Retail Value Inc. (NYSE: RVI) today announced operating results
for the quarter ended December 31, 2019.
Results for the Quarter
- Fourth quarter net loss attributable to common shareholders was
$39.1 million, or $2.06 per diluted share as compared to net income
of $2.9 million, or $0.15 per share, in the year ago-period. The
year-over-year decrease in net income is primarily attributable to
impairment charges.
- Fourth quarter operating funds from operations attributable to
common shareholders (“Operating FFO” or “OFFO”) was $24.1 million,
or $1.27 per diluted share, compared to $25.0 million, or $1.36 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 one shopping center for an aggregate sales price of $19.2
million.
- Payment of $16.6 million payable to SITE Centers Corp.
- The Continental U.S. leased rate was 90.6% as compared to 91.4%
at September 30, 2019 due to lease expirations and tenant
bankruptcies.
- The Puerto Rico leased rate was 84.7% as compared to 83.8% at
September 30, 2019 due to a new anchor lease.
Significant Full Year Activity and 2020 Activity
- Net income attributable to common shareholders for the year
ended December 31, 2019, was $46.7 million, or $2.46 per diluted
share. Generated Operating FFO of $5.05 per diluted share for the
full year 2019.
- Sold 10 shopping centers and two outparcels for an aggregate
sales price of $335.2 million.
- In January and February 2020, sold three shopping centers for
an aggregate sales price of $155.6 million.
Key Quarterly Operating Results
The following metrics are as of December 31, 2019:
Continental U.S.
Puerto Rico
Shopping Center Count
16
12
Gross Leasable Area (thousands)
7,017
4,431
Base Rent PSF
$13.54
$19.93
Leased Rate
90.6%
84.7%
Commenced Rate
90.2%
82.7%
NOI-Quarter (millions)
$19.8
$16.3
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.
In December 2018, the National Association of Real Estate
Investment Trusts (“NAREIT”) issued NAREIT Funds From Operations
White Paper - 2018 Restatement (“the 2018 FFO White Paper”). The
purpose of the 2018 FFO White Paper was not to change the
fundamental definition of FFO but to clarify existing guidance and
to consolidate into a single document, alerts and policy bulletins
issued by NAREIT since the last FFO white paper was issued in 2002.
The 2018 FFO White Paper was effective starting with first quarter
2019 reporting. The Company did not report any changes in the
calculation of FFO in 2019 related to the clarification in the 2018
FFO White Paper.
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, 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 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
4Q19
4Q19
Total
Total
Continental U.S.
Puerto Rico
4Q19
12M19
Revenues (1):
Rental income (2)
$29,965
$25,627
$55,592
$230,328
Other property revenues
38
109
147
1,092
Business interruption income
0
0
0
7,675
30,003
25,736
55,739
239,095
Expenses:
Operating and maintenance (3)
5,334
8,237
13,571
52,964
Real estate taxes
4,909
1,205
6,114
27,693
10,243
9,442
19,685
80,657
Net operating income (4)
19,760
16,294
36,054
158,438
Other income (expense):
Asset management fees
(2,429)
(10,497)
Interest expense, net
(8,473)
(42,674)
Depreciation and amortization
(19,189)
(74,598)
General and administrative
(899)
(3,953)
Impairment charges
(47,080)
(80,070)
Hurricane property insurance income,
net
3,159
79,391
Debt extinguishment costs, net
(21)
(19,379)
Transaction costs
0
(37)
Other expense, net
0
(850)
(Loss) gain on disposition of real estate,
net (5)
(166)
41,482
(Loss) income before other items
(39,044)
47,253
Tax expense
(82)
(504)
Net (loss) income
($39,126)
$46,749
Weighted average shares – Basic &
Diluted – EPS
19,052
19,008
Earnings per common share – Basic &
Diluted
($2.06)
$2.46
Revenue items:
(1)
Lost revenue related to hurricane
$0
$0
$0
($2,946)
(2)
Minimum rents
20,486
14,466
34,952
145,930
Ground lease minimum rents
1,365
1,926
3,291
13,604
Percentage and overage rent
(9)
645
636
3,578
Recoveries
7,556
5,804
13,360
56,010
Lease termination fees
142
0
142
1,082
Ancillary and other rental income
381
2,822
3,203
10,074
Bad debt
44
(36)
8
50
(3)
Operating expenses:
Property management fees
(1,241)
(1,448)
(2,689)
(11,360)
(4)
NOI from assets sold
561
10,247
(5)
SITE Centers disposition fees
192
3,352
Retail Value Inc.
Reconciliation: Net Income
to FFO and Operating FFO
and Other Financial
Information
in thousands, except per share
4Q19
12M19
Net income attributable to Common
Shareholders
($39,126)
$46,749
Depreciation and amortization of real
estate
19,165
74,496
Impairment of real estate
47,080
80,070
Gain on disposition of real estate,
net
166
(41,482)
FFO attributable to Common
Shareholders
$27,285
$159,833
Hurricane activity, net (1)
(3,159)
(84,120)
Debt extinguishment, transaction, other,
net
21
20,266
Total non-operating items, net
(3,138)
(63,854)
Operating FFO attributable to Common
Shareholders
$24,147
$95,979
Weighted average shares and units –
Basic & Diluted – FFO & OFFO
19,052
19,008
FFO per share – Basic &
Diluted
$1.43
$8.41
Operating FFO per share – Basic &
Diluted
$1.27
$5.05
Common stock dividends declared, per
share
$2.05
$2.05
Certain non-cash items:
Straight-line rent
(194)
(1,308)
Straight-line fixed CAM
135
580
Loan cost amortization
(1,134)
(4,828)
Non-real estate depreciation expense
(23)
(101)
Capital expenditures:
Maintenance capital expenditures
233
953
Tenant allowances and landlord work
2,723
10,692
Leasing commissions - SITE Centers
1,340
3,151
Leasing commissions - external
37
708
Hurricane restorations
10,249
62,401
(1)
Hurricane activity, net:
Lost tenant revenue
0
2,946
Hurricane property insurance income,
net
(3,159)
(79,391)
Business interruption income
0
(7,675)
(3,159)
(84,120)
Retail Value Inc.
Balance Sheet
$ in thousands
At Period End
4Q19
4Q18
Assets:
Land
$522,393
$622,827
Buildings
1,380,984
1,629,862
Fixtures and tenant improvements
152,426
172,679
2,055,803
2,425,368
Depreciation
(670,509)
(704,401)
1,385,294
1,720,967
Construction in progress and land
2,017
26,070
Real estate, net
1,387,311
1,747,037
Cash
71,048
44,565
Restricted cash (1)
112,246
66,634
Receivables and straight-line (2)
25,195
31,426
Property insurance receivable
0
29,422
Intangible assets, net (3)
19,573
31,882
Other assets, net
11,314
11,678
Total Assets
1,626,687
1,962,644
Liabilities and Equity:
Secured debt
655,833
967,569
Payable to SITE
105
33,985
Dividends payable
39,057
24,005
Other liabilities (4)
53,789
84,832
Total Liabilities
748,784
1,110,391
Redeemable preferred equity
190,000
190,000
Common shares
1,905
1,846
Paid-in capital
692,871
675,566
Distributions in excess of net income
(6,857)
(15,153)
Common shares in treasury at cost
(16)
(6)
Total Equity
687,903
662,253
Total Liabilities and Equity
$1,626,687
$1,962,644
(1)
Asset sale proceeds
17,388
26,969
Other escrows
94,858
39,665
(2)
Straight-line rents receivable
15,563
18,757
(3)
Operating lease right of use assets
(related to adoption of Topic 842)
1,714
0
(4)
Operating lease liabilities (related to
adoption of Topic 842)
2,835
0
Below-market leases, net
20,042
33,914
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200302005791/en/
Christa Vesy, 216-755-5500 EVP and Chief Financial Officer
Retail Value (NYSE:RVI)
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