Kimco Scales New 52-Week High Riding on Acquisitions


Shares of Kimco Realty Corp. (KIM) reached a new 52-week high of $23.82 during the trading session on Wednesday, Jul 16, 2014. This was a result of increased investors’ confidence following the company’s recent acquisition of a 10-property shopping portfolio from its existing joint venture.

The closing price of $23.35 of this retail real estate investment trust (:REIT) represents a robust year-to-date return of over 20%. The average trading volume for the session was more than 1.3 million shares.

Despite hitting its 52-week high, this Zacks Rank #3 (Hold) stock has plenty of upside left, given its prudent acquisition decisions, strategic dispositions and improving fundamentals.

Growth Drivers

Kimco is making concerted efforts to transform its portfolio and simplify business through premium asset purchases and lowering of property count in its JVs. As part of this, the company recently announced the acquisition of a 10-property shopping portfolio valued at $275.8 million from its existing joint venture with SEB Asset Management, marking the company’s third JV portfolio purchase in 2014.

Spanning 1.4 million square foot, this portfolio is based in mature Mid-Atlantic markets. It is primarily grocery-anchored with 95.4% occupancy. Weis Markets and Safeway Inc. (SWY) rank among its anchors while The Kroger Co. (KR) is one of the shadow anchors. The portfolio also enjoys a lineup of reputed national retailers, which deems it a strategic buyout for Kimco. (Read: Kimco Buys a Portfolio of 10 Shopping Centers from JV).  

In addition, Kimco bought 36 premium shopping centers (spanning 3.0 million square feet) for $678.0 million in the second quarter. Moreover, the company acquired remaining 60.9% stake from its joint venture partners in the 12-property KIF I portfolio for $408.0 million. On the other hand, Kimco offloaded its ownership stake in 15 of its U.S.-based portfolio assets for a gross sales price of $185.6 million. Of the generated proceeds, Kimco’s share was $121.5 million.  

Further, Kimco is slated to announce its second-quarter results on Jul 29. The Zacks Consensus Estimate for FFO per share is currently pegged at 34 cents.

The company’s Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, stands at +2.94%. This, along with a Zacks Rank #3, makes us confident of a positive earnings beat.

Other Stocks to Consider

Apart from Kimco, another retail REIT – Federal Realty Investment Trust (FRT) – also reached its 52-week high on Jul 16.

Note: Funds from operations, a widely accepted and reported measure of REITs performance, are derived by adding depreciation, amortization and other non-cash expenses to net income.

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