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Kimco (KIM) Buys Jantzen Beach Center, Reveals Q2 Activities


In a notable development, Kimco Realty Corp. KIM announced the post second-quarter purchase of Jantzen Beach Center for $131.8 million. This is the company’s eighth property in the Portland-Vancouver-Hillsboro MSA.

The move comes as part of Kimco’s strategic 2020 Vision that envisages portfolio quality upgrade with premium acquisitions in selective locations financed by proceeds reaped from dispositions. Apart from this, the company reported second-quarter 2017 transaction activities.

Specifically, the Jantzen Beach Center is a 746,000-square-foot, open-air shopping center, located on 67 acres in Portland, OR. Currently, the property is 96% occupied, highlighting solid demand for space. The center boasts a solid tenant roster, with retailers like The Home Depot, Inc. HD, Target Corporation TGT, Best Buy Co., Inc. BBY, among others.

Purchased at $177/square foot, significantly below replacement cost, this property is positioned along Portland’s busy I-5 artery, where traffic count exceeds 128,000 cars per day. The sales tax-free shopping draws 5 million visitors annually. Moreover, the property enjoys barrier to entry in this market since it is positioned within the Urban Growth Boundary of Portland, which helps regulate urban expansion.

Additionally, Kimco will have the opportunity to grow on the back of solid mark-to-market upside, stemming from a number of below-market anchor leases. Also, the company’s future redevelopment pipeline will get a boost, with potential outparcel development of two 6,000-square-foot pad buildings. Per management, the flexible zoning offers mixed-use densification scope as well. Thus, the above mentioned acquisition is a strategic fit for the company.

Moreover, Kimco’s second-quarter 2017 activities indicate the continuation of its 2020 Vision which focuses on the ownership of premium assets in major metro markets in the U.S., as well as a reduction in joint-venture portfolio.

Specifically, during the quarter, the company made stake dispositions in nine shopping centers, aggregating 892,000 square feet of space, as well as two land parcels for a gross price of $155.8 million. Kimco’s share of the sales price was $128.1 million. The move helped the company to exit from the states of Maine and Louisiana.

On the other hand, next to the Augusta Exchange shopping center in Augusta, GA, Kimco purchased a parcel for a gross price of $700,000, with the company’s share being $340,000. This offers scope for its redevelopment.

However, in recent times, mall traffic has continued to suffer amid a rapid shift in customers’ shopping preferences and patterns, with online purchases growing by leaps and bounds. This compelled retailers to reconsider their footprint and eventually opt for store closures. Furthermore, retailers unable to cope with competition are filing bankruptcies.

These have affected Kimco’s shares, which declined 18.4% over the last three months, against the Zacks categorized REIT and Equity Trust – Retail industry’s decline of 8.6%.

Currently, Kimco carries a Zacks Rank #4 (Sell). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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