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Kimco Realty (KIM) Disposes 7 Properties in Q1 for $101.7M

Zacks Equity Research

In sync with its efforts to fine tune the company’s portfolio, retail REIT Kimco Realty Corp. KIM announced first-quarter 2019 disposition of seven properties, aggregating 691,000 square feet for $101.7 million. The company’s share of these sales amounted to $84.9 million.

Among the dispositions were properties like Arboretum Crossing, in Austin, TX, Cave Springs shopping center in St. Peters, MI, and Palm Beach Gardens Plaza in West Palm Beach, FL.

Further, with $90.7 million in properties currently under contract, Kimco remains well poised to complete the majority of its planned dispositions in the first half of the year itself. In fact, management anticipates just a small level of sales activity for the remaining of the year to finally achieve its full-year forecast of $200-$300 million in total dispositions, net of any acquisition activity.

Kimco remains focused on strengthening its presence in high-growth markets. As part of such efforts, in the recently-concluded quarter, the company grew its footprint in Arizona and California, with a $31.2-million sale-leaseback transaction with Albertsons Companies for three grocery-anchored parcels in present Kimco shopping centers. Particularly, these included one Vons location in San Diego, CA, and two Safeway locations in Phoenix, AZ, and Truckee, CA. On a blended basis, the grocery boxes acquired generate sales of more than $775 per square foot.

Notably, a rapid shift toward e-retailing, store closures and retailer bankruptcies have emerged as pressing concerns for retail landlords, including Simon Property Group SPG, Kimco, Macerich Company MAC and Taubman Centers, Inc. TCO.

However, Kimco is on track with its 2020 Vision that envisages the ownership of high-quality assets, concentrated in major metro markets which offer several growth levers. In fact, amid transformation in the retail landscape, the company remains well poised to navigate through mall traffic blues, with focus on service and experiential tenants, and omni-channel players. Moreover, it is aimed at expanding its small shops’ portfolio. These shops basically comprise service-based industries, such as restaurants, salons and spas, personal fitness and medical practices. The shops enjoy frequent customer traffic and are Internet resistant. Amid limited new supply and favorable demographics, this diversification is likely to help Kimco limit its operating and leasing risks.

Simultaneously, Kimco is shedding its non-core assets and exiting from the company’s joint-venture portfolio. In connection to this, the company is making significant disposition of its assets. While such efforts are encouraging for the long term, the dilutive effect on earnings from high disposition activity cannot be averted in near term.

Shares of this Zacks Rank #3 (Hold) company have outperformed the industry it belongs to in the past three months. Kimco has gained 15.8%, while the industry has rallied 10.8%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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