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Apr 25, 2018

Retail Opportunity Investments Corp. Reports 2018 First Quarter Results

SAN DIEGO, April 25, 2018 (GLOBE NEWSWIRE) -- Retail Opportunity Investments Corp. (NASDAQ:ROIC) announced today financial and operating results for the three months ended March 31, 2018.

HIGHLIGHTS

  • $10.7 million of net income attributable to common stockholders ($0.09 per diluted share)
  • $37.0 million of Funds From Operations(1) ($0.30 per diluted share)
  • 97.4% portfolio lease rate at March 31, 2018 (15th consecutive quarter at or above 97%)
  • 424,342 square feet of leases executed (record first quarter activity)
  • 21.6% increase in same-space comparative cash rents on new leases (8.3% on renewals)
  • 2.4% increase in same-center cash net operating income (1Q’18 vs. 1Q’17)
  • $19.0 million grocery-anchored shopping center acquired
  • $10.1 million mortgage retired (93.6% of portfolio GLA unencumbered at March 31, 2018)
  • $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, “As 2018 gets fully underway, we are off to another solid start.  Demand for space from a broad and growing number of retailers continues to accelerate across our portfolio, as evidenced by our record, first quarter leasing activity.  Additionally, we again achieved a portfolio lease rate above 97%, as well as strong, same-space rent increases, averaging 21.6% on new leases executed during the first quarter.”  Along with the strong demand from new retailers seeking space at our shopping centers, an increasing number of our existing, necessity-based tenants are proactively seeking to renew their leases well ahead of schedule, which is indicative of the long-term appeal of our properties and fundamental strength of our core West Coast markets.” Tanz concluded, “Given our performance to date, we are on track thus far to meet our previously stated guidance of achieving FFO between $1.16 and $1.20 per diluted share for 2018.”

FINANCIAL SUMMARY

For the three months ended March 31, 2018, GAAP net income attributable to common stockholders was $10.7 million, or $0.09 per diluted share, as compared to GAAP net income attributable to common stockholders of $10.2 million, or $0.09 per diluted share, for the three months ended March 31, 2017.  FFO for the first quarter of 2018 was $37.0 million, or $0.30 per diluted share, as compared to $34.3 million in FFO, or $0.28 per diluted share for the first quarter of 2017.  Included in GAAP net income and FFO for the first quarter of 2018 was $2.2 million of lease settlement income received in connection with a property currently lined up to be sold that is slated for new, multi-family development.  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 March 31, 2018, ROIC had a total market capitalization of approximately $3.7 billion with approximately $1.5 billion of principal debt outstanding, equating to a 40.8% debt-to-total market capitalization ratio.  ROIC’s principal debt outstanding was comprised of $96.0 million of mortgage debt and approximately $1.4 billion of unsecured debt, including $159.5 million outstanding on its unsecured revolving credit facility at March 31, 2018.  During the first quarter, ROIC retired a $10.1 million mortgage.  ROIC’s interest coverage for the first quarter was 3.4 times and 93.6% of its portfolio was unencumbered at March 31, 2018 (based on gross leasable area).

ACQUISITION SUMMARY

Stadium Center

In February 2018, ROIC acquired Stadium Center for $19.0 million.  The shopping center is approximately 49,000 square feet and is anchored by Thriftway Supermarket.  The property is located in Tacoma, Washington, within the Seattle metropolitan area, and is currently 100% leased.

King City Plaza

ROIC has a binding contract to acquire King City Plaza for $15.6 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 March 31, 2018, ROIC’s portfolio was 97.4% leased.  For the first quarter of 2018, same-center net operating income (NOI) was $42.9 million, as compared to $41.8 million in same-center NOI for the first quarter of 2017, representing a 2.4% 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 first quarter of 2018, ROIC executed 94 leases, totaling 424,342 square feet, including 26 new leases, totaling 85,346 square feet, achieving a 21.6% increase in same-space comparative base rent, and 68 renewed leases, totaling 338,996 square feet, achieving an 8.3% increase in base rent.   ROIC reports same-space comparative base rent on a cash basis.

CASH DIVIDEND

On March 29, 2018, ROIC distributed a $0.1950 per share cash dividend.  On April 25, 2018, ROIC’s board of directors declared a cash dividend of $0.1950 per share, payable on June 28, 2018 to stockholders of record on June 14, 2018.

CONFERENCE CALL

ROIC will conduct a conference call and audio webcast to discuss its results on Thursday, April 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: 7872779. 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 April 26, 2018 and will be available until 11:59 p.m. Eastern Time on May 3, 2018. To access the conference call recording, dial (855) 859-2056 (domestic) or (404) 537-3406 (international) and use the Conference ID: 7872779. 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 March 31, 2018, ROIC owned 91 shopping centers encompassing approximately 10.5 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)
 
  March 31, 2018
 (unaudited)
  December 31,
2017
ASSETS      
Real Estate Investments:      
Land $ 896,573     $ 878,797  
Building and improvements 2,238,793     2,230,600  
  3,135,366     3,109,397  
Less: accumulated depreciation 275,708     260,115  
Real Estate Investments, net 2,859,658     2,849,282  
Cash and cash equivalents 13,012     11,553  
Restricted cash 1,998     5,412  
Tenant and other receivables, net 43,560     43,257  
Deposits 500     500  
Acquired lease intangible assets, net 81,262     82,778  
Prepaid expenses 2,941     2,853  
Deferred charges, net 37,151     37,167  
Other 9,641     6,396  
Total assets $ 3,049,723     $ 3,039,198  
       
LIABILITIES AND EQUITY      
Liabilities:      
Term loan $ 298,879     $ 298,816  
Credit facility 156,544     140,329  
Senior Notes 940,422     940,086  
Mortgage notes payable 98,201     107,915  
Acquired lease intangible liabilities, net 177,212     178,984  
Accounts payable and accrued expenses 30,607     18,638  
Tenants’ security deposits 6,919     6,771  
Other liabilities 18,508     18,018  
Total liabilities 1,727,292     1,709,557  
       
Commitments and contingencies      
       
Equity:      
Preferred stock, $.0001 par value 50,000,000 shares authorized; none issued and outstanding      
Common stock, $0.0001 par value, 500,000,000 shares authorized; 112,721,459 and 112,347,451 shares issued and outstanding at March 31, 2018 and December 31, 2017, respectively 11     11  
Additional paid-in capital 1,413,887     1,412,590  
Dividends in excess of earnings (221,841 )   (210,490 )
Accumulated other comprehensive income 5,664     1,856  
Total Retail Opportunity Investments Corp. stockholders’ equity 1,197,721     1,203,967  
Non-controlling interests 124,710     125,674  
Total equity 1,322,431     1,329,641  
Total liabilities and equity $ 3,049,723     $ 3,039,198  
       


RETAIL OPPORTUNITY INVESTMENTS CORP.
Consolidated Statements of Operations
(Unaudited)
(In thousands, except per share data)
 
  Three Months Ended March 31,
  2018   2017
Revenues      
Base rents $ 55,377     $ 51,479  
Recoveries from tenants 16,161     13,668  
Other income 2,857     753  
Total revenues 74,395     65,900  
       
Operating expenses      
Property operating 10,478     9,300  
Property taxes 7,819     7,068  
Depreciation and amortization 25,217     23,058  
General and administrative expenses 3,531     3,499  
Other expense 69     49  
Total operating expenses 47,114     42,974  
       
Operating income 27,281     22,926  
Non-operating expenses      
Interest expense and other finance expenses (15,457 )   (11,675 )
Net income 11,824     11,251  
Net income attributable to non-controlling interests (1,122 )   (1,081 )
Net Income Attributable to Retail Opportunity Investments Corp. $ 10,702     $ 10,170  
       
Earnings per share – basic and diluted $ 0.09     $ 0.09  
       
Dividends per common share $ 0.1950     $ 0.1875  
       


CALCULATION OF FUNDS FROM OPERATIONS
(Unaudited)
(In thousands)
 
  Three Months Ended March 31,
  2018   2017
Net income attributable to ROIC $ 10,702     $ 10,170  
Plus: Depreciation and amortization 25,217     23,058  
Funds from operations – basic 35,919     33,228  
Net income attributable to non-controlling interests 1,122     1,081  
Funds from operations – diluted $ 37,041     $ 34,309  
       


SAME-CENTER CASH NET OPERATING INCOME ANALYSIS
(Unaudited)
(In thousands, except number of shopping centers and percentages)
 
    Three Months Ended March 31,
    2018   2017   $
Change
  %
Change
Number of shopping centers included in same-center analysis 79     79          
Same-center occupancy 97.5 %   97.5 %       0 %
                               
Revenues:                            
  Base rents $ 44,470     $ 43,561     $ 909     2.1 %
  Percentage rent 84     116     (32 )   (27.6 )%
  Recoveries from tenants 14,180     13,620     560     4.1 %
  Other property income 425     758     (333 )   (43.9 )%
Total Revenues 59,159     58,055     1,104     1.9 %
Operating Expenses                            
  Property operating expenses 9,428     8,792     636     7.2 %
  Bad debt expense 88     488     (400 )   (82.0 )%
  Property taxes 6,791     6,932     (141 )   (2.0 )%
Total Operating Expenses 16,307     16,212     95     0.6 %
Same-Center Cash Net Operating Income $ 42,852     $ 41,843     $ 1,009     2.4 %
                 


SAME-CENTER CASH NET OPERATING INCOME RECONCILIATION
(Unaudited)
(In thousands)
 
  Three Months Ended March 31,
  2018   2017
GAAP operating income $ 27,281     $ 22,926  
Depreciation and amortization 25,217     23,058  
General and administrative expenses 3,531     3,499  
Other expense 69     49  
Property revenues and other expenses (1) (5,509 )   (6,889 )
Total Company cash NOI 50,589     42,643  
Non same-center cash NOI (7,737 )   (800 )
Same-center cash NOI $ 42,852     $ 41,843  
       

____________________

(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 Relations
858-255-4913
arubino@roireit.net 

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Source: Retail Opportunity Investments Corp.

Stock Information

  • Nov 20, 2018
  • 10:49 pm EST

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