RAMCO-GERSHENSON PROPERTIES TRUST REPORTS
FINANCIAL AND OPERATING RESULTS FOR THE FOURTH QUARTER AND YEAR-END 2014
FARMINGTON HILLS, Michigan – February 10, 2015 - Ramco-Gershenson Properties Trust (NYSE:RPT) today announced its financial and operating results for the three and twelve months ended December 31, 2014.
FULL YEAR 2014 HIGHLIGHTS:
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| • | Reported Operating Funds from Operations (“Operating FFO”) of $1.27 per diluted share, compared to $1.19 for the comparable period in 2013. |
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| • | Increased same-center net operating income (“NOI”) by 3.3%. |
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| • | Signed 345 leases encompassing 2.3 million square feet at comparable rental growth of 6.3%. |
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| • | Increased annual dividend by 7%, to $0.80 per share. |
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| • | Ended 2014 with core portfolio leased occupancy of 95.5%. |
"During 2014, we continued our success in significantly improving our shopping center portfolio supported by the further diversification of our markets, the achievement of an even stronger demographic profile, and producing higher average base rents. All of these factors are contributing to predictable, strong same-center NOI growth," said Dennis Gershenson, President and Chief Executive Officer. "In 2015, our primary focus will be on driving quality through redeveloping and re-leasing of our core portfolio and the continued sale of non-core properties.”
FINANCIAL RESULTS:
For the three months ended December 31, 2014:
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| • | Operating FFO of $29.1 million, or $0.33 per diluted share, compared to $21.8 million or $0.30 per diluted share for the same period in 2013. |
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| • | Funds from Operations (“FFO”) of $3.8 million, or $0.05 per diluted share, compared to $20.6 million, or $0.28 per diluted share for the same period in 2013. FFO for the fourth quarter of 2014 was reduced as the result of a non-cash impairment charge of approximately $23.3 million related to land available for development or sale. |
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| • | Net loss available to common shareholders of $14.0 million, or $0.18 per diluted share, compared to $7.0 million, or $0.11 per diluted share for the same period in 2013. |
For the twelve months ended December 31, 2014:
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| • | Operating FFO of $103.5 million, or $1.27 per diluted share, compared to $81.9 million, or $1.19 per diluted share for the same period in 2013. |
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| • | FFO of $70.3 million, or $0.94 per diluted share, compared to $79.9 million, or $1.16 per diluted share for the same period in 2013. FFO for 2014 was reduced as the result of non-cash impairment charge of approximately $23.3 million related to land available for development or sale. |
| |
| • | Net loss available to common shareholders of $9.6 million, or $0.14 per diluted share, compared to net income available to common shareholders of $3.7 million, or $0.06 per diluted share for the same period in 2013. |
FOURTH QUARTER OPERATING RESULTS:
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| • | Same-center NOI growth of 2.8%. |
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| • | Core portfolio leased occupancy of 95.5% and physical occupancy of 94.9%. |
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| • | Signed 86 leases encompassing approximately 0.5 million square feet at comparable rental growth of 8.1%, including 56 renewals totaling approximately 0.3 million square feet at comparable rental growth of 7.7%. |
YEAR-END BALANCE SHEET METRICS:
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| • | Net debt to total market capitalization of 35.7%. |
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| • | Net debt to EBITDA of 5.9x, interest coverage of 3.9x, and fixed charge coverage of 3.0x. |
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| • | Weighted average term of debt to maturity of 6.5 years. |
INVESTMENT ACTIVITY:
Acquisitions and Dispositions
During the fourth quarter, the Company sold three non-core shopping centers for $23.1 million: Northwest Crossing, a 124,000 square foot shopping center anchored by Ross Dress for Less, HH Gregg, and OfficeMax, in Knoxville, Tennessee; Fraser Shopping Center, a 68,000 square foot shopping center anchored by Oakridge Market and Family Dollar in Fraser, Michigan and Lake Orion Plaza, a 141,000 square foot shopping center anchored by Kmart and Hollywood Market. Proceeds from the sales were used to reduce debt and fund the Company’s expansion and redevelopment projects.
In 2014, the Company acquired $321.9 million of high-quality shopping centers in the targeted metropolitan markets of Cincinnati, Minneapolis, and Fort Collins. The shopping centers encompass over 1.5 million square feet and are anchored by a number of leading retailers, including Whole Foods, Dick's Sporting Goods, Sprouts Market, Home Depot, Bed Bath & Beyond, and buy buy Baby. Also during the year, the Company sold $32.0 million of non-core shopping centers.
Development and Redevelopment
During 2014, the Company initiated a number of new value-add redevelopment projects. At December 31, 2014, the Company's redevelopment and development pipeline consisted of eight projects with an estimated total cost of $56.5 million.
FINANCING ACTIVITY:
During the quarter, the Company closed a $100 million private placement of senior unsecured notes. The financing consists of $50 million of notes with a ten-year term priced at a fixed interest rate of 4.16% and $50 million of notes with a twelve-year term priced at a fixed interest rate of 4.30%.
DIVIDEND:
During the fourth quarter, the Company declared a regular cash dividend of $0.20 per common share for the period October 1, 2014 through December 31, 2014 and a Series D convertible perpetual preferred share dividend of $0.90625 per share for the same period. The dividends were paid on January 2, 2015 to shareholders of record as of December 19, 2014. The Operating FFO payout ratio was 61.0%.
2015 GUIDANCE:
The Company has affirmed its 2015 guidance for Operating FFO to $1.27 to $1.33 per diluted share.
CONFERENCE CALL/WEBCAST:
Ramco-Gershenson Properties Trust will host a live broadcast of its fourth quarter conference call on Wednesday, February 11, 2015 at 9:00 a.m. eastern time, to discuss its financial and operating results. 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) 660-6853, (Conference ID: 13598785), for one week.
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 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 dozen of the largest metropolitan markets in the United States. At December 31, 2014, the Company owned interest in and managed a portfolio of 80 shopping centers and one office building with approximately 16.9 million square feet of gross leasable area. At December 31, 2014, the Company's core operating portfolio was 95.5% leased. Additional information regarding the Company is available on its corporate website: www.rgpt.com.
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
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| | | | | | | |
| RAMCO-GERSHENSON PROPERTIES TRUST |
| CONSOLIDATED BALANCE SHEETS |
| (In thousands, except per share amounts) |
| | | | |
| | December 31, |
| | 2014 | | 2013 |
| ASSETS | | | |
| Income producing properties, at cost: | | | |
| Land | $ | 341,388 |
| | $ | 284,686 |
|
| Buildings and improvements | 1,592,644 |
| | 1,340,531 |
|
| Less accumulated depreciation and amortization | (287,177 | ) | | (253,292 | ) |
| Income producing properties, net | 1,646,855 |
| | 1,371,925 |
|
| Construction in progress and land available for development or sale | 74,655 |
| | 101,974 |
|
| Net real estate | 1,721,510 |
| | 1,473,899 |
|
| Equity investments in unconsolidated joint ventures | 28,733 |
| | 30,931 |
|
| Cash and cash equivalents | 9,335 |
| | 5,795 |
|
| Restricted cash | 8,163 |
| | 3,454 |
|
| Accounts receivable, net | 11,997 |
| | 9,648 |
|
| Other assets, net | 168,641 |
| | 128,521 |
|
| TOTAL ASSETS | $ | 1,948,379 |
| | $ | 1,652,248 |
|
| | | | |
| LIABILITIES AND SHAREHOLDERS' EQUITY | | | |
| Notes payable: | | | |
| Senior unsecured notes payable | $ | 520,000 |
| | $ | 365,000 |
|
| Mortgages payable | 363,580 |
| | 333,049 |
|
| Unsecured revolving credit facility | 10,000 |
| | 27,000 |
|
| Junior subordinated notes | 28,125 |
| | 28,125 |
|
| Total notes payable | 921,705 |
| | 753,174 |
|
| Capital lease obligation | 1,828 |
| | 5,686 |
|
| Accounts payable and accrued expenses | 44,232 |
| | 32,026 |
|
| Other liabilities | 64,384 |
| | 48,593 |
|
| Distributions payable | 17,951 |
| | 14,809 |
|
| TOTAL LIABILITIES | 1,050,100 |
| | 854,288 |
|
| | | | |
| 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), 2,000 shares issued and outstanding as of December 31, 2014 and December 31, 2013 | $ | 100,000 |
| | $ | 100,000 |
|
| Common shares of beneficial interest, $0.01 par, 120,000 shares authorized, 77,573 and 66,669 shares issued and outstanding as of December 31, 2014 and 2013, respectively | 776 |
| | 667 |
|
| Additional paid-in capital | 1,130,262 |
| | 959,183 |
|
| Accumulated distributions in excess of net income | (356,715 | ) | | (289,837 | ) |
| Accumulated other comprehensive (loss) income | (1,966 | ) | | 84 |
|
| TOTAL SHAREHOLDERS' EQUITY ATTRIBUTABLE TO RPT | 872,357 |
| | 770,097 |
|
| Noncontrolling interest | 25,922 |
| | 27,863 |
|
| TOTAL SHAREHOLDERS' EQUITY | 898,279 |
| | 797,960 |
|
| TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $ | 1,948,379 |
| | $ | 1,652,248 |
|
|
| | | | | | | | | | | | | | | |
| RAMCO-GERSHENSON PROPERTIES TRUST |
| CONSOLIDATED STATEMENTS OF OPERATIONS |
| (In thousands, except per share amounts) |
| | | | |
| | Three Months Ended December 31, | Twelve Months Ended December 31, |
| | 2014 | | 2013 | | 2014 | | 2013 |
| REVENUE | | | | | | | |
| Minimum rent | $ | 43,635 |
| | $ | 34,891 |
| | $ | 157,691 |
| | $ | 124,169 |
|
| Percentage rent | 57 |
| | 9 |
| | 264 |
| | 209 |
|
| Recovery income from tenants | 15,999 |
| | 11,861 |
| | 52,828 |
| | 40,018 |
|
| Other property income | 2,935 |
| | 762 |
| | 5,521 |
| | 3,337 |
|
| Management and other fee income | 531 |
| | 493 |
| | 2,059 |
| | 2,335 |
|
| TOTAL REVENUE | 63,157 |
| | 48,016 |
| | 218,363 |
| | 170,068 |
|
| | | | | | | | |
| EXPENSES | | | | | | | |
| Recoverable operating & real estate tax expense | 18,524 |
| | 13,007 |
| | 58,793 |
| | 43,355 |
|
| Other non-recoverable operating expense | 1,007 |
| | 871 |
| | 3,633 |
| | 3,006 |
|
| Depreciation and amortization | 20,605 |
| | 15,883 |
| | 81,182 |
| | 56,305 |
|
| Acquisition costs | 168 |
| | 538 |
| | 1,890 |
| | 1,322 |
|
| General and administrative expense | 5,575 |
| | 5,238 |
| | 21,670 |
| | 20,951 |
|
| Provision for impairment | 27,865 |
| | 9,669 |
| | 27,865 |
| | 9,669 |
|
| TOTAL EXPENSES | 73,744 |
| | 45,206 |
| | 195,033 |
| | 134,608 |
|
| | | | | | | | |
| OPERATING (LOSS) INCOME | (10,587 | ) | | 2,810 |
| | 23,330 |
| | 35,460 |
|
| | | | | | | | |
| OTHER INCOME AND EXPENSES | | | | | | | |
| Other expense, net | (74 | ) | | (249 | ) | | (689 | ) | | (965 | ) |
| Gain on sale of real estate | 7,927 |
| | 378 |
| | 10,857 |
| | 4,279 |
|
| Earnings (loss) from unconsolidated joint ventures | 411 |
| | 268 |
| | 75 |
| | (4,759 | ) |
| Interest expense | (9,866 | ) | | (7,791 | ) | | (33,742 | ) | | (29,075 | ) |
| Amortization of deferred financing fees | (331 | ) | | (378 | ) | | (1,446 | ) | | (1,447 | ) |
| Deferred gain recognized on real estate | — |
| | — |
| | 117 |
| | 5,282 |
|
| Loss on extinguishment of debt | — |
| | (340 | ) | | (860 | ) | | (340 | ) |
| (LOSS) INCOME FROM CONTINUING OPERATIONS BEFORE TAX | (12,520 | ) | | (5,302 | ) | | (2,358 | ) | | 8,435 |
|
| Income tax provision | (36 | ) | | (63 | ) | | (54 | ) | | (64 | ) |
| (LOSS) INCOME FROM CONTINUING OPERATIONS | (12,556 | ) | | (5,365 | ) | | (2,412 | ) | | 8,371 |
|
| | | | | | | | |
| DISCONTINUED OPERATIONS | | | | | | | |
| (Loss) gain on sale of real estate | — |
| | (74 | ) | | — |
| | 2,120 |
|
| Income from discontinued operations | — |
| | 130 |
| | — |
| | 971 |
|
| INCOME FROM DISCONTINUED OPERATIONS | — |
| | 56 |
| | — |
| | 3,091 |
|
| | | | | | | | |
| NET (LOSS) INCOME | (12,556 | ) | | (5,309 | ) | | (2,412 | ) | | 11,462 |
|
| Net loss (income) attributable to noncontrolling partner interest | 351 |
| | 169 |
| | 48 |
| | (465 | ) |
| NET (LOSS) INCOME ATTRIBUTABLE TO RPT | (12,205 | ) | | (5,140 | ) | | (2,364 | ) | | 10,997 |
|
| Preferred share dividends | (1,812 | ) | | (1,812 | ) | | (7,250 | ) | | (7,250 | ) |
| NET (LOSS) INCOME AVAILABLE TO COMMON SHAREHOLDERS | $ | (14,017 | ) | | $ | (6,952 | ) | | $ | (9,614 | ) | | $ | 3,747 |
|
| | | | | | | | |
| (LOSS) EARNINGS PER COMMON SHARE, BASIC | | | | | | | |
| Continuing operations | $ | (0.18 | ) | | $ | (0.11 | ) | | $ | (0.14 | ) | | $ | 0.01 |
|
| Discontinued operations | — |
| | — |
| | — |
| | 0.05 |
|
| | $ | (0.18 | ) | | $ | (0.11 | ) | | $ | (0.14 | ) | | $ | 0.06 |
|
| (LOSS) EARNINGS PER COMMON SHARE, DILUTED | | | | | | | |
| Continuing operations | $ | (0.18 | ) | | $ | (0.11 | ) | | $ | (0.14 | ) | | $ | 0.01 |
|
| Discontinued operations | — |
| | — |
| | — |
| | 0.05 |
|
| | $ | (0.18 | ) | | $ | (0.11 | ) | | $ | (0.14 | ) | | $ | 0.06 |
|
| WEIGHTED AVERAGE COMMON SHARES OUTSTANDING | | | | | | | |
| Basic | 77,573 |
| | 64,412 |
| | 72,118 |
| | 59,336 |
|
| Diluted | 77,573 |
| | 64,412 |
| | 72,118 |
| | 59,728 |
|
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| | | | | | | | | | | | | | | | |
| RAMCO-GERSHENSON PROPERTIES TRUST |
| FUNDS FROM OPERATIONS |
| (In thousands, except per share data) |
| | | | | | | | | |
| | | Three Months Ended December 31, | | Twelve Months Ended December 31, |
| | | 2014 | | 2013 | | 2014 | | 2013 |
| | | | | | | | | |
| Net (loss) income available to common shareholders | | $ | (14,017 | ) | | $ | (6,952 | ) | | $ | (9,614 | ) | | $ | 3,747 |
|
| Adjustments: | | | | | | |
| | |
|
| Rental property depreciation and amortization expense | | 20,574 |
| | 15,802 |
| | 80,826 |
| | 56,316 |
|
| Pro-rata share of real estate depreciation from unconsolidated joint ventures | | 596 |
| | 722 |
| | 4,719 |
| | 3,689 |
|
| (Gain) loss on sale of depreciable real estate | | (7,556 | ) | | 74 |
| | (10,022 | ) | | (2,120 | ) |
Loss on sale of joint venture depreciable real estate (1) | | — |
| | — |
| | — |
| | 6,454 |
|
| Provision for impairment on income-producing properties | | 4,580 |
| | 9,342 |
| | 4,580 |
| | 9,342 |
|
| Deferred gain recognized on of real estate | | — |
| | — |
| | (117 | ) | | (5,282 | ) |
Noncontrolling interest in Operating Partnership (2) | | (351 | ) | | (169 | ) | | (48 | ) | | 465 |
|
| Subtotal | | $ | 3,826 |
| | $ | 18,819 |
| | $ | 70,324 |
| | $ | 72,611 |
|
| | | | | | | | | |
Add preferred share dividends (if converted) (3) | | — |
| | 1,812 |
| | — |
| | 7,250 |
|
| FFO | | $ | 3,826 |
| | $ | 20,631 |
| | $ | 70,324 |
| | $ | 79,861 |
|
| | | | | | | | | |
| Provision for impairment on land available for development or sale | | 23,285 |
| | 327 |
| | 23,285 |
| | 327 |
|
| Loss on extinguishment of debt | | — |
| | 340 |
| | 860 |
| | 340 |
|
| Gain on extinguishment of joint venture debt, net of RPT expenses | | — |
| | — |
| | (106 | ) | | — |
|
Acquisition costs (4) | | 168 |
| | 538 |
| | 1,890 |
| | 1,322 |
|
Add preferred share dividends (if converted) (3) | | 1,812 |
| | — |
| | 7,250 |
| | — |
|
| OPERATING FFO | | $ | 29,091 |
| | $ | 21,836 |
| | $ | 103,503 |
| | $ | 81,850 |
|
| | | | | | | | | |
| Weighted average common shares | | 77,564 |
| | 64,412 |
| | 72,118 |
| | 59,336 |
|
Shares issuable upon conversion of Operating Partnership Units (2) | | 2,247 |
| | 2,253 |
| | 2,250 |
| | 2,257 |
|
| Dilutive effect of securities | | 222 |
| | 392 |
| | 217 |
| | 392 |
|
| Subtotal | | 80,033 |
| | 67,057 |
| | 74,585 |
| | 61,985 |
|
Shares issuable upon conversion of preferred shares (3) | | 7,019 |
| | 6,940 |
| | 7,019 |
| | 6,940 |
|
| WEIGHTED AVERAGE EQUIVALENT SHARES OUTSTANDING, DILUTED | | 87,052 |
| | 73,997 |
| | 81,604 |
| | 68,925 |
|
| | | | | | | | | |
FFO, PER DILUTED SHARE | | $ | 0.05 |
| | $ | 0.28 |
| | $ | 0.94 |
| | $ | 1.16 |
|
| | | | | | | | | |
| OPERATING FFO, PER DILUTED SHARE | | $ | 0.33 |
| | $ | 0.30 |
| | $ | 1.27 |
| | $ | 1.19 |
|
| | | | | | | | | |
| Dividend per common share | | $0.20000 | | $0.18750 | | $0.77500 | | $0.71150 |
| Payout ratio - Operating FFO | | 60.6 | % | | 62.5 | % | | 61.0 | % | | 59.8 | % |
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| |
(1) | Amount included in earnings (loss) from unconsolidated joint ventures. |
| |
(2) | The total noncontrolling interest reflects OP units convertible 1:1 into common shares or the cash value thereof. |
| |
(3) | Series D convertible preferred shares were dilutive for FFO for the year ended December 31, 2013 and anti-dilutive for the comparable period in 2014. |
| |
(4) | Prior periods have been restated to reflect the add back of acquisition costs beginning in 1Q14. |
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.
Also, we consider “Operating FFO” a meaningful, additional measure of financial performance because it excludes acquisition costs and periodic items such as impairment provisions on land available for 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.
