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Shopping Centers Today -> June 2003
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KIMCO, PARTNERS ON $1 BILLION SPREE
BY IAN RITTER
Kimco Realty Corp. plans to spend about $1 billion on acquisitions by year-end, the company says.
Kimco and its partners — GE Real Estate, the New York State Common Retirement Fund and RioCan Real Estate — had already spent at least $350 million by late April to buy 12 centers in the United States and one in Canada from a number of different owners. Kimco has also bought three single-tenant sites, it said, during a conference call with analysts and investors in April.
It’s surprising that Kimco is making such a huge investment in centers, given the current competition, says Merrie Frankel, a REIT analyst at Moody’s Investors Service.
“It did seem somewhat aggressive,” she said. “It seemed like a hefty goal.”
But the company is likely to meet its goal, she said. “They’re going to go gangbusters. Their business plan seems sound.”
The analyst suggests that one way Kimco could grow quickly this year is by buying the portfolio of another company. “A portfolio is easier,” Frankel said. “If you’re going to grow it, it makes sense to do it that way.”
Kimco, which owns two Mexican centers in a 50-50 joint venture with Stamford, Conn.-based GE Real Estate, is looking to buy more in that country, said David Henry, Kimco’s chief investment officer. Kimco and GE Real Estate say they plan to spend $400 million on Mexican centers, separate from this year’s acquisition, but the terms of that venture have not been finalized. Their current developments there are in the cities of Monterrey and Saltillo.
In the United States, Kimco is looking to buy centers across the country, and it wants to do the same in Canada.
Among the centers Kimco has acquired so far this year are the 137,000-square-foot Ashley Shoppes, Charleston, S.C.; the 506,000-square-foot Market Square at Montrose (Ohio); and the 143,000-square-foot Shoppes at Soncy, Amarillo, Texas.
Kimco, whose exposure to Kmart’s January 2002 bankruptcy and subsequent store closings was greater than that of any other publicly traded REIT, also reported that the retailer is rejecting leases at seven centers.
“Fortunately, the impact of these lease rejections will not have a material impact on the company’s earnings,” said a Merrill Lynch report on Kimco’s first quarter.
Some of those former Kmart spaces are being leased to The Home Depot, Kohl’s and Wal-Mart.
Kimco’s first-quarter funds from operations rose 5 percent to $82.9 million, from $78.9 million for the same period last year.
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