10-Q: Quarterly report [Sections 13 or 15(d)]

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Form 10-Q

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2001

OR

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to
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Commission file number 1-10899
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Kimco Realty Corporation
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(Exact name of registrant as specified in its charter)

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


3333 New Hyde Park Road, New Hyde Park, NY 11042
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(Address of principal executive offices - zip code)

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


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(Former name, former address and former fiscal year,
if changed since last report)


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
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APPLICABLE ONLY TO CORPORATE ISSUERS:
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Indicate the number of shares outstanding of each of the issuer's
classes of common stock as of the latest practicable date.

63,556,574 shares outstanding as of April 30, 2001.


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PART I


FINANCIAL INFORMATION

Item 1. Financial Statements

Condensed Consolidated Financial Statements -
Condensed Consolidated Balance Sheets as of March 31, 2001 and December
31, 2000.

Condensed Consolidated Statements of Income for the Three Months Ended
March 31, 2001 and 2000.

Condensed Consolidated Statements of Comprehensive Income for the Three
Months Ended March 31, 2001 and 2000.

Condensed Consolidated Statements of Cash Flows for the Three Months Ended
March 31, 2001 and 2000.

Notes to Condensed Consolidated Financial Statements.

Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations

The following discussion should be read in conjunction with the
accompanying Condensed Consolidated Financial Statements and Notes thereto.
These unaudited financial statements include all adjustments which are, in the
opinion of management, necessary to reflect a fair statement of the results for
the interim periods presented, and all such adjustments are of a normal
recurring nature.

Results of Operations
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Revenues from rental property increased $9.2 million or 8.2% to $121.6
million for the three months ended March 31, 2001, as compared with $112.4
million for the corresponding quarter ended March 31, 2000. This increase
resulted primarily from the combined effect of (i) acquisitions throughout
calendar year 2000 (12 shopping center properties) providing incremental
revenues of $3.7 million, as compared to the corresponding three month period in
2000 and (ii) the completion of certain development and redevelopment projects,
new leasing and re-tenanting within the portfolio at improved rental rates,
offset by sales of certain properties throughout 2000 and 2001, providing net
incremental revenues of approximately $5.5 million.

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Rental property expenses, including depreciation and amortization,
increased approximately $6.6 million or 9.7% to $74.2 million for the three
months ended March 31, 2001, as compared with $67.6 million for the
corresponding quarter ended March 31, 2000. The rental property expense
components of real estate taxes, operating and maintenance, and depreciation and
amortization increased $1.3 million, $3.6 million and $1.1 million,
respectively, for the three month period ended March 31, 2001, as compared with
the corresponding quarter in the preceding year. These rental property expense
increases are primarily due to property acquisitions, renovations within the
existing portfolio and increased snow removal costs.

The Company has a non-controlling limited partnership interest in Kimco
Income REIT ("KIR"), a limited partnership established to invest in high quality
retail properties financed primarily through the use of individual non-recourse
mortgages. Equity in income of KIR increased $0.6 million to $2.9 million for
the three months ended March 31, 2001, as compared with $2.3 million for the
corresponding period in 2000. This increase is primarily due to the Company's
increased capital investment in KIR. The additional capital investments received
by KIR from the Company and its other institutional partners were used to
purchase additional shopping center properties throughout calendar year 2000 and
during the three months ended March 31, 2001.

Other income, net increased $1.9 million for the three months ended
March 31, 2001, as compared to the same period in 2000. The net increase is
primarily the result of higher interest and dividend income related to the
Company's investment in certain marketable equity and debt securities.

Operating and administrative expenses increased approximately $1.6
million for the three months ended March 31, 2001, as compared to the same
period in 2000. The increase is due primarily to an increase in senior
management and staff levels and other personnel costs in connection with the
growth of the Company, including the issuance of a stock grant award to a
newly-appointed executive officer of the Company valued at approximately $1.1
million.

Effective January 1, 2001, the Company has elected taxable REIT
subsidiary status for its wholly-owned development subsidiary ("KDI"). KDI is
primarily engaged in the ground-up development of neighborhood and community
shopping centers and the subsequent sale thereof upon completion. During January
2001, KDI sold its recently completed project in Chandler, AZ for approximately
$32.5 million, which resulted in a net gain of approximately $3.5 million after
provision for income taxes of approximately $1.9 million.


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Net income for the three months ended March 31, 2001 and 2000 was $56.1
million and $48.7 million, respectively. On a diluted per share basis, net
income improved $0.09 for the three month period ended March 31, 2001, after
adjusting for the gain on sale of operating property during the three months
ended March 31, 2000. This improved performance reflects the combined effect of
property acquisitions, profits from KDI and internal growth from leasing
activity and the completion of certain redevelopment projects which strengthened
operating profitability.

Liquidity and Capital Resources
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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 $2.2 billion for the
purposes of, among other things, repaying indebtedness, acquiring interests in
neighborhood and community shopping centers, funding ground-up development
projects and for expanding and improving properties in the portfolio.

During August 2000, the Company established a $250.0 million unsecured
revolving credit facility, which is scheduled to expire in August 2003. This
credit facility, which replaced the Company's $215.0 million unsecured revolving
credit facility has made available funds to both finance the purchase of
properties and meet any short-term working capital requirements. As of March 31,
2001, there was $55.0 million outstanding under the credit facility.

The Company has also implemented a medium-term notes ("MTN") program
pursuant to which it may from time to time offer for sale its senior unsecured
debt for any general corporate purposes, including (i) funding specific
liquidity requirements in its business, including property acquisitions,
development and redevelopment costs and (ii) managing the Company's debt
maturities.

In addition to the public equity and debt markets as capital sources,
the Company may, from time to time, obtain mortgage financing on selected
properties. As of March 31, 2001, the Company had over 350 unencumbered property
interests in its portfolio.

During 1998, the Company filed a shelf registration statement 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 31, 2001, the
Company had approximately $106.7 million available for issuance under this shelf
registration statement.

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In connection with its intention to continue to qualify as a REIT for
Federal income tax purposes, the Company expects to continue paying regular
dividends to its stockholders. These dividends will be paid from operating cash
flows which are expected to increase due to property acquisitions and growth in
rental revenues in the existing portfolio and from other sources. Since cash
used to pay dividends reduces amounts available for capital investment, the
Company generally intends to maintain a conservative dividend payout ratio,
reserving such amounts as it considers necessary for the expansion and
renovation of shopping centers in its portfolio, repayment of debt, the
acquisition of interests in new properties and other investments as suitable
opportunities arise, and such other factors as the Board of Directors considers
appropriate.

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
flows from operations increased to $73.2 million for the three months ended
March 31, 2001 as compared to $63.8 million for the corresponding period ended
March 31, 2000.

Effects of Inflation
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Many of the Company's leases contain provisions designed to mitigate
the adverse impact of inflation. Such provisions include clauses enabling the
Company to receive payment of additional rent calculated as a percentage of
tenants' gross sales above pre-determined thresholds, which generally increase
as prices rise, and/or escalation clauses, which generally increase rental rates
during the terms of the leases. Such escalation clauses often include increases
based upon changes in the consumer price index or similar inflation indices. In
addition, many of the Company's leases are for terms of less than 10 years,
which permits the Company to seek to increase rents to market rates upon
renewal. Most of the Company's leases require the tenant to pay an allocable
share of operating expenses, including common area maintenance costs, real
estate taxes and insurance, thereby reducing the Company's exposure to increases
in costs and operating expenses resulting from inflation. The Company
periodically evaluates its exposure to short-term interest rates and will, from
time to time, enter into

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interest rate protection agreements which mitigate, but do not eliminate, the
effect of changes in interest rates on its floating-rate debt.

New Accounting Pronouncement
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Effective January 1, 2001, the Company adopted Statement of Financial
Accounting Standards No. 133, Accounting for Derivative Instruments and Hedging
Activities ("FASB No. 133"), as amended. In accordance with the provisions of
FASB No. 133, the Company's interest-rate swap agreement on its $110.0 million
floating-rate MTN has been designated and qualified as a cash flow hedge. The
Company has determined that this swap agreement is highly effective in
offsetting future variable interest cash flows related to the Company's debt
portfolio. The fair value of the swap agreement was recorded on the balance
sheet in other liabilities in the amount of approximately $3.2 million with a
corresponding amount to accumulated other comprehensive loss, a component of
stockholders' equity. The Company does not anticipate any reclassifications to
earnings from accumulated other comprehensive loss over the next 12 months, with
adjustments during the year related to changes in the fair value of the related
swap agreement. Currently, the Company does not have any other financial
contracts, which contain embedded derivatives or fair value hedge relationships,
which are within the scope of FASB No. 133.

Forward-looking Statements
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This quarterly report on Form 10-Q, together with other statements and
information publicly disseminated by the Company contains certain
forward-looking statements within the meaning of Section 27A of the Securities
Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934,
as amended. The Company intends such forward-looking statements to be covered by
the safe harbor provisions for forward-looking statements contained in the
Private Securities Litigation Reform Act of 1995 and include this statement for
purposes of complying with these safe harbor provisions. Forward-looking
statements, which are based on certain assumptions and describe the Company's
future plans, strategies and expectations, are generally identifiable by use of
the words "believe," "expect," "intend," "anticipate," "estimate," "project" or
similar expressions. You should not rely on forward-looking statements since
they involve known and unknown risks, uncertainties and other factors which are,
in some cases, beyond the Company's control and which could materially affect
actual results, performances or achievements. Factors which may cause actual
results to differ materially from current expectations include, but are not
limited to, (i) general economic and local real estate conditions, (ii)
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

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operating costs. Accordingly, there is no assurance that the Company's
expectations will be realized.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

As of March 31, 2001, the Company had approximately $276.9 million of
floating-rate debt outstanding, including $55.0 million on its unsecured line of
credit. The interest rate risk on $110.0 million of such debt has been mitigated
through the use of an interest rate swap agreement (the "Swap") with a major
financial institution. The Company is exposed to credit risk in the event of
non-performance by the counter party to the Swap. The Company believes it
mitigates its credit risk by entering into the Swap with a major financial
institution.

The Company believes the interest rate risk represented by the
remaining $166.9 million of floating-rate debt is not material to the Company or
its overall capitalization.

The Company has not, and does not plan to, enter into any derivative
financial instruments for trading or speculative purposes. As of March 31, 2001,
the Company had no other material exposure to market risk.



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KIMCO REALTY CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share information)