as amended (the "Code"), to qualify as a REIT unless, because of circumstances
or changes in the Code (or in Treasury Regulations), the Board of Directors
determines that it is no longer in the best interests of the Company to qualify
as a REIT.

The Company's policies with respect to the aforementioned activities may be
reviewed and modified from time to time by the Company's Board of Directors
without the vote of the Company's 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, real estate companies, financial institutions and other
investors that compete with the Company in seeking properties for acquisition
and tenants who will lease space in these properties.

Capital Resources Since the completion of the Company's IPO in 1991, the
Company has utilized the public debt and equity markets as its principal source
of capital. Since the IPO, the Company has completed additional offerings of its
public unsecured debt and equity, raising in the aggregate over $2.0 billion for
the purposes of repaying indebtedness, acquiring interests in neighborhood and
community shopping centers and for expanding and improving properties in the
portfolio.

During August 1998, the Company established a $215 million, unsecured revolving
credit facility, which is scheduled to expire in August 2001. This credit
facility, which replaced both the Company's $100 million unsecured revolving
credit facility and $150 million interim credit facility, has made available
funds to both finance the purchase of properties and meet any short-term working
capital requirements. As of December 31, 1999 there were no borrowings
outstanding under the Company's unsecured revolving credit facility.

During November 1999, the Company established a $52 million unsecured term loan
facility, which is scheduled to expire in November 2000. This credit facility
was established to finance the purchase of properties and for general corporate
purposes.

The Company has also implemented a $200 million medium-term notes program (the
"MTN program") pursuant to which it may from time to time offer for sale its
senior unsecured debt for any general corporate purposes, including (i) funding
specific liquidity requirements in its business, including property
acquisitions, development and redevelopment costs, and (ii) managing the
Company's debt maturities. (See Note 8 of the Notes to Consolidated Financial
Statements included in this annual report on Form 10-K.)



6

In addition to the public debt and equity markets as capital sources, the
Company may, from time to time, obtain mortgage financing on selected
properties. As of December 31, 1999, the Company had over 350 unencumbered
property interests in its portfolio.

During August 1998, the Company filed a shelf registration on Form S-3 for up to
$750 million of debt securities, preferred stock, depositary shares, common
stock and common stock warrants. As of March 1, 2000, the Company had
approximately $393.2 million available for issuance under this shelf
registration statement.

It is management's intention that the Company continually have access to the
capital resources necessary to expand and develop its business. Accordingly, the
Company may seek to obtain funds through additional equity offerings, unsecured
debt financings and/or mortgage financings in a manner consistent with its
intention to operate with a conservative debt capitalization policy.

The Company anticipates that cash flows from operations will continue to provide
adequate capital to fund its operating and administrative expenses, regular debt
service obligations and the payment of dividends in accordance with REIT
requirements in both the short-term and long-term. In addition, the Company
anticipates that cash on hand, availability under its revolving credit facility,
issuance of equity and public debt, as well as other debt and equity
alternatives, will provide the necessary capital required by the Company. Cash
flow from operations increased to $237.2 million for the year ended December 31,
1999, as compared to $158.7 million for the year ended December 31, 1998.

Inflation and Other Business Issues Many of the Company's leases contain
provisions designed to mitigate the adverse impact of inflation. Such provisions
include clauses enabling the Company to receive payment of additional rent
calculated as a percentage of tenants' gross sales above predetermined
thresholds ("Percentage Rents"), which generally increase as prices rise, and/or
escalation clauses, which generally increase rental rates during the terms of
the leases. Such escalation clauses include increases in the consumer price
index or similar inflation indices. In addition, many of the Company's leases
are for terms of less than 10 years, which permits the Company to seek to
increase rents upon renewal to market rates. Most of the Company's leases
require the tenant to pay an allocable share of operating expenses, including
common area maintenance costs, real estate taxes and insurance, thereby reducing
the Company's exposure to increases in costs and operating expenses resulting
from inflation. The Company periodically evaluates its exposure to short-term
interest rates and will, from time to time, enter into interest rate protection
agreements which mitigate, but do not eliminate, the effect of changes in
interest rates on its floating-rate debt.

As an owner of real estate, the Company is subject to risks arising in
connection with the underlying real estate, including, among other factors,
defaults or nonrenewal of tenant leases, the financial condition and stability
of tenants, retailing trends, environmental matters and changes in real estate
and zoning laws. The success of the Company also depends upon trends in the
economy, including, but not limited to, interest rates, the availability of
capital, either in the form of debt or equity, on satisfactory terms, 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 Margate, Orlando and Tampa, Florida; Philadelphia, Pennsylvania;
Dallas, Texas; Dayton and Cleveland, Ohio; Lisle and Chicago, Illinois;
Charlotte, North Carolina; Phoenix and Tucson, Arizona and Los Angeles,
California. A total of 222 persons are employed at the Company's executive and
regional offices.

The Company's regional offices are generally staffed by a manager and the
support personnel necessary to both function as local representatives for
leasing and promotional purposes and to complement the corporate office efforts
to ensure that property inspection and maintenance objectives are achieved. The
regional offices are important in reducing the time necessary to respond to the
needs of the Company's tenants. Leasing and maintenance personnel from the
corporate office also conduct regular inspections of each shopping center.

The Company also employs a total of 59 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


7

systems are continually expanded and enhanced by the Company and reflect a
commitment to quality management and tenant relations. The Company has
integrated an advanced mid-range computer with personal computer technology,
creating a management information system that facilitates the development of
property cash flow budgets, forecasts and related management information.

Qualification as a REIT The Company has elected, commencing with its taxable
year which began January 1, 1992, to qualify as a REIT under Sections 856
through 860 of the Code. If, as the Company believes, it is organized and
operates in such a manner so as to qualify and remain qualified as a REIT under
the Code, the Company generally will not be subject to Federal income tax,
provided that distributions to its stockholders equal at least the amount of its
REIT taxable income as defined under the Code.

Recent Developments

Investment in Kimco Income REIT ("KIR") -

During 1998, the Company formed KIR, an entity in which the Company held a
99.99% limited partnership interest. KIR was established for the purpose of
investing in real estate that it believes would be more appropriately financed
through greater leverage than the Company traditionally uses. These properties
include, but are not limited to, fully developed properties with strong, stable
cash flows from credit-worthy retailers with long-term leases that have limited
near-term potential for growth through redevelopment or re-tenanting. The
Company initially identified and contributed 19 property interests to KIR which
met this criteria. Each of these properties was encumbered by an individual
non-recourse mortgage. On April 28, 1999, the Company entered into an agreement
whereby an institutional investor purchased a significant interest in KIR. Under
the terms of the agreement, the agreed equity value for the 19 shopping centers
previously contributed by the Company to KIR was approximately $107 million and
the Company agreed to contribute an additional $10 million for a total
investment of approximately $117 million. The institutional investor has
subscribed for up to $117 million of equity in KIR, of which approximately $107
million has been contributed as of December 31, 1999. During August 1999, KIR
admitted three additional limited partners. Each new partner entered into a
subscription agreement whereby they subscribed for an aggregate $35 million of
equity in KIR. At December 31, 1999 approximately $32 million of such
subscriptions had been contributed. As of December 31, 1999, KIR has
subscription agreements totaling approximately $269 million, of which
approximately $246 million has been contributed. As a result of these
transactions, the Company holds a 43.3% non-controlling limited partnership
interest in KIR and accounts for its investment in KIR under the equity method
of accounting.

During the period April 28, 1999 to December 31, 1999, KIR purchased ten
shopping center properties, in separate transactions, aggregating 2.2 million
square feet of GLA for approximately $218.3 million including the assumption of
approximately $36.1 million of mortgage debt. Four of these properties were
purchased from the Company for an aggregate purchase price of $70.1 million. As
of December 31, 1999, the KIR Portfolio is comprised of 29 shopping center
properties totaling 5.4 million square feet of GLA.

During May 1999, KIR obtained individual non-recourse, non-cross collateralized
ten-year fixed-rate first mortgages aggregating $52.6 million on four of its
properties. These mortgages bear interest at rates ranging from 7.57% to 7.72%
per annum. The net proceeds were used to finance the acquisition of various
shopping center properties.

Shopping Center Acquisitions -

During the year ended December 31, 1999, the Company and its affiliates acquired
interests in 35 shopping center properties located in 14 states (two of which
were subsequently sold to KIR in April 1999), comprising approximately 4.1
million square feet of GLA for an aggregate purchase price of approximately
$248.5 million, including the assumption of approximately $55.7 million of
mortgage debt encumbering the properties as follows:

In January 1999, the Company acquired Riverwalk Plaza located in South
Charleston, WV for a purchase price of approximately $13.5 million, including
the assumption of approximately $8.5 million of mortgage debt encumbering the
property. This shopping center is anchored by Kroger and TJ Maxx and contains
approximately 138,000 square feet of GLA.

Also in January 1999, the Company acquired, in separate transactions, Palm Plaza
and Magnolia Square shopping centers located in Temecula and San Ramon, CA,
respectively, for an aggregate purchase price of approximately $45.1 million.
Palm Plaza, consisting of approximately 340,000 square feet of GLA is anchored
by K-Mart and Food 4 Less. Magnolia Square, anchored by Super Crown Books, has
approximately 42,000 square feet of GLA. These two properties were subsequently
sold to KIR in April 1999.



8

In February 1999, the Company acquired two properties, in separate transactions,
for an aggregate purchase price of approximately $20.4 million. Located in
Downers Grove, IL, Downers Park Plaza is comprised of approximately 137,000
square feet of GLA and is anchored by Dominick's Market and Coomers Crafts.
Sharpstown Court, anchored by Office Depot contains approximately 84,000 square
feet of GLA, and is located in Houston, TX.

In March 1999 the Company acquired Southdale Shopping Center located in Des
Moines, IA for a purchase price of approximately $8.6 million including the
assumption of approximately $5.7 million in mortgage debt encumbering the
property. Southdale is anchored by Best Buy and Office Max and contains
approximately 143,000 square feet of GLA.

In April 1999, the Company, through its Kimco Select Investments affiliate,
acquired a Duane Reade shopping center located in Massapequa, NY containing
approximately 22,000 square feet of GLA for a purchase price of approximately
$3.6 million (See Recent Developments - Kimco Select Investments).

In May 1999, the Company acquired Acadiana Square for a purchase price of
approximately $7.8 million. This shopping center, located in Lafayette, LA, is
anchored by Linens n' Things and Petsmart and contains approximately 71,000
square feet of GLA.

On July 1, 1999, the Company exercised its option to acquire 13 shopping center
properties comprising 1.6 million square feet of GLA from KC Holdings, Inc. ("KC
Holdings"), an entity formed in connection with the Company's initial public
stock offering in November 1991. The properties were acquired for an aggregate
option price of approximately $39.8 million, paid $15.7 million in shares of the
Company's common stock (401,646 common shares issued at $39.00 per share) and
$24.1 million through the assumption of mortgage debt encumbering the
properties. Such mortgage debt was repaid during September 1999. The members of
the Company's Board of Directors who are not also shareholders of KC Holdings,
unanimously approved the Company's purchase of these 13 shopping center
properties (See Note 15 of the Notes to Consolidated Financial Statements
included in this annual report on Form 10-K).

During September 1999, Landmark Station, a shopping center anchored by Waccamaw
was purchased for approximately $6.0 million. This property is located in
Greensboro, SC and contains approximately 101,000 square feet of GLA.

In October 1999, the Company acquired a shopping center located in Houma, LA for
a purchase price of approximately $9.9 million. This shopping center has
approximately 99,000 square feet of GLA and is anchored by Old Navy and Office
Max.

In November 1999, the Company acquired The Center located in Stockton, CA for a
purchase price of approximately $16.9 million including the assumption of
approximately $8.4 million of mortgage debt encumbering the property. This
shopping center is anchored by Homebase and Office Club and contains
approximately 146,000 square feet of GLA. Also during November 1999, the Company
purchased Highland Ridge Plaza, a shopping center anchored by Biggs Foods for a
purchase price of approximately $7.7 million. This center is located in
Cincinnati, OH and contains approximately 169,000 square feet of GLA.

In November 1999, the Company acquired, in a series of transactions, nine
property interests, for an aggregate purchase price of approximately $57.1
million in connection with the Hechinger Stores bankruptcy process. The
properties are located in four states, containing an aggregate 0.8 million
square feet of GLA.

During December 1999, Regency Plaza, a shopping center located in Jacksonville,
FL was acquired for a purchase price of approximately $12.1 million including
the assumption of $9.0 million of mortgage debt encumbering the property. This
property contains approximately 204,000 square feet of GLA and is anchored by
Burlington Coat Factory, TJ Maxx and Office Max.

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 Developments and 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 1999,
the Company substantially completed the redevelopment and re-tenanting of
various shopping center properties. The Company expended approximately $24
million in connection with these major redevelopments and re-tenanting projects
during 1999. The Company is currently involved in redeveloping several other
shopping centers. The Company anticipates its capital commitment toward these
and other redevelopment projects will be approximately $30 million during 2000.



9

During the year ended December 31, 1999, the Company acquired one land parcel
and, through separate partnership investments, interests in two additional land
parcels for the ground-up development of shopping centers for an aggregate
purchase price of approximately $17.3 million.

During 1999, the Company was in progress on ground-up development projects
located in Bridgewater, NJ, Houston, TX, Cedar Hill, TX, San Antonio, TX,
Chandler, AZ, Miamisburg, OH and Dover, DE. These projects had substantial
pre-leasing prior to the commencement of construction. During 1999, the Company
expended approximately $80 million in connection with the purchase of land and
construction costs related to these projects. During 1999, the Company completed
the development of Bridgewater, NJ. The Company anticipates its capital
commitment toward these and other development projects will be approximately
$100 million during 2000.

Each development and redevelopment project represents an opportunity for the
Company to capitalize on its leasing, site planning, design and construction
expertise. 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 -

During the year ended December 31, 1999, the Company disposed of six shopping
center properties and a land parcel. Cash proceeds from four of these
dispositions aggregated approximately $6.1, million which approximated their
aggregate net book value.

During July 1999, the Company disposed of a shopping center property in New Port
Richey, FL. Cash proceeds from the disposition totaling $.5 million, together
with an additional $5.5 million cash investment, were used to acquire an
exchange shopping center property located in Greensboro, NC during September
1999. The sale of this property resulted in a gain of approximately $.3 million.

During October 1999, the Company, in separate transactions, disposed of a
shopping center property and a land parcel for an aggregate sale price of
approximately $4.5 million, which resulted in a gain of approximately $1.3
million.

Kimco Select Investments -

Kimco Select Investments, a New York general partnership ("Kimco Select"), was
formed in 1997 to provide the Company, through its 90% ownership interest, the
opportunity to make investments outside of its core neighborhood and community
shopping center business. Kimco Select is managed by David M. Samber, formerly
President and Chief Operating Officer of the Company, who owns the remaining 10%
ownership interest in Kimco Select.

Although potential investments may be largely retail-focused, Kimco Select may
invest in other asset categories. Kimco Select will focus on investments where
the intrinsic value in the underlying assets may provide potentially superior
returns relative to the inherent risk. These investments may be in the form of
direct ownership of real estate, mortgage loans, public and private debt and
equity securities that Kimco Select believes are undervalued, unoccupied
properties, properties leased to troubled or bankrupt tenants and other assets.

During 1999, Kimco Select (i) invested $17.3 million in a joint venture which
acquired a participation interest in a first and second mortgage collateralized
by 24 properties owned by a national retailer who has filed for bankruptcy
protection, (ii) acquired fee title to a property in Massapequa, NY anchored by
Duane Reade for a purchase price of approximately $3.6 million, (iii) acquired
two first mortgage participation interests collateralized by various convenience
stores for $6.7 million, (iv) invested $.7 million in a joint venture which owns
an office building and (v) invested $5.7 million in a joint venture which
acquired a parcel of land for the development of a shopping center in Henderson,
NV.

Kimco Select also has investments in (i) certain public bonds, (ii) joint
venture interests in two entities which own three office buildings in Miami, FL,
(iii) three retail properties in the Chicago, IL market and (iv) three
properties which are anchored by ambulatory care facilities with complementary
retail space. The aggregate net investment related to these various investments
is approximately $30 million.


10

Other Transactions -

During December 1998, the Company acquired a first mortgage interest on a
shopping center in Manhasset, NY for approximately $21 million. During April
1999, the Company acquired fee title to this property.

During October 1999, the Company invested approximately $4.9 million in a
partnership which is developing an office and retail center in Dover, DE. The
Company has a 50% interest in this partnership.

In October and December 1999, the Company acquired certain asset designation
rights from the bankrupt estate of Hechinger Stores, Inc. These rights, which
enabled the Company to direct the ultimate disposition of the fee or leasehold
positions held by the bankrupt estate, were utilized to facilitate the
acquisition of those positions by various national retailers. The Company was
awarded designation rights to 63 former Hechinger and Builders Square locations,
of which 57 have been designated to various retailers to date.

Financings -

Unsecured Debt. During February 1999, the Company issued $130 million of 6-7/8%
fixed-rate Senior Notes due 2009 (the "Notes"). Interest on the Notes is payable
semi-annually in arrears. The Notes were sold at 99.85% of par value. Net
proceeds from the issuance totaling approximately $128.9 million, after related
transaction costs of approximately $.9 million, were used, in part, to repay
$100 million floating-rate senior notes that matured during February 1999 and
for general corporate purposes.

During October and December 1999, the Company issued an aggregate $100 million
of fixed-rate unsecured medium-term notes (the "October and December MTNs")
under its MTN program. The October and December MTNs mature in October 2004 and
December 2007, respectively, and bear interest at 7.62% and 7.90% per annum,
respectively. The proceeds were used to finance the acquisition of various
shopping center properties and for general corporate purposes.

During November 1999, the Company entered into an unsecured term loan for an
aggregate $52 million. The term loan bears interest at Libor plus .70% per annum
and matures in November 2000. The proceeds were used to finance the acquisition
of various shopping center properties and for general corporate purposes.

Mortgage Debt. During 1999, the Company obtained non-recourse, non-cross
collateralized fixed rate first mortgage financing aggregating approximately
$28.7 million on five of its properties. The mortgages bear interest at rates
ranging from 7.00% to 8.25% per annum.

Credit Facility. On August 21, 1998, the Company established a $215 million
unsecured revolving credit facility (the "Credit Facility") with a group of
banks. The Credit Facility is scheduled to expire in August 2001. Under the
terms of the Credit Facility, funds may be borrowed for general corporate
purposes, including (i) funding property acquisitions and (ii) development and
redevelopment costs. Interest on borrowings under the Credit Facility accrues at
a spread (currently .50%) to LIBOR, which fluctuates in accordance with changes
in the Company's senior debt ratings. This Credit Facility replaced the
Company's (i) $100 million unsecured revolving credit facility and (ii) $150
million interim credit facility.

Equity. During 1999, the Company issued 401,646 shares of common stock at $39.00
per share in connection with its exercise of its option to acquire 13 shopping
center properties from KC Holdings (See Note 15 of the Notes to Consolidated
Financial Statements included in this annual report on Form 10-K).

During December 1999, the Company purchased and retired 160,000 shares of its
common stock at a price of $31.75 per share, totaling approximately $5.1
million. The Company does not have a share repurchase program but acquired the
shares when it received an unsolicited offer to buy them from an institutional
investor.

KC Holdings, Inc.

To facilitate the Company's November 1991 IPO, 46 shopping center properties and
certain other assets, together with indebtedness related thereto, were
transferred to subsidiaries of KC Holdings. The Company, although having no
ownership interest in KC Holdings or its subsidiary companies, was granted
ten-year, fixed-price acquisition options which expire in November 2001 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, 1999, KC Holdings' subsidiaries had conveyed 27


11

shopping center properties back to the Company and had disposed of ten
additional centers in transactions with third parties. The members of the
Company's Board of Directors who are not also shareholders of KC Holdings
unanimously approved the purchase of each of the 27 shopping centers that have
been reacquired by the Company from KC Holdings. (See Notes 11 and 15 of the
Notes to Consolidated Financial Statements included in this annual report on
Form 10-K.) The Company manages five of KC Holdings' remaining nine shopping
center properties pursuant to a management agreement. KC Holdings' other four
shopping center properties are managed by unaffiliated joint venture partners.

At December 31, 1999, the Company holds 10-year acquisition options which expire
in November 2001 to reacquire interests in the remaining nine shopping center
properties owned by KC Holdings' subsidiaries. The option exercise prices are
fixed and payable in shares of the Company's common stock or, in the event
payment in the form of common stock could jeopardize the Company's status as a
REIT, an equivalent value in cash. If the Company exercises its options to
acquire all the remaining shopping center properties, the maximum aggregate
amount payable to KC Holdings would be approximately $5.3 million, or
approximately 157,000 shares of the Company's common stock (assuming shares
valued at the closing price on the NYSE of $33.875 per share as of December 31,
1999). 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 nine shopping center properties subject to the acquisition options are held
in seven subsidiaries of KC Holdings. Four of the properties, which are owned in
two separate joint ventures and managed by unaffiliated joint venture partners,
are held by two subsidiaries, and the remaining five shopping center properties
are each held by separate subsidiaries. The Company may exercise its acquisition
options separately with respect to each subsidiary.

The acquisition options may be exercised by either (i) a majority of the
Company's directors who are not also stockholders of KC Holdings, provided that
the pro forma annualized net cash flows of the properties to be acquired exceed
the dividend yield on the shares issued to exercise each option, or (ii) a
majority of the Company's stockholders who are not also stockholders of KC
Holdings.

KC Holdings' subsidiaries may sell any of the properties subject to the
acquisition options to any third party unaffiliated with KC Holdings or its
stockholders, provided that KC Holdings provides the Company with a 30-day right
of first refusal notice with regard to such sale. KC Holdings may cause such a
selling subsidiary to distribute any sale proceeds to KC Holdings or its
stockholders, provided that the option exercise price with respect to such
subsidiary is reduced by the amount that is distributed, and further provided
that no amount may be distributed so as to cause the option exercise price for
any subsidiary to be reduced to less than $1.

Each of KC Holdings' subsidiaries may pay dividends to KC Holdings to the extent
of net operating cash flow. In addition, any KC Holdings subsidiary may make
distributions to KC Holdings in excess of net operating cash flow, provided that
the option exercise price with respect to such subsidiary is reduced by the
amount of such distribution, and further provided that no amount may be
distributed so as to cause the option exercise price for any subsidiary to be
reduced to less than $1. KC Holdings may increase the indebtedness in its
subsidiaries for the purpose of improving, maintaining, refinancing or operating
the related shopping center properties. Such indebtedness may include borrowings
from the stockholders of KC Holdings.

In the event of a complete casualty or a condemnation of a property held by any
of KC Holdings' subsidiaries, the acquisition option will terminate with respect
to such property and the option shall continue to be effective with respect to
any other properties held by such subsidiary.

Each of KC Holdings' subsidiaries has agreed with the Company that it will
engage in no activities other than in connection with the ownership, maintenance
and improvement of the properties that it owns and only to the extent that the
Company could engage in such activities without receiving or earning
non-qualifying income (in excess of certain limits) under the REIT provisions of
the Code or without otherwise impairing the Company's status as a REIT. In
addition, KC Holdings has covenanted not to engage in any other real


12

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, Class C Depositary Shares and Class D Depositary Shares are traded on
the NYSE under the trading symbols "KIM", "KIMprA", "KIMprB", "KIMprC" and
"KIMprD", respectively.

Item 2. Properties

Real Estate Portfolio As of January 1, 2000 the Company's real estate
portfolio was comprised of approximately 62.0 million square feet of GLA in 404
neighborhood and community shopping center properties, two regional malls, 58
retail store leases, five parcels of undeveloped land, one distribution center
and five projects under development, located in 41 states. The Company's
portfolio includes 29 shopping center properties comprising approximately 5.4
million square feet of GLA relating to the KIR Portfolio. Neighborhood and
community shopping centers comprise the primary focus of the Company's current
portfolio, representing approximately 98% of the Company's total shopping center
GLA. As of January 1, 2000, approximately 92.1% of the Company's neighborhood
and community shopping center space (excluding the KIR Portfolio) was leased,
and the average annualized base rent per leased square foot of the neighborhood
and community shopping center portfolio (excluding the KIR Portfolio) was $7.87.
As of January 1, 2000, the KIR Portfolio was 98% leased with an average
annualized base rent per leased square foot of $10.48.

The Company's neighborhood and community shopping center properties, generally
owned and operated through subsidiaries or joint ventures, had an average size
of approximately 138,000 square feet as of January 1, 2000. The Company retains
its shopping centers for long-term investment and consequently pursues a program
of regular physical maintenance together with major renovations and refurbishing
to preserve and increase the value of its properties. These projects usually
include renovating existing facades, installing uniform signage, resurfacing
parking lots and enhancing parking lot lighting. During 1999, the Company
capitalized approximately $6.3 million in connection with these property
improvements.

The Company's neighborhood and community shopping centers (including the KIR
Portfolio) 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 Kmart Corporation, Kohl's, Ames, The Home Depot,
WalMart, TJX Companies, Toys/Kids R' Us, Shopko, A & P and Costco.

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 1,800 of the Company's 4,538 leases also contain provisions
requiring the payment of additional rent calculated as a percentage of tenants'
gross sales above predetermined thresholds. Percentage Rents accounted for
approximately 2% of the Company's revenues from rental property for the year
ended December 31, 1999.

Minimum base rental revenues and operating expense reimbursements accounted for
approximately 98% of the Company's total revenues from rental property for the
year ended December 31, 1999. The Company's management believes that the average
base rent per square foot for many of the Company's existing leases is generally
lower than the prevailing market-rate base rents in the geographic regions where
the Company operates, reflecting the potential for future growth.



13

The Company has been able to capitalize on the below market-rate leases in its
existing shopping center portfolio to obtain increases in rental revenues
through the renewal of leases or strategic re-tenanting of space. For the period
January 1, 1999 to December 31, 1999 excluding the effects of (i) the transfer
of 21 properties to the KIR Portfolio at $10.25 per leased square foot in April
1999 and (ii) 1999 acquisitions at $7.46 per leased square foot, the Company
increased the average base rent per leased square foot on its portfolio of
neighborhood and community shopping centers (excluding the KIR Portfolio) from
$7.81 to $7.90, an increase of $.09 per square foot, which was attributed to
general leasing activity within the existing portfolio. The effect of 1999
acquisitions decreased the overal rent per leased square foot by $.03, thus
bringing the average rent per leased square foot to $7.87 as of December 31,
1999. The average annual base rent per leased square foot for new leases
(excluding the KIR Portfolio) executed in 1999 was $8.42.

The Company seeks to reduce its operating and leasing risks through geographic
and tenant diversity. No single neighborhood and community shopping center
(excluding the KIR Portfolio) accounted for more than 1.0% of the Company's
total shopping center GLA or more than 1.4% of total annualized base rental
revenues as of December 31, 1999. The Company's five largest tenants (excluding
the KIR Portfolio) include Kmart Corporation, Kohl's, Ames, The Home Depot and
TJX Companies, which represent approximately 13.8%, 2.8%, 2.5%, 2.4% and 1.8%,
respectively, of the annualized base rental revenues at December 31, 1999. The
Company maintains an active leasing and capital improvement program that,
combined with the high quality of the locations, has made, in management's
opinion, the Company's properties attractive to tenants.

The Company's management believes its experience in the real estate industry and
its relationships with numerous national and regional tenants gives it an
advantage in an industry where ownership is fragmented among a large number of
property owners.

Retail Store Leases In addition to neighborhood and community shopping
centers, as of January 1, 2000, the Company's had interests in retail store
leases totaling approximately 5.2 million square feet of anchor stores in 58
neighborhood and community shopping centers located in 24 states. As of January
1, 2000, approximately 94.0% of the space in these anchor stores had been sublet
to retailers that lease the stores under net lease agreements providing for
average annualized base rental payments to us of $4.15 per square foot. Our
average annualized base rental payments under our retail store leases to the
land owners of such subleased stores is approximately $2.77 per square foot. The
average remaining primary term of our retail store leases (and, similarly, the
remaining primary terms of our sublease agreements with the tenants currently
leasing such space) is approximately 4 years, excluding options to renew the
leases for terms which generally range from 5 to 25 years.

Ground-Leased Properties The Company has 55 shopping center properties that
are subject to long-term ground leases where a third party owns and has leased
the underlying land to the Company (or an affiliated joint venture) to construct
and/or operate a shopping center. The Company or the joint venture pays rent for
the use of the land and generally is responsible for all costs and expenses
associated with the building and improvements. At the end of these long-term
leases, unless extended, the land together with all improvements revert to the
land owner.

Undeveloped Land The Company owns certain unimproved land tracts that it
intends to develop as new shopping centers (See Recent Developments - Property
Developments and Redevelopments) and owns 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 15 to 23 sets forth more specific information with respect to
each of the Company's shopping center properties.

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.

14

PROPERTY CHART