RPT - Earnings call transcript Q1 2019

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Operator

Greetings and welcome to the RPT Realty First Quarter 2019 Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. I'd now like to turn the conference over to your host, Mr. Chao. you. Thank

begin. may You

Vincent Chao

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

to that date during expectations itself made Harper made call cause Mike replay of differ the this to quarter which that the call statements Listeners quality for could will their of by the the statements first questions. turn to Additionally, results President the open although opening are as passage the Brian remarks, call. and expectations to the are release. over in and statements risks I any now from press are that reflected any actual the time forward-looking CEO, understand the on should CFO, Factors based made, would assumptions. like of for of we'll believe in detailed we diminish and reasonable Fitzmaurice after call

Brian Harper

quarter's earnings call processes that joining turn the our am to to our thank discuss will past of over Fitzmaurice who an board strong for our our quite conference and regarding early these instituted RPT our changes quarter strategic and reflection a with operating our have would initiatives, I results, Good morning and this portfolio, will results expectations We changes. believe to more at that, financial the Overall, call. first lastly and focus quarters. people, brief recent quarter performance. few are details and I been RPT's I performance provide CFO, provide the pleased XXXX. provide first morning, you quarterly for This After from XXXX like over highlights Mike update on

next to in is leases, on With to said, size that XX seasonally feet performance the progress show up of market up small is of points to strong XXX all leased square signing a an basis covering slow advantage lease shop keeping quarter. in and firing in drove our almost shop XX.X% the to another over our our XXX allowing XXX,XXX to team rate level us points years. activity our This achieve and also produced results, cylinders XX% basis small occupancy us X quickly. to XX% to our is rate our quickly on landscape and track adapt We well believe XX.X% quarter leasing today's new that year-over-year evolving goal

a blended XX.X%, a achieved also We spread quarterly high. of post-recession rent

new renewal to of another In rent. leases, ability fact of for and our our a we spread indicator XX%, re-leasing blended negotiated achieved drive

indicative spreads commencements completion record rents in and quarter Our exceeded discuss Mike our bankruptcy largely Firm from improved the that benefited of detail. than rent unexpected the X.X% which earlier expectations of NOI property our XXX% Same program. from Mattress assets following quality the the coming more quarter recoveries re-leasing are expected to derived XX our tied for first MSAs of nearly in top disposition our are strategic of as now at will

these growth of excluding still growth, our rent NOI forecasts X.X%. of property same fueled base Importantly, by recoveries, was ahead

efforts. occupied as at move to drove ABR quarter to million of commence XXXX earnings ended is a make XX-basis-point progress leasing positions an spread leased signed the X% activity we in million strong and remerchandising expected XXXX. Our activity our expected quarter that versus activity us the on which the is for solid representing to for we of footing approximately return targeted this $X.X that Represented to XXXX. goals operational in increase continue This of puts growth through $X.X our achieve in in on us the our remainder

XX% already XX last spaces discussed of identified these have of we leases. XX were we XX vacant. already At of quarter, signed these As identified spaces, the the quarter, end

opportunities, to for actively continue roster. Beyond pipeline well our to the and our robust remains upgrade as accretive rent earnings leasing and additional drive these proactively we portfolio as occupancy NAV as opportunities mine tenant

Turning to dispositions.

the gross disclosed, and During the Town proceeds as River for at of quarter and Plaza East $XX previously Fox completed we sale Shoppes The million. of

on plan disposition that complete. third is the sales, earnings first-quarter With out XXXX quarter our we our now strategic laid call

further reduced few these of that operational timing years. discussed our ample to internal we would pleased and reiterate program profile, and our detail provided has extremely plans growth depth with are As in simply over sales both risk, which I with tenant our disposition liquidity us into fund we the importantly but go the next results won’t quarter, last improved and business

via beyond we needs-based As value Minneapolis, Miami. target Nashville, Raleigh like opportunities our we the move are opportunistic for in acquisitions of disposition creation plan, increasingly markets looking and phase

cost of will potential funded capital dispositions. like of with be our Given match future any amount acquisitions a

enhancing profile framework our a Our improving earnings on trajectory basis near-term focused portfolio while quality growth maintaining is on our minimum leverage a furthering rigorous objectives. long-term strategic at our our investment neutral and

our through on value on would pursuing residential parallel developers, progress creation with to partnerships, leases sales I make entitlement ground Now, program like while to the briefly parcel and where redevelopment good continue front more. to paths touch we

are we from value solving return our partners. we highest and always our potential to adjusted and the shareholder the by portfolio risk retailers we said, for options, potential for That demand in investment As the evaluate both energized by will solution. projects maximize remain seek we seeing the

additional Park, Columbus, progresses, sharing Miami, as Ohio, densification in larger Lane of such look Rivertown forward as Lincoln others. Avenue well on As Square on our to projects the in as Place details Shops a Webster in year we few Chicago,

retail shareholders Before elected technology the our call and wealth governance that who to our of board comment mix years knowledge meeting another industries. the a provide next reducing Mike average our the last what on of six Board we will I now CFO, a Lau, With to to into of addition I a and experience a achievement RPT election, our believe over to we end This changes Joanna's these of to efforts. months Fitzmaurice. have recent complement XXXX. trustee, new prepared second my diversified creating remarks, eight the our At fresh bring Joanna outstanding also trustees I their from a end board I from towards gender annual recent over the Trustees. I our tenure contributions added that, that as Company's wanted brings applaud existing over of significant the will to XX Joanna's best-in-class is for team, at years three guidance and and the the other the With trustees evolution. enter quarter of balance, is while the brings turn phase perspective

Mike Fitzmaurice

Today and in source morning. our the to We will annualized at ended facility earnings net end remains which EBITDA good cash our balance sheet and the us the and some Brian position liquidity updated our $XX with as accounting and provide million million and balance discussion Thanks, with outlook availability strength change year. I on forma with debt a our for quarter of and quarterly credit turn in X.X focus in dilutive expectations. of full with the sheet, results, with flexibility page on our a growth. debt balance pro discuss sales XXXX, no we $XXX on with Starting our the line lease adjusted commentary maturities times, asset providing of on was

Xs I the our over before noted quarter, mid longer-term falling next times. goal leverage expect the of years few As last remain near towards roughly our six we to

program we As to proceeds and portion to our utilized rate to of the noted, our bringing million, junior strategic this subsequent subordinated we a asset quarter-end, floating Brian completed exposure repay $XX zero. quarter note our X.X% disposition sales

interest during to Looking XXXX term uncertainty in loans when forward, our exploring an we performance. minimize to line acceleration expense revolving operating time to their as rate look already environment low of options our XXXX scheduled well XXXX, in and recast expect our and and a the of we credit, maturities ahead lock are of we continued refinance

to results. Turning

NOI property $X.XX was were the in related The in recoveries driven mark first FFO by share offset a from to mainly Company's XXXX. former per a by award market for XXXX down basis beneficial plan of by primarily NOI. Our was operating an growth activity, property to in benefit for unexpected and XXX about the XXXX minimum $X.XX or increases share FFO with same above rent share, associated per operating per Same was increase the point Exclusions the period $X.XX same CEO. first quarter in partially X.X% change this and a quarter, NOI of in quarter $XXX,XXX driven same X.X% property performance bankruptcy $XXX,XXX FFO to modest from disposition operating a growth. at

bankruptcy recovery same than the of projections of was X.X% expected NOI commencements slightly Excluding income, our bad and growth debt. lease earlier than by internal driven ahead expected lower property

updated we standard. point to new effective I outlook, our adopted discussing the wanted that Before quarter out this leasing

in the of of during previously we which year. last change approximately discussed As the that most expense expensing non-recoverable $XXX,XXX quarter certain capitalized significant was leasing costs, the resulted is

that but Regarding into sheet make our won't statement to have changes other continue percentage I our business we that in we recovery rehash, maintain continue same balance on to and geography income the income to income. transparency modified changes, press financial to rents, release presentation and and will the of provided show note details to level I of disclosure breakout minimum rents, the our property wanted

the now show rent. disclosure a to bad of quarterly of item will our we be provision been on contra-revenue as categorized debt addition, which the In shown and expense supplemental. for losses, updated has This breakout is as minimum credit X will Page historically

for for accounts. and be there expense debt new Finally, the what rules presenting allowance called used determining and are bad to doubtful

which to earnings For of the income recognition an standard, statement. had impact of zero upon in the RPT adoption this new immaterial our amount retained on resulted

Turning to guidance.

increasing to press share $X.XX. expect As operating FFO to our XXXX release, $X.XX from $X.XX up per and are in our noted $X.XX guidance now XXXX we of

tenants outperformance same quarter. we retention a X% our the property first growth more X.XX% X% result favorable expected, the to increasing than range. renewal of Regarding to the positive are range from sooner opening outlook, and up the to are in rate changes X.XX% direct These NOI

the performance same we NOI to from announcements for over quarter per tenants the or store categories, assumption insulated same limited about to Also account property basis our with XX of bad continues XXXX, portfolio. in to are of balance NOI and debt property closures. recent better view growth which relatively major starting pleased of the has reminder, our believe portfolio excludes provides growth now a of assumption though impact our we a As core remained that redevelopments, underlying points, struggling embed exposure of closure our $XXX,XXX unplanned XXXX

NOI the While OFFO. growth tougher income With the per expect bankruptcy understand same of and think property second OFFO unexpected of not the it's provide due and we quarterly and we investors recur do share important do that to property and course quarter this of same decelerate full-quarter the NOI over first year. to for we our year-over-year quarter guidance, not trajectory share OFFO to mind, a quarter impact in given to per on we comp the expect the in first dispositions growth

with heading the With of debt end our the by rate a million an XXXX outlook in $X.X not and first per year. XXXX at that NOI the rent property momentum rising of is XX% the of complete, open second great that, but already please in signed, our closing, operating commenced, driven remainder second operator, half expect the we Importantly, of of OFFO quarter the of and great plan and in XXXX. in reacceleration entirely leases stack, of annualized $X.XX totaled for growth trajectory leasing confidence the In share share and visibility deceleration not of and our fixed line per questions. expected backlog growth we for same the over or have quarter change the into

Operator

Bank. Deutsche here Our from from first question Instructions] Derek go ahead. [Operator Please is Johnston

Derek Johnston

Could the everyone. sentiment or leasing update changed of retailer give over Good that’s or spreads? demand, especially in how and tenant even your And strong few of you quarters has months? or given us couple last morning on past an terms it

Brian Harper

Derek. morning. Good Hi,

top to retailers' do a big the comes the these Tim and markets. retail larger And at are flight it deal. there co, a seeing XX if quality really things. across down and you we’re And and there really, time I all to remaining flight will, is board. the offices with few and team a We’re really a think the is after MSAs as to I dispositions is our demand

seen cosmetics, The say I that a a like to new leasing we’re team. the you’ve is much based haves have say, with and a are the lot in pretty Amazon. fitness you there's three couldn't broad them doing Fs and fabulous big, results. with I Athleta. what They’re we’re in So, with very think the is see doing with nots. the of doing not of is results. the see a lot has expansion -- on seeing clicking which a fitness obviously resurgence Grocery, team It’s the you exposure as Two, discounters you And the lot and having well, we’re tertiary especially that a prouder and The of be deals is all cylinders. lot the them. leasing Sephora when and I really then entirely and of

Derek Johnston

Okay.

great. and the and payout the And you gotten questions it? address guys, sustainability dividend about Okay, I’ve could dividend think guys And just of how about the you few ratios. please a

Brian Harper

Sure. a I’m Thank of is prepared do very is and you remarks, this proud board question. this fact proud in equal. best-in-class for board I’m we obviously as said of the the I have I my and that a And believe gender now that new

we the believe Regarding this plan. dividend, in

quarters and We two visibility past do, especially coverage. board, clear really improved a behalf the few dividend myself NOI tremendous of on see that’s quarter path the speaking have past that’s but We management quarters to and by and evidenced X% growth. this

Michael Fitzmaurice

in and only right-sized is add in payout of on this discussed initiative previous I based as that AFFO deliver that of to shop upside calls, there Mike, we heightened small then would first continue into on be the the have begins re-box on in then delivered to XXXX plan it the bit we thing XXXX quarter us, we’ve we Derek quite that will have. then front de-boxing terms and and and this in Yeah XXXX we occupancy given on, the a -- ratio, be in slow

quarter. have last boxes those XX XX boxes. identified We have activity We already on signed

in great should over ratio down and we visibility see AFFO front So, payout time. come of that us

Derek Johnston

you. Thank stuff. Good

Brian Harper

Thanks, Derek.

Operator

Mings Raymond James. is go Our from from next question Collin Please ahead.

Collin Mings

Thanks. And good morning.

have the terms other any me. on Can you're there particularly maybe meaningful been front? from but structure, noted changes just targeting other expand or have drivers of momentum, front? question the incentive First you any Again, shop tenants that the on for on small leasing you team just in of of been the some there momentum adjustments the

Brian Harper

been I XX Collin, we on are and the three people in we've good the to did focused have back to with Retailers back back going flight come We're see a come again these past We sectors. and I we've morning. come properties XX the that's I leasing, the road. really top -- seen to to And that people and things. very MSAs. much top on MSAs.

installed I'm to the approving retailers, comes keep then space that You and personally to but that's rents And space. pipeline the where processes drive have legal renewal tracking help from new the lease down from of get-go. deal and and between executive demand. consistency committees the And the also more calls by every what we've

So from it's broad-based. a -- very

from at Pier that are signed Tel-Twelve day an tenants T.Js. and world, replace would to As a we CycleBar credit three we low-performing lot proactive also you've high-quality we're magnificent the two very have the now of X where world business left. or and where that replaced Athleta of a doing signed Pier a this of volume a are proactive the quarter We with risk one. a Last proactively. a These the deal tenants four way of with with and we're They replacing quarter measure we Sephoras Athleta. business This very We're lot in a business seen, Ulta Ultas a tenants at of have of times lot past to lot Pier spread. doing only Xs is be doing X. are

and is with obviously pleased pipeline quarters. am very leasing pleased and very results for with this the very really our So broad I based -- future

Collin Mings

all Okay, right.

again, have that here it you some the leasing of the number of but component helped driver, is there implemented drive guys personnel like things So that momentum. have this is a sounds really other

Brian Harper

business and property plan Yes, its orders and the it's marching it's personnel business has plan each team -- has every space. for

to a We are And maximize leasing, said, here shareholder I as value. leasing company. is this leasing,

Collin Mings

tenant number, big just help if on driving a about kind use that? and just on how then this like maybe of Okay. you allowances thinking further. relatively the anything the of a occupancy, Maybe costs step improve new particularly quarter? capital And was bigger in expand just taking you picture, leases the there you improvement Seems will? are Can to

Brian Harper

given in I And our quarter volume movement important have expiration which particularly the it's do was overall of and rent quality deals generated, to context our of for but roughly TI to and these exposure deals it's the we'll years, importantly, quarter, on these of to Sure. a more quarter obviously Collin. three about right, new tenants, the the think the payback size, to credit, reduced tenants. deals riskier period this the think two

freestanding where mean an knew X previously. times three that just to of this an sub restaurant, and there on Pier replacing small granular from a was of Pier are sales. Ulta remerchandised shop portfolio. I the It I and this of quarter, a to these really had then targeted going one, new of $XX is this really signed And was day quarter Tel-Twelve X plan under-managed mentioned more a what And that. reflection underperforming high This the outparcel asset I lease-up there and As results is overspend These deals. volume divide a we business restaurant happen Sleep by a where at clear, to be foot, initiative producing exactly fast but square casual every we three is a to getting tenants just were type we a Number. was not a this deal the for deals replaced

So equates are little roughly that pretty of on damn spend And getting that's give that, good just spread yield $XX a to a XX.X%. releasing you XX% on a of we to business. that, context

Collin Mings

Got turn Thank color there. extremely I'll one it One helpful that's last it. over. No, you. and

on today do lot board the a like here? could there. of is Obviously changes the this refreshment about feel we that complete changes you be a forward additional of call look At point, just some there comments Just lot or refreshment. as

Brian Harper

think board I existing are are, these And both I'm it's complete. at these humbled. and and you've I'm professionals, sure the new board looked I'm our honored, from bios,

We have of was perspective. have the meeting week lot new board we've this past ideas, we had. best a a exciting This of lot one of new ever

So it's page of to this chapter at a exciting RPT. very new new

Operator

Please JPMorgan. Mueller, Michael from ahead. is go question next Our

Michael Mueller

question we got of renewal A throughout like and on change would Hi. would? broad know it you just quick in But how the last relet. example to of sales And or portfolio? touched compare the from was that I to getting spreads on asset spreads mix leasing how a spreads some if you renewal it year's the you better, of say based an same the pickup if tenants new spreads. would store much X reported associate versus you results,

Brian Harper

assets spreads And contractual think the is demand. Mike. it do our spectrum. this not people. processes is But across were this to back look renewal better based and based, at and and the of was, options is XX%. you comes I the broad some, This that spreads tenant if the this I broad most think getting were all

the asset X, very plan again a units was portfolio. leasing transparency every this great we just from between is multiple combination is the this and This business So for all different tenants each wasn't this have management. X, that asset business and focused and X, across

Michael Mueller

it. Appreciate it. was That

Operator

Our next KeyBanc Capital question Markets. is from Todd Thomas,

Todd Thomas

same settlement point that Mike, XXX benefit the flow you from through store. the mentioned bankruptcy the basis

the reconcile a recovery Look growth X.X% that that same-store X.X% occupancy in ratio excluding per print, year-over-year like the unchanged. the flat bit roughly is the solid can So still the and expense with foot? you ABR income square little in a roughly but

could So comment the of bit you little maybe on a some drivers other there.

Mike Fitzmaurice

Yes. Sure, Todd.

give particularly came basis of of that another rent contractual basis from XXX renewal basis occupancy I'll that had, X.X% from minimum contributions XX print over drove same-store, points you rent X.X% the came we re-leasing and what the points just came increases gains, that points from spreads. First, fueled XXX

So that gets X.X%. you the to

saw the terms the same point in I In what to is flat would really on that two that. occupancy the of we on property there you where were front supplemental, had things which

property is of the end occupancy a shown and occupancy our at not that The year-over-year actually average the quarter first to same contributor up was the is growth. which and NOI

second for in qualify same GLA and smaller we several this that to our the new nature and redevelopments our size. property up therefore in we activity small XXXX portfolio The ties in delivered expansion can our outlots not at are do that immaterial inclusion as it of modest add level, of included criteria while a is at and the property And NOI.

Todd Thomas

helpful. Okay, that’s

So with as the outlot going still create some the Should future and we . regards bunch of projects. will -- some [indisernible] GLA volatility expansion will a new projects look continue You included Does of in model? there you same-store. metric additional that in those at forward in-process the have the and those be projects, to

Mike Fitzmaurice

really it that that to remarks XXXX structure back of not that’s re-accelerate should to rents volatility. my I in half set signed is course commenced deliver tied year. the over really to quarter, of our in and comment which create related we we’re the in the that No, will the year the did not the bit what decelerate will but no occurred second any prepared in a

shouldn’t the with definition volatility no, change any So, here in expect you

Mike Fitzmaurice

in assets our of a XX very number representative XX and almost. would I that same are definitions, you remind which NOI property entire And pure of our is our included portfolio

Todd Thomas

of talk bit you the And the current Company. helpful. little that’s leverage can profile a then Okay, about

on completed times and quarter net to program. X.X basis So disposition EBITDA at a the you’ve you ended the debt

the plans So curious further current leverage what around the current target leverage, thinking what is reduce is and if are just level to leverage there I’m from here.

Mike Fitzmaurice

we’re over in once think leasing our we of the and redevelopment stabilize next hang our initiatives projects. put capital we’re the to going I given towards to Yeah, mid going bigger also the around then to years use Xs And couple start some the Place online like to his portfolio redevelopment bring But six get closer to in to we’ll of our and -- Brian bring and a get opportunities mentioned it’s Webster remarks, that prepared there. process down Rivertown times.

Operator

This floor concludes like turn for the to I’d comments. Mr. question-and-answer session. to closing the any Harper back over

Brian Harper

ending believe to what the call, quarter. Before highlight takeaways key the I want we the are from

First, as the been fruit quarter. by the few to the base strong are of rent organizational implemented have quarters portfolio and growth starting our bear past X.X% changes over evidenced that in

place teams cylinders. firing are in new and all Our on operational

plans in with business Second, an not we liquidity put given And completed program enviable line on million us of to signed our finally, and end $XX of disposition strong full has our position on have the good totaling our at backlog quarter our $X.X visibility our on which but the of availability with credit. commenced leases cash million. of execute

we about foundation will same of the grown sense the seeing great weeks. be XXXX continue many While urgency in a ICSC to Whereas of remain you this have encouraged our you for and was the and all leasing. execution forward joining Thank laying that by rest we operate accustomed leasing all our Have with diligent to XXXX for the the morning. day. NAREIT about of and you to. in are look coming future, progress, at will leasing, We us

Operator

This today's concludes teleconference.

You again your may you lines for disconnect participation. time. at your this Thank

RPT Realty (KIM+N) 4 May 192019 Q1 Earnings call transcript