Kimco Realty Corporation

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1 Kimco Realty Corporation (KIM-NYSE) Rating/Risk: Neutral/Moderate Price: $31.12 Target Price: NA Solid Results, Noisy Forecast Continuing to Lower Cost Of Capital Investment Conclusion: We are reiterating our Neutral rating on shares of KIM following solid Q2 results. Though we view the company s capital allocation decisions positively, KIM shares trade at an appropriate relative premium to NAV, based on our estimates. Key Points: FFO in Line with Consensus KIM reported FFO of $0.38 per share, in line with consensus and a penny ahead of our estimate. SS NOI rose 3.1% in the quarter, driven by strong leasing spreads of 16%. Occupancy was at post-crisis high of 96% for overall portfolio and 89.2% for small shop space. Estimates Updated To Match Headline Change We have updated our estimates to reflect the incremental $89 million or $0.21 per share of charges in the 3 rd quarter. The company will take a $48 million prepayment charge to retire its outstanding Canadian dollar bonds. In addition, the company is collapsing its taxable REIT subsidiary KRS into the REIT to shield both 30 long-term hold assets as well as further potential gains on its 9.8% holding in Albertson s which causes a $48 million charge to FFO with resulting annual tax savings of approximately $8 million. We have not made any other material changes to our estimates beyond a slightly lower cost of debt going forward to reflect a likely bond deal and updated transaction guidance. FFO Estimates Guidance 2016 Current $1.39 $1.65 $1.71 $1.34 to $1.42 Prior $1.56 $ $1.54 to $1.61 Source: B&S Research, SNL Financial Active Trader KIM made three significant acquisitions during the quarter. First, buying out the 45% partner in both A rated Oakwood Plaza and Dania Point in Ft. Lauderdale, valuing the assets at $215 million and $84 million, respectively. Additionally, KIM bought an improved site next to its A rated Whole Foods Market anchored property in Jericho, NY. KIM also sold 22 Canadian assets, realizing $358 million for its share as well as disposing 12 US properties that raised $194 million at share. Pending Lifestyle Center Acquisition KIM discussed a pending $95 million acquisition of Kentlands Market Square in Gaithersburg, MD near Washington DC. This 250,000 square foot lifestyle center is anchored by a Whole Foods and appears to have upside in both occupancy and rents, in our opinion. We would not be surprised to see additional acquisition announcements before the end of the year. Balance Sheet Simplification KIM has made great strides over the past 24 months to improve and simplify its balance sheet. To that end, the company will pay down its outstanding C$150 million and C$200 million bonds with proceeds from its Canadian portfolio sale. Early repayment will trigger a $48 million charge. KIM also issued $150 million of 30 year bonds at 4.25% in the quarter, demonstrating its ability to term out debt and lower KIM s cost of capital. July 28, 2016 REITs FFO Estimates Current Q1 Q2 Q3 Q4 FY 2016E* $0.38 $0.38 $0.18 $0.45 $ E $0.41 $0.41 $0.42 $0.41 $ E $0.42 $0.42 $0.44 $0.43 $1.71 *Q1 and Q2 represent actual results Prior Q1 Q2 Q3 Q4 FY 2016 $0.38 $0.37 $0.38 $0.44 $ $0.41 $0.41 $0.42 $0.41 $ Consensus Q1 Q2 Q3 Q4 FY 2016 $0.37 $0.38 $0.38 $0.42 $ $0.41 $0.42 $0.43 $0.43 $ $0.43 $0.45 $0.45 $0.46 $1.76 Market Data Price $ Week Range $ $22.07 Market Value (mm) $13,070 Shares O/S (mm) Week ADTV (000's) 3,112.0 Annual Dividend $1.02 Dividend Yield 3.3% Institutional Ownership 93% Valuation Est. NAV per Share $27.63 Price/NAV 112.6% Price/ FFO 2017E 18.9x Price/ AFFO 2017E 22.9x TEV/ EBITDA 20.8x Capitalization Net Debt including JV share (mm) $6,616 Total Enterprise Value (mm) $19,686 Quarter ended June 30, 2016 Source: SNL Financial, B&S Research Floris van Dijkum fvandijkum@boenninginc.com Andrew Crespo acrespo@boenninginc.com PRICE AS OF PRIOR DAY S CLOSE PLEASE SEE THE IMPORTANT DISCLOSURE APPENDIX ON PAGES 4 AND 5

2 Valuation Fair KIM has done an admirable job of reducing its cost of capital through dispositions, acquisitions, and debt reduction. Management has various tools at its disposal to both further reduce leverage, as well as continue to reduce its average cost of capital. KIM trades at a 13% premium to our estimate of NAV, a 3% premium to sector peers. The results appear adequately reflected in the share price at this stage, in our opinion. Price NAV Premium/ Discount to NAV WRI $41.96 $ % FRT $ $ % KIM $31.12 $ % REG $81.82 $ % DDR $19.26 $ % AKR $36.71 $ % RPT $19.51 $ % CDR $7.93 $7.56 5% RPAI $17.14 $ % BRX $27.47 $ % Strip Sector Average 10% Source: Company documents, B&S Research KIMCO NAV Calculation ($000s, except per share data) 2Q16A NOI from Consolidated Properties $855,167 NOI from Unconsolidated Properties $164,736 Add: NOI from Properties $1,019,903 Assumed Capitalization Rate 6.15% Market Vaue of Properties $16,583,790 Add: Other Income $55,408 Assumed Capitalization Rate 10.0% Market Vaue of Other Income $554,080 Mortgages and Other Receivables $23,815 Cash and cash equivalents $337,815 Marketable Securities $7,006 Accounts and notes receivable $172,702 Other assets $662,470 CIP, Value Creation $652,741 Add: Value of Other Assets $1,856,549 Gross Market Value of Assets $18,994,420 Debt $6,031,927 Other Liabilities $555,299 Subtract: Total Liabilities ($6,587,226) Subtract: Preferred Stock ($800,000) Net Market Value of Assets $11,607,194 Shares & OP Units O/S (000s) 420,050 NAV PER SHARE $27.63 Market Price $31.12 Premium/(Discount) to NAV 12.6% Source: Company documents and B&S Research 2

3 Kimco Realty: Income Statement 2015A 2016E 2016E 2017E 2017E 2018E 2018E Dollars in thousands Full Year 1QA 2QE 3QE 4QE Full Year 1QE 2QE 3QE 4QE Full Year 1QE 2QE 3QE 4QE Full Year Operating Income & Expenses Minimum rents 1,144, , , , ,608 1,154, , , , ,842 1,163, , , , ,315 1,189,185 Operating expenses (310,552) (75,273) (72,927) (77,235) (79,036) (304,471) (73,987) (77,097) (78,539) (80,749) (310,372) (75,654) (78,820) (80,282) (82,528) (317,285) Wholly Owned NOI $ 833,922 $ 217,818 $ 214,188 $ 209,553 $ 208,572 $ 850,130 $ 214,098 $ 212,617 $ 213,092 $ 213,093 $ 852,899 $ 218,922 $ 217,371 $ 217,821 $ 217,787 $ 871,900 NOI from Core Acquisitions/Dispositions 1,243 2,861 4,105 3,028 3,195 3,362 3,529 13,114 4,060 4,591 5,122 5,654 19,427 Total Core NOI $ 833,922 $ 217,818 $ 214,188 $ 210,796 $ 211,433 $ 854,235 $ 217,126 $ 215,812 $ 216,454 $ 216,622 $ 866,013 $ 222,982 $ 221,962 $ 222,943 $ 223,440 $ 891,328 Total JV NOI 235,016 44,867 41,184 41,184 41, ,419 41,184 41,184 41,184 41, ,736 41,184 41,184 41,184 41, ,736 Total Net Operating Income $ 1,068,938 $ 262,685 $ 255,372 $ 251,980 $ 252,617 $ 1,022,654 $ 258,310 $ 256,996 $ 257,638 $ 257,806 $ 1,030,749 $ 264,166 $ 263,146 $ 264,127 $ 264,624 $ 1,056,064 Other Investments, Income & Expenses General & administrative expense (122,735) (31,929) (29,928) (24,579) (28,401) (114,837) (28,736) (26,935) (22,121) (25,561) (103,353) (28,736) (26,935) (22,121) (25,561) (103,353) Income from Other Real Estate Investments 36,090 10,799 7,959 7,959 7,959 34,676 7,959 7,959 7,959 7,959 31,836 7,979 7,999 8,019 8,039 32,035 Mortgage Financing Income 2, , , ,694 Interest, Dividends and Other Investment Incom 39,061 45, ,340 1,000 1,000 1,000 1,000 4,000 1,000 1,000 1,000 1,000 4,000 Other Income, Net 2,234 2,134 (2,070) Other JV Income 384,643 (5,924) (5,924) Management and Fee Income 22,322 4,111 4,373 4,373 4,373 17,230 4,373 4,373 4,373 4,373 17,492 4,384 4,395 4,406 4,417 17,601 Income Attributable to Non-Controlling (6,028) (1,441) (1,437) (1,300) (1,300) (5,478) (1,300) (1,300) (1,300) (1,300) (5,200) (1,300) (1,300) (1,300) (1,300) (5,200) Income from Discontinued Operations (75) EBITDA $ 1,427,390 $ 286,510 $ 235,327 $ 239,817 $ 236,632 $ 998,285 $ 242,262 $ 242,749 $ 248,205 $ 244,933 $ 978,149 $ 248,148 $ 248,961 $ 254,787 $ 251,875 $ 1,003,771 Interest expense (218,891) (52,451) (50,479) (48,549) (45,908) (197,387) (45,442) (45,110) (44,912) (44,848) (180,313) (45,012) (45,223) (45,482) (45,787) (181,505) New Interest expense/savings from Acq/Dev 0 (589) (1,484) (2,073) (1,344) (1,193) (1,004) (826) (4,366) (816) (806) (762) (744) (3,128) JV Interest Expense (70,258) (10,176) (11,309) (11,309) (11,309) (44,103) (11,309) (11,309) (11,309) (11,309) (45,236) (11,309) (11,309) (11,309) (11,309) (45,236) Total Interest Expense (289,149) (62,627) (61,788) (60,447) (58,701) (243,564) (58,095) (57,612) (57,225) (56,983) (229,914) (57,137) (57,338) (57,553) (57,840) (229,869) Depreciation & amortization (344,527) (84,856) (82,753) (83,259) (83,915) (334,783) (83,954) (83,993) (84,033) (84,072) (336,052) (84,197) (84,322) (84,447) (84,572) (337,537) JV depreciation & amortization (69,006) (13,342) (11,470) (11,470) (11,470) (47,752) (11,470) (11,470) (11,470) (11,470) (45,880) (11,470) (11,470) (11,470) (11,470) (45,880) Preferred stock dividends (62,900) (11,555) (11,555) (11,555) (11,555) (46,220) (11,555) (11,555) (11,555) (11,555) (46,220) (11,555) (11,555) (11,555) (11,555) (46,220) Benefit/(Provision) for Income Taxes (60,230) (12,112) (11,866) Net Income before Extra. Items, Gains/Loss $ 601,578 $ 102,018 $ 68,007 $ 73,085 $ 70,991 $ 314,101 $ 77,188 $ 78,118 $ 83,922 $ 80,853 $ 320,082 $ 83,790 $ 84,275 $ 89,762 $ 86,438 $ 344,265 Gain on Sale 128,904 26, , , JV Gain on Sale 0 25,931 25, Net Income before Extraordinary Items $ 824,873 $ 128,914 $ 241,891 $ 73,085 $ 70,991 $ 514,881 $ 77,188 $ 78,118 $ 83,922 $ 80,853 $ 320,082 $ 83,790 $ 84,275 $ 89,762 $ 86,438 $ 344,265 Extraordinary Items 6,342 (52,213) (52,213) 0 0 JV Extraordinary Items 0 2,176 2, Net Income to Common Shareholders $ 831,215 $ 128,914 $ 191,854 $ 73,085 $ 70,991 $ 464,844 $ 77,188 $ 78,118 $ 83,922 $ 80,853 $ 320,082 $ 83,790 $ 84,275 $ 89,762 $ 86,438 $ 344,265 Reconciliation to FFO: Net Income to Common Shareholders 831,215 $ 128,914 $ 191,854 $ 73,085 $ 70, ,844 $ 77,188 $ 78,118 $ 83,922 $ 80, ,082 $ 83,790 $ 84,275 $ 89,762 $ 86, ,265 Real estate depreciation & amortization 333,841 82,451 80,574 81,080 81, ,841 81,775 81,814 81,854 81, ,336 82,018 82,143 82,268 82, ,821 JV Real estate depreciation & amortization 84,676 13,217 11,470 11,470 11,470 47,627 11,470 11,470 11,470 11,470 45,880 11,470 11,470 11,470 11,470 45,880 Gain on sale & other income (net non control) (628,495) (72,528) (180,579) 0 0 (253,107) Other Impairments/Extraordinary 22,010 6,168 54,785 (89,000) 25,000 (3,047) 0 0 Funds From Operations $ 643,247 $ 158,222 $ 158,104 $ 76,635 $ 189,196 $ 582,158 $ 170,434 $ 171,403 $ 177,246 $ 174,216 $ 693,298 $ 177,277 $ 177,888 $ 183,500 $ 180,301 $ 718,966 Impairments Early Extinguishment of Debt (FAS 145) Gain on Outlots, Development Sales and Promo Acquisition Costs Extraordinary Items $ (39,808) (5,361) (2,587) 89,000 (25,000) $ 56,052 "Core" Funds From Operations (Fully Dilute $ 603,439 $ 152,861 $ 155,517 $ 165,635 $ 164,196 $ 638,210 $ 170,434 $ 171,403 $ 177,246 $ 174,216 $ 693,298 $ 177,277 $ 177,888 $ 183,500 $ 180,301 $ 718,966 Other Items Adjusted by Kimco "As Adjusted" FFO KIMCO DEFINITION $ 603,439 $ 152,861 $ 155,517 $ 165,635 $ 164,196 $ 638,210 $ 170,434 $ 171,403 $ 177,246 $ 174,216 $ 693,298 $ 177,277 $ 177,888 $ 183,500 $ 180,301 $ 718,966 Non-GAAP Cash Flow Adjustments Recurring capital expenditures (73,519) (18,956) (18,956) (18,956) (18,956) (75,824) (18,956) (18,956) (18,956) (18,956) (75,824) (18,956) (18,956) (18,956) (18,956) (75,824) Capitalized Interest Adjustment (3,526) (1,142) (1,172) (1,168) (1,163) (4,650) (1,164) (1,166) (1,169) (1,171) (4,683) (1,172) (1,173) (1,175) (1,177) (4,707) Straight-line rent adjustment (14,840) (4,586) (5,316) (3,710) (3,710) (17,322) (4,331) (4,331) (4,331) (4,331) (17,322) (4,331) (4,331) (4,331) (4,331) (17,322) Total accounting adjustments (17,676) (11,404) (6,404) (6,404) (6,404) (30,616) (6,404) (6,404) (6,404) (6,404) (25,616) (6,404) (6,404) (6,404) (6,404) (25,616) Adjusted Funds from Opertations $ 493,877 $ 116,773 $ 123,669 $ 135,397 $ 133,964 $ 509,797 $ 139,578 $ 140,546 $ 146,387 $ 143,355 $ 569,853 $ 146,415 $ 147,024 $ 152,634 $ 149,434 $ 595,497 Other data Ordinary shares outstanding at period end 413, , , , , , , , , , , , , , , ,998 Basic shares outstanding (EPS) 411, , , , , , , , , , , , , , , ,748 Units Oustanding (Period End) 2,341 2,305 2,302 2,302 2,302 2,302 2,302 2,302 2,302 2,302 2,302 2,302 2,302 2,302 2,302 2,302 Diluted avg shares outstanding (EPS) 413, , , , , , , , , , , , , , , ,302 Diluted avg shares outstanding (FFO) 414, , , , , , , , , , , , , , , ,050 PER SHARE DATA FFO $ 1.55 $ 0.38 $ 0.38 $ 0.18 $ 0.45 $ 1.39 $ 0.41 $ 0.41 $ 0.42 $ 0.41 $ 1.65 $ 0.42 $ 0.42 $ 0.44 $ 0.43 $ 1.71 FFO growth 8.1% 3.2% -14.7% -53.9% 30.2% -10.5% 6.4% 8.4% 131.3% -7.9% 18.7% 4.0% 3.8% 3.5% 3.5% 3.7% "Core" Funds From Operations (Fully Dilut $ 1.46 $ 0.37 $ 0.37 $ 0.39 $ 0.39 $ 1.52 $ 0.41 $ 0.41 $ 0.42 $ 0.41 $ 1.65 $ 0.42 $ 0.42 $ 0.44 $ 0.43 $ 1.71 AFFO $ 1.19 $ 0.28 $ 0.29 $ 0.32 $ 0.32 $ 1.22 $ 0.33 $ 0.33 $ 0.35 $ 0.34 $ 1.36 $ 0.35 $ 0.35 $ 0.36 $ 0.36 $ 1.42 Operating EPS $ 1.45 $ 0.25 $ 0.16 $ 0.17 $ 0.17 $ 0.75 $ 0.18 $ 0.19 $ 0.20 $ 0.19 $ 0.76 $ 0.20 $ 0.20 $ 0.21 $ 0.21 $ 0.82 GAAP EPS Before Extraordinary $ 1.99 $ 0.31 $ 0.58 $ 0.17 $ 0.17 $ 1.23 $ 0.18 $ 0.19 $ 0.20 $ 0.19 $ 0.76 $ 0.20 $ 0.20 $ 0.21 $ 0.21 $ 0.82 GAAP EPS After Extraordinary $ 2.01 $ 0.31 $ 0.46 $ 0.17 $ 0.17 $ 1.11 $ 0.18 $ 0.19 $ 0.20 $ 0.19 $ 0.76 $ 0.20 $ 0.20 $ 0.21 $ 0.21 $ 0.82 Common Dividend $ 0.98 $ 0.26 $ 0.26 $ 0.26 $ 0.26 $ 1.02 $ 0.26 $ 0.26 $ 0.26 $ 0.26 $ 1.02 $ 0.26 $ 0.26 $ 0.26 $ 0.26 $ 1.02 Source: Company documents, B&S Research 3

3B Disclosure Appendix Rating and Price Target History: Risk Factors: The realization of any or all of the following risk factors, among others, may adversely affect the company s stock: downturn in

4 3B Disclosure Appendix Rating and Price Target History: Risk Factors: The realization of any or all of the following risk factors, among others, may adversely affect the company s stock: downturn in the economy, change in the valuation of real estate, acceleration of internet shopping, redevelopment pipeline projects failing to come to fruition, unanticipated tenant bankruptcies, and failure to fund growth due to payout requirements. Analyst Certification: The research analysts whose names appear on this research report certify that: (1) all of the views expressed in this research report accurately reflect their personal views about the subject security or issuer, and (2) no part of the research analysts compensation was, is, or will be directly or indirectly related to the specific recommendations or views expressed by the research analysts in this research report. Important Disclosures: Analyst compensation is based on, in part, Boenning & Scattergood, Inc. s profitability, which includes revenues from investment banking. Boenning & Scattergood expects to receive or intends to seek compensation for investment banking services from the subject company in the next three months. 4

5 Boenning & Scattergood s Ratings System: Our three-tier investment ratings are based on a stock s return potential relative to a broad market index: Outperform (Buy): The security s total return over the year or longer is expected to exceed the total return of the S&P 500 over the identical period. Neutral (Hold): The security s total return over the next year or longer is expected to be roughly equivalent to the total return of the S&P 500 over the identical period. Underperform (Sell): The security s total return over the next year or longer is expected to be less than the total return of the S&P 500 over the identical period. Our four-tier risk ratings are based on a mix of price volatility and fundamental factors relative to the market and peer group: Low: The security has higher-than-average fundamental predictability and/or lower-than-average price volatility. Moderate: The security has average fundamental predictability and/or average price volatility. High: The security has lower-than-average fundamental predictability and/or higher-than-average price volatility. Speculative: The security has very inconsistent fundamental predictability and/or very high relative price volatility. Ratings Distribution (3/31/16): Coverage Universe (a) % of Universe Investment Banking Clients (b) % of Rating Group Outperform (Buy) 37% Outperform (Buy) 7% Neutral (Hold) 40% Neutral (Hold) 10% Underperform (Sell) 5% Underperform (Sell) 0% Not Rated 17% Not Rated 23% (a) Total may not add up to 100% due to rounding. (b) Related to services provided within the past 12 months. Additional information on companies in a research report, including financial models, is available on request. Boenning & Scattergood, Inc. does and seeks to do business with companies covered in its research reports. As a result, Investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. This report is not a complete analysis of every material fact representing company, industry, or security mentioned herein. The information has been obtained from sources believed reliable, but is not necessarily complete and is not guaranteed. The reports are prepared for general information only and do not have regard to the specific investment objectives, the financial situation, or the particular needs of any specific person who may receive this report. The information is not to be relied upon in substitution for the exercise of independent judgment. It is recommended that Investors seek financial advice regarding the appropriateness of investing in any securities or investment strategies discussed in any report and should understand that statements regarding future prospects, earnings estimates and forecasts may not be realized. This communication shall not be deemed to constitute an offer, or solicitation on our part with respect to the sale or purchase of any securities. Securities and financial instruments mentioned herein may not be qualified for sale in all states. Opinions are subject to change without notice and reflect the opinion at its original date of publication. Boenning & Scattergood may have issued a trading opinion that may have identified a short term trading opportunity that may differ from the analyst s stock rating which is based on the expected return over a 12-month period. Boenning & Scattergood may trade for its own accounts as market maker, may have a long or short position in any securities of this issuer or related investments, and/or may be the opposite side of public orders. This firm or its officers, directors, stockholders, employees and clients, in the normal course of business, may have, acquire or sell a position including options, if any, in the securities mentioned. Boenning & Scattergood may also act as underwriter, placement agent, advisor, or lender to an issuer mentioned herein. Member FINRA/SIPC 5

6 BOENNING & SCATTERGOOD INSTITUTIONAL CONTACTS RESEARCH ANALYSTS Financials Matthew Schultheis, CFA Financials Scott Beury Internet & Media Murali Sankar, CFA REITs Floris van Dijkum Water & Environment Ryan M. Connors RESEARCH ASSOCIATES REITs Andrew Crespo INSTITUTIONAL SALES Boston Scott Spottiswoode Columbus Nicholas Bicking Columbus Thomas Dooley Europe Scott J. Seidl Mid-Atlantic Eugene Bodo Midwest Ian Burke New York Breege Rohan New York Peter Homsher New York Mary Scattergood West Coast John Kenny AGENCY TRADING Brendan Kenny Melissa Donahue Michael McCarthy Stephen Marcell MARKET MAKING Jeff McMurray DERIVATIVE STRATEGY Louis DePaul TOWER BRIDGE * 200 BARR H ARBOR DRIVE * SUITE 300 * W. CONSHOHOCKEN, PA WWW. BOENNINGINC. COM MEMBER FINRA/ SIPC 6

Note Important Disclosures on Pages 6 and 7. Note Analyst Certification on Page 6.

Note Important Disclosures on Pages 6 and 7. Note Analyst Certification on Page 6. COMPANY UPDATE / ESTIMATE CHANGES Key Metrics WRI - NYSE (as of 2/21/2018) $27.15 Price Target N/A 52-Week Range $25.96 - $35.94 Shares Outstanding (mm) 129 Market Cap. ($mm) $3,502 3-Mo. Average Daily