Kimco Unveils 4Q Transaction Update - Analyst Blog
January 08 2013 - 9:00AM
Zacks
Kimco Realty Corp.
(KIM), a real estate investment trust
(REIT), recently provided an update on the portfolio restructuring
activities it undertook in the fourth quarter of 2012. During the
quarter, the company’s overall transaction volume exceeded $1.2
billion.
Acquisitions
Kimco acquired nine new properties in the quarter. The purchases of
City Heights Retail Village, Savi Ranch and Metro New York Grocery
Portfolio were the noteworthy ones.
San Diego-based City Heights Retail Village is a grocery anchored
property spanning 109,000 square feet. The property, acquired for
$35.6 million, is positioned in the upscale downtown location. Savi
Ranch, an unencumbered retail center, is situated in prosperous
town of Los Angeles, Yorba Linda. The retail center, which spans
161,000 square feet, was acquired for $34.5 million. Metro New York
Grocery Portfolio was acquired for $26.1 million. The 59,000
square-feet urban portfolio comprises five fully-leased
properties.
In addition, Kimco acquired two joint venture-owned properties –
Greeley Commons and Snowden Square Shopping Center. Colorado-based
Greeley Commons spans 139,000 square feet and is fully occupied.
Kimco acquired the remaining 89% stake in the unencumbered shopping
center for $23.4 million. Snowden Square Shopping Center is
positioned in Columbia, Maryland. Kimco bought the 58%
remaining share in the property for $6.2 million.
The abovementioned acquisitions provided Kimco with a strong tenant
base of world-class retailers with long-term leases, such as
Bed Bath & Beyond Inc.
(BBBY), OfficeMax Incorporated
(OMX), Family Dollar Stores Inc.
(FDO) and The Home Depot, Inc.
(HD).
For the full year 2012, Kimco acquired a total of 27 shopping
centers for a gross price of $653.6 million. This includes
acquisition of interests in three Canada-based shopping centers for
$113.6 million.
Dispositions
Kimco sold 34 U.S. retail properties, spanning 3.9 million square
feet, for $246.1 million in the quarter. Among these, the key
dispositions include the divestiture of a shopping center portfolio
in Ohio for $65.1 million as well as an Ohio and Indiana portfolio
for $66 million.
For the full year 2012, Kimco sold 68 U.S. shopping centers,
spanning around 7.7 million square feet, for $631.8 million. Since
the launch of its asset recycling program in 2010, Kimco has sold
110 properties, spanning 10.9 million square feet, for $843.9
million.
Our Viewpoint
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. This augurs well for
its earnings going forward as the properties are positioned mostly
in high-income, high-growth areas. Moreover, the high credit tenant
retention limits the downside risk and provides a long-term steady
source of income for the company.
Kimco is scheduled to release its fourth-quarter 2012 results on
February 5, 2013. The Zacks Consensus Estimate for the fourth
quarter FFO (fund from operations) is currently pegged at 31 cents
per share.
The company’s fourth-quarter FFO will likely miss the Zacks
Consensus Estimate as its earnings ESP (expected surprise
prediction) is negative 3.23%. Kimco currently carries a Zacks #3
Rank (Hold). Also, we maintain our long-term ‘Neutral’
recommendation on the stock.
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.
BED BATH&BEYOND (BBBY): Free Stock Analysis Report
FAMILY DOLLAR (FDO): Free Stock Analysis Report
HOME DEPOT (HD): Free Stock Analysis Report
KIMCO REALTY CO (KIM): Free Stock Analysis Report
OFFICEMAX INC (OMX): Free Stock Analysis Report
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