Retail Value Inc. (NYSE: RVI) today announced operating results
for the quarter ended March 31, 2021.
Results for the Quarter and Recent Activity
- First quarter net income attributable to common shareholders
was $3.2 million, or $0.15 per diluted share, as compared to net
loss of $13.1 million, or $0.66 per share, in the year-ago period.
The period-over-period increase in net income 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.
- First quarter operating funds from operations attributable to
common shareholders (“Operating FFO” or “OFFO”) was $18.6 million,
or $0.89 per diluted share, compared to $20.3 million, or $1.03 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.
- The Continental U.S. leased rate was 86.7% at March 31, 2021 as
compared to 88.9% at December 31, 2020. The decrease in the leased
rate primarily related to the expiration and termination of two
dark anchor tenant leases in the first quarter of 2021.
- The Puerto Rico leased rate was 88.3% at March 31, 2021 as
compared to 89.2% at December 31, 2020 primarily due to the legal
resolution and termination of dark non-paying tenants.
- Exercised its first extension option under its mortgage loan
agreement in which the loan’s maturity was extended to March 9,
2022. In addition, extended the revolving credit facility maturity
date to February 9, 2022.
- In April 2021, sold four properties (Marketplace of Brown Deer,
Noble Town Center, Plaza Vega Baja and Uptown Solon) for a gross
sales price of $38.9 million. In April 2021, net proceeds from the
sale of Marketplace of Brown Deer along with unrestricted cash on
hand aggregating $23.6 million were used to repay the mortgage
loan. The majority of the net proceeds from the other three asset
sales are expected to repay $24.9 million of the mortgage loan in
May 2021.
Key Quarterly Operating Results The following metrics are
as of March 31, 2021:
Continental U.S.
Puerto Rico
Shopping Center Count
11
11
Gross Leasable Area (thousands)
4,533
3,918
Base Rent PSF
$13.17
$19.60
Leased Rate
86.7%
88.3%
Commenced Rate
86.1%
87.6%
NOI-Quarter (millions)
$11.9
$13.4
Impact of the COVID-19 Pandemic The impact to the
portfolio as of April 23, 2021 is as follows:
Continental U.S.
Puerto Rico
% of Tenants open and operating (average
base rent)
100%
99%
% of Second quarter 2020 rent paid
87%
80%
% of Third quarter 2020 rent paid
92%
90%
% of Fourth quarter 2020 rent paid
96%
92%
% of First quarter 2021 rent paid
98%
94%
- For the total portfolio, 99% of tenants were open for business
as of April 23, 2021 (based on average base rents). In Puerto Rico,
while 99% of the Company’s tenants were open for business as of
April 23, 2021, most remain subject to significant capacity and
operating restrictions.
- The Company calculates the aggregate percentage of rents paid
for assets owned as of March 31, 2021, 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 April 23, 2021, agreed upon rent deferral arrangements
that remain unpaid represented approximately 5% of second quarter
2020 rents, 4% of third quarter 2020 rents and 3% of fourth quarter
2020 rents. There were no rent deferral arrangements that remain
unpaid with respect to first quarter 2021 rents. The Company
granted abatements to tenants representing approximately 6% of
second quarter 2020 rents and 1% of third quarter 2020 rents. There
were no significant abatements of fourth quarter 2020 rents or
first quarter 2021 rents.
- At March 31, 2021, the balance sheet reflects $2.1 million of
net deferred rents, a majority of which is expected to be repaid in
2021.
- During the first quarter of 2021, the Company’s rental revenue
and NOI benefited from $1.7 million of payments related to 2020
rental income received from cash-basis tenants.
Property Net Operating Income (NOI) Projection The
Company has updated its projection of 2021 NOI. 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.
$35 – $40 million
Puerto Rico
$48 – $54 million
These Projections:
- Exclude all properties sold to date and assume all properties
owned by the Company on May 4, 2021 are held through year end;
- Reflect payment of property management fees;
- Assume tenant collections at 100% for second quarter of 2021
through fourth quarter of 2021 (as compared to first quarter 2021
rent collections of 98% and 94% for the continental U.S. and Puerto
Rico portfolios, respectively) and
- Assume no reserve reversals related to 2020 rents for the
second quarter of 2021 through fourth quarter of 2021.
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 or extension 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
Forms 10-K and 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
1Q21
1Q21
Total
Total
Continental U.S.
Puerto Rico
1Q21
1Q20
Revenues:
Rental income (1)
$18,153
$23,269
$41,422
$50,330
Other property revenues
17
20
37
39
18,170
23,289
41,459
50,369
Expenses:
Operating and maintenance (2)
3,085
8,787
11,872
13,614
Real estate taxes
3,134
1,132
4,266
5,719
6,219
9,919
16,138
19,333
Net operating income (3)
11,951
13,370
25,321
31,036
Other income (expense):
Asset management fees
(1,770)
(2,324)
Interest expense, net
(3,991)
(7,292)
Depreciation and amortization
(13,358)
(16,470)
General and administrative
(865)
(1,077)
Impairment charges
(2,010)
(15,910)
Debt extinguishment costs, net
(130)
(3,965)
Other income, net
0
334
Gain on disposition of real estate, net
(4)
121
2,674
Income (loss) before other items
3,318
(12,994)
Tax expense
(109)
(73)
Net income (loss)
$3,209
($13,067)
Weighted average shares – Basic &
Diluted – EPS
20,916
19,749
Earnings (loss) per common share –
Basic & Diluted
$0.15
($0.66)
(1)
Revenue items:
Minimum rents
11,567
13,329
24,896
31,391
Ground lease minimum rents
839
1,804
2,643
3,206
Recoveries
4,461
5,834
10,295
12,896
Uncollectible revenue
992
(754)
238
(858)
Percentage and overage rent
18
1,439
1,457
1,017
Ancillary and other rental income
191
1,617
1,808
2,178
Lease termination fees
85
0
85
500
(2)
Operating expenses:
Property management fees
(701)
(1,564)
(2,265)
(2,552)
(3)
NOI from assets sold
23
(50)
(27)
1,680
(4)
SITE Centers disposition fees
0
(1,556)
Retail Value Inc.
Reconciliation: Net Loss to FFO and Operating FFO and Other
Financial Information
in thousands, except per share
1Q21
1Q20
Net income (loss) attributable to
Common Shareholders
$3,209
($13,067)
Depreciation and amortization of real
estate
13,341
16,453
Impairment of real estate
2,010
15,910
Gain on disposition of real estate,
net
(121)
(2,674)
FFO attributable to Common
Shareholders
$18,439
$16,622
Debt extinguishment, transaction, other,
net
130
3,631
Total non-operating items, net
130
3,631
Operating FFO attributable to Common
Shareholders
$18,569
$20,253
Weighted average shares and units –
Basic & Diluted – FFO & OFFO
20,916
19,749
FFO per share – Basic &
Diluted
$0.88
$0.84
Operating FFO per share – Basic &
Diluted
$0.89
$1.03
Common stock dividends declared, per
share
N/A
N/A
Certain non-cash items:
Straight-line rent
(565)
(1,108)
Straight-line fixed CAM
70
101
Loan cost amortization
(781)
(1,020)
Non-real estate depreciation expense
(17)
(17)
Capital expenditures:
Maintenance capital expenditures
328
18
Tenant allowances and landlord work
608
591
Leasing commissions - SITE Centers
778
1,231
Leasing commissions - external
133
87
Hurricane restorations
1,848
3,474
Retail Value Inc. Balance
Sheet
$ in thousands
At Period End
1Q21
4Q20
Assets:
Land
$397,024
$397,699
Buildings
1,030,973
1,031,886
Fixtures and tenant improvements
131,780
134,335
1,559,777
1,563,920
Depreciation
(602,879)
(593,691)
956,898
970,229
Construction in progress and land
1,887
1,515
Real estate, net
958,785
971,744
Cash
72,741
56,849
Restricted cash (1)
63,557
115,939
Receivables and straight-line (2)
22,053
25,302
Intangible assets, net (3)
8,529
9,452
Other assets, net (4)
14,659
16,590
Total Assets
1,140,324
1,195,876
Liabilities and Equity:
Secured debt (5)
294,069
344,485
Dividends payable
0
23,002
Other liabilities (6)
34,239
38,603
Total Liabilities
328,308
406,090
Redeemable preferred equity
190,000
190,000
Common shares
2,108
1,983
Paid-in capital
740,130
721,234
Distributions in excess of net income
(120,219)
(123,428)
Common shares in treasury at cost
(3)
(3)
Total Equity
622,016
599,786
Total Liabilities and Equity
$1,140,324
$1,195,876
(1)
Asset sale proceeds
0
51,168
Hurricane related escrows
37,169
38,469
Other lender required escrows
26,388
26,302
(2)
SL rents (including fixed CAM), net
13,189
13,683
(3)
Operating lease right of use asset
1,456
1,509
(4)
Note receivable
3,000
3,000
(5)
Unamortized loan costs
(8,965)
(9,718)
(6)
Operating lease liabilities
2,540
2,602
Below-market leases, net
13,529
13,829
www.retailvalueinc.com
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version on businesswire.com: https://www.businesswire.com/news/home/20210504006208/en/
Christa Vesy, EVP and Chief Financial Officer 216-755-5500
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