Kimco Realty Corp. KIM reported fourth-quarter 2023 funds from operations (FFO) per share of 39 cents, in line with the Zacks Consensus Estimate. The figure was only a cent higher than the year-ago quarter’s tally.

Though Kimco reported growth in revenues, a rise in interest expenses acted as a dampener. This retail REIT provided an initial outlook for 2024 FFO per share, which is below the consensus mark. Probably because of these negatives, shares of the company lost nearly 2% so far today despite better-than-expected results.

This retail REIT clocked in revenues of $451.6 million, beating the consensus mark of $449.7 million. Moreover, the figure improved 2.7% year over year.

According to Conor Flynn, CEO of Kimco, “The lack of new supply and continued strong demand for our high-quality, grocery-anchored, and mixed-use portfolio bodes well for 2024. And with the completion of the RPT acquisition, our best-in-class team is already working to unlock additional growth and long-term value for our shareholders.”

For full-year 2023, Kimco’s FFO per share came in at $1.57, lower than the prior-year tally of $1.58 and missing the Zacks Consensus Estimate of $1.56. This was backed by 3.2% growth in revenues to $1.78 billion, in line with the consensus mark.

Subsequent to the quarter end, Kimco completed the acquisition of RPT Realty in an all-stock transaction. The buyout adds 56 open-air shopping centers to Kimco’s portfolio encompassing 13.3 million square feet of gross leasable area. Of the 56 shopping centers, 43 are wholly owned.

Quarter in Detail

Pro-rata portfolio occupancy at the end of the fourth quarter was 96.2%, reflecting an expansion of 50 basis points (bps) year over year and 70 bps sequentially.

Pro-rata anchor occupancy ended the quarter at 98%, remaining unchanged year over year and rising 80 bps from the previous quarter. Pro-rata small shop occupancy ended the quarter at 91.7%, representing an uptick of 170 basis points year over year and 60 bps sequentially.

Kimco executed 480 leases, aggregating 2.7 million square feet in the quarter. Blended pro-rata rent spreads on comparable spaces generated was 11.2%, with pro-rata cash rent spreads for new leases climbing 24%, and renewals and options rising 7.8%.

Same-property net operating income (NOI) grew 3.2% year over year to $329.6 million, backed by a rise in the minimum rent of 3.1%. Interest expenses were up 11.2% year over year to $67.8 million in the reported quarter.

Portfolio Activity

During the quarter, Kimco acquired an improved parcel at an existing shopping center for $7.8 million.