Kimco Realty (KIM) Updates on Q2 Acquisitions, Dispositions

Kimco Realty (NYSE: KIM) reported its transaction activity for the second quarter of 2014. The company continued transforming its portfolio and simplifying its business model, highlighted by the acquisition of a 24-property retail portfolio in New England and a 12-property portfolio from the Kimco Income Fund (KIF I) joint venture, and by the disposition of four retail properties in Mexico. These and other key second quarter transactions are summarized below.

ACQUISITIONS

In the second quarter, Kimco acquired 36 high-quality shopping centers totaling approximately 3.0 million square feet for a gross purchase price of $678.0 million, including $158.7 million of mortgage debt. Details of these transactions are as follows:

• New England Portfolio: As previously announced, Kimco acquired a 24-property retail portfolio for a total purchase price of $270 million, including $120.5 million of mortgage debt. This 1.4-million-square-foot portfolio is 96% occupied and includes 17 shopping centers in the Boston metropolitan area, four other Massachusetts shopping centers, two grocery-anchored centers in northern New Jersey, and one Wal-Mart-anchored center in Danbury, Connecticut. The portfolio, which features a diverse tenant mix that includes Whole Foods, Trader Joe’s, Lowe’s, CVS and Walgreens, boasts an average population that is over 25% higher than that of Kimco’s collective retail portfolio and offers multiple redevelopment and re-tenanting opportunities.
• KIF I Portfolio: The company continued its simplification strategy of reducing the number of properties in joint ventures by acquiring the remaining 60.9% interest in the 12-property KIF I portfolio from its joint venture partners for a gross price of $408.0 million, including $38.2 million of mortgage debt. As part of this transaction, the company repaid $118.9 million of mortgage debt encumbering nine of the properties. In addition, Kimco earned a cash promote of approximately $18.8 million, which was used to reduce the company’s overall cash payment to $251.4 million.

In September 2010, Kimco initiated its portfolio transformation efforts to sell non-core, limited-growth properties in favor of acquiring high-quality shopping centers in the company’s key markets. Since the start of this initiative, Kimco has acquired a total of 123 U.S. retail properties, comprising 14.4 million square feet, for a gross purchase price of $2.8 billion, including $996.1 million of mortgage debt. These properties have, on a pro-rata basis, an average occupancy of 96 percent and are supported by excellent demographics, including an average household income of $92,000 within a three-mile radius.

DISPOSITIONS

United States

During the second quarter, Kimco sold ownership interests in 15 U.S. properties (seven wholly owned and eight unconsolidated properties held in joint ventures) totaling 1.7 million square feet for a gross sales price of $185.6 million, including $23.3 million of mortgage debt. The company’s share of the proceeds from these sales was $121.5 million.

Kimco currently has 50 properties for sale that are under contract, including several portfolios, totaling approximately $363.9 million.

Since the start of the company’s disposition efforts, Kimco has sold 169 retail properties, comprising 17.6 million square feet, for a gross sales price of $1.4 billion, including $325.9 million of mortgage debt. The company’s share of the proceeds from these sales was approximately $861.8 million. The properties that were sold had demographics below Kimco’s portfolio averages, including an average population level of 76,000 and a median household income level of $58,000 within a three-mile radius.

Latin America

As previously announced, the company completed the sale of four retail properties in Mexico for a gross sales price of 1.1 billion Mexican pesos ($82.1 million). Kimco’s pro-rata share of the proceeds was approximately 688.1 million pesos ($53.3 million).

In addition, the company has executed a contract of sale for three shopping centers in Mexico for a gross sales price of 1.5 billion pesos ($112.3 million) that is expected to close in the third quarter of 2014. Kimco’s pro-rata share of the sales price is approximately 1.3 billion pesos ($100.5 million). These transactions represent another step toward the company’s commitment to exit Latin America with a focus on its portfolio in the U.S. and Canada.

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