RPT Realty - FORM 8-K - EX-99.1 - EXHIBIT 99.1 - November 1, 2016

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rpt20yr.jpg News Release (NYSE: RPT)
 
 
 

RAMCO-GERSHENSON PROPERTIES TRUST REPORTS
FINANCIAL AND OPERATING RESULTS FOR THE THIRD QUARTER 2016

FARMINGTON HILLS, Michigan – November 1, 2016 - Ramco-Gershenson Properties Trust (NYSE:RPT) today announced its financial and operating results for the three and nine months ended September 30, 2016.

THIRD QUARTER 2016 HIGHLIGHTS AND SUBSEQUENT TRANSACTIONS:

•
Net income attributable to common shareholders for the third quarter of $0.15 per diluted share.
•
Operating Funds from Operations (“Operating FFO”) of $0.34 per diluted share.
•
Sold two Michigan shopping centers for $40.1 million.
•
Signed 65 comparable leases totaling 352,886 square feet at comparable rent growth of 11.2%.
•
Ended the quarter with a net debt to adjusted EBITDA of 6.1X.
•
Acquired Centennial Shops in affluent Minneapolis suburb of Edina for $32.1 million on October 11, 2016.

“Based on our solid performance in the quarter and year to date we are on track to meet our stated business objectives for 2016,” said Dennis Gershenson, President and Chief Executive Officer. “Our two Michigan shopping center sales and subsequent purchase of Centennial Shops in metropolitan Minneapolis reflect our continued focus on selling lower-growth centers and redeploying that capital into high-quality shopping centers, that have significant internal growth potential and the ability to add long-term value through strategic redevelopments, in attractive first ring metropolitan sub-markets.”

FINANCIAL RESULTS:

For the three months ended September 30, 2016:
•
Net income available to common shareholders of $11.9 million, or $0.15 per diluted share, compared to $32.0 million, or $0.38 per diluted share for the same period in 2015.
•
Operating FFO of $29.7 million, or $0.34 per diluted share, compared to $31.9 million, or $0.36 per diluted share for the same period in 2015.
•
FFO of $27.8 million, or $0.32 per diluted share, compared to $32.4 million, or $0.37 per diluted share for the same period in 2015.

For the Nine months ended September 30, 2016
•
Net income available to common shareholders of $47.7 million, or $0.60 per diluted share, compared to $44.8 million, or $0.57 per diluted share for the same period in 2015.
•
Operating FFO of $90.0 million, or $1.02 per diluted share, compared to $87.7 million, or $1.00 per diluted share for the same period in 2015.
•
FFO of $89.6 million, or $1.02 per diluted share, compared to $89.4 million, or $1.02 per diluted share for the same period in 2015.

OPERATING RESULTS:
•
Consolidated portfolio leased occupancy of 94.2% and physical occupancy of 93.6%.
•
Signed 90 leases in the consolidated portfolio encompassing 464,812 square feet, including 65 leases totaling 352,886 square feet at comparable rental growth of 11.2%.





i

BALANCE SHEET METRICS (as of September 30, 2016):
•
Net debt to total market capitalization of 37.5%.
•
Net debt to adjusted EBITDA of 6.1X, interest coverage of 3.8X, and fixed charge coverage of 3.1X.
•
Weighted average debt maturity of 6.2 years.

INVESTMENT ACTIVITY:

Dispositions

The Company sold two Michigan shopping centers for $40.1 million. The shopping centers sold were:

•
Shoppes at Fairlane Meadows, Dearborn, Michigan (100% ownership), a 157,000 square foot shopping center anchored by Best Buy and Citi Trends, with ABR per square foot of $13.85.
•
Livonia Plaza, Livonia, Michigan (100% ownership), a 137,000 square foot shopping center anchored by T.J. Maxx and Kroger, with ABR per square foot of $11.11.

Dispositions of income producing properties year-to-date totaled $121.9 million.

Acquisitions

Subsequent to quarter end, the Company purchased the 85,000 square foot upscale Centennial Shops in the affluent Minneapolis sub-market of Edina, Minnesota for $32.1 million. Centennial Shops is anchored by The Container Store, West Elm and Pinstripes, each of which operates its only Minneapolis location at the shopping center. The center is 100% occupied and benefits from solid in-place tenancies, its infill location in a high income trade area and the opportunity to produce strong internal growth through mark-to-market of existing leases. Additionally, the Company believes there is opportunity for future investment and long-term value creation at the shopping center. Centennial Shops is the Company’s second shopping center in metropolitan Minneapolis.

Redevelopment

The Company commenced two redevelopment projects, including the expansion of Buttermilk Towne Center in metropolitan Cincinnati for a new 12,500 square foot national anchor tenant and the expansion of River City Marketplace for a new 6,000 square foot tenant for a total cost of $4.4 million. At September 30, 2016, the Company had 11 properties under redevelopment, expansion and/or re-anchoring with an estimated total cost of $79.4 million, which are expected to be completed in 2016 and 2017 producing a return on incremental costs of between 9.0 - 10.0%.

FINANCING ACTIVITY:

The Company entered into agreements to issue $75.0 million of senior unsecured notes in a private placement with two high-quality institutional investors. The financing proceeds, as well as proceeds from recent asset sales, will be used to pay off debt maturities through 2017, including mortgages for Crofton Centre and River City Marketplace. The notes have a 12-year term and are priced at a fixed interest rate of 3.64%. The transaction is expected to close on November 30, 2016.

At quarter-end, the Company had $339.9 million available under its $350.0 million revolving line of credit.




ii


DIVIDEND:
The Company declared a regular cash dividend of $0.22 per common share for the period of July 1, 2016 through September 30, 2016 and a Series D convertible perpetual preferred share dividend of $0.90625 per share for the same period. The dividends were paid on October 3, 2016 to shareholders of record as of September 20, 2016. The Operating FFO payout ratio was 64.7%.

2016 GUIDANCE:

The Company has narrowed its 2016 Operating FFO guidance range to $1.34 - $1.36 per share from $1.33 - $1.37.

CONFERENCE CALL/WEBCAST:
Ramco-Gershenson Properties Trust will host a live broadcast of its third quarter conference call on Wednesday, November 2, 2016, at 9:00 a.m. eastern time, to discuss its financial and operating results. The live broadcast will be available online at www.rgpt.com and www.investorcalendar.com and also by telephone at (877) 407-9205. A replay will be available shortly after the call on the aforementioned websites (for ninety days) or by telephone at (877) 660-6853, (Conference ID: 13646918), for one week.

SUPPLEMENTAL MATERIALS:
The Company’s quarterly financial and operating supplement is available on its corporate website at www.rgpt.com. If you wish to receive a copy via email, please send requests to dhendershot@rgpt.com.

ABOUT RAMCO-GERSHENSON PROPERTIES TRUST:
Ramco-Gershenson Properties Trust (NYSE:RPT) is a fully integrated, self-administered, publicly-traded real estate investment trust (REIT) based in Farmington Hills, Michigan.  The Company's business is the ownership and management of large, multi-anchor shopping centers primarily in a number of the largest metropolitan markets in the central United States. At September 30, 2016, the Company owned interests in and managed a portfolio of 66 shopping centers with approximately 14.8 million square feet of gross leasable area. At September 30, 2016, the Company's consolidated operating portfolio was 94.2% leased. For additional information about the Company please visit www.rgpt.com or follow Ramco-Gershenson on Twitter @RamcoGershenson and facebook.com/ramcogershenson/.

This press release may contain forward-looking statements that represent the Company’s expectations and projections for the future. Management of Ramco-Gershenson believes the expectations reflected in any forward-looking statements made in this press release are based on reasonable assumptions. Certain factors could occur that might cause actual results to vary, including deterioration in national economic conditions, weakening of real estate markets, decreases in the availability of credit, increases in interest rates, adverse changes in the retail industry, our continuing ability to qualify as a REIT and other factors discussed in the Company’s reports filed with the Securities and Exchange Commission.

Company Contact:
Dawn L. Hendershot, Vice President of Investor Relations
and Corporate Communications
31500 Northwestern Highway, Suite 300
Farmington Hills, MI 48334
dhendershot@rgpt.com
(248) 592-6202



iii


RAMCO-GERSHENSON PROPERTIES TRUST
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except per share amounts)
 
 
 
 
 
September 30,
2016
 
December 31,
2015
 
(unaudited)
 
 
ASSETS
 
 
 
Income producing properties, at cost:
 
 
 
Land
$
376,285

 
$
392,352

Buildings and improvements
1,729,737

 
1,792,129

Less accumulated depreciation and amortization
(342,749
)
 
(331,520
)
Income producing properties, net
1,763,273

 
1,852,961

Construction in progress and land available for development or sale
66,362

 
60,166

Real estate held for sale
—

 
453

Net real estate
1,829,635

 
1,913,580

Equity investments in unconsolidated joint ventures
3,154

 
4,325

Cash and cash equivalents
3,630

 
6,644

Restricted cash
25,948

 
8,708

Accounts receivable (net of allowance for doubtful accounts of $2,355 and $2,790 as of September 30, 2016 and December 31, 2015, respectively)
15,884

 
18,705

Acquired lease intangibles, net
72,430

 
88,819

Other assets, net
83,045

 
87,890

TOTAL ASSETS
$
2,033,726

 
$
2,128,671

 
 
 
 
LIABILITIES AND SHAREHOLDERS' EQUITY
 

 
 

Notes payable, net
$
997,494

 
$
1,083,711

Capital lease obligation
1,108

 
1,108

Accounts payable and accrued expenses
45,161

 
44,480

Acquired lease intangibles, net
59,964

 
64,193

Other liabilities
12,576

 
10,035

Distributions payable
19,628

 
18,807

TOTAL LIABILITIES
$
1,135,931

 
$
1,222,334

 
 
 
 
Commitments and Contingencies
 
 
 
 
 
 
 
Ramco-Gershenson Properties Trust ("RPT") Shareholders' Equity:
 
 
 

7.25% Series D Cumulative Convertible Perpetual Preferred Shares, $50 par
$
92,427

 
$
92,427

Common shares of beneficial interest, $0.01 par
793

 
792

Additional paid-in capital
1,157,809

 
1,156,345

Accumulated distributions in excess of net income
(367,809
)
 
(363,937
)
Accumulated other comprehensive loss
(6,528
)
 
(1,404
)
TOTAL SHAREHOLDERS' EQUITY ATTRIBUTABLE TO RPT
876,692

 
884,223

Noncontrolling interest
21,103

 
22,114

TOTAL SHAREHOLDERS' EQUITY
897,795

 
906,337

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
$
2,033,726

 
$
2,128,671







Page 1




RAMCO-GERSHENSON PROPERTIES TRUST
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
 
 
 
 
 
 
 
 
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2016
 
2015
 
Inc (Dec)
 
2016
 
2015
 
Inc (Dec)
REVENUE
 
 
 
 
 
 
 
 
 
 
 
Minimum rent
$
47,591

 
$
47,324

 
$
267

 
$
144,540

 
$
135,002

 
$
9,538

Percentage rent
71

 
25

 
46

 
511

 
396

 
115

Recovery income from tenants
15,289

 
15,238

 
51

 
48,067

 
43,522

 
4,545

Other property income
1,055

 
1,161

 
(106
)
 
2,927

 
2,870

 
57

Management and other fee income
73

 
312

 
(239
)
 
429

 
1,422

 
(993
)
TOTAL REVENUE
64,079

 
64,060

 
19

 
196,474

 
183,212

 
13,262

 
 
 
 
 
 
 
 
 
 
 
 
EXPENSES
 

 
 

 
 
 
 
 
 
 
 
Real estate taxes
10,269

 
9,670

 
599

 
31,710

 
27,791

 
3,919

Recoverable operating expense
6,475

 
7,234

 
(759
)
 
21,227

 
21,358

 
(131
)
Other non-recoverable operating expense
603

 
1,101

 
(498
)
 
2,560

 
2,808

 
(248
)
Depreciation and amortization
23,245

 
22,914

 
331

 
69,806

 
64,397

 
5,409

Acquisition costs
55

 
267

 
(212
)
 
118

 
574

 
(456
)
General and administrative expense
5,787

 
4,020

 
1,767

 
17,075

 
14,368

 
2,707

Provision for impairment
977

 
—

 
977

 
977

 
2,521

 
(1,544
)
TOTAL EXPENSES
47,411

 
45,206

 
2,205

 
143,473

 
133,817

 
9,656

 
 
 
 
 
 
 
 
 
 
 
 
OPERATING INCOME
16,668

 
18,854

 
(2,186
)
 
53,001

 
49,395

 
3,606

 
 
 
 
 
 
 
 
 
 
 
 
OTHER INCOME AND EXPENSES
 

 
 

 
 
 
 
 
 
 
 
Other expense, net
(158
)
 
(171
)
 
13

 
(307
)
 
(362
)
 
55

Gain on sale of real estate
9,359

 
4,536

 
4,823

 
35,684

 
8,005

 
27,679

Earnings from unconsolidated joint ventures
119

 
13,977

 
(13,858
)
 
337

 
16,972

 
(16,635
)
Interest expense
(10,795
)
 
(10,091
)
 
(704
)
 
(32,719
)
 
(30,118
)
 
(2,601
)
Amortization of deferred financing fees
(345
)
 
(389
)
 
44

 
(1,099
)
 
(1,053
)
 
(46
)
Other gain on unconsolidated joint ventures
—

 
7,892

 
(7,892
)
 
215

 
7,892

 
(7,677
)
(Loss) gain on extinguishment of debt
(847
)
 
27

 
(874
)
 
(847
)
 
1,414

 
(2,261
)
INCOME BEFORE TAX
14,001

 
34,635

 
(20,634
)
 
54,265

 
52,145

 
2,120

Income tax provision
(133
)
 
(29
)
 
(104
)
 
(234
)
 
(306
)
 
72

NET INCOME
13,868

 
34,606

 
(20,738
)
 
54,031

 
51,839

 
2,192

Net income attributable to noncontrolling partner interest
(326
)
 
(940
)
 
614

 
(1,282
)
 
(1,416
)
 
134

NET INCOME ATTRIBUTABLE TO RPT
13,542

 
33,666

 
(20,124
)
 
52,749

 
50,423

 
2,326

Preferred share dividends
(1,675
)
 
(1,675
)
 
—

 
(5,026
)
 
(5,162
)
 
136

Preferred share conversion costs
—

 
—

 
—

 
—

 
(500
)
 
500

NET INCOME AVAILABLE TO COMMON SHAREHOLDERS
$
11,867

 
$
31,991

 
$
(20,124
)
 
$
47,723

 
$
44,761

 
$
2,962

 
 
 
 
 
 
 
 
 
 
 
 
EARNINGS PER COMMON SHARE
 

 
 

 
 
 
 
 
 
 
 
Basic
$
0.15

 
$
0.39

 
$
(0.24
)
 
$
0.60

 
$
0.57

 
$
0.03

Diluted
$
0.15

 
$
0.38

 
$
(0.23
)
 
$
0.60

 
$
0.57

 
$
0.03

 
 
 
 
 
 
 
 
 
 
 
 
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
 

 
 

 
 
 
 
 
 
 
 
Basic
79,249

 
79,162

 
87

 
79,226

 
78,742

 
484

Diluted
79,437

 
85,881

 
(6,444
)
 
79,404

 
78,939

 
465


Page 2




RAMCO-GERSHENSON PROPERTIES TRUST
FUNDS FROM OPERATIONS
(In thousands, except per share data)
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
 
2016
 
2015
 
2016
 
2015
 
 
 
 
 
 
 
 
 
Net income
 
$
13,868

 
$
34,606

 
$
54,031

 
$
51,839

Net income attributable to noncontrolling partner interest
 
(326
)
 
(940
)
 
(1,282
)
 
(1,416
)
Preferred share dividends
 
(1,675
)
 
(1,675
)
 
(5,026
)
 
(5,162
)
Preferred share conversion costs
 
—

 
—

 
—

 
(500
)
Net income available to common shareholders
 
11,867

 
31,991

 
47,723

 
44,761

Adjustments:
 
 
 
 
 
 
 
 
Rental property depreciation and amortization expense
 
23,201

 
22,878

 
69,680

 
64,285

Pro-rata share of real estate depreciation from unconsolidated joint ventures
 
74

 
296

 
237

 
1,694

Gain on sale of depreciable real estate
 
(9,359
)
 
(3,871
)
 
(34,108
)
 
(4,169
)
Gain on sale of joint venture depreciable real estate (1)
 
—

 
(13,645
)
 
(26
)
 
(15,884
)
Other gain on unconsolidated joint ventures (2)
 
—

 
(7,892
)
 
(215
)
 
(7,892
)
FFO available to common shareholders
 
25,783

 
29,757

 
83,291

 
82,795

Noncontrolling interest in Operating Partnership (3)
 
326

 
940

 
1,282

 
1,416

Preferred share dividends (assuming conversion)
 
1,675

 
1,675

 
5,026

 
5,162

FFO available to common shareholders and dilutive securities
 
$
27,784

 
$
32,372

 
$
89,599

 
$
89,373

 
 
 
 
 
 
 
 
 
(Gain) on sale of land
 
—

 
(666
)
 
(1,576
)
 
(3,837
)
Provision for impairment on land available for development or sale
 
977

 
—

 
977

 
2,521

Loss (gain) on extinguishment of debt
 
847

 
(27
)
 
847

 
(1,414
)
  Acquisition costs
 
55

 
267

 
118

 
574

Preferred share conversion costs
 
—

 
—

 
—

 
500

Operating FFO available to common shareholders and dilutive securities
 
$
29,663

 
$
31,946

 
$
89,965

 
$
87,717

 
 
 
 
 
 
 
 
 
Weighted average common shares
 
79,249

 
79,162

 
79,226

 
78,742

Shares issuable upon conversion of Operating Partnership Units (3)
 
1,917

 
2,226

 
1,951

 
2,240

Dilutive effect of restricted stock
 
188

 
184

 
178

 
197

Shares issuable upon conversion of preferred shares (4)
 
6,592

 
6,535

 
6,592

 
6,719

Weighted average equivalent shares outstanding, diluted
 
87,946

 
88,107

 
87,947

 
87,898

 
 
 
 
 
 
 
 
 
FFO available to common shareholders and dilutive securities per share, diluted
 
$
0.32

 
$
0.37

 
$
1.02

 
$
1.02

Operating FFO available to common shareholders and dilutive securities per share, diluted
 
$
0.34

 
$
0.36

 
$
1.02

 
$
1.00

 
 
 
 
 
 
 
 
 
Dividend per common share
 
$
0.22

 
$
0.21

 
$
0.64

 
$
0.61

Payout ratio - Operating FFO
 
64.7
%
 
58.3
%
 
62.7
%
 
61.0
%
 
 
 
 
 
 
 
 
 
(1)
Amount included in earnings from unconsolidated joint ventures.
(2) 
The gain represents the difference between the carrying value and the fair value of our previously held equity investment in the joint properties triggered by disposals of joint venture properties.
(3) 
The total non-controlling interest reflects OP units convertible 1:1 into common shares.
(4) 
Series D convertible preferred shares are paid annual dividends of $6.7 million and are currently convertible into approximately 6.6 million shares of common stock. They are dilutive only when earnings or FFO exceed approximately $0.26 per diluted share per quarter, which was the case for FFO for the three and nine months ended September 30, 2016 and 2015. The conversion ratio is subject to adjustment based upon a number of factors, and such adjustment could affect the dilutive impact of the Series D convertible preferred shares on FFO and earnings per share in future periods.
We consider funds from operations, also known as “FFO”, to be an appropriate supplemental measure of the financial performance of an equity REIT.  Under the NAREIT definition, FFO represents net income (computed in accordance with generally accepted accounting principles), excluding gains (or losses) from sales of depreciable property and excluding impairment provisions on depreciable real estate or on investments in non-consolidated investees that are driven by measurable decreases in the fair value of depreciable real estate held by the investee, plus depreciation and amortization, (excluding amortization of financing costs). Adjustments for unconsolidated partnerships and joint ventures are calculated to reflect funds from operations on the same basis. Also, we consider “Operating FFO” a meaningful, additional measure of financial performance because it excludes acquisition costs and periodic items such as gains (or losses) from sales of land and impairment provisions on land available for development or sale, bargain purchase gains, and gains or losses on extinguishment of debt that are not adjusted under the current NAREIT definition of FFO.  We provide a reconciliation of FFO to Operating FFO. FFO and Operating FFO should not be considered alternatives to GAAP net income available to common shareholders or as alternatives to cash flow as measures of liquidity. While we consider FFO and Operating FFO useful measures for reviewing our comparative operating and financial performance between periods or to compare our performance to different REITs, our computations of FFO and Operating FFO may differ from the computations utilized by other real estate companies, and therefore, may not be comparable.

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