Kimco Eyeing Potential to Unlock Embedded Value in Sears/Kmart Locations
12/12/2018 | by Nareit Staff

Conor Flynn, CEO of Kimco Realty Corp. (NYSE: KIM), participated in a video interview at Nareit’s REITworld: 2018 Annual Conference in San Francisco.

Flynn discussed Kimco’s exposure to Sears and the ramifications of the retailer’s bankruptcy filing. Kimco currently has 14 Sears/Kmart locations with market leases that can be as much as 500 percent below market value, he said. The locations are “great areas that have been calling out for redevelopment.”

Kimco can use its existing platform to “unlock the embedded value of that real estate,” Flynn said, either through mixed-use redevelopment or by bringing in a new anchor tenant. “There are plenty of players today that can transform that real estate into a higher and better use,” he noted.

Flynn also commented on the REIT’s disposition program, which is expected to be in the $800 million to $900 million range for 2018. “The demand has been very strong for our product type,” he said. Now that Kimco has exited out of the Midwest and has largely completed its disposition program, the company will be able to show the growth embedded in the repositioned portfolio, he said.

Meanwhile, Flynn noted that Kimco has strived to be a sustainability leader in the retail real estate sector. In September, Kimco was named to the 2018 Dow Jones Sustainability North America Index for the fourth consecutive year. Kimco is the only retail property owner in the index.

Kimco’s large European shareholder base has been particularly focused on sustainability, Flynn said, although U.S. investors are growing increasingly interested as well.