areas around these centers (that is, within a three-mile radius) is, on average, 14 percent higher than for the MSA as a whole. 

High-quality retail real estate in attractive markets will always be in demand. Such was the case in 2011, when national retailers – having retrenched and reconfigured their businesses during the downturn – were once again seeking growth by increasing their store counts. More than 37,000 stores were opened in 2011, and one estimate suggests an additional 70,000 will be opened in the U.S. over the next two years. That growing need for space came against a backdrop of virtually non-existent commercial development in our sector. 

The dearth of available space, combined with sustained population growth and improving GDP numbers, is causing effective rents to rise, particularly in Long Island, South Florida, Baltimore/Washington, Puerto Rico and Canada. Together, these markets make up about a third of our base rent. 

With demand and rents up, Kimco signed nearly 2,500 leases totaling more than 8 million square feet in 2011. Of those, 487 were new leases for 1.5 million square feet, and 1,169 were lease renewals and options for 4.5 million square feet. Importantly, the company signed more than 800 new leases totaling nearly 2 million square feet for spaces vacant for more than a year – a clear sign that available inventory is being quickly absorbed. 

Indeed, the number of available anchor spaces in the Kimco portfolio – 10,000 square feet or greater – has been reduced to a little more than 100 boxes, or only 2.5 percent of our total gross leasable area. 

The strong demand for quality anchor space is clearly evident in two recent bankruptcies – A&P and Borders. We quickly signed new leases with supermarket tenants for each of three former A&P stores in our portfolio. And of the 16 Borders locations, four have already been re-leased and we expect another eight to be filled by mid-2012. Unlike previous bankruptcies, the composite leasing spreads on these properties are slightly positive, compared with the negative spreads of two years ago. 

In this improving environment, we are relentlessly focused on enhancing the value of our shopping center portfolio. We don’t want just the largest portfolio, we want the highest-quality portfolio in our industry. 

## Trading Up to Higher Quality 

We’re increasing quality by continuously recycling our portfolio, divesting non-strategic assets and trading up to superior properties in top-tier locations where growth prospects, population, and disposable income are highest. 

Kimco is a company that has grown through 50-plus years of acquisitions. Among the larger portfolios we’ve purchased, asset quality has varied. In some cases, properties that were once attractive to us no longer fit our long-term, strategic focus. In our portfolio review 18 months ago, we identified approximately 150 such “non-strategic” properties – shopping centers that are outside our primary operating markets, do not fit our desired asset profile, or have limited opportunity for growth or repositioning. Those properties represented about 10 percent of our base rental income. 

The list has since expanded, and we have made good progress on it. On the heels of selling nine non-strategic centers in 2010, we sold another 31 non-strategic properties in 2011, for $158 million, including $35 million of mortgage debt. These properties – 25 wholly owned shopping centers and six unconsolidated joint-venture properties – totaled 2.6 million square feet and were less than 80 percent occupied. 

In the same period, we bought for our wholly owned portfolio 17 high-quality shopping centers, virtually all of them in our core markets and with an overall occupancy rate of 97.6 percent. These properties – along with four joint-venture acquisitions – were purchased for $494 million and added 3.6 million square feet to our leasable space. 

At the end of 2011, Kimco had 122 non-strategic U.S. shopping centers remaining in its portfolio. These properties total 12 million square feet, with about 85 percent gross occupancy, and represent about 8 percent of the company’s total base rental income. 

In addition to our ongoing efforts to improve portfolio quality, another way we are enhancing the value of our properties is through redeveloping, re-tenanting and expanding the strongly situated shopping centers we already have. 

Among the major projects currently underway, we’re redeveloping for Nordstrom Rack an empty box formerly 

