31500 Northwestern Highway, Suite 300
Farmington Hills, Michigan 48334
(248) 350-9900
FAX: (248) 350-9925
Ramco-Gershenson Properties Trust Reports Financial Results for the Second Quarter 2010
FARMINGTON HILLS, Mich. – July 27, 2010 -- Ramco-Gershenson Properties Trust (NYSE:RPT) today announced results for the three and six months ended June 30, 2010.
Second Quarter Highlights:
| · | Reported FFO per diluted share of $0.27 |
| · | Posted portfolio occupancy of 90.8% at quarter-end, compared to 90.5% at March 31, 2010 |
| · | Completed a public offering of 6.9 million common shares generating net proceeds of approximately $75.6 million |
| · | Signed leases with Golfsmith and The Fresh Market to fill the recent Albertson’s vacancy at Mission Bay Plaza in Boca Raton, Florida |
| · | Signed a lease with Total Wine for the Circuit City vacancy at Vista Plaza in Jensen Beach, Florida |
| · | Closed a new 5-year CMBS financing of $14.7 million for the Northrop Grumman office building at The Town Center at Aquia in Stafford County, Virginia |
“We are very pleased with our financial and operating results for the second quarter and the progress we are making toward our goals on both fronts,” said Dennis Gershenson, President and Chief Executive Officer. “In a period of ongoing economic uncertainty we have been able to improve our balance sheet and advance our leasing efforts. We are confident that we will be able to maintain this momentum through the remainder of the year.”
Financial Results
Funds from operations (FFO) for the three months ended June 30, 2010 was $10.0 million or $0.27 per diluted share, as compared to FFO of $11.3 million, or $0.52 per diluted share for the same period in 2009. FFO for the six months ended June 30, 2010 was $18.5 million or $0.52 per diluted share, as compared to FFO of $23.2 million, or $1.08 per diluted share for the same period in 2009. The six month 2010 FFO results included $2.7 million, or $0.07 per diluted share, of non-cash impairment charges resulting from other-than-temporary declines in the fair market value of various equity investments in joint ventures taken in the first quarter of 2010. Excluding the $2.7 million non-cash impairment charge, FFO for the six months ended June 30, 201 0 was $21.2 million, or $0.59 per diluted share.
Net income (loss) attributable to RPT common shareholders for the three months ended June 30, 2010 was $(1.0) million or $(0.03) per diluted share, compared to $1.6 million or $0.08 per diluted share for the same period in 2009. Net income (loss) attributable to RPT common shareholders for the six months ended June 30, 2010 was $(1.7) million or $(0.05) per diluted share, compared to $3.8 million or $0.20 per diluted share for the same period in 2009.
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FFO and earnings per diluted share amounts were impacted by the additional shares issued in conjunction with the Company’s equity offerings completed in September of 2009 and May of 2010.
Operating Statistics
As of June 30, 2010, the Company owned equity interests in 87 retail shopping centers totaling approximately 19.8 million square feet, consisting of 54 wholly-owned properties and 33 properties held through joint ventures. At quarter-end, the portfolio was 90.8% leased, compared to 90.5% leased at March 31, 2010.
During the second quarter of 2010, the Company executed 40 new leases in its total portfolio encompassing 210,074 square feet. On a same-space basis, the Company executed 29 new leases totaling 152,024 square feet at an average rental rate of $13.07 per square foot, representing a 2.6% decrease from prior cash rents. Also during the second quarter, the Company renewed 48 leases encompassing 490,900 square feet at an average rental rate of $8.83 per square foot, a decrease of 1.2% on a cash basis.
At quarter-end, the Company had 49 properties in its wholly-owned, same-center portfolio. On a same- center basis, occupancy was 90.9% compared to 94.0% at June 30, 2009. For the second quarter, same-center net operating income (NOI) decreased 1.3% compared to the second quarter of 2009. The decrease was primarily due to tenant vacancies and the impact of rent reductions partly offset by improvements in operating expenses. Same-center NOI in the second quarter was flat compared to the first quarter of 2010.
Redevelopment
At the end of the second quarter, the Company had four redevelopments in process. It is anticipated that the Company will spend an additional $3.4 million to complete these projects. The Company’s total cost for these projects is estimated to be $20.1 million with an expected return on incremental cost of 12.0%.
Balance Sheet
In May 2010, the Company completed an underwritten public offering of 6.9 million shares of common stock generating net proceeds of approximately $75.6 million. Net proceeds from the equity offering were used to pay down $37.0 million of the $67.0 million previously outstanding under the Company’s term loan, to pay-off two mortgages totaling $15.8 million and to reduce borrowings under its revolving lines of credit.
Also in May, the Company closed on a new $14.7 million CMBS loan secured by the newly-constructed Northrop Grumman office building at The Town Center at Aquia in Stafford County, Virginia. The $14.7 million financing has a five year term with a fixed interest rate of 5.8% and a thirty year amortization. Proceeds from the loan were used to reduce borrowings under the Company’s revolving lines of credit.
At June 30, 2010, the Company’s total market capitalization equaled $907.2 million, comprised of 40.9 million shares of common stock (or equivalents) valued at $413.3 million and $493.9 million of debt, net of cash. The Company’s ratio of net debt to total market capitalization was 54.4%. At June 30, 2010, net debt to EBITDA (first half EBITDA annualized) was 7.2x compared to 8.9x for the same period in 2009. The weighted-average term of the Company’s debt was approximately 5.8 years.
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Dividend
On July 1, 2010, the Company paid a second quarter cash dividend of $0.16325 per common share (or equivalents) to shareholders of record on June 20, 2010 for the second quarter ended June 30, 2010. The quarterly dividend represents an annualized dividend rate of $0.653 per common share (or equivalents). The Company’s FFO payout ratio for the second quarter was 61.0%.
2010 Guidance
Excluding the non-cash impairment charge recognized in the first quarter, the Company reaffirms its previously announced 2010 FFO guidance of $1.04 to $1.12 per diluted share.
Conference Call/Webcast
Ramco-Gershenson Properties Trust will host a live broadcast of its second quarter conference call on Wednesday, July 28, 2010, at 1:00 p.m. Eastern Time, to discuss its financial and operating results. The live broadcast will be available online at www.rgpt.com and www.investorcalendar.com and also by telephone at (877) 407-0778, no pass code. A replay will be available shortly after the call on the aforementioned websites (for ninety days) or by telephone at (877) 660-6853, (pass code-Account #286, Conference ID # 353424), for one week.
Supplemental Materials
The Company’s supplemental financial package is available on its corporate web site at www.rgpt.com in the investor info section, SEC filings tab. 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, headquartered in Farmington Hills, Michigan, is a fully integrated, self-administered, publicly-traded real estate investment trust (REIT), which owns, develops, acquires, manages and leases community shopping centers, regional malls and single tenant retail properties, nationally. The Trust owns interests in 87 shopping centers totaling approximately 19.8 million square feet of gross leasable area in Michigan, Florida, Georgia, Ohio, Wisconsin, Tennessee, Indiana, New Jersey, Virginia, South Carolina, Maryland and Illinois. For additional information regarding Ramco-Gershenson Properties Trust visit the Trust’s website at www.rgpt.com.
This press release contains forward-looking statements with respect to the operation of certain of the Trust’s properties. Management of Ramco-Gershenson believes the expectations reflected in the forward-looking statements made in this press release are based on reasonable assumptions. Certain factors could occur that might cause actual results to vary, the ongoing U.S. recession, the existing global credit and financial crisis and other changes in general economic and real estate conditions, changes in the interest rate environment and the availability of financing, adverse changes in the retail industry, our continuing to qualify as a REIT and other factors discussed in the Trust’s reports filed with the Securities and Exchange Commission.
Ramco-Gershenson Properties Trust: Dawn Hendershot, 248-592-6202 Director of Investor Relations and Corporate Communications
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Ramco-Gershenson Properties Trust
Consolidated Condensed Balance Sheets
June 30, 2010 and December 31, 2009
(In thousands)
| | | June 30, | | | December 31, | |
| | | 2010 | | | 2009 | |
| | | (unaudited) | | | | |
| ASSETS | | | | | | |
| Investment in real estate, net | | $ | 825,840 | | | $ | 804,295 | |
| Cash and cash equivalents | | | 12,722 | | | | 8,800 | |
| Restricted cash | | | 5,949 | | | | 3,838 | |
| Accounts receivable, net | | | 30,245 | | | | 31,900 | |
| Notes receivable from unconsolidated entities | | | - | | | | 12,566 | |
| Equity investments in unconsolidated entities | | | 97,775 | | | | 97,506 | |
| Other assets, net | | | 38,280 | | | | 39,052 | |
| Total Assets | | $ | 1,010,811 | | | $ | 997,957 | |
| | | | | | | | | |
| LIABILITIES | | | | | | | | |
| Mortgages and notes payable | | $ | 499,877 | | | $ | 552,551 | |
| Accounts payable and accrued expenses | | | 26,364 | | | | 26,440 | |
| Distributions payable | | | 6,627 | | | | 5,477 | |
| Capital lease obligation | | | 6,784 | | | | 6,924 | |
| Total Liabilities | | | 539,652 | | | | 591,392 | |
| | | | | | | | | |
| SHAREHOLDERS' EQUITY | | | | | | | | |
| Ramco-Gershenson Properties Trust ("RPT") shareholders' equity: | | | | | |
| Common shares of beneficial interest | | | 379 | | | | 309 | |
| Additional paid-in capital | | | 562,384 | | | | 486,731 | |
| Accumulated other comprehensive loss | | | (916 | ) | | | (2,149 | ) |
| Cumulative distributions in excess of net income | | | (130,649 | ) | | | (117,663 | ) |
| Total RPT Shareholders' Equity | | | 431,198 | | | | 367,228 | |
| Noncontrolling interest | | | 39,961 | | | | 39,337 | |
| Total Shareholders' Equity | | | 471,159 | | | | 406,565 | |
| Total Liabilities and Shareholders' Equity | | $ | 1,010,811 | | | $ | 997,957 | |
| | | | | | | | | |
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Ramco-Gershenson Properties Trust
Consolidated Condensed Statements of Operations
For the three and six months ended June 30, 2010 and 2009
(In thousands, except per share amounts)
| | | Three Months Ended June 30, | | | Six Months Ended June 30, | |
| | | | | | | | | | | | | |
| | | 2010 | | | 2009 | | | 2010 | | | 2009 | |
| | | (unaudited) | | | | | | (unaudited) | | | | |
| Revenues: | | | | | | | | | | | | |
| Minimum rents | | $ | 20,411 | | | $ | 21,026 | | | $ | 40,923 | | | $ | 42,175 | |
| Percentage rents | | | 143 | | | | 27 | | | | 216 | | | | 253 | |
| Recoveries from tenants | | | 7,522 | | | | 7,873 | | | | 15,297 | | | | 16,898 | |
| Other property income | | | 1,161 | | | | 822 | | | | 2,380 | | | | 1,021 | |
| Fees and management income | | | 1,134 | | | | 1,497 | | | | 2,255 | | | | 2,626 | |
| Total revenues | | | 30,371 | | | | 31,245 | | | | 61,071 | | | | 62,973 | |
| | | | | | | | | | | | | | | | | |
| Expenses: | | | | | | | | | | | | | | | | |
| Real estate taxes | | | 4,466 | | | | 4,564 | | | | 8,961 | | | | 9,141 | |
| Recoverable operating expenses | | | 3,455 | | | | 3,581 | | | | 7,410 | | | | 8,082 | |
| Other property operating expenses | | | 1,136 | | | | 550 | | | | 2,157 | | | | 1,529 | |
| Depreciation and amortization | | | 7,556 | | | | 7,823 | | | | 15,318 | | | | 15,561 | |
| General and administrative | | | 4,615 | | | | 4,666 | | | | 8,598 | | | | 8,646 | |
| Total expenses | | | 21,228 | | | | 21,184 | | | | 42,444 | | | | 42,959 | |
| | | | | | | | | | | | | | | | | |
| Income from continuing operations before other income and expenses | | | 9,143 | | | | 10,061 | | | | 18,627 | | | | 20,014 | |
| | | | | | | | | | | | | | | | | |
| Other income and expenses: | | | | | | | | | | | | | | | | |
| Other income (expense) | | | (303 | ) | | | 178 | | | | (633 | ) | | | 331 | |
| Gain on sale of real estate | | | 499 | | | | 53 | | | | 499 | | | | 401 | |
| Earnings (loss) from unconsolidated entities | | | (167 | ) | | | 337 | | | | 700 | | | | 857 | |
| Interest expense | | | (8,892 | ) | | | (7,904 | ) | | | (17,626 | ) | | | (16,008 | ) |
| Impairment charge on unconsolidated joint ventures | | | - | | | | - | | | | (2,653 | ) | | | - | |
| Restructuring costs and other items | | | - | | | | (836 | ) | | | - | | | | (1,216 | ) |
| Income (loss) from continuing operations | | | 280 | | | | 1,889 | | | | (1,086 | ) | | | 4,379 | |
| | | | | | | | | | | | | | | | | |
| Discontinued operations: | | | | | | | | | | | | | | | | |
| Loss on sale of real estate | | | (2,050 | ) | | | - | | | | (2,050 | ) | | | - | |
| Income (loss) from operations | | | (32 | ) | | | 75 | | | | (19 | ) | | | 215 | |
| Income (loss) from discontinued operations | | | (2,082 | ) | | | 75 | | | | (2,069 | ) | | | 215 | |
| | | | | | | | | | | | | | | | | |
| Net income (loss) | | | (1,802 | ) | | | 1,964 | | | | (3,155 | ) | | | 4,594 | |
| Less: Net (income) loss attributable to noncontrolling interest | | | 761 | | | | (401 | ) | | | 1,431 | | | | (781 | ) |
| Net income (loss) attributable to RPT common shareholders | | $ | (1,041 | ) | | $ | 1,563 | | | $ | (1,724 | ) | | $ | 3,813 | |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| Amounts attributable to RPT common shareholders: | | | | | | | | | | | | | | | | |
| Income from continuing operations | | $ | 893 | | | $ | 1,493 | | | $ | 198 | | | $ | 3,613 | |
| Income (loss) from discontinued operations | | | (1,934 | ) | | | 70 | | | | (1,922 | ) | | | 200 | |
| Net income (loss) | | $ | (1,041 | ) | | $ | 1,563 | | | $ | (1,724 | ) | | $ | 3,813 | |
| | | | | | | | | | | | | | | | | |
| Property Operating Expense Recovery Ratio | | | 95.0 | % | | | 96.7 | | | | 93.4 | % | | | 98.1 | |
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Ramco-Gershenson Properties Trust
Calculation of Funds from Operations
For the three and six months ended June 30, 2010 and 2009
(In thousands, except per share amounts)
(Unaudited)
| | | Three Months Ended June 30, | | | Six Months Ended June 30, | |
| | | 2010 | | | 2009 | | | 2010 | | | 2009 | |
| Calculation of Funds from Operations: | | | | | | | | | | | | |
| Net income (loss) attributable to RPT common shareholders | | $ | (1,041 | ) | | $ | 1,563 | | | $ | (1,724 | ) | | $ | 3,813 | |
| Add: | | | | | | | | | | | | | | | | |
| Rental property depreciation and amortization expense | | | 7,366 | | | | 7,699 | | | | 14,951 | | | | 15,309 | |
| Pro rata share of real estate depreciation from unconsolidated joint ventures | | | 1,704 | | | | 1,622 | | | | 3,380 | | | | 3,295 | |
| Loss on sale of depreciable real estate | | | 2,050 | | | | - | | | | 2,050 | | | | - | |
| Noncontrolling interest in Operating Partnership | | | (105 | ) | | | 401 | | | | (174 | ) | | | 781 | |
| | | | | | | | | | | | | | | | | |
| Funds from operations | | $ | 9,974 | | | $ | 11,285 | | | $ | 18,483 | | | $ | 23,198 | |
| | | | | | | | | | | | | | | | | |
| Weighted average common shares | | | 34,371 | | | | 18,699 | | | | 32,706 | | | | 18,654 | |
| Shares issuable upon conversion of Operating Partnership units | | | 2,902 | | | | 2,919 | | | | 2,902 | | | | 2,919 | |
| Dilutive effect of securities | | | - | | | | - | | | | - | | | | - | |
| Weighted average equivalent shares outstanding, diluted | | | 37,273 | | | | 21,618 | | | | 35,608 | | | | 21,573 | |
| | | | | | | | | | | | | | | | | |
| Funds from operations per diluted share | | $ | 0.27 | | | $ | 0.52 | | | $ | 0.52 | | | $ | 1.08 | |
| Impairment charge on unconsolidated joint ventures | | | - | | | | - | | | | 0.07 | | | | - | |
| Funds from operations | | | | | | | | | | | | | | | | |
| excluding impairment charge, per diluted share | | $ | 0.27 | | | $ | 0.52 | | | $ | 0.59 | | | $ | 1.08 | |
| | | | | | | | | | | | | | | | | |
| Dividend per common share | | $ | 0.1633 | | | $ | 0.2313 | | | $ | 0.3265 | | | $ | 0.4626 | |
| Payout ratio - FFO | | | 61.0 | % | | | 44.3 | % | | | 62.9 | % | | | 43.0 | % |
Management considers funds from operations, also known as “FFO,” an appropriate supplemental measure of the financial performance of an equity REIT. Under the NAREIT definition, FFO represents net income attributable to common shareholders, excluding extraordinary items, as defined under accounting principles generally accepted in the United States of America (“GAAP”), gains (losses) on sales of depreciable property, plus real estate related depreciation and amortization (excluding amortization of financing costs), and after adjustments for unconsolidated partnerships and joint ventures. FFO should not be considered an alternative to GAAP net income attributable to common shareholders as an indication of our performance. We consider FFO as a useful measure for reviewing our comparative operating and financial performance between periods or to compare our performance to different REITs. However, our computation of FFO may differ from the methodology for calculating FFO utilized by other real estate companies, and therefore, may not be comparable to these other real estate companies.
