Kimco Reports Solid Minimum Rent Growth and Another Dividend Payment Increase in Third Quarter

Third-quarter results for no-moat Kimco Realty were slightly better than we anticipated, though we don’t see anything in the quarter that would materially change our $27 fair value estimate. Occupancy increased 20 basis points sequentially and 120 basis points year over year to 95.3% in the third quarter. Blended re-leasing spreads were 7.6%, in line with our estimate, as leases to existing tenants were up 6.2% while leases to new tenants were up 16.6% over the prior rent levels. As a result, minimum rent for the same-store portfolio was up 4.6% in the third quarter and same-store revenue was up 4.1%. However, operating and maintenance costs saw a 16.5% increase, leading to same-store expenses increasing 6.7% in the quarter. As a result, same-store net operating income grew just 3.1%, though that is still better than our 2.1% estimate for the third quarter. Kimco reported funds from operations of $0.41 per share in the quarter, which was a penny better than our estimate and also a penny better than the figure reported in the third quarter of 2021 after adjusting for nonrecurring merger costs.