Kimco Realty Corp. has been busy this year.

The New Hyde Park, N.Y.-based company has put money in a car dealer real estate in Canada. It invested nearly $100 million in net lease properties in Virginia. It is buddying up with Vestar Development Co. to complete a $140 million redevelopment of part of Tustin Marine Air Base in California into a lifestyle center. And it is leading a group of shareholders to acquire Frank's Nursery & Crafts Inc. for $97 million to redevelop its real estate.

About the only thing Kimco hasn't been doing, is buying its core property: grocery-anchored strip centers.

Kimco Chairman and CEO Milt Cooper says the company isn't purposefully shunning its core property type. It just hasn't seen any deals recently where the math made sense.

“We want to buy right,” Cooper says. “Risk can consist of price if you overpay. In this quarter we are not finding returns [on shopping centers] which we can sleep well at night.”

Cap rates for strip centers are below 6 percent. But Kimco estimates that the Canada auto deal — a joint venture with Capital Automotive REIT — will generate returns between 8.5 percent and 9.25 percent. The joint venture has closed two deals so far and three more should close by the end of the second quarter.

The company isn't alone. Pressed by the ever-rising cap rates, a common strategy emanating from retail REIT boardrooms has been to look for unusual investments. A lot of firms are pursuing mixed-use development and redevelopment of their existing portfolio. But there is other, less conventional activity going on.

More Deals to Come?

Equity One Inc., for example, has invested in another REIT, Cedar Shopping Centers Inc. It owns a 9 percent stake in the strip center REIT, which owns properties in states such as Ohio, Pennsylvania and New York.

“In essence, it's a way for ust to get exposure to new markets,” says Howard Sipzner, Equity One CFO.

New Plan Excel Realty Trust, like Kimco with Frank's and like Vornado Realty Trust with Toys ‘R’ Us, has invested in retailer real estate, buying up 32 former Farmer Jack locations to get control of the real estate and re-tenant the property.

As for Frank's, a reorganization plan approved in June by a U.S. Bankruptcy Court allows the former retailer of lawn and garden supplies to change into a real estate development company. Its holdings include 42 parcels of real estate largely located on the East Coast in freestanding locations, says Britt Beemer, president of America's Research Group.

“I'm sure Kimco is going to evaluate each of Frank's locations for their best use,” says Louis Taylor, a REIT analyst for Deutsche Bank. “It may be turned into a shopping center, an apartment complex or office use.”

There could be more opportunities in this arena soon. Burlington Coat Factory Warehouse Corp. recently said it is exploring “strategic alternatives,” possibly opening the door for a real estate company to swoop in and take advantage of the retailer's real estate assets.

Winn-Dixie, meanwhile, recently announced 326 store closings. The company, however, hasn't rejected all the leases. So far it has said it will take the lead in re-leasing the property. But it's still possible that a REIT may want to come in and take over that property to re-lease itself. Meanwhile Equity One and New Plan Excel are both on the creditors committee as part of Winn Dixie's bankruptcy proceedings, giving them a voice in the process.

About the only company that hasn't expressed interest in looking at retailer real estate is General Growth Properties.

“We do not have any interest in buying retailers,” CEO John Bucksbaum says.

The company instead is ramping up its development pipeline and looking for opportunities in South America.