Kimco Selling Hotel Assets In Effort To Purge Non-Retail
June 09 2011 - 4:13PM
Dow Jones News
Kimco Realty Corp. (KIM) is selling a small hotel company it
acquired in 2007 as part of the shopping centers landlord's plan to
shed all of its non-retail assets over the next few years.
The company is marketing InTown Hospitality Corp., the largest
owner and operator of budget extended-stay hotels in the U.S.
including the brand InTown Suites. The portfolio comprises 138
hotels, 17,978 rooms and is valued at roughly $100 million. Kimco,
the nation's largest shopping center landlord, has a 75% stake in
the hotel company company. The company's partners Caisse de depot,
a Canadian fund manager and Westmont Hospitality Group own the
remaining stake.
"We want to make Wall Street comfortable that we are focusing on
being a neighborhood and shopping centers company" solely, said
David Henry, chief executive of Kimco. He noted the sale, being
handled by Citigroup, is the largest yet of its non-retail
properties which the company hopes to entirely shed by 2013. As of
the end of April, Kimco reduced its non-retail assets to $612
million compared to $1.2 billion at the end of the first quarter in
2009. Kimco says it also plans to sell some office and condominium
properties in Chicago, Philadeplhia and New York worth about $200
million.
Moving forward, Henry said the company's strategy is to focus on
acquiring new properties via joint ventures, which include doing
more investing in retail real estate on behalf of pension funds and
insurance companies.
The real estate investment trust declined to disclose the asking
price. The deal comes at a time when Kimco's shares are
underperforming, down nearly 1% year-to-date, as the shopping
centers industry makes a much slower recovery that other parts of
commercial real estate like office and apartments.
This "helps to reorient the company," said Alexander Goldfarb, a
REIT analyst at Sandler O'Neill+Partners. He added that Kimco
"veered off the path" after forming a lot of complicated joint
ventures in non-retail that hurt the company during the credit
crisis.
-By A.D. Pruitt, Dow Jones Newswires; 212-416-2197;
angela.pruitt@dowjones.com
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