Retail Value Inc. (NYSE: RVI) today announced operating results
for the quarter ended June 30, 2020.
Results for the Quarter
- Second quarter net loss attributable to common shareholders was
$1.9 million, or $0.10 per diluted share as compared to net income
of $13.6 million, or $0.72 per share, in the year ago-period. The
year-over-year decrease in net income is primarily attributable to
the impact of the COVID-19 pandemic and the dilutive effect of
asset sales offset by reduced interest expense and debt
extinguishment costs.
- Second quarter operating funds from operations attributable to
common shareholders (“Operating FFO” or “OFFO”) was $12.2 million,
or $0.61 per diluted share, compared to $24.4 million, or $1.28 per
diluted share, in the year ago-period. The year-over-year decrease
in OFFO is primarily attributable to the same factors as
above.
- Sold one property, Big Oaks Crossing, on June 30, 2020 for $21
million; ninety percent (90%) of net proceeds were used to repay
mortgage debt with the remaining proceeds retained as cash.
- In July 2020, sold the Lowe’s parcel, Newnan Crossing for $15.6
million; ninety percent (90%) of net proceeds were used to repay
mortgage debt with the remaining proceeds retained as cash.
- The Continental U.S. leased rate was 89.3% at June 30, 2020 as
compared to 89.6% at March 31, 2020, the decrease is primarily due
to an asset sold in the second quarter.
- The Puerto Rico leased rate was 85.9% at June 30, 2020 as
compared to 85.8% at March 31, 2020.
Key Quarterly Operating Results The following metrics are
as of June 30, 2020:
Continental U.S.
Puerto Rico
Shopping Center Count
13
12
Gross Leasable Area (thousands)
5,457
4,432
Base Rent PSF
$13.60
$19.80
Leased Rate
89.3%
85.9%
Commenced Rate
88.8%
83.9%
NOI-Quarter (millions)
$10.9
$10.7
Impact of COVID-19 The impact to the portfolio as of July
31, 2020 is as follows:
Continental U.S.
Puerto Rico
% of Tenants open and operating (pro rata
average rent)
92%
94%
% of second quarter rent paid
66%
60%
% of July rent paid
78%
72%
In Puerto Rico, malls and non-essential businesses at outdoor
shopping centers remained fully closed until early June when they
were permitted to reopen with significant occupancy and operating
restrictions. As of July 31, 2020, approximately 93% of the
Company’s tenants (based on average base rents) were open for
business, up from a low of 34% in early April.
As of July 31, 2020, tenants for the entire company had paid
approximately 63% of second quarter rents and 75% of July rents. As
of July 31, 2020, the Company had reached deferral arrangements
with tenants representing approximately 14% of second quarter rents
and 8% of July rents. In addition, during the second quarter the
Company’s rental revenue and NOI were reduced by $6.8 million of
uncollectible revenue primarily related to reserves associated with
cash-basis tenants triggered by the 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 Company furthered its property level COVID-19 pandemic response
to include: property level social media and email marketing
campaigns to help communities identify operating tenants,
facilitated gift card program to connect local businesses with
members of the communities, instituted heightened cleaning and
disinfection protocols, installed social distancing and hygiene
signage around its properties to follow CDC guidelines, developed
and implemented Vendor COVID Operating Protocol to promote safe and
responsible operations by vendors, developed and implemented a
COVID Operating Protocol for all property operations staff,
deployed online purchase pick-up locations across the portfolio and
completed a tenant survey to identify specific tenant needs around
curbside and online purchase pick-up.
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 herein.
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 and finance its
operations 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 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
2Q20
2Q20
Total
Total
Continental U.S.
Puerto Rico
2Q20
6M20
Revenues:
Rental income (1)
$19,077
$20,222
$39,299
$89,629
Other property revenues
(26)
19
(7)
32
19,051
20,241
39,292
89,661
Expenses:
Operating and maintenance (2)
3,854
8,339
12,193
25,807
Real estate taxes
4,299
1,184
5,483
11,202
8,153
9,523
17,676
37,009
Net operating income (3)
10,898
10,718
21,616
52,652
Other income (expense):
Asset management fees
(2,324)
(4,648)
Interest expense, net
(5,660)
(12,952)
Depreciation and amortization
(14,211)
(30,681)
General and administrative
(924)
(2,001)
Impairment charges
(10,910)
(26,820)
Debt extinguishment costs, net
(12)
(3,977)
Other expense, net
0
334
Gain on disposition of real estate, net
(4)
10,958
13,632
Loss before other items
(1,467)
(14,461)
Tax expense
(519)
(592)
Net loss
($1,986)
($15,053)
Weighted average shares – Basic &
Diluted – EPS
19,816
19,782
Earnings per common share – Basic &
Diluted
($0.10)
($0.76)
Revenue items:
(1)
Minimum rents
15,089
15,259
30,348
61,738
Ground lease minimum rents
1,099
2,013
3,112
6,318
Recoveries
5,932
5,887
11,819
24,716
Uncollectible revenue
(3,199)
(3,621)
(6,820)
(7,678)
Percentage and overage rent
6
32
38
1,055
Ancillary and other rental income
150
633
783
2,961
Lease termination fees
0
19
19
519
(2)
Operating expenses:
Property management fees
(1,099)
(1,467)
(2,566)
(5,118)
(3)
NOI from assets sold
224
2,487
(4)
SITE Centers disposition fees
(210)
(1,766)
Retail Value Inc.
Reconciliation: Net Income
to FFO and Operating FFO
and Other Financial
Information
in thousands, except per share
2Q20
6M20
Net loss attributable to Common
Shareholders
($1,986)
($15,053)
Depreciation and amortization of real
estate
14,193
30,646
Impairment of real estate
10,910
26,820
Gain on disposition of real estate,
net
(10,958)
(13,632)
FFO attributable to Common
Shareholders
$12,159
$28,781
Debt extinguishment, transaction, other,
net
12
3,644
Total non-operating items, net
12
3,644
Operating FFO attributable to Common
Shareholders
$12,171
$32,425
Weighted average shares and units –
Basic & Diluted – FFO & OFFO
19,816
19,782
FFO per share – Basic &
Diluted
$0.61
$1.45
Operating FFO per share – Basic &
Diluted
$0.61
$1.64
Common stock dividends declared, per
share
N/A
N/A
Certain non-cash items:
Straight-line rent
590
(517)
Straight-line fixed CAM
99
200
Loan cost amortization
(914)
(1,933)
Non-real estate depreciation expense
(17)
(34)
Capital expenditures:
Maintenance capital expenditures
645
663
Tenant allowances and landlord work
1,020
1,611
Leasing commissions - SITE Centers
473
1,704
Leasing commissions - external
68
155
Hurricane restorations
4,538
8,012
Retail Value Inc.
Balance Sheet
$ in thousands
At Period End
2Q20
4Q19
Assets:
Land
$464,876
$522,393
Buildings
1,205,401
1,380,984
Fixtures and tenant improvements
137,586
152,426
1,807,863
2,055,803
Depreciation
(622,100)
(670,509)
1,185,763
1,385,294
Construction in progress and land
6,962
2,017
Real estate, net
1,192,725
1,387,311
Cash
99,176
71,047
Restricted cash (1)
93,172
112,246
Receivables and straight-line (2)
31,884
25,195
Intangible assets, net (3)
14,106
19,573
Other assets, net
8,197
11,315
Total Assets
1,439,260
1,626,687
Liabilities and Equity:
Secured debt
506,688
655,833
Payable to SITE
280
105
Dividends payable
0
39,057
Other liabilities (4)
41,343
53,789
Total Liabilities
548,311
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
(21,910)
(6,857)
Common shares in treasury at cost
(16)
(16)
Total Equity
700,949
687,903
Total Liabilities and Equity
$1,439,260
$1,626,687
(1)
Asset sale proceeds
17,275
17,388
Other escrows
75,897
94,858
(2)
SL rents (including fixed CAM), net
14,677
16,164
(3)
Operating lease right of use asset
1,613
1,714
(4)
Operating lease liabilities
2,721
2,835
Below-market leases, net
16,373
20,042
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200805005701/en/
Retail Value Inc. For additional
information: Christa Vesy, EVP and Chief Financial Officer
216-755-5500
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