Source: RPT Realty
Ramco-Gershenson Properties Trust Reports Financial and Operating results for the Second Quarter 2014
FARMINGTON HILLS, Mich., July 22, 2014 (GLOBE NEWSWIRE) -- Ramco-Gershenson Properties Trust (NYSE:RPT) today announced its financial and operating results for the three and six months ended June 30, 2014.
SECOND QUARTER 2014 HIGHLIGHTS:
- Reported Operating Funds from Operations ("Operating FFO") of $0.31 per diluted share.
- Increased same-center net operating income ("NOI") by 3.8%.
- Achieved comparable leasing spreads of 5.4%.
- Ended the quarter with core portfolio leased occupancy of 95.7%.
- Improved net debt to EBITDA to 5.8x.
"We continue to post consistently strong operating and financial results," said Dennis Gershenson, President and Chief Executive Officer. "In addition, we have spent the first half of 2014 pursuing attractive investment opportunities that further upgrade our high-quality shopping center portfolio, demonstrate a disciplined approach to capital allocation, and build long-term shareholder value."
FINANCIAL RESULTS:
For the three months ended June 30, 2014:
- Operating FFO of $24.2 million, or $0.31 per diluted share, compared to $20.0 million, or $0.29 per diluted share for the same period in 2013.
- Funds from Operations ("FFO") of $22.9 million, or $0.29 per diluted share, compared to $19.6 million, or $0.28 per diluted share for the same period in 2013.
- Net income (loss) available to common shareholders of $(0.7) million, or $(0.01) per diluted share, compared to $3.8 million, or $0.06 per diluted share for the same period in 2013.
For the six months ended June 30, 2014:
- Operating FFO of $47.2 million, or $0.61 per diluted share, compared to $39.1 million, or $0.60 per diluted share for the same period in 2013.
- FFO of $45.9 million, or $0.59 per diluted share, compared to $38.4 million, or $0.59 per diluted share for the same period in 2013.
- Net income available to common shareholders of $0.1 million, or $0.00 per diluted share, compared to $7.0 million, or $0.12 per diluted share for the same period in 2013.
SECOND QUARTER OPERATING RESULTS:
- Same-center NOI growth of 3.8%.
- Core portfolio leased occupancy of 95.7% and physical occupancy of 95.3%.
- Total portfolio leased occupancy of 94.9% and physical occupancy of 93.5%.
- Signed 78 leases encompassing approximately 0.6 million square feet at comparable rental growth of 5.4%, including 54 renewals totaling approximately 0.4 million square feet at comparable rental growth of 4.4%.
BALANCE SHEET METRICS:
- Net debt to total market capitalization of 35.1%.
- Net debt to EBITDA of 5.8x, interest coverage of 4.1x, and fixed charge coverage of 3.0x.
- Unencumbered operating real estate, as valued under the Company's credit agreements, of $1.3 billion.
INVESTMENT ACTIVITY:
Acquisitions and Dispositions
Subsequent to quarter-end, the Company acquired Woodbury Lakes in Minneapolis-St. Paul (MSA), Minnesota and Bridgewater Falls in Cincinnati (MSA), Ohio, for approximately $150 million. The acquisitions were financed with $58.6 million of assumed mortgage debt, $9.9 million in disposition proceeds, $60.0 million in borrowings under the Company's revolving line of credit, and $21.5 million in cash. Both properties have multiple national anchors, exciting specialty retail concepts, and serves growing, affluent trade areas.
- Woodbury Lakes encompasses approximately 366,000 square feet and is anchored by Trader Joe's (shadow anchor), buybuy Baby, DSW, H&M, The Gap, Charming Charlie, and Michael's.
- Bridgewater Falls encompasses approximately 630,000 square feet and is anchored by Target (shadow anchor), JC Penney (land lease), Dick's Sporting Goods, TJ Maxx, Old Navy, Michael's, PetSmart, and Bed, Bath & Beyond.
During the quarter, the Company sold Naples Towne Centre in Naples, Florida for approximately $7.2 million. The 135,000 square foot shopping center is anchored by Beall's and Save-A-Lot.
Development and Redevelopment
At June 30, 2014, the Company had four redevelopment projects underway with an estimated total cost of $32.5 million and expected average returns on investment of 8% to 10%.
The Company is developing Lakeland Park Center, a 210,000 square foot shopping center located in Lakeland, Florida, anchored by Dick's Sporting Goods, PetSmart, Ross Dress for Less, and Floor and Décor. The development is 98.0% leased and is on track to open in the fourth quarter of 2014.
FINANCING ACTIVITY:
During the quarter, the Company completed a $100 million private placement of senior unsecured notes. The financing consists of $50 million of notes with a ten-year term priced at a fixed interest rate of 4.65% and $50 million of notes with a twelve-year term priced at a fixed interest rate of 4.74%.
The Company also closed a $75 million senior unsecured term loan. The loan has a term of seven years and bears interest at an annual rate of LIBOR plus 1.25% to 2.25% (initially 1.70%) depending upon the Company's leverage or credit ratings.
Also during the quarter, the Company issued 2.15 million shares through its at-the-market equity program generating net proceeds of approximately $34.9 million.
DIVIDEND:
During the second quarter, the Company declared a common share dividend of $0.1875 per share for the period of April 1, 2014 through June 30, 2014 and a Series D convertible perpetual preferred share dividend of $0.90625 per share for the same period. The dividends were paid on July 1, 2014 to shareholders of record as of June 20, 2014. The Operating FFO payout ratio was 64.7%.
2014 GUIDANCE:
The Company is increasing its 2014 guidance for Operating FFO to $1.22 to $1.26 per diluted share from its prior guidance of $1.20 to $1.26 per diluted share.
CONFERENCE CALL/WEBCAST:
Ramco-Gershenson Properties Trust will host a live broadcast of its second quarter conference call on Wednesday, July 23, 2014, at 9:00 a.m. eastern time, to discuss its financial and operating results. The live broadcast will be available online at www.rgpt.com and www.investorcalendar.com and also by telephone at (877) 407-9205, no pass code needed. A replay will be available shortly after the call on the aforementioned websites (for ninety days) or by telephone at (877) 660-6853, (Conference ID: 13585336), for one week.
SUPPLEMENTAL MATERIALS:
The Company's quarterly financial and operating supplement is available on its corporate web site at www.rgpt.com. If you wish to receive a copy via email, please send requests to dhendershot@rgpt.com.
ABOUT RAMCO-GERSHENSON PROPERTIES TRUST:
Ramco-Gershenson Properties Trust (NYSE:RPT) is a fully integrated, self-administered, publicly-traded real estate investment trust (REIT) based in Farmington Hills, Michigan. The Company's business is the ownership and management of multi-anchor shopping centers in strategic metropolitan markets throughout the Eastern, Midwestern and Central United States. At June 30, 2014, the Company owned and managed a portfolio of 78 shopping centers and one office building with approximately 15.6 million square feet of gross leasable area owned by the Company or its joint ventures. The properties are located in Michigan, Florida, Ohio, Georgia, Missouri, Colorado, Wisconsin, Illinois, Indiana, New Jersey, Virginia, Maryland, and Tennessee. At June 30, 2014, the Company's core operating portfolio was 95.7% leased. Additional information regarding the Company is available via the corporate website at www.rgpt.com.
This press release may contain forward-looking statements that represent the Company's expectations and projections for the future. Management of Ramco-Gershenson believes the expectations reflected in any forward-looking statements made in this press release are based on reasonable assumptions. Certain factors could occur that might cause actual results to vary, including deterioration in national economic conditions, weakening of real estate markets, decreases in the availability of credit, increases in interest rates, adverse changes in the retail industry, our continuing ability to qualify as a REIT and other factors discussed in the Company's reports filed with the Securities and Exchange Commission.
| RAMCO-GERSHENSON PROPERTIES TRUST | ||
| CONDENSED CONSOLIDATED BALANCE SHEETS | ||
| (In thousands, except per share amounts) | ||
| June 30, | December 31, | |
| 2014 | 2013 | |
| (unaudited) | ||
| ASSETS | ||
| Income producing properties, at cost: | ||
| Land | $ 285,072 | $ 284,686 |
| Buildings and improvements | 1,337,422 | 1,340,531 |
| Less accumulated depreciation and amortization | (269,575) | (253,292) |
| Income producing properties, net | 1,352,919 | 1,371,925 |
| Construction in progress and land available for development or sale | 115,462 | 101,974 |
| Net real estate | 1,468,381 | 1,473,899 |
| Equity investments in unconsolidated joint ventures | 28,663 | 30,931 |
| Cash and cash equivalents | 33,085 | 5,795 |
| Restricted cash | 14,915 | 3,454 |
| Accounts receivable (net of allowance for doubtful accounts of $2,217 and $2,351 as of June 30, 2014 and December 31, 2013, respectively) | 10,716 | 9,648 |
| Other assets, net | 118,139 | 128,521 |
| TOTAL ASSETS | $ 1,673,899 | $ 1,652,248 |
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||
| Notes payable: | ||
| Senior unsecured notes payable | $ 420,000 | $ 365,000 |
| Mortgages payable | 301,029 | 333,049 |
| Unsecured revolving credit facility | — | 27,000 |
| Junior subordinated notes | 28,125 | 28,125 |
| Total notes payable | 749,154 | 753,174 |
| Capital lease obligation | 5,510 | 5,686 |
| Accounts payable and accrued expenses | 38,104 | 32,026 |
| Other liabilities | 46,631 | 48,593 |
| Distributions payable | 15,406 | 14,809 |
| TOTAL LIABILITIES | 854,805 | 854,288 |
| Commitments and Contingencies | ||
| Ramco-Gershenson Properties Trust ("RPT") Shareholders' Equity: | ||
| Preferred shares, $0.01 par, 2,000 shares authorized: 7.25% Series D Cumulative Convertible Perpetual Preferred Shares, (stated at liquidation preference $50 per share), 2,000 shares issued and outstanding as of June 30, 2014 and December 31, 2013 | $ 100,000 | $ 100,000 |
| Common shares of beneficial interest, $0.01 par, 120,000 shares authorized, 69,937 and 66,669 shares issued and outstanding as of June 30, 2014 and December 31, 2013, respectively | 699 | 667 |
| Additional paid-in capital | 1,008,913 | 959,183 |
| Accumulated distributions in excess of net income | (315,668) | (289,837) |
| Accumulated other comprehensive (loss) income | (1,925) | 84 |
| TOTAL SHAREHOLDERS' EQUITY ATTRIBUTABLE TO RPT | 792,019 | 770,097 |
| Noncontrolling interest | 27,075 | 27,863 |
| TOTAL SHAREHOLDERS' EQUITY | 819,094 | 797,960 |
| TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $ 1,673,899 | $ 1,652,248 |
| RAMCO-GERSHENSON PROPERTIES TRUST | ||||
| CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) | ||||
| (In thousands, except per share amounts) | ||||
| (Unaudited) | ||||
| Three Months Ended June 30, | Six Months Ended June 30, | |||
| 2014 | 2013 | 2014 | 2013 | |
| REVENUE | ||||
| Minimum rent | $ 37,054 | $ 31,946 | $ 73,321 | $ 56,234 |
| Percentage rent | 5 | 20 | 153 | 115 |
| Recovery income from tenants | 11,857 | 9,772 | 24,104 | 18,000 |
| Other property income | 578 | 491 | 1,539 | 1,014 |
| Management and other fee income | 436 | 473 | 946 | 1,277 |
| TOTAL REVENUE | 49,930 | 42,702 | 100,063 | 76,640 |
| EXPENSES | ||||
| Real estate taxes | 7,347 | 5,769 | 14,714 | 10,334 |
| Recoverable operating expense | 5,739 | 4,709 | 11,898 | 8,838 |
| Other non-recoverable operating expense | 835 | 730 | 1,684 | 1,467 |
| Depreciation and amortization | 23,658 | 14,551 | 41,399 | 25,328 |
| General and administrative expense | 5,619 | 5,634 | 11,233 | 11,134 |
| TOTAL EXPENSES | 43,198 | 31,393 | 80,928 | 57,101 |
| OPERATING INCOME | 6,732 | 11,309 | 19,135 | 19,539 |
| OTHER INCOME AND EXPENSES | ||||
| Other expense, net | (239) | (180) | (372) | (316) |
| Gain on sale of real estate | 2,672 | 332 | 2,672 | 3,914 |
| Earnings (loss) from unconsolidated joint ventures | 816 | 260 | (791) | (5,414) |
| Interest expense | (7,632) | (7,296) | (15,231) | (13,369) |
| Amortization of deferred financing fees | (370) | (346) | (773) | (687) |
| Deferred gain recognized on real estate | — | — | 117 | 5,282 |
| Loss on extinguishment of debt | (860) | — | (860) | — |
| INCOME FROM CONTINUING OPERATIONS BEFORE TAX | 1,119 | 4,079 | 3,897 | 8,949 |
| Income tax benefit (provision) | 1 | 13 | (16) | (30) |
| INCOME FROM CONTINUING OPERATIONS | 1,120 | 4,092 | 3,881 | 8,919 |
| DISCONTINUED OPERATIONS | ||||
| Gain on sale of real estate | — | 1,537 | — | 1,537 |
| Income from discontinued operations | — | 153 | — | 600 |
| INCOME FROM DISCONTINUED OPERATIONS | — | 1,690 | — | 2,137 |
| NET INCOME | 1,120 | 5,782 | 3,881 | 11,056 |
| Net income attributable to noncontrolling partner interest | (34) | (208) | (123) | (433) |
| NET INCOME ATTRIBUTABLE TO RPT | 1,086 | 5,574 | 3,758 | 10,623 |
| Preferred share dividends | (1,813) | (1,813) | (3,625) | (3,625) |
| NET (LOSS) INCOME AVAILABLE TO COMMON SHAREHOLDERS | $ (727) | $ 3,761 | $ 133 | $ 6,998 |
| (LOSS) EARNINGS PER COMMON SHARE, BASIC | ||||
| Continuing operations | $ (0.01) | $ 0.03 | $ — | $ 0.08 |
| Discontinued operations | — | 0.03 | — | 0.04 |
| $ (0.01) | $ 0.06 | $ — | $ 0.12 | |
| (LOSS) EARNINGS PER COMMON SHARE, DILUTED | ||||
| Continuing operations | $ (0.01) | $ 0.03 | $ — | $ 0.08 |
| Discontinued operations | — | 0.03 | — | 0.04 |
| $ (0.01) | $ 0.06 | $ — | $ 0.12 | |
| WEIGHTED AVERAGE COMMON SHARES OUTSTANDING | ||||
| Basic | 68,853 | 59,911 | 67,966 | 55,867 |
| Diluted | 69,097 | 60,319 | 68,209 | 56,277 |
| RAMCO-GERSHENSON PROPERTIES TRUST | ||||
| FUNDS FROM OPERATIONS | ||||
| (In thousands, except per share data) | ||||
| Three Months Ended June 30, | Six Months Ended June 30, | |||
| 2014 | 2013 | 2014 | 2013 | |
| (In thousands, except per share data) | ||||
| Net (loss) income available to common shareholders | $ (727) | $ 3,761 | $ 133 | $ 6,998 |
| Adjustments: | ||||
| Rental property depreciation and amortization expense | 23,531 | 14,572 | 41,145 | 25,426 |
| Pro-rata share of real estate depreciation from unconsolidated joint ventures | 682 | 677 | 3,445 | 2,277 |
| Gain on sale of depreciable real estate | (2,466) | (1,537) | (2,466) | (1,537) |
| Loss on sale of joint venture depreciable real estate (1) | — | 89 | — | 6,454 |
| Deferred gain recognized on real estate | — | — | (117) | (5,282) |
| Noncontrolling interest in Operating Partnership (2) | 34 | 208 | 123 | 433 |
| Subtotal | 21,054 | 17,770 | 42,263 | 34,769 |
| Add preferred share dividends (assumes if converted) | 1,813 | 1,813 | 3,625 | 3,625 |
| FFO | $ 22,867 | $ 19,583 | $ 45,888 | $ 38,394 |
| Loss on extinguishment of debt | 860 | — | 860 | — |
| Gain on extinguishment of joint venture debt (1) | — | — | (106) | — |
| Acquisition costs (included in G&A) | 451 | 449 | 533 | 681 |
| Operating FFO | $ 24,178 | $ 20,032 | $ 47,175 | $ 39,075 |
| Weighted average common shares | 68,853 | 59,911 | 67,966 | 55,867 |
| Shares issuable upon conversion of Operating Partnership Units (2) | 2,252 | 2,254 | 2,252 | 2,262 |
| Dilutive effect of securities | 244 | 408 | 242 | 410 |
| Shares issuable upon conversion of preferred shares | 6,990 | 6,947 | 6,990 | 6,947 |
| Weighted average equivalent shares outstanding, diluted | 78,339 | 69,520 | 77,450 | 65,486 |
| FFO, per diluted share (3) | $ 0.29 | $ 0.28 | $ 0.59 | $ 0.59 |
| Operating FFO, per diluted share (3) | $ 0.31 | $ 0.29 | $ 0.61 | $ 0.60 |
| Dividend per common share | $0.18750 | $0.16825 | $ 0.37500 | $ 0.33650 |
| Payout ratio - FFO | 64.7% | 60.1% | 63.6% | 57.0% |
| (1) Amount included in earnings (loss) from unconsolidated joint ventures. | ||||
| (2) The total non-controlling interest reflects OP units convertible 1:1 into common shares. | ||||
| (3) For the six months ended June 30, 2013 FFO and Operating FFO included $0.06 per share of gains on land sales. | ||||
We consider funds from operations, also known as "FFO," to be an appropriate supplemental measure of the financial performance of an equity REIT. Under the NAREIT definition, FFO represents net income available to common shareholders, excluding extraordinary items, as defined under accounting principles generally accepted in the United States of America ("GAAP"), gains (losses) on sales of depreciable property and impairment provisions on depreciable property and equity investments in depreciable property, plus real estate related depreciation and amortization (excluding amortization of financing costs), and adjustments for unconsolidated partnerships and joint ventures. Also, we consider "Operating FFO" a meaningful, additional measure of financial performance because it excludes acquisitions costs and periodic items such as impairment provisions on land available for sale, bargain purchase gains, and gains or losses on extinguishment of debt that are not adjusted under the current NAREIT definition of FFO. We provide a reconciliation of FFO to Operating FFO. 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 and Operating FFO 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 to these other real estate companies.