Riding high on its portfolio transformation activities, Kimco Realty Corp. (KIM) disclosed fourth-quarter deals worth $999 million and full-year 2014 transactions of $3.1 billion. The company has also largely liquidated its Mexican portfolio, reflecting substantial accomplishment of its effort to depart from Latin America.
Reflecting positive market sentiments, the company’s shares gained 2.59% during Wednesday’s regular trading session on the NYSE.
Specifically, in the fourth quarter, Kimco sold 66 properties for a total of $699.6 million. This included sale of ownership stake in 41 properties in the U.S. at a gross sales price of $492.3 million (Kimco’s pro-rata share was $325.8 million). These properties encompass 4.5 million square feet of space. In 2014, the company sold a total of 91 shopping centers for $1.0 billion, including $249.1 million of mortgage debt, with its shares amounting to around $710.8 million.
In Latin America, the company disposed 25 properties for a total of $207.3 million (Kimco’s pro-rata share was $192.7 million). The move was in sync with the company’s aim of leaving the Latin American market and redeploying the proceeds in high-quality investments. In full-year 2014, Kimco sold 41 properties in Latin America for a gross sales price of $622.2 million, with its pro-rata share being $496.1 million.
On the other hand, Kimco acquired 9 properties, including 8 from existing joint ventures (JV), spanning over 1.4 million square feet, for $245 million in the fourth quarter. Moreover, several land parcels for 3 new ground-up development projects were purchased for a total of $54.4 million. The acquired properties boast well-known retailers like Safeway Inc. (SWY), The Kroger Co. (KR) and Target Corp. (TGT).
In full-year 2014, Kimco acquired stake in 60 retail properties, including 33 from existing JV partners, spanning 6.7 million square feet for $1.4 billion (including $583.7 million of mortgage debt).
With an average occupancy of 95.6% and an annual base rent of $15.23 per square foot, and also solid trade area demographics, these buyouts are a strategic fit for Kimco. This is because the company is currently focused on strengthening its portfolio base in key markets of the U.S. and Canada.
As a result, Kimco is shedding its non-strategic assets and redeploying the proceeds to acquire high-quality U.S. shopping centers. We believe such efforts, along with solid demand for Kimco’s properties and easy access to capital, promise considerable upside potential.
Kimco is also involved in a deal to acquire the remaining 66.7% stake in the 39-property Kimstone portfolio from its JV partner for a pro-rata price of $925 million, including a mortgage debt assumption of around $426.7 million. The deal is expected to close in this quarter itself.
Kimco is scheduled to announce its fourth-quarter 2014 results after the closing bell on Feb 5, 2015. The Zacks Consensus Estimate for funds from operations (“FFO”) per share for the stock is pegged at 35 cents.
This retail real estate investment trust (“REIT”) currently carries a Zacks Rank #2 (Buy).
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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