Attached files
| file | filename |
|---|---|
| 8-K - 8-K - RETAIL PROPERTIES OF AMERICA, INC. | form8-k6x30x14.htm |
| EX-99.1 - EX-99.1 - RETAIL PROPERTIES OF AMERICA, INC. | ex-9916x30x14.htm |
Exhibit 99.2
RETAIL PROPERTIES OF AMERICA, INC. REPORTS
SECOND QUARTER 2014 FINANCIAL RESULTS
Oak Brook, IL – August 4, 2014 – Retail Properties of America, Inc. (NYSE: RPAI or the “Company”) today reported financial and operating results for the quarter and six months ended June 30, 2014.
FINANCIAL RESULTS
For the quarter ended June 30, 2014, the Company reported:
▪ | Operating Funds From Operations (Operating FFO) of $65.7 million, or $0.28 per share, compared to $60.6 million, or $0.26 per share, for the same period in 2013; |
▪ | Funds From Operations (FFO) of $63.8 million, or $0.27 per share, compared to $88.2 million, or $0.38 per share, for the same period in 2013; |
▪ | Net income attributable to common shareholders of $27.7 million, or $0.12 per share, compared to $13.6 million, or $0.06 per share, for the same period in 2013. |
For the six months ended June 30, 2014, the Company reported:
▪ | Operating FFO of $128.7 million, or $0.55 per share, compared to $112.8 million, or $0.49 per share, for the same period in 2013; |
▪ | FFO of $129.5 million, or $0.55 per share, compared to $131.4 million, or $0.57 per share, for the same period in 2013; |
▪ | Net income attributable to common shareholders of $39.4 million, or $0.17 per share, compared to $9.4 million, or $0.04 per share, for the same period in 2013. |
OPERATING RESULTS
For the quarter ended June 30, 2014, the Company’s results for its consolidated portfolio were as follows:
▪ | 4.8% increase in total same store net operating income (NOI) over the comparable period in 2013, based on same store occupancy of 93.6% at June 30, 2014, up 30 basis points from 93.3% at March 31, 2014 and up 140 basis points from 92.2% at June 30, 2013; |
▪ | Total portfolio percent leased, including leases signed but not commenced: 94.8% at June 30, 2014, up 20 basis points from 94.6% at March 31, 2014 and up 140 basis points from 93.4% at June 30, 2013; |
▪ | Retail portfolio percent leased, including leases signed but not commenced: 94.5% at June 30, 2014, up 20 basis points from 94.3% at March 31, 2014 and up 150 basis points from 93.0% at June 30, 2013; |
▪ | 958,000 square feet of retail leasing transactions, including the Company’s pro rata share of unconsolidated joint ventures, comprised of 180 new and renewal leases; |
▪ | Positive comparable cash leasing spreads, including the Company’s pro rata share of unconsolidated joint ventures, of 6.0%. |
n Retail Properties of America, Inc.
T: 800.541.7661
www.rpai.com 2021 Spring Road, Suite 200
Oak Brook, IL 60523
“With the closing of our inaugural private placement transaction, the acquisition of six high quality multi-tenant retail assets through the dissolution of our MS Inland joint venture, and another compelling quarter of operational and financial results, we continue to demonstrate a clear path toward sustainable growth,” stated Steve Grimes, president and chief executive officer. “Our strong start to 2014 has positioned us to be opportunistic as we execute on our remaining goals for the year.”
INVESTMENTS ACTIVITY
Joint Venture Transactions
During the quarter, the Company completed the dissolution of its MS Inland joint venture through the acquisition of its partner’s 80% ownership interest in the six properties owned by the joint venture. The properties had an agreed upon value of $292.5 million, with the Company’s partner’s 80% interest valued at $234.0 million. The Company paid total cash consideration of approximately $120.6 million before transaction costs and prorations and after assumption of the joint venture’s in-place mortgage financing on those properties of $141.7 million, as of the acquisition date, at a weighted average interest rate of 4.79%.
Property Transactions
During the quarter, the Company acquired an outparcel at one of its lifestyle centers, Southlake Town Square, for a gross purchase price of $6.4 million. The well-located, contemporary-style building was developed in 2013 and is occupied by Del Frisco’s Grille, a national upscale restaurant.
During the quarter, the Company sold three non-strategic assets for a gross sales price of $71.6 million. Subsequent to quarter end, the Company sold an additional non-strategic asset for a gross sales price of $14.1 million. Year-to-date, asset sales have totaled $95.0 million.
CAPITAL MARKETS ACTIVITY
During the quarter, the Company closed on its inaugural private placement unsecured notes offering to institutional investors by issuing $250 million of senior unsecured notes, consisting of $150 million of notes with a ten-year term, priced at a fixed interest rate of 4.58%, and $100 million of notes with a seven-year term, priced at a fixed interest rate of 4.12%, resulting in a weighted average fixed interest rate of 4.40%.
During the quarter, the Company repaid $34.9 million of mortgage loans, excluding amortization, with a weighted average contractual interest rate of 6.54%. Subsequent to quarter end, the Company repaid an additional $76.8 million of mortgage loans, excluding amortization, with a weighted average contractual interest rate of 5.85%.
As of June 30, 2014, the Company had $2.5 billion of consolidated indebtedness, which resulted in a net debt to adjusted EBITDA ratio of 6.3x, or a net debt and preferred stock to adjusted EBITDA ratio of 6.6x. Consolidated indebtedness, as of June 30, 2014, had a weighted average contractual interest rate of 5.01% and a weighted average maturity of 4.7 years.
GUIDANCE
The Company is increasing its 2014 Operating FFO guidance to a range of $1.04 to $1.07 per share from $0.99 to $1.03 per share. The Company is maintaining 2014 same store NOI growth guidance of 2.0% to 3.0%.
ii
DIVIDEND
On July 29, 2014, the Company’s Board of Directors declared the third quarter 2014 Series A preferred stock distribution of $0.4375 per preferred share, for the period beginning July 1, 2014, which will be paid on September 30, 2014, to preferred shareholders of record on September 19, 2014.
On July 29, 2014, the Company’s Board of Directors also declared the third quarter 2014 quarterly cash dividend of $0.165625 per share on the Company’s outstanding Class A common stock. The common dividend will be paid on October 10, 2014, to Class A common shareholders of record on September 26, 2014.
WEBCAST AND SUPPLEMENTAL INFORMATION
The Company’s management team will host a webcast on Tuesday, August 5, 2014, at 11:00 AM (EDT), to discuss its quarterly financial results and operating performance, business highlights and outlook. In addition, the Company may discuss business and financial developments and trends and other matters affecting the Company, some of which may not have been previously disclosed.
A live webcast will be available online in the Investor Relations section of the Company’s website at www.rpai.com. The conference call can be accessed by dialing (877) 705-6003 or (201) 493-6725 for international callers. Please dial in at least ten minutes prior to the start of the call to register.
A replay of the webcast will be available. To listen to the replay, please go to www.rpai.com in the Investor Relations section of the website and follow the instructions. A replay of the call will be available from 2:00 PM (EDT) on August 5, 2014, until midnight (EDT) on August 19, 2014. The replay can be accessed by dialing (877) 870-5176 or (858) 384-5517 for international callers and entering pin number 13585517.
The Company has also posted supplemental financial and operating information and other data in the Investor Relations section of its website.
ABOUT RPAI
Retail Properties of America, Inc. is a REIT and is one of the largest owners and operators of high quality, strategically located shopping centers in the United States. As of June 30, 2014, the Company owned 224 retail operating properties representing 31.8 million square feet. The Company is publicly traded on the New York Stock Exchange under the ticker symbol RPAI. Additional information about the Company is available at www.rpai.com.
iii
SAFE HARBOR LANGUAGE
The statements and certain other information contained in this press release, which can be identified by the use of forward-looking terminology such as “may,” “expect,” “continue,” “remains,” “intend,” “aim,” “should,” “prospects,” “could,” “future,” “potential,” “believes,” “plans,” “likely,” “anticipate,” and “probable,” or the negative thereof or other variations thereon or comparable terminology, constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and are subject to the safe harbors created thereby. These forward-looking statements reflect our current views about our plans, intentions, expectations, strategies and prospects, which are based on the information currently available to us and on assumptions we have made. Although we believe that our plans, intentions, expectations, strategies and prospects as reflected in or suggested by those forward-looking statements are reasonable, we can give no assurance that such plans, intentions, expectations or strategies will be attained or achieved. Furthermore, these forward-looking statements should be considered as subject to the many risks and uncertainties that exist in the Company’s operations and business environment. Such risks and uncertainties could cause actual results to differ materially from those projected. These uncertainties include, but are not limited to, general economic, business and financial conditions, changes in the Company’s industry and changes in the real estate markets in particular, market demand for and pricing of the Company’s common and preferred stock, general volatility of the capital and credit markets, competitive and cost factors, the ability of the Company to enter into new leases or renew leases on favorable terms, defaults on, early terminations of or non-renewal of leases by tenants, bankruptcy or insolvency of a major tenant or a significant number of smaller tenants, the effects of declining real estate valuations and impairment charges on the Company’s operating results, increased interest rates and operating costs, decreased rental rates or increased vacancy rates, the uncertainties of real estate acquisitions, dispositions and redevelopment activity, satisfaction of closing conditions to the pending transactions described herein, the Company’s failure to successfully execute its non-strategic and non-core disposition program and capital recycling efforts, the Company’s ability to create long-term shareholder value, the Company’s ability to manage its growth effectively, the availability, terms and deployment of capital, regulatory changes and other risk factors, including those detailed in the sections of the Company’s most recent Forms 10-K and 10-Q filed with the SEC titled “Risk Factors”. We assume no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise.
NON-GAAP FINANCIAL MEASURES
As defined by the National Association of Real Estate Investment Trusts (NAREIT), an industry trade group, FFO means net income (loss) computed in accordance with generally accepted accounting principles (GAAP), excluding gains (or losses) from sales of depreciable real estate, plus depreciation and amortization and impairment charges on depreciable real estate, including amounts from continuing and discontinued operations, as well as adjustments for unconsolidated joint ventures in which the Company holds an interest. The Company has adopted the NAREIT definition in its computation of FFO and believes that FFO, which is a non-GAAP performance measure, provides an additional and useful means to assess the operating performance of REITs. The Company believes that, subject to the following limitations, FFO provides a basis for comparing the Company’s performance and operations to those of other REITs. Depreciation and amortization related to investment properties for purposes of calculating FFO includes a portion of loss on lease terminations encompassing the write-off of tenant-related assets, including tenant improvements and in-place lease values, as a result of early lease terminations.
The Company also reports Operating FFO, which is defined as FFO excluding the impact of discrete non-operating transactions and other events which management does not consider representative of the comparable operating results of the Company's core business platform, its real estate operating portfolio. Specific examples include, but are not limited to, the financial statement impact of gains or losses associated with the early extinguishment of debt or other liabilities, actual or anticipated settlement of litigation involving the Company, and impairment charges to write down the carrying value of assets other than depreciable real estate, which are otherwise excluded from our calculation of FFO. Neither FFO nor Operating FFO represent alternatives to “Net Income” as an indicator of the Company’s performance, or “Cash Flows from Operating Activities” as determined by GAAP as a measure of the Company’s capacity to fund cash needs, including the payment of dividends. Further, comparison of the Company’s presentation of Operating FFO to similarly titled measures for other REITs may not necessarily be meaningful due to possible differences in definition and application by such REITs.
The Company also reports Same Store NOI. The Company defines Net Operating Income (NOI) as operating revenues (rental income, tenant recovery income and other property income, excluding straight-line rental income, amortization of lease inducements, amortization of acquired above and below market lease intangibles and lease termination fee income) less property operating expenses (real estate tax expense and property operating expense, excluding straight-line ground rent expense, amortization of acquired ground lease intangible liability, straight-line bad debt expense and lease termination fee expense). Same Store NOI represents NOI from our same store portfolio consisting of 218 operating properties acquired or placed in service prior to January 1, 2013, except for the one property that was classified as held for sale as of June 30, 2014. NOI from Other Investment Properties represents NOI primarily from properties acquired in 2013 and 2014, our development properties, an anticipated redevelopment property, the investment properties that were sold or held for sale in 2014 that did not qualify for discontinued operations treatment, and the historical ground
iv
rent expense related to an existing same store property that was subject to a ground lease with a third party prior to our acquisition of the fee interest during 2014. NOI consists of the sum of Same Store NOI and NOI from Other Investment Properties. We believe that Same Store NOI and NOI from Other Investment Properties are useful measures of our operating performance. Other REITs may use different methodologies for calculating these metrics, and accordingly, our NOI metrics may not be comparable to other REITs. We believe that these metrics provide an operating perspective not immediately apparent from operating income or net income attributable to common shareholders as defined within GAAP. We use these metrics to evaluate our performance on a property-by-property basis because these measures allow management to evaluate the impact that factors such as lease structure, lease rates and tenant base, which vary by property, have on our operating results. However, these measures should only be used as an alternative measure of our financial performance.
Adjusted EBITDA represents net income attributable to common shareholders before interest, income taxes, depreciation and amortization, as further adjusted to eliminate the impact of certain items that we do not consider indicative of our ongoing performance. We believe that Adjusted EBITDA is useful because it allows investors and management to evaluate and compare our performance from period to period in a meaningful and consistent manner in addition to standard financial measurements under GAAP. Adjusted EBITDA is not a measurement of financial performance under GAAP and should not be considered as an alternative to net income attributable to common shareholders, as an indicator of operating performance or any measure of performance derived in accordance with GAAP. Our calculation of Adjusted EBITDA may be different from the calculation used by other companies and, accordingly, comparability may be limited.
Net Debt to Adjusted EBITDA represents (i) our total debt less cash and cash equivalents divided by (ii) Adjusted EBITDA for the prior three months, annualized. We believe that this ratio is useful because it provides investors with information regarding total debt net of cash and cash equivalents, which could be used to repay debt, compared to our performance as measured using Adjusted EBITDA.
Net Debt and Preferred Stock to Adjusted EBITDA represents (i) our total debt, plus preferred stock, less cash and cash equivalents divided by (ii) Adjusted EBITDA for the prior three months, annualized. We believe that this ratio is useful because it provides investors with information regarding total debt and preferred stock, net of cash and cash equivalents, which could be used to repay debt, compared to our performance as measured using Adjusted EBITDA.
CONTACT INFORMATION
Michael Fitzmaurice, VP - Finance
Retail Properties of America, Inc.
(630) 634-4233
v
Retail Properties of America, Inc.
FFO and Operating FFO Guidance (a)
Per Share Guidance Range Full Year 2014 | ||||||||
Low | High | |||||||
Net income attributable to common shareholders | $ | 0.34 | $ | 0.37 | ||||
Depreciation and amortization | 0.92 | 0.92 | ||||||
Provision for impairment of investment properties | 0.02 | 0.02 | ||||||
Gain on sales of investment properties (b) | (0.26 | ) | (0.26 | ) | ||||
FFO | $ | 1.02 | $ | 1.05 | ||||
Impact on earnings from the early extinguishment of debt, net | 0.04 | 0.04 | ||||||
Provision for hedge ineffectiveness | — | — | ||||||
Gain on extinguishment of other liabilities | (0.02 | ) | (0.02 | ) | ||||
Other | — | — | ||||||
Operating FFO | $ | 1.04 | $ | 1.07 | ||||
(a) | Includes amounts from discontinued operations and our pro rata share from our unconsolidated joint ventures. |
(b) | Includes the gain on change in control of investment properties of $0.10 recognized pursuant to the dissolution of our joint venture arrangement with our partner in our MS Inland unconsolidated joint venture on June 5, 2014. |
vi
Retail Properties of America, Inc.
Condensed Consolidated Balance Sheets
(amounts in thousands, except par value amounts)
(unaudited)
June 30, 2014 | December 31, 2013 | |||||||
Assets | ||||||||
Investment properties: | ||||||||
Land | $ | 1,261,506 | $ | 1,174,065 | ||||
Building and other improvements | 4,719,961 | 4,586,657 | ||||||
Developments in progress | 42,025 | 43,796 | ||||||
6,023,492 | 5,804,518 | |||||||
Less accumulated depreciation | (1,390,184 | ) | (1,330,474 | ) | ||||
Net investment properties | 4,633,308 | 4,474,044 | ||||||
Cash and cash equivalents | 58,568 | 58,190 | ||||||
Investment in unconsolidated joint ventures (a) | 7,319 | 15,776 | ||||||
Accounts and notes receivable (net of allowances of $7,456 and $8,197, respectively) | 79,857 | 80,818 | ||||||
Acquired lease intangible assets, net | 142,150 | 129,561 | ||||||
Assets associated with investment properties held for sale | 16,809 | 8,616 | ||||||
Other assets, net | 106,352 | 110,571 | ||||||
Total assets | $ | 5,044,363 | $ | 4,877,576 | ||||
Liabilities and Equity | ||||||||
Liabilities: | ||||||||
Mortgages payable, net (includes unamortized premium of $5,480 and $1,175, respectively, and unamortized discount of $(725) and $(981), respectively) | $ | 1,736,668 | $ | 1,684,633 | ||||
Unsecured notes payable | 250,000 | — | ||||||
Unsecured term loan | 450,000 | 450,000 | ||||||
Unsecured revolving line of credit | 55,000 | 165,000 | ||||||
Accounts payable and accrued expenses | 50,968 | 54,457 | ||||||
Distributions payable | 39,187 | 39,138 | ||||||
Acquired lease intangible liabilities, net | 107,827 | 91,881 | ||||||
Liabilities associated with investment properties held for sale | 15,167 | 6,603 | ||||||
Other liabilities | 68,361 | 77,030 | ||||||
Total liabilities | 2,773,178 | 2,568,742 | ||||||
Commitments and contingencies | ||||||||
Equity: | ||||||||
Preferred stock, $0.001 par value, 10,000 shares authorized, 7.00% Series A cumulative redeemable preferred stock, 5,400 shares issued and outstanding at June 30, 2014 and December 31, 2013; liquidation preference $135,000 | 5 | 5 | ||||||
Class A common stock, $0.001 par value, 475,000 shares authorized, 236,600 and 236,302 shares issued and outstanding at June 30, 2014 and December 31, 2013, respectively | 237 | 236 | ||||||
Additional paid-in capital | 4,921,060 | 4,919,633 | ||||||
Accumulated distributions in excess of earnings | (2,650,718 | ) | (2,611,796 | ) | ||||
Accumulated other comprehensive loss | (893 | ) | (738 | ) | ||||
Total shareholders' equity | 2,269,691 | 2,307,340 | ||||||
Noncontrolling interests | 1,494 | 1,494 | ||||||
Total equity | 2,271,185 | 2,308,834 | ||||||
Total liabilities and equity | $ | 5,044,363 | $ | 4,877,576 | ||||
(a) | As of June 30, 2014, balance represents our investment in Oak Property and Casualty, our captive insurance plan, which is not an investment property unconsolidated joint venture. |
2nd Quarter 2014 Supplemental Information | 1 | |
Retail Properties of America, Inc.
Condensed Consolidated Statements of Operations
(amounts in thousands, except per share amounts)
(unaudited)
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||
Revenues: | ||||||||||||||||
Rental income | $ | 117,279 | $ | 106,096 | $ | 234,407 | $ | 212,391 | ||||||||
Tenant recovery income | 27,108 | 23,856 | 56,856 | 47,178 | ||||||||||||
Other property income | 1,919 | 2,368 | 3,831 | 4,812 | ||||||||||||
Total revenues | 146,306 | 132,320 | 295,094 | 264,381 | ||||||||||||
Expenses: | ||||||||||||||||
Property operating expenses | 22,142 | 21,656 | 48,668 | 44,239 | ||||||||||||
Real estate taxes | 19,067 | 16,819 | 37,481 | 33,630 | ||||||||||||
Depreciation and amortization | 54,094 | 59,596 | 107,690 | 110,604 | ||||||||||||
Provision for impairment of investment properties | 5,400 | — | 5,794 | — | ||||||||||||
Loss on lease terminations | 827 | 381 | 658 | 592 | ||||||||||||
General and administrative expenses | 7,362 | 8,288 | 15,812 | 16,343 | ||||||||||||
Total expenses | 108,892 | 106,740 | 216,103 | 205,408 | ||||||||||||
Operating income | 37,414 | 25,580 | 78,991 | 58,973 | ||||||||||||
Gain on extinguishment of other liabilities | — | — | 4,258 | — | ||||||||||||
Equity in loss of unconsolidated joint ventures, net (a) | (433 | ) | (461 | ) | (1,211 | ) | (862 | ) | ||||||||
Gain on change in control of investment properties | 24,158 | — | 24,158 | — | ||||||||||||
Interest expense | (31,873 | ) | (34,575 | ) | (63,736 | ) | (80,272 | ) | ||||||||
Other income, net | 250 | 2,085 | 677 | 3,161 | ||||||||||||
Income (loss) from continuing operations | 29,516 | (7,371 | ) | 43,137 | (19,000 | ) | ||||||||||
Discontinued operations: | ||||||||||||||||
Income (loss), net | — | 22,928 | (148 | ) | 23,504 | |||||||||||
Gain on sales of investment properties | — | 21 | 655 | 4,930 | ||||||||||||
Income from discontinued operations | — | 22,949 | 507 | 28,434 | ||||||||||||
Gain on sales of investment properties | 527 | 393 | 527 | 4,657 | ||||||||||||
Net income | 30,043 | 15,971 | 44,171 | 14,091 | ||||||||||||
Net income attributable to the Company | 30,043 | 15,971 | 44,171 | 14,091 | ||||||||||||
Preferred stock dividends | (2,363 | ) | (2,363 | ) | (4,725 | ) | (4,725 | ) | ||||||||
Net income attributable to common shareholders | $ | 27,680 | $ | 13,608 | $ | 39,446 | $ | 9,366 | ||||||||
Earnings (loss) per common share - basic and diluted | ||||||||||||||||
Continuing operations | $ | 0.12 | $ | (0.04 | ) | $ | 0.17 | $ | (0.08 | ) | ||||||
Discontinued operations | — | 0.10 | — | 0.12 | ||||||||||||
Net income per common share attributable to common shareholders | $ | 0.12 | $ | 0.06 | $ | 0.17 | $ | 0.04 | ||||||||
Weighted average number of common shares outstanding - basic | 236,176 | 233,624 | 236,164 | 232,117 | ||||||||||||
Weighted average number of common shares outstanding - diluted | 236,179 | 233,624 | 236,166 | 232,117 | ||||||||||||
(a) | Reported amounts include our (loss) income attributable to our ownership interests in our Oak Property and Casualty, MS Inland, RioCan and Hampton unconsolidated joint ventures. Except for Oak Property and Casualty, which is not an investment property unconsolidated joint venture, all of our unconsolidated joint venture arrangements were dissolved prior to June 30, 2014. |
2nd Quarter 2014 Supplemental Information | 2 | |
Retail Properties of America, Inc.
Funds From Operations (FFO), Operating FFO and Additional Information
(amounts in thousands, except per share amounts and percentages)
(unaudited)
FFO and Operating FFO (a) (b) | ||||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||
Net income attributable to common shareholders | $ | 27,680 | $ | 13,608 | $ | 39,446 | $ | 9,366 | ||||||||
Depreciation and amortization | 55,357 | 65,753 | 109,600 | 123,125 | ||||||||||||
Provision for impairment of investment properties | 5,400 | 9,238 | 5,794 | 9,462 | ||||||||||||
Gain on sales of investment properties (c) | (24,685 | ) | (414 | ) | (25,340 | ) | (10,564 | ) | ||||||||
FFO | $ | 63,752 | $ | 88,185 | $ | 129,500 | $ | 131,389 | ||||||||
FFO per common share outstanding | $ | 0.27 | $ | 0.38 | $ | 0.55 | $ | 0.57 | ||||||||
FFO | $ | 63,752 | $ | 88,185 | $ | 129,500 | $ | 131,389 | ||||||||
Impact on earnings from the early extinguishment of debt, net | 1,951 | (26,483 | ) | 3,631 | (19,150 | ) | ||||||||||
Joint venture investment impairment | — | 134 | — | 1,834 | ||||||||||||
Provision for hedge ineffectiveness | — | (1,085 | ) | (13 | ) | (932 | ) | |||||||||
Gain on extinguishment of other liabilities | — | — | (4,258 | ) | — | |||||||||||
Other | (11 | ) | (150 | ) | (126 | ) | (350 | ) | ||||||||
Operating FFO | $ | 65,692 | $ | 60,601 | $ | 128,734 | $ | 112,791 | ||||||||
Operating FFO per common share outstanding | $ | 0.28 | $ | 0.26 | $ | 0.55 | $ | 0.49 | ||||||||
Weighted average number of common shares outstanding - basic | 236,176 | 233,624 | 236,164 | 232,117 | ||||||||||||
Dividends declared per common share | $ | 0.165625 | $ | 0.165625 | $ | 0.33125 | $ | 0.33125 | ||||||||
Additional Information | ||||||||||||||||
Lease-related expenditures (d) | ||||||||||||||||
Same store | $ | 10,289 | $ | 7,923 | $ | 17,570 | $ | 17,291 | ||||||||
Other investment properties | $ | 395 | $ | 328 | $ | 1,405 | $ | 566 | ||||||||
Discontinued operations | $ | — | $ | 2,785 | $ | — | $ | 4,423 | ||||||||
Pro rata share of unconsolidated joint ventures | $ | 12 | $ | 71 | $ | 34 | $ | 179 | ||||||||
Capital expenditures (e) | ||||||||||||||||
Same store | $ | 2,962 | $ | 1,799 | $ | 6,408 | $ | 4,932 | ||||||||
Other investment properties | $ | 119 | $ | 3 | $ | 211 | $ | 108 | ||||||||
Discontinued operations | $ | — | $ | 85 | $ | 6 | $ | 295 | ||||||||
Pro rata share of unconsolidated joint ventures | $ | 24 | $ | 4 | $ | 28 | $ | 31 | ||||||||
Straight-line rental income, net (b) | $ | 1,162 | $ | (264 | ) | $ | 3,113 | $ | (849 | ) | ||||||
Amortization of above and below market lease intangibles and lease inducements (b) (f) | $ | 169 | $ | 203 | $ | 550 | $ | 502 | ||||||||
Non-cash ground rent expense (b) (g) | $ | 816 | $ | 894 | $ | 1,698 | $ | 1,801 | ||||||||
(a) | Refer to page 21 for definitions of FFO and Operating FFO. |
(b) | Includes amounts from discontinued operations and our pro rata share from our unconsolidated joint ventures. |
(c) | Includes the gain on change in control of investment properties of $24,158 recognized pursuant to the dissolution of our joint venture arrangement with our partner in our MS Inland unconsolidated joint venture on June 5, 2014. |
(d) | Consists of payments for tenant improvements, lease commissions and lease inducements and excludes developments in progress. |
(e) | Consists of payments for building, site and other improvements and excludes developments in progress. |
(f) | Amortization of above and below market lease intangibles and lease inducements in the table above includes the write-off of tenant-related above and below market lease intangibles and lease inducements that are presented within "Loss on lease terminations." For the three months ended June 30, 2014 and 2013, the balances were $140 and $96, respectively. For the six months ended June 30, 2014 and 2013, the balances were $578 and $252, respectively. |
(g) | Includes amortization of acquired ground lease intangibles. |
2nd Quarter 2014 Supplemental Information | 3 | |
Retail Properties of America, Inc.
Supplemental Financial Statement Detail
(amounts in thousands)
(unaudited)
Supplemental Balance Sheet Detail | June 30, 2014 | December 31, 2013 | ||||||
Accounts and Notes Receivable | ||||||||
Accounts and notes receivable (net of allowances of $6,653 and $6,549, respectively) | $ | 27,539 | $ | 31,096 | ||||
Straight-line receivables (net of allowances of $803 and $1,648, respectively) | 52,318 | 49,722 | ||||||
Total | $ | 79,857 | $ | 80,818 | ||||
Other Assets, net | ||||||||
Deferred costs, net | $ | 49,409 | $ | 48,790 | ||||
Restricted cash and escrows | 40,853 | 40,198 | ||||||
Other assets, net | 16,090 | 21,583 | ||||||
Total | $ | 106,352 | $ | 110,571 | ||||
Other Liabilities | ||||||||
Unearned income | $ | 16,243 | $ | 24,633 | ||||
Straight-line ground rent liability | 29,640 | 31,920 | ||||||
Fair value of derivatives | 892 | 751 | ||||||
Other liabilities | 21,586 | 19,726 | ||||||
Total | $ | 68,361 | $ | 77,030 | ||||
Developments in Progress | ||||||||
Active developments | $ | 2,552 | $ | 4,321 | ||||
Property available for future development | 39,473 | 39,475 | ||||||
Total | $ | 42,025 | $ | 43,796 | ||||
Supplemental Statements of Operations Detail | ||||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||
Rental Income | ||||||||||||||||
Base rent | $ | 114,795 | $ | 105,476 | $ | 228,368 | $ | 210,117 | ||||||||
Percentage and specialty rent | 1,292 | 705 | 2,953 | 2,877 | ||||||||||||
Straight-line rent | 1,161 | (222 | ) | 3,104 | (928 | ) | ||||||||||
Amortization of above and below market lease intangibles and lease inducements | 31 | 137 | (18 | ) | 325 | |||||||||||
Total | $ | 117,279 | $ | 106,096 | $ | 234,407 | $ | 212,391 | ||||||||
Other Property Income | ||||||||||||||||
Lease termination income | $ | 3 | $ | 686 | $ | 133 | $ | 1,325 | ||||||||
Other property income | 1,916 | 1,682 | 3,698 | 3,487 | ||||||||||||
Total | $ | 1,919 | $ | 2,368 | $ | 3,831 | $ | 4,812 | ||||||||
Loss (Gain) on Lease Terminations | ||||||||||||||||
Write-off of tenant-related tenant improvements and in-place lease intangibles | $ | 967 | $ | 479 | $ | 1,200 | $ | 831 | ||||||||
Write-off of tenant-related above and below market lease intangibles and lease inducements | (140 | ) | (98 | ) | (542 | ) | (239 | ) | ||||||||
Total | $ | 827 | $ | 381 | $ | 658 | $ | 592 | ||||||||
Bad Debt Expense | $ | 341 | $ | 537 | $ | 857 | $ | 1,050 | ||||||||
Non-Cash Ground Rent Expense (a) | $ | 816 | $ | 760 | $ | 1,698 | $ | 1,534 | ||||||||
Management Fee Income from Joint Ventures (b) | $ | 127 | $ | 732 | $ | 338 | $ | 1,544 | ||||||||
Acquisition Costs (c) | $ | 238 | $ | — | $ | 336 | $ | 10 | ||||||||
Capitalized Interest | $ | — | $ | — | $ | — | $ | — | ||||||||
(a) | Includes amortization of acquired ground lease intangibles. |
(b) | Included in "Other income, net" in the condensed consolidated statements of operations. |
(c) | Included in "General and administrative expenses" in the condensed consolidated statements of operations. |
2nd Quarter 2014 Supplemental Information | 4 | |
Retail Properties of America, Inc.
Net Operating Income (NOI)
(amounts in thousands)
Same store portfolio (a) | |||||||||
June 30, | |||||||||
2014 | 2013 | Change | |||||||
Occupancy | 93.6 | % | 92.2 | % | 1.4 | % | |||
Percent leased (b) | 94.8 | % | 94.1 | % | 0.7 | % | |||
Same store NOI (c) | ||||||||||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||
2014 | 2013 | Change | 2014 | 2013 | Change | |||||||||||||||||
Operating revenues | ||||||||||||||||||||||
Rental income | $ | 104,686 | $ | 101,619 | $ | 208,724 | $ | 203,882 | ||||||||||||||
Tenant recovery income | 23,702 | 22,677 | 49,471 | 44,644 | ||||||||||||||||||
Other property income | 1,713 | 1,650 | 3,348 | 3,403 | ||||||||||||||||||
130,101 | 125,946 | 261,543 | 251,929 | |||||||||||||||||||
Operating expenses | ||||||||||||||||||||||
Property operating expenses | 17,999 | 18,809 | 39,355 | 38,582 | ||||||||||||||||||
Bad debt expense | 360 | 550 | 650 | 1,160 | ||||||||||||||||||
Real estate taxes | 16,794 | 15,962 | 32,891 | 31,851 | ||||||||||||||||||
35,153 | 35,321 | 72,896 | 71,593 | |||||||||||||||||||
Same store NOI | $ | 94,948 | $ | 90,625 | 4.8 | % | $ | 188,647 | $ | 180,336 | 4.6 | % | ||||||||||
NOI from Other Investment Properties | 9,745 | 3,564 | 18,777 | 7,173 | ||||||||||||||||||
Total NOI from Continuing Operations | $ | 104,693 | $ | 94,189 | 11.2 | % | $ | 207,424 | $ | 187,509 | 10.6 | % | ||||||||||
Combined NOI from Continuing Operations (d) | $ | 105,365 | $ | 97,522 | $ | 209,079 | $ | 194,054 | ||||||||||||||
Combined NOI (Net Operating Loss) from Discontinued Operations (d) | $ | — | $ | 5,321 | $ | (81 | ) | $ | 11,153 | |||||||||||||
(a) | Consists of 218 properties and excludes properties acquired during 2013 and 2014, our development properties, an anticipated redevelopment property, four investment properties sold or classified as held for sale during 2014 that did not qualify for discontinued operations treatment and the historical ground rent expense related to an existing same store property that was subject to a ground lease with a third party prior to our acquisition of the fee interest during 2014. |
(b) | Includes leases signed but not commenced. |
(c) | NOI is defined as operating revenues (rental income, tenant recovery income and other property income, excluding straight-line rental income, amortization of lease inducements, amortization of acquired above and below market lease intangibles and lease termination fee income) less property operating expenses (real estate tax expense and property operating expense, excluding straight-line ground rent expense, amortization of acquired ground lease intangible liability, straight-line bad debt expense and lease termination fee expense). Refer to pages 21 - 25 for definitions and reconciliations of non-GAAP financial measures. |
(d) | Combined data includes our pro rata share of unconsolidated joint ventures in addition to our wholly-owned and consolidated portfolio. |
2nd Quarter 2014 Supplemental Information | 5 | |
Retail Properties of America, Inc.
Capitalization
(amounts in thousands, except ratios)
Capitalization Data | ||||||||
June 30, 2014 | December 31, 2013 | |||||||
Equity Capitalization | ||||||||
Common stock shares outstanding | 236,600 | 236,302 | ||||||
Common share price | $ | 15.38 | $ | 12.72 | ||||
3,638,908 | 3,005,761 | |||||||
Series A preferred stock | 135,000 | 135,000 | ||||||
Total equity capitalization | $ | 3,773,908 | $ | 3,140,761 | ||||
Debt Capitalization | ||||||||
Mortgages payable | $ | 1,731,913 | $ | 1,684,439 | ||||
Mortgages payable associated with investment properties held for sale | 14,475 | 6,435 | ||||||
Premium, net of accumulated amortization | 5,480 | 1,175 | ||||||
Discount, net of accumulated amortization | (725 | ) | (981 | ) | ||||
Total mortgage debt, net | 1,751,143 | 1,691,068 | ||||||
Unsecured notes payable | 250,000 | — | ||||||
Unsecured term loan | 450,000 | 450,000 | ||||||
Unsecured revolving line of credit | 55,000 | 165,000 | ||||||
Total consolidated debt capitalization | 2,506,143 | 2,306,068 | ||||||
Pro rata share of our investment property unconsolidated joint ventures' total debt | — | 28,507 | ||||||
Combined debt capitalization | 2,506,143 | 2,334,575 | ||||||
Total capitalization at end of period | $ | 6,280,051 | $ | 5,475,336 | ||||
Reconciliation of Debt to Total Net Debt and Combined Net Debt | ||||||||
June 30, 2014 | December 31, 2013 | |||||||
Total consolidated debt | $ | 2,506,143 | $ | 2,306,068 | ||||
Less: consolidated cash and cash equivalents | (58,568 | ) | (58,190 | ) | ||||
Net debt | $ | 2,447,575 | $ | 2,247,878 | ||||
Adjusted EBITDA (a) (b) | $ | 390,768 | $ | 420,292 | ||||
Net Debt to Adjusted EBITDA | 6.3x | 5.3x | ||||||
Net Debt and Preferred Stock to Adjusted EBITDA | 6.6x | 5.7x | ||||||
Net debt | $ | 2,447,575 | $ | 2,247,878 | ||||
Add: pro rata share of our investment property unconsolidated joint ventures' total debt | — | 28,507 | ||||||
Less: pro rata share of our investment property unconsolidated joint ventures' cash and cash equivalents | — | (1,316 | ) | |||||
Combined net debt | $ | 2,447,575 | $ | 2,275,069 | ||||
Combined Adjusted EBITDA (a) (b) | $ | 392,960 | $ | 423,368 | ||||
Combined Net Debt to Combined Adjusted EBITDA | 6.2x | 5.4x | ||||||
Combined Net Debt and Preferred Stock to Combined Adjusted EBITDA | 6.6x | 5.7x | ||||||
(a) | For purposes of these ratio calculations, annualized three months ended figures were used. |
(b) | Refer to pages 21 - 25 for definitions and reconciliations of non-GAAP financial measures. |
2nd Quarter 2014 Supplemental Information | 6 | |
Retail Properties of America, Inc.
Unsecured Credit Facility Covenants (a)
(amounts in thousands, except percentages and ratios)
Covenant | June 30, 2014 | |||
Leverage ratio | < 60.0% | (b) | 40.75 | % |
Fixed charge coverage ratio | > 1.50x | 2.46x | ||
Secured indebtedness as a percentage of Total Asset Value | < 45.0% | (b) | 28.29 | % |
Unencumbered asset pool covenants: | ||||
Leverage ratio | < 60.0% | (b) | 28.97 | % |
Unencumbered interest coverage ratio | > 1.75x | 11.21x | ||
(a) | For a complete listing of all covenants related to our unsecured credit facility (comprised of the unsecured term loan and unsecured revolving line of credit) as well as covenant definitions, refer to the Third Amended and Restated Credit Agreement filed as Exhibit 10.1 to our Current Report on Form 8-K, dated May 13, 2013. |
(b) | Based upon a capitalization rate of 7.25%. |
2nd Quarter 2014 Supplemental Information | 7 | |
Retail Properties of America, Inc.
Consolidated Debt Summary as of June 30, 2014
(dollar amounts in thousands)
Balance | Weighted Average (WA) Interest Rate | WA Years to Maturity | |||||||
Fixed rate mortgages payable (a) | $ | 1,717,649 | 6.05 | % | 4.5 years | ||||
Variable rate construction loan | 14,264 | 2.44 | % | 0.3 years | |||||
Total mortgages payable | 1,731,913 | 6.02 | % | 4.4 years | |||||
Unsecured notes payable: | |||||||||
Series A senior notes | 100,000 | 4.12 | % | 7.0 years | |||||
Series B senior notes | 150,000 | 4.58 | % | 10.0 years | |||||
Total unsecured notes payable | 250,000 | 4.40 | % | 8.8 years | |||||
Unsecured credit facility: | |||||||||
Fixed rate portion of term loan (b) | 300,000 | 1.99 | % | 3.9 years | |||||
Variable rate portion of term loan | 150,000 | 1.61 | % | 3.9 years | |||||
Variable rate revolving line of credit | 55,000 | 1.66 | % | 2.9 years | |||||
Total unsecured credit facility | 505,000 | 1.84 | % | 3.8 years | |||||
Total consolidated indebtedness | $ | 2,486,913 | 5.01 | % | (c) | 4.7 years | |||
Consolidated Debt Maturity Schedule as of June 30, 2014 | |||||||||||||||||||||||||
Year | Fixed Rate (a) | WA Rates on Fixed Debt | Variable Rate | WA Rates on Variable Debt | Total | % of Total | WA Rates on Total Debt | ||||||||||||||||||
2014 | $ | 9,649 | 6.22 | % | $ | 14,264 | 2.44 | % | $ | 23,913 | 1.0 | % | 3.96 | % | |||||||||||
2015 | 443,372 | 5.68 | % | — | — | 443,372 | 17.8 | % | 5.68 | % | |||||||||||||||
2016 | 68,263 | 5.07 | % | — | — | 68,263 | 2.8 | % | 5.07 | % | |||||||||||||||
2017 | 321,692 | 5.53 | % | 55,000 | 1.66 | % | 376,692 | 15.2 | % | 4.97 | % | ||||||||||||||
2018 | 313,019 | 2.19 | % | 150,000 | 1.61 | % | 463,019 | 18.6 | % | 2.00 | % | ||||||||||||||
2019 | 515,491 | 7.50 | % | — | — | 515,491 | 20.7 | % | 7.50 | % | |||||||||||||||
2020 | 23,121 | 7.48 | % | — | — | 23,121 | 0.9 | % | 7.48 | % | |||||||||||||||
2021 | 122,781 | 4.28 | % | — | — | 122,781 | 4.9 | % | 4.28 | % | |||||||||||||||
2022 | 216,678 | 4.88 | % | — | — | 216,678 | 8.7 | % | 4.88 | % | |||||||||||||||
2023 | 31,276 | 4.18 | % | — | — | 31,276 | 1.3 | % | 4.18 | % | |||||||||||||||
Thereafter | 202,307 | 4.65 | % | — | — | 202,307 | 8.1 | % | 4.65 | % | |||||||||||||||
Total | $ | 2,267,649 | 5.33 | % | $ | 219,264 | 1.68 | % | $ | 2,486,913 | 100.0 | % | 5.01 | % | (c) | ||||||||||
(a) | Includes scheduled principal amortization payments. Excludes mortgage premium of $5,480 and discount of $(725), net of accumulated amortization, that was outstanding as of June 30, 2014 and a mortgage payable of $14,475 associated with one investment property classified as held for sale as of June 30, 2014. The interest rate on this property was 4.82% and the loan matures on March 1, 2022. |
(b) | $300,000 of the term loan has been swapped to a fixed rate of 0.54% plus a margin based on a leverage grid ranging from 1.45% to 2.00% through February 24, 2016. The applicable margin was 1.45% as of June 30, 2014. |
(c) | Interest rates presented exclude the impact of the premium, discount and capitalized loan fee amortization. As of June 30, 2014, our overall weighted average interest rate for consolidated debt including the impact of premium, discount and capitalized loan fee amortization was 5.14%. |
2nd Quarter 2014 Supplemental Information | 8 | |
Retail Properties of America, Inc.
Summary of Indebtedness as of June 30, 2014
(dollar amounts in thousands)
Property Name | Maturity Date | Interest Rate (a) | Interest Rate Type | Secured or Unsecured | Balance as of 6/30/2014 | ||||||||
Consolidated Indebtedness | |||||||||||||
Green Valley Crossing | 11/02/14 | 2.44% | (b) | Variable | Secured | $ | 14,264 | ||||||
Crossroads Plaza | 01/01/15 | 5.44% | Fixed | Secured | 4,229 | (c) | |||||||
Pool #2 (7 properties) | 03/01/15 | 6.39% | Fixed | Secured | 18,657 | ||||||||
Bison Hollow | 04/01/15 | 6.39% | Fixed | Secured | 7,461 | ||||||||
Four Peaks Plaza | 04/01/15 | 6.39% | Fixed | Secured | 9,735 | ||||||||
Grapevine Crossing | 04/01/15 | 6.39% | Fixed | Secured | 11,225 | ||||||||
Pool #3 (3 properties) | 04/01/15 | 6.39% | Fixed | Secured | 6,985 | ||||||||
Pool #4 (6 properties) | 04/01/15 | 6.39% | Fixed | Secured | 10,963 | ||||||||
Pool #5 (4 properties) | 04/01/15 | 6.24% | Fixed | Secured | 45,198 | (c) | |||||||
New Forest Crossing | 04/01/15 | 6.39% | Fixed | Secured | 8,907 | ||||||||
Vail Ranch Plaza | 04/01/15 | 6.39% | Fixed | Secured | 10,792 | ||||||||
Ashland & Roosevelt | 09/01/15 | 6.39% | Fixed | Secured | 7,966 | ||||||||
Montecito Crossing | 09/01/15 | 5.90% | Fixed | Secured | 16,736 | ||||||||
Huebner Oaks Center | 09/05/15 | 5.75% | Fixed | Secured | 36,961 | ||||||||
John's Creek Village | 10/01/15 | 5.17% | Fixed | Secured | 21,299 | ||||||||
Pool #7 (3 properties) | 11/01/15 | 6.39% | Fixed | Secured | 22,009 | ||||||||
The Orchard | 11/01/15 | 6.39% | Fixed | Secured | 11,748 | ||||||||
Jefferson Commons | 12/01/15 | 5.14% | Fixed | Secured | 56,500 | ||||||||
King Philip's Crossing | 12/01/15 | 6.39% | Fixed | Secured | 10,370 | ||||||||
Rite Aid (Eckerds) portfolio (22 properties) | 12/11/15 | 4.91% | Fixed | Secured | 53,106 | ||||||||
New York Life portfolio (3 properties) | 12/31/15 | 4.75% | Fixed | Secured | 59,857 | ||||||||
HQ Building | 01/01/16 | 6.39% | Fixed | Secured | 9,130 | ||||||||
Cypress Mill Plaza | 02/01/16 | 4.26% | Fixed | Secured | 8,393 | ||||||||
MacArthur Crossing | 07/01/16 | 7.30% | Fixed | Secured | 6,876 | ||||||||
Heritage Towne Crossing | 09/30/16 | 4.52% | Fixed | Secured | 8,230 | ||||||||
Oswego Commons | 12/01/16 | 3.35% | Fixed | Secured | 21,000 | ||||||||
The Gateway | 04/01/17 | 6.57% | Fixed | Secured | 96,506 | ||||||||
Southlake Grand Ave. | 04/01/17 | 3.50% | Fixed | Secured | 57,555 | ||||||||
Southlake Town Square | 04/01/17 | 6.25% | Fixed | Secured | 85,247 | ||||||||
Central Texas Marketplace | 04/11/17 | 5.46% | Fixed | Secured | 45,386 | ||||||||
Coppell Town Center | 05/01/17 | 3.53% | Fixed | Secured | 10,730 | ||||||||
Lincoln Park | 12/01/17 | 4.05% | Fixed | Secured | 26,271 | ||||||||
Corwest Plaza | 04/01/19 | 7.25% | Fixed | Secured | 14,594 | ||||||||
Dorman Center | 04/01/19 | 7.70% | Fixed | Secured | 20,716 | ||||||||
Shops at Park Place | 05/01/19 | 7.48% | Fixed | Secured | 7,843 | ||||||||
Shoppes of New Hope | 06/01/19 | 7.75% | Fixed | Secured | 3,588 | ||||||||
Village Shoppes at Simonton | 06/01/19 | 7.75% | Fixed | Secured | 3,312 | ||||||||
Plaza at Marysville | 09/01/19 | 8.00% | Fixed | Secured | 9,088 | ||||||||
Forks Town Center | 10/01/19 | 7.70% | Fixed | Secured | 8,305 | ||||||||
IW JV 2009 portfolio (55 properties) | 12/01/19 | 7.50% | Fixed | Secured | 478,974 | ||||||||
Eastwood Towne Center | 05/01/20 | 8.00% | Fixed | Secured | 22,074 | ||||||||
Sawyer Heights Village | 07/01/21 | 5.00% | Fixed | Secured | 18,700 | ||||||||
Ashland & Roosevelt (bank pad) | 02/25/22 | 7.48% | Fixed | Secured | 1,279 | ||||||||
Commons at Temecula | 03/01/22 | 4.74% | Fixed | Secured | 25,665 | ||||||||
Gardiner Manor Mall | 03/01/22 | 4.95% | Fixed | Secured | 36,167 | ||||||||
Peoria Crossings | 04/01/22 | 4.82% | Fixed | Secured | 24,131 | ||||||||
Southlake Corners | 04/01/22 | 4.89% | Fixed | Secured | 20,945 | ||||||||
Tollgate Marketplace | 04/01/22 | 4.84% | Fixed | Secured | 35,000 | ||||||||
Town Square Plaza | 04/01/22 | 4.82% | Fixed | Secured | 16,815 | ||||||||
Village Shoppes at Gainesville | 04/01/22 | 4.25% | Fixed | Secured | 20,000 | ||||||||
Reisterstown Road Plaza | 07/01/22 | 5.25% | Fixed | Secured | 46,250 | ||||||||
Gateway Village | 01/01/23 | 4.14% | Fixed | Secured | 36,703 | ||||||||
Greensburg Commons | 03/01/26 | 4.83% | Fixed | Secured | 10,250 | ||||||||
Home Depot Plaza | 12/01/26 | 4.82% | Fixed | Secured | 10,750 | ||||||||
Northgate North | 06/01/27 | 4.50% | Fixed | Secured | 27,500 | ||||||||
The Market at Clifty Crossing | 11/01/34 | 5.77% | Fixed | Secured | 12,972 | (c) | |||||||
Total mortgages payable | $ | 1,731,913 | |||||||||||
2nd Quarter 2014 Supplemental Information | 9 | |
Retail Properties of America, Inc.
Summary of Indebtedness as of June 30, 2014
(dollar amounts in thousands)
Property Name | Maturity Date | Interest Rate (a) | Interest Rate Type | Secured or Unsecured | Balance as of 6/30/2014 | ||||||||
Series A senior notes | 06/30/21 | 4.12% | Fixed | Unsecured | $ | 100,000 | |||||||
Series B senior notes | 06/30/24 | 4.58% | Fixed | Unsecured | 150,000 | ||||||||
Total unsecured notes payable | 250,000 | ||||||||||||
Term loan | 05/11/18 | 1.99% | (d) | Fixed | Unsecured | 300,000 | |||||||
Term loan | 05/11/18 | 1.61% | Variable | Unsecured | 150,000 | ||||||||
Revolving line of credit | 05/12/17 | 1.66% | Variable | Unsecured | 55,000 | ||||||||
Total unsecured credit facility | 505,000 | ||||||||||||
Mortgage premium | 5,480 | ||||||||||||
Mortgage discount | (725 | ) | |||||||||||
Total consolidated indebtedness | $ | 2,491,668 | |||||||||||
(a) | Interest rates presented exclude the impact of the premium, discount and capitalized loan fee amortization. As of June 30, 2014, our overall weighted average interest rate for consolidated debt including the impact of premium, discount and capitalized loan fee amortization was 5.14%. |
(b) | The loan balance bears interest at a floating rate of LIBOR + 2.25%. |
(c) | These mortgages were paid off subsequent to June 30, 2014. |
(d) | $300,000 of the term loan has been swapped to a fixed rate of 0.54% plus a margin based on a leverage grid ranging from 1.45% to 2.00% through February 24, 2016. The applicable margin was 1.45% as of June 30, 2014. |
2nd Quarter 2014 Supplemental Information | 10 | |
Retail Properties of America, Inc.
Acquisitions and Dispositions for the Six Months Ended June 30, 2014
(amounts in thousands, except square footage amounts)
Gross (at 100%) | Pro Rata Share | |||||||||||||||||||||||||||
Property Name | Acquisition Date | Joint Venture | Property Type | Gross Leasable Area (GLA) | Purchase Price | Mortgage Debt | GLA | Purchase Price | Mortgage Debt | |||||||||||||||||||
Acquisitions: | ||||||||||||||||||||||||||||
Third party | ||||||||||||||||||||||||||||
Heritage Square | February 27, 2014 | n/a | Multi-tenant retail | 53,100 | $ | 18,022 | $ | — | 53,100 | $ | 18,022 | $ | — | |||||||||||||||
Bed Bath & Beyond Plaza (a) | February 27, 2014 | n/a | Ground lease interest (a) | — | 10,350 | — | — | 10,350 | — | |||||||||||||||||||
Southlake Town Square - Del Frisco's Grille (b) | June 23, 2014 | n/a | Single-user outparcel (b) | 8,500 | 6,369 | — | 8,500 | 6,369 | — | |||||||||||||||||||
61,600 | 34,741 | — | 61,600 | 34,741 | — | |||||||||||||||||||||||
Acquisition of our partner's interest (c) | ||||||||||||||||||||||||||||
Commons at Royal Palm | June 5, 2014 | (c) | Multi-tenant retail | 158,300 | 15,500 | — | 126,600 | 12,400 | — | |||||||||||||||||||
Gardiner Manor Mall | June 5, 2014 | (c) | Multi-tenant retail | 220,700 | 70,250 | 36,167 | 176,600 | 56,200 | 28,933 | |||||||||||||||||||
Huebner Oaks Center | June 5, 2014 | (c) | Multi-tenant retail | 287,200 | 85,500 | 36,961 | 229,800 | 68,400 | 29,569 | |||||||||||||||||||
John's Creek Village | June 5, 2014 | (c) | Multi-tenant retail | 192,200 | 41,000 | 21,299 | 153,800 | 32,800 | 17,039 | |||||||||||||||||||
Lincoln Park | June 5, 2014 | (c) | Multi-tenant retail | 148,800 | 54,750 | 26,271 | 119,000 | 43,800 | 21,017 | |||||||||||||||||||
Oswego Commons | June 5, 2014 | (c) | Multi-tenant retail | 187,600 | 25,500 | 21,000 | 150,100 | 20,400 | 16,800 | |||||||||||||||||||
1,194,800 | 292,500 | 141,698 | 955,900 | 234,000 | 113,358 | |||||||||||||||||||||||
Total acquisitions | 1,256,400 | $ | 327,241 | $ | 141,698 | 1,017,500 | $ | 268,741 | $ | 113,358 | ||||||||||||||||||
Gross (at 100%) | Pro Rata Share | |||||||||||||||||||||||||||
Property Name | Disposition Date | Joint Venture | Property Type | GLA | Consideration | Mortgage Debt | GLA | Consideration | Mortgage Debt | |||||||||||||||||||
Dispositions (d): | ||||||||||||||||||||||||||||
Consolidated | ||||||||||||||||||||||||||||
Riverpark Phase IIA | March 11, 2014 | n/a | Single-user retail | 64,300 | $ | 9,269 | $ | — | 64,300 | $ | 9,269 | $ | — | |||||||||||||||
Midtown Center | April 1, 2014 | n/a | Multi-tenant retail | 408,500 | 47,150 | — | 408,500 | 47,150 | — | |||||||||||||||||||
Beachway Plaza & Cornerstone Plaza (e) | May 16, 2014 | n/a | Multi-tenant retail | 189,600 | 24,450 | — | 189,600 | 24,450 | — | |||||||||||||||||||
Total dispositions | 662,400 | $ | 80,869 | $ | — | 662,400 | $ | 80,869 | $ | — | ||||||||||||||||||
(a) | We acquired the fee interest in an existing consolidated multi-tenant retail operating property, which was previously subject to a ground lease with a third party. As a result, the total number of properties in our portfolio was not affected. |
(b) | We acquired an outparcel at an existing consolidated multi-tenant retail operating property. As a result, the total number of properties in our portfolio was not affected. |
(c) | On June 5, 2014, we dissolved our joint venture arrangement with our partner in MS Inland Fund, LLC and acquired their 80% ownership interest in the six multi-tenant retail properties owned by the joint venture. The purchase price at 100% above represents the agreed upon value of the properties and the purchase price at pro rata share above represents the price paid to acquire our partner's 80% interest in the properties. |
(d) | We elected to early adopt a new accounting pronouncement related to discontinued operations treatment effective January 1, 2014. As a result, the investment properties that were sold or held for sale during 2014, except for Riverpark Phase IIA, which qualified for discontinued operations treatment under the previous standard, did not qualify for discontinued operations and, as such, are reflected in continuing operations in the condensed consolidated statements of operations. |
(e) | The terms of the sale of Beachway Plaza and Cornerstone Plaza were negotiated as a single transaction. |
2nd Quarter 2014 Supplemental Information | 11 | |
Retail Properties of America, Inc.
Property Overview as of June 30, 2014
(dollar amounts and square footage in thousands)
Total Operating Portfolio (a): | ||||||||||||||||||||||||||
Property Type/Region | Number of Properties | GLA | % of Total GLA (b) | Occupancy | % Leased Including Signed | Annualized Base Rent (ABR) | % of Total ABR (b) | ABR per Occupied Sq. Ft. | ||||||||||||||||||
Retail: | ||||||||||||||||||||||||||
North | 78 | 9,767 | 30.7 | % | 94.5 | % | 96.1 | % | $ | 142,109 | 31.6 | % | $ | 15.40 | ||||||||||||
East | 63 | 8,504 | 26.7 | % | 94.6 | % | 96.0 | % | 108,421 | 24.1 | % | 13.48 | ||||||||||||||
West | 29 | 5,854 | 18.4 | % | 90.7 | % | 92.1 | % | 81,126 | 18.0 | % | 15.28 | ||||||||||||||
South | 54 | 7,703 | 24.2 | % | 91.7 | % | 92.5 | % | 118,372 | 26.3 | % | 16.76 | ||||||||||||||
Total - Retail | 224 | 31,828 | 100.0 | % | 93.2 | % | 94.5 | % | 450,028 | 100.0 | % | 15.17 | ||||||||||||||
Other: | ||||||||||||||||||||||||||
Office | 8 | 1,660 | 100.0 | % | 100.0 | % | 19,870 | 11.97 | ||||||||||||||||||
Industrial | 1 | 159 | 100.0 | % | 100.0 | % | 1,026 | 6.45 | ||||||||||||||||||
Total - Other | 9 | 1,819 | 100.0 | % | 100.0 | % | 20,896 | 11.49 | ||||||||||||||||||
Total Operating Portfolio | 233 | 33,647 | 93.5 | % | 94.8 | % | $ | 470,924 | $ | 14.97 | ||||||||||||||||
(a) | Excludes one consolidated multi-tenant retail property classified as held for sale as of June 30, 2014. |
(b) | Percentages are only provided for our retail operating portfolio. |
2nd Quarter 2014 Supplemental Information | 12 | |
Retail Properties of America, Inc.
State/Regional Summary as of June 30, 2014
(dollar amounts and square footage in thousands)
Total Operating Portfolio (a): | ||||||||||||||||||||||||||
Property Type/Region | Number of Properties | GLA | % of Total GLA (b) | Occupancy | % Leased Including Signed | ABR | % of Total ABR (b) | ABR per Occupied Sq. Ft. | ||||||||||||||||||
Retail | ||||||||||||||||||||||||||
North | ||||||||||||||||||||||||||
Connecticut | 5 | 449 | 1.4 | % | 100.0 | % | 100.0 | % | $ | 7,540 | 1.7 | % | $ | 16.79 | ||||||||||||
Indiana | 4 | 653 | 2.1 | % | 97.3 | % | 97.9 | % | 6,199 | 1.4 | % | 9.76 | ||||||||||||||
Maine | 1 | 190 | 0.6 | % | 94.9 | % | 94.9 | % | 1,477 | 0.4 | % | 8.19 | ||||||||||||||
Maryland | 8 | 2,300 | 7.2 | % | 92.1 | % | 92.6 | % | 32,426 | 7.2 | % | 15.31 | ||||||||||||||
Massachusetts | 4 | 763 | 2.4 | % | 98.4 | % | 98.4 | % | 8,716 | 1.9 | % | 11.61 | ||||||||||||||
Michigan | 2 | 467 | 1.5 | % | 95.4 | % | 96.7 | % | 8,125 | 1.8 | % | 18.24 | ||||||||||||||
New Jersey | 2 | 265 | 0.8 | % | 93.3 | % | 96.9 | % | 2,528 | 0.6 | % | 10.22 | ||||||||||||||
New York | 33 | 2,179 | 6.8 | % | 98.4 | % | 98.4 | % | 44,478 | 9.9 | % | 20.74 | ||||||||||||||
Ohio | 3 | 408 | 1.3 | % | 79.3 | % | 91.9 | % | 2,452 | 0.5 | % | 7.58 | ||||||||||||||
Pennsylvania | 12 | 1,335 | 4.2 | % | 93.7 | % | 97.7 | % | 16,789 | 3.7 | % | 13.42 | ||||||||||||||
Rhode Island | 3 | 271 | 0.9 | % | 90.1 | % | 90.1 | % | 3,620 | 0.8 | % | 14.83 | ||||||||||||||
Vermont | 1 | 487 | 1.5 | % | 91.3 | % | 94.1 | % | 7,759 | 1.7 | % | 17.45 | ||||||||||||||
Subtotal - North | 78 | 9,767 | 30.7 | % | 94.5 | % | 96.1 | % | 142,109 | 31.6 | % | 15.40 | ||||||||||||||
East | ||||||||||||||||||||||||||
Alabama | 6 | 372 | 1.2 | % | 97.2 | % | 98.3 | % | 4,760 | 1.1 | % | 13.16 | ||||||||||||||
Florida | 11 | 1,385 | 4.4 | % | 91.7 | % | 96.1 | % | 19,174 | 4.2 | % | 15.10 | ||||||||||||||
Georgia | 12 | 1,921 | 6.0 | % | 93.9 | % | 95.8 | % | 22,595 | 5.0 | % | 12.53 | ||||||||||||||
Illinois | 6 | 963 | 3.0 | % | 95.5 | % | 95.5 | % | 16,456 | 3.7 | % | 17.89 | ||||||||||||||
Missouri | 5 | 812 | 2.6 | % | 91.2 | % | 91.7 | % | 8,488 | 1.9 | % | 11.46 | ||||||||||||||
North Carolina | 3 | 681 | 2.1 | % | 99.7 | % | 100.0 | % | 7,300 | 1.6 | % | 10.75 | ||||||||||||||
South Carolina | 11 | 1,270 | 4.0 | % | 96.6 | % | 97.0 | % | 14,791 | 3.3 | % | 12.06 | ||||||||||||||
Tennessee | 7 | 712 | 2.2 | % | 95.5 | % | 96.0 | % | 7,616 | 1.7 | % | 11.20 | ||||||||||||||
Virginia | 2 | 388 | 1.2 | % | 94.6 | % | 94.6 | % | 7,241 | 1.6 | % | 19.73 | ||||||||||||||
Subtotal - East | 63 | 8,504 | 26.7 | % | 94.6 | % | 96.0 | % | 108,421 | 24.1 | % | 13.48 | ||||||||||||||
West | ||||||||||||||||||||||||||
Arizona | 4 | 772 | 2.4 | % | 92.3 | % | 93.7 | % | 11,037 | 2.4 | % | 15.49 | ||||||||||||||
California | 9 | 1,336 | 4.2 | % | 95.1 | % | 95.2 | % | 23,651 | 5.3 | % | 18.61 | ||||||||||||||
Colorado | 2 | 475 | 1.5 | % | 90.6 | % | 90.6 | % | 4,992 | 1.1 | % | 11.60 | ||||||||||||||
Kansas | 1 | 237 | 0.7 | % | 100.0 | % | 100.0 | % | 2,396 | 0.5 | % | 10.11 | ||||||||||||||
Montana | 1 | 162 | 0.5 | % | 100.0 | % | 100.0 | % | 1,992 | 0.4 | % | 12.30 | ||||||||||||||
Nevada | 3 | 607 | 1.9 | % | 84.2 | % | 87.0 | % | 8,967 | 2.0 | % | 17.54 | ||||||||||||||
New Mexico | 1 | 224 | 0.7 | % | 100.0 | % | 100.0 | % | 3,607 | 0.8 | % | 16.10 | ||||||||||||||
Utah | 2 | 717 | 2.3 | % | 75.8 | % | 80.6 | % | 8,025 | 1.8 | % | 14.77 | ||||||||||||||
Washington | 5 | 1,310 | 4.1 | % | 92.1 | % | 93.2 | % | 16,139 | 3.6 | % | 13.38 | ||||||||||||||
Wisconsin | 1 | 14 | 0.1 | % | 100.0 | % | 100.0 | % | 320 | 0.1 | % | 22.86 | ||||||||||||||
Subtotal - West | 29 | 5,854 | 18.4 | % | 90.7 | % | 92.1 | % | 81,126 | 18.0 | % | 15.28 | ||||||||||||||
South | ||||||||||||||||||||||||||
Louisiana | 2 | 176 | 0.6 | % | 100.0 | % | 100.0 | % | 1,865 | 0.4 | % | 10.60 | ||||||||||||||
Oklahoma | 6 | 164 | 0.5 | % | 100.0 | % | 100.0 | % | 2,398 | 0.5 | % | 14.62 | ||||||||||||||
Texas | 46 | 7,363 | 23.1 | % | 91.3 | % | 92.2 | % | 114,109 | 25.4 | % | 16.97 | ||||||||||||||
Subtotal - South | 54 | 7,703 | 24.2 | % | 91.7 | % | 92.5 | % | 118,372 | 26.3 | % | 16.76 | ||||||||||||||
Total - Retail | 224 | 31,828 | 100.0 | % | 93.2 | % | 94.5 | % | 450,028 | 100.0 | % | 15.17 | ||||||||||||||
Other | ||||||||||||||||||||||||||
Office | 8 | 1,660 | 100.0 | % | 100.0 | % | 19,870 | 11.97 | ||||||||||||||||||
Industrial | 1 | 159 | 100.0 | % | 100.0 | % | 1,026 | 6.45 | ||||||||||||||||||
Total - Other | 9 | 1,819 | 100.0 | % | 100.0 | % | 20,896 | 11.49 | ||||||||||||||||||
Total Operating Portfolio | 233 | 33,647 | 93.5 | % | 94.8 | % | $ | 470,924 | $ | 14.97 | ||||||||||||||||
(a) | Excludes one consolidated multi-tenant retail property classified as held for sale as of June 30, 2014. |
(b) | Percentages are only provided for our retail operating portfolio. |
2nd Quarter 2014 Supplemental Information | 13 | |
Retail Properties of America, Inc.
Retail Operating Portfolio Occupancy Breakdown as of June 30, 2014
(square footage in thousands)
Total Retail Operating Portfolio (a): | |||||||||||||||||||||||||||||||||
Total | 25,000+ sq ft | 10,000-24,999 sq ft | 5,000-9,999 sq ft | 0-4,999 sq ft | |||||||||||||||||||||||||||||
Property Type/Region | Number of Properties | GLA | Occupancy | GLA | Occupancy | GLA | Occupancy | GLA | Occupancy | GLA | Occupancy | ||||||||||||||||||||||
Retail | |||||||||||||||||||||||||||||||||
North | 78 | 9,767 | 94.5 | % | 5,957 | 98.6 | % | 1,792 | 95.4 | % | 885 | 88.5 | % | 1,133 | 76.5 | % | |||||||||||||||||
East | 63 | 8,504 | 94.6 | % | 4,562 | 97.7 | % | 1,615 | 100.0 | % | 805 | 90.4 | % | 1,522 | 82.1 | % | |||||||||||||||||
West | 29 | 5,854 | 90.7 | % | 2,957 | 96.6 | % | 1,220 | 94.4 | % | 635 | 75.6 | % | 1,042 | 79.0 | % | |||||||||||||||||
South | 54 | 7,703 | 91.7 | % | 3,322 | 96.1 | % | 1,477 | 91.1 | % | 1,097 | 90.9 | % | 1,807 | 84.6 | % | |||||||||||||||||
Total - Consolidated at 100% | 224 | 31,828 | 93.2 | % | 16,798 | 97.5 | % | 6,104 | 95.4 | % | 3,422 | 87.3 | % | 5,504 | 81.2 | % | |||||||||||||||||
Total - % Leased including Signed | 224 | 31,828 | 94.5 | % | 16,798 | 98.6 | % | 6,104 | 96.0 | % | 3,422 | 89.2 | % | 5,504 | 83.3 | % | |||||||||||||||||
(a) | Excludes one consolidated multi-tenant retail property classified as held for sale as of June 30, 2014. |
2nd Quarter 2014 Supplemental Information | 14 | |
Retail Properties of America, Inc.
Top Retail Tenants as of June 30, 2014
(dollar amounts and square footage in thousands)
The following table sets forth information regarding the 20 largest tenants in our retail operating portfolio based on ABR as of June 30, 2014. Dollars (other than per square foot information) and square feet of GLA are presented in thousands.
Tenant | Primary DBA | Number of Stores | Occupied GLA | % of Occupied GLA | ABR | % of Total ABR | ABR per Occupied Sq. Ft. | |||||||||||||||
Best Buy Co., Inc. | Best Buy, Pacific Sales | 26 | 1,009 | 3.4 | % | $ | 14,828 | 3.3 | % | $ | 14.70 | |||||||||||
Ahold U.S.A. Inc. | Giant Foods, Stop & Shop, Martin's | 11 | 675 | 2.3 | % | 13,160 | 2.9 | % | 19.50 | |||||||||||||
Ross Stores, Inc. | 39 | 1,147 | 3.9 | % | 12,075 | 2.7 | % | 10.53 | ||||||||||||||
The TJX Companies Inc. | HomeGoods, Marshalls, TJ Maxx | 41 | 1,195 | 4.0 | % | 11,186 | 2.5 | % | 9.36 | |||||||||||||
Rite Aid Corporation | 34 | 428 | 1.4 | % | 10,564 | 2.3 | % | 24.68 | ||||||||||||||
Bed Bath & Beyond Inc. | Bed Bath & Beyond, Buy Buy Baby, The Christmas Tree Shops, Cost Plus World Market | 30 | 782 | 2.6 | % | 10,283 | 2.3 | % | 13.15 | |||||||||||||
PetSmart, Inc. | 32 | 665 | 2.2 | % | 9,834 | 2.2 | % | 14.79 | ||||||||||||||
The Home Depot, Inc. | Home Depot, Home Decorators | 9 | 1,003 | 3.4 | % | 8,386 | 1.9 | % | 8.36 | |||||||||||||
Michaels Stores, Inc. | Michaels, Aaron Brothers Art & Frame | 28 | 634 | 2.1 | % | 7,597 | 1.7 | % | 11.98 | |||||||||||||
The Sports Authority, Inc. | 15 | 643 | 2.2 | % | 7,574 | 1.7 | % | 11.78 | ||||||||||||||
Regal Entertainment Group | Edwards Cinema | 2 | 219 | 0.7 | % | 6,609 | 1.5 | % | 30.18 | |||||||||||||
Office Depot, Inc. | Office Depot, OfficeMax | 24 | 489 | 1.7 | % | 6,603 | 1.5 | % | 13.50 | |||||||||||||
Pier 1 Imports, Inc. | 33 | 333 | 1.1 | % | 6,339 | 1.4 | % | 19.04 | ||||||||||||||
Publix Super Markets Inc. | 12 | 511 | 1.7 | % | 5,405 | 1.2 | % | 10.58 | ||||||||||||||
Dick's Sporting Goods, Inc. | Dick's Sporting Goods, Golf Galaxy, Field & Stream | 10 | 495 | 1.7 | % | 5,348 | 1.2 | % | 10.80 | |||||||||||||
Staples, Inc. | 16 | 359 | 1.2 | % | 5,336 | 1.2 | % | 14.86 | ||||||||||||||
Ascena Retail Group Inc. | Catherine's, Dress Barn, Justice, Lane Bryant, Maurices | 46 | 253 | 0.9 | % | 5,055 | 1.1 | % | 19.98 | |||||||||||||
Barnes & Noble, Inc. | 12 | 305 | 1.0 | % | 5,048 | 1.1 | % | 16.55 | ||||||||||||||
Wal-Mart Stores, Inc. | Wal-Mart, Sam's Club | 5 | 761 | 2.6 | % | 4,780 | 1.0 | % | 6.28 | |||||||||||||
AB Acquisition LLC | Acme, Jewel-Osco, Shaw's Supermarkets | 5 | 312 | 1.1 | % | 4,764 | 1.0 | % | 15.27 | |||||||||||||
Total Top Retail Tenants | 430 | 12,218 | 41.2 | % | $ | 160,774 | 35.7 | % | $ | 13.16 | ||||||||||||
2nd Quarter 2014 Supplemental Information | 15 | |
Retail Properties of America, Inc.
Retail Leasing Activity Summary
(square footage amounts in thousands)
The following table summarizes the leasing activity in our retail operating portfolio including our pro rata share of unconsolidated joint ventures as of June 30, 2014 and for the preceding four quarters. Leases of less than 12 months have been excluded.
Total Leases | ||||||||||||||||||||||||
Number of Leases Signed | GLA Signed | New Contractual Rent per Square Foot (PSF) (a) | Prior Contractual Rent PSF (a) | % Change over Prior ABR (a) | WA Lease Term | Tenant Allowances PSF | ||||||||||||||||||
Q2 2014 | 180 | 958 | $ | 15.12 | $ | 14.27 | 5.96 | % | 5.14 | $ | 5.93 | |||||||||||||
Q1 2014 | 204 | 1,075 | $ | 17.70 | $ | 16.51 | 7.21 | % | 5.32 | $ | 4.44 | |||||||||||||
Q4 2013 | 205 | 1,112 | $ | 16.22 | $ | 15.44 | 5.05 | % | 5.75 | $ | 9.52 | |||||||||||||
Q3 2013 | 235 | 1,660 | $ | 13.97 | $ | 13.49 | 3.56 | % | 5.48 | $ | 3.71 | |||||||||||||
Total - 12 months | 824 | 4,805 | $ | 15.56 | $ | 14.78 | 5.28 | % | 5.44 | $ | 5.66 | |||||||||||||
Comparable Renewal Leases | ||||||||||||||||||||||||
Number of Leases Signed | GLA Signed | New Contractual Rent PSF | Prior Contractual Rent PSF | % Change over Prior ABR | WA Lease Term | Tenant Allowances PSF | ||||||||||||||||||
Q2 2014 | 119 | 728 | $ | 14.46 | $ | 13.71 | 5.47 | % | 4.80 | $ | 0.34 | |||||||||||||
Q1 2014 | 152 | 877 | $ | 17.44 | $ | 16.41 | 6.28 | % | 5.06 | $ | 1.12 | |||||||||||||
Q4 2013 | 134 | 786 | $ | 16.53 | $ | 15.94 | 3.70 | % | 4.98 | $ | 0.63 | |||||||||||||
Q3 2013 | 162 | 1,318 | $ | 13.58 | $ | 13.21 | 2.80 | % | 4.91 | $ | 0.47 | |||||||||||||
Total - 12 months | 567 | 3,709 | $ | 15.29 | $ | 14.64 | 4.44 | % | 4.95 | $ | 0.63 | |||||||||||||
Comparable New Leases | ||||||||||||||||||||||||
Number of Leases Signed | GLA Signed | New Contractual Rent PSF | Prior Contractual Rent PSF | % Change over Prior ABR | WA Lease Term | Tenant Allowances PSF | ||||||||||||||||||
Q2 2014 | 17 | 47 | $ | 25.20 | $ | 22.85 | 10.28 | % | 7.42 | $ | 28.68 | |||||||||||||
Q1 2014 | 9 | 26 | $ | 26.70 | $ | 20.09 | 32.90 | % | 8.33 | $ | 51.34 | |||||||||||||
Q4 2013 | 14 | 158 | $ | 14.65 | $ | 12.96 | 13.04 | % | 9.94 | $ | 34.99 | |||||||||||||
Q3 2013 | 18 | 69 | $ | 21.48 | $ | 18.85 | 13.95 | % | 8.45 | $ | 24.39 | |||||||||||||
Total - 12 months | 58 | 300 | $ | 18.92 | $ | 16.49 | 14.74 | % | 8.83 | $ | 32.97 | |||||||||||||
Non-Comparable New and Renewal Leases (b) | ||||||||||||||||||||||||
Number of Leases Signed | GLA Signed | New Contractual Rent PSF | Prior Contractual Rent PSF | % Change over Prior ABR | WA Lease Term | Tenant Allowances PSF | ||||||||||||||||||
Q2 2014 | 44 | 183 | $ | 17.82 | n/a | n/a | 5.39 | $ | 22.24 | |||||||||||||||
Q1 2014 | 43 | 172 | $ | 14.21 | n/a | n/a | 6.05 | $ | 14.37 | |||||||||||||||
Q4 2013 | 57 | 168 | $ | 19.91 | n/a | n/a | 5.87 | $ | 27.21 | |||||||||||||||
Q3 2013 | 55 | 273 | $ | 12.39 | n/a | n/a | 7.18 | $ | 14.13 | |||||||||||||||
Total - 12 months | 199 | 796 | $ | 15.62 | n/a | n/a | 6.14 | $ | 18.81 | |||||||||||||||
(a) | Excludes the impact of Non-Comparable New and Renewal Leases. |
(b) | Includes leases signed on units that were vacant for over 12 months, leases signed without fixed rental payments and leases signed where the previous and the current lease do not have a consistent lease structure. |
2nd Quarter 2014 Supplemental Information | 16 | |
Retail Properties of America, Inc.
Retail Lease Expirations as of June 30, 2014
(dollar amounts and square footage in thousands)
The following tables set forth a summary, as of June 30, 2014, of lease expirations scheduled to occur during the remainder of 2014 and each of the nine calendar years from 2015 to 2023 and thereafter, assuming no exercise of renewal options or early termination rights for all leases in our retail operating portfolio. The following tables are based on leases commenced as of June 30, 2014. Dollars (other than per square foot information) and square feet of GLA are presented in thousands in the table.
Lease Expiration Year | Lease Count | GLA | % of Occupied GLA | % of Total GLA | ABR | % of Total ABR | ABR per Occupied Sq. Ft. | ABR at Exp. (a) | ABR per Occupied Sq. Ft. at Exp. | ||||||||||||||||||||||
2014 | 173 | 578 | 1.9 | % | 1.8 | % | $ | 10,640 | 2.3 | % | $ | 18.41 | $ | 10,640 | $ | 18.41 | |||||||||||||||
2015 | 450 | 2,580 | 8.7 | % | 8.1 | % | 39,731 | 8.8 | % | 15.40 | 40,146 | 15.56 | |||||||||||||||||||
2016 | 441 | 2,558 | 8.7 | % | 8.0 | % | 45,162 | 10.1 | % | 17.66 | 45,771 | 17.89 | |||||||||||||||||||
2017 | 432 | 2,898 | 9.8 | % | 9.1 | % | 45,079 | 10.1 | % | 15.56 | 46,252 | 15.96 | |||||||||||||||||||
2018 | 466 | 3,277 | 11.1 | % | 10.3 | % | 55,130 | 12.2 | % | 16.82 | 57,098 | 17.42 | |||||||||||||||||||
2019 | 478 | 4,599 | 15.5 | % | 14.5 | % | 73,087 | 16.3 | % | 15.89 | 76,467 | 16.63 | |||||||||||||||||||
2020 | 156 | 2,437 | 8.2 | % | 7.6 | % | 31,263 | 7.0 | % | 12.83 | 33,434 | 13.72 | |||||||||||||||||||
2021 | 100 | 1,543 | 5.2 | % | 4.9 | % | 22,298 | 4.9 | % | 14.45 | 24,178 | 15.67 | |||||||||||||||||||
2022 | 104 | 2,117 | 7.1 | % | 6.7 | % | 28,515 | 6.3 | % | 13.47 | 30,726 | 14.51 | |||||||||||||||||||
2023 | 113 | 1,819 | 6.1 | % | 5.7 | % | 26,876 | 6.0 | % | 14.78 | 28,835 | 15.85 | |||||||||||||||||||
Thereafter | 190 | 5,073 | 17.1 | % | 15.9 | % | 69,295 | 15.3 | % | 13.66 | 77,136 | 15.21 | |||||||||||||||||||
Month to month | 53 | 180 | 0.6 | % | 0.6 | % | 2,952 | 0.7 | % | 16.40 | 2,952 | 16.40 | |||||||||||||||||||
Leased Total | 3,156 | 29,659 | 100.0 | % | 93.2 | % | $ | 450,028 | 100.0 | % | $ | 15.17 | $ | 473,635 | $ | 15.97 | |||||||||||||||
Leases signed but not commenced | 66 | 408 | — | 1.3 | % | $ | 6,138 | — | $ | 15.04 | $ | 6,800 | $ | 16.67 | |||||||||||||||||
Available | 1,761 | — | 5.5 | % | |||||||||||||||||||||||||||
The following tables break down the above information into anchor (10,000 sf and above) and non-anchor (under 10,000 sf) details for our retail operating portfolio. Dollars (other than per square foot information) and square feet of GLA are presented in thousands in the tables. | |||||||||||||||||||||||||||||||
Anchor | |||||||||||||||||||||||||||||||
Lease Expiration Year | Lease Count | GLA | % of Occupied GLA | % of Total GLA | ABR | % of Total ABR | ABR per Occupied Sq. Ft. | ABR at Exp. (a) | ABR per Occupied Sq. Ft. at Exp. | ||||||||||||||||||||||
2014 | 7 | 124 | 0.4 | % | 0.4 | % | $ | 1,512 | 0.3 | % | $ | 12.19 | $ | 1,512 | $ | 12.19 | |||||||||||||||
2015 | 63 | 1,507 | 5.1 | % | 4.7 | % | 16,664 | 3.7 | % | 11.06 | 16,785 | 11.14 | |||||||||||||||||||
2016 | 64 | 1,526 | 5.2 | % | 4.8 | % | 20,181 | 4.5 | % | 13.22 | 20,312 | 13.31 | |||||||||||||||||||
2017 | 59 | 1,849 | 6.2 | % | 5.8 | % | 19,185 | 4.3 | % | 10.38 | 19,244 | 10.41 | |||||||||||||||||||
2018 | 72 | 2,077 | 7.0 | % | 6.5 | % | 25,801 | 5.7 | % | 12.42 | 26,187 | 12.61 | |||||||||||||||||||
2019 | 123 | 3,490 | 11.8 | % | 11.0 | % | 46,257 | 10.3 | % | 13.25 | 47,668 | 13.66 | |||||||||||||||||||
2020 | 67 | 2,077 | 7.0 | % | 6.5 | % | 22,825 | 5.1 | % | 10.99 | 24,144 | 11.62 | |||||||||||||||||||
2021 | 38 | 1,280 | 4.3 | % | 4.0 | % | 16,696 | 3.7 | % | 13.04 | 17,859 | 13.95 | |||||||||||||||||||
2022 | 54 | 1,902 | 6.4 | % | 6.0 | % | 23,104 | 5.1 | % | 12.15 | 24,581 | 12.92 | |||||||||||||||||||
2023 | 48 | 1,552 | 5.2 | % | 4.9 | % | 20,611 | 4.6 | % | 13.28 | 21,687 | 13.97 | |||||||||||||||||||
Thereafter | 109 | 4,741 | 16.0 | % | 14.9 | % | 60,784 | 13.4 | % | 12.82 | 66,933 | 14.12 | |||||||||||||||||||
Month to month | 3 | 69 | 0.2 | % | 0.2 | % | 742 | 0.2 | % | 10.75 | 742 | 10.75 | |||||||||||||||||||
Leased Total | 707 | 22,194 | 74.8 | % | 69.7 | % | $ | 274,362 | 60.9 | % | $ | 12.36 | $ | 287,654 | $ | 12.96 | |||||||||||||||
Leases signed but not commenced | 9 | 233 | — | 0.7 | % | $ | 2,448 | — | $ | 10.51 | $ | 2,612 | $ | 11.21 | |||||||||||||||||
Available | 476 | — | 1.5 | % | |||||||||||||||||||||||||||
Non-Anchor | |||||||||||||||||||||||||||||||
Lease Expiration Year | Lease Count | GLA | % of Occupied GLA | % of Total GLA | ABR | % of Total ABR | ABR per Occupied Sq. Ft. | ABR at Exp. (a) | ABR per Occupied Sq. Ft. at Exp. | ||||||||||||||||||||||
2014 | 166 | 454 | 1.5 | % | 1.4 | % | $ | 9,128 | 2.0 | % | $ | 20.11 | $ | 9,128 | $ | 20.11 | |||||||||||||||
2015 | 387 | 1,073 | 3.6 | % | 3.4 | % | 23,067 | 5.1 | % | 21.50 | 23,361 | 21.77 | |||||||||||||||||||
2016 | 377 | 1,032 | 3.5 | % | 3.2 | % | 24,981 | 5.6 | % | 24.21 | 25,459 | 24.67 | |||||||||||||||||||
2017 | 373 | 1,049 | 3.6 | % | 3.3 | % | 25,894 | 5.8 | % | 24.68 | 27,008 | 25.75 | |||||||||||||||||||
2018 | 394 | 1,200 | 4.1 | % | 3.8 | % | 29,329 | 6.5 | % | 24.44 | 30,911 | 25.76 | |||||||||||||||||||
2019 | 355 | 1,109 | 3.7 | % | 3.5 | % | 26,830 | 6.0 | % | 24.19 | 28,799 | 25.97 | |||||||||||||||||||
2020 | 89 | 360 | 1.2 | % | 1.1 | % | 8,438 | 1.9 | % | 23.44 | 9,290 | 25.81 | |||||||||||||||||||
2021 | 62 | 263 | 0.9 | % | 0.9 | % | 5,602 | 1.2 | % | 21.30 | 6,319 | 24.03 | |||||||||||||||||||
2022 | 50 | 215 | 0.7 | % | 0.7 | % | 5,411 | 1.2 | % | 25.17 | 6,145 | 28.58 | |||||||||||||||||||
2023 | 65 | 267 | 0.9 | % | 0.8 | % | 6,265 | 1.4 | % | 23.46 | 7,148 | 26.77 | |||||||||||||||||||
Thereafter | 81 | 332 | 1.1 | % | 1.0 | % | 8,511 | 1.9 | % | 25.64 | 10,203 | 30.73 | |||||||||||||||||||
Month to month | 50 | 111 | 0.4 | % | 0.4 | % | 2,210 | 0.5 | % | 19.91 | 2,210 | 19.91 | |||||||||||||||||||
Leased Total | 2,449 | 7,465 | 25.2 | % | 23.5 | % | $ | 175,666 | 39.1 | % | $ | 23.53 | $ | 185,981 | $ | 24.91 | |||||||||||||||
Leases signed but not commenced | 57 | 175 | — | 0.6 | % | $ | 3,690 | — | $ | 21.09 | $ | 4,188 | $ | 23.93 | |||||||||||||||||
Available | 1,285 | — | 4.0 | % | |||||||||||||||||||||||||||
(a) | Represents annualized base rent at the scheduled expiration of the lease giving effect to fixed contractual increases in base rent. |
2nd Quarter 2014 Supplemental Information | 17 | |
Retail Properties of America, Inc.
Unconsolidated Joint Venture Combined Financial Statements
(amounts in thousands)
Total Investment Property Unconsolidated Joint Venture Combined Balance Sheets (a)
June 30, 2014 | December 31, 2013 | |||||||
Real estate assets | $ | — | $ | 270,916 | ||||
Less: accumulated depreciation | — | (52,624 | ) | |||||
Real estate, net | — | 218,292 | ||||||
Cash and cash equivalents | — | 6,579 | ||||||
Receivables, net | — | 3,037 | ||||||
Acquired lease intangible assets, net | — | 3,947 | ||||||
Other assets, net | — | 5,624 | ||||||
Total assets | $ | — | $ | 237,479 | ||||
Mortgage debt | $ | — | $ | 142,537 | ||||
Accounts payable and accrued expenses | — | 4,211 | ||||||
Acquired lease intangible liabilities, net | — | 1,200 | ||||||
Other liabilities | — | 1,905 | ||||||
Total liabilities | — | 149,853 | ||||||
Total equity | — | 87,626 | ||||||
Total liabilities and equity | $ | — | $ | 237,479 | ||||
RPAI Pro Rata Investment Property Unconsolidated Joint Venture Combined Balance Sheets (b) (c)
June 30, 2014 | December 31, 2013 | |||||||
Real estate assets | $ | — | $ | 54,183 | ||||
Less: accumulated depreciation | — | (10,525 | ) | |||||
Real estate, net | — | 43,658 | ||||||
Cash and cash equivalents | — | 1,316 | ||||||
Receivables, net | — | 607 | ||||||
Acquired lease intangible assets, net | — | 789 | ||||||
Other assets, net | — | 1,125 | ||||||
Total assets | $ | — | $ | 47,495 | ||||
Mortgage debt | $ | — | $ | 28,507 | ||||
Accounts payable and accrued expenses | — | 842 | ||||||
Acquired lease intangible liabilities, net | — | 240 | ||||||
Other liabilities | — | 381 | ||||||
Total liabilities | — | 29,970 | ||||||
Total equity | — | 17,525 | ||||||
Total liabilities and equity | $ | — | $ | 47,495 | ||||
(a) | Represents combined balance sheets of our MS Inland unconsolidated joint venture as of December 31, 2013. During June 2014, we dissolved our joint venture arrangement with our partner in our MS Inland unconsolidated joint venture. |
(b) | Represents our pro rata share of the combined balance sheets of our MS Inland unconsolidated joint venture as of December 31, 2013, net of intercompany eliminations. As noted above, during June 2014, we dissolved our joint venture arrangement with our partner in our MS Inland unconsolidated joint venture. |
(c) | Combined balance sheets exclude our pro rata share of assets of $5,587 and $6,008, respectively, and liabilities of $2,889 and $3,082, respectively, from our captive insurance plan, Oak Property and Casualty, as of June 30, 2014 and December 31, 2013. |
2nd Quarter 2014 Supplemental Information | 18 | |
Retail Properties of America, Inc.
Unconsolidated Joint Venture Combined Financial Statements
(amounts in thousands)
Total Investment Property Unconsolidated Joint Venture Combined Statements of Operations (a)
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||
Rental income | $ | 3,643 | $ | 14,193 | $ | 8,810 | $ | 28,565 | ||||||||
Tenant recovery income | 1,298 | 5,158 | 2,993 | 9,749 | ||||||||||||
Other property income | 26 | 201 | 50 | 345 | ||||||||||||
Total revenues | 4,967 | 19,552 | 11,853 | 38,659 | ||||||||||||
Property operating expenses | 731 | 2,479 | 1,660 | 5,025 | ||||||||||||
Real estate taxes | 1,027 | 3,350 | 2,339 | 6,700 | ||||||||||||
Depreciation and amortization | 1,699 | 9,423 | 4,117 | 19,252 | ||||||||||||
Loss (gain) on lease terminations | 10 | 303 | (169 | ) | 848 | |||||||||||
General and administrative expenses | 51 | 196 | 90 | 377 | ||||||||||||
Total expenses | 3,518 | 15,751 | 8,037 | 32,202 | ||||||||||||
Operating income | 1,449 | 3,801 | 3,816 | 6,457 | ||||||||||||
Interest expense, net | (1,258 | ) | (3,892 | ) | (3,028 | ) | (6,623 | ) | ||||||||
Other (expense) income, net | (3 | ) | 4 | (3 | ) | 4 | ||||||||||
Income (loss) from continuing operations | 188 | (87 | ) | 785 | (162 | ) | ||||||||||
Discontinued operations (b): | ||||||||||||||||
Loss, net | (3 | ) | (435 | ) | — | (886 | ) | |||||||||
Gain on sales of investment properties | — | — | — | 1,019 | ||||||||||||
(Loss) income from discontinued operations | (3 | ) | (435 | ) | — | 133 | ||||||||||
Net income (loss) | $ | 185 | $ | (522 | ) | $ | 785 | $ | (29 | ) | ||||||
Funds From Operations (FFO) (c) | ||||||||||||||||
Net income (loss) | $ | 185 | $ | (522 | ) | $ | 785 | $ | (29 | ) | ||||||
Depreciation and amortization | 1,709 | 11,376 | 4,127 | 23,651 | ||||||||||||
Provision for impairment of investment properties | — | 64 | — | 298 | ||||||||||||
Gain on sales of investment properties | — | — | — | (1,019 | ) | |||||||||||
FFO | $ | 1,894 | $ | 10,918 | $ | 4,912 | $ | 22,901 | ||||||||
(a) | Represents combined statements of operations of our RioCan, MS Inland and Hampton unconsolidated joint ventures. During 2013, we dissolved our joint venture arrangements with our partners in our Hampton and RioCan unconsolidated joint ventures. During June 2014, we dissolved our joint venture arrangement with our partner in our MS Inland unconsolidated joint venture. |
(b) | Included within "Discontinued operations" above are the following: the property-level operating results of the five properties we acquired from our RioCan unconsolidated joint venture on October 1, 2013; all property-level operating results attributable to our Hampton unconsolidated joint venture; and, operating activity associated with a real estate transaction between joint ventures. The property-level operating results for the entire portfolio of properties held by our MS Inland unconsolidated joint venture are presented within "Income (loss) from continuing operations" above given that our acquisition of our partner's entire 80% interest in all of the properties was a transaction among partners rather than at the venture level. The property-level operating results of the eight RioCan properties in which our partner acquired our 20% interest are presented within "Income (loss) from continuing operations" above given the continuity of the controlling financial interest before and after the dissolution transaction. |
(c) | Refer to page 21 for definition of FFO. |
2nd Quarter 2014 Supplemental Information | 19 | |
Retail Properties of America, Inc.
Unconsolidated Joint Venture Combined Financial Statements
(amounts in thousands)
RPAI Pro Rata Investment Property Unconsolidated Joint Venture Combined Statements of Operations (a)
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||
Rental income | $ | 729 | $ | 3,289 | $ | 1,762 | $ | 6,616 | ||||||||
Tenant recovery income | 260 | 1,163 | 599 | 2,222 | ||||||||||||
Other property income | 4 | 41 | 10 | 69 | ||||||||||||
Total revenues | 993 | 4,493 | 2,371 | 8,907 | ||||||||||||
Property operating expenses | 115 | 388 | 248 | 773 | ||||||||||||
Real estate taxes | 206 | 752 | 468 | 1,503 | ||||||||||||
Depreciation and amortization | 339 | 2,204 | 823 | 4,504 | ||||||||||||
Loss (gain) on lease terminations | 2 | 71 | (34 | ) | 181 | |||||||||||
General and administrative expenses | 10 | 43 | 18 | 80 | ||||||||||||
Total expenses | 672 | 3,458 | 1,523 | 7,041 | ||||||||||||
Operating income | 321 | 1,035 | 848 | 1,866 | ||||||||||||
Interest expense, net | (252 | ) | (768 | ) | (606 | ) | (319 | ) | ||||||||
Other (expense) income, net | (1 | ) | 11 | (1 | ) | 10 | ||||||||||
Income from continuing operations | 68 | 278 | 241 | 1,557 | ||||||||||||
Discontinued operations (b): | ||||||||||||||||
Loss, net | — | (67 | ) | — | (112 | ) | ||||||||||
Gain on sales of investment properties | — | — | — | 977 | ||||||||||||
(Loss) income from discontinued operations | — | (67 | ) | — | 865 | |||||||||||
Net income | $ | 68 | $ | 211 | $ | 241 | $ | 2,422 | ||||||||
RPAI ownership adjustments (c) | (501 | ) | (672 | ) | (1,452 | ) | (3,284 | ) | ||||||||
Net loss attributable to RPAI's ownership interests | $ | (433 | ) | $ | (461 | ) | $ | (1,211 | ) | $ | (862 | ) | ||||
Funds From Operations (FFO) (d) | ||||||||||||||||
Net loss attributable to RPAI's ownership interests | $ | (433 | ) | $ | (461 | ) | $ | (1,211 | ) | $ | (862 | ) | ||||
Depreciation and amortization (e) | 296 | 2,275 | 710 | 4,831 | ||||||||||||
Provision for impairment of investment properties | — | 62 | — | 286 | ||||||||||||
Gain on sales of investment properties | — | — | — | (977 | ) | |||||||||||
FFO | $ | (137 | ) | $ | 1,876 | $ | (501 | ) | $ | 3,278 | ||||||
(a) | Represents our pro rata share of the combined statements of operations of our RioCan, MS Inland and Hampton unconsolidated joint ventures, net of intercompany eliminations and GAAP adjustments for real estate transactions between joint ventures or with RPAI due to our continuing involvement with the properties. During 2013, we dissolved our joint venture arrangements with our partners in our Hampton and RioCan unconsolidated joint ventures. During June 2014, we dissolved our joint venture arrangement with our partner in our MS Inland unconsolidated joint venture. |
(b) | Included within "Discontinued operations" above are the property-level operating results attributable to our Hampton unconsolidated joint venture. Due to our continued involvement with the underlying properties, "Discontinued operations" above does not include the property-level operating results attributable to the five properties we acquired from our RioCan unconsolidated joint venture or the operating activity associated with a real estate transaction between joint ventures. The property-level operating results for the entire portfolio of properties held by our MS Inland unconsolidated joint venture are presented within "Income from continuing operations" above given that our acquisition of our partner's entire 80% interest in all of the properties was a transaction among partners rather than at the venture level. Also excluded from "Discontinued operations" above are the property-level operating results of the eight RioCan properties in which our partner acquired our 20% interest as the pro rata statements above are prepared from the perspective of our unconsolidated joint ventures and continuity of the controlling financial interest in these eight properties was maintained before and after the dissolution transaction. |
(c) | Represents adjustments to reflect RPAI's investment basis and other unconsolidated joint venture activity, inclusive of $1,834 of investment-level impairment charge recorded during the six months ended June 30, 2013 ($134 of which relates to the three months ended June 30, 2013) to the carrying value of our Hampton investment, outside basis amortization and activity from our captive insurance plan. |
(d) | Refer to page 21 for definition of FFO. |
(e) | Includes outside basis amortization. |
2nd Quarter 2014 Supplemental Information | 20 | |
Retail Properties of America, Inc.
Non-GAAP Financial Measures and Other Definitions
Occupancy
Occupancy is defined, for a property or group of properties, as the ratio, expressed as a percentage, of (a) the number of square feet of such property economically occupied by tenants under leases with an initial term of greater than one year, to (b) the aggregate number of square feet for such property.
Percent Leased Including Signed
Percent Leased Including Signed is defined, for a property or group of properties, as the ratio, expressed as a percentage, of (a) the sum of occupied square feet (pursuant to the definition above) of such property and vacant square feet for which a lease with an initial term of greater than one year has been signed, but rent has not yet commenced, to (b) the aggregate number of square feet for such property.
Funds From Operations (FFO)
As defined by the National Association of Real Estate Investment Trusts (NAREIT), an industry trade group, Funds From Operations (FFO) means net income (loss) computed in accordance with generally accepted accounting principles (GAAP), excluding gains (or losses) from sales of depreciable real estate, plus depreciation and amortization and impairment charges on depreciable real estate, including amounts from continuing and discontinued operations, as well as adjustments for unconsolidated joint ventures in which we hold an interest. We have adopted the NAREIT definition in our computation of FFO and believe that FFO, which is a non-GAAP performance measure, provides an additional and useful means to assess the operating performance of real estate investment trusts (REITs). We believe that, subject to the following limitations, FFO provides a basis for comparing our performance and operations to those of other REITs. FFO is not intended to be an alternative to "Net Income" as an indicator of our performance, nor an alternative to "Cash Flows from Operating Activities" as determined by GAAP as a measure of our capacity to fund cash needs, including the payment of dividends.
Depreciation and amortization related to investment properties for purposes of calculating FFO includes a portion of loss on lease terminations, encompassing the write-off of tenant-related assets, including tenant improvements and in-place lease values, as a result of early lease terminations.
Operating FFO
Operating FFO is defined as FFO excluding the impact of discrete non-operating transactions and other events which we do not consider representative of the comparable operating results of our core business platform, our real estate operating portfolio. Specific examples include, but are not limited to, the financial statement impact of gains or losses associated with the early extinguishment of debt or other liabilities, actual or anticipated settlement of litigation involving the Company, and impairment charges to write down the carrying value of assets other than depreciable real estate, which are otherwise excluded from our calculation of FFO. Operating FFO does not represent an alternative to "Net Income" as an indicator of our performance, nor an alternative to "Cash Flows from Operating Activities" as determined by GAAP as a measure of our capacity to fund cash needs, including the payment of dividends. Further, comparison of our presentation of Operating FFO to similarly titled measures for other REITs may not necessarily be meaningful due to possible differences in definition and application by such REITs.
Net Operating Income (NOI) and Combined NOI from Continuing Operations
We define Net Operating Income (NOI) as operating revenues (rental income, tenant recovery income and other property income, excluding straight-line rental income, amortization of lease inducements, amortization of acquired above and below market lease intangibles and lease termination fee income) less property operating expenses (real estate tax expense and property operating expense, excluding straight-line ground rent expense, amortization of acquired ground lease intangible liability, straight-line bad debt expense and lease termination fee expense). Combined NOI from Continuing Operations represents NOI plus our pro rata share of NOI from our investment property unconsolidated joint ventures, excluding discontinued operations associated with those ventures. We believe that NOI and Combined NOI from Continuing Operations are useful measures of our operating performance. Other REITs may use different methodologies for calculating NOI, and accordingly, our NOI may not be comparable to other REITs. We believe that NOI and Combined NOI from Continuing Operations provide an operating perspective not immediately apparent from GAAP operating income or net income attributable to common shareholders. We use NOI and Combined NOI from Continuing Operations to evaluate our performance on a property-by-property basis because these measures allow management to evaluate the impact that factors such as lease structure, lease rates and tenant base, which vary by property, have on our operating results. However, these measures should only be used as an alternative measure of our financial performance.
Same Store NOI, NOI from Other Investment Properties, NOI from Discontinued Operations and Combined NOI from Discontinued Operations
Same Store NOI represents NOI from our same store portfolio consisting of 218 operating properties acquired or placed in service prior to January 1, 2013, except for the one property that was classified as held for sale as of June 30, 2014. NOI from Other Investment Properties represents NOI primarily from properties acquired in 2013 and 2014, our development properties, an anticipated redevelopment property, the investment properties that were sold or held for sale in 2014 that did not qualify for discontinued operations treatment, and the historical ground rent expense related to an existing same store property that was subject to a ground lease with a third party prior to our acquisition of the fee interest during 2014. NOI consists of the sum of Same Store NOI and NOI from Other Investment Properties. NOI from Discontinued Operations represents NOI associated with properties accounted for as discontinued operations. Combined NOI from Discontinued Operations represents NOI from discontinued operations plus our pro rata share of NOI from discontinued operations from our investment property unconsolidated joint ventures. We believe that Same Store NOI, NOI from Other Investment Properties, NOI from Discontinued Operations and Combined NOI from Discontinued Operations are useful measures of our operating performance. Other REITs may use different methodologies for calculating these metrics, and accordingly, our NOI metrics may not be comparable to other REITs. We believe that these metrics provide an operating perspective not immediately apparent from operating income or net income attributable to common shareholders as defined within GAAP. We use these metrics to evaluate our performance on a property-by-property basis because these measures allow management to evaluate the impact that factors such as lease structure, lease rates and tenant base, which vary by property, have on our operating results. However, these measures should only be used as an alternative measure of our financial performance.
2nd Quarter 2014 Supplemental Information | 21 | |
Retail Properties of America, Inc.
Non-GAAP Financial Measures and Other Definitions (continued)
Adjusted EBITDA and Combined Adjusted EBITDA
Adjusted EBITDA represents net income attributable to common shareholders before interest, income taxes, depreciation and amortization, as further adjusted to eliminate the impact of certain items that we do not consider indicative of our ongoing performance. Combined Adjusted EBITDA represents Adjusted EBITDA plus our pro rata share of the EBITDA adjustments from our investment property unconsolidated joint ventures, including discontinued operations associated with those ventures. We believe that Adjusted EBITDA and Combined Adjusted EBITDA are useful because they allow investors and management to evaluate and compare our performance from period to period in a meaningful and consistent manner in addition to standard financial measurements under GAAP. Adjusted EBITDA and Combined Adjusted EBITDA are not measurements of financial performance under GAAP and should not be considered as alternatives to net income attributable to common shareholders, as an indicator of operating performance or any measure of performance derived in accordance with GAAP. Our calculations of Adjusted EBITDA and Combined Adjusted EBITDA may be different from the calculation used by other companies and, accordingly, comparability may be limited.
Net Debt to Adjusted EBITDA and Combined Net Debt to Combined Adjusted EBITDA
Net Debt to Adjusted EBITDA represents (i) our total debt less cash and cash equivalents divided by (ii) Adjusted EBITDA for the prior three months, annualized. Combined Net Debt to Combined Adjusted EBITDA represents (i) the sum of (A) our total debt less cash and cash equivalents plus (B) our pro rata share of our investment property unconsolidated joint ventures' total debt less our pro rata share of these joint ventures' cash and cash equivalents divided by (ii) Combined Adjusted EBITDA for the prior three months, annualized. We believe that these ratios are useful because they provide investors with information regarding total debt net of cash and cash equivalents, which could be used to repay debt, compared to our performance as measured using Adjusted EBITDA and Combined Adjusted EBITDA.
Net Debt and Preferred Stock to Adjusted EBITDA and Combined Net Debt and Preferred Stock to Combined Adjusted EBITDA
Net Debt and Preferred Stock to Adjusted EBITDA represents (i) our total debt, plus preferred stock, less cash and cash equivalents divided by (ii) Adjusted EBITDA for the prior three months, annualized. Combined Net Debt and Preferred Stock to Combined Adjusted EBITDA represents (i) the sum of (A) our total debt, plus preferred stock, less cash and cash equivalents plus (B) our pro rata share of our investment property unconsolidated joint ventures' total debt less our pro rata share of these joint ventures' cash and cash equivalents divided by (ii) Combined Adjusted EBITDA for the prior three months, annualized. We believe that these ratios are useful because they provide investors with information regarding total debt and preferred stock, net of cash and cash equivalents, which could be used to repay debt, compared to our performance as measured using Adjusted EBITDA and Combined Adjusted EBITDA.
2nd Quarter 2014 Supplemental Information | 22 | |
Retail Properties of America, Inc.
Reconciliation of Non-GAAP Financial Measures
(amounts in thousands)
Reconciliation of Net Income Attributable to Common Shareholders to NOI
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||
Operating revenues: | ||||||||||||||||
Same store investment properties (218 properties): | ||||||||||||||||
Rental income | $ | 104,686 | $ | 101,619 | $ | 208,724 | $ | 203,882 | ||||||||
Tenant recovery income | 23,702 | 22,677 | 49,471 | 44,644 | ||||||||||||
Other property income | 1,713 | 1,650 | 3,348 | 3,403 | ||||||||||||
Other investment properties: | ||||||||||||||||
Rental income | 11,401 | 4,562 | 22,597 | 9,112 | ||||||||||||
Tenant recovery income | 3,406 | 1,179 | 7,385 | 2,534 | ||||||||||||
Other property income | 203 | 32 | 350 | 84 | ||||||||||||
Operating expenses: | ||||||||||||||||
Same store investment properties (218 properties): | ||||||||||||||||
Property operating expenses | (18,359 | ) | (19,359 | ) | (40,005 | ) | (39,742 | ) | ||||||||
Real estate taxes | (16,794 | ) | (15,962 | ) | (32,891 | ) | (31,851 | ) | ||||||||
Other investment properties: | ||||||||||||||||
Property operating expenses | (2,992 | ) | (1,352 | ) | (6,965 | ) | (2,778 | ) | ||||||||
Real estate taxes | (2,273 | ) | (857 | ) | (4,590 | ) | (1,779 | ) | ||||||||
Net operating income from continuing operations: | ||||||||||||||||
Same store investment properties | 94,948 | 90,625 | 188,647 | 180,336 | ||||||||||||
Other investment properties | 9,745 | 3,564 | 18,777 | 7,173 | ||||||||||||
Total net operating income from continuing operations | 104,693 | 94,189 | 207,424 | 187,509 | ||||||||||||
Other income (expense): | ||||||||||||||||
Straight-line rental income, net | 1,161 | (222 | ) | 3,104 | (928 | ) | ||||||||||
Amortization of acquired above and below market lease intangibles, net | 230 | 172 | 339 | 389 | ||||||||||||
Amortization of lease inducements | (199 | ) | (35 | ) | (357 | ) | (64 | ) | ||||||||
Lease termination fees | 28 | 501 | 133 | 1,140 | ||||||||||||
Straight-line ground rent expense | (956 | ) | (760 | ) | (1,978 | ) | (1,534 | ) | ||||||||
Amortization of acquired ground lease intangible liability | 140 | — | 280 | — | ||||||||||||
Depreciation and amortization | (54,094 | ) | (59,596 | ) | (107,690 | ) | (110,604 | ) | ||||||||
Provision for impairment of investment properties | (5,400 | ) | — | (5,794 | ) | — | ||||||||||
Loss on lease terminations | (827 | ) | (381 | ) | (658 | ) | (592 | ) | ||||||||
General and administrative expenses | (7,362 | ) | (8,288 | ) | (15,812 | ) | (16,343 | ) | ||||||||
Gain on extinguishment of other liabilities | — | — | 4,258 | — | ||||||||||||
Equity in loss of unconsolidated joint ventures, net | (433 | ) | (461 | ) | (1,211 | ) | (862 | ) | ||||||||
Gain on change in control of investment properties | 24,158 | — | 24,158 | — | ||||||||||||
Interest expense | (31,873 | ) | (34,575 | ) | (63,736 | ) | (80,272 | ) | ||||||||
Other income, net | 250 | 2,085 | 677 | 3,161 | ||||||||||||
Total other expense | (75,177 | ) | (101,560 | ) | (164,287 | ) | (206,509 | ) | ||||||||
Income (loss) from continuing operations | 29,516 | (7,371 | ) | 43,137 | (19,000 | ) | ||||||||||
Discontinued operations: | ||||||||||||||||
Income (loss), net | — | 22,928 | (148 | ) | 23,504 | |||||||||||
Gain on sales of investment properties | — | 21 | 655 | 4,930 | ||||||||||||
Income from discontinued operations | — | 22,949 | 507 | 28,434 | ||||||||||||
Gain on sales of investment properties | 527 | 393 | 527 | 4,657 | ||||||||||||
Net income | 30,043 | 15,971 | 44,171 | 14,091 | ||||||||||||
Net income attributable to the Company | 30,043 | 15,971 | 44,171 | 14,091 | ||||||||||||
Preferred stock dividends | (2,363 | ) | (2,363 | ) | (4,725 | ) | (4,725 | ) | ||||||||
Net income attributable to common shareholders | $ | 27,680 | $ | 13,608 | $ | 39,446 | $ | 9,366 | ||||||||
Net operating income: | ||||||||||||||||
Consolidated NOI from continuing operations | $ | 104,693 | $ | 94,189 | $ | 207,424 | $ | 187,509 | ||||||||
Pro rata share of investment property unconsolidated joint ventures NOI (a) | 672 | 3,333 | 1,655 | 6,545 | ||||||||||||
Combined NOI from Continuing Operations | $ | 105,365 | $ | 97,522 | $ | 209,079 | $ | 194,054 | ||||||||
(a) | Amounts shown net of intercompany eliminations and inclusive of amounts from continuing operations only. |
2nd Quarter 2014 Supplemental Information | 23 | |
Retail Properties of America, Inc.
Reconciliation of Non-GAAP Financial Measures
(amounts in thousands)
Reconciliation of Net Income Attributable to Common Shareholders to Adjusted EBITDA and Combined Adjusted EBITDA
Three Months Ended | ||||||||
June 30, 2014 | December 31, 2013 | |||||||
Net income attributable to common shareholders | $ | 27,680 | $ | 34,724 | ||||
Preferred stock dividends | 2,363 | 2,363 | ||||||
Interest expense | 31,873 | 34,440 | ||||||
Interest expense (discontinued operations) | — | 364 | ||||||
Depreciation and amortization | 54,094 | 58,155 | ||||||
Depreciation and amortization (discontinued operations) | — | 1,244 | ||||||
Gain on sales of investment properties | (527 | ) | — | |||||
Gain on sales of investment properties (discontinued operations) | — | (34,644 | ) | |||||
Gain on sale of joint venture interest | — | (17,499 | ) | |||||
Gain on change in control of investment properties | (24,158 | ) | (5,435 | ) | ||||
Gain on extinguishment of other liabilities (discontinued operations) | — | (3,511 | ) | |||||
Loss on lease terminations (a) | 967 | 1,979 | ||||||
Provision for impairment of investment properties | 5,400 | 32,303 | ||||||
Provision for impairment of investment properties (discontinued operations) | — | 590 | ||||||
Adjusted EBITDA | $ | 97,692 | $ | 105,073 | ||||
Annualized | $ | 390,768 | $ | 420,292 | ||||
Pro rata share of adjustments from investment property unconsolidated joint ventures (b): | ||||||||
Interest expense | 252 | 356 | ||||||
Depreciation and amortization | 339 | 485 | ||||||
Loss on lease terminations | 2 | — | ||||||
Amortization of basis | (45 | ) | (72 | ) | ||||
Combined Adjusted EBITDA | $ | 98,240 | $ | 105,842 | ||||
Annualized | $ | 392,960 | $ | 423,368 | ||||
Reconciliation of Operating Income (Loss) from Discontinued Operations to NOI (Net Operating Loss) from Discontinued Operations
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||
Operating revenues: | ||||||||||||||||
Rental income | $ | — | $ | 6,783 | $ | (124 | ) | $ | 13,670 | |||||||
Tenant recovery income | — | 1,396 | 144 | 3,008 | ||||||||||||
Other property income | — | 97 | 23 | 205 | ||||||||||||
Operating expenses: | ||||||||||||||||
Property operating expenses | — | (1,189 | ) | (121 | ) | (2,705 | ) | |||||||||
Real estate taxes | — | (1,777 | ) | (3 | ) | (3,349 | ) | |||||||||
NOI (Net operating loss) from discontinued operations | — | 5,310 | (81 | ) | 10,829 | |||||||||||
Other income (expense): | ||||||||||||||||
Straight-line rental income, net | — | (76 | ) | 1 | (33 | ) | ||||||||||
Amortization of acquired above and below market lease intangibles, net | — | 50 | — | 98 | ||||||||||||
Amortization of lease inducements | — | (52 | ) | — | (117 | ) | ||||||||||
Lease termination fees | — | 5,344 | — | 5,344 | ||||||||||||
Straight-line ground lease expense | — | (134 | ) | — | (267 | ) | ||||||||||
Depreciation and amortization | — | (3,404 | ) | — | (6,860 | ) | ||||||||||
Provision for impairment of investment properties | — | (9,176 | ) | — | (9,176 | ) | ||||||||||
Gain on extinguishment of debt | — | 26,331 | — | 26,331 | ||||||||||||
Interest expense | — | (1,249 | ) | (68 | ) | (2,679 | ) | |||||||||
Other (expense) income, net | — | (16 | ) | — | 34 | |||||||||||
Total other income (expense) | — | 17,618 | (67 | ) | 12,675 | |||||||||||
Operating income (loss) from discontinued operations | $ | — | $ | 22,928 | $ | (148 | ) | $ | 23,504 | |||||||
NOI (Net operating loss) from discontinued operations | ||||||||||||||||
Consolidated | $ | — | $ | 5,310 | $ | (81 | ) | $ | 10,829 | |||||||
Pro rata share of investment property unconsolidated joint ventures (b) | — | 11 | — | 324 | ||||||||||||
Combined NOI (Net Operating Loss) from Discontinued Operations | $ | — | $ | 5,321 | $ | (81 | ) | $ | 11,153 | |||||||
(a) | Loss on lease terminations in the EBITDA reconciliation above excludes the write-off of tenant-related above and below market lease intangibles and lease inducements that are otherwise included in "Loss on lease terminations" in the condensed consolidated statements of operations. |
(b) | Amounts shown net of intercompany eliminations. |
2nd Quarter 2014 Supplemental Information | 24 | |
Retail Properties of America, Inc.
Reconciliation of Non-GAAP Financial Measures
(amounts in thousands)
Reconciliation of Pro Rata Share of Net Income to NOI from Investment Property Unconsolidated Joint Ventures
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||
Operating revenues: | ||||||||||||||||
Same store investment properties: | ||||||||||||||||
Rental income | $ | — | $ | — | $ | — | $ | — | ||||||||
Tenant recovery income | — | — | — | — | ||||||||||||
Other property income | — | — | — | — | ||||||||||||
Other investment properties (MS Inland and RioCan): | ||||||||||||||||
Rental income | 730 | 3,283 | 1,764 | 6,564 | ||||||||||||
Tenant recovery income | 260 | 1,163 | 599 | 2,222 | ||||||||||||
Other property income | 3 | 27 | 8 | 35 | ||||||||||||
Discontinued operations properties (Hampton): | ||||||||||||||||
Rental income | — | 41 | — | 335 | ||||||||||||
Tenant recovery income | — | 21 | — | 124 | ||||||||||||
Other property income | — | — | — | — | ||||||||||||
Operating expenses: | ||||||||||||||||
Same store investment properties: | ||||||||||||||||
Property operating expenses | — | — | — | — | ||||||||||||
Real estate taxes | — | — | — | — | ||||||||||||
Other investment properties (MS Inland and RioCan): | ||||||||||||||||
Property operating expenses | (115 | ) | (388 | ) | (248 | ) | (773 | ) | ||||||||
Real estate taxes | (206 | ) | (752 | ) | (468 | ) | (1,503 | ) | ||||||||
Discontinued operations properties (Hampton): | ||||||||||||||||
Property operating expenses | — | (41 | ) | — | (79 | ) | ||||||||||
Real estate taxes | — | (10 | ) | — | (56 | ) | ||||||||||
Net operating income: | ||||||||||||||||
Same store investment properties | — | — | — | — | ||||||||||||
Other investment properties (MS Inland and RioCan) | 672 | 3,333 | 1,655 | 6,545 | ||||||||||||
Discontinued operations properties (Hampton) | — | 11 | — | 324 | ||||||||||||
Total net operating income | 672 | 3,344 | 1,655 | 6,869 | ||||||||||||
Other income (expense) from continuing operations: | ||||||||||||||||
Straight-line rental income, net | 1 | 34 | 8 | 108 | ||||||||||||
Amortization of acquired above and below market lease intangibles, net | 4 | (18 | ) | 6 | (37 | ) | ||||||||||
Amortization of lease inducements | (6 | ) | (10 | ) | (16 | ) | (19 | ) | ||||||||
Lease termination fees | 1 | 14 | 2 | 34 | ||||||||||||
Depreciation and amortization | (339 | ) | (2,204 | ) | (823 | ) | (4,504 | ) | ||||||||
(Loss) gain on lease terminations | (2 | ) | (71 | ) | 34 | (181 | ) | |||||||||
General and administrative expenses | (10 | ) | (43 | ) | (18 | ) | (80 | ) | ||||||||
Interest expense, net | (252 | ) | (768 | ) | (606 | ) | (319 | ) | ||||||||
Other (expense) income, net | (1 | ) | 11 | (1 | ) | 10 | ||||||||||
Total other expense | (604 | ) | (3,055 | ) | (1,414 | ) | (4,988 | ) | ||||||||
Other expense from discontinued operations, net | — | (78 | ) | — | (436 | ) | ||||||||||
Gain on sales of investment properties | — | — | — | 977 | ||||||||||||
Net income | $ | 68 | $ | 211 | $ | 241 | $ | 2,422 | ||||||||
2nd Quarter 2014 Supplemental Information | 25 | |