KIMCO IN THE NEWS: Q3 2017 RECAP
Kimco’s media coverage for Q3 2017 demonstrated a flurry of activity, from updates on leasing to exciting announcements on our redevelopment projects. Our experts were also called upon to give their perspective on recent happenings in the retail industry.
Here’s a sampling of the top stories from the past quarter.
Kimco weighs in on retail’s major trends
The buzz this past quarter has been centered on the union of two brands, Amazon and Whole Foods. We currently have 15 Whole Foods in our portfolio, making them one of our top anchor tenants. CEO Conor Flynn sees this deal as an opportunity to use omni-channel sales to stimulate business growth.
Executive Vice President and COO David Jamieson thinks that Amazon’s interest in Whole Foods confirms the fact that having a brick-and-mortar presence is valuable in today’s retail climate. Amazon bought Whole Foods to get closer to the customer, which validates the need for physical retail.
The saying “retail is dead” is simply untrue according to Flynn. He understands the challenges retailers are facing, but sees an opportunity for Kimco. “This isn’t the death of all retail real estate,” said Flynn, in the July/August issue of REIT Magazine. “In fact, our occupancy rate for spaces greater than 10,000 square feet is 97.3 percent. In addition, 62 percent of our anchor leases are at below-market rents, so vacancies that do occur offer us an opportunity to raise the rent to a market rate and possibly redevelop the space.”
On Kimco’s Q2 earnings call, Flynn mentioned that physical retail plays a large role in bringing the best shopping experience to customers. As a result, most off-price, home improvement, fitness, beauty, grocery, and other service retailers continue to thrive.
In July, Joshua Weinkranz, president of the Northeast Region, joined other real estate executives at the Institute of Real Estate at Hofstra University to discuss challenges the region faces, but like Flynn, Weinkranz agreed that the “retail apocalypse” has been sensationalized.
Meanwhile, President of the Central Region Rob Nadler and other REIT leaders at Bisnow’s Retail South event agreed that investing in top-tier properties and trimming those in your portfolio that may present risk is a smart move. According to Nadler, it is crucial to stay ahead of trend and have your properties be best in class so they can withstand the ever-changing retail market.
Out with the old, in with the new
This July, Kimco added Jantzen Beach Center, a large highly-trafficked retail center in Portland, Oregon, to its portfolio. Kimco purchased the 746,000-square-foot property for $131.8 million. Part of the purchase included two 6,000-square-foot buildings with flexible zoning, which could pave the way for mixed-use development in the future.
We also sold several properties during the quarter with some of the proceeds used to help fund the acquisition of Jantzen Beach. This includes Ambassador Plaza in Lafayette, Louisiana for $5.3 million, Mallside Plaza in South Portland, Maine, and Marigold Center in California which sold for $43.55 million.
The next chapter on recent (re)developments
Our work in Staten Island to replace Hylan Plaza with The Boulevard is currently underway. The 460,000-square-foot shopping center will include ShopRite, Alamo Drafthouse Cinemas, and Modell’s, in addition to Marshalls and Ulta, who will be opening their second stores on the Island at The Boulevard.
Kimco’s Whole Foods Market-anchored Kentlands Market Square in Gaithersburg, Maryland is making headway on its renovations to existing buildings for a new theater, Cinépolis Luxury Cinemas. The 34,000-square-foot theater is expected to open in 2019.
Over in South Florida, Dania Pointe is under development and making way for new tenants Brandsmart USA, Hobby Lobby, and TJ Maxx. The first phase of Dania Pointe, about 300,000 square feet of the center, will open towards the end of 2018. We decided to redevelop a portion of Stirling Road and an I-95 exit ramp, delaying the projected opening by a year. Upon completion, the center will encompass one million square feet and house more than 100 stores and restaurants.
Beyond redevelopment, we continued to welcome competitive retailers to our shopping centers across the country. Target signed on for 48,142 square feet at our Westmont Plaza in Westmont, New Jersey. HomeGoods and Ashley Furniture HomeStore signed leases at Richmond Shopping Center in New Springville on Staten Island. Construction for these two new tenants is underway and is to be completed by the end of this year.
In other news
CEO Conor Flynn landed a spot in Fortune’s 2017 40 Under 40, an annual ranking of the most influential young business people. Having been at Kimco for 14 years, Flynn moved through the ranks as COO and CIO before becoming CEO. Even through tough retail times, Flynn remains focused on retail’s next big thing. “Retail always changes, and real estate will always change along with it,” he shared with Fortune.
Elsewhere, Senior Director of Strategic Operations Will Teichman continued to lead Kimco’s sustainability program and had nothing but positive news and results to report. For example, Kimco has enforced individual metering for tenants’ water usage, instead of metering based on square footage. This has resulted in reducing payment disputes and ensures that tenants are more mindful of how much water they use on a daily basis.
Finally, in the midst of catastrophic hurricanes devastating the U.S., Kimco was lucky to endure only minimal damage at a few of our Houston-area centers. Not long after, Puerto Rico was hit by Hurricane Maria. While five of our seven centers on the island were significantly impacted, we were again lucky that all Kimco personnel were safe. We maintain property and business-interruption insurance on our Puerto Rico properties and are working diligently to get all tenants up and running.
Alongside others in the shopping center industry, we joined the relief efforts to aid hurricane victims by pledging to match employee donations to the American Red Cross – in total, Kimco and its associates donated over $63,000.
Be sure to check back in January for the next batch of media coverage.