Retail Opportunity Investments Corp. (NASDAQ:ROIC) announced today
financial and operating results for the three and nine months ended
September 30, 2023.
HIGHLIGHTS
- $8.4 million
of net income attributable to common stockholders
($0.07 per diluted
share)
- $36.0 million
in Funds From Operations (FFO)(1)
($0.27 per diluted
share)
- FFO per diluted share guidance
for 2023 narrowed ($1.05 - $1.07 per diluted share)
- 8.2%
increase in same-center cash net operating
income (3Q‘23 vs. 3Q‘22)
- 98.2%
portfolio lease rate at 9/30/23 (vs. 97.8% at
9/30/22)
- 465,187
square feet of leases executed during 3Q‘23 (new and
renewed)
- 36.0%
increase in same-space cash base rents on new leases
(7.2% increase on
renewals)
- 1.5 million
square feet of leases executed during first nine months of
‘23 (record activity)
- $350.0 million senior
unsecured notes issued (due October 2028, 6.75%
coupon)
- 96.8% of
total principal debt outstanding effectively fixed-rate at
9/30/23
- 6.4x net
principal debt-to-annualized EBITDA ratio for 3Q‘23
- $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, “During the
third quarter, we continued to build on the leasing momentum that
we established in the first of half of 2023. As a
result, through the first nine months, we leased a record amount of
space. Additionally, we continued to achieve solid
releasing rent growth, with the third quarter being our strongest
year-to-date in terms of same-space rent increases on both new
leases and renewals.” Tanz added, “Looking ahead, we
are working towards achieving a solid finish to 2023 and
positioning our business and grocery-anchored portfolio for a
strong start to 2024.”
FINANCIAL RESULTS SUMMARY
For the three months ended September 30, 2023,
GAAP net income attributable to common stockholders was $8.4
million, or $0.07 per diluted share, as compared to GAAP net income
attributable to common stockholders of $18.5 million, or $0.15 per
diluted share, for the three months ended September 30,
2022. For the nine months ended September 30, 2023,
GAAP net income attributable to common stockholders was $26.5
million, or $0.21 per diluted share, as compared to GAAP net income
attributable to common stockholders of $41.7 million, or $0.33 per
diluted share, for the nine months ended September 30,
2022. Included in 2022 GAAP net income was a $7.7
million gain on sale of real estate for both the three and nine
months ended September 30, 2022.
FFO for the third quarter of 2023 was $36.0
million, or $0.27 per diluted share, as compared to $36.5 million
in FFO, or $0.27 per diluted share for the third quarter of
2022. FFO for the first nine months of 2023 was $105.4
million, or $0.79 per diluted share, as compared to $109.4 million
in FFO, or $0.83 per diluted share for the first nine 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 third quarter of 2023, same-center net
operating income (NOI) was $55.5 million, as compared to $51.2
million in same-center NOI for the third quarter of 2022,
representing an 8.2% increase. For the first nine
months of 2023, same-center NOI increased 3.6% as compared to
same-center NOI for the first nine months of 2022. ROIC
reports same-center comparative NOI on a cash basis. A
reconciliation of GAAP operating income to same-center comparative
NOI is provided at the end of this press release.
In September 2023, ROIC issued, through its
operating partnership, $350.0 million of senior unsecured
notes. The notes bear interest at a fixed rate of 6.75%
and mature in October 2028. ROIC expects to utilize a
portion of the net proceeds to fully retire its operating
partnership’s $250.0 million senior notes (due December
2023). Additionally, ROIC utilized a portion of the net
proceeds to reduce borrowings outstanding on its unsecured term
loan and unsecured revolving credit facility.
At September 30, 2023, ROIC had total real
estate assets (before accumulated depreciation) of approximately
$3.4 billion and approximately $1.4 billion of net principal debt
outstanding (total principal debt less cash and
equivalents). For the third quarter of 2023, ROIC’s net
principal debt-to-annualized EBITDA ratio was 6.4 times, and 96.8%
of its total principal debt outstanding was effectively fixed-rate
at September 30, 2023.
PROPERTY OPERATIONS SUMMARY
At September 30, 2023, ROIC’s portfolio was
98.2% leased. During the third quarter of 2023, ROIC
executed 95 leases, totaling 465,187 square feet, including 34 new
leases, totaling 155,585 square feet, achieving a 36.0% increase in
same-space comparative base rent, and 61 renewed leases, totaling
309,602 square feet, achieving a 7.2% increase in base rent. ROIC
reports same-space comparative new lease and renewal base rents on
a cash basis.
DIVIDEND SUMMARY
On October 6, 2023, ROIC distributed a $0.15 per
share cash dividend. On October 24, 2023, the Board declared a
cash dividend of $0.15 per share, payable on January 5, 2024
to stockholders of record on December 15, 2023.
2023 GUIDANCE SUMMARY
ROIC currently estimates that GAAP net income
for 2023 will be within the range of $0.28 to $0.30 per diluted
share, and FFO will be within the range of $1.05 to $1.07 per
diluted share.
|
|
Year Ended December 31, 2023 |
|
|
Initial (2/15/23) |
|
Current |
|
|
Low End |
|
High End |
|
Low End |
|
High End |
|
(unaudited, amounts in thousands except per share and percentage
data) |
GAAP net income applicable to stockholders |
|
$ |
43,709 |
|
|
$ |
54,526 |
|
|
$ |
34,693 |
|
|
$ |
37,316 |
|
Funds from operations (FFO) – diluted |
|
$ |
139,650 |
|
|
$ |
150,700 |
|
|
$ |
139,860 |
|
|
$ |
142,524 |
|
|
|
|
|
|
|
|
|
|
GAAP net income per diluted share |
|
$ |
0.35 |
|
|
$ |
0.43 |
|
|
$ |
0.28 |
|
|
$ |
0.30 |
|
FFO per diluted share |
|
$ |
1.05 |
|
|
$ |
1.11 |
|
|
$ |
1.05 |
|
|
$ |
1.07 |
|
|
|
|
|
|
|
|
|
|
Key Drivers |
|
|
|
|
|
|
|
|
General and administrative expenses |
|
$ |
23,000 |
|
|
$ |
22,000 |
|
|
$ |
23,000 |
|
|
$ |
22,000 |
|
Interest expense and other finance expenses |
|
$ |
68,000 |
|
|
$ |
73,000 |
|
|
$ |
73,250 |
|
|
$ |
73,250 |
|
Straight-line rent |
|
$ |
1,000 |
|
|
$ |
1,000 |
|
|
$ |
2,000 |
|
|
$ |
2,500 |
|
Amortization of above- and below-market rent |
|
$ |
10,000 |
|
|
$ |
10,000 |
|
|
$ |
10,000 |
|
|
$ |
10,500 |
|
Bad debt |
|
$ |
5,000 |
|
|
$ |
3,000 |
|
|
$ |
4,000 |
|
|
$ |
3,500 |
|
Acquisitions |
|
$ |
100,000 |
|
|
$ |
200,000 |
|
|
$ |
— |
|
|
$ |
— |
|
Dispositions |
|
$ |
200,000 |
|
|
$ |
50,000 |
|
|
$ |
15,000 |
|
|
$ |
— |
|
Same-center cash NOI growth |
|
|
2.0 |
% |
|
|
5.0 |
% |
|
|
3.0 |
% |
|
|
4.0 |
% |
|
|
|
|
|
|
|
|
|
ROIC’s management will discuss guidance, and the
underlying assumptions, on ROIC’s October 25, 2023 conference
call. ROIC’s guidance is a forward-looking statement
and is subject to risks and other factors noted elsewhere in this
press release.
CONFERENCE CALL
ROIC will conduct a conference call to discuss
its results on Wednesday, October 25, 2023 at 9:00 a.m.
Eastern Time / 6:00 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/BI38ddda3155334a659306e46354049ebd
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/2hpfahit
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 September 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)
|
September 30, 2023
(unaudited) |
|
December 31, 2022 |
ASSETS |
|
|
|
Real Estate Investments: |
|
|
|
Land |
$ |
958,419 |
|
|
$ |
958,236 |
|
Building and improvements |
|
2,476,389 |
|
|
|
2,452,857 |
|
|
|
3,434,808 |
|
|
|
3,411,093 |
|
Less: accumulated depreciation |
|
632,087 |
|
|
|
578,593 |
|
|
|
2,802,721 |
|
|
|
2,832,500 |
|
Mortgage note receivable |
|
4,718 |
|
|
|
4,786 |
|
Real Estate Investments, net |
|
2,807,439 |
|
|
|
2,837,286 |
|
Cash and cash equivalents |
|
205,260 |
|
|
|
5,598 |
|
Restricted cash |
|
2,252 |
|
|
|
1,861 |
|
Tenant and other receivables, net |
|
58,923 |
|
|
|
57,546 |
|
Deposits |
|
— |
|
|
|
500 |
|
Acquired lease intangible assets, net |
|
45,636 |
|
|
|
52,428 |
|
Prepaid expenses |
|
1,627 |
|
|
|
5,957 |
|
Deferred charges, net |
|
28,585 |
|
|
|
26,683 |
|
Other assets |
|
17,465 |
|
|
|
16,420 |
|
Total assets |
$ |
3,167,187 |
|
|
$ |
3,004,279 |
|
|
|
|
|
LIABILITIES AND EQUITY |
|
|
|
Liabilities: |
|
|
|
Term loan |
$ |
199,684 |
|
|
$ |
299,253 |
|
Credit facility |
|
— |
|
|
|
88,000 |
|
Senior Notes |
|
1,293,012 |
|
|
|
946,849 |
|
Mortgage notes payable |
|
60,271 |
|
|
|
60,917 |
|
Acquired lease intangible liabilities, net |
|
142,356 |
|
|
|
152,117 |
|
Accounts payable and accrued expenses |
|
64,466 |
|
|
|
22,885 |
|
Tenants’ security deposits |
|
7,993 |
|
|
|
7,701 |
|
Other liabilities |
|
39,500 |
|
|
|
41,959 |
|
Total liabilities |
|
1,807,282 |
|
|
|
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;
126,001,795 and 124,538,811 shares issued and outstanding at
September 30, 2023 and December 31, 2022,
respectively |
|
13 |
|
|
|
12 |
|
Additional paid-in capital |
|
1,628,663 |
|
|
|
1,612,126 |
|
Accumulated dividends in excess of earnings |
|
(346,260 |
) |
|
|
(315,984 |
) |
Accumulated other comprehensive income |
|
1,270 |
|
|
|
14 |
|
Total Retail Opportunity Investments Corp. stockholders’
equity |
|
1,283,686 |
|
|
|
1,296,168 |
|
Non-controlling interests |
|
76,219 |
|
|
|
88,430 |
|
Total equity |
|
1,359,905 |
|
|
|
1,384,598 |
|
Total liabilities and equity |
$ |
3,167,187 |
|
|
$ |
3,004,279 |
|
|
|
|
|
RETAIL OPPORTUNITY INVESTMENTS
CORP.Consolidated Statements of
Operations(Unaudited)(In thousands, except per share
data)
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
Revenues |
|
|
|
|
|
|
|
Rental revenue |
$ |
78,273 |
|
|
$ |
77,420 |
|
|
$ |
236,902 |
|
|
$ |
229,675 |
|
Other income |
|
3,472 |
|
|
|
618 |
|
|
|
6,179 |
|
|
|
3,061 |
|
Total revenues |
|
81,745 |
|
|
|
78,038 |
|
|
|
243,081 |
|
|
|
232,736 |
|
|
|
|
|
|
|
|
|
Operating expenses |
|
|
|
|
|
|
|
Property operating |
|
13,210 |
|
|
|
12,705 |
|
|
|
40,993 |
|
|
|
37,468 |
|
Property taxes |
|
8,909 |
|
|
|
8,876 |
|
|
|
26,677 |
|
|
|
25,812 |
|
Depreciation and amortization |
|
27,050 |
|
|
|
24,332 |
|
|
|
77,280 |
|
|
|
72,444 |
|
General and administrative expenses |
|
5,492 |
|
|
|
5,203 |
|
|
|
16,588 |
|
|
|
16,145 |
|
Other expense |
|
157 |
|
|
|
111 |
|
|
|
811 |
|
|
|
778 |
|
Total operating expenses |
|
54,818 |
|
|
|
51,227 |
|
|
|
162,349 |
|
|
|
152,647 |
|
|
|
|
|
|
|
|
|
Gain on sale of real estate |
|
— |
|
|
|
7,653 |
|
|
|
— |
|
|
|
7,653 |
|
|
|
|
|
|
|
|
|
Operating income |
|
26,927 |
|
|
|
34,464 |
|
|
|
80,732 |
|
|
|
87,742 |
|
Non-operating expenses |
|
|
|
|
|
|
|
Interest expense and other finance expenses |
|
(17,998 |
) |
|
|
(14,678 |
) |
|
|
(52,589 |
) |
|
|
(43,176 |
) |
Net income |
|
8,929 |
|
|
|
19,786 |
|
|
|
28,143 |
|
|
|
44,566 |
|
Net income attributable to non-controlling interests |
|
(501 |
) |
|
|
(1,264 |
) |
|
|
(1,644 |
) |
|
|
(2,896 |
) |
Net Income Attributable to Retail Opportunity Investments
Corp. |
$ |
8,428 |
|
|
$ |
18,522 |
|
|
$ |
26,499 |
|
|
$ |
41,670 |
|
|
|
|
|
|
|
|
|
Earnings per share – basic |
$ |
0.07 |
|
|
$ |
0.15 |
|
|
$ |
0.21 |
|
|
$ |
0.34 |
|
|
|
|
|
|
|
|
|
Earnings per share – diluted |
$ |
0.07 |
|
|
$ |
0.15 |
|
|
$ |
0.21 |
|
|
$ |
0.33 |
|
|
|
|
|
|
|
|
|
Dividends per common share |
$ |
0.15 |
|
|
$ |
0.15 |
|
|
$ |
0.45 |
|
|
$ |
0.41 |
|
|
|
|
|
|
|
|
|
CALCULATION OF FUNDS FROM
OPERATIONS(Unaudited)(In thousands)
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
|
2023 |
|
|
2022 |
|
|
|
2023 |
|
|
2022 |
|
Net income attributable to ROIC |
$ |
8,428 |
|
$ |
18,522 |
|
|
$ |
26,499 |
|
$ |
41,670 |
|
Plus: Depreciation and amortization |
|
27,050 |
|
|
24,332 |
|
|
|
77,280 |
|
|
72,444 |
|
Less: Gain on sale of real estate |
|
— |
|
|
(7,653 |
) |
|
|
— |
|
|
(7,653 |
) |
Funds from operations – basic |
|
35,478 |
|
|
35,201 |
|
|
|
103,779 |
|
|
106,461 |
|
Net income attributable to non-controlling interests |
|
501 |
|
|
1,264 |
|
|
|
1,644 |
|
|
2,896 |
|
Funds from operations – diluted |
$ |
35,979 |
|
$ |
36,465 |
|
|
$ |
105,423 |
|
$ |
109,357 |
|
|
|
|
|
|
|
|
|
SAME-CENTER CASH NET OPERATING INCOME
ANALYSIS(Unaudited)(In thousands, except number of
shopping centers and percentages)
|
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
|
|
2023 |
|
|
|
2022 |
|
|
$ Change |
|
% Change |
|
|
2023 |
|
|
|
2022 |
|
|
$ Change |
|
% Change |
Number of shopping centers included in same-center analysis |
|
90 |
|
|
|
90 |
|
|
|
|
|
|
|
87 |
|
|
|
87 |
|
|
|
|
|
Same-center leased rate |
|
98.1 |
% |
|
|
98.1 |
% |
|
|
|
— |
% |
|
|
98.1 |
% |
|
|
98.0 |
% |
|
|
|
0.1 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Base rents |
$ |
55,324 |
|
|
$ |
53,990 |
|
|
$ |
1,334 |
|
|
2.5 |
% |
|
$ |
162,912 |
|
|
$ |
158,652 |
|
|
$ |
4,260 |
|
|
2.7 |
% |
|
Percentage rent |
|
419 |
|
|
|
199 |
|
|
|
220 |
|
|
110.6 |
% |
|
|
1,055 |
|
|
|
554 |
|
|
|
501 |
|
|
90.4 |
% |
|
Recoveries from tenants |
|
19,327 |
|
|
|
18,520 |
|
|
|
807 |
|
|
4.4 |
% |
|
|
57,545 |
|
|
|
54,346 |
|
|
|
3,199 |
|
|
5.9 |
% |
|
Other property income |
|
3,090 |
|
|
|
441 |
|
|
|
2,649 |
|
|
600.7 |
% |
|
|
4,497 |
|
|
|
2,314 |
|
|
|
2,183 |
|
|
94.3 |
% |
|
Bad debt |
|
(767 |
) |
|
|
(568 |
) |
|
|
(199 |
) |
|
35.0 |
% |
|
|
(2,416 |
) |
|
|
(1,287 |
) |
|
|
(1,129 |
) |
|
87.7 |
% |
Total Revenues |
|
77,393 |
|
|
|
72,582 |
|
|
|
4,811 |
|
|
6.6 |
% |
|
|
223,593 |
|
|
|
214,579 |
|
|
|
9,014 |
|
|
4.2 |
% |
Operating Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property operating expenses |
|
13,261 |
|
|
|
12,646 |
|
|
|
615 |
|
|
4.9 |
% |
|
|
40,122 |
|
|
|
37,158 |
|
|
|
2,964 |
|
|
8.0 |
% |
|
Property taxes |
|
8,682 |
|
|
|
8,701 |
|
|
|
(19 |
) |
|
(0.2 |
)% |
|
|
25,616 |
|
|
|
25,084 |
|
|
|
532 |
|
|
2.1 |
% |
Total Operating Expenses |
|
21,943 |
|
|
|
21,347 |
|
|
|
596 |
|
|
2.8 |
% |
|
|
65,738 |
|
|
|
62,242 |
|
|
|
3,496 |
|
|
5.6 |
% |
Same-Center Cash Net Operating Income |
$ |
55,450 |
|
|
$ |
51,235 |
|
|
$ |
4,215 |
|
|
8.2 |
% |
|
$ |
157,855 |
|
|
$ |
152,337 |
|
|
$ |
5,518 |
|
|
3.6 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SAME-CENTER CASH NET OPERATING INCOME
RECONCILIATION(Unaudited)(In thousands)
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
GAAP operating income |
$ |
26,927 |
|
|
$ |
34,464 |
|
|
$ |
80,732 |
|
|
$ |
87,742 |
|
Depreciation and amortization |
|
27,050 |
|
|
|
24,332 |
|
|
|
77,280 |
|
|
|
72,444 |
|
General and administrative expenses |
|
5,492 |
|
|
|
5,203 |
|
|
|
16,588 |
|
|
|
16,145 |
|
Other expense |
|
157 |
|
|
|
111 |
|
|
|
811 |
|
|
|
778 |
|
Gain on sale of real estate |
|
— |
|
|
|
(7,653 |
) |
|
|
— |
|
|
|
(7,653 |
) |
Straight-line rent |
|
(362 |
) |
|
|
(922 |
) |
|
|
(1,688 |
) |
|
|
(2,288 |
) |
Amortization of above- and below-market rent |
|
(2,118 |
) |
|
|
(2,906 |
) |
|
|
(7,591 |
) |
|
|
(9,218 |
) |
Property revenues and other expenses (1) |
|
138 |
|
|
|
(16 |
) |
|
|
(523 |
) |
|
|
(176 |
) |
Total Company cash NOI |
|
57,284 |
|
|
|
52,613 |
|
|
|
165,609 |
|
|
|
157,774 |
|
Non same-center cash NOI |
|
(1,834 |
) |
|
|
(1,378 |
) |
|
|
(7,754 |
) |
|
|
(5,437 |
) |
Same-center cash NOI |
$ |
55,450 |
|
|
$ |
51,235 |
|
|
$ |
157,855 |
|
|
$ |
152,337 |
|
|
|
|
|
|
|
|
|
____________________
(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’LearyDirector of Investor
Relations858-677-0900noleary@roireit.net
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