GlobeSt.com UPDATE: Feldman Buys 103,000 SF in Two Kimco Leases

TALLAHASSEE, FL-In a stock transfer deal, Great Neck, NY-based Feldman Mall Properties has bought 103,000 sf in two leases from a subsidiary of Kimco Corp. of New Hyde Park, NY at the Tallahassee Mall. The 98%-leased, 963,000-sf property is the largest regional retail complex in the Florida Panhandle. A Feldman representative tells GlobeSt.com the estimated value of the transaction is $4 million.

Feldman's common stock is currently trading at $11.49 per share. That would value the deal at $4.24 million, according to GlobeSt.com research. Both companies trade on the New York Stock Exchange.

Feldman gave a Kimco subsidiary 369,375 shares of common for the leases of Goody's Family Clothing and Ross Dress for Less. Larry Feldman, chairman and CEO of Feldman Mall Properties was traveling and couldn't be reached. Thomas E. Wirth, Feldman's chief financial officer, also couldn't be reached for comment on the transaction.

However, in a prepared statement, Feldman calls the deal "a good transaction for both FMP and Kimco. We receive a reasonable cash yield on our investment and we will get control over an important portion of the real estate."

Under terms of the deal, Feldman says Kimco "has agreed to enter into a 12-month lockup period during which it will be prohibited from selling its shares." For Feldman Mall Properties, the deal with Kimco is a follow-up to its purchase of the 25-year-old mall in June from Tallahassee Mall Partners Inc. for $61.4 million or $63.86 per sf, as GlobeSt.com reported June 30.

The two leases Feldman Mall Properties has acquired were originally an F.W. Woolworth lease (Woolco Inc.). Woolco sublet its leasehold to two junior tenants, Goody's and Ross. The Goody's lease has six years left; the Ross lease, 11 years. Goody's has a five-year option to renew, beginning in 2012.

Feldman is confident Goody's will renew its lease, "given its below market rental rate." Area retail brokers tell GlobeSt.com average asking base rates for non-anchors at most shopping centers in the Panhandle are $13 to $18 per sf. An FMP subsidiary will become the direct landlord for Goody's and Ross, Feldman says.

In his statement, Feldman says his company "expects to realize an increased rental stream about the rent currently being paid to FMP of approximately $484,000 per annum." He adds, "Assuming the renewal of the Goody's lease in 2012, FMP expects to derive incremental rent over the 12-year remaining lease terms, averaging approximately a total of $540,000 per annum."

Feldman says his company "does not expect FFO accretion as a result of the transaction, due to the previously accounted for impact of FASB 141 adjustments that adjusted the rents upward for the below market rents in place."