10-K: Annual report [Section 13 and 15(d), not 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, 2003
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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
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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 of incorporation) (I.R.S. Employer Identification No.)

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

Registrant's telephone number, including area code (516) 869-9000 Securities
registered pursuant to Section 12(b) of the Act:




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


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


Depositary Shares, each representing one-
tenth of a share of 6.65% Class F
Cumulative Redeemable Preferred Stock,
par value $1.00 per share. New York Stock Exchange
- -------------------------- ------------------------



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

None


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

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

Indicate by check mark whether the Registrant is an accelerated
filer (as defined in rule 12b-2 of the Act.) Yes X No
--- ---

The aggregate market value of the voting stock held by
non-affiliates of the Registrant was approximately $4.4 billion based upon the
closing price on the New York Stock Exchange for such stock on January 30, 2004.

(APPLICABLE ONLY TO CORPORATE REGISTRANTS)
Indicate the number of shares outstanding of each of the
Registrant's classes of common stock, as of the latest practicable date.

110,745,713 shares as of January 30, 2004.


1

DOCUMENTS INCORPORATED BY REFERENCE


Part III incorporates certain information by reference to the Registrant's
definitive proxy statement to be filed with respect to the Annual Meeting of
Stockholders expected to be held on May 20, 2004.

Index to Exhibits begins on page 49.

2
TABLE OF CONTENTS

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

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

2. Properties . . . . . . . . . . . . . . . . . . . . . . . . . 17

3. Legal Proceedings. . . . . . . . . . . . . . . . . . . . . . 19

4. Submission of Matters to a Vote of Security Holders . . . . 19

Executive Officers of the Registrant . . . . . . . . . . . . 28


PART II

5. Market for the Registrant's Common Equity
and Related Shareholder Matters . . . . . . . . . . . . . 30

6. Selected Financial Data . . . . . . . . . . . . . . . . . . 31

7. Management's Discussion and Analysis of Financial Condition and
Results of Operations. . . . . . . . . . . . . . . . . . . 33

7A. Quantitative and Qualitative Disclosures About Market Risk . 45

8. Financial Statements and Supplementary Data . . . . . . . . 46

9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure . . . . . . . . . . . . . . . . . 46

9A. Controls and Procedures . . . . . . . . . . . . . . . . . . 46



PART III

10. Directors and Executive Officers of the Registrant . . . . . 47

11. Executive Compensation . . . . . . . . . . . . . . . . . . . 47

12. Security Ownership of Certain Beneficial Owners and
Management . . . . . . . . . . . . . . . . . . . . . . . . 47

13. Certain Relationships and Related Transactions . . . . . . . 47

14. Principal Accountant Fees and Services . . . . . . . . . . . 47


PART IV

15. Exhibits, Financial Statements, Schedules and Reports on
Form 8-K . . . . . . . . . . . . . . . . . . . . . . . . . 48

3

PART I


FORWARD-LOOKING STATEMENTS

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

Item 1. Business

General Kimco Realty Corporation, a Maryland corporation, is one of the
nation's largest owners and operators of neighborhood and community shopping
centers. The Company is a self-administered real estate investment trust
("REIT") and manages its properties through present management, which has owned
and operated neighborhood and community shopping centers for over 40 years. The
Company has not engaged, nor does it expect to retain, any REIT advisors in
connection with the operation of its properties. As of February 5, 2004, the
Company's portfolio was comprised of 699 property interests including 620
neighborhood and community shopping center properties (including 26 property
interests related to the Company's Preferred Equity program), 36 retail store
leases, 33 ground-up development projects and ten parcels of undeveloped land
totaling approximately 102.6 million square feet of leasable space (including
3.9 million square feet related to the Company's Preferred Equity program and
4.9 million square feet projected for the ground-up development projects)
located in 41 states, Canada and Mexico. The Company's ownership interests in
real estate consist of its consolidated portfolio and in portfolios where the
Company owns an economic interest, such as; Kimco Income REIT ("KIR"), the
RioCan Venture ("RioCan Venture"), Kimco Retail Opportunity Portfolio ("KROP")
and other properties or portfolios where the Company also retains management
(See Recent Developments - Operating Real Estate Joint Venture Investments and
Note 8 of the Notes to Consolidated Financial Statements included in this annual
report on Form 10-K). The Company believes its portfolio of neighborhood and
community shopping center properties is the largest (measured by gross leasable
area ("GLA")) currently held by any publicly-traded REIT.

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

The Company's web site is located at http://www.Kimcorealty.com. On the
Company's web site you can obtain, free of charge, a copy of our annual report
on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and
amendments to those reports filed or furnished pursuant to Section 13(a) or
15(d) of the Exchange Act of 1934, as amended, as soon as reasonably practicable
after we file such material electronically with, or furnish it to, the
Securities and Exchange Commission (the "SEC").

History The Company began operations through its predecessor, The Kimco
Corporation, which was organized in 1966 upon the contribution of several
shopping center properties owned by its principal stockholders. In 1973, these
principals formed the Company as a Delaware corporation, and in 1985, the
operations of The Kimco Corporation were merged into the Company. The Company
completed its initial public stock offering (the "IPO") in November 1991, and
commencing with its taxable year which began January 1, 1992, elected to qualify
as a REIT in accordance with Sections 856 through 860 of the Internal Revenue
Code of 1986, as amended (the "Code"). In 1994, the Company reorganized as a
Maryland corporation.

4

The Company's growth through its first 15 years resulted primarily from the
ground-up development and construction of its shopping centers. By 1981, the
Company had assembled a portfolio of 77 properties that provided an established
source of income and positioned the Company for an expansion of its asset base.
At that time, the Company revised its growth strategy to focus on the
acquisition of existing shopping centers and creating value through the
redevelopment and re-tenanting of those properties. As a result of this
strategy, substantially all of the operating shopping centers added to the
Company's portfolio since 1981 have been through the acquisition of existing
shopping centers.

During 1998, the Company, through a merger transaction, completed the
acquisition of The Price REIT, Inc., a Maryland corporation, (the "Price REIT").
Prior to the merger, Price REIT was a self-administered and self-managed equity
REIT that was primarily focused on the acquisition, development, management and
redevelopment of large retail community shopping center properties concentrated
in the western part of the United States. In connection with the merger, the
Company acquired interests in 43 properties, located in 17 states. With the
completion of the Price REIT merger, the Company expanded its presence in
certain western states including California, Arizona and Washington. In
addition, Price REIT had strong ground-up development capabilities. These
development capabilities, coupled with the Company's own construction management
expertise, provides the Company, on a selective basis, the ability to pursue
ground-up development opportunities.

Also, during 1998, the Company formed KIR, an entity in which the Company held a
99.99% limited partnership interest. KIR was established for the purpose of
investing in high quality properties financed primarily with individual
non-recourse mortgages. The Company believes that these properties are
appropriate for financing with greater leverage than the Company traditionally
uses. At the time of formation, the Company contributed 19 properties to KIR,
each encumbered by an individual non-recourse mortgage. During 1999, KIR sold a
significant interest in the partnership to institutional investors. As of
December 31, 2003, the Company holds a 43.3% non-controlling limited partnership
interest in KIR and accounts for its investment in KIR under the equity method
of accounting. (See Recent Developments - Operating Real Estate Joint Venture
Investments and Note 8 of the Notes to Consolidated Financial Statements
included in this annual report on Form 10-K.)

In connection with the Tax Relief Extension Act of 1999 (the "RMA") which became
effective January 1, 2001, the Company is now permitted to participate in
activities which it was precluded from previously in order to maintain its
qualification as a REIT, so long as these activities are conducted in entities
which elect to be treated as taxable subsidiaries under the Code, subject to
certain limitations. As such, the Company, through its taxable REIT
subsidiaries, is engaged in various retail real estate related opportunities,
including (i) merchant building through its wholly-owned taxable REIT
subsidiary, Kimco Developers, Inc. ("KDI"), which is primarily engaged in the
ground-up development of neighborhood and community shopping centers and
subsequent sale thereof upon completion (see Recent Developments - Kimco
Developers, Inc. ("KDI")), (ii) retail real estate advisory and disposition
services which primarily focus on leasing and disposition strategies for real
estate property interests of both healthy and distressed retailers and (iii)
acting as an agent or principal in connection with tax deferred exchange
transactions. The Company will consider other investments through taxable REIT
subsidiaries should suitable opportunities arise.

During October 2001, the Company continued its geographical expansion by forming
the RioCan Venture with RioCan Real Estate Investment Trust ("RioCan", Canada's
largest publicly traded REIT measured by GLA) in which the Company has a
non-controlling 50% interest, to acquire retail properties and development
projects in Canada. The Company accounts for this investment under the equity
method of accounting (see Recent Developments - Operating Real Estate Joint
Venture Investments and Note 8 of the Notes to Consolidated Financial Statements
included in this annual report on Form 10-K.)

In addition, the Company continues to capitalize on its established expertise in
retail real estate by establishing other ventures in which the Company owns a
smaller equity interest and provides management, leasing and operational support
for those properties. The Company also provides preferred equity capital for
real estate entrepreneurs and provides real estate capital and advisory services
to both healthy and distressed retailers. The Company also makes selective
investments in secondary market opportunities where a security or other
investment is, in management's judgment, priced below the value of the
underlying real estate.

5

Investment and Operating Strategy The Company's investment objective has been
to increase cash flow, current income and, consequently, the value of its
existing portfolio of properties, and to seek continued growth through (i) the
strategic re-tenanting, renovation and expansion of its existing centers and
(ii) the selective acquisition of established income-producing real estate
properties and properties requiring significant re-tenanting and redevelopment,
primarily in neighborhood and community shopping centers in geographic regions
in which the Company presently operates. The Company will consider investments
in other real estate sectors and in geographic markets where it does not
presently operate should suitable opportunities arise.

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

In addition to property or equity ownership, the Company provides property
management services for fees relating to the management, leasing, operation,
supervision and maintenance of real estate properties.

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

The Company seeks to reduce its operating and leasing risks through
diversification achieved by the geographic distribution of its properties and a
large tenant base. At December 31, 2003, the Company's single largest
neighborhood and community shopping center, accounted for only 1.0% of the
Company's annualized base rental revenues and only 0.6% of the Company's total
shopping center GLA. At December 31, 2003, the Company's five largest tenants
were The Home Depot, Kmart Corporation, Kohl's, Royal Ahold and TJX Companies,
which represent approximately 3.0%, 2.9%, 2.8%, 2.6% and 2.5%, respectively, of
the Company's annualized base rental revenues, including the proportionate share
of base rental revenues from properties in which the Company has less than a
100% economic interest.

In connection with the RMA, which became effective January 1, 2001, the Company
has expanded its investment and operating strategy to include new retail real
estate related opportunities which the Company was precluded from previously in
order to maintain its qualification as a REIT. As such, the Company, has
established a merchant building business through its KDI subsidiary. KDI makes
selective acquisitions of land parcels for the ground-up development of
neighborhood and community shopping centers and subsequent sale thereof upon
completion. Additionally, the Company has developed a retail property solutions
business which specializes in real estate advisory and disposition services of
real estate controlled by both healthy and distressed and/or bankrupt retailers.
These services may include assistance with inventory and fixture liquidation in
connection with going-out-of-business sales. The Company may participate with
other entities in providing these advisory services through partnerships, joint
ventures or other co-ownership arrangements. The Company, as a regular part of
its investment strategy, will continue to actively seek investments for its
taxable REIT subsidiaries.

The Company emphasizes equity real estate investments including preferred equity
investments, but may, at its discretion, invest in mortgages, other real estate
interests and other investments. The mortgages in which the Company may invest
may be either first mortgages, junior mortgages or other mortgage-related
securities. The Company provides mortgage financing to retailers with
significant real estate assets, in the form of lease- hold interests or fee
owned properties, where the Company believes the underlying value of the real
estate collateral is in excess of its loan balance. In addition, the Company
will acquire debt instruments at a discount in the secondary market where the
Company believes the real estate value of the enterprise is substantially
greater than the current value.

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

6

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

The Company's policies with respect to the aforementioned activities may be
reviewed and modified from time to time by the Company's Board of Directors
without the vote of the Company's stockholders.

Capital Strategy and Resources The Company intends to operate with and
maintain a conservative capital structure with a level of debt to total market
capitalization of approximately 50% or less. As of December 31, 2003, the
Company's level of debt to total market capitalization was 30%. In addition, the
Company intends to maintain strong debt service coverage and fixed charge
coverage ratios as part of its commitment to maintaining its investment-grade
debt ratings.

Since the completion of the Company's IPO in 1991, the Company has utilized the
public debt and equity markets as its principal source of capital for its
expansion needs. Since the IPO, the Company has completed additional offerings
of its public unsecured debt and equity, raising in the aggregate over $3.3
billion for the purposes of, among other things, repaying indebtedness,
acquiring interests in neighborhood and community shopping centers, funding
ground-up development projects, expanding and improving properties in the
portfolio and other investments.

During June 2003, the Company established a $500.0 million unsecured revolving
credit facility, which is scheduled to expire in August 2006. This credit
facility, which replaced the Company's $250.0 million unsecured revolving credit
facility, has made available funds to both finance the purchase of properties
and other investments and meet any short-term working capital requirements. As
of December 31, 2003, there was $45.0 million outstanding under this unsecured
revolving credit facility.

The Company also established a $400.0 million unsecured bridge facility, which
is scheduled to expire in September 2004, with an option to extend up to $150.0
million for an additional year. Proceeds from this facility were used to
partially fund the Mid-Atlantic Realty Trust transaction (see Recent
Developments - Mid-Atlantic Realty Trust Merger and Notes 3 and 13 of the Notes
to Consolidated Financial Statements included in this annual report on Form
10-K). As of December 31, 2003, there was $329.0 million outstanding on this
unsecured bridge facility.

The Company has a $300.0 million medium-term notes program (the "MTN program")
pursuant to which it may from time to time offer for sale its senior unsecured
debt for any general corporate purposes, including (i) funding specific
liquidity requirements in its business, including property acquisitions,
development and redevelopment costs, and (ii) managing the Company's debt
maturities. (See Note 13 of the Notes to Consolidated Financial Statements
included in this annual report on Form 10-K.)

In addition to the public debt and equity markets as capital sources, the
Company may, from time to time, obtain mortgage financing on selected properties
and construction loans to partially fund the capital needs of KDI, the Company's
merchant building subsidiary. As of December 31, 2003, the Company had over 400
unencumbered property interests in its portfolio representing over 88% of the
Company's net operating income.

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

During May 2003, the Company filed a shelf registration on Form S-3 for up to
$1.0 billion of debt securities, preferred stock, depositary shares, common
stock and common stock warrants. As of January 30, 2004, the Company had
approximately $609.7 million available for issuance under this shelf
registration statement.

7

The Company anticipates that cash flows from operations will continue to provide
adequate capital to fund its operating and administrative expenses, regular debt
service obligations and the payment of dividends in accordance with REIT
requirements in both the short-term and long-term. In addition, the Company
anticipates that cash on hand, free cash flow generated by the operating
business, availability under its revolving credit facility, issuance of equity
and public debt, as well as other debt and equity alternatives, will provide the
necessary capital required by the Company. Cash flow from operations was $308.6
million for the year ended December 31, 2003, as compared to $278.9 million for
the year ended December 31, 2002.

Competition As one of the original participants in the growth of the shopping
center industry and one of the nation's largest owners and operators of
neighborhood and community shopping centers, the Company has established close
relationships with a large number of major national and regional retailers and
maintains a broad network of industry contacts. Management is associated with
and/or actively participates in many shopping center and REIT industry
organizations. Notwithstanding these relationships, there are numerous regional
and local commercial developers, real estate companies, financial institutions
and other investors who compete with the Company for the acquisition of
properties and other investment opportunities and in seeking tenants who will
lease space in the Company's properties.

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

Risk Factors Set forth below are the material risks associated with the
purchase and ownership of the securities of the Company. As an owner of real
estate, the Company is subject to certain business risks arising in connection
with the underlying real estate, including, among other factors, (i) defaults of
major tenants due to bankruptcy, insolvency and/or general downturn in their
business which could reduce the Company's cash flow, (ii) major tenants not
renewing their leases as they expire or renewing at lower rental rates which
could reduce the Company's cash flow, (iii) changes in retailing trends which
could reduce the need for shopping centers, (iv) potential liability for future
or unknown environmental issues, (v) changes in real estate and zoning laws and
competition from other real estate owners which could make it difficult to lease
or develop properties, and (vi) the inability to acquire capital, either in the
form of debt or equity, on satisfactory terms to fund the Company's cash
requirements. The success of the Company also depends upon trends in the
economy, including, but not limited to, interest rates, income tax laws,
governmental regulations and legislation and population trends. Additionally,
the Company is subject to complex regulations related to its status as a REIT
and would be adversely affected if it failed to maintain its qualification as a
REIT.

Operating Practices Nearly all operating functions, including leasing, legal,
construction, data processing, maintenance, finance and accounting, are
administered by the Company from its executive offices in New Hyde Park, New
York. The Company believes it is critical to have a management presence in its
principal areas of operation and accordingly, the Company maintains regional
offices in various cities throughout the United States. A total of 405 persons
are employed at the Company's executive and regional offices.

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

8

The Company also employs a total of 18 persons at several of its larger
properties in order to more effectively administer its maintenance and security
responsibilities.

Management Information Systems Virtually all operating activities are
supported by a sophisticated computer software system designed to provide
management with operating data necessary to make informed business decisions on
a timely basis. These systems are continually expanded and enhanced by the
Company and reflect a commitment to quality management and tenant relations. The
Company has integrated an advanced mid-range computer with personal computer
technology, creating a management information system that facilitates the
development of property cash flow budgets, forecasts and related management
information.

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

In connection with the RMA, which became effective January 1, 2001, the Company
is now permitted to participate in activities which the Company was precluded
from previously in order to maintain its qualification as a REIT, so long as
these activities are conducted in entities which elect to be treated as taxable
subsidiaries under the Code, subject to certain limitations. The primary
activities conducted by the Company in its taxable REIT subsidiaries during 2003
include, but are not limited to, (i) the ground-up development of shopping
center properties and subsequent sale thereof upon completion (see Recent
Developments - Kimco Developers, Inc. ("KDI")), (ii) real estate advisory and
disposition services provided in connection with asset designation rights, and
(iii) acting as an agent or principal in connection with tax deferred exchange
transactions. As such, the Company was subject to federal and state income taxes
on the income from these activities.

Recent Developments

Mid-Atlantic Realty Trust Merger -

During June 2003, the Company and Mid-Atlantic Realty Trust ("Mid-Atlantic")
entered into a definitive merger agreement (the "Merger Agreement") whereby
Mid-Atlantic would merge with and into a wholly-owned subsidiary of the Company
(the "Merger" or "Mid-Atlantic Merger"). The Merger required the approval of
holders of 66 2/3% of Mid-Atlantic's outstanding shares. Subject to certain
conditions, limited partners in Mid-Atlantic's operating partnership were
offered the same cash consideration for each outstanding unit and offered the
opportunity (in lieu of cash) to exchange their interests for preferred units in
the operating partnership upon the closing of the transaction.

The shareholders of Mid-Atlantic approved the Merger on September 30, 2003 and
the closing occurred October 1, 2003. Mid-Atlantic shareholders received cash
consideration of $21.051 per share. In addition, more than 99.0% of the limited
partners in Mid-Atlantic's operating partnership elected to have their
partnership units redeemed for cash consideration equal to $21.051 per unit.

The transaction had a total value of approximately $700.0 million including the
assumption of approximately $216.0 million of debt. The Company funded the
transaction with available cash, a new $400.0 million bridge facility and funds
from its existing revolving credit facility.

In connection with the Merger, the Company acquired interests in 41 operating
shopping centers, one regional mall, two shopping centers under development and
eight other commercial assets. The properties have a gross leasable area of
approximately 5.7 million square feet of which approximately 95.0% of the
stabilized square footage is currently leased. The Company also acquired
approximately 80.0 acres of undeveloped land. The properties are located
primarily in Maryland, Virginia, New York, Pennsylvania, Massachusetts and
Delaware. The Company has tentative agreements for a number of the properties to
be allocated to its strategic co-investment programs. For financial reporting
purposes the Merger was accounted for under the purchase method of accounting in
accordance with Statement of Financial Accounting Standards No. 141, Business
Combinations, ("SFAS No. 141").

During December 2003, the Company disposed of the one regional mall and the
adjacent annex acquired in the Merger located in Bel Air, MD for a sales price
of approximately $71.0 million, which approximated its net book value.

9

Operating Properties -

Acquisitions -

During the year ended December 31, 2003, the Company acquired 14 operating
properties located in eight states and Mexico, comprising approximately 1.7
million square feet of GLA for an aggregate purchase price of approximately
$293.9 million. Details of these transactions are as follows:

During January 2003, the Company acquired a property located in Houston, TX,
comprising approximately 0.2 million square feet of GLA, for a purchase price of
approximately $26.3 million. During June 2003, the Company transferred this
property to KROP.

During February 2003, the Company acquired a property located in Nashau, NH,
comprising approximately 0.2 million square feet of GLA, for a purchase price of
approximately $25.7 million.

During March 2003, the Company acquired four operating properties located in
Queens, NY, comprising approximately 0.1 million square feet of GLA, for an
aggregate purchase price of approximately $19.9 million.

During April 2003, the Company acquired a property located in Sterling, VA,
comprising approximately 0.4 million square feet of GLA, for a purchase price of
approximately $58.7 million. During September 2003, the Company transferred this
property to KROP.

During June 2003, the Company acquired a 66.7% controlling interest in a
property located in New Braunfels, TX, comprising approximately 0.1 million
square feet of GLA, for a purchase price of approximately $4.2 million.

Additionally, during June 2003, the Company acquired a property located in
Colma, CA, comprising approximately 0.2 million square feet of GLA, for a
purchase price of approximately $59.2 million. During November 2003, the Company
transferred this property to KROP.

Also, during June 2003, the Company acquired a property located in Greenwood,
CO, comprising approximately 0.2 million square feet of GLA, for a purchase
price of approximately $29.7 million. During November 2003, the Company sold
this property for a sales price of approximately $30.6 million which resulted in
a gain on sale of approximately $0.7 million.

During July 2003, the Company acquired a property in Novato, CA, comprising
approximately 0.1 million square feet of GLA, for a purchase price of
approximately $21.9 million. During December 2003, the Company transferred this
property into a newly formed joint venture in which the Company has a 10%
non-controlling interest.

During October 2003, the Company acquired a property located in Florence, KY,
comprising approximately 0.1 million square feet of GLA, for an aggregate
purchase price of approximately $14.9 million.

Additionally, during October 2003, the Company acquired an operating property
located in Juarez, Mexico, comprising approximately 0.1 million square feet of
GLA through a joint venture in which the Company has a 90.0% controlling
interest. The property was acquired for a purchase price of approximately $9.9
million.

During November 2003, the Company acquired a property located in Monroeville,
PA, comprising approximately 0.1 million square feet of GLA, for an aggregate
purchase price of approximately $23.5 million.

Dispositions -

During 2003, the Company disposed of, in separate transactions, (i) 10 operating
shopping center properties, for an aggregate sales price of approximately $119.1
million, including the assignment of approximately $1.7 million of mortgage debt
encumbering one of the properties, (ii) two regional malls for an aggregate
sales price of approximately $135.6 million, (iii) one out-parcel for a sales
price of approximately $8.1 million, (iv) transferred three operating properties
to KROP for a price of approximately $144.2 million which approximated their net
book value, (v) transferred an operating property to a newly formed joint
venture in which the Company has a 10% non-controlling interest for a price of
approximately $21.9 million which approximated its net book value and (vi)
terminated four leasehold positions in locations where a tenant in bankruptcy
had rejected its lease. These transactions resulted in net gains of
approximately $50.8 million.

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Redevelopments -

The Company has an ongoing program to reformat and re-tenant its properties to
maintain or enhance its competitive position in the marketplace. During 2003,
the Company substantially completed the redevelopment and re-tenanting of
various operating properties. The Company expended approximately $57.9 million
in connection with these major redevelopments and re-tenanting projects during
2003. The Company is currently involved in redeveloping several other shopping
centers in the existing portfolio. The Company anticipates its capital
commitment toward these and other redevelopment projects will be approximately
$50.0 million to $75.0 million during 2004.

Kimco Developers, Inc. ("KDI") -

Effective January 1, 2001, the Company elected taxable REIT subsidiary status
for its wholly-owned subsidiary, KDI. KDI is primarily engaged in the ground-up
development of neighborhood and community shopping centers and the subsequent
sale thereof upon completion. As of December 31, 2003, KDI had in progress 26
ground-up development projects located in nine states. These projects had
substantial pre-leasing prior to the commencement of construction. During 2003,
KDI expended approximately $208.9 million in connection with the purchase of
land and construction costs related to these projects. These projects are
currently proceeding on schedule and in line with the Company's budgeted costs.
The Company anticipates its capital commitment toward these and other
development projects will be approximately $160.0 million to $200.0 million
during 2004. The proceeds from the sales of the completed ground-up development
projects during 2004 and proceeds from construction loans are expected to be
sufficient to fund these anticipated capital requirements.

KDI Acquisitions -

During the year ended December 31, 2003, KDI acquired interests in 12 land
parcels, in separate transactions, for the ground-up development of shopping
centers and subsequent sales thereof upon completion for an aggregate purchase
price of approximately $80.2 million, as follows:

Purchase Price
Date Acquired City State (in millions)
------------- ---- ----- --------------

February 2003 Avondale AZ $ 2.2
March 2003 Raleigh NC 3.2
April 2003 Maricopa AZ 2.7
May 2003 Muskegan MI 4.2
June 2003 Vancouver WA 9.4
July 2003 Birmingham AL 2.5
September 2003 Longview WA 16.5
September 2003 Ft. Worth TX 8.5
October 2003 Burleson TX 5.6
December 2003 Lake Worth TX 11.8
December 2003 Jacksonville FL 7.6
December 2003 Houston TX 6.0
-----
$80.2
=====

The estimated project costs for these newly acquired parcels is approximately
$220.0 million with completion dates ranging from June 2004 to December 2005.

During 2003, the Company obtained individual construction loans on seven
ground-up development projects and paid off construction loans on three
ground-up development properties. At December 31, 2003 total loan commitments on
the remaining 13 construction loans aggregate approximately $238.9 million of
which approximately $92.8 million has been funded. These loans have maturities
ranging from 3 to 34 months and bear interest at rates ranging from 2.87% to
5.0% at December 31, 2003.

KDI Dispositions -

During the year ended December 31, 2003, KDI sold four of its recently completed
projects and 26 out-parcels for approximately $134.6 million. These sales
resulted in pre-tax gains of approximately $17.5 million. Details are as
follows:

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