EDGAR 10-K Filing

Company CIK: 879101
Filing Year: 2021
Filename: 879101_10-K_2021_0001437749-21-003766.json

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ITEM 1. BUSINESS
Item 1. Business
Overview
Kimco Realty Corporation, a Maryland corporation, is one of North America’s largest publicly traded owners and operators of open-air, grocery-anchored shopping centers and mixed-use assets in the U.S. The terms “Kimco,” the “Company,” “we,” “our” and “us” each refer to Kimco Realty Corporation and our subsidiaries, unless the context indicates otherwise. In statements regarding qualification as a real estate investment trust (“REIT”), such terms refer solely to Kimco Realty Corporation. The Company’s mission is to create destinations for everyday living that inspire a sense of community and deliver value to our many stakeholders.
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”). 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 U.S. federal income tax, provided that distributions to its stockholders equal at least the amount of its REIT taxable income, as defined in the Code. The Company maintains certain subsidiaries that made joint elections with the Company to be treated as taxable REIT subsidiaries (“TRSs”), that permit the Company to engage through such TRSs in certain business activities that the REIT may not conduct directly. A TRS is subject to federal and state taxes on its income, and the Company includes a provision for taxes in its consolidated financial statements. In 1994, the Company reorganized as a Maryland corporation. In March 2006, the Company was added to the S&P 500 Index, an index containing the stock of 500 Large Cap companies, most of which are U.S. corporations. The Company's common stock, Class L Depositary Shares and Class M Depositary Shares are traded on the New York Stock Exchange (“NYSE”) under the trading symbols “KIM”, “KIMprL”, and “KIMprM”, respectively.
The Company is a self-administered REIT and has not engaged, nor does it expect to retain, any REIT advisors in connection with the operation of its properties. The Company’s ownership interests in real estate consist of its consolidated portfolio and portfolios where the Company owns an economic interest, such as properties in the Company’s investment real estate management programs, where the Company partners with institutional investors and also retains management.
The Company began to expand its operations through the development of real estate and the construction of shopping centers but revised its growth strategy to focus on the acquisition and redevelopment of existing shopping centers that include a grocery component. The Company also expanded internationally within Canada, Mexico, Chile, Brazil and Peru, but has since substantially liquidated its investments in Mexico and has completely exited Canada, Chile, Brazil and Peru. More recently the Company, on a selective basis, embarked on several ground-up development and re-development projects which include residential and mixed-use components.
The Company implemented its investment real estate management format through the establishment of various institutional joint venture programs, in which the Company has noncontrolling interests. The Company earns management fees, acquisition fees, disposition fees as well as promoted interests based on achieving certain performance metrics.
In addition, the Company has capitalized 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 has also provided preferred equity capital in the past to real estate entrepreneurs and, from time to time, provides real estate capital and management services to both healthy and distressed retailers. The Company has also made selective investments in secondary market opportunities where a security or other investment is, in management’s judgment, priced below the value of the underlying assets, however these investments are subject to volatility within the equity and debt markets.
As of December 31, 2020, the Company had interests in 400 shopping center properties (the “Combined Shopping Center Portfolio”), aggregating 70.1 million square feet of gross leasable area (“GLA”), located in 27 states. In addition, the Company had 122 other property interests, primarily through the Company’s preferred equity investments and other real estate investments, totaling 5.4 million square feet of GLA.
COVID-19 Pandemic
In March 2020, COVID-19 was recognized as a pandemic by the World Health Organization (“WHO”) and declared a national emergency throughout the United States. The COVID-19 pandemic has resulted in a widespread health crisis that has adversely affected businesses, economies, and financial markets worldwide and has caused significant volatility in U.S. and international debt and equity markets. The impact of COVID-19 on the retail industry for both landlords and tenants has been wide ranging, including, but not limited to, the temporary closures of many businesses, "shelter in place" orders, social distancing guidelines and other governmental, business and individual actions taken in response to the COVID-19 pandemic. There has also been reduced consumer spending due to job losses, government restrictions in response to COVID-19 and other effects attributable to COVID-19.
The Company is aware of the critical role its shopping centers play in the communities they serve, often providing access to essential goods and services such as groceries, drug stores, and medical care. The Company’s shopping centers have remained open throughout the COVID-19 pandemic to continue to provide access to these essential goods and services, and the Company has taken steps to protect the shoppers and tenants at its sites, following the guidance of the Centers for Disease Control and Prevention (“CDC”) and the WHO.
The COVID-19 pandemic has created significant economic uncertainty and volatility and has considerably impacted the Company’s stakeholders. The COVID-19 pandemic has impacted the Company’s financial condition, results of operations and cash flows since its onset. The extent to which the COVID-19 pandemic will continue to impact the Company’s financial condition, results of operations and cash flows, will depend on future developments, which continue to be highly uncertain and difficult to predict. The Company’s business, operations and financial results will depend on numerous evolving factors that the Company is not able to predict, including the duration and scope of the pandemic, governmental, business and individual actions that have been and continue to be, taken in response to the pandemic, the distribution and effectiveness of vaccines, the impact on economic activity from the pandemic and actions taken in response, the effect on the Company’s tenants and their businesses, the ability of tenants to make their rental payments, additional closures of tenants’ businesses and the impact of opening and reclosing of communities in response to COVID-19. Any of these events could materially adversely impact the Company’s business, financial condition, results of operations or stock price. The Company will continue to monitor the economic, financial, and social conditions resulting from the COVID-19 pandemic and will assess its asset portfolio for any impairment indicators. In addition, the Company will continue to monitor for any material or adverse effects resulting from the COVID-19 pandemic.
Since the outbreak of the COVID-19 pandemic, the Company’s shopping centers have remained open; however, a substantial number of tenants had or continue to have temporarily or permanently closed their businesses. Others had, or continue to have, shortened their operating hours or offered reduced services. The Company has also had a substantial number of tenants that have made late or partial rent payments, requested a deferral of rent payments, forgiveness of rent payments or defaulted on rent payments. Since the COVID-19 pandemic began, the Company has seen an increase in the number of tenants filing for bankruptcy, some of which emerged from bankruptcy prior to December 31, 2020. The Company continues to evaluate the impact bankruptcy filings have or will have on collections, vacancies and future rental income.
Business Objective and Strategies
Over the past several years, the Company has transformed its portfolio, focusing on major metropolitan-area U.S. markets, predominantly on the East and West coasts and in the Sunbelt region, which are supported by strong demographics, significant projected population growth, and where the Company perceives significant barriers to entry. As a result of this transformation, the Company now owns a predominantly grocery-anchored portfolio clustered in the nation’s top markets which has positioned the Company to address many of the challenges brought upon by COVID-19. As of December 31, 2020, the Company derived 84.6% of its annualized base rent from its top major metro markets.
The Company’s focus on high-quality locations has led to significant opportunities for value creation through the reinvestment in its assets to add density, replace outdated shopping center concepts, and better meet changing consumer demands. In order to add density to existing properties, the Company has obtained multi-family entitlements for 4,984 units of which 1,266 units have been constructed as of December 31, 2020. The Company continues to place strategic emphasis on live/work/play environments and in reinvesting in its existing assets, while building shareholder value. This philosophy is exemplified by the Company’s Signature SeriesTM properties Dania Pointe, Grand Parkway Marketplace, Kentlands Market Square, Lincoln Square, Mill Station, Pentagon Centre, Suburban Square and The Boulevard.
The strength and security of the Company’s balance sheet remains central to its strategy. The Company’s strong balance sheet and liquidity position are evidenced by its investment grade unsecured debt ratings (Baa1/BBB+) by two major ratings agencies. The Company maintains one of the longest average debt maturity profiles in the REIT industry, now at 10.9 years. The Company expects to continue to take steps to reduce leverage, unencumber assets and improve its debt coverage metrics as redevelopment and development projects continue to come online and contribute additional cash flow growth.
Business Objective
The Company’s primary business objective is to be the premier owner and operators of open-air, grocery-anchored shopping centers and mixed-use assets in the U.S. The Company believes it can achieve this objective by:
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increasing the value of its existing portfolio of properties and generating higher levels of portfolio growth;
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increasing cash flows for reinvestment and/or for distribution to shareholders;
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continuing growth in desirable demographic areas with successful retailers; and
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increasing capital appreciation.
Business Strategies
The Company’s stronger transformed portfolio, over time, should enable the Company to maintain higher occupancy levels, rental rates and rental growth. With the COVID-19 pandemic affecting much of the retail sector the Company further concentrated its business objectives to three main areas as follows:
** The “PLUS” business encompasses investment opportunities with retailers who have significant real estate holdings. The Company believes it can utilize its Structured Investment Program to take advantage of opportunities resulting from market dislocation in the form of preferred equity investments and/or mezzanine financing for qualified real estate owners in need of capital.
To effectively execute these strategies the Company seeks to:
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significantly increase its leasing efforts over the next several years to offset the impact of the COVID-19 pandemic;
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increase rental rates where possible through the leasing of space to new tenants;
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attract a diverse and robust tenant base across a variety of retailers at its properties, with a focus on essential tenants such as grocers and home improvement;
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renew leases with existing tenants;
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decrease vacancy levels and duration of vacancy;
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monitor operating costs and overhead;
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retail re-tenanting, renovating, expanding and redeveloping existing shopping centers to obtain the highest and best use to maximize the real estate value, which could include acquiring adjacent land parcels;
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selectively acquire established income-producing real estate properties and properties requiring significant re-tenanting and redevelopment, primarily in geographic regions in which the Company presently operates;
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continue to assess its portfolio and dispose of certain underperforming properties;
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provide unmatched tenant services deriving from decades of experience managing retail properties;
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assist small shop tenants during the COVID-19 pandemic to enable them to continue to successfully operate; and
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provide communities with a "just around the corner" destination for everyday living goods and services.
The Company has established certain areas of focus which it believes will advance the execution of its strategies over the coming years:
The Company reduces its operating and leasing risks through diversification achieved by the geographic distribution of its properties and a large tenant base. As of December 31, 2020, no single open-air shopping center accounted for more than 2.0% 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, or more than 2.0% of the Company’s total shopping center GLA. Furthermore, at December 31, 2020, the Company’s single largest tenant represented only 4.0%, and the Company’s five largest tenants aggregated less than 12.6%, 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.
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 open-air shopping centers, the Company has established close relationships with 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.
Human Capital Resources
The Company believes that our employees are one of our strongest resources and that a variety of perspectives and experiences found in a diverse workforce spark innovation and enrich company culture. The Company is committed to diversity and inclusion best practices in all phases of the employee life cycle, including recruitment, training and development and promotion.
The Company has been and will continue to be an equal opportunity employer committed to hiring, developing, and supporting a diverse and inclusive workplace. To ensure full implementation of this equal employment policy, we will take steps to ensure that persons are recruited, hired, assigned and promoted without regard to race, national origin, religion, age, color, sex, sexual orientation, gender identity, disability, or protected veteran status, or any other characteristic protected by local, state, or federal laws, rules, or regulations. All of our employees must adhere to a Code of Business Conduct and Ethics that sets standards for appropriate behavior and includes required internal training on preventing, identifying, reporting and stopping any type of discrimination.
In order to attract and retain high performing individuals, we are committed to partnering with our employees to provide opportunities for their professional development and promote their health and well-being. We also offer our employees a broad range of company-paid benefits, and we believe our compensation package and benefits are competitive with others in our industry. Our benefits programs include a robust offering of medical, dental, vision benefits, life, disability and other ancillary benefits requiring very low employee contributions. In addition, the Company has been recognized as a Great Place to Work® based on surveys and feedback collected from its employees.
The Company’s executive and management team promotes a true “open door” environment in which all feedback and suggestions are welcome. Whether it be through regular all employee calls, department meetings, frequent training sessions, Coffee Connections with the executive team, use of our BRAVO recognition program, awarding of iPads for Ideas, or participation in our flagship LABS (Leaders Advancing Business Strategy) program, associates are encouraged to be inquisitive and share ideas. Those ideas have resulted in a number of programs and benefit enhancements.
The Company promotes physical health, including access to a national gym membership program for associates and their family members as well as host regular wellness and nutrition seminars and health screenings. The Company also feels it is important that our associates are engaged and active in the community. At our headquarters and in each of our regions a Committee of employees host numerous volunteer and social activities that are derived from employee sentiment. Whether we’re participating in walks, runs, meal servings, food drives, toy drives, or St. Jude Ride for a Reason, the Company promotes and supports associate volunteerism with two volunteer days off per year and a company matching program that provide up to $500 per year in support of each associates charitable endeavors. In addition, each year, the Company provides $100,000 in education scholarships for children of our associates, which is managed by an independent third-party.
The Company's executive offices are located at 500 North Broadway, Suite 201, Jericho, NY 11753, a mixed-use property that is wholly owned by the Company, and its telephone number is (516) 869-9000. Nearly all operating functions, including leasing, legal, construction, data processing, maintenance, finance and accounting are administered by the Company from its executive offices in Jericho, New York and supported by the Company’s regional offices. As of December 31, 2020, a total of 484 persons were employed by the Company of which 41.5% were located in our corporate office with the remainder located in 26 offices throughout the United States. The average tenure of our employees was 10 years.
The health and safety of the Company’s employees and their families is a top priority. The Company always takes the necessary steps to protect its employees, especially during the COVID-19 pandemic where employees were empowered to work from home and care for their family members and children, whose lives have also been impacted. The Company will continue to evaluate individual situations as they arise and adjust its approach as appropriate, with the goal of enabling its employees to be as productive as possible while offering them the flexibility they need to care for themselves and their families. The following are steps that were taken by the Company in response to the COVID-19 pandemic:
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Transitioned the entire workforce from full-time office to flexible work from home arrangement, which the Company successfully continued since March 2020. This included immediate and extensive technology training on virtual meetings and remote working as well as safety protocols.
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Business travel has been stopped with relatively few business-essential exceptions.
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The Company has benefited from recent investments in new technology and software over the last year, as its entire team is equipped with new laptops and cellular capability to enable them to work remotely.
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The Company’s human resources and information technology teams are available to all employees to address any needs or concerns they may have.
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Associates will be provided paid time off to care for themselves or family members diagnosed with COVID-19.
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The Company has increased communications at all levels and has initiated bi-weekly company-wide virtual meetings such that executives are accessible to answer any questions and transparently keep associates informed.
Environment, Social and Governance (“ESG”) Programs
The Company is focused on building a thriving and viable business, one that succeeds by delivering long-term value for its stakeholders. The Company’s ESG programs are aligned with its core business strategy of creating destinations for everyday living that inspire a sense of community and deliver value to its many stakeholders.
The Company has established five ESG Program Pillars and the corresponding objectives:
The Company is committed to best-in-class ESG disclosure, and has aligned its annual reporting with standards from the Global Reporting Initiative (“GRI”), Sustainability Accounting Standards Board (“SASB”) and Task Force on Climate-Related Financial Disclosures (“TCFD”). Additional ESG information of relevance to stakeholders can be found on the Company’s website in the Corporate Responsibility Report. This report, which is based on the GRI standard, summarizes the Company's environmental and social performance.
The Company recognizes that climate change is one of the most significant stakeholder issues of our times, threatening the viability of economic and environmental systems globally. As a real estate portfolio owner, the Company monitors physical and transition risks as well as opportunities posed to its business by climate change and quantifies and discloses the climate impacts of its activities. The Company’s science-based emissions reduction goals are aligned with the Paris Climate Accord and put the company on pace to achieve net zero emissions by 2050. During 2020, the Company issued $500.0 million in 2.70% notes due 2030 in its inaugural green bond offering. Net proceeds from this offering are allocated to finance or refinance, in whole or in part, recently completed, existing or future eligible green projects, in alignment with the four core components of the Green Bond Principles, 2018 as administered by the International Capital Market Association. Additionally, the Company’s $2.0 billion Credit Facility (as defined below) is a green credit facility which incorporates rate reductions associated with attainment of Scope 1 and 2 greenhouse gas emissions reductions.
The Company’s industry leading ESG initiatives led to its 2020 listing on the Dow Jones Sustainability World Index (“DJSI World Index”), where it is the only North American retail real estate owner listed. The DJSI World Index is comprised of corporate leaders in global sustainability, with companies listed on the DJSI World Index representing the top 10 percent of the largest 2,500 companies in the S&P Global Broad Market Index based on long-term economic and ESG factors. The Company has been the sole retail real estate owner listed on the Dow Jones Sustainability North America Index for the last six years, and the Company also is a constituent of the FTSE4Good Index Series, designed to measure the performance of companies demonstrating strong ESG practices.
Information About Our Executive Officers
The following table sets forth information with respect to the executive officers of the Company as of December 31, 2020:
Name
Age
Position
Joined Kimco
Milton Cooper
Executive Chairman of the Board of Directors
Co-Founder
Conor C. Flynn
Chief Executive Officer
Ross Cooper
President and Chief Investment Officer
Glenn G. Cohen
Executive Vice President,
Chief Financial Officer and Treasurer
David Jamieson
Executive Vice President,
Chief Operating Officer
Available Information
The Company’s website is located at http://www.kimcorealty.com. The information contained on our website does not constitute part of this Form 10-K. On the Company’s website you can obtain, free of charge, a copy of this 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 SEC. The public may read and obtain a copy of any materials we file electronically with the SEC at http://www.sec.gov.

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ITEM 1A. RISK FACTORS
Item 1A. Risk Factors
We are subject to certain business and legal risks including, but not limited to, the following:
Risks Related to Our Business and Operations
Adverse global market and economic conditions may impede our ability to generate sufficient income and maintain our properties.
Our properties consist primarily of open-air shopping centers and other retail properties. Our performance, therefore, is generally linked to economic conditions in the market for retail space. The economic performance and value of our properties is subject to all of the risks associated with owning and operating real estate, including but not limited to:
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changes in the national, regional and local economic climate;
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local conditions, including an oversupply of, or a reduction in demand for, space in properties like those that we own;
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trends toward smaller store sizes as retailers reduce inventory and develop new prototypes;
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increasing use by customers of e-commerce and online store sites;
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the attractiveness of our properties to tenants;
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market disruptions due to global pandemics;
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the ability of tenants to pay rent, particularly anchor tenants with leases in multiple locations;
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tenants who may declare bankruptcy and/or close stores;
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competition from other available properties to attract and retain tenants;
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changes in market rental rates;
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the need to periodically pay for costs to repair, renovate and re-let space;
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ongoing consolidation in the retail sector;
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the excess amount of retail space in a number of markets;
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changes in operating costs, including costs for maintenance, insurance and real estate taxes;
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the expenses of owning and operating properties, which are not necessarily reduced when circumstances such as market factors and competition cause a reduction in income from the properties;
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changes in laws and governmental regulations, including those governing usage, zoning, the environment and taxes;
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acts of terrorism and war and acts of God, including physical and weather-related damage to our properties;
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the continued service and availability of key personnel; and
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the risk of functional obsolescence of properties over time.
Competition may limit our ability to purchase new properties or generate sufficient income from tenants and may decrease the occupancy and rental rates for our properties.
Numerous commercial developers and real estate companies compete with us in seeking tenants for our existing properties and properties for acquisition. Open-air lifestyle centers or other retail shopping centers with more convenient locations or better rents may attract tenants or cause them to seek more favorable lease terms at or prior to renewal. Retailers at our properties may face increasing competition from other retailers, e-commerce, outlet malls, discount shopping clubs, direct mail, telemarketing or home shopping networks, all of which could (i) reduce rents payable to us; (ii) reduce our ability to attract and retain tenants at our properties; or (iii) lead to increased vacancy rates at our properties. We may fail to anticipate the effects of changes in consumer buying practices, particularly of growing online sales and the resulting retailing practices and space needs of our tenants or a general downturn in our tenants’ businesses, which may cause tenants to close stores or default in payment of rent.
We face competition in the acquisition or development of real property from others engaged in real estate investment that could increase our costs associated with purchasing and maintaining assets. Some of these competitors may have greater financial resources than we do. This could result in competition for the acquisition of properties for tenants who lease or consider leasing space in our existing and subsequently acquired properties and for other real estate investment or development opportunities.
Our performance depends on our ability to collect rent from tenants, including anchor tenants, our tenants’ financial condition and our tenants maintaining leases for our properties.
At any time, our tenants may experience a downturn in their business that may significantly weaken their financial condition. As a result, our tenants may delay a number of lease commencements, decline to extend or renew leases upon expiration, fail to make rental payments when due, close stores or declare bankruptcy. Any of these actions could result in the termination of tenants’ leases and the loss of rental income attributable to these tenants’ leases. In the event of a default by a tenant, we may experience delays and costs in enforcing our rights as landlord under the terms of the leases.
In addition, multiple lease terminations by tenants, including anchor tenants, or a failure by multiple tenants to occupy their premises in a shopping center could result in lease terminations or significant reductions in rent by other tenants in the same shopping centers under the terms of some leases. In that event, we may be unable to re-lease the vacated space at attractive rents or at all, and our rental payments from our continuing tenants could significantly decrease. The occurrence of any of the situations described above, particularly involving a substantial tenant with leases in multiple locations, could have a material adverse effect on our financial condition, results of operations and cash flows.
A tenant that files for bankruptcy protection may not continue to pay us rent. A bankruptcy filing by, or relating to, one of our tenants or a lease guarantor would bar all efforts by us to collect pre-bankruptcy debts from the tenant or the lease guarantor, or their property, unless the bankruptcy court permits us to do so. A tenant bankruptcy could delay our efforts to collect past due balances under the relevant leases and could ultimately preclude collection of these sums. If a lease is rejected by a tenant in bankruptcy, we would have only a general unsecured claim for damages. As a result, it is likely that we would recover substantially less than the full value of any unsecured claims we hold, if at all.
Our expenses may remain constant or increase, even if income from our Combined Shopping Center Portfolio decreases, which could adversely affect our financial condition, results of operations and cash flows.
Costs associated with our business, such as common area expenses, utilities, insurance, real estate taxes, mortgage payments, and corporate expenses are relatively inflexible and generally do not decrease in the event that a property is not fully occupied, rental rates decrease, a tenant fails to pay rent or other circumstances cause our revenues to decrease. In addition, inflation could result in higher operating costs. If we are unable to lower our operating costs when revenues decline and/or are unable to pass along cost increases to our tenants, our financial condition, results of operations and cash flows could be adversely impacted.
We may be unable to sell our real estate property investments when appropriate or on terms favorable to us.
Real estate property investments are illiquid and generally cannot be disposed of quickly. The capitalization rates at which properties may be sold could be higher than historic rates, thereby reducing our potential proceeds from sale. In addition, the Code includes certain restrictions on a REIT’s ability to dispose of properties that are not applicable to other types of real estate companies. Therefore, we may not be able to vary our portfolio in response to economic or other conditions promptly or on terms favorable to us within a time frame that we would need. All of these factors reduce our ability to respond to changes in the performance of our investments and could adversely affect our business, financial condition and results of operations.
Certain properties we own have a low tax basis, which may result in a taxable gain on sale. We may utilize 1031 exchanges to mitigate taxable income; however, there can be no assurance that we will identify properties that meet our investment objectives for acquisitions. In the event that we do not utilize 1031 exchanges, we may be required to distribute the gain proceeds to shareholders or pay income tax, which may reduce our cash flow available to fund our commitments.
We may acquire or develop properties or acquire other real estate related companies, and this may create risks.
We may acquire or develop properties or acquire other real estate related companies when we believe that an acquisition or development is consistent with our business strategies. We may not succeed in consummating desired acquisitions or in completing developments on time or within budget. When we do pursue a project or acquisition, we may not succeed in leasing newly developed or acquired properties at rents sufficient to cover the costs of acquisition or development and operations. Difficulties in integrating acquisitions may prove costly or time-consuming and could divert management’s attention from other activities. Acquisitions or developments in new markets or industries where we do not have the same level of market knowledge may result in poorer than anticipated performance. We may also abandon acquisition or development opportunities that management has begun pursuing and consequently fail to recover expenses already incurred and will have devoted management’s time to a matter not consummated. Furthermore, our acquisitions of new properties or companies will expose us to the liabilities of those properties or companies, some of which we may not be aware of at the time of the acquisition. In addition, development of our existing properties presents similar risks.
Newly acquired or re-developed properties may have characteristics or deficiencies currently unknown to us that affect their value or revenue potential. It is also possible that the operating performance of these properties may decline under our management. As we acquire additional properties, we will be subject to risks associated with managing new properties, including lease-up and tenant retention. In addition, our ability to manage our growth effectively will require us to successfully integrate our new acquisitions into our existing management structure. We may not succeed with this integration or effectively manage additional properties, particularly in secondary markets. Also, newly acquired properties may not perform as expected.
We face risks associated with the development of mixed-use commercial properties.
We operate, are currently developing, and may in the future develop, properties either alone or through joint ventures with other persons that are known as “mixed-use” developments. This means that in addition to the development of retail space, the project may also include space for residential, office, hotel or other commercial purposes. We have less experience in developing and managing non-retail real estate than we do with retail real estate. As a result, if a development project includes a non-retail use, we may seek to develop that component ourselves, sell the rights to that component to a third-party developer with experience developing properties for such use or partner with such a developer. If we do not sell the rights or partner with such a developer, or if we choose to develop the other component ourselves, we would be exposed not only to those risks typically associated with the development of commercial real estate generally, but also to specific risks associated with the development and ownership of non-retail real estate. In addition, even if we sell the rights to develop the other component or elect to participate in the development through a joint venture, we may be exposed to the risks associated with the failure of the other party to complete the development as expected. These include the risk that the other party would default on its obligations necessitating that we complete the other component ourselves, including providing any necessary financing. In the case of residential properties, these risks include competition for prospective residents from other operators whose properties may be perceived to offer a better location or better amenities or whose rent may be perceived as a better value given the quality, location and amenities that the resident seeks. We will also compete against condominiums and single-family homes that are for sale or rent. In the case of office properties, the risks also include changes in space utilization by tenants due to technology, economic conditions and business culture, declines in financial condition of these tenants and competition for credit worthy office tenants. In the case of hotel properties, the risks also include increases in inflation and utilities that may not be offset by increases in room rates. We are also dependent on business and commercial travelers and tourism. Because we have less experience with residential, office and hotel properties than with retail properties, we expect to retain third-parties to manage our residential and other non-retail components as deemed warranted. If we decide to not sell or participate in a joint venture and instead hire a third-party manager, we would be dependent on them and their key personnel who provide services to us and we may not find a suitable replacement if the management agreement is terminated, or if key personnel leave or otherwise become unavailable to us.
Construction projects are subject to risks that materially increase the costs of completion.
In the event that we decide to redevelop existing properties, we will be subject to risks and uncertainties associated with construction and development. These risks include, but are not limited to, risks related to obtaining all necessary zoning, land-use, building occupancy and other governmental permits and authorizations, risks related to the environmental concerns of government entities or community groups, risks related to changes in economic and market conditions between development commencement and stabilization, risks related to construction labor disruptions, adverse weather, acts of God or shortages of materials and labor which could cause construction delays and risks related to increases in the cost of labor and materials which could cause construction costs to be greater than projected and adversely impact the amount of our development fees or our financial condition, results of operations and cash flows.
The Americans with Disabilities Act of 1990 could require us to take remedial steps with respect to existing or newly acquired properties.
Our existing properties, as well as properties we may acquire, as commercial facilities, are required to comply with Title III of the Americans with Disabilities Act of 1990 (the “ADA”). Investigation of a property may reveal non-compliance with this Act. The requirements of the ADA, or of other federal, state or local laws or regulations, also may change in the future and restrict further renovations of our properties with respect to access for disabled persons. Future compliance with this Act may require expensive changes to the properties.
We do not have exclusive control over our joint venture and preferred equity investments, such that we are unable to ensure that our objectives will be pursued.
We have invested in some properties as a co-venturer or a partner, instead of owning directly. In these investments, we do not have exclusive control over the development, financing, leasing, management and other aspects of these investments. As a result, the co-venturer or partner might have interests or goals that are inconsistent with ours, take action contrary to our interests or otherwise impede our objectives. These investments involve risks and uncertainties. The co-venturer or partner may fail to provide capital or fulfill its obligations, which may result in certain liabilities to us for guarantees and other commitments. Conflicts arising between us and our partners may be difficult to manage and/or resolve and it could be difficult to manage or otherwise monitor the existing business arrangements. The co-venturer or partner also might become insolvent or bankrupt, which may result in significant losses to us.
In addition, joint venture arrangements may decrease our ability to manage risk and implicate additional risks, such as:
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potentially inferior financial capacity, diverging business goals and strategies and the need for our venture partner’s continued cooperation;
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our inability to take actions with respect to the joint venture activities that we believe are favorable to us if our joint venture partner does not agree;
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our inability to control the legal entity that has title to the real estate associated with the joint venture;
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our lenders may not be easily able to sell our joint venture assets and investments or may view them less favorably as collateral, which could negatively affect our liquidity and capital resources;
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our joint venture partners can take actions that we may not be able to anticipate or prevent, which could result in negative impacts on our debt and equity; and
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our joint venture partners’ business decisions or other actions or omissions may result in harm to our reputation or adversely affect the value of our investments.
Our joint venture and preferred equity investments generally own real estate properties for which the economic performance and value is subject to all the risks associated with owning and operating real estate as described above.
We may not be able to recover our investments in marketable securities, mortgage receivables or other investments, which may result in significant losses to us.
See “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Footnote 9 to the Notes to the Company’s Consolidated Financial Statements included in this Form 10-K for additional discussion regarding the shares held by the Company of Albertsons Companies, Inc. (“ACI”).
Our investments in marketable securities are subject to specific risks relating to the particular issuer of the securities, including the financial condition and business outlook of the issuer, which may result in significant losses to us. Marketable securities are generally unsecured and may also be subordinated to other obligations of the issuer. As a result, investments in marketable securities are subject to risks of:
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limited liquidity in the secondary trading market;
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substantial market price volatility, resulting from changes in prevailing interest rates;
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subordination to the prior claims of banks and other senior lenders to the issuer;
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the possibility that earnings of the issuer may be insufficient to meet its debt service and distribution obligations; and
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the declining creditworthiness and potential for insolvency of the issuer during periods of rising interest rates and economic downturn.
These risks may adversely affect the value of outstanding marketable securities and the ability of the issuers to make distribution payments.
Our investments in mortgage receivables are subject to specific risks relating to the borrower and the underlying property. In the event of a default by a borrower, it may be necessary for us to foreclose our mortgage or engage in costly negotiations. Delays in liquidating defaulted mortgage loans and repossessing and selling the underlying properties could reduce our investment returns. Furthermore, in the event of default, the actual value of the property securing the mortgage may decrease. A decline in real estate values will adversely affect the value of our loans and the value of the mortgages securing our loans.
Our mortgage receivables may be or become subordinated to mechanics' or materialmen's liens or property tax liens. In these instances, we may need to protect a particular investment by making payments to maintain the current status of a prior lien or discharge it entirely. Where that occurs, the total amount we recover may be less than our total investment, resulting in a loss. In the event of a major loan default or several loan defaults resulting in losses, our investments in mortgage receivables would be materially and adversely affected.
The economic performance and value of our other investments, which we do not control and are in retail operations, are subject to risks associated with owning and operating retail businesses, including:
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changes in the national, regional and local economic climate;
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the adverse financial condition of some large retailing companies;
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increasing use by customers of e-commerce and online store sites; and
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ongoing consolidation in the retail sector.
A decline in the value of our other investments may require us to recognize an other-than-temporary impairment (“OTTI”) against such assets. When the fair value of an investment is determined to be less than its amortized cost at the balance sheet date, we assess whether the decline is temporary or other-than-temporary. If we intend to sell an impaired asset, or it is more likely than not that we will be required to sell the impaired asset before any anticipated recovery, then we must recognize an OTTI through charges to earnings equal to the entire difference between the asset’s amortized cost and its fair value at the balance sheet date. When an OTTI is recognized through earnings, a new cost basis is established for the asset, and the new cost basis may not be adjusted through earnings for subsequent recoveries in fair value.
Our real estate assets may be subject to impairment charges.
We periodically assess whether there are any indicators that the value of our real estate assets and other investments may be impaired. A property’s value is considered to be impaired only if the estimated aggregate future undiscounted property cash flows are less than the carrying value of the property. In our estimate of cash flows, we consider factors such as trends and prospects and the effects of demand and competition on expected future operating income. If we are evaluating the potential sale of an asset or redevelopment alternatives, the undiscounted future cash flows consider the most likely course of action as of the balance sheet date based on current plans, intended holding periods and available market information. We are required to make subjective assessments as to whether there are impairments in the value of our real estate assets and other investments. Impairment charges have an immediate direct impact on our earnings. There can be no assurance that we will not take additional charges in the future related to the impairment of our assets. Any future impairment could have a material adverse effect on our results of operations in the period in which the charge is taken.
We intend to continue to sell our lesser quality assets and may not be able to recover our investments, which may result in significant losses to us.
There can be no assurance that we will be able to recover the current carrying amount of all of our lesser quality properties and investments and those of our unconsolidated joint ventures in the future. Our failure to do so would require us to recognize impairment charges for the period in which we reached that conclusion, which could materially and adversely affect our financial condition, results of operations and cash flows.
We have substantially completed our efforts to exit our investments in Mexico and have completely exited Chile, Brazil, Peru and Canada, however, we cannot predict the impact of laws and regulations affecting these international operations, including the United States Foreign Corrupt Practices Act, or the potential that we may face regulatory sanctions.
Our international operations have included properties in Canada, Mexico, Chile, Brazil and Peru and are subject to a variety of United States and foreign laws and regulations, including the United States Foreign Corrupt Practices Act and foreign tax laws and regulations. Although we have substantially completed our efforts to exit our investments in Mexico, South America and Canada, we cannot assure you that our past or any current international operations will continue to be found to be in compliance with such laws or regulations. In addition, we cannot predict the manner in which such laws or regulations might be administered or interpreted, or when, or the potential that we may face regulatory sanctions or tax audits as a result of our international operations.
We face risks relating to cybersecurity attacks which could adversely affect our business, cause loss of confidential information and disrupt operations.
A cyber incident is considered to be any adverse event that threatens the confidentiality, integrity, or availability of our information resources. More specifically, a cyber incident is an intentional attack or an unintentional event that can include gaining unauthorized access to systems to disrupt operations, corrupt data, or steal confidential information. We may face cyber incidents and security breaches through malware, computer viruses, ransomware, attachments to e-mails, persons inside our organization or persons with access to systems inside our organization and other significant disruptions of our IT networks and related systems. The risk of a cybersecurity breach or disruption, particularly through a cyber incident, including by computer hackers, foreign governments and cyber terrorists, has generally increased as the number, intensity and sophistication of attempted attacks and intrusions from around the world have increased. Our IT networks and related systems are essential to the operation of our business and our ability to perform day-to-day operations and, in some cases, may be critical to the operations of certain of our tenants. Although we make efforts to maintain the security and integrity of these types of IT networks and related systems, and we have implemented various measures to manage the risk of a security breach or disruption, there can be no assurance that our security efforts and measures will be effective or that attempted security breaches or disruptions would not be successful or damaging.
As a result of the COVID-19 pandemic, employees working remotely has amplified certain risks to our business. The number of points of potential cyberattack, such as laptops and mobile devices have increased and any failure to effectively manage these risks, including to timely identify and appropriately respond to any cyberattacks or other disruption to our technology infrastructure, may adversely affect our business. Cyber criminals are targeting their attacks on individual employees, utilizing interest in pandemic related information to increase business email compromise scams designed to trick victims into transferring sensitive data or funds, or steal credentials that compromise information systems which extend to multiple platforms throughout the Company.
While we maintain some of our own critical information technology systems, we also depend on third-parties to provide important information technology services relating to several key business functions, such as payroll, human resources, electronic communications and certain finance functions. Our measures to prevent, detect and mitigate these threats, including password protection, firewalls, backup servers, threat monitoring, log aggregation, vulnerability scanning, data encryption, periodic penetration testing and multifactor authentication, may not be successful in preventing a data breach or limiting the effects of a breach. Furthermore, the security measures employed by third-party service providers may prove to be ineffective at preventing breaches of their systems.
The primary risks that could directly result from the occurrence of a cyber incident include operational interruption, damage to our relationship with our tenants, and private data exposure. We could be required to expend significant capital and other resources to address any data security incident or breach, which may not be covered or fully covered by our insurance and which may involve payments for investigations, forensic analyses, legal advice, public relations advice, system repair or replacement, or other services. Our financial results may be negatively impacted by such an incident or any resulting negative media attention.
A cyber incident could:
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disrupt the proper functioning of our networks and systems and therefore our operations and/or those of certain of our tenants;
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result in misstated financial reports, violations of loan covenants and/or missed reporting deadlines;
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result in our inability to properly monitor our compliance with the rules and regulations regarding our qualification as a REIT;
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result in the unauthorized access to, and destruction, loss, theft, misappropriation or release of proprietary, confidential, sensitive or otherwise valuable information of ours or others, which others could use to compete against us or for disruptive, destructive or otherwise harmful purposes and outcomes;
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result in our inability to maintain the building systems relied upon by our tenants for the efficient use of their leased space;
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require significant management attention and resources to remedy and damages that result;
● subject us to regulatory enforcement;
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subject us to claims for breach of contract, damages, credits, penalties or termination of leases or other agreements; or
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damage our reputation among our tenants, investors and associates.
Moreover, cyber incidents perpetrated against our tenants, including unauthorized access to customers’ credit card data and other confidential information, could diminish consumer confidence and consumer spending and negatively impact our business.
We may be subject to liability under environmental laws, ordinances and regulations.
Under various federal, state, and local laws, ordinances and regulations, we may be considered an owner or operator of real property and may be responsible for paying for the disposal or treatment of hazardous or toxic substances released on or in our property, as well as certain other potential costs relating to hazardous or toxic substances (including governmental fines and injuries to persons and property). This liability may be imposed whether or not we knew about, or were responsible for, the presence of hazardous or toxic substances.
Natural disasters, severe weather conditions and the effects of climate change could have an adverse impact on our financial condition, results of operations and cash flows.
Our operations are located in areas that are subject to natural disasters and severe weather conditions such as hurricanes, tornados, earthquakes, snowstorms, floods and fires, and the frequency of these natural disasters and severe weather conditions may increase due to climate change. The occurrence of natural disasters, severe weather conditions and the effects of climate change can delay new development or redevelopment projects, increase investment costs to repair or replace damaged properties, increase operation costs, including the cost of energy at our properties, increase costs for future property insurance, negatively impact the tenant demand for lease space and cause substantial damages or losses to our properties which could exceed any applicable insurance coverage. The incurrence of any of these losses, costs or business interruptions may adversely affect our financial condition, results of operations and cash flows.
In addition, changes in government legislation and regulation on climate change could result in increased capital expenditures to improve the energy efficiency of our existing properties and could also require us to spend more on our development or redevelopment projects without a corresponding increase in revenues, which may adversely affect our financial condition, results of operations and cash flows.
Pandemics or other health crises may adversely affect our tenants’ financial condition and the profitability of our properties.
Our business and the businesses of our tenants could be materially and adversely affected by the risks, or the public perception of the risks, related to a pandemic or other health crisis, such as the recent outbreak of novel coronavirus (COVID-19).
Such events could result in the complete or partial closure of one or more of our tenants’ manufacturing facilities or distribution centers, temporary or long-term disruption in our tenants’ supply chains from local and international suppliers, and /or delays in the delivery of our tenants’ inventory.
The profitability of our properties depends, in part, on the willingness of customers to visit our tenants’ businesses. The risk, or public perception of the risk, of a pandemic or media coverage of infectious diseases could cause employees or customers to avoid our properties, which could adversely affect foot traffic to our tenants’ businesses and our tenants’ ability to adequately staff their businesses. Such events could adversely impact tenants’ sales and/or cause the temporary closure of our tenants’ businesses, which could severely disrupt their operations and have a material adverse effect on our business, financial condition and results of operations.
The Company’s business, financial condition, results of operations or stock price has and may continue to be adversely impacted by the COVID-19 pandemic and such impact could be material.
In March 2020, the outbreak of COVID-19 was recognized as a pandemic by the WHO. The COVID-19 pandemic has resulted in a widespread health crisis that has had a significant adverse effect on businesses, economies and financial markets worldwide, and has caused significant volatility in U.S. and international debt and equity markets. There is significant uncertainty around the extent and duration of business disruptions related to COVID-19, as well as its long-term impact on the U.S. economy.
Our business and the businesses of our tenants have been adversely affected by the COVID-19 pandemic and actions taken to contain or prevent its spread. A substantial number of tenants have temporarily or permanently closed their businesses, have shortened their operating hours or offered reduced services. As a result, the Company has also had a substantial number of tenants that have made late or partial rent payments, requested a deferral of rent payments, forgiveness of rent payments or defaulted on rent payments, and it is likely that more of our tenants will be similarly impacted in the future. Impacts of COVID-19 could also result in the complete or partial closure of one or more of our tenants’ manufacturing facilities or distribution centers, temporary or long-term disruption in our tenants’ supply chains from local and international suppliers, and/or delays in the delivery of our tenants’ inventory.
Even after governmental restrictions are lifted, our tenants may continue to be impacted by economic conditions resulting from COVID-19 or public perception of the risk of COVID-19, which could adversely affect foot traffic to our tenants’ businesses and our tenants’ ability to adequately staff their businesses. Such events could severely disrupt their operations and have a material adverse effect on our business, financial condition and results of operations. A downturn in our tenants’ businesses that significantly weakens their financial condition could cause them to delay lease commencements or decline to extend or renew leases upon expiration and could lead to additional failures to make rental payments when due, store closures or bankruptcies, and we may be unable to collect past due balances under relevant leases. We have received requests for rent relief from some of our tenants. We are assessing these requests on a case-by-case basis and have agreed, and may continue to agree, to certain relief. It is likely there will be additional requests for relief in the future.
In addition, like many other companies, due to government mandates, we have instructed our employees to work from home, which, especially if this persists for a prolonged period of time, may have an adverse impact on our employees, operations and systems. Extended periods of remote work arrangements could strain our business continuity plans, introduce operational risk, including but not limited to cybersecurity risks, and impair our ability to manage our business. While most of our operations can be performed remotely, there is no guarantee that we will be as effective while working remotely because our team is dispersed, many employees may have additional personal needs to attend to and employees may become sick themselves and be unable to work. Decreased effectiveness of our team could adversely affect our results due to our inability to meet in person with potential tenants, longer time periods to review and approve leases, longer time to respond to tenant and property issues, or other decreases in productivity that could seriously harm our business.
The COVID-19 pandemic, or a future pandemic, could also have material and adverse effects on our ability to successfully operate and on our financial condition, results of operations and cash flows due to, among other factors:
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a complete or partial closure of, or other operational issues at, one or more of our properties resulting from government or tenant action;
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the reduced economic activity severely impacts our tenants' businesses, financial condition and liquidity and may cause one or more of our tenants to be unable to meet their obligations to us in full, or in part, or to otherwise seek modifications of such obligations;
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the reduced economic activity could result in a prolonged recession, which could negatively impact consumer discretionary spending;
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difficulty accessing debt and equity capital on attractive terms, or at all, impacts to our credit ratings, and a prolonged severe disruption and instability in the global financial markets or deteriorations in credit and financing conditions may affect our access to capital necessary to fund business operations or address maturing liabilities on a timely basis and our tenants' ability to fund their business operations and meet their obligations to us;
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the financial impact of the COVID-19 pandemic could negatively impact our future compliance with financial covenants of our Credit Facility and other debt agreements and result in a default and potentially an acceleration of indebtedness, which non-compliance could negatively impact our ability to make additional borrowings under our Credit Facility and pay dividends;
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any impairment in value of our real estate assets that is recorded as a result of weaker economic conditions;
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a continued decline in business activity and demand for real estate transactions could adversely affect our ability or desire to grow our portfolio of properties; and
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a deterioration in our or our tenants' ability to operate in affected areas or delays in the supply of products or services to us or our tenants from vendors that are needed for our or our tenants' efficient operations could adversely affect our operations and those of our tenants.
The extent to which the COVID-19 pandemic continues to impact our business, results of operations, financial condition and stock price will depend on numerous evolving factors that are highly uncertain and which we may not be able to predict, including the duration and scope of the pandemic, governmental, business and individual actions that have been and continue to be taken in response to the pandemic, the impact on economic activity from the pandemic and actions taken in response, the impact on our employees and other operational disruptions or difficulties we may face, the effect on our tenants and their businesses, the ability of tenants to pay their contracted rents and any additional closures of our tenants’ businesses. These effects, individually or in the aggregate, will adversely impact our tenant’s ability to pay their contracted rent. Any of these events could materially adversely impact our business, financial condition, results of operations or stock price.
Financial disruption or a prolonged economic downturn could materially and adversely affect the Company’s business.
Worldwide financial markets have recently experienced periods of extraordinary disruption and volatility, which has been exacerbated by the COVID-19 pandemic, resulting in heightened credit risk, reduced valuation of investments and decreased economic activity. Moreover, many companies have experienced reduced liquidity and uncertainty as to their ability to raise capital during such periods of market disruption and volatility. In the event that these conditions recur or result in a prolonged economic downturn, our results of operations, financial position or liquidity could be materially and adversely affected. These market conditions may affect the Company's ability to access debt and equity capital markets. In addition, as a result of recent financial events, we may face increased regulation.
Corporate responsibility, specifically related to ESG factors, may impose additional costs and expose us to new risks.
The importance of sustainability evaluations is becoming more broadly accepted by investors and shareholders. Certain organizations that provide corporate governance and other corporate risk information to investors and shareholders have developed scores and ratings to evaluate companies and investment funds based upon ESG or “sustainability” metrics. Many investment funds focus on positive ESG business practices and sustainability scores when making investments and may consider a company’s sustainability score as a reputational or other factor in making an investment decision. In addition, investors, particularly institutional investors, use these scores to benchmark companies against their peers and if a company is perceived as lagging, these investors may engage with companies to require improved ESG disclosure or performance. We may face reputational damage in the event our corporate responsibility procedures or standards do not meet the standards set by various constituencies. In addition, the criteria by which companies are rated may change, which could cause us to receive lower scores than previous years. A low sustainability score could result in a negative perception of the Company, or exclusion of our common stock from consideration by certain investors who may elect to invest with our competition instead.
Our success depends largely on the continued service and availability of key personnel.
We depend on the deep industry knowledge and efforts of key personnel, including our executive officers, to manage our day-to-day operations and strategic business direction. Our ability to attract, retain and motivate key personnel may significantly impact our future performance, and if any of our executive officers or other key personnel depart the Company, for any reason, we may not be able to easily replace such individual. The loss of the services of our executive officers and other key personnel could have a material adverse effect on our financial condition, results of operations and cash flows.
Risks Related to Our Debt and Equity Securities
We may be unable to obtain financing through the debt and equity markets, which would have a material adverse effect on our growth strategy, our financial condition and our results of operations.
We cannot assure you that we will be able to access the credit and/or equity markets to obtain additional debt or equity financing or that we will be able to obtain financing on terms favorable to us. The inability to obtain financing on a timely basis could have negative effects on our business, such as:
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we could have great difficulty acquiring or developing properties, which would materially adversely affect our investment strategy;
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our liquidity could be adversely affected;
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we may be unable to repay or refinance our indebtedness;
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we may need to make higher interest and principal payments or sell some of our assets on terms unfavorable to us to fund our indebtedness; or
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we may need to issue additional capital stock, which could further dilute the ownership of our existing stakeholders.
Adverse changes in our credit ratings could impair our ability to obtain additional debt and equity financing on terms favorable to us, if at all, and could significantly reduce the market price of our publicly traded securities.
We are subject to financial covenants that may restrict our operating and acquisition activities.
Our Credit Facility and the indentures under which our senior unsecured debt is issued contain certain financial and operating covenants, including, among other things, certain coverage ratios and limitations on our ability to incur debt, make dividend payments, sell all or substantially all of our assets and engage in mergers and consolidations and certain acquisitions. These covenants may restrict our ability to pursue certain business initiatives or certain acquisition transactions that might otherwise be advantageous. In addition, failure to meet any of the financial covenants could cause an event of default under our Credit Facility and the indentures and/or accelerate some or all of our indebtedness, which would have a material adverse effect on us.
Impacts from transition away from London Inter-bank Offered Rate (“LIBOR”).
A portion of our long-term indebtedness bears interest at fluctuating interest rates based on LIBOR for deposits of U.S. dollars. LIBOR and certain other interest “benchmarks” may be subject to regulatory guidance and/or reform that could cause interest rates under our current or future debt agreements to perform differently than in the past or cause other unanticipated consequences. The United Kingdom’s Financial Conduct Authority, which regulates LIBOR, has announced that it intends to stop encouraging or requiring banks to submit LIBOR rates after 2021, and it is unclear if LIBOR will cease to exist or if new methods of calculating LIBOR will evolve. In November 2020, ICE Benchmark Association, the administrator of LIBOR, published a consultation regarding its intention to cease publication of U.S. dollar LIBOR after June 2023. If LIBOR ceases to exist or if the methods of calculating LIBOR change from their current form, interest rates on our current or future indebtedness may be adversely affected.
Changes in market conditions could adversely affect the market price of our publicly traded securities.
The market price of our publicly traded securities depends on various market conditions, which may change from time-to-time. Among the market conditions that may affect the market price of our publicly traded securities are the following:
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the extent of institutional investor interest in us;
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the reputation of REITs generally and the reputation of REITs with portfolios similar to ours;
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the attractiveness of the securities of REITs in comparison to securities issued by other entities, including securities issued by other real estate companies;
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our financial condition and performance;
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the market’s perception of our growth potential, potential future cash dividends and risk profile;
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an increase in market interest rates, which may lead prospective investors to demand a higher distribution rate in relation to the price paid for our shares; and
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general economic and financial market conditions.
We may change the dividend policy for our common stock in the future.
The decision to declare and pay dividends on our common stock in the future, as well as the timing, amount and composition of any such future dividends, will be at the sole discretion of our Board of Directors and will depend on our earnings, operating cash flows, liquidity, financial condition, capital requirements, contractual prohibitions or other limitations under our indebtedness including preferred stock, the annual distribution requirements under the REIT provisions of the Code, state law and such other factors as our Board of Directors deems relevant or are requirements under the Code or state or federal laws. Any negative change in our dividend policy could have a material adverse effect on the market price of our common stock.
Our charter and bylaws and Maryland law contain provisions that may delay, defer or prevent a change of control transaction, even if such a change in control may be in our best interest, and as a result may depress the market price of our securities.
Our charter contains certain ownership limits. Our charter contains various provisions that are intended to preserve our qualification as a REIT and, subject to certain exceptions, authorize our directors to take such actions as are necessary or appropriate to preserve our qualification as a REIT. For example, our charter prohibits the actual, beneficial or constructive ownership by any person of more than 9.8% in value or number of shares, whichever is more restrictive, of the outstanding shares of our common stock, and more than 9.8% in value of the aggregate outstanding shares of all classes and series of our stock. Our Board of Directors, in its sole and absolute discretion, may exempt a person, prospectively or retroactively, from these ownership limits if certain conditions are satisfied. The restrictions on ownership and transfer of our stock may:
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discourage a tender offer or other transactions or a change in management or of control that might involve a premium price for our common stock or that our stockholders otherwise believe to be in their best interests; or
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result in the transfer of shares acquired in excess of the restrictions to a trust for the benefit of a charitable beneficiary and, as a result, the forfeiture by the acquirer of the benefits of owning the additional shares.
Risks Related to Our Status as a REIT and Related U.S. Federal Income Tax Matters
Loss of our tax status as a REIT or changes in U.S. federal income tax laws, regulations, administrative interpretations or court decisions relating to REITs could have significant adverse consequences to us and the value of our securities.
We have elected to be taxed as a REIT for U.S. federal income tax purposes under the Code. We believe that we are organized and operate in a manner that has allowed us to qualify and will allow us to remain qualified as a REIT under the Code. However, there can be no assurance that we have qualified or will continue to qualify as a REIT for U.S. federal income tax purposes.
Qualification as a REIT involves the application of highly technical and complex Code provisions, for which there are only limited judicial and administrative interpretations. The determination of various factual matters and circumstances not entirely within our control may affect our ability to qualify as a REIT. The rules dealing with U.S. federal income taxation are constantly under review by persons involved in the legislative process and by the U.S. Internal Revenue Service (the "IRS") and U.S. Department of the Treasury. We cannot predict how changes in the tax laws might affect our investors or us. New legislation, regulations, administrative interpretations or court decisions could significantly and negatively change the tax laws with respect to qualification as a REIT, the U.S. federal income tax consequences of such qualification or the desirability of an investment in a REIT relative to other investments.
In order to qualify as a REIT, we must satisfy a number of requirements, including requirements regarding the ownership of our stock, the composition of our assets and the sources of our gross income. Also, we must make distributions to stockholders aggregating annually at least 90% of our REIT taxable income, excluding net capital gains. Furthermore, we own a direct or indirect interest in certain subsidiary REITs which have elected to be taxed as REITs for U.S. federal income tax purposes under the Code. Provided that each subsidiary REIT qualifies as a REIT, our interest in such subsidiary REIT will be treated as a qualifying real estate asset for purposes of the REIT asset tests. To qualify as a REIT, the subsidiary REIT must independently satisfy all of the REIT qualification requirements. The failure of a subsidiary REIT to qualify as a REIT could have an adverse effect on our ability to comply with the REIT income and asset tests, and thus our ability to qualify as a REIT.
If we were to lose our REIT status, we would face serious tax consequences that would substantially reduce the funds available to pay dividends to stockholders for each of the years involved because:
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we would not be allowed a deduction for dividends to stockholders in computing our taxable income and we would be subject to the regular U.S. federal corporate income tax;
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we could possibly be subject to the federal alternative minimum tax for taxable years prior to 2018 or increased state and local taxes;
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unless we were entitled to relief under statutory provisions, we could not elect to be taxed as a REIT for four taxable years following the year during which we were disqualified; and
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we would not be required to make distributions to stockholders.
Our failure to qualify as a REIT or new legislation or changes in U.S. federal income tax laws including with respect to qualification as a REIT or the tax consequences of such qualification, could also impair our ability to expand our business or raise capital and have a materially adverse effect on the value of our securities.
To maintain our REIT status, we may be forced to borrow funds during unfavorable market conditions, and the unavailability of such capital on favorable terms at the desired times, or at all, may cause us to curtail our investment activities and/or to dispose of assets at inopportune times, which could adversely affect our financial condition, results of operations, cash flows and per share trading price of our common stock.
To qualify as a REIT, we generally must distribute to our stockholders at least 90% of our REIT taxable income each year, excluding net capital gains, and we will be subject to regular U.S. federal corporate income taxes on the amount we distribute that is less than 100% of our net taxable income each year, including capital gains. In addition, we will be subject to a 4% nondeductible excise tax on the amount, if any, by which distributions paid by us in any calendar year are less than the sum of 85% of our ordinary income, 95% of our capital gain net income and 100% of our undistributed income from prior years. While we have historically satisfied these distribution requirements by making cash distributions to our stockholders, a REIT is permitted to satisfy these requirements by making distributions of cash or other property, including, in limited circumstances, its own stock. Assuming we continue to satisfy these distribution requirements with cash, we may need to borrow funds to meet the REIT distribution requirements and avoid the payment of income and excise taxes even if the then prevailing market conditions are not favorable for these borrowings. These borrowing needs could result from differences in timing between the actual receipt of cash and inclusion of income for U.S. federal income tax purposes, or the effect of non-deductible capital expenditures, the creation of cash reserves or required debt or amortization payments. These sources, however, may not be available on favorable terms or at all. Our access to third-party sources of capital depends on a number of factors, including the market's perception of our growth potential, our current debt levels, the market price of our common stock, and our current and potential future earnings. We cannot assure you that we will have access to such capital on favorable terms at the desired times, or at all, which may cause us to curtail our investment activities and/or to dispose of assets at inopportune times, and could adversely affect our financial condition, results of operations, cash flows and per share trading price of our common stock.
The tax imposed on REITs engaging in “prohibited transactions” may limit our ability to engage in transactions which would be treated as sales for U.S. federal income tax purposes.
A REIT's net income from prohibited transactions is subject to a 100% penalty tax. In general, prohibited transactions are sales or other dispositions of property, other than foreclosure property, held primarily for sale to customers in the ordinary course of business. Although we do not intend to hold any properties that would be characterized as held for sale to customers in the ordinary course of our business, unless a sale or disposition qualifies under certain statutory safe harbors, such characterization is a factual determination and no guarantee can be given that the IRS would agree with our characterization of our properties or that we will always be able to make use of the available safe harbors.
Dividends payable by REITs do not qualify for the reduced tax rates available for some dividends.
The maximum tax rate applicable to “qualified dividend income” payable to U.S. stockholders that are individuals, trusts and estates is 20%. Dividends payable by REITs, however, generally are not eligible for these reduced rates. U.S. stockholders that are individuals, trusts and estates generally may deduct up to 20% of the ordinary dividends (i.e., dividends not designated as capital gain dividends or qualified dividend income) received from a REIT for taxable years beginning before January 1, 2026. Although this deduction reduces the effective tax rate applicable to certain dividends paid by REITs (generally to 29.6% assuming the shareholder is subject to the 37% maximum rate), such tax rate is still higher than the tax rate applicable to corporate dividends that constitute qualified dividend income. Accordingly, investors who are individuals, trusts and estates may perceive investments in REITs to be relatively less attractive than investments in the stocks of non-REIT corporations that pay dividends treated as qualified dividend income, which could materially and adversely affect the value of the shares of REITs, including the per share trading price of our common stock.

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ITEM 1B. UNRESOLVED STAFF COMMENTS
Item 1B. Unresolved Staff Comments
None.

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ITEM 2. PROPERTIES
Item 2. Properties
Real Estate Portfolio. As of December 31, 2020, the Company had interests in 400 shopping center properties aggregating 70.1 million square feet of GLA located in 27 states and Puerto Rico. In addition, the Company had 122 other property interests, primarily through the Company’s preferred equity investments and other real estate investments, totaling 5.4 million square feet of GLA. Open-air shopping centers comprise the primary focus of the Company's current portfolio. As of December 31, 2020, the Company’s Combined Shopping Center Portfolio, including noncontrolling interests, was 93.9% leased.
The Company's open-air shopping center properties, which are generally owned and operated through subsidiaries or joint ventures, had an average size of 175,302 square feet as of December 31, 2020. The Company generally retains its shopping centers for long-term investment and consequently pursues a program of regular physical maintenance together with redevelopment, major renovations and refurbishing to preserve and increase the value of its properties. This includes renovating existing facades, installing uniform signage, resurfacing parking lots and enhancing parking lot lighting. During 2020, the Company expended $175.7 million in connection with property redevelopments and $45.6 million related to improvements.
The Company's management believes its experience in the real estate industry and its relationships with numerous national and regional tenants gives it an advantage in an industry where ownership is fragmented among a large number of property owners. The Company's open-air shopping centers are usually "anchored" by a grocery store, off-price retailer, discounter or service-oriented tenant. 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 shopping centers, the Company has established close relationships with a large number of major national and regional retailers. Some of the major national and regional companies that are tenants in the Company's shopping center properties include TJX Companies, The Home Depot, Ahold Delhaize, Albertsons Companies, Ross Stores, PetSmart, Whole Foods Market, Walmart, Burlington Stores and Bed Bath & Beyond.
The Company reduces its operating and leasing risks through diversification achieved by the geographic distribution of its properties and a large tenant base. As of December 31, 2020, no single open-air shopping center accounted for more than 2.0% 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, or more than 2.0% of the Company’s total shopping center GLA. At December 31, 2020, the Company’s five largest tenants were TJX Companies, The Home Depot, Ahold Delhaize, Albertsons Companies and Ross Stores, which represented 4.0%, 2.6%, 2.1%, 2.0% and 1.9%, 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.
A substantial portion of the Company's income consists of rent received under long-term leases. Most of the leases provide for the payment of fixed-base rentals monthly in advance and for the payment by tenants of an allocable share of the real estate taxes, insurance, utilities and common area maintenance expenses incurred in operating the shopping centers (certain of the leases provide for the payment of a fixed-rate reimbursement of these such expenses). Although many of the leases require the Company to make roof and structural repairs as needed, a number of tenant leases place that responsibility on the tenant, and the Company's standard small store lease provides for reimbursements by the tenant as part of common area maintenance. Additionally, many of the leases provide for reimbursements by the tenant of capital expenditures.
Minimum base rental revenues and operating expense reimbursements accounted for 99% and other revenues, including percentage rents, accounted for 1% of the Company's total revenues from rental properties for the year ended December 31, 2020. The Company's management believes that the base rent per leased square foot for many of the Company's existing leases is generally lower than the prevailing market-rate base rents in the geographic regions where the Company operates, reflecting the potential for future growth. Additionally, a majority of the Company’s leases have provisions requiring contractual rent increases. The Company’s leases may also include escalation clauses, which provide for increases based upon changes in the consumer price index or similar inflation indices.
As of December 31, 2020, the Company’s consolidated operating portfolio, comprised of 311 shopping center properties aggregating 51.0 million square feet of GLA, was 93.9% leased. The consolidated operating portfolio consists entirely of properties located in the U.S., inclusive of Puerto Rico For the period January 1, 2020 to December 31, 2020, the Company increased the average base rent per leased square foot, which includes the impact of tenant concessions, in its consolidated portfolio of open-air shopping centers from $17.96 to $18.16, an increase of $0.20. This increase primarily consists of (i) an $0.18 increase relating to rent step-ups within the portfolio and new leases signed net of leases vacated and (ii) a $0.02 increase relating to dispositions.
The Company has a total of 5,277 leases in the consolidated operating portfolio. The following table sets forth the aggregate lease expirations for each of the next ten years, assuming no renewal options are exercised. For purposes of the table, the Total Annual Base Rent Expiring represents annualized rental revenue, excluding the impact of straight-line rent, for each lease that expires during the respective year. Amounts in thousands, except for number of leases data:
Year Ending
December 31,
Number of
Leases
Expiring
Square Feet
Expiring
Total Annual Base
Rent Expiring
% of Gross
Annual Rent
(1)
$ 10,931
1.3 %
3,930
$ 64,045
7.9 %
5,684
$ 98,680
12.2 %
5,770
$ 98,264
12.1 %
5,094
$ 93,610
11.6 %
5,245
$ 92,695
11.4 %
5,311
$ 76,080
9.4 %
3,269
$ 51,477
6.4 %
3,398
$ 61,161
7.6 %
2,601
$ 45,274
5.6 %
1,704
$ 32,698
4.0 %
(1)
Leases currently under a month to month lease or in process of renewal.
During 2020, the Company executed 761 leases totaling over 5.3 million square feet in the Company’s consolidated operating portfolio comprised of 204 new leases and 557 renewals and options. The leasing costs associated with these new leases are estimated to aggregate $39.1 million or $31.11 per square foot. These costs include $30.4 million of tenant improvements and $8.7 million of external leasing commissions. The average rent per square foot for (i) new leases was $19.10 and (ii) renewals and options was $18.33. The Company will seek to obtain rents that are higher than amounts within its expiring leases, however, there are many variables and uncertainties which can significantly affect the leasing market at any time; as such, the Company cannot guarantee that future leases will continue to be signed for rents that are equal to or higher than current amounts.
Ground-Leased Properties. The Company has interests in 30 consolidated shopping center properties that are subject to long-term ground leases where a third-party owns and has leased the underlying land to the Company to construct and/or operate a shopping center. The Company pays rent for the use of the land and generally is responsible for all costs and expenses associated with the building and improvements. At the end of these long-term leases, unless extended, the land together with all improvements reverts to the landowner.
More specific information with respect to each of the Company's property interests is set forth in Exhibit 99.1, which is incorporated herein by reference.

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ITEM 3. LEGAL PROCEEDINGS
Item 3. Legal Proceedings
The Company is not presently involved in any litigation nor, to its knowledge, is any litigation threatened against the Company or its subsidiaries that, in management's opinion, would result in any material effect on the Company's ownership, management or operation of its properties taken as a whole, or which is not covered by the Company's liability insurance.

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ITEM 4. MINE SAFETY DISCLOSURE
Item 4. Mine Safety Disclosures
Not applicable.
PART II

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ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY
Item 5. Market for the Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
Market Information: The Company’s common stock is traded on the NYSE under the trading symbol "KIM".
Holders: The number of holders of record of the Company's common stock, par value $0.01 per share, was 1,944 as of February 1, 2021.
Dividends: Since the IPO, the Company has paid regular quarterly cash dividends to its stockholders. While the Company intends to continue paying regular quarterly cash dividends, future dividend declarations will be paid at the discretion of the Board of Directors and will depend on the actual cash flows of the Company, its financial condition, capital requirements, the annual distribution requirements under the REIT provisions of the Code and such other factors as the Board of Directors deems relevant. The Company’s Board of Directors will continue to evaluate the Company’s dividend policy on a quarterly basis as they monitor sources of capital and evaluate operating fundamentals. The Company is required by the Code to distribute at least 90% of its REIT taxable income. The actual cash flow available to pay dividends will be affected by a number of factors, including the revenues received from operating properties, the operating expenses of the Company, the interest expense on its borrowings, the ability of lessees to meet their obligations to the Company, the ability to refinance near-term debt maturities and any unanticipated capital expenditures.
Year Ended December 31,
Dividend paid per share
$ 0.82
$ 1.12
Ordinary income
%
%
Capital gains
%
%
Return of capital
%
%
In addition to common stock offerings, the Company has capitalized on the growth in its business through the issuance of unsecured fixed and floating-rate medium-term notes, underwritten bonds, unsecured bank debt, mortgage debt and construction loans, convertible preferred stock and perpetual preferred stock. Borrowings under the Company's Credit Facility have also been an interim source of funds to both finance the purchase of properties and other investments and meet any short-term working capital requirements. The various instruments governing the Company's issuance of its unsecured public debt, bank debt, mortgage debt and preferred stock impose certain restrictions on the Company regarding dividends, voting, liquidation and other preferential rights available to the holders of such instruments. See "Management's Discussion and Analysis of Financial Condition and Results of Operations" and Footnotes 13, 14 and 17 of the Notes to Consolidated Financial Statements included in this Form 10-K.
The Company does not believe that the preferential rights available to the holders of its Class L Preferred Stock and Class M Preferred Stock, the financial covenants contained in its public bond indentures, as amended, or the credit agreement for its Credit Facility will have an adverse impact on the Company's ability to pay dividends in the normal course to its common stockholders or to distribute amounts necessary to maintain its qualification as a REIT.
The Company maintains a dividend reinvestment and direct stock purchase plan (the "Plan") pursuant to which common and preferred stockholders and other interested investors may elect to automatically reinvest their dividends to purchase shares of the Company’s common stock or, through optional cash payments, purchase shares of the Company’s common stock. The Company may, from time-to-time, either (i) purchase shares of its common stock in the open market or (ii) issue new shares of its common stock for the purpose of fulfilling its obligations under the Plan.
Recent Sales of Unregistered Securities: None.
Issuer Purchases of Equity Securities: During the year ended December 31, 2020, the Company repurchased 294,346 shares for an aggregate purchase price of $5.4 million (weighted average price of $18.27 per share) in connection with common shares surrendered or deemed surrendered to the Company to satisfy statutory minimum tax withholding obligations in connection with the vesting of restricted stock awards under the Company’s equity-based compensation plans. In addition, during February 2020, the Company extended its share repurchase program for a term of two years, which will expire in February 2022, pursuant to which the Company may repurchase shares of its common stock, par value $0.01 per share, with an aggregate gross purchase price of up to $300.0 million. The Company did not make any repurchases under this common share repurchase program during 2020. As of December 31, 2020, the Company had $224.9 million available under this common share repurchase program.
Period
Total
Number of
Shares
Purchased
Average
Price
Paid per
Share
Total Number of
Shares Purchased
as Part of Publicly
Announced Plans
or Programs
Approximate Dollar
Value of Shares that
May Yet Be Purchased
Under the Plans or
Programs
(in millions)
January 1, 2020 - January 31, 2020
30,631
$ 20.63
-
$ 224.9
February 1, 2020 - February 29, 2020
238,412
18.82
-
224.9
March 1, 2020 - March 31, 2020
1,665
17.76
-
224.9
April 1, 2020 - April 30, 2020
-
-
-
224.9
May 1, 2020 - May 31, 2020
17,157
8.76
-
224.9
June 1, 2020 - June 30, 2020
1,020
12.72
-
224.9
July 1, 2020 - July 31, 2020
-
-
-
224.9
August 1, 2020 - August 31, 2020
-
-
-
224.9
September 1, 2020 - September 30, 2020
-
-
-
224.9
October 1, 2020 - October 31, 2020
3,155
11.49
-
224.9
November 1, 2020 - November 30, 2020
2,306
12.80
-
224.9
December 1, 2020 - December 31, 2020
-
-
-
224.9
Total
294,346
$ 18.27
-
Total Stockholder Return Performance: The following performance chart compares, over the five years ended December 31, 2020, the cumulative total stockholder return on the Company’s common stock with the cumulative total return of the S&P 500 Index and the cumulative total return of the NAREIT Equity REITs Index (the “NAREIT Equity REITs”) prepared and published by the National Association of Real Estate Investment Trusts (“NAREIT”). The NAREIT Equity REITs Index is a free-float adjusted, market capitalization-weighted index of U.S. equity REITs. Constituents of the index include all tax-qualified REITs with more than 50% of total assets in qualifying real estate assets other than mortgages secured by real property.
Stockholder return performance, presented annually for the five years ended December 31, 2020, is not necessarily indicative of future results. All stockholder return performance assumes the reinvestment of dividends. The information in this paragraph and the following performance chart are deemed to be furnished, not filed.
Comparison of 5 year cumulative total return data points
Dec-15
Dec-16
Dec-17
Dec-18
Dec-19
Dec-20
Kimco Realty Corporation
$
$
$
$
$
$
S&P 500
$
$
$
$
$
$
NAREIT Equity REITs
$
$
$
$
$
$

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ITEM 6. SELECTED FINANCIAL DATA
Item 6. Selected Financial Data
The following table sets forth selected, historical, consolidated financial data for the Company and should be read in conjunction with the Consolidated Financial Statements of the Company and Notes thereto and "Management’s Discussion and Analysis of Financial Condition and Results of Operations" included in this Form 10-K.
The Company believes that the book value of its real estate assets, which reflects the historical costs of such real estate assets less accumulated depreciation, is not indicative of the current market value of its properties. Historical operating results are not necessarily indicative of future operating performance.
Year Ended December 31,
(in thousands, except per share data)
Operating Data:
Revenues from rental properties, net
$ 1,044,888
$ 1,142,334
$ 1,149,603
$ 1,183,785
$ 1,152,401
Impairment charges (1)
$ (6,624 )
$ (48,743 )
$ (79,207 )
$ (67,331 )
$ (93,266 )
Depreciation and amortization
$ (288,955 )
$ (277,879 )
$ (310,380 )
$ (360,811 )
$ (355,320 )
Gain on sale of properties/change in control of interests (1)
$ 6,484
$ 79,218
$ 229,840
$ 93,538
$ 92,823
Gain/(loss) on marketable securities, net (1) (2)
$ 594,753
$
$ (3,487 )
$ -
$ -
Interest expense
$ (186,904 )
$ (177,395 )
$ (183,339 )
$ (191,956 )
$ (192,549 )
Early extinguishment of debt charges
$ (7,538 )
$ -
$ (12,762 )
$ (1,753 )
$ (45,674 )
(Provision)/benefit for income taxes, net
$ (978 )
$ 3,317
$ (1,600 )
$
$ (78,583 )
Net income
$ 1,002,877
$ 413,561
$ 498,463
$ 439,671
$ 386,138
Net income attributable to the Company
$ 1,000,833
$ 410,605
$ 497,795
$ 426,075
$ 378,850
Net income available to the Company’s common shareholders
$ 975,417
$ 339,988
$ 439,604
$ 372,461
$ 332,630
Earnings per common share:
Net income available to the Company’s common shareholders:
Basic
$ 2.26
$ 0.80
$ 1.02
$ 0.87
$ 0.79
Diluted
$ 2.25
$ 0.80
$ 1.02
$ 0.87
$ 0.79
Weighted average shares of common stock:
Basic
429,950
420,370
420,641
423,614
418,402
Diluted
431,633
421,799
421,379
424,019
419,709
Cash dividends declared per common share
$ 0.540
$ 1.120
$ 1.120
$ 1.090
$ 1.035
Cash flow provided by operations
$ 589,913
$ 583,628
$ 637,936
$ 614,181
$ 592,096
Cash flow (used for)/provided by investing activities
$ (33,273 )
$ (120,421 )
$ 253,645
$ (294,280 )
$ 165,383
Cash flow used for financing activities
$ (387,399 )
$ (482,841 )
$ (986,513 )
$ (223,874 )
$ (804,527 )
December 31,
(in thousands)
Balance Sheet Data:
Real estate, before accumulated depreciation
$ 12,068,827
$ 11,929,276
$ 11,877,190
$ 12,653,446
$ 12,008,075
Total assets
$ 11,614,498
$ 10,997,867
$ 10,999,100
$ 11,763,726
$ 11,230,600
Total debt
$ 5,355,480
$ 5,315,767
$ 4,873,872
$ 5,478,927
$ 5,066,368
Total stockholders' equity
$ 5,608,044
$ 4,864,892
$ 5,333,804
$ 5,394,244
$ 5,256,139
(1)
Amounts exclude noncontrolling interests.
(2)
On January 1, 2018, the Company adopted ASU 2016-01, Financial Instruments-Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities (“ASU 2016-01”). In accordance with the adoption of ASU 2016-01, the Company recognizes changes in the fair value of equity investments with readily determinable fair values in net income. Previously, changes in fair value of the Company’s available-for-sale marketable securities were recognized in accumulated other comprehensive income.

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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations
The following discussion should be read in conjunction with the Consolidated Financial Statements and Notes thereto included in this Form 10-K. Historical results and percentage relationships set forth in the Consolidated Statements of Income contained in the Consolidated Financial Statements, including trends, should not be taken as indicative of future operations.
Critical Accounting Policies
The Consolidated Financial Statements of the Company include the accounts of the Company, its wholly owned subsidiaries and all entities in which the Company has a controlling interest, including where the Company has been determined to be a primary beneficiary of a variable interest entity in accordance with the consolidation guidance of the FASB Accounting Standards Codification. The Company applies these provisions to each of its joint venture investments to determine whether the cost, equity or consolidation method of accounting is appropriate. The Company evaluates performance on a property specific or transactional basis and does not distinguish its principal business or group its operations on a geographical basis for purposes of measuring performance. Accordingly, the Company believes it has a single reportable segment for disclosure purposes in accordance with accounting principles generally accepted in the United States of America (“GAAP”). The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions in certain circumstances that affect amounts reported in the accompanying Consolidated Financial Statements and related notes. In preparing these financial statements, management has made its best estimates and assumptions that affect the reported amounts of assets and liabilities. These estimates are based on, but not limited to, historical results, industry standards and current economic conditions, giving due consideration to materiality. The most significant assumptions and estimates relate to revenue recognition and the recoverability of trade accounts receivable, depreciable lives, valuation of real estate and intangible assets and liabilities, valuation of joint venture investments and other investments, and realizability of deferred tax assets and uncertain tax positions. Application of these assumptions requires the exercise of judgment as to future uncertainties, and, as a result, actual results could materially differ from these estimates.
The Company is required to make subjective assessments as to whether there are impairments in the value of its real estate properties, investments in joint ventures and other investments. The Company’s reported net earnings are directly affected by management’s estimate of impairments.
Revenue Recognition and Recoverability of Trade Accounts Receivable
Revenues from rental properties, net are comprised of minimum base rent, percentage rent, lease termination fee income, amortization of above-market and below-market rent adjustments and straight-line rent adjustments. Upon the adoption of ASU 2016-02, Leases (Topic 842) (“ASU 2016-02”), the Company elected the lessor practical expedient to combine the lease and non-lease components, determined the lease component was the predominant component and as a result, accounted for the combined components under Topic 842. Non-lease components include reimbursements paid to the Company from tenants for common area maintenance costs and other operating expenses. The combined components are included in Revenues from rental properties, net on the Company’s Consolidated Statements of Income.
Base rental revenues from rental properties are recognized on a straight-line basis over the terms of the related leases. Certain of these leases also provide for percentage rents based upon the level of sales achieved by the lessee. These percentage rents are recognized once the required sales level is achieved. Rental income may also include payments received in connection with lease termination agreements. Lease termination fee income is recognized when the lessee provides consideration in order to terminate an existing lease agreement and has vacated the leased space. If the lessee continues to occupy the leased space for a period of time after the lease termination is agreed upon, the termination fee is accounted for as a lease modification based on the modified lease term. Upon acquisition of real estate operating properties, the Company estimates the fair value of identified intangible assets and liabilities (including above-market and below-market leases, where applicable). The capitalized above-market or below-market intangible asset or liability is amortized to rental income over the estimated remaining term of the respective leases, which includes the expected renewal option period for below-market leases.
Also included in Revenues from rental properties, net are ancillary income and tax increment financing (“TIF”) income. Ancillary income is derived through various agreements relating to parking lots, clothing bins, temporary storage, vending machines, ATMs, trash bins and trash collections, seasonal leases, etc. The majority of the revenue derived from these sources is through lease agreements/arrangements and is recognized in accordance with the lease terms described in the lease. The Company has TIF agreements with certain municipalities and receives payments in accordance with the agreements. TIF reimbursement income is recognized on a cash-basis when received.
Trade accounts receivable
The Company reviews its trade accounts receivable, including its straight-line rent receivable, related to base rents, straight-line rent, expense reimbursements and other revenues for collectability. When evaluating the probability of the collection of the lessee’s total accounts receivable, including the corresponding straight-line rent receivable balance on a lease-by-lease basis, the Company considered the effects COVID-19 has had on its tenants, including the corresponding straight-line rent receivable. The Company’s analysis of its accounts receivable included (i) customer credit worthiness, (ii) assessment of risk associated with the tenant, and (iii) current economic trends. In addition, tenants in bankruptcy are analyzed and considerations are made in connection with the expected recovery of pre-petition and post-petition bankruptcy claims. Effective January 1, 2019, in accordance with the adoption of Topic 842, the Company includes provision for doubtful accounts in Revenues from rental properties, net. If a lessee’s accounts receivable balance is considered uncollectible, the Company will write-off the receivable balances associated with the lease and will only recognize lease income on a cash basis. In addition to the lease-specific collectability assessment performed under Topic 842, the analysis also recognizes a general reserve, as a reduction to Revenues from rental properties, for its portfolio of operating lease receivables which are not expected to be fully collectible based on the Company’s historical and current collection experience and the potential for settlement of arrears. Although the Company estimates uncollectible receivables and provides for them through charges against revenues from rental properties, actual results may differ from those estimates. If the Company subsequently determines that it is probable it will collect the remaining lessee’s lease payments under the lease term, the Company will then reinstate the straight-line balance and the lease income will then be limited to the lesser of (i) the straight-line rental income or (ii) the lease payments that have been collected from the lessee.
Real Estate
Depreciable Lives
The Company’s investments in real estate properties are stated at cost, less accumulated depreciation and amortization. Expenditures for maintenance and repairs are charged to operations as incurred. Significant renovations and replacements, which improve and extend the life of the asset, are capitalized.
The Company capitalizes acquisition costs related to real estate operating properties, which qualify as asset acquisitions. Also, upon acquisition of real estate operating properties, the Company estimates the fair value of acquired tangible assets (consisting of land, building, building improvements and tenant improvements) and identified intangible assets and liabilities (consisting of above and below-market leases, in-place leases, and tenant relationships, where applicable), assumed debt and redeemable units issued at the date of acquisition, based on evaluation of information and estimates available at that date. Fair value is determined based on a market approach, which contemplates the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.
Depreciation and amortization are provided on the straight-line method over the estimated useful lives of the assets, as follows:
Buildings and building improvements (in years)
5 to 50
Fixtures, leasehold and tenant improvements (including certain identified intangible assets)
Terms of leases or useful lives, whichever is shorter
The Company is required to make subjective assessments as to the useful lives of its properties for purposes of determining the amount of depreciation to reflect on an annual basis with respect to those properties. These assessments have a direct impact on the Company’s net earnings.
Valuation of Real Estate, and Intangible Assets and Liabilities
On a continuous basis, management assesses whether there are any indicators, including property operating performance, changes in anticipated holding period, general market conditions and delays of development, that the value of the real estate properties (including any related amortizable intangible assets or liabilities) may be impaired. A property value is considered impaired only if management’s estimate of current and projected operating cash flows, net of anticipated construction and leasing costs (undiscounted and unleveraged), of the property over its anticipated hold period is less than the net carrying value of the property. Such cash flow projections consider factors such as expected future costs of materials and labor, operating income, trends and prospects, as well as the effects of demand, competition and other factors. To the extent impairment has occurred, the carrying value of the property would be adjusted to reflect the estimated fair value of the property. The Company’s estimated fair values are primarily based upon estimated sales prices from signed contracts or letters of intent from third-parties, discounted cash flow models or third-party appraisals. Estimated fair values that are based on discounted cash flow models include all estimated cash inflows and outflows over a specified holding period. Capitalization rates and discount rates utilized in these models are based upon unobservable rates that the Company believes to be within a reasonable range of current market rates.
When a real estate asset is identified by management as held-for-sale, the Company ceases depreciation of the asset and estimates the sales price of such asset net of selling costs. If, in management’s opinion, the net sales price of the asset is less than the net book value of such asset, an adjustment to the carrying value would be recorded to reflect the estimated fair value of the property.
Valuation of Joint Venture Investments and Other Investments
The Company accounts for its investments in unconsolidated joint ventures under the equity method of accounting as the Company exercises significant influence, but does not control, these entities. These investments are recorded initially at cost and are subsequently adjusted for cash contributions and distributions. Earnings for each investment are recognized in accordance with each respective investment agreement and, where applicable, are based upon an allocation of the investment’s net assets at book value as if the investment was hypothetically liquidated at the end of each reporting period.
The Company’s joint ventures and other real estate investments primarily consist of co-investments with institutional and other joint venture partners in open-air shopping center properties, consistent with its core business. These joint ventures typically obtain non-recourse third-party financing on their property investments, thus contractually limiting the Company’s exposure to losses to the amount of its equity investment, and, due to the lender’s exposure to losses, a lender typically will require a minimum level of equity in order to mitigate its risk. From time to time the joint ventures will obtain unsecured debt, which may be guaranteed by the joint venture. The Company’s exposure to losses associated with its unconsolidated joint ventures is primarily limited to its carrying value in these investments.
On a continuous basis, management assesses whether there are any indicators, including property operating performance and general market conditions, that the value of the Company’s investments in unconsolidated joint ventures may be impaired. An investment’s value is impaired only if management’s estimate of the fair value of the investment is less than the carrying value of the investment and such difference is deemed to be other-than-temporary. To the extent impairment has occurred, the loss will be measured as the excess of the carrying amount of the investment over the estimated fair value of the investment. Estimated fair values which are based on discounted cash flow models include all estimated cash inflows and outflows over a specified holding period, capitalization rates and discount rates utilized in these models are based upon unobservable rates that the Company believes to be within a reasonable range of current market rates.
Realizability of Deferred Tax Assets and Uncertain Tax Positions
The Company is subject to U.S. federal, state and local income taxes on the income from its activities relating to its TRSs and subject to local taxes on certain non-U.S. investments. The Company accounts for income taxes using the asset and liability method, which requires that deferred tax assets and liabilities be recognized based on future tax consequences of temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply in the years in which temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in earnings in the period when the changes are enacted.
A reduction of the carrying amounts of deferred tax assets by a valuation allowance is required if, based on the evidence available, it is more likely than not (i.e., a likelihood of more than 50 percent) that some portion or all of the deferred tax assets will not be realized. The valuation allowance, which requires significant judgement from management, should be sufficient to reduce the deferred tax asset to the amount that is more likely than not to be realized. The Company’s reported net earnings are directly affected by management’s judgement in determining a valuation allowance.
The Company recognizes and measures benefits for uncertain tax positions, which requires significant judgment from management. Although the Company believes it has adequately reserved for any uncertain tax positions, no assurance can be given that the final tax outcome of these matters will not be different. The Company adjusts these reserves in light of changing facts and circumstances, such as the closing of a tax audit or the refinement of an estimate. Changes in the recognition or measurement of uncertain tax positions could result in material increases or decreases in the Company’s income tax expense in the period in which a change is made, which could have a material impact on operating results (see Footnote 22 of the Notes to Consolidated Financial Statements included in this Form 10-K).
Executive Overview
Kimco Realty Corporation is one of North America’s largest publicly traded owners and operators of open-air, grocery-anchored shopping centers and mixed-use assets. The executive officers are engaged in the day-to-day management and operation of real estate exclusively with the Company, with nearly all operating functions, including leasing, asset management, maintenance, construction, legal, finance and accounting, administered by the Company.
COVID-19 Pandemic
The COVID-19 pandemic has resulted in a widespread health crisis that has adversely affected businesses, economies and financial markets worldwide, and has caused significant volatility in U.S. and international debt and equity markets. The COVID-19 pandemic has significantly impacted the retail sector in which the Company operates and, if the effects of the pandemic are prolonged, it could continue to have a significant adverse impact on the underlying industries of many of the Company’s tenants. The majority of the Company’s tenants and their operations have been impacted, and may continue to be impacted, affecting their ability to pay rent. Through the duration of the pandemic a substantial number of tenants have had to temporarily or permanently close their business, shortened their operating hours or offer reduced services for some period of time.
As a result of the current economic uncertainty and the impact to many of the Company’s tenants, the Company has taken important steps to offer its support, including:
●
The Company has worked, and continues to work, with these tenants to grant rent deferrals or rent waivers on a lease by lease basis.
●
The Company established a Tenant Assistance Program to assist small business tenants in identifying and applying for federal and state aid to help support their businesses during the COVID-19 pandemic. In partnership with advisory firms the Company provides assistance with the application process at the Company’s expense. These firms assist tenants in identifying suitable loan programs, identifying potential lending institutions, and preparing and submitting applications.
●
The Company is closely monitoring recommendations and mandates of federal, state and local governments, and health authorities.
●
At the onset of the COVID-19 pandemic in the U.S., the Company immediately increased the frequency and intensity of its janitorial services to help prevent the spread of the virus. Areas such as public bathrooms, interior concourses and hallways, vestibules and shared doors, and elevators and escalators are being sanitized multiple times per day.
●
The Company’s teams worked to provide additional assistance in the communities where it operates, finding creative ways to use its conveniently located shopping centers during this difficult time. The Company fast-tracked the approval of drive-thru testing centers, blood-drive locations, and school lunch pick-ups.
● The Company launched the Kimco Curbside Pickup™ program designating dedicated parking spots for curbside merchandise pickup at its shopping centers for use by all tenants and their customers.
As of December 31, 2020, mandated or voluntary tenant closures represented 2.7% of annual base rent for all of the Company's wholly owned locations and the Company's share of ownership in joint ventures (collectively, the "pro-rata annual base rent"). As a result, the Company has also had a substantial number of tenants that have made late or partial rent payments, requested a deferral of rent payments, forgiveness of rent payments or defaulted on rent payments, and it is likely that more of the Company’s tenants will be similarly impacted in the future. From the onset of the COVID-19 pandemic, the Company granted selective deferrals for approximately 9%, of its pro-rata annual base rent, forgave rental payments aggregating $13.7 million of pro-rata rents. Collection rates have steadily increased from 74% of its pro-rata annual base rent for second quarter ended June 30, 2020 to 92% for the fourth quarter ended December 31, 2020, with rates increasing each quarter. The Company continues to negotiate for the payment of the remaining rents not yet collected as well as work with tenants to grant rent waivers on a lease by lease basis. The deferrals generally have a repayment period of six to 18 months. The Company has also collected 91% of the pro-rata annual base rent for the month of January 2021.
The Company considered the impacts COVID-19 has had on its tenants when evaluating the adequacy of the collectability of the lessee’s total accounts receivable balance, including the corresponding straight-line rent receivable. During the year ended December 31, 2020, the Company’s revenue was reduced by $81.0 million associated with potentially uncollectible revenues including revenues from tenants that are being accounted for on a cash basis, which includes $15.2 million for straight-line rent receivables, primarily attributable to the COVID-19 pandemic. Since the COVID-19 pandemic began, the Company has seen an increase in the number of tenants filing for bankruptcy, some of which emerged from bankruptcy prior to December 31, 2020. As of December 31, 2020, there were 38 leases or 0.7% of pro-rata annual base rent, within the Company’s portfolio associated with tenants in bankruptcy. The Company continues to evaluate the impact these bankruptcy filings have or will have on collections, vacancies and future rental income. Management’s estimate of the collectability of accrued rents and accounts receivable is based on the best information available to management at the time of evaluation. The Company will continue to monitor the economic, financial, and social conditions resulting from the COVID-19 pandemic and will continue to assess the collectability of its tenant accounts receivables. As such, the Company may determine that further adjustments to its accounts receivable may be required in the future, and such amounts may be material.
The impact of COVID-19 on the Company’s future results could be significant and will largely depend on future developments, which are highly uncertain and cannot be predicted, including new information that may emerge concerning the severity of COVID-19, the success of governmental, business and individual actions that have been and continue to be taken in response to COVID-19, the impact of COVID-19 on economic activity, the effect of COVID-19 on the Company’s tenants and their businesses, the ability of tenants to make their rental payments and any additional closures of tenants’ businesses.
The Company continues to monitor the impact of COVID-19 on the Company’s business, tenants and industry as a whole. The magnitude and duration of the COVID-19 pandemic and its impact on the Company’s operations and liquidity remains uncertain as this pandemic continues to evolve globally and within the United States. Management cannot, at this point, estimate ultimate losses related to the COVID-19 pandemic. The Company will continue to monitor the economic, financial, and social conditions resulting from the COVID-19 pandemic and will assess its asset portfolio for any impairment indicators. If the Company determines that any of its assets are impaired, the Company would be required to take impairment charges, and such amounts could be material. See Footnote 6 to the Notes to the Company’s Consolidated Financial Statements for additional discussion regarding impairment charges.
The following highlights the Company’s significant transactions, events and results that occurred during the year ended December 31, 2020:
Financial and Portfolio Information:
●
Net income available to the Company’s common shareholders was $975.4 million, or $2.25 per diluted share, for the year ended December 31, 2020 as compared to $340.0 million, or $0.80 per diluted share, for the year ended December 31, 2019.
●
Funds from operations (“FFO”) was $503.7 million, or $1.17 per diluted share, for the year ended December 31, 2020, as compared to $608.4 million, or $1.44 per diluted share, for the corresponding period in 2019 (see additional disclosure on FFO beginning on page 40).
●
Same property net operating income (“Same property NOI”) was $784.5 million for the year ended December 31, 2020, as compared to $852.5 million the corresponding period in 2019 (see additional disclosure on Same property NOI beginning on page 41).
●
Increased collections of pro-rata base rent from 74% in the second quarter ended June 30, 2020 to 92% in the fourth quarter ended December 31, 2020. Executed 761 new leases, renewals and options totaling approximately 5.4 million square feet in the consolidated operating portfolio.
●
The Company’s consolidated operating portfolio occupancy at December 31, 2020 was 93.9% as compared to 96.2% at December 31, 2019.
Acquisition Disposition and Other Activity (see Footnotes 3, 5 and 9 of the Notes to Consolidated Financial Statements included in this Form 10-K):
●
Acquired a land parcel located in Peoria, AZ next to an existing shopping center, for a purchase price of $7.1 million.
●
Disposed of three operating properties and four parcels, in separate transactions, for an aggregate sales price of $31.8 million. Certain of these transactions resulted in aggregate gains of $6.5 million.
●
Monetized $227.3 million from the Company’s ACI investment, which resulted in a gain of $190.8 million. The Company now holds 39.8 million shares of ACI.
Development Activity (see Footnote 4 of the Notes to Consolidated Financial Statements included in this Form 10-K):
●
Placed in service Dania Pointe Phase II, a Signature SeriesTM development project located in Dania Beach, FL.
Capital Activity (for additional details see Liquidity and Capital Resources below):
●
Obtained a new $2.0 billion revolving Credit Facility, scheduled to mature in March 2024, with two additional six-month options to extend, which accrues interest at a rate of LIBOR plus 76.5 basis points.
●
Issued $400.0 million of 1.90% notes maturing March 2028.
●
Issued $500.0 million of 2.70% unsecured Green Bond maturing in October 2030 (the "Green Bond").
●
Redeemed all its 3.20% senior unsecured notes due 2021 totaling $484.9 million, the Company incurred aggregate prepayment charges of $7.5 million.
●
Entered into a term loan with total borrowing capacity of $590.0 million in April 2020, at a rate of LIBOR plus 140 basis points (the "Term Loan"), which was terminated and fully repaid in July 2020.
●
Repaid $159.0 million of mortgage and construction debt that encumbered 5 properties.
●
As of December 31, 2020, had $2.3 billion in immediate liquidity, including $293.2 million in cash.
As a result of the above debt activity, the Company’s consolidated debt maturity profile, including extension options, is as follows:
●
As of December 31, 2020, the weighted average interest rate was 3.41% and the weighted average maturity profile was 10.9 years related to the Company’s consolidated debt.
The Company faces external factors which may influence its future results from operations. The convenience and availability of e-commerce has continued to impact the retail sector, which could affect our ability to increase or maintain rental rates and our ability to renew expiring leases and/or lease available space. To mitigate the effect of e-commerce on its business, the Company’s strategy has been to attract local area customers to its properties by providing a diverse and robust tenant base across a variety of retailers, including grocery stores, off-price retailers, discounters or service-oriented tenants, which offer buy online and pick up in store, off-price merchandise and day-to-day necessities rather than high-priced luxury items.
Over the past several years, the Company has transformed its portfolio, focusing on major metropolitan-area U.S. markets, predominantly on the East and West coasts and in the Sunbelt region, which are supported by strong demographics, significant projected population growth, and where the Company perceives significant barriers to entry. Given this significant transformation successfully executed over the last several years, the Company now owns a predominantly grocery-anchored portfolio clustered in the nation’s top markets which positioned the Company to overcome many of the challenges brought upon by COVID-19. The Company believes that this transformed portfolio will enable it to maintain higher occupancy levels, rental rates and rental growth. In addition, the Company, on a selective basis, has developed or redeveloped projects which include residential and mixed-use components.
As part of the Company’s investment strategy, each property is evaluated for its highest and best use, which may include residential and mixed-use components. In addition, the Company may consider other opportunistic investments related to retailer controlled real estate, such as, repositioning underperforming retail locations, retail real estate financing and bankruptcy transaction support. The Company may continue to dispose of certain properties. If the estimated fair value for any of these assets is less than their net carrying values, the Company would be required to take impairment charges and such amounts could be material. For a further discussion of these and other factors that could impact our future results, performance or transactions, see Item 1A. “Risk Factors.”
Results of Operations
Comparison of the years ended December 31, 2020 and 2019
The following table presents the comparative results from the Company’s Consolidated Statements of Income for the year ended December 31, 2020, as compared to the corresponding period in 2019 (in thousands, except per share data):
Year Ended December 31,
$ Change
Revenues
Revenues from rental properties, net
$ 1,044,888
$ 1,142,334
$ (97,446 )
Management and other fee income
13,005
16,550
(3,545 )
Operating expenses
Rent (1)
(11,270 )
(11,311 )
Real estate taxes
(157,661 )
(153,659 )
(4,002 )
Operating and maintenance (2)
(174,038 )
(171,981 )
(2,057 )
General and administrative (3)
(93,217 )
(96,942 )
3,725
Impairment charges
(6,624 )
(48,743 )
42,119
Depreciation and amortization
(288,955 )
(277,879 )
(11,076 )
Gain on sale of properties/change in control of interests
6,484
79,218
(72,734 )
Other income/(expense)
Other income, net
4,119
10,985
(6,866 )
Gain on marketable securities, net
594,753
593,924
Gain on sale of cost method investment
190,832
-
190,832
Interest expense
(186,904 )
(177,395 )
(9,509 )
Early extinguishment of debt charges
(7,538 )
-
(7,538 )
(Provision)/benefit for income taxes, net
(978 )
3,317
(4,295 )
Equity in income of joint ventures, net
47,353
72,162
(24,809 )
Equity in income of other real estate investments, net
28,628
26,076
2,552
Net income attributable to noncontrolling interests
(2,044 )
(2,956 )
Preferred stock redemption charges
-
(18,528 )
18,528
Preferred dividends
(25,416 )
(52,089 )
26,673
Net income available to the Company's common shareholders
$ 975,417
$ 339,988
$ 635,429
Net income available to the Company's common shareholders:
Diluted per share
$ 2.25
$ 0.80
$ 1.45
(1)
Rent expense relates to ground lease payments for which the Company is the lessee.
(2)
Operating and maintenance expense consists of property related costs including repairs and maintenance costs, roof repair, landscaping, parking lot repair, snow removal, utilities, property insurance costs, security and various other property related expenses.
(3)
General and administrative expense includes employee-related expenses (including salaries, bonuses, equity awards, benefits, severance costs and payroll taxes), professional fees, office rent, travel expense and other company-specific expenses.
Net income available to the Company’s common shareholders was $975.4 million for the year ended December 31, 2020, as compared to $340.0 million for the comparable period in 2019. On a diluted per share basis, net income available to the Company’s common shareholders for the year ended December 31, 2020, was $2.25 as compared to $0.80 for the comparable period in 2019. For additional disclosure, see Footnote 24 of the Notes to Consolidated Financial Statements included in this Form 10-K.
The following describes the changes of certain line items included on the Company’s Consolidated Statements of Income, that the Company believes changed significantly and affected Net income available to the Company’s common shareholders during the year ended December 31, 2020, as compared to the corresponding period in 2019:
Revenue from rental properties, net -
The decrease in Revenues from rental properties, net of $97.4 million is primarily from (i) an increase of $80.0 million in adjustments associated with potentially uncollectible revenues, including revenues from tenants that are being accounted for on a cash basis and straight-line rent receivables, primarily due to the COVID-19 pandemic, for the year ended December 31, 2020, as compared to the corresponding period in 2019 and (ii) a decrease in revenues of $30.6 million due to properties sold during 2020 and 2019, partially offset by (iii) the completion of certain redevelopment and development projects included in the Company’s Signature Series™, acquisitions, tenant buyouts and net growth in the current portfolio, which provided incremental revenues for the year ended December 31, 2020 of $13.2 million, as compared to the corresponding period in 2019.
Management and other fee income -
The decrease in Management and other fee income of $3.5 million is primarily due to lower cash receipts for the year ended December 31, 2020, as compared to the corresponding period in 2019, related to (i) the deferral of rent payments, rent relief provided, late or partial rent payments or defaulted rent payments as a result of the COVID-19 pandemic and (ii) the sale of properties and change of ownership interest within various joint venture investments during the year ended December 31, 2020, as compared to the corresponding period in 2019.
Real estate taxes -
The increase in Real estate taxes of $4.0 million is primarily due to (i) an increase of $8.4 million related to the completion of certain redevelopment and development projects and an overall increase in assessed values in the current portfolio during the year ended December 31, 2020, as compared to the corresponding period in 2019, partially offset by (ii) a decrease of $4.4 million due to properties sold during 2020 and 2019.
General and administrative -
The decrease in General and administrative expense of $3.7 million is primarily due to (i) a reduction in travel and entertainment and convention costs of $2.9 million due to fewer business related trips as a result of the COVID-19 pandemic, (ii) a decrease in employee-related expenses of $2.3 million, (iii) a reduction in office rent expense of $1.4 million, due to the relocation of the Company’s headquarters to Company-owned office space, (iv) a decrease of $0.9 million primarily due to the fluctuations in value of various directors’ deferred stock, (v) a decrease in professional fees of $0.9 million and (vi) a decrease in information technology costs of $0.7 million for the year ended December 31, 2020, as compared to the corresponding period in 2019, partially offset by (vii) an increase in severance charges related to employee retirement and terminations of $5.5 million during the year ended December 31, 2020, as compared to the corresponding period in 2019.
Impairment charges -
During the years ended December 31, 2020 and 2019, the Company recognized impairment charges related to adjustments to property carrying values of $6.6 million and $48.7 million, respectively, for which the Company’s estimated fair values were primarily based upon (i) signed contracts or letters of intent from third-party offers or (ii) discounted cash flow models. These adjustments to property carrying values were recognized in connection with the Company’s efforts to market certain properties and management’s assessment as to the likelihood and timing of such potential transactions. Certain of the calculations to determine fair value utilized unobservable inputs and, as such, were classified as Level 3 of the fair value hierarchy. For additional disclosure, see Footnotes 6 and 16 of the Notes to Consolidated Financial Statements included in this Form 10-K.
Depreciation and amortization -
The increase in Depreciation and amortization of $11.1 million is primarily due to (i) an increase of $17.3 million in write-offs of depreciable assets primarily due to tenant vacates during the year ended December 31, 2020, as compared to the corresponding period in 2019 and (ii) an increase of $6.0 million primarily related to the completion of certain development and redevelopment projects being placed into service during 2020 and 2019, partially offset by (iii) a decrease of $6.2 million resulting from property dispositions in 2020 and 2019 and (iv) a decrease of $6.0 million related to fully depreciated assets during the year ended December 31, 2020, as compared to the corresponding period in 2019.
Gain on sale of properties/change in control of interests -
During 2020, the Company disposed of three operating properties and four parcels, in separate transactions, for an aggregate sales price of $31.8 million, for which certain of the transactions resulted in aggregate gains of $6.5 million. During 2019, the Company disposed of 20 operating properties and nine parcels, in separate transactions, for an aggregate sales price of $344.7 million, for which certain of the transactions resulted in aggregate gains of $79.2 million.
Other income, net -
The decrease in Other income, net of $6.9 million is primarily due to (i) a net decrease in settlement proceeds of $2.8 million related to property condemnations during the year ended December 31, 2020, as compared to the corresponding period in 2019, (ii) a gain on forgiveness of debt of $2.8 million related to property disposed through a deed in lieu transaction during 2019, (iii) a decrease of $1.6 million related to the recognition of income from the Company’s Puerto Rico properties, resulting from the receipt of casualty insurance claims in excess of the value of the assets written-off during the year ended December 31, 2020, as compared to the corresponding period in 2019, (iv) an increase in environmental remediation costs of $1.3 million for the year ended December 31, 2020, as compared to the corresponding period in 2019, and (v) a decrease in mortgage financing income of $0.8 million, partially offset by (vi) a net increase in interest, dividends and other income of $2.9 million, primarily related to dividends received on the Company’s ACI shares during the year ended December 31, 2020, as compared to the corresponding period in 2019.
Gain on marketable securities, net -
The increase in Gain on marketable securities, net of $593.9 million is primarily the result of the mark-to-market fluctuations of the Company’s ACI investment, which launched its IPO in June 2020. This offering resulted in the Company changing the classification of its ACI investment from a cost method investment to a marketable security.
Gain on sale of cost method investment -
In June 2020, the Company recognized an aggregate gain of $190.8 million related to (i) a $131.6 million gain resulting from ACI’s partial repurchase of its common stock from existing shareholders in conjunction with its issuance of convertible preferred stock and (ii) a gain of $59.2 million in connection with the partial sale of the Company’s investment in ACI through ACI’s IPO.
Interest expense -
The increase in Interest expense of $9.5 million is primarily due to higher levels of borrowings during 2020, as compared to 2019.
Early extinguishment of debt charges -
During the year ended December 31, 2020, the Company fully redeemed $484.9 million of its outstanding 3.20% senior unsecured notes, which were scheduled to mature in May 2021. As a result, the Company incurred a prepayment charge of $7.5 million for the year ended December 31, 2020.
(Provision)/benefit for income taxes, net -
The change in (Provision)/benefit for income taxes, net of $4.3 million is primarily due to release of a deferred tax asset valuation allowance relating to Alternative Minimum Tax credits during 2019.
Equity in income of joint ventures, net -
The decrease in Equity in income of joint ventures, net of $24.8 million is primarily due to (i) the recognition of net gains of $16.0 million resulting from the sale of properties within various joint venture investments during 2019 and (ii) lower equity in income of $13.6 million within various joint venture investments during the year ended December 31, 2020, as compared to the corresponding period in 2019, primarily resulting from the sale of properties within various joint venture investments during 2019 and an increase in adjustments of trade account receivable and straight-line receivable balances associated with the leases accounted for on a cash basis due to the impact from the COVID-19 pandemic during 2020, partially offset by (iii) a decrease in impairment charges of $4.8 million recognized during the year ended December 31, 2020, as compared to the corresponding period in 2019.
Preferred stock redemption charges -
During 2019, the Company redeemed all its outstanding Class I Preferred Stock, Class J Preferred Stock and Class K Preferred Stock and, as a result, the Company recorded a redemption charge of $18.5 million. This charge was subtracted from net income attributable to the Company to arrive at net income available to the Company’s common shareholders and used in the calculation of earnings per share for the year ended December 31, 2019.
Preferred dividends -
The decrease in Preferred dividends of $26.7 million is primarily due to the redemption of all the Company's outstanding Class I Preferred Stock, Class J Preferred Stock and Class K Preferred Stock during 2019 as discussed above.
Comparison of the years ended December 31, 2019 and 2018
Information pertaining to fiscal year 2018 was included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019 under Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” which was filed with the SEC on February 25, 2020.
Liquidity and Capital Resources
The Company’s capital resources include accessing the public debt and equity capital markets, mortgage and construction loan financing, and immediate access to an unsecured revolving credit facility (the “Credit Facility”) with bank commitments of $2.0 billion which can be increased to $2.75 billion through an accordion feature. In addition, the Company holds 39.8 million shares of ACI, which are subject to certain contractual lock-up provisions.
The Company’s cash flow activities are summarized as follows (in thousands):
Year Ended December 31,
Cash and cash equivalents, beginning of year
$ 123,947
$ 143,581
Net cash flow provided by operating activities
589,913
583,628
Net cash flow used for investing activities
(33,273 )
(120,421 )
Net cash flow used for financing activities
(387,399 )
(482,841 )
Net change in cash and cash equivalents
169,241
(19,634 )
Cash and cash equivalents, end of year
$ 293,188
$ 123,947
Operating Activities
The Company anticipates that cash on hand, net cash flow provided by operating activities, borrowings under its Credit Facility and the issuance of equity and public debt, as well as other debt and equity alternatives, will provide the necessary capital required by the Company. The Company will continue to evaluate its capital requirements for both its short-term and long-term liquidity needs, which could be affected by various risks and uncertainties, including, but not limited to, the effects of the COVID-19 pandemic and other risks detailed in Part I, Item 1A. Risk Factors. See further discussion relating to the effects of the COVID-19 pandemic in the “COVID-19 Pandemic” and “Financing Activities” sections within this Item 7.
Cash flows provided by operating activities for the year ended December 31, 2020, were $589.9 million, as compared to $583.6 million for the comparable period in 2019. The increase of $6.3 million is primarily attributable to:
●
an increase in distributions from the Company’s joint venture programs;
●
changes in accounts payable, accrued expenses, operating assets and liabilities, net due to timing of receipts and payments;
●
new leasing, expansion and re-tenanting of core portfolio properties; and
●
the acquisition of an operating property during 2020; partially offset by
●
an increase in tenants on cash basis, tenant vacates and rent relief provided as a result of the COVID-19 pandemic; and
●
the disposition of operating properties in 2020 and 2019.
Due to the current economic uncertainty resulting from the COVID-19 pandemic, the Company has worked, and continues to work, with its tenants to grant rent deferrals or rent waivers on a lease by lease basis. The deferrals are generally anticipated to be paid within six to 18 months.
Investing Activities
Cash flows used for investing activities were $33.3 million for 2020, as compared to $120.4 million for 2019.
Investing activities during 2020 consisted primarily of:
Cash inflows:
●
$227.3 million in proceeds from the partial sale of the Company’s ACI cost method investment prior to its IPO and the sale of 4.7 million shares of ACI common stock during its IPO;
●
$30.5 million in proceeds from the sale of three operating properties and four parcels;
●
$17.9 million in reimbursements of investments in and advances to real estate joint ventures and reimbursements of investments in and advances to other real estate investments, primarily related to the sale of properties within the joint venture portfolio and the Company’s Preferred Equity Program; and
●
$2.5 million in proceeds from insurance casualty claims.
Cash outflows:
●
$243.6 million for improvements to operating real estate primarily related to the Company’s active redevelopment pipeline and improvements to real estate under development;
●
$30.8 million for investments in and advances to real estate joint ventures, primarily related to a redevelopment project and the repayment of a mortgage within the Company’s joint venture portfolio, and investments in other real estate investments, primarily related to an investment in a new preferred equity investment and the repayment of mortgages within the Company’s Preferred Equity Program;
●
$25.0 million for investment in other financing receivable; and
●
$12.6 million for the acquisition of operating real estate.
Investing activities during 2019 consisted primarily of:
Cash inflows:
●
$324.3 million in proceeds from the sale of 20 consolidated operating properties and nine parcels;
●
$27.7 million in reimbursements of investments in and advances to real estate joint ventures and reimbursements of investments in and advances to other real estate investments, primarily related to the sale of properties within the joint venture portfolio and the Company’s Preferred Equity Program;
●
$10.4 million in collection of mortgage loans receivable;
●
$4.0 million in proceeds from insurance casualty claims; and
●
$2.0 million in proceeds from sale of marketable securities.
Cash outflows:
●
$443.7 million for improvements to operating real estate primarily related to the Company’s active redevelopment pipeline and improvements to real estate under development; and
●
$40.5 million for investments in and advances to real estate joint ventures, primarily related to a redevelopment project within the Company’s joint venture portfolio, and investments in other real estate investments, primarily related to repayment of a mortgage within the Company’s Preferred Equity Program.
Acquisitions of Operating Real Estate and Other Related Net Assets
During the years ended December 31, 2020 and 2019, the Company expended $12.6 million and $2.0 million, respectively, (net of Internal Revenue Code 26 U.S.C. §1031 proceeds) towards the acquisition of operating real estate properties. The Company anticipates spending approximately $75.0 million to $100.0 million towards the acquisition of operating properties during 2021. The Company intends to fund these acquisitions with cash flow from operating activities, proceeds from property dispositions and availability under its Credit Facility.
Improvements to Operating Real Estate
During the years ended December 31, 2020 and 2019, the Company expended $221.3 million and $324.8 million, respectively, towards improvements to operating real estate. These amounts consist of the following (in thousands):
Year Ended December 31,
Redevelopment and renovations
$ 175,661
$ 265,954
Tenant improvements and tenant allowances
45,617
58,867
Total (1)
$ 221,278
$ 324,821
(1)
During the year ended December 31, 2020 and 2019, the Company capitalized payroll of $9.4 million and $7.9 million, respectively, and capitalized interest of $9.7 million and $6.3 million, respectively, in connection with the Company’s improvements to operating real estate.
The Company has an ongoing program to redevelop and re-tenant its properties to maintain or enhance its competitive position in the marketplace. The Company is actively pursuing redevelopment opportunities within its operating portfolio which it believes will increase the overall value by bringing in new tenants and improving the assets’ value. The Company has identified three categories of redevelopment: (i) large scale redevelopment, which involves demolishing and building new square footage, including square footage for mixed-use, (ii) value creation redevelopment, which includes the subdivision of large anchor spaces into multiple tenant layouts, and (iii) creation of out-parcels and pads located in the front of the shopping center properties.
The Company anticipates its capital commitment toward these redevelopment projects and re-tenanting efforts for 2021 will be approximately $75.0 million to $150.0 million. The funding of these capital requirements will be provided by proceeds from property dispositions, net cash flow provided by operating activities and availability under the Company’s Credit Facility.
Financing Activities
Cash flows used for financing activities were $387.4 million for 2020, as compared to $482.8 million for 2019.
Financing activities during 2020 primarily consisted of the following:
Cash inflows:
●
$900.0 million in proceeds from issuance of unsecured notes comprised of (i) $500.0 million of the Company’s unsecured 2.700% Green Bond due 2030 and (ii) $400.0 million of the Company’s unsecured 1.90% Notes due 2028; and
●
$590.0 million in proceeds from issuance of the Term Loan.
Cash outflows:
●
$590.0 million in repayments of the Term Loan;
●
$484.9 million in early redemption of the Company’s 3.20% senior unsecured notes due 2021;
●
$379.9 million of dividends paid;
●
$200.0 million in repayments under the Credit Facility, net;
●
$169.2 million in principal payment on debt (related to the repayment of debt on four encumbered properties), including normal amortization of rental property debt;
●
$23.3 million for the redemption/distribution of noncontrolling interests, primarily related to the redemption of certain partnership interests by consolidated subsidiaries;
●
$18.0 million for financing origination costs, primarily related to the Credit Facility, Term Loan, Green Bond and senior unsecured notes;
●
$7.5 million in payment of early extinguishment of debt charges; and
●
$5.6 million in other financing related costs.
Financing activities during 2019 primarily consisted of the following:
Cash inflows:
●
$350.0 million in proceeds from the issuance of unsecured notes;
●
$204.0 million in proceeds from the issuance of stock, net, primarily through the Company’s at-the-market continuous offering program (the "ATM program");
●
$100.0 million in proceeds from the Company’s Credit Facility, net; and
●
$16.0 million in proceeds from construction loan financing for one development project.
Cash outflows:
●
$575.0 million for the redemption of the Company’s Class I, Class J and Class K Preferred Stock;
●
$531.6 million of dividends paid;
●
$18.8 million for principal payments on debt (related to the repayment of debt on two encumbered properties), including normal amortization on rental property debt;
●
$15.1 million for the redemption/distribution of noncontrolling interests, primarily related to the redemption of certain partnership interests by consolidated subsidiaries; and
●
$7.7 million for financing origination cost, primarily related to the issuance of senior unsecured notes.
The Company continually evaluates its debt maturities, and, based on management’s current assessment, believes it has viable financing and refinancing alternatives that will not materially adversely impact its expected financial results. The Company continues to pursue borrowing opportunities with large commercial U.S. and global banks, select life insurance companies and certain regional and local banks.
Debt maturities for 2021 consist of: $139.4 million of consolidated debt; $138.0 million of unconsolidated joint venture debt and $19.9 million of debt included in the Company’s Preferred Equity Program, assuming the utilization of extension options where available. The 2021 consolidated debt maturities are anticipated to be repaid with operating cash flows and borrowings from the Credit Facility. The 2021 debt maturities on properties in the Company’s unconsolidated joint ventures and Preferred Equity Program are anticipated to be repaid through operating cash flows, debt refinancing, unsecured credit facilities, proceeds from sales and partner capital contributions, as deemed appropriate.
The Company intends to maintain strong debt service coverage and fixed charge coverage ratios as part of its commitment to maintain or obtain an upgrade on its investment-grade senior, unsecured debt ratings. The Company may, from time to time, seek to obtain funds through additional common and preferred equity offerings, unsecured debt financings and/or mortgage/construction loan financings and other capital alternatives.
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 $15.6 billion. Proceeds from public capital market activities have been used for the purposes of, among other things, repaying indebtedness, acquiring interests in open-air shopping centers, funding real estate under development projects, expanding and improving properties in the portfolio and other investments.
During February 2018, the Company filed a shelf registration statement on Form S-3, which is effective for a term of three years, for future unlimited offerings, from time-to-time, of debt securities, preferred stock, depositary shares, common stock and common stock warrants. The Company, pursuant to this shelf registration statement may, or a new shelf registration statement filed to replace the existing shelf registration statement, 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.
During May 2020, the Company filed a registration statement on Form S-8 for its 2020 Equity Participation Plan (the “2020 Plan”), which was approved by the Company’s stockholders and is a successor to the Restated Kimco Realty Corporation 2010 Equity Participation Plan that expired in March 2020. The 2020 Plan provides for a maximum of 10,000,000 shares of the Company’s common stock to be reserved for the issuance of stock options, stock appreciation rights, restricted stock, restricted stock units, performance awards, dividend equivalents, stock payments and deferred stock awards. At December 31, 2020, the Company had 9.98 million shares of common stock available for issuance under the 2020 Plan. (See Footnote 21 of the Notes to Consolidated Financial Statements included in this Form 10-K).
Preferred Stock -
The following Preferred Stock classes were redeemed during the year ended December 31, 2019:
Class of
Preferred
Stock
Redemption
Date
Dividend
Rate
Depositary
Shares
Redeemed
Redemption
Price per Depositary Share
Redemption
Amount
(in millions)
Redemption
Charges (1)
(in millions)
Class I
9/14/2019
6.00 %
7,000,000
$
$ 175.0
$ 5.5
Class K
9/14/2019
5.625 %
7,000,000
$
$ 175.0
$ 5.9
Class J
12/31/2019
5.50 %
9,000,000
$
$ 225.0
$ 7.1
(1)
Redemption charges resulting from the difference between the redemption amount and the carrying amount of the respective preferred stock class on the Company’s Consolidated Balance Sheets are accounted for in accordance with the FASB’s guidance on Distinguishing Liabilities from Equity. These charges were subtracted from net income attributable to the Company to arrive at net income available to the Company’s common shareholders and used in the calculation of earnings per share.
ATM Program
During September 2019, the Company established an ATM program pursuant to which the Company may offer and sell from time to time shares of its common stock, par value $0.01 per share, with an aggregate gross sales price of up to $500.0 million through a consortium of banks acting as sales agents. Sales of the shares of common stock may be made, as needed, from time to time in “at the market” offerings as defined in Rule 415 of the Securities Act of 1933, including by means of ordinary brokers’ transactions on the New York Stock Exchange or otherwise (i) at market prices prevailing at the time of sale, (ii) at prices related to prevailing market prices or (iii) as otherwise agreed to with the applicable sales agent. During 2019, the Company issued 9,514,544 shares and received proceeds of $200.1 million, net of commissions and fees of $1.8 million. The Company did not offer for sale any shares of common stock under the ATM program during 2020. As of December 31, 2020, the Company had $298.1 million available under this ATM program.
Share Repurchase Program -
During February 2020, the Company extended its share repurchase program, for a term of two years, which is scheduled to expire February 29, 2022. Under this program, the Company may repurchase shares of its common stock, par value $0.01 per share, with an aggregate gross purchase price of up to $300.0 million. The Company did not repurchase any shares under the share repurchase program during the year ended December 31, 2020. As of December 31, 2020, the Company had $224.9 million available under this common share repurchase program.
Senior Notes -
During the year ended December 31, 2020, the Company issued the following senior unsecured notes (dollars in millions):
Date Issued
Maturity Date
Amount Issued
Interest Rate
Aug-2020
Mar-2028
$ 400.0
1.90%
Jul-2020 (1)
Oct-2030
$ 500.0
2.70%
(1)
In July 2020, the Company issued unsecured Green Bond, of which the net proceeds from this offering are allocated to finance or refinance, in whole or in part, recently completed, existing or future Eligible Green Projects, in alignment with the four core components of the Green Bond Principles, 2018 as administered by the International Capital Market Association. Eligible Green Projects include projects with disbursements made in the three years preceding the issue date of the notes. The Company intends to spend the remaining net proceeds from the offering during the life of the notes.
During the year ended December 31, 2020, the Company repaid the following senior unsecured notes (dollars in millions):
Date Paid
Maturity Date
Amount Repaid
Interest Rate
Jul-2020 & Aug-2020 (1)
May-2021
$ 484.9
3.20%
(1)
The Company incurred a prepayment charge of $7.5 million, which is included in Early extinguishment of debt charges on the Company’s Consolidated Statements of Income.
The Company’s supplemental indenture governing its senior notes contains the following covenants, all of which the Company is compliant with:
Covenant
Must Be
As of December 31, 2020
Consolidated Indebtedness to Total Assets
<65%
39%
Consolidated Secured Indebtedness to Total Assets
<40%
2%
Consolidated Income Available for Debt Service to Maximum Annual Service Charge
>1.50x
7.9x
Unencumbered Total Asset Value to Consolidated Unsecured Indebtedness
>1.50x
2.6x
For a full description of the various indenture covenants refer to the Indenture dated September 1, 1993; the First Supplemental Indenture dated August 4, 1994; the Second Supplemental Indenture dated April 7, 1995; the Third Supplemental Indenture dated June 2, 2006; the Fourth Supplemental Indenture dated April 26, 2007; the Fifth Supplemental Indenture dated as of September 24, 2009; the Sixth Supplemental Indenture dated as of May 23, 2013; and the Seventh Supplemental Indenture dated as of April 24, 2014, each as filed with the SEC. See the Exhibits Index for specific filing information.
Credit Facility -
In February 2020, the Company obtained a new $2.0 billion Credit Facility with a group of banks, which replaced the Company’s existing $2.25 billion unsecured revolving credit facility. The Credit Facility is scheduled to expire in March 2024, with two additional six-month options to extend the maturity date, at the Company’s discretion, to March 2025. The Credit Facility is a green credit facility tied to sustainability metric targets, as described in the agreement. The Company achieved such targets, which effectively reduced the rate on the Credit Facility by one basis point. The Credit Facility, which accrues interest at a rate of LIBOR plus 76.5 basis points (0.91% as of December 31, 2020), can be increased to $2.75 billion through an accordion feature. Pursuant to the terms of the Credit Facility, the Company, among other things, is subject to covenants requiring the maintenance of (i) maximum indebtedness ratios and (ii) minimum interest and fixed charge coverage ratios. As of December 31, 2020, the Credit Facility had no outstanding balance and $0.3 million appropriated for letters of credit and the Company was in compliance with its covenants.
Pursuant to the terms of the Credit Facility, the Company is subject to maintenance of various covenants. The Company is currently in compliance with these covenants. The financial covenants for the Credit Facility are as follows:
Covenant
Must Be
As of December 31, 2020
Total Indebtedness to Gross Asset Value (“GAV”)
<60%
45%
Total Priority Indebtedness to GAV
<35%
0%
Unencumbered Asset Net Operating Income to Total Unsecured Interest Expense
>1.75x
3.6x
Fixed Charge Total Adjusted EBITDA to Total Debt Service
>1.50x
3.3x
For a full description of the Credit Facility’s covenants refer to the Amended and Restated Credit Agreement dated as of February 27, 2020, filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K dated February 28, 2020.
Term Loan -
On April 1, 2020, the Company entered into the Term Loan with total outstanding borrowings of $590.0 million pursuant to a credit agreement with a group of banks. The Term Loan was scheduled to mature in April 2021, with a one-year extension option to extend the maturity date, at the Company’s discretion, to April 2022. The Term Loan accrued interest at a rate of LIBOR plus 140 basis points or, at the Company’s option, a spread of 40 basis points to the base rate defined in the Term Loan, that in each case fluctuated in accordance with changes in the Company’s senior debt ratings. The Term Loan could be increased by an additional $750.0 million through an accordion feature. Pursuant to the terms of the Term Loan, the Company was subject to covenants that were substantially the same as those in the Credit Facility. During July 2020, the Term Loan was fully repaid and the facility was terminated.
Mortgages and Construction Loan Payable -
During 2020, the Company repaid $92.0 million of mortgage debt (including fair market value adjustment of $0.4 million) that encumbered four operating properties.
In August 2018, the Company closed on a construction loan commitment of $67.0 million relating to one development property. This loan commitment was scheduled to mature in August 2020, with six additional six-month options to extend the maturity date to August 2023 and bore interest at a rate of LIBOR plus 180 basis points. This construction loan was fully repaid in January 2020.
In addition to the public equity and debt 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 its real estate under development projects. As of December 31, 2020, the Company had over 325 unencumbered property interests in its portfolio.
COVID-19 -
As the COVID-19 pandemic continues to evolve, an uncertainty remains in relation to the long-term economic impact it will have. As a result, the Company has focused on creating a strong liquidity position by: (i) maintaining availability under its $2.0 billion ($2.75 billion with the accordion feature) Credit Facility; (ii) issuing a $500.0 million Green Bond, (iii) issuing $400.0 million of 1.90% unsecured senior notes due 2028; (iv) paying down and terminating its Term Loan; (v) repaying $484.9 million of senior unsecured notes due 2021 which extended the Company’s weighted average debt maturity profile to 10.9 years, (vi) holding $293.2 million of cash and cash equivalents on hand at December 31, 2020; and (vii) having access to over 325 unencumbered property interests.
The Company continues to monitor the impact of COVID-19 on the Company’s business, tenants and industry as a whole. The magnitude and duration of the COVID-19 pandemic and its impact on the Company’s operations and liquidity remains uncertain as this pandemic continues to evolve globally and within the United States. The continued impact of COVID-19 could materially disrupt the Company’s business operations and materially adversely affect the Company’s liquidity. Management cannot, at this point, fully estimate ultimate losses related to the COVID-19 pandemic.
Dividends -
In connection with its intention to continue to qualify as a REIT for U.S. federal income tax purposes, the Company expects to continue paying regular dividends to its stockholders. These dividends will be paid from operating cash flows. The Company’s Board of Directors will continue to evaluate the Company’s dividend policy on a quarterly basis as the Board of Directors monitors sources of capital and evaluates the impact of the economy and capital markets availability on operating fundamentals. Since cash used to pay dividends reduces amounts available for capital investment, the Company generally intends to maintain a dividend payout ratio which reserves such amounts as it considers necessary for the expansion and renovation of shopping centers in its portfolio, debt reduction, the acquisition of interests in new properties and other investments as suitable opportunities arise and such other factors as the Board of Directors considers appropriate. Cash dividends paid were $379.9 million, $531.6 million and $529.8 million in 2020, 2019 and 2018 respectively.
Although the Company receives substantially all of its rental payments on a monthly basis, it generally intends to continue paying dividends quarterly. Amounts accumulated in advance of each quarterly distribution will be invested by the Company in short-term money market or other suitable instruments. The Company’s Board of Directors will continue to monitor the impact the COVID-19 pandemic has on the Company's financial performance and economic outlook. The Company’s objective is to establish a dividend level which maintains compliance with the Company’s REIT taxable income distribution requirements. On February 22, 2021, the Company’s Board of Directors declared a quarterly cash dividend of $0.17 per common share payable to shareholders of record on March 10, 2021, which is scheduled to be paid on March 24, 2021.
The Company’s Board of Directors declared a quarterly dividend with respect to the Company’s classes of cumulative redeemable preferred shares (Classes L and M) which are scheduled to be paid on April 15, 2021, to shareholders of record on April 1, 2021.
Other -
The Company is subject to taxes on activities in Puerto Rico, Canada, and Mexico. In general, under local country law applicable to the structures the Company has in place and applicable treaties, the repatriation of cash to the Company from its subsidiaries and joint ventures in Puerto Rico, Canada and Mexico generally are not subject to withholding tax. The Company is subject to and also includes in its tax provision non-U.S. income taxes on certain investments located in jurisdictions outside the U.S. These investments are held by the Company at the REIT level and not in the Company’s taxable REIT subsidiary. Accordingly, the Company does not expect a U.S. income tax impact associated with the repatriation of undistributed earnings from the Company’s foreign subsidiaries.
Contractual Obligations and Other Commitments
The Company has debt obligations relating to its Credit Facility, unsecured senior notes and mortgages with maturities ranging from four months to 28 years. As of December 31, 2020, the Company’s total debt had a weighted average term to maturity of 10.9 years. In addition, the Company has non-cancelable operating leases pertaining to its shopping center portfolio. As of December 31, 2020, the Company had 30 consolidated shopping center properties that are subject to long-term ground leases where a third-party owns and has leased the underlying land to the Company to construct and/or operate a shopping center. The following table summarizes the Company’s debt maturities (excluding extension options, unamortized debt issuance costs of $56.4 million and fair market value of debt adjustments aggregating $3.5 million) and obligations under non-cancelable operating leases as of December 31, 2020:
Payments due by period (in millions)
Thereafter
Total
Long-Term Debt:
Principal (1)
$ 144.9
$ 644.4
$ 365.1
$ 401.7
$ 500.6
$ 3,351.7
$ 5,408.4
Interest (2)
$ 183.0
$ 170.4
$ 146.9
$ 133.0
$ 116.0
$ 1,466.3
$ 2,215.6
Non-cancelable operating leases (3)
$ 11.2
$ 10.6
$ 10.6
$ 9.8
$ 9.3
$ 128.8
$ 180.3
(1)
Maturities utilized do not reflect extension options, which range from six months to one year.
(2)
For loans which have interest at floating rates, future interest expense was calculated using the rate as of December 31, 2020.
(3)
For leases which have inflationary increases, future ground and office rent expense was calculated using the rent based upon initial lease payment.
The Company has $139.4 million of secured debt scheduled to mature in 2021. Subsequent to December 31, 2020, the Company repaid $12.3 million of this secured debt. The Company anticipates satisfying the remaining future maturities with operating cash flows and its Credit Facility, if needed.
The Company has issued letters of credit in connection with the completion and repayment guarantees, primarily on certain of the Company’s redevelopment projects and guaranty of payment related to the Company’s insurance program. At December 31, 2020, these letters of credit aggregated $36.2 million.
In connection with the construction of its development/redevelopment projects and related infrastructure, certain public agencies require posting of performance and surety bonds to guarantee that the Company’s obligations are satisfied. These bonds expire upon the completion of the improvements and infrastructure. As of December 31, 2020, the Company had $16.3 million in performance and surety bonds outstanding.
The Company has accrued $1.5 million of non-current uncertain tax positions and related interest under the provisions of the authoritative guidance that addresses accounting for income taxes, which are included in Other liabilities on the Company’s Consolidated Balance Sheets at December 31, 2020. These amounts are not included in the table above because a reasonably reliable estimate regarding the timing of settlements with the relevant tax authorities, if any, cannot be made.
Off-Balance Sheet Arrangements
Unconsolidated Real Estate Joint Ventures
The Company has investments in various unconsolidated real estate joint ventures with varying structures. These joint ventures primarily operate shopping center properties. Such arrangements are generally with third-party institutional investors and individuals. The properties owned by the joint ventures are primarily financed with individual non-recourse mortgage loans, however, the Company, on a selective basis, has obtained unsecured financing for certain joint ventures. As of December 31, 2020, the Company did not guarantee any joint venture unsecured debt. Non-recourse mortgage debt is generally defined as debt whereby the lenders’ sole recourse with respect to borrower defaults is limited to the value of the property collateralized by the mortgage. The lender generally does not have recourse against any other assets owned by the borrower or any of the constituent members of the borrower, except for certain specified exceptions listed in the particular loan documents (see Footnote 7 of the Notes to Consolidated Financial Statements included in this Form 10-K). The table below presents debt balances within the Company’s unconsolidated joint venture investments for which the Company held noncontrolling ownership interests at December 31, 2020 (dollars in millions):
Joint Venture
Kimco
Ownership
Interest
Number of
Properties
Mortgages
and Notes
Payable, Net
(in millions)
Number of
Encumbered
Properties
Weighted
Average
Interest
Rate
Weighted
Average
Remaining
Term (months)*
Prudential Investment Program (1)
15.0 %
$ 495.8
2.05 %
37.2
Kimco Income Opportunity Portfolio (2)
48.6 %
536.9
3.87 %
25.3
Canada Pension Plan Investment Board
55.0 %
84.9
3.25 %
30.0
Other Joint Venture Programs
Various
423.4
3.41 %
86.7
Total
$ 1,541.0
* Average remaining term includes extensions
(1)
Includes an unsecured term loan of $200.0 million (excluding deferred financing costs of $0.2 million), which is scheduled to mature in August 2021, with a one-year extension option at the joint venture’s discretion, and bears interest at a rate equal to LIBOR plus 1.50% (1.64% at December 31, 2020).
(2)
Includes unsecured revolving credit facilities, which had an aggregate outstanding balance of $92.5 million at December 31, 2020 and are scheduled to mature in January 2024, with two, six-month extension options at the joint venture’s discretion, and January 2025.
As of December 31, 2020, these loans had scheduled maturities ranging from four months to 10.5 years and bore interest at rates ranging from 1.34% to 5.79%. Approximately $138.0 million of the aggregate outstanding loan balances matures in 2021. These maturing loans are anticipated to be repaid with operating cash flows, debt refinancing, unsecured credit facilities, proceeds from sales and partner capital contributions, as deemed appropriate (see Footnote 7 of the Notes to Consolidated Financial Statements included in this Form 10-K).
Other Real Estate Investments
The Company has provided capital to owners and developers of real estate properties and loans through its Preferred Equity Program. As of December 31, 2020, the Company’s net investment under the Preferred Equity program was $98.2 million relating to 113 properties, including 103 net leased properties, which are accounted for as direct financing leases. As of December 31, 2020, these preferred equity investment properties had non-recourse mortgage loans aggregating $141.9 million (including fair market value of debt adjustments aggregating $4.8 million). These loans have scheduled maturities ranging from one month to four years and bear interest at rates ranging from 4.19% to 9.85%. Due to the Company’s preferred position in these investments, the Company’s share of each investment is subject to fluctuation and is dependent upon property cash flows. The Company’s maximum exposure to losses associated with its preferred equity investments is limited to its invested capital.
Funds From Operations
FFO is a supplemental non-GAAP financial measure utilized to evaluate the operating performance of real estate companies. NAREIT defines FFO as net income/(loss) available to the Company’s common shareholders computed in accordance with GAAP, excluding (i) depreciation and amortization related to real estate, (ii) gains or losses from sales of certain real estate assets, (iii) gains and losses from change in control, (iv) impairment write-downs of certain real estate assets and investments in entities when the impairment is directly attributable to decreases in the value of depreciable real estate held by the entity and (v) after adjustments for unconsolidated partnerships and joint ventures calculated to reflect FFO on the same basis. The Company also made an election, per the NAREIT Funds From Operations White Paper-2018 Restatement, to exclude from its calculation of FFO (i) gains and losses on the sale of assets and impairments of assets incidental to its main business and (ii) mark-to-market changes in the value of its equity securities. As such, the Company does not include gains/impairments on land parcels, gains/losses (realized or unrealized) from marketable securities, allowance for credit losses on mortgage receivables or gains/impairments on preferred equity participations in NAREIT defined FFO. As a result of this election, the Company will no longer disclose FFO available to the Company’s common shareholders as adjusted (“FFO as adjusted”) as an additional supplemental measure. The incidental adjustments noted above which were previously excluded from NAREIT FFO and used to determine FFO as adjusted are now included in NAREIT FFO, and therefore, the Company believes FFO as adjusted is no longer necessary.
The Company presents FFO available to the Company’s common shareholders as it considers it an important supplemental measure of our operating performance and believes it is frequently used by securities analysts, investors and other interested parties in the evaluation of REITs, many of which present FFO available to the Company’s common shareholders when reporting results. Comparison of our presentation of FFO available to the Company’s common shareholders to similarly titled measures for other REITs may not necessarily be meaningful due to possible differences in the application of the NAREIT definition used by such REITs.
FFO is a supplemental non-GAAP financial measure of real estate companies’ operating performances, which does not represent cash generated from operating activities in accordance with GAAP and, therefore, should not be considered an alternative for net income or cash flows from operations as a measure of liquidity. Our method of calculating FFO available to the Company’s common shareholders may be different from methods used by other REITs and, accordingly, may not be comparable to such other REITs.
The Company’s reconciliation of net income available to the Company’s common shareholders to FFO available to the Company’s common shareholders is reflected in the table below (in thousands, except per share data).
Three Months Ended
December 31,
Year Ended
December 31,
Net income available to the Company’s common shareholders
$ 194,880
$ 92,812
$ 975,417
$ 339,988
Gain on sale of properties/change in control of interests
(787 )
(31,836 )
(6,484 )
(79,218 )
Gain on sale of joint venture properties
(30 )
(892 )
(48 )
(16,066 )
Depreciation and amortization - real estate related
73,578
67,864
285,596
276,097
Depreciation and amortization - real estate joint ventures
9,658
10,910
40,331
40,954
Impairment charges of depreciable real estate properties
4,043
11,504
8,397
55,945
Gain on sale of cost method investment
-
-
(190,832 )
-
Profit participation from other real estate investments, net
2,210
1,288
(13,665 )
(7,300 )
(Gain)/loss on of marketable securities, net
(150,108 )
(594,753 )
(829 )
(Benefit)/provision for income taxes (1)
(74 )
-
1,426
-
Noncontrolling interests (1)
(337 )
(303 )
(1,710 )
(1,193 )
FFO available to the Company’s common shareholders
$ 133,033
$ 151,893
$ 503,675
$ 608,378
Weighted average shares outstanding for FFO calculations:
Basic
430,103
422,467
429,950
420,370
Units
Dilutive effect of equity awards
1,364
1,336
1,475
1,365
Diluted (2)
432,133
424,580
432,064
422,561
FFO per common share - basic
$ 0.31
$ 0.36
$ 1.17
$ 1.45
FFO per common share - diluted (2)
$ 0.31
$ 0.36
$ 1.17
$ 1.44
(1)
Related to gains, impairment and depreciation on properties, where applicable.
(2)
Reflects the potential impact if certain units were converted to common stock at the beginning of the period, which would have a dilutive effect on FFO available to the Company’s common shareholders. FFO available to the Company’s common shareholders would be increased by $92 and $199 for the three months ended December 31, 2020 and 2019, respectively, and $309 and $868 for the years ended December 31, 2020 and 2019, respectively. The effect of other certain convertible units would have an anti-dilutive effect upon the calculation of Net income available to the Company’s common shareholders per share. Accordingly, the impact of such conversion has not been included in the determination of diluted earnings per share calculations.
Same Property Net Operating Income
Same property NOI is a supplemental non-GAAP financial measure of real estate companies’ operating performance and should not be considered an alternative to net income in accordance with GAAP or cash flows from operations as a measure of liquidity. The Company considers Same property NOI as an important operating performance measure because it is frequently used by securities analysts and investors to measure only the net operating income of properties that have been owned by the Company for the entire current and prior year reporting periods. It excludes properties under redevelopment, development and pending stabilization; properties are deemed stabilized at the earlier of (i) reaching 90% leased or (ii) one year following a project’s inclusion in operating real estate. Same property NOI assists in eliminating disparities in net income due to the development, acquisition or disposition of properties during the particular period presented, and thus provides a more consistent performance measure for the comparison of the Company's properties.
Same property NOI is calculated using revenues from rental properties (excluding straight-line rent adjustments, lease termination fees, TIFs and amortization of above/below market rents) less charges for bad debt, operating and maintenance expense, real estate taxes and rent expense plus the Company’s proportionate share of Same property NOI from unconsolidated real estate joint ventures, calculated on the same basis. The Company’s method of calculating Same property NOI available to the Company’s common shareholders may differ from methods used by other REITs and, accordingly, may not be comparable to such other REITs.
The following is a reconciliation of Net income available to the Company’s common shareholders to Same property NOI (in thousands):
Three Months Ended
December 31,
Year Ended
December 31,
Net income available to the Company’s common shareholders
$ 194,880
$ 92,812
$ 975,417
$ 339,988
Adjustments:
Management and other fee income
(3,125 )
(4,321 )
(13,005 )
(16,550 )
General and administrative
20,901
24,646
93,217
96,942
Impairment charges
3,115
7,508
6,624
48,743
Depreciation and amortization
74,295
68,439
288,955
277,879
Gain on sale of properties/change in control of interests
(787 )
(31,836 )
(6,484 )
(79,218 )
Interest and other expense, net
42,162
42,284
190,323
166,410
(Gain)/loss on marketable securities, net
(150,108 )
(594,753 )
(829 )
Gain on sale of cost method investment
-
-
(190,832 )
-
Provision/(benefit) for income taxes, net
(3,317 )
Equity in income of other real estate investments, net
(1,733 )
(3,318 )
(28,628 )
(26,076 )
Net income attributable to noncontrolling interests
2,044
2,956
Preferred stock redemption charges
-
7,159
-
18,528
Preferred dividends
6,354
9,448
25,416
52,089
Non same property net operating income
(10,929 )
(19,778 )
(33,328 )
(85,087 )
Non-operational expense from joint ventures, net
16,237
20,463
68,510
59,992
Same property NOI
$ 192,323
$ 214,939
$ 784,454
$ 852,450
Same property NOI decreased by $22.6 million, or 10.5%, for the three months ended December 31, 2020, as compared to the corresponding period in 2019, which is primarily the result of a reduction of revenue associated with potentially uncollectible revenues.
Same property NOI decreased by $68.0 million, or 8.0%, for the year ended December 31, 2020, as compared to the corresponding period in 2019, which is primarily the result of a reduction of revenue associated with potentially uncollectible revenues.
Effects of Inflation
Many of the Company's long-term 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 pre-determined thresholds, which generally increase as prices rise, and/or as a result of escalation clauses, which generally increase rental rates during the terms of the leases. Such escalation clauses often include increases based upon changes 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 to market rates upon renewal. Most of the Company's leases include escalation clauses or require the tenant to pay an 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.
New Accounting Pronouncements
See Footnote 1 of the Notes to Consolidated Financial Statements included in this Form 10-K.

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ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
The Company’s primary market risk exposure is interest rate risk. The Company periodically evaluates its exposure to short-term interest rates and will, from time-to-time, enter into interest rate protection agreements which mitigate, but do not eliminate, the effect of changes in interest rates on its floating-rate debt. The Company has not entered, and does not plan to enter, into any derivative financial instruments for trading or speculative purposes. The following table presents the Company’s aggregate fixed rate and variable rate debt obligations outstanding, including fair market value adjustments and unamortized deferred financing costs, as of December 31, 2020, with corresponding weighted-average interest rates sorted by maturity date. The table does not include extension options where available (amounts in millions).
Thereafter
Total
Fair Value
Secured Debt
Fixed Rate
$ 139.4
$ 147.1
$ 12.0
$ 8.3
$ -
$ 4.5
$ 311.3
$ 312.9
Average Interest Rate
5.39 %
4.05 %
3.23 %
6.73 %
-
7.08 %
4.73 %
Unsecured Debt
Fixed Rate
$ -
$ 498.0
$ 348.8
$ 397.8
$ 497.4
$ 3,302.2
$ 5,044.2
$ 5,487.0
Average Interest Rate
-
3.40 %
3.13 %
2.7 %
3.3 %
3.42 %
3.3 %

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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Item 8. Financial Statements and Supplementary Data
The response to this Item 8 is included in our audited Consolidated Financial Statements and Notes to Consolidated Financial Statements, which are contained in Part IV, Item 15 of this Form 10-K.

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ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
None.

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ITEM 9A. CONTROLS AND PROCEDURES
Item 9A. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
The Company’s management, with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the Company’s disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act")) as of the end of the period covered by this report. Based on such evaluation, the Company’s Chief Executive Officer and Chief Financial Officer have concluded that the Company’s disclosure controls and procedures are effective as of December 31, 2020.
Changes in Internal Control Over Financial Reporting
There have not been any changes in the Company’s internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fourth fiscal quarter ended December 31, 2020, that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
Management’s Report on Internal Control Over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rule 13a-15(f) and 15d-15(f). Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in the Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on our evaluation under the framework in Internal Control - Integrated Framework (2013), our management concluded that our internal control over financial reporting was effective as of December 31, 2020.
The effectiveness of our internal control over financial reporting as of December 31, 2020, has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report which appears under Item 8.

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ITEM 9B. OTHER INFORMATION
Item 9B. Other Information
None.
PART III

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ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Item 10. Directors, Executive Officers and Corporate Governance
The information required by this item is incorporated by reference to “Proposal 1-Election of Directors,” “Corporate Governance,” “Committees of the Board of Directors,” “Executive Officers” and “Other Matters” in our definitive proxy statement to be filed with respect to the Annual Meeting of Stockholders expected to be held on April 27, 2021 (“Proxy Statement”).
We have adopted a Code of Business Conduct and Ethics (the “Code of Ethics”). The Code of Ethics is available at the Investors/Governance/Governance Documents section of our website at www.kimcorealty.com. A copy of the Code of Ethics is available in print, free of charge, to stockholders upon request to us at the address set forth in Item 1 of this Annual Report on Form 10-K under the section “Business - Overview.” We intend to satisfy the disclosure requirements under the Securities and Exchange Act of 1934, as amended, regarding an amendment to or waiver from a provision of our Code of Ethics by posting such information on our website.

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ITEM 11. EXECUTIVE COMPENSATION
Item 11. Executive Compensation
The information required by this item is incorporated by reference to “Compensation Discussion and Analysis,” “Executive Compensation Committee Report,” “Compensation Tables,” “Compensation of Directors” and “Other Matters” in our Proxy Statement.

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ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
The information required by this item is incorporated by reference to “Security Ownership of Certain Beneficial Owners and Management” and “Compensation Tables” in our Proxy Statement.

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ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Item 13. Certain Relationships and Related Transactions, and Director Independence
The information required by this item is incorporated by reference to “Certain Relationships and Related Transactions” and “Corporate Governance” in our Proxy Statement.

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ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
Item 14. Principal Accountant Fees and Services
The information required by this item is incorporated by reference to “Independent Registered Public Accountants” in our Proxy Statement.
PART IV

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ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
Item 15. Exhibits and Financial Statement Schedules
(a) 1.
Financial Statements -
The following consolidated financial information is included as a separate section of this annual report on Form 10-K.
Form 10-K
Report
Page
Report of Independent Registered Public Accounting Firm
Consolidated Financial Statements
Consolidated Balance Sheets as of December 31, 2020 and 2019
Consolidated Statements of Income for the years ended December 31, 2020, 2019 and 2018
Consolidated Statements of Comprehensive Income for the years ended December 31, 2020, 2019 and 2018
Consolidated Statements of Changes in Equity for the years ended December 31, 2020, 2019 and 2018
Consolidated Statements of Cash Flows for the years ended December 31, 2020, 2019 and 2018
Notes to Consolidated Financial Statements
2.
Financial Statement Schedules -
Schedule II -
Valuation and Qualifying Accounts for the years ended December 31, 2020, 2019 and 2018
Schedule III -
Real Estate and Accumulated Depreciation as of December 31, 2020
Schedule IV -
Mortgage Loans on Real Estate as of December 31, 2020
All other schedules are omitted since the required information is not present or is not present in amounts sufficient to require submission of the schedule.
3.
Exhibits -
The exhibits listed on the accompanying Index to Exhibits are filed as part of this report.