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KIM Vends Mexican Assets Again

Zacks Equity Research

Kimco Realty Corp. (KIM) and its joint venture partner – American Industries – decided to vend its interests in several trusts that hold Mexican industrial properties portfolio. The move is part of Kimco’s attempts to divest its non-core Mexican assets, in order to strengthen its overall portfolio.

The deal value was about $600 million, which comprises $294 million worth beneficial trusts and mortgage debt worth $306 million. The transaction is anticipated to close by the third quarter of 2013, subject to customary conditions (including lender approvals).

The retail real estate investment trust (:REIT) agreed to sell the proposed assets to Terrafina – a Mexican REIT. Terrafina’s portfolio consists primarily of strategically positioned warehouses and other light manufacturing properties throughout the central, Bajío and northern regions of Mexico.

Notably, Kimco and American Industries have about 50.7% and 49.3% interests, respectively in the Mexican portfolio, which comprises 84 industrial properties spanning around 11 million square feet. The non-retail properties are occupied by several multi-national tenants largely for distribution, light assembly, research and development, and industrial production.

Of late, Kimco has been actively divesting its interests in Mexican non-core properties to improve its core business operations. Earlier this week, 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), which include 573 million Mexican pesos ($47 million) of mortgage debt. The company had a 47.6% interest in the assets, which spanned 2.6 million square feet and were 91% leased.

Kimco currently carries a Zacks Rank #3 (Hold). Better performing retail REITs include Cedar Shopping Centers, Inc. (CDR), Acadia Realty Trust (AKR) and AmREIT, Inc. (AMRE), all of which carry a Zacks Rank #2 (Buy).

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