Retail Properties of America, Inc. Reports Fourth Quarter And Full Year 2018 Results

 

 

 

OAK BROOK, Ill., Feb. 12, 2019 /PRNewswire/ -- Retail Properties of America, Inc. (NYSE: RPAI) (the "Company") today reported financial and operating results for the quarter and year ended December 31, 2018.

FINANCIAL RESULTS
For the quarter ended December 31, 2018, the Company reported:

  • Net income attributable to common shareholders of $12.1 million, or $0.06 per diluted share, compared to $103.1 million, or $0.46 per diluted share, for the same period in 2017;
  • Funds from operations (FFO) attributable to common shareholders of $56.4 million, or $0.26 per diluted share, compared to $50.4 million, or $0.23 per diluted share, for the same period in 2017; and
  • Operating funds from operations (Operating FFO) attributable to common shareholders of $56.7 million, or $0.26 per diluted share, compared to $56.4 million, or $0.25 per diluted share, for the same period in 2017.

For the year ended December 31, 2018, the Company reported:

  • Net income attributable to common shareholders of $77.6 million, or $0.35 per diluted share, compared to $237.6 million, or $1.03 per diluted share, for 2017;
  • FFO attributable to common shareholders of $220.6 million, or $1.01 per diluted share, compared to $168.8 million, or $0.73 per diluted share, for 2017; and
  • Operating FFO attributable to common shareholders of $225.5 million, or $1.03 per diluted share, compared to $245.5 million, or $1.06 per diluted share, for 2017.

OPERATING RESULTS
For the quarter ended December 31, 2018, the Company's portfolio results were as follows:

  • 2.5% increase in same store net operating income (NOI) over the comparable period in 2017;
  • Retail portfolio occupancy: 93.8% at December 31, 2018, up 170 basis points from 92.1% at September 30, 2018, consisting of anchor occupancy gains of 240 basis points and small shop occupancy gains of 40 basis points;
  • Total same store portfolio percent leased, including leases signed but not commenced: 94.8% at December 31, 2018, up 80 basis points from 94.0% at September 30, 2018 and flat compared to December 31, 2017;
  • Retail portfolio percent leased, including leases signed but not commenced: 94.8% at December 31, 2018, up 80 basis points from 94.0% at September 30, 2018 and down 10 basis points from 94.9% at December 31, 2017;
  • Retail portfolio annualized base rent (ABR) per occupied square foot of $19.11 at December 31, 2018, up 2.1% from $18.72 ABR per occupied square foot at December 31, 2017;
  • 1,082,000 square feet of retail leasing transactions comprised of 147 new and renewal leases; and
  • Positive comparable cash leasing spreads of 34.9% on new leases and 3.0% on renewal leases for a blended re-leasing spread of 6.3%.

For the year ended December 31, 2018, the Company's portfolio results were as follows:

  • 2.2% increase in same store NOI over the comparable period in 2017;
  • 3,407,000 square feet of retail leasing transactions comprised of 512 new and renewal leases; and
  • Positive comparable cash leasing spreads of 14.4% on new leases and 4.8% on renewal leases for a blended re-leasing spread of 6.0%.

"2018 was a solid year for RPAI, positioning us very well to put RPAI 2.0 into action," stated Steve Grimes, chief executive officer. "Our 2018 leasing momentum, with contractual rent bumps on new leases of more than 185 basis points, coupled with our $400 million in announced mixed-use redevelopments and expansions, and our fortress-like balance sheet give us confidence in our portfolio's ability to deliver strong operating performance in 2019 and beyond, creating meaningful shareholder value purely through organic means."

INVESTMENT ACTIVITY
Acquisitions
During the quarter, the Company completed the acquisition of One Loudoun Uptown for a gross purchase price of $25.0 million. The 58-acre land parcel, of which 32 acres are developable, is located adjacent to One Loudoun Downtown, a Company-owned multi-tenant retail operating property in the Washington, D.C. metropolitan statistical area. This parcel is currently entitled for 2.3 million square feet of commercial development.

Dispositions
During the quarter, the Company completed the sale of one non-target multi-tenant retail asset for $8.5 million, bringing full-year 2018 completed property dispositions to $201.4 million. Additionally, in 2018, the Company completed the sale of development air rights for $12.0 million and the sale of a land parcel and the rights to develop eight residential units at One Loudoun Downtown for $1.8 million.

The Company is under contract to sell one single-user retail asset for $25.9 million, which is expected to close during the first quarter of 2019, subject to satisfaction of customary closing conditions. Also, the Company is under contract to sell land and the rights to develop 22 additional residential units at One Loudoun Downtown for $5.0 million. The sale of land and development rights is expected to close in two phases in early 2019, subject to satisfaction of customary closing conditions.

BALANCE SHEET AND CAPITAL MARKETS ACTIVITY
As of December 31, 2018, the Company had approximately $1.6 billion of consolidated indebtedness with a weighted average contractual interest rate of 3.98%, a weighted average maturity of 4.7 years and a net debt to adjusted EBITDAre ratio of 5.5x.

During 2018, the Company executed on several significant capital markets initiatives, including the following:

  • In April 2018, closed on a $1.1 billion amended and restated unsecured credit facility, which increased revolver capacity by $100 million, extended the revolver maturity date by 2.3 years, improved the pricing on borrowings under the $850 million revolver and $250 million Term Loan Due 2021 by 30 basis points and 10 basis points, respectively, and featured a 25 basis point reduction in the capitalization rate used in the computation of certain financial covenants;
  • In November 2018, amended the agreement governing the $200 million Term Loan Due 2023 to improve the credit spread by 50 basis points, and in September 2018, entered into two new interest rate swap agreements that became effective upon maturity of the previously existing swaps, which effectively fixed the interest rate on the $200 million Term Loan Due 2023 for its remaining term at 2.85% plus the applicable credit spread. As of December 31, 2018, the applicable credit spread was 1.20%;
  • During 2018, repaid $178.0 million of total debt, excluding amortization, with a weighted average interest rate of 4.46% and incurred prepayment penalties of approximately $5.8 million; and
  • During 2018, repurchased more than 6.3 million shares of Class A common stock under its stock repurchase program at an average price per share of $11.80 for a total of approximately $75.0 million, of which nearly 3.8 million shares of Class A common stock were repurchased during the fourth quarter at an average price per share of $11.57 for a total of approximately $43.8 million.

2019 GUIDANCE
The Company expects to generate net income attributable to common shareholders of $0.33 to $0.37 per diluted share in 2019. The Company expects to generate Operating FFO of $1.03 to $1.07 per diluted share in 2019, up $0.02 from the midpoint of the range of $1.01 to $1.05 communicated previously, based, in part, on the following assumptions:

  • Same store NOI growth of 1.75% to 2.75%;  
  • General and administrative expenses of $40 to $43 million;
  • Acquisitions, including repurchases of Class A common stock, and property dispositions evaluated and executed opportunistically; and
  • Issuance of $200 to $300 million of unsecured debt capital, dependent on market conditions. The Company intends to use proceeds from this contemplated issuance to repay revolver borrowings.

The Company's moderated same store NOI growth assumption, which is down 1.00% at the midpoint from the previously communicated assumption, stems from resolution of the Mattress Firm bankruptcy, which reclassifies certain amounts from expected same store NOI to expected incremental termination fees, the non-renewal of one anchor tenant and updated rent commencement and occupancy projections. The Company's higher Operating FFO attributable to common shareholders per diluted share guidance stems from the impact of recent Class A common stock repurchases, the aforementioned termination fees and other items, partially offset by a lower same store NOI growth assumption.

The following table reconciles the Company's reported 2018 Operating FFO attributable to common shareholders per diluted share to the Company's 2019 Operating FFO attributable to common shareholders per diluted share guidance range.

 

Low

 

High

2018 Operating FFO per common share outstanding – diluted

$1.03

 

$1.03

2018 net investment activity

(0.005)

 

(0.005)

2018 common stock repurchase activity

0.02

 

0.02

2019 net investment activity (1)

-

 

-

Subtotal

1.045

 

1.045

       

Same store NOI growth

0.025

 

0.04

Lease termination fee income

0.01

 

0.01

Interest expense

(0.02)

 

(0.01)

General and administrative expenses

(0.01)

 

-

Non-cash items (2)

(0.02)

 

(0.015)

Expected impact – adoption of new lease accounting standard

-

 

-

2019 estimated Operating FFO per common share outstanding – diluted

$1.03

 

$1.07

   

(1)

Reflects expectations for opportunistic acquisition and disposition activity during the year

(2)

Non-cash items include straight-line rental income, amortization of above and below market lease intangibles and lease inducements, and non-cash ground rent expense

DIVIDEND
On February 6, 2019, the Company declared the first quarter 2019 quarterly cash dividend of $0.165625 per share on its outstanding Class A common stock, which will be paid on April 10, 2019 to Class A common shareholders of record on March 27, 2019.

WEBCAST AND CONFERENCE CALL INFORMATION
The Company's management team will hold a webcast on Wednesday, February 13, 2019 at 11:00 AM (ET), to discuss its quarterly and full year financial results and operating performance, as well as 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 on the Company's website at www.rpai.com in the INVEST section. A replay of the webcast will be available. To listen to the replay, please go to www.rpai.com in the INVEST section of the website and follow the instructions.

The conference call can be accessed by dialing (877) 705-6003 or (201) 493-6725 for international participants. Please dial in at least ten minutes prior to the start of the call to register. A replay of the call will be available from 2:00 PM (ET) on February 13, 2019 until midnight (ET) on February 27, 2019. The replay can be accessed by dialing (844) 512-2921 or (412) 317-6671 for international callers and entering pin number 13685267.

SUPPLEMENTAL INFORMATION
The Company has posted supplemental financial and operating information and other data in the INVEST section of its website.

ABOUT RPAI
Retail Properties of America, Inc. is a REIT that owns and operates high quality, strategically located open-air shopping centers, including properties with a mixed-use component. As of December 31, 2018, the Company owned 105 retail operating properties in the United States representing 20.1 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.

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 "believes," "expects," "may," "should," "intends," "plans," "estimates" or "anticipates" and variations of such words or similar expressions or the negative of such words, 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 the Company's current views about its plans, intentions, expectations, strategies and prospects, which are based on the information currently available to the Company and on assumptions it has made. Although the Company believes that its plans, intentions, expectations, strategies and prospects as reflected in or suggested by those forward-looking statements are reasonable, the Company 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, economic, business and financial conditions, and changes in the Company's industry and changes in the real estate markets in particular, rental rates and/or vacancy rates, frequency and magnitude of 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, adverse impact of e-commerce developments and shifting consumer retail behavior on tenants, interest rates or operating costs, real estate valuations, the availability, terms and deployment of capital, general volatility of the capital and credit markets and the market price of the Company's Class A common stock, risks generally associated with real estate acquisitions and dispositions, including the Company's ability to identify and pursue acquisition and disposition opportunities, risks generally associated with redevelopment, including the impact of construction delays and cost overruns, the Company's ability to lease redeveloped space and identify and pursue redevelopment opportunities, competitive and cost factors, the Company's ability to enter into new leases or renew leases on favorable terms, the Company's ability to create long-term shareholder value, satisfaction of closing conditions to the pending transactions described herein, 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." The Company assumes 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, 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. The Company has adopted the NAREIT definition in its computation of FFO attributable to common shareholders. The Company believes that, subject to the following limitations, FFO attributable to common shareholders provides a basis for comparing its performance and operations to those of other real estate investment trusts (REITs). The Company believes that FFO attributable to common shareholders, which is a supplemental non-GAAP financial measure, provides an additional and useful means to assess the operating performance of REITs. FFO attributable to common shareholders does not represent an alternative to (i) "Net income" or "Net income attributable to common shareholders" as an indicator of the Company's financial performance, or (ii) "Cash flows from operating activities" in accordance with GAAP as a measure of the Company's capacity to fund cash needs, including the payment of dividends.

The Company also reports Operating FFO attributable to common shareholders, which is defined as FFO attributable to common shareholders excluding the impact of discrete non-operating transactions and other events which the Company does not consider representative of the comparable operating results of its real estate operating portfolio, which is its core business platform. Specific examples of discrete non-operating transactions and other events include, but are not limited to, the impact on earnings from gains or losses associated with the early extinguishment of debt or other liabilities, gain on sale and impairment charges on assets other than depreciable real estate, litigation involving the Company, including actual or anticipated settlement and associated legal costs, the impact on earnings from executive separation and the excess of redemption value over carrying value of preferred stock redemption, which are not otherwise adjusted in the Company's calculation of FFO attributable to common shareholders. The Company believes that Operating FFO attributable to common shareholders, which is a supplemental non-GAAP financial measure, provides an additional and useful means to assess the operating performance of REITs. Operating FFO attributable to common shareholders does not represent an alternative to (i) "Net income" or "Net income attributable to common shareholders" as an indicator of the Company's financial performance, or (ii) "Cash flows from operating activities" in accordance with GAAP as a measure of the Company's capacity to fund cash needs, including the payment of dividends. Comparison of the Company's presentation of Operating FFO attributable to common shareholders 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 Net Operating Income (NOI), which it defines as all revenues other than straight-line rental income (non-cash), amortization of lease inducements, amortization of acquired above and below market lease intangibles and lease termination fee income, less real estate taxes and all operating expenses other than lease termination fee expense and non-cash ground rent expense, which is comprised of straight-line ground rent expense and amortization of acquired ground lease intangibles. NOI consists of Same Store NOI and NOI from Other Investment Properties. Same Store NOI for the three months and year ended December 31, 2018 represents NOI from the Company's same store portfolio consisting of 101 retail operating properties acquired or placed in service and stabilized prior to January 1, 2017. NOI from Other Investment Properties for the three months and year ended December 31, 2018 represents NOI primarily from (i) properties acquired during 2017 and 2018, (ii) Reisterstown Road Plaza, which was reclassified from active redevelopment into the Company's retail operating portfolio during 2018, (iii) the redevelopment portion of Circle East, formerly known as Towson Circle, which is in active redevelopment, (iv) the multi-family rental units at Plaza del Lago, which are in active redevelopment, (v) Carillon, formerly known as Boulevard at the Capital Centre, where the Company has begun activities in anticipation of future redevelopment, (vi) the properties that were sold or held for sale in 2017 and 2018, including Schaumburg Towers, and (vii) the net income from the Company's wholly-owned captive insurance company. The Company believes that NOI, Same Store NOI and NOI from Other Investment Properties, which are supplemental non-GAAP financial measures, provide an additional and useful operating perspective not immediately apparent from "Operating income" or "Net income attributable to common shareholders" in accordance with GAAP. The Company uses these measures to evaluate its performance on a property-by-property basis because they allow management to evaluate the impact that factors such as lease structure, lease rates and tenant base have on the Company's operating results. NOI, Same Store NOI and NOI from Other Investment Properties do not represent alternatives to "Net income" or "Net income attributable to common shareholders" in accordance with GAAP as indicators of the Company's financial performance. Comparison of the Company's presentation of NOI, Same Store NOI and NOI from Other Investment Properties to similarly titled measures for other REITs may not necessarily be meaningful due to possible differences in definition and application by such REITs.

As defined by NAREIT, EBITDA for real estate (EBITDAre) means net income (loss) computed in accordance with GAAP, plus (i) interest expense, (ii) income tax expense, (iii) depreciation and amortization, (iv) impairment charges on depreciable property and (v) impairment charges on investments in unconsolidated affiliates if caused by a decrease in the value of depreciable property in the affiliate, plus or minus (i) gains (or losses) from sales of depreciable property, including gains (or losses) on change in control, and (ii) adjustments to reflect the entity's share of EBITDAre of unconsolidated affiliates. The Company reports Adjusted EBITDAre, which excludes the impact of certain discrete non-operating transactions and other events such as (i) the impact on earnings from executive separation, (ii) impairment charges on non-depreciable real estate and (iii) gains on the sale of non-depreciable real estate, if any. The Company believes that Adjusted EBITDAre is useful because it allows investors and management to evaluate and compare the Company's performance from period to period in a meaningful and consistent manner in addition to standard financial measurements under GAAP. Adjusted EBITDAre is a supplemental non-GAAP financial measure and should not be considered an alternative to "Net income" or "Net income attributable to common shareholders" as an indicator of the Company's financial performance. Comparison of the Company's presentation of Adjusted EBITDAre to similarly titled measures for other REITs may not necessarily be meaningful due to possible differences in definition and application by such REITs.

Net Debt to Adjusted EBITDAre is a supplemental non-GAAP financial measure and represents (i) the Company's total notional debt, excluding unamortized premium, discount and capitalized loan fees, less cash and cash equivalents and disposition proceeds temporarily restricted related to potential Internal Revenue Code Section 1031 tax-deferred exchanges (1031 Exchanges) divided by (ii) Adjusted EBITDAre for the prior three months, annualized (Annualized Adjusted EBITDAre). The Company believes that this ratio is useful because it provides investors with information regarding its total notional debt net of cash and cash equivalents and disposition proceeds temporarily restricted related to potential 1031 Exchanges, which could be used to repay debt, compared to its performance as measured using Annualized Adjusted EBITDAre. Comparison of the Company's presentation of Net Debt to Adjusted EBITDAre to similarly titled measures for other REITs may not necessarily be meaningful due to possible differences in definition and application by such REITs.

CONTACT INFORMATION
Michael Gaiden
Vice President – Investor Relations
Retail Properties of America, Inc.       
(630) 634-4233 

Retail Properties of America, Inc.

Consolidated Balance Sheets

(amounts in thousands, except par value amounts)

(unaudited)

 
   

December 31,
 2018

 

December 31,
 2017

Assets

       

Investment properties:

       

Land

 

$

1,036,901

   

$

1,066,705

 

Building and other improvements

 

3,607,484

   

3,686,200

 

Developments in progress

 

48,369

   

33,022

 
   

4,692,754

   

4,785,927

 

Less accumulated depreciation

 

(1,313,602)

   

(1,215,990)

 

Net investment properties

 

3,379,152

   

3,569,937

 
         

Cash and cash equivalents

 

14,722

   

25,185

 

Accounts and notes receivable (net of allowances of $7,976 and $6,567, respectively)

 

78,398

   

71,678

 

Acquired lease intangible assets, net

 

97,090

   

122,646

 

Assets associated with investment properties held for sale

 

   

3,647

 

Other assets, net

 

78,108

   

125,171

 

Total assets

 

$

3,647,470

   

$

3,918,264

 
         

Liabilities and Equity

       

Liabilities:

       

Mortgages payable, net (includes unamortized premium of $775 and $1,024, respectively, unamortized discount of $(536) and $(579), respectively, and  unamortized capitalized loan fees of $(369) and $(615), respectively)

               
               
 

$

205,320

   

$

287,068

 

Unsecured notes payable, net (includes unamortized discount of $(734) and $(853), respectively, and unamortized capitalized loan fees of $(2,904) and $(3,399), respectively)

 

696,362

   

695,748

 
           

Unsecured term loans, net (includes unamortized capitalized loan fees of $(2,633) and $(2,730), respectively)

 

447,367

   

547,270

 
           

Unsecured revolving line of credit

 

273,000

   

216,000

 

Accounts payable and accrued expenses

 

82,942

   

82,698

 

Distributions payable

 

35,387

   

36,311

 

Acquired lease intangible liabilities, net

 

86,543

   

97,971

 

Other liabilities

 

73,540

   

69,498

 

Total liabilities

 

1,900,461

   

2,032,564

 
         

Commitments and contingencies

       
         

Equity:

       

Preferred stock, $0.001 par value, 10,000 shares authorized, none issued or outstanding

 

   

 

Class A common stock, $0.001 par value, 475,000 shares authorized, 213,176 and 219,237 shares issued and outstanding as of December 31, 2018 and 2017, respectively

 

213

   

219

 

Additional paid-in capital

 

4,504,702

   

4,574,428

 

Accumulated distributions in excess of earnings

 

(2,756,802)

   

(2,690,021)

 

Accumulated other comprehensive (loss) income

 

(1,522)

   

1,074

 

Total shareholders' equity

 

1,746,591

   

1,885,700

 

Noncontrolling interests

 

418

   

 

Total equity

 

1,747,009

   

1,885,700

 

Total liabilities and equity

 

$

3,647,470

   

$

3,918,264

 

 

Retail Properties of America, Inc.

Consolidated Statements of Operations

(amounts in thousands, except per share amounts)

(unaudited)

 
   

Three Months Ended

December 31,

 

Year Ended

December 31,

   

2018

 

2017

 

2018

 

2017

Revenues

               

Rental income

 

$

92,562

   

$

97,836

   

$

370,638

   

$

414,804

 

Tenant recovery income

 

25,080

   

27,610

   

105,170

   

115,944

 

Other property income

 

1,712

   

1,142

   

6,689

   

7,391

 

Total revenues

 

119,354

   

126,588

   

482,497

   

538,139

 
                 

Expenses

               

Operating expenses

 

17,650

   

22,116

   

74,885

 

(a)

84,556

 

Real estate taxes

 

17,477

   

17,526

   

73,683

   

82,755

 

Depreciation and amortization

 

43,870

   

46,598

   

175,977

   

203,866

 

Provision for impairment of investment properties

 

763

   

8,147

   

2,079

   

67,003

 

General and administrative expenses

 

10,434

   

11,356

   

42,363

   

40,724

 

Total expenses

 

90,194

   

105,743

   

368,987

   

478,904

 
                 

Operating income

 

29,160

   

20,845

   

113,510

   

59,235

 
                 

Interest expense

 

(16,828)

   

(18,015)

   

(73,746)

   

(146,092)

 

Other (expense) income, net

 

(188)

   

(7)

   

665

   

373

 

Income (loss) from continuing operations

 

12,144

   

2,823

   

40,429

   

(86,484)

 

Gain on sales of investment properties

 

   

107,101

   

37,211

   

337,975

 

Net income

 

12,144

   

109,924

   

77,640

   

251,491

 

Preferred stock dividends

 

   

(6,780)

   

   

(13,867)

 

Net income attributable to common shareholders

 

$

12,144

   

$

103,144

   

$

77,640

   

$

237,624

 
                 

Earnings per common share – basic and diluted

               

Net income per common share attributable to common shareholders

 

$

0.06

   

$

0.46

   

$

0.35

   

$

1.03

 
                 

Weighted average number of common shares outstanding – basic

 

214,684

   

222,942

   

217,830

   

230,747

 
                 

Weighted average number of common shares outstanding – diluted

 

215,093

   

223,095

   

218,231

   

230,927

 
 

(a)

Includes $1,900 of termination fees recorded during the second quarter of 2018 related to the Toys "R" Us auction process whereby the Company was the winning bidder on two leases.

 

 

 

Retail Properties of America, Inc.

Reconciliation of Non-GAAP Financial Measures

(amounts in thousands, except per share amounts)

(unaudited)

 

Funds From Operations (FFO) Attributable to Common Shareholders and

Operating FFO Attributable to Common Shareholders

   
   

Three Months Ended

December 31,

 

Year Ended

December 31,

   

2018

 

2017

 

2018

 

2017

                 

Net income attributable to common shareholders

 

$

12,144

   

$

103,144

   

$

77,640

   

$

237,624

 

Depreciation and amortization of depreciable real estate

 

43,446

   

46,253

   

174,672

   

202,110

 

Provision for impairment of investment properties

 

763

   

8,147

   

2,079

   

67,003

 

Gain on sales of depreciable investment properties

 

   

(107,101)

   

(33,747)

   

(337,975)

 

FFO attributable to common shareholders

 

$

56,353

   

$

50,443

   

$

220,644

   

$

168,762

 
                 

FFO attributable to common shareholders  per common share outstanding – diluted

 

$

0.26

   

$

0.23

   

$

1.01

   

$

0.73

 
                               
                 
                 

FFO attributable to common shareholders

 

$

56,353

   

$

50,443

   

$

220,644

   

$

168,762

 

Impact on earnings from the early extinguishment of debt, net

 

   

979

   

5,944

   

72,654

 

Provision for hedge ineffectiveness

 

   

(7)

   

   

9

 

Gain on sale of non-depreciable investment property

 

   

   

(3,464)

   

 

Impact on earnings from executive separation (a)

 

   

   

1,737

   

(1,086)

 

Excess of redemption value over carrying value of preferred stock  redemption (b)

 

   

4,706

   

   

4,706

 
                       

Other (c)

 

306

   

253

   

629

   

441

 

Operating FFO attributable to common shareholders

 

$

56,659

   

$

56,374

   

$

225,490

   

$

245,486

 
                 

Operating FFO attributable to common shareholders per common share outstanding – diluted

 

$

0.26

   

$

0.25

   

$

1.03

   

$

1.06

 
                               
                 

Weighted average number of common shares outstanding – diluted

 

215,093

   

223,095

   

218,231

   

230,927

 
   

(a)

Reflected as an increase (decrease) within "General and administrative expenses" in the consolidated statements of operations.

   

(b)

Included within "Preferred stock dividends" in the consolidated statements of operations.

   

(c)

Primarily consists of the impact on earnings from litigation involving the Company, including actual or anticipated settlement and associated legal costs, which are included in "Other (expense) income, net" in the consolidated statements of operations.

 

FFO Attributable to Common Shareholders and Operating FFO Attributable to Common Shareholders Guidance

 
   

Per Share Guidance Range

Full Year 2019

   

Low

 

High

         

Net income attributable to common shareholders

 

$

0.33

   

$

0.37

 

Depreciation and amortization of depreciable real estate

 

0.76

   

0.76

 

Gain on sales of depreciable investment properties

 

(0.04)

   

(0.04)

 

FFO attributable to common shareholders

 

$

1.05

   

$

1.09

 
         

Gain on sale of non-depreciable investment property

 

(0.02)

   

(0.02)

 

Other

 

   

 

Operating FFO attributable to common shareholders

 

$

1.03

   

$

1.07

 

 

Retail Properties of America, Inc.

Reconciliation of Non-GAAP Financial Measures (continued)

(amounts in thousands)

(unaudited)

 

Reconciliation of Net Income Attributable to Common Shareholders to Same Store NOI

 
 

Three Months Ended
December 31,

 

Year Ended
December 31,

 

2018

 

2017

 

2018

 

2017

               

Net income attributable to common shareholders

$

12,144

   

$

103,144

   

$

77,640

   

$

237,624

 

Adjustments to reconcile to Same Store NOI:

             

Preferred stock dividends

   

6,780

   

   

13,867

 

Gain on sales of investment properties

   

(107,101)

   

(37,211)

   

(337,975)

 

Depreciation and amortization

43,870

   

46,598

   

175,977

   

203,866

 

Provision for impairment of investment properties

763

   

8,147

   

2,079

   

67,003

 

General and administrative expenses

10,434

   

11,356

   

42,363

   

40,724

 

Interest expense

16,828

   

18,015

   

73,746

   

146,092

 

Straight-line rental income, net

(891)

   

(1,537)

   

(5,717)

   

(4,646)

 

Amortization of acquired above and below market lease intangibles, net

(1,719)

   

(1,551)

   

(5,467)

   

(3,313)

 

Amortization of lease inducements

274

   

241

   

1,020

   

1,065

 

Lease termination fees, net

(298)

   

289

   

179

   

(2,021)

 

Non-cash ground rent expense, net

439

   

533

   

1,844

   

2,150

 

Other expense (income), net

188

   

7

   

(665)

   

(373)

 

NOI

82,032

   

84,921

   

325,788

   

364,063

 

NOI from Other Investment Properties

(5,124)

   

(9,921)

   

(19,114)

   

(64,115)

 

Same Store NOI

$

76,908

   

$

75,000

   

$

306,674

   

$

299,948

 

 

Retail Properties of America, Inc.

Reconciliation of Non-GAAP Financial Measures (continued)

(amounts in thousands, except ratio)

(unaudited)

 

Reconciliation of Mortgages Payable, Net, Unsecured Notes Payable, Net,

Unsecured Term Loans, Net and Unsecured Revolving Line of Credit to Total Net Debt

 
   

December 31,
 2018

 

December 31,
 2017

         

Mortgages payable, net

 

$

205,320

   

$

287,068

 

Unsecured notes payable, net

 

696,362

   

695,748

 

Unsecured term loans, net

 

447,367

   

547,270

 

Unsecured revolving line of credit

 

273,000

   

216,000

 

Total

 

1,622,049

   

1,746,086

 

Mortgage premium, net of accumulated amortization

 

(775)

   

(1,024)

 

Mortgage discount, net of accumulated amortization

 

536

   

579

 

Unsecured notes payable discount, net of accumulated amortization

 

734

   

853

 

Capitalized loan fees, net of accumulated amortization

 

5,906

   

6,744

 

Total notional debt

 

1,628,450

   

1,753,238

 

Less: consolidated cash and cash equivalents

 

(14,722)

   

(25,185)

 

Less: disposition proceeds temporarily restricted related to potential Internal Revenue Code Section 1031 tax-deferred exchanges

 

   

(54,087)

 
             

Total net debt

 

$

1,613,728

   

$

1,673,966

 

Net Debt to Adjusted EBITDAre (a)

 

5.5x

   

5.5x

 
 
 

Reconciliation of Net Income to Adjusted EBITDAre

 
   

Three Months Ended December 31,

   

2018

 

2017

         

Net income

 

$

12,144

   

$

109,924

 

Interest expense

 

16,828

   

18,015

 

Depreciation and amortization

 

43,870

   

46,598

 

Gain on sales of depreciable investment properties

 

   

(107,101)

 

Provision for impairment of depreciable investment properties

 

763

   

8,147

 

EBITDAre

 

$

73,605

   

$

75,583

 

Adjustments to EBITDAre

 

   

 

Adjusted EBITDAre

 

$

73,605

   

$

75,583

 

Annualized Adjusted EBITDAre

 

$

294,420

   

$

302,332

 
   

(a)

 For purposes of this ratio calculation, annualized three months ended figures were used.

 

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SOURCE Retail Properties of America, Inc.

Contact Information
Investor Relations
RETAIL PROPERTIES OF AMERICA, INC.
2021 Spring Road Suite 200
Oak Brook, IL 60523
ir@rpai.com
TRANSFER AGENT
COMPUTERSHARE
P.O. BOX 505000
Louisville, KY 40233
(800) 368-5948