Retail Opportunity Investments Corp. (NASDAQ:ROIC) announced today
financial and operating results for the three and six months ended
June 30, 2018.
HIGHLIGHTS
- $7.3 million of net income attributable to common
stockholders ($0.06 per diluted share)
- $33.4 million of Funds From Operations(1) ($0.27 per
diluted share)
- 97.5% portfolio lease rate at June 30,
2018
- 20.4% increase in same-space comparative cash rents on
new leases (7.6% on renewals)
- 2.8% increase in same-center cash net operating income
(2Q’18 vs. 2Q’17)
- $15.7 million grocery-anchored shopping center
acquired
- $0.1950 per share quarterly cash dividend
paid
__________________________
(1) A reconciliation of GAAP net income to Funds From Operations
(FFO) is provided at the end of this press release.
Stuart A. Tanz, President and Chief Executive
Officer of Retail Opportunity Investments Corp. stated, “During the
second quarter, demand for space across our portfolio continued to
be strong, coming from a broad range of necessity-based
retailers. We continued to maintain our portfolio at over 97%
leased, ending the second quarter specifically at a strong,
97.5%. Additionally, for the 26th consecutive quarter, we
achieved growth in our key same-center and same-space comparative
operating metrics. During the second quarter, we grew
same-center cash NOI by 2.8% and achieved a 20.4% increase in
same-space cash rents on new leases.” Tanz added, “Looking
ahead, with the current leasing activity and momentum across our
portfolio, we are on track to continue achieving solid portfolio
operational results as we progress through the second half of
2018.”
FINANCIAL SUMMARY
For the three months ended June 30, 2018, GAAP
net income attributable to common stockholders was $7.3 million, or
$0.06 per diluted share, as compared to GAAP net income
attributable to common stockholders of $8.3 million, or $0.08 per
diluted share, for the three months ended June 30, 2017. For
the six months ended June 30, 2018, GAAP net income attributable to
common stockholders was $18.0 million, or $0.16 per diluted share,
as compared to GAAP net income attributable to common stockholders
of $18.5 million, or $0.17 per diluted share, for the six months
ended June 30, 2017.
FFO for the second quarter of 2018 was $33.4
million, or $0.27 per diluted share, as compared to $32.8 million
in FFO, or $0.27 per diluted share for the second quarter of
2017. FFO for the first six months of 2018 was $70.5 million,
or $0.57 per diluted share, as compared to $67.2 million in FFO, or
$0.55 per diluted share for the first six months of 2017.
ROIC reports FFO as a supplemental performance measure in
accordance with the definition set forth by the National
Association of Real Estate Investment Trusts. A
reconciliation of GAAP net income to FFO is provided at the end of
this press release.
At June 30, 2018, ROIC had a total market
capitalization of approximately $3.9 billion with approximately
$1.5 billion of principal debt outstanding, equating to a 39.3%
debt-to-total market capitalization ratio. ROIC’s principal
debt outstanding was comprised of $95.8 million of mortgage debt
and approximately $1.4 billion of unsecured debt, including $192.0
million outstanding on its unsecured revolving credit facility at
June 30, 2018. ROIC’s interest coverage for the second
quarter was 3.1 times and 93.6% of its portfolio was unencumbered
at June 30, 2018 (based on gross leasable area).
ACQUISITION SUMMARY
Year-to-date in 2018, ROIC has acquired a total
of $38.7 million of shopping center assets. During the first
quarter of 2018, ROIC acquired a grocery-anchored shopping center
for $19.0 million. During the second quarter of 2018, ROIC
acquired a grocery-anchored shopping center for $15.7
million. Additionally, during the second quarter, ROIC
acquired a multi-tenant, freestanding pad for $4.0 million located
at one of its existing grocery-anchored shopping centers.
King City Plaza
In May 2018, ROIC acquired King City Plaza for
$15.7 million. The shopping center is approximately 63,000
square feet and is anchored by Grocery Outlet Supermarket and
McCann’s Pharmacy. The property is located in King City,
Oregon, within the Portland metropolitan area, and is currently
100% leased.
PROPERTY OPERATIONS SUMMARY
At June 30, 2018, ROIC’s portfolio was 97.5%
leased. For the second quarter of 2018, same-center net
operating income (NOI) was $44.5 million, as compared to $43.2
million in same-center NOI for the second quarter of 2017,
representing a 2.8% increase. ROIC reports same-center
comparative NOI on a cash basis. A reconciliation of GAAP
operating income to same-center comparative NOI is provided at the
end of this press release.
During the second quarter of 2018, ROIC executed
97 leases, totaling 265,743 square feet, including 42 new leases,
totaling 98,669 square feet, achieving a 20.4% increase in
same-space comparative base rent, and 55 renewed leases, totaling
167,074 square feet, achieving a 7.6% increase in base
rent. ROIC reports same-space comparative base rent on
a cash basis.
CASH DIVIDEND
On June 28, 2018, ROIC distributed a $0.1950 per
share cash dividend. On July 25, 2018, ROIC’s board of
directors declared a cash dividend of $0.1950 per share, payable on
September 27, 2018 to stockholders of record on September 13,
2018.
CONFERENCE CALL
ROIC will conduct a conference call and audio
webcast to discuss its results on Thursday, July 26, 2018 at 9:00
a.m. Eastern Time / 6:00 a.m. Pacific Time. Those interested
in participating in the conference call should dial (877) 312-8783
(domestic), or (408) 940-3874 (international) at least ten minutes
prior to the scheduled start of the call. When prompted, provide
the Conference ID: 1890648. A live webcast will also be available
in listen-only mode at
http://www.roireit.net/. The conference call
will be recorded and available for replay beginning at 12:00 p.m.
Eastern Time on July 26, 2018 and will be available until 12:00
a.m. Eastern Time on August 2, 2018. To access the conference call
recording, dial (855) 859-2056 (domestic) or (404) 537-3406
(international) and use the Conference ID: 1890648. The conference
call will also be archived on
http://www.roireit.net/ for approximately 90
days.
ABOUT RETAIL OPPORTUNITY INVESTMENTS
CORP.
Retail Opportunity Investments Corp.
(NASDAQ:ROIC), is a fully-integrated, self-managed real estate
investment trust (REIT) that specializes in the acquisition,
ownership and management of grocery-anchored shopping centers
located in densely-populated, metropolitan markets across
the West Coast. As of June 30, 2018, ROIC owned 92 shopping
centers encompassing approximately 10.6 million square feet.
ROIC is the
largest publicly-traded, grocery-anchored shopping
center REIT focused exclusively on the West Coast. ROIC
is a member of the S&P SmallCap 600 Index and has
investment-grade corporate debt ratings from Moody's Investor
Services and Standard & Poor's. Additional information is
available at: www.roireit.net.
When used herein, the words "believes,"
"anticipates," "projects," "should," "estimates," "expects,"
“guidance” and similar expressions are intended to identify
forward-looking statements with the meaning of that term in Section
27A of the Securities Act of 1933, as amended, and in Section 21F
of the Securities and Exchange Act of 1934, as amended. Certain
statements contained herein may constitute “forward-looking
statements” within the meaning of the Private Securities Litigation
Reform Act of 1995. Such forward-looking statements involve
known and unknown risks, uncertainties and other factors which may
cause the actual results of ROIC to differ materially from future
results expressed or implied by such forward-looking
statements. Information regarding such risks and
factors is described in ROIC's filings with the SEC, including its
most recent Annual Report on Form 10-K, which is available at:
www.roireit.net.
RETAIL OPPORTUNITY INVESTMENTS
CORP.Consolidated Balance Sheets(In
thousands, except share data)
|
June 30, 2018 (unaudited) |
|
December 31, 2017 |
ASSETS |
|
|
|
Real Estate
Investments: |
|
|
|
Land |
$ |
898,436 |
|
|
$ |
878,797 |
|
Building and
improvements |
2,265,760 |
|
|
2,230,600 |
|
|
3,164,196 |
|
|
3,109,397 |
|
Less: accumulated
depreciation |
295,602 |
|
|
260,115 |
|
Real Estate
Investments, net |
2,868,594 |
|
|
2,849,282 |
|
Cash and cash
equivalents |
10,958 |
|
|
11,553 |
|
Restricted cash |
1,420 |
|
|
5,412 |
|
Tenant and other
receivables, net |
42,095 |
|
|
43,257 |
|
Deposits |
— |
|
|
500 |
|
Acquired lease
intangible assets, net |
78,246 |
|
|
82,778 |
|
Prepaid expenses |
1,600 |
|
|
2,853 |
|
Deferred charges,
net |
36,150 |
|
|
37,167 |
|
Other |
10,606 |
|
|
6,396 |
|
Total
assets |
$ |
3,049,669 |
|
|
$ |
3,039,198 |
|
|
|
|
|
LIABILITIES AND
EQUITY |
|
|
|
Liabilities: |
|
|
|
Term loan |
$ |
298,942 |
|
|
$ |
298,816 |
|
Credit facility |
189,259 |
|
|
140,329 |
|
Senior Notes |
940,762 |
|
|
940,086 |
|
Mortgage notes
payable |
97,884 |
|
|
107,915 |
|
Acquired lease
intangible liabilities, net |
173,911 |
|
|
178,984 |
|
Accounts payable and
accrued expenses |
14,580 |
|
|
18,638 |
|
Tenants’ security
deposits |
6,997 |
|
|
6,771 |
|
Other liabilities |
18,213 |
|
|
18,018 |
|
Total
liabilities |
1,740,548 |
|
|
1,709,557 |
|
|
|
|
|
Commitments and
contingencies |
|
|
|
|
|
|
|
Equity: |
|
|
|
Preferred stock,
$0.0001 par value 50,000,000 shares authorized; none issued and
outstanding |
— |
|
|
— |
|
Common stock, $0.0001
par value, 500,000,000 shares authorized; 112,719,459 and
112,347,451 shares issued and outstanding at June 30, 2018 and
December 31, 2017, respectively |
11 |
|
|
11 |
|
Additional paid-in
capital |
1,415,286 |
|
|
1,412,590 |
|
Dividends in excess of
earnings |
(236,570 |
) |
|
(210,490 |
) |
Accumulated other
comprehensive income |
7,235 |
|
|
1,856 |
|
Total Retail
Opportunity Investments Corp. stockholders’ equity |
1,185,962 |
|
|
1,203,967 |
|
Non-controlling
interests |
123,159 |
|
|
125,674 |
|
Total
equity |
1,309,121 |
|
|
1,329,641 |
|
Total
liabilities and equity |
$ |
3,049,669 |
|
|
$ |
3,039,198 |
|
|
|
|
|
RETAIL OPPORTUNITY INVESTMENTS
CORP.Consolidated Statements of
Operations(Unaudited)(In thousands, except per share
data)
|
|
|
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
2018 |
|
2017 |
|
2018 |
|
2017 |
Revenues |
|
|
|
|
|
|
|
Base rents |
$ |
55,050 |
|
|
$ |
50,528 |
|
|
$ |
110,427 |
|
|
$ |
102,007 |
|
Recoveries from
tenants |
16,471 |
|
|
15,222 |
|
|
32,632 |
|
|
28,890 |
|
Other income |
820 |
|
|
890 |
|
|
3,677 |
|
|
1,643 |
|
Total
revenues |
72,341 |
|
|
66,640 |
|
|
146,736 |
|
|
132,540 |
|
|
|
|
|
|
|
|
|
Operating
expenses |
|
|
|
|
|
|
|
Property operating |
11,017 |
|
|
9,628 |
|
|
21,495 |
|
|
18,928 |
|
Property taxes |
7,914 |
|
|
7,647 |
|
|
15,733 |
|
|
14,715 |
|
Depreciation and
amortization |
25,331 |
|
|
23,645 |
|
|
50,548 |
|
|
46,703 |
|
General and
administrative expenses |
3,990 |
|
|
3,817 |
|
|
7,521 |
|
|
7,316 |
|
Acquisition transaction
costs |
— |
|
|
4 |
|
|
— |
|
|
4 |
|
Other expense |
274 |
|
|
225 |
|
|
343 |
|
|
274 |
|
Total operating
expenses |
48,526 |
|
|
44,966 |
|
|
95,640 |
|
|
87,940 |
|
|
|
|
|
|
|
|
|
Operating
income |
23,815 |
|
|
21,674 |
|
|
51,096 |
|
|
44,600 |
|
Non-operating
expenses |
|
|
|
|
|
|
|
Interest expense and
other finance expenses |
(15,713 |
) |
|
(12,477 |
) |
|
(31,170 |
) |
|
(24,152 |
) |
Net income |
8,102 |
|
|
9,197 |
|
|
19,926 |
|
|
20,448 |
|
Net income attributable
to non-controlling interests |
(763 |
) |
|
(888 |
) |
|
(1,885 |
) |
|
(1,969 |
) |
Net Income
Attributable to Retail Opportunity Investments Corp. |
$ |
7,339 |
|
|
$ |
8,309 |
|
|
$ |
18,041 |
|
|
$ |
18,479 |
|
|
|
|
|
|
|
|
|
Earnings per
share – basic and diluted |
$ |
0.06 |
|
|
$ |
0.08 |
|
|
$ |
0.16 |
|
|
$ |
0.17 |
|
|
|
|
|
|
|
|
|
Dividends per
common share |
$ |
0.1950 |
|
|
$ |
0.1875 |
|
|
$ |
0.3900 |
|
|
$ |
0.3750 |
|
|
|
|
|
|
|
|
|
CALCULATION OF FUNDS FROM
OPERATIONS(Unaudited)(In thousands)
|
|
|
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
2018 |
|
2017 |
|
2018 |
|
2017 |
Net income attributable
to ROIC |
$ |
7,339 |
|
|
$ |
8,309 |
|
|
$ |
18,041 |
|
|
$ |
18,479 |
|
Plus: Depreciation
and amortization |
25,331 |
|
|
23,645 |
|
|
50,548 |
|
|
46,703 |
|
Funds from operations –
basic |
32,670 |
|
|
31,954 |
|
|
68,589 |
|
|
65,182 |
|
Net income attributable
to non-controlling interests |
763 |
|
|
888 |
|
|
1,885 |
|
|
1,969 |
|
Funds from operations –
diluted |
$ |
33,433 |
|
|
$ |
32,842 |
|
|
$ |
70,474 |
|
|
$ |
67,151 |
|
|
|
|
|
|
|
|
|
SAME-CENTER CASH NET OPERATING INCOME
ANALYSIS(Unaudited)(In thousands, except number of
shopping centers and percentages)
|
|
|
|
|
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
|
2018 |
|
2017 |
|
$ Change |
|
% Change |
|
2018 |
|
2017 |
|
$ Change |
|
% Change |
Number of
shopping centers included in same-center analysis |
82 |
|
|
82 |
|
|
|
|
|
|
79 |
|
|
79 |
|
|
|
|
|
Same-center
occupancy |
97.3 |
% |
|
97.4 |
% |
|
|
|
(0.1 |
)% |
|
97.4 |
% |
|
97.5 |
% |
|
|
|
(0.1 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Base
rents |
$ |
46,229 |
|
|
$ |
44,666 |
|
|
$ |
1,563 |
|
|
3.5 |
% |
|
$ |
89,342 |
|
|
$ |
86,911 |
|
|
$ |
2,431 |
|
|
2.8 |
% |
|
Percentage rent |
91 |
|
|
187 |
|
|
(96 |
) |
|
(51.3 |
)% |
|
176 |
|
|
302 |
|
|
(126 |
) |
|
(41.7 |
)% |
|
Recoveries from tenants |
15,181 |
|
|
14,985 |
|
|
196 |
|
|
1.3 |
% |
|
28,861 |
|
|
28,183 |
|
|
678 |
|
|
2.4 |
% |
|
Other
property income |
789 |
|
|
897 |
|
|
(108 |
) |
|
(12.0 |
)% |
|
1,089 |
|
|
1,655 |
|
|
(566 |
) |
|
(34.2 |
)% |
Total
Revenues |
62,290 |
|
|
60,735 |
|
|
1,555 |
|
|
2.6 |
% |
|
119,468 |
|
|
117,051 |
|
|
2,417 |
|
|
2.1 |
% |
Operating
Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property
operating expenses |
10,312 |
|
|
9,805 |
|
|
507 |
|
|
5.2 |
% |
|
19,418 |
|
|
18,322 |
|
|
1,096 |
|
|
6.0 |
% |
|
Bad debt
expense |
276 |
|
|
255 |
|
|
21 |
|
|
8.2 |
% |
|
364 |
|
|
743 |
|
|
(379 |
) |
|
(51.0 |
)% |
|
Property
taxes |
7,252 |
|
|
7,449 |
|
|
(197 |
) |
|
(2.6 |
)% |
|
13,769 |
|
|
14,134 |
|
|
(365 |
) |
|
(2.6 |
)% |
Total
Operating Expenses |
17,840 |
|
|
17,509 |
|
|
331 |
|
|
1.9 |
% |
|
33,551 |
|
|
33,199 |
|
|
352 |
|
|
1.1 |
% |
Same-Center
Cash Net Operating Income |
$ |
44,450 |
|
|
$ |
43,226 |
|
|
$ |
1,224 |
|
|
2.8 |
% |
|
$ |
85,917 |
|
|
$ |
83,852 |
|
|
$ |
2,065 |
|
|
2.5 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SAME-CENTER CASH NET OPERATING INCOME
RECONCILIATION(Unaudited)(In thousands)
|
|
|
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
2018 |
|
2017 |
|
2018 |
|
2017 |
GAAP operating
income |
$ |
23,815 |
|
|
$ |
21,674 |
|
|
$ |
51,096 |
|
|
$ |
44,600 |
|
Depreciation and amortization |
25,331 |
|
|
23,645 |
|
|
50,548 |
|
|
46,703 |
|
General
and administrative expenses |
3,990 |
|
|
3,817 |
|
|
7,521 |
|
|
7,316 |
|
Acquisition transaction costs |
— |
|
|
4 |
|
|
— |
|
|
4 |
|
Other
expense |
274 |
|
|
225 |
|
|
343 |
|
|
274 |
|
Property
revenues and other expenses (1) |
(4,441 |
) |
|
(4,311 |
) |
|
(9,924 |
) |
|
(11,201 |
) |
Total Company cash
NOI |
48,969 |
|
|
45,054 |
|
|
99,584 |
|
|
87,696 |
|
Non
same-center cash NOI |
(4,519 |
) |
|
(1,828 |
) |
|
(13,667 |
) |
|
(3,844 |
) |
Same-center cash
NOI |
$ |
44,450 |
|
|
$ |
43,226 |
|
|
$ |
85,917 |
|
|
$ |
83,852 |
|
|
|
|
|
|
|
|
|
__________________________
(1) Includes straight-line rents, amortization of above and
below-market lease intangibles, anchor lease termination fees, net
of contractual amounts, and expense and recovery adjustments
related to prior periods.
NON-GAAP DISCLOSURES
Funds from operations (“FFO”), is a widely
recognized non-GAAP financial measure for REITs that the Company
believes when considered with financial statements presented in
accordance with GAAP, provides additional and useful means to
assess its financial performance. FFO is frequently used by
securities analysts, investors and other interested parties to
evaluate the performance of REITs, most of which present FFO along
with net income as calculated in accordance with GAAP. The
Company computes FFO in accordance with the “White Paper” on FFO
published by the National Association of Real Estate Investment
Trusts (“NAREIT”), which defines FFO as net income attributable to
common stockholders (determined in accordance with GAAP) excluding
gains or losses from debt restructuring, sales of depreciable
property and impairments, plus real estate related depreciation and
amortization, and after adjustments for partnerships and
unconsolidated joint ventures.
The Company uses cash net operating income
(“NOI”) internally to evaluate and compare the operating
performance of the Company’s properties. The Company believes
cash 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, can be used
to determine trends in earnings of the Company’s properties as this
measure is not affected by the non-cash revenue and expense
recognition items, the cost of the Company’s funding, the impact of
depreciation and amortization expenses, gains or losses from the
acquisition and sale of operating real estate assets, general and
administrative expenses or other gains and losses that relate to
the Company’s ownership of properties. The Company believes
the exclusion of these items from operating income is useful
because the resulting measure captures the actual revenue generated
and actual expenses incurred in operating the Company’s properties
as well as trends in occupancy rates, rental rates and operating
costs. Cash NOI is a measure of the operating performance of
the Company’s properties but does not measure the Company’s
performance as a whole and is therefore not a substitute for net
income or operating income as computed in accordance with
GAAP. The Company defines cash NOI as operating revenues
(base rent and recoveries from tenants), less property and related
expenses (property operating expenses and property taxes), adjusted
for non-cash revenue and operating expense items such as
straight-line rent and amortization of lease intangibles,
debt-related expenses and other adjustments. Cash NOI also
excludes general and administrative expenses, depreciation and
amortization, acquisition transaction costs, other expense,
interest expense, gains and losses from property acquisitions and
dispositions, extraordinary items, tenant improvements and leasing
commissions. Other REITs may use different methodologies for
calculating cash NOI, and accordingly, the Company’s cash NOI may
not be comparable to other REITs.
Contact:Ashley Rubino, Investor
Relations858-255-4913arubino@roireit.net
Retail Oppurtunity Inves... (NASDAQ:ROIC)
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