Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations

The following discussion should be read in conjunction with the Consolidated Financial Statements and Notes thereto included in this Form 10-K. Historical results and percentage relationships set forth in the Consolidated Statements of Income contained in the Consolidated Financial Statements, including trends, should not be taken as indicative of future operations.

Critical Accounting Policies

The Consolidated Financial Statements of the Company include the accounts of the Company, its wholly-owned subsidiaries and all entities in which the Company has a controlling interest, including where the Company has been determined to be a primary beneficiary of a variable interest entity in accordance with the consolidation guidance of the FASB Accounting Standards Codification (“ASC”). The Company applies these provisions to each of its joint venture investments to determine whether the cost, equity or consolidation method of accounting is appropriate. The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions in certain circumstances that affect amounts reported in the accompanying Consolidated Financial Statements and related notes. In preparing these financial statements, management has made its best estimates and assumptions that affect the reported amounts of assets and liabilities. These estimates are based on, but not limited to, historical results, industry standards and current economic conditions, giving due consideration to materiality. The most significant assumptions and estimates relate to revenue recognition and the recoverability of trade accounts receivable, depreciable lives, valuation of real estate, including real estate under development, and intangible assets and liabilities, valuation of joint venture investments and other investments, and realizability of deferred tax assets and uncertain tax positions. Application of these assumptions requires the exercise of judgment as to future uncertainties, and, as a result, actual results could materially differ from these estimates.

The Company is required to make subjective assessments as to whether there are impairments in the value of its real estate properties, investments in joint ventures, marketable securities and other investments. The Company’s reported net earnings are directly affected by management’s estimate of impairments.

Revenue Recognition and Recoverability of Trade Accounts Receivable

The Company’s primary source of revenue is derived from property leases which produce the Company’s Revenues from rental properties, Reimbursement income and Other rental property income. On January 1, 2018, the Company adopted ASU 2014-09, Revenue from Contracts with Customers (Topic 606), using the modified retrospective method. The adoption of this standard did not result in any material changes to the Company’s revenue recognition (See Footnote 1 of the Notes to Consolidated Financial Statements included in this Form 10-K).

Revenues from rental properties

Revenues from rental properties are comprised of minimum base rent, percentage rent, lease termination fee income, amortization of above-market and below-market rent adjustments and straight-line rent adjustments. Base rental revenues from rental properties are recognized on a straight-line basis over the terms of the related leases. Certain of these leases also provide for percentage rents based upon the level of sales achieved by the lessee. These percentage rents are recognized once the required sales level is achieved. Rental income may also include payments received in connection with lease termination agreements. Lease termination fee income is recognized when the lessee provides consideration in order to terminate an existing lease agreement and has vacated the leased space. The performance obligation of the Company is the termination of the lease agreement which occurs upon consideration received and execution of the termination agreement. Upon acquisition of real estate operating properties, the Company estimates the fair value of identified intangible assets and liabilities (including above-market and below-market leases, where applicable). The capitalized above-market or below-market intangible asset or liability is amortized to rental income over the estimated remaining term of the respective leases, which includes the expected renewal option period for below-market leases.

Reimbursement income

Leases typically provide for reimbursement to the Company of common area maintenance costs (“CAM”), real estate taxes and other operating expenses. Operating expense reimbursements are recognized as earned.

Trade accounts receivable

The Company makes estimates of the uncollectable trade accounts receivables related to base rents, straight-line rent, expense reimbursements and other revenues. The Company analyzes accounts receivable and historical bad debt levels, customer credit worthiness and current economic trends when evaluating the adequacy of the allowance for doubtful accounts. In addition, tenants in bankruptcy are analyzed and estimates are made in connection with the expected recovery of pre-petition and post-petition claims. The Company’s reported net earnings are directly affected by management’s estimate of the collectability of trade accounts receivable.

Real Estate

Depreciable Lives

The Company’s investments in real estate properties are stated at cost, less accumulated depreciation and amortization. Expenditures for maintenance and repairs are charged to operations as incurred. Significant renovations and replacements, which improve and extend the life of the asset, are capitalized.

The Company capitalizes acquisition costs related to real estate operating properties, which qualify as asset acquisitions. Also, upon acquisition of real estate operating properties, the Company estimates the fair value of acquired tangible assets (consisting of land, building, building improvements and tenant improvements) and identified intangible assets and liabilities (consisting of above and below-market leases, in-place leases, and tenant relationships, where applicable), assumed debt and redeemable units issued at the date of acquisition, based on evaluation of information and estimates available at that date. Fair value is determined based on a market approach, which contemplates the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

Depreciation and amortization are provided on the straight-line method over the estimated useful lives of the assets, as follows:

Buildings and building improvements (in years)		5 to 50
Fixtures, leasehold and tenant improvements (including certain identified intangible assets)		Terms of leases or useful lives, whichever is shorter

The Company is required to make subjective assessments as to the useful lives of its properties for purposes of determining the amount of depreciation to reflect on an annual basis with respect to those properties. These assessments have a direct impact on the Company’s net earnings.

Valuation of real estate, including real estate under development, and intangible assets and liabilities

On a continuous basis, management assesses whether there are any indicators, including property operating performance, changes in anticipated holding period, general market conditions and delays of development, that the value of the real estate properties (including any related amortizable intangible assets or liabilities) may be impaired. A property value is considered impaired only if management’s estimate of current and projected operating cash flows, net of anticipated construction and leasing costs, (undiscounted and unleveraged) of the property over its anticipated hold period is less than the net carrying value of the property. Such cash flow projections consider factors such as expected future costs of materials and labor, operating income, trends and prospects, as well as the effects of demand, competition and other factors. To the extent impairment has occurred, the carrying value of the property would be adjusted to reflect the estimated fair value of the property. The Company’s estimated fair values are based upon a discounted cash flow model for each property that includes all estimated cash inflows and outflows over a specified holding period. Capitalization rates, discount rates and credit spreads utilized in these models are based upon rates that the Company believes to be within a reasonable range of current market rates.

When a real estate asset is identified by management as held-for-sale, the Company ceases depreciation of the asset and estimates the sales price of such asset net of selling costs. If, in management’s opinion, the net sales price of the asset is less than the net book value of such asset, an adjustment to the carrying value would be recorded to reflect the estimated fair value of the property.

Valuation of Joint Venture Investments and Other Investments

The Company accounts for its investments in unconsolidated joint ventures under the equity method of accounting as the Company exercises significant influence, but does not control, these entities. These investments are recorded initially at cost and are subsequently adjusted for cash contributions and distributions. Earnings for each investment are recognized in accordance with each respective investment agreement and, where applicable, are based upon an allocation of the investment’s net assets at book value as if the investment was hypothetically liquidated at the end of each reporting period.

The Company’s joint ventures and other real estate investments primarily consist of co-investments with institutional and other joint venture partners in open-air shopping center properties, consistent with its core business. These joint ventures typically obtain non-recourse third-party financing on their property investments, thus contractually limiting the Company’s exposure to losses to the amount of its equity investment, and, due to the lender’s exposure to losses, a lender typically will require a minimum level of equity in order to mitigate its risk. From time to time the joint ventures will obtain unsecured debt, which may be guaranteed by the joint venture. The Company’s exposure to losses associated with its unconsolidated joint ventures is primarily limited to its carrying value in these investments.

On a continuous basis, management assesses whether there are any indicators, including property operating performance and general market conditions, that the value of the Company’s investments in unconsolidated joint ventures may be impaired. An investment’s value is impaired only if management’s estimate of the fair value of the investment is less than the carrying value of the investment and such difference is deemed to be other-than-temporary. To the extent impairment has occurred, the loss will be measured as the excess of the carrying amount of the investment over the estimated fair value of the investment.

The Company’s estimated fair values are based upon a discounted cash flow model for each joint venture that includes all estimated cash inflows and outflows over a specified holding period and, where applicable, any estimated debt premiums. Capitalization rates, discount rates and credit spreads utilized in these models are based upon rates that the Company believes to be within a reasonable range of current market rates.

Realizability of Deferred Tax Assets and Uncertain Tax Positions

The Company is subject to federal, state and local income taxes on the income from its activities relating to its TRS activities and subject to local taxes on certain non-U.S. investments. The Company accounts for income taxes using the asset and liability method, which requires that deferred tax assets and liabilities be recognized based on future tax consequences of temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply in the years in which temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in earnings in the period when the changes are enacted.

A reduction of the carrying amounts of deferred tax assets by a valuation allowance is required, if based on the evidence available, it is more likely than not (a likelihood of more than 50 percent) that some portion or all of the deferred tax assets will not be realized. The valuation allowance, which requires significant judgement from management, should be sufficient to reduce the deferred tax asset to the amount that is more likely than not to be realized. The Company’s reported net earnings are directly affected by management’s judgement in determining a valuation allowance.

The Company recognizes and measures benefits for uncertain tax positions, which requires significant judgment from management. Although the Company believes it has adequately reserved for any uncertain tax positions, no assurance can be given that the final tax outcome of these matters will not be different. The Company adjusts these reserves in light of changing facts and circumstances, such as the closing of a tax audit or the refinement of an estimate. Changes in the recognition or measurement of uncertain tax positions could result in material increases or decreases in the Company’s income tax expense in the period in which a change is made, which could have a material impact on operating results (see Footnote 21 of the Notes to Consolidated Financial Statements included in this Form 10-K).

Executive Overview

Kimco Realty Corporation is one of North America’s largest publicly traded owners and operators of open-air shopping centers. As of December 31, 2018, the Company had interests in 437 shopping center properties aggregating 76.3 million square feet of GLA located in 27 states and Puerto Rico. In addition, the Company had 290 other property interests, primarily through the Company’s preferred equity investments and other real estate investments, totaling 4.7 million square feet of GLA.

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 following highlights the Company’s significant transactions, events and results that occurred during the year ended December 31, 2018:

Financial and Portfolio Information_:_

	●	Net income available to the Company’s common shareholders increased to $439.6 million, or $1.02 per diluted share for the year ended December 31, 2018 from $372.5 million, or $0.87 per diluted share for the year ended December 31, 2017.

	●	Funds from operations (“FFO”) was $620.7 million or $1.47 per diluted share for the year ended December 31, 2018, as compared to $655.6 million or $1.55 per diluted share for the corresponding period in 2017 (see additional disclosure on FFO beginning on page 36).

	●	FFO as adjusted was $613.0 million or $1.45 per diluted share for the year ended December 31, 2018, as compared to $644.2 million or $1.52 per diluted share for the corresponding period in 2017 (see additional disclosure on FFO beginning on page 36).

	●	Same property net operating income (“Same property NOI”) increased 2.9% for the year ended December 31, 2018, as compared to the corresponding period in 2017 (see additional disclosure on Same property NOI beginning on page 38).

	●	Executed 1,046 new leases, renewals and options totaling approximately 7.6 million square feet in the consolidated operating portfolio.

	●	The Company’s consolidated operating portfolio occupancy at December 31, 2018 was 95.8% as compared to 95.9% at December 31, 2017.

Acquisition and Development Activity (see Footnote__s 3 and 4 of the Notes to Consolidated Financial Statements included in this Form 10-K_)__:_

	●	Acquired two land parcels adjacent to existing shopping centers located in Ardmore, PA and Elmont, NY, in separate transactions, for an aggregate purchase price of $5.4 million.

	●	Completed and opened three development projects totaling $338.8 million (including capitalized costs of $21.4 million) during the year ended December 31, 2018.

Disposition Activity (see Footnote 5 of the Notes to Consolidated Financial Statements included in this Form 10-K_)__:_

	●	During 2018, the Company disposed of 54 operating properties (including the deconsolidation of one property) and seven out-parcels, in separate transactions, for an aggregate sales price of $1.2 billion. These transactions resulted in (i) aggregate gains of $229.8 million and (ii) aggregate impairment charges of $19.7 million.

	●	During 2018, the Company sold 10 land parcels for an aggregate sales price of $9.7 million, which resulted in an aggregate gain of $6.3 million.

Capital Activity (for additional details see Liquidity and Capital Resources below):

	●	During January 2018, the underwriting financial institutions for the Class M Preferred Stock exercised the over-allotment option and as a result, the Company issued an additional 1,380,000 Class M Depositary Shares and received net proceeds before expenses of $33.4 million.
	●	During the year ended December 31, 2018, the Company repaid the following notes (dollars in millions):

Type		Date Paid		Amount Repaid				Interest Rate			Maturity Date
Senior unsecured notes (1)		Aug-18		$	300.0				6.875%		Oct-19
Senior unsecured notes (2)		Jun-18 & Jul-18		$	15.1				3.200%		May-21

	(1)	The Company recorded an early extinguishment of debt charge of $12.8 million resulting from the early repayment of these notes.

	(2)	Represents partial repayments. As of December 31, 2018, these notes had a remaining outstanding balance of $484.9 million.

	●	Also, during 2018, the Company (i) deconsolidated $206.0 million of individual non-recourse mortgage debt relating to an operating property for which the Company no longer holds a controlling interest, (ii) repaid $205.6 million of maturing mortgage debt (including fair market value adjustments of $0.9 million) that encumbered six operating properties and (iii) disposed of a $12.4 million encumbered property through foreclosure.

	●	In August 2018, the Company closed on a construction loan commitment of $67.0 million relating to one development property, which had a balance of $51.0 million outstanding as of December 31, 2018.

	●	As a result of the above activity, the Company’s debt maturity profile, including extension options, is as follows:

	●	As of December 31, 2018, the weighted average interest rate was 3.62% and the weighted average maturity profile was 10.5 years.

The Company faces external factors which may influence its future results from operations. The convenience and availability of e-commerce has continued to have an impact on the retail sector, which could affect our ability to increase or maintain rental rates and our ability to renew expiring leases and/or lease available space. To mitigate the effect of e-commerce on its business, the Company’s strategy has been to attract local area customers to its properties by providing a diverse and robust tenant base across a variety of retailers, including grocery stores, off-price retailers, discounters or service-oriented tenants, which offer off-price merchandise and day-to-day necessities rather than high-priced luxury items. In addition, the Company’s strategy includes investing capital into high quality assets, which are concentrated in major metro markets, allowing our tenants to generate higher foot traffic resulting in higher sales volume while also disposing of lesser quality assets in less desirable locations. For a further discussion of these and other factors that could impact our future results, performance or transactions, see Item 1A. “Risk Factors.”

The Company continues to take steps to strengthen its portfolio in the rapidly changing retail environment. The Company intends to continue to dispose of assets outside its core markets, which will allow it to concentrate its presence in target coastal markets by completing development projects underway and continuing to invest in redevelopment, ultimately producing a stronger portfolio for sustained long-term growth.

Results of Operations

Comparison of Years Ended December 31, 2018 to 2017

The following table presents the comparative results from the Company’s Consolidated Statements of Income for the year ended December 31, 2018, as compared to the corresponding period in 2017 (in thousands, except per share data):

		Year Ended December 31,
		2018				2017				$ Change
Revenues
Revenues from rental properties (1)		$	882,345			$	912,670			$	(30,325	)
Reimbursement income (1)			246,381				247,563				(1,182	)
Other rental property income (1)			20,877				23,552				(2,675	)
Management and other fee income			15,159				17,049				(1,890	)
Operating expenses
Rent (2)			(10,929	)			(11,145	)			216
Real estate taxes			(153,336	)			(157,196	)			3,860
Operating and maintenance (1) (3)			(164,294	)			(169,552	)			5,258
General and administrative (1) (4)			(87,797	)			(91,690	)			3,893
Provision for doubtful accounts			(6,253	)			(5,630	)			(623	)
Impairment charges			(79,207	)			(67,331	)			(11,876	)
Depreciation and amortization			(310,380	)			(360,811	)			50,431
Gain on sale of operating properties/change in control of interests			229,840				93,538				136,302
Other income/(expense)
Other income, net			13,041				2,559				10,482
Interest expense			(183,339	)			(191,956	)			8,617
Early extinguishment of debt charges			(12,762	)			(1,753	)			(11,009	)
(Provision)/benefit for income taxes, net			(1,600	)			880				(2,480	)
Equity in income of joint ventures, net			71,617				60,763				10,854
Gain on change in control of joint venture interests			-				71,160				(71,160	)
Equity in income of other real estate investments, net			29,100				67,001				(37,901	)
Net income attributable to noncontrolling interests			(668	)			(13,596	)			12,928
Preferred stock redemption charges			-				(7,014	)			7,014
Preferred dividends			(58,191	)			(46,600	)			(11,591	)
Net income available to the Company's common shareholders		$	439,604			$	372,461			$	67,143
Net income available to the Company's common shareholders:
Diluted per share		$	1.02			$	0.87			$	0.15

	(1)	The Company reclassified $247.6 million of Reimbursement income and $23.6 million of Other rental property income from Revenues from rental properties on the Company’s Consolidated Statements of Income for the year ended December 31, 2017. The Company reclassified $26.8 million from General and administrative to Operating and maintenance on the Company’s Consolidated Statements of Income for the year ended December 31, 2017. See Footnote 1 of the Notes to the Consolidated Financial Statements for further discussion.

	(2)	Rent expense relates to ground lease payments for which the Company is the lessee.

	(3)	Operating and maintenance expense consists of property related costs including repairs and maintenance costs, roof repair, landscaping, parking lot repair, snow removal, utilities, property insurance costs, security, personnel costs related to property management services and various other property related expenses.

	(4)	General and administrative costs include employee-related expenses (including salaries, bonuses, equity awards, benefits, severance costs and payroll taxes but excluding property management personnel), professional fees, office rent, travel expense and other company-specific expenses.

Net income available to the Company’s common shareholders was $439.6 million for the year ended December 31, 2018, as compared to $372.5 million for the comparable period in 2017. On a diluted per share basis, net income available to the Company’s common shareholders for year ended December 31, 2018, was $1.02 as compared to $0.87 for the comparable period in 2017. For additional disclosure, see Footnote 23 of the Notes to Consolidated Financial Statements included in this Form 10-K.

The following describes the changes of certain line items included in Net income available to the Company’s common shareholders on the Company’s Consolidated Statements of Income, which it believes represent items that have significant changes during the year ended December 31, 2018, as compared to the corresponding periods in 2017:

Revenue from r__ental p__roperties –

The decrease in Revenues from rental properties of $30.3 million is primarily from the combined effect of (i) a decrease in revenues of $63.2 million from properties sold during 2018 and 2017, partially offset by (ii) the completion of certain development/redevelopment projects, tenant buyouts and net growth in the current portfolio, which provided incremental revenues for the year ended December 31, 2018 of $21.6 million, as compared to the corresponding period in 2017, and (iii) the acquisition/consolidation of operating properties during 2018 and 2017, which provided incremental revenues for the year ended December 31, 2018 of $11.3 million, as compared to the corresponding period in 2017.

Real e__state t__axes –

Real estate taxes decreased $3.9 million primarily due to (i) a decrease of $12.0 million resulting from properties sold during 2018 and 2017, partially offset by (ii) an overall net increase of $6.4 million primarily due to increases in property tax rates and assessments during 2018, as compared to 2017 and (iii) an increase of $1.7 million related to the acquisition/consolidation of operating properties during 2018 and 2017.

Operating and maintenance –

The decrease in Operating and maintenance of $5.3 million is primarily from the combined effect of (i) a decrease in operating costs of $9.4 million from properties sold during 2018 and 2017, partially offset by (ii) an increase of $2.5 million related to the acquisition/consolidation of operating properties and (iii) an increase of $1.6 million primarily related to snow removal costs.

General and administrative –

The decrease in General and administrative costs of $3.9 million is primarily due to a decrease in personnel costs and consulting fees.

Impairment c__harges –

During the years ended December 31, 2018 and 2017, the Company recognized impairment charges related to adjustments to property carrying values of $79.2 million and $67.3 million, respectively, for which the Company’s estimated fair values were primarily based upon (i) signed contracts or letters of intent from third party offers, (ii) discounted cash flow models or (iii) third party appraisal. These adjustments to property carrying values were recognized in connection with the Company’s efforts to market certain properties, including a property which the Company discontinued its plan to develop and now intends to market it for sale as is, and management’s assessment as to the likelihood and timing of such potential transactions. Certain of the calculations to determine fair value utilized unobservable inputs and as such are classified as Level 3 of the fair value hierarchy. For additional disclosure, see Footnotes 6 and 15 of the Notes to Consolidated Financial Statements included in this Form 10-K.

Depreciation and a__mortization –

The decrease in Depreciation and amortization of $50.4 million is primarily due to (i) a decrease of $29.1 million related to the acceleration of depreciable lives of assets due to demolition within the Company’s redevelopment projects during 2017, as compared to 2018, (ii) a decrease of $15.6 million resulting from property dispositions in 2018 and 2017 and (iii) a decrease related to tenant vacates and write-offs of depreciable assets of $14.5 million, partially offset by (iv) an increase of $8.8 million related to the acquisition/consolidation of operating properties during 2017.

Gain on sale of operating properties/change in control of interests_-_

During 2018, the Company disposed of 54 operating properties (including the deconsolidation of one property) and seven out-parcels, in separate transactions, for an aggregate sales price of $1.2 billion. These transactions resulted in aggregate gains of $229.8 million and aggregate impairment charges of $19.7 million. During 2017, the Company disposed of 25 operating properties and nine parcels, in separate transactions, for an aggregate sales price of $352.2 million. These transactions resulted in aggregate gains of $93.5 million and aggregate impairment charges of $17.1 million.

Other i__ncome_,_ n__et –

The increase in Other income, net of $10.5 million is primarily due to (i) the recognition of gain on forgiveness of debt of $4.3 million and relief of accrued interest expense of $3.4 million resulting from the foreclosure of an encumbered property during 2018, (ii) the recognition of $4.2 million in income resulting from the receipt of casualty insurance claims in excess of the value of the assets written off, (iii) a reduction in demolition related costs of $3.5 million and (iv) an increase in gains on land sales of $2.9 million, partially offset by (v) the recognition of a net loss on changes in fair value of available-for-sale marketable securities of $3.5 million during 2018 and (vi) an increase in deal costs of $3.2 million related to transactions the Company is no longer pursuing.

Interest expense –

The decrease in Interest expense of $8.6 million for the year ended December 31, 2018, as compared to the corresponding period in 2017, is primarily the result of the repayment of maturing debt during 2018 and 2017 and lower levels of borrowings during the year ended December 31, 2018, as compared to the corresponding period in 2017.

Early e__xtinguishment of d__ebt c__harges –

During the year ended December 31, 2018, the Company incurred early extinguishment of debt charges of $12.8 million in connection with the optional make-whole provisions of unsecured notes that were repaid prior to maturity. During the year ended December 31, 2017, the Company incurred early extinguishment of debt charges of $1.8 million in connection with the tender premium on Medium Term Notes that were partially tendered prior to maturity.

Equity in i__ncome of j__oint v__entures, n__et –

The increase in Equity in income of joint ventures, net of $10.9 million is primarily due to (i) an increase in net gains of $13.8 million resulting from the sales of properties and ownership interests within various joint venture investments during 2018 as compared to 2017 and (ii) the recognition during 2017 of a cumulative foreign currency translation loss of $4.8 million as a result of the substantial liquidation of the Company’s investments in Canada, partially offset by (iii) lower equity in income of $5.6 million primarily resulting from the sales of properties within various joint venture investments and the acquisition of partnership interests in joint ventures by the Company during 2018 and 2017 and (iv) an increase in impairment charges of $2.1 million recognized during 2018 as compared to 2017.

Gain on c__hange in c__ontrol of joint venture i__nterests –

During 2017, the Company acquired, in separate transactions, a controlling interest in three operating properties from certain joint venture partners in which the Company had noncontrolling interests. As a result of these transactions, the Company recorded an aggregate gain on change in control of interests of $71.2 million related to the fair value adjustment associated with its previously held equity interest in these operating properties.

Equity in i__ncome from o__ther r__eal e__state i__nvestments, n__et –

The decrease in Equity in income from other real estate investments, net of $37.9 million is primarily due to (i) a decrease of $34.6 million in equity in income from the Albertsons joint venture resulting from cash distributions received in excess of the Company’s carrying basis during 2017 and (ii) the recognition in 2017 of a cumulative foreign currency translation gain of $14.8 million as a result of the substantial liquidation of the Company’s investments in Canada during 2017, partially offset by (iii) an increase in earnings and profit participation from capital transactions related to Company’s Preferred Equity Program of $11.4 million during 2018, as compared to the corresponding period in 2017.

Net i__ncome a__ttributable to n__oncontrolling i__nterests –

The decrease in Net income attributable to noncontrolling interests of $12.9 million is primarily due to equity in income allocated to the Company’s noncontrolling interest members as a result of a distribution in excess of basis in the Albertsons joint venture during 2017.

Preferred s__tock r__edemption charge__s –

During 2017, the Company partially redeemed its Class I Preferred Stock shares, and as a result, the Company recorded a redemption charge of $7.0 million. This $7.0 million charge was subtracted from net income attributable to the Company to arrive at net income available to the Company’s common shareholders and used in the calculation of earnings per share for the year ended December 31, 2017.

Preferred dividend__s –

The increase in Preferred dividends of $11.6 million is primarily due to the issuances of Class L Preferred Stock and Class M Preferred Stock in 2017 and 2018, partially offset by the partial redemption of Class I Preferred Stock in 2017.

Comparison of Years Ended December 31, 201****7 to 201****6

The following table presents the comparative results from the Company’s Consolidated Statements of Income for the year ended December 31, 2017, as compared to the corresponding period in 2016 (in thousands, except per share data):

		Year Ended December 31,
		2017				2016				$ Change
Revenues
Revenues from rental properties (1)		$	912,670			$	893,365			$	19,305
Reimbursement income (1)			247,563				239,015				8,548
Other rental property income (1)			23,552				20,021				3,531
Management and other fee income			17,049				18,391				(1,342	)
Operating expenses
Rent			(11,145	)			(10,993	)			(152	)
Real estate taxes			(157,196	)			(146,615	)			(10,581	)
Operating and maintenance (1)			(169,552	)			(171,416	)			1,864
General and administrative (1)			(91,690	)			(86,796	)			(4,894	)
Provision for doubtful accounts			(5,630	)			(5,563	)			(67	)
Impairment charges			(67,331	)			(93,266	)			25,935
Depreciation and amortization			(360,811	)			(355,320	)			(5,491	)
Gain on sale of operating properties/change in control of interests (1)			93,538				92,823				715
Other income/(expense)
Other income, net			2,559				5,425				(2,866	)
Interest expense			(191,956	)			(192,549	)			593
Early extinguishment of debt charges			(1,753	)			(45,674	)			43,921
Benefit/(provision) for income taxes, net			880				(78,583	)			79,463
Equity in income of joint ventures, net			60,763				218,714				(157,951	)
Gain on change in control of joint venture interests			71,160				57,386				13,774
Equity in income of other real estate investments, net			67,001				27,773				39,228
Net income attributable to noncontrolling interests			(13,596	)			(7,288	)			(6,308	)
Preferred stock redemption charges			(7,014	)			-				(7,014	)
Preferred dividends			(46,600	)			(46,220	)			(380	)
Net income available to the Company's common shareholders		$	372,461			$	332,630			$	39,831
Net income available to the Company's common shareholders:
Diluted per share		$	0.87			$	0.79			$	0.08

	(1)	The Company reclassified $239.0 million of Reimbursement income and $20.0 million of Other rental property income from Revenues from rental properties on the Company’s Consolidated Statements of Income for the year ended December 31, 2016. The Company reclassified $30.5 million from General and administrative to Operating and maintenance on the Company’s Consolidated Statements of Income for the year ended December 31, 2016. The Company reclassified $6.0 million from Gain on sale of operating properties/change in control of interests to (Provision)/benefit for income taxes, net on the Company’s Consolidated Statements of Income for the year ended December 31, 2016. See Footnote 1 of the Notes to the Consolidated Financial Statements for further discussion.

Net income available to the Company’s common shareholders was $372.5 million for the year ended December 31, 2017, as compared to $332.6 million for the comparable period in 2016. On a diluted per share basis, net income available to the Company for the year ended December 31, 2017 was $0.87 as compared to $0.79 for the comparable period in 2016. For additional disclosure, see Footnote 23 of the Notes to Consolidated Financial Statements included in this Form 10-K.

The following describes the changes of certain line items included in Net income available to the Company’s common shareholders on the Company’s Consolidated Statements of Income, which it believes represent items that have significant changes during the year ended December 31, 2017, as compared to the corresponding periods in 2016:

Revenue from rental properties –

The increase in Revenues from rental properties of $19.3 million is primarily from the combined effect of (i) the acquisition/consolidation of operating properties during 2017 and 2016, which provided incremental revenues for the year ended December 31, 2017 of $43.5 million, as compared to the corresponding period in 2016, and (ii) the completion of certain redevelopment projects, tenant buyouts and net growth in the current portfolio, which provided incremental revenues for the year ended December 31, 2017 of $0.4 million, as compared to the corresponding period in 2016, partially offset by (iii) a decrease in revenues of $24.6 million from properties sold during 2017 and 2016.

Reimbursement income –

The increase in Reimbursement income of $8.5 million is primarily from the combined effect of (i) the acquisition/consolidation of operating properties during 2017 and 2016, which provided incremental revenues for the year ended December 31, 2017 of $12.9 million, as compared to the corresponding period in 2016, and (ii) increased occupancy rates, the nature and timing of spending and net growth in recovery rates for the current portfolio, which provided incremental reimbursement income for the year ended December 31, 2017 of $2.1 million, as compared to the corresponding period in 2016, partially offset by (iii) a decrease in revenues of $6.5 million from properties sold during 2017 and 2016.

Other rental income –

The increase in Other rental income of $3.5 million is primarily from the combined effect of (i) the acquisition/consolidation of operating properties during 2017 and 2016, which provided incremental revenues for the year ended December 31, 2017 of $1.1 million, as compared to the corresponding period in 2016, and (ii) the completion of certain redevelopment projects, tenant buyouts and net growth in the current portfolio, which provided incremental revenues for the year ended December 31, 2017 of $2.4 million, as compared to the corresponding period in 2016.

Real e__state t__axes –

The increase in Real estate taxes of $10.6 million is primarily due to (i) an increase of $8.4 million related to the acquisition and consolidation of operating properties during 2017 and 2016, and (ii) an overall net increase of $5.0 million primarily due to refunds received during 2016, partially offset by (iii) a decrease of $2.8 million resulting from properties sold during 2017 and 2016.

General and administrative –

The increase in General and administrative costs of $4.9 million due to an increase in severance and personnel costs.

Impairment c__harges –

During the years ended December 31, 2017 and 2016, the Company recognized impairment charges related to adjustments to property carrying values of $67.3 million and $93.3 million, respectively, for which the Company’s estimated fair values were primarily based upon (i) signed contracts or letters of intent from third party offers or (ii) discounted cash flow models. These adjustments to property carrying values were recognized in connection with the Company’s efforts to market certain properties and management’s assessment as to the likelihood and timing of such potential transactions. Also, the Company re-evaluated its long-term plan for a single property due to unfavorable local market conditions. Certain of the calculations to determine fair value utilized unobservable inputs and as such are classified as Level 3 of the fair value hierarchy. For additional disclosure, see Footnotes 6 and 15 of the Notes to Consolidated Financial Statements included in this Form 10-K.

Depreciation and a__mortization –

The increase in Depreciation and amortization of $5.5 million is primarily due to (i) an increase of $21.8 million related to the acquisition/consolidation of operating properties during 2017 and 2016, and (ii) an increase of $15.2 million related to the acceleration of depreciable lives of assets due to demolition within the Company’s redevelopment projects in 2017 and 2016, partially offset by (iii) a decrease of $31.5 million resulting from property dispositions and tenant vacates in 2017 and 2016.

Gain on sale of operating properties/change in control of interests –

During 2017, the Company disposed of 25 operating properties and nine parcels, in separate transactions, for an aggregate sales price of $352.2 million. These transactions resulted in (i) an aggregate gain of $93.5 million and (ii) aggregate impairment charges of $17.1 million. During 2016, the Company disposed of 30 operating properties and two parcels, in separate transactions, for an aggregate sales price of $378.7 million. These transactions resulted in an aggregate gain of $92.8 million and aggregate impairment charges of $37.2 million.

Early e__xtinguishment of d__ebt c__harges –

During 2017, the Company incurred early Extinguishment of debt charges aggregating $1.8 million in connection with the tender premium on Medium Term Notes that were partially tendered prior to maturity. During 2016, the Company incurred early extinguishment of debt charges aggregating $45.7 million in connection with the optional make-whole provisions of unsecured notes that were repaid prior to maturity and prepayment penalties on a mortgage encumbering 10 operating properties, which the Company also paid prior to the scheduled maturity date.

(P__rovision_)__/benefit_ for i__ncome t__axes, n__et –

The change in (Provision)/benefit for income taxes, net of $79.5 million is primarily due to (i) a decrease in tax expense of $63.5 million resulting from the recognition of a valuation allowance as a result of the Company’s merger of its taxable REIT subsidiary into a wholly owned LLC of the Company on August 1, 2016, (ii) a decrease in foreign tax expense of $30.4 million primarily relating to the sale of certain unconsolidated properties during 2016 within the Company’s Canadian portfolio which were subject to foreign taxes at a consolidated reporting entity level and (iii) a decrease in tax expense of $6.0 million resulting from the sales of properties during 2017, partially offset by (iv) a decrease in tax benefit of $17.1 million primarily related to impairment charges recognized during 2016, (v) a tax refund during 2016 of $2.0 million resulting from the favorable settlement of a tax audit and (vi) an increase in tax expense of $1.1 million due to effects of changes in U.S. tax law, which lowered corporate tax rates impacting the amounts relating to the Company’s deferred tax assets and liabilities within its TRS.

Equity in i__ncome of j__oint v__entures, n__et –

The decrease in Equity in income of joint ventures, net of $158.0 million is primarily due to (i) a decrease in net gains of $158.1 million resulting from fewer sales of properties and ownership interests within various joint venture investments during 2017 as compared to 2016, (ii) lower equity in income of $5.3 million primarily resulting from the sales of properties within various joint venture investments and the acquisition of partnership interests in joint ventures by the Company during 2017 and 2016, and (iii) the recognition of a cumulative foreign currency translation loss of $4.8 million as a result of the substantial liquidation of the Company’s investments in Canada during 2017, partially offset by (iv) a decrease in impairment charges of $10.2 million recognized during 2017 as compared to 2016.

Gain on c__hange in c__ontrol of joint venture i__nterests –

During 2017, the Company acquired, in separate transactions, a controlling interest in three operating properties from certain joint venture partners in which the Company had noncontrolling interests. As a result of these transactions, the Company recorded an aggregate gain on change in control of interests of $71.2 million related to the fair value adjustment associated with its previously held equity interest in these operating properties. During 2016, the Company acquired, in separate transactions, a controlling interest in nine operating properties and one development project from certain joint venture partners in which the Company had noncontrolling interests. As a result of these transactions, the Company recorded a gain on change in control of interests of $57.4 million related to the fair value adjustment associated with its previously held equity interest in these operating properties and the development project.

Equity in i__ncome from o__ther r__eal e__state i__nvestments, n__et –

The increase in Equity in income from other real estate investments, net of $39.2 million is primarily due to (i) an increase of $34.6 million in equity in income from the Albertsons joint venture resulting from cash distributions received in excess of the Company’s carrying basis during 2017 and (ii) the recognition of a cumulative foreign currency translation gain of $14.8 million as a result of the substantial liquidation of the Company’s investments in Canada during 2017, partially offset by (iii) a decrease in earnings and profit participation from capital transactions related to Company’s Preferred Equity Program of $10.1 million during 2017, as compared to the corresponding period in 2016.

Net income attributable to noncontrolling interests –

The increase in Net income attributable to noncontrolling interests of $6.3 million is primarily due to (i) an increase of $10.9 million in equity in income attributable to the Company’s noncontrolling partners in the Albertsons joint venture during 2017, partially offset by (ii) lower equity in income of $4.4 million resulting from the redemption of certain noncontrolling interests, the sales of properties within various joint venture investments and/or acquisition/consolidation of ownership interests in joint ventures by the Company during 2017 and 2016.

Preferred s__tock r__edemption charge__s –

During 2017, the Company partially redeemed its Class I Preferred Stock shares and as a result, the Company recorded a non-cash redemption charge of $7.0 million. This $7.0 million charge was subtracted from net income attributable to the Company to arrive at net income available to the Company’s common shareholders and used in the calculation of earnings per share for the year ended December 31, 2017.

Liquidity and Capital Resources

The Company’s capital resources include accessing the public debt and equity capital markets, mortgage and construction loan financing, and immediate access to an unsecured revolving credit facility (the “Credit Facility”) with bank commitments of $2.25 billion which can be increased to $2.75 billion through an accordion feature.

The Company’s cash flow activities are summarized as follows (in thousands):

		Year Ended December 31,
		2018****				2017****
Cash and cash equivalents, beginning of year		$	238,513			$	142,486
Net cash flow provided by operating activities			637,936				614,181
Net cash flow provided by/(used for) investing activities			253,645				(294,280	)
Net cash flow used for financing activities			(986,513	)			(223,874	)
Change in cash and cash equivalents			(94,932	)			96,027
Cash and cash equivalents, end of year		$	143,581			$	238,513

Operating Activities

The Company anticipates that cash on hand, cash flows from operations, borrowings under its Credit Facility, and the issuance of equity and public debt, as well as other debt and equity alternatives, will provide the necessary capital required by the Company.

Cash flows provided by operating activities for the year ended December 31, 2018, were $637.9 million, as compared to $614.2 million for the comparable period in 2017. The increase of $23.7 million is primarily attributable to:

	●	the acquisition of operating properties during 2017;

	●	new leasing, expansion and re-tenanting of core portfolio properties;

	●	an increase in distributions from the Company’s joint venture programs; and

	●	a decrease in interest expense; partially offset by

	●	changes in operating receivables and payables due to timing of receipts and payments; and

	●	the disposition of operating properties during 2018 and 2017.

During the years ended December 31, 2018 and 2017, the Company capitalized personnel costs of $14.8 million and $16.1 million, respectively, relating to deferred leasing costs.

Investing Activities

Cash flows provided by investing activities were $253.6 million for 2018, as compared to cash flows used for investing activities of $294.3 million for 2017.

Investing activities during 2018 consisted primarily of:

Cash inflows:

	●	$754.7 million in proceeds from the sale of 54 operating properties (including the deconsolidation of one property), seven out-parcels and 10 land parcels;

	●	$34.0 million in reimbursements of investments and advances to real estate joint ventures and reimbursements of investments and advances to other real estate investments, primarily related to disposition of properties and loan refinancing within the joint venture portfolio and the Company’s Preferred Equity Program;

	●	$22.3 million in collection of mortgage loans receivable; and

	●	$16.2 million in proceeds from insurance casualty claims in connection with Hurricane Maria which damaged several of the Company’s properties in Puerto Rico during 2017.

Cash outflows:

	●	$526.9 million for improvements to operating real estate related to the Company’s active redevelopment pipeline and improvements to real estate under development;

	●	$36.1 million for investments in and advances to real estate joint ventures, primarily related to a redevelopment project within the Company’s joint venture portfolio; and

	●	$10.0 million for acquisition of operating real estate and other related net assets, including two land parcels, and the acquisition of a land parcel at one development project.

Investing activities during 2017 consisted primarily of:

Cash in__flows:

	●	$181.3 million in proceeds from the sale of 25 operating properties and nine parcels; and

	●	$96.5 million in reimbursements of investments and advances to real estate joint ventures, primarily related to disposition of properties within the joint venture portfolio, and reimbursements of investments and advances to other real estate investments, primarily related to the distribution from the Albertsons joint venture.

Cash out__flows_:_

	●	$367.1 million for improvements to operating real estate related to the Company’s active redevelopment pipeline and improvements to real estate under development;

	●	$163.9 million for acquisition of operating real estate and other related net assets, including seven operating properties and six parcels, and acquisition of real estate under development related to one development project;

	●	$35.3 million for investments in and advances to real estate joint ventures, primarily related to a redevelopment project and the repayment of a mortgage within the Company’s joint venture portfolio; and

	●	$9.8 million for investment in marketable securities.

Acquisitions of Operating Real Estate and Other Related Net Assets

During the years ended December 31, 2018 and 2017, the Company expended $5.4 million and $153.9 million, respectively, towards the acquisition of operating real estate properties. The Company anticipates spending approximately $50.0 million to $75.0 million towards the acquisition of operating properties during 2019. The Company intends to fund these acquisitions with cash flow from operating activities, proceeds from property dispositions and availability under its Credit Facility.

Improvements to Operating Real Estate

During the years ended December 31, 2018 and 2017, the Company expended $290.9 million and $206.8 million, respectively, towards improvements to operating real estate. These amounts consist of the following (in thousands):

		Year Ended December 31,
		2018				2017
Redevelopment and renovations		$	220,829			$	177,840
Tenant improvements and tenant allowances			67,624				16,995
Other			2,421				11,965
Total (1)		$	290,874			$	206,800

	(1)	During the years ended December 31, 2018 and 2017, the Company capitalized interest of $3.6 million and $3.5 million, respectively, and capitalized payroll of $7.1 million and $3.1 million, respectively, in connection with the Company’s improvements to operating real estate.

The Company has an ongoing program to redevelop and re-tenant its properties to maintain or enhance its competitive position in the marketplace. The Company is actively pursuing redevelopment opportunities within its operating portfolio which it believes will increase the overall value by bringing in new tenants and improving the assets’ value. The Company has identified three categories of redevelopment, (i) large scale redevelopment, which involves demolishing and building new square footage, (ii) value creation redevelopment, which includes the subdivision of large anchor spaces into multiple tenant layouts, and (iii) creation of out-parcels and pads located in the front or adjacent to its existing shopping center properties. The Company anticipates its capital commitment toward these redevelopment projects and re-tenanting efforts during 2019 will be approximately $200.0 million to $250.0 million. The funding of these capital requirements will be provided by proceeds from property dispositions, cash flow from operating activities and availability under the Company’s Credit Facility.

Improvements to Real Estate Under Development

The Company is engaged in select real estate development projects, which are expected to be held as long-term investments. As of December 31, 2018, the Company had in progress two active consolidated real estate development projects and one additional project held for future development. During 2018 and 2017, the Company capitalized (i) interest of $13.9 million and $11.0 million, respectively, (ii) real estate taxes, insurance and legal costs of $2.6 million and $5.7 million, respectively, and (iii) payroll of $1.9 million and $3.3 million, respectively, in connection with its real estate development projects. The Company anticipates the total remaining costs to complete its active projects to be approximately $150.0 million to $200.0 million. The Company anticipates its capital commitment toward these development projects during 2019 will be approximately $100.0 million to $150.0 million. The funding of these capital requirements will be provided by proceeds from property dispositions, cash flow from operating activities and availability under the Company’s Credit Facility.

Financing Activities

Cash flows used for financing activities were $986.5 million for 2018, as compared to $223.9 million for 2017.

Financing activities during 2018 primarily consisted of the following:

Cash in__flows:

	●	$92.3 million in proceeds from the Company’s unsecured revolving credit facility, net;

	●	$51.0 million in proceeds from construction loan financing at one of the Company’s development projects; and

	●	$33.7 million in proceeds primarily from the exercise of the Class M Preferred Stock over-allotment option.

Cash out__flows_:_

	●	$529.8 million of dividends paid;

	●	$315.1 million for the repayment of unsecured notes;

	●	$217.9 million for principal payments on debt (related to the repayment of debt on six encumbered properties), including normal amortization on rental property debt;

	●	$75.1 million for the repurchase of common stock;

	●	$13.3 million for the payment of early extinguishment of debt charges; and

	●	$6.7 million for redemption/distribution of noncontrolling interests, primarily related to the redemption of certain partnership units by consolidated subsidiaries.

Financing activities during 2017 primarily consisted of:

Cash in__flows:

	●	$1.25 billion in proceeds from issuance of the $500.0 million, the $400.0 million and the $350.0 million unsecured notes;

	●	$440.9 million in proceeds from issuance of stock, net, including the issuances of Class L Preferred Stock and Class M Preferred Stock; and

	●	$206.0 million in proceeds from mortgage loan financing.

Cash out__flows_:_

	●	$702.3 million for principal payments on debt (related to the repayment of debt on 27 encumbered properties), including normal amortization on rental property debt;

	●	$550.0 million for repayments under unsecured term loan/notes, including $300.0 million of unsecured notes and $250.0 million of unsecured term loan;

	●	$506.2 million of dividends paid;

	●	$225.0 million for the partial redemption of Class I Preferred Stock;

	●	$96.6 million for redemption/distribution of noncontrolling interests, primarily related to the redemption of certain partnership units by consolidated subsidiaries;

	●	$23.3 million for financing origination costs, primarily related to costs associated with the issuance of unsecured notes; and

	●	$17.1 million for repayments under the Company’s unsecured revolving credit facility, net.

The Company continually evaluates its debt maturities, and, based on management’s current assessment, believes it has viable financing and refinancing alternatives that will not materially adversely impact its expected financial results. The Company continues to pursue borrowing opportunities with large commercial U.S. and global banks, select life insurance companies and certain regional and local banks. The Company has noticed a continuing trend that, although pricing remains dependent on specific deal terms, generally spreads for non-recourse mortgage financing has stabilized and the unsecured debt markets are functioning well and credit spreads are at manageable levels.

Debt maturities for 2019 consist of: $45.6 million of unconsolidated joint venture debt and $26.3 million of debt included in the Company’s Preferred Equity Program, assuming the utilization of extension options where available. These debt maturities are anticipated to be repaid through operating cash flows, debt refinancing, unsecured credit facilities, proceeds from sales and partner capital contributions, as deemed appropriate.

The Company intends to maintain strong debt service coverage and fixed charge coverage ratios as part of its commitment to maintain its investment-grade senior, unsecured debt ratings. The Company may, from time-to-time, seek to obtain funds through additional common and preferred equity offerings, unsecured debt financings and/or mortgage/construction loan financings and other capital alternatives.

Since the completion of the Company’s IPO in 1991, the Company has utilized the public debt and equity markets as its principal source of capital for its expansion needs. Since the IPO, the Company has completed additional offerings of its public unsecured debt and equity, raising in the aggregate over $13.8 billion. Proceeds from public capital market activities have been used for the purposes of, among other things, repaying indebtedness, acquiring interests in open-air shopping centers, funding real estate under development projects, expanding and improving properties in the portfolio and other investments.

During February 2018, the Company filed a shelf registration statement on Form S-3, which is effective for a term of three years, for the future unlimited offerings, from time-to-time, of debt securities, preferred stock, depositary shares, common stock and common stock warrants. The Company, pursuant to this shelf registration statement may, 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 (See Footnotes 12 and 13 of the Notes to Consolidated Financial Statements included in this Form 10-K).

Preferred Stock –

During January 2018, the underwriting financial institutions for the Class M Preferred Stock issuance elected to exercise the over-allotment option and as a result, the Company issued an additional 1,380,000 Class M Depositary Shares, each representing a one-thousandth fractional interest in a share of the Company's 5.250% Class M Cumulative Redeemable Preferred Stock, $1.00 par value per share. The Company received net proceeds before expenses of $33.4 million from this over-allotment issuance.

Share Repurchase Program –

During February 2018, the Company’s Board of Directors authorized a share repurchase program, which is effective for a term of two years, pursuant to which the Company may repurchase shares of its common stock, par value $0.01 per share, with an aggregate gross purchase price of up to $300.0 million. During the year ended December 31, 2018, the Company repurchased 5,100,000 shares for an aggregate purchase price of $75.1 million (weighted average price of $14.72 per share). As of December 31, 2018, the Company had $224.9 million available under this share repurchase program.

Senior Notes –

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 **12/31/**18
Consolidated Indebtedness to Total Assets		<65%		37%
Consolidated Secured Indebtedness to Total Assets		<40%		4%
Consolidated Income Available for Debt Service to Maximum Annual Service Charge		>1.50x		6.0x
Unencumbered Total Asset Value to Consolidated Unsecured Indebtedness		>1.50x		2.6x

For a full description of the various indenture covenants refer to the Indenture dated September 1, 1993; the First Supplemental Indenture dated August 4, 1994; the Second Supplemental Indenture dated April 7, 1995; the Third Supplemental Indenture dated June 2, 2006; the Fourth Supplemental Indenture dated April 26, 2007; the Fifth Supplemental Indenture dated as of September 24, 2009; the Sixth Supplemental Indenture dated as of May 23, 2013; and the Seventh Supplemental Indenture dated as of April 24, 2014, each as filed with the SEC. See the Exhibits Index for specific filing information.

During the year ended December 31, 2018, the Company repaid the following notes (dollars in millions):

Type			Date Paid			Amount Repaid				Interest Rate		Maturity Date
Senior unsecured notes (1)			Aug-18			$	300.0			6.875%		Oct-19
Senior unsecured notes (2)			Jun-18 & Jul-18			$	15.1			3.200%		May-21

	(1)	The Company recorded an early extinguishment of debt charge of $12.8 million resulting from the early repayment of these notes.

	(2)	Represents partial repayments. As of December 31, 2018, these notes had an outstanding balance of $484.9 million.

Credit Facility –

The Company has a $2.25 billion unsecured revolving credit facility (the “Credit Facility”) with a group of banks, which is scheduled to expire in March 2021, with two additional six-month options to extend the maturity date, at the Company’s discretion, to March 2022. This Credit Facility, which accrues interest at a rate of LIBOR plus 87.5 basis points (3.31% as of December 31, 2018), can be increased to $2.75 billion through an accordion feature. In addition, the Credit Facility includes a $500.0 million sub-limit which provides the Company the opportunity to borrow in alternative currencies including Canadian Dollars (“CAD”), 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 December 31, 2018, the Credit Facility had a balance of $100.0 million outstanding and $0.3 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 in compliance with these covenants. The financial covenants for the Credit Facility are as follows:

Co****venant		Must Be		As of **12/31/**18
Total Indebtedness to Gross Asset Value (“GAV”)		<60%		38%
Total Priority Indebtedness to GAV		<35%		3%
Unencumbered Asset Net Operating Income to Total Unsecured Interest Expense		>1.75x		4.2x
Fixed Charge Total Adjusted EBITDA to Total Debt Service		>1.50x		3.0x

For a full description of the New Credit Facility’s covenants refer to the Amended and Restated Credit Agreement dated as of February 1, 2017, filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K dated January 30, 2017.

Mortgages and Construction Loan Payable –

During 2018, the Company (i) deconsolidated $206.0 million of individual non-recourse mortgage debt relating to an operating property for which the Company no longer holds a controlling interest and (ii) repaid $205.6 million of maturing mortgage debt (including fair market value adjustments of $0.9 million) that encumbered six operating properties.

In August 2018, the Company closed on a construction loan commitment of $67.0 million relating to one development property. This loan commitment is scheduled to mature in August 2020, with six additional six-month options to extend the maturity date to August 2023 and bears interest at a rate of LIBOR plus 180 basis points (4.23% as of December 31, 2018). As of December 31, 2018, the construction loan had a balance of $51.0 million outstanding.

During 2018, the Company disposed of an encumbered property through foreclosure. The transaction resulted in a net decrease in mortgage debt of $12.4 million. In addition, the Company recognized a gain on forgiveness of debt of $4.3 million and relief of accrued interest expense of $3.4 million, both of which are included in Other income, net in the Company’s Consolidated Statements of Income.

In addition to the public equity and debt markets as capital sources, the Company may, from time-to-time, obtain mortgage financing on selected properties and construction loans to partially fund the capital needs of its real estate under development projects. As of December 31, 2018, the Company had over 325 unencumbered property interests in its portfolio.

Dividends –

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 evaluates the impact of the economy and capital markets availability on operating fundamentals. Since cash used to pay dividends reduces amounts available for capital investment, the Company generally intends to maintain a 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 were $529.8 million, $506.2 million and $474.0 million in 2018, 2017 and 2016, 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. On October 23, 2018, the Company’s Board of Directors declared a quarterly cash dividend of $0.28 per common share payable to shareholders of record on January 2, 2019, which was paid on January 15, 2019. Additionally, on January 29, 2019, the Company’s Board of Directors declared a quarterly cash dividend of $0.28 per common share payable to shareholders of record on April 2, 2019, which is scheduled to be paid on April 15, 2019.

The Company’s Board of Directors also declared quarterly dividends with respect to the Company’s various classes of cumulative redeemable preferred shares (Classes I, J, K, L and M). All dividends on the preferred shares are scheduled to be paid on April 15, 2019, to shareholders of record on April 1, 2019.

Hurricane Impacts –

The Company incurred no significant damage to its properties in September 2018 as a result of Hurricanes Florence, which primarily hit North and South Carolina, and Michael, which hit the Florida Panhandle.

On September 20, 2017, Hurricane Maria struck Puerto Rico as a Category 4 hurricane which resulted in widespread damage, flooding, and power outages. The Company has interests in seven operating properties located throughout Puerto Rico, aggregating 2.2 million square feet of GLA, which were variously impacted by the hurricane. The Company maintains a comprehensive property insurance policy on these properties with total coverage of up to $62.0 million, as well as business interruption insurance with coverage up to $39.3 million in the aggregate, subject to a collective deductible of $1.2 million.

The Company expects to collect property insurance proceeds (net of deductible) equal to the replacement cost of its damaged property, currently estimated to be approximately $30.3 million. As of December 31, 2018, the Company has collected property insurance proceeds totaling $20.2 million to date, which exceeds the $16.0 million previously written off due to property damage by $4.2 million. As a result, the Company recognized this excess as income included in Other income, net on the Company’s Consolidated Statements of Income for the year ended December 31, 2018.

The Company’s business interruption insurance covers lost revenues as a result of the hurricane for a period of up to one year. After the expiration of one year following the loss, the policy has 365 days of an extended period of indemnity which provides business interruption coverage in the event the properties have not fully recovered from the storm. During 2018 and 2017, the Company collected business interruption claims totaling $2.8 million and $1.6 million, respectively, from its insurance provider. Although the Company has primarily recovered its business interruption insurance claims, it will continue to assess and process any future business interruption claims for the extended period of indemnity and will submit insurance claims for its losses, if any, under its business interruption insurance policy.

Income Taxes –

The Company is subject to taxes on its activities in Canada, Puerto Rico and Mexico. In general, under local country law applicable to the structures the Company has in place and applicable treaties, the repatriation of cash to the Company from its subsidiaries and joint ventures in Canada, Puerto Rico and Mexico generally are not subject to withholding tax. The Company is subject to and also includes in its tax provision non-U.S. income taxes on certain investments located in jurisdictions outside the U.S. These investments are held by the Company at the REIT level and not in the Company’s taxable REIT subsidiary. Accordingly, the Company does not expect a U.S. income tax impact associated with the repatriation of undistributed earnings from the Company’s foreign subsidiaries.

Contractual Obligations and Other Commitments

The Company has debt obligations relating to its Credit Facility, unsecured senior notes and mortgages with maturities ranging from one year to 29 years. As of December 31, 2018, the Company’s total debt had a weighted average term to maturity of 10.5 years. In addition, the Company has non-cancelable operating leases pertaining to its shopping center portfolio. As of December 31, 2018, the Company had 31 consolidated shopping center properties that are subject to long-term ground leases where a third party owns and has leased the underlying land to the Company to construct and/or operate a shopping center. The following table summarizes the Company’s debt maturities (excluding extension options, unamortized debt issuance costs of $55.9 million and fair market value of debt adjustments aggregating $13.1 million) and obligations under non-cancelable operating leases as of December 31, 2018:

		Payments due by period (in millions)
		2019				2020				2021				2022				2023				Thereafter				Total
Long-Term Debt:
Principal (1)		$	12.7			$	160.3			$	729.8			$	640.1			$	365.5			$	3,008.3			$	4,916.7
Interest (2)		$	177.9			$	175.0			$	155.0			$	136.6			$	113.1			$	1,260.3			$	2,017.9
Operating Leases:
Ground Leases (3)		$	7.9			$	7.5			$	7.5			$	7.4			$	7.5			$	115.4			$	153.2
Office Leases		$	4.3			$	2.4			$	2.3			$	1.8			$	1.5			$	0.3			$	12.6

	(1)	Maturities utilized do not reflect extension options, which range from six months to one year.

	(2)	For loans which have interest at floating rates, future interest expense was calculated using the rate as of December 31, 2018.

	(3)	For leases which have inflationary increases, future ground rent expense was calculated using the rent based upon initial lease payment.

The Company has no secured debt scheduled to mature in 2019. The Company anticipates satisfying the remaining future maturities with a combination of operating cash flows, its Credit Facility, exercise of extension options, where available, and new debt issuances.

The Company has issued letters of credit in connection with completion and repayment guarantees for loans encumbering certain of the Company’s development and redevelopment projects and guarantee of payment related to the Company’s insurance program. As of December 31, 2018, these letters of credit aggregated $41.8 million.

In connection with the construction of its development/redevelopment projects and related infrastructure, certain public agencies require posting of performance and surety bonds to guarantee that the Company’s obligations are satisfied. These bonds expire upon the completion of the improvements and infrastructure. As of December 31, 2018, the Company had $20.6 million in performance and surety bonds outstanding.

The Company has accrued $2.8 million of non-current uncertain tax positions and related interest under the provisions of the authoritative guidance that addresses accounting for income taxes, which are included in Other liabilities on the Company’s Consolidated Balance Sheets at December 31, 2018. These amounts are not included in the table above because a reasonably reliable estimate regarding the timing of settlements with the relevant tax authorities, if any, cannot be made.

Off-Balance Sheet Arrangements

Unconsolidated Real Estate Joint Ventures

The Company has investments in various unconsolidated real estate joint ventures with varying structures. These joint ventures primarily operate shopping center properties. Such arrangements are generally with third-party institutional investors and individuals. The properties owned by the joint ventures are primarily financed with individual non-recourse mortgage loans, however, the Company, on a selective basis, has obtained unsecured financing for certain joint ventures. As of December 31, 2018, the Company did not guarantee any joint venture unsecured debt. Non-recourse mortgage debt is generally defined as debt whereby the lenders’ sole recourse with respect to borrower defaults is limited to the value of the property collateralized by the mortgage. The lender generally does not have recourse against any other assets owned by the borrower or any of the constituent members of the borrower, except for certain specified exceptions listed in the particular loan documents (see Footnote 7 of the Notes to Consolidated Financial Statements included in this Form 10-K). The table below presents debt balances within the Company’s unconsolidated joint venture investments for which the Company held noncontrolling ownership interests at December 31, 2018 (dollars in millions):

Joint Venture		Kimco Ownership Interest				Number of Properties				Mortgages and Notes Payable, Net**** (in millions)				Number of Encumbered Properties				Weighted Average Interest Rate				Weighted Average Remaining Term (months)*****
Prudential Investment Program (1)			15.0%				42			$	572.6				13				4.29	%			49.0
Kimco Income Opportunity Portfolio (2)			48.6%				39				651.4				27				4.43	%			40.4
Canada Pension Plan Investment Board			55.0%				4				84.4				1				3.85	%			54.0
Other Joint Venture Programs		Various					24				474.2				14				4.26	%			78.6
Total										$	1,782.6

• Average remaining term includes extensions

(1)	Includes an unsecured term loan of $200.0 million (excluding deferred financing costs of $0.3 million), which is scheduled to mature in August 2019, with two one-year extension options at the joint venture’s discretion, and bears interest at a rate equal to LIBOR plus 1.75% (4.18% at December 31, 2018).

(2)	Includes an unsecured revolving credit facility with an outstanding balance at December 31, 2018 of $73.3 million (excluding deferred financing costs of $0.3 million), which is scheduled to mature in September 2020, with two one-year extension options at the joint venture’s discretion, and bears interest at a rate equal to LIBOR plus 1.75% (4.18% at December 31, 2018).

As of December 31, 2018, these loans had scheduled maturities ranging from one month to 13 years and bore interest at rates ranging from 2.91% to 7.25%. Approximately $45.6 million of the aggregate outstanding loan balance matures in 2019. These maturing loans are anticipated to be repaid with operating cash flows, debt refinancing, unsecured credit facilities, proceeds from sales and partner capital contributions, as deemed appropriate (see Footnote 7 of the Notes to Consolidated Financial Statements included in this Form 10-K).

Other Real Estate Investments

The Company previously provided capital to owners and developers of real estate properties through its Preferred Equity Program. As of December 31, 2018, the Company’s net investment under the Preferred Equity Program was $176.3 million relating to 285 properties, including 273 net leased properties. As of December 31, 2018, these preferred equity investment properties had individual non-recourse mortgage loans aggregating $298.9 million (excluding fair market value of debt adjustments aggregating $15.1 million). These loans have scheduled maturities ranging from six months to six years and bear interest at rates ranging from 4.19% to 10.47%. Due to the Company’s preferred position in these investments, the Company’s share of each investment is subject to fluctuation and is dependent upon property cash flows. The Company’s maximum exposure to losses associated with its preferred equity investments is limited to its invested capital.

Funds From Operations

Funds From Operations (“FFO”) is a supplemental non-GAAP financial 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) available to the Company’s common shareholders computed in accordance with generally accepted accounting principles in the United States (“GAAP”), excluding (i) gains or losses from sales of operating real estate assets and change in control of interests, plus (ii) depreciation and amortization of operating properties and (iii) impairment of depreciable real estate and in substance real estate equity investments and (iv) after adjustments for unconsolidated partnerships and joint ventures calculated to reflect FFO on the same basis.

The Company presents FFO available to the Company’s common shareholders as it considers it an important supplemental measure of our operating performance and believes it is frequently used by securities analysts, investors and other interested parties in the evaluation of REITs, many of which present FFO available to the Company’s common shareholders when reporting results. Comparison of our presentation of FFO available to the Company’s common shareholders to similarly titled measures for other REITs may not necessarily be meaningful due to possible differences in the application of the NAREIT definition used by such REITs.

The Company also presents FFO available to the Company’s common shareholders as adjusted as an additional supplemental measure as it believes it is more reflective of its core operating performance and provides investors and analysts an additional measure to compare 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 available to the Company’s common shareholders as adjusted is generally calculated by the Company as FFO available to the Company’s common shareholders 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.

FFO is a supplemental non-GAAP financial measure of real estate companies’ operating performances, which does not represent cash generated from operating activities in accordance with GAAP and therefore should not be considered an alternative for net income or cash flows from operations as a measure of liquidity. Our method of calculating FFO available to the Company’s common shareholders and FFO available to the Company’s common shareholders 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 the Company’s common shareholders to FFO available to the Company’s common shareholders and FFO available to the Company’s common shareholders as adjusted for the three months and years ended December 31, 2018 and 2017 is as follows (in thousands, except per share data):

		Three Months Ended December 31,								Year Ended December 31,
		2018****				2017****				2018****				2017****
Net income available to the Company’s common shareholders		$	73,627			$	73,465			$	439,604			$	372,461
Gain on sale of operating properties/change in control of interests			(49,379	)			(31,436	)			(229,763	)			(92,830	)
Gain on sale of joint venture operating properties/change in control of interests			(12,446	)			(6,849	)			(18,549	)			(79,034	)
Depreciation and amortization - real estate related			74,086				83,959				305,079				356,191
Depreciation and amortization - real estate joint ventures			10,717				9,835				43,483				39,248
Impairment of depreciable real estate properties			50,050				32,854				83,754				65,148
Benefit for income taxes (2)			-				-				-				(39	)
Noncontrolling interests (2)			(421	)			(1,688	)			(2,891	)			(5,583	)
FFO available to the Company’s common shareholders			146,234				160,140				620,717				655,562
Transactional (income)/expense:
Profit participation from other real estate investments			(129	)			(379	)			(10,903	)			(34,952	)
Losses/(gains) from land sales			10				(2,362	)			(6,295	)			(3,422	)
Distribution in excess of basis			-				-				(3,550	)			-
Demolition costs			495				3,589				1,487				4,686
Gain on forgiveness of debt			-				(380	)			(4,274	)			(380	)
Prepayment penalties			-				-				12,762				1,753
Severance costs			-				5,190				1,185				5,190
Gain on liquidation of a foreign entity			-				-				-				(14,822	)
Insurance proceeds in excess of related loss			(2,722	)			-				(4,279	)			-
Loss on of marketable securities			1,444				-				3,487				-
Impairments on other investments			2,051				423				2,318				11,766
Preferred stock redemption charges			-				-				-				7,014
Noncontrolling interests (3)			-				-				136				11,338
Other income, net			32				170				252				502
Total transactional expense/(income), net			1,181				6,251				(7,674	)			(11,327	)
FFO available to the Company’s common shareholders as adjusted		$	147,415			$	166,391			$	613,043			$	644,235
Weighted average shares outstanding for FFO calculations:
Basic			419,258				423,734				420,641				423,614
Units			837				961				835				852
Dilutive effect of equity awards			628				354				629				405
Diluted			420,723	(1)			425,049	(1)			422,105	(1)			424,871	(1)
FFO per common share – basic		$	0.35			$	0.38			$	1.48			$	1.55
FFO per common share – diluted		$	0.35	(1)		$	0.38	(1)		$	1.47	(1)		$	1.55	(1)
FFO as adjusted per common share – basic		$	0.35			$	0.39			$	1.46			$	1.52
FFO as adjusted per common share – diluted		$	0.35	(1)		$	0.39	(1)		$	1.45	(1)		$	1.52	(1)

(1)

Reflects the potential impact if certain units were converted to common stock at the beginning of the period, which would have a dilutive effect on FFO. FFO would be increased by $228 and $274 for the three months ended December 31, 2018 and 2017, respectively, and $916 and $923 for the years ended December 31, 2018 and 2017, respectively. The effect of other 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.

(2)	Related to gains, impairment and deprecation on depreciable real estate properties, where applicable.

(3)	Related to transaction (income)/expense, where applicable.

Same Property Net Operating Income (“Same property NOI”)

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. The Company considers Same property NOI as an important operating performance measure because it is frequently used by securities analysts and investors to measure only the net operating income of properties that have been owned by the Company for the entire current and prior year reporting periods. It excludes properties under redevelopment, development and pending stabilization; properties are deemed stabilized at the earlier of (i) reaching 90% leased or (ii) one year following a project’s inclusion in operating real estate. Same property NOI assists in eliminating disparities in net income due to the development, acquisition or disposition of properties during the particular period presented, and thus provides a more consistent performance measure for the comparison of the Company's properties.

Same property NOI is calculated using revenues from rental properties (excluding straight-line rent adjustments, lease termination fees and amortization of above/below market rents) less charges for bad debt, operating and maintenance expense, real estate taxes and rent expense plus the Company’s proportionate share of Same property NOI from unconsolidated real estate joint ventures, calculated on the same basis. The Company’s method of calculating Same property NOI available to the Company’s common shareholders may differ from methods used by other REITs and, accordingly, may not be comparable to such other REITs.

The following is a reconciliation of Net income available to the Company’s common shareholders to Same property NOI (in thousands):

		Three Months Ended December 31,								Year Ended December 31,
		2018****				2017				2018				2017
Net income available to the Company’s common shareholders		$	73,627			$	73,465			$	439,604			$	372,461
Adjustments:
Management and other fee income			(2,397	)			(4,593	)			(15,159	)			(17,049	)
General and administrative			20,022				27,972				87,797				91,690
Impairment charges			45,352				33,051				79,207				67,331
Depreciation and amortization			74,266				85,024				310,380				360,811
Gain on sale of operating properties/change in control of interests			(49,379	)			(31,436	)			(229,840	)			(93,538	)
Interest and other expense, net			44,515				53,380				183,060				191,150
Provision/(benefit) for income taxes, net			2,583				1,344				1,600				(880	)
Gain on change in control of joint venture interests			-				-				-				(71,160	)
Equity in income of other real estate investments, net			(4,462	)			(5,049	)			(29,100	)			(67,001	)
Net (loss)/income attributable to noncontrolling interests			(214	)			(330	)			668				13,596
Preferred stock redemption charges			-				-				-				7,014
Preferred dividends			14,534				11,431				58,191				46,600
Non same property net operating income			(20,269	)			(47,533	)			(118,690	)			(169,513	)
Non-operational expense from joint ventures, net			13,219				9,359				60,417				72,970
Same property NOI		$	211,397			$	206,085			$	828,135			$	804,482

Same property NOI increased by $5.3 million or 2.6% for the three months ended December 31, 2018, as compared to the corresponding period in 2017. This increase is primarily the result of (i) an increase of $5.6 million related to lease-up and rent commencements in the portfolio, partially offset by (ii) an increase of $0.2 million of credit losses and (iii) a decrease in other property income of $0.1 million.

Same property NOI increased by $23.7 million or 2.9% for the year ended December 31, 2018, as compared to the corresponding period in 2017. This increase is primarily the result of (i) an increase of $24.6 million related to lease-up and rent commencements in the portfolio, partially offset by (ii) a decrease in other property income of $0.5 million and (iii) an increase of $0.4 million of credit losses.

Effects of Inflation

Many of the Company's long-term leases contain provisions designed to mitigate the adverse impact of inflation. Such provisions include clauses enabling the Company to receive payment of additional rent calculated as a percentage of tenants' gross sales above pre-determined thresholds, which generally increase as prices rise, and/or escalation clauses, which generally increase rental rates during the terms of the leases. Such escalation clauses often include increases based upon changes in the consumer price index or similar inflation indices. In addition, many of the Company's leases are for terms of less than 10 years, which permits the Company to seek to increase rents to market rates upon renewal. Most of the Company's leases include escalation clauses or require the tenant to pay an allocable share of operating expenses, including common area maintenance costs, real estate taxes and insurance, thereby reducing the Company's exposure to increases in costs and operating expenses resulting from inflation.

New Accounting Pronouncements

See Footnote 1 of the Notes to Consolidated Financial Statements included in this Form 10-K.