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Kimco Realty Corp. KIM has provided an update of its Q3 transaction activity and announced that it sold 10 shopping centers, along with two land, spanning 1.3 million square feet of space, in the quarter.
With these dispositions, the company’s third-quarter 2018 sales volume has surpassed $150 million, while year-to-date dispositions have reached $700 million. Also, the retail real estate investment trust (REIT) is on track to meet its full-year disposition target of $700-$900 million.
Specifically, the 10 shopping centers were sold off for $156.8 million, of which Kimco’s share of dispositions amounted to $153.7 million. The properties that were disposed included a 190,000-square-foot property in Harrisonburg, VA — Skyline Village — that was sold for $32.5 million, a 264,000-square-foot property in Temple, TX — Temple Towne Center — for $26.9 million, as well as a 253,000-square-foot center in Kirkwood, MO — Kirkwood Crossing — for $15.9 million.
Accordingly, dispositions for the nine-month period ended Sep 30, 2018, include the sale of 48 shopping centers and six land parcels, aggregating 6.3 million square feet. The sale price totaled $712.9 million, with Kimco’s share of the same amounting to $685.5 million. Further, these disposals were in line with the company’s projected range of blended cap rate of 7.50-8.00%.
Management noted that a favorable disposition environment, courtesy easy availability of capital and debt financing to buyers, supported Kimco’s large-scale dispositions. In addition, it believes strategic dispositions will enable the company to rationalize its footprint and position the company for constant growth in the short term.
As mall traffic continues to suffer from the increasing inclination of customers toward online shopping, retailers are reconsidering their store fleet, while others unable to contend with the likes of Amazon AMZN and Walmart WMT, have resorted to bankruptcy filing. These have cast a pall on retail REITs, including Kimco, Simon Property Group Inc. SPG and Macerich Company MAC.
Hence, amid transformation in the retail landscape, Kimco’s efforts to improve its portfolio mix and focus on major metro markets are a strategic fit. Although such efforts are encouraging for the long term, the dilutive effect on earnings from high disposition activity cannot be averted in the near term.
Additionally, shares of the company have outperformed its industry over the past six months. In fact, its shares have rallied 10.5%, against the industry’s decline of 1.3% during the same time period.
Kimco carries a Zacks Rank #3 (Hold), at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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