RAMCO-GERSHENSON PROPERTIES TRUST REPORTS
FINANCIAL AND OPERATING RESULTS FOR THE FOURTH QUARTER 2017
FARMINGTON HILLS, Michigan – February 20, 2018 - Ramco-Gershenson Properties Trust (NYSE:RPT) today announced its financial and operating results for the three and twelve months ended December 31, 2017.
FOURTH QUARTER FINANCIAL AND OPERATING RESULTS:
| |
| • | Net income available to common shareholders of $0.24 per diluted share, compared to $0.07 per diluted share for the same period in 2016. |
| |
| • | Funds from Operations ("FFO") of $0.30 per diluted share, compared to $0.33 per diluted share for the same period in 2016. |
| |
| • | Operating Funds from Operations (“Operating FFO”) of $0.31 per diluted share, compared to $0.34 per diluted share for the same period in 2016. |
| |
| • | Generated same property NOI growth with redevelopment of 2.3% for the three months ended December 31, 2017. |
| |
| • | Sold $101.4 million of non-core shopping centers. |
| |
| • | Signed 40 comparable leases encompassing 206,502 square feet at a positive leasing spread of 8.9% with an annualized base rent ("ABR") of $14.47 per square feet, including seven new leases with an ABR of $18.06 per square feet and positive leasing spread of 16.8%. |
| |
| • | Increased ABR to $15.16 per square foot, excluding ground leases, compared to $14.20 for the same period in 2016. |
2017 FULL-YEAR HIGHLIGHTS
| |
| • | Generated same-center NOI growth with redevelopment of 2.4% for the twelve months ended December 31, 2017. |
| |
| • | Signed 186 comparable leases encompassing 1,073,197 square feet at a positive leasing spread of 8.8%, including 24 new leases with an ABR of $19.38 per square feet and positive leasing spread of 18.0%. |
| |
| • | Acquired one dynamic town center and one urban in-fill property for a purchase price totaling $168.3 million. |
| |
| • | Sold $225.7 million of non-core shopping centers. |
| |
| • | Completed approximately $15.5 million in redevelopment projects. |
| |
| • | Posted portfolio leased occupancy of 93.3%, compared to 94.4% for the same period in 2016, primarily the result of bankruptcy closures in 2017. |
| |
| • | Reduced Michigan rental exposure to 20.0% of total ABR. |
"In 2017, we completed the sale of $226 million of non-core properties diversifying our portfolio in strategic non-coastal markets," said Dennis Gershenson, President and Chief Executive Officer. "In 2018, our focus is on operating fundamentals, including growing occupancy, increasing our portfolio ABR and completing in-process redevelopment projects to maximize the value of our rebalanced portfolio."
FINANCIAL RESULTS:
For the three months ended December 31, 2017:
| |
| • | Net income available to common shareholders of $19.2 million, or $0.24 per diluted share, compared to $5.2 million, or $0.07 per diluted share for the same period in 2016. |
| |
| • | FFO of $26.5 million, or $0.30 per diluted share, compared to $29.1 million, or $0.33 per diluted share for the same period in 2016. |
| |
| • | Operating FFO of $27.7 million, or $0.31 per diluted share, compared to $29.5 million or $0.34 per diluted share for the same period in 2016. |
For the twelve months ended December 31, 2017:
| |
| • | Net income available to common shareholders of $62.4 million, or $0.78 per diluted share, compared to $53.0 million, or $0.66 per diluted share for the same period in 2016. |
| |
| • | FFO of $118.6 million, or $1.34 per diluted share, compared to $118.7 million, or $1.35 per diluted share for the same period in 2016. |
| |
| • | Operating FFO of $119.6 million, or $1.36 per diluted share, compared to $119.9 million or $1.36 per diluted share for the same period in 2016. |
BALANCE SHEET METRICS AND CAPITAL MARKETS ACTIVITY:
| |
| • | Net debt to annualized proforma adjusted EBITDA of 6.7X, interest coverage of 3.6X, and fixed charge coverage of 3.0X. |
INVESTMENT ACTIVITY:
Dispositions
During the fourth quarter, the Company sold four shopping centers which are not part of the Company’s long-term portfolio strategy, at a gross sales price of $101.4 million. The properties sold are:
| |
| • | Millennium Park, Livonia, Michigan, a 273,000 square foot power center anchored by Meijer (shadow), Costco (shadow), The Home Depot, Marshalls, Michaels and Five Below; |
| |
| • | Village Plaza, Lakeland, Florida, a 158,000 square foot center anchored by Hobby Lobby, Big Lots and Party City; |
| |
| • | Liberty Square, Wauconda, Illinois, a 107,000 square foot Jewel-Osco anchored center; and |
| |
| • | Rolling Meadows, Rolling Meadows, Illinois, a 134,000 square foot Jewel-Osco anchored center. |
The Company’s total shopping center dispositions for the year totaled $225.7 million.
Redevelopment
At December 31, 2017, the Company's active redevelopment pipeline consisted of seven projects with an estimated total cost of $73.7 million, which are expected to stabilize in 2018 at an estimated weighted average return on cost of between 9% - 10%.
FINANCING ACTIVITY:
The Company closed a $75.0 million private placement of senior unsecured notes in December 2017. The notes were issued in three tranches with terms of 5, 10, and 12 years and a weighted average interest rate of 4.46%. Proceeds were used to pay off two mortgages totaling $36.7 million with an average interest rate of 4.64% as well as for general corporate purposes.
In addition, during the quarter, the Company amended and repriced its $75.0 million term loan due 2021. The transaction reduced the loan's interest rate by 35 basis points for the remainder of the term.
DIVIDEND:
In the fourth quarter, the Company declared a regular cash dividend of $0.22 per common share for the period October 1, 2017 through December 31, 2017 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, 2018 to shareholders of record as of December 20, 2017. During the year, the Company declared dividends of $0.88 per common share. The Operating FFO payout ratio for the full year was 64.7%.
GUIDANCE:
The Company affirmed its 2018 FFO and Operating FFO guidance of $1.31 to $1.37 per share, as well as certain other key assumptions:
| |
| • | Same Property NOI growth including redevelopment of 2.25% to 3.75%. |
| |
| • | Redevelopment Expenditures of $40.0 to $50.0 million. |
| |
| • | Year End Physical Occupancy of 93% - 94%. |
|
| | | | |
| | | | | |
| Measure | | Low | | High |
| Cash NOI | | $1.99 | | $2.02 |
| Non-cash adjustments | | 0.08 | | 0.08 |
| General and administrative | | (0.26) | | (0.24) |
| Interest expense | | (0.50) | | (0.49) |
| Total Operating FFO | | $1.31 | | $1.37 |
| | | | | |
CONFERENCE CALL/WEBCAST:
Ramco-Gershenson Properties Trust will host a live broadcast of its fourth quarter conference call on Wednesday, February 21, 2018 at 10:00 a.m. eastern time, to discuss its financial and operating results as well as its 2018 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: 23919) through February 28, 2018.
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 December 31, 2017, the Company owned interests in and managed a portfolio of 56 shopping centers and three joint venture properties. At December 31, 2017, the Company's consolidated portfolio was 93.3% 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
|
| | | | | | | |
| RAMCO-GERSHENSON PROPERTIES TRUST |
| CONSOLIDATED BALANCE SHEETS |
| (In thousands, except per share amounts) |
| | | | |
| | December 31, 2017 | | December 31, 2016 |
| | |
| ASSETS | | | (as revised) |
| Income producing properties, at cost: | | | |
| Land | $ | 397,935 |
| | $ | 374,889 |
|
| Buildings and improvements | 1,732,844 |
| | 1,757,781 |
|
| Less accumulated depreciation and amortization | (351,632 | ) | | (345,204 | ) |
| Income producing properties, net | 1,779,147 |
| | 1,787,466 |
|
| Construction in progress and land available for development or sale | 58,243 |
| | 61,224 |
|
| Real estate held for sale | — |
| | 8,776 |
|
| Net real estate | 1,837,390 |
| | 1,857,466 |
|
| Equity investments in unconsolidated joint ventures | 3,493 |
| | 3,150 |
|
| Cash and cash equivalents | 8,081 |
| | 3,582 |
|
| Restricted cash and escrows | 4,810 |
| | 11,144 |
|
| Accounts receivable, net | 26,145 |
| | 24,016 |
|
| Acquired lease intangibles, net | 59,559 |
| | 72,424 |
|
| Other assets, net | 90,916 |
| | 89,716 |
|
| TOTAL ASSETS | $ | 2,030,394 |
| | $ | 2,061,498 |
|
| | | | |
| LIABILITIES AND SHAREHOLDERS' EQUITY | | | |
| Notes payable, net | $ | 999,215 |
|
| $ | 1,021,223 |
|
| Capital lease obligation | 1,022 |
| | 1,066 |
|
| Accounts payable and accrued expenses | 56,750 |
| | 57,357 |
|
| Acquired lease intangibles, net | 60,197 |
| | 63,734 |
|
| Other liabilities | 8,375 |
| | 9,893 |
|
| Distributions payable | 19,666 |
| | 19,627 |
|
| TOTAL LIABILITIES | 1,145,225 |
| | 1,172,900 |
|
| | | | |
| 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 December 31, 2017 and 2016, respectively | 92,427 |
| | 92,427 |
|
| Common shares of beneficial interest, $0.01 par, 120,000 shares authorized, 79,366 and 79,272 shares issued and outstanding as of December 31, 2017 and 2016, respectively | 794 |
| | 793 |
|
| Additional paid-in capital | 1,160,862 |
| | 1,158,430 |
|
| Accumulated distributions in excess of net income | (392,619 | ) | | (384,934 | ) |
| Accumulated other comprehensive income | 2,858 |
| | 985 |
|
| TOTAL SHAREHOLDERS' EQUITY ATTRIBUTABLE TO RPT | 864,322 |
| | 867,701 |
|
| Noncontrolling interest | 20,847 |
| | 20,897 |
|
| TOTAL SHAREHOLDERS' EQUITY | 885,169 |
| | 888,598 |
|
| TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $ | 2,030,394 |
| | $ | 2,061,498 |
|
|
| | | | | | | | | | | | | | | | |
| RAMCO-GERSHENSON PROPERTIES TRUST | |
| CONSOLIDATED STATEMENTS OF OPERATIONS | |
| (In thousands, except per share amounts) | |
| | | | | | | |
| | Three Months | | Twelve Months | |
| | December 31, | | December 31, | |
| | 2017 | | 2016 | | 2017 | | 2016 | |
| REVENUE | | | | | | | | |
| Minimum rent | $ | 48,392 |
| | $ | 48,253 |
| | $ | 198,362 |
| | $ | 192,793 |
| |
| Percentage rent | 134 |
| | 90 |
| | 704 |
| | 600 |
| |
| Recovery income from tenants | 14,603 |
| | 14,774 |
| | 61,258 |
| | 62,841 |
| |
| Other property income | 993 |
| | 1,239 |
| | 4,303 |
| | 4,167 |
| |
| Management and other fee income | 141 |
| | 98 |
| | 455 |
| | 529 |
| |
| TOTAL REVENUE | 64,263 |
| | 64,454 |
| | 265,082 |
| | 260,930 |
| |
| | | | | | | | | |
| EXPENSES | | | | | | | | |
| Real estate tax expense | 10,012 |
| | 10,029 |
| | 42,683 |
| | 41,739 |
| |
| Recoverable operating expense | 6,954 |
| | 8,355 |
| | 27,653 |
| | 29,581 |
| |
| Non-recoverable operating expense | 1,233 |
| | 1,014 |
| | 4,449 |
| | 3,575 |
| |
| Depreciation and amortization | 22,053 |
| | 21,986 |
| | 91,335 |
| | 91,793 |
| |
| Acquisition costs | — |
|
| 198 |
| | — |
| | 316 |
| |
| General and administrative expense | 7,383 |
| | 4,967 |
| | 26,159 |
| | 22,041 |
| |
| Provision for impairment | 982 |
| | — |
| | 9,404 |
| | 977 |
| |
| TOTAL EXPENSES | 48,617 |
| | 46,549 |
| | 201,683 |
| | 190,022 |
| |
| | | | | | | | | |
| OPERATING INCOME | 15,646 |
|
| 17,905 |
| | 63,399 |
| | 70,908 |
| |
| | | | | | | | | |
| OTHER INCOME AND EXPENSES | | | | | | | | |
| Other expense, net | (96 | ) | | 129 |
| | (708 | ) | | (177 | ) | |
| Gain on sale of real estate | 16,843 |
| | 96 |
| | 52,764 |
| | 35,781 |
| |
| Earnings from unconsolidated joint ventures | 50 |
| | 117 |
| | 273 |
| | 454 |
| |
| Interest expense | (10,995 | ) | | (10,696 | ) | | (44,866 | ) | | (44,514 | ) | |
| Other gain on unconsolidated joint ventures | — |
| | — |
| | — |
| | 215 |
| |
| (Loss) on extinguishment of debt | — |
| | (409 | ) | | — |
| | (1,256 | ) | |
| INCOME BEFORE TAX | 21,448 |
| | 7,142 |
| | 70,862 |
| | 61,411 |
| |
| Income tax provision | (24 | ) | | (65 | ) | | (143 | ) | | (299 | ) | |
| | | | | | | | | |
| NET INCOME | 21,424 |
|
| 7,077 |
|
| 70,719 |
| | 61,112 |
| |
| Net income attributable to noncontrolling partner interest | (501 | ) | | (166 | ) | | (1,659 | ) | | (1,448 | ) | |
| NET INCOME ATTRIBUTABLE TO RPT | 20,923 |
|
| 6,911 |
|
| 69,060 |
| | 59,664 |
| |
| Preferred share dividends | (1,675 | ) | | (1,676 | ) | | (6,701 | ) | | (6,701 | ) | |
| NET INCOME AVAILABLE TO COMMON SHAREHOLDERS | $ | 19,248 |
|
| $ | 5,235 |
|
| $ | 62,359 |
| | $ | 52,963 |
| |
| | | | | | | | | |
| EARNINGS PER COMMON SHARE | | | | | | | | |
| Basic | $ | 0.24 |
| | $ | 0.07 |
| | $ | 0.78 |
| | $ | 0.66 |
| |
| Diluted | $ | 0.24 |
| | $ | 0.07 |
| | $ | 0.78 |
| | $ | 0.66 |
| |
| | | | | | | | | |
| WEIGHTED AVERAGE COMMON SHARES OUTSTANDING | | | | | | | | |
| Basic | 79,366 |
| | 79,268 |
| | 79,344 |
| | 79,236 |
| |
| Diluted | 79,550 |
| | 79,461 |
| | 79,530 |
| | 79,435 |
| |
|
| | | | | | | | | | | | | | | |
| RAMCO-GERSHENSON PROPERTIES TRUST |
| RECONCILIATION OF NON-GAAP FINANCIAL MEASURES |
| FUNDS FROM OPERATIONS |
| (In thousands, except per share data) |
| | | | | | | | |
| | Three Months Ended December 31, | | Twelve Months Ended December 31, |
| | 2017 | | 2016 | | 2017 | | 2016 |
| | | | | | | | |
| Net income | $ | 21,424 |
| | $ | 7,077 |
| | $ | 70,719 |
| | $ | 61,112 |
|
| Net income attributable to noncontrolling partner interest | (501 | ) | | (166 | ) | | (1,659 | ) | | (1,448 | ) |
| Preferred share dividends | (1,675 | ) | | (1,676 | ) | | (6,701 | ) | | (6,701 | ) |
| Net income available to common shareholders | 19,248 |
| | 5,235 |
|
| 62,359 |
| | 52,963 |
|
| Adjustments: | | | | | |
| | |
|
| Rental property depreciation and amortization expense | 21,993 |
| | 21,931 |
| | 91,097 |
| | 91,610 |
|
| Pro-rata share of real estate depreciation from unconsolidated joint ventures | 73 |
| | 73 |
| | 302 |
| | 310 |
|
| Gain on sale of depreciable real estate | (16,945 | ) | | — |
| | (51,977 | ) | | (34,108 | ) |
| Gain on sale of joint venture depreciable real estate | — |
| | — |
| | — |
| | (26 | ) |
| Provision for impairment on income-producing properties | — |
| | — |
| | 8,422 |
| | — |
|
| Other gain on unconsolidated joint ventures | — |
| | — |
| | — |
| | (215 | ) |
| FFO available to common shareholders | 24,369 |
| | 27,239 |
|
| 110,203 |
| | 110,534 |
|
| | | | | | | | |
Noncontrolling interest in Operating Partnership (1) | 501 |
| | 166 |
| | 1,659 |
| | 1,448 |
|
Preferred share dividends (assuming conversion) (2) | 1,675 |
| | 1,676 |
| | 6,701 |
| | 6,701 |
|
| FFO available to common shareholders and dilutive securities | $ | 26,545 |
| | $ | 29,081 |
|
| $ | 118,563 |
| | $ | 118,683 |
|
| | | | | | | | |
| (Gain) loss on sale of land | 102 |
| | (96 | ) | | (787 | ) | | (1,673 | ) |
| Provision for impairment on land available for development or sale | 982 |
| | — |
| | 982 |
| | 977 |
|
| Severance expense | 60 |
| | 43 |
| | 715 |
| | 492 |
|
| Loss on early extinguishment of debt | — |
|
| — |
| | — |
| | 1,256 |
|
| Acquisition costs | — |
| | 198 |
| | — |
| | 316 |
|
| Cost associated with early extinguishment of debt | 30 |
|
| 281 |
| | 110 |
| | (128 | ) |
| Operating FFO available to common shareholders and dilutive securities | $ | 27,719 |
| | $ | 29,507 |
|
| $ | 119,583 |
| | $ | 119,923 |
|
| | | | | | | | |
| Weighted average common shares | 79,366 |
| | 79,268 |
| | 79,344 |
| | 79,236 |
|
Shares issuable upon conversion of Operating Partnership Units (1) | 1,916 |
| | 1,917 |
| | 1,917 |
| | 1,943 |
|
| Dilutive effect of restricted stock | 184 |
| | 193 |
| | 186 |
| | 199 |
|
Shares issuable upon conversion of preferred shares (2) | 6,740 |
| | 6,630 |
| | 6,740 |
| | 6,630 |
|
| Weighted average equivalent shares outstanding, diluted | 88,206 |
| | 88,008 |
|
| 88,187 |
| | 88,008 |
|
| | | | | | | | |
| FFO available to common shareholders and dilutive securities per share, diluted | $ | 0.30 |
| | $ | 0.33 |
| | $ | 1.34 |
| | $ | 1.35 |
|
| | | | | | | | |
| Operating FFO available to common shareholders and dilutive securities per share, diluted | $ | 0.31 |
| | $ | 0.34 |
| | $ | 1.36 |
| | $ | 1.36 |
|
| | | | | | | | |
| Dividend per common share | $ | 0.22 |
| | $ | 0.22 |
| | $ | 0.88 |
| | $ | 0.86 |
|
| Payout ratio - Operating FFO | 71.0 | % |
| 64.7 | % |
| 64.7 | % | | 63.2 | % |
| | | | | | | | |
| |
(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. |
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 | | Twelve Months Ended |
| | December 31, | | December 31, |
| | 2017 | | 2016 | | 2017 | | 2016 |
| Net income available to common shareholders | $ | 19,248 |
| | $ | 5,235 |
| | $ | 62,359 |
| | $ | 52,963 |
|
| Preferred share dividends | 1,675 |
| | 1,676 |
| | 6,701 |
| | 6,701 |
|
| Net income attributable to noncontrolling partner interest | 501 |
| | 166 |
| | 1,659 |
| | 1,448 |
|
| Income tax provision | 24 |
|
| 65 |
| | 143 |
| | 299 |
|
| Interest expense | 10,995 |
| | 10,696 |
| | 44,866 |
| | 44,514 |
|
| Costs associated with early extinguishment of debt | — |
| | 409 |
| | — |
| | 1,256 |
|
| Earnings from unconsolidated joint ventures | (50 | ) |
| (117 | ) | | (273 | ) | | (454 | ) |
| Gain on sale of real estate | (16,843 | ) |
| (96 | ) | | (52,764 | ) | | (35,781 | ) |
| Gain on remeasurement of unconsolidated joint venture | — |
| | — |
| | — |
| | (215 | ) |
| Other expense, net | 96 |
|
| (129 | ) | | 708 |
| | 177 |
|
| Management and other fee income | (141 | ) |
| (98 | ) | | (455 | ) | | (529 | ) |
| Depreciation and amortization | 22,053 |
| | 21,986 |
| | 91,335 |
| | 91,793 |
|
| Acquisition costs | — |
| | 198 |
| | — |
| | 316 |
|
| General and administrative expenses | 7,383 |
| | 4,967 |
| | 26,159 |
| | 22,041 |
|
| Provision for impairment | 982 |
| | — |
| | 9,404 |
| | 977 |
|
| Lease termination fees | (23 | ) |
| (71 | ) | | (83 | ) | | (139 | ) |
| Amortization of lease inducements | 44 |
|
| 44 |
| | 175 |
| | 221 |
|
| Amortization of acquired above and below market lease intangibles, net | (1,130 | ) |
| (1,069 | ) | | (4,397 | ) | | (3,397 | ) |
| Straight-line ground rent expense | 70 |
|
| 63 |
| | 281 |
| | 63 |
|
| Amortization of acquired ground lease intangibles | 6 |
|
| 6 |
| | 25 |
| | 6 |
|
| Straight-line rental income | (872 | ) |
| (948 | ) | | (2,669 | ) | | (2,383 | ) |
| NOI | 44,018 |
| | 42,983 |
| | 183,174 |
| | 179,877 |
|
| NOI from Other Investments | (4,951 | ) | | (4,788 | ) | | (25,529 | ) | | (25,866 | ) |
| Same Property NOI with Redevelopment | 39,067 |
| | 38,195 |
| | 157,645 |
| | 154,011 |
|
NOI from Redevelopment (1) | (6,016 | ) | | (5,850 | ) | | (23,991 | ) | | (21,954 | ) |
| Same Property NOI without Redevelopment | $ | 33,051 |
| | $ | 32,345 |
| | $ | 133,654 |
| | $ | 132,057 |
|
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(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 December 31, |
| | 2017 | | 2016 |
| Reconciliation of net income to proforma adjusted EBITDA | | | |
| Net income | $ | 21,424 |
| | $ | 7,077 |
|
| Gain on sale of real estate | (16,843 | ) | | (96 | ) |
| Depreciation and amortization | 22,053 |
| | 21,986 |
|
| Pro-rata share of depreciation from unconsolidated joint venture | 73 |
| | 73 |
|
| Provision for impairment | 982 |
| | — |
|
| Severance expense | 60 |
| | 43 |
|
| Costs associated with early extinguishment of debt | — |
| | 409 |
|
| Interest expense | 10,995 |
| | 10,696 |
|
| Income tax provision | 24 |
| | 65 |
|
| Lease termination income | (23 | ) | | (71 | ) |
| Acquisition costs | — |
| | 198 |
|
| Adjusted EBITDA | 38,745 |
| | 40,380 |
|
Proforma adjustments (1) | (1,324 | ) | | (251 | ) |
| Proforma adjusted EBITDA | $ | 37,421 |
| | $ | 40,129 |
|
| Annualized proforma adjusted EBITDA | $ | 149,684 |
| | $ | 160,516 |
|
| | | | |
| | | | |
| Reconciliation of Notes Payable, net to Net Debt | | | |
| Notes payable, net | $ | 999,215 |
| | $ | 1,021,223 |
|
| Unamortized premium | (3,967 | ) | | (5,120 | ) |
| Deferred financing costs, net | 3,821 |
| | 3,740 |
|
| Consolidated notional debt | 999,069 |
| | 1,019,843 |
|
| Pro-rata share of debt from unconsolidated joint venture | 12,699 |
| | — |
|
| Capital lease obligation | 1,022 |
| | 1,066 |
|
| Cash and cash equivalents | (8,081 | ) | | (3,582 | ) |
| Net debt | $ | 1,004,709 |
| | $ | 1,017,327 |
|
| | | | |
| | | | |
| Reconciliation of interest expense to total fixed charges | | | |
| Interest expense | $ | 10,616 |
| | $ | 10,351 |
|
| Preferred share dividends | 1,675 |
| | 1,676 |
|
| Scheduled mortgage principal payments | 758 |
| | 777 |
|
| Total fixed charges | $ | 13,049 |
| | $ | 12,804 |
|
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| | | | |
| Net debt to annualized proforma adjusted EBITDA | 6.7 | X | | 6.3 | X |
| Interest coverage ratio (Adjusted EBITDA / interest expense) | 3.6 | X | | 3.9 | X |
| Fixed charge coverage ratio (Adjusted EBITDA / fixed charges) | 3.0 | X | | 3.2 | X |
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(1) 4Q17 excludes $1.3 million from acquisitions and dispositions including our Millennium Park joint venture. 4Q16 excludes $0.3 million related to miscellaneous income. |
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Ramco-Gershenson Properties Trust
Non-GAAP Financial Definitions
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 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.
Adjusted EBITDA/Proforma Adjusted EBITDA
Adjusted EBITDA is net income or loss plus depreciation and amortization, interest expense net of deferred financing costs, 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.
