Kimco Selling Hotel Assets In Effort To Purge Non-Retail

Kimco Realty Corp. (KIM) is selling a small hotel company it acquired in 2007 as part of the shopping centers landlord's plan to shed all of its non-retail assets over the next few years.

The company is marketing InTown Hospitality Corp., the largest owner and operator of budget extended-stay hotels in the U.S. including the brand InTown Suites. The portfolio comprises 138 hotels, 17,978 rooms and is valued at roughly $100 million. Kimco, the nation's largest shopping center landlord, has a 75% stake in the hotel company company. The company's partners Caisse de depot, a Canadian fund manager and Westmont Hospitality Group own the remaining stake.

"We want to make Wall Street comfortable that we are focusing on being a neighborhood and shopping centers company" solely, said David Henry, chief executive of Kimco. He noted the sale, being handled by Citigroup, is the largest yet of its non-retail properties which the company hopes to entirely shed by 2013. As of the end of April, Kimco reduced its non-retail assets to $612 million compared to $1.2 billion at the end of the first quarter in 2009. Kimco says it also plans to sell some office and condominium properties in Chicago, Philadeplhia and New York worth about $200 million.

Moving forward, Henry said the company's strategy is to focus on acquiring new properties via joint ventures, which include doing more investing in retail real estate on behalf of pension funds and insurance companies.

The real estate investment trust declined to disclose the asking price. The deal comes at a time when Kimco's shares are underperforming, down nearly 1% year-to-date, as the shopping centers industry makes a much slower recovery that other parts of commercial real estate like office and apartments.

This "helps to reorient the company," said Alexander Goldfarb, a REIT analyst at Sandler O'Neill+Partners. He added that Kimco "veered off the path" after forming a lot of complicated joint ventures in non-retail that hurt the company during the credit crisis.

-By A.D. Pruitt, Dow Jones Newswires; 212-416-2197; [e-mail]