Kimco Realty Corp. (KIM - Analyst Report), a real estate investment trust (REIT), has recently announced the acquisition of 50% ownership stake in Orleans Gardens Shopping Centre in Ottawa, Ontario, for $16.5 million. With the purchase of this grocery-anchored shopping center, Kimco presently has six retail centers in Ottawa, bringing its tally of Canadian shopping center portfolio to 64 properties.
The acquisition is part of a new pari passu joint venture with the existing owner of the property – the North American Property Group. Pari passu refers to an “equal footing” scenario and describes situations where two or more assets, securities, creditors or obligations are equally managed without any display of preference.
Spanning 110,000 square feet of retail space, Orleans Gardens Shopping Centre is anchored by two Canadian retailers: a 49,000-square-foot Loblaws Supermarket, and an 11,000-square-foot Rexall Pharma Plus drugstore.
The acquired property is strategically located in an established residential neighborhood in Orleans, which is one of the fast-growing eastern suburbs of Ottawa with an expanding residential and commercial population. The property boasts of approximately 110,000 residents within a 3-mile radius with an average household income of $111,000.
With a geographically diverse portfolio concentrated mostly in high-income, high-growth areas, Kimco is the largest publicly traded owner and operator of neighborhood and community shopping centers in the U.S.
Kimco has established a track record of conservative capital management and maintains strong investment-grade debt ratings. Furthermore, the company has continuous access to capital through debt or equity financing, that provide the necessary resources to expand and develop its business.
We maintain our long-term Neutral recommendation on Kimco, which currently has a Zacks #3 Rank that translates into a short-term Hold rating. We also have a long-term Neutral recommendation and a Zacks #2 Rank (short-term Buy) for Simon Property Group (SPG - Analyst Report), one of the competitors of Kimco.