RPT - Earnings call transcript Q2 2018

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Operator

Greetings and welcome to the Ramco Properties Second Quarter 2018 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host Vin Chao, Vice President of Finance. Please go ahead.

Vin Chao

Good morning and thank you for joining us for RPT's second quarter 2018 earnings conference call. statements would during to are Reform this may deemed management certain you not Act time, of be made meaning statements conference forward-looking of this XXXX. like Securities inform me that historical, the At Private the Litigation within call which

made. Additionally, during itself of the that passage are time by the made date quality of the understand statements this replay call. statements should diminish made will the the of Listeners call as to any of

CFO, which, turn we call call like expectations press assumptions, statements and release. Brian? President actual Although the second now are based expectations we’ll risks cause for quarter I forward-looking that their questions. in over the any would the from opening remarks. Fitzmaurice open believe reflected Michael could for Harper the After detailed and differ on factors to results in and to are CEO, Brian reasonable to that

Brian Harper

we summarize I'm than our our that finally, forward. recent this RPT’s then of months and outlook the will morning, Share morning, second my coming Good for I role. for release. earnings to balance as open your will touch talk to organizational questions. observations, this outlined results RPT, press would will rationale near-term now structure our And two almost like I call. into yesterday's on in about for the our then and initial and to XXXX quarter call upgrades going first sheet, discuss balance strategy year my Mike for thank discuss you joining This and

this our am our I’ve the and of focusing retail years we to CEO I solely organization. completing estate comes potentially we both always always focus of densification career, My at we first surrounding incredible I want that thank have successfully projects. shareholders. demand XX create more significant generation And get leasing. my for next our to scale there and believe Properties office. estate believe begin to to share June shareholder later into spent misunderstood last appointment best meaningful to most by on passion details Let are XX even based finding how very is proven and context the the identify lead internally and obviously record our underlying both down attributes I'll years. at amount lead with I've the And larger tremendous for factors, RPT XX both opportunity then executing some real value and track locational was assets of stating several for and developed upside. Throughout of intend the and and of in within to list understand I use recently And the for to RPT's identifying, I excited externally. Trustees on real a highest value Rouse portfolio join residential value I for top in maximizing it mixed-use I shareholders. marks decision to potential opportunity GGP. had all success. change call, and and terrific honored but where the Board of the I over a that is humbled the value for the me is My vision to a at within undervalued unlock but worked

excited estate with already this with my great end, with leasing to I've Given as my had run existing us. experience and grow new side company see relationships the are deep. and on RPT years and many To tenants, real of conversations they tenant a

this place to company. hires the right value Turning in management recent now we the believe to following in I the organizational team have underappreciated structure, unlock

from recently to Tim Monday Tim position who Acadia. Executive to the the of Leasing addition joined us Head for of Mike, Leasing. prior In Vice comes announced President on we as his Collier company as hiring of

our Vice have and as complementary large has believe He and over experience and recently Fulton executed us and the at VP Jonathan on board. most and to complex of recently to achieve building culture a stewardship, entrepreneurial platform while of Plaza. The inherent Development. of Corbin blue reinforcing them President self Jonathan’s that of ours redevelopments chip including understand construction also the have and of build in We Development Center, Senior foundation culture Jonathan estate was We an has spirit, at cultivating impressive multi-million-dollar retail XX World goals continued hired our experience can-do a excited and success. and RPT passion the I and Krausche is Westfield. at years strong and key chance help building are development State we're opportunities to we're humility. RPT the company. Tim real and Mike Center exist Trade to on Jonathan, list first-class collaboration, to Garden innovation, integrity, and insure sustainable this Tim, the urgency, Together, discipline, components

on that leverage credit environment remarks. current touch and operate the pool as topic result position my completed once strengths properties, portfolio share to in Now ready our sheet later estate The better observations and risk, in in days for be completed prepared reviews resulted and RPT comprehensive outline have to and lower arise. that would XX risk capital to reviews a will retail first my opportunities I’ll effectively near-term lower visited improvement. XX% I should Within my and identified over more initial and of in disposition organizational this lower portfolio, I deploy strategic real our like plan. opportunities the balance a

immediate near-term has maturities of sheet review comfort that balance Our limited laddering the given long-duration. there is no us our and debt, pressure given

environment, However, given by it we to retail controllable prudent risk de-levering. is believe reduce the current

follows; to was two business intelligence region space. structure Regarding also challenges re-imagine previous or for balance meaningful certain There the with and sheet committee that opportunities. no opportunities. instituted two, and mine and sell profile lease resulted is prioritization inefficiencies that growth Number The good focus The of in former the consistency top five non-core to for mix the the out dispositions. process, strategy have operating priorities. shop singular platform of leasing growth small number market and and platform across geographic best of position there specifically internal portfolio leverage The the as no the in no performance Number and one, near-term operating Beginning the densification goals. number on inefficiencies and tool, external four, reduce platform decision number and charter making without occupancy; the mixed-use were streamline these repurpose solved and communication. scale news portfolio. hampered strengthen for practices small-shop three, is we increase process

long-term taken scale have view non-core not that of are identified in a the assets and have market We growth without long-term in prospects our holds. portfolio

we we these As sales end by and of finalize XXXX. we plan the will our to on execute you update on target, overall specifics dispositions expect but

value of farsightedness. about assured, going this the we're solving for portfolio, are cash We best the markets undertaking near-term on disciplined will Rest Once but impact in. is be to that aware discipline with long-term endeavor path earnings, we which growth we’ll and high-quality for extremely both right-size creation. flow sustainable we we operate the believe

markets Columbus, see scale operate Tampa, and Miami, as these similar new growth, eventually to high can are significant density enough I Chicago, where follows; Jacksonville. Minneapolis, markets large efficient further scale. as Potential Nashville and characteristics with have existing with Our

favor markets. our the we will be into growth capital timing is high judicious with in relationships. our new will We When reinvestment opportunities utilizing of industry our seek deep

shop existing to that - lease us which in to a to would our and shop million We're our XX% the invested space. Today local strong Leasing this return quickest together Turning goal to leasing drive rate higher greatest vacancy to our to XX% higher drive leasing. up will lease small XX% of ABR. is governance X with at capital. add small is the adopting stands about ABR, allow on X growth internal which approach million

long potential and on with developed will tenant time that a we career fully we a tenant. sit every portfolio focus Tim a cohesive strong from Additionally, both have over strategy leverage I across our relationships

to growth. shop another small redevelopment Beyond long-term view lever leasing as we generate

to known firm no on its today premier in in priorities multifaceted, Barnes retail high and with for also performing versus working development. existing several projects environment Lincoln one-off large To in We're few a A today’s examples with a Park densification involve on scale on architectural on Lincoln pad and several are Place residential on Gensler, high redevelopment property will the and assets. densification is early with follows; densification understanding will theaters We're that Yards. conversations arguably of working an least, operators & development expires neighborhood the that called our mixed-use the front sits that say impact regard forward, Going Webster partner Noble renowned with extremely at in Regal focus high. opportunities demand the We're is a estate our this options. a debt year as component. the retail sits that Existing redevelopment best XX-acre design the Immediately door of residential. Chicago. developers real for and

and plus strong, time mid has and the Lane they floor terrific and State that in average shared-office Foods also do they upscale is center are the from space at on Arlington added demand Ohio Columbus, was the the space asset as operator income $XXX,XXX the vacant well Upper demand is to since in extremely is Next anchor is been property the major is shopping the for this Whole one-mile property COhatch Shops in takeover approximately uniquely partner. Ohio, residential acquired positioned was is community market, household one-mile office. is Tenant second XXXXs. University. recently the

access best and large leading residential will the a of of tired for state. is of in a configuration demand high The a maximize located are Square in firm. Winn-Dixie $XXX,XXX. a tenants for three-mile a the market. with Beach, are the we estate. with not This located working center Florida. average one that XX visibility top quarter a includes Minnesota's phenomenal entry stages shops and to Again master environment. areas Minneapolis approximately in all Rivertowne on Centennial the and asset are in has architectural with on in site Road, uses acres demand the of in plan, the sits there retail thoughtful a design barrier use real We current mixed leading use in-place asset income preliminary that off Bealls. France is that is for architect the Edina, which plan This Deerfield The and household a wealthiest

a just collaborating grocery dynamic, Class anchored, early a quick and density, mixed-use of new we’re the with residential opportunities the creating and units. unlock These a A limited leading are of tremendous value innings of the to supply housing portfolio. center access within few XXX Given in residential operator upwards examples of some and our

expect centralized changes mid-XXXX. assets these to to in open as the RPT. creation key made entrepreneurial urgency we new and the and lastly, Instead, foster created office program one, will we and stages, blue place creating not and oversight we cash committee changes. X-region the as governance the of progress have Number our we to include but of are in that tenant, an region projects redevelopment catalysts the several rightsizing the month designed including forward. innovative with was improve two, the processes the we chip implemented knowledge expect With leasing, position these and future. the we new the of focus to summary, just management executive are cost review Number to and While savings. into we decentralizing four leadership culture and optimal total, limited lease to result Suffice are investments. banking, create beginning say excited next dissolution that property preliminary to leverage actions in These of already at New eliminate proper that local relationships. are RPT of structure. goal three, and to office, are an ensure our redundancies key densification in since between that collaboration investor York teams will one recurring come. X those planned team members more will extremely a our a and and streamlining staffing our before those to the In to our for as net where structure of to mind, Number as markets. that urgency significant of reimagining corporate efficiency, Farmington million much a REIT. approve XXXX. the week, two of in key enters the move will lease, share it collaborative, biweekly I our These generate we departments. ensure several highlights we development the view organizational offices In foster transform as by Last here in savings, well on in immediate strengthen calls accountability deal every structure Both annual legal rebranding Hills be it all into approximately reviews portfolio for tracking Number to company we're

investors. the are the investment in provide new a for number stewardship every requirement decisions I’m investors. right our outlook creating These with the platform. of XX%. feet an to necessary signed my intelligence also going driven of potential balance our not forward make provides year. comparable data practices we more dollar Having new one invested our business XXX,XXX results. risk-adjusted We of is We of for X.X% for per like be ensure square quarter. allocation highly We the leases with growth for real-time primarily to capital same-store XX% capital of our of With blended re-leasing which a midst scrutinized much a over governance spreads responsibility. the FFO I but to $X.XX pleased of results will are gears achieving were and the that the by will spreads space interest oil. prudent say shareholder’s and new over operating comprehensive comparable summarize ensure briefly is leasing the posted share data me in is strong All the decisions shift financial Careful decisions. return and option, best operating and let of redevelopment NOI for

during We backfilled up Kmart continue located leases home which our leased Shops sequentially. improve at were at in now Aldi Jacksonville. Center, the XX at the basis signed quarter to portfolio points Parkway location XX.X% and Crossing Notable at former rate

one it in Colorado. our As on relates we center shopping Front developments to completed the Collins, out-parcel Range Village of redevelopment Fort

XX,XXX over I longer meaningful on positive plans. of initiated days XX I many to $X.XX a new call quarter able third FFO And a change added in the of return confident Fit the over our dispositions with ways will cost. with be management XX% meeting plan, business we we substance and a my potential quantifying less next to results XX the solid I'm Mike spend collaborating the Mike. adding as to have implementing on we enthusiastic new plan team, regarding RPT. second the half our we’ll call, accomplished. moment. I’m provide lastly, as XXXX Tru a are various square share. well fine to $X.XX Here long-term provide of and much on that how we heading year. operating days you the be details in earned footing community, to the foot guidance our context tenant job to Athletic our term will With confident business I am with into now Clubs that more turn than on tuning the team And will per by

Michael Fitzmaurice

like this Thanks like exciting and on I'm years new the Brian understand I’d in welcoming I unparalleled to XX shopping and and best-in-class RPT. you morning. of is provide to comes our have all we We our that center REIT and access your thank I is many one on and mandates When long-term of role good as chapter public coming to Board with for this inviting nearly Brian primary justify and help along do senior choices that believe creating I next and amazing it if focus thank Also, family ensure our to so we our of take value. to attention for space, being your experience to that management. my Trustees shareholder earn employees usher investors to investment. with that the would adventure. transparency of want disclosure to for we’ll me

over to of other and by per share. turn of These $X.XX intangible share from offset our operating a has fully was which were to XXXX fourth lease months per acceleration share in Downtime per tenant related the per with team. charges below by of streamline investments decrease open that Brian early $X.XX primarily the associated July. to the share of increase spread quarter items driven below minimal and Home of Operating the this XXXX. the $X.XX the we with lease The management year. the to intangible expense compared location the executive were non-cash was was been same largely market a quarter quarter FFO did $X.XX an let’s leasing partially in to at The Kmart as related a At interest NOI in FFO second XXX%. of in unexpected per reorganization was five already was results. of of Now our the in sales. termination asset backfilled of the quarter non-recurring to share end expect Non-operating this former decrease a for we $X.XX at market period non-cash Further organization mentioned, related

quarter approximately in a recognize result of approximately savings, XX will non-recurring expense by basis points driven expect severance were NAREIT income with points. basis income excluded $X property an by during basis FFO of basis higher offset changes redevelopment in from growth but These operating cash was we of increase of rental higher Same-property XX partially X.X% NOI points operating these other XXX recovery be non-recoverable charge annual quarter lower points. in that the of million XXX $X.X to will will second expenses and of net the million third FFO. impact ongoing While

recovery is quarter expense of X was operating year-over-year. of that handful rates our than expected Page outsized recovery XX.X% supplemental for properties. increase to second of and basis timing better XXX You'll due notice a points higher combination same-property the quarter, ratio our The a at on

Moving high we ratio the towards the into year, of will back expect this moderate half XXs. the

strategy liquid to unsecured, Turning support due investment continue sheet will low in maintain be will opportunistic to issuer. balance growth to management, grade We’ll course rated sheet our an highly strong our levered be initiatives. balance a and that

end As of duration weeks our of I less of net last our was years, was several fact X.X only roughly matures that quarter debt evaluated EBITDA took sheet and six over over times, comfort XX% unencumbered XX% the is the the through in was the our than the debt balance I debt to XXXX. floating, debt as our of NOI XX% of

pressure strengthen isn’t idle. doesn't While balance immediate sheet that there the we’ll to sit mean

We’ve will implications Brian arms that able down debt and year. to use We our will like to fee what use on over net our trend to be to sales the already see sales Consistent Xx debt take all in and expect currency asset we into in redeployed candidates terms were quickly earnings in balance able get second say to for EBITDA repay repayment several remarks, studying sheet. the to done sale proceeds the pace to range the alluded we’ll times half our and of the time to opportunities of net X.X to debt. as to our asset diligence to with to tax we suffice prepared his around

excluded still guidance our we’ve finalizing we from are plan, sales assumption. that disposition asset Given our

for sizeable share $X.XX to to from at In increase operating was of $X.XX team’s guidance per acquisitions redevelopment removal XX commencement with initiated management midpoint which the by acceleration of of due share. per redevelopment team’s X.XX% lower Also to established at our points $X.XX our market dates our certain $X.XX intangible my reconciliation of guidance a same-property and share. with previous $X.XX that $X.XX. outlook of the basis $X.XX of last assumption offset I mid-point expectation the lease previous partially Our provided management is we from below same-property the described from XXXX release, lower This X.XX% revised FFO new NOI earlier expected we per is in the due remarks tenants. plan night’s around of rent to $X.XX to operating the FFO growth NOI our

expect fourth into then with trajectory As our NOI for the the reaccelerate in growth of decelerate quarter. we same-property third sharply redevelopment, to quarter and the

of up and recovery due Our in which vacant $X.X not deceleration the the had is reacceleration half quarter at points ABR mentioned end in to in operating by of XXX representing approximately $X.X anchor million second is impact fourth the normalization Of rent earlier. million expense basis the will the economic quarter signed largely in commenced commencing And of XXXX. lease note third the quarter bankruptcy same-property be we of space we driven locations. of from the the Toys the

X% of the new the address Now adopt an can start the approximately lease the result operating we executed to capitalized. the would of to roughly a FFO be our I specific to of direct new Under only million $X.X topic impact accounting XXXX X% expect When guidance FFO. that new which lease have at like expected to the guidance of $X.X are XXXX, represents to costs standard. being million we

We’ll we between expense update analysis impact this NOI. point, will operating be have you still this within At continues. this change on G&A our are as will expense Importantly, and how allocated evaluating AFFO. no

to over and Finally, Vin to and in company. of Vin able worked who Brian I the a finance a perfect as our corporate six his He And relation, to new to like the sell analyst plug markets like I activities. brings value closing would investor Brian? remarks. a will know now, and call fit to experience Chao I be to back for is tremendous of to a add for quickly Finance, capital wealth turn will welcome be fantastic have RPT. side and addition years already VP over he with cultural our

Brian Harper

Thank you, Mike.

of path. working the the our and came earlier, with shareholders. RPT our As to urgency on sense over difference make a with I elevated several I for said past right to are understand We company we get frustrations an here years your

change narrative and enthusiasm not are to solid the tough determination are and RPT’s transform make the have real best-in-class team My hard and into to Thank meeting decisions working estate we’ll foundation to of and it knowledge, RPT. all afraid at I very and happy take a We first the Operator, answer be questions. question. I to for you with And your you platform. few that, we're forward ready joining next over much for months. to many us with look our

Operator

with first question RJ go Milligan Our comes Please from Baird. ahead.

RJ Milligan

of Obviously a I comments can C-Suite being you dynamic a appreciate of your legacy - the talk about Ramco here going sort between and lot direction, new unchanged, however changes forward? a remain new relatively company in boards the about the board the

Brian Harper

RJ first technical difficulties I their had here. We your for this proactive the hear plan the outage and thanks excited appreciative involvement. happier voice. very very and new on couldn't be and good very The an to been Well about question board’s and apologize with

RJ Milligan

you to Can markets I any to looking exit. as much you specific detail didn’t looking there color the to know into give go more exit? markets about you you’re too what

Brian Harper

mean this on plan. targets we’ll to exact more that of call. you markets at in more But in process didn't these are disclosing due still our finalizing non-core like and course. say But tertiary share it's I safe of this are as the your mention we specifics time, with I I'm not

Operator

Todd Please from comes Thomas Capital Markets. KeyBanc go next ahead. with Our question

Todd Thomas

plan the Brian through you’ve and how First on increasing commented about streamlined to a internal growth you drive talked and rents. little occupancy question leasing bit

XX% take get that do might base how $X to to small to the $X long XX% opportunity? long you to side anticipate how it rent shop million XX% mine that to from million On

Brian Harper

of it’s get you we efficiencies I efficiency, but legal already to through But back urgent by process, now organization. asset XXX our finance I’ll points well. hit right clarity are throughout to put to have greater felt as about that the budget are to as The tracking with going the XX%, seen end lease the how this is leasing felt pace given quarter, XX% long better I’ll basis tell suffice with you say in, timing can’t I year. to the committee management that be lease we where and really both on all next the charter going the get as

Todd Thomas

you property When doing when obviously you the XX% today the And at for peak? been this some the have research could said think you occupancy today physical this and and look where portfolio look at of spending time do you visited you portfolio portfolio here.

Brian Harper

– and total mid-XXs then see as our I that is goal said mid-XXs very, I easily to XX% shop to Physical could occupancy very as XX% obviously that well. and from beat

Michael Fitzmaurice

Mike XX% XX% expecting to this infers with like, kind looks about the we’re rate to on be mean what basis. a Yes of give leased the XX% XXXX you physical outlook I which between and I’ll of at end the year XX%

Brian Harper

replacing proactively lower rent With to we're that growth occupancy to payers lower drive as well as performing retailers.

a So I good use. would think to be XX%, XX% that number

Todd Thomas

the provide value maybe sales understand kind terms of completed proceeds of gross quarters I I there. the largely here assets end terms of understand of and guess some But expect book just considering? through next of us in that non-core sales asset then parameters to by you end having still what you're strategy around talked How back I the magnitude what you the working help over just circling should maybe here, the preliminary you’re suppose? about dispositions. part many in of some And the Can the asset XXXX. plans we six as

Brian Harper

asset. to is I that the an deal million average on back you roughly you get tell $XX on specific size around targets, can I'll but

at on exact later given quantity and greater these in a date. So that back this surety me you the allow on just smaller liquidity are an executing pool. to I’ll get

Michael Fitzmaurice

mean the over to I And just to operate few the the want ago, minutes get I’ll prepared with you disposition could Xx. down idea give a X.Xx want but as long-term, of expect balance between there what we back to these go to We like. X.Xx proceeds. my look remarks to to just sheet kind proceeds get an we to

Todd Thomas

last on could wondering policy was I a just if one today. could I you comment the Brian just And if dividend

at shareholder Is the level the about current I policy feel any mean maximize consideration a effort to a $X.XX and the regarding at today? look annualized where do about board relative your how dividend to it’s there that you recommendation to value. you As here share making at

Brian Harper

Todd the comfortable I has mean to clearly in outline… of it a regular on is board dividend our decision, policy distribution the obviously reviews we’ve them. decision. as what policy can’t board to speak outlined a I with it’s basis, board’s been board future a

Michael Fitzmaurice

on you half leasing end ratio to aiming the portfolio up AFFO The grow some of the end believe to - the our the think mid-XXs pick bit it small get quarter. kind we year the just would the of I year. the at it’s only lease – the XX and I I kind space that additional of we payout of back given down bring the hit thing But add in redevelopment toward into the a Probably Todd head within progress second up active that’s of as with range. out percentile we’re shop should of the kind

Operator

Mike Please Our comes question next from Mueller go ahead. with JPMorgan. Instructions] [Operator

Mike Mueller

the I term, you side. dollar handle Quick layout to over at million overall, pipeline? that? mean I think About than how given a $XXX how can but and one-time question platform much volumes size on any there. platform you less there it the development the much of the the do is expected near you Is and going think just about if redevelopment understand you’re few

Brian Harper

and $XXX you just per very plans preliminary down I and million already. you. I It’s to are been third to get sitting would mining a quarter. days say in to We’ll very, think $XX million already we’re I’ll get mean year. added I and with value municipalities drawings back guidance Again these back portfolio. XX

these doing the not enough densification office ourselves. going not be are of we we ourselves said the I will going to we’re Some as to be be residential nor doing

So we will. takes would are if some this out a – with doing so manpower we partner that be of the you obviously

Mike Mueller

Mattress there? one talk Firm And operating then can just you about quick your exposure question

Brian Harper

I pads tell on Firm deals $X eight roughly of them XX% eight, of So you are XX% Mattress we the have and in are ABR. in million could line. that

indicator Firms Mattress that’s their Firm have, should their whether we’ve is high mile existing have too them performers. we Mattress a some be them, very Sleepys that low going radius, within which one other been say an have to We And closure which with very, list. talked for locations on I pretty with or overlap

if our the that comfortable Firm I today. you Mattress real – with So estate with feel occupies will do

Operator

session. Thank concludes our the answer and That question you. joining for Thank today. you call

You may now disconnect.

RPT Realty (KIM+N) 12 Aug 182018 Q2 Earnings call transcript