Retail real estate investment trust (REIT), Kimco Realty Corporation
(KIM - Analyst Report
) continues to narrow down its exposure to the Mexican assets. The latest disclosure comes from the Macquarie Mexican REIT that penned a deal to acquire 50% stake in a portfolio of 9 retail properties and additional land for $113.3 million (Ps.1.47 billion) from Kimco.
The remaining 50% would be owned by the Mexican developer and property owner, Grupo Frisa. Notably, Frisa that currently has a blended stake of 31% would acquire the rest 19% from Kimco at the same price as Macquarie.
The portfolio that Kimco is offloading spans 191,488 square meters of gross leasable area as well as an additional 67,676 square meters of land that can support future expansion moves. These properties, which are positioned in the Mexico City Metropolitan Area, Monterrey, and Guadalajara, enjoyed 88.5% occupancy as of Sep 30, 2013 with an average age of around 6 years.
Currently, Kimco intends to concentrate its future investments around the neighborhood and community shopping center segment, primarily focusing on the North American market. It is well on track to improve its business operations and is shedding its non-retail assets and investments as well as non-strategic retail assets.
In recent times, the company has aggressively pruned its Latin American portfolio and redeployed the proceeds to acquire high quality U.S. shopping center assets in its key markets, with demographics and household income levels higher than the national average.
During third-quarter 2013, Kimco and its JV partner – American Industries – divested their stake in 84 Mexican industrial assets for $603.5 million. The properties were sold to Terrafina – a Mexican REIT. Moreover, Kimco offloaded a 4-property Mexican shopping center portfolio to its local operating partner, Planigrupo, for $84 million. Additionally, Kimco sold its 43% stake in a Guadalajara, Mexico-based asset Centro Sur shopping center for $41 million.
Notably, as of Sep 30, 2013, Kimco’s Mexican investments had a book value of around $445.2 million and the company is making further efforts to narrow this exposure. On the other hand, Kimco is redeploying its capital in its core markets and accordingly, since 2010, the company has acquired 70 properties in highly affluent areas of the U.S. for $1.7 billion.
Going forward, solid demand for its properties, its portfolio restructuring activity, along with easy access to capital, promises considerable upside potential. As such, the company currently enjoys a Zacks Rank #2 (Buy). Moreover, investors interested in the retail REIT industry may consider stocks like Cedar Realty Trust, Inc.
(CDR - Snapshot Report
), General Growth Properties, Inc.
(GGP - Analyst Report
) and Regency Centers Corporation
(REG - Analyst Report
). All these stocks carry a Zacks Rank #2.