Retail Opportunity Investments Corp. (NASDAQ:ROIC) announced today
financial and operating results for the three and six months ended
June 30, 2023.
HIGHLIGHTS
- $9.9 million of net income
attributable to common stockholders
($0.08 per diluted
share)
- $35.6 million in Funds From Operations
(FFO)(1)
($0.27 per diluted
share)
- FFO per diluted share guidance for 2023 reaffirmed
($1.05 - $1.11 per diluted share)
- 3.2% increase in
same-center cash net operating income (2Q‘23 vs.
2Q‘22)
- 98.3% portfolio lease rate at 6/30/23
(matching all-time record high)
- 429,687 square feet of leases executed
(most active 2nd quarter on record)
- 988,844 square feet of leases executed
during first six months of 2023 (record activity)
- 16.8% increase in same-space cash base
rents on new leases (6.6% on
renewals)
- 6.5x net principal debt-to-annualized
EBITDA ratio for 2Q‘23
- 84.5% of total principal debt
outstanding effectively fixed-rate at 6/30/23
- Environmental, Social & Governance annual report
issued
- $0.15 per share cash dividend
declared_____________________________________(1)
A reconciliation of GAAP net income to FFO is provided at the end
of this press release.
Stuart A. Tanz, President and Chief Executive
Officer of Retail Opportunity Investments Corp. stated, “Demand for
space across our portfolio continues to be consistent and strong.
Capitalizing on the demand, during the second quarter we continued
to lease space at a record pace and maintained our portfolio lease
rate at an all-time high. Additionally, we continue to achieve
solid releasing rent growth on new leases, as well as renewals.”
Tanz added, “Our continued success with portfolio operations and
leasing is underscored by the fundamental strength and appeal of
our West Coast grocery-anchored shopping center portfolio and sound
tenant base. We expect that to continue to drive our results in the
second half of 2023.”
FINANCIAL RESULTS SUMMARY
For the three months ended June 30, 2023, GAAP
net income attributable to common stockholders was $9.9 million, or
$0.08 per diluted share, as compared to GAAP net income
attributable to common stockholders of $11.5 million, or $0.09 per
diluted share, for the three months ended June 30, 2022. For the
six months ended June 30, 2023, GAAP net income attributable to
common stockholders was $18.1 million, or $0.14 per diluted share,
as compared to GAAP net income attributable to common stockholders
of $23.1 million, or $0.19 per diluted share, for the six months
ended June 30, 2022.
FFO for the second quarter of 2023 was $35.6
million, or $0.27 per diluted share, as compared to $36.7 million
in FFO, or $0.28 per diluted share for the second quarter of 2022.
FFO for the first six months of 2023 was $69.4 million, or $0.52
per diluted share, as compared to $72.9 million in FFO, or $0.55
per diluted share for the first six months of 2022. ROIC reports
FFO as a supplemental performance measure in accordance with the
definition set forth by the National Association of Real Estate
Investment Trusts. A reconciliation of GAAP net income to FFO is
provided at the end of this press release.
For the second quarter of 2023, same-center net
operating income (NOI) was $53.2 million, as compared to $51.5
million in same-center NOI for the second quarter of 2022,
representing a 3.2% increase. For the first six months of 2023,
same-center NOI increased 1.3% as compared to same-center NOI for
the first six months of 2022. ROIC reports same-center NOI on a
cash basis. A reconciliation of GAAP operating income to
same-center NOI is provided at the end of this press release.
At June 30, 2023, ROIC had total real estate
assets (before accumulated depreciation) of approximately $3.4
billion and approximately $1.4 billion of principal debt
outstanding, of which approximately $1.3 billion was unsecured
debt, including $63.0 million outstanding on its $600.0 million
unsecured credit facility. For the second quarter of 2023, ROIC’s
net principal debt-to-annualized EBITDA ratio was 6.5 times, and
84.5% of its total principal debt outstanding was effectively
fixed-rate at June 30, 2023.
PROPERTY OPERATIONS SUMMARY
At June 30, 2023, ROIC’s portfolio was
98.3% leased. During the second quarter of 2023, ROIC executed 128
leases, totaling 429,687 square feet, including 45 new leases,
totaling 88,830 square feet, achieving a 16.8% increase in
same-space comparative base rent, and 83 renewed leases, totaling
340,857 square feet, achieving a 6.6% increase in base rent. ROIC
reports same-space comparative new lease and renewal base rents on
a cash basis.
ENVIRONMENTAL, SOCIAL & GOVERNANCE
SUMMARY
In April 2023, ROIC was selected, for the third
consecutive year, as a Green Lease Leader by the U.S. Department of
Energy’s Better Buildings Alliance and the Institute for Market
Transformation. Specifically, ROIC was awarded 2023 Green Lease
Leader “Gold” level designation in recognition of its continued
success in collaborating with tenants on energy efficiency,
decarbonization, air quality and other environmental and social
issues.
In June 2023, ROIC issued its fourth Environmental, Social and
Governance (ESG) annual report, detailing it’s ESG achievements
during 2022, as well as its ongoing initiatives and goals. The
report was prepared in accordance with the Sustainability
Accounting Standards Board (SASB) standards, the Task Force on
Climate-related Financial Disclosures (TCFD) framework, and the
United Nations Sustainable Development Goals (SDG). The report is
available at: https://www.roireit.net/esg
DIVIDEND SUMMARY
On July 7, 2023, ROIC distributed a $0.15 per
share cash dividend. On July 25, 2023, the Board declared a
cash dividend of $0.15 per share, payable on October 6, 2023
to stockholders of record on September 15, 2023.
CONFERENCE CALL
ROIC will conduct a conference call to discuss
its results on Wednesday, July 26, 2023 at 12:00 p.m. Eastern
Time / 9:00 a.m. Pacific Time.
To participate in the conference call, click on
the following link (ten minutes prior to the call) to register:
https://register.vevent.com/register/BI4b8698f12a6e4ed999de6434d0df2e87
Once registered, participants will have the
option of: 1) dialing in from their phone (using a PIN); or 2)
clicking the “Call Me” option to receive an automated call directly
to their phone.
The conference call will also be available live
(in a listen-only mode) at:
https://edge.media-server.com/mmc/p/5u6nvqev
The conference call will be recorded and available for replay
following the conclusion of the live broadcast and will be
accessible up to one year on ROIC’s website, specifically on its
Investor Relations Events & Presentations page:
https://investor.roicreit.com/events-presentations
ABOUT RETAIL OPPORTUNITY INVESTMENTS
CORP.
Retail Opportunity Investments Corp. (NASDAQ:
ROIC), is a fully-integrated, self-managed real estate investment
trust (REIT) that specializes in the acquisition, ownership and
management of grocery-anchored shopping centers located in
densely-populated, metropolitan markets across the West Coast. As
of June 30, 2023, ROIC owned 93 shopping centers encompassing
approximately 10.6 million square feet. ROIC is the largest
publicly-traded, grocery-anchored shopping center REIT focused
exclusively on the West Coast. ROIC is a member of the S&P
SmallCap 600 Index and has investment-grade corporate debt ratings
from Moody's Investor Services, S&P Global Ratings and Fitch
Ratings, Inc. Additional information is available at:
www.roireit.net.
When used herein, the words "believes,"
"anticipates," "projects," "should," "estimates," "expects,"
“guidance” and similar expressions are intended to identify
forward-looking statements with the meaning of that term in Section
27A of the Securities Act of 1933, as amended, and in Section 21F
of the Securities and Exchange Act of 1934, as amended. Certain
statements contained herein may constitute “forward-looking
statements” within the meaning of the Private Securities Litigation
Reform Act of 1995. Such forward-looking statements involve known
and unknown risks, uncertainties and other factors which may cause
the actual results of ROIC to differ materially from future results
expressed or implied by such forward-looking statements.
Information regarding such risks and factors is described in ROIC's
filings with the SEC, including its most recent Annual Report on
Form 10-K, which is available at: www.roireit.net.
RETAIL OPPORTUNITY INVESTMENTS
CORP.Consolidated Balance Sheets(In
thousands, except share data) |
|
|
June 30, 2023 (unaudited) |
|
December 31, 2022 |
ASSETS |
|
|
|
Real Estate Investments: |
|
|
|
Land |
$ |
958,397 |
|
|
$ |
958,236 |
|
Building and improvements |
|
2,467,962 |
|
|
|
2,452,857 |
|
|
|
3,426,359 |
|
|
|
3,411,093 |
|
Less: accumulated
depreciation |
|
615,501 |
|
|
|
578,593 |
|
|
|
2,810,858 |
|
|
|
2,832,500 |
|
Mortgage note receivable |
|
4,741 |
|
|
|
4,786 |
|
Real Estate Investments,
net |
|
2,815,599 |
|
|
|
2,837,286 |
|
Cash and cash equivalents |
|
5,296 |
|
|
|
5,598 |
|
Restricted cash |
|
2,069 |
|
|
|
1,861 |
|
Tenant and other receivables,
net |
|
57,336 |
|
|
|
57,546 |
|
Deposits |
|
— |
|
|
|
500 |
|
Acquired lease intangible
assets, net |
|
48,564 |
|
|
|
52,428 |
|
Prepaid expenses |
|
2,251 |
|
|
|
5,957 |
|
Deferred charges, net |
|
30,011 |
|
|
|
26,683 |
|
Other assets |
|
17,433 |
|
|
|
16,420 |
|
Total
assets |
$ |
2,978,559 |
|
|
$ |
3,004,279 |
|
|
|
|
|
LIABILITIES AND
EQUITY |
|
|
|
Liabilities: |
|
|
|
Term loan |
$ |
299,435 |
|
|
$ |
299,253 |
|
Credit facility |
|
63,000 |
|
|
|
88,000 |
|
Senior Notes |
|
947,673 |
|
|
|
946,849 |
|
Mortgage notes payable |
|
60,486 |
|
|
|
60,917 |
|
Acquired lease intangible
liabilities, net |
|
145,685 |
|
|
|
152,117 |
|
Accounts payable and accrued
expenses |
|
43,733 |
|
|
|
22,885 |
|
Tenants’ security
deposits |
|
7,894 |
|
|
|
7,701 |
|
Other liabilities |
|
42,722 |
|
|
|
41,959 |
|
Total
liabilities |
|
1,610,628 |
|
|
|
1,619,681 |
|
|
|
|
|
Commitments and
contingencies |
|
|
|
|
|
|
|
Equity: |
|
|
|
Preferred stock, $0.0001 par
value 50,000,000 shares authorized; none issued and
outstanding |
|
— |
|
|
|
— |
|
Common stock, $0.0001 par
value, 500,000,000 shares authorized; 126,003,795 and 124,538,811
shares issued and outstanding at June 30, 2023 and
December 31, 2022, respectively |
|
13 |
|
|
|
12 |
|
Additional paid-in
capital |
|
1,625,667 |
|
|
|
1,612,126 |
|
Accumulated dividends in
excess of earnings |
|
(335,755 |
) |
|
|
(315,984 |
) |
Accumulated other
comprehensive income |
|
1,337 |
|
|
|
14 |
|
Total Retail Opportunity
Investments Corp. stockholders’ equity |
|
1,291,262 |
|
|
|
1,296,168 |
|
Non-controlling interests |
|
76,669 |
|
|
|
88,430 |
|
Total
equity |
|
1,367,931 |
|
|
|
1,384,598 |
|
Total liabilities and
equity |
$ |
2,978,559 |
|
|
$ |
3,004,279 |
|
|
|
|
|
RETAIL OPPORTUNITY INVESTMENTS
CORP.Consolidated Statements of
Operations(Unaudited)(In thousands, except per share
data) |
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
2023 |
|
2022 |
|
2023 |
|
2022 |
Revenues |
|
|
|
|
|
|
|
Rental revenue |
$ |
79,630 |
|
|
$ |
77,218 |
|
|
$ |
158,629 |
|
|
$ |
152,255 |
|
Other income |
|
2,410 |
|
|
|
1,007 |
|
|
|
2,707 |
|
|
|
2,443 |
|
Total
revenues |
|
82,040 |
|
|
|
78,225 |
|
|
|
161,336 |
|
|
|
154,698 |
|
|
|
|
|
|
|
|
|
Operating
expenses |
|
|
|
|
|
|
|
Property operating |
|
13,581 |
|
|
|
12,672 |
|
|
|
27,783 |
|
|
|
24,763 |
|
Property taxes |
|
8,924 |
|
|
|
8,416 |
|
|
|
17,768 |
|
|
|
16,936 |
|
Depreciation and
amortization |
|
25,126 |
|
|
|
24,350 |
|
|
|
50,230 |
|
|
|
48,112 |
|
General and administrative
expenses |
|
5,776 |
|
|
|
5,702 |
|
|
|
11,096 |
|
|
|
10,942 |
|
Other expense |
|
482 |
|
|
|
488 |
|
|
|
654 |
|
|
|
667 |
|
Total operating
expenses |
|
53,889 |
|
|
|
51,628 |
|
|
|
107,531 |
|
|
|
101,420 |
|
|
|
|
|
|
|
|
|
Operating
income |
|
28,151 |
|
|
|
26,597 |
|
|
|
53,805 |
|
|
|
53,278 |
|
Non-operating
expenses |
|
|
|
|
|
|
|
Interest expense and other
finance expenses |
|
(17,633 |
) |
|
|
(14,283 |
) |
|
|
(34,591 |
) |
|
|
(28,498 |
) |
Net income |
|
10,518 |
|
|
|
12,314 |
|
|
|
19,214 |
|
|
|
24,780 |
|
Net income attributable to
non-controlling interests |
|
(589 |
) |
|
|
(807 |
) |
|
|
(1,143 |
) |
|
|
(1,632 |
) |
Net Income
Attributable to Retail Opportunity Investments Corp. |
$ |
9,929 |
|
|
$ |
11,507 |
|
|
$ |
18,071 |
|
|
$ |
23,148 |
|
|
|
|
|
|
|
|
|
Earnings per share –
basic and diluted |
$ |
0.08 |
|
|
$ |
0.09 |
|
|
$ |
0.14 |
|
|
$ |
0.19 |
|
|
|
|
|
|
|
|
|
Dividends per common
share |
$ |
0.15 |
|
|
$ |
0.13 |
|
|
$ |
0.30 |
|
|
$ |
0.26 |
|
|
|
|
|
|
|
|
|
CALCULATION OF FUNDS FROM OPERATIONS(Unaudited)(In
thousands) |
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
2023 |
|
2022 |
|
2023 |
|
2022 |
Net income attributable to ROIC |
$ |
9,929 |
|
$ |
11,507 |
|
$ |
18,071 |
|
$ |
23,148 |
Plus: Depreciation and amortization |
|
25,126 |
|
|
24,350 |
|
|
50,230 |
|
|
48,112 |
Funds from operations –
basic |
|
35,055 |
|
|
35,857 |
|
|
68,301 |
|
|
71,260 |
Net income attributable to non-controlling interests |
|
589 |
|
|
807 |
|
|
1,143 |
|
|
1,632 |
Funds from operations –
diluted |
$ |
35,644 |
|
$ |
36,664 |
|
$ |
69,444 |
|
$ |
72,892 |
|
|
|
|
|
|
|
|
SAME-CENTER CASH NET OPERATING INCOME
ANALYSIS(Unaudited)(In thousands, except number of
shopping centers and percentages) |
|
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
|
2023 |
|
2022 |
|
$ Change |
|
% Change |
|
2023 |
|
2022 |
|
$ Change |
|
% Change |
Number of shopping
centers included in same-center analysis |
|
89 |
|
|
|
89 |
|
|
|
|
|
|
|
87 |
|
|
|
87 |
|
|
|
|
|
Same-center leased
rate |
|
98.3 |
% |
|
|
97.7 |
% |
|
|
|
0.6 |
% |
|
|
98.3 |
% |
|
|
97.7 |
% |
|
|
|
0.6 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Base rents |
$ |
55,206 |
|
|
$ |
53,459 |
|
|
$ |
1,747 |
|
|
3.3 |
% |
|
$ |
108,530 |
|
|
$ |
105,560 |
|
|
$ |
2,970 |
|
|
2.8 |
% |
|
Percentage rent |
|
269 |
|
|
|
157 |
|
|
|
112 |
|
|
71.3 |
% |
|
|
634 |
|
|
|
356 |
|
|
|
278 |
|
|
78.1 |
% |
|
Recoveries from tenants |
|
19,464 |
|
|
|
18,237 |
|
|
|
1,227 |
|
|
6.7 |
% |
|
|
38,580 |
|
|
|
36,155 |
|
|
|
2,425 |
|
|
6.7 |
% |
|
Other property income |
|
1,288 |
|
|
|
827 |
|
|
|
461 |
|
|
55.7 |
% |
|
|
1,402 |
|
|
|
1,873 |
|
|
|
(471 |
) |
|
(25.1 |
)% |
|
Bad debt |
|
(864 |
) |
|
|
(133 |
) |
|
|
(731 |
) |
|
549.6 |
% |
|
|
(1,674 |
) |
|
|
(718 |
) |
|
|
(956 |
) |
|
133.1 |
% |
Total
Revenues |
|
75,363 |
|
|
|
72,547 |
|
|
|
2,816 |
|
|
3.9 |
% |
|
|
147,472 |
|
|
|
143,226 |
|
|
|
4,246 |
|
|
3.0 |
% |
Operating
Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property operating
expenses |
|
13,524 |
|
|
|
12,785 |
|
|
|
739 |
|
|
5.8 |
% |
|
|
27,128 |
|
|
|
24,737 |
|
|
|
2,391 |
|
|
9.7 |
% |
|
Property taxes |
|
8,681 |
|
|
|
8,276 |
|
|
|
405 |
|
|
4.9 |
% |
|
|
17,033 |
|
|
|
16,540 |
|
|
|
493 |
|
|
3.0 |
% |
Total Operating
Expenses |
|
22,205 |
|
|
|
21,061 |
|
|
|
1,144 |
|
|
5.4 |
% |
|
|
44,161 |
|
|
|
41,277 |
|
|
|
2,884 |
|
|
7.0 |
% |
Same-Center Cash
Net Operating Income |
$ |
53,158 |
|
|
$ |
51,486 |
|
|
$ |
1,672 |
|
|
3.2 |
% |
|
$ |
103,311 |
|
|
$ |
101,949 |
|
|
$ |
1,362 |
|
|
1.3 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SAME-CENTER CASH NET OPERATING INCOME
RECONCILIATION(Unaudited)(In thousands) |
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
2023 |
|
2022 |
|
2023 |
|
2022 |
GAAP operating income |
$ |
28,151 |
|
|
$ |
26,597 |
|
|
$ |
53,805 |
|
|
$ |
53,278 |
|
Depreciation and amortization |
|
25,126 |
|
|
|
24,350 |
|
|
|
50,230 |
|
|
|
48,112 |
|
General and administrative expenses |
|
5,776 |
|
|
|
5,702 |
|
|
|
11,096 |
|
|
|
10,942 |
|
Other expense |
|
482 |
|
|
|
488 |
|
|
|
654 |
|
|
|
667 |
|
Straight-line rent |
|
(979 |
) |
|
|
(915 |
) |
|
|
(1,326 |
) |
|
|
(1,366 |
) |
Amortization of above- and below-market rent |
|
(2,609 |
) |
|
|
(3,254 |
) |
|
|
(5,473 |
) |
|
|
(6,311 |
) |
Property revenues and other expenses (1) |
|
(634 |
) |
|
|
(32 |
) |
|
|
(629 |
) |
|
|
(129 |
) |
Total Company cash NOI |
|
55,313 |
|
|
|
52,936 |
|
|
|
108,357 |
|
|
|
105,193 |
|
Non same-center cash NOI |
|
(2,155 |
) |
|
|
(1,450 |
) |
|
|
(5,046 |
) |
|
|
(3,244 |
) |
Same-center cash NOI |
$ |
53,158 |
|
|
$ |
51,486 |
|
|
$ |
103,311 |
|
|
$ |
101,949 |
|
|
|
|
|
|
|
|
|
____________________(1) Includes anchor lease
termination fees, net of contractual amounts, if any, expense and
recovery adjustments related to prior periods and other
miscellaneous adjustments.
NON-GAAP DISCLOSURES
Funds from operations (“FFO”), is a widely
recognized non-GAAP financial measure for REITs that the Company
believes when considered with financial statements presented in
accordance with GAAP, provides additional and useful means to
assess its financial performance. FFO is frequently used by
securities analysts, investors and other interested parties to
evaluate the performance of REITs, most of which present FFO along
with net income as calculated in accordance with GAAP. The Company
computes FFO in accordance with the “White Paper” on FFO published
by the National Association of Real Estate Investment Trusts
(“NAREIT”), which defines FFO as net income attributable to common
stockholders (determined in accordance with GAAP) excluding gains
or losses from debt restructuring, sales of depreciable property
and impairments, plus real estate related depreciation and
amortization, and after adjustments for partnerships and
unconsolidated joint ventures.
The Company uses cash net operating income
(“NOI”) internally to evaluate and compare the operating
performance of the Company’s properties. The Company believes cash
NOI provides useful information to investors regarding the
Company’s financial condition and results of operations because it
reflects only those income and expense items that are incurred at
the property level, and when compared across periods, can be used
to determine trends in earnings of the Company’s properties as this
measure is not affected by the non-cash revenue and expense
recognition items, the cost of the Company’s funding, the impact of
depreciation and amortization expenses, gains or losses from the
acquisition and sale of operating real estate assets, general and
administrative expenses or other gains and losses that relate to
the Company’s ownership of properties. The Company believes the
exclusion of these items from operating income is useful because
the resulting measure captures the actual revenue generated and
actual expenses incurred in operating the Company’s properties as
well as trends in occupancy rates, rental rates and operating
costs. Cash NOI is a measure of the operating performance of the
Company’s properties but does not measure the Company’s performance
as a whole and is therefore not a substitute for net income or
operating income as computed in accordance with GAAP. The Company
defines cash NOI as operating revenues (base rent and recoveries
from tenants), less property and related expenses (property
operating expenses and property taxes), adjusted for non-cash
revenue and operating expense items such as straight-line rent and
amortization of lease intangibles, debt-related expenses and other
adjustments. Cash NOI also excludes general and administrative
expenses, depreciation and amortization, acquisition transaction
costs, other expense, interest expense, gains and losses from
property acquisitions and dispositions, extraordinary items, tenant
improvements and leasing commissions. Other REITs may use different
methodologies for calculating cash NOI, and accordingly, the
Company’s cash NOI may not be comparable to other REITs.
Contact:
Nicolette O’Leary
Director of Investor Relations
858-677-0900
noleary@roireit.net
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