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Kimco Realty (KIM) Announces $166.7M in Q3 Dispositions

Zacks Equity Research

Kimco Realty Corp. KIM has provided an update of its Q3 transaction activity. The company announced that it sold eight properties and two land parcels, aggregating 1 million square feet of space, during the September-end quarter.

With these dispositions, the company’s third-quarter 2019 sales volume totaled $166.7 million (Kimco’s share of the sales price being $70.9 million), while year-to-date dispositions have resulted in gross proceeds of $392.8 million. Also, the retail real estate investment trust (REIT) is on track to meet its full-year disposition target of $200-$300 million in net dispositions.

Specifically, the assets disposed included Shoppes at Midway Plantation, a 323,000-square-foot shopping center situated in Knightdale, NC, and Tacoma Central spanning 112,000 square feet of space in Tacoma, WA. The properties were sold for $43.6 million and $29.9 million, respectively.

The company also sold two shopping centers in California. These consisted of Corona Hills Marketplace — a 149,000-square-foot property — that was sold for $31.5 million and Fairmont Shopping Center, spanning 103,000 square feet of space, for $39.3 million.

Accordingly, dispositions for the nine-month period ended Sep 30, 2019 include 20 properties and three land parcels, aggregating 3 million square feet of space, for a combined gross sales price of $392.8 million. Moreover, through a sales-leaseback transaction, the company acquired three grocery-anchored parcels at its existing properties for $31.2 million.  

Net of this acquisition, the company’s share of year-to-date total dispositions was $200.8 million. Further, these disposals were in line with Kimco’s projected range of blended cap rate of 7.25-7.75%.

Notably, these strategic dispositions support the company’s portfolio-transformation initiatives aimed at simplifying its business structure.

Additionally, shares of this Zacks Rank #3 (Hold) company have outperformed its industry over the past three months. In fact, its shares have rallied 10% compared with the industry’s growth of 2.2% during the same time period. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The rapid shift toward e-retailing, store closures and retailer bankruptcies have long prevailed as pressing concerns for retail landlords, including Kimco, Macerich Company MAC, SITE Centers Corp. SITC and Taubman Centers, Inc. TCO.

Hence, amid transformation in the retail landscape, Kimco’s efforts to improve its portfolio mix are a strategic fit. Although such efforts are encouraging for the long run, the dilutive impact on earnings from high disposition activity cannot be averted in the near term.

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