Fitch Affirms Kimco Realty Corporation's IDR at 'BBB+'; Outlook Stable

--Issuer Default Rating (IDR) at 'BBB+';
--Unsecured revolving credit facilities at 'BBB+';
--Senior unsecured notes at 'BBB+';
--Preferred stock at 'BBB-'.

The Rating Outlook is Stable.

The rating affirmations are based on Kimco's solid track record as a leading owner of community and neighborhood shopping centers; the company's large and diversified pool of retail properties; its experienced leasing and management team and its high quality, diversified tenant mix with a well laddered lease expiration schedule.

In addition, the company's solid unencumbered asset coverage of unsecured debt, manageable debt maturity profile, demonstrated access to a variety of capital sources over time, solid liquidity position and an increasingly conservative investment strategy are also positively factored into the ratings. The company also has solid fixed charge coverage that is commensurate with current ratings.
Balancing these strengths is expected softness in the retail sector, which will likely result in modest same store NOI growth over the near term. The ratings also factor the higher risk associated with the company's existing portfolio of non-retail assets, many of which are currently targeted for disposition. This portfolio represented a fairly low 5.4% of total undepreciated assets at June 30, 2011 down from 7.6% at Dec. 31, 2009.

The ratings positively consider Kimco's large and diversified portfolio of consolidated and unconsolidated interests in 946 operating retail property investments, primarily needs-based neighborhood and community shopping centers, spread across 45 states in the U.S. and Puerto Rico, as well as Mexico and Canada. Moreover, the company has a highly diversified tenant roster and a manageable lease expiration schedule with no more than 12% of total annual base rent expiring in any one year and a manageable 2.5% expiring in the second half of 2011.

No tenant represents more than 3.1% of annualized base rent and Kimco's largest 20 tenants represented a fairly low 29% of total annualized base rents at June 30, 2011. The company's largest tenants are comprised of national retailers, heavily weighted towards investment grade companies.
Kimco's fixed charge coverage is solid for the 'BBB+' rating level. Fixed charge coverage was 2.1 times (x) and 2.1x for the twelve months ended June 30, 2011 and Dec. 31, 2010, respectively. Under Fitch's 2011-2013 forecast, this ratio remains in the low 2.0x's range. Fixed charge coverage is defined as recurring operating EBITDA plus Fitch's estimate of recurring cash distributions from unconsolidated joint ventures less recurring capital expenditures and non-cash straight-line rental income divided by interest incurred and preferred stock dividends.

Kimco has a long track record of accessing a wide variety of capital sources, including secured and unsecured debt, common and preferred equity and joint venture capital. During 2009 and 2010, the company demonstrated access to various forms of capital despite challenging market conditions, raising more than $2.0 billion of capital by way of common equity ($1.1 billion), perpetual preferred stock ($175 million), unsecured debt ($450 million), and an unsecured term loan ($220 million). Thus far in 2011, the company has yet to raise any capital due to limited capital needs.

Certain of these capital market activities have strengthened Kimco's leverage and capitalization metrics, in line with management's plans to de-lever. Leverage, as measured by net debt to recurring operating EBITDA plus Fitch's estimate of recurring cash distributions from unconsolidated joint ventures, declined from 6.5x at Dec. 31, 2009 to 5.6x at June 30, 2011. Kimco's risk-adjusted capitalization at a 'BBB' stress level was strong at 1.2x at June 30, 2011.

Kimco's liquidity position is also strong, which is factored in the proposed ratings. Under the base case scenario which assumes no access to external capital, Kimco has a liquidity coverage ratio of 0.9x through the end of 2013. Under a scenario where Kimco is able to refinance 80% of its secured debt, liquidity coverage ratio rises to 1.4x. The company's demonstrated strong access to capital mitigates refinance risk.

The bulk of Kimco's retail portfolio is unencumbered, which also provides support for the ratings. As of June 30, 2011, the company had a large diversified pool of 427 stabilized unencumbered properties, which represents over 89% of its 478 consolidated properties. Unencumbered asset coverage of unsecured debt, calculated by applying a stressed capitalization rate of 8% to annualized 1H 2011 unencumbered NOI, was 2.2x at June 30, 2011, up slightly from 2.1x at June 30, 2010. Unencumbered NOI excludes income from preferred equity investments and Kimco's equity interests in unconsolidated joint ventures, which incrementally provide some cash flow benefit and value to unsecured bondholders.

In line with a more simplified operating strategy, Kimco curtailed most of its development activities over the past few years, completing only existing projects. As a result, the development portfolio declined to represent a limited 2.9% of undepreciated assets as of June 30, 2011, down from 11.4% at Dec. 31, 2007. The active development portfolio was over 56% complete and remaining capital requirements on the total portfolio were estimated to be only $61 million, representing a minimal amount of contingent capital use.

The higher risk profile of Kimco's non-retail assets is also factored in the ratings. These assets were acquired during the latter half of the last decade as part of the company's efforts to earn higher returns. The company plans to dispose of this portfolio, which represented 5.4% of undepreciated assets at June 30, 2011, over the next few years.

The two-notch differential between Kimco's IDR and its preferred stock rating is consistent with Fitch's criteria for corporate entities with an IDR of 'BBB'. Based on Fitch's criteria report, 'Rating Hybrid Securities,' dated Dec. 29, 2009, this preferred stock is deeply subordinated and have loss absorption elements that would likely result in poor recoveries in the event of a corporate default.

The Stable Outlook factors Fitch's expectation that Kimco's same store NOI performance is likely to be flat to slightly positive due in part to stabilizing occupancy and relatively flat or modestly increasing re-leasing spreads. Fitch expects that any negative re-leasing spreads will be partly offset by incremental revenue generated by the lease up of recently completed development projects. Fitch's forecasts assume same store NOI increases by 1% for the remainder of 2011, and grows by 1% in each of 2012 and 2013. Under this scenario, fixed charge coverage would be 2.1x in 2011 and 2.3x by 2013 and leverage would be 5.2x by end of both 2011 and 2013, which would be appropriate for a 'BBB+' IDR.

Any of the following factors may have a positive impact on Kimco's ratings or Outlook:

--Fixed charge coverage sustaining above 2.5x (this ratio was 2.1x for the 12 months ended June 30, 2011).
--Net debt to recurring operating EBITDA sustaining below 5.0x (this ratio was 5.6x at June 30, 2011).
--Reducing the risk profile of the balance sheet through sales of non-strategic retail properties and non-retail assets.

Any of the following factors may have a negative impact on Kimco's ratings or outlook:
--Fixed charge coverage sustaining below 2.0x.
--Leverage sustaining above 6.5x.
--Increased exposure to non-retail assets or increased joint venture debt guarantees.

Additional information is available at '[ www.fitchratings.com ]'.
Applicable Criteria and Related Research:
--Rating Hybrid Securities (July 28, 2011);
--Treatment of Hybrids in Corporate and REIT Credit Analysis (July 11, 2011);
--Recovery Rating and Notching Criteria for Equity REITs (May 12, 2011);
--Criteria for Rating U.S. Equity REITs and REOCs (March 15, 2011);
--Corporate Rating Methodology (Aug. 16, 2010).

Applicable Criteria and Related Research:
Treatment of Hybrids in Corporate and REIT Credit Analysis
[ http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=642132 ]
Recovery Rating and Notching Criteria for Equity REITs
[ http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=628490 ]
Criteria for Rating U.S. Equity REITs and REOCs
[ http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=610687 ]
Corporate Rating Methodology - Amended
[ http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=546646 ]
Rating Hybrid Securities
[ http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=647091 ]

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Contributing Sources

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Fitch Affirms Kimco Realty Corporation's IDR at 'BBB+'; Outlook Stable