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Kimco (KIM) Boosts New York Market Presence With $376M Buyout

To enhance its presence in the high barrier-to-entry market of New York, Kimco KIM has announced the acquisition of a private, multi-generationally-owned portfolio of eight shopping centers in Long Island, NY, for $375.8 million.

The acquisition will add to Kimco’s portfolio 540,000 square feet of retail space, further strengthening its position as one of Long Island’s largest owners of grocery-anchored shopping centers with 36 assets aggregating more than 3.5 million square feet.

Moreover, with the buyout, KIM is expected to capitalize on the highly captive consumer base with some of the best demographic profiles in the country that Long Island’s ultra-infill markets have to offer. The portfolio comprises a three-mile estimated population of 95,000 with an average household income of $187,000 and is 94.4% leased.

The eight high-quality shopping centers comprise five grocery-anchored centers with a strong collection of necessity-based tenants and retailers that offer everyday goods and services. This is likely to enhance Kimco’s portfolio, a large portion of which includes grocery-anchored centers. As of third-quarter 2022 end, this segment generated 81% of Kimco’s annual base rent.

Kimco funded the purchase through the issuance of a combination of cash and redeemable units and the assumption of a 4.1% mortgage debt of $88.8 million, having a remaining term of around six years.

Per Conor Flynn, CEO of KIM, “The acquisition also brings us closer to our target of 85% of the company’s annual base rent coming from grocery anchored centers.”

Kimco has been following an opportunistic investment policy to enhance its overall portfolio quality. It has been divesting its joint venture assets that have maximized their value and utilizing the proceeds to fund acquisitions and development and redevelopment projects.  

During the third quarter, this retail REIT acquired two grocery-anchored centers for $89 million in aggregate. The centers are located in the Fishtown neighborhood of Philadelphia and Massapequa, NY, and encompass 329,000 square feet.

Further, its strong balance-sheet position supports its expansionary efforts. KIM exited the third quarter of 2022 with nearly $2.0 billion of immediate liquidity. This included $1.9 billion of availability under its $2-billion unsecured revolving credit facility and cash and cash equivalents of $124 million.

Analysts seem bullish on this Zacks Rank #3 (Hold) company. The Zacks Consensus Estimate for the company’s 2022 funds from operations (FFO) per share has been revised marginally upward over the past week to $1.58.

Shares of Kimco have lost 9.2% in the past three months compared with the industry's decline of 9.4%.

Zacks Investment Research
Zacks Investment Research


Image Source: Zacks Investment Research

Stocks to Consider

Some better-ranked stocks from the retail REIT sector are Regency Centers REG, Federal Realty Investment Trust FRT and American Assets Trust AAT, each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for Regency Centers’ current-year FFO per share is currently pegged at $3.96.

The Zacks Consensus Estimate for Federal Realty’s ongoing year’s FFO per share has presently stands at $6.21.

The Zacks Consensus Estimate for American Assets Trust’s 2022 FFO per share is pegged at $2.26, presently.

Note: Anything related to earnings presented in this write-up represent funds from operations (FFO) — a widely used metric to gauge the performance of REITs.


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