Kimco Realty has paid $295 million for two large shopping centers in Louisville, Ky., trading lower-growth properties elsewhere for retail space it expects to re-lease at higher rents. The Jericho, N.Y.-based shopping center REIT announced on Nov. 2, 2026 that it had acquired Paddock Shops and Shelbyville Road Plaza, open-air, grocery-anchored centers in Louisville’s East End.
The two properties total more than 741,000 square feet, are anchored by Trader Joe’s and The Fresh Market, and each draw more than 4 million visits a year, according to foot-traffic data from Placer.ai cited by the company. Kimco did not name the seller.
The price and the math
Kimco said it bought the centers at a blended going-in cap rate of 6%, meaning first-year net operating income equal to about 6% of the purchase price. That is more than 100 basis points above the roughly 5% average cap rate on the properties Kimco has sold in 2026. In other words, the company says it sold assets at lower yields and is reinvesting the money at higher ones.
The deal was primarily funded with 1031 exchange proceeds from those 2026 dispositions, which Kimco described as self-funded and leverage-neutral. A 1031 exchange lets an owner defer taxes on a property sale by reinvesting the proceeds in similar real estate.
Kimco’s third-quarter results, released Oct. 29, show where some of that money came from. During the quarter the company sold The Witmer, a 440-unit apartment building at its Pentagon Centre property in Pentagon City, Va., for $211.5 million at a cap rate of about 5.1%; Kimco’s pro-rata share of that price was $116.3 million. It also sold four Costco-anchored assets, including two ground-lease parcels, for about $127 million.
Kimco said it underwrote net operating income at the Louisville centers to grow about 4% a year over the next 10 years, pointing to below-market rents on a number of leases and room to change the tenant mix.
“Paddock Shops and Shelbyville Road Plaza are exactly the kind of centers we want to own: grocery-anchored, in the strongest trade areas of a supply-constrained market,” said Conor Flynn, Kimco’s chief executive. He added: “These centers also offer meaningful embedded upside through the recapture of below-market leases and the opportunity to further enhance the tenant mix with dynamic brands and specialty retailers.”
Inside the two Louisville centers
Paddock Shops is a 351,000-square-foot lifestyle center in northeast Louisville that is 94% leased. Kimco said its shopper base has a median household income of about $122,000, according to Placer.ai. It will join Kimco’s Lifestyle Collection, the company’s group of signature open-air and mixed-use centers.
Shelbyville Road Plaza is a 390,000-square-foot center in St. Matthews, which Kimco calls the established retail hub of the Louisville metro, and is 92% leased. National tenants across the two properties include REI, Total Wine & More, Pottery Barn, West Elm, Ulta Beauty, Nordstrom Rack, Burlington, Ross Dress for Less and Old Navy.
With the purchase, Kimco owns three grocery-anchored centers in Louisville totaling 911,000 square feet. The third is Festival at Jefferson Court, a Kroger-anchored center it already held.
“Louisville is a market we’ve targeted, and these centers give us meaningful scale in one of the strongest retail corridors,” said Ross Cooper, Kimco’s president and chief investment officer. He said owning all three centers “makes us the first call for retailers entering or expanding in Louisville.”
A tight retail market, by the company’s account
Kimco’s case for Louisville rests on scarce space. Citing Cushman & Wakefield data, the company said shopping center vacancy in the Louisville market is 3.9%, compared with 6% nationally, that the market ranks among the top 10 major U.S. markets for occupancy, and that no new shopping center space is under construction there.
Kimco’s own portfolio is near full. The company reported record pro-rata leased occupancy of 96.6% in the third quarter, with small-shop occupancy at a record-matching 92.9%, and comparable new leases signed at cash rents 31.5% above the previous ones. It again raised its full-year guidance, which Flynn said would mark a third consecutive year of growth above 5% in funds from operations (FFO) per share, the standard REIT earnings measure.
The Louisville purchase fits a broader pattern of capital chasing grocery-anchored retail that RealtyWire has tracked, from Brixmor and Everview’s $2.34 billion deal for Slate Grocery REIT to the $790 million PSP Investments and Nuveen venture. On our reading, Kimco’s twist is the spread: it is buying at a higher yield than it sold at, and betting that below-market leases in a market with no new supply will widen that gap. Whether the roughly 4% annual income growth it underwrote materializes will depend on how quickly those leases roll.
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