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Press Release

Ramco-Gershenson Properties Trust Reports Financial and Operating Results for the Fourth Quarter and Year-End 2016 and Provides Guidance for 2017

Company Release - 2/21/2017 4:15 PM ET

FARMINGTON HILLS, Mich., Feb. 21, 2017 (GLOBE NEWSWIRE) -- Ramco-Gershenson Properties Trust (NYSE:RPT) today announced its financial and operating results for the three and twelve months ended December 31, 2016.  The Company also provided guidance for 2017.

FOURTH QUARTER FINANCIAL AND OPERATING RESULTS:

  • Net income attributable to common shareholders of $0.07 per diluted share, compared to $0.16 per diluted share for the same period in 2015.
  • Operating Funds from Operations (“Operating FFO”) of $0.33 per diluted share, compared to $0.34 per diluted share for the same period in 2015.
  • Total consolidated portfolio net operating income ("NOI") growth of 11.2%.
  • Generated same-center NOI growth with redevelopment of 1.1% for the three months ended December 31, 2016. Excluding the impact of Sports Authority, same property NOI growth with redevelopment for the quarter would have been 3.8%.
  • Signed 63 comparable leases encompassing 379,571 square feet at a positive releasing spread of 9.2%.
  • Acquired one in-fill, urban-oriented shopping center in the affluent Minneapolis sub-market of Edina, Minnesota for $32.0 million.

 2016 FULL-YEAR FINANCIAL AND OPERATING RESULTS:

  • Net income attributable to common shareholders of $0.66 per diluted share, compared to $0.73 per diluted share for the same period in 2015.
  • Operating FFO of $1.36 per diluted share, compared to $1.34 per diluted share for the same period in 2015.
  • Total consolidated portfolio NOI growth of 8.3%.
  • Generated same-center NOI growth with redevelopment of 2.8% for the twelve months ended December 31, 2016.  Excluding the impact of Sports Authority, same property NOI growth with redevelopment for the year would have been 3.9%.
  • Signed 252 comparable leases encompassing 1,652,010 square feet at a positive releasing spread of 9.0%.
  • Disposed of $121.9 million of income producing properties at a blended capitalization rate of 7.6%.
  • Completed approximately $35.9 million in redevelopment projects at a stabilized return on cost of 9.3%.
  • Posted consolidated portfolio average base rent per square foot of $14.20, excluding land leases.
  • Generated consolidated portfolio leased occupancy at year-end of 94.4%, including anchor leased occupancy of 97.0% and small shop leased occupancy of 88.2%.
  • Increased annual dividend by 4.8%, to $0.86 per share.

SUBSEQUENT TRANSACTIONS:

  • Acquired Providence Marketplace, an 830,000 square foot regional dominant shopping center in the rapidly growing eastern Nashville suburb of Mt. Juliet, Tennessee, for $114.7 million.
  • Acquired Webster Place, a 135,000 square foot in-fill, urban-oriented shopping center in the affluent Chicago neighborhood of Lincoln Park, Illinois, for $52.7 million.
  • Sold one Flint Township, Michigan shopping center totaling 152,073 square feet for $14.2 million.
  • Under contract to sell an Auburn Hills, Michigan shopping center totaling 90,553 square feet for $14.3 million.

“In 2016, the Company achieved a number of its stated objectives, including the continued enhancement of our shopping center portfolio, which contributed to solid financial and operating results,” said Dennis Gershenson, President and Chief Executive Officer. “We are enthusiastic about our prospects in 2017, as we initiate the roll-out of our value-creation strategy that we believe will contribute to stronger earnings and NAV growth that both envisions and benefits from a rapidly changing retail environment. Our plans for the year includes transforming 10% of our portfolio through buying and selling approximately $250 million of income producing properties, reducing our Michigan exposure to less than 20% and producing solid same-property NOI growth."

FINANCIAL RESULTS:

For the three months ended December 31, 2016:

  • Net income available to common shareholders of $5.2 million, or $0.07 per diluted share, compared to $13.0 million, or $0.16 per diluted share for the same period in 2015.  
  • Funds from Operations (“FFO”) of $29.1 million, or $0.33 per diluted share, compared to $30.2 million, or $0.34 per diluted share for the same period in 2015. 
  • Operating FFO of $29.5 million, or $0.33 per diluted share, compared to $30.0 million or $0.34 per diluted share for the same period in 2015. 

For the twelve months ended December 31, 2016:

  • Net income available to common shareholders of $53.0 million, or $0.66 per diluted share, compared to $57.8 million, or $0.73 per diluted share for the same period in 2015.  
  • FFO of $118.7 million, or $1.35 per diluted share, compared to $119.6 million, or $1.36 per diluted share for the same period in 2015.  
  • Operating FFO of $119.4 million, or $1.36 per diluted share, compared to $117.8 million, or $1.34 per diluted share for the same period in 2015.

YEAR-END BALANCE SHEET METRICS:

  • Net debt to EBITDA of 6.3X, interest coverage of 3.9X, and fixed charge coverage of 3.2X.
  • Weighted average term of debt to maturity of 7.0 years.

INVESTMENT ACTIVITY:

Acquisitions

In the fourth quarter, the Company acquired Centennial Shops, an 85,000 square foot urban-oriented shopping center in the first-ring, affluent Minneapolis suburb of Edina, Minnesota, for $32.0 million. Centennial Shops is strategically positioned as a premier entertainment and specialty center anchored by The Container Store, West Elm and Pinstripes, each of which operates its only Minneapolis location at the property.  The center is 100% occupied and benefits from solid in-place tenancies, its infill location in a high income trade area, and presents the opportunity to produce strong internal growth through mark-to-market of existing leases.

Subsequent to year-end, the Company acquired two high-quality shopping centers for $167.4 million. The shopping centers acquired are:

  • Providence Marketplace, an 830,000 square foot regional dominant shopping center, located in Mt. Juliet, a rapidly growing eastern suburb of Nashville, Tennessee, was acquired for $114.7 million.  Located 15 miles east of Nashville, the center is strategically located off the I-40 interchange and benefits from a slip ramp that directs traffic off of the highway into the property.  Providence Marketplace features a best-in-market grocery, value and entertainment retail line-up including Target (shadow), Kroger (shadow), T.J. Maxx/Home Goods, Dick’s Sporting Goods, Ross Dress for Less and Regal Cinema as well as 127,000 square feet of restaurants, service uses and specialty retailers. Providence Marketplace is the Company’s first shopping center in the Nashville metropolitan area reflecting a major component of the Company’s long-term strategy of investing in regional dominant centers in large trade areas that are part of high-growth markets.  The trade area for Providence is projected to grow 12.0% over the next five years.  The Nashville MSA is expected to grow 9.5%.  The substantial growth in the area is being driven primarily by Nashville’s expanding music, healthcare and education industries.  The Company believes this growth will provide the catalyst to expand and densify the shopping center. Providence Marketplace is 98% leased. 

  • Webster Place, a 135,000 in-fill, urban-oriented shopping center, located in Lincoln Park, an affluent neighborhood of Chicago, Illinois was acquired for $52.7 million.  The center is located along the highly-desirable Clybourn Corridor, the primary retail corridor in Lincoln Park, at the southwest corner of Clybourn and Webster Avenues. Webster Place’s entertainment driven tenant line-up, featuring an 11-screen Regal Cinema, Webster Place Athletic Club, Barnes and Noble and 23,000 square feet of small shop space, caters to an exceptionally dense three-mile trade area of 524,000 people with an average household income of $104,000.  As a result of tight barriers to entry in the market, the center is poised to benefit from small shop occupancy gains and mark-to-market of leases as well as from a 40 acre mixed-use development adjacent to the center that is currently under construction.  Webster Place is 95% leased.

Dispositions

During 2016, the Company disposed of $121.9 million of income producing properties.

Subsequent to year-end, the Company sold one Michigan shopping center for $14.2 million and agreed to sell a second Michigan shopping center for $14.3 million. The shopping centers are:

  • Oakbrook Square, Flint Township, Michigan (100% ownership), a 152,073 square foot shopping center anchored by T.J. Maxx and Hobby Lobby with average base rent per square foot of $9.57.
  • The Auburn Mile, Auburn Hills, Michigan (100% ownership), a 90,553 square foot shopping center anchored by Best Buy and JoAnn Fabrics with average base rent per square foot of $11.59.

Redevelopment

In 2016, the Company completed approximately $35.9 million of value-add redevelopments at a weighted average stabilized return on cost of 9.3%.

During the quarter, the Company commenced two new redevelopment projects totaling $21.8 million.  The projects are:

  • Troy Marketplace, Troy, Michigan - Adding 28,000 square feet of new GLA by acquiring additional outparcel land and expanding the existing shopping center.  Troy Marketplace is 100% leased and is anchored by Nordstrom Rack, REI and LA Fitness.  The total cost of the project is expected to be $10.1 million. 

  • Woodbury Lakes, Woodbury, Minnesota - Adding a 44,000 square foot best-in-class dine-in, movie theater complex at a total estimated cost of $11.7 million.  The addition of the theater is the first phase of a multi-phase strategic redevelopment at the property. 

At December 31, 2016, the Company's redevelopment pipeline consisted of ten projects with an estimated total cost of $69.6 million, which are expected to stabilize over the next two years at an average return on cost between 9% - 10%.

FINANCING ACTIVITY:

In November, the Company closed on the sale of $75.0 million of senior unsecured notes in a private placement with two high-quality institutional investors. The financing proceeds, as well as proceeds from recent asset sales, were used to pay off debt maturities through 2017.

At year-end, the Company had $859.1 million of unsecured debt at an average interest rate of 3.60% and $160.7 million in mortgage debt at an average interest rate of 5.28%.  The weighted average term for all debt was 7.0 years at an overall average interest rate of 3.95% and the unencumbered asset pool was approximately $2.1 billion.

DIVIDEND:

In the fourth quarter, the Company declared a regular cash dividend of $0.22 per common share for the period October 1, 2016 through December 31, 2016 and a Series D convertible perpetual preferred share dividend of $0.90625 per share for the same period.  The dividends were paid on January 3, 2017 to shareholders of record as of December 20, 2016.  During the year, the Company declared dividends of $0.86 per common share.  The Operating FFO payout ratio for the full year was 63.2%.

2017 GUIDANCE:

The Company is introducing guidance for 2017 FFO and Operating FFO per diluted share, as well as certain other key measures:

  • Same Property NOI growth including redevelopment of 2.5% to 3.5%.
  • Same Property NOI growth excluding redevelopment of 0.5% to 1.5%.
  • Non-cash adjustments (straight-line, other) of $6.2 million to $6.6 million.
  • General and Administrative expenses of $22.5 million to $23.5 million.
  • Interest Expense of approximately $43.0 million.
  • Investment Activity:
    - $250 million of acquisitions at an average capitalization rate of 5.75% - 6.25%.
    - $250 million of dispositions at an average capitalization rate of 7.75% - 8.75%.
               Low High
 2016 FFO and OFFO per common share-diluted $1.36  $1.36 
 Same Property NOI growth, excluding the impact of development  0.01   0.02 
 Growth from development  0.03   0.04 
 Total Same Property NOI $0.04  $0.06 
      
 Non-cash adjustments (straight-line adjustments) $0.01  $0.01 
 General and Administrative expenses  (0.02)  (0.01)
 Interest Expense  0.02   0.02 
 Impact of 2016 transaction NOI  (0.05)  (0.05)
 Impact of 2017 transaction NOI  (0.02)  (0.01)
 2017 OFFO per common share-diluted $1.34  $1.38 
          

The Company's 2017 guidance excludes any unforeseen one-time items including provisions for impairment, transactions costs, gain or loss on extinguishment of debt and other items.

CONFERENCE CALL/WEBCAST:

Ramco-Gershenson Properties Trust will host a live broadcast of its fourth quarter conference call on Wednesday, February 22, 2017 at 9:00 a.m. eastern time, to discuss its financial and operating results as well as its 2017 guidance.  The live broadcast will be available on-line at www.rgpt.com and www.investorcalendar.com and also by telephone at (877) 407-9205, no pass code needed.  A replay will be available shortly after the call on the aforementioned websites (for ninety days) or by telephone at (877) 481-4010, (Conference ID: 13652439), 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 premier, national publicly-traded shopping center real estate investment trust (REIT) based in Farmington Hills, Michigan.  The Company's primary business is the ownership and management of regional dominant and urban-oriented shopping centers in the 40 largest metropolitan markets in the United States.  At December 31, 2016, the Company owned interests in and managed a portfolio of 65 shopping centers and two joint venture properties. At December 31, 2016, the Company's consolidated portfolio was 94.4% leased.  Ramco-Gershenson is a fully-integrated qualified REIT that is self-administered and self-managed. For additional information about the Company please visit www.rgpt.com or follow Ramco-Gershenson on Twitter @RamcoGershenson and facebook.com/ramcogershenson/.

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

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Source: Ramco-Gershenson Properties Trust