UNITED
STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_________________
FORM 8-K
_________________
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
April 27, 2016
RETAIL OPPORTUNITY INVESTMENTS CORP.
(Exact Name of Registrant as Specified in Its Charter)
_________________
| Maryland (State or other jurisdiction of incorporation) |
001-33749 (Commission File Number) |
26-0500600 (I.R.S. Employer Identification No.) |
_________________
RETAIL OPPORTUNITY INVESTMENTS PARTNERSHIP, LP
(Exact Name of Registrant as Specified in Its Charter)
_________________
| Delaware (State or other jurisdiction of incorporation) |
333-189057-01 (Commission File Number) |
94-2969738 (LR.S. Employer Identification No.) |
| 8905 Towne Centre Drive, Suite 108 San Diego, California |
92122 (Zip Code) | |
| (858) 677-0900 (Registrants' Telephone Number, Including Area Code) |
||
| Not applicable (Former Name or Former Address, if Changed Since Last Report) |
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_________________
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
[_] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[_] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[_] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
[_] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 2.02. Results of Operations and Financial Condition.
On April 27, 2016, Retail Opportunity Investments Corp. (the "Company") issued an earnings release announcing its financial results for the quarter ended March 31, 2016. A copy of the earnings release is attached as Exhibit 99.1 hereto and incorporated herein by reference. On April 27, 2016, in connection with this earnings release, the Company posted certain supplemental information regarding the Company's operations for the quarter ended March 31, 2016 on its website, www.roireit.net. A copy of the supplemental information is attached as Exhibit 99.2 hereto and incorporated herein by reference.
The information in this Current Report, including the exhibits hereto, is being furnished and shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section. The information in this Current Report shall not be incorporated by reference into any registration statement or other document pursuant to the Securities Act of 1933, as amended, unless it is specifically incorporated by reference therein.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
| Exhibit No. | Description | |
| 99.1 | Earnings Release, dated April 27, 2016 | |
| 99.2 | Supplemental Information for the quarter ended March 31, 2016 | |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| RETAIL OPPORTUNITY INVESTMENTS CORP. | |||
| Dated: April 27, 2016 | By: | /s/ Michael B. Haines | |
| Name: Michael B. Haines | |||
| Title: Chief Financial Officer | |||
| RETAIL OPPORTUNITY INVESTMENTS | |||
| PARTNERSHIP, LP | |||
| By: | RETAIL OPPORTUNITY INVESTMENTS GP, LLC, its general partner | ||
| By: | /s/ Michael B. Haines | ||
| Name: Michael B. Haines | |||
| Title: Chief Financial Officer | |||
EXHIBIT 99.1
Retail Opportunity Investments Corp. Reports Strong First Quarter Results & Raises FFO Guidance
$17.4% increase in FFO Per Diluted Share
7.6% Increase in Same-Center Cash Net Operating Income
SAN DIEGO, April 27, 2016 (GLOBE NEWSWIRE) -- Retail Opportunity Investments Corp. (NASDAQ:ROIC) announced today financial and operating results for the first quarter ended March 31, 2016.
HIGHLIGHTS
- Net income of $8.9 million, or $0.08 per diluted share
- 17.4% increase in FFO(1) per diluted share to $0.27 (1Q’16 vs. 1Q’15)
- $155.2 million of grocery-anchored acquisitions committed year-to-date
- $64.0 million of grocery-anchored shopping centers acquired during 1Q’16
- $91.2 million of grocery-anchored shopping center acquisitions currently under contract
- 97.2% portfolio leased rate at March 31, 2016
- 7.6% increase in same-center cash net operating income (1Q’16 vs. 1Q’15)
- 15.4% increase in same-space comparative cash rents on new leases
- $46.1mm of operating partnership units issued to fund 1Q’16 acquisitions ($18.85 per unit)
- 31.8% debt-to-total market capitalization ratio at March 31, 2016
- 4.2x interest coverage for 1Q’16
- Quarterly cash dividend of $0.18 per share declared
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(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 2016 gets fully underway, we are executing our business plan seamlessly across all disciplines. Year-to-date, we have secured $155.2 million of grocery-anchored shopping center acquisitions. Additionally, we continue to post strong property operating results, including achieving a portfolio lease rate above 97% and a 7.6% increase in same-center cash NOI.” Tanz further stated, “With our strong start to the year, we are excited about the prospects of 2016 shaping up to be another solid year of growth and performance for the company.”
FINANCIAL SUMMARY
For the three months ended March 31, 2016, GAAP net income applicable to common shareholders was $8.9 million, or $0.8 per diluted share, as compared to GAAP net income of $4.4 million, or $0.04 per diluted share for the three months ended March 31, 2015. FFO for the first quarter of 2016 was $29.9 million, or $0.27 per diluted share, as compared to $22.0 million in FFO, or $0.23 per diluted share for the first quarter of 2015, representing a 17.4% increase on a per diluted share basis. 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, 2016, ROIC had a total market capitalization of approximately $3.3 billion with approximately $1.0 billion of principal debt outstanding, equating to a 31.8% debt-to-total market capitalization ratio. ROIC’s debt outstanding was comprised of $79.4 million of mortgage debt and $954.8 million of unsecured debt, with $169.5 million in principal outstanding on its unsecured credit facility. For the first quarter of 2016, ROIC’s interest coverage was 4.2 times and 93.8% of its portfolio was unencumbered (based on gross leasable area) at March 31, 2016.
ACQUISITION SUMMARY
Year-to-date in 2016, ROIC has committed a total of $155.2 million in grocery-anchored shopping center acquisitions.
In March 2016, ROIC acquired the following two-property portfolio for $64.0 million. ROIC funded the acquisition in part with issuance of $46.1 million of ROIC common equity in the form of operating partnership units, based on a value of $18.85 per unit.
Magnolia Shopping Center
Magnolia Shopping Center is approximately 116,000 square feet and is anchored by Kroger (Ralph’s) Supermarket. The property is located in Santa Barbara, California and is currently 97.7% leased.
Casitas Plaza Shopping Center
Casitas Plaza Shopping Center is approximately 97,000 square feet and is anchored by Albertson’s Supermarket and CVS Pharmacy. The property is located in Carpinteria, California, within Santa Barbara County, and is currently 100% leased.
Additionally, ROIC currently has binding contracts to acquire two grocery-anchored shopping centers, in separate transactions, totaling $91.2 million.
Bouquet Center
ROIC has a binding contract to acquire Bouquet Center for $59.0 million. The shopping center is approximately 149,000 square feet and is anchored by Safeway (Vons) Supermarket, CVS Pharmacy and Ross Dress For Less. The property is located in Santa Clarita, California, within the Los Angeles metropolitan area, and is currently 95.0% leased.
Bridle Trails Shopping Center
ROIC has a binding contract to acquire Bridle Trails Shopping Center for $32.2 million. The shopping center is approximately 106,000 square feet and is anchored by Red Apple (Unified) Supermarket and Bartell Drugs, a Seattle-based regional pharmacy. The property is located in Kirkland, Washington, within the Seattle metropolitan area, and is currently 97.0% leased.
PROPERTY OPERATIONS SUMMARY
At March 31, 2016, ROIC’s portfolio was 97.2% leased. For the first quarter of 2016, same-center net operating income (NOI) was $31.4 million, as compared to $29.2 million in same-center NOI for the first quarter of 2015, representing a 7.6% increase. Same-center NOI includes all of the properties owned by ROIC as of January 1, 2015, totaling 61 shopping centers. 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.
During the first quarter of 2016, ROIC executed 101 leases, totaling 297,963 square feet, achieving a 12.7% increase in same-space comparative base rent, including 32 new leases, totaling 111,869 square feet, achieving a 15.4% increase in same-space comparative base rent, and 69 renewed leases, totaling 186,094 square feet, achieving an 11.8% increase in base rent. ROIC reports same-space comparative base rent on a cash basis.
CASH DIVIDEND
On March 30, 2016, ROIC distributed an $0.18 per share cash dividend, representing a 5.9% increase as compared to ROIC’s previous dividend. On April 27, 2016, ROIC’s board of directors declared a cash dividend of $0.18 per share, payable on June 29, 2016 to stockholders of record on June 15, 2016.
2016 FFO GUIDANCE
ROIC currently estimates that FFO for the full year 2016 will be within the range of $1.02 to $1.06 per diluted share, and net income to be within the range of $0.33 to $0.34 per diluted share. The following table provides a reconciliation of GAAP net income to FFO.
| For the year ending December 31, 2016 | ||||||||
| Low End | High End | |||||||
| GAAP net income applicable to common stockholders | $ | 36,825 | $ | 38,269 | ||||
| Plus: | ||||||||
| Depreciation & Amortization | $ | 78,435 | $ | 81,511 | ||||
| Funds From Operations (FFO) applicable to common stockholders | $ | 115,260 | $ | 119,780 | ||||
| Diluted Shares | 113,000 | 113,000 | ||||||
| Earnings per share (diluted) | $ | 0.33 | $ | 0.34 | ||||
| FFO per share (diluted) | $ | 1.02 | $ | 1.06 | ||||
ROIC’s estimates are based on numerous underlying assumptions. ROIC’s management will discuss the company’s guidance and underlying assumptions on its April 28, 2016 conference call. ROIC’s guidance is a forward-looking statement and is subject to risks and other factors described elsewhere in this press release.
CONFERENCE CALL
ROIC will conduct a conference call and audio webcast to discuss its quarterly results on Thursday, April 28, 2016 at 10:00 a.m. Eastern Time / 7:00 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: 68643666. 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 1:00 p.m. Eastern Time on April 28, 2016 and will be available until 11:59 p.m. Eastern Time on May 5, 2016. To access the conference call recording, dial (855) 859-2056 (domestic) or (404) 537-3406 (international) and use the Conference ID: 68643666. 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, 2016, ROIC owned 75 shopping centers encompassing approximately 8.8 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)
| March 31, 2016 | December 31, 2015 | ||||||
| ASSETS | |||||||
| Real Estate Investments: | |||||||
| Land | $ | 686,644 | $ | 669,307 | |||
| Building and improvements | 1,685,135 | 1,627,310 | |||||
| 2,371,779 | 2,296,617 | ||||||
| Less: accumulated depreciation | 147,411 | 134,311 | |||||
| Real Estate Investments, net | 2,224,368 | 2,162,306 | |||||
| Cash and cash equivalents | 14,987 | 8,844 | |||||
| Restricted cash | 290 | 227 | |||||
| Tenant and other receivables, net | 30,310 | 28,652 | |||||
| Deposits | — | 500 | |||||
| Acquired lease intangible assets, net of accumulated amortization | 75,052 | 66,942 | |||||
| Prepaid expenses | 2,022 | 1,953 | |||||
| Deferred charges, net of accumulated amortization | 32,370 | 30,129 | |||||
| Other | 1,871 | 1,895 | |||||
| Total assets | $ | 2,381,270 | $ | 2,301,448 | |||
| LIABILITIES AND EQUITY | |||||||
| Liabilities: | |||||||
| Term loan | $ | 298,899 | $ | 298,802 | |||
| Credit facility | 166,310 | 132,028 | |||||
| Senior Notes Due 2024 | 244,962 | 244,833 | |||||
| Senior Notes Due 2023 | 244,581 | 244,426 | |||||
| Mortgage notes payable | 79,443 | 62,156 | |||||
| Acquired lease intangible liabilities, net of accumulated amortization | 136,174 | 124,861 | |||||
| Accounts payable and accrued expenses | 24,123 | 13,205 | |||||
| Tenants' security deposits | 5,218 | 5,085 | |||||
| Other liabilities | 13,707 | 11,036 | |||||
| Total liabilities | 1,213,417 | 1,136,432 | |||||
| Commitments and contingencies | — | — | |||||
| Non-controlling interests - redeemable OP Units | $ | — | $ | 33,674 | |||
| Equity: | |||||||
| Preferred stock, $.0001 par value 50,000,000 shares authorized; none issued and outstanding | — | — | |||||
| Common stock, $.0001 par value 500,000,000 shares authorized; 99,942,118 and 99,531,034 shares issued and outstanding at March 31, 2016 and December 31, 2015, respectively | 10 | 10 | |||||
| Additional paid-in-capital | 1,179,074 | 1,166,395 | |||||
| Dividends in excess of earnings | (132,999 | ) | (122,991 | ) | |||
| Accumulated other comprehensive loss | (6,447 | ) | (6,743 | ) | |||
| Total Retail Opportunity Investments Corp. stockholders' equity | 1,039,638 | 1,036,671 | |||||
| Non-controlling interests | 128,215 | 94,671 | |||||
| Total equity | 1,167,853 | 1,131,342 | |||||
| Total liabilities and equity | $ | 2,381,270 | $ | 2,301,448 | |||
RETAIL OPPORTUNITY INVESTMENTS CORP.
Consolidated Statements of Operations
(In thousands, except per share data)
| Three Months Ended March 31, | |||||||||
| 2016 | 2015 | ||||||||
| Revenues | |||||||||
| Base rents | $ | 43,848 | $ | 35,202 | |||||
| Recoveries from tenants | 11,860 | 9,689 | |||||||
| Other income | 386 | 231 | |||||||
| Total revenues | 56,094 | 45,122 | |||||||
| Operating expenses | |||||||||
| Property operating | 7,498 | 6,925 | |||||||
| Property taxes | 5,655 | 4,732 | |||||||
| Depreciation and amortization | 20,933 | 17,634 | |||||||
| General and administrative expenses | 3,319 | 2,641 | |||||||
| Acquisition transaction costs | 136 | 171 | |||||||
| Other expenses | 154 | 149 | |||||||
| Total operating expenses | 37,695 | 32,252 | |||||||
| Operating income | 18,399 | 12,870 | |||||||
| Non-operating income (expenses) | |||||||||
| Interest expense and other finance expenses | (9,474 | ) | (8,494 | ) | |||||
| Net income | 8,925 | 4,376 | |||||||
| Net income attributable to non-controlling interest | (898 | ) | (176 | ) | |||||
| Net Income Attributable to Retail Opportunity Investments Corp. | $ | 8,027 | $ | 4,200 | |||||
| Net income per share - basic and diluted: | $ | 0.08 | $ | 0.04 | |||||
| Dividends per common share | $ | 0.18 | $ | 0.17 | |||||
CALCULATION OF FUNDS FROM OPERATIONS
(Unaudited)
(In thousands)
| Three Months Ended March 31, | ||||||||
| 2016 | 2015 | |||||||
| Net income attributable to ROIC | $ | 8,027 | $ | 4,200 | ||||
| Plus: Depreciation and amortization | 20,933 | 17,634 | ||||||
| Funds from operations - basic | 28,960 | 21,834 | ||||||
| Net income attributable to non-controlling interests | 898 | 176 | ||||||
| Funds from operations - diluted | $ | 29,858 | $ | 22,010 | ||||
SAME-CENTER CASH NET OPERATING INCOME ANALYSIS
(Unaudited)
(In thousands, except number of shopping centers and percentages)
| Three Months Ended | |||||||||||||||||
| 3/31/16 | 3/31/15 | $ Change | % Change | ||||||||||||||
| Number of shopping centers included in same-center analysis (1) | 61 | 61 | |||||||||||||||
| Same-center occupancy | 97.1 | % | 97.0 | % | 0.1 | % | |||||||||||
| Revenues: | |||||||||||||||||
| Base rents | $ | 32,039 | $ | 30,351 | $ | 1,688 | 5.6 | % | |||||||||
| Percentage rent | 166 | 100 | 66 | 66.0 | % | ||||||||||||
| Recoveries from tenants | 10,257 | 9,434 | 823 | 8.7 | % | ||||||||||||
| Other property income | 146 | 192 | (46 | ) | (24.0 | %) | |||||||||||
| Total Revenues | 42,608 | 40,077 | 2,531 | 6.3 | % | ||||||||||||
| Operating Expenses | |||||||||||||||||
| Property operating expenses | $ | 6,399 | $ | 6,058 | $ | 341 | 5.6 | % | |||||||||
| Bad debt expense | 98 | 309 | (211 | ) | (68.3 | %) | |||||||||||
| Property taxes | 4,696 | 4,504 | 192 | 4.3 | % | ||||||||||||
| Total Operating Expenses | 11,193 | 10,871 | 322 | 3.0 | % | ||||||||||||
| Same Center Cash Net Operating Income | $ | 31,415 | $ | 29,206 | $ | 2,209 | 7.6 | % | |||||||||
SAME-CENTER CASH NET OPERATING INCOME RECONCILIATION
(Unaudited)
(In thousands)
| Three Months Ended March 31, | ||||||||
| 2016 | 2015 | |||||||
| Same-center cash NOI | $ | 31,415 | $ | 29,206 | ||||
| Adjustments | ||||||||
| Depreciation and amortization | (20,933 | ) | (17,634 | ) | ||||
| General and administrative expenses | (3,319 | ) | (2,641 | ) | ||||
| Acquisition transaction costs | (136 | ) | (171 | ) | ||||
| Other expense | (154 | ) | (149 | ) | ||||
| Property revenues and expenses (1) | 5,082 | 3,189 | ||||||
| Non same-center cash NOI | 6,444 | 1,070 | ||||||
| GAAP operating income | $ | 18,399 | $ | 12,870 | ||||
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(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 Bulot, Investor Relations
858-255-4913
abulot@roireit.net
EXHIBIT 99.2
