Retail Value Inc. (NYSE: RVI) today announced operating results
for the quarter ended December 31, 2020.
Results for the Quarter and Recent Activity
- Fourth quarter net loss attributable to common shareholders was
$9.5 million, or $0.48 per diluted share, as compared to net loss
of $39.1 million, or $2.06 per share, in the year-ago period. The
period-over-period decrease in net loss is primarily attributable
to reduced impairment charges, interest expense and debt
extinguishment costs partly offset by reduced rental income
stemming from the impact of the COVID-19 pandemic and asset
sales.
- Fourth quarter operating funds from operations attributable to
common shareholders (“Operating FFO” or “OFFO”) was $14.8 million,
or $0.75 per diluted share, compared to $24.1 million, or $1.27 per
diluted share, in the year-ago period. The period-over-period
decrease in OFFO is primarily attributable to the impact of the
COVID-19 pandemic and asset sales partly offset by lower interest
expense and debt extinguishment costs.
- Sold one property, Plaza Palma Real, and an outparcel for an
aggregate gross sales price of $52.1 million; $51.2 million of
mortgage debt was repaid in January 2021.
- In December, made a $65.0 million voluntary repayment on
mortgage debt from operating cash flow.
- The Continental U.S. leased rate was 88.9% at December 31, 2020
as compared to 90.7% at September 30, 2020. The decrease in the
leased rate primarily related to the bankruptcy of Stein Mart.
- The Puerto Rico leased rate was 87.7% at December 31, 2020 as
compared to 86.3% at September 30, 2020. The increase in the leased
rate primarily related to the sale of Plaza Palma Real, which had a
lower leased rate than the Puerto Rico portfolio’s average leased
rate.
- Exercised its first extension option under its loan agreement
in which the loan was extended effective March 9, 2021 to March 9,
2022. In addition, extended the revolving credit facility maturity
date to February 9, 2022.
Significant Full-Year Activity
- Net loss attributable to common shareholders for the year ended
December 31, 2020 was $93.6 million, or $4.72 per diluted
share.
- Generated Operating FFO of $61.8 million, or $3.12 per diluted
share for the full year of 2020.
- Sold six shopping centers and one outparcel for an aggregate
gross sales price of $314.2 million.
- Made principal repayments on the Company’s mortgage loan of
$320.1 million since December 31, 2019, excluding $51.2 million of
restricted cash held at December 31, 2020 related to December 2020
asset sales that were applied toward the repayment of the loan in
January 2021. As of December 31, 2020, the outstanding balance of
the Company’s mortgage loan was $354.2 million.
Key Quarterly Operating Results The following metrics are
as of December 31, 2020:
Continental U.S.
Puerto Rico
Shopping Center Count
11
11
Gross Leasable Area (thousands)
4,533
3,984
Base Rent PSF
$13.35
$19.95
Leased Rate
88.9%
87.7%
Commenced Rate
88.1%
86.5%
NOI-Quarter (millions)
$10.9
$12.0
Impact of the COVID-19 Pandemic The impact to the
portfolio as of March 4, 2021 is as follows:
Continental U.S.
Puerto Rico
% of Tenants open and operating (average
base rent)
100%
96%
% of Second quarter 2020 rent paid
85%
78%
% of Third quarter 2020 rent paid
91%
90%
% of Fourth quarter 2020 rent paid
95%
90%
% of January 2021 rent paid
99%
91%
- The 98% of tenants open for business as of March 4, 2021 (based
on average base rents), is up from a low of 34% in early April. In
Puerto Rico, while 96% of the Company’s tenants are open, most
remain subject to capacity and operating restrictions.
- The Company calculates the aggregate percentage of rents paid
for assets owned as of December 31, 2020, by comparing the amount
of tenant payments received as of the date presented to the amount
billed to tenants during the period, which billed amount includes
abated rents, rents subject to deferral arrangements and rents
owing from bankrupt tenants that were in possession of the space
and billed. For the purposes of reporting the percentage of
aggregate base rents collected for a given period, when rents
subject to deferral arrangements are later paid, those payments are
allocated to the period in which the rent was originally owed.
- As of March 4, 2021, agreed upon rent deferral arrangements
that remain unpaid represented approximately 6% of second quarter
2020 rents, 4% of third quarter 2020 rents and 3% of fourth quarter
2020 rents. The Company granted abatements to tenants representing
approximately 7% of second quarter 2020 rents and 1% of third
quarter 2020 rents. There were no significant abatements of fourth
quarter 2020 rents.
- At December 31, 2020, the balance sheet reflects $2.3 million
of net deferred rents, a majority of which is expected to be repaid
in 2021.
- In addition, during the fourth quarter of 2020, the Company’s
rental revenue and NOI were reduced by $2.7 million of
uncollectible revenue primarily related to reserves associated with
cash-basis tenants as well as the impact of lease modification
accounting. In addition, the Company recorded a charge of $0.7
million to straight-line revenue primarily related to write-offs
associated with cash-basis tenants. Both amounts primarily were
triggered by the impacts of the COVID-19 pandemic.
- RVI continues to work with tenants to maximize their ability to
provide goods and services to customers in accordance with phased
openings in the municipalities where it operates. Efforts include
facilitating curbside and online purchase pick-up, utilization of
social media platforms, and on-site promotional programs and
marketing. Our property operations team continues to monitor CDC
and local governmental health agencies to ensure property level
practices are in line with best practices and engage with property
level vendors in accordance with its Vendor COVID Operating
Protocol.
Property Net Operating Income (NOI) Projection
The Company projects, based on the assumptions below, 2021
property level net operating income (NOI) to be as follows:
Portfolio
NOI Projection
Continental U.S.
$38 – $43 million
Puerto Rico
$46 – $53 million
These Projections:
- Assume that properties owned by the Company on January 1, 2021
are held through December 31, 2021;
- Reflect payment of property management fees;
- Assume tenant collections at 100% as compared to fourth quarter
2020 rent collections of 95% and 90% for the continental U.S. and
Puerto Rico portfolios, respectively and
- Assume no reserve reversals related to 2020 rents.
Because these projections are based on assumptions that are
subject to change, including, without limitation, the Company’s
actual tenant collections, they should not be viewed as
guidance.
About RVI
RVI is an independent publicly traded company trading under the
ticker symbol “RVI” on the New York Stock Exchange. RVI holds
assets in the continental U.S. and Puerto Rico and is managed by
one or more subsidiaries of SITE Centers Corp. RVI focuses on
realizing value in its business through operations and sales of its
assets. Additional information about RVI is available at
www.retailvalueinc.com.
Non-GAAP Measures
Funds from Operations (“FFO”) is a supplemental non-GAAP
financial measure used as a standard in the real estate industry
and is a widely accepted measure of real estate investment trust
(“REIT”) performance. Management believes that both FFO and
Operating FFO provide additional indicators of the financial
performance of a REIT. The Company also believes that FFO and
Operating FFO more appropriately measure the core operations of the
Company and provide benchmarks to its peer group.
FFO is generally defined and calculated by the Company as net
income (loss) (computed in accordance with generally accepted
accounting principles in the United States (“GAAP”)) adjusted to
exclude (i) gains and losses from disposition of real estate
property and related investments, which are presented net of taxes,
if any, (ii) impairment charges on real estate property and related
investments and (iii) certain non-cash items. These non-cash items
principally include real property depreciation and amortization of
intangibles. The Company’s calculation of FFO is consistent with
the definition of FFO provided by NAREIT. The Company calculates
Operating FFO by excluding certain non-operating charges and
income. Operating FFO is useful to investors as the Company removes
non-comparable charges and income to analyze the results of its
operations and assess performance of the core operating real estate
portfolio. Other real estate companies may calculate FFO and
Operating FFO in a different manner.
The Company also uses net operating income (“NOI”), a non-GAAP
financial measure, as a supplemental performance measure. NOI is
calculated as property revenues less property-related expenses. The
Company believes NOI provides useful information to investors
regarding the Company’s financial condition and results of
operations because it reflects only those income and expense items
that are incurred at the property level and, when compared across
periods, reflects the impact on operations from trends in occupancy
rates, rental rates, operating costs and acquisition and
disposition activity on an unleveraged basis.
FFO, Operating FFO and NOI do not represent cash generated from
operating activities in accordance with GAAP, are not necessarily
indicative of cash available to fund cash needs and should not be
considered as alternatives to net income computed in accordance
with GAAP as indicators of the Company’s operating performance or
as alternatives to cash flow as a measure of liquidity.
Reconciliations of these non-GAAP measures to their most directly
comparable GAAP measures are included in this release herein.
Reconciliation of 2021 projected NOI to the most directly
comparable GAAP financial measure is not provided because the
Company is unable to provide such reconciliation without
unreasonable effort.
Safe Harbor
RVI considers portions of the information in this press release
to be forward-looking statements within the meaning of Section 27A
of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934, both as amended, with respect to the
Company's expectation for future periods. Although the Company
believes that the expectations reflected in such forward-looking
statements are based upon reasonable assumptions, it can give no
assurance that its expectations will be achieved. For this purpose,
any statements contained herein that are not historical fact may be
deemed to be forward-looking statements. There are a number of
important factors that could cause our results to differ materially
from those indicated by such forward-looking statements, including,
among other factors, the Company’s actual property NOI for 2021,
which could differ materially from the NOI projections included in
this press release; the impact of the COVID-19 pandemic on the
Company’s ability to manage its properties and finance its
operations and on tenants’ ability to operate their businesses,
generate sales and meet their financial obligations, including the
obligation to pay ongoing and deferred rents; our ability to sell
assets on commercially reasonable terms; our ability to complete
dispositions of assets under contract; property damage, expenses
related thereto and other business and economic consequences
(including the potential loss of rental revenues) resulting from
extreme weather conditions and natural disasters in locations where
we own properties, and the ability to estimate accurately the
amounts thereof; sufficiency and timing of any insurance recovery
payments related to damages from extreme weather conditions and
natural disasters; local conditions such as an increase in the
supply of, or a reduction in demand for, retail real estate in the
area; the impact of e-commerce; dependence on rental income from
real property; the loss of, significant downsizing of or bankruptcy
of a major tenant and the impact of any such event on rental income
from other tenants at our properties; our ability to secure equity
or debt financing on commercially acceptable terms or at all;
impairment charges; our ability to enter into definitive agreements
with regard to our financing arrangements and our ability to
satisfy conditions to the completion of these arrangements; changes
with respect to the Puerto Rican economy and government; the
ability to secure and maintain management services provided to us,
including pursuant to our external management agreement with one or
more subsidiaries of SITE Centers; and our ability to maintain our
REIT status. For additional factors that could cause the results of
the Company to differ materially from those indicated in the
forward-looking statements, please refer to the Company’s most
recent report on Form 10-K. The impacts of the COVID-19 pandemic
may also exacerbate the risks described therein, any of which could
have a material effect on the Company. The Company undertakes no
obligation to publicly revise these forward-looking statements to
reflect events or circumstances that arise after the date
hereof.
Retail Value Inc.
Income Statement
in thousands, except per share
4Q20
4Q20
Total
Total
Continental U.S.
Puerto Rico
4Q20
12M20
Revenues:
Rental income (1)
$17,318
$22,814
$40,132
$169,725
Other property revenues
14
(15)
(1)
83
17,332
22,799
40,131
169,808
Expenses:
Operating and maintenance (2)
3,363
9,613
12,976
50,762
Real estate taxes
3,079
1,153
4,232
20,752
6,442
10,766
17,208
71,514
Net operating income (3)
10,890
12,033
22,923
98,294
Other income (expense):
Asset management fees
(2,003)
(8,653)
Interest expense, net
(4,615)
(22,742)
Depreciation and amortization
(12,575)
(57,053)
General and administrative
(751)
(3,612)
Impairment charges
(10,910)
(115,525)
Debt extinguishment costs, net
(1,505)
(5,922)
Other expense, net
(190)
251
Gain on disposition of real estate, net
(4)
844
22,800
Loss before other items
(8,782)
(92,162)
Tax expense
(714)
(1,392)
Net loss
($9,496)
($93,554)
Weighted average shares – Basic &
Diluted – EPS
19,829
19,806
Earnings per common share – Basic &
Diluted
($0.48)
($4.72)
Revenue items:
(1)
Minimum rents
11,987
14,122
26,109
117,206
Ground lease minimum rents
861
1,946
2,807
12,255
Recoveries
4,554
6,491
11,045
47,156
Uncollectible revenue
(353)
(2,387)
(2,740)
(16,558)
Percentage and overage rent
44
796
840
2,319
Ancillary and other rental income
140
1,846
1,986
6,743
Lease termination fees
85
0
85
604
(2)
Operating expenses:
Property management fees
(850)
(1,583)
(2,433)
(9,959)
(3)
NOI from assets sold
429
10,069
(4)
SITE Centers disposition fees
(521)
(3,142)
Retail Value Inc.
Reconciliation: Net Loss
to FFO and Operating FFO
and Other Financial
Information
in thousands, except per share
4Q20
12M20
Net loss attributable to Common
Shareholders
($9,496)
($93,554)
Depreciation and amortization of real
estate
12,559
56,986
Impairment of real estate
10,910
115,525
Gain on disposition of real estate,
net
(844)
(22,800)
FFO attributable to Common
Shareholders
$13,129
$56,157
Debt extinguishment, transaction, other,
net
1,695
5,671
Total non-operating items, net
1,695
5,671
Operating FFO attributable to Common
Shareholders
$14,824
$61,828
Weighted average shares and units –
Basic & Diluted – FFO & OFFO
19,829
19,806
FFO per share – Basic &
Diluted
$0.66
$2.84
Operating FFO per share – Basic &
Diluted
$0.75
$3.12
Common stock dividends declared, per
share
$1.16
$1.16
Certain non-cash items:
Straight-line rent
(443)
(919)
Straight-line fixed CAM
99
408
Loan cost amortization
(786)
(3,602)
Non-real estate depreciation expense
(16)
(67)
Capital expenditures:
Maintenance capital expenditures
551
1,685
Tenant allowances and landlord work
1,954
5,183
Leasing commissions - SITE Centers
762
2,755
Leasing commissions - external
53
278
Hurricane restorations
1,456
11,343
Retail Value Inc.
Balance Sheet
$ in thousands
At Period End
4Q20
4Q19
Assets:
Land
$397,699
$522,393
Buildings
1,031,886
1,380,984
Fixtures and tenant improvements
134,335
152,426
1,563,920
2,055,803
Depreciation
(593,691)
(670,509)
970,229
1,385,294
Construction in progress and land
1,515
2,017
Real estate, net
971,744
1,387,311
Cash
56,849
71,047
Restricted cash (1)
115,939
112,246
Receivables and straight-line (2)
25,302
25,195
Intangible assets, net (3)
9,452
19,573
Other assets, net
16,590
11,315
Total Assets
1,195,876
1,626,687
Liabilities and Equity:
Secured debt (4)
344,485
655,833
Payable to SITE
35
105
Dividends payable
23,002
39,057
Other liabilities (5)
38,568
53,789
Total Liabilities
406,090
748,784
Redeemable preferred equity
190,000
190,000
Common shares
1,983
1,905
Paid-in capital
721,234
692,871
Distributions in excess of net income
(123,428)
(6,857)
Common shares in treasury at cost
(3)
(16)
Total Equity
599,786
687,903
Total Liabilities and Equity
$1,195,876
$1,626,687
(1)
Asset sale proceeds
51,168
17,388
Hurricane related escrows
38,469
57,224
Other lender required escrows
26,302
37,634
(2)
SL rents (including fixed CAM), net
13,683
16,164
(3)
Operating lease right of use asset
1,509
1,714
(4)
Unamortized loan costs
(9,718)
(18,498)
(5)
Operating lease liabilities
2,602
2,835
Below-market leases, net
13,829
20,042
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210310005050/en/
Christa Vesy, EVP and Chief Financial Officer 216-755-5500
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