Kimco's (KIM) Q2 Deals Exceed $1B, Streamlining Continues

Riding high on its portfolio transformation activities, Kimco Realty Corp. (NYSE:KIM) disclosed second-quarter 2016 deals worth over $1.0 billion. The company remains on track with its strategic 2020 Vision, making joint-venture buyouts and progressing on its simplification efforts, reducing the number of joint ventures (JV) and particularly pruning its Canadian portfolio.

Q2 Activity

Kimco’s second-quarter sales aggregated $696.0 million and included disposition of 34 shopping centers, totaling 4.3 million square feet, and one land parcel. The company’s share of the sales price was $562.9 million.

Specifically, the company sold interests in 22 Canadian shopping centers for a gross sales price of USD $474.4 million. Additionally, 12 unencumbered U.S. properties were disposed for a gross sales price of $220.5 million. Further, the land parcel was sold for a gross sales price of $1.1 million.

On the other hand, Kimco’s second-quarter acquisitions totaled $328.9 million, of which the company’s share was $164.4 million. Particularly, this included the acquisition of the remaining 45% ownership stake in the Oakwood Plaza shopping center and the Dania Pointe development project for a gross price of $299.2 million, together with the $100.0 million of mortgage debt assumption.

The company also bought an improved parcel for $29.8 million at the Whole Foods Market, Inc. (NASDAQ:WFM) anchored Jericho Commons shopping center situated in the prosperous community of Jericho, N.Y.

2020 Vision on Track

Importantly, Kimco remains on track with its 2020 Vision which envisages the ownership of premium assets in major metro markets in the U.S. while reduction in the joint-venture portfolio.

In fact, the company’s 2016 shopping-center disposition guidance range is $825–$975 million (Kimco’s share). Its share has already reached $820.9 million year-to-date from disposition of 29 Canadian properties for $522.8 million and sale of 18 U.S. assets for $298.1 million. Presently, Kimco has six remaining Canadian shopping centers held in JVs and the company expects their sale to occur by year end.

On the other hand, Kimco’s acquisition guidance is $450–$550 million (Kimco’s share) for full-year 2016 and year-to-date the company’s share totaled $138.0 million.

In Conclusion

Going forward, premium properties in high-growth areas, presence of well-capitalized retailers in its tenant roster, investments in high-quality neighborhood and community shopping centers, and shedding of non-core assets augur well for Kimco’s growth. But, earnings dilution led by high disposition activity and competition from other players remain causes of concern.

Kimco currently has a Zacks Rank #3 (Hold). Investors interested in the retail REIT industry can also consider other better-ranked stocks like The Macerich Company (NYSE:MAC) and Simon Property Group Inc. (NYSE:SPG) . Both the stocks has a Zacks Rank #2 (Buy).