Kimco Realty Goes Shopping - Analyst Blog

Kimco Realty Corporation (KIM), a real estate investment trust (REIT), has recently announced its major property transactions in fourth quarter 2010. The company acquired 4 shopping centers during the quarter spanning 982,000 square feet of retail space for approximately $151.1 million, including $50.9 million in mortgage debt.

The acquisitions were part of the long-term strategy of Kimco Realty to concentrate its investments in the neighborhood and community shopping center segment, focusing primarily on the North American market.

The acquired properties are presently 97% occupied on an average and are located in North Carolina, South Carolina, Texas and Maryland. During the quarter, Kimco Realty also converted its preferred equity interests in 5 shopping centers (totaling 329,000 square feet) into its wholly-owned portfolio for $51.6 million, including $42.6 million in mortgage debt.

Subsequent to the quarter-end, the company acquired an unencumbered 266,000 square foot shopping center in Pennsylvania for $52.0 million. This property is currently 93% occupied and is anchored by the leading retailers in the region such as BJ's Wholesale Club Inc. (BJ), Best Buy Co. Inc. (BBY) and PetSmart, Inc. (PETM).

During fourth quarter 2010, Kimco Realty sold about 8 non-core shopping center properties totaling 536,000 square feet for approximately $35.2 million. At the same time, the company monetized approximately $55.0 million in non-retail assets to increase its liquidity.

Together with its subsidiaries, Kimco Realty is the largest publicly traded owner and operator of neighborhood and community shopping centers in the U.S., with interests in 948 properties spanning 137 million square feet of space in 44 states across the country, along with Puerto Rico, Canada, Mexico, Chile, Brazil and Peru.

The company also operates complementary businesses that include merchant buildings, private preferred equity, and real estate capital and advisory services.

Kimco Realty generally signs long-term leases with strong creditworthy tenants, which limit the downside risk and provide a steady source of income. Given the current uncertainty in the capital markets, Kimco Realty has also modified its business strategy to focus on core retail competencies. This provides a strong upside potential for the top-line growth of the company.

The rating on Kimco Realty is currently ‘Neutral' with a Zacks #3 Rank, which translates into a short-term ‘Hold' recommendation and indicates that the stock is expected to perform in line with the overall U.S. equity market for the next 1−3 months.

 
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