Kimco's Pentagon Centre To Capitalize On Amazon's HQ2 Pick

Kimco Realty Corporation’s (NYSE:KIM) Pentagon Centre Signature Series redevelopment is well poised to gain following Amazon.com Inc.'s (NASDAQ:AMZN) selection of National Landing in Arlington, VA, as one of its second headquarters.

Notably, the mixed-use redevelopment is located diagonally across Amazon’s proposed headquarter, and Phase I will be completed just in time to meet the oncoming demand anticipated in Northern Virginia and its neighborhood. In fact, Pentagon Centre’s 26-story residential tower, housing 440 luxury units, will likely enjoy favorable demand when leasing begins early 2019.

The multi-phase redevelopment will allow for additional residential, retail, office and hotel space to the existing 329,000-square-foot retail center. In fact, Phase I of the center’s redevelopment is nearly 70% funded, and will offer 7,000 square feet of ground-floor retail space, along with the residential tower.

Furthermore, Phase II will include an additional 253-unit residential tower and around 16,000 square feet of new retail space. The company has also secured additional entitlements for future expansion that could result in a developed site, enclosing 346,000 square feet of retail and 705,000 square feet of office space, along with a 200-room hotel and 693 residential units. With this, the project will likely span nearly two million square feet of area.

Along with its proximity to the proposed Amazon headquarter, the property has easy accessibility to the Pentagon City Metro Station, The Pentagon, Downtown DC, and Reagan National Airport. The project is a joint-venture initiative, with Kimco owning 55% stake.

Per management, the company’s sizable portfolio in the New York metropolitan statistical area (MSA) also stands to gain from the online giant’s choice of Long Island City, NY, as one of its second headquarters. Notably, the MSA accounts for 13.2% of the company’s annualized base rent. In fact, it owns 64 sites in the region spanning approximately 7.3 million square feet.

Kimco currently carries a Zacks Rank #3 (Hold). In the past six months, the stock has rallied 15.5% compared with the industry's 1.7% growth.

Stocks to Consider

A few better-ranked stocks from the REIT space are Iron Mountain Incorporated (NYSE:IRM) and Boston Properties, Inc. (NYSE:BXP) . You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Iron Mountain’s funds from operations (FFO) per share estimates for 2018 remained unchanged at $2.13 in 30 days’ time. The stock has gained 3.3% in a month’s time.

Boston Properties’ Zacks Consensus Estimate for 2018 FFO per share has been revised upward marginally to $6.38 in the last month. Its shares have rallied 7.6% over the past month.

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