Kimco Realty Corp.
) - a retail real estate investment trust (REIT) - recently
unveiled its second-quarter 2013 transaction activities. During
the quarter, the company's investments totaled to around $172
million, while the proceeds from divestitures amounted to about
During the quarter, Kimco bought 2 former joint venture (JV)
properties namely 'The Marketplace at Factoria' and 'Canyon
Square Plaza'. The assets spanning 607,000 square feet were
acquired for $146.6 million.
Wash.-based shopping center, The Marketplace at Factoria is
situated in the prosperous Seattle community of Bellevue. The
property, which is 94% leased, boasts a cluster of retail giants
Wal-Mart Stores Inc.
). On the other hand, Calif.-based Canyon Square Plaza is in the
Los Angeles-Long Beach-Santa Ana MSA (Metropolitan Statistical
Area). The property is a grocery-anchored center and occupied by
a North American grocery company, Albertsons.
Moreover, during the quarter, Kimco increased its stake in 3
existing institutional JVs - Kimco-UBS ('KUBS'), Kimco Income
Fund I ('KIF I') and Kimco Income REIT ('KIR') - for $133.3
During second-quarter 2013, Kimco disposed 11 U.S. shopping
centers for $71.6 million, of which the company's share was $36.9
million. Since the initiation of its asset-recycling program
in 2010, Kimco has sold 121 properties spanning 11.9 million
square feet, for $907.2 million. Of this, Kimco's share was
In addition, the company sold 9 assets of its Mexican shopping
center portfolio to a local real estate operator for 3.35 billion
Mexican pesos ($274 million), of which company's share was $93
Non-Retail Portfolio Update
In tune with the monetization of non-retail assets, Kimco
reduced its non-retail investment portfolio by $177.9 million
(46%) during second-quarter 2013. Notably, the non-retail
portfolio is presently at its lowest level, since 2010, and
represents below 2% of gross assets.
Moreover, during the second quarter, Kimco and its JV partner
- American Industries - decided to sell their interests in
several trusts that hold Mexican industrial properties portfolio.
The assets proposed for sale to Terrafina - a Mexican REIT - were
valued at about $600 million.
We remain impressed with Kimco's strategic move of
restructuring the overall portfolio through divestiture of
non-strategic assets and acquisition of high-quality properties.
Moreover, acquiring interests in existing JVs go well with the
company's core operating strategy. This augurs well for future
earnings as the properties are positioned mostly in high-income,
high-growth areas. Moreover, the high credit tenant retention
limits the downside risks and provides a long-term steady source
of rental income for the company.
Kimco is scheduled to release second-quarter 2013 results on
Jul 30, after the closing bell. The Zacks Consensus Estimate for
second-quarter funds from operations (FFO) is currently pegged at
33 cents per share.
Kimco has an Earnings ESP (Read:
Zacks Earnings ESP: A Better Method
) of 0.00% for the second quarter. This, along with its Zacks
Rank #3 (Hold), reduces the chances of a positive earnings
Note: FFO, a widely accepted and reported measure of the
performance of REITs is derived by adding depreciation,
amortization and other non-cash expenses to net income.
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