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Shopping Centers Today -> September 2003
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KIMCO NEARS $1B ACQUISITION GOAL
BY IAN RITTER
Keeping up a brisk pace of acquisitions, Kimco Realty Corp. spent $327 million to buy 11 U.S. centers during the second quarter and an additional four in July.
At press time the company had spent $443 million on acquisitions so far this year and was poised last month to close on a $444 million purchase of Mid-Atlantic Realty Trust’s 41-center portfolio. All this puts Kimco well on the way to reaching its $1 billion target for community center acquisitions by year-end.
New Hyde Park, N.Y.—based Kimco bought the properties from a variety of owners, and two of the deals were done in partnership with GE Capital. Kimco declined to disclose the capitalization rates on the purchases.
The largest purchases included 280 Metro Center, Colma, Calif. ($59.2 million); Potomac Run Shopping Center, Sterling, Va. ($58.7 million); and Arapahoe Marketplace, Greenwood, Colo. ($29.7 million).
At press time the Mid-Atlantic deal, priced at $21 per share, awaited the approval of Mid-Atlantic shareholders. Those centers, totaling 95 million square feet, are located primarily in Delaware, Maryland, Massachusetts, New York, Pennsylvania and Virginia.
“We feel very good about the quality and long-term prospects for the neighborhood shopping centers in [the Mid-Atlantic] portfolio,” said Kimco Chairman and CEO Milton Cooper in a press release when the deal was announced in June. “This fits well with our strategy of growing our management business and generating solid investment returns for our partners while preserving our own equity capital.”
Morgan Stanley said in a July report that investors were concerned at first about Kimco’s $1 billion target because of a competitive acquisition market combined with low cap rates. But now the shopping center owner has provided them with “reassurance,” it said. Morgan Stanley calculates the cap rate on the Mid-Atlantic deal at about 8.3 percent, which it called a “reasonable price.”
A Merrill Lynch report in July speculates that Kimco could in fact surpass its $1 billion acquisition goal for the year.
“We expect the company to significantly beat this target,” the report said. “We continue to believe that Kimco is interested in acquiring additional neighborhood and community shopping center portfolios over the next 18 months.”
Kimco, the largest community center owner in the United States, with 634 properties, also owns two centers in Mexico as part of a joint venture with GE Real Estate. It plans to buy more properties there.
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