RPT Realty (NYSE:RPT) (the "Company" or "RPT")
today announced its financial and operating results for the quarter
and year ended December 31, 2022.
"Our results in 2022 underscored the strength of
our business against the challenges of the current economic
environment," said Brian Harper, President and CEO. "We experienced
record setting signed not commenced levels, double-digit new
releasing spreads, and our highest leasing volume in nearly a
decade. While we had another year of accretive capital recycling
into Boston and Miami, we will be disciplined, yet opportunistic in
2023. Our balance sheet is on solid footing with leverage ticking
lower, no debt maturing until 2025 and a debt stack that is 95%
fixed; positioning us to drive strong internal growth through our
leasing and re-tenanting activities, which remain our highest and
best use of capital.”
FINANCIAL RESULTS
Net income (loss) attributable to common
shareholders for the fourth quarter 2022 of $56.8 million, or $0.63
per diluted share, compared to $(12.0) million, or $(0.15) per
diluted share for the same period in 2021. Net income available to
common shareholders for the full year 2022 of $77.3 million, or
$0.89 per diluted share, compared to $61.9 million, or $0.75 per
diluted share for the full year 2021.
FFO for the fourth quarter 2022 of $22.7
million, or $0.24 per diluted share, compared to $13.6 million, or
$0.16 per diluted share for the same period in 2021. FFO for the
full year 2022 of $95.8 million, or $1.02 per diluted share,
compared to $70.2 million, or $0.85 per diluted share for the full
year 2021.
Operating FFO for the fourth quarter 2022 of
$22.2 million, or $0.24 per diluted share, compared to $21.9
million or $0.25 per diluted share for the same period in 2021.
Operating FFO for the fourth quarter 2022 excludes certain net
income that totaled $0.5 million, primarily attributable to gains
on sale of land. The change in operating FFO per share was
primarily attributable to lower NOI from the net impact of
dispositions and acquisitions completed in 2021 and 2022, partially
offset by higher management fees from unconsolidated joint
ventures.
Operating FFO for the full year 2022 of $97.9
million, or $1.04 per diluted share, compared to $78.4 million, or
$0.95 per diluted share in the full year 2021. Operating FFO for
the full year 2022 excludes certain net expenses that totaled $2.1
million primarily attributable to transaction costs and loan
amendment fees, partially offset by above and below-market lease
intangible write-offs and gains on sale of land. The change in
operating FFO per share was primarily driven by higher NOI from the
net impact of acquisitions and dispositions completed in 2021 and
2022, lower rent not probable of collection net of abatements,
higher management fees from unconsolidated joint ventures and lower
interest expense, partially offset by higher general and
administrative expense and an increase in common and dilutive
shares.
Same property NOI during the fourth quarter 2022
increased 1.1% compared to the same period in 2021. The increase
was primarily driven by higher base rent excluding abatements
associated with reversals of rent not probable of collection,
partially offset by lower net recoveries.
Same property NOI for the full year 2022
increased 4.3% compared to the same period in 2021. The increase
was primarily driven by higher base rent and lower rent not
probable of collection, net of abatements.
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 fourth quarter 2022, the Company
signed 69 leases totaling 502,704 square feet. Blended re-leasing
spreads on comparable leases were 5.6% with ABR of $15.54 per
square foot. Re-leasing spreads on six comparable new and 49
renewal leases were 24.3% and 5.0%, respectively.
For the full year 2022, the Company signed
leases totaling 2,208,591 square feet. Blended re-leasing spreads
on comparable leases were 8.2% with ABR of $17.25 per square foot.
Re-leasing spreads on 19 comparable new and 202 renewal leases were
42.6% and 6.5%, respectively.
As of December 31, 2022, the Company had
$11.2 million of signed not commenced rent and recovery
income.
The table below summarizes the Company's leased
rate and occupancy results at December 31, 2022,
September 30, 2022 and December 31, 2021.
Consolidated & Joint Ventures at Pro-rata |
December 31, 2022 |
September 30, 2022 |
December 31, 2021 |
Aggregate Portfolio |
|
|
|
Leased rate |
93.8% |
94.0% |
93.1% |
Occupancy |
89.9% |
88.9% |
90.7% |
Anchor (GLA of 10,000 square feet or more) |
|
|
|
Leased rate |
96.7% |
96.7% |
96.4% |
Occupancy |
92.6% |
91.0% |
94.1% |
Small Shop (GLA of less than 10,000 square
feet) |
|
|
|
Leased rate |
86.8% |
87.2% |
85.0% |
Occupancy |
83.5% |
83.6% |
82.4% |
BALANCE SHEET
The Company ended the fourth quarter 2022 with
$5.9 million in consolidated cash, cash equivalents and restricted
cash and $465.0 million of unused capacity on its $500.0 million
unsecured revolving credit facility. At December 31, 2022, the
Company had approximately $859.8 million of consolidated notional
debt and finance lease obligations. Including the Company's
pro-rata share of joint venture cash and notional debt of
$4.9 million and $53.7 million, respectively, resulted in
a fourth quarter 2022 net debt to annualized adjusted EBITDA ratio
of 6.9x. Proforma for the $11.2 million signed not commenced
rent and recovery income balance, the net debt to annualized
adjusted EBITDA ratio would be 6.3x. Total debt including RPT's
pro-rata share of joint venture debt had a weighted average
interest rate of 3.63% and a weighted average maturity of 5.1
years.
FINANCING ACTIVITY
In October, the Company closed on the repayment
of a $27.2 million mortgage secured by The Shops on Lane Avenue,
thereby eliminating all debt maturities until 2025.
In December, the Company opportunistically
executed forward starting swaps covering $160.0 million of notional
value that swap SOFR to a fixed rate of 3.04%, consisting of $60.0
million fixed at 3.35% that starts in March 2023, $50.0 million
fixed at 2.87% that starts in November 2024 and $50 million fixed
at 2.86% that starts in January 2025. With these swaps, the Company
has fixed the rate on the SOFR component of all outstanding term
loan debt through their respective maturities.
As previously announced, in December, the
Company settled 1.2 million common shares that were previously
offered and sold on a forward basis under its at-the-market equity
distribution program ("ATM") at a weighted average gross price of
$13.85 per share. The Company currently has $133.0 million
available for issuance under the ATM.
For the full year 2022, the Company, through its
three strategic platforms, raised and closed on $1.2 billion of
gross capital, comprised of an $810.0 million amended and restated
credit facility, a $350.0 million refinancing of its RGMZ
acquisition revolver, $52.0 million of R2G mortgage debt and $18.0
million of a forward equity issuance under the ATM.
INVESTMENT ACTIVITY
During the fourth quarter 2022, the Company
closed on the contribution of two wholly-owned properties into its
grocery-anchored joint venture platform for a total contract price
of $162.7 million, retaining a 51.5% stake in both properties.
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. Proceeds were used to
fund the Company’s share of the Mary Brickell Village acquisition
in the Miami market that closed in the third quarter 2022.
For the full year 2022, the Company through its
three strategic investment platforms, closed on third-party
acquisitions totaling $375.0 million or $223.4 million at
the Company’s pro-rata share. The Company also closed on
dispositions and contributions into its two strategic joint venture
platforms totaling $282.9 million or $197.7 million at
the Company’s pro-rata share. For more information on the Company's
2022 investment activity, please see our press release, RPT Realty
Announces 2022 Investment and Capital Markets Activity, dated
January 10, 2023.
DIVIDEND
As previously announced, on February 9, 2023,
the Board of Trustees declared a first quarter 2023 regular cash
dividend of $0.14 per common share, representing an increase of 8%
over the prior quarterly rate. The Board of Trustees also approved
a first quarter 2023 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 January 1, 2023 through March 31, 2023
are payable on April 3, 2023 for shareholders of record on March
20, 2023.
2023 GUIDANCE
The Company initiated 2023 operating FFO per
diluted share guidance of $0.97 to $1.01. Selected expectations are
outlined below.
- Same property NOI growth of 1.50%
to 3.25%
- Same property NOI growth includes
unfavorable impacts from assumed elevated bad debt expense and
occupancy loss due to tenant bankruptcies
- Due to the current capital markets
environment, the Company has assumed no multi-tenant acquisition
and disposition activity at this point for 2023, however the
Company will remain opportunistic with its three strategic
investment platforms
The Company does not provide a reconciliation
for non-GAAP estimates on a forward-looking basis, including the
information under "2023 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 2023 guidance reflects
management’s view of current and future market conditions,
including current expectations with respect to rental rates,
occupancy levels, tenant bankruptcies, acquisitions and
dispositions and debt and equity financing activities. To the
extent actual results differ from our current expectations, the
Company’s 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
fourth quarter 2022 conference call to discuss its financial and
operating results.
Date: |
Thursday, February 16, 2023 |
Time: |
9:00 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 Thursday, February 23, 2023. The replay can
be accessed by dialing (844) 512-2921 or (412) 317-6671 for
international callers and entering passcode 13734573. 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 investor relations website
at investors.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 December 31, 2022,
the Company's property portfolio (the "aggregate portfolio")
consisted of 44 wholly-owned shopping centers, 13 shopping centers
owned through its grocery anchored joint venture, 48 retail
properties owned through its net lease joint venture and one net
lease retail property that was held for sale by the Company, which
together represent 15.0 million square feet of gross leasable area
(“GLA”). As of December 31, 2022, the Company’s pro-rata share
of the aggregate portfolio was 93.8% 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 (including supply chain disruptions and construction
delays) 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
such as the inability to obtain equity, debt or other sources of
funding or refinancing on favorable terms to the Company and; 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 London Interbank
Offered Rate; 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. 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) |
|
December 31,2022 |
|
December 31,2021 |
ASSETS |
|
|
|
Income producing properties, at cost: |
|
|
|
Land |
$ |
302,062 |
|
|
$ |
315,687 |
|
Buildings and improvements |
|
1,373,893 |
|
|
|
1,512,455 |
|
Less accumulated depreciation and amortization |
|
(386,036 |
) |
|
|
(422,270 |
) |
Income producing properties, net |
|
1,289,919 |
|
|
|
1,405,872 |
|
Construction in progress and land available for development |
|
37,772 |
|
|
|
43,017 |
|
Real estate held for sale |
|
3,115 |
|
|
|
3,808 |
|
Net real estate |
|
1,330,806 |
|
|
|
1,452,697 |
|
Equity investments in unconsolidated joint ventures |
|
423,089 |
|
|
|
267,183 |
|
Cash and cash equivalents |
|
5,414 |
|
|
|
13,367 |
|
Restricted cash and escrows |
|
461 |
|
|
|
666 |
|
Accounts receivable, net |
|
19,914 |
|
|
|
23,954 |
|
Acquired lease intangibles, net |
|
40,043 |
|
|
|
37,854 |
|
Operating lease right-of-use assets |
|
17,269 |
|
|
|
17,934 |
|
Other assets, net |
|
109,443 |
|
|
|
88,424 |
|
TOTAL ASSETS |
$ |
1,946,439 |
|
|
$ |
1,902,079 |
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS' EQUITY |
|
|
|
Notes payable, net |
$ |
854,596 |
|
|
$ |
884,185 |
|
Finance lease obligation |
|
763 |
|
|
|
821 |
|
Accounts payable and accrued expenses |
|
41,985 |
|
|
|
47,034 |
|
Distributions payable |
|
14,336 |
|
|
|
12,555 |
|
Acquired lease intangibles, net |
|
33,157 |
|
|
|
36,207 |
|
Operating lease liabilities |
|
17,016 |
|
|
|
17,431 |
|
Other liabilities |
|
5,933 |
|
|
|
8,392 |
|
TOTAL LIABILITIES |
|
967,786 |
|
|
|
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 December 31, 2022
and December 31, 2021, respectively |
|
92,427 |
|
|
|
92,427 |
|
Common shares of beneficial interest, $0.01 par, 240,000 shares
authorized, 85,525 and 83,894 shares issued and outstanding as of
December 31, 2022 and December 31, 2021,
respectively |
|
855 |
|
|
|
839 |
|
Additional paid-in capital |
|
1,255,087 |
|
|
|
1,227,791 |
|
Accumulated distributions in excess of net income |
|
(409,290 |
) |
|
|
(441,478 |
) |
Accumulated other comprehensive gain (loss) |
|
21,434 |
|
|
|
(2,635 |
) |
TOTAL SHAREHOLDERS' EQUITY ATTRIBUTABLE TO
RPT |
|
960,513 |
|
|
|
876,944 |
|
Noncontrolling interest |
|
18,140 |
|
|
|
18,510 |
|
TOTAL SHAREHOLDERS' EQUITY |
|
978,653 |
|
|
|
895,454 |
|
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY |
$ |
1,946,439 |
|
|
$ |
1,902,079 |
|
|
|
|
|
|
|
|
|
RPT REALTY |
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS |
(In thousands, except per share amounts) |
(unaudited) |
|
Three Months Ended |
|
Twelve Months Ended |
|
December 31, |
|
December 31, |
|
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
REVENUE |
|
|
|
|
|
|
|
Rental income |
$ |
48,896 |
|
|
$ |
53,900 |
|
|
$ |
208,928 |
|
|
$ |
207,103 |
|
Other property income |
|
1,376 |
|
|
|
1,382 |
|
|
|
4,603 |
|
|
|
4,399 |
|
Management and other fee income |
|
1,277 |
|
|
|
714 |
|
|
|
4,125 |
|
|
|
1,986 |
|
TOTAL REVENUE |
|
51,549 |
|
|
|
55,996 |
|
|
|
217,656 |
|
|
|
213,488 |
|
|
|
|
|
|
|
|
|
EXPENSES |
|
|
|
|
|
|
|
Real estate tax expense |
|
4,786 |
|
|
|
7,258 |
|
|
|
27,517 |
|
|
|
32,816 |
|
Recoverable operating expense |
|
7,523 |
|
|
|
7,517 |
|
|
|
28,642 |
|
|
|
25,452 |
|
Non-recoverable operating expense |
|
2,755 |
|
|
|
2,823 |
|
|
|
10,547 |
|
|
|
10,009 |
|
Depreciation and amortization |
|
21,631 |
|
|
|
18,791 |
|
|
|
79,456 |
|
|
|
72,254 |
|
Transaction costs |
|
56 |
|
|
|
218 |
|
|
|
4,937 |
|
|
|
607 |
|
General and administrative expense |
|
10,303 |
|
|
|
10,030 |
|
|
|
36,697 |
|
|
|
32,328 |
|
Provision for impairment |
|
— |
|
|
|
17,196 |
|
|
|
— |
|
|
|
17,201 |
|
TOTAL EXPENSES |
|
47,054 |
|
|
|
63,833 |
|
|
|
187,796 |
|
|
|
190,667 |
|
|
|
|
|
|
|
|
|
Gain on sale of real estate |
|
62,704 |
|
|
|
13,500 |
|
|
|
88,938 |
|
|
|
88,915 |
|
|
|
|
|
|
|
|
|
OPERATING INCOME |
|
67,199 |
|
|
|
5,663 |
|
|
|
118,798 |
|
|
|
111,736 |
|
|
|
|
|
|
|
|
|
OTHER INCOME AND EXPENSES |
|
|
|
|
|
|
|
Other income (expense), net |
|
635 |
|
|
|
(13 |
) |
|
|
1,530 |
|
|
|
(236 |
) |
Earnings from unconsolidated joint ventures |
|
692 |
|
|
|
1,048 |
|
|
|
1,159 |
|
|
|
3,995 |
|
Interest expense |
|
(8,939 |
) |
|
|
(9,017 |
) |
|
|
(35,589 |
) |
|
|
(37,025 |
) |
Loss on extinguishment of debt |
|
— |
|
|
|
(8,294 |
) |
|
|
(121 |
) |
|
|
(8,294 |
) |
INCOME (LOSS) BEFORE TAX |
|
59,587 |
|
|
|
(10,613 |
) |
|
|
85,777 |
|
|
|
70,176 |
|
Income tax benefit (provision) |
|
22 |
|
|
|
41 |
|
|
|
(120 |
) |
|
|
88 |
|
NET INCOME (LOSS) |
|
59,609 |
|
|
|
(10,572 |
) |
|
|
85,657 |
|
|
|
70,264 |
|
Net (income) loss attributable to noncontrolling partner
interest |
|
(1,105 |
) |
|
|
218 |
|
|
|
(1,607 |
) |
|
|
(1,625 |
) |
NET INCOME (LOSS) ATTRIBUTABLE TO RPT |
|
58,504 |
|
|
|
(10,354 |
) |
|
|
84,050 |
|
|
|
68,639 |
|
Preferred share dividends |
|
(1,675 |
) |
|
|
(1,675 |
) |
|
|
(6,701 |
) |
|
|
(6,701 |
) |
NET INCOME (LOSS) AVAILABLE TO COMMON
SHAREHOLDERS |
$ |
56,829 |
|
|
$ |
(12,029 |
) |
|
$ |
77,349 |
|
|
$ |
61,938 |
|
|
|
|
|
|
|
|
|
EARNINGS (LOSS) PER COMMON SHARE |
|
|
|
|
|
|
|
Basic |
$ |
0.67 |
|
|
$ |
(0.15 |
) |
|
$ |
0.91 |
|
|
$ |
0.76 |
|
Diluted |
$ |
0.63 |
|
|
$ |
(0.15 |
) |
|
$ |
0.89 |
|
|
$ |
0.75 |
|
|
|
|
|
|
|
|
|
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING |
|
|
|
|
|
|
|
Basic |
|
84,522 |
|
|
|
83,618 |
|
|
|
84,231 |
|
|
|
81,083 |
|
Diluted |
|
92,660 |
|
|
|
83,618 |
|
|
|
85,474 |
|
|
|
82,298 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RPT REALTY |
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES |
FUNDS FROM OPERATIONS |
(In thousands, except per share data) |
(unaudited) |
|
Three Months Ended December 31, |
|
Twelve Months Ended December 31, |
|
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
Net income (loss) |
$ |
59,609 |
|
|
$ |
(10,572 |
) |
|
$ |
85,657 |
|
|
$ |
70,264 |
|
Net (income) loss attributable to noncontrolling partner
interest |
|
(1,105 |
) |
|
|
218 |
|
|
|
(1,607 |
) |
|
|
(1,625 |
) |
Preferred share dividends |
|
(1,675 |
) |
|
|
(1,675 |
) |
|
|
(6,701 |
) |
|
|
(6,701 |
) |
Net income (loss) available to common shareholders |
|
56,829 |
|
|
|
(12,029 |
) |
|
|
77,349 |
|
|
|
61,938 |
|
Adjustments: |
|
|
|
|
|
|
|
Rental property depreciation and amortization expense |
|
21,479 |
|
|
|
18,640 |
|
|
|
78,845 |
|
|
|
71,655 |
|
Pro-rata share of real estate depreciation from unconsolidated
joint ventures (1) |
|
4,879 |
|
|
|
3,331 |
|
|
|
19,414 |
|
|
|
8,144 |
|
Gain on sale of income producing real estate |
|
(62,183 |
) |
|
|
(13,278 |
) |
|
|
(88,163 |
) |
|
|
(88,693 |
) |
Provision for impairment on income producing real estate |
|
— |
|
|
|
17,196 |
|
|
|
— |
|
|
|
17,201 |
|
FFO available to common shareholders |
|
21,004 |
|
|
|
13,860 |
|
|
|
87,445 |
|
|
|
70,245 |
|
Noncontrolling interest in Operating Partnership (2) |
|
— |
|
|
|
(218 |
) |
|
|
1,607 |
|
|
|
— |
|
Preferred share dividends (assuming conversion) (3) |
|
1,675 |
|
|
|
— |
|
|
|
6,701 |
|
|
|
— |
|
FFO available to common shareholders and dilutive
securities |
$ |
22,679 |
|
|
$ |
13,642 |
|
|
$ |
95,753 |
|
|
$ |
70,245 |
|
Gain on sale of land |
|
(521 |
) |
|
|
(222 |
) |
|
|
(775 |
) |
|
|
(222 |
) |
Transaction costs (4) |
|
56 |
|
|
|
218 |
|
|
|
4,937 |
|
|
|
607 |
|
Severance expense (5) |
|
— |
|
|
|
33 |
|
|
|
— |
|
|
|
62 |
|
Loss on extinguishment of debt |
|
— |
|
|
|
8,294 |
|
|
|
121 |
|
|
|
8,294 |
|
Above and below market lease intangible write-offs |
|
— |
|
|
|
(65 |
) |
|
|
(2,022 |
) |
|
|
(562 |
) |
Pro-rata share of transaction costs from unconsolidated joint
ventures (1) |
|
1 |
|
|
|
— |
|
|
|
9 |
|
|
|
— |
|
Pro-rata share of above and below market lease intangible
write-offs from unconsolidated joint ventures (1) |
|
(24 |
) |
|
|
(1 |
) |
|
|
(1,008 |
) |
|
|
(41 |
) |
Pro-rata share of loss on extinguishment of debt from
unconsolidated joint ventures (1) |
|
— |
|
|
|
— |
|
|
|
20 |
|
|
|
— |
|
Payment of loan amendment fees (5) |
|
23 |
|
|
|
— |
|
|
|
981 |
|
|
|
— |
|
Insurance proceeds, net (6) |
|
— |
|
|
|
— |
|
|
|
(136 |
) |
|
|
— |
|
Operating FFO available to common shareholders and dilutive
securities |
$ |
22,214 |
|
|
$ |
21,899 |
|
|
$ |
97,880 |
|
|
$ |
78,383 |
|
|
|
|
|
|
|
|
|
Weighted average common shares |
|
84,522 |
|
|
|
83,618 |
|
|
|
84,231 |
|
|
|
81,083 |
|
Shares issuable upon conversion of Operating Partnership Units (“OP
Units”) (2) |
|
— |
|
|
|
1,812 |
|
|
|
1,666 |
|
|
|
— |
|
Dilutive effect of restricted stock |
|
1,121 |
|
|
|
1,322 |
|
|
|
1,243 |
|
|
|
1,215 |
|
Shares issuable upon conversion of preferred shares (3) |
|
7,017 |
|
|
|
— |
|
|
|
7,017 |
|
|
|
— |
|
Weighted average equivalent shares outstanding,
diluted |
|
92,660 |
|
|
|
86,752 |
|
|
|
94,157 |
|
|
|
82,298 |
|
|
|
|
|
|
|
|
|
FFO available to common shareholders and dilutive
securities per share, diluted |
$ |
0.24 |
|
|
$ |
0.16 |
|
|
$ |
1.02 |
|
|
$ |
0.85 |
|
|
|
|
|
|
|
|
|
Operating FFO available to common shareholders and dilutive
securities per share, diluted |
$ |
0.24 |
|
|
$ |
0.25 |
|
|
$ |
1.04 |
|
|
$ |
0.95 |
|
|
|
|
|
|
|
|
|
Dividend per common share |
$ |
0.13 |
|
|
$ |
0.12 |
|
|
$ |
0.52 |
|
|
$ |
0.39 |
|
Payout ratio - Operating FFO |
|
54.2 |
% |
|
|
48.0 |
% |
|
|
50.0 |
% |
|
|
41.1 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
Amounts noted are included in Earnings from unconsolidated joint
ventures. |
(2) |
The total noncontrolling interest reflects OP units convertible on
a one-of-one basis into common shares. The Company's net income for
the three months ended December 31, 2022 and the twelve months
ended December 31, 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 $0.69 and $0.87, respectively (based on 1,607
weighted average OP units outstanding for the three months ended
December 31, 2022 and 1,876 weighted average OP Units outstanding
for the twelve months ended December 31, 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 months ended December 31, 2022 and the twelve months ended
December 31, 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 earning per
share in future periods. |
(4) |
For 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 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 (loss) available to common
shareholders to Same Property Net Operating Income
(NOI) |
|
|
|
|
|
|
|
|
|
Three Months Ended December 31, |
|
Twelve Months Ended December 31, |
|
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
Net income (loss) available to common shareholders |
$ |
56,829 |
|
|
$ |
(12,029 |
) |
|
$ |
77,349 |
|
|
$ |
61,938 |
|
Preferred share dividends |
|
1,675 |
|
|
|
1,675 |
|
|
|
6,701 |
|
|
|
6,701 |
|
Net income (loss) attributable to noncontrolling partner
interest |
|
1,105 |
|
|
|
(218 |
) |
|
|
1,607 |
|
|
|
1,625 |
|
Income tax (benefit) provision |
|
(22 |
) |
|
|
(41 |
) |
|
|
120 |
|
|
|
(88 |
) |
Interest expense |
|
8,939 |
|
|
|
9,017 |
|
|
|
35,589 |
|
|
|
37,025 |
|
Loss on extinguishment of debt |
|
— |
|
|
|
8,294 |
|
|
|
121 |
|
|
|
8,294 |
|
Earnings from unconsolidated joint ventures |
|
(692 |
) |
|
|
(1,048 |
) |
|
|
(1,159 |
) |
|
|
(3,995 |
) |
Gain on sale of real estate |
|
(62,704 |
) |
|
|
(13,500 |
) |
|
|
(88,938 |
) |
|
|
(88,915 |
) |
Other (income) expense, net |
|
(635 |
) |
|
|
13 |
|
|
|
(1,530 |
) |
|
|
236 |
|
Management and other fee income |
|
(1,277 |
) |
|
|
(714 |
) |
|
|
(4,125 |
) |
|
|
(1,986 |
) |
Depreciation and amortization |
|
21,631 |
|
|
|
18,791 |
|
|
|
79,456 |
|
|
|
72,254 |
|
Transaction costs |
|
56 |
|
|
|
218 |
|
|
|
4,937 |
|
|
|
607 |
|
General and administrative expenses |
|
10,303 |
|
|
|
10,030 |
|
|
|
36,697 |
|
|
|
32,328 |
|
Provision for impairment |
|
— |
|
|
|
17,196 |
|
|
|
— |
|
|
|
17,201 |
|
Pro-rata share of NOI from R2G Venture LLC (1) |
|
5,992 |
|
|
|
4,372 |
|
|
|
20,581 |
|
|
|
11,858 |
|
Pro-rata share of NOI from RGMZ Venture REIT LLC (2) |
|
291 |
|
|
|
144 |
|
|
|
1,048 |
|
|
|
308 |
|
Lease termination fees |
|
(131 |
) |
|
|
(264 |
) |
|
|
(285 |
) |
|
|
(845 |
) |
Amortization of lease inducements |
|
181 |
|
|
|
214 |
|
|
|
799 |
|
|
|
848 |
|
Amortization of acquired above and below market lease intangibles,
net |
|
(426 |
) |
|
|
(523 |
) |
|
|
(4,192 |
) |
|
|
(2,662 |
) |
Straight-line ground rent expense |
|
76 |
|
|
|
76 |
|
|
|
306 |
|
|
|
306 |
|
Straight-line rental income |
|
(1,034 |
) |
|
|
(410 |
) |
|
|
(2,185 |
) |
|
|
(2,412 |
) |
NOI at Pro-Rata |
|
40,157 |
|
|
|
41,293 |
|
|
|
162,897 |
|
|
|
150,626 |
|
NOI from Other Investments |
|
(8,724 |
) |
|
|
(9,955 |
) |
|
|
(38,234 |
) |
|
|
(29,425 |
) |
Non-RPT NOI from RGMZ Venture REIT LLC (3) |
|
1,027 |
|
|
|
762 |
|
|
|
3,876 |
|
|
|
2,001 |
|
Same Property NOI |
$ |
32,460 |
|
|
$ |
32,100 |
|
|
$ |
128,539 |
|
|
$ |
123,202 |
|
|
|
|
|
|
|
|
|
(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 properties owned by RGMZ Venture REIT LLC
after March 4, 2021. |
|
|
RPT REALTY |
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES |
(amounts in thousands) |
(unaudited) |
|
|
|
|
|
Three Months Ended December 31, |
|
|
2022 |
|
|
|
2021 |
|
Reconciliation of net income to annualized proforma
adjusted EBITDA |
|
|
|
Net income (loss) |
$ |
59,609 |
|
|
$ |
(10,572 |
) |
Interest expense |
|
8,939 |
|
|
|
9,017 |
|
Income tax benefit |
|
(22 |
) |
|
|
(41 |
) |
Depreciation and amortization |
|
21,631 |
|
|
|
18,791 |
|
Gain on sale of income producing real estate |
|
(62,183 |
) |
|
|
(13,278 |
) |
Provision for impairment on income producing real estate |
|
— |
|
|
|
17,196 |
|
Pro-rata share of interest expense from unconsolidated
entities |
|
540 |
|
|
|
108 |
|
Pro-rata share of depreciation and amortization from unconsolidated
entities |
|
4,879 |
|
|
|
3,331 |
|
EBITDAre |
|
33,393 |
|
|
|
24,552 |
|
|
|
|
|
Severance expense |
|
— |
|
|
|
33 |
|
Above and below market lease intangible write-offs |
|
— |
|
|
|
(65 |
) |
Transaction costs |
|
56 |
|
|
|
218 |
|
Pro-rata share of transaction costs from unconsolidated
entities |
|
1 |
|
|
|
— |
|
Gain on sale of land |
|
(521 |
) |
|
|
(222 |
) |
Pro-rata share of above and below market lease intangible
write-offs from unconsolidated entities |
|
(24 |
) |
|
|
(1 |
) |
Loss on extinguishment of debt |
|
— |
|
|
|
8,294 |
|
Payment of loan amendment fees |
|
23 |
|
|
|
— |
|
Adjusted EBITDA |
|
32,928 |
|
|
|
32,809 |
|
Annualized adjusted EBITDA |
$ |
131,712 |
|
|
$ |
131,236 |
|
|
|
|
|
Reconciliation of Notes Payable, net to Net
Debt |
|
|
|
Notes payable, net |
$ |
854,596 |
|
|
$ |
884,185 |
|
Unamortized premium |
|
(77 |
) |
|
|
(153 |
) |
Deferred financing costs, net |
|
5,271 |
|
|
|
4,165 |
|
Consolidated notional debt |
|
859,790 |
|
|
|
888,197 |
|
Pro-rata share of notional debt from unconsolidated entities |
|
53,691 |
|
|
|
23,307 |
|
Finance lease obligation |
|
763 |
|
|
|
821 |
|
Cash, cash equivalents and restricted cash |
|
(5,875 |
) |
|
|
(14,033 |
) |
Pro-rata share of unconsolidated entities cash, cash equivalents
and restricted cash |
|
(4,906 |
) |
|
|
(3,088 |
) |
Net debt |
$ |
903,463 |
|
|
$ |
895,204 |
|
|
|
|
|
Reconciliation of interest expense to total fixed
charges |
|
|
|
Interest expense |
$ |
8,939 |
|
|
$ |
9,017 |
|
Pro-rata share of interest expense from unconsolidated
entities |
|
540 |
|
|
|
108 |
|
Preferred share dividends |
|
1,675 |
|
|
|
1,675 |
|
Scheduled mortgage principal payments |
|
200 |
|
|
|
434 |
|
Pro-rata share of mortgage principal payments from unconsolidated
entities |
|
7 |
|
|
|
— |
|
Total fixed charges |
$ |
11,361 |
|
|
$ |
11,234 |
|
|
|
|
|
Net debt to annualized adjusted EBITDA |
|
6.9 |
x |
|
|
6.8 |
x |
Interest coverage ratio (adjusted EBITDA / interest expense) |
|
3.5 |
x |
|
|
3.6 |
x |
Fixed charge coverage ratio (adjusted EBITDA / fixed charges) |
|
2.9 |
x |
|
|
2.9 |
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 twelve months ended December 31, 2022 and
2021 represents NOI from the Company's same property portfolio
consisting of 35 consolidated operating properties and our 51.5%
pro-rata share of six 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 is 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 twelve
months ended December 31, 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
EBITDA/Proforma 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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