Retail Value Inc. (NYSE: RVI) today announced operating results
for the quarter ended March 31, 2020.
Results for the Quarter
- First quarter net loss attributable to common shareholders was
$13.1 million, or $0.66 per diluted share as compared to net loss
of $10 thousand, or $0.00 per share, in the year ago-period. The
year-over-year increase in net loss is primarily attributable to an
increase in impairment charges and lower gain on sale of assets and
the dilutive effect of asset sales offset by reduced interest
expense and debt extinguishment costs.
- First quarter operating funds from operations attributable to
common shareholders (“Operating FFO” or “OFFO”) was $20.3 million,
or $1.03 per diluted share, compared to $24.3 million, or $1.29 per
diluted share, in the year ago-period. The year-over-year decrease
in OFFO is primarily attributable to the impact of asset
sales.
- Sold three shopping centers for an aggregate sales price of
$155.6 million.
- The Continental U.S. leased rate was 89.6% as compared to 90.6%
at December 31, 2019 due to lease expirations and assets sold in
first quarter.
- The Puerto Rico leased rate was 85.8% as compared to 84.7% at
December 31, 2019 primarily due to the reopening of an anchor lease
tenant that had closed in 2017 due to the hurricane.
Key Quarterly Operating Results
The following metrics are as of March 31, 2020:
Continental U.S.
Puerto Rico
Shopping Center Count
14
12
Gross Leasable Area (thousands)
5,805
4,435
Base Rent PSF
$13.00
$19.85
Leased Rate
89.6%
85.8%
Commenced Rate
89.3%
83.4%
NOI-Quarter (millions)
$15.5
$15.5
Impact of COVID-19
The Company implemented a COVID-19 response plan that included
enacting protocols in line with government guidelines at
Company-owned shopping centers to keep its properties operational
and working with tenants to access small business resources
including those provided by the Payroll Protection Program
(PPP).
The impact to the portfolio as of April 29, 2020 is as
follows:
Continental U.S.
Puerto Rico
% of Tenants open and operating (pro rata
rent)
49%
37%
% of April rent paid
44%
36%
In addition, during the first quarter the Company’s NOI was
reduced by $1.2 million of straight-line rent reserves and bad debt
triggered by the impact of COVID-19.
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 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 and the
accompanying financial supplement.
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 impact of the outbreak of COVID-19 on the
Company’s ability to manage its properties, finance its operations
and perform necessary administrative and reporting functions and on
tenants’ ability to operate their businesses, generate sales and
meet their financial obligations, including the obligation to pay
rent; 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 reports on
Form 10-K and Form 10-Q. The impacts of COVID-19 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
1Q20
1Q20
Total
Continental U.S.
Puerto Rico
1Q20
Revenues:
Rental income (1)
$24,931
$25,399
$50,330
Other property revenues
24
15
39
24,955
25,414
50,369
Expenses:
Operating and maintenance (2)
4,889
8,725
13,614
Real estate taxes
4,488
1,231
5,719
9,377
9,956
19,333
Net operating income (3)
15,578
15,458
31,036
Other income (expense):
Asset management fees
(2,324)
Interest expense, net
(7,292)
Depreciation and amortization
(16,470)
General and administrative
(1,077)
Impairment charges
(15,910)
Debt extinguishment costs, net
(3,965)
Other expense, net
334
Gain on disposition of real estate, net
(4)
2,674
Loss before other items
(12,994)
Tax expense
(73)
Net loss
($13,067)
Weighted average shares – Basic &
Diluted – EPS
19,749
Earnings per common share – Basic &
Diluted
($0.66)
Revenue items:
(1)
Minimum rents
17,012
14,379
31,391
Ground lease minimum rents
1,205
2,001
3,206
Percentage and overage rent
97
920
1,017
Recoveries
6,646
6,250
12,896
Lease termination fees
500
0
500
Ancillary and other rental income
322
1,856
2,178
Bad debt
(851)
(7)
(858)
(2)
Operating expenses:
Property management fees
(1,099)
(1,453)
(2,552)
(3)
NOI from assets sold
1,680
(4)
SITE Centers disposition fees
(1,556)
Retail Value Inc.
Reconciliation: Net Income
to FFO and Operating FFO
and Other Financial
Information
in thousands, except per share
1Q20
Net loss attributable to Common
Shareholders
($13,067)
Depreciation and amortization of real
estate
16,453
Impairment of real estate
15,910
Gain on disposition of real estate,
net
(2,674)
FFO attributable to Common
Shareholders
$16,622
Debt extinguishment, transaction, other,
net
3,631
Total non-operating items, net
3,631
Operating FFO attributable to Common
Shareholders
$20,253
Weighted average shares and units –
Basic & Diluted – FFO & OFFO
19,749
FFO per share – Basic &
Diluted
$0.84
Operating FFO per share – Basic &
Diluted
$1.03
Common stock dividends declared, per
share
N/A
Certain non-cash items:
Straight-line rent
(1,108)
Straight-line fixed CAM
101
Loan cost amortization
(1,020)
Non-real estate depreciation expense
(17)
Capital expenditures:
Maintenance capital expenditures
18
Tenant allowances and landlord work
591
Leasing commissions - SITE Centers
1,231
Leasing commissions - external
87
Hurricane restorations
3,474
Retail Value Inc.
Balance Sheet
$ in thousands
At Period End
1Q20
4Q19
Assets:
Land
$469,890
$522,393
Buildings
1,230,987
1,380,984
Fixtures and tenant improvements
140,181
152,426
1,841,058
2,055,803
Depreciation
(624,546)
(670,509)
1,216,512
1,385,294
Construction in progress and land
2,242
2,017
Real estate, net
1,218,754
1,387,311
Cash
92,366
71,047
Restricted cash (1)
81,268
112,246
Receivables and straight-line (2)
21,407
25,195
Intangible assets, net (3)
15,036
19,573
Other assets, net
11,837
11,315
Total Assets
1,440,668
1,626,687
Liabilities and Equity:
Secured debt
505,790
655,833
Payable to SITE
105
105
Dividends payable
0
39,057
Other liabilities (4)
41,838
53,789
Total Liabilities
547,733
748,784
Redeemable preferred equity
190,000
190,000
Common shares
1,982
1,905
Paid-in capital
720,893
692,871
Distributions in excess of net income
(19,924)
(6,857)
Common shares in treasury at cost
(16)
(16)
Total Equity
702,935
687,903
Total Liabilities and Equity
$1,440,668
$1,626,687
(1)
Asset sale proceeds
0
17,388
Other escrows
81,268
94,858
(2)
SL rents (including fixed CAM), net
14,011
16,164
(3)
Operating lease right of use asset
1,664
1,714
(4)
Operating lease liabilities
2,779
2,835
Below-market leases, net
16,733
20,042
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200501005409/en/
Retail Value Inc. Christa Vesy, EVP and Chief Financial
Officer 216-755-5500
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