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Kimco To Participate In Safeway Transaction

Kimco Realty Corp. (NYSE: KIM), the nation’s largest owner and operator of neighborhood and community shopping centers, has confirmed its participation as an investor in a Cerberus Capital Management, L.P. led consortium in connection with today's announced execution of a definitive agreement under which AB Acquisition LLC (“AB Acquisition”) will acquire all of the outstanding shares of Safeway (NYSE: SWY).

Transaction Dynamics

As part of the Safeway transaction, Kimco will contribute up to $90 million of new equity, together with its existing equity stake in the remaining Albertsons investments, and will hold a 9.94 percent ownership interest in the combined companies.

In addition to its equity position, Kimco will provide strategic counsel to the consortium, leveraging its decades of expertise in retail real estate leasing and asset positioning. The company may also have an opportunity to acquire selective real estate assets for its own account over time.

“We’re pleased to be able to build on the momentum of our Albertsons and SUPERVALU investments as part of the Safeway acquisition,” commented Milton Cooper, Kimco’s Executive Chairman. “This deal is an excellent fit with our Plus strategy of creating additional value through opportunistic investments with real estate rich retailers.”

The transaction is expected to close in the fourth quarter of 2014 following the satisfaction of customary closing conditions, including approval by the holders of a majority of the outstanding shares of Safeway common stock and regulatory approvals. The Safeway Board of Directors has unanimously approved the agreement.

History

In 2006, a Cerberus-led investment group, including several members of the new investment consortium, acquired 661 non-core Albertsons stores from Albertsons, Inc., a transaction in which Kimco invested approximately $51 million and has subsequently received approximately $245 million in cash distributions.

In 2013, the investment group acquired the remaining Albertsons stores, as well as the grocery banners of Jewel-Osco, Acme, Shaws and Star Markets, from SUPERVALU (NYSE: SVU) for $3.3 billion, with Kimco contributing approximately $37 million for a 13.6 percent equity interest. In addition, the consortium purchased approximately 21.2 percent of the outstanding SUPERVALU common stock at $4 per share. As part of this transaction, Kimco paid $33.6 million for 8.2 million shares of SUPERVALU common stock, an investment which had a $22 million unrealized gain as of March 5, 2014.

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