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8-K - 8-K - Excel Trust, Inc.d766731d8k.htm
EX-99.2 - EX-99.2 - Excel Trust, Inc.d766731dex992.htm

Exhibit 99.1

Excel Trust Announces Results For the Quarter Ended June 30, 2014 Declares Dividend

SAN DIEGO July 30, 2014— Excel Trust, Inc. (the “Company”) announced today financial and operating results for the quarter ended June 30, 2014. A supplemental financial package with additional information can be found on Excel Trust’s website under the Investor Relations tab.

Highlights for the Second Quarter 2014

 

    Reported Adjusted Funds from Operations (AFFO) for the quarter of approximately $12 million, or $0.24 per diluted share

 

    Reported Funds from Operations (FFO) for the quarter of approximately $10.7 million or $0.21 per diluted share

 

    Declared a third quarter 2014 dividend of $0.175 per share of common stock, which equates to an annualized dividend rate of $0.70 per share

 

    Issued $250 million in 4.625% 10-year Senior Unsecured Notes with a 4.691% yield to maturity

 

    Issued 12.65 million shares of common stock at a price of $13.25 per share, generating net proceeds of approximately $160.7 million

“We believe the progress we made in the second quarter will benefit the company for years to come,” said Gary Sabin, Chairman and CEO. “In May, we capitalized on our investment grade ratings by issuing $250 million of attractive, long-term, unsecured debt. In June, we successfully raised approximately $161 million in equity to help purchase several high quality properties currently under contract. These transactions mark important milestones for the company as they enhance the quality of our earnings, strengthen our balance sheet, and lay a foundation for future growth.”

Financial Results

Excel Trust reported Adjusted Funds From Operations (AFFO) for the second quarter of 2014 of $12.0 million, or $0.24 per diluted share and Funds From Operations (FFO) for the second quarter of $10.7 million or $0.21 per diluted share. Net loss attributable to the common stockholders for the second quarter was $0.8 million, or $0.02 per diluted share. This compares to AFFO of $10.7 million, or $0.22 per diluted share, FFO of $12.0 million or $0.25 per diluted share and net income attributable to the common stockholders of $0.6 million, or $0.1 per diluted share in the three-month period ended June 30, 2013.

Excel Trust reported AFFO for the six months ended June 30, 2014 of $23.8 million or $0.48 per diluted share and FFO of $22.1 million or $0.44 per diluted share. Net loss attributable to the common stockholders for the six months ended June 30, 2014 was $1.4 million or $0.03 per diluted share. The compares to AFFO of $20.7 million, or $0.44 per diluted share, FFO of $22.3 million or $0.47 per diluted share and a net loss attributable to the common stockholders of $1.8 million or $0.04 per diluted share in the six month period ended June 30, 2013.

Excel Trust considers AFFO and FFO important supplemental measures of its operating performance and believes that they are frequently used by securities analysts, investors and other interested parties in the evaluation of real estate investment trusts (REITs), many of which


present AFFO and FFO when reporting their results. A complete reconciliation containing adjustments from GAAP net income available to the common shareholders to AFFO and FFO and a definition of both are included at the end of this release.

Operating Results

At the end of the second quarter 2014, the retail portfolio was 94.0% leased compared to 93.7% in the first quarter 2014. Anchor space was 99.1% leased compared to 99.1% in the first quarter 2014 and inline space was 84.5% leased compared to 83.9% in the first quarter 2014.

During the second quarter 2014, the Company signed 49 retail leases and renewals, totaling 231,779 square feet. The average releasing spread on comparable new leases was 4.9%.

Same Store Net Operating Income (“SSNOI”) for the second quarter 2014 increased 1.8%.

Summary of Significant Activities During Second Quarter 2014

On May 12, 2014, the Company completed an underwritten public offering of $250.0 million aggregate principal amount of 4.625% Senior Unsecured Notes due 2024. The notes were priced at 99.477% of the principal amount to yield 4.691% to maturity. The notes will be senior unsecured obligations of the operating partnership and will be fully and unconditionally guaranteed by Excel Trust, Inc.

On June 25, 2014, the Company completed a public offering of 12.65 million shares of its common stock at a public offering price of $13.25 per share. After the underwriting discount and estimated offering expenses payable by the Company, the Company received net proceeds of approximately $160.7 million.

Third Quarter 2014 Dividends Declared

The Board of Directors declared a third quarter cash dividend of $0.175 per common share payable on October 15, 2014 to shareholders of record as of September 30, 2014.

The Board of Directors has also declared a dividend of $0.4375 per share on the Company’s Series A Cumulative Convertible Perpetual Preferred Shares, and a dividend of $0.5078 on its Series B Cumulative Redeemable Preferred Shares. The dividend on Excel Trust’s outstanding Series A and Series B Preferred Shares will be payable on October 15, 2014 to shareholders of record as of September 30, 2014.

Revised 2014 Guidance

Excel Trust is revising its previously announced guidance to incorporate recent debt and equity offerings. The Company expects its AFFO per share for fiscal year 2014 to be between $0.85 and $0.91and its FFO per share to be between $0.77 and $0.83. The Company will further discuss assumptions surrounding guidance tomorrow on the conference call.


Conference Call

In conjunction with Excel Trust’s results, you are invited to listen to its conference call on Thursday, July 31, 2014 at 1:00 p.m. Eastern Time.

PHONE: Conference call access information is as follows:

Dial in number: (800) 299-8538

International Dial in number: (617) 786-2902

Pass code: 34697712

INTERNET: A live webcast of the conference call will be available through Excel Trust’s web site at www.exceltrust.com.

REPLAY: A replay of the conference call will be made available through Excel Trust’s web site at www.exceltrust.com. A replay will also be available by phone for three days beginning at 4:00 p.m. ET on July 31, 2014. Replay access information is as follows:

Dial in number: (888) 286-8010

International Dial in number: (617) 801-6888

Pass code: 30082346

About Excel Trust

Excel Trust, Inc. is a retail focused REIT that primarily targets community and power centers, grocery anchored neighborhood centers and freestanding retail properties. The Company has elected to be treated as a REIT, for U.S. federal income tax purposes. Excel Trust trades publicly on the NYSE under the symbol “EXL”. For more information on Excel Trust, Inc., please visit www.exceltrust.com.

Forward Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 based on current expectations, forecasts and assumptions that involve risks and uncertainties that could cause actual outcomes and results to differ materially. These risks and uncertainties include, without limitation: general risks affecting the real estate industry (including, without limitation, the inability to enter into or renew leases, dependence on tenants’ financial condition, and competition from other developers, owners and operators of real estate); adverse economic or real estate developments in the retail industry or the markets in which the Company operates; increased interest rates and operating costs; decreased rental rates or increased vacancy rates; the Company’s failure to obtain necessary outside financing on favorable terms or at all; changes in the availability of additional acquisition opportunities; the Company’s inability to successfully complete real estate acquisitions or successfully operate acquired properties; the Company’s failure to qualify or maintain its status as a REIT; risks associated with the Company’s dependence on key personnel whose continued service is not guaranteed; and risks associated with downturns in domestic and local economies, and volatility in the securities markets. For a further list and description of such risks and uncertainties, see the reports filed by the Company with the Securities and Exchange Commission, including the Company’s most recent annual report on Form 10-K and


quarterly reports on Form 10-Q. The Company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Funds From Operations (FFO) and Adjusted Funds From Operations (AFFO)

Excel Trust considers FFO and AFFO to be important supplemental measures of its operating performance and believes they are frequently used by securities analysts, investors and other interested parties in the evaluation of REITs, many of which present FFO and AFFO when reporting their results. FFO and AFFO are intended to exclude GAAP historical cost depreciation and amortization of real estate and related assets, which assumes that the value of real estate assets diminishes ratably over time. Historically, however, real estate values have risen or fallen with market conditions. Because FFO and AFFO exclude depreciation and amortization unique to real estate, gains and losses from property dispositions and extraordinary items, they provide a performance measure that, when compared year-over-year, reflects the impact to operations from trends in occupancy rates, rental rates, operating costs, development activities and interest costs, providing perspective not immediately apparent from net income.

Excel Trust computes FFO in accordance with standards established by the National Association of Real Estate Investment Trusts, or NAREIT. As defined by NAREIT, FFO represents net income (loss) (computed in accordance with generally accepted accounting principles, or GAAP), excluding real estate-related depreciation and amortization, impairment charges and net gains (losses) on the disposition of assets and after adjustments for unconsolidated partnerships and joint ventures. Excel Trust computes AFFO by adding to FFO the non-cash compensation expense, amortization of prepaid financing costs and non-recurring transaction costs, and other one-time items, then subtracting or adding straight-line rents, amortization of above and below market leases and non-incremental capital expenditures. Excel Trust’s computation of FFO and AFFO may differ from the methodology for calculating FFO and AFFO utilized by other equity REITs and, accordingly, may not be comparable to such other REITs. Further, FFO and AFFO do not represent amounts available for management’s discretionary use because of needed capital replacement or expansion, debt service obligations, or other commitments and uncertainties.

FFO and AFFO should not be considered alternatives to net income (loss) (computed in accordance with GAAP) as an indicator of Excel Trust’s financial performance or to cash flow from operating activities (computed in accordance with GAAP) as an indicator of Excel Trust’s liquidity, nor are they indicative of funds available to fund Excel Trust’s cash needs, including Excel Trust’s ability to pay dividends or make distributions.

Summarized Financial Statements

Reported results are preliminary and not final until the filing of Excel Trust’s Form 10-Q or 10-K with the Securities and Exchange Commission and, therefore, remain subject to adjustment. The accompanying notes to follow in the Form 10-Q or 10-K are an integral part of these consolidated financial statements.


Excel Trust Consolidated Balance Sheet

CONSOLIDATED BALANCE SHEETS

(Dollars in thousands)

 

     June 30, 2014     December 31, 2013  

ASSETS:

    

Property:

    

Land

   $ 380,363      $ 380,366   

Buildings

     647,401        642,356   

Site improvements

     64,769        63,242   

Tenant improvements

     56,459        54,025   

Construction in progress

     14,980        7,576   

Less accumulated depreciation

     (75,834     (61,479
  

 

 

   

 

 

 

Property, net

     1,088,138        1,086,086   

Cash and cash equivalents

     183,749        3,245   

Restricted cash

     6,973        8,147   

Tenant receivables, net

     3,205        5,117   

Lease intangibles, net

     68,213        78,345   

Deferred rent receivable

     10,342        9,226   

Other assets (1)

     22,572        20,135   

Real estate held for sale, net of accumulated amortization

     —          —     

Investment in unconsolidated entities

     8,303        8,520   
  

 

 

   

 

 

 

Total assets

   $ 1,391,495      $ 1,218,821   
  

 

 

   

 

 

 

LIABILITIES AND EQUITY:

    

Liabilities:

    

Mortgages payable, net

   $ 207,048      $ 251,191   

Notes payable

     —          179,500   

Unsecured notes

     348,693        100,000   

Accounts payable and other liabilities

     29,110        21,700   

Lease intangibles, net

     25,845        28,114   

Dividends/distributions payable

     13,160        10,932   
  

 

 

   

 

 

 

Total liabilities

     623,856        591,437   

Equity:

    

Total stockholders’ equity

     755,611        615,446   

Non-controlling interests

     12,028        11,938   
  

 

 

   

 

 

 

Total equity

     767,639        627,384   
  

 

 

   

 

 

 

Total liabilities and equity

   $ 1,391,495      $ 1,218,821   
  

 

 

   

 

 

 

 

(1) Other assets is primarily comprised of deposits, notes receivable, prepaid expenses and furniture, fixtures, and equipment


Excel Trust Consolidated Statement of Operations

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data and dividends per share)

 

     Three Months Ended
June 30, 2014
    Three Months Ended
June 30, 2013
    Six Months Ended
June 30, 2014
    Six Months Ended
June 30, 2013
 

Revenues:

        

Rental revenue

   $ 25,179      $ 22,227      $ 50,086      $ 44,129   

Tenant recoveries

     4,855        4,446        10,110        9,076   

Other income

     596        285        1,030        601   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total revenues

     30,630        26,958        61,226        53,806   

Expenses:

        

Maintenance and repairs

     2,186        1,737        4,409        3,418   

Real estate taxes

     2,930        2,992        6,295        5,958   

Management fees

     519        415        1,037        633   

Other operating expenses

     1,615        1,354        3,346        2,862   

Changes in fair value of contingent consideration

     —          (1,558     —          (1,558

General and administrative

     4,158        3,306        7,973        7,137   

Depreciation and amortization

     11,411        10,810        23,207        22,976   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total expenses

     22,819        19,056        46,267        41,426   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net operating income

     7,811        7,902        14,959        12,380   

Interest expense

     (5,981     (4,444     (10,970     (9,022

Interest income

     54        48        103        97   

Income (loss) from equity in unconsolidated entities

     95        (65     165        (25

Gain on acquisition of real estate and sale of land parcel

     —          —          —          —     

Changes in fair value of financial instruments and gain on OP unit redemption

     —          —          —          230   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss) from continuing operations

     1,979        3,441        4,257        3,660   

Income from discontinued operations before gain on sale of real estate assets

     —          31        —          136   

Gain on sale of real estate assets

     —          —          —          —     
  

 

 

   

 

 

   

 

 

   

 

 

 

Income from discontinued operations

     —          31        —          136   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss)

     1,979        3,472        4,257        3,796   

Net (income) loss attributable to non-controlling interests

     (74     (105     (157     (133
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss) attributable to Excel Trust, Inc.

     1,905        3,367        4,100        3,663   

Preferred stock dividends

     (2,744     (2,744     (5,488     (5,488
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss) attributable to the common stockholders

   $ (839   $ 623      $ (1,388   $ (1,825
  

 

 

   

 

 

   

 

 

   

 

 

 

Basic and diluted net income (loss) per share

   $ (0.02   $ 0.01      $ (0.03   $ (0.04
  

 

 

   

 

 

   

 

 

   

 

 

 

Weighted-average common shares outstanding - basic and diluted

     48,567        47,150        48,178        46,256   
  

 

 

   

 

 

   

 

 

   

 

 

 

The notes in the Form 10-Q or 10-K are an integral part of these condensed consolidated financial statements.


RECONCILIATION OF NET INCOME TO FFO AND AFFO

For the Periods Ended June 30, 2014

(In thousands, except per share data)

Excel Trust, Inc.’s FFO and AFFO available to common stockholders and operating partnership unitholders and a reconciliation to net income(loss) for the three and six months ended June 30, 2014 and 2013 is as follows:

 

     Three Months Ended
June 30, 2014
    Three Months Ended
June 30, 2013
    Six Months Ended
June 30, 2014
    Six Months Ended
June 30, 2013
 

Net income (loss) attributable to the common stockholders

   $ (839   $ 623      $ (1,388   $ (1,825

Add:

        

Non-controlling interests in operating partnership

     (16     20        (26     (39

Depreciation and amortization

     11,411        11,149        23,207        23,540   

Deduct:

        

Depreciation and amortization related to joint venture

     156        255        326        666   
  

 

 

   

 

 

   

 

 

   

 

 

 

Funds from operations

   $ 10,712      $ 12,047      $ 22,119      $ 22,342   

Adjustments:

        

Transaction costs

     171        313        477        447   

Deferred financing costs

     499        419        923        913   

Stock-based and other non-cash compensation expense

     1,390        568        1,964        1,130   

Changes in fair value of contingent consideration

     —          (1,558     —          (1,558

Changes in fair value of financial instruments

     —          —          —          (230

Straight-line effects of lease revenue

     (524     (1,100     (1,116     (1,977

Amortization of above- and below-market leases

     (222     179        (360     219   

Non-incremental capital expenditures

     (68     (234     (179     (350

Non-cash expenses (income) related to joint venture

     (8     16        (17     (281
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted funds from operations

   $ 11,950      $ 10,650      $ 23,811      $ 20,655   
  

 

 

   

 

 

   

 

 

   

 

 

 

Weighted average common shares outstanding

     48,567        47,150        48,178        46,256   

Add:

        

OP units

     1,020        1,225        1,020        1,233   

Restricted stock

     747        213        —          223   

Contingent consideration related to business combinations

     —          —            —     

LTIP restricted stock

     —          94        —          94   
  

 

 

   

 

 

   

 

 

   

 

 

 

Weighted average common shares outstanding—diluted (FFO and AFFO)

     50,334        48,682        49,198        47,806   
  

 

 

   

 

 

   

 

 

   

 

 

 

Funds from operations per share (diluted)

   $ 0.21      $ 0.25      $ 0.44      $ 0.47   

Adjusted funds from operations per share (diluted)

   $ 0.24      $ 0.22      $ 0.48      $ 0.44   
  

 

 

   

 

 

   

 

 

   

 

 

 

Other Information:

        

Leasing commissions paid

   $ 216      $ 462      $ 488      $ 970   

Tenant improvements paid

   $ 771      $ 711      $ 2,028      $ 3,092