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):
(Exact Name of Registrant as Specified in Its Charter)
_________________
(State or other jurisdiction of incorporation) | (Commission File Number) | (I.R.S. Employer Identification No.) |
_________________
RETAIL OPPORTUNITY INVESTMENTS PARTNERSHIP, LP
(Exact Name of Registrant as Specified in Its Charter)
_________________
(State or other jurisdiction of incorporation) | (Commission File Number) | (I.R.S. Employer Identification No.) |
(Address of Principal Executive Offices) | (Zip Code) | |||
(858 ) 677-0900
(Registrant’s telephone number, including area code)
N/A
(Former name, former address and former fiscal year, if changed since last report)
_________________
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:
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)
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 24, 2019, Retail Opportunity Investments Corp. (the "Company") issued an earnings release announcing its financial results for the quarter ended June 30, 2019. A copy of the earnings release is attached as Exhibit 99.1 hereto and incorporated herein by reference. On July 24, 2019, in connection with this earnings release, the Company posted certain supplemental information regarding the Company's operations for the quarter ended June 30, 2019 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 24, 2019
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 24, 2019
Retail Opportunity Investments Corp. Reports
2019 Second Quarter Results
San Diego, CA, July 24, 2019 - Retail Opportunity Investments Corp. (NASDAQ:ROIC) announced today financial and operating results for the three and six months ended June 30, 2019.
HIGHLIGHTS
▪ $7.6 million of net income attributable to common stockholders ($0.07 per diluted share)
▪ $32.6 million of Funds From Operations (FFO)(1) ($0.26 per diluted share)
▪ 97.9% portfolio lease rate at June 30, 2019 (20th consecutive quarter at or above 97%)
▪ 27.3% increase in same-space comparative cash rents on new leases (10.7% on renewals)
▪ 4.6% increase in same-center cash net operating income (2Q‘19 vs. 2Q‘18)
▪ 3.8% increase in same-center cash net operating income (first 6 months ‘19 vs. ‘18)
▪ $13.5 million property disposition ($30.5 million of property dispositions YTD)
▪ $0.1970 per share quarterly cash dividend paid
▪2019 FFO guidance range reaffirmed ($1.11 - $1.15 per diluted share)
▪ Investment-grade ratings & stable outlook reaffirmed by Moody’s and S&P
________________________________________
(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, “During the second quarter we continued to build on the solid momentum we established during the first quarter. We again posted strong releasing spreads and same-center NOI growth. Additionally, we achieved a new record high lease rate for the company, finishing the second quarter at a very strong 97.9%. We also continued to make steady progress in terms of disposing of non-core properties and with the entitlement process on our densification initiatives.” Tanz added, “Thus far we are squarely on track to achieve our stated objectives for the year and look forward to continuing to advance our business during the second half of 2019.”
FINANCIAL SUMMARY
For the three months ended June 30, 2019, GAAP net income attributable to common stockholders was $7.6 million, or $0.07 per diluted share, as compared to GAAP net income attributable to common stockholders of $7.3 million, or $0.06 per diluted share, for the three months ended June 30, 2018. For the six months ended June 30, 2019, GAAP net income attributable to common stockholders was $20.8 million, or $0.18 per diluted share, as compared to GAAP net income attributable to common stockholders of $18.0 million, or $0.16 per diluted share, for the six months ended June 30, 2018.
FFO for the second quarter of 2019 was $32.6 million, or $0.26 per diluted share, as compared to $33.4 million in FFO, or $0.27 per diluted share for the second quarter of 2018. FFO for the first six months of 2019 was $69.3 million, or $0.55 per diluted share, as compared to $70.5 million in FFO, or $0.57 per diluted share for the first six months of 2018. 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.
Included in GAAP net income attributable to common stockholders and FFO for the second quarter of 2019 was a one-time, $0.95 million settlement expense in connection with a 2010 property acquisition.
At June 30, 2019, ROIC had a total market capitalization of approximately $3.6 billion, including approximately $1.5 billion of principal debt outstanding and an equity market capitalization of approximately $2.1 billion. ROIC’s principal debt outstanding was comprised of $86.4 million of mortgage debt and approximately $1.4 billion of unsecured debt, including $151.0 million outstanding on its unsecured revolving credit facility at June 30, 2019. ROIC’s interest coverage for the first quarter was 3.1 times and 94.5% of its portfolio was unencumbered at June 30, 2019 (based on gross leasable area).
DISPOSITION SUMMARY
Year to date in 2019, ROIC has sold two properties totaling $30.5 million. During the first quarter, ROIC sold one property for $17.0 million, and during the second quarter ROIC sold Norwood Shopping Center, located in Sacramento, California, for $13.5 million. Additionally, ROIC currently has agreements to sell two properties, in separate transactions, totaling approximately $43 million, subject to completion of customary due diligence and other closing conditions.
PROPERTY OPERATIONS SUMMARY
At June 30, 2019, ROIC’s portfolio was 97.9% leased. For the second quarter of 2019, same-center net operating income (NOI) was $49.3 million, as compared to $47.1 million in same-center NOI for the second quarter of 2018, representing a 4.6% increase. For the first six months of 2019, same-center NOI increased 3.8% as compared to same-center NOI for the first six months of 2018. 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 2019, ROIC executed 84 leases, totaling 319,481 square feet, including 27 new leases, totaling 88,037 square feet, achieving a 27.3% increase in same-space comparative base rent, and 57 renewed leases, totaling 231,444 square feet, achieving a 10.7% increase in base rent. ROIC reports same-space comparative base rent on a cash basis.
CASH DIVIDEND
On June 27, 2019, ROIC distributed a $0.1970 per share cash dividend. On July 24, 2019, ROIC’s board of directors declared a cash dividend of $0.1970 per share, payable on September 26, 2019 to stockholders of record on September 12, 2019.
2019 FFO GUIDANCE
ROIC reaffirms its previously disclosed guidance range for GAAP net income and FFO per diluted share.
Year Ended December 31, 2019 | |||||||
Low End | High End | ||||||
GAAP net income per diluted share | $ | 0.40 | $ | 0.44 | |||
FFO per diluted share | $ | 1.11 | $ | 1.15 | |||
Key Assumptions (dollars in thousands) | |||||||
Acquisitions | $ | — | $ | 50,000 | |||
Dispositions | $ | 75,000 | $ | 100,000 | |||
Debt retired | $ | 75,000 | $ | 50,000 | |||
Same-center cash NOI growth (vs. 2018) | 3 | % | 4 | % | |||
ROIC’s management will discuss the company’s guidance and underlying assumptions on its July 25, 2019 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 results on Thursday, July 25, 2019 at 9:00 a.m. Eastern Time / 6:00 a.m. Pacific Time. Those interested in participating in the conference call should dial (877) 312-8783 (domestic), or (408) 940-3874 (international) at least ten minutes prior to the scheduled start of the call. When prompted, provide the Conference ID: 4476536. 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 25, 2019 and will be available until 12:00a.m. Eastern Time on August 2, 2019. To access the conference call recording, dial (855) 859-2056 (domestic) or (404) 537-3406 (international) and use the Conference ID: 4476536. 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, 2019, ROIC owned 89 shopping centers encompassing approximately 10.2 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, 2019 (unaudited) | December 31, 2018 | ||||||
ASSETS | |||||||
Real Estate Investments: | |||||||
Land | $ | 887,080 | $ | 894,240 | |||
Building and improvements | 2,257,777 | 2,266,232 | |||||
3,144,857 | 3,160,472 | ||||||
Less: accumulated depreciation | 359,090 | 329,207 | |||||
2,785,767 | 2,831,265 | ||||||
Mortgage note receivable | 13,250 | — | |||||
Real Estate Investments, net | 2,799,017 | 2,831,265 | |||||
Cash and cash equivalents | 7,488 | 6,076 | |||||
Restricted cash | 1,554 | 1,373 | |||||
Tenant and other receivables, net | 44,304 | 46,832 | |||||
Acquired lease intangible assets, net | 66,285 | 72,109 | |||||
Prepaid expenses | 1,479 | 4,194 | |||||
Deferred charges, net | 30,323 | 33,857 | |||||
Other | 18,519 | 7,365 | |||||
Total assets | $ | 2,968,969 | $ | 3,003,071 | |||
LIABILITIES AND EQUITY | |||||||
Liabilities: | |||||||
Term loan | $ | 299,201 | $ | 299,076 | |||
Credit facility | 149,120 | 153,689 | |||||
Senior Notes | 942,145 | 941,449 | |||||
Mortgage notes payable | 88,019 | 88,511 | |||||
Acquired lease intangible liabilities, net | 154,059 | 166,146 | |||||
Accounts payable and accrued expenses | 15,287 | 15,488 | |||||
Tenants’ security deposits | 7,118 | 7,065 | |||||
Other liabilities | 39,426 | 23,219 | |||||
Total liabilities | 1,694,375 | 1,694,643 | |||||
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; 114,307,789 and 113,992,837 shares issued and outstanding at June 30, 2019 and December 31, 2018, respectively | 11 | 11 | |||||
Additional paid-in capital | 1,443,165 | 1,441,080 | |||||
Dividends in excess of earnings | (280,488 | ) | (256,438 | ) | |||
Accumulated other comprehensive (loss) income | (4,327 | ) | 3,561 | ||||
Total Retail Opportunity Investments Corp. stockholders’ equity | 1,158,361 | 1,188,214 | |||||
Non-controlling interests | 116,233 | 120,214 | |||||
Total equity | 1,274,594 | 1,308,428 | |||||
Total liabilities and equity | $ | 2,968,969 | $ | 3,003,071 | |||
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, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Revenues | |||||||||||||||
Rental revenue | $ | 71,821 | $ | 71,521 | $ | 147,188 | $ | 143,059 | |||||||
Other income | 1,109 | 820 | 1,795 | 3,677 | |||||||||||
Total revenues | 72,930 | 72,341 | 148,983 | 146,736 | |||||||||||
Operating expenses | |||||||||||||||
Property operating | 10,710 | 11,017 | 21,771 | 21,495 | |||||||||||
Property taxes | 7,832 | 7,914 | 16,070 | 15,733 | |||||||||||
Depreciation and amortization | 24,443 | 25,331 | 49,204 | 50,548 | |||||||||||
General and administrative expenses | 4,950 | 3,990 | 9,226 | 7,521 | |||||||||||
Other expense | 1,224 | 274 | 1,317 | 343 | |||||||||||
Total operating expenses | 49,159 | 48,526 | 97,588 | 95,640 | |||||||||||
Gain on sale of real estate | 180 | — | 2,818 | — | |||||||||||
Operating income | 23,951 | 23,815 | 54,213 | 51,096 | |||||||||||
Non-operating expenses | |||||||||||||||
Interest expense and other finance expenses | (15,605 | ) | (15,713 | ) | (31,284 | ) | (31,170 | ) | |||||||
Net income | 8,346 | 8,102 | 22,929 | 19,926 | |||||||||||
Net income attributable to non-controlling interests | (761 | ) | (763 | ) | (2,094 | ) | (1,885 | ) | |||||||
Net Income Attributable to Retail Opportunity Investments Corp. | $ | 7,585 | $ | 7,339 | $ | 20,835 | $ | 18,041 | |||||||
Earnings per share – basic and diluted | $ | 0.07 | $ | 0.06 | $ | 0.18 | $ | 0.16 | |||||||
Dividends per common share | $ | 0.1970 | $ | 0.1950 | $ | 0.3940 | $ | 0.3900 | |||||||
CALCULATION OF FUNDS FROM OPERATIONS
(Unaudited)
(In thousands)
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Net income attributable to ROIC | $ | 7,585 | $ | 7,339 | $ | 20,835 | $ | 18,041 | |||||||
Plus: Depreciation and amortization | 24,443 | 25,331 | 49,204 | 50,548 | |||||||||||
Less: Gain on sale of real estate | (180 | ) | — | (2,818 | ) | — | |||||||||
Funds from operations – basic | 31,848 | 32,670 | 67,221 | 68,589 | |||||||||||
Net income attributable to non-controlling interests | 761 | 763 | 2,094 | 1,885 | |||||||||||
Funds from operations – diluted | $ | 32,609 | $ | 33,433 | $ | 69,315 | $ | 70,474 | |||||||
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, | |||||||||||||||||||||||||||||
2019 | 2018 | $ Change | % Change | 2019 | 2018 | $ Change | % Change | |||||||||||||||||||||||
Number of shopping centers included in same-center analysis | 87 | 87 | 86 | 86 | ||||||||||||||||||||||||||
Same-center occupancy | 97.9 | % | 97.5 | % | 0.4 | % | 97.9 | % | 97.5 | % | 0.4 | % | ||||||||||||||||||
Revenues: | ||||||||||||||||||||||||||||||
Base rents | $ | 51,017 | $ | 48,921 | $ | 2,096 | 4.3 | % | $ | 100,935 | $ | 96,948 | $ | 3,987 | 4.1 | % | ||||||||||||||
Percentage rent | 46 | 88 | (42 | ) | (47.7 | )% | 130 | 196 | (66 | ) | (33.7 | )% | ||||||||||||||||||
Recoveries from tenants | 16,495 | 16,027 | 468 | 2.9 | % | 33,141 | 31,602 | 1,539 | 4.9 | % | ||||||||||||||||||||
Other property income | 846 | 812 | 34 | 4.2 | % | 1,440 | 1,283 | 157 | 12.2 | % | ||||||||||||||||||||
Bad debt (1) | (297 | ) | — | (297 | ) | N/A | (913 | ) | — | (913 | ) | N/A | ||||||||||||||||||
Total Revenues | 68,107 | 65,848 | 2,259 | 3.4 | % | 134,733 | 130,029 | 4,704 | 3.6 | % | ||||||||||||||||||||
Operating Expenses | ||||||||||||||||||||||||||||||
Property operating expenses | 11,139 | 10,689 | 450 | 4.2 | % | 21,925 | 20,706 | 1,219 | 5.9 | % | ||||||||||||||||||||
Bad debt (1) | — | 228 | (228 | ) | N/A | — | 313 | (313 | ) | N/A | ||||||||||||||||||||
Property taxes | 7,677 | 7,810 | (133 | ) | (1.7 | )% | 15,600 | 15,374 | 226 | 1.5 | % | |||||||||||||||||||
Total Operating Expenses | 18,816 | 18,727 | 89 | 0.5 | % | 37,525 | 36,393 | 1,132 | 3.1 | % | ||||||||||||||||||||
Same-Center Cash Net Operating Income | $ | 49,291 | $ | 47,121 | $ | 2,170 | 4.6 | % | $ | 97,208 | $ | 93,636 | $ | 3,572 | 3.8 | % | ||||||||||||||
____________________
(1) | In connection with the adoption of the lease accounting standard ASU No. 2016-2, effective January 1, 2019, bad debt is now classified as an offset to revenue instead of being included in operating expenses. |
SAME-CENTER CASH NET OPERATING INCOME RECONCILIATION
(Unaudited)
(In thousands)
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
GAAP operating income | $ | 23,951 | $ | 23,815 | $ | 54,213 | $ | 51,096 | |||||||
Depreciation and amortization | 24,443 | 25,331 | 49,204 | 50,548 | |||||||||||
General and administrative expenses | 4,950 | 3,990 | 9,226 | 7,521 | |||||||||||
Other expense | 1,224 | 274 | 1,317 | 343 | |||||||||||
Gain on sale of real estate | (180 | ) | — | (2,818 | ) | — | |||||||||
Straight-line rent | (546 | ) | (1,410 | ) | (1,726 | ) | (2,881 | ) | |||||||
Amortization of above- and below-market rent | (3,460 | ) | (3,143 | ) | (9,938 | ) | (7,218 | ) | |||||||
Property revenues and other expenses (1) | 43 | 113 | 237 | 135 | |||||||||||
Total Company cash NOI | 50,425 | 48,970 | 99,715 | 99,544 | |||||||||||
Non same-center cash NOI | (1,134 | ) | (1,849 | ) | (2,507 | ) | (5,908 | ) | |||||||
Same-center cash NOI | $ | 49,291 | $ | 47,121 | $ | 97,208 | $ | 93,636 | |||||||
(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:
Carol Merriman, Investor Relations
858-255-7426
cmerriman@roireit.net
2nd QUARTER 2019 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, 2019 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, 2019, ROIC owned 89 shopping centers encompassing approximately 10.2 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, 2019 Financial Data Page Balance Sheets……..……………………………………………………………..………………………………………………… 4 Income Statements .…………………………………………………………………………………..……..…………...………… 5 Funds From Operations …………………………………………………………………………………………………………… 6 Summary of Debt Outstanding .……………………………………………..…………………………………………………… 7 Selected Financial Analysis .……………………………………………………………………………………………………… 9 Portfolio Data Property Acquisitions and Dispositions ………………………….………………………...……………………………………… 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 Leased vs. Billed Summary ………………………………………………………..…............................................................. 19 Investor Information …………………………………………………………..…………………………………………………… 20 - 3 -
Supplemental Disclosure Balance Sheets Quarter Ended June 30, 2019 (unaudited, dollars in thousands, except par values and share amounts) 06/30/19 12/31/18 ASSETS: Real Estate Investments: Land $ 887,080 $ 894,240 Building and improvements 2,257,777 2,266,232 3,144,857 3,160,472 Less: accumulated depreciation 359,090 329,207 2,785,767 2,831,265 Mortgage note receivable 13,250 - Real Estate Investments, net 2,799,017 2,831,265 Cash and cash equivalents 7,488 6,076 Restricted cash 1,554 1,373 Tenant and other receivables, net 44,304 46,832 Acquired lease intangible assets, net 66,285 72,109 Prepaid expenses 1,479 4,194 Deferred charges, net 30,323 33,857 Other assets 18,519 7,365 TOTAL ASSETS $ 2,968,969 $ 3,003,071 LIABILITIES: Term loan $ 299,201 $ 299,076 Credit facility 149,120 153,689 Senior Notes 942,145 941,449 Mortgage notes payable 88,019 88,511 Acquired lease intangible liabilities, net 154,059 166,146 Accounts payable and accrued expenses 15,287 15,488 Tenants' security deposits 7,118 7,065 Other liabilities 39,426 23,219 TOTAL LIABILITIES 1,694,375 1,694,643 EQUITY: Common stock, $.0001 par value 500,000,000 shares authorized 11 11 Additional paid-in capital 1,443,165 1,441,080 Dividends in excess of earnings (280,488) (256,438) Accumulated other comprehensive income (4,327) 3,561 Total Retail Opportunity Investments Corp. stockholders' equity 1,158,361 1,188,214 Non-controlling interests 116,233 120,214 TOTAL EQUITY 1,274,594 1,308,428 TOTAL LIABILITIES AND EQUITY $ 2,968,969 $ 3,003,071 The Company's Form 10-Q for the quarter ended June 30, 2019, and Form 10-K for the year ended December 31, 2018 should be read in conjunction with the above information. - 4 -
Supplemental Disclosure Income Statements Quarter Ended June 30, 2019 (unaudited, in thousands, except per share amounts) Three Months Ended Six Months Ended 06/30/19 06/30/18 06/30/19 06/30/18 REVENUES: Rental revenue (1) $ 71,821 $ 71,521 $ 147,188 $ 143,059 Other income 1,109 820 1,795 3,677 TOTAL REVENUES 72,930 72,341 148,983 146,736 OPERATING EXPENSES: Property operating 10,710 11,017 21,771 21,495 Property taxes 7,832 7,914 16,070 15,733 Depreciation and amortization 24,443 25,331 49,204 50,548 General and administrative expenses 4,950 3,990 9,226 7,521 Other expense 1,224 274 1,317 343 TOTAL OPERATING EXPENSES 49,159 48,526 97,588 95,640 Gain on sale of real estate 180 - 2,818 - OPERATING INCOME 23,951 23,815 54,213 51,096 NON-OPERATING EXPENSES: Interest expense and other finance expenses (15,605) (15,713) (31,284) (31,170) NET INCOME 8,346 8,102 22,929 19,926 NET INCOME ATTRIBUTABLE TO NON-CONTROLLING INTERESTS (761) (763) (2,094) (1,885) NET INCOME ATTRIBUTABLE TO RETAIL OPPORTUNITY INVESTMENTS CORP. $ 7,585 $ 7,339 $ 20,835 $ 18,041 NET INCOME PER COMMON SHARE - BASIC $ 0.07 $ 0.06 $ 0.18 $ 0.16 NET INCOME PER COMMON SHARE - DILUTED $ 0.07 $ 0.06 $ 0.18 $ 0.16 Weighted average common shares outstanding - basic 113,681 112,165 113,681 112,164 Weighted average common shares outstanding - diluted 125,458 124,205 125,458 124,178 (1) RENTAL REVENUE Base rents $ 51,548 $ 50,497 $ 102,826 $ 100,328 Recoveries from tenants 16,674 16,471 33,972 32,632 Straight-line rent 546 1,410 1,726 2,881 Amortization of above- and below-market rent 3,460 3,143 9,938 7,218 Bad debt (407) - (1,274) - TOTAL RENTAL REVENUE $ 71,821 $ 71,521 $ 147,188 $ 143,059 The Company's Form 10-Q for the quarters ended June 30, 2019 and June 30, 2018 should be read in conjunction with the above information. In connection with the adoption of the lease accounting standard ASU No. 2016-2, effective January 1, 2019, previously capitalized internal leasing costs are now expensed and included in General and administrative expenses. These costs amounted to $277,000 and $611,000 for the three and six months ended June 30, 2018, respectively. In addition, bad debt is now classified as an offset to revenue instead of being included in Property operating expenses. - 5 -
Supplemental Disclosure Funds From Operations Quarter Ended June 30, 2019 (unaudited, in thousands, except per share amounts) Three Months Ended Six Months Ended 06/30/19 06/30/18 06/30/19 06/30/18 Funds from Operations (FFO) (1) : Net income attributable to ROIC common stockholders $ 7,585 $ 7,339 $ 20,835 $ 18,041 Plus: Depreciation and amortization expense 24,443 25,331 49,204 50,548 Less: Gain on sale of real estate (180) - (2,818) - FUNDS FROM OPERATIONS - BASIC 31,848 32,670 67,221 68,589 Net income attributable to non-controlling interests 761 763 2,094 1,885 FUNDS FROM OPERATIONS - DILUTED $ 32,609 $ 33,433 $ 69,315 $ 70,474 FUNDS FROM OPERATIONS PER SHARE - BASIC $ 0.28 $ 0.29 $ 0.59 $ 0.61 FUNDS FROM OPERATIONS PER SHARE - DILUTED $ 0.26 $ 0.27 $ 0.55 $ 0.57 Weighted average common shares outstanding - basic 113,681 112,165 113,681 112,164 Weighted average common shares outstanding - diluted 125,458 124,205 125,458 124,178 Common dividends per share $ 0.1970 $ 0.1950 $ 0.3940 $ 0.3900 FFO Payout Ratio 75.8% 72.2% 71.6% 68.4% Additional Disclosures: Non Cash Expense (Income) Straight line rent $ (546) $ (1,410) $ (1,726) $ (2,881) Above/below market rent amortization, net (3,460) (3,143) (9,938) (7,218) Non-cash interest expense 76 535 377 1,070 Deferred financing costs and mortgage premiums, net 518 477 1,033 926 Stock based compensation 2,239 1,991 3,890 3,419 Capital Expenditures Tenant improvements $ 5,671 $ 4,431 $ 10,697 $ 7,538 Leasing commissions 183 255 501 1,008 Building improvements 499 629 332 990 Reimbursable property improvements 443 1,143 1,205 1,335 Pad and other development 729 1,411 2,322 2,428 Value enhancing tenant improvements 1,228 4,261 3,485 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, 2019 (unaudited, dollars in thousands) Outstanding GAAP Maturity Percent of Balance Interest Rate Interest Rate Date Total Indebtedness Fixed Rate Debt Mortgage Debt: Casitas Plaza Shopping Center $ 7,081 5.32% 4.20% 06/01/22 0.5% Riverstone Marketplace 17,854 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 2.4% Net unamortized premiums/deferred financing charges 1,584 Total Mortgage Debt 88,019 4.34% 3.76% 4.9 Years (WA) 5.8% Unsecured Senior Notes: Senior Notes Due 2023 250,000 5.00% 5.21% 12/15/23 16.8% Senior Notes Due 2024 250,000 4.00% 4.21% 12/15/24 16.8% Senior Notes Due 2026 200,000 3.95% 3.95% 09/22/26 13.5% Senior Notes Due 2027 250,000 4.19% 4.19% 12/15/27 16.8% Net unamortized discounts/deferred financing charges (7,855) Total Unsecured Senior Notes 942,145 4.30% 4.41% 6.4 Years (WA) 63.9% Term Loan: Interest rate swaps 100,000 3.69% 3.69% 8/31/2022 6.7% Interest rate swaps 200,000 2.84% 2.84% 8/31/2022 13.4% Total Term Loan 300,000 3.12% 3.12% 3.2 Years (WA) 20.1% Total Fixed Rate Debt 1,330,164 4.04% 4.08% 5.5 Years (WA) 89.8% Variable Rate Debt Credit Facility 151,000 3.41% 3.41% 09/08/21 (1) 10.2% Net unamortized deferred financing charges (1,880) Credit Facility, net 149,120 Term Loan 300,000 09/08/22 Net unamortized deferred financing charges (799) Term Loan, net 299,201 Interest rate swaps - Term loan (300,000) Total Variable Rate Debt 148,321 3.41% 3.41% 2.2 Years (WA) 10.2% TOTAL DEBT $ 1,478,485 3.98% 4.01% 5.2 Years (WA) 100.0% Net unamortized premiums on mortgages (1,834) Net unamortized discounts on notes 4,213 Net unamortized deferred financing charges 6,571 Total Principal Debt $ 1,487,435 (1) Does not include extension options available to ROIC. - 7 -
Supplemental Disclosure Summary of Debt Outstanding, continued Quarter Ended June 30, 2019 (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 2019 $ 278 $ - $ - $ - $ - $ 278 0.0% 2020 577 - - - - 577 0.0% (1) 2021 717 - 151,000 - - 151,717 10.2% 2022 1,003 23,129 - 300,000 - 324,132 21.8% 2023 686 - - - 250,000 250,686 16.9% 2024 708 26,000 - - 250,000 276,708 18.7% 2025 550 32,787 - - - 33,337 2.2% 2026 - - - - 200,000 200,000 13.4% 2027 - - - - 250,000 250,000 16.8% $ 4,519 $ 81,916 $ 151,000 $ 300,000 $ 950,000 $ 1,487,435 100.0% Summary of Unencumbered/Encumbered Properties Number of Percentage Properties GLA of GLA Unencumbered properties 85 9,643,911 94.5% Encumbered properties 4 560,163 5.5% 89 10,204,074 100.0% Summary of Unsecured Debt/Secured Debt Percentage of Total Amount Principal Debt Unsecured principal debt $ 1,401,000 94.2% Secured principal debt 86,435 5.8% Total Principal Debt $ 1,487,435 100.0% (1) Does not include extension options available to ROIC. - 8 -
Supplemental Disclosure Selected Financial Analysis Quarter Ended June 30, 2019 (unaudited, in thousands, except per share amounts) 06/30/19 03/31/19 12/31/18 09/30/18 06/30/18 Debt coverage ratios, three months ending: Interest coverage ratio (EBITDA/interest expense) 3.1x 3.4x 3.4x 3.3x 3.1x Debt service coverage (EBITDA/(interest expense + scheduled principal payments)) 3.1x 3.3x 3.4x 3.2x 3.1x Net principal debt (Total principal debt less cash & equivalents)/Annualized EBITDA 7.5x 7.3x 7.1x 7.2x 7.7x Net principal debt (Total principal debt less cash & equivalents)/TTM EBITDA 7.2x 7.1x 7.2x 7.2x 7.6x Debt/equity ratios, at period end: Total principal debt/total market capitalization 41.0% 40.5% 42.9% 38.7% 39.3% Total principal debt/total equity market capitalization 69.4% 68.2% 75.2% 63.2% 64.8% Total principal debt/total book assets 50.1% 49.4% 49.7% 48.9% 50.4% Total principal debt/undepreciated book value 44.7% 44.3% 44.8% 44.3% 46.0% Secured principal debt/undepreciated book value 2.6% 2.6% 2.6% 2.6% 2.9% Market capitalization calculations, at period end: Common shares outstanding 113,681 113,681 113,441 113,431 112,165 Operating partnership units (OP units) outstanding 11,407 11,407 11,477 11,574 11,648 Common stock price per share $ 17.13 $ 17.34 $ 15.88 $ 18.67 $ 19.16 Total equity market capitalization $ 2,142,752 $ 2,169,021 $ 1,983,698 $ 2,333,843 $ 2,372,268 Total principal debt 1,487,435 1,478,570 1,492,708 1,473,841 1,537,827 TOTAL MARKET CAPITALIZATION $ 3,630,187 $ 3,647,591 $ 3,476,406 $ 3,807,684 $ 3,910,095 Unsecured Senior Notes Financial Covenants: (1) Total debt to total assets not to exceed 60% 46.5% 46.1% 46.6% 46.2% 47.9% Total secured debt to total assets not to exceed 40% 2.8% 2.8% 2.8% 2.8% 3.1% Total unencumbered assets to total unsecured debt not to be less than 150% 215.5% 217.7% 215.0% 217.2% 207.6% Consolidated income available for debt service to interest expense not to be less than 1.5:1 3.3x 3.3x 3.3x 3.4x 3.5x (1) Calculated in accordance with GAAP pursuant to underlying bond indentures. - 9 -
Supplemental Disclosure Property Acquisitions and Dispositions Quarter Ended June 30, 2019 (dollars in thousands) Dispositions Date Owned Shopping Centers Location Sold Sales Amount GLA 1Q 2019 Vancouver Market Center Vancouver, WA 02/15/19 $ 17,000 118,385 2Q 2019 Norwood Shopping Center Sacramento, CA 05/01/19 $ 13,500 85,706 Total 2019 Dispositions $ 30,500 204,091 - 10 -
Supplemental Disclosure Property Portfolio Quarter Ended June 30, 2019 (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 98.0% $ 1,812 Grocery Outlet Supermarket, 99¢ Only Stores, Rite Aid Pharmacy Claremont Promenade * Claremont CA 09/23/10 92,297 97.4% 2,411 Super King Supermarket Gateway Village * Chino Hills CA 12/17/10 96,959 100.0% 3,026 Sprouts Market Seabridge Marketplace * Oxnard CA 05/31/12 98,348 97.4% 1,890 Safeway (Vons) Supermarket Glendora Shopping Center * Glendora CA 08/01/12 106,535 95.8% 1,349 Albertson's Supermarket Redondo Beach Plaza * Redondo Beach CA 12/28/12 110,509 100.0% 2,214 Safeway (Vons) Supermarket, Petco Diamond Bar Town Center * Diamond Bar CA 02/01/13 100,342 96.4% 2,271 Walmart Neighborhood Market, Crunch Fitness Diamond Hills Plaza * Diamond Bar CA 04/22/13 139,486 97.3% 3,802 H-Mart Supermarket, Planet Fitness Plaza de la Cañada * La Cañada Flintridge CA 12/13/13 100,401 100.0% 2,688 Gelson's Supermarket, TJ Maxx, Rite Aid Pharmacy Fallbrook Shopping Center * Los Angeles CA 06/13/14 755,299 99.7% 13,089 Sprouts Market, Trader Joe's, Kroger (Ralph's) Supermarket(2), TJ Maxx Moorpark Town Center * Moorpark CA 12/03/14 133,547 95.5% 2,021 Kroger (Ralph's) Supermarket, CVS Pharmacy Ontario Plaza * Ontario CA 01/06/15 150,149 100.0% 2,422 El Super Supermarket, Rite Aid Pharmacy Park Oaks Shopping Center * Thousand Oaks CA 01/06/15 110,092 89.8% 2,511 Safeway (Vons) Supermarket, Dollar Tree Warner Plaza * Woodland Hills CA 12/31/15 110,918 99.7% 4,673 Sprouts Market, Kroger (Ralph's) Supermarket (2), Rite Aid Pharmacy (2) Magnolia Shopping Center * Santa Barbara CA 03/10/16 116,360 86.2% 2,046 Kroger (Ralph's) Supermarket Casitas Plaza Shopping Center * Carpinteria CA 03/10/16 105,118 97.7% 1,784 Albertson's Supermarket, CVS Pharmacy Bouquet Center * Santa Clarita CA 04/28/16 148,903 95.5% 3,225 Safeway (Vons) Supermarket, CVS Pharmacy, Ross Dress For Less North Ranch Shopping Center * Westlake Village CA 06/01/16 146,448 91.0% 4,763 Kroger (Ralph's) Supermarket, Trader Joe's, Rite Aid Pharmacy, Petco The Knolls * Long Beach CA 10/03/16 52,021 95.2% 1,268 Trader Joe's, Pet Food Express The Terraces * Rancho Palos Verdes CA 03/17/17 172,922 94.7% 3,460 Trader Joe's, Marshall's, LA Fitness Los Angeles metro area total 2,941,716 97.0% $ 62,725 Orange County metro area Santa Ana Downtown Plaza * Santa Ana CA 01/26/10 105,536 93.4% $ 2,101 Kroger (Food 4 Less) Supermarket, Marshall's Sycamore Creek * Corona CA 09/30/10 74,198 100.0% 1,837 Safeway (Vons) Supermarket, CVS Pharmacy (2) Desert Springs Marketplace * Palm Desert CA 02/17/11 113,718 96.3% 2,855 Kroger (Ralph's) Supermarket, Rite Aid Pharmacy Cypress Center West * Cypress CA 12/04/12 107,246 100.0% 2,070 Kroger (Ralph's) Supermarket, Rite Aid Pharmacy Harbor Place Center * Garden Grove CA 12/28/12 119,821 98.6% 1,809 AA Supermarket, Ross Dress For Less 5 Points Plaza * Huntington Beach CA 09/27/13 160,536 97.2% 4,342 Trader Joe's, Pier 1 Peninsula Marketplace * Huntington Beach CA 10/15/13 95,416 100.0% 2,477 Kroger (Ralph's) Supermarket, Planet Fitness Fullerton Crossroads * Fullerton CA 10/11/17 219,785 98.2% 3,330 Kroger (Ralph's) Supermarket, Kohl's, Jo-Ann Fabrics and Crafts The Village at Nellie Gail Ranch * Laguna Hills CA 11/30/17 89,041 98.7% 3,021 Smart & Final Extra Supermarket Orange Country metro area total 1,085,297 97.9% $ 23,842 San Diego metro area Marketplace Del Rio * Oceanside CA 01/03/11 176,001 89.0% $ 3,099 Stater Brothers Supermarket, Walgreens Renaissance Towne Centre * San Diego CA 08/03/11 53,012 100.0% 2,619 CVS Pharmacy Euclid Plaza * San Diego CA 03/29/12 77,044 100.0% 1,477 Vallarta Supermarket, Walgreens Bay Plaza * San Diego CA 10/05/12 73,324 99.9% 2,040 Seafood City Supermarket Bernardo Heights Plaza * Rancho Bernardo CA 02/06/13 37,729 100.0% 945 Sprouts Market Hawthorne Crossings * San Diego CA 06/27/13 141,288 100.0% 3,174 Mitsuwa Supermarket, Ross Dress For Less, Staples Creekside Plaza * Poway CA 02/28/14 128,852 97.1% 3,045 Stater Brothers Supermarket, AMC Theatres San Diego metro area total 687,250 96.6% $ 16,399 Southern California Totals 4,714,263 97.2% $ 102,966 (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 2019. - 11 -
Supplemental Disclosure Property Portfolio, continued Quarter Ended June 30, 2019 (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 01/06/11 135,962 97.8% 2,727 SaveMart (Lucky) Supermarket, Planet Fitness Country Club Gate Center * Pacific Grove CA 07/08/11 109,331 97.6% 2,148 SaveMart (Lucky) Supermarket, Rite Aid Pharmacy Marlin Cove Shopping Center * Foster City CA 05/04/12 73,943 100.0% 2,372 99 Ranch Market The Village at Novato * Novato CA 07/24/12 20,081 100.0% 554 Trader Joe's, Pharmaca Pharmacy Santa Teresa Village * San Jose CA 11/08/12 124,306 98.4% 2,726 Grocery Outlet Supermarket, Dollar Tree Granada Shopping Center * Livermore CA 06/27/13 69,325 100.0% 1,336 SaveMart (Lucky) Supermarket Country Club Village * San Ramon CA 11/26/13 111,093 98.8% 2,402 Walmart Neighborhood Market, CVS Pharmacy North Park Plaza * San Jose CA 04/30/14 76,697 96.6% 2,339 H-Mart Supermarket Winston Manor * South San Francisco CA 01/07/15 49,852 100.0% 1,644 Grocery Outlet Supermarket Jackson Square * Hayward CA 07/01/15 114,220 100.0% 2,224 Safeway Supermarket, CVS Pharmacy, 24 Hour Fitness Gateway Centre * San Ramon CA 09/01/15 112,553 100.0% 2,772 SaveMart (Lucky) Supermarket, Walgreens Iron Horse Plaza * Danville CA 12/04/15 62,007 100.0% 2,338 Lunardi's Market Monterey Center * Monterey CA 07/14/16 25,626 87.9% 946 Trader Joe's, Pharmaca Pharmacy Santa Rosa Southside Shopping Center * Santa Rosa CA 03/24/17 88,535 98.0% 1,657 REI, Cost Plus World Market Monta Loma Plaza * Mountain View CA 09/19/17 48,078 100.0% 1,469 Safeway Supermarket San Francisco metro area total 1,291,324 98.7% $ 31,125 Sacramento metro area Mills Shopping Center * Rancho Cordova CA 02/17/11 235,514 86.9% $ 2,573 Viva Supermarket, Ross Dress For Less (dd's Discounts), Dollar Tree Morada Ranch * Stockton CA 05/16/11 101,842 97.5% 2,263 Raleys Supermarket Green Valley Station * Cameron Park CA 06/15/12 52,245 85.8% 935 CVS Pharmacy Sacramento metro area total 389,601 89.5% $ 5,771 Northern California Totals 1,680,925 96.6% $ 36,896 (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 2019. - 12 -
Supplemental Disclosure Property Portfolio, continued Quarter Ended June 30, 2019 (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 51,597 100.0% $ 838 Kroger (QFC) Supermarket The Market at Lake Stevens * Lake Stevens WA 03/11/10 74,130 100.0% 1,475 Albertson's (Haggen) Supermarket Canyon Park Shopping Center * Bothell WA 07/29/11 123,592 100.0% 2,459 PCC Community Markets, Rite Aid Pharmacy, Petco Hawks Prairie Shopping Center * Lacey WA 09/09/11 157,529 100.0% 1,870 Safeway Supermarket, Dollar Tree, Big Lots The Kress Building * Seattle WA 09/30/11 74,616 100.0% 1,964 IGA Supermarket, TJMaxx Gateway Shopping Center * Marysville WA 02/16/12 104,298 93.8% 2,489 WinCo Foods (2), Rite Aid Pharmacy, Ross Dress For Less Aurora Square * Shoreline WA 2012/2014 108,558 100.0% 1,762 Central Supermarket, Marshall's, Pier 1 Canyon Crossing * Puyallup WA 04/15/13 120,398 98.5% 2,778 Safeway Supermarket Crossroads Shopping Center * Bellevue WA 2010/2013 475,413 99.5% 10,700 Kroger (QFC) Supermarket, Bed Bath & Beyond, Dick's Sporting Goods Bellevue Marketplace * Bellevue WA 12/10/15 113,758 100.0% 3,318 Asian Family Market Four Corner Square * Maple Valley WA 12/21/15 119,560 100.0% 2,600 Grocery Outlet Supermarket, Walgreens, Johnsons Home & Garden Bridle Trails Shopping Center * Kirkland WA 10/17/16 108,377 100.0% 2,264 Grocery Outlet Supermarket, Bartell Drugs, Dollar Tree PCC Community Markets Plaza * Edmonds WA 01/25/17 34,459 100.0% 690 PCC Community Markets Highland Hill Shopping Center * Tacoma WA 05/09/17 163,926 100.0% 2,817 Safeway Supermarket, LA Fitness, Dollar Tree, Petco North Lynnwood Shopping Center * Lynnwood WA 10/19/17 63,606 95.8% 876 Kroger (QFC) Supermarket Stadium Center * Tacoma WA 02/23/18 48,888 100.0% 1,030 Thriftway Supermarket Seattle metro area total 1,942,705 99.3% $ 39,930 Portland metro area Happy Valley Town Center * Happy Valley OR 07/14/10 138,662 97.8% $ 3,647 New Seasons Supermarket Wilsonville Old Town Square * Wilsonville OR 2010/2012 49,937 93.4% 1,709 Kroger (Fred Meyer) Supermarket (2) Cascade Summit Town Square * West Linn OR 08/20/10 94,934 100.0% 1,767 Safeway Supermarket Heritage Market Center * Vancouver WA 09/23/10 107,468 98.4% 1,727 Safeway Supermarket, Dollar Tree Division Crossing * Portland OR 12/22/10 103,561 100.0% 1,281 Rite Aid Pharmacy, Ross Dress For Less, Ace Hardware Halsey Crossing * Gresham OR 12/22/10 99,428 100.0% 1,380 24 Hour Fitness, Dollar Tree Hillsboro Market Center * Hillsboro OR 11/23/11 156,021 100.0% 2,583 Albertson's Supermarket, Dollar Tree, Ace Hardware Robinwood Shopping Center * West Linn OR 08/23/13 70,831 100.0% 1,066 Walmart Neighborhood Market Tigard Marketplace * Tigard OR 02/18/14 136,889 99.3% 2,034 H-Mart Supermarket, Bi-Mart Pharmacy Wilsonville Town Center * Wilsonville OR 12/11/14 167,829 100.0% 2,843 Safeway Supermarket, Rite Aid Pharmacy, Dollar Tree Tigard Promenade * Tigard OR 07/28/15 88,043 100.0% 1,484 Safeway Supermarket Sunnyside Village Square * Happy Valley OR 07/28/15 92,278 100.0% 1,577 Grocery Outlet Supermarket, 24 Hour Fitness, Ace Hardware Johnson Creek Center * Happy Valley OR 11/09/15 108,588 100.0% 2,269 Trader Joe's, Walgreens, Sportsman's Warehouse Rose City Center * Portland OR 09/15/16 60,680 100.0% 829 Safeway Supermarket Division Center * Portland OR 04/05/17 121,904 100.0% 1,985 Grocery Outlet Supermarket, Rite Aid Pharmacy, Petco Riverstone Marketplace * Vancouver WA 10/11/17 95,774 100.0% 2,209 Kroger (QFC) Supermarket King City Plaza King City OR 05/18/18 62,676 100.0% 984 Grocery Outlet Supermarket Portland metro area total 1,755,503 99.5% $ 31,374 Pacific Northwest Totals 3,698,208 99.4% $ 71,304 TOTAL SHOPPING CENTERS 10,093,396 97.9% $ 211,166 (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 2019. - 13 -
Supplemental Disclosure Same-Center Cash Net Operating Income Analysis Quarter Ended June 30, 2019 (unaudited, dollars in thousands) Three Months Ended Six Months Ended 06/30/19 06/30/18 $ Change % Change 06/30/19 06/30/18 $ Change % Change Number of shopping centers included in same-center analysis (1) 87 87 86 86 Same-center occupancy 97.9% 97.5% 0.4% 97.9% 97.5% 0.4% REVENUES: Base rents $ 51,017 $ 48,921 $ 2,096 4.3% $ 100,935 $ 96,948 $ 3,987 4.1% Percentage rent 46 88 (42) (47.7%) 130 196 (66) (33.7%) Recoveries from tenants 16,495 16,027 468 2.9% 33,141 31,602 1,539 4.9% Other property income 846 812 34 4.2% 1,440 1,283 157 12.2% Bad debt (2) (297) - (297) N/A (913) - (913) N/A TOTAL REVENUES 68,107 65,848 2,259 3.4% 134,733 130,029 4,704 3.6% OPERATING EXPENSES: Property operating expenses 11,139 10,689 450 4.2% 21,925 20,706 1,219 5.9% Bad debt (2) - 228 (228) N/A - 313 (313) N/A Property taxes 7,677 7,810 (133) (1.7)% 15,600 15,374 226 1.5% TOTAL OPERATING EXPENSES 18,816 18,727 89 0.5% 37,525 36,393 1,132 3.1% SAME-CENTER CASH NET OPERATING INCOME $ 49,291 $ 47,121 $ 2,170 4.6% $ 97,208 $ 93,636 $ 3,572 3.8% SAME-CENTER CASH NET OPERATING INCOME RECONCILIATION GAAP Operating Income $ 23,951 $ 23,815 $ 54,213 $ 51,096 Depreciation and amortization 24,443 25,331 49,204 50,548 General and administrative expenses 4,950 3,990 9,226 7,521 Other expense 1,224 274 1,317 343 Gain on sale of real estate (180) - (2,818) - Straight-line rent (546) (1,410) (1,726) (2,881) Amortization of above- and below-market rent (3,460) (3,143) (9,938) (7,218) Property revenues and other expenses (3) 43 113 237 135 TOTAL COMPANY CASH NET OPERATING INCOME 50,425 48,970 99,715 99,544 Non Same-Center Cash NOI (1,134) (1,849) (2,507) (5,908) SAME-CENTER CASH NET OPERATING INCOME $ 49,291 $ 47,121 $ 97,208 $ 93,636 (1) Same centers are those properties which were owned for the entirety of the current and comparable prior year period. (2) In connection with the adoption of the lease accounting standard ASU No. 2016-2, effective January 1, 2019, bad debt is now classified as an offset to revenue instead of being included in operating expenses. (3) Includes anchor lease termination fees net of contractual amounts, if any, expense and recovery adjustments related to prior periods and other miscellaneous adjustments. 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, 2019 (dollars in thousands) Percent Number of Leased of Total Percent of Tenant Leases GLA Leased GLA ABR Total ABR 1 Albertson's / Safeway Supermarkets 19 951,600 9.6% $ 11,774 5.6% 2 Kroger Supermarkets 12 511,240 5.2% 7,500 3.5% 3 Rite Aid Pharmacy 12 232,586 2.4% 3,060 1.4% 4 JP Morgan Chase 21 95,163 1.0% 2,999 1.4% 5 Marshall's / TJMaxx 6 178,195 1.8% 2,819 1.3% 6 SaveMart Supermarkets 4 187,639 1.9% 2,813 1.3% 7 Sprouts Markets 4 159,163 1.6% 2,747 1.3% 8 Ross Dress For Less / dd's Discounts 7 191,703 1.9% 2,655 1.3% 9 Trader Joe's 8 96,714 1.0% 2,588 1.2% 10 H-Mart Supermarkets 3 147,040 1.5% 2,400 1.1% Top 10 Tenants Total 96 2,751,043 27.9% $ 41,355 19.4% Other Tenants 1,858 7,135,673 72.1% 170,332 80.6% Total Portfolio 1,954 9,886,716 100.0% $ 211,687 100.0% - 15 -
Supplemental Disclosure Lease Expiration Schedule Quarter Ended June 30, 2019 (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. 2019 3 74,255 0.8% $ 1,089 0.5% $ 14.67 2020 11 408,063 4.1% 4,234 2.0% 10.37 2021 14 425,104 4.3% 5,095 2.4% 11.99 2022 18 530,799 5.4% 7,055 3.3% 13.29 2023 26 836,758 8.5% 13,312 6.3% 15.91 2024 16 595,384 6.0% 9,523 4.5% 15.99 2025 12 396,260 4.0% 5,517 2.6% 13.92 2026 9 336,444 3.4% 4,707 2.2% 13.99 2027 8 212,350 2.1% 3,336 1.6% 15.71 2028 14 514,446 5.2% 9,342 4.4% 18.16 2029+ 29 1,110,598 11.2% 17,185 8.2% 15.47 160 5,440,461 55.0% $ 80,395 38.0% $ 14.78 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. 2019 95 187,439 1.9% $ 4,881 2.3% $ 26.04 2020 265 566,486 5.7% 16,170 7.6% 28.55 2021 296 613,573 6.2% 18,382 8.7% 29.96 2022 290 650,201 6.6% 19,617 9.3% 30.17 2023 267 627,130 6.3% 19,438 9.2% 30.99 2024 233 586,049 5.9% 17,263 8.1% 29.46 2025 76 241,441 2.4% 6,594 3.1% 27.31 2026 66 204,044 2.1% 6,067 2.9% 29.73 2027 57 191,667 1.9% 5,532 2.6% 28.86 2028 58 186,807 2.0% 6,422 3.0% 34.38 2029+ 91 391,418 4.0% 10,926 5.2% 27.91 1,794 4,446,255 45.0% $ 131,292 62.0% $ 29.53 All Tenants Number of Leased Percent of Total Percent of ABR Leases Expiring (2) GLA Total Leased GLA ABR Total ABR Per Sq. Ft. 2019 98 261,694 2.7% $ 5,970 2.8% $ 22.82 2020 276 974,549 9.8% 20,404 9.6% 20.94 2021 310 1,038,677 10.5% 23,477 11.1% 22.60 2022 308 1,181,000 12.0% 26,672 12.6% 22.58 2023 293 1,463,888 14.8% 32,750 15.5% 22.37 2024 249 1,181,433 11.9% 26,786 12.6% 22.67 2025 88 637,701 6.4% 12,111 5.7% 18.99 2026 75 540,488 5.5% 10,774 5.1% 19.93 2027 65 404,017 4.0% 8,868 4.2% 21.95 2028 72 701,253 7.2% 15,764 7.4% 22.48 2029+ 120 1,502,016 15.2% 28,111 13.4% 18.72 1,954 9,886,716 100.0% $ 211,687 100.0% $ 21.41 (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, 2019 For the Three Months Ended June 30, 2019 For the Six Months Ended June 30, 2019 New Leases Non-Anchor Anchor Total Non-Anchor Anchor Total Number of Leases 26 1 27 53 1 54 Gross Leasable Area (sq. ft.) 66,597 21,440 88,037 139,500 21,440 160,940 Initial Base Rent ($/sq. ft.) (1) $ 23.14 $ 16.50 $ 21.52 $ 25.80 $ 16.50 $ 24.56 Tenant Improvements ($/sq. ft.) $ 3.04 $ - $ 2.30 $ 3.36 $ - $ 2.91 Leasing Commissions ($/sq. ft.) $ 2.63 $ 5.00 $ 3.20 $ 2.70 $ 5.00 $ 3.01 Weighted Average Lease Term (Yrs.) (2) 4.6 15.6 7.3 5.9 15.6 7.2 Renewals Non-Anchor Anchor Total Non-Anchor Anchor Total Number of Leases 54 3 57 131 7 138 Gross Leasable Area (sq. ft.) 114,149 117,295 231,444 243,488 226,710 470,198 Initial Base Rent ($/sq. ft.) (1) $ 32.47 $ 13.97 $ 23.10 $ 32.60 $ 16.73 $ 24.95 Tenant Improvements ($/sq. ft.) $ 3.02 $ 2.98 $ 3.00 $ 1.55 $ - $ 0.81 Leasing Commissions ($/sq. ft.) $ 0.47 $ - $ 0.23 $ 0.22 $ - $ 0.11 Weighted Average Lease Term (Yrs.) (2) 5.9 4.7 5.3 5.3 6.3 5.8 Total Non-Anchor Anchor Total Non-Anchor Anchor Total Number of Leases 80 4 84 184 8 192 Gross Leasable Area (sq. ft.) 180,746 138,735 319,481 382,988 248,150 631,138 Initial Base Rent ($/sq. ft.) (1) $ 29.03 $ 14.36 $ 22.66 $ 30.12 $ 16.71 $ 24.85 Tenant Improvements ($/sq. ft.) $ 3.03 $ 2.52 $ 2.81 $ 2.21 $ 2.20 $ 2.21 Leasing Commissions ($/sq. ft.) $ 1.26 $ 0.77 $ 1.05 $ 1.12 $ 0.43 $ 0.85 Weighted Average Lease Term (Yrs.) (2) 5.4 6.4 5.8 5.5 7.1 6.1 (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, 2019 For the Three Months Ended June 30, 2019 For the Six Months Ended June 30, 2019 New Leases Non-Anchor Anchor Total Non-Anchor Anchor Total Comparative # of Leases 16 1 17 35 1 36 Comparative GLA (sq. ft.) (1) 30,157 21,440 51,597 69,916 21,440 91,356 Prior Base Rent ($/sq. ft.) (2) $ 33.42 $ 4.56 $ 21.43 $ 27.91 $ 4.56 $ 22.43 Initial Base Rent ($/sq. ft.) $ 34.95 $ 16.50 $ 27.28 $ 32.71 $ 16.50 $ 28.91 Percentage Change in Base Rents 4.6% 261.8% 27.3% 17.2% 261.8% 28.9% Tenant Improvements ($/sq. ft.) $ 2.07 $ - $ 1.21 $ 3.61 $ - $ 2.76 Leasing Commissions ($/sq. ft.) $ 3.27 $ 5.00 $ 3.99 $ 3.90 $ 5.00 $ 4.16 Weighted Average Lease Term (Yrs.) (3) 5.6 15.6 9.7 6.6 15.6 8.7 Renewals Non-Anchor Anchor Total Non-Anchor Anchor Total Comparative # of Leases 54 3 57 131 7 138 Comparative GLA (sq. ft.) 114,149 117,295 231,444 243,488 226,710 470,198 Prior Base Rent ($/sq. ft.) (2) $ 28.99 $ 12.94 $ 20.86 $ 29.80 $ 14.34 $ 22.35 Initial Base Rent ($/sq. ft.) $ 32.47 $ 13.97 $ 23.10 $ 32.60 $ 16.73 $ 24.95 Percentage Change in Base Rents 12.0% 8.0% 10.7% 9.4% 16.7% 11.6% Tenant Improvements ($/sq. ft.) $ 3.02 $ 2.98 $ 3.00 $ 1.55 $ 2.41 $ 1.97 Leasing Commissions ($/sq. ft.) $ 0.47 $ - $ 0.23 $ 0.22 $ - $ 0.11 Weighted Average Lease Term (Yrs.) (3) 5.9 4.7 5.3 5.3 6.3 5.8 Total Non-Anchor Anchor Total Non-Anchor Anchor Total Comparative # of Leases 70 4 74 166 8 174 Comparative GLA (sq. ft.) (1) 144,306 138,735 283,041 313,404 248,150 561,554 Prior Base Rent ($/sq. ft.) (2) $ 29.92 $ 11.65 $ 20.96 $ 29.38 $ 13.50 $ 22.36 Initial Base Rent ($/sq. ft.) $ 32.99 $ 14.36 $ 23.86 $ 32.63 $ 16.71 $ 25.59 Percentage Change in Base Rents 10.3% 23.3% 13.8% 11.0% 23.8% 14.5% Tenant Improvements ($/sq. ft.) $ 2.82 $ 2.52 $ 2.68 $ 2.01 $ 2.20 $ 2.10 Leasing Commissions ($/sq. ft.) $ 1.05 $ 0.77 $ 0.92 $ 1.04 $ 0.43 $ 0.77 Weighted Average Lease Term (Yrs.) (3) 5.8 6.4 6.1 5.6 7.1 6.3 (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 Leased vs. Billed Summary Quarter Ended June 30, 2019 (dollars in thousands) 06/30/19 03/31/19 % leased at beginning of quarter 97.8% 97.7% % billed at beginning of quarter 95.2% 94.9% ABR of new leases signed/not yet commenced - at beginning of quarter $ 6,520 $ 6,804 less: ABR of new leases commenced during quarter (1,872) (2,010) plus: ABR of new leases signed during quarter 1,599 1,726 ABR of new leases signed/not yet commenced - at end of quarter $ 6,247 $ 6,520 % leased at end of quarter 97.9% 97.8% % billed at end of quarter 95.3% 95.2% ABR of new leases commenced during quarter - actual cash received $ 371 $ 283 - 19 -
Supplemental Disclosure Investor Information Quarter Ended June 30, 2019 Retail Opportunity Investments Corp. www.roireit.net Investor Relations: Transfer Agent: NASDAQ: ROIC Carol Merriman Constance Adams 11250 El Camino Real, Suite 200 cmerriman@roireit.net ComputerShare San Diego, CA 92130 858.255.7426 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 Bank of Montreal Jeremy Metz 212.885.4053 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. Barry Oxford 212.240.9871 Green Street Vince Tibone 949.640.8780 J.P. Morgan Michael W. Mueller 212.622.6689 Jefferies Jonathan Petersen 212.284.1705 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 - 20 -