KIM Kimco Realty Corporation

By Micah Maidenberg

To roll out its new grocery chain, Amazon.com Inc. (AMZN) may need to sign dozens of new real-estate leases, a potential bonanza for landlords. But investors appear to be skeptical that retail property companies that focus on shopping centers anchored by grocery stores would benefit from the technology giant's plans.

The reason, analysts say, is the potential gains from property deals with Amazon must be weighed against the impact the new chain could have on grocery-store operators.

Shares in Kroger Co. (KR) and Walmart Inc. (WMT) fell after The Wall Street Journal reported last Friday that Amazon has been planning to develop its own grocery concept, signing at least two leases and potentially opening dozens of stores in multiple cities. The chain would be distinct from its high-end Whole Foods Market unit and has the potential to cut into the big grocers' market share.

"I think the knee-jerk reaction has definitely been negative," said Christopher Lucas, an analyst at Capital One Securities, who follows real-estate investment trusts.

Grocery-focused real-estate investment trusts also saw their stocks fall the day the news broke. Shares in Regency Centers Corp. (REG), which owns all or part of 425 properties mostly anchored by groceries, fell 1.6% Friday.

Kimco Realty Corp.'s (KIM) stock dropped 1.5%. The company counted the parent of the Food Lion and Stop & Shop, and Albertsons Cos. as its third- and fifth-largest tenants at the end of last year, respectively.

Brixmor Property Group Inc. (BRX), which said in its latest annual report that 68% of its properties are anchored by grocery stores, saw its stock fall 0.9% Friday.

Shares of Kimco and Brixmor were both down 0.5% in Monday afternoon trading, while Regency's stock gained 0.5%.

Grocery chains have been shaken in recent years after Amazon bought Whole Foods and because consumers are expected to purchase more food and consumer products via the internet.

As the market shifts, grocers like Kroger, Walmart and closely held Albertsons, which runs chains like Vons, Jewel Osco and Safeway, have been investing to bolster their ecommerce capabilities.

"Amazon is one of the main storm clouds that hangs over the industry," according to a Feb. 28 report from A&G Realty Advisors and Readco Sylvia Advisors.

Retail property companies with grocery anchors have sold assets in recent years, trying to focus their portfolios on strong locations and markets, analysts say.

"To the degree that...there's a need or demand from retailers for space, it's going to be for the better-located centers," said Mr. Lucas, the Capital One Securities analyst.

Write to Micah Maidenberg at micah.maidenberg@wsj.com

(END) Dow Jones Newswires

March 04, 2019 16:47 ET (21:47 GMT)

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