FARMINGTON HILLS, Mich., Aug. 02, 2016 (GLOBE NEWSWIRE) -- Ramco-Gershenson Properties Trust (NYSE:RPT) today announced its financial and operating results for the three and six months ended June 30, 2016.
SECOND QUARTER 2016 HIGHLIGHTS:
- Net income attributable to common shareholders for the second quarter of $0.32 per diluted share, an increase of $0.26 over the prior year.
- Operating Funds from Operations (“Operating FFO”) of $0.35 per diluted share, an increase of 12.9% over the prior year.
- Sold interests in four shopping centers and two outparcels for $58.9 million.
- Signed 63 comparable leases totaling 553,560 square feet at comparable rent growth of 8.0%.
- Ended the quarter with a consolidated portfolio leased occupancy of 95.0%.
- Ended the quarter with a net debt to EBITDA of 6.3X.
“We posted solid results in every key operating measure during the second quarter,” said Dennis Gershenson, President and Chief Executive Officer. “We also sold approximately $59 million of non-core properties, which pushes us over 60% of our disposition goal for the year. This year's sales support our strategy of owning a portfolio of high-quality, high-growth shopping centers that are the dominant retail destinations in the communities they serve.”
FINANCIAL RESULTS:
For the three months ended June 30, 2016:
- Net income attributable to common shareholders for the second quarter of $0.32 per diluted share, an increase of $0.26 over the prior year.
- Operating FFO of $30.7 million, or $0.35 per diluted share, compared to $27.7 million, or $0.31 per diluted share for the same period in 2015.
- FFO of $32.1 million, or $0.36 per diluted share, compared to $28.3 million, or $0.32 per diluted share for the same period in 2015.
For the Six months ended June 30, 2016
- Net income available to common shareholders of $35.7 million, or $0.45 per diluted share, compared to $12.7 million, or $0.16 per diluted share for the same period in 2015.
- Operating FFO of $60.3 million, or $0.69 per diluted share, compared to $55.8 million, or $0.64 per diluted share for the same period in 2015.
- FFO of $61.8 million, or $0.70 per diluted share, compared to $57.0 million, or $0.65 per diluted share for the same period in 2015.
OPERATING RESULTS:
- Same-center NOI growth for the second quarter of 4.8% including redevelopments. Same-center NOI has been impacted by the bankruptcy filing by The Sports Authority ("TSA"). Excluding the reversal of a reserve for bad debts for TSA taken in the first quarter, same-center NOI would have increased 3.9% for the quarter.
- Consolidated portfolio leased occupancy of 95.0% and physical occupancy of 94.2%.
- Signed 80 leases in the consolidated portfolio encompassing 628,188 square feet, including 63 leases totaling 553,560 square feet at comparable rental growth of 8.0%.
BALANCE SHEET METRICS (as of June 30, 2016):
- Net debt to total market capitalization of 37.2%.
- Net debt to EBITDA of 6.3X, interest coverage of 3.8X, and fixed charge coverage of 3.1X.
- Weighted average debt maturity of 6.4 years.
INVESTMENT ACTIVITY:
Dispositions
The Company sold its interest in four shopping centers and two land parcels for $58.9 million. The shopping centers sold were:
- Lakeshore Marketplace, Norton Shores, Michigan (100% ownership), a 343,000 square foot center anchored by Barnes & Noble, Dunham's, Gordman's, Hobby Lobby, T.J. Maxx and Toys "R" US, with ABR per square foot of $8.91
- River Crossing Center, New Port Ritchey, Florida (100% ownership), a 62,000 square foot center anchored by Publix, with ABR per square foot of $12.72
- Centre at Woodstock, Woodstock, Georgia (100% ownership), a 87,000 square foot center anchored by Publix, with ABR per square foot of $12.06
- Kissimmee West, Kissimmee, Florida (7% ownership), a 116,000 square foot center anchored by Marshalls and JoAnn, with ABR per square foot of $12.76
Redevelopment
At June 30, 2016, the Company had ten properties under redevelopment, expansion and/or re-anchoring with an estimated total cost of $79.9 million, which are expected to be completed in 2016 and 2017 producing a return on incremental costs of between 9.0 - 10.0%.
FINANCING ACTIVITY:
The Company executed a new at-the-market equity offering program through which it may sell up to an aggregate 8.0 million common shares.
Subsequent to June 30, 2016, the Company entered into agreements to issue $75.0 million of senior unsecured notes in a private placement with two high-quality institutional investors. The notes have a 12-year term and are priced at a fixed interest rate of 3.64%. The transaction is expected to close on November 30, 2016.
At quarter-end, the Company had $323.9 million available under its $350.0 million revolving line of credit.
DIVIDEND:
The Company declared a regular cash dividend of $0.21 per common share for the period of April 1, 2016 through June 30, 2016 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, 2016 to shareholders of record as of June 20, 2016. The Operating FFO payout ratio was 60.0%.
2016 GUIDANCE:
The Company has narrowed its 2016 Operating FFO guidance range to $1.33 - $1.37 per share. The Company’s previous Operating FFO guidance was $1.32 - $1.38 per share.
CONFERENCE CALL/WEBCAST:
Ramco-Gershenson Properties Trust will host a live broadcast of its second quarter conference call on Wednesday, August 3, 2016, 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. 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: 13639466), 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 large, multi-anchor shopping centers primarily in a number of the largest metropolitan markets in the central United States. At June 30, 2016, the Company owned interests in and managed a portfolio of 68 shopping centers and one office building with approximately 15.2 million square feet of gross leasable area. At June 30, 2016, the Company's consolidated operating portfolio was 95% leased. Additional information regarding the Company is available on its corporate website: 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, 2016 | December 31, 2015 | ||||||
| (unaudited) | |||||||
| ASSETS | |||||||
| Income producing properties, at cost: | |||||||
| Land | $ | 385,423 | $ | 392,352 | |||
| Buildings and improvements | 1,758,731 | 1,792,129 | |||||
| Less accumulated depreciation and amortization | (342,304 | ) | (331,520 | ) | |||
| Income producing properties, net | 1,801,850 | 1,852,961 | |||||
| Construction in progress and land available for development or sale | 66,224 | 60,166 | |||||
| Real estate held for sale | — | 453 | |||||
| Net real estate | 1,868,074 | 1,913,580 | |||||
| Equity investments in unconsolidated joint ventures | 3,159 | 4,325 | |||||
| Cash and cash equivalents | 4,369 | 6,644 | |||||
| Restricted cash | 7,785 | 8,708 | |||||
| Accounts receivable (net of allowance for doubtful accounts of $2,945 and $2,790 as of June 30, 2016 and December 31, 2015, respectively) | 16,854 | 18,705 | |||||
| Acquired lease intangibles, net | 78,115 | 88,819 | |||||
| Other assets, net | 86,904 | 87,890 | |||||
| TOTAL ASSETS | $ | 2,065,260 | $ | 2,128,671 | |||
| LIABILITIES AND SHAREHOLDERS' EQUITY | |||||||
| Notes payable, net | $ | 1,026,418 | $ | 1,083,711 | |||
| Capital lease obligation | 1,108 | 1,108 | |||||
| Accounts payable and accrued expenses | 42,115 | 44,480 | |||||
| Acquired lease intangibles, net | 61,366 | 64,193 | |||||
| Other liabilities | 14,366 | 10,035 | |||||
| Distributions payable | 18,807 | 18,807 | |||||
| TOTAL LIABILITIES | $ | 1,164,180 | $ | 1,222,334 | |||
| Commitments and Contingencies | |||||||
| Ramco-Gershenson Properties Trust ("RPT") Shareholders' Equity: | |||||||
| 7.25% Series D Cumulative Convertible Perpetual Preferred Shares, $50 par | $ | 92,427 | $ | 92,427 | |||
| Common shares of beneficial interest, $0.01 par | 792 | 792 | |||||
| Additional paid-in capital | 1,157,066 | 1,156,345 | |||||
| Accumulated distributions in excess of net income | (362,137 | ) | (363,937 | ) | |||
| Accumulated other comprehensive loss | (8,232 | ) | (1,404 | ) | |||
| TOTAL SHAREHOLDERS' EQUITY ATTRIBUTABLE TO RPT | 879,916 | 884,223 | |||||
| Noncontrolling interest | 21,164 | 22,114 | |||||
| TOTAL SHAREHOLDERS' EQUITY | 901,080 | 906,337 | |||||
| TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $ | 2,065,260 | $ | 2,128,671 | |||
| RAMCO-GERSHENSON PROPERTIES TRUST | |||||||||||||||||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||||||||||||||
| (In thousands, except per share amounts) | |||||||||||||||||||||||
| (Unaudited) | |||||||||||||||||||||||
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| 2016 | 2015 | Inc (Dec) | 2016 | 2015 | Inc (Dec) | ||||||||||||||||||
| REVENUE | |||||||||||||||||||||||
| Minimum rent | $ | 48,554 | $ | 44,327 | $ | 4,227 | $ | 96,950 | $ | 87,678 | $ | 9,272 | |||||||||||
| Percentage rent | 138 | 18 | 120 | 440 | 371 | 69 | |||||||||||||||||
| Recovery income from tenants | 16,032 | 13,962 | 2,070 | 32,778 | 28,284 | 4,494 | |||||||||||||||||
| Other property income | 914 | 850 | 64 | 1,872 | 1,709 | 163 | |||||||||||||||||
| Management and other fee income | 245 | 578 | (333 | ) | 355 | 1,110 | (755 | ) | |||||||||||||||
| TOTAL REVENUE | 65,883 | 59,735 | 6,148 | 132,395 | 119,152 | 13,243 | |||||||||||||||||
| EXPENSES | |||||||||||||||||||||||
| Real estate taxes | 11,132 | 9,126 | 2,006 | 21,441 | 18,121 | 3,320 | |||||||||||||||||
| Recoverable operating expense | 6,672 | 6,846 | (174 | ) | 14,751 | 14,124 | 627 | ||||||||||||||||
| Other non-recoverable operating expense | 564 | 994 | (430 | ) | 1,957 | 1,707 | 250 | ||||||||||||||||
| Depreciation and amortization | 22,714 | 21,120 | 1,594 | 46,561 | 41,483 | 5,078 | |||||||||||||||||
| Acquisition costs | 4 | 265 | (261 | ) | 63 | 307 | (244 | ) | |||||||||||||||
| General and administrative expense | 5,683 | 5,474 | 209 | 11,288 | 10,348 | 940 | |||||||||||||||||
| Provision for impairment | — | — | — | — | 2,521 | (2,521 | ) | ||||||||||||||||
| TOTAL EXPENSES | 46,769 | 43,825 | 2,944 | 96,061 | 88,611 | 7,450 | |||||||||||||||||
| OPERATING INCOME | 19,114 | 15,910 | 3,204 | 36,334 | 30,541 | 5,793 | |||||||||||||||||
| OTHER INCOME AND EXPENSES | |||||||||||||||||||||||
| Other income (expense), net | 198 | 27 | 171 | (150 | ) | (191 | ) | 41 | |||||||||||||||
| Gain on sale of real estate | 19,799 | 273 | 19,526 | 26,324 | 3,469 | 22,855 | |||||||||||||||||
| Earnings from unconsolidated joint ventures | 109 | 335 | (226 | ) | 218 | 2,995 | (2,777 | ) | |||||||||||||||
| Interest expense | (11,002 | ) | (10,058 | ) | (944 | ) | (21,924 | ) | (20,027 | ) | (1,897 | ) | |||||||||||
| Amortization of deferred financing fees | (374 | ) | (330 | ) | (44 | ) | (754 | ) | (664 | ) | (90 | ) | |||||||||||
| Other gain on unconsolidated joint ventures | 215 | — | 215 | 215 | — | 215 | |||||||||||||||||
| Gain on extinguishment of debt | — | 1,387 | (1,387 | ) | — | 1,387 | (1,387 | ) | |||||||||||||||
| INCOME BEFORE TAX | 28,059 | 7,544 | 20,515 | 40,263 | 17,510 | 22,753 | |||||||||||||||||
| Income tax provision | (39 | ) | (255 | ) | 216 | (101 | ) | (277 | ) | 176 | |||||||||||||
| NET INCOME | 28,020 | 7,289 | 20,731 | 40,162 | 17,233 | 22,929 | |||||||||||||||||
| Net income attributable to noncontrolling partner interest | (659 | ) | (199 | ) | (460 | ) | (956 | ) | (476 | ) | (480 | ) | |||||||||||
| NET INCOME ATTRIBUTABLE TO RPT | 27,361 | 7,090 | 20,271 | 39,206 | 16,757 | 22,449 | |||||||||||||||||
| Preferred share dividends | (1,675 | ) | (1,675 | ) | — | (3,350 | ) | (3,487 | ) | 137 | |||||||||||||
| Preferred share conversion costs | — | (500 | ) | 500 | — | (500 | ) | 500 | |||||||||||||||
| NET INCOME AVAILABLE TO COMMON SHAREHOLDERS | $ | 25,686 | $ | 4,915 | $ | 20,771 | $ | 35,856 | $ | 12,770 | $ | 23,086 | |||||||||||
| EARNINGS PER COMMON SHARE | |||||||||||||||||||||||
| Basic | $ | 0.32 | $ | 0.06 | $ | 0.26 | $ | 0.45 | $ | 0.16 | $ | 0.29 | |||||||||||
| Diluted | $ | 0.32 | $ | 0.06 | $ | 0.26 | $ | 0.45 | $ | 0.16 | $ | 0.29 | |||||||||||
| WEIGHTED AVERAGE COMMON SHARES OUTSTANDING | |||||||||||||||||||||||
| Basic | 79,233 | 79,124 | 109 | 79,214 | 78,528 | 686 | |||||||||||||||||
| Diluted | 86,027 | 79,319 | 6,708 | 79,413 | 78,731 | 682 | |||||||||||||||||
| RAMCO-GERSHENSON PROPERTIES TRUST | ||||||||||||||||
| FUNDS FROM OPERATIONS | ||||||||||||||||
| (In thousands, except per share data) | ||||||||||||||||
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| 2016 | 2015 | 2016 | 2015 | |||||||||||||
| Net income available to common shareholders | $ | 25,686 | $ | 4,915 | $ | 35,856 | $ | 12,770 | ||||||||
| Adjustments: | ||||||||||||||||
| Rental property depreciation and amortization expense | 22,671 | 21,080 | 46,478 | 41,407 | ||||||||||||
| Pro-rata share of real estate depreciation from unconsolidated joint ventures | 81 | 702 | 163 | 1,398 | ||||||||||||
| Gain on sale of depreciable real estate | (18,473 | ) | (298 | ) | (24,747 | ) | (298 | ) | ||||||||
| Gain on sale of joint venture depreciable real estate (1) | (26 | ) | — | (26 | ) | (2,239 | ) | |||||||||
| Other gain on unconsolidated joint ventures (2) | (215 | ) | — | (215 | ) | — | ||||||||||
| Noncontrolling interest in Operating Partnership (3) | 659 | 199 | 956 | 476 | ||||||||||||
| FFO | $ | 30,383 | $ | 26,598 | $ | 58,465 | $ | 53,514 | ||||||||
| Preferred share dividends (assuming conversion) | 1,675 | 1,675 | 3,350 | 3,487 | ||||||||||||
| FFO available to common shareholders | 32,058 | 28,273 | 61,815 | 57,001 | ||||||||||||
| (Gain) loss on sale of land | $ | (1,326 | ) | $ | 25 | $ | (1,577 | ) | $ | (3,171 | ) | |||||
| Provision for impairment on land available for development or sale | — | — | — | 2,521 | ||||||||||||
| Gain on extinguishment of debt | — | (1,387 | ) | — | (1,387 | ) | ||||||||||
| Acquisition costs | 4 | 265 | 63 | 307 | ||||||||||||
| Preferred share conversion costs | — | 500 | — | 500 | ||||||||||||
| Operating FFO | $ | 30,736 | $ | 27,676 | $ | 60,301 | $ | 55,771 | ||||||||
| Weighted average common shares | 79,233 | 79,124 | 79,214 | 78,528 | ||||||||||||
| Shares issuable upon conversion of Operating Partnership Units (3) | 1,936 | 2,247 | 1,969 | 2,247 | ||||||||||||
| Dilutive effect of securities | 206 | 195 | 199 | 203 | ||||||||||||
| Subtotal | 81,375 | 81,566 | 81,382 | 80,978 | ||||||||||||
| Shares issuable upon conversion of preferred shares (4) | 6,588 | 6,538 | 6,588 | 6,792 | ||||||||||||
| Weighted average equivalent shares outstanding, diluted | 87,963 | 88,104 | 87,970 | 87,770 | ||||||||||||
| FFO, per diluted share | $ | 0.36 | $ | 0.32 | $ | 0.70 | $ | 0.65 | ||||||||
| Operating FFO, per diluted share | $ | 0.35 | $ | 0.31 | $ | 0.69 | $ | 0.64 | ||||||||
| Dividend per common share | $ | 0.21 | $ | 0.20 | $ | 0.42 | $ | 0.40 | ||||||||
| Payout ratio - Operating FFO | 60.0 | % | 64.5 | % | 60.9 | % | 62.5 | % | ||||||||
(1) Amount included in earnings from unconsolidated joint ventures.
(2) The gain represents the write off of costs associated with of our equity investment in a joint venture that was triggered by the sale of of the Venture's only property.
(3) The total non-controlling interest reflects OP units convertible 1:1 into common shares.
(4) Series D convertible preferred shares are paid annual dividends of $6.7 million and are currently convertible into approximately 6.6 million shares of common stock. They are dilutive only when earnings or FFO exceed approximately $0.26 per diluted share per quarter, which was the case for FFO for the three and six months ended June 30, 2016 and 2015. 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.
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 (computed in accordance with generally accepted accounting principles), excluding gains (or losses) from sales of depreciable property and excluding impairment provisions on depreciable real estate or on investments in non-consolidated investees that are driven by measurable decreases in the fair value of depreciable real estate held by the investee, plus depreciation and amortization, (excluding amortization of financing costs). Adjustments for unconsolidated partnerships and joint ventures are calculated to reflect funds from operations on the same basis. Also, we consider “Operating FFO” a meaningful, additional measure of financial performance because it excludes acquisition costs and periodic items such as gains (or losses) from sales of land and impairment provisions on land available for development or 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.