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Kimco enters auto race
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November 5, 1997: 11:48 a.m. ET
Real estate trust takes on Wayne Huizenga with auto dealership strategy
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NEW YORK (CNNfn) - Kimco Realty Corp. on Wednesday announced a strategy which could challenge Wayne Huizenga's plans for auto dealership dominance.
Kimco, a New Hyde Park, N.Y.-based real estate trust, said it was establishing a fund, known as Kimco AutoFund, to acquire and lease back auto dealerships.
Under the strategy, Kimco will buy the land on which auto dealerships operate and rent it back to the auto dealers currently selling there.
Kimco said it already has agreements for an initial portfolio of dealership franchises of Chevrolet, Chrysler, Dodge, Hyundai, Isuzu, Jeep-Eagle and Toyota, among others.
The strategy is the opposite of the one employed by Republic Industries' chairman, Wayne Huizenga, who has been buying up both the land and the franchises as well.
John Casesa, managing director at Schroder and Co., said that Kimco's strategy may present a better deal to individual auto dealers.
"It would make [a dealer's] capital requirements lower to get into the business," he said.
But Kimco will be taking on a giant, Casesa explained. Republic Industries (RII) has deep pockets for acquiring dealerships.
In the past year it has snapped up 199 new-car dealerships and has built 14 used-car "megastores." It anticipates sales of about $10 billion this year.
Republic's appetite has raised the ire of several auto makers, including Honda Motor Co. and Toyota Motors Corp. Both car companies took Republic to court seeking to limit the number of dealerships Huizenga could buy.
Toyota eventually settled its dispute with Republic, but Honda lost round one of its battle after a judge threw out its request in September.
The real estate trust will be breaking new ground with its auto venture. Kimco (KIM) currently owns and operates a portfolio of shopping centers in 37 states but said it felt sound in approaching this new venture.
"The AutoFund is a logical extension for Kimco Realty, which historically focuses on fundamental, inherent real estate values" said Kimco CEO Milton Cooper.
Cooper said Kimco would only acquire properties in high-traffic areas suitable for multiple uses.
To make up for the experience gap, Kimco hired J.E. Farrell to head up the Kimco AutoFund. Farrell spent 29 years in Chrysler Corp.'s consumer and commercial financial division.
Kimco also said it will keep in place experienced managers who have shown they can operate the dealerships successfully.
-- by staff writer Randy Schultz
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Kimco Realty
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