Redhawk Towne Center, California 

leased by Linens ’n Things at the West Farm Shopping Center in Farmington, Conn., and opening up an area around the Cinemark theater at our Mesa Riverview center in Arizona to improve visibility, parking and traffic flow. At our Metro Crossing center in Council Bluffs, Iowa, we’ve just added new big-box space for T.J. Maxx, and we’re constructing another box for Ulta and adding a new small-shop building. In Hollywood, Fla., at our Oakwood Plaza center, we’re demolishing a former Barnes & Noble store and replacing it with new space for Sports Authority, while expanding an existing BJ’s Wholesale Club store. 

Most recently, in Pompano, Fla., we negotiated a lease termination of an announced Kmart closing, and are currently pursuing a redevelopment of that space for a supermarket and a sporting- goods retailer. In San Diego, we took an empty space still under lease to a supermarket tenant and re-let the space to a fitness club alongside a sporting goods co-tenant at a much higher spread. 

## Growing Our International Business 

The U.S. isn’t the only place where the retail real estate market is on the rise. In Mexico, GDP grew 3.9 percent in 2011 (higher growth than Brazil for the first time in eight years) and both the currency and retail sales strengthened. Same-store sales in Mexico rose 8 percent in the fourth quarter of 2011, and 5 percent for the full year. 

Against this backdrop, we are seeing increased leasing demand from national and international tenants. Of the 55 shopping centers we own in Mexico, 43 are now fully operational, and our overall occupancy rate has climbed to 84 percent. During 2011, we signed more than 700,000 square feet of new leases, with gross annual base rent of about $10 million, and our target is an additional 800,000 square feet in 2012, which will push our occupancy rate close to 90 percent. It is worth noting that virtually all of our leases in Mexico contain full annual-cost-of- living escalators, and our anchor tenants paid percentage rents of more than $2 million in 2011. 

In Canada, our occupancy rate remains high, at 97 percent, and retailer expansion continues to fuel strong demand for space. A notable example is Target, which has committed to open 60 new stores in Canada beginning in early 2013. Canada is an attractive market for retailers: the nation’s economy is strong, with low 

interest rates, moderate unemployment levels, and GDP forecast to grow by 2 percent in 2012. To capitalize on the growing demand, we continue to make strategic additions to our portfolio. In December, we bought a high-quality, grocery-anchored center in the greater Vancouver market, and we expect to close on another attractive grocery-anchored center in Edmonton shortly. 

## Exiting Non-Retail Assets 

Kimco is focusing all of its energies on being the premier owner and operator of high-quality shopping centers in North America, and, as such, we’re intent on exiting non-retail investments that do not fit with our core competency. The value of such assets stood at $1.2 billion in early 2009, but after reducing our non-retail portfolio by $286 million, or 36 percent, in 2011, our non-retail assets are now down to $495 million, or less than 4.5 percent of our total gross assets. 

Our largest remaining non-retail investment, the InTown Suites portfolio of extended-stay facilities, is attracting strong interest from investors, as it continues to perform very well, with substantial growth in revenue per available room. Several parties are conducting due diligence, and we’re confident of selling the portfolio in the near term. 

## Strengthening Our Balance Sheet 

A healthy balance sheet and ample liquidity are crucial to our efforts to build a stronger, more valuable portfolio of high-quality shopping centers. During 2011, we continued to improve our debt metrics, lowering our consolidated net-debt-to-recurring- EBITDA ratio to 6.2 times, on our way to 6.0 times by the end of 2012. Each of the three major credit rating agencies continues to maintain its investment-grade rating on our unsecured bonds and preferred stock securities. 

Our immediate liquidity currently stands at more than $1.4 billion, thanks to the $1.75 billion unsecured U.S. revolving credit facility we announced in October. The new facility, with one of the lowest borrowing spreads in our industry, replaced our previous $1.5 billion U.S. and $250 million Canadian dollar-denominated revolving credit facilities, which were scheduled to mature in 2012. Our existing consolidated debt maturities are well- staggered, with only $353 million of maturing debt coming due in 2012, mostly in the latter half of the year, and our access to capital remains strong. 

