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Riding high on its portfolio transformation activity, Kimco Realty Corp. (KIM - Analyst Report) disclosed the transactions conducted in the second quarter of 2014. This included a number of noteworthy acquisitions and divestitures concluded in the quarter.


Kimco bought 36 premium shopping centers (spanning around 3.0 million square feet) for $678.0 million. Specifically, the company acquired a New England-based portfolio comprising 24 properties (spanning 1.4-million square foot) for $270 million. The 96% occupied portfolio boasts a tenant mix of renowned retailers such as CVS Caremark Corporation (CVS - Analyst Report), Walgreen Co. (WAG - Analyst Report) and Whole Foods Market, Inc. (WFM - Analyst Report).

Moreover, Kimco acquired the remaining 60.9% stake from its joint venture partners in the 12-property KIF I portfolio for $408.0 million. This was at par with the company’s strategy of trimming down a number of assets in JVs through acquisition of the same.

Notably, since Kimco’s Investor Day in Sep 2010, it has purchased 123 premium properties (spanning 14.4 million square feet) for $2.8 billion in the U.S.


On the other hand, Kimco offloaded its ownership stake in 15 assets in its U.S. portfolio for a gross sales price of $185.6 million. Of the generated proceeds, Kimco’s share was $121.5 million. Notably, the company has sold 169 retail properties for a gross sales price of $1.4 billion, since the commencement of its U.S. non-strategic retail disposition program in Sep 2010. Kimco’s share of the reaped proceeds from the sale was around $861.8 million.

Moreover, in the Latin America Portfolio, Kimco vended four assets in Mexico for a gross sales price of 1.1 billion Mexican pesos ($82.1 million). The pro-rata share of that sale price was around 688.1 million pesos ($53.3 million) for Kimco. The move was in line with Kimco’s aim of leaving the Latin American market and redeploying the proceeds in high quality investments. 

In Conclusion

Kimco’s current focus on restructuring its portfolio and simplifying its business model is commendable. Particularly, the company intends to concentrate its future investments on the neighborhood and community shopping center assets, primarily focusing on key markets of the U.S. and Canada having demographics and household income levels higher than the national average. Going forward, solid demand for Kimco’s properties, its portfolio transformation initiative, along with easy access to capital, promises considerable upside potential.

Kimco is slated to announce its second-quarter 2014 results on Jul 29. The Zacks Consensus Estimate for funds from operations (FFO) per share for the same is pegged at 34 cents.

This retail real estate investment trust (REIT) currently carries a Zacks Rank #3 (Hold).

Note: FFO, a widely accepted and reported measure of the performance of REITs is derived by adding depreciation, amortization and other non-cash expenses to net income.

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