Attached files
| file | filename |
|---|---|
| 8-K - 8-K - Seritage Growth Properties | srg-8k_20180227.htm |
| EX-99..2 - EX-99..2 - Seritage Growth Properties | srg-ex992_7.htm |
Exhibit 99.1
Seritage Growth Properties Reports Fourth Quarter and Full Year 2017 Operating Results
– Increased New Leasing Volume by 26% in 2017 Over Prior Year –
– Achieved 4.1x Rent Uplift on 4.5 Million SF of Re-Leased Space Since Inception –
– Completed or Commenced 78 Redevelopment Projects Totaling $1.1 Billion Since Inception –
New York, NY – February 27, 2018 – Seritage Growth Properties (NYSE: SRG) (the “Company”), a national owner of 253 retail properties totaling over 39 million square feet of gross leasable area (“GLA”), today reported financial and operating results for the three months and year ended December 31, 2017.
Financial Results
For the three months ended December 31, 2017:
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• |
Net loss attributable to common shareholders of $43.5 million, or $1.27 per diluted share |
|
• |
Total Net Operating Income (“Total NOI”) of $39.6 million |
|
• |
Funds from Operations (“FFO”) of $11.1 million, or $0.20 per diluted share |
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• |
Company FFO of $11.5 million, or $0.21 per diluted share |
For the year ended December 31, 2017:
|
• |
Net loss attributable to common shareholders of $74.0 million, or $2.19 per diluted share |
|
• |
Total NOI of $174.8 million |
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• |
FFO of $91.7 million, or $1.65 per diluted share |
|
• |
Company FFO of $81.8 million, or $1.47 per diluted share |
Operating Highlights
During the year ended December 31, 2017, including the Company’s proportional share of its unconsolidated joint ventures:
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• |
Signed new leases totaling 2.6 million square feet at an average annual base rent of $17.16 PSF, including 872,000 square feet at $17.00 PSF in the fourth quarter. |
|
• |
Achieved releasing multiples of 4.0x for space currently or formerly occupied by Sears Holdings Corporation (“Sears Holdings”), with new rents averaging $17.49 PSF compared to $4.40 PSF paid by Sears Holdings across 2.5 million square feet on a same-space basis. |
|
• |
Increased annual base rent from tenants other than Sears Holdings to 52.2% of total annual base rent from 36.1% in the prior year period, including all signed leases and net of rent attributable to associated space to be recaptured. |
During the year ended December 31, 2017:
|
• |
Announced 30 new wholly-owned redevelopment projects with an estimated total cost of $632.0 million, expanded six previously announced projects with an estimated total cost of $96.5 million and substantially completed 14 projects with an estimated total cost of approximately $114.2 million. Total redevelopment program to date includes 78 projects completed or commenced representing $1.1 billion of capital investment. |
|
• |
Sold the Company’s 50% interests in 13 existing joint venture properties, and sold 50% joint venture interests in five additional properties, for aggregate gross consideration of $315.6 million. |
1
“We ended 2017 on a very strong note with one of our most active quarters to date, including over 870,000 square feet of newly signed leases and the commencement of eight new projects totaling an investment of approximately $385 million. Since our inception, we have signed over 4.8 million square feet of new leases and achieved an average re-leasing multiple of 4.1x on space formerly occupied by Sears Holdings, with new rents averaging approximately $18.00 per square foot compared to $4.35 per square foot, on a same space basis. We have completed or commenced 78 projects representing a total capital investment of approximately $1.1 billion at returns ranging from 10-12% on an incremental unlevered basis, well in excess of capitalization rates for stabilized shopping centers. We were also pleased to commence our premier projects in Santa Monica and San Diego (La Jolla), CA and Aventura, FL, the first three in a series of premier and larger scale densification opportunities within our existing portfolio. Finally, during the quarter, we raised capital through a perpetual preferred equity offering and the extension of our existing unsecured term loan facility, resulting in a total of $530 million of gross proceeds raised during 2017 from financings, asset sales and additional joint ventures. As we enter 2018, we remain focused on unlocking the substantial value of our portfolio through intensive redevelopment and by strengthening our position as preferred partners for growing retailers, mixed-use developers and investors.”
Financial Results
For the three months ended December 31, 2017:
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• |
Net loss attributable to Class A and Class C shareholders was $43.5 million, or $1.27 per diluted share, as compared to a net loss of $15.0 million, or $0.48 per diluted share, for the prior year period. |
|
• |
Total NOI, which includes the Company’s proportional share of NOI from properties owned through investments in its unconsolidated joint ventures, was $39.5 million as compared to $48.7 million for the prior year period. |
|
• |
FFO, as calculated in accordance with the National Association of Real Estate Investment Trusts (“NAREIT”) definition, was $11.1 million, or $0.20 per diluted share, as compared to $34.5 million, or $0.62 per diluted share, for the prior year period. |
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• |
Company FFO was $11.5 million, or $0.21 per diluted share, as compared to $30.0 million, or $0.54 per diluted share, for the prior year period. The Company makes certain adjustments to FFO, which it refers to as Company FFO, to account for certain non-cash and non-comparable items that it does not believe are representative of ongoing operating results. See “Non-GAAP Financial Measures.” |
For the year ended December 31, 2017:
|
• |
Net loss attributable to Class A and Class C shareholders was $74.0 million, or $2.19 per diluted share, as compared to a net loss of $51.6 million, or $1.64 per diluted share, for the prior year period. |
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• |
Total NOI was $174.7 million as compared to $190.5 million for the prior year period. |
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• |
FFO was $91.7 million, or $1.65 per diluted share, as compared to $106.5 million, or $1.92 per diluted share, for the prior year period. |
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• |
Company FFO was $81.8 million, or $1.47 per diluted share, as compared to $127.3 million, or $2.29 per diluted share, for the prior year period. |
Portfolio Summary
As of December 31, 2017, the Company’s portfolio included interests in 253 retail properties totaling over 39 million square feet of gross leasable area, including 230 wholly-owned properties and 23 properties owned through investments in unconsolidated joint ventures. The Company’s portfolio includes 120 properties attached to regional malls and 133 shopping center or freestanding properties.
The portfolio was 80.0% leased and included 51 properties leased only to third-party tenants, 85 properties leased to Sears Holdings and one or more third-party tenants, and 85 properties leased only to Sears Holdings; 32 properties in the portfolio were vacant as of December 31, 2017. Of the properties leased to Sears Holdings, 127 operated under the Sears brand and 43 operated under the Kmart brand. The unleased space as of December 31, 2017 included approximately 2.5 million SF of remaining lease-up at announced redevelopment projects, and approximately 4.9 million SF of additional leasing opportunity at properties in the Company’s redevelopment pipeline.
2
Wholly-Owned Properties
During the year ended December 31, 2017, the Company commenced 30 new redevelopment projects representing an estimated total investment of $632.0 million, including eight projects representing an estimated total investment of $384.2 million in the fourth quarter. The Company also expanded six previously announced representing an estimated total investment of $96.5 million.
The table below summarizes project commencements in the Company’s wholly-owned portfolio since inception:
|
(in thousands) |
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|
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Estimated |
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Estimated |
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||
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Number |
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|
Project |
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|
Development |
|
|
Project |
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||||
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Quarter |
|
of Projects |
|
|
Square Feet |
|
|
Costs (1) |
|
|
Costs (1) |
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||||
|
Acquired (2) |
|
|
15 |
|
|
|
|
|
|
$ |
63,600 |
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|
$ |
63,600 |
|
|
2015 |
|
|
5 |
|
|
|
352 |
|
|
|
51,500 |
|
|
|
64,200 |
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|
2016 (3) |
|
|
28 |
|
|
|
2,677 |
|
|
|
353,600 |
|
|
|
370,700 |
|
|
2017 |
|
|
30 |
|
|
|
3,168 |
|
|
|
589,100 |
|
|
|
632,000 |
|
|
Total |
|
|
78 |
|
|
|
6,197 |
|
|
$ |
1,057,800 |
|
|
$ |
1,130,500 |
|
|
(1) |
Total estimated development costs exclude, and total estimated project costs include, termination fees to recapture 100% of certain properties. |
|
(2) |
Projects were in various stages of development when acquired by the Company in July 2015. |
|
(3) |
Includes subsequent expansions to previously announced projects. |
As of December 31, 2017, the Company had originated 63 wholly-owned projects since the Company’s inception. These projects represent an estimated total investment of $1,066.9 million, of which an estimated $801.7 million remains to be spent, and are expected to generate an incremental yield on cost of approximately 11.0%.
The table below provides additional information regarding the Company’s wholly-owned development activity from inception through December 31, 2017:
|
(in thousands) |
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|
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|
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|
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|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
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|
Estimated |
|
|
Estimated |
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|
|
|
|
|
|
|
|
|
|
|
|
|
Estimated |
||
|
Estimated |
|
Number |
|
|
Project |
|
|
Development |
|
|
Project |
|
|
Projected Annual Income (2) |
|
|
Incremental |
|||||||||||||
|
Project Costs (1) |
|
of Projects |
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|
Square Feet |
|
|
Costs (1) |
|
|
Costs (1) |
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|
Total |
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|
Existing |
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|
Incremental |
|
|
Yield (3) |
|||||||
|
< $10,000 |
|
|
24 |
|
|
|
1,427 |
|
|
$ |
104,900 |
|
|
$ |
104,900 |
|
|
$ |
19,600 |
|
|
$ |
5,200 |
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|
$ |
14,400 |
|
|
|
|
$10,001 - $20,000 (4) |
|
|
25 |
|
|
|
2,525 |
|
|
|
331,300 |
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|
|
351,200 |
|
|
|
52,500 |
|
|
|
15,300 |
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|
|
37,100 |
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|
|
|
> $20,000 |
|
|
14 |
|
|
|
2,245 |
|
|
|
558,000 |
|
|
|
610,800 |
|
|
|
84,500 |
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|
|
17,900 |
|
|
|
66,600 |
|
|
|
|
Announced projects |
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|
63 |
|
|
|
6,197 |
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|
$ |
994,200 |
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|
$ |
1,066,900 |
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|
$ |
156,600 |
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|
$ |
38,400 |
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|
$ |
118,100 |
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|
10.5 - 11.5% |
|
Acquired projects |
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|
15 |
|
|
|
|
|
|
|
63,600 |
|
|
|
63,600 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total projects |
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|
78 |
|
|
|
|
|
|
$ |
1,057,800 |
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|
$ |
1,130,500 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
(1) |
Total estimated development costs exclude, and total estimated project costs include, termination fees to recapture 100% of certain properties. |
|
(2) |
Projected annual income includes assumptions on stabilized rents to be achieved for space under redevelopment. There can be no assurance that stabilized rent targets will be achieved. |
|
(3) |
Projected incremental annual income divided by total estimated project costs. |
|
(4) |
Includes Saugus, MA project which has been temporarily postponed while the Company identifies a new lead tenant. The original lead tenant was unable to obtain a use permit at the site. |
3
The tables below provide brief descriptions of each of the redevelopment projects originated on the Company’s platform since its inception:
|
Total Project Costs under $10 Million |
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Total |
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Estimated |
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Estimated |
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|
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|
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|
|
|
|
Project |
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Construction |
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Substantial |
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|
Property |
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Description |
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Square Feet |
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|
Start |
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Completion |
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|
King of Prussia, PA |
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Repurpose former auto center space for Outback Steakhouse, Yard House and small shop retail |
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|
29,100 |
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|
Substantially complete |
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|
Merrillville, IN |
|
Termination property; redevelop existing store for At Home, Powerhouse Gym and small shop retail |
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|
132,000 |
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|
Substantially complete |
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Elkhart, IN |
|
Termination property; existing store has been released to Big R Stores |
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|
86,500 |
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|
Substantially complete |
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|
San Antonio, TX |
|
Recapture and repurpose auto center space for Orvis, Jared's Jeweler, Shake Shack and small shop retail |
|
|
18,900 |
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|
Substantially complete |
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|
Bowie, MD |
|
Recapture and repurpose auto center space for BJ's Brewhouse |
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|
8,200 |
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|
Substantially complete |
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|
Troy, MI |
|
Partial recapture; redevelop existing store for At Home |
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|
100,000 |
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|
Substantially complete |
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|
Roseville, MI |
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Partial recapture; redevelop existing store for At Home |
|
|
100,400 |
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|
Substantially complete |
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Henderson, NV |
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Termination property; redevelop existing store for At Home, Seafood City and additional retail |
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|
144,400 |
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|
Substantially complete |
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|
Rehoboth Beach, DE |
|
Partial recapture; redevelop existing store for Christmas Tree Shops andThat! and PetSmart |
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|
56,700 |
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|
Substantially complete |
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Cullman, AL |
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Termination property; redevelop existing store for Bargain Hunt, Tractor Supply and Planet Fitness |
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|
99,000 |
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|
Substantially complete |
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Jefferson City, MO |
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Termination property; redevelop existing store for Orscheln Farm and Home |
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|
96,000 |
|
|
Delivered to tenant |
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Albany, NY |
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Recapture and repurpose auto center space for BJ's Brewhouse and additional small shop retail |
|
|
28,000 |
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|
Delivered to tenant |
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|
Hagerstown, MD |
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Recapture and repurpose auto center space for BJ's Brewhouse, Verizon and additional restaurants |
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|
15,400 |
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|
Delivered to tenant |
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Ft. Wayne, IN |
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Site densification; new outparcels for BJ's Brewhouse (substantially complete) and Chick-Fil-A (project expansion) |
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|
12,000 |
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|
Underway |
|
Q1 2018 |
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Kearney, NE |
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Termination property; redevelop existing store for Marshall's, PetSmart and additional junior anchors |
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|
92,500 |
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|
Underway |
|
Q2 2018 |
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|
Olean, NY |
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Partial recapture; redevelop existing store for Marshall's and additional retail |
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|
45,000 |
|
|
Underway |
|
Q2 2018 |
||||||||
|
Roseville, CA |
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Recapture and repurpose auto center space for AAA Auto Repair Center |
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|
10,400 |
|
|
Underway |
|
Q2 2018 |
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|
Guaynabo, PR |
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Partial recapture; redevelop existing store for Planet Fitness and Capri |
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|
56,100 |
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|
Underway |
|
Q3 2018 |
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Florissant, MO |
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Site densification; new outparcel for Chick-Fil-A |
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|
5,000 |
|
|
Underway |
|
Q3 2018 |
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|
Dayton, OH |
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Recapture and repurpose auto center space for Outback Steakhouse and additional restaurants |
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|
14,100 |
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|
Underway |
|
Q4 2018 |
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New Iberia, LA |
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Termination property; redevelop existing store for Rouses Supermarkets, additional junior anchors and small shop retail |
|
|
93,100 |
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Underway |
|
Q1 2019 |
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North Little Rock, AR |
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Recapture and repurpose auto center space for LongHorn Steakhouse and additional small shop retail |
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17,300 |
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|
Q2 2018 |
|
Q2 2019 |
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St. Clair Shores, MI |
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100% recapture; demolish existing store and develop site for new Kroger store |
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107,200 |
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|
Q2 2018 |
|
Q2 2019 |
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Oklahoma City, OK |
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Site densification; new fitness center for Vasa Fitness |
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59,500 |
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|
Q3 2018 |
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Q3 2019 |
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4
|
Total Project Costs $10 - $20 Million (1) |
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Total |
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Estimated |
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Estimated |
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|
|
|
|
|
|
|
Project |
|
|
Construction |
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Substantial |
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|
Property |
|
Description |
|
Square Feet |
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|
Start |
|
Completion |
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|
Braintree, MA |
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100% recapture; redevelop existing store for Nordstrom Rack, Saks OFF 5th and additional retail |
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|
90,000 |
|
|
Substantially complete |
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Honolulu, HI |
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100% recapture; redevelop existing store for Longs Drugs (CVS), PetSmart and Ross Dress for Less |
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79,000 |
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|
Substantially complete |
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|
West Jordan, UT |
|
Partial recapture; redevelop existing store and attached auto center for Burlington Stores and additional retail |
|
|
81,400 |
|
|
Substantially complete |
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Anderson, SC |
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100% recapture (project expansion); redevelop existing store for Burlington Stores, Sportsman's Warehouse, additional retail and restaurants |
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|
111,300 |
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|
Substantially complete |
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Madison, WI |
|
Partial recapture; redevelop existing store for Dave & Busters, Total Wine & More, additional retail and restaurants |
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75,300 |
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|
Delivered to tenant |
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|
Thornton, CO |
|
Termination property; redevelop existing store for Vasa Fitness and additional junior anchors |
|
|
191,600 |
|
|
Underway |
|
Q1 2018 |
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Fairfax, VA |
|
Partial recapture; redevelop existing store and attached auto center for Dave & Busters, Seasons 52, additional junior anchors and restaurants |
|
|
110,300 |
|
|
Underway |
|
Q1 2018 |
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|
Orlando, FL |
|
100% recapture; demolish and construct new buildings for Floor & Décor, Orchard Supply Hardware, LongHorn Steakhouse, Olive Garden, additional small shop retail and restaurants |
|
|
139,200 |
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|
Underway |
|
Q2 2018 |
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|
Springfield, IL |
|
Termination property; redevelop existing store for Burlington Stores, Binny's Beverage Depot, Orangetheory Fitness, Outback Steakhouse, CoreLife Eatery, additional junior anchors and small shop retail |
|
|
133,400 |
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|
Underway |
|
Q2 2018 |
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|
North Miami, FL |
|
100% recapture; redevelop existing store for Michael's, PetSmart and Ross Dress for Less |
|
|
124,300 |
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|
Underway |
|
Q2 2018 |
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|
Hialeah, FL |
|
100% recapture; redevelop existing store for Bed, Bath & Beyond, Ross Dress for Less and additional junior anchors to join current tenant, Aldi |
|
|
88,400 |
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|
Underway |
|
Q2 2018 |
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|
Cockeysville, MD |
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Partial recapture; redevelop existing store for HomeGoods, Michael's Stores, additional junior anchors and restaurants |
|
|
83,500 |
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|
Underway |
|
Q2 2018 |
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|
North Hollywood, CA |
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Partial recapture; redevelop existing store for Burlington Stores and additional junior anchors |
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|
79,800 |
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|
Underway |
|
Q3 2018 |
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|
Salem, NH |
|
Site densification; new theatre for Cinemark Recapture and repurpose auto center for restaurant space |
|
|
71,200 |
|
|
Underway |
|
Q3 2018 |
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|
Charleston, SC |
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100% recapture (project expansion); redevelop existing store and detached auto center for Burlington Stores and additional retail |
|
|
126,700 |
|
|
Underway |
|
Q3 2018 |
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|
Paducah, KY |
|
Termination property; redevelop existing store for Burlington Stores and additional retail |
|
|
102,300 |
|
|
Underway |
|
Q3 2018 |
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|
Warwick, RI |
|
Termination property; repurpose auto center space for BJ's Brewhouse and additional retail Redevelop existing store for At Home and Raymour & Flanigan (project expansion) |
|
|
190,700 |
|
|
Underway |
|
Q4 2018 |
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|
Temecula, CA |
|
Partial recapture; redevelop existing store and detached auto center for Round One, small shop retail and restaurants |
|
|
65,100 |
|
|
Underway |
|
Q4 2018 |
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|
Canton, OH |
|
Partial recapture; redevelop existing store for Dave & Busters and restaurants |
|
|
83,900 |
|
|
Underway |
|
Q2 2019 |
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|
North Riverside, IL |
|
Partial recapture; redevelop existing store and detached auto center for Round One, additional junior anchors, small shop retail and restaurants |
|
|
103,900 |
|
|
Underway |
|
Q2 2019 |
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|
Santa Cruz, CA |
|
Partial recapture; redevelop existing store for TJ Maxx, HomeGoods and additional junior anchors |
|
|
62,200 |
|
|
Q1 2018 |
|
Q4 2018 |
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|
Las Vegas, NV |
|
Partial recapture; redevelop existing store for Round One Entertainment and additional retail |
|
|
78,800 |
|
|
Q3 2018 |
|
Q3 2019 |
||||||||
|
Yorktown Heights, NY |
|
Partial recapture; redevelop existing store for 24 Hour Fitness and additional retail |
|
|
85,200 |
|
|
Q3 2018 |
|
Q4 2019 |
||||||||
|
Fairfield, CA |
|
Partial recapture; redevelop existing store for Dave & Busters and additional junior anchors |
|
|
68,400 |
|
|
Q3 2018 |
|
Q4 2019 |
||||||||
|
(1) |
Excludes Saugus, MA project which has been temporarily postponed while the Company identifies a new lead tenant. The original lead tenant was unable to obtain a use permit at the site. |
5
|
Total Project Costs over $20 Million |
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|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
Estimated |
|
Estimated |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Project |
|
|
Construction |
|
Substantial |
|
|
Property |
|
Description |
|
Square Feet |
|
|
Start |
|
Completion |
|||||||||
|
Memphis, TN |
|
100% recapture; demolish and construct new buildings for LA Fitness, Nordstrom Rack, Ulta Beauty, Hopdoddy Burger Bar, additional junior anchors, restaurants and small shop retail |
|
|
135,200 |
|
|
Substantially complete |
||||||||||
|
West Hartford, CT |
|
100% recapture; redevelop existing store and detached auto center for Buy Buy Baby, Cost Plus World Market, REI, Saks OFF Fifth, other junior anchors, Shake Shack and additional small shop retail |
|
|
147,600 |
|
|
Underway |
|
Q1 2018 |
||||||||
|
St. Petersburg, FL |
|
100% recapture; demolish and construct new buildings for Dick's Sporting Goods, Lucky's Market, PetSmart, Five Below, Chili's Grill & Bar, Pollo Tropical, LongHorn Steakhouse and additional small shop retail and restaurants |
|
|
142,400 |
|
|
Underway |
|
Q2 2018 |
||||||||
|
Wayne, NJ |
|
Partial recapture; redevelop existing store for Dave & Busters, additional junior anchors and restaurants Recapture and repurpose detached auto center for Cinemark (project expansion) NOTE: contributed to GGP II JV in July 2017 |
|
|
156,700 |
|
|
Underway |
|
Q3 2018 |
||||||||
|
Carson, CA |
|
100% recapture (project expansion); redevelop existing store for Burlington Stores, Ross Dress for Less and additional retail |
|
|
163,800 |
|
|
Underway |
|
Q1 2019 |
||||||||
|
Watchung, NJ |
|
100% recapture; demolish full-line store and construct new buildings for HomeSense, Sierra Trading Post, Ulta Beauty and additional small shop retail and restaurants Demolish detached auto center and construct a freestanding Cinemark theater |
|
|
126,700 |
|
|
Underway |
|
Q2 2019 |
||||||||
|
Santa Monica, CA |
|
100% recapture; redevelop existing building into premier, mixed-use asset featuring unique, small-shop retail and creative office space |
|
|
96,500 |
|
|
Underway |
|
Q4 2019 |
||||||||
|
Aventura, FL |
|
100% recapture; demolish existing store and construct new, multi-level open air retail destination featuring a leading collection of experiential shopping, dining and entertainment concepts alongside a treelined esplanade and activated plazas |
|
|
216,600 |
|
|
Underway |
|
Q4 2019 |
||||||||
|
San Diego, CA |
|
100% recapture; redevelop existing store into two highly-visible, multi-level buildings with exterior facing retail representing a premier mix of experiential shopping, dining, and entertainment concepts |
|
|
206,000 |
|
|
Underway |
|
Q4 2019 |
||||||||
|
Austin, TX |
|
100% recapture (project expansion); redevelop existing store for AMC Theatres, additional junior anchors and restaurants |
|
|
177,400 |
|
|
Q2 2018 |
|
Q3 2019 |
||||||||
|
Greendale, WI |
|
Termination property; redevelop existing store and attached auto center for Dick's Sporting Goods, Round One Entertainment, additional junior anchors and restaurants |
|
|
223,800 |
|
|
Q2 2018 |
|
Q4 2019 |
||||||||
|
Anchorage, AK |
|
100% recapture; redevelop existing store for Guitar Center, Safeway and additional junior anchors to join current tenant, Nordstrom Rack |
|
|
142,500 |
|
|
Q2 2018 |
|
Q4 2019 |
||||||||
|
East Northport, NY |
|
Termination property; redevelop existing store and attached auto center for AMC Theatres, 24 Hour Fitness, additional junior anchors and small shop retail |
|
|
179,700 |
|
|
Q2 2018 |
|
Q4 2019 |
||||||||
|
Plantation, FL |
|
Partial recapture; redevelop existing store for GameTime, additional retail and restaurants |
|
|
130,500 |
|
|
Q3 2018 |
|
Q4 2019 |
||||||||
Joint Venture Properties
During the fourth quarter, the Company sold to Simon Property Group (“Simon”) the Company’s 50% interest in five of the ten assets in the existing joint venture between the two companies for gross consideration of $68.0 million.
Also in 2017, the Company completed two transactions with GGP Inc. (“GGP”) for gross consideration of $247.6 million whereby the Company (i) sold to GGP the Company’s 50% interest in eight of the twelve assets in the existing joint venture between the two companies for $190.1 million; and (ii) sold to GGP a 50% joint venture interest in five additional assets for $57.5 million.
The Company continues to own 50% interests in nine assets in an unconsolidated joint venture with The Macerich Company.
6
During the year ended December 31, 2017, the Company signed new leases totaling 2.6 million square feet at an average annual base rent of $17.16 PSF, including 872,000 square feet at $17.00 in the fourth quarter. On a same-space basis, new rents averaged 4.0x prior rents for space currently or formerly occupied by Sears Holdings, increasing to $17.49 PSF for new tenants compared to $4.40 PSF paid by Sears Holdings across 2.5 million square feet.
The table below provides a summary of the Company’s leasing activity since inception, including unconsolidated joint ventures presented at the Company’s proportional share:
|
(in thousands except number of leases and PSF data) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
Release of Sears Holdings Space |
|
||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
Leased |
|
|
Annual |
|
|
Annual |
|
|
|
|
|
|
Leased |
|
|
Annual |
|
|
Annual |
|
|
Releasing |
|
|||||||
|
Period |
|
Leases |
|
|
GLA |
|
|
Rent |
|
|
Rent PSF |
|
|
Leases |
|
|
GLA |
|
|
Rent |
|
|
Rent PSF |
|
|
Multiple |
|
|||||||||
|
2015 |
|
|
9 |
|
|
|
154 |
|
|
$ |
4,650 |
|
|
$ |
30.28 |
|
|
|
6 |
|
|
|
130 |
|
|
$ |
3,820 |
|
|
$ |
29.41 |
|
|
|
4.4 |
x |
|
2016 |
|
|
65 |
|
|
|
2,070 |
|
|
|
36,600 |
|
|
|
17.68 |
|
|
|
59 |
|
|
|
1,882 |
|
|
|
33,610 |
|
|
|
17.86 |
|
|
|
4.5 |
x |
|
2017 |
|
|
94 |
|
|
|
2,606 |
|
|
|
44,717 |
|
|
|
17.16 |
|
|
|
86 |
|
|
|
2,476 |
|
|
|
43,299 |
|
|
|
17.49 |
|
|
|
4.0 |
x |
|
Total |
|
|
168 |
|
|
|
4,830 |
|
|
$ |
85,967 |
|
|
$ |
17.80 |
|
|
|
151 |
|
|
|
4,488 |
|
|
$ |
80,729 |
|
|
$ |
17.99 |
|
|
|
4.1 |
x |
During the year ended December 31, 2017, the Company added $44.7 million of new third-party income and increased annual base rent attributable to third-party tenants to 52.2% of total annual base rent from 36.1% as of December 31, 2016, including all signed leases and net of rent attributable to the associated space to be recaptured.
The table below provides a summary of all the Company’s signed leases as of December 31, 2017, including unconsolidated joint ventures presented at the Company’s proportional share:
|
(in thousands except number of leases and PSF data) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of |
|
|
Leased |
|
|
% of Total |
|
|
Annual |
|
|
% of Total |
|
|
Annual |
|
||||||
|
Tenant |
|
Leases |
|
|
GLA |
|
|
Leased GLA |
|
|
Rent |
|
|
Annual Rent |
|
|
Rent PSF |
|
||||||
|
Sears Holdings (1) |
|
|
170 |
|
|
|
22,471 |
|
|
|
75.4 |
% |
|
$ |
102,645 |
|
|
|
47.8 |
% |
|
$ |
4.57 |
|
|
In-Place Third-Party Leases |
|
|
225 |
|
|
|
3,819 |
|
|
|
12.8 |
% |
|
|
48,624 |
|
|
|
22.6 |
% |
|
|
12.73 |
|
|
SNO Third-Party Leases |
|
|
114 |
|
|
|
3,534 |
|
|
|
11.8 |
% |
|
|
63,407 |
|
|
|
29.6 |
% |
|
|
17.94 |
|
|
Sub-Total Third-Party Leases |
|
|
339 |
|
|
|
7,353 |
|
|
|
24.6 |
% |
|
|
112,031 |
|
|
|
52.2 |
% |
|
|
15.24 |
|
|
Total |
|
|
509 |
|
|
|
29,824 |
|
|
|
100.0 |
% |
|
$ |
214,676 |
|
|
|
100.0 |
% |
|
$ |
7.20 |
|
|
(1) |
Leases reflects number of properties subject to the Master Lease and JV Master Leases. |
7
As of December 31, 2017, the Company’s total market capitalization was approximately $3.6 billion. Total market capitalization is calculated as the sum of total debt and the market value of the Company's outstanding shares of common stock, assuming conversion of operating partnership units.
Total debt to total market capitalization was 37.5% and net debt to Adjusted EBITDA was 6.5x. The Company deducts both unrestricted and restricted cash from total debt when calculating net debt. Reconciliations of net loss attributable to common shareholders to EBITDA and Adjusted EBITDA, are provided in the tables accompanying this press release.
As of December 31, 2017, the Company had $241.6 million of unrestricted cash and restricted cash of $175.7 million, the substantial majority of which was held in reserve accounts for redevelopment, re-leasing and operating expenses at the Company’s properties. The Company also had $55.0 million of permitted, but uncommitted, borrowing capacity under its $200.0 million unsecured term loan facility due December 31, 2018.
Series A Preferred Shares
During the fourth quarter, the Company issued 2,800,000 7.00% Series A Cumulative Redeemable Preferred Shares (the “Series A Preferred Shares”) in a public offering at $25.00 per share. The Company received net proceeds from the offering of approximately $66.7 million after deducting payment of the underwriting discount and offering expenses.
Unsecured Term Loan
During the fourth quarter, The Company refinanced its existing $200 million unsecured term loan facility with a new $200 million unsecured term loan facility (the “Unsecured Term Loan”). The previous facility was a delayed draw facility with a maturity of December 31, 2017, against which the Company had drawn $85 million against the total capacity of $200 million.
The lenders under the previous facility, which are entities controlled by ESL Investments, Inc., have maintained their funding of $85 million in the Unsecured Term Loan, and new, non-affiliated lender committed and funded an additional $60 million for a total of $145 million committed and funded at closing. Maximum total commitments under the Unsecured Term Loan are $200 million and the Company has the right to syndicate the remaining $55 million with existing or new lenders. Existing lenders are not obligated to make all or any portion of the incremental loans.
Dividends
On February 20, 2018, the Company’s Board of Trustees declared a first quarter common stock dividend of $0.25 per each Class A and Class C common share. The dividend will be paid on April 12, 2018 to shareholders of record on March 30, 2018. Holders of units in Seritage Growth Properties, L.P. (the “Operating Partnership”) are entitled to an equal distribution per each Operating Partnership unit held as of March 30, 2018.
On February 20, 2018, the Company’s Board of Trustees also declared a preferred stock dividend of $0.593056 per each Series A Preferred Share. The dividend covers the period from, and including, December 14, 2017 to, but excluding, April 15, 2018. The dividend will be paid on April 16, 2018 to holders of record on March 30, 2018.
Supplemental Report
A Supplemental Report will be available in the Investors section of the Company’s website, www.seritage.com.
8
The Company makes reference to NOI, Total NOI, EBITDA, Adjusted EBITDA, FFO and Company FFO which are financial measures that include adjustments to accounting principles generally accepted in the United States (“GAAP”).
None of Total NOI, EBITDA, Adjusted EBITDA, FFO or Company FFO, are measures that (i) represent cash flow from operations as defined by GAAP; (ii) are indicative of cash available to fund all cash flow needs, including the ability to make distributions; (iii) are alternatives to cash flow as a measure of liquidity; or (iv) should be considered alternatives to net income (which is determined in accordance with GAAP) for purposes of evaluating the Company’s operating performance. Reconciliations of these measures to the respective GAAP measures we deem most comparable have been provided in the tables accompanying this press release.
Net Operating Income ("NOI”), Total NOI and Annualized Total NOI
NOI is defined as income from property operations less property operating expenses. The Company believes NOI provides useful information regarding Seritage, its financial condition, and results of operations because it reflects only those income and expense items that are incurred at the property level.
The Company also uses Total NOI, which includes its proportional share of unconsolidated properties. This form of presentation offers insights into the financial performance and condition of the Company as a whole given the Company’s ownership of unconsolidated properties that are accounted for under GAAP using the equity method. The Company also considers Total NOI to be a helpful supplemental measure of its operating performance because it excludes from NOI variable items such as termination fee income, as well as non-cash items such as straight-line rent and amortization of lease intangibles.
Annualized Total NOI is an estimate, as of the end of the reporting period, of the annual Total NOI to be generated by the Company’s portfolio including all signed leases and modifications to the Company’s master lease with Sears Holdings with respect to recaptured space. We calculate Annualized Total NOI by adding or subtracting current period adjustments for leases that commenced or expired during the period to Total NOI (as defined) for the period and annualizing, and then adding estimated annual Total NOI attributable to SNO leases and subtracting estimated annual Total NOI attributable to Sears Holdings’ space to be recaptured.
Annualized Total NOI is a forward-looking non-GAAP measure for which the Company does not believe it can provide reconciling information to a corresponding forward-looking GAAP measure without unreasonable effort.
Earnings Before Interest Expense, Income Tax, Depreciation, and Amortization ("EBITDA") and Adjusted EBITDA
EBITDA is defined as net income less depreciation, amortization, interest expense and provision for income and other taxes. EBITDA is a commonly used measure of performance in many industries, but may not be comparable to measures calculated by other companies. The Company believes EBITDA provides useful information to investors regarding its results of operations because it removes the impact of the Company’s capital structure (primarily interest expense) and its asset base (primarily depreciation and amortization). Management also believes the use of EBITDA facilitates comparisons between the Company and other equity REITs, retail property owners who are not REITs, and other capital-intensive companies.
The Company makes certain adjustments to EBITDA, which it refers to as Adjusted EBITDA, to account for certain non-cash and non-comparable items, such as termination fee income, unrealized loss on interest rate cap, litigation charges, acquisition-related expenses, certain up-front-hiring and personnel costs and gains (or losses) from property sales, that it does not believe are representative of ongoing operating results.
Funds From Operations ("FFO") and Company FFO
FFO is calculated in accordance with the National Association of Real Estate Investment Trusts ("NAREIT"), which defines FFO as net income computed in accordance with GAAP, excluding gains (or losses) from property sales, real estate related depreciation and amortization, and impairment charges on depreciable real estate assets. The Company considers FFO a helpful supplemental measure of the operating performance for equity REITs and a complement to GAAP measures because it is a recognized measure of performance by the real estate industry.
The Company makes certain adjustments to FFO, which it refers to as Company FFO, to account for certain non-cash and non-comparable items, such as termination fee income, unrealized loss on interest rate cap, litigation charges, acquisition-related expenses, amortization of deferred financing costs and certain up-front-hiring and personnel costs, that it does not believe are representative of ongoing operating results. The Company previously referred to this metric as Normalized FFO; the definition and calculation remain the same.
9
This document contains forward-looking statements, which are based on the current beliefs and expectations of management and are subject to significant risks, assumptions and uncertainties that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by these forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to: competition in the real estate and retail industries; our substantial dependence on Sears Holdings; Sears Holdings’ termination and other rights under its master lease with us; risks relating to our recapture and redevelopment activities; contingencies to the commencement of rent under leases; the terms of our indebtedness; restrictions with which we are required to comply in order to maintain REIT status and other legal requirements to which we are subject; and our limited operating history. For additional discussion of these and other applicable risks, assumptions and uncertainties, see the “Risk Factors” and forward-looking statement disclosure contained in filings with the Securities and Exchange Commission. While we believe that our forecasts and assumptions are reasonable, we caution that actual results may differ materially. We intend the forward-looking statements to speak only as of the time made and do not undertake to update or revise them as more information becomes available, except as required by law.
About Seritage Growth Properties
Seritage Growth Properties is a publicly-traded, self-administered and self-managed REIT with 230 wholly-owned properties and 23 joint venture properties totaling over 39 million square feet of space across 49 states and Puerto Rico. The Company was formed to unlock the underlying real estate value of a high-quality retail portfolio it acquired from Sears Holdings in July 2015. Pursuant to a master lease, the Company has the right to recapture certain space from Sears Holdings for retenanting or redevelopment purposes. The Company’s mission is to create and own revitalized shopping, dining, entertainment and mixed-use destinations that provide enriched experiences for consumers and local communities, and create long-term value for our shareholders.
Contact
Seritage Growth Properties
646-277-1268
IR@Seritage.com
10
Consolidated Balance SheetS
(In thousands, except share and per share amounts)
(Unaudited)
|
|
|
December 31, 2017 |
|
|
December 31, 2016 |
|
||
|
ASSETS |
|
|
|
|
|
|
|
|
|
Investment in real estate |
|
|
|
|
|
|
|
|
|
Land |
|
$ |
799,971 |
|
|
$ |
840,021 |
|
|
Buildings and improvements |
|
|
829,168 |
|
|
|
839,663 |
|
|
Accumulated depreciation |
|
|
(139,483 |
) |
|
|
(89,940 |
) |
|
|
|
|
1,489,656 |
|
|
|
1,589,744 |
|
|
Construction in progress |
|
|
224,904 |
|
|
|
55,208 |
|
|
Net investment in real estate |
|
|
1,714,560 |
|
|
|
1,644,952 |
|
|
Investment in unconsolidated joint ventures |
|
|
282,990 |
|
|
|
425,020 |
|
|
Cash and cash equivalents |
|
|
241,569 |
|
|
|
52,026 |
|
|
Restricted cash |
|
|
175,665 |
|
|
|
87,616 |
|
|
Tenant and other receivables, net |
|
|
30,787 |
|
|
|
23,172 |
|
|
Lease intangible assets, net |
|
|
310,098 |
|
|
|
464,399 |
|
|
Prepaid expenses, deferred expenses and other assets, net |
|
|
20,148 |
|
|
|
15,052 |
|
|
Total assets |
|
$ |
2,775,817 |
|
|
$ |
2,712,237 |
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND EQUITY |
|
|
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
|
|
|
|
Mortgage loans payable, net |
|
$ |
1,202,314 |
|
|
$ |
1,166,871 |
|
|
Unsecured term loan, net |
|
|
143,210 |
|
|
|
— |
|
|
Accounts payable, accrued expenses and other liabilities |
|
|
109,433 |
|
|
|
121,055 |
|
|
Total liabilities |
|
|
1,454,957 |
|
|
|
1,287,926 |
|
|
|
|
|
|
|
|
|
|
|
|
Commitments and contingencies |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders' Equity |
|
|
|
|
|
|
|
|
|
Class A common shares $0.01 par value; 100,000,000 shares authorized; 32,415,734 and 25,843,251 shares issued and outstanding as of December 31, 2017 and December 31, 2016, respectively |
|
|
324 |
|
|
|
258 |
|
|
Class B common shares $0.01 par value; 5,000,000 shares authorized; 1,328,866 and 1,589,020 shares issued and outstanding as of December 31, 2017 and December 31, 2016, respectively |
|
|
13 |
|
|
|
16 |
|
|
Class C common shares $0.01 par value; 50,000,000 shares authorized; 3,151,131 and 5,754,685 shares issued and outstanding as of December 31, 2017 and December 31, 2016, respectively |
|
|
31 |
|
|
|
58 |
|
|
Series A preferred shares $0.01 par value; 10,000,000 shares authorized; 2,800,000 shares issued and outstanding as of December 31, 2017; liquidation preference of $70,000 |
|
|
28 |
|
|
|
— |
|
|
Additional paid-in capital |
|
|
1,116,060 |
|
|
|
925,563 |
|
|
Accumulated deficit |
|
|
(229,760 |
) |
|
|
(121,338 |
) |
|
Total shareholders' equity |
|
|
886,696 |
|
|
|
804,557 |
|
|
Non-controlling interests |
|
|
434,164 |
|
|
|
619,754 |
|
|
Total equity |
|
|
1,320,860 |
|
|
|
1,424,311 |
|
|
Total liabilities and equity |
|
$ |
2,775,817 |
|
|
$ |
2,712,237 |
|
11
Consolidated Statements of OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended December 31, |
|
|
Year Ended December 31, |
|
||||||||||
|
|
|
2017 |
|
|
2016 |
|
|
2017 |
|
|
2016 |
|
||||
|
REVENUE |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rental income |
|
$ |
38,966 |
|
|
$ |
49,684 |
|
|
$ |
178,492 |
|
|
$ |
186,421 |
|
|
Tenant reimbursements |
|
|
14,712 |
|
|
|
16,512 |
|
|
|
62,525 |
|
|
|
62,253 |
|
|
Total revenue |
|
|
53,678 |
|
|
|
66,196 |
|
|
|
241,017 |
|
|
|
248,674 |
|
|
EXPENSES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property operating |
|
|
5,715 |
|
|
|
4,334 |
|
|
|
19,700 |
|
|
|
21,510 |
|
|
Real estate taxes |
|
|
9,946 |
|
|
|
12,580 |
|
|
|
45,653 |
|
|
|
43,681 |
|
|
Depreciation and amortization |
|
|
91,878 |
|
|
|
55,754 |
|
|
|
262,171 |
|
|
|
177,119 |
|
|
General and administrative |
|
|
11,263 |
|
|
|
4,365 |
|
|
|
27,902 |
|
|
|
17,469 |
|
|
Litigation charge |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
19,000 |
|
|
Provision for doubtful accounts |
|
|
39 |
|
|
|
— |
|
|
|
158 |
|
|
|
269 |
|
|
Acquisition-related expenses |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
73 |
|
|
Total expenses |
|
|
118,841 |
|
|
|
77,033 |
|
|
|
355,584 |
|
|
|
279,121 |
|
|
Operating loss |
|
|
(65,163 |
) |
|
|
(10,837 |
) |
|
|
(114,567 |
) |
|
|
(30,447 |
) |
|
Equity in (loss) income of unconsolidated joint ventures |
|
|
(3,562 |
) |
|
|
151 |
|
|
|
(7,788 |
) |
|
|
4,646 |
|
|
Gain on sale of interests in unconsolidated joint ventures |
|
|
16,573 |
|
|
|
— |
|
|
|
60,302 |
|
|
|
— |
|
|
Gain on sale of real estate |
|
|
(1,571 |
) |
|
|
— |
|
|
|
11,447 |
|
|
|
— |
|
|
Interest and other income |
|
|
405 |
|
|
|
70 |
|
|
|
877 |
|
|
|
266 |
|
|
Interest expense |
|
|
(17,040 |
) |
|
|
(16,294 |
) |
|
|
(70,112 |
) |
|
|
(63,591 |
) |
|
Unrealized (loss) gain on interest rate cap |
|
|
(15 |
) |
|
|
520 |
|
|
|
(701 |
) |
|
|
(1,378 |
) |
|
Loss before income taxes |
|
|
(70,373 |
) |
|
|
(26,390 |
) |
|
|
(120,542 |
) |
|
|
(90,504 |
) |
|
Provision for income taxes |
|
|
(5 |
) |
|
|
(93 |
) |
|
|
(271 |
) |
|
|
(505 |
) |
|
Net loss |
|
|
(70,378 |
) |
|
|
(26,483 |
) |
|
|
(120,813 |
) |
|
|
(91,009 |
) |
|
Net loss attributable to non-controlling interests |
|
|
27,167 |
|
|
|
11,479 |
|
|
|
47,059 |
|
|
|
39,451 |
|
|
Net loss attributable to Seritage |
|
$ |
(43,211 |
) |
|
$ |
(15,004 |
) |
|
$ |
(73,754 |
) |
|
$ |
(51,558 |
) |
|
Preferred dividends |
|
|
(245 |
) |
|
|
— |
|
|
|
(245 |
) |
|
|
— |
|
|
Net loss attributable to Seritage common shareholders |
|
$ |
(43,456 |
) |
|
$ |
(15,004 |
) |
|
$ |
(73,999 |
) |
|
$ |
(51,558 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss per share attributable to Class A and Class C common shareholders - Basic and diluted |
|
$ |
(1.27 |
) |
|
$ |
(0.48 |
) |
|
$ |
(2.19 |
) |
|
$ |
(1.64 |
) |
|
Weighted average Class A and Class C common shares outstanding - Basic and diluted |
|
|
34,094 |
|
|
|
31,418 |
|
|
|
33,804 |
|
|
|
31,416 |
|
12
Reconciliation of Net Loss to NOI and Total NOI (in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended December 31, |
|
|
Year Ended December 31, |
|
||||||||||
|
NOI and Total NOI |
|
2017 |
|
|
2016 |
|
|
2017 |
|
|
2016 |
|
||||
|
Net loss |
|
$ |
(70,378 |
) |
|
$ |
(26,483 |
) |
|
$ |
(120,813 |
) |
|
$ |
(91,009 |
) |
|
Termination fee income |
|
|
(1,954 |
) |
|
|
(5,288 |
) |
|
|
(19,314 |
) |
|
|
(5,288 |
) |
|
Depreciation and amortization |
|
|
91,878 |
|
|
|
55,754 |
|
|
|
262,171 |
|
|
|
177,119 |
|
|
General and administrative expenses |
|
|
11,263 |
|
|
|
4,365 |
|
|
|
27,902 |
|
|
|
17,469 |
|
|
Litigation charge |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
19,000 |
|
|
Acquisition-related expenses |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
73 |
|
|
Equity in loss (income) of unconsolidated joint ventures |
|
|
3,562 |
|
|
|
(151 |
) |
|
|
7,788 |
|
|
|
(4,646 |
) |
|
Gain on sale of interests in unconsolidated joint ventures |
|
|
(16,573 |
) |
|
|
— |
|
|
|
(60,302 |
) |
|
|
— |
|
|
Gain on sale of real estate |
|
|
1,571 |
|
|
|
— |
|
|
|
(11,447 |
) |
|
|
— |
|
|
Interest and other income |
|
|
(405 |
) |
|
|
(70 |
) |
|
|
(877 |
) |
|
|
(266 |
) |
|
Interest expense |
|
|
17,040 |
|
|
|
16,294 |
|
|
|
70,112 |
|
|
|
63,591 |
|
|
Unrealized loss (gain) on interest rate cap |
|
|
15 |
|
|
|
(520 |
) |
|
|
701 |
|
|
|
1,378 |
|
|
Provision for income taxes |
|
|
5 |
|
|
|
93 |
|
|
|
271 |
|
|
|
505 |
|
|
NOI |
|
$ |
36,024 |
|
|
$ |
43,994 |
|
|
$ |
156,192 |
|
|
$ |
177,926 |
|
|
NOI of unconsolidated joint ventures |
|
|
5,219 |
|
|
|
6,554 |
|
|
|
23,547 |
|
|
|
26,611 |
|
|
Straight-line rent adjustment (1) |
|
|
(1,522 |
) |
|
|
(1,642 |
) |
|
|
(3,918 |
) |
|
|
(13,168 |
) |
|
Above/below market rental income/expense (1) |
|
|
(161 |
) |
|
|
(196 |
) |
|
|
(1,063 |
) |
|
|
(877 |
) |
|
Total NOI |
|
$ |
39,560 |
|
|
$ |
48,710 |
|
|
$ |
174,758 |
|
|
$ |
190,492 |
|
|
(1) |
Includes adjustments for unconsolidated joint ventures. |
Computation of Annualized Total NOI (in thousands)
|
|
|
As of December 31, |
|
|
|
|
|
|||||
|
Annualized Total NOI |
|
2017 |
|
|
2016 |
|
|
|
|
|
||
|
Total NOI (per above) |
|
$ |
39,560 |
|
|
$ |
48,710 |
|
|
|
|
|
|
Period adjustments (1) |
|
|
(698 |
) |
|
|
(199 |
) |
|
|
|
|
|
Adjusted Total NOI |
|
|
38,862 |
|
|
|
48,512 |
|
|
|
|
|
|
Annualize |
|
|
x 4 |
|
|
|
x 4 |
|
|
|
|
|
|
Adjusted Total NOI annualized |
|
|
155,448 |
|
|
|
194,046 |
|
|
|
|
|
|
Plus: estimated annual Total NOI from SNO leases |
|
|
62,376 |
|
|
|
39,217 |
|
|
|
|
|
|
Less: estimated annual Total NOI from associated space to be recaptured from Sears |
|
|
(4,994 |
) |
|
|
(6,586 |
) |
|
|
|
|
|
Annualized Total NOI |
|
$ |
212,830 |
|
|
$ |
226,677 |
|
|
|
|
|
|
(1) |
Includes adjustments to account for leases not in place for the full period. |
13
Reconciliation of Net Loss to EBITDA and Adjusted EBITDA (in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended December 31, |
|
|
Year Ended December 31, |
|
||||||||||
|
EBITDA and Adjusted EBITDA |
|
2017 |
|
|
2016 |
|
|
2017 |
|
|
2016 |
|
||||
|
Net loss |
|
$ |
(70,378 |
) |
|
$ |
(26,483 |
) |
|
$ |
(120,813 |
) |
|
$ |
(91,009 |
) |
|
Depreciation and amortization |
|
|
91,878 |
|
|
|
55,754 |
|
|
|
262,171 |
|
|
|
177,119 |
|
|
Depreciation and amortization (unconsolidated joint ventures) |
|
|
5,371 |
|
|
|
5,465 |
|
|
|
23,954 |
|
|
|
21,118 |
|
|
Interest expense |
|
|
17,040 |
|
|
|
16,294 |
|
|
|
70,112 |
|
|
|
63,591 |
|
|
Provision for income and other taxes |
|
|
5 |
|
|
|
93 |
|
|
|
271 |
|
|
|
505 |
|
|
EBITDA |
|
$ |
43,916 |
|
|
$ |
51,123 |
|
|
$ |
235,695 |
|
|
$ |
171,324 |
|
|
Termination fee income |
|
|
(1,954 |
) |
|
|
(5,288 |
) |
|
|
(19,314 |
) |
|
|
(5,288 |
) |
|
Unrealized loss (gain) on interest rate cap |
|
|
15 |
|
|
|
(520 |
) |
|
|
701 |
|
|
|
1,378 |
|
|
Litigation charge |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
19,000 |
|
|
Acquisition-related expenses |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
73 |
|
|
Up-front hiring and personnel costs |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
328 |
|
|
Gain on sale of interests in unconsolidated joint ventures |
|
|
(16,573 |
) |
|
|
— |
|
|
|
(60,302 |
) |
|
|
— |
|
|
Gain on sale of real estate |
|
|
1,571 |
|
|
|
— |
|
|
|
(11,447 |
) |
|
|
— |
|
|
Adjusted EBITDA |
|
$ |
26,975 |
|
|
$ |
45,315 |
|
|
$ |
145,333 |
|
|
$ |
186,815 |
|
Reconciliation of Net Loss to FFO and Company FFO (in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended December 31, |
|
|
Year Ended December 31, |
|
||||||||||
|
FFO and Company FFO |
|
2017 |
|
|
2016 |
|
|
2017 |
|
|
2016 |
|
||||
|
Net loss |
|
$ |
(70,378 |
) |
|
$ |
(26,483 |
) |
|
$ |
(120,813 |
) |
|
$ |
(91,009 |
) |
|
Real estate depreciation and amortization (consolidated properties) |
|
|
91,385 |
|
|
|
55,521 |
|
|
|
260,543 |
|
|
|
176,366 |
|
|
Real estate depreciation and amortization (unconsolidated joint ventures) |
|
|
5,371 |
|
|
|
5,465 |
|
|
|
23,954 |
|
|
|
21,118 |
|
|
Gain on sale of interests in unconsolidated joint ventures |
|
|
(16,573 |
) |
|
|
— |
|
|
|
(60,302 |
) |
|
|
— |
|
|
Gain on sale of real estate |
|
|
1,571 |
|
|
|
— |
|
|
|
(11,447 |
) |
|
|
— |
|
|
Dividends on preferred shares |
|
|
(245 |
) |
|
|
— |
|
|
|
(245 |
) |
|
|
— |
|
|
FFO attributable to common shareholders and unitholders |
|
$ |
11,131 |
|
|
$ |
34,503 |
|
|
$ |
91,690 |
|
|
$ |
106,475 |
|
|
Termination fee income |
|
|
(1,954 |
) |
|
|
(5,288 |
) |
|
|
(19,314 |
) |
|
|
(5,288 |
) |
|
Unrealized loss (gain) on interest rate cap |
|
|
15 |
|
|
|
(520 |
) |
|
|
701 |
|
|
|
1,378 |
|
|
Amortization of deferred financing costs |
|
|
2,330 |
|
|
|
1,340 |
|
|
|
8,720 |
|
|
|
5,360 |
|
|
Litigation charge |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
19,000 |
|
|
Acquisition-related expenses |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
73 |
|
|
Up-front hiring and personnel costs |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
328 |
|
|
Company FFO attributable to common shareholders and unitholders |
|
$ |
11,522 |
|
|
$ |
30,035 |
|
|
$ |
81,797 |
|
|
$ |
127,326 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FFO per diluted common share and unit |
|
$ |
0.20 |
|
|
$ |
0.62 |
|
|
$ |
1.65 |
|
|
$ |
1.92 |
|
|
Company FFO per diluted common share and unit |
|
$ |
0.21 |
|
|
$ |
0.54 |
|
|
$ |
1.47 |
|
|
$ |
2.29 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted Average Common Shares and Units Outstanding |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding |
|
|
34,094 |
|
|
|
31,418 |
|
|
|
33,804 |
|
|
|
31,416 |
|
|
Weighted average OP units outstanding |
|
|
21,820 |
|
|
|
24,176 |
|
|
|
21,820 |
|
|
|
24,176 |
|
|
Weighted average common shares and units outstanding |
|
|
55,914 |
|
|
|
55,594 |
|
|
|
55,624 |
|
|
|
55,592 |
|
14