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Announcement:

Moody's revises Kimco's outlook to stable

21 Sep 2010

Approximately $ 3.6 Billion of Securities Affected.

New York, September 21, 2010 -- Moody's Investors Service has affirmed the ratings of Kimco Realty Corporation (senior debt at Baa1) and revised the outlook to stable, from negative.

The Baa1 senior debt ratings reflect the REIT's solid franchise in the community and shopping center business, large and well-diversified portfolio, good liquidity position with moderate leverage, and excellent property management and leasing platform. The REIT has re-aligned its business strategy and is concentrating on substantially reducing the non-core businesses such as merchant building and other ancillary businesses in order to re-focus on its core operations. The revision to a stable outlook reflects Moody's view that Kimco has made good progress in working through the pressures they faced due to the challenging retail and economic environment, and improving its credit metrics. Moody's believes that Kimco's metrics will continue to improve.

Kimco's has a good liquidity profile with access to two revolving credit facilities (US$1.5 billion and CAD$250 million) that provide liquidity to its US and Canadian retail real estate operations. As of 2Q10, there was 91% available on the facilities. Kimco's liquidity position was strengthened even further when it raised proceeds of approximately $475 million from a $300 million unsecured note offering and a $175 preferred stock offering in August 2010. Kimco's debt maturity schedule is well-laddered with only $10 million outstanding currently in 2010. The unencumbered asset base of the REIT's core portfolio is good at 77% of its total assets on a gross book basis. The REIT's FFO payout ratio is modest at 50%, enhancing its financial flexibility.

Kimco's overall effective and secured leverage profile, including pro-rata share of joint ventures and fixed charge coverage, has shown improvement. The REIT's consolidated effective leverage, which includes preferred stock, is 43.2% (without JV interests) as of 2Q10, down from 44.1% at YE09 and 49.2% at YE08. Secured debt comprises a modest portion of the REIT's capital structure at 11.3% of gross assets at cost (without JV interests) at 2Q10, down from 12.5% at YE09. Fixed charge coverage has improved to 2.1x at 2Q10, up from 2x at YE09, but is still low for the Baa1 range. EBITDA margins remain healthy at 65%, but are still lower than historical standards when the REIT enjoyed margins of over 70%.

Kimco has a strong and diverse franchise in the US and Canadian retail real estate business, focused principally on owning and operating a portfolio of high quality necessity-based neighborhood and community shopping centers comprising 150 million square feet. Portfolio occupancy for its total shopping portfolio at 2Q10 was 92.7%. Kimco's portfolio is well-diversified with minimal geographic or tenant concentrations. As of 2Q10, the REIT derived approximately 14% of its annualized base rent from core portfolio properties located in California, 10% in Florida, 8% in New York, and 8% in Canada. Kimco's top 25 tenants, national retail and supermarket chains, accounted for approximately 33% of annualized based rent. Moody's also has a very high regard for Kimco's management team, which possesses a strong expertise in both the retail sector and retail real estate, and has a long and successful track record managing the REIT's diverse business lines.

Upward rating movement would be challenging as Kimco needs to further improve its credit metrics within the Baa1 rating range. A downgrade of Kimco's ratings would be prompted by fixed charge coverage (not including JVs) falling below 2.1x, net debt to EBITDA (not including JVs) above 7.0x, and prolonged deterioration in NOI (three-plus quarters of negative growth). Any pressure on the REIT's liquidity position would also result in a downgrade.

The last rating action for Kimco was taken on August 12, 2009, at which time Moody's affirmed Kimco's Baa1 ratings and changed the outlook to negative, from stable.

The following ratings were affirmed with a stable outlook:

Kimco Realty Corporation -- Senior unsecured debt at Baa1; senior unsecured debt shelf at (P)Baa1; preferred stock at Baa2; preferred stock shelf at (P)Baa2.

Kimco North Trust III -- Senior unsecured guaranteed Canadian debentures at Baa1.

Pan Pacific Retail Properties, Inc. -- Senior unsecured debt at Baa1.

Kimco Realty Corporation [NYSE: KIM], headquartered in New Hyde Park, New York, USA, is a real estate investment trust (REIT) that owns and operates North America's largest portfolio of neighborhood and community shopping centers, with interests in 1,465 retail properties comprising approximately 150 million square feet of leasable space located across 45 US states, Puerto Rico, Canada, Mexico and South America. At June 30, 2010, Kimco had book assets of $9.9 billion and total equity of $5 billion.

The principal methodology used in rating Kimco Realty Corporation was the Global Rating Methodology for REITs and Other Commercial Property Firms published in July 2010. Other methodologies and factors that may have been considered in the process of rating this issuer can also be found on Moody's website.

New York
Merrie S. Frankel
VP - Senior Credit Officer
Commercial Real Estate Finance
Moody's Investors Service
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

New York
Alice Chung
Analyst
Commercial Real Estate Finance
Moody's Investors Service
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Moody's Investors Service
250 Greenwich Street
New York, NY 10007
USA

Moody's revises Kimco's outlook to stable
No Related Data.
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