Kimco Realty Earnings: Reports Highest Blended Re-Leasing Spread in Six Years

Third-quarter results for no-moat Kimco Realty were in line with our estimates, leading us to reaffirm our $25.50 fair value estimate. Same-store occupancy sequentially fell 30 basis points to 95.5%, slightly worse than our estimate of flat growth for the third quarter, with Bed Bath & Beyond vacating the last 16 remaining anchor spaces having a 45-basis point impact on occupancy during the quarter. However, blended re-leasing spreads were very strong at 13.4% in the quarter, the highest single quarter in six years, with rent terms to new tenants up 34.9% over prior rent levels, while renewals were also strong at 8.8% higher rent terms. Same-store revenue grew 2.6% in the quarter, while same-store operating expenses grew 2.7%, leading to same-store net operating income growth of 2.6%, which was slightly better than our estimate of 1.4% growth. Kimco reported funds from operations of $0.40 per share in the third quarter, matching our estimate for the quarter.