Kimco Realty Corp. (NYSE:KIM) announced the acquisition of the remaining stake in a four property joint-venture portfolio for $170.7 million. The company also bought a 251,000-square-foot, Whole Foods (NASDAQ:WFM) -anchored open-air shopping center – Kentlands Market Square (NYSE:SQ) – in the Washington-Arlington-Alexandria metropolitan statistical area (MSA) for $95.0 million.
This move is in sync with Kimco’s 2020 Vision that envisages the ownership of premium assets in major metro markets in the U.S. as well as a reduction in the joint-venture exposure.
The Acquisition Details
The stake buyout in the four-property joint-venture portfolio included Perimeter Expo in Atlanta, GA, Cranberry Commons in Pittsburgh, PA, Cypress Towne Center in Houston, TX and Doc Stone Commons in Stafford, VA. Kimco already has a robust presence in these major metro markets.
Kimco’s purchase of this portfolio for $170.7 million included assumption of $103 million in mortgage debt. The company also prepaid $26 million in mortgage debt related to the acquired portfolio.
On the other hand, the Kentlands Market Square that Kimco acquired is anchored by Whole Foods as well as by other national tenants like PetSmart, Michaels (NASDAQ:MIK) and Starbucks (NASDAQ:SBUX) . This property is presently 69.1% occupied.
Located in the affluent, master-planned, suburban community in Gaithersburg, MD, this retail property enjoys solid trade area demographics. In fact, it has a three-mile population of 106,931 and median household income of $99,177. This is quite encouraging and makes the property a strategic buy for Kimco. There are also scopes for redevelopment, mixed-use development and densification at the site.
In Conclusion
Going forward, premium properties in high-growth areas, presence of well-capitalized retailers in its tenant roster, investments in high-quality shopping centers and shedding of non-core assets augur well for Kimco’s growth. However, earnings dilution led by high disposition activity and competition from other players remain causes of concern.
Kimco currently has a Zacks Rank #3 (Hold).
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