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Note 8 - Investment and Advances in Real Estate Joint Ventures

12 Months Ended

Dec. 31, 2012

Investments And Advances In Real Estate Joint Ventures [Text Block]

8. Investment 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 December 31, 2012 and 2011 (in millions, except number of properties):

			As of December 31, 2012						As of December 31, 2011
Venture	Average Ownership Interest		Number of Properties	GLA	Gross Real Estate		The Company's Investment		Number of Properties	GLA	Gross Real Estate		The Company's Investment
Prudential Investment Program (“KimPru” and “KimPru II”) (1) (2)	15.00	%	61	10.7	$	2,744.9	$	170.1	63	10.9	$	2,781.4	$	151.9
Kimco Income Opportunity Portfolio (“KIR”) (2)	45.00	%	58	12.4		1,543.2		140.3	59	12.6		1,556.6		151.4
UBS Programs (2)*	17.90	%	40	5.7		1,260.1		58.4	42	5.9		1,330.5		61.3
BIG Shopping Centers (2)*	37.70	%	22	3.6		547.7		31.3	23	3.7		557.4		41.2
The Canada Pension Plan Investment Board (“CPP”) (2)	55.00	%	6	2.4		436.1		149.5	6	2.4		430.0		140.6
Kimco Income Fund (2)	15.20	%	12	1.5		287.0		12.3	12	1.5		281.1		12.1
SEB Immobilien (2)	15.00	%	13	1.8		361.2		1.5	13	1.8		360.5		2.1
Other Institutional Programs (2)	Various		58	2.6		499.2		21.3	67	4.7		804.4		33.7
RioCan	50.00	%	45	9.3		1,379.3		111.0	45	9.3		1,367.0		62.2
Intown (3)	-		138	N/A		841.0		86.9	138	N/A		829.9		90.8
Latin America	Various		131	18.0		1,198.1		334.2	130	17.9		1,145.8		318.0
Other Joint Venture Programs (4) (5) (7) (8)	Various		87	13.2		1,846.7		311.4	92	13.7		2,016.5		338.9
Total			671	81.2	$	12,944.5	$	1,428.2	690	84.4	$	13,461.1	$	1,404.2

*	Ownership % is a blended rate

The table below presents the Company’s share of net income/(loss) for these investments which is included in the Company’s Consolidated Statements of Income under Equity in income of joint ventures, net and Gains on change in control of interests for the years ended December 31, 2012, 2011 and 2010 (in millions):

	Year ended December 31,
	2012			2011			2010
KimPru and KimPru II (14) (15) (16)	$	7.4		$	(1.6	)	$	(18.4	)
KIR (17) (18)		23.4			17.3			19.8
UBS Programs (19)		0.5			(0.8	)		1.2
BIG Shopping Centers (20)		(3.7	)		(2.9	)		(1.2	)
CPP		5.3			5.2			3.2
Kimco Income Fund		1.7			1.0			1.0
SEB Immobilien		0.7			-			0.8
Other Institutional Programs (6) (10) (13) (21)		19.6			5.5			-
RioCan (9)		30.4			19.7			18.6
Intown		4.0			(1.9	)		(6.0	)
Latin America		15.8			12.5			10.4
Other Joint Venture Programs (11) (12) (22) (23) (24)		23.4			10.0			5.2
Total	$	128.5		$	64.0		$	34.6

(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 year ended December 31, 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 Consolidated Balance Sheets.

(5) During the year ended December 31, 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.

(6) During the year ended December 31, 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.

(7) During the year ended December 31, 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.

(8) During the year ended December 31, 2012, a joint venture in which the Company holds a noncontrolling interest acquired an operating property in Alberta, Canada for a purchase price of $42.4 million. The Company’s capital contribution was $14.5 million.

(9) During the year ended December 31, 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.

(10) During the year ended December 31, 2012, the Company acquired four properties from joint ventures in which the Company has a noncontrolling interest. The Company evaluated these transactions pursuant to the FASB’s Consolidation guidance and as such recognized an aggregate gain of $14.5 million from the fair value adjustment associated with its original ownership due to a change in control.

(11) During the year ended December 31, 2012, the Company acquired a property from a joint venture in which the Company had a noncontrolling interest. The Company evaluated this transaction pursuant to the FASB’s Consolidation guidance and as such recognized an aggregate gain of $1.0 million from the fair value adjustment associated with its original ownership due to a change in control.

(12) During the year ended December 31, 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.

(13) During the year ended December 31, 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.

(14) KimPru recognized impairment charges of $6.5 million related to the sale of two properties; $53.6 million related to the potential foreclosure of two properties and $161.7 million related to the sale of 26 properties, during the years ended December 31, 2012, 2011 and 2010, respectively. The Company had previously taken other-than-temporary impairment charges on its investment in KimPru and had allocated these impairment charges to the underlying assets of the KimPru joint ventures including a portion to these operating properties. As such, the Company’s share of these impairment charges for the years ended December 31, 2012, 2011 and 2010 were $0.8 million, $6.0 million and $14.8 million, respectively.

(15) During 2011, a third party mortgage lender foreclosed on an operating property for which KimPru had previously taken an impairment charge during 2010. As a result of the foreclosure during 2011, KimPru recognized an aggregate gain on early extinguishment of debt of $29.6 million. The Company’s share of this gain was $4.4 million, before income taxes.

(16) KimPru II recognized impairment charges of $7.3 million and $25.6 million, during the years ended December 31, 2011 and 2010, respectively. The impairment charges recognized in 2011 related to the foreclosure of one operating property and the impairment charges recognized in 2010 related to the sale of four operating properties. The Company had previously taken other-than-temporary impairment charges on its investment in KimPru II and had allocated these impairment charges to the underlying assets of the KimPru II joint ventures including a portion to these operating properties. As such, the Company’s share of these impairment charges for the years ended December 31, 2011 and 2010 were $1.0 million and $3.4 million, respectively.

(17) KIR recognized impairment charges of $4.6 million related to the sale of one operating property and $6.7 million related to the sale of one operating property and one out-parcel during the years ended December 31, 2011 and 2010, respectively. The Company’s share of these impairment charges for the years ended December 31, 2011 and 2010 were $2.1 million and $3.0 million, respectively.

(18) During 2010, KIR recognized a gain on early extinguishment of debt of $5.8 million related to a property that was foreclosed on by a third party lender. The Company’s share of this gain was $2.6 million.

(19) The UBS Program recognized impairment charges of $13.0 million related to the sale of two properties and $9.7 million related to the sale of one property, during the years ended December 31, 2012 and 2011, respectively. The Company’s share of these impairment charges for the years ended December 31, 2012 and 2011 were $2.2 million and $1.9 million, respectively. Additionally, during the year ended December 31, 2011, the UBS Program recognized an impairment charge of $5.0 million relating to a property that was anticipated to be foreclosed on by the third party lender in 2012. The Company’s share of this impairment charge was $0.8 million. A deed in lieu of foreclosure was given to the third party lender in 2012.

(20) During the year ended December 31, 2012, BIG recognized an impairment charge of $9.0 million on a property that is expected to be foreclosed upon in 2013. The Company’s share of this impairment charge was $0.9 million.

(21) During the year ended December 31, 2012, two joint ventures in which the Company has a noncontrolling interest recognized aggregate impairment charges of $6.5 million related to the sale of four operating properties. The Company’s share of these impairment charges was $0.8 million.

(22) During the year ended December 31, 2012, three joint ventures in which the Company has noncontrolling interests recognized aggregate impairment charges of $12.8 million related to the sale of one operating property, the pending sale of one property and the potential foreclosure of another property. The Company’s share of these impairment charges was $6.4 million.

(23) During the year ended December 31, 2011, the Company sold its interest in a Canadian hotel portfolio to its partner, for Canadian Dollars (“CAD”) $2.5 million (USD $2.4 million). As a result, the Company recorded an impairment charge of USD $5.2 million, before income taxes.

(24) For the year ended December 31, 2010, the Company recognized impairment charges of $7.0 million, against the carrying value of its investments in various unconsolidated joint ventures. These impairment charges resulted from properties, within various unconsolidated joint ventures, being classified as held-for-sale.

The table below presents debt balances within the Company’s joint venture investments for which the Company held noncontrolling ownership interests at December 31, 2012 and 2011 (dollars in millions):

	As of December 31, 2012							As of December 31, 2011
Venture	Mortgages and Notes Payable		Average Interest Rate			Average Remaining Term (months)**		Mortgages and Notes Payable		Average Interest Rate			Average Remaining Term (months)**
KimPru and KimPru II	$	1,010.2		5.54	%		44.5	$	1,185.2		5.59	%		52.6
KIR		914.6		5.22	%		78.6		911.5		5.89	%		75.6
UBS Programs		691.9		5.40	%		39.1		718.9		5.66	%		47.4
BIG Shopping Centers		443.8		5.52	%		45.5		444.5		5.52	%		57.4
CPP		141.5		5.19	%		31.0		166.3		4.45	%		27.0
Kimco Income Fund		161.4		5.45	%		20.7		164.7		5.45	%		32.7
SEB Immobilien		243.8		5.11	%		55.3		243.7		5.34	%		61.9
RioCan		923.2		5.16	%		41.2		925.0		5.66	%		43.3
Intown		614.4		4.46	%		46.1		621.8		5.09	%		39.6
Other Institutional Programs		310.5		5.24	%		39.0		514.4		4.90	%		45.4
Other Joint Venture Programs		1,612.2		5.70	%		57.8		1,804.7		5.60	%		56.9
Total	$	7,067.5						$	7,700.7

** Average remaining term includes extensions

Other Real Estate Joint Ventures -

During 2011, the Company exited its investment in a redevelopment joint venture property in Harlem, NY. As a result, the Company recognized an other-than-temporary impairment charge of approximately $3.1 million representing the Company’s entire investment balance.

Additionally, during 2011, the Company recorded an other-than-temporary impairment of $2.0 million, before income tax benefit, against the carrying value of an investment in which the Company holds a 13.4% noncontrolling ownership interest. The Company determined the fair value of its investment based on the estimated sales price of the property in the joint venture.

KIR -

The Company holds a 45% noncontrolling limited partnership interest in KIR and has a master management agreement whereby the Company performs services for fees relating to the management, operation, supervision and maintenance of the joint venture properties.

The Company’s equity in income from KIR for the year ended December 31, 2012, exceeded 10% of the Company’s income from continuing operations before income taxes; as such the Company is providing summarized financial information for KIR as follows (in millions):

	December 31,
	2012		2011
Assets:
Real estate, net	$	1,134.2	$	1,177.6
Other assets		87.7		76.4
	$	1,221.9	$	1,254.0
Liabilities and Members’ Capital:
Mortgages payable	$	914.6	$	911.5
Other liabilities		26.8		27.4
Noncontrolling interests		-		10.7
Members’ capital		280.5		304.4
	$	1,221.9	$	1,254.0

	Year Ended December 31,
	2012			2011			2010
Revenues from rental property	$	197.3		$	195.1		$	193.9
Operating expenses		(53.0	)		(54.3	)		(54.0	)
Interest expense		(54.0	)		(60.2	)		(66.6	)
Depreciation and amortization		(40.7	)		(38.2	)		(38.6	)
Impairment charges		(0.1	)		(0.5	)		(0.5	)
Other expense, net		(1.3	)		(2.5	)		(2.6	)
		(149.1	)		(155.7	)		(162.3	)
Income from continuing operations		48.2			39.4			31.6
Discontinued Operations:
Income/(loss) from discontinued operations		0.1			(0.7	)		8.3
Impairment on dispositions of properties		(0.1	)		(4.6	)		(6.3	)
Gain on dispositions of properties		-			-			5.6
Net income	$	48.2		$	34.1		$	39.2

RioCan Investments -

During October 2001, the Company formed three joint ventures (collectively, the "RioCan Ventures") with RioCan Real Estate Investment Trust ("RioCan"), in which the Company has 50% noncontrolling interests, to acquire retail properties and development projects in Canada. The acquisition and development projects are to be sourced and managed by RioCan and are subject to review and approval by a joint oversight committee consisting of RioCan management and the Company’s management personnel. Capital contributions will only be required as suitable opportunities arise and are agreed to by the Company and RioCan.

The Company’s equity in income from the Riocan Ventures for the year ended December 31, 2012, exceeded 10% of the Company’s income from continuing operations, as such the Company is providing summarized financial information for the RioCan Ventures as follows (in millions):

	December 31,
	2012		2011
Assets:
Real estate, net	$	1,189.9	$	1,143.6
Other assets		43.7		26.6
	$	1,233.6	$	1,170.2
Liabilities and Members' Capital:
Mortgages payable	$	923.2	$	925.0
Other liabilities		18.1		19.7
Members' capital		292.3		225.5
	$	1,233.6	$	1,170.2

	December 31,
	2012			2011			2010
Revenues from rental properties	$	213.3		$	209.2		$	197.1

Operating expenses		(78.1	)		(73.0	)		(70.9	)
Interest expense		(51.9	)		(57.5	)		(52.6	)
Depreciation and amortization		(37.3	)		(36.8	)		(34.4	)
Other income/(expense), net		14.7			(0.2	)		(0.3	)
		(152.6	)		(167.5	)		(158.2	)
Net income	$	60.7		$	41.7		$	38.9

Summarized financial information for the Company’s investment and advances in real estate joint ventures (excluding KIR and the RioCan Ventures, which is presented above) is as follows (in millions):

	December 31,
	2012		2011
Assets:
Real estate, net	$	8,523.3	$	9,158.5
Other assets		507.7		609.3
	$	9,031.0	$	9,767.8
Liabilities and Partners’/Members’ Capital:
Notes payable	$	148.0	$	150.5
Mortgages payable		5,056.5		5,604.3
Construction loans		25.1		109.4
Other liabilities		188.5		216.2
Noncontrolling interests		19.1		25.4
Partners’/Members’ capital		3,593.8		3,662.0
	$	9,031.0	$	9,767.8

	Year Ended December 31,
	2012			2011			2010
Revenues from rental property	$	1,074.5		$	1,115.4		$	1,028.6
Operating expenses		(350.2	)		(390.5	)		(368.1	)
Interest expense		(311.3	)		(332.7	)		(316.6	)
Depreciation and amortization		(283.3	)		(325.1	)		(313.3	)
Impairment charges		(15.5	)		(20.9	)		(3.1	)
Other (expense)/income, net		(11.2	)		22.9			(18.4	)
		(971.5	)		(1,046.3	)		(1,019.5	)
Income from continuing operations		103.0			69.1			9.1
Discontinued Operations:
Income/(loss) from discontinued operations		0.3			16.6			(12.4	)
Impairment on dispositions of properties		(31.4	)		(68.4	)		(194.3	)
Gain on dispositions of properties		94.5			(0.1	)		3.1
Net income/(loss)	$	166.4		$	17.2		$	(194.5	)

Other liabilities included in the Company’s accompanying Consolidated Balance Sheets include accounts with certain real estate joint ventures totaling $21.3 million and $24.2 million at December 31, 2012 and 2011, respectively. The Company and its subsidiaries have varying equity interests in these real estate joint ventures, which may differ from their proportionate share of net income or loss recognized in accordance with GAAP.

The Company’s maximum exposure to losses associated with its unconsolidated joint ventures is primarily limited to its carrying value in these investments. Generally, such investments contain operating properties and the Company has determined these entities do not contain the characteristics of a VIE. As of December 31, 2012 and 2011, the Company’s carrying value in these investments is $1.4 billion.