UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
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
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
July 25, 2018
RETAIL OPPORTUNITY INVESTMENTS CORP.
(Exact Name of Registrant as Specified in Its Charter)
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Maryland (State or other jurisdiction of incorporation) | 001-33749 (Commission File Number) | 26-0500600 (I.R.S. Employer Identification No.) |
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RETAIL OPPORTUNITY INVESTMENTS PARTNERSHIP, LP
(Exact Name of Registrant as Specified in Its Charter)
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Delaware (State or other jurisdiction of incorporation) | 333-189057-01 (Commission File Number) | 94-2969738 (LR.S. Employer Identification No.) |
11250 El Camino Real, Suite 200 San Diego, California | (858) 677-0900 (Registrants' Telephone Number, Including Area Code) | 92130 (Zip 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))
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (Section 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (Section 240.12b-2 of this chapter)
[_] Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [_]
Item 2.02. Results of Operations and Financial Condition.
On July 25, 2018, Retail Opportunity Investments Corp. (the "Company") issued an earnings release announcing its financial results for the quarter ended June 30, 2018. A copy of the earnings release is attached as Exhibit 99.1 hereto and incorporated herein by reference. On July 25, 2018, in connection with this earnings release, the Company posted certain supplemental information regarding the Company's operations for the quarter ended June 30, 2018 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.
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: July 25, 2018
By: | /s/ Michael B. Haines Name: Michael B. Haines Title: Chief Financial Officer |
RETAIL OPPORTUNITY INVESTMENTS
PARTNERSHIP, LP
PARTNERSHIP, LP
By: | RETAIL OPPORTUNITY INVESTMENTS GP, LLC, its general partner |
By: | /s/ Michael B. Haines Name: Michael B. Haines Title: Chief Financial Officer |
Retail Opportunity Investments Corp. TRADED: NASDAQ: ROIC
11250 El Camino Real, Suite 200
San Diego, CA 92130
FOR IMMEDIATE RELEASE
Wednesday, July 25, 2018
Retail Opportunity Investments Corp. Reports
2018 Second Quarter Results
San Diego, CA, July 25, 2018 - Retail Opportunity Investments Corp. (NASDAQ:ROIC) announced today financial and operating results for the three and six months ended June 30, 2018.
HIGHLIGHTS
▪$7.3 million of net income attributable to common stockholders ($0.06 per diluted share)
▪$33.4 million of Funds From Operations(1) ($0.27 per diluted share)
▪97.5% portfolio lease rate at June 30, 2018
▪20.4% increase in same-space comparative cash rents on new leases (7.6% on renewals)
▪2.8% increase in same-center cash net operating income (2Q’18 vs. 2Q’17)
▪$15.7 million grocery-anchored shopping center acquired
▪$0.1950 per share quarterly cash dividend paid
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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, “During the second quarter, demand for space across our portfolio continued to be strong, coming from a broad range of necessity-based retailers. We continued to maintain our portfolio at over 97% leased, ending the second quarter specifically at a strong, 97.5%. Additionally, for the 26th consecutive quarter, we achieved growth in our key same-center and same-space comparative operating metrics. During the second quarter, we grew same-center cash NOI by 2.8% and achieved a 20.4% increase in same-space cash rents on new leases.” Tanz added, “Looking ahead, with the current leasing activity and momentum across our portfolio, we are on track to continue achieving solid portfolio operational results as we progress through the second half of 2018.”
FINANCIAL SUMMARY
For the three months ended June 30, 2018, GAAP net income attributable to common stockholders was $7.3 million, or $0.06 per diluted share, as compared to GAAP net income attributable to common stockholders of $8.3 million, or $0.08 per diluted share, for the three months ended June 30, 2017. For the six months ended June 30, 2018, GAAP net income attributable to common stockholders was $18.0 million, or $0.16 per diluted share, as compared to GAAP net income attributable to common stockholders of $18.5 million, or $0.17 per diluted share, for the six months ended June 30, 2017.
FFO for the second quarter of 2018 was $33.4 million, or $0.27 per diluted share, as compared to $32.8 million in FFO, or $0.27 per diluted share for the second quarter of 2017. FFO for the first six months of 2018 was $70.5 million, or $0.57 per diluted share, as compared to $67.2 million in FFO, or $0.55 per diluted share for the first six months of 2017.
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 June 30, 2018, ROIC had a total market capitalization of approximately $3.9 billion with approximately $1.5 billion of principal debt outstanding, equating to a 39.3% debt-to-total market capitalization ratio. ROIC’s principal debt outstanding was comprised of $95.8 million of mortgage debt and approximately $1.4 billion of unsecured debt, including $192.0 million outstanding on its unsecured revolving credit facility at June 30, 2018. ROIC’s interest coverage for the second quarter was 3.1 times and 93.6% of its portfolio was unencumbered at June 30, 2018 (based on gross leasable area).
ACQUISITION SUMMARY
Year-to-date in 2018, ROIC has acquired a total of $38.7 million of shopping center assets. During the first quarter of 2018, ROIC acquired a grocery-anchored shopping center for $19.0 million. During the second quarter of 2018, ROIC acquired a grocery-anchored shopping center for $15.7 million. Additionally, during the second quarter, ROIC acquired a multi-tenant, freestanding pad for $4.0 million located at one of its existing grocery-anchored shopping centers.
King City Plaza
In May 2018, ROIC acquired King City Plaza for $15.7 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 June 30, 2018, ROIC’s portfolio was 97.5% leased. For the second quarter of 2018, same-center net operating income (NOI) was $44.5 million, as compared to $43.2 million in same-center NOI for the second quarter of 2017, representing a 2.8% 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 second quarter of 2018, ROIC executed 97 leases, totaling 265,743 square feet, including 42 new leases, totaling 98,669 square feet, achieving a 20.4% increase in same-space comparative base rent, and 55 renewed leases, totaling 167,074 square feet, achieving a 7.6% increase in base rent. ROIC reports same-space comparative base rent on a cash basis.
CASH DIVIDEND
On June 28, 2018, ROIC distributed a $0.1950 per share cash dividend. On July 25, 2018, ROIC’s board of directors declared a cash dividend of $0.1950 per share, payable on September 27, 2018 to stockholders of record on September 13, 2018.
CONFERENCE CALL
ROIC will conduct a conference call and audio webcast to discuss its results on Thursday, July 26, 2018 at 9:00a.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: 1890648. 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 July 26, 2018 and will be available until 12:00a.m. Eastern Time on August 2, 2018. To access the conference call recording, dial (855) 859-2056 (domestic) or (404) 537-3406 (international) and use the Conference ID: 1890648. 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 June 30, 2018, ROIC owned 92 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 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)
June 30, 2018 (unaudited) | December 31, 2017 | ||||||
ASSETS | |||||||
Real Estate Investments: | |||||||
Land | $ | 898,436 | $ | 878,797 | |||
Building and improvements | 2,265,760 | 2,230,600 | |||||
3,164,196 | 3,109,397 | ||||||
Less: accumulated depreciation | 295,602 | 260,115 | |||||
Real Estate Investments, net | 2,868,594 | 2,849,282 | |||||
Cash and cash equivalents | 10,958 | 11,553 | |||||
Restricted cash | 1,420 | 5,412 | |||||
Tenant and other receivables, net | 42,095 | 43,257 | |||||
Deposits | — | 500 | |||||
Acquired lease intangible assets, net | 78,246 | 82,778 | |||||
Prepaid expenses | 1,600 | 2,853 | |||||
Deferred charges, net | 36,150 | 37,167 | |||||
Other | 10,606 | 6,396 | |||||
Total assets | $ | 3,049,669 | $ | 3,039,198 | |||
LIABILITIES AND EQUITY | |||||||
Liabilities: | |||||||
Term loan | $ | 298,942 | $ | 298,816 | |||
Credit facility | 189,259 | 140,329 | |||||
Senior Notes | 940,762 | 940,086 | |||||
Mortgage notes payable | 97,884 | 107,915 | |||||
Acquired lease intangible liabilities, net | 173,911 | 178,984 | |||||
Accounts payable and accrued expenses | 14,580 | 18,638 | |||||
Tenants’ security deposits | 6,997 | 6,771 | |||||
Other liabilities | 18,213 | 18,018 | |||||
Total liabilities | 1,740,548 | 1,709,557 | |||||
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; 112,719,459 and 112,347,451 shares issued and outstanding at June 30, 2018 and December 31, 2017, respectively | 11 | 11 | |||||
Additional paid-in capital | 1,415,286 | 1,412,590 | |||||
Dividends in excess of earnings | (236,570 | ) | (210,490 | ) | |||
Accumulated other comprehensive income | 7,235 | 1,856 | |||||
Total Retail Opportunity Investments Corp. stockholders’ equity | 1,185,962 | 1,203,967 | |||||
Non-controlling interests | 123,159 | 125,674 | |||||
Total equity | 1,309,121 | 1,329,641 | |||||
Total liabilities and equity | $ | 3,049,669 | $ | 3,039,198 | |||
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, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Revenues | |||||||||||||||
Base rents | $ | 55,050 | $ | 50,528 | $ | 110,427 | $ | 102,007 | |||||||
Recoveries from tenants | 16,471 | 15,222 | 32,632 | 28,890 | |||||||||||
Other income | 820 | 890 | 3,677 | 1,643 | |||||||||||
Total revenues | 72,341 | 66,640 | 146,736 | 132,540 | |||||||||||
Operating expenses | |||||||||||||||
Property operating | 11,017 | 9,628 | 21,495 | 18,928 | |||||||||||
Property taxes | 7,914 | 7,647 | 15,733 | 14,715 | |||||||||||
Depreciation and amortization | 25,331 | 23,645 | 50,548 | 46,703 | |||||||||||
General and administrative expenses | 3,990 | 3,817 | 7,521 | 7,316 | |||||||||||
Acquisition transaction costs | — | 4 | — | 4 | |||||||||||
Other expense | 274 | 225 | 343 | 274 | |||||||||||
Total operating expenses | 48,526 | 44,966 | 95,640 | 87,940 | |||||||||||
Operating income | 23,815 | 21,674 | 51,096 | 44,600 | |||||||||||
Non-operating expenses | |||||||||||||||
Interest expense and other finance expenses | (15,713 | ) | (12,477 | ) | (31,170 | ) | (24,152 | ) | |||||||
Net income | 8,102 | 9,197 | 19,926 | 20,448 | |||||||||||
Net income attributable to non-controlling interests | (763 | ) | (888 | ) | (1,885 | ) | (1,969 | ) | |||||||
Net Income Attributable to Retail Opportunity Investments Corp. | $ | 7,339 | $ | 8,309 | $ | 18,041 | $ | 18,479 | |||||||
Earnings per share – basic and diluted | $ | 0.06 | $ | 0.08 | $ | 0.16 | $ | 0.17 | |||||||
Dividends per common share | $ | 0.1950 | $ | 0.1875 | $ | 0.3900 | $ | 0.3750 | |||||||
CALCULATION OF FUNDS FROM OPERATIONS
(Unaudited)
(In thousands)
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Net income attributable to ROIC | $ | 7,339 | $ | 8,309 | $ | 18,041 | $ | 18,479 | |||||||
Plus: Depreciation and amortization | 25,331 | 23,645 | 50,548 | 46,703 | |||||||||||
Funds from operations – basic | 32,670 | 31,954 | 68,589 | 65,182 | |||||||||||
Net income attributable to non-controlling interests | 763 | 888 | 1,885 | 1,969 | |||||||||||
Funds from operations – diluted | $ | 33,433 | $ | 32,842 | $ | 70,474 | $ | 67,151 | |||||||
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, | |||||||||||||||||||||||||||||
2018 | 2017 | $ Change | % Change | 2018 | 2017 | $ Change | % Change | |||||||||||||||||||||||
Number of shopping centers included in same-center analysis | 82 | 82 | 79 | 79 | ||||||||||||||||||||||||||
Same-center occupancy | 97.3 | % | 97.4 | % | (0.1 | )% | 97.4 | % | 97.5 | % | (0.1 | )% | ||||||||||||||||||
Revenues: | ||||||||||||||||||||||||||||||
Base rents | $ | 46,229 | $ | 44,666 | $ | 1,563 | 3.5 | % | $ | 89,342 | $ | 86,911 | $ | 2,431 | 2.8 | % | ||||||||||||||
Percentage rent | 91 | 187 | (96 | ) | (51.3 | )% | 176 | 302 | (126 | ) | (41.7 | )% | ||||||||||||||||||
Recoveries from tenants | 15,181 | 14,985 | 196 | 1.3 | % | 28,861 | 28,183 | 678 | 2.4 | % | ||||||||||||||||||||
Other property income | 789 | 897 | (108 | ) | (12.0 | )% | 1,089 | 1,655 | (566 | ) | (34.2 | )% | ||||||||||||||||||
Total Revenues | 62,290 | 60,735 | 1,555 | 2.6 | % | 119,468 | 117,051 | 2,417 | 2.1 | % | ||||||||||||||||||||
Operating Expenses | ||||||||||||||||||||||||||||||
Property operating expenses | 10,312 | 9,805 | 507 | 5.2 | % | 19,418 | 18,322 | 1,096 | 6.0 | % | ||||||||||||||||||||
Bad debt expense | 276 | 255 | 21 | 8.2 | % | 364 | 743 | (379 | ) | (51.0 | )% | |||||||||||||||||||
Property taxes | 7,252 | 7,449 | (197 | ) | (2.6 | )% | 13,769 | 14,134 | (365 | ) | (2.6 | )% | ||||||||||||||||||
Total Operating Expenses | 17,840 | 17,509 | 331 | 1.9 | % | 33,551 | 33,199 | 352 | 1.1 | % | ||||||||||||||||||||
Same-Center Cash Net Operating Income | $ | 44,450 | $ | 43,226 | $ | 1,224 | 2.8 | % | $ | 85,917 | $ | 83,852 | $ | 2,065 | 2.5 | % | ||||||||||||||
SAME-CENTER CASH NET OPERATING INCOME RECONCILIATION
(Unaudited)
(In thousands)
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
GAAP operating income | $ | 23,815 | $ | 21,674 | $ | 51,096 | $ | 44,600 | |||||||
Depreciation and amortization | 25,331 | 23,645 | 50,548 | 46,703 | |||||||||||
General and administrative expenses | 3,990 | 3,817 | 7,521 | 7,316 | |||||||||||
Acquisition transaction costs | — | 4 | — | 4 | |||||||||||
Other expense | 274 | 225 | 343 | 274 | |||||||||||
Property revenues and other expenses (1) | (4,441 | ) | (4,311 | ) | (9,924 | ) | (11,201 | ) | |||||||
Total Company cash NOI | 48,969 | 45,054 | 99,584 | 87,696 | |||||||||||
Non same-center cash NOI | (4,519 | ) | (1,828 | ) | (13,667 | ) | (3,844 | ) | |||||||
Same-center cash NOI | $ | 44,450 | $ | 43,226 | $ | 85,917 | $ | 83,852 | |||||||
(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
2nd QUARTER 2018 SUPPLEMENTAL INFORMATION Retail Opportunity Investments Corporation 11250 El Camino Real, Suite 200 San Diego, CA 92130 www.roireit.net
Supplemental Disclosure Overview Quarter Ended June 30, 2018 Our Company 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, 2018, ROIC owned 92 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 and S&P Global Ratings. Additional information is available at www.roireit.net. Supplemental Information The enclosed information should be read in conjunction with ROIC's filings with the Securities and Exchange Commission, including but not limited to, its Form 10-Qs filed quarterly and Form 10-Ks filed annually. Additionally, the enclosed information does not purport to disclose all items under generally accepted accounting principles (“GAAP”). 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. - 2 -
Supplemental Disclosure Table of Contents Quarter Ended June 30, 2018 Financial Data Page Balance Sheets……..……………………………………………………………..………………………………………………… 4 Income Statements .…………………………………………………………………………………..……..…………...………… 5 Funds From Operations …………………………………………………………………………………………………………… 6 Summary of Debt Outstanding .……………………………………………..…………………………………………………… 7 Selected Financial Analysis .……………………………………………………………………………………………………… 9 Portfolio Data 2018 Property Acquisitions ………………………….………………………...………………………………………………… 10 Property Portfolio ………………………………………………….……………………………………………………………… 11 Same-Center Cash Net Operating Income Analysis……………………………………………………………………………… 14 Top Ten Tenants ………………….…………….………………….……………………………………………………………… 15 Lease Expiration Schedule ……………………..………………………..…….………………………………………………… 16 Leasing Summary ………………………………………………………..…................................................................................ 17 Same-Space Comparative Leasing Summary ………………………………………………………..…...................................... 18 Investor Information …………………………………………………………..…………………………………………………… 19 - 3 -
Supplemental Disclosure Balance Sheets Quarter Ended June 30, 2018 (unaudited, dollars in thousands, except par values and share amounts) 06/30/18 12/31/17 ASSETS: Real Estate Investments: Land $ 898,436 $ 878,797 Building and improvements 2,265,760 2,230,600 Less: accumulated depreciation (295,602) (260,115) Real Estate Investments, net 2,868,594 2,849,282 Cash and cash equivalents 10,958 11,553 Restricted cash 1,420 5,412 Tenant and other receivables, net 42,095 43,257 Deposits - 500 Acquired lease intangible assets, net 78,246 82,778 Prepaid expenses 1,600 2,853 Deferred charges, net 36,150 37,167 Other assets 10,606 6,396 TOTAL ASSETS $ 3,049,669 $ 3,039,198 LIABILITIES: Term loan $ 298,942 $ 298,816 Credit facility 189,259 140,329 Senior Notes 940,762 940,086 Mortgage notes payable 97,884 107,915 Acquired lease intangible liabilities, net 173,911 178,984 Accounts payable and accrued expenses 14,580 18,638 Tenants' security deposits 6,997 6,771 Other liabilities 18,213 18,018 TOTAL LIABILITIES 1,740,548 1,709,557 EQUITY: Common stock, $.0001 par value 500,000,000 shares authorized 11 11 Additional paid-in capital 1,415,286 1,412,590 Dividends in excess of earnings (236,570) (210,490) Accumulated other comprehensive income 7,235 1,856 Total Retail Opportunity Investments Corp. stockholders' equity 1,185,962 1,203,967 Non-controlling interests 123,159 125,674 TOTAL EQUITY 1,309,121 1,329,641 TOTAL LIABILITIES AND EQUITY $ 3,049,669 $ 3,039,198 The Company's Form 10-Q for the quarter ended June 30, 2018, and Form 10-K for the year ended December 31, 2017 should be read in conjunction with the above information. - 4 -
Supplemental Disclosure Income Statements Quarter Ended June 30, 2018 (unaudited, in thousands, except per share amounts) Three Months Ended Six Months Ended 06/30/18 06/30/17 06/30/18 06/30/17 REVENUES: Base rents $ 55,050 $ 50,528 $ 110,427 $ 102,007 Recoveries from tenants 16,471 15,222 32,632 28,890 Other income 820 890 3,677 1,643 TOTAL REVENUES 72,341 66,640 146,736 132,540 OPERATING EXPENSES: Property operating $ 11,017 $ 9,628 $ 21,495 $ 18,928 Property taxes 7,914 7,647 15,733 14,715 Depreciation and amortization 25,331 23,645 50,548 46,703 General and administrative expenses 3,990 3,817 7,521 7,316 Acquisition transaction costs - 4 - 4 Other expense 274 225 343 274 TOTAL OPERATING EXPENSES 48,526 44,966 95,640 87,940 OPERATING INCOME 23,815 21,674 51,096 44,600 NON-OPERATING EXPENSES: Interest expense and other finance expenses (15,713) (12,477) (31,170) (24,152) TOTAL NON-OPERATING EXPENSES (15,713) (12,477) (31,170) (24,152) NET INCOME $ 8,102 $ 9,197 $ 19,926 $ 20,448 NET INCOME ATTRIBUTABLE TO NON-CONTROLLING INTERESTS (763) (888) (1,885) (1,969) NET INCOME ATTRIBUTABLE TO RETAIL OPPORTUNITY INVESTMENTS CORP. $ 7,339 $ 8,309 $ 18,041 $ 18,479 NET INCOME PER COMMON SHARE - BASIC $ 0.06 $ 0.08 $ 0.16 $ 0.17 NET INCOME PER COMMON SHARE - DILUTED $ 0.06 $ 0.08 $ 0.16 $ 0.17 Weighted average common shares outstanding - basic 112,165 109,267 112,164 109,247 Weighted average common shares outstanding - diluted 124,205 121,238 124,178 121,156 The Company's Form 10-Q for the quarters ended June 30, 2018 and June 30, 2017 should be read in conjunction with the above information. - 5 -
Supplemental Disclosure Funds From Operations Quarter Ended June 30, 2018 (in thousands, except per share amounts) Three Months Ended Six Months Ended 06/30/18 06/30/17 06/30/18 06/30/17 Funds from Operations (FFO) (1) : Net income attributable to ROIC common stockholders $ 7,339 $ 8,309 $ 18,041 $ 18,479 Plus: Depreciation and amortization expense 25,331 23,645 50,548 46,703 FUNDS FROM OPERATIONS - BASIC $ 32,670 $ 31,954 $ 68,589 $ 65,182 Net income attributable to non-controlling interests 763 888 1,885 1,969 FUNDS FROM OPERATIONS - DILUTED $ 33,433 $ 32,842 $ 70,474 $ 67,151 FUNDS FROM OPERATIONS PER SHARE - BASIC $ 0.29 $ 0.29 $ 0.61 $ 0.60 FUNDS FROM OPERATIONS PER SHARE - DILUTED $ 0.27 $ 0.27 $ 0.57 $ 0.55 Weighted average common shares outstanding - basic 112,165 109,267 112,164 109,247 Weighted average common shares outstanding - diluted 124,205 121,238 124,178 121,156 Common dividends per share $ 0.1950 $ 0.1875 $ 0.3900 $ 0.3750 FFO Payout Ratio 72.2% 69.4% 68.4% 68.2% Additional Disclosures: Non Cash Expense (Income) $ - Straight line rent $ (1,410) $ (2,881) Above/below market rent amortization, net (3,143) (7,218) Non-cash interest expense 535 1,070 Deferred financing costs and mortgage premiums, net 477 926 Stock based compensation 1,991 3,419 Capital Expenditures Tenant improvements $ 4,431 $ 7,538 Leasing commissions 255 1,008 Building improvements 629 990 Reimbursable property improvements 1,143 1,335 Pad and other development 1,411 2,428 Value enhancing tenant improvements 4,261 6,639 (1) - Funds from operations ("FFO"), is a widely-recognized non GAAP financial measure for REITs that ROIC believes, when considered with financial statements determined 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. ROIC 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 shareholders (determined in accordance with GAAP) excluding gains or losses from debt restructuring and sales of property, plus real estate related depreciation and amortization, and after adjustments for partnerships and unconsolidated joint ventures. The above does not purport to disclose all items required under GAAP. - 6 -
Supplemental Disclosure Summary of Debt Outstanding Quarter Ended June 30, 2018 (unaudited, dollars in thousands) Outstanding GAAP Maturity Percent of Balance Interest Rate Interest Rate Date Total Indebtedness Fixed Rate Debt Mortgage Debt: Magnolia Shopping Center $ 8,855 5.50% 3.86% 10/01/18 0.6% Casitas Plaza Shopping Center 7,234 5.32% 4.20% 06/01/22 0.5% Riverstone Marketplace 18,238 4.96% 3.80% 07/01/22 1.2% Fullerton Crossroads 26,000 4.73% 3.82% 04/06/24 1.7% Diamond Hills Plaza 35,500 3.55% 3.61% 10/01/25 2.2% Net unamortized premiums/deferred financing charges 2,057 Total Mortgage Debt 97,884 4.5% 3.8% 5.3 Years (WA) 6.2% Unsecured Senior Notes: Senior Notes Due 2023 250,000 5.00% 5.21% 12/15/23 16.3% Senior Notes Due 2024 250,000 4.00% 4.21% 12/15/24 16.3% Senior Notes Due 2026 200,000 3.95% 3.95% 09/22/26 13.0% Senior Notes Due 2027 250,000 4.19% 4.19% 12/15/27 16.3% Net unamortized discounts/deferred financing charges (9,238) Total Unsecured Senior Notes 940,762 4.30% 4.41% 7.4 Years (WA) 61.9% Interest rate swaps 100,000 1.96% 1.96% 1/31/2019 6.4% Interest rate swaps 200,000 2.84% 2.84% 8/31/2022 13.0% Total Fixed Rate Debt $ 1,338,646 3.92% 3.95% 7.2 Years (WA) 87.5% Variable Rate Debt Credit Facility $ 192,000 3.10% 3.10% 09/08/21 (1) 12.5% Net unamortized deferred financing charges (2,741) Credit Facility, net 189,259 Term Loan 300,000 3.20% 3.20% 09/08/22 19.5% Net unamortized deferred financing charges (1,058) Term Loan, net 298,942 Interest rate swaps (300,000) (19.5)% Total Variable Rate Debt $ 188,201 3.16% 3.16% 3.8 Years (WA) 12.5% TOTAL DEBT $ 1,526,847 4.44% 4.48% 6.1 Years (WA) 100.0% Net unamortized premiums on mortgages (2,354) Net unamortized discounts on notes 4,959 Net unamortized deferred financing charges 8,375 Total Principal Debt $ 1,537,827 (1) Does not include extension options available to ROIC. - 7 -
Supplemental Disclosure Summary of Debt Outstanding, continued Quarter Ended June 30, 2018 (unaudited, dollars in thousands) Summary of Principal Maturities Mortgage Principal Mortgage Principal Senior Total Principal Percentage of Year Payments due at Maturity Credit Facility Term Loan Unsecured Notes Payments Debt Maturing 2018 $ 313 $ 8,806 $ - $ - $ - $ 9,119 0.6% 2019 551 - - - - 551 0.0% (2) 2020 577 - - - - 577 0.0% (2) 2021 717 - 192,000 (1) - - 192,717 12.5% 2022 1,003 23,129 - 300,000 - 324,132 21.1% 2023 686 - - - 250,000 250,686 16.3% 2024 708 26,000 - - 250,000 276,708 18.0% 2025 550 32,787 - - - 33,337 2.2% 2026 - - - - 200,000 200,000 13.0% 2027 - - - - 250,000 250,000 16.3% $ 5,105 $ 90,722 $ 192,000 $ 300,000 $ 950,000 $ 1,537,827 100.0% Summary of Unencumbered/Encumbered Properties Number of Percentage Properties GLA of GLA Unencumbered properties 87 9,921,612 93.6% Encumbered properties 5 676,522 6.4% 92 10,598,134 100.0% Summary of Unsecured Debt/Secured Debt Percentage of Total Amount Principal Debt Unsecured principal debt $ 1,442,000 93.8% Secured principal debt 95,827 6.2% Total Principal Debt $ 1,537,827 100.0% (1) Does not include extension options available to ROIC. (2) Negligible percentage rounds down to zero. - 8 -
Supplemental Disclosure Selected Financial Analysis Quarter Ended June 30, 2018 (unaudited, in thousands, except per share amounts) 06/30/18 03/31/18 12/31/17 09/30/17 06/30/17 Debt coverage ratios, three months ending: Interest coverage ratio (EBITDA/interest expense) 3.1x 3.4x 3.7x 3.7x 3.7x Debt service coverage (EBITDA/(interest expense + scheduled principal payments)) 3.1x 3.4x 3.6x 3.7x 3.6x Net principal debt (Total principal debt less cash & equivalents)/Annualized EBITDA 7.7x 7.1x 7.3x 7.1x 7.2x Debt/equity ratios, at period end: Total principal debt/total market capitalization 39.3% 40.8% 37.8% 37.5% 36.7% Total principal debt/total equity market capitalization 64.8% 68.8% 60.8% 60.0% 57.9% Total principal debt/total book assets 50.4% 49.4% 49.3% 48.2% 47.5% Total principal debt/undepreciated book value 46.0% 45.3% 45.5% 44.5% 44.0% Secured principal debt/undepreciated book value 2.9% 2.9% 3.2% 2.0% 2.0% Market capitalization calculations, at period end: Common shares outstanding 112,165 112,165 111,886 109,267 109,267 Operating partnership units (OP units) outstanding 11,648 11,679 11,679 11,679 11,679 Common stock price per share $ 19.16 $ 17.67 $ 19.95 $ 19.01 $ 19.19 Total equity market capitalization $ 2,372,268 $ 2,188,331 $ 2,465,116 $ 2,299,192 $ 2,320,960 Total principal debt 1,537,827 1,505,503 1,499,820 1,379,042 1,343,185 TOTAL MARKET CAPITALIZATION $ 3,910,095 $ 3,693,834 $ 3,964,936 $ 3,678,234 $ 3,664,145 Unsecured Senior Notes Financial Covenants: (1) Total debt to total assets not to exceed 60% 47.9% 47.2% 47.4% 46.3% 45.9% Total secured debt to total assets not to exceed 40% 3.1% 3.1% 3.4% 2.1% 2.2% Total unencumbered assets to total unsecured debt not to be less than 150% 207.6% 210.7% 208.7% 214.5% 216.6% Consolidated income available for debt service to interest expense not to be less than 1.5:1 3.5x 3.6x 3.7x 3.8x 3.9x (1) Calculated in accordance with GAAP pursuant to underlying bond indentures. - 9 -
Supplemental Disclosure 2018 Property Acquisitions Quarter Ended June 30, 2018 (dollars in thousands) Date Owned Shopping Centers Location Acquired Purchase Amount GLA 1Q 2018 Stadium Center Tacoma, WA 02/23/18 $ 19,000 48,888 Total 1Q 2018 $ 19,000 48,888 2Q 2018 King City Plaza King City, OR 05/18/18 $ 15,686 62,676 Outparcel at Casitas Plaza Carpinteria, CA 05/25/18 $ 3,950 7,691 Total 2Q 2018 $ 19,636 70,367 Total 2018 Acquisitions $ 38,636 119,255 - 10 -
Supplemental Disclosure Property Portfolio Quarter Ended June 30, 2018 (dollars in thousands) Date Owned % Southern California City State Acquired GLA Leased ABR (1) Major Tenants Los Angeles metro area Paramount Plaza * Paramount CA 12/22/09 95,062 95.9% $ 1,715 Grocery Outlet Supermarket, 99¢ Only Stores, Rite Aid Pharmacy Claremont Promenade * Claremont CA 09/23/10 92,297 97.2% 2,358 Super King Supermarket Gateway Village * Chino Hills CA 12/17/10 96,959 96.9% 2,782 Sprouts Market Seabridge Marketplace * Oxnard CA 05/31/12 95,830 100.0% 1,848 Safeway (Vons) Supermarket Glendora Shopping Center * Glendora CA 08/01/12 106,535 94.8% 1,275 Albertson's Supermarket Redondo Beach Plaza * Redondo Beach CA 12/28/12 110,509 100.0% 2,185 Safeway (Vons) Supermarket, Petco Diamond Bar Town Center * Diamond Bar CA 02/01/13 100,342 100.0% 2,295 Walmart Neighborhood Market, Crunch Fitness Diamond Hills Plaza * Diamond Bar CA 04/22/13 139,505 96.0% 3,443 H-Mart Supermarket, Rite Aid Pharmacy Plaza de la Cañada * La Cañada Flintridge CA 12/13/13 100,408 95.9% 2,388 Gelson's Supermarket, TJ Maxx, Rite Aid Pharmacy Fallbrook Shopping Center * Los Angeles CA 06/13/14 755,299 99.6% 12,719 Sprouts Market, Trader Joe's, Kroger (Ralph's) Supermarket(2), TJ Maxx Moorpark Town Center * Moorpark CA 12/03/14 133,547 98.3% 2,097 Kroger (Ralph's) Supermarket, CVS Pharmacy Ontario Plaza * Ontario CA 01/06/15 150,149 99.1% 2,302 El Super Supermarket, Rite Aid Pharmacy Park Oaks Shopping Center * Thousand Oaks CA 01/06/15 110,092 91.2% 2,513 Safeway (Vons) Supermarket, Dollar Tree Warner Plaza * Woodland Hills CA 12/31/15 110,918 98.8% 4,488 Sprouts Market, Kroger (Ralph's) Supermarket (2), Rite Aid Pharmacy (2) Magnolia Shopping Center * Santa Barbara CA 03/10/16 116,360 91.5% 2,106 Kroger (Ralph's) Supermarket Casitas Plaza Shopping Center * Carpinteria CA 03/10/16 105,098 97.4% 1,678 Albertson's Supermarket, CVS Pharmacy Bouquet Center * Santa Clarita CA 04/28/16 148,903 97.0% 3,255 Safeway (Vons) Supermarket, CVS Pharmacy, Ross Dress For Less North Ranch Shopping Center * Westlake Village CA 06/01/16 146,625 87.8% 4,499 Kroger (Ralph's) Supermarket, Trader Joe's, Rite Aid Pharmacy, Petco The Knolls * Long Beach CA 10/03/16 52,021 100.0% 1,411 Trader Joe's, Pet Food Express The Terraces * Rancho Palos Verdes CA 03/17/17 172,922 92.0% 3,323 Trader Joe's, Marshall's, LA Fitness Los Angeles metro area total 2,939,381 96.9% $ 60,680 Orange County metro area Santa Ana Downtown Plaza * Santa Ana CA 01/26/10 105,536 93.0% $ 2,042 Kroger (Food 4 Less) Supermarket, Marshall's Sycamore Creek * Corona CA 09/30/10 74,198 100.0% 1,752 Safeway (Vons) Supermarket, CVS Pharmacy (2) Desert Springs Marketplace * Palm Desert CA 02/17/11 113,718 96.3% 2,744 Kroger (Ralph's) Supermarket, Rite Aid Pharmacy Cypress Center West * Cypress CA 12/04/12 107,246 96.5% 2,382 Kroger (Ralph's) Supermarket, Rite Aid Pharmacy Harbor Place Center * Garden Grove CA 12/28/12 119,821 100.0% 1,651 AA Supermarket, Ross Dress For Less 5 Points Plaza * Huntington Beach CA 09/27/13 160,536 95.0% 4,155 Trader Joe's, Pier 1 Peninsula Marketplace * Huntington Beach CA 10/15/13 95,416 99.0% 2,424 Kroger (Ralph's) Supermarket, Planet Fitness Fullerton Crossroads Fullerton CA 10/11/17 219,785 99.7% 3,410 Kroger (Ralph's) Supermarket, Kohl's, Jo-Ann Fabrics and Crafts The Village at Nellie Gail Ranch Laguna Hills CA 11/30/17 88,486 98.5% 2,973 Smart & Final Extra Supermarket Orange Country metro area total 1,084,742 97.6% $ 23,533 San Diego metro area Marketplace Del Rio * Oceanside CA 01/03/11 177,195 94.9% $ 3,236 Stater Brothers Supermarket, Walgreens Renaissance Towne Centre * San Diego CA 08/03/11 53,074 91.6% 2,333 CVS Pharmacy Euclid Plaza * San Diego CA 03/29/12 77,044 96.8% 1,411 Vallarta Supermarket, Walgreens Bay Plaza * San Diego CA 10/05/12 73,324 100.0% 1,969 Seafood City Supermarket Bernardo Heights Plaza * Rancho Bernardo CA 02/06/13 37,729 96.3% 906 Sprouts Market Hawthorne Crossings * San Diego CA 06/27/13 141,288 96.3% 3,104 Mitsuwa Supermarket, Ross Dress For Less, Staples Creekside Plaza * Poway CA 02/28/14 128,852 98.9% 2,767 Stater Brothers Supermarket, AMC Theatres San Diego metro area total 688,506 96.5% $ 15,726 Southern California Totals 4,712,629 97.0% $ 99,939 (1) ABR is equal to annualized base rent on a cash basis for all leases in-place at period end. (2) These retailers are not tenants of ROIC. *Denotes properties in same center pool for 2Q 2018. - 11 -
Supplemental Disclosure Property Portfolio, continued Quarter Ended June 30, 2018 (dollars in thousands) Date Owned % Northern California City State Acquired GLA Leased ABR (1) Major Tenants San Francisco metro area Pleasant Hill Marketplace * Pleasant Hill CA 04/08/10 69,715 100.0% $ 1,471 Total Wine and More, Buy Buy Baby, Basset Furniture Pinole Vista Shopping Center * Pinole CA 01/06/11 223,369 97.2% 2,992 SaveMart (Lucky) Supermarket, Planet Fitness, Kmart Country Club Gate Center * Pacific Grove CA 07/08/11 109,331 95.6% 2,041 SaveMart (Lucky) Supermarket, Rite Aid Pharmacy Marlin Cove Shopping Center * Foster City CA 05/04/12 73,943 97.7% 2,258 99 Ranch Market The Village at Novato * Novato CA 07/24/12 20,081 100.0% 552 Trader Joe's, Pharmaca Pharmacy Santa Teresa Village * San Jose CA 11/08/12 124,306 92.4% 2,516 Raleys (Nob Hill) Supermarket, Dollar Tree Granada Shopping Center * Livermore CA 06/27/13 69,325 100.0% 1,307 SaveMart (Lucky) Supermarket Country Club Village * San Ramon CA 11/26/13 111,093 100.0% 2,153 Walmart Neighborhood Market, CVS Pharmacy North Park Plaza * San Jose CA 04/30/14 76,697 100.0% 2,379 H-Mart Supermarket Winston Manor * South San Francisco CA 01/07/15 49,852 100.0% 1,476 Grocery Outlet Supermarket Jackson Square * Hayward CA 07/01/15 114,220 100.0% 2,178 Safeway Supermarket, CVS Pharmacy, 24 Hour Fitness Gateway Centre * San Ramon CA 09/01/15 112,553 100.0% 2,655 SaveMart (Lucky) Supermarket, Walgreens Iron Horse Plaza * Danville CA 12/04/15 61,860 93.0% 2,071 Lunardi's Market Monterey Center * Monterey CA 07/14/16 25,798 92.4% 1,023 Trader Joe's, Pharmaca Pharmacy Santa Rosa Southside Shopping Center * Santa Rosa CA 03/24/17 88,535 100.0% 1,678 REI, Cost Plus World Market Monta Loma Plaza Mountain View CA 09/19/17 48,078 100.0% 1,392 Safeway Supermarket San Francisco metro area total 1,378,756 97.9% $ 30,142 Sacramento metro area Norwood Shopping Center * Sacramento CA 04/06/10 85,693 92.1% $ 1,269 Viva Supermarket, Rite Aid Pharmacy, Citi Trends Mills Shopping Center * Rancho Cordova CA 02/17/11 235,314 86.4% 2,449 Viva Supermarket, Ross Dress For Less (dd's Discounts), Dollar Tree Morada Ranch * Stockton CA 05/16/11 101,842 93.5% 2,166 Raleys Supermarket Round Hill Square Shopping Center * Zephyr Cove NV 09/21/11 115,984 96.8% 1,972 Safeway Supermarket, Dollar Tree, US Postal Service Green Valley Station * Cameron Park CA 06/15/12 52,245 76.7% 1,037 CVS Pharmacy Sacramento metro area total 591,078 89.7% $ 8,893 Northern California Totals 1,969,834 95.4% $ 39,035 (1) ABR is equal to annualized base rent on a cash basis for all leases in-place at period end. *Denotes properties in same center pool for 2Q 2018. - 12 -
Supplemental Disclosure Property Portfolio, continued Quarter Ended June 30, 2018 (dollars in thousands) Date Owned % Pacific Northwest City State Acquired GLA Leased ABR (1) Major Tenants Seattle metro area Meridian Valley Plaza * Kent WA 02/01/10 51,597 96.9% $ 621 Kroger (QFC) Supermarket The Market at Lake Stevens * Lake Stevens WA 03/11/10 74,130 100.0% 1,464 Albertson's (Haggen) Supermarket Canyon Park Shopping Center * Bothell WA 07/29/11 123,592 98.4% 2,370 PCC Community Markets, Rite Aid Pharmacy, Petco Hawks Prairie Shopping Center * Lacey WA 09/09/11 157,529 100.0% 1,810 Safeway Supermarket, Dollar Tree, Big Lots The Kress Building * Seattle WA 09/30/11 74,616 100.0% 1,862 IGA Supermarket, TJMaxx Gateway Shopping Center * Marysville WA 02/16/12 104,298 90.4% 2,383 WinCo Foods (2), Rite Aid Pharmacy, Ross Dress For Less Aurora Square * Shoreline WA 2012/2014 108,558 100.0% 1,782 Central Supermarket, Marshall's, Pier 1 Canyon Crossing * Puyallup WA 04/15/13 120,398 100.0% 2,634 Safeway Supermarket Crossroads Shopping Center * Bellevue WA 2010/2013 463,813 100.0% 10,504 Kroger (QFC) Supermarket, Bed Bath & Beyond, Dick's Sporting Goods Bellevue Marketplace * Bellevue WA 12/10/15 113,758 100.0% 3,143 Asian Family Market Four Corner Square * Maple Valley WA 12/21/15 119,560 100.0% 2,569 Grocery Outlet Supermarket, Walgreens, Johnsons Home & Garden Bridle Trails Shopping Center * Kirkland WA 10/17/16 108,377 100.0% 2,234 Grocery Outlet Supermarket, Bartell Drugs, Dollar Tree PCC Community Markets Plaza * Edmonds WA 01/25/17 34,459 100.0% 646 PCC Community Markets Highland Hill Shopping Center Tacoma WA 05/09/17 163,926 100.0% 2,770 Safeway Supermarket, LA Fitness, Dollar Tree, Petco North Lynnwood Shopping Center Lynnwood WA 10/19/17 63,606 91.3% 808 Kroger (QFC) Supermarket Stadium Center Tacoma WA 02/23/18 48,888 100.0% 1,029 Thriftway Supermarket Seattle metro area total 1,931,105 99.0% $ 38,629 Portland metro area Vancouver Market Center * Vancouver WA 06/17/10 118,385 97.0% $ 1,370 Skyzone Happy Valley Town Center * Happy Valley OR 07/14/10 138,662 99.2% 3,673 New Seasons Supermarket Wilsonville Old Town Square * Wilsonville OR 2010/2012 49,937 100.0% 1,819 Kroger (Fred Meyer) Supermarket (2) Cascade Summit Town Square * West Linn OR 08/20/10 94,934 100.0% 1,719 Safeway Supermarket Heritage Market Center * Vancouver WA 09/23/10 107,468 100.0% 1,754 Safeway Supermarket, Dollar Tree Division Crossing * Portland OR 12/22/10 103,561 98.8% 1,225 Rite Aid Pharmacy, Ross Dress For Less, Ace Hardware Halsey Crossing * Gresham OR 12/22/10 99,428 96.3% 1,295 24 Hour Fitness, Dollar Tree Hillsboro Market Center * Hillsboro OR 11/23/11 156,021 100.0% 2,608 Albertson's Supermarket, Dollar Tree, Ace Hardware Robinwood Shopping Center * West Linn OR 08/23/13 70,831 100.0% 1,057 Walmart Neighborhood Market Tigard Marketplace * Tigard OR 02/18/14 136,889 99.3% 1,964 H-Mart Supermarket, Bi-Mart Pharmacy Wilsonville Town Center * Wilsonville OR 12/11/14 167,829 100.0% 2,779 Safeway Supermarket, Rite Aid Pharmacy, Dollar Tree Tigard Promenade * Tigard OR 07/28/15 88,043 100.0% 1,470 Safeway Supermarket Sunnyside Village Square * Happy Valley OR 07/28/15 92,278 100.0% 1,575 Grocery Outlet Supermarket, 24 Hour Fitness, Ace Hardware Johnson Creek Center * Happy Valley OR 11/09/15 108,588 100.0% 2,220 Trader Joe's, Walgreens, Sportsman's Warehouse Rose City Center * Portland OR 09/15/16 60,680 100.0% 820 Safeway Supermarket Division Center Portland OR 04/05/17 121,904 100.0% 1,921 Grocery Outlet Supermarket, Rite Aid Pharmacy, Petco Riverstone Marketplace Vancouver WA 10/11/17 95,774 98.5% 2,133 Kroger (QFC) Supermarket King City Plaza King City OR 05/18/18 62,676 100.0% 974 Grocery Outlet Supermarket Portland metro area total 1,873,888 99.4% $ 32,376 Pacific Northwest Totals 3,804,993 99.2% $ 71,005 TOTAL SHOPPING CENTERS 10,487,456 97.5% $ 209,979 (1) ABR is equal to annualized base rent on a cash basis for all leases in-place at period end. (2) These retailers are not tenants of ROIC. Note: Property Portfolio excludes one shopping center that is currently under contract to be sold (slated for new multi-family development). *Denotes properties in same center pool for 2Q 2018. - 13 -
Supplemental Disclosure Same-Center Cash Net Operating Income Analysis Quarter Ended June 30, 2018 (unaudited, dollars in thousands) Three Months Ended Six Months Ended 06/30/18 06/30/17 $ Change % Change 06/30/18 06/30/17 $ Change % Change Number of shopping centers included in same-center analysis (1) 82 82 79 79 Same-center occupancy 97.3% 97.4% (0.1)% 97.4% 97.5% (0.1)% REVENUES: Base rents $ 46,229 $ 44,666 $ 1,563 3.5% $ 89,342 $ 86,911 $ 2,431 2.8% Percentage rent 91 187 (96) (51.3%) 176 302 (126) (41.7%) Recoveries from tenants 15,181 14,985 196 1.3% 28,861 28,183 678 2.4% Other property income 789 897 (108) (12.0)% 1,089 1,655 (566) (34.2)% TOTAL REVENUES 62,290 60,735 1,555 2.6% 119,468 117,051 2,417 2.1% OPERATING EXPENSES: Property operating expenses $ 10,312 $ 9,805 $ 507 5.2% $ 19,418 $ 18,322 $ 1,096 6.0% Bad debt expense 276 255 21 8.2% 364 743 (379) (51.0)% Property taxes 7,252 7,449 (197) (2.6)% 13,769 14,134 (365) (2.6)% TOTAL OPERATING EXPENSES 17,840 17,509 331 1.9% 33,551 33,199 352 1.1% SAME-CENTER CASH NET OPERATING INCOME $ 44,450 $ 43,226 $ 1,224 2.8% $ 85,917 $ 83,852 $ 2,065 2.5% SAME-CENTER CASH NET OPERATING INCOME RECONCILIATION GAAP Operating Income $ 23,815 $ 21,674 $ 51,096 $ 44,600 Depreciation and amortization 25,331 23,645 50,548 46,703 General and administrative expenses 3,990 3,817 7,521 7,316 Acquisition transaction costs - 4 - 4 Other expense 274 225 343 274 Property revenues and other expenses (2) (4,441) (4,311) (9,924) (11,201) TOTAL COMPANY CASH NET OPERATING INCOME 48,969 45,054 99,584 87,696 Non Same-Center Cash NOI (4,519) (1,828) (13,667) (3,844) SAME-CENTER CASH NET OPERATING INCOME $ 44,450 $ 43,226 $ 85,917 $ 83,852 (1) Same centers are those properties which were owned for the entirety of the current and comparable prior year period. (2) 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. Note: Analysis excludes one shopping center that is currently under contract to be sold (slated for new multi-family development). - 14 -
Supplemental Disclosure Top Ten Tenants Quarter Ended June 30, 2018 (dollars in thousands) Percent Number of Leased of Total Percent of Tenant Leases GLA Leased GLA ABR Total ABR 1 Albertson's / Safeway Supermarkets 20 990,998 9.7% $ 12,055 5.7% 2 Kroger Supermarkets 12 511,240 5.0% 7,054 3.4% 3 Rite Aid Pharmacy 14 266,921 2.6% 3,312 1.6% 4 JP Morgan Chase 22 98,473 1.0% 3,073 1.5% 5 SaveMart Supermarkets 4 187,639 1.8% 2,813 1.3% 6 Marshall's / TJMaxx 6 178,195 1.7% 2,672 1.3% 7 Sprouts Markets 4 159,163 1.6% 2,650 1.3% 8 Ross Dress For Less / dd's Discounts 7 191,703 1.9% 2,618 1.2% 9 Trader Joe's 8 96,714 0.9% 2,522 1.2% 10 H-Mart Supermarkets 3 147,040 1.4% 2,400 1.1% Top 10 Tenants Total 100 2,828,086 27.6% $ 41,169 19.6% Other Tenants 1,897 7,407,457 72.4% 169,373 80.4% Total Portfolio 1,997 10,235,543 100.0% $ 210,542 100.0% - 15 -
Supplemental Disclosure Lease Expiration Schedule Quarter Ended June 30, 2018 (dollars in thousands) Anchor Tenants (1) Number of Leased Percent of Total Percent of ABR Leases Expiring (2) GLA Total Leased GLA ABR Total ABR Per Sq. Ft. 2018 3 79,654 0.8% $ 992 0.5% $ 12.45 2019 13 407,547 4.0% 6,358 3.0% 15.60 2020 17 553,496 5.4% 6,413 3.0% 11.59 2021 15 512,511 5.0% 5,454 2.6% 10.64 2022 17 509,775 5.0% 6,441 3.1% 12.63 2023 28 926,015 9.0% 14,206 6.7% 15.34 2024 8 337,727 3.3% 4,614 2.2% 13.66 2025 10 341,785 3.3% 4,919 2.3% 14.39 2026 11 389,933 3.8% 5,242 2.5% 13.44 2027 9 231,234 2.3% 3,694 1.8% 15.98 2028+ 35 1,387,250 13.6% 21,637 10.2% 15.60 166 5,676,927 55.5% $ 79,970 37.9% $ 14.09 Non-Anchor Tenants Number of Leased Percent of Total Percent of ABR Leases Expiring (2) GLA Total Leased GLA ABR Total ABR Per Sq. Ft. 2018 115 169,539 1.7% $ 4,999 2.4% $ 29.49 2019 262 536,010 5.2% 14,907 7.1% 27.81 2020 281 646,492 6.3% 17,705 8.4% 27.39 2021 293 638,297 6.2% 18,885 9.0% 29.59 2022 273 651,249 6.4% 19,404 9.2% 29.79 2023 237 597,379 5.8% 17,609 8.4% 29.48 2024 85 287,101 2.8% 7,291 3.5% 25.39 2025 63 219,677 2.1% 6,050 2.9% 27.54 2026 61 194,637 1.9% 5,803 2.8% 29.82 2027 59 195,353 1.9% 5,722 2.7% 29.29 2028+ 102 422,882 4.2% 12,197 5.7% 28.85 1,831 4,558,616 44.5% $ 130,572 62.1% $ 28.64 All Tenants Number of Leased Percent of Total Percent of ABR Leases Expiring (2) GLA Total Leased GLA ABR Total ABR Per Sq. Ft. 2018 118 249,193 2.5% $ 5,991 2.9% $ 24.04 2019 275 943,557 9.2% 21,265 10.1% 22.54 2020 298 1,199,988 11.7% 24,118 11.4% 20.10 2021 308 1,150,808 11.2% 24,339 11.6% 21.15 2022 290 1,161,024 11.4% 25,845 12.3% 22.26 2023 265 1,523,394 14.8% 31,815 15.1% 20.88 2024 93 624,828 6.1% 11,905 5.7% 19.05 2025 73 561,462 5.4% 10,969 5.2% 19.54 2026 72 584,570 5.7% 11,045 5.3% 18.90 2027 68 426,587 4.2% 9,416 4.5% 22.07 2028+ 137 1,810,132 17.8% 33,834 15.9% 18.69 1,997 10,235,543 100.0% $ 210,542 100.0% $ 20.57 (1) Anchor tenants are leases equal to or greater than 15,000 square feet. (2) Does not assume exercise of renewal options. - 16 -
Supplemental Disclosure Leasing Summary Quarter Ended June 30, 2018 For the Three Months Ended June 30, 2018 For the Six Months Ended June 30, 2018 New Leases Non-Anchor Anchor Total Non-Anchor Anchor Total Number of Leases 42 - 42 67 1 68 Gross Leasable Area (sq. ft.) 98,669 - 98,669 145,515 38,500 184,015 Initial Base Rent ($/sq. ft.) (1) $ 25.25 $ - $ 25.25 $ 25.91 $ 22.36 $ 25.17 Tenant Improvements ($/sq. ft.) $ 4.01 $ - $ 4.01 $ 4.22 $ 3.75 $ 4.12 Leasing Commissions ($/sq. ft.) $ 2.94 $ - $ 2.94 $ 2.70 $ - $ 2.13 Weighted Average Lease Term (Yrs.) (2) 6.9 - 6.9 6.7 13.0 8.1 Renewals Non-Anchor Anchor Total Non-Anchor Anchor Total Number of Leases 54 1 55 117 6 123 Gross Leasable Area (sq. ft.) 140,976 26,098 167,074 290,939 215,131 506,070 Initial Base Rent ($/sq. ft.) (1) $ 28.60 $ 32.00 $ 29.13 $ 29.70 $ 19.62 $ 25.41 Tenant Improvements ($/sq. ft.) $ 0.09 $ - $ 0.08 $ 0.56 $ - $ 0.32 Leasing Commissions ($/sq. ft.) $ 0.04 $ - $ 0.03 $ 0.17 $ - $ 0.10 Weighted Average Lease Term (Yrs.) (2) 4.7 5.0 4.7 5.1 5.0 5.1 Total Non-Anchor Anchor Total Non-Anchor Anchor Total Number of Leases 96 1 97 184 7 191 Gross Leasable Area (sq. ft.) 239,645 26,098 265,743 436,454 253,631 690,085 Initial Base Rent ($/sq. ft.) (1) $ 27.22 $ 32.00 $ 27.69 $ 28.43 $ 20.03 $ 25.35 Tenant Improvements ($/sq. ft.) $ 1.70 $ - $ 1.54 $ 1.78 $ 0.57 $ 1.34 Leasing Commissions ($/sq. ft.) $ 1.23 $ - $ 1.11 $ 1.01 $ - $ 0.64 Weighted Average Lease Term (Yrs.) (2) 5.6 5.0 5.5 5.7 6.2 5.9 (1) Initial Base Rent is on a cash basis and is the initial contractual monthly rent, annualized. (2) Does not assume exercise of renewal options. - 17 -
Supplemental Disclosure Same-Space Comparative Leasing Summary Quarter Ended June 30, 2018 For the Three Months Ended June 30, 2018 For the Six Months Ended June 30, 2018 New Leases Non-Anchor Anchor Total Non-Anchor Anchor Total Comparative # of Leases 25 - 25 44 1 45 Comparative GLA (sq. ft.) (1) 63,734 - 63,734 99,689 38,500 138,189 Prior Base Rent ($/sq. ft.) (2) $ 23.34 $ - $ 23.34 $ 24.35 $ 15.45 $ 21.87 Initial Base Rent ($/sq. ft.) $ 28.11 $ - $ 28.11 $ 28.06 $ 22.36 $ 26.47 Percentage Change in Base Rents 20.4% - 20.4% 15.2% 44.7% 21.0% Tenant Improvements ($/sq. ft.) $ 3.69 $ - $ 3.69 $ 3.01 $ 3.75 $ 3.22 Leasing Commissions ($/sq. ft.) $ 3.20 $ - $ 3.20 $ 3.00 $ - $ 2.17 Weighted Average Lease Term (Yrs.) (3) 8.3 - 8.3 7.6 13.0 9.1 Renewals Non-Anchor Anchor Total Non-Anchor Anchor Total Comparative # of Leases 54 1 55 117 6 123 Comparative GLA (sq. ft.) 140,976 26,098 167,074 290,939 215,131 506,070 Prior Base Rent ($/sq. ft.) (2) $ 26.24 $ 31.64 $ 27.08 $ 27.15 $ 18.64 $ 23.53 Initial Base Rent ($/sq. ft.) $ 28.60 $ 32.00 $ 29.13 $ 29.70 $ 19.62 $ 25.41 Percentage Change in Base Rents 9.0% 1.1% 7.6% 9.4% 5.2% 8.0% Tenant Improvements ($/sq. ft.) $ 0.09 $ - $ 0.08 $ 0.56 $ - $ 0.32 Leasing Commissions ($/sq. ft.) $ 0.04 $ - $ 0.03 $ 0.17 $ - $ 0.10 Weighted Average Lease Term (Yrs.) (3) 4.7 5.0 4.7 5.1 5.0 5.1 Total Non-Anchor Anchor Total Non-Anchor Anchor Total Comparative # of Leases 79 1 80 161 7 168 Comparative GLA (sq. ft.) (1) 204,710 26,098 230,808 390,628 253,631 644,259 Prior Base Rent ($/sq. ft.) (2) $ 25.33 $ 31.64 $ 26.05 $ 26.43 $ 18.16 $ 23.17 Initial Base Rent ($/sq. ft.) $ 28.45 $ 32.00 $ 28.85 $ 29.28 $ 20.03 $ 25.64 Percentage Change in Base Rents 12.3% 1.1% 10.7% 10.8% 10.3% 10.6% Tenant Improvements ($/sq. ft.) $ 1.21 $ - $ 1.08 $ 1.19 $ 0.57 $ 0.94 Leasing Commissions ($/sq. ft.) $ 1.02 $ - $ 0.91 $ 0.89 $ - $ 0.54 Weighted Average Lease Term (Yrs.) (3) 5.8 5.0 5.7 5.7 6.2 5.9 (1) Comparative GLA includes spaces that were vacant for less than 12 months, excluding spaces that were not leased at the time of acquisition. (2) Prior Base Rent is on a cash basis and is the final monthly rent paid, annualized, for the prior tenant or the prior lease that was renewed. (3) Does not assume exercise of renewal options. - 18 -
Supplemental Disclosure Investor Information Quarter Ended June 30, 2018 Retail Opportunity Investments Corp. www.roireit.net Investor Relations: Transfer Agent: NASDAQ: ROIC Ashley Rubino Constance Adams 11250 El Camino Real, Suite 200 arubino@roireit.net ComputerShare San Diego, CA 92130 858.255.4913 constance.adams@computershare.com Equity Research Coverage Baird Equity Research RJ Milligan 813.273.8252 Bank of America Merrill Lynch Craig Schmidt 646.855.3640 BTIG Michael Gorman 212.738.6138 Capital One Securities, Inc. Chris Lucas 571.633.8151 Citi Michael Bilerman 212.816.1383 Christy McElroy 212.816.6981 D.A. Davidson & Co. James O. Lykins 503.603.3041 Green Street Daniel J. Busch 949.640.8780 J.P. Morgan Michael W. Mueller 212.622.6689 Jefferies George Hoglund 212.284.2226 KeyBanc Capital Markets Todd Thomas 917.368.2286 Raymond James Paul Puryear 727.567.2253 Collin Mings 727.567.2585 RBC Capital Markets Wes Golladay 440.715.2650 Wells Fargo Jeff Donnelly 617.603.4262 Fixed Income Research Coverage J.P. Morgan Mark Streeter 212.834.5086 Ratings Agency Coverage Moody’s Investors Service Dilara Sukhov 212.553.1438 S&P Global Ratings Michael Souers 212.438.2508 - 19 -