High Re-Leasing Spreads and Lower Expenses Lead to Strong Q4 Results for Kimco Realty

Kimco Realty reported fourth-quarter results that were above 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 improved 30 basis points sequentially to 94.4%, slightly better than our 94.2% estimate. Re-leasing spreads were strong at 9.2% in the fourth quarter, better than our 6.3% estimate and better than the 4.9% figure the company reported in the third quarter, which helped drive same-store revenue growth of 8.3%. Same-store expenses fell 1.7% in the fourth quarter as operating expenses only rose 1.5% and real estate taxes were down 5.2%. As a result, same-store net operating income growth was 12.9% in the fourth quarter, well ahead of our estimate of 5.6% growth. The strong operations in the quarter led to Kimco reporting funds from operations of $0.39 per share, which was 4 cents better than our $0.35 estimate and 8 cents better than the $0.31 reported in the fourth quarter of 2020.