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Retail real estate investment trust (REIT) – Kimco Realty Corp. (KIM - Analyst Report) invested $67 million to raise its stake in two ventures. The move has facilitated the company to gain stake in 70 shopping centers, occupancy levels at which averaged at approximately 96%.
The tenant list of these shopping centers includes retailers such as Bed Bath & Beyond Inc. (BBBY - Analyst Report), The Home Depot, Inc. (HD - Analyst Report), and Wal-Mart Stores Inc. (WMT - Analyst Report).
This stake acquisition is in sync with Kimco’s current focus on improving its core business line and reshuffling its joint venture investments to achieve overall efficiency.

Particularly, Kimco acquired its partner’s 9.7% stake in the Kimco Income Fund I (“KIF I”) portfolio and 3.6% interest in the Kimco Income REIT (“KIR”) joint venture. This raised the company’s ownership stake in KIF I and KIR to 39.2% and 48.6%, respectively.

Spanning 13.9 million square feet of retail space in aggregate and mainly positioned in N.Y., Va., Fla., Md., Calif., and Texas, the 12-property KIF I and 58-property KIR shopping center portfolios are strategically located in retail markets with high barriers to entry.  

Our Take

This stake acquisition by Kimco places it in a favorable position. Last month, the company also disclosed the acquisition of Marketplace at Factoria in the suburban Seattle community of Bellevue, Wash. Kimco, which earlier had a 50% ownership interest in this property, has now acquired the majority of its joint venture partner’s ownership interest in this property.

Alongside, Kimco has been trimming its non-retail assets and investments as well as non-strategic retail assets. It has been actively divesting its interests in the Mexican non-core properties to improve its core business operations. Hence, backed by its solid operating platform, we expect this Zacks Rank #2 (Buy) stock to ride high on the growth trajectory, going forward.

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