RAMCO-GERSHENSON PROPERTIES TRUST REPORTS
FINANCIAL AND OPERATING RESULTS FOR THE FOURTH QUARTER AND YEAR-END 2015
AND PROVIDES GUIDANCE FOR 2016
FARMINGTON HILLS, Michigan – February 23, 2016 - Ramco-Gershenson Properties Trust (NYSE:RPT) today announced its financial and operating results for the three and twelve months ended December 31, 2015. The Company also provided guidance for 2016.
FULL YEAR 2015 FINANCIAL AND OPERATING HIGHLIGHTS:
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| • | Reported Operating Funds from Operations (“Operating FFO”) of $1.39 per diluted share, compared to $1.27 for the comparable period in 2014. |
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| • | Generated same-center net operating income (“NOI”) growth of 3.9%, excluding redevelopments same-center NOI growth was 2.3%. |
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| • | Signed 286 leases encompassing 1,795,051 square feet at comparable rental growth of 9.1%. |
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| • | Sold $88.7 million of non-core properties at a blended capitalization rate of 6.4%. |
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| • | Acquired its joint venture partners' interest in seven high-quality shopping centers for $185.9 million. |
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| • | Completed approximately $32.8 million in redevelopment projects at a stabilized return on cost of 9.8%. |
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| • | Increased annual dividend by 5.0%, to $0.82 per share. |
“Our performance in 2015 reflects an ongoing streamlining of our portfolio with a focus on high-growth central U.S. metro markets. This includes further upgrading of our income quality with best-in-class tenancies and maintaining an investment grade balance sheet. Our growth in earnings for the year allowed us to increase our annual dividend by 5.0%,” said Dennis Gershenson, President and Chief Executive Officer. “In 2016, we are focused on further improving our portfolio through the value-add redevelopments of our shopping centers and the sale of non-core properties. These activities, will position our portfolio of large, multi-anchored community centers for superior growth and value creation in 2017 and beyond.”
FINANCIAL RESULTS:
For the three months ended December 31, 2015:
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| • | Operating FFO of $30.3 million, or $0.34 per diluted share, compared to $29.1 million or $0.33 per diluted share for the same period in 2014. |
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| • | Funds from Operations (“FFO”) of $30.2 million, or $0.34 per diluted share, compared to $3.8 million, or $0.05 per diluted share for the same period in 2014. The change in FFO quarter-over-quarter was impacted by a $23.3 million non-cash impairment charge related to land available for development or sale incurred in the fourth quarter of 2014. |
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| • | Net income available to common shareholders of $13.0 million, or $0.16 per diluted share, compared to a net loss of $14.0 million, or $0.18 per diluted share for the same period in 2014. |
For the twelve months ended December 31, 2015:
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| • | Operating FFO of $121.8 million, or $1.39 per diluted share, compared to $103.5 million, or $1.27 per diluted share for the same period in 2014. |
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| • | FFO of $119.6 million, or $1.36 per diluted share, compared to $70.3 million, or $0.94 per diluted share for the same period in 2014. The change in FFO year-over-year was also impacted by the aforementioned $23.3 million non-cash impairment charge. |
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| • | Net income available to common shareholders of $57.8 million, or $0.73 per diluted share, compared to a net loss of $9.6 million, or $0.14 per diluted share for the same period in 2014. |
FOURTH QUARTER OPERATING RESULTS:
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| • | Same-center NOI growth for the fourth quarter of 1.7%, excluding redevelopments same-center NOI was 1.1%, reflecting slightly lower occupancy in the same-center pool as the Company continues to drive the quality of it small-shop leases. |
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| • | Signed 70 leases encompassing 407,975 square feet at comparable rental growth of 10.1%. |
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| • | Consolidated portfolio leased occupancy of 94.6% and physical occupancy of 94.0%. |
YEAR-END BALANCE SHEET METRICS:
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| • | Net debt to total market capitalization of 42.3%. |
| |
| • | Net debt to EBITDA of 6.6x, interest coverage of 3.9x, and fixed charge coverage of 3.1x. |
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| • | Weighted average term of debt to maturity of 6.5 years. |
INVESTMENT ACTIVITY:
Capital Recycling:
During the fourth quarter, the Company sold its ownership interest in three non-core shopping centers for approximately $32.1 million, including its 100% interest in Cocoa Commons, a 90,000 square foot shopping center anchored by Publix, in Cocoa, Florida and Horizon Village, a 97,000 square foot shopping center anchored by Movie Tavern Grill, You Fit Health Club and Crossroads Treatment Center, in Suwanee, Georgia; as well as its 20% interest in Chester Springs, a 223,000 shopping center anchored by Marshalls and Shop-Rite Supermarket, in Chester Springs, New Jersey.
Subsequent to quarter-end, the Company sold Troy Towne Center, a 144,000 square foot shopping center anchored by Kohl's and Petco, in Troy, Ohio for $12.4 million.
In 2015, the Company sold $88.7 million in wholly-owned and joint venture properties primarily in markets that are not part of the Company's long-term strategic plan. Proceeds from the sales were used to reduce debt and fund the Company's business plan.
Acquisitions
In 2015, the Company acquired its joint partners' interest in seven high-quality shopping centers for $185.9 million. A number of these centers have redevelopment opportunities that the Company plans to capitalize on over the next 12-18 months. The shopping centers encompass over 1.4 million square feet and are anchored by leading retailers, including Whole Foods, Home Depot, Bed Bath & Beyond, and Jewel-Osco. The Company also acquired three retail buildings contiguous to existing Ramco centers.
Redevelopment
In 2015, the Company completed approximately $32.8 million of value-add redevelopments at a stabilized return on cost of 9.8%. At December 31, 2015, the Company's redevelopment pipeline consisted of 10 projects with an estimated total cost of $76.8 million, which are expected to stabilize over the next two years at an average return on cost between 9% - 10%.
FINANCING ACTIVITY:
In the fourth quarter, the Company closed a $50.0 million private placement of senior unsecured notes. The financing consists of $25.0 million of notes with a ten-year term priced at a fixed interest rate of 4.05% and $25.0 million of notes with an eleven-year term priced at a fixed interest rate of 4.28%.
At year-end, the Company had $758.1 million of unsecured debt at an average interest rate of 3.6% and $322.5 million in mortgage debt at an average interest rate of 5.4%. The average term for all debt was 6.5 years and the unencumbered asset pool was approximately $2.0 billion.
DIVIDEND:
In the fourth quarter, the Company declared a regular cash dividend of $0.21 per common share for the period October 1, 2015 through December 31, 2015 and a Series D convertible perpetual preferred share dividend of $0.90625 per share for the same period. The dividends were paid on January 4, 2016 to shareholders of record as of December 21, 2015. During the year, the Company declared dividends of $0.82 per common share. The Operating FFO payout ratio for the full year was 59.0%.
2016 GUIDANCE:
The Company is introducing guidance for 2016 FFO and Operating FFO per diluted share, as well as certain other key measures:
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| | |
| Reported Funds from Operations | | $1.33 - $1.40 |
| Less: Gain on Land Sales | | $0.01 - $0.02 |
| Operating Funds from Operations | | $1.32 - $1.38 |
| Same-Center NOI increase with redevelopments | | 3.0% - 4.0% |
| Same-Center NOI increase without redevelopments | | 2.0% - 3.0% |
| Dispositions | | $100 Million - $125 Million |
| Acquisitions | | Opportunistic |
| General and Administrative Expense | | $22 Million - $23 Million |
| Debt to EBITDA | | 6.2x - 6.4x |
The Company's 2016 guidance excludes any unforeseen one-time items including provisions for impairment, transactions costs, gain or loss on extinguishment of debt and other items.
CONFERENCE CALL/WEBCAST:
Ramco-Gershenson Properties Trust will host a live broadcast of its fourth quarter conference call on Wednesday, February 24, 2016 at 9:00 a.m. eastern time, to discuss its financial and operating results as well as its 2016 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) 660-6853, (Conference ID: 13628563), 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 number of the largest metropolitan markets in the central United States. At December 31, 2015, the Company owned interests in and managed a portfolio of 73 shopping centers and one office building with approximately 15.9 million square feet of gross leasable area. At December 31, 2015, the Company's consolidated portfolio was 94.6% 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, |
| | 2015 | | 2014 |
| ASSETS | | | |
| Income producing properties, at cost: | | | |
| Land | $ | 392,352 |
| | $ | 341,388 |
|
| Buildings and improvements | 1,792,129 |
| | 1,592,644 |
|
| Less accumulated depreciation and amortization | (331,520 | ) | | (287,177 | ) |
| Income producing properties, net | 1,852,961 |
| | 1,646,855 |
|
| Construction in progress and land available for development or sale | 60,166 |
| | 74,655 |
|
| Real estate held for sale | 453 |
| | — |
|
| Net real estate | 1,913,580 |
| | 1,721,510 |
|
| Equity investments in unconsolidated joint ventures | 4,325 |
| | 28,733 |
|
| Cash and cash equivalents | 6,644 |
| | 9,335 |
|
| Restricted cash | 8,708 |
| | 8,163 |
|
| Accounts receivable, net | 18,705 |
| | 11,997 |
|
| Acquired lease intangibles, net | 88,819 |
| | 77,045 |
|
| Other assets, net | 87,890 |
| | 87,549 |
|
| TOTAL ASSETS | $ | 2,128,671 |
| | $ | 1,944,332 |
|
| | | | |
| LIABILITIES AND SHAREHOLDERS' EQUITY | | | |
| Notes payable, net | $ | 1,083,711 |
| | $ | 917,658 |
|
| Capital lease obligation | 1,108 |
| | 1,828 |
|
| Accounts payable and accrued expenses | 44,480 |
| | 44,232 |
|
| Acquired lease intangibles, net | 64,193 |
| | 54,278 |
|
| Other liabilities | 10,035 |
| | 10,106 |
|
| Distributions payable | 18,807 |
| | 17,951 |
|
| TOTAL LIABILITIES | 1,222,334 |
| | 1,046,053 |
|
| | | | |
| 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 and 2,000 shares issued and outstanding as of December 31, 2015 and 2014, respectively | 92,427 |
| | 100,000 |
|
| Common shares of beneficial interest, $0.01 par, 120,000 shares authorized, 79,162 and 77,573 shares issued and outstanding as of December 31, 2015 and 2014, respectively | 792 |
| | 776 |
|
| Additional paid-in capital | 1,156,345 |
| | 1,130,262 |
|
| Accumulated distributions in excess of net income | (363,937 | ) | | (356,715 | ) |
| Accumulated other comprehensive loss | (1,404 | ) | | (1,966 | ) |
| TOTAL SHAREHOLDERS' EQUITY ATTRIBUTABLE TO RPT | 884,223 |
| | 872,357 |
|
| Noncontrolling interest | 22,114 |
| | 25,922 |
|
| TOTAL SHAREHOLDERS' EQUITY | 906,337 |
| | 898,279 |
|
| TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $ | 2,128,671 |
| | $ | 1,944,332 |
|
|
| | | | | | | | | | | | | | | |
| RAMCO-GERSHENSON PROPERTIES TRUST |
| CONSOLIDATED STATEMENTS OF OPERATIONS |
| (In thousands, except per share amounts) |
| | | | |
| | Three Months Ended December 31, | Twelve Months Ended December 31, |
| | 2015 | | 2014 | | 2015 | | 2014 |
| REVENUE | | | | | | | |
| Minimum rent | $ | 48,196 |
| | $ | 43,635 |
| | $ | 183,198 |
| | $ | 157,691 |
|
| Percentage rent | 143 |
| | 57 |
| | 539 |
| | 264 |
|
| Recovery income from tenants | 18,039 |
| | 15,999 |
| | 61,561 |
| | 52,828 |
|
| Other property income | 1,869 |
| | 2,935 |
| | 4,739 |
| | 5,521 |
|
| Management and other fee income | 331 |
| | 531 |
| | 1,753 |
| | 2,059 |
|
| TOTAL REVENUE | 68,578 |
| | 63,157 |
| | 251,790 |
| | 218,363 |
|
| | | | | | | | |
| EXPENSES | | | | | | | |
| Recoverable operating & real estate tax expense | 20,192 |
| | 18,524 |
| | 69,341 |
| | 58,793 |
|
| Other non-recoverable operating expense | 1,463 |
| | 1,007 |
| | 4,271 |
| | 3,633 |
|
| Depreciation and amortization | 25,042 |
| | 20,605 |
| | 89,439 |
| | 81,182 |
|
| Acquisition costs | 70 |
| | 168 |
| | 644 |
| | 1,890 |
|
| General and administrative expense | 5,709 |
| | 5,575 |
| | 20,077 |
| | 21,670 |
|
| Provision for impairment | — |
| | 27,865 |
| | 2,521 |
| | 27,865 |
|
| TOTAL EXPENSES | 52,476 |
| | 73,744 |
| | 186,293 |
| | 195,033 |
|
| | | | | | | | |
| OPERATING INCOME (LOSS) | 16,102 |
| | (10,587 | ) | | 65,497 |
| | 23,330 |
|
| | | | | | | | |
| OTHER INCOME AND EXPENSES | | | | | | | |
| Other expense, net | (262 | ) | | (74 | ) | | (624 | ) | | (689 | ) |
| Gain on sale of real estate | 9,565 |
| | 7,927 |
| | 17,570 |
| | 10,857 |
|
| Earnings from unconsolidated joint ventures | 724 |
| | 411 |
| | 17,696 |
| | 75 |
|
| Interest expense | (10,660 | ) | | (9,866 | ) | | (40,778 | ) | | (33,742 | ) |
| Amortization of deferred financing fees | (380 | ) | | (331 | ) | | (1,433 | ) | | (1,446 | ) |
| Gain on remeasurement of unconsolidated joint ventures | — |
| | — |
| | 7,892 |
| | 117 |
|
| Gain (loss) on extinguishment of debt | — |
| | — |
| | 1,414 |
| | (860 | ) |
| INCOME (LOSS) BEFORE TAX | 15,089 |
| | (12,520 | ) | | 67,234 |
| | (2,358 | ) |
| Income tax provision | (33 | ) | | (36 | ) | | (339 | ) | | (54 | ) |
| NET INCOME (LOSS) | 15,056 |
| | (12,556 | ) | | 66,895 |
| | (2,412 | ) |
| Net (income) loss attributable to noncontrolling partner interest | (370 | ) | | 351 |
| | (1,786 | ) | | 48 |
|
| NET INCOME (LOSS) ATTRIBUTABLE TO RPT | 14,686 |
| | (12,205 | ) | | 65,109 |
| | (2,364 | ) |
| Preferred share dividends | (1,676 | ) | | (1,812 | ) | | (6,838 | ) | | (7,250 | ) |
| Preferred share conversion costs | — |
| | — |
| | (500 | ) | | — |
|
| NET INCOME (LOSS) AVAILABLE TO COMMON SHAREHOLDERS | $ | 13,010 |
| | $ | (14,017 | ) | | $ | 57,771 |
| | $ | (9,614 | ) |
| | | | | | | | |
| EARNINGS (LOSS) PER COMMON SHARE | | | | | | | |
| Basic | $ | 0.16 |
| | $ | (0.18 | ) | | $ | 0.73 |
| | $ | (0.14 | ) |
| Diluted | $ | 0.16 |
| | $ | (0.18 | ) | | $ | 0.73 |
| | $ | (0.14 | ) |
| | | | | | | | |
| WEIGHTED AVERAGE COMMON SHARES OUTSTANDING | | | | | | | |
| Basic | 79,162 |
| | 77,564 |
| | 78,848 |
| | 72,118 |
|
| Diluted | 79,339 |
| | 77,564 |
| | 79,035 |
| | 72,118 |
|
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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, |
| | | 2015 | | 2014 | | 2015 | | 2014 |
| | | | | | | | | |
| Net income (loss) available to common shareholders | | $ | 13,010 |
| | $ | (14,017 | ) | | $ | 57,771 |
| | $ | (9,614 | ) |
| Adjustments: | | | | | | |
| | |
|
| Rental property depreciation and amortization expense | | 25,004 |
| | 20,574 |
| | 89,289 |
| | 80,826 |
|
| Pro-rata share of real estate depreciation from unconsolidated joint ventures | | 88 |
| | 596 |
| | 1,782 |
| | 4,719 |
|
Gain on sale of depreciable real estate (1) | | (9,360 | ) | | (7,556 | ) | | (13,529 | ) | | (10,022 | ) |
Gain on sale of joint venture depreciable real estate (2) | | (605 | ) | | — |
| | (16,489 | ) | | — |
|
| Provision for impairment on income-producing properties | | — |
| | 4,580 |
| | — |
| | 4,580 |
|
Gain on remeasurement of unconsolidated joint ventures (3) | | — |
| | — |
| | (7,892 | ) | | (117 | ) |
Noncontrolling interest in Operating Partnership (4) | | 370 |
| | (351 | ) | | 1,786 |
| | (48 | ) |
| FFO | | $ | 28,507 |
| | $ | 3,826 |
| | $ | 112,718 |
| | $ | 70,324 |
|
| | | | | | | | | |
Add preferred share dividends (assuming conversion) (5) | | 1,676 |
| | — |
| | 6,838 |
| | — |
|
| FFO available to common shareholders | | $ | 30,183 |
| | $ | 3,826 |
| | $ | 119,556 |
| | $ | 70,324 |
|
| | | | | | | | | |
| Provision for impairment on land available for development or sale | | — |
| | 23,285 |
| | 2,521 |
| | 23,285 |
|
| (Gain) loss on extinguishment of debt | | — |
| | — |
| | (1,414 | ) | | 860 |
|
Gain on extinguishment of joint venture debt, net of RPT expenses (2) | | — |
| | — |
| | — |
| | (106 | ) |
| Acquisition costs | | 70 |
| | 168 |
| | 644 |
| | 1,890 |
|
Preferred share dividends (assuming conversion) and conversion costs (6) | | — |
| | 1,812 |
| | 500 |
| | 7,250 |
|
| OPERATING FFO | | $ | 30,253 |
| | $ | 29,091 |
| | $ | 121,807 |
| | $ | 103,503 |
|
| | | | | | | | | |
| Weighted average common shares | | 79,162 |
| | 77,564 |
| | 78,848 |
| | 72,118 |
|
Shares issuable upon conversion of Operating Partnership Units (4) | | 2,029 |
| | 2,247 |
| | 2,187 |
| | 2,250 |
|
| Dilutive effect of securities | | 177 |
| | 222 |
| | 187 |
| | 217 |
|
| Subtotal | | 81,368 |
| | 80,033 |
| | 81,222 |
| | 74,585 |
|
Shares issuable upon conversion of preferred shares (5)(6) | | 6,553 |
| | 7,019 |
| | 6,692 |
| | 7,019 |
|
| WEIGHTED AVERAGE EQUIVALENT SHARES OUTSTANDING, DILUTED | | 87,921 |
| | 87,052 |
| | 87,914 |
| | 81,604 |
|
| | | | | | | | | |
FFO, PER DILUTED SHARE (5)(7) | | $ | 0.34 |
| | $ | 0.05 |
| | $ | 1.36 |
| | $ | 0.94 |
|
| | | | | | | | | |
OPERATING FFO, PER DILUTED SHARE (6) | | $ | 0.34 |
| | $ | 0.33 |
| | $ | 1.39 |
| | $ | 1.27 |
|
| | | | | | | | | |
| Dividend per common share | | $0.21000 | | $0.20000 | | $0.82000 | | $0.77500 |
| Payout ratio - Operating FFO | | 61.8 | % | | 60.6 | % | | 59.0 | % | | 61.0 | % |
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(1) | Includes $5.7 million net gain recognized as a result of Ramco 450 Venture LLC selling its last property. |
| |
(2) | Amount included in earnings from unconsolidated joint ventures. |
| |
(3) | In the third quarter 2015, we purchased our partner's interest in six properties owned by Ramco 450 Venture LLC and one property owned by Ramco/Lion Venture L.P. The total gain of $7.9 million in the twelve months ended December 31, 2015, represents the difference between the carrying value and the fair value of our previously held equity investment in the properties. |
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(4) | The total noncontrolling interest reflects OP units convertible 1:1 into common shares. |
| |
(5) | Series D convertible preferred shares were dilutive for FFO for the three and the twelve months ended December 31, 2015 and anti-dilutive for the comparable period in 2014. |
| |
(6) | Series D convertible preferred shares were dilutive for Operating FFO for year ended December 31, 2014. |
| |
(7) | The year ended December 31, 2015 includes $0.04 per share attributable to gain on sale of land at Gaines Marketplace. |
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.
