First-Quarter Occupancy Gain Helps Drive Solid NOI Growth That Matches Our Estimates for Kimco

First-quarter results for Kimco Realty were in line with our expectations, giving us confidence in our $26.50 fair value estimate for the no-moat company. Portfolio occupancy sequentially improved another 30 basis points to 94.6% and is now 120 basis points higher than it was a year ago. The occupancy increase is particularly strong given that occupancy typically falls in the first quarter and this quarter’s increase is the largest sequential increase seen in a first quarter in over 10 years. Re-leasing spreads in the first quarter came in at 7.1%, in line with our estimate of 6.7% and in line with the company’s trailing four-quarter figure of 6.9%. Same-store revenue was up 5.9% in the first quarter driven by 3.6% minimum rent growth but further helped by significantly reduced rent abatements needed for tenants. Same-store expenses fell 1.4%, leading to same-store net operating income growth of 8.9% that was in line with our estimate of 8.2% growth. The strong portfolio growth drove Kimco Realty’s funds from operations, which was up 16.6% year over year to $0.39 per share and beat our estimate by a penny.