UPDATE 2-Kimco third-quarter FFO falls 36 percent

* FFO, ex items, $0.31 meets Street view

* Lowers 2009 forecast

* Shares close down 3.8 pct, unchanged after hours (Adds outlook, further details, share price)

By Ilaina Jonas

NEW YORK, Nov 4 (Reuters) - Kimco Realty Corp (KIM.N), the largest U.S. strip mall owner and developer, reported a 36-percent drop in quarterly funds from operations, hurt by lower occupancy and stores vacated by bankrupt retailers.

The company, which also lowered its forecast for the year, reported late Wednesday that third-quarter FFO fell to $112.6 million or 30 cents per share, compared with $176.9 million, or 68 cents per share in the year-earlier period.

Excluding non-cash impairments and charges for the acceleration of deferred costs from early debt repayment, FFO was $117.9 million, or 31 cents per share, meeting the average of analysts forecasts, according to Thomson Reuters I/B/E/S.

FFO, a performance metric, removes the profit-reducing effect of depreciation, a noncash accounting item.

Kimco owns or has an interest in 914 operating properties, 805 in the United States and Puerto Rico, and others in Canada, Mexico and South America.

Occupancy at the company's shopping centers was 92.4 percent at the end of the third quarter and 91.9 percent in the United States.

For U.S. properties Kimco has operated at least a year, net operating income, which reflects the net cash the properties generate, fell 3.6 percent from a year earlier. About 2 percent of that was due to lost revenue from bankrupt tenants Linens N Things, Circuit City and Value City. The company attributed the remainder to the decline in occupancy.

Third-quarter new leases were about 0.2 percent lower than expiring ones because of lower rates to re-lease spaces formerly occupied by Linens N Things and Circuit City. Renewals were about 2.1 percent higher than prior leases.

At the end of the quarter, Kimco had no remaining debt maturities in 2009. About $1 billion, or 26 percent of total outstanding debt, is scheduled to mature during 2010 through 2012.

For 2009, the company shaved its outlook for FFO before impairments to a range of $1.30 to $1.33 per share from a previously lowered range of $1.33 to $1.38 per share. It sees FFO including items in the range of 79 cents to 82 cents, while analysts had forecast 87 cents per share.

Shares of Kimco closed down 3.8 percent at $12.48 in regular trading ahead of the release of the results, and were unchanged in after-hours activity. (Reporting by Ilaina Jonas; Editing by Tim Dobbyn)