RPT Realty (NYSE:RPT) ("RPT" or the "Company")
today announced its financial and operating results for the quarter
ended September 30, 2022.
“Our record level signed not commenced balance,
94.0% leased rate, consistently strong re-leasing spreads and
elevated leasing volumes are the result of the reshaping of the
portfolio that has taken place over the last few years,” said Brian
Harper, President and CEO. “Even in this volatile macro
environment, our reshaped portfolio combined with no debt maturing
until 2025 allows us to focus on driving outsized internal growth
over the next few years.”
FINANCIAL RESULTS
Net income attributable to common shareholders
for the third quarter 2022 of $11.3 million, or $0.13 per diluted
share, compared to $24.0 million, or $0.29 per diluted share for
the same period in 2021. FFO for the third quarter 2022 of $24.1
million, or $0.26 per diluted share, compared to $24.0 million, or
$0.27 per diluted share for the same period in 2021.
Operating FFO for the third quarter 2022 of
$25.2 million, or $0.27 per diluted share, compared to $24.4
million or $0.27 per diluted share, for the same period in 2021.
Operating FFO for the third quarter 2022 excludes certain net
expenses that totaled $1.1 million, primarily attributable to
payment of loan amendment fees, transaction costs and losses on
extinguishment of debt, partially offset by non-cash accelerations
of below market lease intangibles. The change in operating FFO was
primarily driven by higher income from net acquisition activity and
higher same property NOI, partially offset by higher general and
administrative expense and lower termination income.
Same property NOI for the third quarter 2022
increased 1.6% compared to the same period in 2021. The increase
was primarily driven by higher base rent which contributed 2.6%,
partially offset by higher rental income not probable of
collection.
OPERATING RESULTS
The Company's operating results include its
consolidated properties and its pro-rata share of unconsolidated
joint venture properties for the aggregate portfolio.
During the third quarter 2022, the Company
signed 85 leases totaling 696,725 square feet. Blended re-leasing
spreads on comparable leases were 8.5% with ABR of $17.24 per
square foot. Re-leasing spreads on one comparable new and 59
renewal leases were 10.3% and 8.5%, respectively.
As of September 30, 2022, the Company had
$14.0 million of signed not commenced rent and recovery
income.
The table below summarizes the Company's leased
rate and occupancy results at September 30, 2022, June 30,
2022 and September 30, 2021.
Consolidated & Joint Ventures at Pro-rata |
September 30, 2022 |
June 30, 2022 |
September 30, 2021 |
Aggregate Portfolio |
|
|
|
Leased rate |
94.0% |
93.3% |
92.5% |
Occupancy |
88.9% |
90.3% |
91.1% |
Anchor (GLA of 10,000 square feet or more) |
|
|
|
Leased rate |
96.7% |
96.0% |
96.0% |
Occupancy |
91.0% |
92.9% |
94.9% |
Small Shop (GLA of less than 10,000 square
feet) |
|
|
|
Leased rate |
87.2% |
86.4% |
84.0% |
Occupancy |
83.6% |
83.9% |
81.7% |
The quarter-over-quarter decrease in aggregate
portfolio occupancy is due to the purposeful recapture of two
anchor spaces that have been re-leased to top tier tenants and are
reflected in the aggregate portfolio leased rate.
BALANCE SHEET
The Company ended the third quarter 2022 with
$8.6 million in consolidated cash, cash equivalents and restricted
cash and $400.0 million of unused capacity on its $500.0 million
unsecured revolving line of credit. At September 30, 2022, the
Company had approximately $952.2 million of consolidated debt and
finance lease obligations. Including the Company's pro-rata share
of joint venture cash and debt of $4.5 million and
$53.7 million, respectively, results in a third quarter 2022
net debt to annualized adjusted EBITDA ratio of 7.0x. Proforma for
the $14.0 million signed not commenced rent and recovery income
balance, contributions to our grocery-anchored joint venture that
closed subsequent to the end of the third quarter 2022 and $16.4
million of undrawn forward equity, the net debt to annualized
adjusted EBITDA ratio would be 6.0x. Total debt including RPT's
pro-rata share of joint venture debt had a weighted average
interest rate of 3.57% and a weighted average maturity of 5.1
years.
FINANCING ACTIVITY
During the third quarter 2022, the Company
closed on the previously announced $810 million amended and
restated unsecured, SOFR-based, credit facility (the "Facility"),
an increase of $150 million over the Company’s previous unsecured
credit facility. The Facility consists of a $500 million unsecured
revolving line of credit with an initial maturity in 2026, with two
six-month extension options, and $310 million of term loans with
maturities in 2026 through 2028. The Facility includes an accordion
feature that allows the Company to increase the total potential
capacity up to $1.25 billion, subject to certain conditions. The
Facility also features a sustainability-linked pricing component
whereby the applicable interest rate margin can be reduced if the
Company meets certain sustainability performance targets. For more
information on the Facility please see the Company's press release,
RPT Realty Refinances and Upsizes Its $810 Million Unsecured Credit
Facility, dated August 23, 2022.
On October 11, 2022, the Company repaid a
mortgage note secured by The Shops on Lane Avenue totaling $27.2
million with an interest rate of 3.76%. Following the payoff of The
Shops on Lane mortgage, the Company has no debt maturing until
2025.
GROCERY-ANCHORED INVESTMENT PLATFORM
ACTIVITY
As previously announced, during the third
quarter 2022, the Company, through its grocery-anchored joint
venture platform, acquired MBV for a contract price of
$216.0 million or $111.2 million at the Company’s
pro-rata share. MBV is a generational three-story, 200,000 square
foot, grocery-anchored center that sits on 5.2 acres in the heart
of Miami’s booming Brickell neighborhood. Located at the epicenter
of Miami’s premier retail and dining destination, with over 6.7
million annual visitors, it has quickly become one of the most
sought-after office, residential and hospitality markets in the
U.S., creating the ultimate day to night lifestyle and
entertainment oasis. The center is strategically positioned on both
sides of bustling South Miami Avenue, just a few blocks from
Biscayne Bay, in a dense infill and high traffic location that
offers world-class entertainment, luxury residences, hospitality
and a thriving shopping district. MBV is anchored by a top
performing Publix supermarket and features a strong lineup of food
and beverage, service and necessity tenants. Tenant sales average
over $1,100 per square foot with low occupancy costs. The property
is currently 80.5% occupied and 94.4% leased, with attractive
contractual rent growth providing visible near-term earnings
upside. In addition, MBV provides for compelling value-creation
opportunities as the site’s zoning allows for the potential to
develop up to 80 stories or 4.1 million square feet, which could
consist of residential, office and hospitality. See the Company's
press release, RPT Realty Announces Acquisition of Mary Brickell
Village in Miami, FL, dated August 3, 2022 for additional
details.
On October 27, 2022, the Company closed on the
contribution of two wholly-owned properties into its
grocery-anchored joint venture platform valued at a total contract
price of $162.7 million. The Company retained a 51.5% stake in
both properties that were sold to the joint venture. The properties
include The Shops on Lane Avenue in the Columbus market valued at
$80.8 million and Troy Marketplace in the Detroit market
valued at $81.9 million.
NET LEASE INVESTMENT PLATFORM
ACTIVITY
During the third quarter 2022, the net lease
joint venture platform closed on the acquisition of a single-tenant
property from an RPT shopping center for a contract price of
$10.2 million or $0.7 million at the Company's pro-rata
share.
In conjunction with the net lease joint venture
platform acquisition closed during the third quarter 2022, the
Company invested $0.6 million in preferred equity directly with its
RGMZ joint venture partners, Zimmer Partners and Monarch
Alternative Capital LP, which will earn a fixed return of 7.0%.
WHOLLY-OWNED DISPOSITIONS
During the third quarter 2022, the Company
closed on the previously announced sales of Mount Prospect Plaza in
the Chicago market for $34.6 million and Tel-Twelve in the
Detroit market for $45.0 million. Following the sale of Mount
Prospect Plaza, the Company has one remaining property in the
Chicago market representing 0.9% of annualized base rent as of
September 30, 2022.
During the third quarter 2022, the Company
contributed one single-tenant property from an RPT shopping center
to its net lease joint venture platform valued at
$10.2 million.
DIVIDEND
As previously announced, the Board of Trustees
declared a fourth quarter 2022 regular cash dividend of $0.13 per
common share. The Board of Trustees also approved a fourth quarter
2022 Series D convertible preferred share dividend of $0.90625 per
share. The current conversion ratio of the Series D convertible
preferred shares can be found on the Company's website at
investors.rptrealty.com/shareholder-information/dividends. The
dividends for the period October 1, 2022 through December 31, 2022
are payable on January 3, 2023 for shareholders of record on
December 20, 2022.
2022 GUIDANCE
The Company is raising its 2022 operating FFO
per diluted share guidance to $1.02 to $1.05 per diluted share from
$1.01 to $1.05. Selected expectations are outlined below:
Guidance item |
Prior 2022 Guidance |
Current 2022 Guidance |
YTD Actual as of September 30, 2022 |
Operating FFO per diluted share |
$1.01 to $1.05 |
$1.02 to $1.05 |
$0.80 |
Same property NOI growth |
3.0% to 4.0% |
3.75% to 4.25% |
5.4% |
Acquisitions (at share, in millions) |
+/- $225 |
+/- $225 |
$223 |
Dispositions (at share in millions)(1) |
up to $200 |
up to $200 |
$198 |
(1) YTD investment activity includes
contributions to the grocery-anchored joint venture subsequent to
the end of the third quarter 2022.
The Company does not provide a reconciliation
for non-GAAP estimates on a forward-looking basis, including the
information under "2022 Guidance" above, where it is unable to
provide a meaningful or accurate calculation or estimation of
reconciling items and the information is not available without
unreasonable effort. This is due to the inherent difficulty of
forecasting the timing and/or amount of various items that would
impact net income attributable to common stockholders per diluted
share, which is the most directly comparable forward-looking GAAP
financial measure. This includes, for example, acquisition costs
and other non-core items that have not yet occurred, are out of the
Company's control and/or cannot be reasonably predicted. For the
same reasons, the Company is unable to address the probable
significance of the unavailable information. Forward-looking
non-GAAP financial measures provided without the most directly
comparable GAAP financial measures may vary materially from the
corresponding GAAP financial measures.
The Company’s 2022 guidance reflects
management’s view of current and future market conditions,
including current expectations with respect to rental rates,
occupancy levels, acquisitions and dispositions and debt and equity
financing activities. To the extent actual results differ from the
Company's current expectations, its results may differ materially
from the guidance set forth above. Other factors, as referenced
elsewhere in this press release, may also cause the Company’s
results to differ materially from the guidance set forth above.
CONFERENCE CALL/WEBCAST:
The Company will host a live broadcast of its
third quarter 2022 conference call to discuss its financial and
operating results.
Date: |
Thursday, November 3, 2022 |
Time: |
10:00 a.m. ET |
Dial in #: |
(877) 704-4453 |
International Dial in # |
(201) 389-0920 |
Webcast: |
investors.rptrealty.com |
A telephonic replay of the call will be
available through November 10, 2022. The replay can be accessed by
dialing (844) 512-2921 or (412) 317-6671 for international callers
and entering passcode 13732362. A webcast replay will also be
archived on the Company’s website for twelve months.
SUPPLEMENTAL MATERIALS
The Company’s quarterly financial and operating
supplement is available on its corporate web site at rptrealty.com.
If you wish to receive a copy via email, please send requests to
invest@rptrealty.com.
RPT Realty owns and operates a national
portfolio of open-air shopping destinations principally located in
top U.S. markets. The Company's shopping centers offer diverse,
locally-curated consumer experiences that reflect the lifestyles of
their surrounding communities and meet the modern expectations of
the Company's retail partners. The Company is a fully integrated
and self-administered REIT publicly traded on the New York Stock
Exchange (the “NYSE”). The common shares of the Company, par value
$0.01 per share (the “common shares”) are listed and traded on the
NYSE under the ticker symbol “RPT”. As of September 30, 2022,
the Company's property portfolio (the "aggregate portfolio")
consisted of 46 wholly-owned shopping centers, 11 shopping centers
owned through its grocery-anchored joint venture, and 48 retail
properties owned through its net lease joint venture, which
together represent 15.0 million square feet of gross leasable area
(“GLA”). As of September 30, 2022, the Company’s pro-rata
share of the aggregate portfolio was 94.0% leased. For additional
information about the Company please visit rptrealty.com.
Company Contact:
Vin Chao, Managing Director - Finance and
Investments19 W 44th St. 10th Floor, Ste
1002New York, New York
10036vchao@rptrealty.com(212)
221-1752
FORWARD-LOOKING STATEMENTS
This press release contains forward-looking
statements within the meaning of Section 27A of the Securities Act
of 1933, as amended, and Section 21E of the Securities Exchange Act
of 1934, as amended. These forward-looking statements represent our
expectations, plans or beliefs concerning future events and may be
identified by terminology such as “may,” “will,” “should,”
“believe,” “expect,” “estimate,” “anticipate,” “continue,”
“predict” or similar terms. Although the forward-looking statements
made in this document are based on our good faith beliefs,
reasonable assumptions and our best judgment based upon current
information, certain factors could cause actual results to differ
materially from those in the forward-looking statements. Many of
the factors that will determine the outcome of forward-looking
statements are beyond our ability to predict or control. Factors
which may cause actual results to differ materially from current
expectations include, but are not limited to: our success or
failure in implementing our business strategy; economic conditions
generally and in the commercial real estate and finance markets,
including, without limitation, as a result of continued high
inflation rates or further increases in inflation or interest
rates; the cost and availability of capital, which depends in part
on our asset quality and our relationships with lenders and other
capital providers; changes in interest rates and/or other changes
in the interest rate environment; the discontinuance of LIBOR; the
Company's ability to consummate the acquisitions described herein
on the anticipated timeline and terms, or at all; risks associated
with bankruptcies or insolvencies or general downturn in the
businesses of tenants; the ongoing impact of the novel coronavirus
(“COVID-19”), or the impact of any future pandemic, epidemic or
outbreak of any other highly infectious disease, on the U.S.,
regional and global economies and on the Company’s business,
financial condition and results of operations and that of its
tenants; the potential adverse impact from tenant defaults
generally or from the unpredictability of the business plans and
financial condition of the Company's tenants; the execution of rent
deferral or concession agreements on the agreed-upon terms; our
business prospects and outlook; changes in governmental
regulations, tax rates and similar matters; our continuing to
qualify as a REIT; and other factors detailed from time to time in
our filings with the Securities and Exchange Commission ("SEC"),
including in particular those set forth under “Risk Factors” in our
latest annual report on Form 10-K and quarterly report on Form
10-Q. Given these uncertainties, you should not place undue
reliance on any forward-looking statements. Except as required by
law, we assume no obligation to update these forward-looking
statements, even if new information becomes available in the
future.
RPT REALTY |
CONDENSED CONSOLIDATED BALANCE SHEETS |
(In thousands, except per share amounts) |
(unaudited) |
|
September 30,2022 |
|
December 31, 2021 |
|
|
ASSETS |
|
|
|
Income producing properties, at cost: |
|
|
|
Land |
$ |
316,124 |
|
|
$ |
315,687 |
|
Buildings and improvements |
|
1,480,304 |
|
|
|
1,512,455 |
|
Less accumulated depreciation and amortization |
|
(400,694 |
) |
|
|
(422,270 |
) |
Income producing properties, net |
|
1,395,734 |
|
|
|
1,405,872 |
|
Construction in progress and land available for development |
|
38,530 |
|
|
|
43,017 |
|
Real estate held for sale |
|
727 |
|
|
|
3,808 |
|
Net real estate |
|
1,434,991 |
|
|
|
1,452,697 |
|
Equity investments in unconsolidated joint ventures |
|
340,338 |
|
|
|
267,183 |
|
Cash and cash equivalents |
|
7,611 |
|
|
|
13,367 |
|
Restricted cash and escrows |
|
951 |
|
|
|
666 |
|
Accounts receivable, net |
|
23,228 |
|
|
|
23,954 |
|
Acquired lease intangibles, net |
|
43,933 |
|
|
|
37,854 |
|
Operating lease right-of-use assets |
|
17,437 |
|
|
|
17,934 |
|
Other assets, net |
|
114,762 |
|
|
|
88,424 |
|
TOTAL ASSETS |
$ |
1,983,251 |
|
|
$ |
1,902,079 |
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS' EQUITY |
|
|
|
Notes payable, net |
$ |
946,758 |
|
|
$ |
884,185 |
|
Finance lease obligation |
|
821 |
|
|
|
821 |
|
Accounts payable and accrued expenses |
|
50,912 |
|
|
|
47,034 |
|
Distributions payable |
|
14,285 |
|
|
|
12,555 |
|
Acquired lease intangibles, net |
|
34,737 |
|
|
|
36,207 |
|
Operating lease liabilities |
|
17,121 |
|
|
|
17,431 |
|
Other liabilities |
|
5,987 |
|
|
|
8,392 |
|
TOTAL LIABILITIES |
|
1,070,621 |
|
|
|
1,006,625 |
|
|
|
|
|
Commitments and Contingencies |
|
|
|
|
|
|
|
RPT Realty (“RPT”) Shareholders' Equity: |
|
|
|
Preferred shares of beneficial interest, $0.01 par, 2,000 shares
authorized: 7.25% Series D Cumulative Convertible Perpetual
Preferred Shares, (stated at liquidation preference $50 per share),
1,849 shares issued and outstanding as of September 30, 2022
and December 31, 2021, respectively |
|
92,427 |
|
|
|
92,427 |
|
Common shares of beneficial interest, $0.01 par, 240,000 shares
authorized, 84,293 and 83,894 shares issued and outstanding as of
September 30, 2022 and December 31, 2021,
respectively |
|
843 |
|
|
|
839 |
|
Additional paid-in capital |
|
1,235,627 |
|
|
|
1,227,791 |
|
Accumulated distributions in excess of net income |
|
(454,776 |
) |
|
|
(441,478 |
) |
Accumulated other comprehensive gain (loss) |
|
21,216 |
|
|
|
(2,635 |
) |
TOTAL SHAREHOLDERS' EQUITY ATTRIBUTABLE TO
RPT |
|
895,337 |
|
|
|
876,944 |
|
Noncontrolling interest |
|
17,293 |
|
|
|
18,510 |
|
TOTAL SHAREHOLDERS' EQUITY |
|
912,630 |
|
|
|
895,454 |
|
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY |
$ |
1,983,251 |
|
|
$ |
1,902,079 |
|
RPT REALTY |
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS |
(In thousands, except per share amounts) |
(unaudited) |
|
Three Months Ended |
|
Nine Months Ended |
|
September 30, |
|
September 30, |
|
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
REVENUE |
|
|
|
|
|
|
|
Rental income |
$ |
52,487 |
|
|
$ |
53,385 |
|
|
$ |
160,032 |
|
|
$ |
153,203 |
|
Other property income |
|
1,012 |
|
|
|
1,364 |
|
|
|
3,227 |
|
|
|
3,017 |
|
Management and other fee income |
|
1,231 |
|
|
|
426 |
|
|
|
2,848 |
|
|
|
1,272 |
|
TOTAL REVENUE |
|
54,730 |
|
|
|
55,175 |
|
|
|
166,107 |
|
|
|
157,492 |
|
|
|
|
|
|
|
|
|
EXPENSES |
|
|
|
|
|
|
|
Real estate tax expense |
|
7,329 |
|
|
|
8,249 |
|
|
|
22,731 |
|
|
|
25,558 |
|
Recoverable operating expense |
|
6,832 |
|
|
|
6,003 |
|
|
|
21,119 |
|
|
|
17,935 |
|
Non-recoverable operating expense |
|
2,817 |
|
|
|
2,507 |
|
|
|
7,792 |
|
|
|
7,186 |
|
Depreciation and amortization |
|
18,442 |
|
|
|
18,487 |
|
|
|
57,825 |
|
|
|
53,463 |
|
Transaction costs |
|
405 |
|
|
|
389 |
|
|
|
4,881 |
|
|
|
389 |
|
General and administrative expense |
|
9,372 |
|
|
|
7,330 |
|
|
|
26,394 |
|
|
|
22,298 |
|
Provision for impairment |
|
— |
|
|
|
5 |
|
|
|
— |
|
|
|
5 |
|
TOTAL EXPENSES |
|
45,197 |
|
|
|
42,970 |
|
|
|
140,742 |
|
|
|
126,834 |
|
|
|
|
|
|
|
|
|
Gain on sale of real estate |
|
11,144 |
|
|
|
22,196 |
|
|
|
26,234 |
|
|
|
75,415 |
|
|
|
|
|
|
|
|
|
OPERATING INCOME |
|
20,677 |
|
|
|
34,401 |
|
|
|
51,599 |
|
|
|
106,073 |
|
|
|
|
|
|
|
|
|
OTHER INCOME AND EXPENSES |
|
|
|
|
|
|
|
Other income (expense), net |
|
530 |
|
|
|
(38 |
) |
|
|
895 |
|
|
|
(223 |
) |
Earnings from unconsolidated joint ventures |
|
1,779 |
|
|
|
1,074 |
|
|
|
467 |
|
|
|
2,947 |
|
Interest expense |
|
(9,568 |
) |
|
|
(9,297 |
) |
|
|
(26,650 |
) |
|
|
(28,008 |
) |
Loss on extinguishment of debt |
|
(121 |
) |
|
|
— |
|
|
|
(121 |
) |
|
|
— |
|
INCOME BEFORE TAX |
|
13,297 |
|
|
|
26,140 |
|
|
|
26,190 |
|
|
|
80,789 |
|
Income tax (provision) benefit |
|
(71 |
) |
|
|
157 |
|
|
|
(142 |
) |
|
|
47 |
|
NET INCOME |
|
13,226 |
|
|
|
26,297 |
|
|
|
26,048 |
|
|
|
80,836 |
|
Net income attributable to noncontrolling partner interest |
|
(251 |
) |
|
|
(595 |
) |
|
|
(502 |
) |
|
|
(1,843 |
) |
NET INCOME ATTRIBUTABLE TO RPT |
|
12,975 |
|
|
|
25,702 |
|
|
|
25,546 |
|
|
|
78,993 |
|
Preferred share dividends |
|
(1,676 |
) |
|
|
(1,676 |
) |
|
|
(5,026 |
) |
|
|
(5,026 |
) |
NET INCOME AVAILABLE TO COMMON SHAREHOLDERS |
$ |
11,299 |
|
|
$ |
24,026 |
|
|
$ |
20,520 |
|
|
$ |
73,967 |
|
|
|
|
|
|
|
|
|
EARNINGS PER COMMON SHARE |
|
|
|
|
|
|
|
Basic |
$ |
0.13 |
|
|
$ |
0.30 |
|
|
$ |
0.24 |
|
|
$ |
0.92 |
|
Diluted |
$ |
0.13 |
|
|
$ |
0.29 |
|
|
$ |
0.23 |
|
|
$ |
0.89 |
|
|
|
|
|
|
|
|
|
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING |
|
|
|
|
|
|
|
Basic |
|
84,259 |
|
|
|
80,418 |
|
|
|
84,133 |
|
|
|
80,228 |
|
Diluted |
|
84,855 |
|
|
|
88,851 |
|
|
|
84,861 |
|
|
|
88,544 |
|
RPT REALTY |
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES |
FUNDS FROM OPERATIONS |
(In thousands, except per share data) |
(unaudited) |
|
Three Months EndedSeptember
30, |
|
Nine Months EndedSeptember
30, |
|
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
Net income |
$ |
13,226 |
|
|
$ |
26,297 |
|
|
$ |
26,048 |
|
|
$ |
80,836 |
|
Net income attributable to noncontrolling partner interest |
|
(251 |
) |
|
|
(595 |
) |
|
|
(502 |
) |
|
|
(1,843 |
) |
Preferred share dividends |
|
(1,676 |
) |
|
|
(1,676 |
) |
|
|
(5,026 |
) |
|
|
(5,026 |
) |
Net income available to common shareholders |
|
11,299 |
|
|
|
24,026 |
|
|
|
20,520 |
|
|
|
73,967 |
|
Adjustments: |
|
|
|
|
|
|
|
Rental property depreciation and amortization expense |
|
18,292 |
|
|
|
18,338 |
|
|
|
57,366 |
|
|
|
53,015 |
|
Pro-rata share of real estate depreciation from unconsolidated
joint ventures(1) |
|
3,715 |
|
|
|
2,169 |
|
|
|
14,535 |
|
|
|
4,813 |
|
Gain on sale of income producing real estate |
|
(11,144 |
) |
|
|
(22,196 |
) |
|
|
(25,980 |
) |
|
|
(75,415 |
) |
Provision for impairment on income-producing properties |
|
— |
|
|
|
5 |
|
|
|
— |
|
|
|
5 |
|
FFO available to common shareholders |
|
22,162 |
|
|
|
22,342 |
|
|
|
66,441 |
|
|
|
56,385 |
|
Noncontrolling interest in Operating Partnership(2) |
|
251 |
|
|
|
— |
|
|
|
502 |
|
|
|
— |
|
Preferred share dividends (assuming conversion)(3) |
|
1,676 |
|
|
|
1,676 |
|
|
|
5,026 |
|
|
|
— |
|
FFO available to common shareholders and dilutive
securities |
$ |
24,089 |
|
|
$ |
24,018 |
|
|
$ |
71,969 |
|
|
$ |
56,385 |
|
Gain on sale of land |
|
— |
|
|
|
— |
|
|
|
(254 |
) |
|
|
— |
|
Transaction costs(4) |
|
405 |
|
|
|
389 |
|
|
|
4,881 |
|
|
|
389 |
|
Severance expense(5) |
|
— |
|
|
|
1 |
|
|
|
— |
|
|
|
29 |
|
Loss on extinguishment of debt |
|
121 |
|
|
|
— |
|
|
|
121 |
|
|
|
— |
|
Above and below market lease intangible write-offs |
|
(422 |
) |
|
|
— |
|
|
|
(2,022 |
) |
|
|
(497 |
) |
Pro-rata share of transaction costs from unconsolidated joint
ventures(1) |
|
8 |
|
|
|
— |
|
|
|
8 |
|
|
|
— |
|
Pro-rata share of above and below market lease intangible
write-offs from unconsolidated joint ventures(1) |
|
— |
|
|
|
— |
|
|
|
(984 |
) |
|
|
(40 |
) |
Pro-rata share of loss on extinguishment of debt from
unconsolidated joint ventures(1) |
|
20 |
|
|
|
— |
|
|
|
20 |
|
|
|
— |
|
Payment of loan amendment fees(5) |
|
958 |
|
|
|
— |
|
|
|
958 |
|
|
|
— |
|
Insurance proceeds, net(6) |
|
— |
|
|
|
— |
|
|
|
(136 |
) |
|
|
— |
|
Operating FFO available to common shareholders and dilutive
securities |
$ |
25,179 |
|
|
$ |
24,408 |
|
|
$ |
74,561 |
|
|
$ |
56,266 |
|
|
|
|
|
|
|
|
|
Weighted average common shares |
|
84,259 |
|
|
|
80,418 |
|
|
|
84,133 |
|
|
|
80,228 |
|
Shares issuable upon conversion of Operating Partnership Units (“OP
Units”)(2) |
|
1,635 |
|
|
|
— |
|
|
|
1,685 |
|
|
|
— |
|
Dilutive effect of restricted stock |
|
596 |
|
|
|
1,416 |
|
|
|
728 |
|
|
|
1,299 |
|
Shares issuable upon conversion of preferred shares(3) |
|
7,017 |
|
|
|
7,017 |
|
|
|
7,017 |
|
|
|
— |
|
Weighted average equivalent shares outstanding,
diluted |
|
93,507 |
|
|
|
88,851 |
|
|
|
93,563 |
|
|
|
81,527 |
|
|
|
|
|
|
|
|
|
FFO available to common shareholders and dilutive
securities per share, diluted |
$ |
0.26 |
|
|
$ |
0.27 |
|
|
$ |
0.77 |
|
|
$ |
0.69 |
|
|
|
|
|
|
|
|
|
Operating FFO available to common shareholders and dilutive
securities per share, diluted |
$ |
0.27 |
|
|
$ |
0.27 |
|
|
$ |
0.80 |
|
|
$ |
0.69 |
|
|
|
|
|
|
|
|
|
Dividend per common share |
$ |
0.13 |
|
|
$ |
0.12 |
|
|
$ |
0.39 |
|
|
$ |
0.27 |
|
Payout ratio - Operating FFO |
|
48.1 |
% |
|
|
44.4 |
% |
|
|
48.8 |
% |
|
|
39.1 |
% |
|
|
|
|
|
|
|
|
(1) Amounts noted are included in
Earnings from unconsolidated joint ventures.(2) The
total noncontrolling interest reflects OP units convertible on a
one-for-one basis into common shares. The Company's net income for
the three and nine months ended September 30, 2021 (largely driven
by gain on sale of real estate), resulted in an income allocation
to OP Units which drove an OP Unit ratio of $0.32 and $0.97,
respectively (based on 1,881 and 1,897 weighted average OP Units
outstanding for the three and nine months ended September 30, 2021,
respectively). In instances when the OP Unit ratio exceeds basic
FFO, the OP Units are considered anti-dilutive, and as a result are
not included in the calculation of fully diluted FFO and Operating
FFO for the three and nine months ended September 30,
2021.(3) 7.25% Series D Cumulative Convertible Perpetual
Preferred Shares of Beneficial Interest, $0.01 par (“Series D
Preferred Shares”) are paid annual dividends of $6.7 million and
are currently convertible into approximately 7.0 million shares of
common stock. They are dilutive only when earnings or FFO exceed
approximately $0.24 per diluted share per quarter and $0.96 per
diluted share per year. The conversion ratio is subject to
adjustment based upon a number of factors, and such adjustment
could affect the dilutive impact of the Series D convertible
preferred shares on FFO and earnings per share in future periods.
In instances when the Preferred Share ratio exceeds basic FFO, the
Preferred Shares are considered anti-dilutive, and as a result are
not included in the calculation of fully diluted FFO and Operating
FFO for the nine months ended September 30, 2021.(4) For
the three months ended September 30, 2022, primarily comprised of
costs associated with a terminated acquisition. For the nine months
ended September 30, 2022, primarily comprised of fees paid by the
Company associated with the early termination of an existing tenant
which did not qualify for capitalization as an initial direct cost
in accordance with ASC 842. For the three and nine
months ended September 30, 2021, primarily costs associated with
terminated acquisitions.(5) Amounts noted are included
in General and administrative expense.(6) Amounts noted
are included in Other income (expense), net.
RPT REALTY |
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES |
(amounts in thousands) |
(unaudited) |
|
Reconciliation of net income available to common
shareholders to Same Property Net Operating Income
(NOI) |
|
|
|
|
|
|
|
|
|
Three Months EndedSeptember
30, |
|
Nine Months EndedSeptember
30, |
|
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
Net income available to common shareholders |
$ |
11,299 |
|
|
$ |
24,026 |
|
|
$ |
20,520 |
|
|
$ |
73,967 |
|
Preferred share dividends |
|
1,676 |
|
|
|
1,676 |
|
|
|
5,026 |
|
|
|
5,026 |
|
Net income attributable to noncontrolling partner interest |
|
251 |
|
|
|
595 |
|
|
|
502 |
|
|
|
1,843 |
|
Income tax provision (benefit) |
|
71 |
|
|
|
(157 |
) |
|
|
142 |
|
|
|
(47 |
) |
Interest expense |
|
9,568 |
|
|
|
9,297 |
|
|
|
26,650 |
|
|
|
28,008 |
|
Loss on extinguishment of debt |
|
121 |
|
|
|
— |
|
|
|
121 |
|
|
|
— |
|
Earnings from unconsolidated joint ventures |
|
(1,779 |
) |
|
|
(1,074 |
) |
|
|
(467 |
) |
|
|
(2,947 |
) |
Gain on sale of real estate |
|
(11,144 |
) |
|
|
(22,196 |
) |
|
|
(26,234 |
) |
|
|
(75,415 |
) |
Other (income) expense, net |
|
(530 |
) |
|
|
38 |
|
|
|
(895 |
) |
|
|
223 |
|
Management and other fee income |
|
(1,231 |
) |
|
|
(426 |
) |
|
|
(2,848 |
) |
|
|
(1,272 |
) |
Depreciation and amortization |
|
18,442 |
|
|
|
18,487 |
|
|
|
57,825 |
|
|
|
53,463 |
|
Transaction costs |
|
405 |
|
|
|
389 |
|
|
|
4,881 |
|
|
|
389 |
|
General and administrative expenses |
|
9,372 |
|
|
|
7,330 |
|
|
|
26,394 |
|
|
|
22,298 |
|
Provision for impairment |
|
— |
|
|
|
5 |
|
|
|
— |
|
|
|
5 |
|
Pro-rata share of NOI from R2G Venture LLC(1) |
|
5,547 |
|
|
|
3,155 |
|
|
|
14,590 |
|
|
|
7,487 |
|
Pro-rata share of NOI from RGMZ Venture REIT LLC(2) |
|
276 |
|
|
|
97 |
|
|
|
757 |
|
|
|
164 |
|
Lease termination fees |
|
— |
|
|
|
(486 |
) |
|
|
(154 |
) |
|
|
(581 |
) |
Amortization of lease inducements |
|
190 |
|
|
|
212 |
|
|
|
618 |
|
|
|
634 |
|
Amortization of acquired above and below market lease intangibles,
net |
|
(907 |
) |
|
|
(388 |
) |
|
|
(3,766 |
) |
|
|
(2,139 |
) |
Straight-line ground rent expense |
|
77 |
|
|
|
77 |
|
|
|
230 |
|
|
|
230 |
|
Straight-line rental income |
|
(362 |
) |
|
|
(392 |
) |
|
|
(1,151 |
) |
|
|
(2,002 |
) |
NOI at Pro-Rata |
|
41,342 |
|
|
|
40,265 |
|
|
|
122,741 |
|
|
|
109,334 |
|
NOI from Other Investments |
|
(8,883 |
) |
|
|
(7,980 |
) |
|
|
(26,154 |
) |
|
|
(16,255 |
) |
Non-RPT NOI from RGMZ Venture REIT LLC(3) |
|
944 |
|
|
|
598 |
|
|
|
2,849 |
|
|
|
1,239 |
|
Same Property NOI |
$ |
33,403 |
|
|
$ |
32,883 |
|
|
$ |
99,436 |
|
|
$ |
94,318 |
|
|
|
|
|
|
|
|
|
(1) Represents 51.5% of the NOI from the
properties owned by R2G Venture LLC for all periods
presented.(2) Represents 6.4% of the NOI from the
properties owned by RGMZ Venture REIT LLC after March 4, 2021.(3)
Represents 93.6% of the RGMZ Venture REIT LLC properties included
in Same Property NOI after March 4, 2021.
RPT REALTY |
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES |
(amounts in thousands) |
(unaudited) |
|
|
|
|
|
Three Months Ended September 30, |
|
|
2022 |
|
|
|
2021 |
|
Reconciliation of net income to annualized adjusted
EBITDA |
|
|
|
Net income |
$ |
13,226 |
|
|
$ |
26,297 |
|
Interest expense |
|
9,568 |
|
|
|
9,297 |
|
Income tax provision (benefit) |
|
71 |
|
|
|
(157 |
) |
Depreciation and amortization |
|
18,442 |
|
|
|
18,487 |
|
Gain on sale of income producing real estate |
|
(11,144 |
) |
|
|
(22,196 |
) |
Provision for impairment on depreciable real estate |
|
— |
|
|
|
5 |
|
Pro-rata share of interest expense from unconsolidated
entities |
|
489 |
|
|
|
46 |
|
Pro-rata share of depreciation and amortization from unconsolidated
entities |
|
3,715 |
|
|
|
2,215 |
|
EBITDAre |
|
34,367 |
|
|
|
33,994 |
|
|
|
|
|
Severance expense |
|
— |
|
|
|
1 |
|
Above and below market lease intangible write-offs |
|
(422 |
) |
|
|
— |
|
Transaction costs |
|
405 |
|
|
|
389 |
|
Pro-rata share of transaction costs from unconsolidated
entities |
|
8 |
|
|
|
— |
|
Loss on extinguishment of debt |
|
121 |
|
|
|
— |
|
Pro-rata share of loss on extinguishment of debt from
unconsolidated joint ventures |
|
20 |
|
|
|
— |
|
Payment of loan amendment fees |
|
958 |
|
|
|
— |
|
Adjusted EBITDA |
|
35,457 |
|
|
|
34,384 |
|
Annualized adjusted EBITDA |
$ |
141,828 |
|
|
$ |
137,536 |
|
|
|
|
|
Reconciliation of Notes Payable, net to Net
Debt |
|
|
|
Notes payable, net |
$ |
946,758 |
|
|
$ |
943,828 |
|
Unamortized premium |
|
(97 |
) |
|
|
(475 |
) |
Deferred financing costs, net |
|
5,531 |
|
|
|
3,035 |
|
Consolidated notional debt |
|
952,192 |
|
|
|
946,388 |
|
Pro-rata share of notional debt from unconsolidated entities |
|
53,698 |
|
|
|
4,513 |
|
Finance lease obligation |
|
821 |
|
|
|
875 |
|
Cash, cash equivalents and restricted cash |
|
(8,562 |
) |
|
|
(9,675 |
) |
Pro-rata share of unconsolidated entities cash, cash equivalents
and restricted cash |
|
(4,473 |
) |
|
|
(3,510 |
) |
Net debt |
$ |
993,676 |
|
|
$ |
938,591 |
|
|
|
|
|
Reconciliation of interest expense to total fixed
charges |
|
|
|
Interest expense |
$ |
9,568 |
|
|
$ |
9,297 |
|
Pro-rata share of interest expense from unconsolidated
entities |
|
489 |
|
|
|
46 |
|
Preferred share dividends |
|
1,676 |
|
|
|
1,676 |
|
Scheduled mortgage principal payments |
|
339 |
|
|
|
625 |
|
Total fixed charges |
$ |
12,072 |
|
|
$ |
11,644 |
|
|
|
|
|
Net debt to annualized adjusted EBITDA |
7.0 x |
|
6.8 x |
Interest coverage ratio (adjusted EBITDA / interest expense) |
3.5 x |
|
3.7 x |
Fixed charge coverage ratio (adjusted EBITDA / fixed charges) |
2.9 x |
|
3.0 x |
|
|
|
|
RPT RealtyNon-GAAP
Financial Definitions
Certain of our key performance indicators are
considered non-GAAP financial measures. Management uses these
measures along with our GAAP financial statements in order to
evaluate our operations results. We believe these measures provide
additional and useful means to assess our performance. These
measures do not represent alternatives to GAAP measures as
indicators of performance and a comparison of the Company's
presentations to similarly titled measures of other REITs may not
necessarily be meaningful due to possible differences in definition
and application by such REITs.
Funds From Operations (FFO)As
defined by the National Association of Real Estate Investment
Trusts (NAREIT), Funds From Operations (FFO) represents net income
computed in accordance with generally accepted accounting
principles, excluding gains (or losses) from sales of operating
real estate assets and impairment provisions on operating real
estate assets or on investments in non-consolidated investees that
are driven by measurable decreases in the fair value of operating
real estate assets held by the investee, plus depreciation and
amortization of depreciable real estate, (excluding amortization of
financing costs). Adjustments for unconsolidated partnerships and
joint ventures are calculated to reflect funds from operations on
the same basis. We have adopted the NAREIT definition in our
computation of FFO.
Operating FFOIn addition to
FFO, we include Operating FFO as an additional measure of our
financial and operating performance. Operating FFO excludes
transactions costs and periodic items such as gains (or losses)
from sales of non-operating real estate assets and impairment
provisions on non-operating real estate assets, bargain purchase
gains, severance expense, accelerated amortization of debt
premiums, gains or losses on extinguishment of debt, insured
proceeds, net, accelerated write-offs of above and below market
lease intangibles, accelerated write-offs of lease incentives and
payment of loan amendment fees that are not adjusted under the
current NAREIT definition of FFO. We provide a reconciliation of
FFO to Operating FFO. In future periods, Operating FFO may also
include other adjustments, which will be detailed in the
reconciliation for such measure, that we believe will enhance
comparability of Operating FFO from period to period. FFO and
Operating FFO should not be considered alternatives to GAAP net
income available to common shareholders or as alternatives to cash
flow as measures of liquidity.
While we consider FFO available to common
shareholders and Operating FFO available to common shareholders
useful measures for reviewing our comparative operating and
financial performance between periods or to compare our performance
to different REITs, our computations of FFO and Operating FFO may
differ from the computations utilized by other real estate
companies, and therefore, may not be comparable. We recognize the
limitations of FFO and Operating FFO when compared to GAAP net
income available to common shareholders. FFO and Operating FFO
available to common shareholders do not represent amounts available
for needed capital replacement or expansion, debt service
obligations, or other commitments and uncertainties. In addition,
FFO and Operating FFO do not represent cash generated from
operating activities in accordance with GAAP and are not
necessarily indicative of cash available to fund cash needs,
including the payment of dividends.
Net Operating Income (NOI) / Same
Property NOI / NOI from Other InvestmentsNOI consists of
(i) rental income and other property income, before straight-line
rental income, amortization of lease inducements, amortization of
acquired above and below market lease intangibles and lease
termination fees less (ii) real estate taxes and all recoverable
and non-recoverable operating expenses other than straight-line
ground rent expense, in each case, including our share of these
items from our R2G Venture LLC and RGMZ Venture REIT LLC
unconsolidated joint ventures.
NOI, Same Property NOI and NOI from Other
Investments are supplemental non-GAAP financial measures of real
estate companies' operating performance. Same Property NOI is
considered by management to be a relevant performance measure of
our operations because it includes only the NOI of comparable
operating properties for the reporting period. Same Property NOI
for the three and nine months ended September 30, 2022 and
2021 represents NOI from the Company's same property portfolio
consisting of 37 consolidated operating properties and our 51.5%
pro-rata share of four properties owned by our R2G Venture LLC
unconsolidated joint venture and 100% of the 22 properties owned by
our RGMZ Venture REIT LLC unconsolidated joint venture (excludes
seven properties that are part of our Marketplace of Delray
multi-tenant property where activities have started in preparation
for redevelopment). All properties included in Same Property NOI
were either acquired or placed in service and stabilized prior to
January 1, 2021. We present Same Property NOI primarily to show the
percentage change in our NOI from period to period across a
consistent pool of properties. The properties contributed to RGMZ
Venture REIT LLC had previously been parts of larger shopping
centers that we own. Accordingly, 100.0% of the NOI from these
properties is included in our results for periods on or prior to
March 4, 2021 and, for these prior periods, we had not separately
allocated expenses attributable to the larger shopping centers
between these properties and the remainder of these shopping
centers. As a result, in order to help ensure the comparability of
our Same Property NOI for the periods presented, we are continuing
to include 100.0% of the NOI from these properties in our Same
Property NOI following their contribution even though our pro-rata
share following March 4, 2021 is only 6.4%. Same Property NOI
excludes properties under redevelopment or where activities have
started in preparation for redevelopment. A property is designated
as a redevelopment when planned improvements significantly impact
the property. NOI from Other Investments for the three and nine
months ended September 30, 2022 and 2021 represents pro-rata
NOI primarily from (i) properties disposed of and acquired during
2022 and 2021, (ii) Hunter's Square, Marketplace of Delray and The
Crossroads (R2G) where the Company has begun activities in
anticipation of future redevelopment, (iii) certain property
related employee compensation, benefits, and travel expense and
(iv) noncomparable operating income and expense adjustments.
Non-RPT NOI from RGMZ Venture REIT LLC represents 93.6% of the
properties contributed to RGMZ Venture REIT LLC after March 4,
2021, which is our partners’ share of RGMZ Venture REIT LLC.
RPT RealtyNon-GAAP
Financial Definitions (continued)
NOI, Same Property NOI and NOI from Other
Investments should not be considered as alternatives to net income
in accordance with GAAP or as measures of liquidity. Our method of
calculating these measures may differ from methods used by other
REITs and, accordingly, may not be comparable to such other
REITs.
Net DebtNet Debt represents (i)
our total debt principal, which excludes unamortized premium and
deferred financing costs, net, plus (ii) our finance lease
obligation, plus (iii) our pro-rata share of total debt principal,
which excludes unamortized discount and deferred financing costs,
net, of each of our unconsolidated entities, less (iv) our cash,
cash equivalents and restricted cash, less (v) our pro-rata share
of cash, cash equivalents and restricted cash of each of our
unconsolidated entities. We present net debt to show the ratio of
our net debt to our proforma Adjusted EBITDA.
EBITDAre/Adjusted
EBITDANAREIT defines EBITDAre as net income computed in
accordance with GAAP, plus interest expense, income tax expense
(benefit), depreciation and amortization and impairment of
depreciable real estate and in substance real estate equity
investments; plus or minus gains or losses from sales of operating
real estate assets and interests in real estate equity investments;
and adjustments to reflect our share of unconsolidated real estate
joint ventures and partnerships for these items. The Company
calculates EBITDAre in a manner consistent with the NAREIT
definition. The Company also presents Adjusted EBITDA which is
EBITDAre net of other items that we believe enhance comparability
of Adjusted EBITDA across periods and are listed as adjustments in
the applicable reconciliation. EBITDAre and Adjusted EBITDA should
not be considered an alternative measure of operating results or
cash flow from operations as determined in accordance with
GAAP.
Pro-RataWe present certain
financial information on a “pro-rata” basis or including “pro-rata”
adjustments. Unless otherwise specified, pro-rata financial
information includes our proportionate economic ownership of each
of our unconsolidated joint ventures derived on an entity-by-entity
basis by applying the ownership percentage interest used to arrive
at our share of the net operations for the period consistent with
the application of the equity method of accounting to each of our
unconsolidated joint ventures. See page 34 of our quarterly
financial and operating supplement for a discussion of important
considerations and limitations that you should be aware of when
reviewing financial information that we present on a pro-rata basis
or include pro-rata adjustments.
OccupancyOccupancy is defined,
for a property or group of properties, as the ratio, expressed as a
percentage, of (a) the number of square feet of such property
economically occupied by tenants under leases with an initial term
of greater than one year, to (b) the aggregate number of square
feet for such property.
Leased RateLease Rate is defined,
for a property or group of properties, as the ratio, expressed as a
percentage, of (a) the number of square feet of such property under
leases with an initial term of greater than one year, including
signed leases not yet commenced, to (b) the aggregate number of
square feet for such property.
Metropolitan Statistical Area
(MSA)Metropolitan Statistical Area (MSA) information is
sourced from the United States Census Bureau and rank is determined
based on the most recently available population estimates.
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