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Press Release

Ramco-Gershenson Properties Trust Reports Financial and Operating Results for the First Quarter 2017

Company Release - 5/2/2017 4:15 PM ET

FARMINGTON HILLS, Mich., May 02, 2017 (GLOBE NEWSWIRE) -- Ramco-Gershenson Properties Trust (NYSE:RPT) today announced its financial and operating results for the three months ended March 31, 2017. 

FIRST QUARTER FINANCIAL AND OPERATING RESULTS:

  • Net income attributable to common shareholders of $0.14 per diluted share, compared to $0.13 per diluted share for the same period in 2016.
  • Operating Funds from Operations (“Operating FFO”) of $0.35 per diluted share, compared to $0.34 per diluted share for the same period in 2016.
  • Generated same property NOI growth with redevelopment of 4.1% for the three months ended March 31, 2017.
  • Signed 70 comparable leases encompassing 438,631 square feet at a positive leasing spread of 7.7%.
  • Acquired two shopping centers, a regional dominant center in Mt. Juliet (Nashville), Tennessee and an urban-oriented, infill center in Lincoln Park (Chicago), Illinois for $168.3 million.
  • Sold two Michigan shopping centers totaling 242,626 square feet for $27.5 million.

“In this current retail environment, Ramco is focused on aggressively leasing its centers to growing, best-in-class retailers and completing its capital recycling program.  Our solid financial and operating performance this quarter is reflective of the Company’s high-quality portfolio,” said Dennis Gershenson, President and Chief Executive Officer. “Projected same-property NOI growth, leasing velocity and completion of in-process redevelopments position us to absorb the effects of tenant failures and the dilution from non-core asset sales this year.”

FINANCIAL RESULTS:

For the three months ended March 31, 2017:

  • Net income available to common shareholders of $11.4 million, or $0.14 per diluted share, compared to $10.2 million, or $0.13 per diluted share for the same period in 2016.
  • Funds from Operations (“FFO”) of $30.8 million, or $0.35 per diluted share, compared to $29.8 million, or $0.34 per diluted share for the same period in 2016.
  • Operating FFO of $30.6 million, or $0.35 per diluted share, compared to $29.6 million or $0.34 per diluted share for the same period in 2016. 

BALANCE SHEET METRICS:

  • Net debt to EBITDA of 7.0X, interest coverage of 3.8X, and fixed charge coverage of 3.1X. Including funds held in escrow of $26.1 million for two asset sales, net debt to EBITDA would have been 6.8X.
  • Weighted average cost and term of debt of 3.75% and 5.9 years, respectively.

INVESTMENT ACTIVITY:

Acquisitions

In the first quarter the Company acquired two shopping centers in key growth markets totaling $168.3 million:

  • Regional Dominant Center - Providence Marketplace, encompasses 632,000 square feet (830,000 square feet with shadow anchors) and is located in Mt. Juliet, a rapidly growing eastern suburb of Nashville, Tennessee was purchased for $115.1 million.
  • Urban-Oriented, Infill Center - Webster Place, encompasses 135,000 square feet and is located in Lincoln Park, an affluent neighborhood of Chicago, Illinois was purchased for $53.2 million.

Dispositions

In the first quarter, the Company sold two Michigan shopping centers for $27.5 million:

  • Oak Brook Square, Flint Township, Michigan (100% ownership), a 152,073 square foot shopping center anchored by T.J. Maxx and Hobby Lobby with an 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 JoAnn Fabrics with an average base rent per square foot of $11.59.

The Company previously announced that it plans to sell approximately $250 million of non-strategic assets throughout 2017 to fund its acquisition and redevelopment activities.

Redevelopment

At March 31, 2017, the Company's active redevelopment pipeline consisted of ten projects with an estimated total cost of $69.3 million, which are expected to stabilize over the next two years at an average return on cost of between 9% - 10%.

DIVIDEND:

In the first quarter, the Company declared a regular cash dividend of $0.22 per common share for the period January 1, 2017 through March 31, 2017 and a Series D convertible perpetual preferred share dividend of $0.90625 per share for the same period.  The dividends were paid on April 3, 2017 to shareholders of record as of March 20, 2017.

GUIDANCE:
The Company has affirmed its 2017 Operating FFO guidance of $1.34 to $1.38 per diluted share.

CONFERENCE CALL/WEBCAST:

Ramco-Gershenson Properties Trust will host a live broadcast of its first quarter conference call on Wednesday, May 3, 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: 13659316), 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, infill shopping centers in key growth markets in the 40 largest metropolitan markets in the United States.  At March 31, 2017, the Company owned interests in and managed a portfolio of 65 shopping centers and two joint venture properties. At March 31, 2017, the Company's consolidated portfolio was 94.3% 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.

RAMCO-GERSHENSON PROPERTIES TRUST
CONSOLIDATED BALANCE SHEETS
(In thousands, except per share amounts)
    
 March 31, December 31,
 2017 2016
ASSETS   
Income producing properties, at cost:   
Land$420,450  $374,889 
Buildings and improvements1,861,025  1,757,781 
Less accumulated depreciation and amortization(358,979) (345,204)
Income producing properties, net1,922,496  1,787,466 
Construction in progress and land available for development or sale63,341  61,224 
Real estate held for sale  8,776 
Net real estate1,985,837  1,857,466 
Equity investments in unconsolidated joint ventures2,855  3,150 
Cash and cash equivalents4,486  3,582 
Restricted cash and escrows31,785  11,144 
Accounts receivable, net26,888  24,016 
Acquired lease intangibles, net80,965  72,424 
Other assets, net93,342  89,716 
TOTAL ASSETS$2,226,158  $2,061,498 
    
LIABILITIES AND SHAREHOLDERS' EQUITY   
Notes payable, net$1,192,312  $1,021,223 
Capital lease obligation1,066  1,066 
Accounts payable and accrued expenses51,404  57,357 
Acquired lease intangibles, net68,903  63,734 
Other liabilities6,488  6,800 
Distributions payable19,653  19,627 
TOTAL LIABILITIES1,339,826  1,169,807 
    
Commitments and Contingencies   
    
Ramco-Gershenson Properties Trust ("RPT") Shareholders' Equity:   
Preferred shares, $0.01 par, 2,000 shares authorized: 7.25% Series D Cumulative Convertible Perpetual Preferred Shares, (stated at liquidation preference $50 per share), 1,849 shares issued and outstanding as of March 31, 2017 and December 31, 201692,427  92,427 
Common shares of beneficial interest, $0.01 par, 120,000 shares authorized, 79,343 and 79,272 shares issued and outstanding as of  March 31, 2017 and December 31, 2016, respectively793  793 
Additional paid-in capital1,158,590  1,158,430 
Accumulated distributions in excess of net income(388,048) (381,912)
Accumulated other comprehensive income1,691  985 
TOTAL SHAREHOLDERS' EQUITY ATTRIBUTABLE TO RPT865,453  870,723 
Noncontrolling interest20,879  20,968 
TOTAL SHAREHOLDERS' EQUITY886,332  891,691 
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY$2,226,158  $2,061,498 


RAMCO-GERSHENSON PROPERTIES TRUST
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
   
 Three Months 
 Ended March 31, 
 2017 2016 
REVENUE    
Minimum rent$49,437  $48,396  
Percentage rent238  302  
Recovery income from tenants16,891  16,746  
Other property income1,106  958  
Management and other fee income153  110  
TOTAL REVENUE67,825  66,512  
     
EXPENSES    
Real estate tax expense10,993  10,308  
Recoverable operating expense7,608  8,080  
Non-recoverable operating expense1,148  1,394  
Depreciation and amortization22,817  23,847  
Acquisition costs  59  
General and administrative expense6,451  5,605  
Provision for impairment5,717    
TOTAL EXPENSES54,734  49,293  
     
OPERATING INCOME13,091  17,219  
     
OTHER INCOME AND EXPENSES    
Other expense, net(311) (347) 
Gain on sale of real estate11,375  6,525  
Earnings from unconsolidated joint ventures86  109  
Interest expense(10,799) (11,302) 
INCOME BEFORE TAX13,442  12,204  
Income tax provision(28) (62) 
     
NET INCOME13,414  12,142  
Net income attributable to noncontrolling partner interest(316) (297) 
NET INCOME ATTRIBUTABLE TO RPT13,098  11,845  
Preferred share dividends(1,675) (1,675) 
NET INCOME AVAILABLE TO COMMON SHAREHOLDERS$11,423  $10,170  
     
EARNINGS PER COMMON SHARE    
Basic$0.14  $0.13  
Diluted$0.14  $0.13  
     
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING    
Basic79,299  79,194  
Diluted79,481  79,372  


RAMCO-GERSHENSON PROPERTIES TRUST
FUNDS FROM OPERATIONS
(In thousands, except per share data)
     
  Three Months Ended March 31,
  2017 2016
     
Net income $13,414  $12,142 
Net income attributable to noncontrolling partner interest (316) (297)
Preferred share dividends (1,675) (1,675)
Net income available to common shareholders 11,423  10,170 
Adjustments:    
Rental property depreciation and amortization expense 22,758  23,807 
Pro-rata share of real estate depreciation from unconsolidated joint ventures 73  82 
Gain on sale of depreciable real estate (11,190) (6,274)
Provision for impairment on income-producing properties 5,717   
FFO available to common shareholders 28,781  27,785 
     
Noncontrolling interest in Operating Partnership (1) 316  297 
Preferred share dividends (assuming conversion) (2) 1,675  1,675 
FFO available to common shareholders and dilutive securities $30,772  $29,757 
     
Gain on sale of land (185) (251)
Acquisition costs   59 
OPERATING FFO available to common shareholders and dilutive securities $30,587  $29,565 
     
Weighted average common shares 79,299  79,194 
Shares issuable upon conversion of Operating Partnership Units (1) 1,917  2,001 
Dilutive effect of restricted stock 182  178 
Shares issuable upon conversion of preferred shares (2) 6,657  6,572 
Weighted average equivalent shares outstanding, diluted 88,055  87,945 
     
FFO available to common shareholders and dilutive securities per share, diluted $0.35  $0.34 
     
Operating FFO available to common shareholders and dilutive securities per share, diluted $0.35  $0.34 
     
Dividend per common share $0.22  $0.21 
Payout ratio - Operating FFO 62.9% 61.8%
     

(1) The total noncontrolling interest reflects OP units convertible 1:1 into common shares.

(2) Series D convertible preferred shares are paid annual dividends of $6.7 million and are currently convertible into approximately 6.7 million shares of common stock. They are dilutive only when earnings or FFO exceed approximately $0.25 per diluted share per quarter and $1.00 per diluted share per year.  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 earning per share in future periods.

Management considers 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. In addition to FFO available to common shareholders,  we include Operating FFO available to common shareholders as an additional measure of financial and operating performance. Operating FFO excludes acquisition costs and periodic items such as 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 available to common shareholders and Operating FFO available to common shareholders 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.

 
RAMCO-GERSHENSON PROPERTIES TRUST
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(amounts in thousands)
 
Reconciliation of net income available to common shareholders to Same Property NOI
    
 Three Months Ended March 31,
 2017 2016
Net income available to common shareholders$11,423  $10,170 
Preferred share dividends1,675  1,675 
Net income attributable to noncontrolling partner interest316  297 
Income tax provision28  62 
Interest expense10,799  11,302 
Earnings from unconsolidated joint ventures(86) (109)
Gain on sale of real estate(11,375) (6,525)
Other expense, net311  347 
Management and other fee income(153) (110)
Depreciation and amortization22,817  23,847 
Acquisition costs  59 
General and administrative expenses6,451  5,605 
Provision for impairment5,717   
Amortization of lease inducements44  94 
Amortization of acquired above and below market lease intangibles, net(959) (735)
Lease termination fees(33) (68)
Straight-line ground rent expense70   
Amortization of acquired ground lease intangibles6   
Straight-line rental income(810) (480)
NOI46,241  45,431 
NOI from Other Investments(2,151) (3,091)
Same Property NOI with Redevelopment44,090  42,340 
NOI from Redevelopment (1)(4,848) (4,242)
Same Property NOI without Redevelopment$39,242  $38,098 
    
    
(1) The NOI from Redevelopment adjustments represent 100% of the NOI related to Deerfield Towne Center, Hunter’s Square and West Oaks, and a portion of the NOI related to specific GLA at Spring Meadows, The Shoppes at Fox River II, The Shops on Lane Avenue, Mission Bay, and Town & Country for the periods presented.  Because of the redevelopment activity, the center or specific space is not considered comparable for the periods presented and adjusted out of Same Property NOI with Redevelopment in arriving at Same Property NOI without Redevelopment.
    


RAMCO-GERSHENSON PROPERTIES TRUST
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(amounts in thousands)
 
 Three Months Ended March 31,
 2017 2016
Reconciliation of net income to proforma adjusted EBITDA   
Net income$13,414  $12,142 
Gain on sale of real estate(11,375) (6,525)
Depreciation and amortization22,817  23,847 
Provision for impairment5,717   
Severance expense13   
Interest expense10,799  11,302 
Income tax provision28  62 
Acquisition costs  59 
Adjusted EBITDA41,413  40,887 
Proforma adjustments (1)1,026  (83)
Proforma adjusted EBITDA$42,439  $40,804 
Annualized proforma adjusted EBITDA$169,756  $163,216 
    
    
Reconciliation of Notes Payable, net to Net Debt   
Notes payable, net$1,192,312  $1,077,582 
Unamortized premium(4,829) (6,467)
Deferred financing costs, net3,555  3,970 
Notional debt1,191,038  1,075,085 
Capital lease obligation1,066  1,108 
Cash and cash equivalents(4,486) (3,655)
Net debt$1,187,618  $1,072,538 
    
    
Reconciliation of interest expense to total fixed charges   
Interest expense$10,799  $11,302 
Preferred share dividends1,675  920 
Scheduled mortgage principal payments806  1,675 
Total fixed charges$13,280  $13,897 
    
    
Net debt to annualized proforma adjusted EBITDA(2)7.0X 6.6X
Interest coverage ratio (Adjusted EBITDA / interest expense)3.8X 3.7X
Fixed charge coverage ratio (Adjusted EBITDA / fixed charges)3.1X 3.0X
    
(1) 1Q17 includes EBITDA of $1.4 million for acquisitions and excludes $0.4 million for dispositions. 1Q16 excludes EBITDA of $0.1 million from dispositions. These proforma adjustments treat the acquisitions and dispositions as if they occurred at the start of each quarter.
(2) 1Q17 does not include $26.1 million of disposition proceeds deposited in a 1031 escrow account at March 31, 2017.  The consolidated net debt to annualized proforma adjusted EBITDA would have been 6.8X after adjusting for the $26.1 million.
 

Ramco-Gershenson Properties Trust
Non-GAAP Financial Definitions
March 31, 2017

                                                                                                                                                                                                                                                                                                                                                                                     

Certain of our key performance indicators are considered non-GAAP financial measures. Management uses these measures along with our GAAP financial statements in order to evaluate our operations results.  We believe these additional measures provide users of our financial information additional comparable indicators of our industry, as well as our performance.

Funds From Operations (FFO) Available to Common Shareholders

As defined by the National Association of Real Estate Investment Trusts (NAREIT), Funds From Operations (FFO) represents net income computed in accordance with generally accepted accounting principles, excluding gains (or losses) from sales of depreciable property and 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.  We have adopted the NAREIT definition in our computation of FFO available to common shareholders.

Operating FFO Available to Common Shareholders

In addition to FFO available to common shareholders, we include Operating FFO available to common shareholders as an additional measure of our financial and operating performance.  Operating FFO 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, accelerated amortization of debt premiums 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 available to common shareholders and Operating FFO available to common shareholders 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.  We  recognize the  limitations of  FFO  and  Operating FFO  when  compared to  GAAP net  income available to  common shareholders. FFO and Operating FFO available to common shareholders do not represent amounts available for needed capital replacement or expansion, debt service obligations, or other commitments and uncertainties. In addition, FFO and Operating FFO do not represent cash generated from operating activities in accordance with GAAP and are not necessarily indicative of cash available to fund cash needs, including the payment of dividends. FFO and Operating FFO are simply  used as additional indicators of our operating performance.

Adjusted EBITDA/Proforma Adjusted EBITDA

Adjusted EBITDA is net income or loss plus depreciation and amortization, net interest expense, severance expense, income taxes, gain or loss on sale of real estate, and impairments of real estate, if any.  Adjusted EBITDA should not be considered an alternative measure of operating results or cash flow from operations as determined in accordance with GAAP.  Proforma Adjusted EBITDA further adjusts for the effect of the acquisition or disposition of properties during the period.

Same Property Operating Income

Same Property Operating Income ("Same Property NOI") is a supplemental non-GAAP financial measure of real estate companies' operating performance. Same Property NOI is considered by management to be a relevant performance measure of our operations because it includes only the NOI of comparable properties for the reporting period.  Same Property NOI excludes acquisitions, dispositions, and redevelopment properties.  A property is designated as redevelopment when projected costs exceed $1.0 million, and the construction impacts approximately 20% or more of the income producing property's gross leasable area ("GLA") or the location and nature of the construction significantly impacts or disrupts the daily operations of the property.  Redevelopment may also include a portion of certain properties designated as same property for which we are adding additional GLA or retenanting space.  Same Property NOI is calculated using consolidated operating income and adjusted to exclude management and other fee income, depreciation and amortization, general and administrative expense, provision for impairment and non-comparable income/expense adjustments such as straight-line rents, lease termination fees, above/below market rents, and other non-comparable operating income and expense adjustments.

In addition, to Same Property NOI, the Company also believes Same Property NOI with Redevelopment to be a relevant performance measure of our operations.  Same Property NOI with Redevelopment follows the same methodology as Same Property NOI, however it is inclusive of redevelopment activity that significantly impacts the entire property, as well as lesser redevelopment activity where we are adding GLA or retenanting a specific space.

Same Property NOI should not be considered an alternative to net income in accordance with GAAP or as a measure of liquidity. Our method of calculating Same Property NOI may differ from methods used by other REITs and, accordingly, may not be comparable to such other REITs.

 

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