Kimco Realty Earnings: Rent Growth Accelerates as Kimco Reports Double-Digit Re-Leasing Spreads

Kimco Realty reported fourth-quarter results that were mixed compared with our expectations, though we didn’t see anything in the quarter that would materially change our $26.50 fair value estimate for the no-moat company. Same-store occupancy fell 10 basis points sequentially to 96.3%, but we note the 96.4% figure reported in the third quarter matched the company’s all-time high, and occupancy in the fourth quarter was still up 20 basis points year over year. Re-leasing spreads were 11.4% in the fourth quarter, relatively in line with our estimate. Same-store minimum rent growth continues to accelerate due to six straight quarters of double-digit re-leasing spreads with Kimco reporting 3.8% minimum rent growth and 4.1% same-store revenue growth in the fourth quarter. Operating expenses were only up 3.3%, leading to same-store net operating income growth of 4.5% that beat our estimate of 3.3% growth. Kimco reported funds from operations of $0.42 per share in the fourth quarter, and while that was slightly below our $0.43 estimate we note that the company took a $3.3 million charge related to the cash tender offer on its preferred stock, which explains the difference.