Kimco Realty : Reports Second Quarter 2016 Results

Strong Operating Fundamentals and Tenant Demand Drive Occupancy to Eight-Year High Company Remains Focused on 2020 Vision - Exit from Canada 90% Complete and

Early Debt Repayment Plan Strengthens Capital Structure

NEW HYDE PARK, New York, July 27, 2016 - Kimco Realty Corp. (NYSE: KIM) today reported results for the second quarter ended June 30, 2016.

• U.S pro-rata occupancy increased 20 basis points over the prior quarter to 96.0% - the company's highest occupancy rate since the fourth quarter of 2007;

• U.S. pro-rata small shop occupancy improved to 89.2%;

• U.S. leasing spreads increased 29.8% for new leases and 10.7% for renewals/options. Combined leasing spreads increased 16.2%;

• Income from continuing operations increased 63.8% for the second quarter compared to the same period in 2015;

• U.S. same-property net operating income (NOI) increased 3.1% for the second quarter compared to the same period in 2015;

• Sold interests in 22 Canadian shopping centers, all of which were in joint ventures, for a gross sales price of USD $474.4 million. Six remaining Canadian joint venture assets are expected to be sold by year end; and

• Announced capital structure initiative with the planned prepayment of two Canadian dollar-denominated bonds outstanding (CAD $150M at 5.99% due 2018 and CAD $200M at 3.855% due 2020) and $428 million of U.S. debt (due 2017 at blended rate of 5.9%).

  Financial Results

  Net income available to common shareholders for the second quarter of 2016 was $191.9 million, or $0.46 per diluted share, compared to $112.4 million, or $0.27 per diluted share, for the second quarter of 2015. Net income available to common shareholders during the second quarter of 2016 included $180.6 million of gains on sales of operating properties (before tax expense and non-controlling interests of $21.4 million) and

  $55.0 million of impairments attributable to the sale or pending disposition of operating properties (before tax benefit and non-controlling interests of $21.3 million). This compares to $34.8 million of gains on the sales of operating properties (before tax expense and non-controlling interests of $0.3 million) and $17.7 million of impairments (before tax benefit and non-controlling interests of $7.9 million) during the second quarter 2015. Both operating property impairments and gains on sales are excluded from the calculation of Funds From Operations available to common shareholders (FFO).

  For the six months ended June 30, 2016, net income available to common shareholders was $321.0 million, or $0.77 per diluted share, compared to $408.2 million, or $0.98 per diluted share, for the six months ended June 30, 2015. Net income available to common shareholders for the six months ended June 30, 2016

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  included $265.2 million of gains on sales of operating properties (before tax expense and non-controlling interests of $33.4 million) and $60.9 million of impairments attributable to the sale or pending disposition of operating properties (before tax benefit and non-controlling interests of $21.4 million). This compares to

  $279.6 million of gains on the sales of operating properties (before tax expense and non-controlling interests of $7.3 million) and $25.8 million of impairments (before tax benefit and non-controlling interests of $10.3 million) for the six months ended June 30, 2015.

  FFO, a widely accepted supplemental measure of REIT performance, was $158.1 million, or $0.38 per diluted share, for the second quarter of 2016 compared to $182.7 million, or $0.44 per diluted share, for the second quarter of 2015. For the six months ended June 30, 2016, FFO available to common shareholders was

  $316.3 million, or $0.76 per diluted share compared, to $336.2 million, or $0.81 per diluted share, for the same period last year.

  FFO as adjusted, which excludes the effects of non-operating impairments and transactional income and expenses, was $155.5 million, or $0.37 per diluted share, for the second quarter of 2016 compared to $152.7 million, or $0.37 per diluted share, for the second quarter of 2015. FFO available to common shareholders as adjusted for the six months ended June 30, 2016 was $308.4 million, or $0.74 per diluted share, compared to

  $299.9 million, or $0.73 per diluted share, for the same period in 2015.

  A reconciliation of net income available to common shareholders to FFO and FFO as adjusted is provided in the tables accompanying this press release.

  Operating Results

• U.S. pro-rata occupancy ended the quarter at 96.0%, representing an increase of 20 basis points sequentially and 30 basis points over the second quarter of 2015;

• U.S. pro-rata occupancy for small shop space (under 10,000 square feet) was 89.2%, a 60-basis-point increase sequentially and a 120-basis-point increase over the second quarter of 2015. Anchor tenant occupancy was 98.3%, an increase of 10 basis points sequentially;

• U.S. pro-rata rental-rate leasing spreads increased 16.2%, the highest combined leasing spreads reported in three years. Rental rates for new leases were up 29.8% and renewals/options increased 10.7%;

• Income from continuing operations increased 63.8% compared to the second quarter of 2015. For the six months ended June 30, 2016, income from continuing operations decreased 26.5% compared to the same period in 2015; and

• U.S. Same-property NOI increased 3.1% compared to the second quarter of 2015. For the six months ended June 30, 2016, same-property NOI increased 2.5% compared to the same period in 2015.

  A reconciliation of income from continuing operations to U.S. same-property NOI is provided in the tables accompanying this press release.

  Investment Activity

  The second quarter and year-to-date transactions, as previously announced, highlight the company's continued focus on the ownership of high-quality assets in major U.S. markets.

  Acquisitions: Second quarter acquisitions totaled $328.9 million, of which Kimco's share was $164.4 million:

• Acquired the remaining 45% ownership interest in both Oakwood Plaza shopping center for a gross sales price of $215.0 million and the signature Dania Pointe development project for a gross sales price of $84.2 million; and

• Acquired an improved parcel for $29.8 million at the Whole Foods-anchored Jericho Commons shopping center in Jericho, New York, as part of a future redevelopment opportunity.

  Year-to-date acquisitions, including land parcels, totaled $364.6 million, of which Kimco's share was $188.6 million.

  Dispositions: Sales for the second quarter totaled $696.0 million from the disposition of 34 shopping centers, totaling 4.3 million square feet, and one land parcel. Kimco's share of the sales price was $562.9 million:

• Sold interests in 22 Canadian shopping centers, totaling 2.8 million square feet, for a gross sales price of USD $474.4 million. Kimco's share of the sales price was USD $367.5 million;

• Disposed of 12 unencumbered U.S. properties, totaling 1.5 million square feet, for a gross sales price of

  $220.5 million. Kimco's share from these sales was $194.4 million; and

• Sold one land parcel for a gross sales price of $1.1 million.

  Year-to-date dispositions totaled $1.1 billion from the sale of 47 shopping centers, totaling 6.8 million square feet; Kimco's share from these sales was $820.8 million. In addition, the company sold five land parcels with Kimco's share totaling $7.1 million.

  Capital Activities

  During the second quarter, Kimco issued an additional $150 million of its 4.25% notes due 2045 using the proceeds to fund 2016 debt maturities.

  Subsequent to the second quarter, Kimco announced an early debt repayment initiative to strengthen the company's capital structure by extending its debt maturity profile, reducing leverage and unencumbering an additional 10 properties.

  Under this initiative, Kimco has elected to prepay $137 million of mortgage debt due in 2017 and will redeem its $291 million 5.70% senior notes due 2017, and Kimco North Trust III, a wholly-owned subsidiary, will redeem its CAD $150.0 million 5.99% notes due 2018 and its CAD $200.0 million 3.855% notes due 2020.

  As a result of these transactions, Kimco will recognize a one-time charge of approximately $48 million related to the early extinguishment of debt during the third quarter of 2016.

  The company plans to merge Kimco Realty Services, Inc. (the "TRS") into Kimco (the "REIT") which will effectively transfer ownership of certain desirable long-term shopping center assets, as well as the company's investment in Albertsons, to the REIT. Any non-REIT qualifying assets or activities would reside in a newly formed taxable REIT subsidiary. The transaction will provide greater tax efficiency and reduce ongoing administrative costs. In conjunction with this merger, Kimco will establish a valuation allowance against certain deferred tax assets currently on the balance sheet, resulting in a non-cash charge against Net Income and FFO of approximately $66 million and $41 million, respectively, in the third quarter of 2016.

  2016 Guidance

  Kimco revises its full year 2016 guidance for net income and FFO resulting from the pending one-time transaction charges associated with the planned early repayment of debt and TRS merger as outlined within the Capital Activities section above; the 2016 guidance range for FFO as adjusted is unchanged:

  2016 Guidance (per diluted share)	Current	Previous
  Net income	$0.86 - $0.94	$0.81 - $0.92
  FFO	$1.34 - $1.42	$1.54 - $1.62
  FFO as adjusted *	$1.48 - $1.52	$1.48 - $1.52

  *Excludes transactional income/(expense), net

  The company's current 2016 operational assumptions (Kimco's share) related to the revised 2016 guidance is as follows:

  2016 Operational Assumptions	Current	Previous
  Transactional income/(expense), net:	$(59) million - $(40) million	$25 million - $42 million
  U.S. portfolio occupancy	95.7% - 96.2%	95.7% - 96.2%
  U.S. same property NOI	+2.50% - +3.50%	+2.50% - +3.50%
  Operating Property Acquisitions	$450 million - $550 million	$450 million - $550 million
  Operating Property Dispositions	$1.0 billion - $1.15 billion	$825 million - $975 million

  Dividend Declarations

• Kimco's board of directors declared a quarterly cash dividend of $0.255 per common share, payable on October 17, 2016, to shareholders of record on October 5, 2016, with an ex-dividend date of October 3, 2016.

• The board of directors also declared quarterly dividends with respect to the company's various series of cumulative redeemable preferred shares (Class I, Class J and Class K). All dividends on the preferred shares will be paid on October 17, 2016, to shareholders of record on October 4, 2016, with an ex- dividend date of September 30, 2016.