Investor Relations

Press Release Details

Retail Opportunity Investments Corp. Reports 2023 Second Quarter Results

07/25/2023

SAN DIEGO, July 25, 2023 (GLOBE NEWSWIRE) -- Retail Opportunity Investments Corp. (NASDAQ:ROIC) announced today financial and operating results for the three and six months ended June 30, 2023.

HIGHLIGHTS

  • $9.9 million of net income attributable to common stockholders ($0.08 per diluted share)
  • $35.6 million in Funds From Operations (FFO)(1) ($0.27 per diluted share)
  • FFO per diluted share guidance for 2023 reaffirmed ($1.05 - $1.11 per diluted share)
  • 3.2% increase in same-center cash net operating income (2Q‘23 vs. 2Q‘22)
  • 98.3% portfolio lease rate at 6/30/23 (matching all-time record high)
  • 429,687 square feet of leases executed (most active 2nd quarter on record)
  • 988,844 square feet of leases executed during first six months of 2023 (record activity)
  • 16.8% increase in same-space cash base rents on new leases (6.6% on renewals)
  • 6.5x net principal debt-to-annualized EBITDA ratio for 2Q‘23
  • 84.5% of total principal debt outstanding effectively fixed-rate at 6/30/23
  • Environmental, Social & Governance annual report issued
  • $0.15 per share cash dividend declared
    _____________________________________
    (1) A reconciliation of GAAP net income to FFO is provided at the end of this press release.

Stuart A. Tanz, President and Chief Executive Officer of Retail Opportunity Investments Corp. stated, “Demand for space across our portfolio continues to be consistent and strong. Capitalizing on the demand, during the second quarter we continued to lease space at a record pace and maintained our portfolio lease rate at an all-time high. Additionally, we continue to achieve solid releasing rent growth on new leases, as well as renewals.” Tanz added, “Our continued success with portfolio operations and leasing is underscored by the fundamental strength and appeal of our West Coast grocery-anchored shopping center portfolio and sound tenant base. We expect that to continue to drive our results in the second half of 2023.”

FINANCIAL RESULTS SUMMARY

For the three months ended June 30, 2023, GAAP net income attributable to common stockholders was $9.9 million, or $0.08 per diluted share, as compared to GAAP net income attributable to common stockholders of $11.5 million, or $0.09 per diluted share, for the three months ended June 30, 2022. For the six months ended June 30, 2023, GAAP net income attributable to common stockholders was $18.1 million, or $0.14 per diluted share, as compared to GAAP net income attributable to common stockholders of $23.1 million, or $0.19 per diluted share, for the six months ended June 30, 2022.

FFO for the second quarter of 2023 was $35.6 million, or $0.27 per diluted share, as compared to $36.7 million in FFO, or $0.28 per diluted share for the second quarter of 2022. FFO for the first six months of 2023 was $69.4 million, or $0.52 per diluted share, as compared to $72.9 million in FFO, or $0.55 per diluted share for the first six months of 2022. 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.

For the second quarter of 2023, same-center net operating income (NOI) was $53.2 million, as compared to $51.5 million in same-center NOI for the second quarter of 2022, representing a 3.2% increase. For the first six months of 2023, same-center NOI increased 1.3% as compared to same-center NOI for the first six months of 2022. ROIC reports same-center NOI on a cash basis. A reconciliation of GAAP operating income to same-center NOI is provided at the end of this press release.

At June 30, 2023, ROIC had total real estate assets (before accumulated depreciation) of approximately $3.4 billion and approximately $1.4 billion of principal debt outstanding, of which approximately $1.3 billion was unsecured debt, including $63.0 million outstanding on its $600.0 million unsecured credit facility. For the second quarter of 2023, ROIC’s net principal debt-to-annualized EBITDA ratio was 6.5 times, and 84.5% of its total principal debt outstanding was effectively fixed-rate at June 30, 2023.

PROPERTY OPERATIONS SUMMARY

At June 30, 2023, ROIC’s portfolio was 98.3% leased. During the second quarter of 2023, ROIC executed 128 leases, totaling 429,687 square feet, including 45 new leases, totaling 88,830 square feet, achieving a 16.8% increase in same-space comparative base rent, and 83 renewed leases, totaling 340,857 square feet, achieving a 6.6% increase in base rent. ROIC reports same-space comparative new lease and renewal base rents on a cash basis.

ENVIRONMENTAL, SOCIAL & GOVERNANCE SUMMARY

In April 2023, ROIC was selected, for the third consecutive year, as a Green Lease Leader by the U.S. Department of Energy’s Better Buildings Alliance and the Institute for Market Transformation. Specifically, ROIC was awarded 2023 Green Lease Leader “Gold” level designation in recognition of its continued success in collaborating with tenants on energy efficiency, decarbonization, air quality and other environmental and social issues.

In June 2023, ROIC issued its fourth Environmental, Social and Governance (ESG) annual report, detailing it’s ESG achievements during 2022, as well as its ongoing initiatives and goals. The report was prepared in accordance with the Sustainability Accounting Standards Board (SASB) standards, the Task Force on Climate-related Financial Disclosures (TCFD) framework, and the United Nations Sustainable Development Goals (SDG). The report is available at: https://www.roireit.net/esg

DIVIDEND SUMMARY

On July 7, 2023, ROIC distributed a $0.15 per share cash dividend. On July 25, 2023, the Board declared a cash dividend of $0.15 per share, payable on October 6, 2023 to stockholders of record on September 15, 2023.

CONFERENCE CALL

ROIC will conduct a conference call to discuss its results on Wednesday, July 26, 2023 at 12:00 p.m. Eastern Time / 9:00 a.m. Pacific Time.

To participate in the conference call, click on the following link (ten minutes prior to the call) to register: https://register.vevent.com/register/BI4b8698f12a6e4ed999de6434d0df2e87

Once registered, participants will have the option of: 1) dialing in from their phone (using a PIN); or 2) clicking the “Call Me” option to receive an automated call directly to their phone.

The conference call will also be available live (in a listen-only mode) at: https://edge.media-server.com/mmc/p/5u6nvqev

The conference call will be recorded and available for replay following the conclusion of the live broadcast and will be accessible up to one year on ROIC’s website, specifically on its Investor Relations Events & Presentations page: https://investor.roicreit.com/events-presentations

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, 2023, ROIC owned 93 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, S&P Global Ratings and Fitch Ratings, Inc. 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, 2023
(unaudited)
  December 31, 2022
ASSETS      
Real Estate Investments:      
Land $ 958,397     $ 958,236  
Building and improvements   2,467,962       2,452,857  
    3,426,359       3,411,093  
Less:  accumulated depreciation   615,501       578,593  
    2,810,858       2,832,500  
Mortgage note receivable   4,741       4,786  
Real Estate Investments, net   2,815,599       2,837,286  
Cash and cash equivalents   5,296       5,598  
Restricted cash   2,069       1,861  
Tenant and other receivables, net   57,336       57,546  
Deposits         500  
Acquired lease intangible assets, net   48,564       52,428  
Prepaid expenses   2,251       5,957  
Deferred charges, net   30,011       26,683  
Other assets   17,433       16,420  
Total assets $ 2,978,559     $ 3,004,279  
       
LIABILITIES AND EQUITY      
Liabilities:      
Term loan $ 299,435     $ 299,253  
Credit facility   63,000       88,000  
Senior Notes   947,673       946,849  
Mortgage notes payable   60,486       60,917  
Acquired lease intangible liabilities, net   145,685       152,117  
Accounts payable and accrued expenses   43,733       22,885  
Tenants’ security deposits   7,894       7,701  
Other liabilities   42,722       41,959  
Total liabilities   1,610,628       1,619,681  
       
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; 126,003,795 and 124,538,811 shares issued and outstanding at June 30, 2023 and December 31, 2022, respectively   13       12  
Additional paid-in capital   1,625,667       1,612,126  
Accumulated dividends in excess of earnings   (335,755 )     (315,984 )
Accumulated other comprehensive income   1,337       14  
Total Retail Opportunity Investments Corp. stockholders’ equity   1,291,262       1,296,168  
Non-controlling interests   76,669       88,430  
Total equity   1,367,931       1,384,598  
Total liabilities and equity $ 2,978,559     $ 3,004,279  
       

 

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,
  2023   2022   2023   2022
Revenues              
Rental revenue $ 79,630     $ 77,218     $ 158,629     $ 152,255  
Other income   2,410       1,007       2,707       2,443  
Total revenues   82,040       78,225       161,336       154,698  
               
Operating expenses              
Property operating   13,581       12,672       27,783       24,763  
Property taxes   8,924       8,416       17,768       16,936  
Depreciation and amortization   25,126       24,350       50,230       48,112  
General and administrative expenses   5,776       5,702       11,096       10,942  
Other expense   482       488       654       667  
Total operating expenses   53,889       51,628       107,531       101,420  
               
Operating income   28,151       26,597       53,805       53,278  
Non-operating expenses              
Interest expense and other finance expenses   (17,633 )     (14,283 )     (34,591 )     (28,498 )
Net income   10,518       12,314       19,214       24,780  
Net income attributable to non-controlling interests   (589 )     (807 )     (1,143 )     (1,632 )
Net Income Attributable to Retail Opportunity Investments Corp. $ 9,929     $ 11,507     $ 18,071     $ 23,148  
               
Earnings per share – basic and diluted $ 0.08     $ 0.09     $ 0.14     $ 0.19  
               
Dividends per common share $ 0.15     $ 0.13     $ 0.30     $ 0.26  
               

 

CALCULATION OF FUNDS FROM OPERATIONS
(Unaudited)
(In thousands)
 
  Three Months Ended June 30,   Six Months Ended June 30,
  2023   2022   2023   2022
Net income attributable to ROIC $ 9,929   $ 11,507   $ 18,071   $ 23,148
Plus:  Depreciation and amortization   25,126     24,350     50,230     48,112
Funds from operations – basic   35,055     35,857     68,301     71,260
Net income attributable to non-controlling interests   589     807     1,143     1,632
Funds from operations – diluted $ 35,644   $ 36,664   $ 69,444   $ 72,892
               

 

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,
    2023   2022   $ Change   % Change   2023   2022   $ Change   % Change
Number of shopping centers included in same-center analysis   89       89               87       87          
Same-center leased rate   98.3 %     97.7 %       0.6 %     98.3 %     97.7 %       0.6 %
                                 
Revenues:                              
  Base rents $ 55,206     $ 53,459     $ 1,747     3.3 %   $ 108,530     $ 105,560     $ 2,970     2.8 %
  Percentage rent   269       157       112     71.3 %     634       356       278     78.1 %
  Recoveries from tenants   19,464       18,237       1,227     6.7 %     38,580       36,155       2,425     6.7 %
  Other property income   1,288       827       461     55.7 %     1,402       1,873       (471 )   (25.1 )%
  Bad debt   (864 )     (133 )     (731 )   549.6 %     (1,674 )     (718 )     (956 )   133.1 %
Total Revenues   75,363       72,547       2,816     3.9 %     147,472       143,226       4,246     3.0 %
Operating Expenses                              
  Property operating expenses   13,524       12,785       739     5.8 %     27,128       24,737       2,391     9.7 %
  Property taxes   8,681       8,276       405     4.9 %     17,033       16,540       493     3.0 %
Total Operating Expenses   22,205       21,061       1,144     5.4 %     44,161       41,277       2,884     7.0 %
Same-Center Cash Net Operating Income $ 53,158     $ 51,486     $ 1,672     3.2 %   $ 103,311     $ 101,949     $ 1,362     1.3 %
                                 

 

SAME-CENTER CASH NET OPERATING INCOME RECONCILIATION
(Unaudited)
(In thousands)
 
  Three Months Ended June 30,   Six Months Ended June 30,
  2023   2022   2023   2022
GAAP operating income $ 28,151     $ 26,597     $ 53,805     $ 53,278  
Depreciation and amortization   25,126       24,350       50,230       48,112  
General and administrative expenses   5,776       5,702       11,096       10,942  
Other expense   482       488       654       667  
Straight-line rent   (979 )     (915 )     (1,326 )     (1,366 )
Amortization of above- and below-market rent   (2,609 )     (3,254 )     (5,473 )     (6,311 )
Property revenues and other expenses (1)   (634 )     (32 )     (629 )     (129 )
Total Company cash NOI   55,313       52,936       108,357       105,193  
Non same-center cash NOI   (2,155 )     (1,450 )     (5,046 )     (3,244 )
Same-center cash NOI $ 53,158     $ 51,486     $ 103,311     $ 101,949  
               

____________________
(1)   Includes anchor lease termination fees, net of contractual amounts, if any, expense and recovery adjustments related to prior periods and other miscellaneous adjustments.

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: Nicolette O’Leary Director of Investor Relations 858-677-0900  noleary@roireit.net