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Retail REIT Kimco Realty Corp. (KIM - Free Report) revealed its transaction activities for first-quarter 2017. Specifically, the company disclosed acquisitions of two operating properties for a total of $43.1 million and a purchase of 90% ownership stake in a new mixed-use development project for $10.0 million.
On the other hand, the company’s first-quarter sales aggregated $113.2 million, with Kimco’s share being $65.8 million. This involved the disposition of eight shopping centers, aggregating 948,000 square feet of space and one land parcel.
Notably, Kimco remains on track with its strategic 2020 Vision, making premium asset purchase in key metro markets in the U.S., exiting non-core markets and progressing on its simplification efforts.
The company’s first-quarter 2017 transaction activities are in sync with this move. Particularly, the acquisition of Plaza Del Prado, a 142,000-square-foot, grocery-anchored shopping center in the Chicago-Naperville-Elgin MSA, for $38.0 million is a strategic buyout given that it is situated in the flourishing suburb of Glenview, IL.
The property enjoys solid trade area demographics with a population of around 83,000 and an average household income of $126,000 within a three-mile radius. The property not only has the Jewel-Osco grocery store, but also enjoys presence of national retailers like Starbucks Corporation (SBUX - Free Report) , McDonald's Corporation (MCD - Free Report) and Petco.
The other property acquired in the quarter is an improved retail parcel at the company’s Columbia Crossing shopping center, in Columbia, MD, for $5.1 million. Further, Kimco acquired a 90% ownership stake in the mixed-use development project – Lincoln Square – in the Center City district of Philadelphia. This stake acquisition was made for $10.0 million.
The mixed-use project would comprise 322 residential units. It would also include 100,000 square feet of retail space, anchored by a 36,000-square-foot small-format Target (TGT - Free Report) store, a 32,000-square-foot specialty grocer as well as a 16,000-square-foot PetSmart, per the company’s press release. This project also enjoys solid demographics, with a population of 111,500, and an average household income of around $90,000, within a one-mile radius.
Admittedly, mixed-use developments gained popularity for their solid neighborhood character, greater housing variety and density. Such developments bring down the distance between housing, workplaces, retail businesses and other amenities and destinations. Hence, such developments enable the companies to grab the attention of people, who prefer to live, work and play in the same area – a trend that drove development in several other cities in the U.S.
In Conclusion
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 over the long term. However, earnings dilution led by high disposition activity remains a concern for the near term. Also, dwindling mall traffic and store closures amid aggressive growth in online sales are major headwinds.
However, over the past six months, shares of Kimco underperformed the Zacks categorized REIT and Equity Trust – Retail industry. During the time frame, shares of the company lost 22.8%, whereas the industry descended 8.2%.
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Kimco (KIM) Reveals Q1 Transactions, Continues Reshuffling
Retail REIT Kimco Realty Corp. (KIM - Free Report) revealed its transaction activities for first-quarter 2017. Specifically, the company disclosed acquisitions of two operating properties for a total of $43.1 million and a purchase of 90% ownership stake in a new mixed-use development project for $10.0 million.
On the other hand, the company’s first-quarter sales aggregated $113.2 million, with Kimco’s share being $65.8 million. This involved the disposition of eight shopping centers, aggregating 948,000 square feet of space and one land parcel.
Notably, Kimco remains on track with its strategic 2020 Vision, making premium asset purchase in key metro markets in the U.S., exiting non-core markets and progressing on its simplification efforts.
The company’s first-quarter 2017 transaction activities are in sync with this move. Particularly, the acquisition of Plaza Del Prado, a 142,000-square-foot, grocery-anchored shopping center in the Chicago-Naperville-Elgin MSA, for $38.0 million is a strategic buyout given that it is situated in the flourishing suburb of Glenview, IL.
The property enjoys solid trade area demographics with a population of around 83,000 and an average household income of $126,000 within a three-mile radius. The property not only has the Jewel-Osco grocery store, but also enjoys presence of national retailers like Starbucks Corporation (SBUX - Free Report) , McDonald's Corporation (MCD - Free Report) and Petco.
The other property acquired in the quarter is an improved retail parcel at the company’s Columbia Crossing shopping center, in Columbia, MD, for $5.1 million. Further, Kimco acquired a 90% ownership stake in the mixed-use development project – Lincoln Square – in the Center City district of Philadelphia. This stake acquisition was made for $10.0 million.
The mixed-use project would comprise 322 residential units. It would also include 100,000 square feet of retail space, anchored by a 36,000-square-foot small-format Target (TGT - Free Report) store, a 32,000-square-foot specialty grocer as well as a 16,000-square-foot PetSmart, per the company’s press release. This project also enjoys solid demographics, with a population of 111,500, and an average household income of around $90,000, within a one-mile radius.
Admittedly, mixed-use developments gained popularity for their solid neighborhood character, greater housing variety and density. Such developments bring down the distance between housing, workplaces, retail businesses and other amenities and destinations. Hence, such developments enable the companies to grab the attention of people, who prefer to live, work and play in the same area – a trend that drove development in several other cities in the U.S.
In Conclusion
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 over the long term. However, earnings dilution led by high disposition activity remains a concern for the near term. Also, dwindling mall traffic and store closures amid aggressive growth in online sales are major headwinds.
Currently, Kimco carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
However, over the past six months, shares of Kimco underperformed the Zacks categorized REIT and Equity Trust – Retail industry. During the time frame, shares of the company lost 22.8%, whereas the industry descended 8.2%.
Zacks’ Best Private Investment Ideas
While we are happy to share many articles like this on the website, our best recommendations and most in-depth research are not available to the public.
Starting today, for the next month, you can follow all Zacks' private buys and sells in real time. Our experts cover all kinds of trades… from value to momentum . . . from stocks under $10 to ETF and option moves . . . from stocks that corporate insiders are buying up to companies that are about to report positive earnings surprises. You can even look inside exclusive portfolios that are normally closed to new investors. Click here for Zacks' private trades >>