10-Q 1 kimco_10q-093012.htm FORM 10-Q

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Form 10-Q

x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2012
or

o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to
Commission File Number: 1-10899
Kimco Realty Corporation
(Exact name of registrant as specified in its charter)

Maryland |  | 13-2744380
(State or other jurisdiction of incorporation or organization) |  | (I.R.S. Employer Identification No.)

3333 New Hyde Park Road, New Hyde Park, NY 11042
(Address of principal executive offices) (Zip Code)
(516) 869-9000
(Registrant’s telephone number, including area code)
N/A
(Former name, former address and former fiscal year, if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý No o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (sec. 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files.) Yes ý No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer, “accelerated filer” and “smaller reporting company” in Rule 12-b-2 of the Exchange Act.

Large accelerated filer | ý | Accelerated filer | o
Non-accelerated filer | o | Smaller reporting company | o
(Do not check if a smaller reporting company) |

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12-b-2 of the Exchange Act). Yes o No ý
As of October 24, 2012, the registrant had 407,623,066 shares of common stock outstanding.

PART I FINANCIAL INFORMATION
Item 1. | Financial Statements of Kimco Realty Corporation and Subsidiaries (the “Company”) |
Condensed Consolidated Financial Statements - |
| Condensed Consolidated Balance Sheets as of September 30, 2012 and December 31, 2011 | 3
| Condensed Consolidated Statements of Income for the Three and Nine Months Ended September 30, 2012 and 2011 | 4
| Condensed Consolidated Statements of Comprehensive Income for the Three and Nine Months Ended September 30, 2012 and 2011 | 5
| Condensed Consolidated Statements of Changes in Equity for the Nine Months Ended September 30, 2012 and 2011 | 6
| Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2012 and 2011 | 7
Notes to Condensed Consolidated Financial Statements | 8
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 24
Item 3. | Quantitative and Qualitative Disclosures About Market Risk | 33
Item 4. | Controls and Procedures | 35
PART II OTHER INFORMATION
Item 1. | Legal Proceedings | 35
Item 1A. | Risk Factors | 35
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 35
Item 6. | Exhibits | 36
Signatures | 37

2

KIMCO REALTY CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(in thousands, except share information)

|  | September 30, |  |  | December 31, |
|  | 2012 |  |  | 2011 |
Assets: |  |  |  |  |  |
Operating real estate, net of accumulated depreciation of $1,745,992 and $1,693,090, respectively |  | $ | 7,078,206 |  |  | $ | 6,898,445 |
Investments and advances in real estate joint ventures |  |  | 1,433,450 |  |  |  | 1,404,214 |
Real estate under development |  |  | 132,113 |  |  |  | 179,722 |
Other real estate investments |  |  | 326,268 |  |  |  | 344,131 |
Mortgages and other financing receivables |  |  | 98,188 |  |  |  | 102,972 |
Cash and cash equivalents |  |  | 429,529 |  |  |  | 112,882 |
Marketable securities |  |  | 35,811 |  |  |  | 33,540 |
Accounts and notes receivable |  |  | 138,558 |  |  |  | 149,807 |
Other assets |  |  | 443,853 |  |  |  | 388,803 |
Total assets |  | $ | 10,115,976 |  |  | $ | 9,614,516 |
Liabilities: |  |  |  |  |  |  |  |
Notes payable |  | $ | 3,159,943 |  |  | $ | 2,983,886 |
Mortgages payable |  |  | 1,015,313 |  |  |  | 1,085,371 |
Construction loans payable |  |  | 42,935 |  |  |  | 45,128 |
Dividends payable |  |  | 94,856 |  |  |  | 92,159 |
Other liabilities |  |  | 464,691 |  |  |  | 432,755 |
Total liabilities |  |  | 4,777,738 |  |  |  | 4,639,299 |
Redeemable noncontrolling interests |  |  | 95,059 |  |  |  | 95,074 |
Stockholders' equity: |  |  |  |  |  |  |  |
Preferred Stock, $1.00 par value, authorized 5,791,200 and 5,146,000 shares, respectively |  |  |  |  |
Class F Preferred Stock, $1.00 par value, authorized zero shares and 700,000 shares, respectively issued and outstanding zero shares and 700,000 shares, respectively Aggregate liquidation preference $175,000 |  |  | - |  |  |  | 700 |
Class G Preferred Stock, $1.00 par value, authorized 184,000 shares issued and outstanding 184,000 shares Aggregate liquidation preference $460,000 |  |  | 184 |  |  |  | 184 |
Class H Preferred Stock, $1.00 par value, authorized 70,000 shares issued and outstanding 70,000 shares Aggregate liquidation preference $175,000 |  |  | 70 |  |  |  | 70 |
Class I Preferred Stock, $1.00 par value, authorized 18,400 and zero shares, respectively issued and outstanding 16,000 and zero shares, respectively Aggregate liquidation preference $400,000 |  |  | 16 |  |  |  | - |
Class J preferred stock, $1.00 par value, authorized 9,000 and zero shares, respectively issued and outstanding 9,000 and zero shares, respectively Aggregate liquidation preference $225,000 |  |  | 9 |  |  |  | - |
Common Stock, $.01 par value, authorized 750,000,000 shares issued and outstanding 407,608,794 and 406,937,830 shares, respectively |  |  | 4,076 |  |  |  | 4,069 |
Paid-in capital |  |  | 5,938,244 |  |  |  | 5,492,022 |
Cumulative distributions in excess of net income |  |  | (813,097 | ) |  |  | (702,999 | )
|  |  | 5,129,502 |  |  |  | 4,794,046 |
Accumulated other comprehensive income |  |  | (56,785 | ) |  |  | (107,660 | )
Total stockholders' equity |  |  | 5,072,717 |  |  |  | 4,686,386 |
Noncontrolling interests |  |  | 170,462 |  |  |  | 193,757 |
Total equity |  |  | 5,243,179 |  |  |  | 4,880,143 |
Total liabilities and equity |  | $ | 10,115,976 |  |  | $ | 9,614,516 |

The accompanying notes are an integral part of these condensed consolidated financial statements.
3

KIMCO REALTY CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(in thousands, except per share data)

|  | Three Months Ended September 30, |  |  | Nine Months Ended September 30, |
|  | 2012 |  |  | 2011 |  |  | 2012 |  |  | 2011 |
Revenues |  |  |  |  |  |  |  |  |  |  |  |
Revenues from rental property |  | $ | 222,961 |  |  | $ | 204,297 |  |  | $ | 660,502 |  |  | $ | 620,440 |
Management and other fee income |  |  | 8,917 |  |  |  | 8,728 |  |  |  | 27,053 |  |  |  | 26,827 |
Total revenues |  |  | 231,878 |  |  |  | 213,025 |  |  |  | 687,555 |  |  |  | 647,267 |
Operating expenses |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Rent |  |  | 3,270 |  |  |  | 3,455 |  |  |  | 9,457 |  |  |  | 10,545 |
Real estate taxes |  |  | 29,917 |  |  |  | 27,827 |  |  |  | 87,606 |  |  |  | 83,985 |
Operating and maintenance |  |  | 27,478 |  |  |  | 27,315 |  |  |  | 82,589 |  |  |  | 84,896 |
General and administrative expenses |  |  | 29,957 |  |  |  | 30,846 |  |  |  | 95,317 |  |  |  | 90,188 |
Impairment charges |  |  | 588 |  |  |  | 4,037 |  |  |  | 22,539 |  |  |  | 7,757 |
Depreciation and amortization |  |  | 65,631 |  |  |  | 56,870 |  |  |  | 187,839 |  |  |  | 176,165 |
Total operating expenses |  |  | 156,841 |  |  |  | 150,350 |  |  |  | 485,347 |  |  |  | 453,536 |
Operating income |  |  | 75,037 |  |  |  | 62,675 |  |  |  | 202,208 |  |  |  | 193,731 |
Other income/(expense) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Mortgage and other financing income |  |  | 2,092 |  |  |  | 1,959 |  |  |  | 6,083 |  |  |  | 5,728 |
Interest, dividends and other investment income |  |  | 598 |  |  |  | 375 |  |  |  | 1,110 |  |  |  | 14,173 |
Other expense, net |  |  | (3,085 | ) |  |  | (2,655 | ) |  |  | (6,169 | ) |  |  | (2,153 | )
Interest expense |  |  | (57,116 | ) |  |  | (56,120 | ) |  |  | (171,632 | ) |  |  | (166,535 | )
Income from other real estate investments |  |  | 545 |  |  |  | 2,449 |  |  |  | 1,688 |  |  |  | 3,062 |
Income from continuing operations before income taxes, equity in income of joint ventures and equity in income from other real estate investments |  |  | 18,071 |  |  |  | 8,683 |  |  |  | 33,288 |  |  |  | 48,006 |
Provision for income taxes, net |  |  | (5,183 | ) |  |  | (4,443 | ) |  |  | (4,822 | ) |  |  | (14,332 | )
Equity in income of joint ventures, net |  |  | 24,498 |  |  |  | 19,641 |  |  |  | 103,743 |  |  |  | 49,810 |
Equity in income of other real estate investments, net |  |  | 10,239 |  |  |  | 24,788 |  |  |  | 35,340 |  |  |  | 35,123 |
Income from continuing operations |  |  | 47,625 |  |  |  | 48,669 |  |  |  | 167,549 |  |  |  | 118,607 |
Discontinued operations |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Income/(loss) from discontinued operating properties, net of tax |  |  | 734 |  |  |  | 5,678 |  |  |  | (2,195 | ) |  |  | 13,521 |
Impairment/loss on operating properties sold, net of tax |  |  | (2,604 | ) |  |  | (289 | ) |  |  | (15,364 | ) |  |  | (8,919 | )
Gain on disposition of operating properties, net of tax |  |  | 11,329 |  |  |  | 4,535 |  |  |  | 34,571 |  |  |  | 8,722 |
Income from discontinued operations |  |  | 9,459 |  |  |  | 9,924 |  |  |  | 17,012 |  |  |  | 13,324 |
Gain on sale of operating properties, net of tax |  |  | - |  |  |  | - |  |  |  | 4,059 |  |  |  | - |
Net income |  |  | 57,084 |  |  |  | 58,593 |  |  |  | 188,620 |  |  |  | 131,931 |
Net income attributable to noncontrolling interests |  |  | (2,143 | ) |  |  | (3,612 | ) |  |  | (10,928 | ) |  |  | (9,277 | )
Net income attributable to the Company |  |  | 54,941 |  |  |  | 54,981 |  |  |  | 177,692 |  |  |  | 122,654 |
Redemption costs |  |  | (6,213 | ) |  |  | - |  |  |  | (6,213 | ) |  |  | - |
Preferred stock dividends |  |  | (21,622 | ) |  |  | (14,841 | ) |  |  | (58,037 | ) |  |  | (44,522 | )
Net income available to the Company's common shareholders |  | $ | 27,106 |  |  | $ | 40,140 |  |  | $ | 113,442 |  |  | $ | 78,132 |
Per common share: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Income from continuing operations: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
-Basic |  | $ | 0.04 |  |  | $ | 0.07 |  |  | $ | 0.24 |  |  | $ | 0.16 |
-Diluted |  | $ | 0.04 |  |  | $ | 0.07 |  |  | $ | 0.24 |  |  | $ | 0.16 |
Net income: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
-Basic |  | $ | 0.07 |  |  | $ | 0.10 |  |  | $ | 0.28 |  |  | $ | 0.19 |
-Diluted |  | $ | 0.07 |  |  | $ | 0.10 |  |  | $ | 0.28 |  |  | $ | 0.19 |
Weighted average shares: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
-Basic |  |  | 405,810 |  |  |  | 406,564 |  |  |  | 405,880 |  |  |  | 406,521 |
-Diluted |  |  | 406,747 |  |  |  | 407,292 |  |  |  | 406,650 |  |  |  | 407,386 |
Amounts available to the Company's common shareholders: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Income from continuing operations, net of tax |  | $ | 16,761 |  |  | $ | 30,191 |  |  | $ | 97,795 |  |  | $ | 65,010 |
Income from discontinued operations |  |  | 10,345 |  |  |  | 9,949 |  |  |  | 15,647 |  |  |  | 13,122 |
Net income |  | $ | 27,106 |  |  | $ | 40,140 |  |  | $ | 113,442 |  |  | $ | 78,132 |

The accompanying notes are an integral part of these condensed consolidated financial statements.
4

KIMCO REALTY CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
(in thousands)

|  | Three Months Ended September 30, |  |  | Nine Months Ended September 30, |
|  | 2012 |  |  | 2011 |  |  | 2012 |  |  | 2011 |
Net income |  | $ | 57,084 |  |  | $ | 58,593 |  |  | $ | 188,620 |  |  | $ | 131,931 |
Other comprehensive income: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Change in unrealized gain/(loss) on marketable securities |  |  | 1,382 |  |  |  | (5,240 | ) |  |  | 2,311 |  |  |  | (7,369 | )
Change in unrealized gain on interest rate swaps |  |  | 31 |  |  |  | 103 |  |  |  | 403 |  |  |  | 362 |
Foreign currency translation adjustment |  |  | 42,807 |  |  |  | (113,855 | ) |  |  | 52,378 |  |  |  | (55,823 | )
Other comprehensive income |  |  | 44,220 |  |  |  | (118,992 | ) |  |  | 55,092 |  |  |  | (62,830 | )
Comprehensive income |  |  | 101,304 |  |  |  | (60,399 | ) |  |  | 243,712 |  |  |  | 69,101 |
Comprehensive income attributable to noncontrolling interests |  |  | (3,259 | ) |  |  | 1,310 |  |  |  | (15,145 | ) |  |  | (8,674 | )
Comprehensive income attributable to the Company |  | $ | 98,045 |  |  | $ | (59,089 | ) |  | $ | 228,567 |  |  | $ | 60,427 |

The accompanying notes are an integral part of these condensed consolidated financial statements.
5

KIMCO REALTY CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
For the Nine Months Ended September 30, 2012 and 2011
(Unaudited)
(in thousands)

|  | Cumulative Distributions in Excess of Net |  |  | Accumulated Other Comprehensive |  |  | Preferred Stock |  |  | Common Stock |  |  | Paid-in |  |  | Total Stockholders' |  |  | Noncontrolling |  | Total |
|  | Income |  |  | Income |  |  | Issued |  |  | Amount |  |  | Issued |  |  | Amount |  |  | Capital |  |  | Equity |  |  | Interests |  | Equity |
Balance, January 1, 2011 |  | $ | (515,164 | ) |  | $ | (23,853 | ) |  |  | 954 |  |  | $ | 954 |  |  |  | 406,424 |  |  | $ | 4,064 |  |  | $ | 5,469,841 |  |  | $ | 4,935,842 |  |  | $ | 225,444 |  |  | $ | 5,161,286 |
Contributions from noncontrolling interests |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 1,011 |  |  |  | 1,011 |
Comprehensive income: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Net income |  |  | 122,654 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 122,654 |  |  |  | 9,277 |  |  |  | 131,931 |
Other comprehensive income, net of tax: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Change in unrealized loss on marketable securities |  |  | - |  |  |  | (7,369 | ) |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (7,369 | ) |  |  | - |  |  |  | (7,369 | )
Change in unrealized gain on interest rate swaps |  |  | - |  |  |  | 362 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 362 |  |  |  | - |  |  |  | 362 |
Change in foreign currency translation adjustment |  |  | - |  |  |  | (55,220 | ) |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (55,220 | ) |  |  | (603 | ) |  |  | (55,823 | )
Comprehensive income |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Redeemable noncontrolling interests |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (4,758 | ) |  |  | (4,758 | )
Dividends ($0.54 per common share; $1.2468 per Class F Depositary Share, $1.4532 per Class G Depositary Share and $1.2989 per Class H Depositary Share, respectively) |  |  | (264,727 | ) |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (264,727 | ) |  |  | - |  |  |  | (264,727 | )
Distributions to noncontrolling interests |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (11,539 | ) |  |  | (11,539 | )
Issuance of common stock |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 438 |  |  |  | 5 |  |  |  | 4,936 |  |  |  | 4,941 |  |  |  | - |  |  |  | 4,941 |
Surrender of common stock |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (34 | ) |  |  | (1 | ) |  |  | (579 | ) |  |  | (580 | ) |  |  | - |  |  |  | (580 | )
Repurchase of common stock |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (214 | ) |  |  | (2 | ) |  |  | (3,979 | ) |  |  | (3,981 | ) |  |  | - |  |  |  | (3,981 | )
Exercise of common stock options |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 326 |  |  |  | 3 |  |  |  | 4,897 |  |  |  | 4,900 |  |  |  | - |  |  |  | 4,900 |
Acquisition of noncontrolling interests |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 2,970 |  |  |  | 2,970 |  |  |  | (22,456 | ) |  |  | (19,486 | )
Amortization of equity awards |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 10,669 |  |  |  | 10,669 |  |  |  | - |  |  |  | 10,669 |
Balance, September 30, 2011 |  | $ | (657,237 | ) |  | $ | (86,080 | ) |  |  | 954 |  |  | $ | 954 |  |  |  | 406,940 |  |  | $ | 4,069 |  |  | $ | 5,488,755 |  |  | $ | 4,750,461 |  |  | $ | 196,376 |  |  | $ | 4,946,837 |
Balance, January 1, 2012 |  | $ | (702,999 | ) |  | $ | (107,660 | ) |  |  | 954 |  |  | $ | 954 |  |  |  | 406,938 |  |  | $ | 4,069 |  |  | $ | 5,492,022 |  |  | $ | 4,686,386 |  |  | $ | 193,757 |  |  | $ | 4,880,143 |
Contributions from noncontrolling interests |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 1,343 |  |  |  | 1,343 |
Comprehensive income: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Net income |  |  | 177,692 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 177,692 |  |  |  | 10,928 |  |  |  | 188,620 |
Other comprehensive income, net of tax: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Change in unrealized gain on marketable securities |  |  | - |  |  |  | 2,311 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 2,311 |  |  |  | - |  |  |  | 2,311 |
Change in unrealized gain on interest rate swaps |  |  | - |  |  |  | 403 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 403 |  |  |  | - |  |  |  | 403 |
Change in foreign currency translation adjustment |  |  | - |  |  |  | 48,161 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 48,161 |  |  |  | 4,217 |  |  |  | 52,378 |
Redeemable noncontrolling interests |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (4,745 | ) |  |  | (4,745 | )
Dividends ($0.57 per common share; $1.0344 per Class F Depositary Share, $1.4532 per Class G Depositary Share, $1.2989 per Class H Depositary Share and $0.79583 per Class I Depositary Share, and $0.2521 per Class J Depositary Share, respectively) |  |  | (287,790 | ) |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (287,790 | ) |  |  | - |  |  |  | (287,790 | )
Distributions to noncontrolling interests |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (11,874 | ) |  |  | (11,874 | )
Issuance of common stock |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 1,093 |  |  |  | 11 |  |  |  | 18,055 |  |  |  | 18,066 |  |  |  | - |  |  |  | 18,066 |
Issuance of preferred stock |  |  | - |  |  |  | - |  |  |  | 25 |  |  |  | 25 |  |  |  | - |  |  |  | - |  |  |  | 605,046 |  |  |  | 605,071 |  |  |  | - |  |  |  | 605,071 |
Surrender of common stock |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (111 | ) |  |  | (1 | ) |  |  | (2,072 | ) |  |  | (2,073 | ) |  |  | - |  |  |  | (2,073 | )
Repurchase of common stock |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (1,636 | ) |  |  | (16 | ) |  |  | (30,930 | ) |  |  | (30,946 | ) |  |  | - |  |  |  | (30,946 | )
Exercise of common stock options |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 1,325 |  |  |  | 13 |  |  |  | 20,018 |  |  |  | 20,031 |  |  |  | - |  |  |  | 20,031 |
Acquisition of noncontrolling interests |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 296 |  |  |  | 296 |  |  |  | (23,164 | ) |  |  | (22,868 | )
Amortization of equity awards |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 10,109 |  |  |  | 10,109 |  |  |  | - |  |  |  | 10,109 |
Redemption of preferred stock |  |  | - |  |  |  | - |  |  |  | (700 | ) |  |  | (700 | ) |  |  | - |  |  |  | - |  |  |  | (174,300 | ) |  |  | (175,000 | ) |  |  | - |  |  |  | (175,000 | )
Balance, September 30, 2012 |  | $ | (813,097 | ) |  | $ | (56,785 | ) |  |  | 279 |  |  | $ | 279 |  |  |  | 407,609 |  |  | $ | 4,076 |  |  | $ | 5,938,244 |  |  | $ | 5,072,717 |  |  | $ | 170,462 |  |  | $ | 5,243,179 |

The accompanying notes are an integral part of these condensed consolidated financial statements.
6

KIMCO REALTY CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)

|  | Nine Months Ended September 30, |
|  | 2012 |  |  | 2011 |
Cash flow from operating activities: |  |  |  |  |  |
Net income |  | $ | 188,620 |  |  | $ | 131,931 |
Adjustments to reconcile net income to net cash provided by operating activities: |  |  |  |  |  |  |  |
Depreciation and amortization |  |  | 197,964 |  |  |  | 188,812 |
Impairment charges |  |  | 37,740 |  |  |  | 16,676 |
Gain on sale of operating properties |  |  | (44,596 | ) |  |  | (8,722 | )
Equity in income of joint ventures, net |  |  | (103,743 | ) |  |  | (49,810 | )
Equity in income from other real estate investments, net |  |  | (35,340 | ) |  |  | (35,123 | )
Distributions from joint ventures and other real estate investments |  |  | 150,721 |  |  |  | 108,595 |
Cash retained from excess tax benefits |  |  | - |  |  |  | (69 | )
Change in accounts and notes receivable |  |  | 11,249 |  |  |  | (5,182 | )
Change in accounts payable and accrued expenses |  |  | 34,915 |  |  |  | 32,826 |
Change in other operating assets and liabilities |  |  | (29,940 | ) |  |  | (12,019 | )
Net cash flow provided by operating activities |  |  | 407,590 |  |  |  | 367,915 |
Cash flow from investing activities: |  |  |  |  |  |  |  |
Acquisition of and improvements to operating real estate |  |  | (421,849 | ) |  |  | (169,350 | )
Acquisition of and improvements to real estate under development |  |  | (2,423 | ) |  |  | (26,939 | )
Proceeds from sale/repayments of marketable securities |  |  | 156 |  |  |  | 178,290 |
Investments and advances to real estate joint ventures |  |  | (159,121 | ) |  |  | (90,747 | )
Reimbursements of investments and advances to real estate joint ventures |  |  | 135,987 |  |  |  | 44,894 |
Other real estate investments |  |  | (4,215 | ) |  |  | (5,225 | )
Reimbursements of investments and advances to other real estate investments |  |  | 26,637 |  |  |  | 50,536 |
Investment in mortgage loans receivable |  |  | (15,623 | ) |  |  | - |
Collection of mortgage loans receivable |  |  | 24,613 |  |  |  | 14,732 |
Other investments |  |  | (924 | ) |  |  | (730 | )
Reimbursements of other investments |  |  | 9,538 |  |  |  | 11,122 |
Proceeds from sale of operating properties |  |  | 277,174 |  |  |  | 65,593 |
Proceeds from sale of development properties |  |  | - |  |  |  | 7,373 |
Net cash flow (used for) provided by investing activities |  |  | (130,050 | ) |  |  | 79,549 |
Cash flow from financing activities: |  |  |  |  |  |  |  |
Principal payments on debt, excluding normal amortization of rental property debt |  |  | (212,105 | ) |  |  | (24,393 | )
Principal payments on rental property debt |  |  | (17,585 | ) |  |  | (17,130 | )
Principal payments on construction loan financings |  |  | (213 | ) |  |  | (409 | )
Proceeds from mortgage/construction loan financings |  |  | 6,276 |  |  |  | 13,685 |
(Repayment) proceeds under unsecured revolving credit facilities, net |  |  | (226,558 | ) |  |  | 13,326 |
Proceeds from issuance of unsecured term loan |  |  | 400,000 |  |  |  | - |
Repayment of unsecured notes |  |  | (17,000 | ) |  |  | (88,000 | )
Financing origination costs |  |  | (1,904 | ) |  |  | (855 | )
Redemption of non-controlling interests |  |  | (25,868 | ) |  |  | (23,890 | )
Dividends paid |  |  | (285,092 | ) |  |  | (265,674 | )
Cash retained from excess tax benefits |  |  | - |  |  |  | 69 |
Proceeds from issuance of stock |  |  | 625,102 |  |  |  | 4,832 |
Redemption of preferred stock |  |  | (175,000 | ) |  |  | - |
Repurchase of common stock |  |  | (30,946 | ) |  |  | (3,981 | )
Net cash flow provided by (used for) financing activities |  |  | 39,107 |  |  |  | (392,420 | )
Change in cash and cash equivalents |  | $ | 316,647 |  |  | $ | 55,044 |
Cash and cash equivalents, beginning of year |  |  | 112,882 |  |  |  | 125,154 |
Cash and cash equivalents, end of year |  | $ | 429,529 |  |  | $ | 180,198 |
Interest paid during the year (net of capitalized interest of $1,273 and $6,142, respectively) |  | $ | 149,976 |  |  | $ | 145,378 |
Income taxes paid during the year |  | $ | 1,970 |  |  | $ | 2,062 |

The accompanying notes are an integral part of these condensed consolidated financial statements.
7

KIMCO REALTY CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
1. Interim Financial Statements
Principles of Consolidation -
The accompanying Condensed Consolidated Financial Statements include the accounts of Kimco Realty Corporation and Subsidiaries, (the “Company”). The Company’s Subsidiaries includes subsidiaries which are wholly-owned, and all entities in which the Company has a controlling financial interest, including where the Company has been determined to be a primary beneficiary of a variable interest entity (“VIE”) or meets certain criteria of a sole general partner or managing member in accordance with the Consolidation guidance of the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”). All inter-company balances and transactions have been eliminated in consolidation. The information furnished in the accompanying Condensed Consolidated Financial Statements is unaudited and reflects all adjustments which are, in the opinion of management, necessary to reflect a fair statement of the results for the interim periods presented, and all such adjustments are of a normal recurring nature. These Condensed Consolidated Financial Statements should be read in conjunction with the Company's 2011 Annual Report on Form 10-K for the year ended December 31, 2011 ("10-K"), as certain disclosures in the Quarterly Report on Form 10-Q that would duplicate those included in the 10-K are not included in these Condensed Consolidated Financial Statements.
Subsequent Events -
The Company has evaluated subsequent events and transactions for potential recognition or disclosure in the financial statements.
Income Taxes -
The Company elected status as a Real Estate Investment Trust (a “REIT”) for federal income tax purposes beginning in its taxable year ended December 31, 1991 and operates in a manner that enables the Company to maintain its status as a REIT. As a REIT, the Company must distribute at least 90 percent of its taxable income and will not pay federal income taxes on the amount distributed to its shareholders. Therefore, the Company is not subject to federal income taxes if it distributes 100 percent of its taxable income. Most states, where the Company holds investments in real estate, conform to the federal rules recognizing REITs. Certain subsidiaries have made a joint election with the Company to be treated as taxable REIT subsidiaries (“TRS”), which permit the Company to engage in certain business activities in which the REIT may not conduct directly. A TRS is subject to federal and state income taxes on the income from these activities and the Company includes a provision for taxes in its condensed consolidated financial statements. 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.
8

Earnings Per Share -
The following table sets forth the reconciliation of earnings and the weighted average number of shares used in the calculation of basic and diluted earnings per share (amounts presented in thousands except per share data):

|  | Three Months Ended September 30, |  |  | Nine Months Ended September 30, |
|  | 2012 |  |  | 2011 |  |  | 2012 |  |  | 2011 |
Computation of Basic Earnings Per Share: |  |  |  |  |  |  |  |  |  |  |  |
Income from continuing operations |  | $ | 47,625 |  |  | $ | 48,669 |  |  | $ | 167,549 |  |  | $ | 118,607 |
Gain on sale of operating properties, net of tax |  |  | - |  |  |  | - |  |  |  | 4,059 |  |  |  | - |
Net income attributable to noncontrolling interests |  |  | (2,143 | ) |  |  | (3,612 | ) |  |  | (10,928 | ) |  |  | (9,277 | )
Discontinued operations attributable to noncontrolling interests |  |  | (886 | ) |  |  | (25 | ) |  |  | 1,365 |  |  |  | 202 |
Redemption costs |  |  | (6,213 | ) |  |  | - |  |  |  | (6,213 | ) |  |  | - |
Preferred stock dividends |  |  | (21,622 | ) |  |  | (14,841 | ) |  |  | (58,037 | ) |  |  | (44,522 | )
Income from continuing operations available to the common shareholders |  |  | 16,761 |  |  |  | 30,191 |  |  |  | 97,795 |  |  |  | 65,010 |
Earnings attributable to unvested restricted shares |  |  | (298 | ) |  |  | (150 | ) |  |  | (893 | ) |  |  | (450 | )
Income from continuing operations attributable to common shareholders |  |  | 16,463 |  |  |  | 30,041 |  |  |  | 96,902 |  |  |  | 64,560 |
Income from discontinued operations attributable to the Company |  |  | 10,345 |  |  |  | 9,949 |  |  |  | 15,647 |  |  |  | 13,122 |
Net income attributable to the Company’s common shareholders for basic earnings per share |  | $ | 26,808 |  |  | $ | 39,990 |  |  | $ | 112,549 |  |  | $ | 77,682 |
Weighted average common shares outstanding |  |  | 405,810 |  |  |  | 406,564 |  |  |  | 405,880 |  |  |  | 406,521 |
Basic Earnings Per Share Attributable to the Company’s Common Shareholders: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Income from continuing operations |  | $ | 0.04 |  |  | $ | 0.07 |  |  | $ | 0.24 |  |  | $ | 0.16 |
Income from discontinued operations |  |  | 0.03 |  |  |  | 0.03 |  |  |  | 0.04 |  |  |  | 0.03 |
Net income |  | $ | 0.07 |  |  | $ | 0.10 |  |  | $ | 0.28 |  |  | $ | 0.19 |
Computation of Diluted Earnings Per Share: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Income from continuing operations attributable to common shareholders |  | $ | 16,463 |  |  | $ | 30,041 |  |  | $ | 96,902 |  |  | $ | 64,560 |
Income from discontinued operations attributable to the Company |  |  | 10,345 |  |  |  | 9,949 |  |  |  | 15,647 |  |  |  | 13,122 |
Net income attributable to the Company’s common shareholders for diluted earnings per share |  | $ | 26,808 |  |  | $ | 39,990 |  |  | $ | 112,549 |  |  | $ | 77,682 |
Weighted average common shares outstanding – basic |  |  | 405,810 |  |  |  | 406,564 |  |  |  | 405,880 |  |  |  | 406,521 |
Effect of dilutive securities (a): |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Equity awards |  |  | 937 |  |  |  | 728 |  |  |  | 770 |  |  |  | 865 |
Shares for diluted earnings per common share |  |  | 406,747 |  |  |  | 407,292 |  |  |  | 406,650 |  |  |  | 407,386 |
Diluted Earnings Per Share Attributable to the Company’s Common Shareholders: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Income from continuing operations |  | $ | 0.04 |  |  | $ | 0.07 |  |  | $ | 0.24 |  |  | $ | 0.16 |
Income from discontinued operations |  |  | 0.03 |  |  |  | 0.03 |  |  |  | 0.04 |  |  |  | 0.03 |
Net income |  | $ | 0.07 |  |  | $ | 0.10 |  |  | $ | 0.28 |  |  | $ | 0.19 |

(a) For the three and nine months ended September 30, 2012 and 2011, the effect of certain convertible units would have an anti-dilutive effect upon the calculation of Income from continuing operations per share. Accordingly, the impact of such conversion has not been included in the determination of diluted earnings per share calculations. Additionally, there were 11,205,056 and 13,552,139 stock options that were not dilutive at September 30, 2012 and 2011, respectively.
The Company's unvested restricted share awards contain non-forfeitable rights to distributions or distribution equivalents. The impact of the unvested restricted share awards on earnings per share has been calculated using the two-class method whereby earnings are allocated to the unvested restricted share awards based on dividends declared and the unvested restricted shares' participation rights in undistributed earnings.
New Accounting Pronouncements -
In May 2011, the FASB issued Accounting Standards Update No. 2011-04, "Fair Value Measurements and Disclosures (Topic 820) - Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRS" ("ASU 2011-04"). ASU 2011-04 clarifies the application of existing fair value measurement requirements, changes certain principles related to measuring fair value and requires additional disclosures about fair value measurements. Specifically, the guidance specifies that the concepts of highest and best use and valuation premise in a fair value measurement are only relevant when measuring the fair value of nonfinancial assets whereas they are not relevant when measuring the fair value of financial assets and liabilities. Required disclosures are expanded under the new guidance, especially for fair value measurements that are categorized within Level 3 of the fair value hierarchy, for which quantitative information about the unobservable inputs used, and a narrative description of the valuation processes in place and sensitivity of recurring Level 3 measurements to changes in unobservable inputs will be required. Entities will also be required to disclose the categorization by level of the fair value hierarchy for items that are not measured at fair value in the balance sheet but for which the fair value is required to be disclosed. ASU 2011-04 is effective for annual periods beginning after December 15, 2011, and is to be applied prospectively. The Company’s adoption of this guidance did not have a material impact on its financial statement presentation.
9

In June 2011, the FASB issued ASU No. 2011-05, Comprehensive Income (Topic 220): Presentation of Comprehensive Income (“ASU 2011-05”). The amendments in this ASU require an entity to present the total of comprehensive income, the components of net income, and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements. ASU 2011-05 eliminates the option to present the components of other comprehensive income as part of the statement of equity. In December 2011, the FASB deferred portions of this update in its issuance of ASU 2011-12 Accounting Standards Update No. 2011-12 (“ASU 2011-12”), Comprehensive Income (Topic 220): Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items Out of Accumulated Other Comprehensive Income in ASU 2011-05. The amendment requires that all non-owner changes in stockholders’ equity be presented in either a single continuous statement of comprehensive income or in two separate but consecutive statements. ASU 2011-12 defers only those changes in ASU 2011-05 that relate to the presentation of reclassification adjustments out of accumulated other comprehensive income. ASU 2011-05 is effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2011, with early adoption permitted, but full retrospective application is required. The adoption of ASU 2011-05 and ASU 2011-12 did not have a material impact on the Company’s financial statement presentation.
In November 2011, the FASB issued ASU 2011-10, Property, Plant and Equipment (Topic 360): Derecognition of in Substance Real Estate - a Scope Clarification (a consensus of the FASB Emerging Issues Task Force) (“ASU 2011-10”). ASU 2011-10 requires a parent company that ceases to have a controlling financial interest in a subsidiary that is in substance real estate because the subsidiary has defaulted on its nonrecourse debt to use the FASB’s Real Estate guidance to determine whether to derecognize the in substance real estate entities. ASU 2011-10 is effective for reporting periods beginning on or after June 15, 2012. The adoption of ASU 2011-10 did not have a material impact on the Company’s financial position or results of operations.
In December 2011, the FASB released ASU 2011-11, Balance Sheet (Topic 210): Disclosures about Offsetting Assets and Liabilities (“ASU 2011-11”). ASU 2011-11 requires companies to provide new disclosures about offsetting and related arrangements for financial instruments and derivatives. The provisions of ASU 2011-11 are effective for reporting periods beginning on or after January 1, 2013, and are required to be applied retrospectively. The adoption of ASU 2011-11 is not expected to have a material impact on the Company’s financial statement disclosures.
Reclassifications –
The Company made the following reclassification to the Company’s 2011 Condensed Consolidated Balance Sheets to conform to the 2012 presentation: (i) a reclassification of amounts relating to leasing commissions from Operating real estate and Real estate under development to Other assets.
2. Operating Property Activities
Acquisitions -
During the nine months ended September 30, 2012, the Company acquired the following properties, in separate transactions (in thousands):

|  |  |  | Purchase Price |
Property Name | Location | Month Acquired |  | Cash |  |  | Debt Assumed |  |  | Total |  |  | GLA* |
Woodbridge S.C. | Sugarland, TX | Jan-12 |  | $ | 9,000 |  |  | $ | - |  |  | $ | 9,000 |  |  |  | 97 |
Bell Camino Center | Sun City, AZ | Jan-12 |  |  | 4,185 |  |  |  | 4,210 |  |  |  | 8,395 |  |  |  | 63 |
Olympia West Outparcel | Olympia, WA | Feb-12 |  |  | 1,200 |  |  |  | - |  |  |  | 1,200 |  |  |  | 6 |
Frontier Village (1) | Lake Stevens, WA | Mar-12 |  |  | 12,231 |  |  |  | 30,900 |  |  |  | 43,131 |  |  |  | 195 |
Silverdale S.C. (1) | Silverdale, WA | Mar-12 |  |  | 8,335 |  |  |  | 24,000 |  |  |  | 32,335 |  |  |  | 170 |
31 parcels (2) | Various | Jan-12 |  |  | 30,753 |  |  |  | - |  |  |  | 30,753 |  |  |  | 83 |
1 parcel (3) | Duncan, SC | Jan-12 |  |  | 1,048 |  |  |  | - |  |  |  | 1,048 |  |  |  | 3 |
30 parcels (2) | Various | Mar-12 |  |  | 39,493 |  |  |  | - |  |  |  | 39,493 |  |  |  | 107 |
1 parcel (3) | Peru, IL | Mar-12 |  |  | 995 |  |  |  | - |  |  |  | 995 |  |  |  | 4 |
Towson Place (4) | Towson, MD | Apr - 12 |  |  | 69,375 |  |  |  | 57,625 |  |  |  | 127,000 |  |  |  | 680 |
Prien Lake Outparcel | Lake Charles, LA | May - 12 |  |  | 1,800 |  |  |  | - |  |  |  | 1,800 |  |  |  | 8 |
Devon Village | Devon, PA | June -12 |  |  | 28,550 |  |  |  | - |  |  |  | 28,550 |  |  |  | 79 |
4 Properties | Various, NC | June - 12 |  |  | 63,750 |  |  |  | - |  |  |  | 63,750 |  |  |  | 368 |
Lake Jackson (5) | Lake Jackson, TX | July - 12 |  |  | 5,500 |  |  |  | - |  |  |  | 5,500 |  |  |  | 35 |
Woodlawn S.C. | Charlotte, NC | July - 12 |  |  | 7,050 |  |  |  | - |  |  |  | 7,050 |  |  |  | 137 |
Columbia Crossing - 2 Outparcels | Columbia, MD | July - 12 |  |  | 11,060 |  |  |  | - |  |  |  | 11,060 |  |  |  | 69 |
Pompano Beach (6) | Pompano Beach, FL | July - 12 |  |  | 12,180 |  |  |  | - |  |  |  | 12,180 |  |  |  | 81 |
6 Parcels (2) | Various | July - 12 |  |  | 8,111 |  |  |  | - |  |  |  | 8,111 |  |  |  | 19 |
Wilton S.C. | Wilton, CT | Aug - 12 |  |  | 18,800 |  |  |  | 20,900 |  |  |  | 39,700 |  |  |  | 96 |
Hawthorne Hills S. C. | Vernon Hills, IL | Aug - 12 |  |  | 15,974 |  |  |  | 21,563 |  |  |  | 37,537 |  |  |  | 193 |
|  |  |  | $ | 349,390 |  |  | $ | 159,198 |  |  | $ | 508,588 |  |  |  | 2,493 |

* Gross leasable area ("GLA")
10

(1) These properties were acquired from a joint venture in which the Company has a 15% noncontrolling interest. The Company evaluated these transactions pursuant to the FASB’s Consolidation guidance and as such recognized an aggregate gain of $2.0 million from the fair value adjustment associated with its original ownership due to a change in control which is included in Equity in income of joint ventures, net on the Company’s Condensed Consolidated Statements of Income.
(2) Acquired an aggregate of 67 parcels net leased to restaurants through a consolidated joint venture, in which the Company has a 99.1% controlling interest. During July 2012, the Company purchased the remaining 0.9% interest for $0.7 million.
(3) Acquired an aggregate of two parcels net leased to restaurants through a consolidated joint venture, in which the Company has a 92.0% controlling interest. During July 2012, the Company sold 4% of its interest for $0.1 million. The Company continues to have a controlling interest in the joint venture and therefore continues to consolidate this investment.
(4) This property was acquired from a joint venture in which the Company had a 30% noncontrolling interest. The Company evaluated this transaction pursuant to the FASB’s Consolidation guidance and as such recognized a gain of $12.1 million from the fair value adjustment associated with its original ownership due to a change in control. In addition, the Company recognized promote income of $1.1 million in connection with this transaction. The gain and promote income are included in Equity in income of joint ventures, net on the Company’s Condensed Consolidated Statements of Income. Additionally, the debt assumed in connection with this transaction of $57.6 million was repaid in May 2012.
(5) The Company acquired this property from a preferred equity investment in which the Company held a noncontrolling interest. The Company evaluated this transaction pursuant to the FASB’s Consolidation guidance. This transaction resulted in a change in control with no gain or loss recognized.
(6) This property was acquired from a joint venture in which the Company had a 50% noncontrolling interest. The Company evaluated this transaction pursuant to the FASB’s Consolidation guidance. This transaction resulted in a change in control with no gain or loss recognized.
The aggregate purchase price of the properties acquired during the nine months ended September 30, 2012 has been allocated as follows (in thousands):

Land |  | $ | 164,990 |
Buildings |  |  | 250,505 |
Above Market Rents |  |  | 12,556 |
Below Market Rents |  |  | (35,735 | )
In-Place Leases |  |  | 26,128 |
Building Improvements |  |  | 78,687 |
Tenant Improvements |  |  | 15,615 |
Mortgage Fair Value Adjustment |  |  | (4,158 | )
|  | $ | 508,588 |

Additionally, during the nine months ended September 30, 2012, the Company acquired, in separate transactions, the remaining interest in four separate consolidated joint ventures for $8.7 million. There was no change in control as a result of these transactions and as such the purchase of the remaining interest in these joint ventures resulted in a decrease in noncontrolling interest of $7.4 million and an increase to the Company’s Paid-in capital of $0.2 million.
FNC Realty Corporation –
During the nine months ended September 30, 2012, the Company acquired an additional 13.00% interest in FNC Realty Corporation (“FNC”) for $14.6 million, which increased the Company’s total ownership interest to 82.08%. The Company had previously and continues to consolidate FNC.
Dispositions –
During the nine months ended September 30, 2012, the Company disposed of 30 operating properties and two outparcels, in separate transactions, for an aggregate sales price of $234.0 million. These transactions, which are included in Discontinued Operations, resulted in an aggregate gain of $36.5 million and impairment charges of $14.3 million.
Additionally, during the nine months ended September 30, 2012, the Company disposed of four land parcels and two outparcels for an aggregate sales price of $7.1 million and recognized an aggregate gain of $2.0 million and impairment charges of $0.3 million related to these transactions. The gains from these transactions are recorded as other income, which is included in Other expense, net, and the impairment charges have been recorded as Impairment charges in the Company’s Condensed Consolidated Statements of Income. The Company provided seller financing in connection with the sale of one of the land parcels for $1.75 million, which bears interest at a rate of 6.5% for the first six months and 7.5% for the remaining term, and is scheduled to mature in November 2012. The Company evaluated this transaction pursuant to the FASB’s real estate sales guidance and concluded that the criteria for sale recognition was met.
11

Also, during the nine months ended September 30, 2012, the Company sold a land parcel in San Juan del Rio, Mexico for a sales price of 24.3 million Mexican Pesos (“MXN”) (USD $1.9 million). The Company recognized a gain of MXN 5.7 million (USD $0.4 million) on this transaction. The gain from this transaction is recorded as other income, which is included in Other expense, net, in the Company’s Condensed Consolidated Statements of Income.
During the nine months ended September 30, 2012, the Company sold a previously consolidated operating property to a newly formed unconsolidated joint venture in which the Company has a 20% noncontrolling interest for a sales price of $55.5 million. This transaction resulted in a pre-tax gain of $10.0 million, of which the Company deferred $2.0 million due to its continued involvement. This gain has been recorded as Gain on sale of operating properties, net of tax in the Company’s Condensed Consolidated Statements of Income.
Impairment Charges -
In addition to the impairment charges described above, during the nine months ended September 30, 2012, the Company recognized an aggregate impairment charge of $22.2 million relating to its investment in three operating properties, which are included in Operating expenses in the Company’s Condensed Consolidated Statements of Income. The aggregate book value of these properties was $38.3 million. The estimated aggregate fair value of these properties is based upon purchase price offers and comparable sales information aggregating $16.1 million. These impairment charges resulted from the Company’s efforts to market certain assets and management’s assessment as to the likelihood and timing of such potential transactions (see Footnote 14).
3. Discontinued Operations
The Company reports as discontinued operations, properties held-for-sale as of the end of the current period and assets sold during the period. The results of these discontinued operations are included as a separate component of income on the Condensed Consolidated Statements of Income under the caption Discontinued operations. This reporting has resulted in certain reclassifications of 2011 financial statement amounts.
The components of income and expense relating to discontinued operations for the three and nine months ended September 30, 2012 and 2011 are shown below. These include the results of operations through the date of each respective sale for properties sold during 2012 and 2011 and the operations for the applicable period for those assets classified as held-for-sale as of September 30, 2012 (in thousands):

|  | Three Months Ended September 30, |  |  | Nine Months Ended September 30, |
|  | 2012 |  |  | 2011 |  |  | 2012 |  |  | 2011 |
Discontinued operations: |  |  |  |  |  |  |  |  |  |  |  |
Revenues from rental property |  | $ | 3,524 |  |  | $ | 12,669 |  |  | $ | 15,515 |  |  | $ | 39,593 |
Rental property expenses |  |  | (1,391 | ) |  |  | (4,266 | ) |  |  | (7,246 | ) |  |  | (14,042 | )
Depreciation and amortization |  |  | (1,143 | ) |  |  | (3,656 | ) |  |  | (10,125 | ) |  |  | (12,647 | )
Interest expense |  |  | (199 | ) |  |  | (403 | ) |  |  | (589 | ) |  |  | (1,348 | )
Income from other real estate investments |  |  | - |  |  |  | 1,430 |  |  |  | 13 |  |  |  | 1,945 |
Other expense, net |  |  | (35 | ) |  |  | (124 | ) |  |  | (178 | ) |  |  | (57 | )
Income/(loss) from discontinued operating properties, before income taxes |  |  | 756 |  |  |  | 5,650 |  |  |  | (2,610 | ) |  |  | 13,444 |
Impairment charges |  |  | (2,582 | ) |  |  | (289 | ) |  |  | (15,201 | ) |  |  | (8,919 | )
Gain on disposition of operating properties |  |  | 13,278 |  |  |  | 4,535 |  |  |  | 36,520 |  |  |  | 8,722 |
(Provision)/benefit for income taxes, net |  |  | (1,993 | ) |  |  | 28 |  |  |  | (1,697 | ) |  |  | 77 |
Income from discontinued operating properties |  |  | 9,459 |  |  |  | 9,924 |  |  |  | 17,012 |  |  |  | 13,324 |
Net loss/(income) attributable to noncontrolling interests |  |  | 886 |  |  |  | 25 |  |  |  | (1,365 | ) |  |  | (202 | )
Income from discontinued operations attributable to the Company |  | $ | 10,345 |  |  | $ | 9,949 |  |  | $ | 15,647 |  |  | $ | 13,122 |

During the nine months ended September 30, 2012, the Company classified as held-for-sale 17 operating properties, comprising 1.9 million square feet of GLA. The book value of these properties was $69.8 million, net of accumulated depreciation of $51.1 million. The Company recognized impairment charges of $4.2 million on three of these properties. The book value of the other properties did not exceed its estimated fair value, less costs to sell, and as such no impairment charges were recognized. The Company’s determination of the fair value of these properties, aggregating $98.6 million, was based upon executed contracts of sale with third parties (see Footnote 14). In addition, the Company completed the sale of three operating properties during the nine months ended September 30, 2012 for which two were classified as held-for-sale during 2011 (these dispositions are included in Footnote 2 above). The remaining 16 properties held-for-sale, aggregating $59.1 million, net of accumulated depreciation of $46.4 million, are included in Other assets on the Company’s Condensed Consolidated Balance Sheets.
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4. Ground-Up Development
The Company is engaged in ground-up development projects which will be held as long-term investments by the Company. The ground-up development projects generally have significant pre-leasing prior to the commencement of construction. As of September 30, 2012, the Company had a total of three ground-up development projects, consisting of two projects located in the U.S. and one project located in Peru.
5. Investments and Advances in Real Estate Joint Ventures
The Company and its subsidiaries have investments in and advances to various real estate joint ventures. These joint ventures are engaged primarily in the operation of shopping centers which are either owned or held under long-term operating leases. The Company and the joint venture partners have joint approval rights for major decisions, including those regarding property operations. As such, the Company holds noncontrolling interests in these joint ventures and accounts for them under the equity method of accounting. The table below presents joint venture investments for which the Company held an ownership interest at September 30, 2012 and December 31, 2011 and the Company’s share of income/(loss) for the nine months ended September 30, 2012 and 2011 (in millions, except number of properties):

As of and for the nine months ended September 30, 2012 |
Venture |  | Average Ownership Interest |  |  | Number of Properties |  |  | Total GLA |  |  | Gross Investment In Real Estate |  |  | The Company's Investment |  |  | The Company's Share of Income/(Loss) |
Prudential Investment Program (“KimPru” and “KimPru II”) (1) (2) |  |  | 15.00 | % |  |  | 61 |  |  |  | 10.7 |  |  | $ | 2,741.1 |  |  | $ | 157.6 |  |  | $ | 5.6 |
Kimco Income Opportunity Portfolio (“KIR”) (2) |  |  | 45.00 | % |  |  | 58 |  |  |  | 12.4 |  |  |  | 1,541.9 |  |  |  | 140.3 |  |  |  | 17.2 |
UBS Programs (2)* |  |  | 17.90 | % |  |  | 40 |  |  |  | 5.7 |  |  |  | 1,258.2 |  |  |  | 58.4 |  |  |  | (0.3 | )
BIG Shopping Centers (2)* |  |  | 37.60 | % |  |  | 22 |  |  |  | 3.6 |  |  |  | 555.9 |  |  |  | 33.8 |  |  |  | (2.1 | )
The Canada Pension Plan Investment Board (“CPP”) (2) |  |  | 55.00 | % |  |  | 6 |  |  |  | 2.4 |  |  |  | 434.2 |  |  |  | 149.8 |  |  |  | 4.0 |
Kimco Income Fund (2) |  |  | 15.20 | % |  |  | 12 |  |  |  | 1.5 |  |  |  | 284.7 |  |  |  | 12.3 |  |  |  | 1.4 |
SEB Immobilien (2) |  |  | 15.00 | % |  |  | 13 |  |  |  | 1.8 |  |  |  | 361.2 |  |  |  | 1.8 |  |  |  | 0.5 |
Other Institutional Programs (2) (5) (8) |  | Various |  |  |  | 61 |  |  |  | 3.1 |  |  |  | 556.2 |  |  |  | 20.7 |  |  |  | 18.7 |
RioCan (10) |  |  | 50.00 | % |  |  | 45 |  |  |  | 9.3 |  |  |  | 1,388.8 |  |  |  | 122.0 |  |  |  | 24.2 |
Intown (3) |  |  | - |  |  |  | 138 |  |  |  | N/A |  |  |  | 839.3 |  |  |  | 86.7 |  |  |  | 2.4 |
Latin America |  | Various |  |  |  | 131 |  |  |  | 18.1 |  |  |  | 1,184.8 |  |  |  | 333.8 |  |  |  | 11.1 |
Other Joint Venture Programs (4) (6) (7) (9) (11) |  | Various |  |  |  | 91 |  |  |  | 13.4 |  |  |  | 1,845.7 |  |  |  | 316.3 |  |  |  | 21.0 |
Total |  |  |  |  |  |  | 678 |  |  |  | 82.0 |  |  | $ | 12,992.0 |  |  | $ | 1,433.5 |  |  | $ | 103.7 |

As of December 31, 2011 |  |  | For the nine months ended September 30, 2011 |
Venture |  | Average Ownership Interest |  |  | Number of Properties |  |  | Total GLA |  |  | Gross Investment In Real Estate |  |  | The Company's Investment |  |  | The Company's Share of Income/(Loss) |
Prudential Investment Program (“KimPru” and “KimPru II”) (1) (2) |  |  | 15.00 | % |  |  | 63 |  |  |  | 10.9 |  |  | $ | 2,781.4 |  |  | $ | 151.9 |  |  | $ | (1.4 | )
Kimco Income Opportunity Portfolio (“KIR”) (2) |  |  | 45.00 | % |  |  | 59 |  |  |  | 12.6 |  |  |  | 1,556.6 |  |  |  | 151.4 |  |  |  | 12.7 |
UBS Programs (2)* |  |  | 17.90 | % |  |  | 42 |  |  |  | 5.9 |  |  |  | 1,330.5 |  |  |  | 61.3 |  |  |  | (0.4 | )
BIG Shopping Centers (2)* |  |  | 37.60 | % |  |  | 23 |  |  |  | 3.7 |  |  |  | 557.4 |  |  |  | 41.2 |  |  |  | (2.0 | )
The Canada Pension Plan Investment Board (“CPP”) (2) |  |  | 55.00 | % |  |  | 6 |  |  |  | 2.4 |  |  |  | 430.0 |  |  |  | 140.6 |  |  |  | 4.0 |
Kimco Income Fund (2) |  |  | 15.20 | % |  |  | 12 |  |  |  | 1.5 |  |  |  | 281.1 |  |  |  | 12.1 |  |  |  | 0.8 |
SEB Immobilien (2) |  |  | 15.00 | % |  |  | 13 |  |  |  | 1.8 |  |  |  | 360.5 |  |  |  | 2.1 |  |  |  | 0.0 |
Other Institutional Programs (2) |  | Various |  |  |  | 67 |  |  |  | 4.7 |  |  |  | 804.4 |  |  |  | 33.7 |  |  |  | 1.0 |
RioCan |  |  | 50.00 | % |  |  | 45 |  |  |  | 9.3 |  |  |  | 1,367.0 |  |  |  | 62.2 |  |  |  | 15.9 |
Intown (3) |  |  | - |  |  |  | 138 |  |  |  | N/A |  |  |  | 829.9 |  |  |  | 90.8 |  |  |  | (1.8 | )
Latin America |  | Various |  |  |  | 130 |  |  |  | 17.9 |  |  |  | 1,145.8 |  |  |  | 318.0 |  |  |  | 9.9 |
Other Joint Venture Programs |  | Various |  |  |  | 92 |  |  |  | 13.7 |  |  |  | 2,016.5 |  |  |  | 338.9 |  |  |  | 11.1 |
Total |  |  |  |  |  |  | 690 |  |  |  | 84.4 |  |  | $ | 13,461.1 |  |  | $ | 1,404.2 |  |  | $ | 49.8 |

13

* Ownership % is a blended rate
(1) This venture represents four separate joint ventures, with four separate accounts managed by Prudential Real Estate Investors (“PREI”), three of these ventures are collectively referred to as KimPru and the remaining venture is referred to as KimPru II.
(2) The Company manages these joint venture investments and, where applicable, earns acquisition fees, leasing commissions, property management fees, assets management fees and construction management fees.
(3) The Company’s share of this investment is subject to fluctuation and is dependent upon property cash flows.
(4) During the nine months ended September 30, 2012, two joint ventures in which the Company holds noncontrolling interests sold two properties for an aggregate sales price of $118.0 million. The Company received distributions of $18.5 million and recognized an aggregate gain of $8.3 million.
(5) During the nine months ended September 30, 2012, a joint venture in which the Company holds a noncontrolling interest sold two encumbered operating properties to the Company for an aggregate sales price of $75.5 million. The Company recognized promote income of $2.6 million.
(6) During the nine months ended September 30, 2012, the Company amended one of its Canadian preferred equity investment agreements to restructure the investment as a pari passu joint venture in which the Company holds a noncontrolling interest. As a result of this transaction, the Company continues to account for its investment in this joint venture under the equity method of accounting and includes this investment in Investments and advances to real estate joint ventures within the Company’s Condensed Consolidated Balance Sheets.
(7) During the nine months ended September 30, 2012, a joint venture in which the Company holds a noncontrolling interest sold an operating property for a sales price of $62.0 million, which resulted in no gain or loss recognized.
(8) During the nine months ended September 30, 2012, a joint venture in which the Company held a noncontrolling interest sold an operating property to the Company for a sales price of $127.0 million. The Company evaluated this transaction pursuant to the FASB’s Consolidation guidance and as such recognized a gain of $12.1 million from the fair value adjustment associated with its original ownership due to a change in control. In addition, the Company recognized promote income of $1.1 million in connection with this transaction.
(9) During the nine months ended September 30, 2012, the Company sold an operating property to a newly formed unconsolidated joint venture in which the Company has a noncontrolling interest for a sales price of $55.5 million.
(10) During the nine months September 30, 2012, the Company recognized income of $7.5 million, before taxes of $1.5 million, from the sale of certain air rights at one of the properties in this portfolio.
(11) During the nine months ended September 30, 2012, a joint venture in which the Company holds a noncontrolling interest acquired an operating property in Alberta, Canada for a purchase price of $41.7 million. The Company’s capital contribution was $14.2 million.
The table below presents debt balances within the Company’s unconsolidated joint venture investments for which the Company held noncontrolling ownership interests at September 30, 2012 and December 31, 2011 (in millions, except weighted average remaining term):

|  | As of September 30, 2012 |  |  | As of December 31, 2011 |
Venture |  | Mortgages and Notes Payable |  |  | Weighted Average Interest Rate |  |  | Weighted Average Remaining Term (months)** |  |  | Mortgages and Notes Payable |  |  | Weighted Average Interest Rate |  |  | Weighted Average Remaining Term (months)** |
KimPru and KimPru II |  | $ | 1,103.0 |  |  |  | 5.53 | % |  |  | 47.2 |  |  | $ | 1,185.2 |  |  |  | 5.59 | % |  |  | 52.6 |
KIR |  |  | 916.7 |  |  |  | 5.44 | % |  |  | 68.1 |  |  |  | 911.5 |  |  |  | 5.89 | % |  |  | 75.6 |
UBS Programs |  |  | 695.1 |  |  |  | 5.40 | % |  |  | 42.1 |  |  |  | 718.9 |  |  |  | 5.66 | % |  |  | 47.4 |
BIG Shopping Centers |  |  | 444.0 |  |  |  | 5.52 | % |  |  | 48.5 |  |  |  | 444.5 |  |  |  | 5.52 | % |  |  | 57.4 |
CPP |  |  | 142.3 |  |  |  | 5.21 | % |  |  | 34.0 |  |  |  | 166.3 |  |  |  | 4.45 | % |  |  | 27.0 |
Kimco Income Fund |  |  | 162.2 |  |  |  | 5.45 | % |  |  | 23.7 |  |  |  | 164.7 |  |  |  | 5.45 | % |  |  | 32.7 |
SEB Immobilien |  |  | 243.8 |  |  |  | 5.11 | % |  |  | 58.3 |  |  |  | 243.7 |  |  |  | 5.34 | % |  |  | 61.9 |
RioCan |  |  | 922.5 |  |  |  | 5.42 | % |  |  | 38.9 |  |  |  | 925.0 |  |  |  | 5.66 | % |  |  | 43.3 |
Intown |  |  | 616.9 |  |  |  | 4.42 | % |  |  | 40.9 |  |  |  | 621.8 |  |  |  | 5.09 | % |  |  | 39.6 |
Other Institutional Programs |  |  | 355.2 |  |  |  | 5.26 | % |  |  | 37.2 |  |  |  | 514.4 |  |  |  | 4.90 | % |  |  | 45.4 |
Other Joint Venture Programs |  |  | 1,625.3 |  |  |  | 5.69 | % |  |  | 59.9 |  |  |  | 1,804.7 |  |  |  | 5.60 | % |  |  | 56.9 |
Total |  | $ | 7,227.0 |  |  |  |  |  |  |  |  |  |  | $ | 7,700.7 |  |  |  |  |  |  |  |  |

** Average Remaining Term includes extension options
14

Prudential Investment Program -
During the nine months ended September 30, 2012, a third party mortgage lender foreclosed on an operating property for which KimPru had previously taken an impairment charge during 2011. As a result of this foreclosure, KimPru recognized an additional impairment of $0.8 million. Additionally, KimPru recognized an impairment charge of $4.2 million on a property which was sold to a third party. The Company’s share of these impairment charges was $0.6 million, which is included in Equity in income of joint ventures, net on the Company’s Condensed Consolidated Statements of Income.
UBS Programs (“KUBS”) –
During the nine months ended September 30, 2012, KUBS recognized an aggregate impairment charge of $12.9 million relating to an operating property which was classified as held-for-sale and an operating property that was sold to a third party. KUBS’s determination of the fair value for these properties, $44.1 million, was based upon contracts of sale. The Company’s share of this aggregate impairment was $2.2 million and is included in Equity in income of joint ventures, net on the Company’s Condensed Consolidated Statements of Income.
6. Other Real Estate Investments
Preferred Equity Capital -
The Company has provided capital to owners and developers of real estate properties through its Preferred Equity program. As of September 30, 2012, the Company’s net investment under the Preferred Equity program was $297.4 million relating to 509 properties, including 397 net leased properties. During the nine months ended September 30, 2012, the Company earned $26.0 million from its preferred equity investments, including $6.6 million in net profit participation earned from 17 capital transactions. During the nine months ended September 30, 2011, the Company earned $19.8 million from its preferred equity investments, including $3.9 million in profit participation earned from seven capital transactions.
During the nine months ended September 30, 2012, the Company amended one of its preferred equity agreements to restructure its investment, into a pari passu joint venture investment in which the Company holds a noncontrolling interest. As a result of the amendment, the Company continues to account for this investment under the equity method of accounting and from the date of the amendment will include this investment in Investments and advances to real estate joint ventures within the Company’s Condensed Consolidated Balance Sheets.
Other –
The Company holds a 13.4% noncontrolling interest in a joint venture with an investment group, which owns a portion of Albertson’s Inc. During the nine months ended September 30, 2012, the joint venture distributed $50.3 million of which the Company received $6.9 million. As a result of this transaction, the Company recognized income of $6.9 million, before income taxes, as the cash received was in excess of the Company’s investment.
7. Variable Interest Entities
Consolidated Operating Properties
Included within the Company’s consolidated operating properties at September 30, 2012, are two consolidated entities that are VIEs, for which the Company is the primary beneficiary. All of these entities have been established to own and operate real estate property. The Company’s involvement with these entities is through its majority ownership and management of the properties. These entities were deemed VIEs primarily based on the fact that the voting rights of the equity investors is not proportional to their obligation to absorb expected losses or receive the expected residual returns of the entity and substantially all of the entity's activities are conducted on behalf of the investor which has disproportionately fewer voting rights. The Company determined that it was the primary beneficiary of these VIEs as a result of its controlling financial interest.
At September 30, 2012, total assets of these VIEs were $10.8 million and total liabilities were $0.1 million. The classification of these assets is primarily within real estate and the classification of liabilities are primarily within accounts payable and accrued expenses, which is included in Other liabilities in the Company’s Condensed Consolidated Balance Sheets.
The majority of the operations of these VIEs are funded with cash flows generated from the properties. The Company has not provided financial support to any of these VIEs that it was not previously contractually required to provide, which consists primarily of funding any capital expenditures, including tenant improvements, which are deemed necessary to continue to operate the entity and any operating cash shortfalls that the entity may experience.
15

Consolidated Ground-Up Development Projects
Included within the Company’s ground-up development projects at September 30, 2012 are two entities that are VIEs, for which the Company is the primary beneficiary. These entities were established to develop real estate property to hold as long-term investments. The Company’s involvement with these entities is through its majority ownership and management of the properties. These entities were deemed VIEs primarily based on the fact that the equity investment at risk is not sufficient to permit the entity to finance its activities without additional financial support. The initial equity contributed to these entities was not sufficient to fully finance the real estate construction as development costs are funded by the partners throughout the construction period. The Company determined that it was the primary beneficiary of these VIEs as a result of its controlling financial interest.
At September 30, 2012, total assets of these ground-up development VIEs were $87.8 million and total liabilities were $0.4 million. The classification of these assets is primarily within Real estate under development and the classification of liabilities are primarily within accounts payable and accrued expenses, which is included in Other liabilities in the Company’s Condensed Consolidated Balance Sheets.
Substantially all of the projected development costs to be funded for these ground-up development VIEs, aggregating $31.2 million, will be funded with capital contributions from the Company and by the outside partners, when contractually obligated. The Company has not provided financial support to these VIEs that it was not previously contractually required to provide.
Unconsolidated Ground-Up Development
Also included within the Company’s ground-up development projects at September 30, 2012, is an unconsolidated joint venture, which is a VIE for which the Company is not the primary beneficiary. This joint venture is primarily established to develop real estate property for long-term investment and was deemed a VIE primarily based on the fact that the equity investment at risk was not sufficient to permit the entity to finance its activities without additional financial support. The initial equity contributed to this entity was not sufficient to fully finance the real estate construction as development costs are funded by the partners throughout the construction period. The Company determined that it was not the primary beneficiary of this VIE based on the fact that Company has shared control of this entity along with the entity’s partners and therefore does not have a controlling financial interest.
The Company’s investment in this VIE was $33.9 million as of September 30, 2012, which is included in Real estate under development in the Company’s Condensed Consolidated Balance Sheets. The Company’s maximum exposure to loss as a result of its involvement with this VIE is estimated to be $52.3 million, which primarily represents the Company’s current investment and estimated future funding commitments of $18.4 million. The Company has not provided financial support to this VIE that it was not previously contractually required to provide. All future costs of development will be funded with capital contributions from the Company and the outside partner in accordance with their respective ownership percentages.
8. Mortgages and Other Financing Receivables:
Mortgages and other financing receivables consist of loans acquired and loans originated by the Company. Borrowers of these loans are primarily experienced owners, operators or developers of commercial real estate. The Company’s loans are primarily mortgage loans that are collateralized by real estate. Loan receivables are recorded at stated principal amounts, net of any discount or premium or deferred loan origination costs or fees. The related discounts or premiums on mortgages and other loans purchased are amortized or accreted over the life of the related loan receivable. The Company defers certain loan origination and commitment fees, net of certain origination costs and amortizes them as an adjustment of the loan’s yield over the term of the related loan. The Company reviews on a quarterly basis credit quality indicators such as (i) payment status to identify performing versus non-performing loans, (ii) changes affecting the underlying real estate collateral and (ii) national and regional economic factors.
Interest income on performing loans is accrued as earned. A non-performing loan is placed on non-accrual status when it is probable that the borrower may be unable to meet interest payments as they become due. Generally, loans 90 days or more past due are placed on non-accrual status unless there is sufficient collateral to assure collectability of principal and interest. Upon the designation of non-accrual status, all unpaid accrued interest is reserved against through current income. Interest income on non-performing loans is generally recognized on a cash basis. Recognition of interest income on non-performing loans on an accrual basis is resumed when it is probable that the Company will be able to collect amounts due according to the contractual terms.
The Company has determined that it has one portfolio segment, primarily represented by loans collateralized by real estate, whereby it determines, as needed, reserves for loan losses on an asset-specific basis. The reserve for loan losses reflects management's estimate of loan losses as of the balance sheet date. The reserve is increased through loan loss expense and is decreased by charge-offs when losses are confirmed through the receipt of assets such as cash or via ownership control of the underlying collateral in full satisfaction of the loan upon foreclosure or when significant collection efforts have ceased.
16

The Company considers a loan to be impaired when, based upon current information and events, it is probable that the Company will be unable to collect all amounts due under the existing contractual terms. A reserve allowance is established for an impaired loan when the estimated fair value of the underlying collateral (for collateralized loans) or the present value of expected future cash flows is lower than the carrying value of the loan. An internal valuation is performed generally using the income approach to estimate the fair value of the collateral at the time a loan is determined to be impaired. The model is updated if circumstances indicate a significant change in value has occurred. The Company does not provide for an additional allowance for loan losses based on the grouping of loans as the Company believes the characteristics of the loans are not sufficiently similar to allow an evaluation of these loans as a group for a possible loan loss allowance. As such, all of the Company’s loans are evaluated individually for impairment purposes.
The following table presents performing and non-performing loans as of September 30, 2012 (in thousands):

|  | Number of Loans |  |  | Amount |
Performing Loans |  |  | 22 |  |  | $ | 78,145 |
Non-Performing Loans |  |  | 4 |  |  |  | 20,043 |
Total |  |  | 26 |  |  | $ | 98,188 |

As of September 30, 2012, the Company had four loans aggregating $20.0 million which were in default for nonpayment of interest only or principal and interest. The Company has placed all these loans on non-accrual status with respect to the recognition of interest income starting from each loan’s nonperformance date. Nonperformance dates for these loans range from 4 months to 6 years. The Company assessed each of these four loans and determined that the estimated fair value of the underlying collateral exceeded the respective carrying values as of September 30, 2012.
9. Marketable Securities and Other Investments
At September 30, 2012, the Company’s investment in marketable securities was $35.8 million which includes an aggregate unrealized gain of $18.5 million relating to marketable equity security investments.
10. Notes Payable
During April 2012, the Company obtained a new $400.0 million unsecured term loan with a consortium of banks, which accrues interest at LIBOR plus 105 basis points. The term loan is scheduled to mature in April 2014, with three additional one-year options to extend the maturity date, at the Company’s discretion, to April 17, 2017. Proceeds from this term loan were used for general corporate purposes including the repayment of maturing debt amounts.
During July 2012, the Company repaid the $17.0 million outstanding on its 5.98% medium-term notes, which matured in July 2012.
11. Mortgages Payable
During the nine months ended September 30, 2012, the Company (i) assumed $163.4 million of individual non-recourse mortgage debt relating to the acquisition of six operating properties, including an increase of $4.2 million associated with fair value debt adjustments, (ii) paid off $212.1 million of mortgage debt that encumbered 14 properties and (iii) assigned three mortgages aggregating $13.7 million in connection with property dispositions.
Mortgages payable, collateralized by certain shopping center properties and related tenants' leases, are generally due in monthly installments of principal and/or interest, which mature at various dates through 2031. Interest rates range from LIBOR (0.21% as of September 30, 2012) to 9.75% (weighted-average interest rate of 6.16% as of September 30, 2012). The scheduled principal payments (excluding any extension options available to the Company) of all mortgages payable, excluding unamortized fair value debt adjustments of $9.8 million, as of September 30, 2012, were as follows (in millions): 2012, $31.7; 2013, $123.0; 2014, $225.2; 2015, $131.8; 2016, $233.7; and thereafter, $260.1.
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12. Construction Loans
As of September 30, 2012, the Company had two construction loans with total loan commitments aggregating $68.6 million, of which $42.9 million has been funded. These loans are scheduled to mature in 2014 and 2035 and bear interest at rates of LIBOR plus 1.90% (2.11% as of September 30, 2012) and 5.72%. These construction loans are collateralized by the respective projects and associated tenants’ leases.
13. Noncontrolling Interests
Noncontrolling interests represent the portion of equity that the Company does not own in those entities it consolidates as a result of having a controlling financial interest in accordance with the provisions of the FASB’s Consolidation guidance.
The Company identifies its noncontrolling interests separately within the equity section on the Company’s Condensed Consolidated Balance Sheets. Noncontrolling interests also includes amounts related to partnership units issued by consolidated subsidiaries of the Company in connection with certain property acquisitions. Partnership units which embody an unconditional obligation requiring the Company to redeem the units for cash at a specified or determinable date (or dates) or upon an event that is certain to occur are determined to be mandatorily redeemable under the FASB’s Distinguishing Liabilities from Equity guidance and are classified as Redeemable noncontrolling interests and presented in the mezzanine section between Total liabilities and Stockholder’s equity on the Company’s Condensed Consolidated Balance Sheets. The amounts of consolidated net income attributable to the Company and to the noncontrolling interests are presented on the Company’s Condensed Consolidated Statements of Income.
The following table presents the change in the redemption value of the Redeemable noncontrolling interests for the nine months ended September 30, 2012 and September 30, 2011 (amounts in thousands):

|  | 2012 |  |  | 2011 |
Balance at January 1, |  | $ | 95,074 |  |  | $ | 95,060 |
Fair market value amortization |  |  | - |  |  |  | 15 |
Other |  |  | (15) |  |  |  | (16) |
Balance at September 30, |  | $ | 95,059 |  |  | $ | 95,059 |

14. Fair Value Measurements
All financial instruments of the Company are reflected in the accompanying Condensed Consolidated Balance Sheets at amounts which, in management’s estimation based upon an interpretation of available market information and valuation methodologies, reasonably approximate their fair values except those listed below, for which fair values are reflected. The valuation method used to estimate fair value for fixed-rate and variable-rate debt and noncontrolling interests relating to mandatorily redeemable noncontrolling interests associated with finite-lived subsidiaries of the Company is based on discounted cash flow analyses, with assumptions that include credit spreads, market yield curves, trading activity, loan amounts and debt maturities. The fair values for marketable securities are based on published, securities dealers’ estimated market values or comparable market sales. Such fair value estimates are not necessarily indicative of the amounts that would be realized upon disposition.
As a basis for considering market participant assumptions in fair value measurements, the FASB’s Fair Value Measurements and Disclosures guidance establishes a fair value hierarchy that distinguishes between market participant assumptions based on market data obtained from sources independent of the reporting entity (observable inputs that are classified within Levels 1 and 2 of the hierarchy) and the reporting entity’s own assumptions about market participant assumptions (unobservable inputs classified within Level 3 of the hierarchy).
The following are financial instruments for which the Company’s estimate of fair value differs from the carrying amounts (in thousands):

|  | September 30, 2012 |  | December 31, 2011 |
|  | Carrying Amounts |  | Estimated Fair Value |  | Carrying Amounts |  |  | Estimated Fair Value |
Marketable Securities (1) |  | $ | 35,811 | $ | 36,117 |  | $ | 33,540 |  |  | $ | 33,908 |
Notes Payable (2) |  | $ | 3,159,943 | $ | 3,387,913 |  | $ | 2,983,886 |  |  | $ | 3,136,728 |
Mortgages Payable (3) |  | $ | 1,015,313 | $ | 1,082,627 |  | $ | 1,085,371 |  |  | $ | 1,166,116 |
Construction Loans Payable (3) |  | $ | 42,935 | $ | 48,559 |  | $ | 45,128 |  |  | $ | 49,345 |
Mandatorily Redeemable Noncontrolling Interests (termination dates ranging from 2019 – 2027) (4) |  | $ | - | $ | - |  | $ | 2,654 |  |  | $ | 5,044 |

(1) As of September 30, 2012, $32.7 million of these assets’ estimated fair value were classified within Level 1 of the fair value hierarchy and the remaining $3.4 million were classified within Level 3 of the fair value hierarchy.
(2) The Company determined that its valuation of these Notes payable was classified within Level 2 of the fair value hierarchy.
(3) The Company determined that its valuation of these liabilities was classified within Level 3 of the fair value hierarchy.
(4) The Company sold its investment in the consolidated joint ventures that included mandatorily redeemable noncontrolling interests during the nine months ended September 30, 2012.
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The Company has certain financial instruments that must be measured under the FASB’s Fair Value Measurements and Disclosures guidance, including available for sale securities and derivatives. The Company currently does not have non-financial assets and non-financial liabilities that are required to be measured at fair value on a recurring basis.
The table below presents the Company’s financial assets and liabilities measured at fair value on a recurring basis as of September 30, 2012 and December 31, 2011, aggregated by the level in the fair value hierarchy within which those measurements fall (in thousands):

|  | Balance at September 30, 2012 |  |  | Level 1 |  |  | Level 2 |  |  | Level 3 |
Assets: |  |  |  |  |  |  |  |  |  |  |  |
Marketable equity securities |  | $ | 32,725 |  |  | $ | 32,725 |  |  | $ | - |  |  | $ | - |

|  | Balance at December 31, 2011 |  |  | Level 1 |  |  | Level 2 |  |  | Level 3 |
Assets: |  |  |  |  |  |  |  |  |  |  |  |
Marketable equity securities |  | $ | 30,462 |  |  | $ | 30,462 |  |  | $ | - |  |  | $ | - |
Liabilities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest rate swaps |  | $ | 222 |  |  | $ | - |  |  | $ | 222 |  |  | $ | - |

Assets measured at fair value on a non-recurring basis at September 30, 2012 and December 31, 2011 are as follows (in thousands):

|  | Balance at September 30, 2012 |  |  | Level 1 |  |  | Level 2 |  |  | Level 3 |
Real estate |  | $ | 16,141 |  |  | $ | - |  |  | $ | - |  |  | $ | 16,141 |

|  | Balance at December 31, 2011 |  |  | Level 1 |  |  | Level 2 |  |  | Level 3 |
Real Estate |  | $ | 5,289 |  |  | $ | - |  |  | $ | - |  |  | $ | 5,289 |
Other real estate investments (1) |  | $ | 9,041 |  |  | $ | - |  |  | $ | 9,041 |  |  | $ | - |

(1) Amount represents an investment in a mutual fund for which fair value was determined based on net asset value.
During the nine months ended September 30, 2012, the Company recognized impairment charges of $37.6 million ($15.2 million of which is included in discontinued operations) relating to adjustments to property carrying values. During the nine months ended September 30, 2011, the Company recognized impairment charges of $16.7 million ($8.9 million of which is included in discontinued operations) relating to adjustments to property carrying values, investment in other real estate investments and investment in real estate joint ventures. The Company’s estimated fair values relating to these impairment assessments were primarily based upon estimated sales prices from third party offers and comparable sales information. The Company does not have access to the unobservable inputs used by these third parties to determine these estimated fair values. Based on these inputs the Company determined that its valuation of these investments was classified within Level 3 of the fair value hierarchy.
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15. Financial Instruments – Derivatives and Hedging
The Company is exposed to certain risk arising from both economic conditions and its business operations. The Company principally manages its exposures to a wide variety of business and operational risk through management of its core business activities. The Company manages economic risks, including interest rate, liquidity, and credit risk primarily by managing the amount, sources, and duration of its debt funding and the use of derivative financial instruments. Specifically, the Company may use derivatives to manage exposures that arise from changes in interest rates, foreign currency exchange rate fluctuations and market value fluctuations of equity securities. The Company limits these risks by following established risk management policies and procedures including the use of derivatives.
Cash Flow Hedges of Interest Rate Risk -
The Company, from time to time, hedges the future cash flows of its floating-rate debt instruments to reduce exposure to interest rate risk principally through interest rate swaps and interest rate caps with major financial institutions. The effective portion of the changes in fair value of derivatives designated and that qualify as cash flow hedges is recorded in Accumulated other comprehensive income and is subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. Any ineffective portion of the change in fair value of the derivatives is recognized directly in earnings. During the nine months ended September 30, 2012 and 2011, the Company had no hedge ineffectiveness. As of September 30, 2012, the Company had no outstanding interest rate derivatives designated as cash flow hedges of interest rate risk.
16. Supplemental Schedule of Non-Cash Investing / Financing Activities
The following schedule summarizes the non-cash investing and financing activities of the Company for the nine months ended September 30, 2012 and 2011 (in thousands):

|  | 2012 |  |  | 2011 |
Acquisition of real estate interests by assumption of mortgage debt |  | $ | 159,198 |  |  | $ | 51,749 |
Issuance of restricted common stock |  | $ | 18,066 |  |  | $ | 4,941 |
Surrender of restricted common stock |  | $ | (2,073 | ) |  | $ | (596 | )
Disposition of real estate interests by assignment of debt |  | $ | 13,655 |  |  | $ | - |
Disposition of real estate through the issuance of an unsecured obligation |  | $ | 1,750 |  |  | $ | - |
Declaration of dividends paid in succeeding period |  | $ | 94,856 |  |  | $ | 88,090 |

17. Preferred Stock
During March 2012, the Company issued 16,000,000 Depositary Shares (the "Class I Depositary Shares"), each representing a one-thousandth fractional interest in a share of the Company's 6.00% Class I Cumulative Redeemable Preferred Stock, $1.00 par value per share (the "Class I Preferred Stock"). Dividends on the Class I Depositary Shares are cumulative and payable quarterly in arrears at the rate of 6.00% per annum based on the $25.00 per share initial offering price, or $1.50 per annum. The Class I Depositary Shares are redeemable, in whole or part, for cash on or after March 20, 2017, at the option of the Company, at a redemption price of $25.00 per depositary share, plus any accrued and unpaid dividends thereon. The Class I Depositary Shares are not convertible or exchangeable for any other property or securities of the Company. The net proceeds received from this offering of $387.2 million are for general corporate purposes, including the reduction of borrowings outstanding under the Company’s revolving credit facility and the redemption of shares of the Company’s preferred stock when they become redeemable at the Company’s option.
During July 2012, the Company issued 9,000,000 Depositary Shares (the "Class J Depositary Shares"), each representing a one-thousandth fractional interest in a share of the Company's 5.50% Class J Cumulative Redeemable Preferred Stock, $1.00 par value per share (the "Class J Preferred Stock"). Dividends on the Class J Depositary Shares are cumulative and payable quarterly in arrears at the rate of 5.50% per annum based on the $25.00 per share initial offering price, or $1.375 per annum. The Class J Depositary Shares are redeemable, in whole or part, for cash on or after July 25, 2017, at the option of the Company, at a redemption price of $25.00 per depositary share, plus any accrued and unpaid dividends thereon. The Class J Depositary Shares are not convertible or exchangeable for any other property or securities of the Company. The net proceeds received from this offering of $217.8 million, after expenses, were for the redemption of all the outstanding depositary shares representing the Company’s Class F preferred stock, as discussed below and for general corporate purposes, including the potential redemption of additional classes of the Company’s preferred stock when they become redeemable at our option.
On August 15, 2012, the Company redeemed all of its outstanding 7,000,000 depositary shares of the Company’s 6.65% Class F Cumulative Redeemable Preferred Stock, $1.00 par value per share (the “Class F Preferred Stock”) for $175.0 million, before payment of accrued and unpaid dividends of $1.0 million. In connection with this redemption the Company recorded a non-cash charge of $6.2 million resulting from the difference between the redemption amount and the carrying amount of the Class F Preferred Stock on the Company’s Condensed Consolidated Balance Sheets in accordance with the FASB’s guidance on Distinguishing Liabilities from Equity. The $6.2 million was subtracted from net income to arrive at net income available to common shareholders and is used in the calculation of earnings per share for the three and nine months ended September 30, 2012.
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On August 15, 2012, the Company called for the redemption of all of its outstanding 18,400,000 depositary shares of the Company’s 7.75% Class G Cumulative Redeemable Preferred Stock, $1.00 par value per share (the “Class G Preferred Stock”). The aggregate redemption amount of $460.0 million, before payment of accrued and unpaid dividends of $8.5 million, was paid on October 10, 2012. The Company will record a non-cash charge of $15.5 million resulting from the difference between the redemption amount and the carrying amount of the Class G Preferred Stock on the Company’s Condensed Consolidated Balance Sheets in accordance with the FASB’s guidance on Distinguishing Liabilities from Equity. The $15.5 million will be subtracted from net income to arrive at net income available to common shareholders and will be used in the calculation of earnings per share in the quarter ending December 31, 2012.
The Company’s Class J Preferred Stock, Class I Preferred Stock, Class H Preferred Stock and Class G Preferred Stock rank pari passu as to voting rights, priority for receiving dividends and liquidation preference.
As to any matter on which the Class I Preferred Stock or Class J Preferred Stock may vote, including any action by written consent, each share of Class I Preferred Stock and Class J Preferred Stock shall be entitled to 1,000 votes, each of which 1,000 votes may be directed separately by the holder thereof. With respect to each share of Class I Preferred Stock and Class J Preferred Stock, the holder thereof may designate up to 1,000 proxies, with each such proxy having the right to vote a whole number of votes (totaling 1,000 votes per share of Class I Preferred Stock and Class J Preferred Stock). As a result, each Class I Depositary Share and Class J Preferred Stock is entitled to one vote.
In the event of any liquidation, dissolution or winding up of the affairs of the Company, preferred stock holders are entitled to be paid, out of the assets of the Company legally available for distribution to its stockholders, a liquidation preference of $2,500.00 Class G Preferred Stock per share, $2,500.00 Class H Preferred Stock per share, $25,000.00 Class I Preferred per share and $25,000.00 Class J Preferred Stock per share ($25.00 per each Class G, Class H, Class I and Class J Depositary Share), plus an amount equal to any accrued and unpaid dividends to the date of payment, before any distribution of assets is made to holders of the Company’s common stock or any other capital stock that ranks junior to the preferred stock as to liquidation rights.
18. Incentive Plans
The Company maintains two equity participation plans, the Second Amended and Restated 1998 Equity Participation Plan (the “Prior Plan”) and the 2010 Equity Participation Plan (the “2010 Plan”) (collectively, the “Plans”). The Prior Plan provides for a maximum of 47,000,000 shares of the Company’s common stock to be issued for qualified and non-qualified options and restricted stock grants. Effective May 1, 2012, the 2010 Plan provides for a maximum of 10,000,000 shares of the Company’s common stock to be issued for qualified and non-qualified options and other awards, plus the number of shares of common stock which are or become available for issuance under the Prior Plan and which are not thereafter issued under the Prior Plan, subject to certain conditions. Unless otherwise determined by the Board of Directors at its sole discretion, options granted under the Plans generally vest ratably over a range of three to five years, expire ten years from the date of grant and are exercisable at the market price on the date of grant. Restricted stock grants generally vest (i) 100% on the fourth or fifth anniversary of the grant, (ii) ratably over three or four years, (iii) over three years, at 50% after two years and 50% after the third year or (iv) over ten years at 20% per year commencing after the fifth year. Performance share awards may provide a right to receive shares of restricted stock based on the Company’s performance relative to its peers, as defined, or based on other performance criteria as determined by the Board of Directors. In addition, the Plans provide for the granting of certain options and restricted stock to each of the Company’s non-employee directors (the “Independent Directors”) and permits such Independent Directors to elect to receive deferred stock awards in lieu of directors’ fees.
The Company recognized expense associated with its equity awards of $15.1 million and $14.0 million for the nine months ended September 30, 2012 and 2011, respectively. As of September 30, 2012, the Company had $33.8 million of total unrecognized compensation cost related to unvested stock compensation granted under the Plans. That cost is expected to be recognized over a weighted average period of approximately 4.1 years.
The Company, from time to time, repurchases shares of its common stock in amounts that offset new issuances of common shares in connection with the exercise of stock options or the issuance of restricted stock awards. These repurchases may occur in open market purchases, privately negotiated transactions or otherwise, subject to prevailing market conditions, the Company’s liquidity requirements, contractual restrictions and other factors. During the nine months ended September 30, 2012, the Company repurchased 1.6 million shares of the Company’s common stock for $30.9 million, of which $20.0 million was provided to the Company from options exercised.
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During the nine months ended September 30, 2012, the Company expensed $5.4 million relating to severance costs associated with employees that have been terminated during 2012; $2.5 million of these severance costs related to the departure of an executive officer during January 2012.
19. Taxable REIT Subsidiaries (“TRS”)
The Company is subject to federal, state and local income taxes on the income from its TRS activities, which include Kimco Realty Services ("KRS"), a wholly owned subsidiary of the Company, the consolidated entities of FNC Realty Corporation (“FNC”) and Blue Ridge Real Estate Company/Big Boulder Corporation. The Company is also subject to local non-U.S. taxes on certain investments located outside the U.S.
Income taxes have been provided for on the asset and liability method as required by the FASB’s Income Taxes guidance. Under the asset and liability method, deferred income taxes are recognized for the temporary differences between the financial reporting basis and the tax basis of the taxable assets and liabilities.
The Company’s deferred tax assets and liabilities, which are included in the caption Other assets and Other liabilities on the accompanying Condensed Consolidated Balance Sheets, at September 30, 2012 and December 31, 2011, were as follows (in thousands):

|  | September 30, 2012 |  |  | December 31, 2011 |
Deferred tax assets: |  |  |  |  |  |
Tax/GAAP basis differences |  | $ | 65,350 |  |  | $ | 66,177 |
Net operating losses |  |  | 43,628 |  |  |  | 47,719 |
Related party deferred loss |  |  | 7,577 |  |  |  | 7,577 |
Tax credit carryforwards |  |  | 3,815 |  |  |  | 3,537 |
Capital loss carryforwards |  |  | 647 |  |  |  | 364 |
Charitable contribution carryforward |  |  | 3 |  |  |  | - |
Non-U.S. tax/GAAP basis differences |  |  | 68,782 |  |  |  | 63,610 |
Valuation allowance – U.S. |  |  | (33,783 | ) |  |  | (33,783 | )
Valuation allowance – Non-U.S. |  |  | (35,906 | ) |  |  | (32,737 | )
Total deferred tax assets |  |  | 120,113 |  |  |  | 122,464 |
Deferred tax liabilities – U.S. |  |  | (11,463 | ) |  |  | (11,434 | )
Deferred tax liabilities – Non-U.S. |  |  | (20,875 | ) |  |  | (16,085 | )
Net deferred tax assets |  | $ | 87,775 |  |  | $ | 94,945 |

As of September 30, 2012, the Company had net deferred tax assets of $87.8 million comprised of (i) $54.0 million relating to the difference between the basis of accounting for federal and state income tax reporting and GAAP reporting for U.S. real estate assets, joint ventures, and other investments, net of $11.5 million of deferred tax liabilities, (ii) $3.8 million and $6.0 million for the tax effect of net operating loss carryovers within KRS and FNC, respectively, net of a valuation allowance within FNC of $33.8 million, (iii) $7.6 million for losses deferred for federal and state income tax purposes for transactions with related parties, (iv) $3.8 million for tax credit carryovers, (v) $0.6 million for capital loss carryovers, and (vi) $12.0 million of net deferred tax assets related to its investments in Canada and Latin America, net of a valuation allowance of $35.9 million and deferred tax liabilities of $20.9 million. General business tax credit carryovers of $2.2 million within KRS expire during taxable years from 2028 through 2031, and alternative minimum tax credit carryovers of $1.6 million that do not expire.
As of September 30, 2012, the Company determined that no valuation allowance was needed against a $67.7 million net deferred tax asset within KRS. The Company based its determination on an analysis of both positive and negative evidence. Positive evidence includes positive book income in the KRS’s most recent year and quarter to date as well as future projected income. Although KRS has three-year cumulative book income through the quarter ended September 30, 2012, the Company considered as negative evidence the three-year cumulative book loss for KRS as of December 31, 2011. The cumulative loss was primarily the result of impairment charges taken by KRS. The analysis showed that KRS will more likely than not realize its net deferred tax asset of $67.7 million. If future income projections do not occur as forecasted, and if KRS does not have sufficient future taxable earnings, the Company will reevaluate the need for a valuation allowance.
The Company’s investments in Latin America are made through individual entities which are subject to local, non-U.S. taxes. The Company assesses each entity to determine if deferred tax assets are more likely than not realizable. This assessment primarily includes an analysis of cumulative earnings and the determination of future earnings to the extent necessary to fully realize the individual deferred tax asset. Based on this analysis the Company has determined that a full valuation allowance is required for entities that have a three-year cumulative book loss and for which future earnings are not readily determinable. In addition, the Company has determined that no valuation allowance is needed for entities that have three-years of cumulative book income and future earnings are anticipated to be sufficient to more likely than not realize their deferred tax assets. At September 30, 2012, the Company had total deferred tax assets of $45.2 million relating to its Latin American investments with an aggregate valuation allowance of $35.9 million.
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The Company’s deferred tax assets in Canada result principally from depreciation deducted under generally accepted accounting principles that exceeds capital cost allowances claimed under Canadian tax rules. The deferred tax asset will naturally reverse upon disposition as the tax basis will be greater than the basis of the assets under generally accepted accounting principles.
Uncertain Tax Positions:
The Company is subject to income tax in certain jurisdictions outside the U.S., principally Canada and Mexico. The statute of limitations on assessment of tax varies from three to seven years depending on the jurisdiction and tax issue. Tax returns filed in each jurisdiction are subject to examination by local tax authorities. The Company is currently under audit by the Canadian Revenue Agency, Mexican Tax Authority and the U.S. Internal Revenue Service (“IRS”). On March 30, 2012, the IRS issued a notice of proposed assessment, which proposes pursuant to Section 482 of the Internal Revenue Code, as amended (the “Code”), to disallow a capital loss claimed by KRS on the disposition of common shares of Valad Property Ltd., an Australian publicly listed company. Because the adjustment is being made pursuant to Section 482 of the Code, the IRS may assert a 100 percent “penalty” tax pursuant to Section 857(b)(7) of the Code in lieu of disallowing the capital loss deduction. The notice of proposed assessment issued to the Company and KRS impose the 100 percent penalty tax in the amount of $40.9 million and disallows the capital loss, respectively. The Company strongly disagrees with the IRS’ position on the application of Section 482 of the Code to the disposition of the shares, the imposition of the 100 percent penalty tax and the simultaneous assertion of the penalty tax and disallowance of the capital loss deduction. The Company timely filed a written protest in response including a request for an IRS Appeals Office conference. The Company intends to vigorously defend its position in this matter and believes it will prevail.
Resolutions of these audits are not expected to have a material effect on the Company’s financial statements. The Company does not believe that the total amount of unrecognized tax benefits will significantly increase or decrease within the next 12 months.
20. Pro Forma Financial Information
As discussed in Note 2, the Company and certain of its affiliates acquired and disposed of interests in certain operating properties during the nine months ended September 30, 2012. The pro forma financial information set forth below is based upon the Company’s historical Condensed Consolidated Statements of Income for the nine months ended September 30, 2012 and 2011, adjusted to give effect to these transactions at the beginning of 2011.
The pro forma financial information is presented for informational purposes only and may not be indicative of what actual results of operations would have been had the transactions occurred at the beginning of each year, nor does it purport to represent the results of future operations, amounts presented in millions, except per share figures.

|  | Nine Months Ended September 30, |
|  | 2012 |  |  | 2011 |
Revenues from rental property |  | $ | 699.5 |  |  | $ | 672.4 |
Net income |  | $ | 177.1 |  |  | $ | 124.5 |
Net income available to the Company’s common shareholders |  | $ | 101.9 |  |  | $ | 70.7 |
Net income available to the Company’s common shareholders per common share: |  |  |  |  |  |  |  |
Basic |  | $ | 0.25 |  |  | $ | 0.17 |
Diluted |  | $ | 0.25 |  |  | $ | 0.17 |

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Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Forward-Looking Statements
This Quarterly Report on Form 10-Q, together with other statements and information publicly disseminated by the Company contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The Company intends such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 and includes this statement for purposes of complying with the safe harbor provisions. Forward-looking statements, which are based on certain assumptions and describe the Company’s future plans, strategies and expectations, are generally identifiable by use of the words “believe,” “expect,” “intend,” “anticipate,” “estimate,” “project” or similar expressions. You should not rely on forward-looking statements since they involve known and unknown risks, uncertainties and other factors which are, in some cases, beyond the Company’s control and could materially affect actual results, performances or achievements. Factors which may cause actual results to differ materially from current expectations include, but are not limited to (i) general adverse economic and local real estate conditions, (ii) the inability of major tenants to continue paying their rent obligations due to bankruptcy, insolvency or a general downturn in their business, (iii) financing risks, such as the inability to obtain equity, debt or other sources of financing or refinancing on favorable terms, (iv) the Company’s ability to raise capital by selling its assets, (v) changes in governmental laws and regulations, (vi) the level and volatility of interest rates and foreign currency exchange rates, (vii) risks related to our international operations, (viii) the availability of suitable acquisition and disposition opportunities, (ix) valuation and risks related to our joint venture and preferred equity investments, (x) valuation of marketable securities and other investments, (xi) increases in operating costs, (xii) changes in the dividend policy for the Company’s common stock, (xiii) the reduction in the Company’s income in the event of multiple lease terminations by tenants or a failure by multiple tenants to occupy their premises in a shopping center, (xiv) impairment charges and (xv) unanticipated changes in the Company’s intention or ability to prepay certain debt prior to maturity and/or hold certain securities until maturity and the risk factors discussed in Part II, Item 1A. included in this Form 10-Q and in our Annual Report on Form 10-K for the year ended December 31, 2011, Accordingly, there is no assurance that the Company’s expectations will be realized.
The following discussion should be read in conjunction with the accompanying Condensed Consolidated Financial Statements and Notes thereto. These unaudited financial statements include all adjustments which are, in the opinion of management, necessary to reflect a fair statement of the results for the interim periods presented, and all such adjustments are of a normal recurring nature.
Executive Summary
Kimco Realty Corporation is one of the nation’s largest publicly-traded owners and operators of neighborhood and community shopping centers. As of September 30, 2012, the Company had interests in 922 shopping center properties (the “Combined Shopping Center Portfolio”) aggregating 134.7 million square feet of gross leasable area (“GLA”) and 894 other property interests, primarily through the Company’s preferred equity investments, other real estate investments and non-retail properties, totaling 27.1 million square feet of GLA, for a grand total of 1,757 properties aggregating 161.8 million square feet of GLA, located in 44 states, Puerto Rico, Canada, Mexico, Chile, Brazil and Peru.
The Company is self-administered and self-managed through present management, which has owned and managed neighborhood and community shopping centers for over 50 years. 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.
The Company’s vision is to be the premier owner and operator of shopping centers with its core business operations focusing on owning and operating neighborhood and community shopping centers through investments in North America. This vision has entailed a shift away from non-retail assets that the Company currently holds including, non-retail preferred equity investments, marketable securities, mortgages on non-retail properties and several urban mixed-use properties. As such, the Company’s plan is to sell these non-retail assets. If the Company accepts sales prices for these non-retail assets that are less than their net carrying values, the Company would be required to take impairment charges. In addition, the Company has an active capital recycling program of selling retail assets deemed non-strategic. The Company continues to be committed to broadening its institutional management business by selectively forming joint ventures with high quality domestic and foreign institutional partners for the purpose of investing in neighborhood and community shopping centers.
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Results of Operations
Comparison of the three months ended September 30, 2012 to 2011

|  | Three Months Ended |  |  |  |
|  | September 30, |  |  |  |
|  | (amounts in millions) |  |  |  |
|  | 2012 |  |  | 2011 |  |  | Increase |  |  | % change |
Revenues from rental property (1) |  | $ | 223.0 |  |  | $ | 204.3 |  |  | $ | 18.7 |  |  |  | 9.2 | %
Rental property expenses: (2) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Rent |  | $ | 3.3 |  |  | $ | 3.5 |  |  | $ | (0.2) |  |  |  | (5.7 | )%
Real estate taxes |  |  | 29.9 |  |  |  | 27.8 |  |  |  | 2.1 |  |  |  | 7.6 | %
Operating and maintenance |  |  | 27.5 |  |  |  | 27.3 |  |  |  | 0.2 |  |  |  | 0.7 | %
|  | $ | 60.7 |  |  | $ | 58.6 |  |  | $ | 2.1 |  |  |  | 3.6 | %
Depreciation and amortization (3) |  | $ | 65.6 |  |  | $ | 56.9 |  |  | $ | 8.7 |  |  |  | 15.3 | %

Comparison of the nine months ended September 30, 2012 to 2011

|  | Nine Months Ended |  |  |  |
|  | September 30, |  |  |  |
|  | (amounts in millions) |  |  |  |
|  | 2012 |  |  | 2011 |  |  | Increase |  |  | % change |
Revenues from rental property (1) |  | $ | 660.5 |  |  | $ | 620.4 |  |  | $ | 40.1 |  |  |  | 6.5 | %
Rental property expenses: (2) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Rent |  | $ | 9.5 |  |  | $ | 10.5 |  |  | $ | (1.0) |  |  |  | (9.5 | )%
Real estate taxes |  |  | 87.6 |  |  |  | 84.0 |  |  |  | 3.6 |  |  |  | 4.3 | %
Operating and maintenance |  |  | 82.6 |  |  |  | 84.9 |  |  |  | (2.3 | ) |  |  | (2.7 | )%
|  | $ | 179.7 |  |  | $ | 179.4 |  |  | $ | 0.3 |  |  |  | 0.2 | %
Depreciation and amortization (3) |  | $ | 187.8 |  |  | $ | 176.2 |  |  | $ | 11.6 |  |  |  | 6.6 | %

(1) | Revenues from rental property increased primarily from the combined effect of (i) the acquisition of operating properties during 2012 and 2011, providing incremental revenues for the three and nine months ended September 30, 2012 of $16.0 million and $40.6 million, respectively as compared to the corresponding periods in 2011, (ii) an overall increase in the consolidated shopping center portfolio occupancy to 92.7% at September 30, 2012, as compared to 92.2% at September 30, 2011, (iii) the completion of certain development and redevelopment projects, tenant buyouts and net growth in the current portfolio, providing incremental revenues for the three and nine months ended September 30, 2012 of $4.2 million and $0.4 million, respectively, as compared to the corresponding periods in 2011, and (iv) an increase in revenues relating to the Company’s Latin American portfolio of $1.4 million and $5.4 million, for the three and nine months ended September 30, 2012, respectively, partially offset by (v) a decrease in revenues of $2.9 million and $6.3 million, for the three and nine months ended September 30, 2012, respectively, primarily resulting from the sale of certain properties during 2012 and 2011.

(2) | Rental property expenses include (i) rent expense relating to ground lease payments for which the Company is the lessee; (ii) real estate tax expense for consolidated properties for which the Company has a controlling ownership interest; and (iii) operating and maintenance expense, which 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. Rental property expenses increased for the three months ended September 30, 2012, as compared to the corresponding period in 2011, primarily due to (i) an increase in real estate taxes of $2.1 million, (ii) an increase in insurance premiums and claims of $0.6 million, and (iii) an increase in utilities expense of $0.3 million, partially offset by (iv) a decrease in repairs and maintenance costs of $0.8 million. Rental property expenses increased for the nine months ended September 30, 2012, as compared to the corresponding period in 2011, primarily due to (i) an increase in real estate taxes of $3.6 million, (ii) an increase in insurance premiums and claims of $1.9 million and (iii) an increase in utilities of $1.2 million, partially offset by (iv) a decrease in snow removal costs of $5.7 million.

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(3) | Depreciation and amortization increased for the three and nine months ended September 30, 2012, as compared to the corresponding periods in 2011, primarily due to (i) operating property acquisitions during 2012 and 2011, (ii) the placement of certain development properties into service and (iii) tenant vacancies, partially offset by (iv) certain operating property dispositions during 2012 and 2011.

General and administrative costs include employee-related expenses (salaries, bonuses, equity awards, benefits, and payroll taxes), professional fees, office rent, travel expense, and other company-specific expenses. General and administrative expense increased $5.1 million for the nine months ended September 30, 2012, as compared to the corresponding period in 2011. This increase is primarily due to an increase in equity awards expense related to grants issued during 2012 and 2011 and an increase in other personnel related costs, including $3.2 million in severance costs of which $2.5 million relates to the departure of an executive officer in January 2012, as compared to the corresponding period in 2011.
During the nine months ended September 30, 2012, the Company recognized impairment charges of $37.6 million ($15.2 million of which is included in discontinued operations) relating to adjustments to property carrying values based on their respective estimated sales prices. During the nine months ended September 30, 2011, the Company recognized impairment charges of $16.7 million ($8.9 million of which is included in discontinued operations) relating to adjustments to property carrying values investments in other real estate investments and investments in real estate joint ventures based on their respective estimated sales prices. Based on the usage of estimated sales prices and comparable sales information as inputs to determine fair value the Company determined that its valuation in these investments was classified within Level 3 of the FASB’s fair value hierarchy. These impairment charges resulted from the Company’s efforts to market certain assets and management’s assessment as to the likelihood and timing of such potential transactions.
Interest, dividends and other investment income decreased $13.1 million for the nine months ended September 30, 2012, as compared to the corresponding period in 2011. This decrease is primarily due to a decrease in other investment income of $6.9 million relating to the receipt of cash distributions during 2011 in excess of the Company’s carrying value of a cost method investment and the Company’s sale of its investment in Valad notes during 2011 resulting in a decrease in interest income of $6.2 million for the nine months ended September 30, 2012, as compared to the corresponding period in 2011.
Other expense, net increased $4.0 million for the nine months ended September 30, 2012, as compared to the corresponding period in 2011. This increase is primarily due to (i) a decrease in gains on foreign currency of $3.1 million relating to changes in foreign currency exchange rates and (ii) an increase in acquisition related costs of $3.6 million relating to an increase in transactional activity, partially offset by (iii) an increase of $2.5 million in gains on land sales during 2012, as compared to the corresponding period in 2011.
Interest expense increased $5.1 million for the nine months ended September 30, 2012, as compared to the corresponding period in 2011. This increase is primarily related to a decrease in capitalization of interest due to the placement of certain development and redevelopment properties into service during the nine months ended September 30, 2012, as compared to the corresponding period in 2011.
Provision for income taxes, net decreased $9.5 million for the nine months ended September 30, 2012, as compared to the corresponding period in 2011. This change is primarily due to (i) an increase in income tax benefit of $6.3 million related to impairments taken during the nine months ended September 30, 2012, as compared to the corresponding period in 2011, (ii) a decrease in tax provision of $2.7 million resulting from the receipt of a cash distribution during 2011 in excess of the Company’s carrying value of a cost method investment and (iii) a decrease in tax provision of $2.7 million resulting from a decrease in equity income recognized in connection with the Albertson’s investment during the nine months ended September 30, 2012, as compared to the corresponding period in 2011, partially offset by (iv) an increase in tax provision of $2.7 million for the nine months ended September 30, 2012, as compared to the corresponding period in 2011, resulting from incremental earnings due to increased profitability from properties within the Company’s taxable REIT subsidiaries.
Equity in income of joint ventures, net increased $4.9 million for the three months ended September 30, 2012, as compared to the corresponding period in 2011. This increase is primarily the result of (i) a decrease in impairment charges of $2.6 million during the three months ended September 30, 2012, as compared to the corresponding period in 2011, (ii) an increase in equity in income of $1.1 million from the Company’s InTown Suites investment primarily resulting from increased operating profitability and (iii) incremental earnings due to increased profitability from properties within the Company’s joint venture program, partially offset by (iv) a decrease in gains on sale and promote income recognized of $1.9 million during the three months ended September 30, 2012, as compared the corresponding period in 2011.
Equity in income of joint ventures, net increased $53.9 million for the nine months ended September 30, 2012, as compared to the corresponding period in 2011. This increase is primarily the result of (i) an increase in gains on sale and promote income recognized of $23.7 million, (ii) the recognition of $7.5 million in income on the sale of certain air rights at a property within one of the Company’s joint venture investments in Canada, (iii) an increase in equity in income of $4.1 million from the Company’s InTown Suites investment primarily resulting from increased operating profitability, (iv) the recognition of $2.1 million in income resulting from cash distributions received in excess of the Company’s carrying value of its investment in an unconsolidated joint venture, (v) a decrease in equity in loss of $3.7 million resulting from the disposition of a portfolio of properties during 2011, (vi) an increase in equity in income of $3.4 million from the Company’s joint venture investments in Canada and (vii) incremental earnings due to increased profitability from properties within the Company’s joint venture program.
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Equity in income from other real estate investments, net decreased $14.5 million for the three months ended September 30, 2012, as compared to the corresponding period in 2011. This decrease is primarily due to (i) a decrease of $13.9 million in equity in income from the Albertson’s joint venture resulting from cash distributions received in excess of the Company’s investment during the three months ended September 30, 2011 and (ii) a decrease of $1.3 million in equity in income from the Company’s Preferred Equity Program during the three months ended September 30, 2012, as compared to the corresponding period in 2011.
During the nine months ended September 30, 2012, the Company disposed of 30 operating properties and two outparcels, in separate transactions, for an aggregate sales price of $234.0 million. These transactions, which are included in Discontinued Operations, resulted in an aggregate gain of $36.5 million and impairment charges of $14.3 million.
During the nine months ended September 30, 2011, the Company disposed of 17 operating properties, one development property and one outparcel, in separate transactions, for an aggregate sales price of approximately $70.0 million. These transactions, which are included in Discontinued operations, resulted in an aggregate gain of approximately $8.7 million and impairment charges of approximately $8.9 million.
Additionally, during the nine months ended September 30, 2011, a consolidated joint venture in which the Company had a preferred equity investment disposed of a property for a sales price of approximately $6.1 million. As a result of this capital transaction, the Company received approximately $1.4 million of profit participation, before noncontrolling interest of approximately $0.1 million. This profit participation has been recorded as Income from other real estate investments and is reflected in Income from discontinued operating properties in the Company’s Condensed Consolidated Statements of Income.
During the nine months ended September 30, 2012, the Company sold an operating property to a newly formed unconsolidated joint venture in which the Company has a noncontrolling interest for a sales price of $55.5 million. This transaction resulted in a pre-tax gain of $10.0 million, of which the Company deferred $2.0 million due to its continued involvement. This gain has been recorded as Gain on sale of operating properties, net of tax in the Company’s Condensed Consolidated Statements of Income.
Net income attributable to the Company for the three and nine months ended September 30, 2012 was $54.9 million and $177.7 million, respectively. Net income attributable to the Company for the three and nine months ended September 30, 2011 was $55.0 million and $122.7 million, respectively. On a diluted per share basis, net income was $0.07 and $0.28 for the three and nine month periods ended September 30, 2012, respectively, as compared to $0.10 and $0.19 for the three and nine month period ended September 30, 2011, respectively. These changes are primarily attributable to (i) a decrease in interest, dividends and other investment income resulting primarily from the sale of certain marketable securities during 2011, (ii) a decrease in equity in income resulting from the Albertson’s joint venture and (iii) an increase in impairment charges recognized during the three and nine months ended September 30, 2012, as compared to the corresponding periods in 2011, partially offset by (iv) incremental earnings due to increased profitability from the Company’s operating properties and the acquisition of operating properties during 2012 and 2011 and (v) an increase in equity in income of joint ventures, net primarily due to gains on sales of operating properties sold within various joint venture portfolios during 2012. The 2012 diluted per share results were decreased by a reduction in net income available to common shareholders of $6.2 million resulting from the deduction of original issuance costs associated with the redemption of the Company’s 6.65% Class F Cumulative Redeemable Preferred Stock.
Tenant Concentration
The Company seeks to reduce its operating and leasing risks through diversification achieved by the geographic distribution of its properties, avoiding dependence on any single property, and a large tenant base. At September 30, 2012, the Company’s five largest tenants were TJX Companies, The Home Depot, Wal-Mart, Sears Holdings and Kohl’s, which represented 3.0%, 3.0%, 2.5%, 2.0% and 1.6%, 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.
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 with aggregate bank commitments of $1.75 billion.
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The Company’s cash flow activities are summarized as follows (in millions):

|  | Nine Months Ended September 30, |
|  | 2012 |  |  | 2011 |
Net cash flow provided by operating activities |  | $ | 407.6 |  |  | $ | 367.9 |
Net cash flow (used for)/provided by investing activities |  | $ | (130.1 | ) |  | $ | 79.5 |
Net cash flow provided by/(used for) financing activities |  | $ | 39.1 |  |  | $ | (392.4) |

Operating Activities
The Company anticipates that cash on hand, borrowings under its revolving credit facility, issuance of equity and public debt, as well as other debt and equity alternatives, will provide the necessary capital required by the Company. Net cash flow provided by operating activities for the nine months ended September 30, 2012, was primarily attributable to (i) cash flow from the diverse portfolio of rental properties, (ii) the acquisition of operating properties during 2012 and 2011, (iii) new leasing, expansion and re-tenanting of core portfolio properties and (iv) distributions from the Company’s joint venture programs.
Cash flows provided by operating activities for the nine months ended September 30, 2012, were $407.6 million, as compared to $367.9 million for the comparable period in 2011. This increase of $39.7 million is primarily attributable to higher operational income, increased distributions from joint ventures and other real estate investments and changes in accounts and notes receivable, other operating assets and liabilities and accounts payable and accrued expenses due to timing of receipts and payments.
Investing Activities
Cash flows used for investing activities for the nine months ended September 30, 2012, was $130.1 million, as compared to cash flows provided by investing activities of $79.5 million for the comparable period in 2011. This change of $209.6 million resulted primarily from (i) an increase in acquisition of and improvements to operating real estate of $252.5 million, (ii) a decrease in proceeds from the sale/repayments of marketable securities of $178.1 million, (iii) an increase in investments and advances to real estate joint ventures of $68.4 million, (iv) a decrease in reimbursements of investments and advances to other real estate investments of $23.9 million, partially offset by, (v) an increase in proceeds from the sale of operating and development properties of $204.2 million, (vi) an increase in reimbursements of investments and advances to real estate joint ventures of $91.1 million, and (vii) a decrease in acquisition of and improvements to real estate under development of $24.5 million.
Acquisitions of and Improvements to Operating Real Estate -
During the nine months ended September 30, 2012, the Company expended $421.8 million towards the acquisition of and improvements to operating real estate including $52.5 million expended in connection with redevelopments and re-tenanting projects as described below.
The Company has an ongoing program to reformat and re-tenant its properties to maintain or enhance its competitive position in the marketplace. The Company anticipates its total capital commitment toward these reformatting and re-tenanting efforts and other redevelopment projects during 2012 will be approximately $75 million to $85 million. The funding of these capital requirements will be provided by cash flow from operating activities and availability under the Company’s revolving line of credit.
Investments and Advances to Joint Ventures -
During the nine months ended September 30, 2012, the Company expended $159.1 million for investments and advances to real estate joint ventures, which is primarily related to the acquisition of and improvements to properties within the joint ventures, and received $136.0 million from reimbursements of investments and advances to real estate joint ventures.
Acquisitions of and Improvements to Real Estate Under Development -
The Company is engaged in ground-up development projects which will be held as long-term investments by the Company. The ground-up development projects generally have significant pre-leasing prior to the commencement of construction. As of September 30, 2012, the Company had a total of three ground-up development projects, consisting of two projects located in the U.S. and one project located in Peru.
The Company anticipates its total capital commitment during 2012 toward these development projects will be approximately $20 million to $30 million. The proceeds from availability under the Company’s revolving line of credit are expected to be sufficient to fund these anticipated capital requirements.
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Dispositions and Transfers-
During the nine months ended September 30, 2012, the Company received net proceeds of $277.2 million relating to the sale of various operating properties.
Financing Activities
Cash flows provided by financing activities for the nine months ended September 30, 2012, were $39.1 million, as compared to cash flows used for financing activities of $392.4 million for the comparable period in 2011. This change of $431.5 million resulted primarily from (i) an increase of $620.3 million from the issuance of stock, primarily relating to the issuance of the Company’s 6.00% Class I Preferred Stock and 5.50% Class J Preferred Stock and (ii) an increase of $471.0 million from proceeds from issuance of unsecured term loan/notes, partially offset by (iii) an increase of $239.9 million in repayments under the Company’s unsecured revolving credit facilities, (iv) an increase in principal payments of $188.0 million, (v) the redemption of the Company’s 6.65% Class F Preferred Stock of $175.0 million, (vi) an increase in repurchases of common stock of $27.0 million and (vii) an increase in dividends paid of $19.4 million due to the issuance of the Company’s 6.10% Class I Preferred Stock and 5.50% Class J Preferred Stock.
Debt maturities for the remainder of 2012 consist of: $227.2 million of consolidated debt; $184.3 million of unconsolidated joint venture debt and $67.6 million of debt on properties included in the Company’s preferred equity program, assuming the utilization of extension options where available. The 2012 consolidated debt maturities are anticipated to be repaid with operating cash flows, borrowings from the Company’s credit facility (which at September 30, 2012 had $1.7 billion available) and debt refinancing. The 2012 unconsolidated joint venture and preferred equity debt maturities are anticipated to be repaid through debt refinancing 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 its investment-grade debt ratings. The Company plans to continue strengthening its balance sheet by pursuing deleveraging efforts over time. 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 $8.5 billion. Proceeds from public capital market activities have been used for the purposes of, among other things, repaying indebtedness, acquiring interests in neighborhood and community shopping centers, funding ground-up development projects, expanding and improving properties in the portfolio and other investments.
The Company has a $1.75 billion unsecured revolving credit facility (the “Credit Facility”) with a group of banks, which is scheduled to expire in October 2015 and has a one-year extension option. This credit facility, , provides funds to finance general corporate purposes, including (i) property acquisitions, (ii) investments in the Company’s institutional management programs, (iii) development and redevelopment costs and (iv) any short-term working capital requirements. Interest on borrowings under the Credit Facility accrues at LIBOR plus 1.05% and fluctuates in accordance with changes in the Company’s senior debt ratings and has a facility fee of 0.20% per annum. As part of this Credit Facility, the Company has a competitive bid option whereby the Company could auction up to $875.0 million of its requested borrowings to the bank group. This competitive bid option provides the Company the opportunity to obtain pricing below the currently stated spread. In addition, as part of the Credit Facility, the Company has a $500.0 million sub-limit which provides it the opportunity to borrow in alternative currencies such as Canadian Dollars, British Pounds Sterling, Japanese Yen or Euros. Pursuant to the terms of the Credit Facility, the Company, among other things, is subject to covenants requiring the maintenance of (i) maximum leverage ratios on both unsecured and secured debt and (ii) minimum interest and fixed coverage ratios. As of September 30, 2012, the Credit Facility had a balance of $14.5 million outstanding and $27.2 million appropriated for letters of credit.
Pursuant to the terms of the Credit Facility, the Company, among other things, is subject to maintenance of various covenants. The Company is currently not in violation of these covenants. The financial covenants for the Credit Facility are as follows:

Covenant |  | Must Be |  | As of 9/30/12
Total Indebtedness to Gross Asset Value (“GAV”) |  | <60% |  | 41%
Total Priority Indebtedness to GAV |  | <35% |  | 8%
Unencumbered Asset Net Operating Income to Total Unsecured Interest Expense |  | >1.75x |  | 3.25x
Fixed Charge Total Adjusted EBITDA to Total Debt Service |  | >1.50x |  | 2.13x

For a full description of the Credit Facility’s covenants refer to the Credit Agreement dated as of October 27, 2011, filed in the Company’s Current Report on Form 8-K dated November 2, 2011.
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During April 2012, the Company obtained a new $400.0 million unsecured term loan with a consortium of banks, which accrues interest at LIBOR plus 105 basis points. The term loan is scheduled to mature in April 2014, with three additional one-year options to extend the maturity date, at the Company’s discretion, to April 17, 2017. Pursuant to the terms of the Credit Agreement, 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. Proceeds from this term loan were used for general corporate purposes including the repayment of debt. The term loan covenants are similar to the Credit Facility covenants described above.
During March 2008, the Company obtained a Mexican peso (“MXN”) 1.0 billion term loan, which bears interest at a fixed rate of 8.58%, subject to change in accordance with the Company’s senior debt ratings and is scheduled to mature in March 2013. The Company utilized proceeds from this term loan to fully repay the outstanding balance of its MXN 500.0 million unsecured revolving credit facility, which was terminated by the Company. Remaining proceeds from this term loan were used for funding MXN denominated investments. As of September 30, 2012, the outstanding balance on this term loan was MXN 1.0 billion (USD $77.8 million). The Mexican term loan covenants are similar to the Credit Facility covenants described above.
The Company, pursuant to its shelf registration statement may, 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.
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 9/30/12
Consolidated Indebtedness to Total Assets |  | <60% |  | 37%
Consolidated Secured Indebtedness to Total Assets |  | <40% |  | 9%
Consolidated Income Available for Debt Service to Maximum Annual Service Charge |  | >1.50x |  | 4.2x
Unencumbered Total Asset Value to Consolidated Unsecured Indebtedness |  | >1.50x |  | 2.9x

For a full description of the various indenture covenants refer to the Indenture dated September 1, 1993; First Supplemental Indenture dated August 4, 1994; the Second Supplemental Indenture dated April 7, 1995; the Third Supplemental Indenture dated June 2, 2006; the Fifth Supplemental Indenture dated as of September 24, 2009; the Fifth Supplemental Indenture dated as of October 31, 2006; and First Supplemental Indenture dated October 31, 2006, as filed with the U.S. Securities and Exchange Commission.
During April 2012, the Company filed a shelf registration statement on Form S-3, which is effective for a term of three years, for the future unlimited offerings, from time-to-time, of debt securities, preferred stock, depositary shares, common stock and common stock warrants.
During March 2012, the Company issued 16,000,000 Depositary Shares (the "Class I Depositary Shares"), each representing a one-thousandth fractional interest in a share of the Company's 6.00% Class I Cumulative Redeemable Preferred Stock, $1.00 par value per share (the "Class I Preferred Stock"). Dividends on the Class I Depositary Shares are cumulative and payable quarterly in arrears at the rate of 6.00% per annum based on the $25.00 per share initial offering price, or $1.50 per annum. The Class I Depositary Shares are redeemable, in whole or part, for cash on or after March 20, 2017, at the option of the Company, at a redemption price of $25.00 per depositary share, plus any accrued and unpaid dividends thereon. The Class I Depositary Shares are not convertible or exchangeable for any other property or securities of the Company. The net proceeds received from this offering of $388.1 million were for general corporate purposes, including the reduction of borrowings outstanding under the Company’s revolving credit facility and the redemption of shares of the Company’s preferred stock when they become redeemable at the Company’s option.
During July 2012, the Company issued 9,000,000 Depositary Shares (the "Class J Depositary Shares"), each representing a one-thousandth fractional interest in a share of the Company's 5.50% Class J Cumulative Redeemable Preferred Stock, $1.00 par value per share (the "Class J Preferred Stock"). Dividends on the Class J Depositary Shares are cumulative and payable quarterly in arrears at the rate of 5.50% per annum based on the $25.00 per share initial offering price, or $1.375 per annum. The Class J Depositary Shares are redeemable, in whole or part, for cash on or after July 25, 2017, at the option of the Company, at a redemption price of $25.00 per depositary share, plus any accrued and unpaid dividends thereon. The Class J Depositary Shares are not convertible or exchangeable for any other property or securities of the Company. The net proceeds received from this offering of $217.8 million were for the redemption of all the outstanding depositary shares representing the Company’s Class F preferred stock, which redemption occurred on August 15, 2012, as discussed below, and for general corporate purposes, including the potential redemption of additional classes of the Company’s preferred stock when they become redeemable at our option.
On August 15, 2012, the Company redeemed of all of its outstanding 7,000,000 depositary shares of the Company’s 6.65% Class F Cumulative Redeemable Preferred Stock, $1.00 par value per share (the “Class F Preferred Stock”) for $175.0 million, before payment of accrued and unpaid dividends of $1.0 million. In connection with this redemption the Company recorded a charge of $6.2 million resulting from the difference between the redemption amount and the carrying amount of the Class F Preferred Stock on the Company’s Condensed Consolidated Balance Sheets in accordance with the FASB’s guidance on Distinguishing Liabilities from Equity. The $6.2 million was subtracted from net income to arrive at net income available to common shareholders and is used in the calculation of earnings per share for the three and nine months ended September 30, 2012.
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Additionally, on August 15, 2012, the Company called for the redemption of all of its outstanding 18,400,000 depositary shares of the Company’s 7.75% Class G Cumulative Redeemable Preferred Stock, $1.00 par value per share (the “Class G Preferred Stock”). The aggregate redemption amount of $460.0 million, before payment of accrued and unpaid dividends of $8.5 million, was paid on October 10, 2012. The Company will record a charge of $15.5 million resulting from the difference between the redemption amount and the carrying amount of the Class G Preferred Stock on the Company’s Condensed Consolidated Balance Sheets in accordance with the FASB’s guidance on Distinguishing Liabilities from Equity. The $15.5 million will be subtracted from net income to arrive at net income available to common shareholders and will be used in the calculation of earnings per share in the quarter ending December 31, 2012.
The Company, from time to time, repurchases shares of its common stock in amounts that offset new issuances of common shares in connection with the exercise of stock options or the issuance of restricted stock awards. These repurchases may occur in open market purchases, privately negotiated transactions or otherwise, subject to prevailing market conditions, the Company’s liquidity requirements, contractual restrictions and other factors. During the nine months ended September 30, 2012, the Company repurchased 1.6 million shares of the Company’s common stock for $30.9 million, of which $20.0 million was provided to the Company from employee stock option exercises.
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 ground-up development projects. As of September 30, 2012, the Company had over 400 unencumbered property interests in its portfolio.
In connection with its intention to continue to qualify as a REIT for 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 evaluate 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 conservative dividend payout ratio, reserving 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 for the nine months ended September 30, 2012 and 2011 were $285.1 million and $265.7 million, 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 declared a quarterly cash dividend of $0.19 per common share payable to shareholders of record on October 2, 2012, which was paid on October 15, 2012. On October 30, 2012, the Company’s Board of Directors declared a $0.21 dividend which represents a quarterly cash dividend increase of $0.02 or 10.5% on an annualized basis per common share payable to shareholders of record on January 2, 2013. This dividend will be paid on January 15, 2013.
Funds from Operations
Funds From Operations (“FFO”) is a supplemental non-GAAP measure utilized to evaluate the operating performance of real estate companies. The National Association of Real Estate Investment Trusts (“NAREIT”) defines FFO as net income/(loss) attributable to common shareholders computed in accordance with generally accepted accounting principles (“GAAP”), excluding (i) gains or losses from sales of operating real estate assets and (ii) extraordinary items, plus (iii) depreciation and amortization of operating properties and (iv) impairment of depreciable real estate and in substance real estate equity investments and (v) after adjustments for unconsolidated partnerships and joint ventures calculated to reflect funds from operations on the same basis.
The Company presents FFO 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 when reporting results. Comparison of our presentation of FFO 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.
The Company also presents FFO as adjusted as an additional supplemental measure as it believes it is more reflective of the Company’s core operating performance. The Company believes FFO as adjusted provides investors and analysts an additional measure in comparing the Company’s performance across reporting periods on a consistent basis by excluding items that we do not believe are indicative of our core operating performance. FFO as adjusted is generally calculated by the Company as FFO excluding certain transactional income and expenses and non-operating impairments which management believes are not reflective of the results within the Company’s operating real estate portfolio.
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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 as a measure of liquidity. Our method of calculating FFO and FFO as adjusted 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 common shareholders to FFO and FFO as adjusted for the three and nine months ended September 30, 2012 and 2011 is as follows (in thousands, except per share data):

|  | Three Months Ended |  |  | Nine Months Ended |
|  | September 30, |  |  | September 30, |
|  | 2012 |  |  | 2011 |  |  | 2012 |  |  | 2011 |
Net income available to common shareholders |  | $ | 27,106 |  |  | $ | 40,140 |  |  | $ | 113,442 |  |  | $ | 78,132 |
Gain on disposition of operating property, net of noncontrolling interests |  |  | (11,084 | ) |  |  | (3,859 | ) |  |  | (35,806 | ) |  |  | (8,046 | )
Gain on disposition of joint venture operating properties |  |  | (641 | ) |  |  | (2,551 | ) |  |  | (23,013 | ) |  |  | (3,231 | )
Depreciation and amortization - real estate related |  |  | 65,496 |  |  |  | 59,408 |  |  |  | 194,032 |  |  |  | 186,185 |
Depreciation and amortization - real estate joint ventures, net of noncontrolling interests |  |  | 33,821 |  |  |  | 35,096 |  |  |  | 101,506 |  |  |  | 103,953 |
Remeasurement of derivative instrument |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 4,287 |
Impairments of operating properties, net of tax and noncontrolling interests |  |  | 4,295 |  |  |  | 6,029 |  |  |  | 33,070 |  |  |  | 21,028 |
FFO |  |  | 118,993 |  |  |  | 134,263 |  |  |  | 383,231 |  |  |  | 382,308 |
Transactional (income)/charges: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Promote income from other real estate investments |  |  | (862 | ) |  |  | - |  |  |  | (9,750 | ) |  |  | (114 | )
Promote income from real estate joint ventures |  |  | - |  |  |  | (272 | ) |  |  | (3,921 | ) |  |  | (272 | )
Gains from land sales |  |  | - |  |  |  | (993 | ) |  |  | (8,295 | ) |  |  | (1,618 | )
(Income)/expense from other real estate investments |  |  | - |  |  |  | (2,846 | ) |  |  | - |  |  |  | (1,311 | )
Foreign currency exchange gains |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (839 | )
Acquisition costs |  |  | 2,290 |  |  |  | 1,437 |  |  |  | 8,459 |  |  |  | 4,323 |
Executive severance costs |  |  | - |  |  |  | - |  |  |  | 2,472 |  |  |  | - |
Excess distribution from a cost method investment |  |  | - |  |  |  | (8,699 | ) |  |  | - |  |  |  | (12,829 | )
Gain on sale of marketable securities |  |  | - |  |  |  | 24 |  |  |  | - |  |  |  | (4,117 | )
Impairments on other investments |  |  | - |  |  |  | 1,461 |  |  |  | - |  |  |  | 1,461 |
Preferred stock redemption costs |  |  | 6,213 |  |  |  | - |  |  |  | 6,213 |  |  |  | - |
Other expense/(income), net |  |  | 668 |  |  |  | (704 | ) |  |  | 1,024 |  |  |  | (724 | )
Total transactional charges/(income), net |  |  | 8,309 |  |  |  | (10,592 | ) |  |  | (3,798 | ) |  |  | (16,040 | )
FFO as adjusted |  | $ | 127,302 |  |  | $ | 123,671 |  |  | $ | 379,433 |  |  | $ | 366,268 |
Weighted average shares outstanding for FFO calculations: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Basic |  |  | 405,810 |  |  |  | 406,564 |  |  |  | 405,880 |  |  |  | 406,521 |
Units |  |  | 1,526 |  |  |  | 1,526 |  |  |  | 1,533 |  |  |  | 1,529 |
Dilutive effect of equity awards |  |  | 2,274 |  |  |  | 729 |  |  |  | 2,106 |  |  |  | 865 |
Diluted (1) |  |  | 409,610 |  |  |  | 408,819 |  |  |  | 409,519 |  |  |  | 408,915 |
FFO per common share – basic |  | $ | 0.29 |  |  | $ | 0.33 |  |  | $ | 0.94 |  |  | $ | 0.94 |
FFO per common share – diluted (1) |  | $ | 0.29 |  |  | $ | 0.33 |  |  | $ | 0.94 |  |  | $ | 0.94 |
FFO as adjusted per common share – basic |  | $ | 0.31 |  |  | $ | 0.30 |  |  | $ | 0.93 |  |  | $ | 0.90 |
FFO as adjusted per common share – diluted (1) |  | $ | 0.31 |  |  | $ | 0.30 |  |  | $ | 0.93 |  |  | $ | 0.90 |

| (1) | For the three and nine months ended September 30, 2012 and 2011, the effect of certain convertible units would have an anti-dilutive effect upon the calculation of Income from continuing operations per share. Accordingly, the impact of such conversion has not been included in the determination of diluted earnings per share calculations.

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Same Property Net Operating Income
Same Property Net Operating Income (“Same Property NOI”) is a supplemental non-GAAP financial measure of real estate companies’ operating performance. Same Property NOI is considered by management to be an important performance measure of the Company’s operations and management believes that it is helpful to investors as a measure of the Company’s operating performance because it includes only the net operating income of properties that have been owned for the entire current and prior year reporting periods and excludes properties under development and pending stabilization. As such, 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 rents, lease termination fees and above/below market rents) less 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. Same Property NOI includes all properties that are owned for the entire current and prior year reporting periods and excludes properties under development and properties pending stabilization. Properties are deemed stabilized at the earlier of (i) reaching 90% leased or (ii) one year following a projects inclusion in operating real estate (two years for Latin American properties).
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 as a measure of liquidity. Our method of calculating Same Property NOI may differ from methods used by other REITs and, accordingly, may not be comparable to such other REITs.
The following is a reconciliation of the Company’s Net income from continuing operations to Same Property NOI (in thousands):

|  | Three Months Ended September 30, |
|  | 2012 |  |  | 2011 |
Net income from continuing operations |  | $ | 47,625 |  |  | $ | 48,669 |
Adjustments: |  |  |  |  |  |  |  |
Management and other fee income |  |  | (8,917 | ) |  |  | (8,728 | )
General and administrative expenses |  |  | 29,957 |  |  |  | 30,846 |
Impairment charges |  |  | 588 |  |  |  | 4,037 |
Depreciation and amortization |  |  | 65,631 |  |  |  | 56,870 |
Other expense, net |  |  | 56,966 |  |  |  | 53,992 |
Provision for income taxes, net |  |  | 5,183 |  |  |  | 4,443 |
Equity in income of other real estate investments, net |  |  | (10,239 | ) |  |  | (24,788 | )
Non same property net operating income |  |  | (40,788 | ) |  |  | (27,549 | )
Non-operational expense from joint ventures, net |  |  | 76,008 |  |  |  | 81,133 |
Net operating income from noncontrolling interests |  |  | (2,514 | ) |  |  | (2,886 | )
Same Property NOI |  | $ | 219,500 |  |  | $ | 216,039 |

Same Property NOI increased by $3.5 million or 1.6% for the three months ended September 30, 2012, as compared to the corresponding period in 2011. This increase is primarily the result of (i) an increase of $3.8 million related to lease-up and rent commencements in the U.S. and Latin America and (ii) an increase of $1.8 million in other property income, partially offset by, (iii) the negative impact from changes in foreign currency exchange rates of $2.1 million.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
The Company’s primary market risk exposure is interest rate risk and fluctuations in foreign currency exchange rate risk. The following table presents the Company’s aggregate fixed rate and variable rate domestic and foreign debt obligations outstanding as of September 30, 2012, with corresponding weighted-average interest rates sorted by maturity date. The table does not include extension options where available. The information is presented in U.S. dollar equivalents, which is the Company’s reporting currency. The instruments’ actual cash flows are denominated in U.S. dollars, Canadian dollars (CAD), Mexican pesos (MXN) and Chilean pesos (CLP) as indicated by geographic description (amounts are USD equivalent in millions).
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|  | 2012 |  |  | 2013 |  |  | 2014 |  |  | 2015 |  |  | 2016 |  |  | Thereafter |  |  | Total |  |  | Fair Value |
U.S. Dollar Denominated |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Secured Debt |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Fixed Rate |  | $ | 26.2 |  |  | $ | 104.9 |  |  | $ | 192.8 |  |  | $ | 130.7 |  |  | $ | 235.5 |  |  | $ | 278.9 |  |  | $ | 969.0 |  |  | $ | 1,057.6 |
Average Interest Rate |  |  | 5.66 | % |  |  | 6.02 | % |  |  | 6.47 | % |  |  | 5.45 | % |  |  | 6.80 | % |  |  | 6.46 | % |  |  | 6.34 | % |  |  |  |
Variable Rate |  | $ | - |  |  | $ | - |  |  | $ | 20.7 |  |  | $ | 6.0 |  |  | $ | - |  |  | $ | 21.6 |  |  | $ | 48.3 |  |  | $ | 26.9 |
Average Interest Rate |  |  | - |  |  |  | - |  |  |  | 2.11 | % |  |  | 0.21 | % |  |  | - |  |  |  | 3.10 | % |  |  | 2.31 | % |  |  |  |
Unsecured Debt |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Fixed Rate |  | $ | 198.9 |  |  | $ | 275.1 |  |  | $ | 294.9 |  |  | $ | 350.0 |  |  | $ | 300.0 |  |  | $ | 890.9 |  |  | $ | 2,309.8 |  |  | $ | 2,546.0 |
Average Interest Rate |  |  | 6.00 | % |  |  | 5.40 | % |  |  | 5.20 | % |  |  | 5.29 | % |  |  | 5.78 | % |  |  | 5.62 | % |  |  | 5.55 | % |  |  |  |
Variable Rate |  | $ | 2.1 |  |  | $ | - |  |  | $ | 400.0 |  |  | $ | 14.5 |  |  | $ | - |  |  | $ | - |  |  | $ | 416.6 |  |  | $ | 403.6 |
Average Interest Rate |  |  | 5.50 | % |  |  | - |  |  |  | 1.26 | % |  |  | 1.12 | % |  |  | - |  |  |  | - |  |  |  | 1.28 | % |  |  |  |
Canadian Dollar Denominated |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Unsecured Debt |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Fixed Rate |  | $ | - |  |  | $ | 203.3 |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | 152.4 |  |  | $ | 355.7 |  |  | $ | 368.3 |
Average Interest Rate |  |  | - |  |  |  | 5.18 | % |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 5.99 | % |  |  | 5.53 | % |  |  |  |
Mexican Pesos Denominated |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Unsecured Debt |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Fixed Rate |  | $ | - |  |  | $ | 77.8 |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | 77.8 |  |  | $ | 70.0 |
Average Interest Rate |  |  | - |  |  |  | 8.58 | % |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 8.58 | % |  |  |  |
Chilean Pesos Denominated |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Secured Debt |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Variable Rate |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | 41.0 |  |  | $ | 41.0 |  |  | $ | 46.7 |
Average Interest Rate |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 5.72 | % |  |  | 5.72 | % |  |  |  |

Based on the Company’s variable-rate debt balances, interest expense would have increased by $3.8 million for the nine months ended September 30, 2012, if short-term interest rates were 1% higher.
The following table presents the Company’s foreign investments as of September 30, 2012. Investment amounts are shown in their respective local currencies and the U.S. dollar equivalents:

Foreign Investment (in millions) |
Country |  | Local Currency |  |  | US Dollars |
Mexican real estate investments (MXN) |  |  | 8,892.5 |  |  | $ | 691.0 |
Canadian real estate joint venture and marketable securities investments (CAD) |  |  | 420.1 |  |  | $ | 427.0 |
Chilean real estate investments (CLP) |  |  | 37,734.5 |  |  | $ | 80.2 |
Brazilian real estate investments (Brazilian Real) |  |  | 42.6 |  |  | $ | 21.0 |
Peruvian real estate investments (Peruvian Nuevo Sol) |  |  | 14.3 |  |  | $ | 5.5 |

The foreign currency exchange risk has been partially mitigated, but not eliminated, through the use of local currency denominated debt. The Company has not, and does not plan to, enter into any derivative financial instruments for trading or speculative purposes.
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Item 4. 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, as of the end of such period, the Company’s disclosure controls and procedures are effective.
There have not been any changes in the Company’s internal control over financial reporting during the fiscal quarter to which this report relates that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.
PART II
OTHER INFORMATION
Item 1. 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 adverse 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.
Item 1A. Risk Factors
There are no material changes from risk factors as previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2011.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
Issuer Purchases of Equity Securities

Period |  | Number of Shares Purchased* |  |  | Price Paid per Share |  |  | Purchased as Part of Publicly Announced Plans or Programs |  |  | Value of Shares that May Yet Be Purchased Under the Plans or Programs (in millions) |
January 1, 2012 - January 31, 2012 |  |  | 20,233 |  |  | $ | 18.20 |  |  |  | - |  |  | $ | - |
February 1, 2012 - February 29, 2012 |  |  | 358,908 |  |  | $ | 18.56 |  |  |  | - |  |  |  | - |
March 1, 2012 - March 31, 2012 |  |  | 1,005,934 |  |  | $ | 18.91 |  |  |  | - |  |  |  | - |
April 1, 2012 – April 30, 2012 |  |  | 41,138 |  |  | $ | 19.23 |  |  |  | - |  |  |  | - |
May 1, 2012 – May 31, 2012 |  |  | 61,211 |  |  | $ | 19.20 |  |  |  | - |  |  |  | - |
June 1, 2012 – June 30, 2012 |  |  | 48,327 |  |  | $ | 18.44 |  |  |  | - |  |  |  | - |
July 1, 2012 – July 31, 2012 |  |  | - |  |  | $ | - |  |  |  |  | - |  |  | - |
August 1, 2012 – August 31, 2012 |  |  | 100,072 |  |  | $ | 19.84 |  |  |  |  | - |  |  | - |
September 1, 2012 – September 30, 2012 |  |  | - |  |  | $ | - |  |  |  | - |  |  |  | - |
Total |  |  | 1,635,823 |  |  | $ | 18.92 |  |  |  | - |  |  | $ | - |

* | During the nine months ended September 30, 2012, the Company repurchased 1,635,823 shares of common stock in open-market transactions to offset new issuances of common shares in connection with restricted stock awards and the exercise of stock options. The Company expended $30.9 million to repurchase these shares, of which $20.0 million was provided to the Company from employee stock option exercises.

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Item 6. Exhibits
Exhibits –
4.1 Agreement to File Instruments
Kimco Realty Corporation (the “Registrant”) hereby agrees to file with the Securities and Exchange Commission, upon request of the Commission, all instruments defining the rights of holders of long-term debt of the Registrant and its consolidated subsidiaries, and for any of its unconsolidated subsidiaries for which financial statements are required to be filed, and for which the total amount of securities authorized thereunder does not exceed 10 percent of the total assets of the Registrant and its subsidiaries on a consolidated basis.

| 10.1 | Credit Agreement, dated as of June 28, 2012, among InTown Hospitality Corp., a Maryland corporation, Kimco Realty Corporation, a Maryland corporation, the lenders from time to time parties to the Credit Agreement, and JPMorgan Chase Bank, N.A., as administrative agent for the lenders thereunder (filed with the Company’s Current Report on Form 8-K on July 3, 2012)
| 12.1 | Computation of Ratio of Earnings to Fixed Charges
| 12.2 | Computation of Ratio of Earnings to Combined Fixed Charges and Preferred Stock Dividends
| 31.1 | Certification of the Company’s Chief Executive Officer, David B. Henry, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
| 31.2 | Certification of the Company’s Chief Financial Officer, Glenn G. Cohen, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
| 32.1 | Certification of the Company’s Chief Executive Officer, David B. Henry, and the Company’s Chief Financial Officer, Glenn G. Cohen, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
| 101.INS | XBRL Instance Document
| 101.SCH | XBRL Taxonomy Extension Schema
| 101.CAL | XBRL Taxonomy Extension Calculation Linkbase
| 101.DEF | XBRL Taxonomy Extension Definition Linkbase
| 101.LAB | XBRL Taxonomy Extension Label Linkbase
| 101.PRE | XBRL Taxonomy Extension Presentation Linkbase

36

SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

|  |  | KIMCO REALTY CORPORATION
November 5, 2012 |  |  | /s/ David B. Henry
(Date) |  |  | David B. Henry
|  |  | Chief Executive Officer
November 5, 2012 |  |  | /s/ Glenn G. Cohen
(Date) |  |  | Glenn G. Cohen
|  |  | Chief Financial Officer

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