One of the leading retail real estate investment trusts (REIT), Kimco Realty Corp. (KIM), disclosed its fourth-quarter 2013 portfolio restructuring activities. During the quarter, the company concluded deal worth $479.9 million in fourth-quarter 2013 and $2.1 billion in 2013.
Acquisitions
During the fourth quarter, Kimco bought 14 assets, spanning over 1.5 million square feet, for $247.5 million. These are Northridge Shopping Center (Northridge, Milwaukee); Five Forks Crossing (Lilburn, Georgia); Lawrenceville Market (Lawrenceville, Georgia); Atascocita Commons (Humble, Texas); and Tomball Crossing (Houston, Texas). In addition, Kimco acquired five individual sites and the Marathon Center (Marathon, Florida); and three-property retail portfolio (New York-Newark-Jersey City metropolitan statistical area).
With these asset buyouts, Kimco strengthened its relationship with several industry leading retailers such as Kohl's Corp. (KSS), Petco, Target Corp. (TGT), Marshalls and Ross Stores Inc. (ROST).
For full-year 2013, Kimco bought 24 retail properties, totaling 3.5 million square feet, for $675.2 million. Notably, since Kimco’s Investor Day in Sep 2010, it purchased a total of 82 premium properties, spanning 10.6 million square feet, for $1.9 billion in the U.S.
Dispositions
During fourth-quarter 2013, Kimco offloaded ownership stake in 14 assets in the U.S. for a gross sales price of $192.3 million. In total in 2013, Kimco divested 35 shopping centers for a gross sales price of $349.7 million. Of the generated proceeds, Kimco’s share was $180.3 million.
Notably, the company has sold 143 retail properties for a gross sales price of $1.2 billion, since the commencement of its U.S. non-strategic retail disposition program in Sep 2010. Kimco’ share of the reaped proceeds from the sale was $684.5 million.
Furthermore, during fourth-quarter 2013, Kimco vended Latin America-based 5 mortgage-free assets and one outparcel for a gross sales price of $40.1 million. With these divestitures, that included the sale of stake in 2 Brazilian assets, Kimco exited the Brazil market.
In total, Kimco concluded the dispositions of 112 Latin American properties for a gross sales price of $1.1 billion in 2013. Of the generated proceeds, Kimco’s share was $360.3 million.
Redevelopments & Joint venture Program
During fourth-quarter 2013, Kimco finished 7 redevelopment projects totaling around $15 million. Also, the company included five projects in its pipeline with a gross cost of about $16 million.
Altogether, Kimco added 35 projects in its active redevelopment pipeline for a gross cost of approximately $109 million in 2013. This increased its total redevelopment pipeline to 262 projects, having a gross cost of around $778 million.
Moreover, the company has been striving to simplify its joint venture (JV) program and met with success. Since Sep 2010, the total JV assets dipped to 412 from 547 properties, signifying over $2 billion worth of reduction in the company’s gross real estate investment.
In Conclusion
Kimco’s successful efforts to improve its core portfolio through the divestiture of non-strategic assets and acquisition of high-quality properties are commendable. In addition, significant redevelopments pipeline is encouraging. This augurs well for its earnings going forward as the properties are positioned mostly in high-income, high-growth areas. Moreover, the high credit tenant retention limits the downside risk and provides a long-term steady source of income for the company.
Kimco is scheduled to release its fourth-quarter 2013 results on Feb 06, 2014, after the closing bell. The Zacks Consensus Estimate for third-quarter funds from operations (FFO) is currently pegged at 33 cents per share, representing a year-over-year increase of 7.53%.
Kimco currently carries a Zacks Rank #3 (Hold).
Note: FFO, a widely accepted and reported measure of the performance of REITs is derived by adding depreciation, amortization and other non-cash expenses to net income.
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