Yahoo Finance Kimco (KIM) Attains 2024 Disposition Target for Former RPT Assets
Kimco Realty KIM shares were up 2.92% during yesterday’s regular trading session after the retail REIT announced significant first-quarter transaction activity, marking a milestone in its strategic objectives for 2024. Particularly, the company achieved its disposition target for the current year with the sale of 10 former RPT Realty (“RPT”) properties for $248 million, showcasing a proactive approach to portfolio optimization.
The disposition of these properties came as part of Kimco’s efforts to align its portfolio with long-term investment goals. The company had prioritized the disposition of the centers because of their lower growth potential, higher risk profiles or need for significant capital requirements.
The pricing for the 10 properties, totaling 2.1 million square feet of gross leasable area, equated to a blended in-place cap rate of around 8.5%. Moreover, as part of these sales, Kimco invested around $67 million under its Structured Investment program on seven of the properties. The company expects this strategic deployment of capital to generate a 10% blended return, reflecting its efficiency in identifying and capitalizing on investment opportunities.
Going forward, Kimco anticipates its new investment activity to surpass dispositions for the rest of 2024. The company seems well-poised to capitalize on market opportunities and deploy capital effectively.
After the completion of sales, the remaining 46 former RPT assets further enhanced Kimco’s percentage of the pro-rata annual base rent from grocery-anchored shopping centers to around 83%.
Apart from the activities mentioned above, the retail REIT made a $9.0 million structured investment in a third-party-owned shopping center and sold six parcels in separate transactions for a total of $2.2 million during the quarter. KIM also sold its remaining 14.2 million shares of Albertsons Companies, Inc. common stock, reaping net proceeds of $299.1 million.
Kimco anticipates providing an update on its 2024 outlook and assumptions when it reports first-quarter results. The retail REIT positions itself well for long-term success in the dynamic real estate market with a focus on optimizing its portfolio, strengthening its balance sheet and pursuing strategic investments. However, a rise in e-commerce adoption and efforts of online retailers to go deeper into the grocery business are concerns. A high interest rate environment adds to its woes.
Shares of this Zacks Rank #4 (Sell) company have rallied 10.2% in the past six months compared with the industry's growth of 15%.
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Stocks to Consider
Some better-ranked stocks from the broader REIT sector are Host Hotels & Resorts HST and Iron Mountain IRM. While Iron Mountain sports a Zacks Rank #1 (Strong Buy) at present, Host Hotels & Resorts carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for HST’s 2024 FFO per share is pegged at $1.97, which suggests year-over-year growth of 2.6%.
The Zacks Consensus Estimate for IRM’s 2024 FFO per share stands at $4.42, which indicates an increase of 7.3% from the year-ago quarter.
Note: Anything related to earnings presented in this write-up represents funds from operations (FFO) — a widely used metric to gauge the performance of REITs.
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