Kimco Buys Out Blackstone in Retail JV

NEW HYDE PARK, NY—Kimco Realty Corp. said Friday it had acquired the remaining 66.67% interest in the Kimstone portfolio from a subsidiary of Blackstone Real Estate Partners VII. The $925-million purchase price includes the assumption of $426.7 million in mortgage debt; Kimco will pay BREP $512.3 million for its interest in the joint venture, with the deal expected to close in the first quarter of 2015.

The portfolio totals 5.6 million square feet across 39 shopping centers in California, Florida, Georgia, Maryland, Massachusetts, Nevada, New York, Pennsylvania, Texas, Virginia and Washington. It's about 97% occupied and is divided between grocery-anchored centers and regional power centers.

Kimco says the Kimstone buyout continues its simplification goals, which include reducing the number of properties in JVs while adding high-quality retail assets to its wholly owned portfolio. In addition to the pending Kimstone transaction, year to date the company has acquired the remaining interests in 33 properties from JV partners at a pro-rata total of $697.6 million.

Largest of the assets is the 799,442-square-foot Dulles Town Crossing in the Washington, DC suburb of Sterling, VA. It's one of four signature assets in the portfolio; others include Metro Center in Colma, CA, spanning 228,000 square feet and considered the first dominant power center in the US; the 437,000-square-foot Airport Plaza in the high-income Long Island community of Farmingdale, NY; and Stafford Marketplace, a 331,000-square-foot, fully occupied grocery anchored shopping center in Stafford, VA.

Across the portfolio, there's a three-mile average household income level of $92,000 and an average base rent per square foot of $15.83, both exceeding Kimco's current portfolio averages. There are also plenty of opportunities for redevelopment, repositioning and re-tenanting, Kimco says. The active pipeline already includes replacing an old Borders space with Nordstrom Rack in Reno, NV and redeveloping a specialty grocer at the Franklin Park Shopping Center in Spokane, WA.

For the Blackstone Group, the sale of the Kimstone interest represents its third major divestiture this month. The private equity and asset management giant began December by announcing that it would sell its IndCor US industrial platform for $8.1 billion to GIC, Singapore's sovereign wealth fund; and earlier this week said that Hudson Pacific Properties would pay it $3.5 billion for a group of Bay Area and Silicon Valley office assets that formerly comprised Equity Office Properties' Northern California portfolio.