ROIC Retail Oppurtunity Investments Corporation

Retail Opportunity Investments Corp. (NASDAQ:ROIC) announced today financial and operating results for the three and nine months ended September 30, 2024.

HIGHLIGHTS

• $32.1 million of net income attributable to common stockholders ($0.25 per diluted share)
• $33.2 million in Funds From Operations (FFO)(1) ($0.25 per diluted share)
• FFO per diluted share guidance for 2024 updated ($1.03 - $1.05 per diluted share)
• $68.8 million of dispositions in 3Q‘24 ($26.7 million gain on sale of real estate)
• 97.1% portfolio lease rate at 9/30/24 (98.0% anchor lease rate, 96.0% non-anchor lease rate)
• 450,623 square feet of leasing activity during 3Q‘24 (most active quarter year-to-date)
• 1.2 million square feet of leasing activity year-to-date (2nd most active on record)
• 13.8% increase in same-space cash base rents on new leases in 3Q‘24 (7.0% on renewals)
• 2.1% decrease in same-center cash net operating income (NOI) (3Q‘24 vs. 3Q‘23)
• 1.5% increase in same-center cash NOI (1st 9 months of ‘24 vs. 1st 9 months of ‘23)
• 98.7% of total gross leasable area unencumbered at 9/30/24
• 6.3x net principal debt-to-annualized EBITDA ratio for 3Q‘24 (vs. 6.4x for 3Q‘23)
• $0.15 per share cash dividend declared

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(1) A reconciliation of GAAP net income to FFO is provided at the end of this press release.

Stuart A. Tanz, President and Chief Executive Officer of Retail Opportunity Investments Corp. stated, “2024 continues to be one of our most productive years in terms of strong leasing activity. Year to date, we have already leased over 1.2 million square feet, including over 450,000 square feet in the third quarter alone. In step with the strong activity, we continue to achieve solid releasing rent growth, and are on track to post our 12th consecutive year of rent growth on both new and renewed leases.” Tanz added, “Along with our strong leasing activity, we continue to advance our investment capital recycling program aimed at enhancing the long term value of our portfolio and business. Year to date, we have sold $68.8 million of properties, while acquiring $70.1 million.”

FINANCIAL SUMMARY

For the three months ended September 30, 2024, GAAP net income attributable to common stockholders was $32.1 million, or $0.25 per diluted share, as compared to GAAP net income attributable to common stockholders of $8.4 million, or $0.07 per diluted share, for the three months ended September 30, 2023. For the nine months ended September 30, 2024, GAAP net income attributable to common stockholders was $50.5 million, or $0.39 per diluted share, as compared to GAAP net income attributable to common stockholders of $26.5 million, or $0.21 per diluted share, for the nine months ended September 30, 2023. Included in 2024 GAAP net income is $26.7 million of gain on sale of real estate for both the three and nine months ended September 30, 2024.

FFO for the third quarter of 2024 was $33.2 million, or $0.25 per diluted share, as compared to $36.0 million in FFO, or $0.27 per diluted share for the third quarter of 2023. FFO for the first nine months of 2024 was $105.3 million, or $0.78 per diluted share, as compared to $105.4 million in FFO, or $0.79 per diluted share for the first nine months of 2023. ROIC reports FFO as a supplemental performance measure in accordance with the definition set forth by the National Association of Real Estate Investment Trusts. A reconciliation of GAAP net income to FFO is provided at the end of this press release.

For the third quarter of 2024, same-center NOI was $54.3 million, as compared to $55.4 million in same-center NOI for the third quarter of 2023, representing a 2.1% decrease. For the first nine months of 2024, same-center NOI increased 1.5%, as compared to the first nine months of 2023. A reconciliation of GAAP operating income to same-center comparative NOI is provided at the end of this press release.

At September 30, 2024, ROIC had total real estate assets (before accumulated depreciation) of approximately $3.5 billion and approximately $1.4 billion of principal debt outstanding, including $135.0 million outstanding on its $600.0 million unsecured credit facility. For the third quarter of 2024, ROIC’s net principal debt-to-annualized EBITDA ratio was 6.3 times, and 98.7% of ROIC’s total gross leasable area was unencumbered at September 30, 2024.

DISPOSITION SUMMARY

During the third quarter of 2024, ROIC sold two properties for a total of $68.8 million, recording a $26.7 million aggregate gain on sale of real estate.

PROPERTY OPERATIONS SUMMARY

At September 30, 2024, ROIC’s portfolio was 97.1% leased. During the third quarter of 2024, ROIC executed 110 leases, totaling 450,623 square feet, including 35 new leases, totaling 110,464 square feet, achieving a 13.8% increase in same-space comparative base rent, and 75 renewed leases, totaling 340,159 square feet, achieving a 7.0% increase in base rent. For the first nine months of 2024, ROIC executed 328 leases, totaling 1,226,662 square feet, including 101 new leases, totaling 271,083 square feet, achieving a 12.9% increase in same-space comparative base rent, and 227 renewed leases, totaling 955,579 square feet, achieving a 6.5% increase in base rent. ROIC reports same-space comparative base rent on a cash basis.

DIVIDEND SUMMARY

On October 4, 2024, ROIC distributed a $0.15 per share cash dividend. On October 22, 2024, the Board declared a cash dividend of $0.15 per share, payable on January 10, 2025 to stockholders of record on December 20, 2024.

2024 GUIDANCE SUMMARY

ROIC currently estimates that GAAP net income for 2024 will be within the range of $0.45 to $0.47 per diluted share, and FFO will be within the range of $1.03 to $1.05 per diluted share.

	Year Ended December 31, 2024
	Previous (7/23/24)								Current
	Low End				High End				Low End				High End
	(unaudited, amounts in thousands except per share and percentage data)
GAAP net income applicable to stockholders	$	31,374			$	35,336			$	56,880			$	59,506
Funds From Operations – diluted	$	139,360			$	143,380			$	138,535			$	141,225
GAAP net income per diluted share	$	0.25			$	0.28			$	0.45			$	0.47
Funds From Operations per diluted share	$	1.04			$	1.07			$	1.03			$	1.05
Key Drivers
General and administrative expenses	$	23,000			$	22,500			$	23,500			$	23,200
Interest expense and other finance expenses	$	80,000			$	78,000			$	80,000			$	78,500
Straight-line rent	$	600			$	1,500			$	600			$	1,000
Amortization of above-market and below-market rent	$	14,300			$	14,300			$	14,600			$	14,600
Bad debt	$	4,000			$	3,000			$	3,000			$	3,000
Acquisitions (net of dispositions)	$	13,500			$	13,500			$	1,300			$	1,300
Equity issued	$	—			$	—			$	—			$	—
Same-center NOI growth		1.0	%			2.0	%			1.0	%			2.0	%

ROIC’s management will discuss guidance, and the underlying assumptions, on ROIC’s October 23, 2024 conference call. ROIC’s guidance is a forward-looking statement and is subject to risks and other factors noted elsewhere in this press release.

CONFERENCE CALL

ROIC will conduct a conference call to discuss its results on Wednesday, October 23, 2024 at 9:00 a.m. Eastern Time / 6:00 a.m. Pacific Time.

To participate in the conference call, click on the following link (ten minutes prior to the call) to register: https://register.vevent.com/register/BI1159e29665c0441fb6af478fc52e86a9

Once registered, participants will have the option of: 1) dialing in from their phone (using a PIN); or 2) clicking the “Call Me” option to receive an automated call directly to their phone.

The conference call will also be available live (in a listen-only mode) at: https://edge.media-server.com/mmc/p/4i9ibu36

The conference call will be recorded and available for replay following the conclusion of the live broadcast and will be accessible up to one year on ROIC’s website, specifically on its Investor Relations Events & Presentations page: https://investor.roicreit.com/events-presentations

ABOUT RETAIL OPPORTUNITY INVESTMENTS CORP.

Retail Opportunity Investments Corp. (NASDAQ: ROIC), is a fully-integrated, self-managed real estate investment trust (REIT) that specializes in the acquisition, ownership and management of grocery-anchored shopping centers located in densely-populated, metropolitan markets across the West Coast. As of September 30, 2024, ROIC owned 93 shopping centers encompassing approximately 10.5 million square feet. ROIC is the largest publicly-traded, grocery-anchored shopping center REIT focused exclusively on the West Coast. ROIC is a member of the S&P SmallCap 600 Index and has investment-grade corporate debt ratings from Moody's Investor Services, S&P Global Ratings and Fitch Ratings, Inc. Additional information is available at: www.roireit.net.

When used herein, the words "believes," "anticipates," "projects," "should," "estimates," "expects," “guidance” and similar expressions are intended to identify forward-looking statements with the meaning of that term in Section 27A of the Securities Act of 1933, as amended, and in Section 21F of the Securities and Exchange Act of 1934, as amended. Certain statements contained herein may constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results of ROIC to differ materially from future results expressed or implied by such forward-looking statements. Information regarding such risks and factors is described in ROIC's filings with the SEC, including its most recent Annual Report on Form 10-K, which is available at: www.roireit.net.

RETAIL OPPORTUNITY INVESTMENTS CORP.Consolidated Balance Sheets(In thousands, except share data)
	September 30, 2024(unaudited)				December 31, 2023
ASSETS
Real Estate Investments:
Land	$	971,609			$	967,251
Building and improvements		2,525,268				2,500,647
		3,496,877				3,467,898
Less: accumulated depreciation		693,690				654,543
		2,803,187				2,813,355
Mortgage note receivable		4,622				4,694
Real Estate Investments, net		2,807,809				2,818,049
Cash and cash equivalents		61,338				6,302
Restricted cash		—				2,116
Tenant and other receivables, net		59,986				61,193
Deposit on real estate acquisition		200				—
Acquired lease intangible assets, net		42,364				42,791
Prepaid expenses		1,932				3,354
Deferred charges, net		26,032				27,294
Other assets		16,500				16,541
Total assets	$	3,016,161			$	2,977,640
LIABILITIES AND EQUITY
Liabilities:
Term loan	$	199,927			$	199,745
Credit facility		135,000				75,000
Senior Notes		1,044,992				1,043,593
Mortgage notes payable		33,481				60,052
Acquired lease intangible liabilities, net		128,520				137,820
Accounts payable and accrued expenses		63,265				50,598
Tenants’ security deposits		8,382				8,205
Other liabilities		41,821				39,420
Total liabilities		1,655,388				1,614,433
Commitments and contingencies
Equity:
Preferred stock, $0.0001 par value 50,000,000 shares authorized; none issued and outstanding		—				—
Common stock, $0.0001 par value, 500,000,000 shares authorized; 128,648,870 and 126,904,085 shares issued and outstanding at September 30, 2024 and December 31, 2023, respectively		13				13
Additional paid-in capital		1,661,702				1,643,908
Accumulated dividends in excess of earnings		(364,322	)			(357,160	)
Accumulated other comprehensive income		—				559
Total Retail Opportunity Investments Corp. stockholders’ equity		1,297,393				1,287,320
Non-controlling interests		63,380				75,887
Total equity		1,360,773				1,363,207
Total liabilities and equity	$	3,016,161			$	2,977,640

RETAIL OPPORTUNITY INVESTMENTS CORP.Consolidated Statements of Operations(Unaudited)(In thousands, except per share data)
	Three Months Ended September 30,								Nine Months Ended September 30,
		2024				2023				2024				2023
Revenues
Rental revenue	$	82,437			$	78,273			$	249,216			$	236,902
Other income		1,047				3,472				2,918				6,179
Total revenues		83,484				81,745				252,134				243,081
Operating expenses
Property operating		14,923				13,210				43,478				40,993
Property taxes		9,324				8,909				26,372				26,677
Depreciation and amortization		25,918				27,050				78,518				77,280
General and administrative expenses		5,959				5,492				17,323				16,588
Other expense		158				157				815				811
Total operating expenses		56,282				54,818				166,506				162,349
Gain on sale of real estate		26,656				—				26,656				—
Operating income		53,858				26,927				112,284				80,732
Non-operating expenses
Interest expense and other finance expenses		(19,933	)			(17,998	)			(58,895	)			(52,589	)
Net income		33,925				8,929				53,389				28,143
Net income attributable to non-controlling interests		(1,797	)			(501	)			(2,877	)			(1,644	)
Net Income Attributable to Retail Opportunity Investments Corp.	$	32,128			$	8,428			$	50,512			$	26,499
Earnings per share – basic	$	0.25			$	0.07			$	0.40			$	0.21
Earnings per share – diluted	$	0.25			$	0.07			$	0.39			$	0.21
Dividends per common share	$	0.15			$	0.15			$	0.45			$	0.45

CALCULATION OF FUNDS FROM OPERATIONS(Unaudited)(In thousands)
	Three Months Ended September 30,								Nine Months Ended September 30,
		2024				2023				2024				2023
Net income attributable to ROIC	$	32,128			$	8,428			$	50,512			$	26,499
Plus: Depreciation and amortization		25,918				27,050				78,518				77,280
Less: Gain on sale of real estate		(26,656	)			—				(26,656	)			—
Funds from operations – basic		31,390				35,478				102,374				103,779
Net income attributable to non-controlling interests		1,797				501				2,877				1,644
Funds from operations – diluted	$	33,187			$	35,979			$	105,251			$	105,423

SAME-CENTER CASH NET OPERATING INCOME ANALYSIS(Unaudited)(In thousands, except number of shopping centers and percentages)
	Three Months Ended September 30,																Nine Months Ended September 30,
		2024				2023			$ Change				% Change					2024				2023			$ Change				% Change
Number of shopping centers included in same-center analysis		90				90												90				90
Same-center leased rate		97.1	%			98.2	%							(1.1	)%			97.1	%			98.2	%							(1.1	)%
Revenues:
Base rents	$	56,942			$	55,738			$	1,204				2.2	%		$	169,825			$	166,828			$	2,997				1.8	%
Recoveries from tenants		21,006				19,274				1,732				9.0	%			61,081				58,517				2,564				4.4	%
Other property income		414				3,088				(2,674	)			(86.6	)%			1,862				4,489				(2,627	)			(58.5	)%
Bad debt		(602	)			(779	)			177				(22.7	)%			(1,640	)			(2,552	)			912				(35.7	)%
Total Revenues		77,760				77,321				439				0.6	%			231,128				227,282				3,846				1.7	%
Operating Expenses
Property operating expenses		14,503				13,154				1,349				10.3	%			42,450				40,220				2,230				5.5	%
Property taxes		9,005				8,726				279				3.2	%			25,405				26,128				(723	)			(2.8	)%
Total Operating Expenses		23,508				21,880				1,628				7.4	%			67,855				66,348				1,507				2.3	%
Same-Center Cash Net Operating Income	$	54,252			$	55,441			$	(1,189	)			(2.1	)%		$	163,273			$	160,934			$	2,339				1.5	%

SAME-CENTER CASH NET OPERATING INCOME RECONCILIATION(Unaudited)(In thousands)
	Three Months Ended September 30,								Nine Months Ended September 30,
		2024				2023				2024				2023
GAAP operating income	$	53,858			$	26,927			$	112,284			$	80,732
Depreciation and amortization		25,918				27,050				78,518				77,280
General and administrative expenses		5,959				5,492				17,323				16,588
Other expense		158				157				815				811
Gain on sale of real estate		(26,656	)			—				(26,656	)			—
Straight-line rent		177				(362	)			(246	)			(1,688	)
Amortization of above-market and below-market rent, net		(2,644	)			(2,118	)			(11,965	)			(7,591	)
Property revenues and other expenses(1)		(174	)			196				(89	)			(428	)
Total Company cash NOI		56,596				57,342				169,984				165,704
Non same-center cash NOI		(2,344	)			(1,901	)			(6,711	)			(4,770	)
Same-center cash NOI	$	54,252			$	55,441			$	163,273			$	160,934

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(1) Includes anchor lease termination fees, net of contractual amounts, if any, expense and recovery adjustments related to prior periods and other miscellaneous adjustments.

NON-GAAP DISCLOSURES

Funds from operations (“FFO”), is a widely recognized non-GAAP financial measure for REITs that the Company believes when considered with financial statements presented in accordance with GAAP, provides additional and useful means to assess its financial performance. FFO is frequently used by securities analysts, investors and other interested parties to evaluate the performance of REITs, most of which present FFO along with net income as calculated in accordance with GAAP. The Company computes FFO in accordance with the “White Paper” on FFO published by the National Association of Real Estate Investment Trusts (“NAREIT”), which defines FFO as net income attributable to common stockholders (determined in accordance with GAAP) excluding gains or losses from debt restructuring, sales of depreciable property and impairments, plus real estate related depreciation and amortization, and after adjustments for partnerships and unconsolidated joint ventures.

The Company uses cash net operating income (“NOI”) internally to evaluate and compare the operating performance of the Company’s properties. The Company believes cash NOI provides useful information to investors regarding the Company’s financial condition and results of operations because it reflects only those income and expense items that are incurred at the property level, and when compared across periods, can be used to determine trends in earnings of the Company’s properties as this measure is not affected by the non-cash revenue and expense recognition items, the cost of the Company’s funding, the impact of depreciation and amortization expenses, gains or losses from the acquisition and sale of operating real estate assets, general and administrative expenses or other gains and losses that relate to the Company’s ownership of properties. The Company believes the exclusion of these items from operating income is useful because the resulting measure captures the actual revenue generated and actual expenses incurred in operating the Company’s properties as well as trends in occupancy rates, rental rates and operating costs. Cash NOI is a measure of the operating performance of the Company’s properties but does not measure the Company’s performance as a whole and is therefore not a substitute for net income or operating income as computed in accordance with GAAP. The Company defines cash NOI as operating revenues (base rent and recoveries from tenants), less property and related expenses (property operating expenses and property taxes), adjusted for non-cash revenue and operating expense items such as straight-line rent and amortization of lease intangibles, debt-related expenses and other adjustments. Cash NOI also excludes general and administrative expenses, depreciation and amortization, acquisition transaction costs, other expense, interest expense, gains and losses from property acquisitions and dispositions, extraordinary items, tenant improvements and leasing commissions. Other REITs may use different methodologies for calculating cash NOI, and accordingly, the Company’s cash NOI may not be comparable to other REITs.

Contact:Nicolette O’LearyDirector of Investor Relations858-677-0900noleary@roireit.net