RPT Realty - FORM 8-K - EX-99.1 - EXHIBIT 99.1 - August 2, 2016

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RAMCO-GERSHENSON PROPERTIES TRUST REPORTS
FINANCIAL AND OPERATING RESULTS FOR THE SECOND QUARTER 2016

FARMINGTON HILLS, Michigan – August 2, 2016 - Ramco-Gershenson Properties Trust (NYSE:RPT) today announced its financial and operating results for the three and six months ended June 30, 2016.

SECOND QUARTER 2016 HIGHLIGHTS:

•
Net income attributable to common shareholders for the second quarter of $0.32 per diluted share, an increase of $0.26 over the prior year.
•
Operating Funds from Operations (“Operating FFO”) of $0.35 per diluted share, an increase of 12.9% over the prior year.
•
Sold interests in four shopping centers and two outparcels for $58.9 million.
•
Signed 63 comparable leases totaling 553,560 square feet at comparable rent growth of 8.0%.
•
Ended the quarter with a consolidated portfolio leased occupancy of 95.0%.
•
Ended the quarter with a net debt to EBITDA of 6.3X.

“We posted solid results in every key operating measure during the second quarter,” said Dennis Gershenson, President and Chief Executive Officer. “We also sold approximately $59 million of non-core properties, which pushes us over 60% of our disposition goal for the year. This year's sales support our strategy of owning a portfolio of high-quality, high-growth shopping centers that are the dominant retail destinations in the communities they serve.”

FINANCIAL RESULTS:
For the three months ended June 30, 2016:
•
Net income attributable to common shareholders for the second quarter of $0.32 per diluted share, an increase of $0.26 over the prior year.
•
Operating FFO of $30.7 million, or $0.35 per diluted share, compared to $27.7 million, or $0.31 per diluted share for the same period in 2015.
•
FFO of $32.1 million, or $0.36 per diluted share, compared to $28.3 million, or $0.32 per diluted share for the same period in 2015.

For the Six months ended June 30, 2016

•
Net income available to common shareholders of $35.7 million, or $0.45 per diluted share, compared to $12.7 million, or $0.16 per diluted share for the same period in 2015.
•
Operating FFO of $60.3 million, or $0.69 per diluted share, compared to $55.8 million, or $0.64 per diluted share for the same period in 2015.
•
FFO of $61.8 million, or $0.70 per diluted share, compared to $57.0 million, or $0.65 per diluted share for the same period in 2015.










i

OPERATING RESULTS:

•
Same-center NOI growth for the second quarter of 4.8% including redevelopments. Same-center NOI has been impacted by the bankruptcy filing by The Sports Authority ("TSA"). Excluding the reversal of a reserve for bad debts for TSA taken in the first quarter, same-center NOI would have increased 3.9% for the quarter.
•
Consolidated portfolio leased occupancy of 95.0% and physical occupancy of 94.2%.
•
Signed 80 leases in the consolidated portfolio encompassing 628,188 square feet, including 63 leases totaling 553,560 square feet at comparable rental growth of 8.0%.

BALANCE SHEET METRICS (as of June 30, 2016):

•
Net debt to total market capitalization of 37.2%.
•
Net debt to EBITDA of 6.3X, interest coverage of 3.8X, and fixed charge coverage of 3.1X.
•
Weighted average debt maturity of 6.4 years.

INVESTMENT ACTIVITY:
Dispositions
The Company sold its interest in four shopping centers and two land parcels for $58.9 million. The shopping centers sold were:
•
Lakeshore Marketplace, Norton Shores, Michigan (100% ownership), a 343,000 square foot center anchored by Barnes & Noble, Dunham's, Gordman's, Hobby Lobby, T.J. Maxx and Toys "R" US, with ABR per square foot of $8.91
•
River Crossing Center, New Port Ritchey, Florida (100% ownership), a 62,000 square foot center anchored by Publix, with ABR per square foot of $12.72
•
Centre at Woodstock, Woodstock, Georgia (100% ownership), a 87,000 square foot center anchored by Publix, with ABR per square foot of $12.06
•
Kissimmee West, Kissimmee, Florida (7% ownership), a 116,000 square foot center anchored by Marshalls and JoAnn, with ABR per square foot of $12.76

Redevelopment
At June 30, 2016, the Company had ten properties under redevelopment, expansion and/or re-anchoring with an estimated total cost of $79.9 million, which are expected to be completed in 2016 and 2017 producing a return on incremental costs of between 9.0 - 10.0%.

FINANCING ACTIVITY:

The Company executed a new at-the-market equity offering program through which it may sell up to an aggregate 8.0 million common shares.

Subsequent to June 30, 2016, the Company entered into agreements to issue $75.0 million of senior unsecured notes in a private placement with two high-quality institutional investors. The notes have a 12-year term and are priced at a fixed interest rate of 3.64%. The transaction is expected to close on November 30, 2016.

At quarter-end, the Company had $323.9 million available under its $350.0 million revolving line of credit.




ii


DIVIDEND:

The Company declared a regular cash dividend of $0.21 per common share for the period of April 1, 2016 through June 30, 2016 and a Series D convertible perpetual preferred share dividend of $0.90625 per share for the same period. The dividends were paid on July 1, 2016 to shareholders of record as of June 20, 2016. The Operating FFO payout ratio was 60.0%.

2016 GUIDANCE:

The Company has narrowed its 2016 Operating FFO guidance range to $1.33 - $1.37 per share.  The Company’s previous Operating FFO guidance was $1.32 - $1.38 per share.  

CONFERENCE CALL/WEBCAST:

Ramco-Gershenson Properties Trust will host a live broadcast of its second quarter conference call on Wednesday, August 3, 2016, at 9:00 a.m. eastern time, to discuss its financial and operating results. The live broadcast will be available online at www.rgpt.com and www.investorcalendar.com and also by telephone at (877) 407-9205. A replay will be available shortly after the call on the aforementioned websites (for ninety days) or by telephone at (877) 660-6853, (Conference ID: 13639466), for one week.

SUPPLEMENTAL MATERIALS:

The Company’s quarterly financial and operating supplement is available on its corporate web site at www.rgpt.com. If you wish to receive a copy via email, please send requests to dhendershot@rgpt.com.

ABOUT RAMCO-GERSHENSON PROPERTIES TRUST:
Ramco-Gershenson Properties Trust (NYSE:RPT) is a fully integrated, self-administered, publicly-traded real estate investment trust (REIT) based in Farmington Hills, Michigan.  The Company's business is the ownership and management of large, multi-anchor shopping centers primarily in a number of the largest metropolitan markets in the central United States.  At June 30, 2016, the Company owned interests in and managed a portfolio of 68 shopping centers and one office building with approximately 15.2 million square feet of gross leasable area. At June 30, 2016, the Company's consolidated operating portfolio was 95% leased. Additional information regarding the Company is available on its corporate website: www.rgpt.com.

This press release may contain forward-looking statements that represent the Company’s expectations and projections for the future. Management of Ramco-Gershenson believes the expectations reflected in any forward-looking statements made in this press release are based on reasonable assumptions. Certain factors could occur that might cause actual results to vary, including deterioration in national economic conditions, weakening of real estate markets, decreases in the availability of credit, increases in interest rates, adverse changes in the retail industry, our continuing ability to qualify as a REIT and other factors discussed in the Company’s reports filed with the Securities and Exchange Commission.

Company Contact:
Dawn L. Hendershot, Vice President of Investor Relations
and Corporate Communications
31500 Northwestern Highway, Suite 300
Farmington Hills, MI 48334
dhendershot@rgpt.com
(248) 592-6202



iii


RAMCO-GERSHENSON PROPERTIES TRUST
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except per share amounts)
 
 
 
 
 
June 30,
2016
 
December 31,
2015
 
(unaudited)
 
 
ASSETS
 
 
 
Income producing properties, at cost:
 
 
 
Land
$
385,423

 
$
392,352

Buildings and improvements
1,758,731

 
1,792,129

Less accumulated depreciation and amortization
(342,304
)
 
(331,520
)
Income producing properties, net
1,801,850

 
1,852,961

Construction in progress and land available for development or sale
66,224

 
60,166

Real estate held for sale
—

 
453

Net real estate
1,868,074

 
1,913,580

Equity investments in unconsolidated joint ventures
3,159

 
4,325

Cash and cash equivalents
4,369

 
6,644

Restricted cash
7,785

 
8,708

Accounts receivable (net of allowance for doubtful accounts of $2,945 and $2,790 as of June 30, 2016 and December 31, 2015, respectively)
16,854

 
18,705

Acquired lease intangibles, net
78,115

 
88,819

Other assets, net
86,904

 
87,890

TOTAL ASSETS
$
2,065,260

 
$
2,128,671

 
 
 
 
LIABILITIES AND SHAREHOLDERS' EQUITY
 

 
 

Notes payable, net
$
1,026,418

 
$
1,083,711

Capital lease obligation
1,108

 
1,108

Accounts payable and accrued expenses
42,115

 
44,480

Acquired lease intangibles, net
61,366

 
64,193

Other liabilities
14,366

 
10,035

Distributions payable
18,807

 
18,807

TOTAL LIABILITIES
$
1,164,180

 
$
1,222,334

 
 
 
 
Commitments and Contingencies
 
 
 
 
 
 
 
Ramco-Gershenson Properties Trust ("RPT") Shareholders' Equity:
 
 
 

7.25% Series D Cumulative Convertible Perpetual Preferred Shares, $50 par
$
92,427

 
$
92,427

Common shares of beneficial interest, $0.01 par
792

 
792

Additional paid-in capital
1,157,066

 
1,156,345

Accumulated distributions in excess of net income
(362,137
)
 
(363,937
)
Accumulated other comprehensive loss
(8,232
)
 
(1,404
)
TOTAL SHAREHOLDERS' EQUITY ATTRIBUTABLE TO RPT
879,916

 
884,223

Noncontrolling interest
21,164

 
22,114

TOTAL SHAREHOLDERS' EQUITY
901,080

 
906,337

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
$
2,065,260

 
$
2,128,671










RAMCO-GERSHENSON PROPERTIES TRUST
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
 
 
 
 
 
 
 
 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2016
 
2015
 
Inc (Dec)
 
2016
 
2015
 
Inc (Dec)
REVENUE
 
 
 
 
 
 
 
 
 
 
 
Minimum rent
$
48,554

 
$
44,327

 
$
4,227

 
$
96,950

 
$
87,678

 
$
9,272

Percentage rent
138

 
18

 
120

 
440

 
371

 
69

Recovery income from tenants
16,032

 
13,962

 
2,070

 
32,778

 
28,284

 
4,494

Other property income
914

 
850

 
64

 
1,872

 
1,709

 
163

Management and other fee income
245

 
578

 
(333
)
 
355

 
1,110

 
(755
)
TOTAL REVENUE
65,883

 
59,735

 
6,148

 
132,395

 
119,152

 
13,243

 
 
 
 
 
 
 
 
 
 
 
 
EXPENSES
 

 
 

 
 
 
 
 
 
 
 
Real estate taxes
11,132

 
9,126

 
2,006

 
21,441

 
18,121

 
3,320

Recoverable operating expense
6,672

 
6,846

 
(174
)
 
14,751

 
14,124

 
627

Other non-recoverable operating expense
564

 
994

 
(430
)
 
1,957

 
1,707

 
250

Depreciation and amortization
22,714

 
21,120

 
1,594

 
46,561

 
41,483

 
5,078

Acquisition costs
4

 
265

 
(261
)
 
63

 
307

 
(244
)
General and administrative expense
5,683

 
5,474

 
209

 
11,288

 
10,348

 
940

Provision for impairment
—

 
—

 
—

 
—

 
2,521

 
(2,521
)
TOTAL EXPENSES
46,769

 
43,825

 
2,944

 
96,061

 
88,611

 
7,450

 
 
 
 
 
 
 
 
 
 
 
 
OPERATING INCOME
19,114

 
15,910

 
3,204

 
36,334

 
30,541

 
5,793

 
 
 
 
 
 
 
 
 
 
 
 
OTHER INCOME AND EXPENSES
 

 
 

 
 
 
 
 
 
 
 
Other income (expense), net
198

 
27

 
171

 
(150
)
 
(191
)
 
41

Gain on sale of real estate
19,799

 
273

 
19,526

 
26,324

 
3,469

 
22,855

Earnings from unconsolidated joint ventures
109

 
335

 
(226
)
 
218

 
2,995

 
(2,777
)
Interest expense
(11,002
)
 
(10,058
)
 
(944
)
 
(21,924
)
 
(20,027
)
 
(1,897
)
Amortization of deferred financing fees
(374
)
 
(330
)
 
(44
)
 
(754
)
 
(664
)
 
(90
)
Other gain on unconsolidated joint ventures
215

 
—

 
215

 
215

 
—

 
215

Gain on extinguishment of debt
—

 
1,387

 
(1,387
)
 
—

 
1,387

 
(1,387
)
INCOME BEFORE TAX
28,059

 
7,544

 
20,515

 
40,263

 
17,510

 
22,753

Income tax provision
(39
)
 
(255
)
 
216

 
(101
)
 
(277
)
 
176

NET INCOME
28,020

 
7,289

 
20,731

 
40,162

 
17,233

 
22,929

Net income attributable to noncontrolling partner interest
(659
)
 
(199
)
 
(460
)
 
(956
)
 
(476
)
 
(480
)
NET INCOME ATTRIBUTABLE TO RPT
27,361

 
7,090

 
20,271

 
39,206

 
16,757

 
22,449

Preferred share dividends
(1,675
)
 
(1,675
)
 
—

 
(3,350
)
 
(3,487
)
 
137

Preferred share conversion costs
—

 
(500
)
 
500

 
—

 
(500
)
 
500

NET INCOME AVAILABLE TO COMMON SHAREHOLDERS
$
25,686

 
$
4,915

 
$
20,771

 
$
35,856

 
$
12,770

 
$
23,086

 
 
 
 
 
 
 
 
 
 
 
 
EARNINGS PER COMMON SHARE
 

 
 

 
 
 
 
 
 
 
 
Basic
$
0.32

 
$
0.06

 
$
0.26

 
$
0.45

 
$
0.16

 
$
0.29

Diluted
$
0.32

 
$
0.06

 
$
0.26

 
$
0.45

 
$
0.16

 
$
0.29

 
 
 
 
 
 
 
 
 
 
 
 
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
 

 
 

 
 
 
 
 
 
 
 
Basic
79,233

 
79,124

 
109

 
79,214

 
78,528

 
686

Diluted
86,027

 
79,319

 
6,708

 
79,413

 
78,731

 
682





RAMCO-GERSHENSON PROPERTIES TRUST
FUNDS FROM OPERATIONS
(In thousands, except per share data)
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
 
2016
 
2015
 
2016
 
2015
 
 
 
 
 
 
 
 
 
Net income available to common shareholders
 
$
25,686

 
$
4,915

 
$
35,856

 
$
12,770

Adjustments:
 
 
 
 
 
 
 
 
Rental property depreciation and amortization expense
 
22,671

 
21,080

 
46,478

 
41,407

Pro-rata share of real estate depreciation from unconsolidated joint ventures
 
81

 
702

 
163

 
1,398

Gain on sale of depreciable real estate
 
(18,473
)
 
(298
)
 
(24,747
)
 
(298
)
Gain on sale of joint venture depreciable real estate (1)
 
(26
)
 
—

 
(26
)
 
(2,239
)
Other gain on unconsolidated joint ventures (2)
 
(215
)
 
—

 
(215
)
 
—

Noncontrolling interest in Operating Partnership (3)
 
659

 
199

 
956

 
476

FFO
 
$
30,383

 
$
26,598

 
$
58,465

 
$
53,514

Preferred share dividends (assuming conversion)
 
1,675

 
1,675

 
3,350

 
3,487

FFO available to common shareholders
 
32,058

 
28,273

 
61,815

 
57,001

 
 
 
 
 
 
 
 
 
(Gain) loss on sale of land
 
$
(1,326
)
 
$
25

 
$
(1,577
)
 
$
(3,171
)
Provision for impairment on land available for development or sale
 
—

 
—

 
—

 
2,521

Gain on extinguishment of debt
 
—

 
(1,387
)
 
—

 
(1,387
)
  Acquisition costs
 
4

 
265

 
63

 
307

Preferred share conversion costs
 
—

 
500

 
—

 
500

Operating FFO
 
$
30,736

 
$
27,676

 
$
60,301

 
$
55,771

 
 
 
 
 
 
 
 
 
Weighted average common shares
 
79,233

 
79,124

 
79,214

 
78,528

Shares issuable upon conversion of Operating Partnership Units (3)
 
1,936

 
2,247

 
1,969

 
2,247

Dilutive effect of securities
 
206

 
195

 
199

 
203

Subtotal
 
81,375

 
81,566

 
81,382

 
80,978

Shares issuable upon conversion of preferred shares (4)
 
6,588

 
6,538

 
6,588

 
6,792

Weighted average equivalent shares outstanding, diluted
 
87,963

 
88,104

 
87,970

 
87,770

 
 
 
 
 
 
 
 
 
FFO, per diluted share
 
$
0.36

 
$
0.32

 
$
0.70

 
$
0.65

Operating FFO, per diluted share
 
$
0.35

 
$
0.31

 
$
0.69

 
$
0.64

 
 
 
 
 
 
 
 
 
Dividend per common share
 
$
0.21

 
$
0.20

 
$
0.42

 
$
0.40

Payout ratio - Operating FFO
 
60.0
%
 
64.5
%
 
60.9
%
 
62.5
%
 
 
 
 
 
 
 
 
 
(1)
Amount included in earnings from unconsolidated joint ventures.
(2) 
The gain represents the write off of costs associated with of our equity investment in a joint venture that was triggered by the sale of of the Venture's only property.
(3) 
The total non-controlling interest reflects OP units convertible 1:1 into common shares.
(4) 
Series D convertible preferred shares are paid annual dividends of $6.7 million and are currently convertible into approximately 6.6 million shares of common stock. They are dilutive only when earnings or FFO exceed approximately $0.26 per diluted share per quarter, which was the case for FFO for the three and six months ended June 30, 2016 and 2015. The conversion ratio is subject to adjustment based upon a number of factors, and such adjustment could affect the dilutive impact of the Series D convertible preferred shares on FFO and earnings per share in future periods.
We consider funds from operations, also known as “FFO”, to be an appropriate supplemental measure of the financial performance of an equity REIT.  Under the NAREIT definition, FFO represents net income (computed in accordance with generally accepted accounting principles), excluding gains (or losses) from sales of depreciable property and excluding impairment provisions on depreciable real estate or on investments in non-consolidated investees that are driven by measurable decreases in the fair value of depreciable real estate held by the investee, plus depreciation and amortization, (excluding amortization of financing costs). Adjustments for unconsolidated partnerships and joint ventures are calculated to reflect funds from operations on the same basis. Also, we consider “Operating FFO” a meaningful, additional measure of financial performance because it excludes acquisition costs and periodic items such as gains (or losses) from sales of land and impairment provisions on land available for development or sale, bargain purchase gains, and gains or losses on extinguishment of debt that are not adjusted under the current NAREIT definition of FFO.  We provide a reconciliation of FFO to Operating FFO. FFO and Operating FFO should not be considered alternatives to GAAP net income available to common shareholders or as alternatives to cash flow as measures of liquidity. While we consider FFO and Operating FFO useful measures for reviewing our comparative operating and financial performance between periods or to compare our performance to different REITs, our computations of FFO and Operating FFO may differ from the computations utilized by other real estate companies, and therefore, may not be comparable.

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