Attached files
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| 8-K - 8-K - RPT Realty | a2q178-kearnings.htm |
Exhibit 99.1
RAMCO-GERSHENSON PROPERTIES TRUST REPORTS
FINANCIAL AND OPERATING RESULTS FOR THE SECOND QUARTER 2017
FARMINGTON HILLS, Michigan – August 1, 2017 - Ramco-Gershenson Properties Trust (NYSE:RPT) today announced its financial and operating results for the three and six months ended June 30, 2017.
SECOND QUARTER FINANCIAL AND OPERATING RESULTS:
• | Net income attributable to common shareholders of $0.05 per diluted share, compared to $0.32 per diluted share for the same period in 2016, reflecting lower gains on land sales during the second quarter of 2017. |
• | Operating Funds from Operations (“Operating FFO”) of $0.35 per diluted share, compared to $0.35 per diluted share for the same period in 2016. |
• | Generated same property NOI growth with redevelopment of 1.1% for the three months ended June 30, 2017, positively impacted by strong minimum rent growth of 2.9% offset by lower comparable recovery income and credit adjustments recognized in the same period in 2016. |
• | Signed 38 comparable leases encompassing 234,503 square feet at a positive leasing spread of 7.1% with an average base rent of $16.53 per square feet. |
• | Posted portfolio leased occupancy of 93.7%, compared to 95.0% for the same period in 2016. |
“Our second quarter results reflect anticipated short-term moderation in our operating performance. We are maintaining same-property NOI and operating FFO guidance for the year,” said Dennis Gershenson, President and Chief Executive Officer. “Subsequent to quarter-end we closed, or expect to close within the next 30 days, an additional $75 million in planned shopping center dispositions, bringing our year-to-date sales to $104 million and reducing our rental exposure to the state of Michigan to less than 22%, in line with our stated goal.”
FINANCIAL RESULTS:
For the three months ended June 30, 2017:
• | Net income available to common shareholders of $4.4 million, or $0.05 per diluted share, compared to $25.7 million, which included a $19.8 million gain on land sales, or $0.32 per diluted share for the same period in 2016. |
• | Funds from Operations (“FFO”) of $30.4 million, or $0.35 per diluted share, compared to $32.1 million, or $0.36 per diluted share for the same period in 2016. |
• | Operating FFO of $31.0 million, or $0.35 per diluted share, compared to $30.8 million or $0.35 per diluted share for the same period in 2016. |
For the six months ended June 30, 2017:
• | Net income available to common shareholders of $15.9 million, or $0.20 per diluted share, compared to $35.9 million, or $0.45 per diluted share for the same period in 2016. |
• | Funds from Operations (“FFO”) of $61.2 million, or $0.69 per diluted share, compared to $61.8 million, or $0.70 per diluted share for the same period in 2016. |
• | Operating FFO of $61.6 million, or $0.70 per diluted share, compared to $60.4 million or $0.69 per diluted share for the same period in 2016. |
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BALANCE SHEET METRICS:
• | Net debt to EBITDA of 7.0X, interest coverage of 3.7X, and fixed charge coverage of 3.0X. Including funds held in escrow of $26.1 million for two asset sales, net debt to EBITDA would have been 6.9X. |
• | Weighted average cost and term of debt of 3.84% and 5.6 years, respectively. |
INVESTMENT ACTIVITY:
Dispositions
Subsequent to quarter-end, the Company sold or placed under contract four Michigan shopping centers for $69.3 million. The Company also sold a Walgreen’s Data Center in Mount Prospect, Illinois for $6.2 million.
The Michigan Properties sold, or placed under contract, are:
Clinton Valley, Sterling Heights, 205,000 square feet anchored by Hobby Lobby and Office Depot
Gaines Marketplace, Gaines Township, 60,000 square feet anchored by Staples
New Towne Plaza, Canton, 193,000 square feet anchored by Kohl’s and JoAnn
Roseville Plaza, Roseville, 77,000 square feet anchored by Marshalls and Dollar Tree
Year-to-date the Company has sold, or placed under contract to sell, seven non-core properties for a total of $104.0 million, including six Michigan shopping centers for a total of $97.8 million.
Redevelopment
At June 30, 2017, the Company's active redevelopment pipeline consisted of 9 projects with an estimated total cost of $86.5 million, which are expected to stabilize over the next two years at a weighted average return on cost of between 9% - 10%.
The Company’s redevelopment pipeline includes the following strategic new projects:
• | Woodbury Lakes - Woodbury, Minnesota - The Company finalized plans for the expansion and relocation of H&M to a strategic 20,000 square foot store and the addition of 44,000 square foot Alamo Drafthouse Cinema. Construction on the initial phase of this multi-year redevelopment will begin in August of 2017. The project will also feature a newly designed and remerchandised Main Street. Woodbury Lakes is the premier regional retail destination in the eastern Minneapolis/St. Paul area. The cost of the initial phase of the redevelopment is estimated at $22.8 million. |
• | Front Range Village - Fort Collins (Denver MSA), Colorado - The Company initiated its Phase I site densification project, which will include 15,000 square feet of premium service and restaurant space, numerous placemaking improvements, and a new TruFit fitness center in 28,000 square feet. Phase I is expected to cost $11.4 million with a projected stabilization in the second quarter of 2018. |
DIVIDEND:
In the second quarter, the Company declared a regular cash dividend of $0.22 per common share for the period April 1, 2017 through June 30, 2017 and a Series D convertible perpetual preferred share dividend of $0.90625 per share for the same period. The dividends were paid on July 3, 2017 to shareholders of record as of June 20, 2017.
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GUIDANCE:
The Company has affirmed its 2017 Operating FFO guidance of $1.34 to $1.38 per diluted share and its same-property with redevelopment NOI growth guidance of 2.5% to 3.5%.
CONFERENCE CALL/WEBCAST:
Ramco-Gershenson Properties Trust will host a live broadcast of its second quarter conference call on Wednesday, August 2, 2017 at 1:00 p.m. eastern time, to discuss its financial and operating results as well as its 2017 guidance. The live broadcast will be available on-line at www.rgpt.com and www.investorcalendar.com and also by telephone at (877) 407-9205, no pass code needed. A replay will be available shortly after the call on the aforementioned websites (for ninety days) or by telephone at (877) 481-4010, (Conference ID: 15997) through August 9, 2017.
SUPPLEMENTAL MATERIALS:
The Company’s quarterly financial and operating supplement is available on its corporate web site at www.rgpt.com. If you wish to receive a copy via email, please send requests to dhendershot@rgpt.com.
ABOUT RAMCO-GERSHENSON PROPERTIES TRUST:
Ramco-Gershenson Properties Trust (NYSE:RPT) is a premier, national publicly-traded shopping center real estate investment trust (REIT) based in Farmington Hills, Michigan. The Company's primary business is the ownership and management of regional dominant and urban-oriented, infill shopping centers in key growth markets in the 40 largest metropolitan markets in the United States. At June 30, 2017, the Company owned interests in and managed a portfolio of 64 shopping centers, one property held for sale and two joint venture properties. At June 30, 2017, the Company's consolidated portfolio was 93.7% leased. Ramco-Gershenson is a fully-integrated qualified REIT that is self-administered and self-managed. For additional information about the Company please visit www.rgpt.com or follow Ramco-Gershenson on Twitter @RamcoGershenson and facebook.com/ramcogershenson/.
This press release may contain forward-looking statements that represent the Company’s expectations and projections for the future. Management of Ramco-Gershenson believes the expectations reflected in any forward-looking statements made in this press release are based on reasonable assumptions. Certain factors could occur that might cause actual results to vary, including deterioration in national economic conditions, weakening of real estate markets, decreases in the availability of credit, increases in interest rates, adverse changes in the retail industry, our continuing ability to qualify as a REIT and other factors discussed in the Company’s reports filed with the Securities and Exchange Commission.
Company Contact:
Dawn L. Hendershot, Senior Vice President Investor Relations and Public Affairs
31500 Northwestern Highway, Suite 300
Farmington Hills, MI 48334
dhendershot@rgpt.com
(248) 592-6202
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RAMCO-GERSHENSON PROPERTIES TRUST | |||||||
CONSOLIDATED BALANCE SHEETS | |||||||
(In thousands, except per share amounts) | |||||||
June 30, 2017 | December 31, 2016 | ||||||
ASSETS | |||||||
Income producing properties, at cost: | |||||||
Land | $ | 415,694 | $ | 374,889 | |||
Buildings and improvements | 1,853,221 | 1,757,781 | |||||
Less accumulated depreciation and amortization | (368,292 | ) | (345,204 | ) | |||
Income producing properties, net | 1,900,623 | 1,787,466 | |||||
Construction in progress and land available for development or sale | 68,853 | 61,224 | |||||
Real estate held for sale | 13,837 | 8,776 | |||||
Net real estate | 1,983,313 | 1,857,466 | |||||
Equity investments in unconsolidated joint ventures | 2,798 | 3,150 | |||||
Cash and cash equivalents | 4,798 | 3,582 | |||||
Restricted cash and escrows | 31,819 | 11,144 | |||||
Accounts receivable, net | 25,842 | 24,016 | |||||
Acquired lease intangibles, net | 76,328 | 72,424 | |||||
Other assets, net | 93,645 | 89,716 | |||||
TOTAL ASSETS | $ | 2,218,543 | $ | 2,061,498 | |||
LIABILITIES AND SHAREHOLDERS' EQUITY | |||||||
Notes payable, net | 1,197,414 | 1,021,223 | |||||
Capital lease obligation | 1,066 | 1,066 | |||||
Accounts payable and accrued expenses | 53,982 | 57,357 | |||||
Acquired lease intangibles, net | 67,237 | 63,734 | |||||
Other liabilities | 6,294 | 6,800 | |||||
Distributions payable | 19,654 | 19,627 | |||||
TOTAL LIABILITIES | 1,345,647 | 1,169,807 | |||||
Commitments and Contingencies | |||||||
Ramco-Gershenson Properties Trust ("RPT") Shareholders' Equity: | |||||||
Preferred shares, $0.01 par, 2,000 shares authorized: 7.25% Series D Cumulative Convertible Perpetual Preferred Shares, (stated at liquidation preference $50 per share), 1,849 shares issued and outstanding as of June 30, 2017 and December 31, 2016 | $ | 92,427 | $ | 92,427 | |||
Common shares of beneficial interest, $0.01 par, 120,000 shares authorized, 79,345 and 79,272 shares issued and outstanding as of June 30, 2017 and December 31, 2016, respectively | 793 | 793 | |||||
Additional paid-in capital | 1,159,197 | 1,158,430 | |||||
Accumulated distributions in excess of net income | (401,179 | ) | (381,912 | ) | |||
Accumulated other comprehensive income | 1,074 | 985 | |||||
TOTAL SHAREHOLDERS' EQUITY ATTRIBUTABLE TO RPT | 852,312 | 870,723 | |||||
Noncontrolling interest | 20,584 | 20,968 | |||||
TOTAL SHAREHOLDERS' EQUITY | 872,896 | 891,691 | |||||
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $ | 2,218,543 | $ | 2,061,498 | |||
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RAMCO-GERSHENSON PROPERTIES TRUST | ||||||||||||||||
CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||||||||||
(In thousands, except per share amounts) | ||||||||||||||||
Three Months | Six Months | |||||||||||||||
Ended June 30, | Ended June 30, | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
REVENUE | ||||||||||||||||
Minimum rent | $ | 50,797 | $ | 48,554 | $ | 100,234 | $ | 96,950 | ||||||||
Percentage rent | 225 | 138 | 463 | 440 | ||||||||||||
Recovery income from tenants | 14,841 | 16,032 | 31,732 | 32,778 | ||||||||||||
Other property income | 1,126 | 914 | 2,232 | 1,872 | ||||||||||||
Management and other fee income | 73 | 245 | 226 | 355 | ||||||||||||
TOTAL REVENUE | 67,062 | 65,883 | 134,887 | 132,395 | ||||||||||||
EXPENSES | ||||||||||||||||
Real estate tax expense | 10,730 | 11,132 | 21,723 | 21,441 | ||||||||||||
Recoverable operating expense | 6,431 | 6,672 | 14,039 | 14,751 | ||||||||||||
Non-recoverable operating expense | 1,242 | 564 | 2,390 | 1,957 | ||||||||||||
Depreciation and amortization | 23,335 | 22,714 | 46,152 | 46,561 | ||||||||||||
Acquisition costs | — | 4 | — | 63 | ||||||||||||
General and administrative expense | 6,372 | 5,683 | 12,823 | 11,288 | ||||||||||||
Provision for impairment | 820 | — | 6,537 | — | ||||||||||||
TOTAL EXPENSES | 48,930 | 46,769 | 103,664 | 96,061 | ||||||||||||
OPERATING INCOME | 18,132 | 19,114 | 31,223 | 36,334 | ||||||||||||
OTHER INCOME AND EXPENSES | ||||||||||||||||
Other expense, net | (424 | ) | 198 | (735 | ) | (150 | ) | |||||||||
Gain on sale of real estate | — | 19,799 | 11,375 | 26,324 | ||||||||||||
Earnings from unconsolidated joint ventures | 55 | 109 | 141 | 218 | ||||||||||||
Interest expense | (11,486 | ) | (11,376 | ) | (22,285 | ) | (22,678 | ) | ||||||||
Other gain on unconsolidated joint ventures | — | 215 | — | 215 | ||||||||||||
INCOME BEFORE TAX | 6,277 | 28,059 | 19,719 | 40,263 | ||||||||||||
Income tax provision | (25 | ) | (39 | ) | (53 | ) | (101 | ) | ||||||||
NET INCOME | 6,252 | 28,020 | 19,666 | 40,162 | ||||||||||||
Net income attributable to noncontrolling partner interest | (147 | ) | (659 | ) | (462 | ) | (956 | ) | ||||||||
NET INCOME ATTRIBUTABLE TO RPT | 6,105 | 27,361 | 19,204 | 39,206 | ||||||||||||
Preferred share dividends | (1,675 | ) | (1,675 | ) | (3,350 | ) | (3,350 | ) | ||||||||
NET INCOME AVAILABLE TO COMMON SHAREHOLDERS | $ | 4,430 | $ | 25,686 | $ | 15,854 | $ | 35,856 | ||||||||
EARNINGS PER COMMON SHARE | ||||||||||||||||
Basic | $ | 0.05 | $ | 0.32 | $ | 0.20 | $ | 0.45 | ||||||||
Diluted | $ | 0.05 | $ | 0.32 | $ | 0.20 | $ | 0.45 | ||||||||
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING | ||||||||||||||||
Basic | 79,344 | 79,233 | 79,322 | 79,214 | ||||||||||||
Diluted | 79,529 | 86,027 | 79,525 | 79,413 | ||||||||||||
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RAMCO-GERSHENSON PROPERTIES TRUST | |||||||||||||||
FUNDS FROM OPERATIONS | |||||||||||||||
(In thousands, except per share data) | |||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Net income | $ | 6,252 | $ | 28,020 | $ | 19,666 | $ | 40,162 | |||||||
Net income attributable to noncontrolling partner interest | (147 | ) | (659 | ) | (462 | ) | (956 | ) | |||||||
Preferred share dividends | (1,675 | ) | (1,675 | ) | (3,350 | ) | (3,350 | ) | |||||||
Net income available to common shareholders | 4,430 | 25,686 | 15,854 | 35,856 | |||||||||||
Adjustments: | |||||||||||||||
Rental property depreciation and amortization expense | 23,275 | 22,671 | 46,033 | 46,478 | |||||||||||
Pro-rata share of real estate depreciation from unconsolidated joint ventures | 79 | 81 | 152 | 163 | |||||||||||
Gain on sale of depreciable real estate | — | (18,473 | ) | (11,190 | ) | (24,747 | ) | ||||||||
Gain on sale of joint venture depreciable real estate (1) | — | (26 | ) | — | (26 | ) | |||||||||
Provision for impairment on income-producing properties | 820 | — | 6,537 | — | |||||||||||
Other gain on unconsolidated joint ventures (2) | — | (215 | ) | — | (215 | ) | |||||||||
FFO available to common shareholders | 28,604 | 29,724 | 57,386 | 57,509 | |||||||||||
Noncontrolling interest in Operating Partnership (1) | 147 | 659 | 462 | 956 | |||||||||||
Preferred share dividends (assuming conversion) (2) | 1,675 | 1,675 | 3,350 | 3,350 | |||||||||||
FFO available to common shareholders and dilutive securities | $ | 30,426 | $ | 32,058 | $ | 61,198 | $ | 61,815 | |||||||
Gain on sale of land | — | (1,326 | ) | (185 | ) | (1,577 | ) | ||||||||
Severence expense | 554 | 80 | 567 | 80 | |||||||||||
Acquisition costs | — | 4 | — | 63 | |||||||||||
OPERATING FFO available to common shareholders and dilutive securities | $ | 30,980 | $ | 30,816 | $ | 61,580 | $ | 60,381 | |||||||
Weighted average common shares | 79,344 | 79,233 | 79,322 | 79,214 | |||||||||||
Shares issuable upon conversion of Operating Partnership Units (1) | 1,917 | 1,936 | 1,917 | 1,969 | |||||||||||
Dilutive effect of restricted stock | 185 | 206 | 203 | 199 | |||||||||||
Shares issuable upon conversion of preferred shares (2) | 6,685 | 6,588 | 6,685 | 6,588 | |||||||||||
Weighted average equivalent shares outstanding, diluted | 88,131 | 87,963 | 88,127 | 87,970 | |||||||||||
FFO available to common shareholders and dilutive securities per share, diluted | $ | 0.35 | $ | 0.36 | $ | 0.69 | $ | 0.70 | |||||||
Operating FFO available to common shareholders and dilutive securities per share, diluted | $ | 0.35 | $ | 0.35 | $ | 0.70 | $ | 0.69 | |||||||
Dividend per common share | $ | 0.22 | $ | 0.21 | $ | 0.44 | $ | 0.42 | |||||||
Payout ratio - Operating FFO | 62.9 | % | 60.0 | % | 62.9 | % | 60.9 | % | |||||||
(1) | The total noncontrolling interest reflects OP units convertible 1:1 into common shares. |
(2) | Series D convertible preferred shares are paid annual dividends of $6.7 million and are currently convertible into approximately 6.7 million shares of common stock. They are dilutive only when earnings or FFO exceed approximately $0.25 per diluted share per quarter and $1.00 per diluted share per year. The conversion ratio is subject to adjustment based upon a number of factors, and such adjustment could affect the dilutive impact of the Series D convertible preferred shares on FFO and earning per share in future periods. |
Management considers funds from operations, also known as “FFO”, to be an appropriate supplemental measure of the financial performance of an equity REIT. Under the NAREIT definition, FFO represents net income (computed in accordance with generally accepted accounting principles), excluding gains (or losses) from sales of depreciable property and excluding impairment provisions on depreciable real estate or on investments in non-consolidated investees that are driven by measurable decreases in the fair value of depreciable real estate held by the investee, plus depreciation and amortization, (excluding amortization of financing costs). Adjustments for unconsolidated partnerships and joint ventures are calculated to reflect funds from operations on the same basis. In addition to FFO available to common shareholders, we include Operating FFO available to common shareholders as an additional measure of financial and operating performance. Operating FFO excludes acquisition costs and periodic items such as impairment provisions on land available for development or sale, bargain purchase gains, and gains or losses on extinguishment of debt that are not adjusted under the current NAREIT definition of FFO. We provide a reconciliation of FFO to Operating FFO. FFO and Operating FFO should not be considered alternatives to GAAP net income available to common shareholders or as alternatives to cash flow as measures of liquidity. While we consider FFO available to common shareholders and Operating FFO available to common shareholders useful measures for reviewing our comparative operating and financial performance between periods or to compare our performance to different REITs, our computations of FFO and Operating FFO may differ from the computations utilized by other real estate companies, and therefore, may not be comparable.
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RAMCO-GERSHENSON PROPERTIES TRUST
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(amounts in thousands)
Reconciliation of net income available to common shareholders to Same Property NOI | |||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Net income available to common shareholders | $ | 4,430 | $ | 25,686 | $ | 15,854 | $ | 35,856 | |||||||
Preferred share dividends | 1,675 | 1,675 | 3,350 | 3,350 | |||||||||||
Net income attributable to noncontrolling partner interest | 147 | 659 | 462 | 956 | |||||||||||
Income tax provision | 25 | 39 | 53 | 101 | |||||||||||
Interest expense | 11,486 | 11,376 | 22,285 | 22,678 | |||||||||||
Earnings from unconsolidated joint ventures | (55 | ) | (109 | ) | (141 | ) | (218 | ) | |||||||
Gain on sale of real estate | — | (19,799 | ) | (11,375 | ) | (26,324 | ) | ||||||||
Gain on remeasurment of unconsolidated joint venture | — | (215 | ) | — | (215 | ) | |||||||||
Other expense, net | 424 | (198 | ) | 735 | 150 | ||||||||||
Management and other fee income | (73 | ) | (245 | ) | (226 | ) | (355 | ) | |||||||
Depreciation and amortization | 23,335 | 22,714 | 46,152 | 46,561 | |||||||||||
Acquisition costs | — | 4 | — | 63 | |||||||||||
General and administrative expenses | 6,372 | 5,683 | 12,823 | 11,288 | |||||||||||
Provision for impairment | 820 | — | 6,537 | — | |||||||||||
Amortization of lease inducements | 44 | 112 | 88 | 206 | |||||||||||
Amortization of acquired above and below market lease intangibles, net | (1,149 | ) | (822 | ) | (2,108 | ) | (1,557 | ) | |||||||
Lease termination fees | — | — | (33 | ) | (68 | ) | |||||||||
Straight-line ground rent expense | 70 | — | 141 | — | |||||||||||
Amortization of acquired ground lease intangibles | 6 | — | 12 | — | |||||||||||
Straight-line rental income | (378 | ) | (331 | ) | (1,188 | ) | (810 | ) | |||||||
NOI | 47,179 | 46,229 | 93,421 | 91,662 | |||||||||||
NOI from Other Investments | (3,769 | ) | (3,310 | ) | (6,301 | ) | (6,745 | ) | |||||||
Same Property NOI with Redevelopment | 43,410 | 42,919 | 87,120 | 84,917 | |||||||||||
NOI from Redevelopment (1) | (6,107 | ) | (5,186 | ) | (11,995 | ) | (10,528 | ) | |||||||
Same Property NOI without Redevelopment | $ | 37,303 | $ | 37,733 | $ | 75,125 | $ | 74,389 | |||||||
(1) The NOI from Redevelopment adjustments represent 100% of the NOI related to Deerfield Towne Center, Hunter’s Square, Woodbury Lakes and West Oaks, and a portion of the NOI related to specific GLA at Spring Meadows, The Shoppes at Fox River II, The Shops on Lane Avenue, Mission Bay, River City Marketplace and Town & Country for the periods presented. Because of the redevelopment activity, the center or specific space is not considered comparable for the periods presented and adjusted out of Same Property NOI with Redevelopment in arriving at Same Property NOI without Redevelopment. | |||||||||||||||
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RAMCO-GERSHENSON PROPERTIES TRUST
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(amounts in thousands)
Three Months Ended June 30, | |||||||
2017 | 2016 | ||||||
Reconciliation of net income to proforma adjusted EBITDA | |||||||
Net income | $ | 6,252 | $ | 28,020 | |||
Gain on sale of real estate | — | (19,799 | ) | ||||
Depreciation and amortization | 23,335 | 22,714 | |||||
Provision for impairment | 820 | — | |||||
Severance expense | 554 | 80 | |||||
(Gain) on sale of joint venture real estate | — | (26 | ) | ||||
Gain on remeasurement of unconsolidated joint ventures | — | (215 | ) | ||||
Interest expense | 11,486 | 11,376 | |||||
Income tax provision | 25 | 39 | |||||
Acquisition costs | — | 4 | |||||
Adjusted EBITDA | 42,472 | 42,193 | |||||
Proforma adjustments (1) | — | (1,461 | ) | ||||
Proforma adjusted EBITDA | $ | 42,472 | $ | 40,732 | |||
Annualized proforma adjusted EBITDA | $ | 169,888 | $ | 162,928 | |||
Reconciliation of Notes Payable, net to Net Debt | |||||||
Notes payable, net | $ | 1,197,414 | $ | 1,026,418 | |||
Unamortized premium | (4,537 | ) | (6,025 | ) | |||
Deferred financing costs, net | 3,379 | 3,777 | |||||
Notional debt | 1,196,256 | 1,024,170 | |||||
Capital lease obligation | 1,066 | 1,108 | |||||
Cash and cash equivalents | (4,798 | ) | (4,369 | ) | |||
Net debt | $ | 1,192,524 | $ | 1,020,909 | |||
Reconciliation of interest expense to total fixed charges | |||||||
Interest expense | $ | 11,486 | $ | 11,376 | |||
Preferred share dividends | 1,675 | 1,675 | |||||
Scheduled mortgage principal payments | 782 | 915 | |||||
Total fixed charges | $ | 13,943 | $ | 13,966 | |||
Net debt to annualized proforma adjusted EBITDA(2) | 7.0X | 6.3X | |||||
Interest coverage ratio (Adjusted EBITDA / interest expense) | 3.7X | 3.7X | |||||
Fixed charge coverage ratio (Adjusted EBITDA / fixed charges) | 3.0X | 3.0X | |||||
(1) 2Q16 excludes EBITDA of $1.0 million from dispositions and approximately $0.5 million of insurance settlement proceeds and miscellaneous income. The proforma adjustments treat the activity as if they occurred at the start of each quarter. | |||||||
(2) 2Q17 does not include $26.1 million of disposition proceeds deposited in a 1031 escrow account at June 30, 2017. The consolidated net debt to annualized proforma adjusted EBITDA would have been 6.9X after adjusting for the $26.1 million. | |||||||
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Ramco-Gershenson Properties Trust
Non-GAAP Financial Definitions
June 30, 2017
Certain of our key performance indicators are considered non-GAAP financial measures. Management uses these measures along with our GAAP financial statements in order to evaluate our operations results. We believe these additional measures provide users of our financial information additional comparable indicators of our industry, as well as our performance.
Funds From Operations (FFO) Available to Common Shareholders
As defined by the National Association of Real Estate Investment Trusts (NAREIT), Funds From Operations (FFO) represents net income computed in accordance with generally accepted accounting principles, excluding gains (or losses) from sales of depreciable property and impairment provisions on depreciable real estate or on investments in non-consolidated investees that are driven by measurable decreases in the fair value of depreciable real estate held by the investee, plus depreciation and amortization, (excluding amortization of financing costs). Adjustments for unconsolidated partnerships and joint ventures are calculated to reflect funds from operations on the same basis. We have adopted the NAREIT definition in our computation of FFO available to common shareholders.
Operating FFO Available to Common Shareholders
In addition to FFO available to common shareholders, we include Operating FFO available to common shareholders as an additional measure of our financial and operating performance. Operating FFO excludes acquisition costs and periodic items such as gains (or losses) from sales of land and impairment provisions on land available for development or sale, bargain purchase gains, severance expense, accelerated amortization of debt premiums and gains or losses on extinguishment of debt that are not adjusted under the current NAREIT definition of FFO. We provide a reconciliation of FFO to Operating FFO. FFO and Operating FFO should not be considered alternatives to GAAP net income available to common shareholders or as alternatives to cash flow as measures of liquidity.
While we consider FFO available to common shareholders and Operating FFO available to common shareholders useful measures for reviewing our comparative operating and financial performance between periods or to compare our performance to different REITs, our computations of FFO and Operating FFO may differ from the computations utilized by other real estate companies, and therefore, may not be comparable. We recognize the limitations of FFO and Operating FFO when compared to GAAP net income available to common shareholders. FFO and Operating FFO available to common shareholders do not represent amounts available for needed capital replacement or expansion, debt service obligations, or other commitments and uncertainties. In addition, FFO and Operating FFO do not represent cash generated from operating activities in accordance with GAAP and are not necessarily indicative of cash available to fund cash needs, including the payment of dividends. FFO and Operating FFO are simply used as additional indicators of our operating performance.
Adjusted EBITDA/Proforma Adjusted EBITDA
Adjusted EBITDA is net income or loss plus depreciation and amortization, net interest expense, severance expense, income taxes, gain or loss on sale of real estate, and impairments of real estate, if any. Adjusted EBITDA should not be considered an alternative measure of operating results or cash flow from operations as determined in accordance with GAAP. Proforma Adjusted EBITDA further adjusts for the effect of the acquisition or disposition of properties during the period.
Same Property Operating Income
Same Property Operating Income ("Same Property NOI with Redevelopment") is a supplemental non-GAAP financial measure of real estate companies' operating performance. Same Property NOI with Redevelopment is considered by management to be a relevant performance measure of our operations because it includes only the NOI of comparable properties for the reporting period. Same Property NOI with Redevelopment excludes acquisitions and dispositions. Same Property NOI with Redevelopment is calculated using consolidated operating income and adjusted to exclude management and other fee income, depreciation and amortization, general and administrative expense, provision for impairment and non-comparable income/expense adjustments such as straight-line rents, lease termination fees, above/below market rents, and other non-comparable operating income and expense adjustments.
In addition to Same Property NOI with Redevelopment, the Company also believes Same Property NOI without Redevelopment to be a relevant performance measure of our operations. Same Property NOI without Redevelopment follows the same methodology as Same Property NOI with Redevelopment, however it excludes redevelopment activity that significantly impacts the entire property, as well as lesser redevelopment activity where we are adding GLA or retenanting a specific space. A property is designated as redevelopment when projected costs exceed $1.0 million, and the construction impacts approximately 20% or more of the income producing property's gross leasable area ("GLA") or the location and nature of the construction significantly impacts or disrupts the daily operations of the property. Redevelopment may also include a portion of certain properties designated as same property for which we are adding additional GLA or retenanting space.
Same Property NOI should not be considered an alternative to net income in accordance with GAAP or as a measure of liquidity. Our method of calculating Same Property NOI may differ from methods used by other REITs and, accordingly, may not be comparable to such other REITs.
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