Kimco Realty KIM recently acquired The Markets at Town Center in Jacksonville, FL, for $108 million. This premier asset of 254,000 square feet of space, is located in North Florida’s most sought-after shopping district.

The acquisition strengthens this retail-based REIT’s footprint in the Jacksonville market, which includes six properties encompassing approximately 1.5 million square feet with a 98.6% occupancy rate as of Dec. 31, 2024.

With an estimated 192,000 population and an average household income of $95,000 within a five-mile radius, the property enjoys the benefits of an affluent customer base. These robust demographics drive more than four million visitors to the center annually. According to Placer.ai, several national tenants rank among the top traffic generators for their respective chains in Florida.

The Markets at Town Center, which is 97% occupied, has a diverse mix of top tenants that combines lifestyle, grocery and dining options with essential goods and services. The property, built in 2008, offers considerable mark-to-market opportunities due to below-market in-place leases, with several leases scheduled to expire in the next few years.

The buyout represents the first property Kimco has acquired through its Structured Investment Program. The program aims to deploy mezzanine financing while obtaining rights of first refusal or rights of the first offer on assets that enhance the portfolio. Under this program, the company had earlier provided $15 million in mezzanine financing for the property, which was repaid at the time of closing.

KIM’s Management Commentary

Per Ross Cooper, president and chief investment officer of Kimco, “This unique and strategic program is a true differentiator for the company, enabling above average returns while providing the potential to transition into equity ownership of high-quality properties. We are excited to continue leveraging this program to acquire valuable assets and to unlock the full potential of each property through our extensive operating platform.”

Summing-Up

Kimco is well-poised to benefit from its portfolio of high-quality, open-air shopping centers, which are predominantly grocery-anchored, in the drivable first-ring suburbs within top major metropolitan Sunbelt and coastal markets. Its focus on developing mixed-use assets bodes well for long-term growth.

The company’s latest buyout is part of its ongoing efforts to expand its premium shopping center portfolio that offers essential goods and services. The necessity-driven nature of this portfolio makes it resilient during periods of economic downturns and provides a stable source of income. Hence, its acquisition of The Markets at Town Center seems like a strategic fit.

Shares of this Zacks Rank #3 (Hold) company have rallied 11.8% in the past six months, outperforming the industry's growth of 10%.

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Stocks to Consider

Some better-ranked stocks from the retail REIT sector are Regency Centers REG and Tanger, Inc. SKT, each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for Regency’s 2024 FFO per share is pinned at $4.28, suggesting year-over-year growth of 3.1%.

The Zacks Consensus Estimate for Tanger’s 2024 FFO per share stands at $2.11, indicating an increase of 7.7% from the year-ago reported figure.

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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