Kimco Realty Earnings: Newly Signed Leases for Anchor Space Drive High Re-Leasing Spreads

Kimco Realty reported second-quarter results that were in line with our estimates, leading us to reaffirm our $26.50 fair value estimate for the no-moat company. Same-store occupancy sequentially remained flat at 95.8% in the second quarter and was up 60 basis points year over year. Blended re-leasing spreads were up 9.9% as spaces signed to new tenants saw a 25.3% increase in rent terms over the prior tenant’s lease. As a result, minimum rent for the same-store portfolio was up 2.9% year over year, though same-store revenue only increased 2.6% as the company recorded a $3.2 million credit loss. Same-store operating expenses increased 3.4% in the second quarter, leading to same-store net operating income growth of 2.3% that was slightly below our estimate of 2.6% growth. Kimco reported second-quarter funds from operation of $0.39 per share that matched our estimate for the quarter.