Attached files
| file | filename |
|---|---|
| EX-99.1 - EXHIBIT 99.1 - RETAIL PROPERTIES OF AMERICA, INC. | ex-9913x31x16.htm |
| 8-K - 8-K - RETAIL PROPERTIES OF AMERICA, INC. | form8-k3x31x16.htm |
Exhibit 99.2
RETAIL PROPERTIES OF AMERICA, INC. REPORTS
FIRST QUARTER SAME STORE NOI INCREASE OF 3.1%
Oak Brook, IL – May 2, 2016 – Retail Properties of America, Inc. (NYSE: RPAI) (the “Company”) today reported financial and operating results for the quarter ended March 31, 2016.
FINANCIAL RESULTS
For the quarter ended March 31, 2016, the Company reported:
▪ | Operating funds from operations (Operating FFO) attributable to common shareholders of $65.7 million, or $0.28 per share, compared to $62.3 million, or $0.26 per share, for the same period in 2015; |
▪ | Funds from operations (FFO) attributable to common shareholders of $76.4 million, or $0.32 per share, compared to $60.5 million, or $0.26 per share, for the same period in 2015; |
▪ | Net income attributable to common shareholders of $45.1 million, or $0.19 per share, compared to $10.7 million, or $0.05 per share, for the same period in 2015; and |
▪ | Results for the quarter ended March 31, 2016 included the following: |
▪ | $1.8 million of Circuit City Stores, Inc. (Circuit City) bankruptcy proceeds, consisting of $1.1 million of termination fee income and $0.7 million of bad debt recovery; and |
▪ | $0.8 million of bad debt expense related to The Sports Authority, Inc. (Sports Authority) bankruptcy. |
OPERATING RESULTS
For the quarter ended March 31, 2016, the Company’s portfolio results were as follows:
▪ | 3.1% increase in same store net operating income (NOI) over the comparable period in 2015, which included the following: |
▪ | a contribution of 75 basis points from bad debt recovery attributable to Circuit City bankruptcy proceeds; and |
▪ | a reduction of 80 basis points from bad debt expense related to the Sports Authority bankruptcy. |
▪ | Total same store portfolio percent leased, including leases signed but not commenced: 95.2% at March 31, 2016, down 50 basis points from 95.7% at December 31, 2015 and down 40 basis points from 95.6% at March 31, 2015; |
▪ | Total portfolio percent leased, including leases signed but not commenced: 94.7% at both March 31, 2016 and March 31, 2015, down 40 basis points from 95.1% at December 31, 2015; |
▪ | Retail portfolio percent leased, including leases signed but not commenced: 94.6% at March 31, 2016, up 10 basis points from 94.5% at March 31, 2015 and down 30 basis points from 94.9% at December 31, 2015; |
▪ | Retail portfolio annualized base rent (ABR) per occupied square foot of $16.64 at March 31, 2016, up 6.0% from $15.70 ABR per occupied square foot at March 31, 2015; |
▪ | 789,000 square feet of retail leasing transactions comprised of 140 new and renewal leases; and |
▪ | Positive comparable cash blended leasing spreads of 6.7%, consisting of 7.3% on renewal leases and 1.8% on new leases. Excluding the impact from eight Rite Aid leases within the |
n Retail Properties of America, Inc.
T: 800.541.7661
www.rpai.com 2021 Spring Road, Suite 200
Oak Brook, IL 60523
Company’s single-user retail portfolio that were extended to effectuate the planned 2016 disposition of these assets, comparable cash blended leasing spreads were 8.0%, including 8.9% on renewal leases.
“We are pleased to report another solid quarter of financial and operational results, with same store NOI growth of 3.1% and strong leasing spreads,” stated Steve Grimes, president and chief executive officer. “In addition, we continue to execute on our strategic plan, with notable additional progress on our 2016 disposition goals with 40% of our targeted amount closed or under contract.”
INVESTMENT ACTIVITY
Dispositions
During the quarter, the Company completed $127.9 million of dispositions, including the sales of two non-target multi-tenant retail assets for $92.5 million and six single-user retail assets for $35.4 million. Subsequent to quarter end, the Company completed the sale of a single-user retail asset for $4.7 million.
Additionally, the Company is under contract to sell two non-target multi-tenant retail assets for $97.8 million and nine single-user retail assets for $31.5 million. These transactions are expected to close during the second or third quarter of 2016, subject to satisfaction of customary closing conditions. Year to date, the Company has completed or is under contract for $261.9 million of dispositions.
Acquisitions
During the quarter, the Company completed $138.7 million of previously announced acquisitions, including Merrifield Town Center II and Shoppes at Hagerstown, both located in the greater Washington, D.C./Baltimore area, and Oak Brook Promenade located in the Chicago Metropolitan Statistical Area (MSA). Subsequent to quarter end, the Company closed on the previously announced acquisition of The Shoppes at Union Hill located in the New York MSA for $63.1 million, which includes the assumption of mortgage debt with a principal balance of $16.0 million and an interest rate of 3.75% that matures in 2031. In addition, the Company acquired the fee interest in one of its multi-tenant retail properties for a gross purchase price of $13.9 million.
Year to date, the Company has completed $215.7 million of acquisitions, primarily on an unencumbered basis, with a weighted average ABR per occupied square foot of $24.90.
BALANCE SHEET AND CAPITAL MARKETS ACTIVITY
As of March 31, 2016, the Company had approximately $2.3 billion of consolidated indebtedness, which resulted in a net debt to adjusted EBITDA ratio of 5.7x, or a net debt and preferred stock to adjusted EBITDA ratio of 6.1x. Consolidated indebtedness had a weighted average contractual interest rate of 4.27% and a weighted average maturity of 4.7 years.
During the quarter, the Company completed the previously announced disposition of The Gateway for $75.0 million through a lender-directed sale in full satisfaction of its mortgage obligation of approximately $94.4 million. The mortgage had an interest rate of 6.57%. Immediately prior to the disposition, the lender reduced the Company’s loan obligation to $75.0 million which was assumed by the buyer in connection with the disposition, resulting in a gain on extinguishment of debt of $13.7 million and a gain on sale of $3.9 million. Subsequent to quarter end, the Company repaid $6.6 million of mortgage debt, excluding amortization, with an interest rate of 7.30% and assumed a $16.0 million mortgage with an interest rate of 3.75% that matures in 2031 in connection with the acquisition of The Shoppes at Union Hill.
ii
During the quarter, the Company closed on the previously announced $1.2 billion amended and restated unsecured credit facility, which increased total capacity by $200.0 million, extended the term by a weighted average of 2.2 years and lowered the interest rate by a weighted average of 13 basis points.
In addition, during the quarter, the Company entered into an interest rate swap agreement to effectively fix the interest rate on $100.0 million of borrowings under its $250.0 million unsecured term loan at 0.6591% plus a credit spread through December 31, 2017. As of March 31, 2016, the all-in rate was 1.9591%.
GUIDANCE
The Company is increasing its 2016 Operating FFO guidance to a range of $1.03 to $1.07 per share from $1.01 to $1.05 per share, as detailed below:
▪ | Maintaining its 2016 same store NOI growth guidance range of 2.5% to 3.5%; |
▪ | Maintaining its 2016 general and administrative expenses guidance range of $45 to $47 million; |
▪ | Increasing its 2016 disposition guidance to a range of $600 to $700 million from $525 to $625 million; |
▪ | Maintaining its 2016 acquisition guidance range of $375 to $475 million; and |
▪ | Issuing $250 million of unsecured debt capital during the fourth quarter of 2016 rather than the first half of 2016, depending on market conditions. |
The following table reconciles the Company’s previous 2016 Operating FFO guidance range to the Company’s updated 2016 Operating FFO guidance range:
Low | High | ||||||
Previous 2016 Operating FFO attributable to common shareholders per common share outstanding | $ | 1.01 | $ | 1.05 | |||
Impact of 2016 net investment activity | 0.01 | 0.01 | |||||
Interest expense | 0.01 | 0.01 | |||||
Updated 2016 Operating FFO attributable to common shareholders per common share outstanding | $ | 1.03 | $ | 1.07 | |||
DIVIDEND
On April 26, 2016, the Company’s Board of Directors declared the second quarter 2016 Series A preferred stock distribution of $0.4375 per preferred share, for the period beginning April 1, 2016, which will be paid on June 30, 2016 to preferred shareholders of record on June 20, 2016.
On April 26, 2016, the Company’s Board of Directors also declared the second quarter 2016 quarterly cash dividend of $0.165625 per share on the Company’s outstanding Class A common stock, which will be paid on July 8, 2016 to Class A common shareholders of record on June 27, 2016.
WEBCAST AND SUPPLEMENTAL INFORMATION
The Company’s management team will hold a webcast on Tuesday, May 3, 2016 at 11:00 AM (EDT), to discuss its quarterly financial results and operating performance, as well as business highlights and outlook. In addition, the Company may discuss business and financial developments and trends and other matters affecting the Company, some of which may not have been previously disclosed.
iii
A live webcast will be available online on the Company’s website at www.rpai.com in the Investor Relations section. The conference call can be accessed by dialing (877) 705-6003 or (201) 493-6725 for international participants. Please dial in at least ten minutes prior to the start of the call to register.
A replay of the webcast will be available. To listen to the replay, please go to www.rpai.com in the Investor Relations section of the website and follow the instructions. A replay of the call will be available from 2:00 PM (EDT) on May 3, 2016 until midnight (EDT) on May 17, 2016. The replay can be accessed by dialing (877) 870-5176 or (858) 384-5517 for international callers and entering pin number 13632428.
The Company has also posted supplemental financial and operating information and other data in the Investor Relations section of its website.
ABOUT RPAI
Retail Properties of America, Inc. is a REIT and is one of the largest owners and operators of high quality, strategically located shopping centers in the United States. As of March 31, 2016, the Company owned 192 retail operating properties representing 28.3 million square feet. The Company is publicly traded on the New York Stock Exchange under the ticker symbol RPAI. Additional information about the Company is available at www.rpai.com.
SAFE HARBOR LANGUAGE
The statements and certain other information contained in this press release, which can be identified by the use of forward-looking terminology such as “believes,” “expects,” “may,” “should,” “intends,” “plans,” “estimates,” “continues” or “anticipates” and variations of such words or similar expressions or the negative of such words, constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and are subject to the safe harbors created thereby. These forward-looking statements reflect the Company’s current views about its plans, intentions, expectations, strategies and prospects, which are based on the information currently available to the Company and on assumptions it has made. Although the Company believes that its plans, intentions, expectations, strategies and prospects as reflected in or suggested by those forward-looking statements are reasonable, the Company can give no assurance that such plans, intentions, expectations or strategies will be attained or achieved. Furthermore, these forward-looking statements should be considered as subject to the many risks and uncertainties that exist in the Company’s operations and business environment. Such risks and uncertainties could cause actual results to differ materially from those projected. These uncertainties include, but are not limited to, economic, business and financial conditions, and changes in the Company’s industry and changes in the real estate markets in particular, rental rates and/or vacancy rates, frequency and magnitude of defaults on, early terminations of or non-renewal of leases by tenants, bankruptcy or insolvency of a major tenant or a significant number of smaller tenants, including The Sports Authority, Inc., which filed for bankruptcy during the three months ended March 31, 2016, interest rates or operating costs, real estate valuations, potentially resulting in impairment charges, the availability, terms and deployment of capital, general volatility of the capital and credit markets and the market price of the Company’s Class A common stock, risks generally associated with real estate acquisitions, dispositions and redevelopment, including the impact of construction delays and cost overruns, the Company’s ability to effectively manage growth, competitive and cost factors, the ability of the Company to enter into new leases or renew leases on favorable terms, the Company's ability to create long-term shareholder value, satisfaction of closing conditions to the pending transactions described herein, the Company’s failure to successfully execute its non-target disposition program and capital recycling efforts, regulatory changes and other risk factors, including those detailed in the sections of the Company’s most recent Forms 10-K and 10-Q filed with the SEC titled “Risk Factors”. The Company assumes no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise.
NON-GAAP FINANCIAL MEASURES
As defined by the National Association of Real Estate Investment Trusts (NAREIT), an industry trade group, Funds From Operations (FFO) means net income (loss) computed in accordance with generally accepted accounting principles (GAAP), excluding gains (or losses) from sales of depreciable real estate, plus depreciation and amortization and impairment charges on depreciable real estate. The Company has adopted the NAREIT definition in its computation of FFO attributable to common shareholders. The Company believes that, subject to the following limitations, FFO attributable to common shareholders provides a basis for comparing its performance and operations to those of other
iv
real estate investment trusts (REITs). The Company believes that FFO attributable to common shareholders, which is a non-GAAP performance measure, provides an additional and useful means to assess the operating performance of REITs. FFO attributable to common shareholders does not represent an alternative to “Net Income” or “Net Income Attributable to Common Shareholders” as an indicator of the Company’s performance or “Cash Flows from Operating Activities” as determined by GAAP as a measure of the Company’s capacity to fund cash needs, including the payment of dividends.
The Company also reports Operating FFO attributable to common shareholders, which is defined as FFO attributable to common shareholders excluding the impact of discrete non-operating transactions and other events which the Company does not consider representative of the comparable operating results of the Company’s core business platform, its real estate operating portfolio. Specific examples of discrete non-operating transactions and other events include, but are not limited to, the financial statement impact of gains or losses associated with the early extinguishment of debt or other liabilities, impairment charges to write down the carrying value of assets other than depreciable real estate, actual or anticipated settlement of litigation involving the Company and executive and realignment separation charges, which are otherwise excluded from the Company’s calculation of FFO attributable to common shareholders. The Company believes that Operating FFO attributable to common shareholders, which is a non-GAAP performance measure, provides an additional and useful means to assess the operating performance of REITs. Operating FFO attributable to common shareholders does not represent an alternative to “Net Income” or “Net Income Attributable to Common Shareholders” as an indicator of the Company’s performance or “Cash Flows from Operating Activities” as determined by GAAP as a measure of the Company’s capacity to fund cash needs, including the payment of dividends. Further, comparison of the Company’s presentation of Operating FFO attributable to common shareholders to similarly titled measures for other REITs may not necessarily be meaningful due to possible differences in definition and application by such REITs.
The Company also reports NOI and same store NOI. The Company defines NOI as operating revenues (rental income, tenant recovery income and other property income, excluding straight-line rental income, amortization of lease inducements, amortization of acquired above and below market lease intangibles and lease termination fee income) less property operating expenses (real estate tax expense and property operating expense, excluding straight-line ground rent expense, amortization of acquired ground lease intangibles and straight-line bad debt expense). Same Store NOI represents NOI from the Company’s same store portfolio consisting of 178 retail operating properties acquired or placed in service and stabilized prior to January 1, 2015. NOI from Other Investment Properties represents NOI primarily from properties acquired during 2015 and 2016, the Company’s development property, the Company’s one remaining office property, three properties where the Company has begun activities in anticipation of future redevelopment, the properties that were sold or held for sale in 2015 and 2016 and the net income from the Company’s wholly-owned captive insurance company, which was formed on December 1, 2014. NOI consists of the sum of Same Store NOI and NOI from Other Investment Properties. The Company believes that NOI, Same Store NOI and NOI from Other Investment Properties are useful measures of the Company’s operating performance. Other REITs may use different methodologies for calculating these metrics, and accordingly, the Company’s NOI metrics may not be comparable to other REITs. The Company believes that these metrics provide an operating perspective not immediately apparent from Operating income or Net income attributable to common shareholders as defined within GAAP. The Company uses these metrics to evaluate its performance on a property-by-property basis because these measures allow management to evaluate the impact that factors such as lease structure, lease rates and tenant base, which vary by property, have on the Company’s operating results. However, these measures should only be used as alternative measures of the Company’s financial performance.
Adjusted EBITDA represents net income attributable to common shareholders before interest, income taxes, depreciation and amortization, as further adjusted to eliminate the impact of certain items that the Company does not consider indicative of its ongoing performance. The Company believes that Adjusted EBITDA is useful because it allows investors and management to evaluate and compare its performance from period to period in a meaningful and consistent manner in addition to standard financial measurements under GAAP. Adjusted EBITDA is not a measurement of financial performance under GAAP and should not be considered as an alternative to net income attributable to common shareholders as an indicator of operating performance or any measure of performance derived in accordance with GAAP. The Company’s calculation of Adjusted EBITDA may be different from the calculation used by other companies and, accordingly, comparability may be limited.
Net Debt to Adjusted EBITDA represents (i) the Company’s total borrowed debt, excluding unamortized premium, discount and capitalized loan fees, less cash and cash equivalents divided by (ii) Adjusted EBITDA for the prior three months, annualized. The Company believes that this ratio is useful because it provides investors with information regarding total borrowed debt net of cash and cash equivalents, which could be used to repay borrowed debt, compared to the Company’s performance as measured using Adjusted EBITDA.
v
Net Debt and Preferred Stock to Adjusted EBITDA represents (i) the Company’s total borrowed debt, excluding unamortized premium, discount and capitalized loan fees, plus preferred stock, less cash and cash equivalents divided by (ii) Adjusted EBITDA for the prior three months, annualized. The Company believes that this ratio is useful because it provides investors with information regarding total borrowed debt and preferred stock, net of cash and cash equivalents, which could be used to repay borrowed debt, compared to the Company’s performance as measured using Adjusted EBITDA.
CONTACT INFORMATION
Michael Fitzmaurice, VP – Finance
Retail Properties of America, Inc.
(630) 634-4233
vi
Retail Properties of America, Inc.
FFO Attributable to Common Shareholders and
Operating FFO Attributable to Common Shareholders Guidance
Per Share Guidance Range Full Year 2016 | ||||||||
Low | High | |||||||
Net income attributable to common shareholders | $ | 0.94 | $ | 0.98 | ||||
Depreciation and amortization | 0.90 | 0.90 | ||||||
Provision for impairment of investment properties | — | — | ||||||
Gain on sales of investment properties | (0.74 | ) | (0.74 | ) | ||||
FFO attributable to common shareholders | $ | 1.10 | $ | 1.14 | ||||
Impact on earnings from the early extinguishment of debt, net | (0.05 | ) | (0.05 | ) | ||||
Provision for hedge ineffectiveness | — | — | ||||||
Provision for impairment of non-depreciable investment property | 0.01 | 0.01 | ||||||
Gain on extinguishment of other liabilities | (0.03 | ) | (0.03 | ) | ||||
Operating FFO attributable to common shareholders | $ | 1.03 | $ | 1.07 | ||||
vii
Retail Properties of America, Inc.
Condensed Consolidated Balance Sheets
(amounts in thousands, except par value amounts)
(unaudited)
March 31, 2016 | December 31, 2015 | |||||||
Assets | ||||||||
Investment properties: | ||||||||
Land | $ | 1,266,307 | $ | 1,254,131 | ||||
Building and other improvements | 4,428,741 | 4,428,554 | ||||||
Developments in progress | 3,000 | 5,157 | ||||||
5,698,048 | 5,687,842 | |||||||
Less accumulated depreciation | (1,458,841 | ) | (1,433,195 | ) | ||||
Net investment properties (includes $60,400 and $0 from consolidated variable interest entities, respectively) | 4,239,207 | 4,254,647 | ||||||
Cash and cash equivalents | 100,588 | 51,424 | ||||||
Accounts and notes receivable (net of allowances of $7,085 and $7,910, respectively) | 73,774 | 82,804 | ||||||
Acquired lease intangible assets, net | 142,788 | 138,766 | ||||||
Assets associated with investment properties held for sale | 2,843 | — | ||||||
Other assets, net | 128,610 | 93,610 | ||||||
Total assets | $ | 4,687,810 | $ | 4,621,251 | ||||
Liabilities and Equity | ||||||||
Liabilities: | ||||||||
Mortgages payable, net (includes unamortized premium of $1,758 and $1,865, respectively, unamortized discount of $(1) and $(1), respectively, and unamortized capitalized loan fees of $(6,630) and $(7,233), respectively) | $ | 1,026,443 | $ | 1,123,136 | ||||
Unsecured notes payable, net (includes unamortized discount of $(1,060) and ($1,090), respectively, and unamortized capitalized loan fees of $(3,233) and $(3,334), respectively) | 495,707 | 495,576 | ||||||
Unsecured term loans, net (includes unamortized capitalized loan fees of $(3,290) and $(2,474), respectively) | 446,710 | 447,526 | ||||||
Unsecured revolving line of credit | 280,000 | 100,000 | ||||||
Accounts payable and accrued expenses | 51,370 | 69,800 | ||||||
Distributions payable | 39,311 | 39,297 | ||||||
Acquired lease intangible liabilities, net | 113,900 | 114,834 | ||||||
Other liabilities | 72,951 | 75,745 | ||||||
Total liabilities | 2,526,392 | 2,465,914 | ||||||
Commitments and contingencies | ||||||||
Equity: | ||||||||
Preferred stock, $0.001 par value, 10,000 shares authorized, 7.00% Series A cumulative redeemable preferred stock, 5,400 shares issued and outstanding as of March 31, 2016 and December 31, 2015; liquidation preference $135,000 | 5 | 5 | ||||||
Class A common stock, $0.001 par value, 475,000 shares authorized, 237,347 and 237,267 shares issued and outstanding as of March 31, 2016 and December 31, 2015, respectively | 237 | 237 | ||||||
Additional paid-in capital | 4,931,707 | 4,931,395 | ||||||
Accumulated distributions in excess of earnings | (2,770,479 | ) | (2,776,215 | ) | ||||
Accumulated other comprehensive loss | (52 | ) | (85 | ) | ||||
Total equity | 2,161,418 | 2,155,337 | ||||||
Total liabilities and equity | $ | 4,687,810 | $ | 4,621,251 | ||||
1st Quarter 2016 Supplemental Information | 1 | |
Retail Properties of America, Inc.
Condensed Consolidated Statements of Operations
(amounts in thousands, except per share amounts)
(unaudited)
Three Months Ended March 31, | ||||||||
2016 | 2015 | |||||||
Revenues | ||||||||
Rental income | $ | 115,260 | $ | 119,788 | ||||
Tenant recovery income | 30,356 | 31,300 | ||||||
Other property income | 3,023 | 2,109 | ||||||
Total revenues | 148,639 | 153,197 | ||||||
Expenses | ||||||||
Property operating expenses | 23,061 | 25,695 | ||||||
Real estate taxes | 19,939 | 20,510 | ||||||
Depreciation and amortization | 53,396 | 54,676 | ||||||
Provision for impairment of investment properties | 2,164 | — | ||||||
General and administrative expenses | 11,406 | 10,992 | ||||||
Total expenses | 109,966 | 111,873 | ||||||
Operating income | 38,673 | 41,324 | ||||||
Gain on extinguishment of debt | 13,653 | — | ||||||
Interest expense | (26,764 | ) | (34,045 | ) | ||||
Other income, net | 125 | 1,225 | ||||||
Income from continuing operations | 25,687 | 8,504 | ||||||
Gain on sales of investment properties | 21,739 | 4,572 | ||||||
Net income | 47,426 | 13,076 | ||||||
Preferred stock dividends | (2,362 | ) | (2,362 | ) | ||||
Net income attributable to common shareholders | $ | 45,064 | $ | 10,714 | ||||
Earnings per common share – basic and diluted | ||||||||
Net income per common share attributable to common shareholders | $ | 0.19 | $ | 0.05 | ||||
Weighted average number of common shares outstanding – basic | 236,578 | 236,250 | ||||||
Weighted average number of common shares outstanding – diluted | 236,680 | 236,253 | ||||||
1st Quarter 2016 Supplemental Information | 2 | |
Retail Properties of America, Inc.
Funds From Operations (FFO) Attributable to Common Shareholders,
Operating FFO Attributable to Common Shareholders and Additional Information
(dollar amounts in thousands, except per share amounts)
(unaudited)
FFO attributable to common shareholders and Operating FFO attributable to common shareholders (a) | ||||||||
Three Months Ended March 31, | ||||||||
2016 | 2015 | |||||||
Net income attributable to common shareholders | $ | 45,064 | $ | 10,714 | ||||
Depreciation and amortization | 53,094 | 54,401 | ||||||
Gain on sales of investment properties | (21,739 | ) | (4,572 | ) | ||||
FFO attributable to common shareholders | $ | 76,419 | $ | 60,543 | ||||
FFO attributable to common shareholders per common share outstanding | $ | 0.32 | $ | 0.26 | ||||
FFO attributable to common shareholders | $ | 76,419 | $ | 60,543 | ||||
Impact on earnings from the early extinguishment of debt, net | (12,846 | ) | 2,786 | |||||
Provision for hedge ineffectiveness | — | (25 | ) | |||||
Provision for impairment of non-depreciable investment property | 2,164 | — | ||||||
Other (b) | — | (1,000 | ) | |||||
Operating FFO attributable to common shareholders | $ | 65,737 | $ | 62,304 | ||||
Operating FFO attributable to common shareholders per common share outstanding | $ | 0.28 | $ | 0.26 | ||||
Weighted average number of common shares outstanding – basic | 236,578 | 236,250 | ||||||
Dividends declared per common share | $ | 0.165625 | $ | 0.165625 | ||||
Additional Information (c) | ||||||||
Lease-related expenditures (d) | ||||||||
Same store | $ | 7,660 | $ | 6,668 | ||||
Other investment properties | $ | 993 | $ | 2,922 | ||||
Capital expenditures (e) | ||||||||
Same store | $ | 2,718 | $ | 2,317 | ||||
Other investment properties | $ | 205 | $ | 578 | ||||
Straight-line rental income, net | $ | 1,028 | $ | 1,012 | ||||
Amortization of above and below market lease intangibles and lease inducements | $ | 345 | $ | 262 | ||||
Non-cash ground rent expense (f) | $ | 776 | $ | 794 | ||||
(a) | Refer to page 19 for definitions of FFO attributable to common shareholders and Operating FFO attributable to common shareholders. |
(b) | Consists of the impact on earnings from net settlements, which are included in "Other income, net" in the condensed consolidated statements of operations. |
(c) | The same store portfolio for the three months ended March 31, 2016 consists of 178 retail operating properties. Refer to pages 19 – 22 for definitions and reconciliations of non-GAAP financial measures. |
(d) | Consists of payments for tenant improvements, lease commissions and lease inducements and excludes developments in progress. |
(e) | Consists of payments for building, site and other improvements, net of anticipated recoveries, and excludes developments in progress. |
(f) | Includes amortization of acquired ground lease intangibles. |
1st Quarter 2016 Supplemental Information | 3 | |
Retail Properties of America, Inc.
Supplemental Financial Statement Detail
(amounts in thousands)
(unaudited)
Supplemental Balance Sheet Detail | March 31, 2016 | December 31, 2015 | ||||||
Accounts and Notes Receivable | ||||||||
Accounts and notes receivable (net of allowances of $6,367 and $7,052, respectively) | $ | 21,804 | $ | 30,143 | ||||
Straight-line receivables (net of allowances of $718 and $858, respectively) | 51,970 | 52,661 | ||||||
Total | $ | 73,774 | $ | 82,804 | ||||
Other Assets, net | ||||||||
Deferred costs, net | $ | 32,780 | $ | 27,132 | ||||
Restricted cash and escrows | 67,213 | 35,804 | ||||||
Other assets, net | 28,617 | 30,674 | ||||||
Total | $ | 128,610 | $ | 93,610 | ||||
Other Liabilities | ||||||||
Unearned income | $ | 18,144 | $ | 22,216 | ||||
Straight-line ground rent liability | 36,157 | 35,241 | ||||||
Fair value of derivatives | 52 | 85 | ||||||
Other liabilities | 18,598 | 18,203 | ||||||
Total | $ | 72,951 | $ | 75,745 | ||||
Developments in Progress | ||||||||
Property available for future development | $ | 3,000 | $ | 5,157 | ||||
Supplemental Statements of Operations Detail | ||||||||
Three Months Ended March 31, | ||||||||
2016 | 2015 | |||||||
Rental Income | ||||||||
Base rent | $ | 111,984 | $ | 116,997 | ||||
Percentage and specialty rent | 1,903 | 1,517 | ||||||
Straight-line rent | 1,028 | 1,012 | ||||||
Amortization of above and below market lease intangibles and lease inducements | 345 | 262 | ||||||
Total | $ | 115,260 | $ | 119,788 | ||||
Other Property Income | ||||||||
Lease termination income | $ | 1,658 | $ | 134 | ||||
Other property income | 1,365 | 1,975 | ||||||
Total | $ | 3,023 | $ | 2,109 | ||||
Property Operating Expense Supplemental Information | ||||||||
Bad Debt Expense | $ | 602 | $ | 982 | ||||
Non-Cash Ground Rent Expense (a) | $ | 776 | $ | 794 | ||||
General and Administrative Expense Supplemental Information | ||||||||
Acquisition Costs | $ | 339 | $ | 911 | ||||
Non-Cash Amortization of Stock-based Compensation | $ | 2,024 | $ | 1,310 | ||||
Additional Supplemental Information | ||||||||
Capitalized Compensation Costs – Construction and Development | $ | 261 | $ | — | ||||
Capitalized Internal Leasing Incentives | $ | 79 | $ | 134 | ||||
Capitalized Interest | $ | — | $ | — | ||||
(a) | Includes amortization of acquired ground lease intangibles. |
1st Quarter 2016 Supplemental Information | 4 | |
Retail Properties of America, Inc.
Net Operating Income (NOI)
(dollar amounts in thousands)
(unaudited)
Same store portfolio (a) | |||||||||
As of March 31 based on Same store portfolio for the Three Months Ended March 31, 2016 | |||||||||
2016 | 2015 | Change | |||||||
Number of retail operating properties in same store portfolio | 178 | 178 | — | ||||||
Occupancy | 94.5 | % | 94.2 | % | 0.3 | % | |||
Percent leased (b) | 95.2 | % | 95.6 | % | (0.4 | )% | |||
Same store NOI (c) | |||||||||||
Three Months Ended March 31, | |||||||||||
2016 | 2015 | Change | |||||||||
Operating revenues | |||||||||||
Rental income | $ | 98,278 | $ | 96,384 | |||||||
Tenant recovery income | 26,166 | 26,671 | |||||||||
Other property income | 898 | 1,002 | |||||||||
125,342 | 124,057 | ||||||||||
Operating expenses | |||||||||||
Property operating expenses | 17,617 | 18,528 | |||||||||
Bad debt expense | 160 | 588 | |||||||||
Real estate taxes | 17,759 | 17,817 | |||||||||
35,536 | 36,933 | ||||||||||
Same store NOI | $ | 89,806 | $ | 87,124 | 3.1 | % | |||||
NOI from other investment properties | 13,578 | 19,254 | |||||||||
Total NOI from continuing operations | $ | 103,384 | $ | 106,378 | (2.8 | )% | |||||
(a) | For the three months ended March 31, 2016, our same store portfolio consists of 178 retail operating properties and excludes properties acquired or placed in service and stabilized during 2015 and 2016, our development property, our one remaining office property, three properties where we have begun activities in anticipation of future redevelopment and investment properties sold or classified as held for sale during 2015 and 2016. |
(b) | Includes leases signed but not commenced. |
(c) | NOI is defined as operating revenues (rental income, tenant recovery income and other property income, excluding straight-line rental income, amortization of lease inducements, amortization of acquired above and below market lease intangibles and lease termination fee income) less property operating expenses (real estate tax expense and property operating expense, excluding straight-line ground rent expense, amortization of acquired ground lease intangibles and straight-line bad debt expense). Same store NOI excludes the net income from our wholly-owned captive insurance company. Refer to pages 19 – 22 for definitions and reconciliations of non-GAAP financial measures. |
1st Quarter 2016 Supplemental Information | 5 | |
Retail Properties of America, Inc.
Capitalization
(dollar amounts in thousands, except share price and ratios)
Capitalization Data | ||||||||
March 31, 2016 | December 31, 2015 | |||||||
Equity Capitalization | ||||||||
Common stock shares outstanding (a) | 237,347 | 237,267 | ||||||
Common share price | $ | 15.85 | $ | 14.77 | ||||
3,761,950 | 3,504,434 | |||||||
Series A preferred stock | 135,000 | 135,000 | ||||||
Total equity capitalization | $ | 3,896,950 | $ | 3,639,434 | ||||
Debt Capitalization | ||||||||
Mortgages payable (b) | $ | 1,031,316 | $ | 1,128,505 | ||||
Unsecured notes payable (c) | 500,000 | 500,000 | ||||||
Unsecured term loans (d) | 450,000 | 450,000 | ||||||
Unsecured revolving line of credit | 280,000 | 100,000 | ||||||
Total debt capitalization | $ | 2,261,316 | $ | 2,178,505 | ||||
Total capitalization at end of period | $ | 6,158,266 | $ | 5,817,939 | ||||
Reconciliation of Borrowed Debt to Total Net Debt | ||||||||
March 31, 2016 | December 31, 2015 | |||||||
Total borrowed debt | $ | 2,261,316 | $ | 2,178,505 | ||||
Less: consolidated cash and cash equivalents | (100,588 | ) | (51,424 | ) | ||||
Total net debt | $ | 2,160,728 | $ | 2,127,081 | ||||
Adjusted EBITDA (e) (f) | $ | 377,432 | $ | 366,652 | ||||
Net Debt to Adjusted EBITDA (f) | 5.7x | 5.8x | ||||||
Net Debt and Preferred Stock to Adjusted EBITDA (f) | 6.1x | 6.2x | ||||||
(a) | Excludes performance restricted stock units and options outstanding, which could potentially convert into common stock in the future. |
(b) | Mortgages payable excludes mortgage premium of $1,758 and $1,865, discount of $(1) and $(1), and capitalized loan fees of $(6,630) and $(7,233), net of accumulated amortization, as of March 31, 2016 and December 31, 2015, respectively. |
(c) | Unsecured notes payable exclude discount of $(1,060) and $(1,090) and capitalized loan fees of $(3,233) and $(3,334), net of accumulated amortization, as of March 31, 2016 and December 31, 2015, respectively. |
(d) | Unsecured term loans exclude capitalized loan fees of $(3,290) and $(2,474), net of accumulated amortization, as of March 31, 2016 and December 31, 2015, respectively. |
(e) | For purposes of these ratio calculations, annualized three months ended figures were used. |
(f) | Refer to pages 19 – 22 for definitions and reconciliations of non-GAAP financial measures. |
1st Quarter 2016 Supplemental Information | 6 | |
Retail Properties of America, Inc.
Covenants
Unsecured Credit Facility and Series A and B Notes (a) | |||||
Covenant | March 31, 2016 | ||||
Leverage ratio (b) | < 60.0% | (b) | 36.4 | % | |
Secured leverage ratio (b) | Unsecured Credit Facility: Series A and B notes: | < 45.0% < 40.0% | (b) | 16.6 | % |
Fixed charge coverage ratio (c) | > 1.50x | 2.6x | |||
Interest coverage ratio (d) | > 1.50x | 3.2x | |||
Unencumbered leverage ratio (b) | < 60.0% | (b) | 34.2 | % | |
Unencumbered interest coverage ratio | > 1.75x | 6.3x | |||
4.00% Notes (e) | ||||
Covenant | March 31, 2016 | |||
Leverage ratio (f) | < 60.0% | 37.2 | % | |
Secured leverage ratio (f) | < 40.0% | 17.0 | % | |
Debt service coverage ratio (g) | > 1.50x | 3.5x | ||
Unencumbered assets to unsecured debt ratio | > 150% | 307 | % | |
(a) | For a complete listing of all covenants related to our Unsecured Credit Facility (comprised of the unsecured term loans and unsecured revolving line of credit) as well as covenant definitions, refer to the Fourth Amended and Restated Credit Agreement filed as Exhibit 10.8 to our Annual Report on Form 10-K for the year ended December 31, 2015, filed on February 17, 2016. For a complete listing of all covenants related to our 4.12% Series A senior notes due 2021 and 4.58% Series B senior notes due 2024 (collectively, Series A and B notes) as well as covenant definitions, refer to the Note Purchase Agreement filed as Exhibit 10.1 to our Current Report on Form 8-K, dated May 22, 2014. |
(b) | Based upon a capitalization rate of 6.75%. |
(c) | Applies only to our Unsecured Credit Facility. This ratio is based upon consolidated debt service, including interest expense, principal amortization and preferred dividends declared, excluding interest expense related to defeasance costs and prepayment premiums. |
(d) | Applies only to our Series A and B notes. |
(e) | For a complete listing of all covenants related to our 4.00% senior notes due 2025 (4.00% notes) as well as covenant definitions, refer to the First Supplemental Indenture filed as Exhibit 4.2 to our Current Report on Form 8-K, dated March 12, 2015. |
(f) | Based upon the book value of Total Assets as defined in the First Supplemental Indenture. |
(g) | Based upon interest expense and excludes principal amortization and preferred dividends declared. This ratio is calculated on a pro forma basis with the assumption that debt and property transactions occurred on the first day of the preceding four-quarter period. |
1st Quarter 2016 Supplemental Information | 7 | |
Retail Properties of America, Inc.
Consolidated Debt Summary as of March 31, 2016
(dollar amounts in thousands)
Balance | Weighted Average (WA) Interest Rate (a) | WA Years to Maturity | |||||||
Fixed rate mortgages payable (b) | $ | 1,031,316 | 6.03 | % | 3.9 years | ||||
Unsecured notes payable: | |||||||||
Senior notes – 4.12% Series A due 2021 | 100,000 | 4.12 | % | 5.3 years | |||||
Senior notes – 4.58% Series B due 2024 | 150,000 | 4.58 | % | 8.3 years | |||||
Senior notes – 4.00% due 2025 | 250,000 | 4.00 | % | 9.0 years | |||||
Total unsecured notes payable (b) | 500,000 | 4.20 | % | 8.0 years | |||||
Unsecured credit facility: | |||||||||
Term loan — fixed rate portion (c) | 100,000 | 1.96 | % | 4.8 years | |||||
Term loan — variable rate portion | 150,000 | 1.73 | % | 4.8 years | |||||
Term loan — variable rate portion | 200,000 | 1.88 | % | 2.1 years | |||||
Revolving line of credit — variable rate | 280,000 | 1.78 | % | 3.8 years | |||||
Total unsecured credit facility (b) | 730,000 | 1.82 | % | 3.7 years | |||||
Total consolidated indebtedness | $ | 2,261,316 | 4.27 | % | 4.7 years | ||||
Consolidated Debt Maturity Schedule as of March 31, 2016 | ||||||||||||||||||||||||
Year | Fixed Rate (b) | WA Rates on Fixed Debt | Variable Rate (b) | WA Rates on Variable Debt (d) | Total | % of Total | WA Rates on Total Debt (a) | |||||||||||||||||
2016 | $ | 44,683 | 4.73 | % | $ | — | — | $ | 44,683 | 2.0 | % | 4.73 | % | |||||||||||
2017 | 226,637 | 5.09 | % | — | — | 226,637 | 10.0 | % | 5.09 | % | ||||||||||||||
2018 | 10,801 | 6.74 | % | 200,000 | 1.88 | % | 210,801 | 9.3 | % | 2.13 | % | |||||||||||||
2019 | 443,447 | 7.50 | % | — | — | 443,447 | 19.6 | % | 7.50 | % | ||||||||||||||
2020 | 3,424 | 4.80 | % | 280,000 | 1.78 | % | 283,424 | 12.5 | % | 1.82 | % | |||||||||||||
2021 | 222,304 | 3.23 | % | 150,000 | 1.73 | % | 372,304 | 16.5 | % | 2.63 | % | |||||||||||||
2022 | 216,171 | 4.87 | % | — | — | 216,171 | 9.6 | % | 4.87 | % | ||||||||||||||
2023 | 30,739 | 4.15 | % | — | — | 30,739 | 1.3 | % | 4.15 | % | ||||||||||||||
2024 | 150,680 | 4.58 | % | — | — | 150,680 | 6.7 | % | 4.58 | % | ||||||||||||||
2025 | 250,711 | 4.00 | % | — | — | 250,711 | 11.1 | % | 4.00 | % | ||||||||||||||
Thereafter | 31,719 | 4.61 | % | — | — | 31,719 | 1.4 | % | 4.61 | % | ||||||||||||||
Total | $ | 1,631,316 | 5.22 | % | $ | 630,000 | 1.80 | % | $ | 2,261,316 | 100.0 | % | 4.27 | % | ||||||||||
(a) | Interest rates presented exclude the impact of the premium, discount and capitalized loan fee amortization. As of March 31, 2016, our overall weighted average interest rate for consolidated debt including the impact of premium, discount and capitalized loan fee amortization was 4.47%. |
(b) | Fixed rate mortgages payable excludes mortgage premium of $1,758, discount of $(1) and capitalized loan fees of $(6,630), net of accumulated amortization, as of March 31, 2016. Unsecured notes payable excludes discount of $(1,060) and capitalized loan fees of $(3,233), net of accumulated amortization, as of March 31, 2016. Term loans exclude capitalized loan fees of $(3,290), net of accumulated amortization, as of March 31, 2016. In the consolidated debt maturity schedule, maturity amounts for each year include scheduled principal amortization payments. |
(c) | Reflects $100,000 of LIBOR-based variable rate debt that has been swapped to a fixed rate of 0.6591% plus a credit spread based on a leverage grid ranging from 1.30% to 2.20% through December 31, 2017. The applicable credit spread was 1.30% as of March 31, 2016. |
(d) | Represents interest rates as of March 31, 2016. |
1st Quarter 2016 Supplemental Information | 8 | |
Retail Properties of America, Inc.
Summary of Indebtedness as of March 31, 2016
(dollar amounts in thousands)
Description | Maturity Date | Interest Rate (a) | Interest Rate Type | Secured or Unsecured | Balance as of 3/31/2016 | ||||||||
Consolidated Indebtedness | |||||||||||||
MacArthur Crossing (b) | 07/01/16 | 7.30% | Fixed | Secured | $ | 6,594 | (b) | ||||||
Heritage Towne Crossing | 09/30/16 | 4.52% | Fixed | Secured | 7,857 | ||||||||
Oswego Commons | 12/01/16 | 3.35% | Fixed | Secured | 21,000 | ||||||||
Southlake Grand Ave. | 04/01/17 | 3.50% | Fixed | Secured | 55,359 | ||||||||
Southlake Town Square | 04/01/17 | 6.25% | Fixed | Secured | 82,809 | ||||||||
Central Texas Marketplace | 04/11/17 | 5.46% | Fixed | Secured | 45,387 | ||||||||
Coppell Town Center | 05/01/17 | 3.53% | Fixed | Secured | 10,560 | ||||||||
Lincoln Park | 12/01/17 | 4.05% | Fixed | Secured | 25,432 | ||||||||
Corwest Plaza | 04/01/19 | 7.25% | Fixed | Secured | 14,202 | ||||||||
Dorman Center | 04/01/19 | 7.70% | Fixed | Secured | 20,196 | ||||||||
Shops at Park Place | 05/01/19 | 7.48% | Fixed | Secured | 7,640 | ||||||||
Shoppes of New Hope | 06/01/19 | 7.75% | Fixed | Secured | 3,447 | ||||||||
Village Shoppes at Simonton | 06/01/19 | 7.75% | Fixed | Secured | 3,182 | ||||||||
Plaza at Marysville | 09/01/19 | 8.00% | Fixed | Secured | 8,750 | ||||||||
Forks Town Center | 10/01/19 | 7.70% | Fixed | Secured | 7,988 | ||||||||
IW JV 2009 portfolio (48 properties) | 12/01/19 | 7.50% | Fixed | Secured | 394,467 | ||||||||
Sawyer Heights Village | 07/01/21 | 5.00% | Fixed | Secured | 18,700 | ||||||||
Ashland & Roosevelt (bank pad) | 02/25/22 | 7.48% | Fixed | Secured | 1,071 | ||||||||
Commons at Temecula | 03/01/22 | 4.74% | Fixed | Secured | 25,665 | ||||||||
Gardiner Manor Mall | 03/01/22 | 4.95% | Fixed | Secured | 35,192 | ||||||||
Peoria Crossings | 04/01/22 | 4.82% | Fixed | Secured | 24,131 | ||||||||
Southlake Corners | 04/01/22 | 4.89% | Fixed | Secured | 20,945 | ||||||||
Tollgate Marketplace | 04/01/22 | 4.84% | Fixed | Secured | 35,000 | ||||||||
Town Square Plaza | 04/01/22 | 4.82% | Fixed | Secured | 16,815 | ||||||||
Village Shoppes at Gainesville | 04/01/22 | 4.25% | Fixed | Secured | 19,691 | ||||||||
Reisterstown Road Plaza | 06/01/22 | 5.25% | Fixed | Secured | 46,250 | ||||||||
Gateway Village | 01/01/23 | 4.14% | Fixed | Secured | 35,526 | ||||||||
Home Depot Plaza | 12/01/26 | 4.82% | Fixed | Secured | 10,750 | ||||||||
Northgate North | 06/01/27 | 4.50% | Fixed | Secured | 26,710 | ||||||||
Mortgages payable (c) | 1,031,316 | ||||||||||||
Senior notes – 4.12% Series A due 2021 | 06/30/21 | 4.12% | Fixed | Unsecured | 100,000 | ||||||||
Senior notes – 4.58% Series B due 2024 | 06/30/24 | 4.58% | Fixed | Unsecured | 150,000 | ||||||||
Senior notes – 4.00% due 2025 | 03/15/25 | 4.00% | Fixed | Unsecured | 250,000 | ||||||||
Unsecured notes payable (c) | 500,000 | ||||||||||||
Term loan | 01/05/21 | 1.96% | (d) | Fixed | Unsecured | 100,000 | |||||||
Term loan | 01/05/21 | 1.73% | Variable | Unsecured | 150,000 | ||||||||
Term loan | 05/11/18 | 1.88% | Variable | Unsecured | 200,000 | ||||||||
Revolving line of credit | 01/05/20 | 1.78% | Variable | Unsecured | 280,000 | ||||||||
Unsecured credit facility (c) | 730,000 | ||||||||||||
Total consolidated indebtedness | 12/20/20 | 4.27% | $ | 2,261,316 | |||||||||
(a) | Interest rates presented exclude the impact of the premium, discount and capitalized loan fee amortization. As of March 31, 2016, our overall weighted average interest rate for consolidated debt including the impact of premium, discount and capitalized loan fee amortization was 4.47%. |
(b) | This mortgage was repaid subsequent to March 31, 2016. |
(c) | Mortgages payable excludes mortgage premium of $1,758, discount of $(1) and capitalized loan fees of $(6,630), net of accumulated amortization, as of March 31, 2016. Unsecured notes payable excludes discount of $(1,060) and capitalized loan fees of $(3,233), net of accumulated amortization, as of March 31, 2016. Term loans exclude capitalized loan fees of $(3,290), net of accumulated amortization, as of March 31, 2016. |
(d) | Reflects $100,000 of LIBOR-based variable rate debt that has been swapped to a fixed rate of 0.6591% plus a credit spread based on a leverage grid ranging from 1.30% to 2.20% through December 31, 2017. The applicable credit spread was 1.30% as of March 31, 2016. |
1st Quarter 2016 Supplemental Information | 9 | |
Retail Properties of America, Inc.
Development Projects as of March 31, 2016
(dollar amounts in thousands)
Active Redevelopment | |||||||||||||||||||||
Property Name | Metropolitan Statistical Area (MSA) | Included in Same store portfolio (a) | Total Estimated Net Costs (b) | Net Costs Inception to Date | Incremental GLA | Targeted Stabilization (c) | Projected Incremental Return on Cost (d) | Project Description | |||||||||||||
Reisterstown Road Plaza (e) | Baltimore | No | $11,000-$12,000 | $ | 82 | (52,500 | ) | Q4 2017 | 9.5%-11.5% | Renovation of existing property through de-mall and reconfiguration resulting in reduction of 61,200 gross sq. ft. multi-tenant retail, partially offset by 8,700 sq. ft. multi-tenant retail pad addition | |||||||||||
Active Expansions / Pad Development | |||||||||||||||||||||
Property Name | MSA | Included in Same store portfolio (a) | Total Estimated Net Costs (b) | Net Costs Inception to Date | Incremental GLA | Targeted Completion | Projected Incremental Return on Cost (d) | Project Description | |||||||||||||
Parkway Towne Crossing | Dallas | Yes | $ | 3,500 | $ | 1,619 | 21,000 | Q3 2016 | 9.0%-10.0% | 21,000 sq. ft. multi-tenant retail | |||||||||||
Heritage Square | Seattle | Yes | $ | 1,500 | $ | 726 | (360 | ) | Q3 2016 | 10.5%-11.5% | 4,200 sq. ft. redevelopment of outparcel for new tenant, Corner Bakery | ||||||||||
Redevelopment Pipeline | |||||||||||||||||||||
Property Name | MSA | Included in Same store portfolio (a) | Targeted Commencement | Project Description | |||||||||||||||||
Towson Circle | Baltimore | No | 2017 | Mixed-use redevelopment and monetization of air rights | |||||||||||||||||
Merrifield Town Center II | Washington, D.C. | No (f) | 2019 | Mixed-use redevelopment and monetization of air rights | |||||||||||||||||
Boulevard at the Capital Centre | Washington, D.C. | No | 2018 | Dimensions Healthcare/University of Maryland Regional Medical Center phased redevelopment | |||||||||||||||||
Tysons Corner | Washington, D.C. | No (f) | 2021 | Redevelopment with increased density | |||||||||||||||||
(a) | A property is removed from our same store portfolio if the project is considered to significantly impact the existing property's NOI and activities have begun in anticipation of the project. Properties listed under "Active Expansions / Pad Development" are not considered to significantly impact the existing property's NOI, and therefore, have not been removed from our same store portfolio if they have otherwise met the criteria to be included in our same store portfolio. |
(b) | Net costs represent our estimated share of the project costs, net of proceeds from land sales, reimbursement from third parties and contributions from project partners, as applicable. |
(c) | A property is considered stabilized upon reaching 90% occupancy, but no later than one year from the date it was classified as operating. |
(d) | Projected Incremental Return on Cost (ROC) generally reflects only the unleveraged incremental NOI generated by the project upon stabilization and is calculated as incremental NOI divided by incremental cost. Incremental NOI is the difference between NOI expected to be generated by the stabilized project and the NOI generated prior to the commencement of active redevelopment, development or expansion of the space. ROC does not include peripheral impacts, such as the impact on future lease rollover at the property or the impact on the long-term value of the property. |
(e) | We expect to begin demolition activities in Q3 2016. |
(f) | Property was acquired subsequent to December 31, 2014, and as such, does not meet the criteria to be included in our same store portfolio. |
We cannot guarantee that ROC will be generated at the percentage listed or at all, total net costs associated with these projects will be equal to the total estimated net costs, project completion will occur when anticipated or that we will ultimately complete any or all of these projects. The ROC and total estimated net costs reflect management's best estimate based upon current information, may change over time and are subject to certain conditions which are beyond our control, including, without limitation, general economic conditions, market conditions and other business factors.
1st Quarter 2016 Supplemental Information | 10 | |
Retail Properties of America, Inc.
Expansions and Pad Development Opportunities as of March 31, 2016
We have identified the following potential opportunities to add stand-alone buildings, convert previously under-utilized space or develop additional retail GLA at existing properties. Executing on these opportunities may be subject to certain conditions which are beyond our control, including, without limitation, government approvals, tenant consents as well as general economic, market and other conditions and, therefore, we can provide no assurances that any of these opportunities will be executed on or will ultimately be realized.
Property Name | Potential Additional Square Feet | MSA | |||
Downtown Crown | 3,000 - 9,000 | Washington, D.C. | |||
Gateway Plaza | 8,000 | Dallas | |||
Shops at Park Place | 22,000 | Dallas | |||
Watauga Pavilion | 5,000 | Dallas | |||
Humblewood Shopping Center | 5,000 | Houston | |||
Lakewood Towne Center | 10,500 | Seattle | |||
Century III Plaza | 6,000 | Pittsburgh | |||
Maple Tree Place | 18,000 | Burlington, VT | |||
Governor's Marketplace | 20,600 | Tallahassee | |||
High Ridge Crossing | 7,500 | St. Louis | |||
Pavilion at King's Grant | 32,500 | Charlotte | |||
Page Field Commons | 4,700 | Cape Coral-Fort Myers, FL | |||
Fox Creek Village | 6,500 | Boulder | |||
1st Quarter 2016 Supplemental Information | 11 | |
Retail Properties of America, Inc.
Acquisitions for the Three Months Ended March 31, 2016
(amounts in thousands, except square footage amounts)
Property Name | Acquisition Date | MSA | Property Type | Gross Leasable Area (GLA) | Purchase Price | ||||||||
Shoppes at Hagerstown (a) | January 15, 2016 | Hagerstown | Multi-tenant retail | 113,000 | $ | 27,055 | |||||||
Merrifield Town Center II (a) | January 15, 2016 | Washington, D.C. | Multi-tenant retail | 76,000 | 45,676 | ||||||||
Oak Brook Promenade (b) | March 29, 2016 | Chicago | Multi-tenant retail | 183,200 | 65,954 | ||||||||
Total 2016 acquisitions (through March 31, 2016) | 372,200 | $ | 138,685 | ||||||||||
(a) | These properties were acquired as a two-property portfolio. Merrifield Town Center II also contains 62,000 square feet of storage space for a total of 138,000 square feet. |
(b) | This property was acquired through a consolidated variable interest entity and may be used to facilitate a potential Internal Revenue Code Section 1031 tax-deferred exchange (1031 Exchange). |
Subsequent to March 31, 2016, we closed on the following acquisitions:
Property Name | Acquisition Date | MSA | Property Type | GLA | Purchase Price | Mortgage Debt Assumed | ||||||||||||
The Shoppes at Union Hill | April 1, 2016 | New York | Multi-tenant retail | 91,700 | $ | 63,060 | $ | 15,971 | (c) | |||||||||
Ashland & Roosevelt (d) | April 29, 2016 | Chicago | Ground lease interest (d) | — | 13,850 | — | ||||||||||||
Subsequent acquisitions | 91,700 | $ | 76,910 | $ | 15,971 | |||||||||||||
(c) | The mortgage has an interest rate of 3.75% and matures in 2031. |
(d) | We acquired the fee interest in an existing wholly-owned multi-tenant retail operating property, which was previously subject to a ground lease with a third party. As a result, the total number of properties in our portfolio was not affected. |
1st Quarter 2016 Supplemental Information | 12 | |
Retail Properties of America, Inc.
Dispositions for the Three Months Ended March 31, 2016
(amounts in thousands, except square footage amounts)
Property Name | Disposition Date | Property Type | GLA | Consideration | Debt Repaid, Forgiven, Assumed or Defeased | Defeasance Cost / Prepayment Premium | |||||||||||||
The Gateway | February 1, 2016 | Multi-tenant retail | 623,200 | $ | 75,000 | (a) | $ | 94,353 | (a) | $ | — | ||||||||
Stateline Station | February 10, 2016 | Multi-tenant retail | 142,600 | 17,500 | — | — | |||||||||||||
Six Property Portfolio (b) | March 30, 2016 | Single-user retail | 230,400 | 35,413 | — | — | |||||||||||||
Total 2016 dispositions (through March 31, 2016) | 996,200 | $ | 127,913 | $ | 94,353 | $ | — | ||||||||||||
(a) | The property was disposed of through a lender-directed sale in full satisfaction of our mortgage obligation. Immediately prior to the disposition, the lender reduced our loan obligation to $75,000 which was assumed by the buyer in connection with the disposition. Along with the loan reduction, the lender received the balance of the restricted escrows that they held and the rights to unpaid accounts receivable and forgave accrued interest, resulting in a net gain on extinguishment of debt of $13,653. |
(b) | Portfolio consists of the following properties: (i) Academy Sports – Houma, (ii) Academy Sports – Port Arthur, (iii) Academy Sports – San Antonio, (iv) CVS Pharmacy – Moore, (v) CVS Pharmacy – Saginaw and (vi) Rite Aid Store (Eckerd) – Olean. Proceeds of $34,973 from the dispositions are temporarily restricted related to potential 1031 Exchanges and are included in "Other assets, net" in the condensed consolidated balance sheets. |
Subsequent to March 31, 2016, we closed on the following disposition:
Property Name | Disposition Date | Property Type | GLA | Consideration | Debt Repaid or Defeased | Defeasance Cost / Prepayment Premium | |||||||||||||
CVS Pharmacy – Oklahoma City | April 20, 2016 | Single-user retail | 10,900 | $ | 4,676 | $ | — | $ | — | ||||||||||
Subsequent disposition | 10,900 | $ | 4,676 | $ | — | $ | — | ||||||||||||
1st Quarter 2016 Supplemental Information | 13 | |
Retail Properties of America, Inc.
Market Summary as of March 31, 2016
(dollar amounts and square footage in thousands)
Property Type/Market | Number of Properties | Annualized Base Rent (ABR) | % of Total Multi-Tenant Retail ABR (a) | ABR per Occupied Sq. Ft. | GLA | % of Total Multi-Tenant Retail GLA (a) | Occupancy | % Leased Including Signed | ||||||||||||||||||
Multi-Tenant Retail: | ||||||||||||||||||||||||||
Target Markets | ||||||||||||||||||||||||||
Dallas, Texas | 19 | $ | 79,331 | 18.9 | % | $ | 21.18 | 4,006 | 14.7 | % | 93.5 | % | 94.4 | % | ||||||||||||
Washington, D.C. / Baltimore, Maryland | 14 | 53,410 | 12.7 | % | 18.75 | 3,187 | 11.7 | % | 89.4 | % | 90.2 | % | ||||||||||||||
New York, New York | 8 | 33,750 | 8.0 | % | 24.58 | 1,404 | 5.1 | % | 97.8 | % | 97.8 | % | ||||||||||||||
Chicago, Illinois | 6 | 19,553 | 4.7 | % | 19.90 | 1,075 | 3.9 | % | 91.4 | % | 93.2 | % | ||||||||||||||
Atlanta, Georgia | 9 | 18,948 | 4.5 | % | 12.92 | 1,513 | 5.5 | % | 96.9 | % | 97.1 | % | ||||||||||||||
Seattle, Washington | 7 | 15,746 | 3.8 | % | 14.29 | 1,238 | 4.5 | % | 89.0 | % | 91.8 | % | ||||||||||||||
Houston, Texas | 9 | 15,154 | 3.6 | % | 13.94 | 1,141 | 4.2 | % | 95.3 | % | 95.5 | % | ||||||||||||||
San Antonio, Texas | 4 | 12,265 | 2.9 | % | 16.23 | 779 | 2.9 | % | 97.0 | % | 97.1 | % | ||||||||||||||
Phoenix, Arizona | 3 | 10,253 | 2.4 | % | 16.67 | 632 | 2.3 | % | 97.3 | % | 97.7 | % | ||||||||||||||
Austin, Texas | 4 | 5,320 | 1.3 | % | 15.97 | 350 | 1.3 | % | 95.2 | % | 95.6 | % | ||||||||||||||
Subtotal | 83 | 263,730 | 62.8 | % | 18.43 | 15,325 | 56.1 | % | 93.4 | % | 94.2 | % | ||||||||||||||
Non-Target – Top 50 MSAs | ||||||||||||||||||||||||||
California | 5 | 16,767 | 4.0 | % | 18.16 | 954 | 3.5 | % | 96.8 | % | 97.1 | % | ||||||||||||||
Florida | 7 | 11,791 | 2.8 | % | 17.22 | 754 | 2.8 | % | 90.8 | % | 97.3 | % | ||||||||||||||
Pennsylvania | 4 | 8,653 | 2.1 | % | 11.45 | 757 | 2.8 | % | 99.8 | % | 99.8 | % | ||||||||||||||
Virginia | 1 | 4,749 | 1.1 | % | 18.03 | 308 | 1.1 | % | 85.5 | % | 90.4 | % | ||||||||||||||
Rhode Island | 3 | 3,836 | 0.9 | % | 14.68 | 271 | 1.0 | % | 96.4 | % | 97.1 | % | ||||||||||||||
Indiana | 2 | 2,967 | 0.7 | % | 14.62 | 205 | 0.8 | % | 99.0 | % | 99.0 | % | ||||||||||||||
Missouri | 2 | 2,933 | 0.7 | % | 10.10 | 531 | 1.9 | % | 54.7 | % | 54.7 | % | ||||||||||||||
North Carolina | 1 | 2,687 | 0.7 | % | 11.03 | 286 | 1.0 | % | 85.2 | % | 85.2 | % | ||||||||||||||
Connecticut | 1 | 2,608 | 0.6 | % | 24.28 | 115 | 0.4 | % | 93.4 | % | 93.4 | % | ||||||||||||||
Massachusetts | 1 | 1,714 | 0.4 | % | 16.17 | 106 | 0.4 | % | 100.0 | % | 100.0 | % | ||||||||||||||
Alabama | 1 | 1,177 | 0.3 | % | 15.09 | 78 | 0.3 | % | 100.0 | % | 100.0 | % | ||||||||||||||
Tennessee | 1 | 999 | 0.2 | % | 11.32 | 93 | 0.3 | % | 94.9 | % | 94.9 | % | ||||||||||||||
South Carolina | 1 | 827 | 0.2 | % | 12.16 | 68 | 0.3 | % | 100.0 | % | 100.0 | % | ||||||||||||||
Subtotal | 30 | 61,708 | 14.7 | % | 15.15 | 4,526 | 16.6 | % | 90.0 | % | 91.5 | % | ||||||||||||||
Subtotal Target Markets and Top 50 MSAs | 113 | 325,438 | 77.5 | % | 17.70 | 19,851 | 72.7 | % | 92.6 | % | 93.6 | % | ||||||||||||||
Non-Target – Other | ||||||||||||||||||||||||||
South Carolina | 8 | 14,097 | 3.4 | % | 12.33 | 1,173 | 4.3 | % | 97.5 | % | 97.5 | % | ||||||||||||||
Florida | 3 | 8,121 | 1.9 | % | 13.66 | 616 | 2.2 | % | 96.5 | % | 97.5 | % | ||||||||||||||
Vermont | 1 | 7,997 | 1.9 | % | 17.72 | 489 | 1.8 | % | 92.3 | % | 92.3 | % | ||||||||||||||
Texas | 3 | 7,841 | 1.9 | % | 13.29 | 651 | 2.4 | % | 90.6 | % | 94.5 | % | ||||||||||||||
Michigan | 1 | 6,966 | 1.7 | % | 22.30 | 333 | 1.2 | % | 93.8 | % | 93.8 | % | ||||||||||||||
Massachusetts | 1 | 5,740 | 1.4 | % | 10.76 | 537 | 2.0 | % | 99.3 | % | 99.3 | % | ||||||||||||||
New York | 2 | 5,677 | 1.4 | % | 9.42 | 604 | 2.2 | % | 99.8 | % | 99.8 | % | ||||||||||||||
Tennessee | 2 | 4,805 | 1.1 | % | 11.45 | 445 | 1.6 | % | 94.3 | % | 94.3 | % | ||||||||||||||
Washington | 1 | 4,706 | 1.1 | % | 12.85 | 378 | 1.4 | % | 96.9 | % | 96.9 | % | ||||||||||||||
North Carolina | 1 | 4,208 | 1.0 | % | 11.07 | 380 | 1.4 | % | 100.0 | % | 100.0 | % | ||||||||||||||
Pennsylvania | 3 | 3,687 | 0.9 | % | 15.10 | 264 | 1.0 | % | 92.5 | % | 92.9 | % | ||||||||||||||
New Mexico | 1 | 3,660 | 0.9 | % | 16.44 | 224 | 0.8 | % | 99.4 | % | 99.4 | % | ||||||||||||||
Georgia | 2 | 3,546 | 0.8 | % | 12.95 | 305 | 1.1 | % | 89.8 | % | 89.8 | % | ||||||||||||||
Alabama | 3 | 3,342 | 0.8 | % | 12.36 | 274 | 1.0 | % | 98.7 | % | 98.7 | % | ||||||||||||||
Conneticut | 2 | 2,514 | 0.6 | % | 12.96 | 194 | 0.7 | % | 100.0 | % | 100.0 | % | ||||||||||||||
Maryland | 1 | 1,983 | 0.5 | % | 18.87 | 113 | 0.4 | % | 93.0 | % | 93.0 | % | ||||||||||||||
Maine | 1 | 1,566 | 0.4 | % | 8.50 | 190 | 0.7 | % | 97.0 | % | 97.0 | % | ||||||||||||||
Colorado | 1 | 1,430 | 0.3 | % | 13.64 | 108 | 0.4 | % | 97.1 | % | 97.1 | % | ||||||||||||||
Louisiana | 1 | 1,359 | 0.3 | % | 12.68 | 116 | 0.4 | % | 92.4 | % | 95.2 | % | ||||||||||||||
Ohio | 1 | 1,029 | 0.2 | % | 13.54 | 76 | 0.3 | % | 100.0 | % | 100.0 | % | ||||||||||||||
Subtotal | 39 | 94,274 | 22.5 | % | 13.13 | 7,470 | 27.3 | % | 96.1 | % | 96.6 | % | ||||||||||||||
Total Multi-Tenant Retail | 152 | 419,712 | 100.0 | % | 16.43 | 27,321 | 100.0 | % | 93.5 | % | 94.4 | % | ||||||||||||||
Single-User Retail | 40 | 21,857 | 22.42 | 975 | 100.0 | % | 100.0 | % | ||||||||||||||||||
Total Retail | 192 | 441,569 | 16.64 | 28,296 | 93.8 | % | 94.6 | % | ||||||||||||||||||
Office | 1 | 10,476 | 11.71 | 895 | 100.0 | % | 100.0 | % | ||||||||||||||||||
Total Operating Portfolio (b) | 193 | $ | 452,045 | $ | 16.47 | 29,191 | 94.0 | % | 94.7 | % | ||||||||||||||||
(a) | Percentages are only provided for our retail operating portfolio. |
(b) | Excludes one single-user retail operating property classified as held for sale as of March 31, 2016. |
1st Quarter 2016 Supplemental Information | 14 | |
Retail Properties of America, Inc.
Retail Operating Portfolio Occupancy Breakdown as of March 31, 2016
(square footage in thousands)
Total Retail Operating Portfolio: | |||||||||||||||||||||||||||||||||
Total | 25,000+ sq ft | 10,000-24,999 sq ft | 5,000-9,999 sq ft | 0-4,999 sq ft | |||||||||||||||||||||||||||||
Property Type/Region | Number of Properties | GLA | Occupancy | GLA | Occupancy | GLA | Occupancy | GLA | Occupancy | GLA | Occupancy | ||||||||||||||||||||||
Retail: | |||||||||||||||||||||||||||||||||
Multi-Tenant Retail | |||||||||||||||||||||||||||||||||
Target Markets | 83 | 15,325 | 93.4 | % | 7,300 | 98.2 | % | 2,755 | 92.3 | % | 2,084 | 91.0 | % | 3,186 | 84.8 | % | |||||||||||||||||
Non-Target – Top 50 MSAs | 30 | 4,526 | 90.0 | % | 2,630 | 89.1 | % | 840 | 96.4 | % | 378 | 93.8 | % | 678 | 83.4 | % | |||||||||||||||||
Non-Target – Other | 39 | 7,470 | 96.1 | % | 4,259 | 100.0 | % | 1,330 | 97.4 | % | 728 | 92.7 | % | 1,153 | 82.2 | % | |||||||||||||||||
Total Multi-Tenant Retail | 152 | 27,321 | 93.5 | % | 14,189 | 97.0 | % | 4,925 | 94.4 | % | 3,190 | 91.7 | % | 5,017 | 84.0 | % | |||||||||||||||||
Single-User Retail (a) | 40 | 975 | 100.0 | % | 561 | 100.0 | % | 407 | 100.0 | % | — | — | % | 7 | 100.0 | % | |||||||||||||||||
Total Retail | 192 | 28,296 | 93.8 | % | 14,750 | 97.1 | % | 5,332 | 94.8 | % | 3,190 | 91.7 | % | 5,024 | 84.0 | % | |||||||||||||||||
Total – % Leased including Signed | 192 | 28,296 | 94.6 | % | 14,750 | 97.5 | % | 5,332 | 96.9 | % | 3,190 | 92.2 | % | 5,024 | 85.1 | % | |||||||||||||||||
(a) | Excludes one single-user retail operating property classified as held for sale as of March 31, 2016. |
1st Quarter 2016 Supplemental Information | 15 | |
Retail Properties of America, Inc.
Top Retail Tenants as of March 31, 2016
(dollar amounts and square footage in thousands)
The following table sets forth information regarding the 20 largest tenants in our retail operating portfolio based on ABR as of March 31, 2016. Dollars (other than per square foot information) and square feet of GLA are presented in thousands.
Tenant | Primary DBA | Number of Stores | ABR | % of Total ABR | ABR per Occupied Sq. Ft. | Occupied GLA | % of Occupied GLA | |||||||||||||||
Best Buy Co., Inc. | Best Buy, Pacific Sales | 22 | $ | 13,309 | 3.0 | % | $ | 15.42 | 863 | 3.3 | % | |||||||||||
Ahold U.S.A. Inc. | Giant Foods, Stop & Shop, Martin's | 11 | 13,275 | 3.0 | % | 19.67 | 675 | 2.5 | % | |||||||||||||
The TJX Companies, Inc. | HomeGoods, Marshalls, T.J. Maxx | 39 | 10,984 | 2.5 | % | 9.54 | 1,151 | 4.3 | % | |||||||||||||
Ross Stores, Inc. | 32 | 10,731 | 2.4 | % | 11.38 | 943 | 3.6 | % | ||||||||||||||
Bed Bath & Beyond Inc. | Bed Bath & Beyond, Buy Buy Baby, The Christmas Tree Shops, Cost Plus World Market | 25 | 9,306 | 2.1 | % | 13.81 | 674 | 2.5 | % | |||||||||||||
Rite Aid Corporation | 31 | 9,082 | 2.1 | % | 22.82 | 398 | 1.5 | % | ||||||||||||||
PetSmart, Inc. | 28 | 8,532 | 1.9 | % | 14.86 | 574 | 2.2 | % | ||||||||||||||
The Home Depot, Inc. | 7 | 7,126 | 1.6 | % | 8.33 | 855 | 3.2 | % | ||||||||||||||
AB Acquisition LLC | Safeway, Jewel-Osco, Shaw's Supermarket, Tom Thumb | 10 | 7,117 | 1.6 | % | 13.53 | 526 | 2.0 | % | |||||||||||||
Regal Entertainment Group | Edwards Cinema | 2 | 6,911 | 1.6 | % | 31.56 | 219 | 0.8 | % | |||||||||||||
Michaels Stores, Inc. | Michaels, Aaron Brothers Art & Frame | 24 | 6,381 | 1.5 | % | 11.77 | 542 | 2.0 | % | |||||||||||||
Dick's Sporting Goods, Inc. | Dick's Sporting Goods, Golf Galaxy, Field & Stream | 9 | 5,437 | 1.2 | % | 13.46 | 404 | 1.5 | % | |||||||||||||
Publix Super Markets Inc. | 12 | 5,405 | 1.2 | % | 10.58 | 511 | 1.9 | % | ||||||||||||||
The Sports Authority, Inc. | 9 | 5,319 | 1.2 | % | 13.40 | 397 | 1.5 | % | ||||||||||||||
Ascena Retail Group Inc. | Dress Barn, Lane Bryant, Justice, Catherine's, Ann Taylor, Maurices, LOFT | 46 | 5,264 | 1.2 | % | 20.97 | 251 | 0.9 | % | |||||||||||||
Gap Inc. | Old Navy, Banana Republic, The Gap, Gap Factory Store | 26 | 5,258 | 1.2 | % | 15.11 | 348 | 1.3 | % | |||||||||||||
The Kroger Co. | Kroger, Harris Teeter, King Soopers, QFC | 10 | 5,234 | 1.2 | % | 9.99 | 524 | 2.0 | % | |||||||||||||
Office Depot, Inc. | Office Depot, OfficeMax | 17 | 4,904 | 1.1 | % | 14.05 | 349 | 1.3 | % | |||||||||||||
Pier 1 Imports, Inc. | 24 | 4,829 | 1.1 | % | 19.87 | 243 | 0.9 | % | ||||||||||||||
Barnes & Noble, Inc. | 10 | 4,742 | 1.1 | % | 18.67 | 254 | 1.0 | % | ||||||||||||||
Total Top Retail Tenants | 394 | $ | 149,146 | 33.8 | % | $ | 13.94 | 10,701 | 40.2 | % | ||||||||||||
1st Quarter 2016 Supplemental Information | 16 | |
Retail Properties of America, Inc.
Retail Leasing Activity Summary
(square footage amounts in thousands)
The following table summarizes the leasing activity in our retail operating portfolio as of March 31, 2016 and for the preceding four quarters. Leases of less than 12 months have been excluded.
Total Leases | ||||||||||||||||||||||||
Number of Leases Signed | GLA Signed | New Contractual Rent per Square Foot (PSF) (a) | Prior Contractual Rent PSF (a) | % Change over Prior ABR (a) | WA Lease Term | Tenant Allowances PSF | ||||||||||||||||||
Q1 2016 | 140 | 789 | $ | 21.75 | $ | 20.39 | 6.67 | % | (b) | 5.05 | $ | 7.02 | ||||||||||||
Q4 2015 | 109 | 517 | $ | 21.70 | $ | 19.75 | 9.87 | % | 5.98 | $ | 13.07 | |||||||||||||
Q3 2015 | 131 | 666 | $ | 19.01 | $ | 17.38 | 9.38 | % | 5.94 | $ | 13.99 | |||||||||||||
Q2 2015 | 142 | 782 | $ | 19.52 | $ | 17.95 | 8.75 | % | 6.28 | $ | 7.70 | |||||||||||||
Total – 12 months | 522 | 2,754 | $ | 20.54 | $ | 18.96 | 8.33 | % | 5.77 | $ | 10.04 | |||||||||||||
Comparable Renewal Leases | ||||||||||||||||||||||||
Number of Leases Signed | GLA Signed | New Contractual Rent PSF | Prior Contractual Rent PSF | % Change over Prior ABR | WA Lease Term | Tenant Allowances PSF | ||||||||||||||||||
Q1 2016 | 105 | 627 | $ | 22.57 | $ | 21.03 | 7.32 | % | (b) | 4.67 | $ | 3.36 | ||||||||||||
Q4 2015 | 64 | 322 | $ | 21.66 | $ | 20.38 | 6.28 | % | 4.73 | $ | 3.20 | |||||||||||||
Q3 2015 | 80 | 412 | $ | 18.85 | $ | 17.57 | 7.29 | % | 4.61 | $ | 0.05 | |||||||||||||
Q2 2015 | 92 | 528 | $ | 18.58 | $ | 17.34 | 7.15 | % | 4.85 | $ | 1.82 | |||||||||||||
Total – 12 months | 341 | 1,889 | $ | 20.49 | $ | 19.13 | 7.11 | % | 4.71 | $ | 2.18 | |||||||||||||
Comparable New Leases | ||||||||||||||||||||||||
Number of Leases Signed | GLA Signed | New Contractual Rent PSF | Prior Contractual Rent PSF | % Change over Prior ABR | WA Lease Term | Tenant Allowances PSF | ||||||||||||||||||
Q1 2016 | 17 | 102 | $ | 16.73 | $ | 16.44 | 1.76 | % | 8.68 | $ | 28.55 | |||||||||||||
Q4 2015 | 17 | 81 | $ | 21.87 | $ | 17.22 | 27.00 | % | 8.85 | $ | 36.89 | |||||||||||||
Q3 2015 | 14 | 89 | $ | 19.77 | $ | 16.53 | 19.60 | % | 8.58 | $ | 32.56 | |||||||||||||
Q2 2015 | 15 | 39 | $ | 32.24 | $ | 26.21 | 23.01 | % | 8.11 | $ | 33.63 | |||||||||||||
Total – 12 months | 63 | 311 | $ | 20.88 | $ | 17.90 | 16.65 | % | 8.59 | $ | 32.51 | |||||||||||||
Non-Comparable New and Renewal Leases (c) | ||||||||||||||||||||||||
Number of Leases Signed | GLA Signed | New Contractual Rent PSF | Prior Contractual Rent PSF | % Change over Prior ABR | WA Lease Term | Tenant Allowances PSF | ||||||||||||||||||
Q1 2016 | 18 | 60 | $ | 15.03 | n/a | n/a | 4.16 | $ | 8.53 | |||||||||||||||
Q4 2015 | 28 | 114 | $ | 16.76 | n/a | n/a | 7.91 | $ | 24.03 | |||||||||||||||
Q3 2015 | 37 | 165 | $ | 22.41 | n/a | n/a | 7.49 | $ | 38.86 | |||||||||||||||
Q2 2015 | 35 | 215 | $ | 19.41 | n/a | n/a | 9.09 | $ | 17.45 | |||||||||||||||
Total – 12 months | 118 | 554 | $ | 19.29 | n/a | n/a | 7.91 | $ | 24.22 | |||||||||||||||
(a) | Excludes the impact of Non-Comparable New and Renewal Leases. |
(b) | Excluding the impact from eight Ride Aid leases that were extended to effectuate the planned 2016 disposition of these single-user assets, combined comparable re-leasing spreads were approximately 7.95% and comparable renewal re-leasing spreads were approximately 8.88% for the three months ended March 31, 2016 over previous rental rates. |
(c) | Includes (i) leases signed on units that were vacant for over 12 months, (ii) leases signed without fixed rental payments and (iii) leases signed where the previous and the current lease do not have a consistent lease structure. |
1st Quarter 2016 Supplemental Information | 17 | |
Retail Properties of America, Inc.
Retail Lease Expirations as of March 31, 2016
(dollar amounts and square footage in thousands)
The following tables set forth a summary, as of March 31, 2016, of lease expirations scheduled to occur during the remainder of 2016 and each of the nine calendar years from 2017 to 2025 and thereafter, assuming no exercise of renewal options or early termination rights for all leases in our retail operating portfolio. The following tables are based on leases commenced as of March 31, 2016. Dollars (other than per square foot information) and square feet of GLA are presented in thousands in the table.
Lease Expiration Year | Lease Count | ABR | % of Total ABR | ABR per Occupied Sq. Ft. | ABR at Exp. (a) | ABR per Occupied Sq. Ft. at Exp. | GLA | % of Occupied GLA | % of Total GLA | ||||||||||||||||||||||
2016 | 222 | $ | 16,016 | 3.6 | % | $ | 19.44 | $ | 16,016 | $ | 19.44 | 824 | 3.1 | % | 2.9 | % | |||||||||||||||
2017 | 437 | 43,833 | 9.9 | % | 16.28 | 43,988 | 16.33 | 2,693 | 10.1 | % | 9.5 | % | |||||||||||||||||||
2018 | 491 | 55,834 | 12.7 | % | 18.31 | 56,832 | 18.63 | 3,050 | 11.5 | % | 10.7 | % | |||||||||||||||||||
2019 | 522 | 72,671 | 16.4 | % | 18.04 | 74,003 | 18.37 | 4,029 | 15.2 | % | 14.2 | % | |||||||||||||||||||
2020 | 388 | 50,860 | 11.6 | % | 15.63 | 52,042 | 15.99 | 3,255 | 12.3 | % | 11.5 | % | |||||||||||||||||||
2021 | 266 | 44,836 | 10.2 | % | 17.07 | 47,377 | 18.03 | 2,627 | 9.9 | % | 9.3 | % | |||||||||||||||||||
2022 | 105 | 29,651 | 6.7 | % | 14.01 | 31,838 | 15.05 | 2,116 | 8.0 | % | 7.5 | % | |||||||||||||||||||
2023 | 101 | 24,823 | 5.6 | % | 15.28 | 26,584 | 16.36 | 1,625 | 6.1 | % | 5.8 | % | |||||||||||||||||||
2024 | 152 | 31,519 | 7.1 | % | 15.48 | 34,039 | 16.72 | 2,036 | 7.7 | % | 7.2 | % | |||||||||||||||||||
2025 | 110 | 23,932 | 5.5 | % | 16.76 | 26,181 | 18.33 | 1,428 | 5.4 | % | 5.1 | % | |||||||||||||||||||
Thereafter | 116 | 45,411 | 10.2 | % | 16.62 | 52,358 | 19.16 | 2,733 | 10.3 | % | 9.7 | % | |||||||||||||||||||
Month to month | 46 | 2,183 | 0.5 | % | 18.82 | 2,183 | 18.82 | 116 | 0.4 | % | 0.4 | % | |||||||||||||||||||
Leased Total | 2,956 | $ | 441,569 | 100.0 | % | $ | 16.64 | $ | 463,441 | $ | 17.47 | 26,532 | 100.0 | % | 93.8 | % | |||||||||||||||
Leases signed but not commenced | 36 | $ | 3,892 | — | $ | 16.92 | $ | 4,294 | $ | 18.67 | 230 | — | 0.8 | % | |||||||||||||||||
Available | 1,534 | — | 5.4 | % | |||||||||||||||||||||||||||
The following tables break down the above information into anchor (10,000 sf and above) and non-anchor (under 10,000 sf) details for our retail operating portfolio. Dollars (other than per square foot information) and square feet of GLA are presented in thousands in the tables. | |||||||||||||||||||||||||||||||
Anchor | |||||||||||||||||||||||||||||||
Lease Expiration Year | Lease Count | ABR | % of Total ABR | ABR per Occupied Sq. Ft. | ABR at Exp. (a) | ABR per Occupied Sq. Ft. at Exp. | GLA | % of Occupied GLA | % of Total GLA | ||||||||||||||||||||||
2016 | 14 | $ | 4,077 | 0.9 | % | $ | 14.36 | $ | 4,077 | $ | 14.36 | 284 | 1.1 | % | 1.0 | % | |||||||||||||||
2017 | 52 | 16,867 | 3.8 | % | 10.38 | 16,886 | 10.39 | 1,625 | 6.1 | % | 5.7 | % | |||||||||||||||||||
2018 | 67 | 24,161 | 5.5 | % | 13.24 | 24,365 | 13.35 | 1,825 | 6.9 | % | 6.4 | % | |||||||||||||||||||
2019 | 106 | 41,942 | 9.5 | % | 14.80 | 42,141 | 14.88 | 2,833 | 10.7 | % | 10.0 | % | |||||||||||||||||||
2020 | 84 | 27,550 | 6.3 | % | 12.04 | 27,621 | 12.07 | 2,288 | 8.6 | % | 8.1 | % | |||||||||||||||||||
2021 | 66 | 27,769 | 6.3 | % | 14.28 | 28,636 | 14.73 | 1,944 | 7.3 | % | 6.9 | % | |||||||||||||||||||
2022 | 51 | 23,423 | 5.3 | % | 12.41 | 24,891 | 13.18 | 1,888 | 7.1 | % | 6.7 | % | |||||||||||||||||||
2023 | 41 | 18,848 | 4.3 | % | 13.62 | 19,801 | 14.31 | 1,384 | 5.2 | % | 4.9 | % | |||||||||||||||||||
2024 | 53 | 20,927 | 4.7 | % | 12.40 | 21,926 | 13.00 | 1,687 | 6.4 | % | 6.0 | % | |||||||||||||||||||
2025 | 32 | 14,847 | 3.4 | % | 13.20 | 15,687 | 13.94 | 1,125 | 4.3 | % | 4.0 | % | |||||||||||||||||||
Thereafter | 61 | 37,302 | 8.4 | % | 14.99 | 42,170 | 16.95 | 2,488 | 9.4 | % | 8.8 | % | |||||||||||||||||||
Month to month | 1 | 162 | — | % | 13.50 | 162 | 13.50 | 12 | — | % | — | % | |||||||||||||||||||
Leased Total | 628 | $ | 257,875 | 58.4 | % | $ | 13.30 | $ | 268,363 | $ | 13.85 | 19,383 | 73.1 | % | 68.5 | % | |||||||||||||||
Leases signed but not commenced | 7 | $ | 2,033 | — | $ | 12.63 | $ | 2,201 | $ | 13.67 | 161 | — | 0.6 | % | |||||||||||||||||
Available | 538 | — | 1.9 | % | |||||||||||||||||||||||||||
Non-Anchor | |||||||||||||||||||||||||||||||
Lease Expiration Year | Lease Count | ABR | % of Total ABR | ABR per Occupied Sq. Ft. | ABR at Exp. (a) | ABR per Occupied Sq. Ft. at Exp. | GLA | % of Occupied GLA | % of Total GLA | ||||||||||||||||||||||
2016 | 208 | $ | 11,939 | 2.7 | % | $ | 22.11 | $ | 11,939 | $ | 22.11 | 540 | 2.0 | % | 1.9 | % | |||||||||||||||
2017 | 385 | 26,966 | 6.1 | % | 25.25 | 27,102 | 25.38 | 1,068 | 4.0 | % | 3.8 | % | |||||||||||||||||||
2018 | 424 | 31,673 | 7.2 | % | 25.86 | 32,467 | 26.50 | 1,225 | 4.6 | % | 4.3 | % | |||||||||||||||||||
2019 | 416 | 30,729 | 6.9 | % | 25.69 | 31,862 | 26.64 | 1,196 | 4.5 | % | 4.2 | % | |||||||||||||||||||
2020 | 304 | 23,310 | 5.3 | % | 24.11 | 24,421 | 25.25 | 967 | 3.7 | % | 3.4 | % | |||||||||||||||||||
2021 | 200 | 17,067 | 3.9 | % | 24.99 | 18,741 | 27.44 | 683 | 2.6 | % | 2.4 | % | |||||||||||||||||||
2022 | 54 | 6,228 | 1.4 | % | 27.32 | 6,947 | 30.47 | 228 | 0.9 | % | 0.8 | % | |||||||||||||||||||
2023 | 60 | 5,975 | 1.3 | % | 24.79 | 6,783 | 28.15 | 241 | 0.9 | % | 0.9 | % | |||||||||||||||||||
2024 | 99 | 10,592 | 2.4 | % | 30.35 | 12,113 | 34.71 | 349 | 1.3 | % | 1.2 | % | |||||||||||||||||||
2025 | 78 | 9,085 | 2.1 | % | 29.98 | 10,494 | 34.63 | 303 | 1.1 | % | 1.1 | % | |||||||||||||||||||
Thereafter | 55 | 8,109 | 1.8 | % | 33.10 | 10,188 | 41.58 | 245 | 0.9 | % | 0.9 | % | |||||||||||||||||||
Month to month | 45 | 2,021 | 0.5 | % | 19.43 | 2,021 | 19.43 | 104 | 0.4 | % | 0.4 | % | |||||||||||||||||||
Leased Total | 2,328 | $ | 183,694 | 41.6 | % | $ | 25.70 | $ | 195,078 | $ | 27.29 | 7,149 | 26.9 | % | 25.3 | % | |||||||||||||||
Leases signed but not commenced | 29 | $ | 1,859 | — | $ | 26.94 | $ | 2,093 | $ | 30.33 | 69 | — | 0.2 | % | |||||||||||||||||
Available | 996 | — | 3.5 | % | |||||||||||||||||||||||||||
(a) | Represents annualized base rent at the scheduled expiration of the lease giving effect to fixed contractual increases in base rent. |
1st Quarter 2016 Supplemental Information | 18 | |
Retail Properties of America, Inc.
Non-GAAP Financial Measures and Other Definitions
Gross Leasable Area (GLA)
Gross Leasable Area (GLA) is defined as the aggregate number of square feet available for lease. GLA excludes square footage attributable to third-party managed storage units, of which we owned 62,000 square feet as of March 31, 2016.
Occupancy
Occupancy is defined, for a property or group of properties, as the ratio, expressed as a percentage, of (a) the number of square feet of such property economically occupied by tenants under leases with an initial term of greater than one year, to (b) the aggregate number of square feet for such property.
Percent Leased Including Signed
Percent Leased Including Signed is defined, for a property or group of properties, as the ratio, expressed as a percentage, of (a) the sum of occupied square feet (pursuant to the definition above) of such property and vacant square feet for which a lease with an initial term of greater than one year has been signed, but rent has not yet commenced, to (b) the aggregate number of square feet for such property.
Funds From Operations (FFO) Attributable to Common Shareholders
As defined by the National Association of Real Estate Investment Trusts (NAREIT), an industry trade group, Funds From Operations (FFO) means net income (loss) computed in accordance with generally accepted accounting principles (GAAP), excluding gains (or losses) from sales of depreciable real estate, plus depreciation and amortization and impairment charges on depreciable real estate, including amounts from continuing and discontinued operations, as well as adjustments for unconsolidated joint ventures in which we hold an interest. We have adopted the NAREIT definition in our computation of FFO attributable to common shareholders. Management believes that, subject to the following limitations, FFO attributable to common shareholders provides a basis for comparing our performance and operations to those of other real estate investment trusts (REITs). We believe that FFO attributable to common shareholders, which is a non-GAAP performance measure, provides an additional and useful means to assess the operating performance of REITs. FFO attributable to common shareholders does not represent an alternative to "Net income" or "Net income attributable to common shareholders" as an indicator of our performance or "Cash Flows from Operating Activities" as determined by GAAP as a measure of our capacity to fund cash needs, including the payment of dividends.
Operating FFO Attributable to Common Shareholders
Operating FFO attributable to common shareholders is defined as FFO attributable to common shareholders excluding the impact of discrete non-operating transactions and other events which we do not consider representative of the comparable operating results of our core business platform, our real estate operating portfolio. Specific examples of discrete non-operating transactions and other events include, but are not limited to, the financial statement impact of gains or losses associated with the early extinguishment of debt or other liabilities, impairment charges to write down the carrying value of assets other than depreciable real estate, actual or anticipated settlement of litigation involving the Company and executive and realignment separation charges, which are otherwise excluded from our calculation of FFO attributable to common shareholders. We believe that Operating FFO attributable to common shareholders, which is a non-GAAP performance measure, provides an additional and useful means to assess the operating performance of REITs. Operating FFO attributable to common shareholders does not represent an alternative to "Net income" or "Net income attributable to common shareholders" as an indicator of our performance or "Cash Flows from Operating Activities" as determined by GAAP as a measure of our capacity to fund cash needs, including the payment of dividends. Further, comparison of our presentation of Operating FFO attributable to common shareholders to similarly titled measures for other REITs may not necessarily be meaningful due to possible differences in definition and application by such REITs.
Net Operating Income (NOI)
We define Net Operating Income (NOI) as operating revenues (rental income, tenant recovery income and other property income, excluding straight-line rental income, amortization of lease inducements, amortization of acquired above and below market lease intangibles and lease termination fee income) less property operating expenses (real estate tax expense and property operating expense, excluding straight-line ground rent expense, amortization of acquired ground lease intangibles and straight-line bad debt expense). We believe that NOI is a useful measure of our operating performance. Other REITs may use different methodologies for calculating NOI, and accordingly, our NOI may not be comparable to other REITs. We believe that NOI provides an operating perspective not immediately apparent from GAAP operating income or net income attributable to common shareholders. We use NOI to evaluate our performance on a property-by-property basis because this measure allows management to evaluate the impact that factors such as lease structure, lease rates and tenant base, which vary by property, have on our operating results. However, this measure should only be used as an alternative measure of our financial performance.
Same Store NOI and NOI from Other Investment Properties
Same Store NOI for the three months ended March 31, 2016 represents NOI from our same store portfolio consisting of 178 retail operating properties acquired or placed in service and stabilized prior to January 1, 2015. NOI from Other Investment Properties for the three months ended March 31, 2016 represents NOI primarily from properties acquired during 2015 and 2016, our development property, our one remaining office property, three properties where we have begun activities in anticipation of future redevelopment, the properties that were sold or held for sale in 2015 and 2016 and the net income from our wholly-owned captive insurance company, which was formed on December 1, 2014.
1st Quarter 2016 Supplemental Information | 19 | |
Retail Properties of America, Inc.
Non-GAAP Financial Measures and Other Definitions (continued)
Same Store NOI and NOI from Other Investment Properties (continued)
We believe that Same Store NOI and NOI from Other Investment Properties are useful measures of our operating performance. Other REITs may use different methodologies for calculating these metrics, and accordingly, our NOI metrics may not be comparable to other REITs. We believe that these metrics provide an operating perspective not immediately apparent from "Operating income" or "Net income attributable to common shareholders" as defined within GAAP. We use these metrics to evaluate our performance on a property-by-property basis because these measures allow management to evaluate the impact that factors such as lease structure, lease rates and tenant base have on our operating results. However, these measures should only be used as alternative measures of our financial performance.
Adjusted EBITDA
Adjusted EBITDA represents net income attributable to common shareholders before interest, income taxes, depreciation and amortization, as further adjusted to eliminate the impact of certain items that we do not consider indicative of our ongoing performance. We believe that Adjusted EBITDA is useful because it allows investors and management to evaluate and compare our performance from period to period in a meaningful and consistent manner in addition to standard financial measurements under GAAP. Adjusted EBITDA is not a measurement of financial performance under GAAP and should not be considered as an alternative to "Net income attributable to common shareholders" as an indicator of operating performance or any measure of performance derived in accordance with GAAP. Our calculation of Adjusted EBITDA may be different from the calculation used by other companies and, accordingly, comparability may be limited.
Net Debt to Adjusted EBITDA
Net Debt to Adjusted EBITDA represents (i) our total borrowed debt, excluding unamortized premium, discount and capitalized loan fees, less cash and cash equivalents divided by (ii) Adjusted EBITDA for the prior three months, annualized. We believe that this ratio is useful because it provides investors with information regarding our total borrowed debt net of cash and cash equivalents, which could be used to repay borrowed debt, compared to our performance as measured using Adjusted EBITDA.
Net Debt and Preferred Stock to Adjusted EBITDA
Net Debt and Preferred Stock to Adjusted EBITDA represents (i) our total borrowed debt, excluding unamortized premium, discount and capitalized loan fees, plus preferred stock, less cash and cash equivalents divided by (ii) Adjusted EBITDA for the prior three months, annualized. We believe that this ratio is useful because it provides investors with information regarding our total borrowed debt and preferred stock, net of cash and cash equivalents, which could be used to repay borrowed debt, compared to our performance as measured using Adjusted EBITDA.
1st Quarter 2016 Supplemental Information | 20 | |
Retail Properties of America, Inc.
Reconciliation of Non-GAAP Financial Measures
(amounts in thousands)
(unaudited)
Reconciliation of Net Income Attributable to Common Shareholders to NOI
Three Months Ended March 31, | ||||||||
2016 | 2015 | |||||||
Operating revenues | ||||||||
Same store investment properties (178 retail operating properties): | ||||||||
Rental income | $ | 98,278 | $ | 96,384 | ||||
Tenant recovery income | 26,166 | 26,671 | ||||||
Other property income | 898 | 1,002 | ||||||
Other investment properties: | ||||||||
Rental income | 15,609 | 22,130 | ||||||
Tenant recovery income | 4,190 | 4,629 | ||||||
Other property income | 467 | 973 | ||||||
Operating expenses | ||||||||
Same store investment properties (178 retail operating properties): | ||||||||
Property operating expenses | (17,777 | ) | (19,116 | ) | ||||
Real estate taxes | (17,759 | ) | (17,817 | ) | ||||
Other investment properties: | ||||||||
Property operating expenses | (4,508 | ) | (5,785 | ) | ||||
Real estate taxes | (2,180 | ) | (2,693 | ) | ||||
NOI from continuing operations | ||||||||
Same store investment properties | 89,806 | 87,124 | ||||||
Other investment properties | 13,578 | 19,254 | ||||||
Total NOI from continuing operations | 103,384 | 106,378 | ||||||
Other income (expense) | ||||||||
Straight-line rental income, net | 1,028 | 1,012 | ||||||
Amortization of acquired above and below market lease intangibles, net | 576 | 451 | ||||||
Amortization of lease inducements | (231 | ) | (189 | ) | ||||
Lease termination fees | 1,658 | 134 | ||||||
Straight-line ground rent expense | (916 | ) | (934 | ) | ||||
Amortization of acquired ground lease intangibles | 140 | 140 | ||||||
Depreciation and amortization | (53,396 | ) | (54,676 | ) | ||||
Provision for impairment of investment properties | (2,164 | ) | — | |||||
General and administrative expenses | (11,406 | ) | (10,992 | ) | ||||
Gain on extinguishment of debt | 13,653 | — | ||||||
Interest expense | (26,764 | ) | (34,045 | ) | ||||
Other income, net | 125 | 1,225 | ||||||
Total other expense | (77,697 | ) | (97,874 | ) | ||||
Income from continuing operations | 25,687 | 8,504 | ||||||
Gain on sales of investment properties | 21,739 | 4,572 | ||||||
Net income | 47,426 | 13,076 | ||||||
Preferred stock dividends | (2,362 | ) | (2,362 | ) | ||||
Net income attributable to common shareholders | $ | 45,064 | $ | 10,714 | ||||
1st Quarter 2016 Supplemental Information | 21 | |
Retail Properties of America, Inc.
Reconciliation of Non-GAAP Financial Measures
(amounts in thousands)
(unaudited)
Reconciliation of Net Income Attributable to Common Shareholders to Adjusted EBITDA
Three Months Ended | ||||||||
March 31, 2016 | December 31, 2015 | |||||||
Net income attributable to common shareholders | $ | 45,064 | $ | 644 | ||||
Preferred stock dividends | 2,362 | 2,363 | ||||||
Interest expense | 26,764 | 28,328 | ||||||
Depreciation and amortization | 53,396 | 51,361 | ||||||
Gain on sales of investment properties, net of noncontrolling interest | (21,739 | ) | (8,050 | ) | ||||
Gain on extinguishment of debt | (13,653 | ) | — | |||||
Provision for impairment of investment properties | 2,164 | 15,824 | ||||||
Realignment separation charges (a) | — | 1,193 | ||||||
Adjusted EBITDA | $ | 94,358 | $ | 91,663 | ||||
Annualized | $ | 377,432 | $ | 366,652 | ||||
(a) | Included in "General and administrative expenses" in the condensed consolidated statements of operations. |
1st Quarter 2016 Supplemental Information | 22 | |