RPT - Earnings call transcript Q2 2019

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Operator

Greetings. Welcome to RPT Realty’s Second Quarter 2019 Earnings Call. [Operator Instructions]. Please note, this conference is being recorded.

At this time, I’ll turn the conference over to Vin Chao. Mr. begin. now may you Chao,

Vincent Chao

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

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

Although, we on Form expectations. XX-K these our recent factors factors in assumptions, and on forward-looking believe risks risk most quarterly annual report are could report described Certain statements of as XX-Q. results reflected factors from any are cause in and based differ reasonable the that our on actual Form in expectations to

call are in of also which of Certain on and website financial those which press nearest measures section. is non-GAAP our to reconciliations includes and second directed measures. on available release, definitions GAAP measures Investors these quarter non-GAAP involve the our to the statements made today’s Listeners

questions. President for like the now open remarks, opening to Michael I would Fitzmaurice their call Brian call and over turn Harper; to CEO, for CFO, we’ll and after the which,

Brian Harper

recent our Vin. quarterly thank organizational of capital and comment small you, end plans our morning, with highlights initiatives, This you results, and update a recycling I to on from on morning briefly Good remerchandising like changes. shop would provide discussion and our

who financial over our details increased discuss call drivers results second for of then Fitzmaurice, quarter turn I to more our and the regarding XXXX. CFO, guidance the our and operating provide will will Mike

another happy towards year-to-date strong the X.X%. On yet am with same-property foundational NOI front, this As by headlined better-than-expected at our focus I in operating growth organizational now of same-property of call, our mentioned growth on our putting to leasing work X%, leasing, and XXXX, NOI last we’ve completion report turned I quarter, leasing. almost

past signed driven Growth with the quarter. feet the of over in the in success quarter quarters leasing and covering the our by square platform was, XX XXX,XXX few leases again,

averaged XX.X% Blended new on leases. X.X% on renewals leases rent X.X%, comparable including spreads on and

This quarter’s by rent X.X%, a anchor have been renewal impacted and would the spreads without blended single were respectively. which, negatively spreads renewal, X.X% and

quarter-over-quarter basis XXX Second activity quarter our XX.X% and basis leasing basis up and leased year-over-year. occupancy to at points points year-over-year. points sequentially XX points rate XX up pushed end, XX.X%, Economic was basis XXX quarter

total leased is annualized This point represents to XXX we combined year, headed between which providing basis into spread our $X.X with million targets. great expected our ability and leasing increased $X XXXX of feel to rent, the comfort And the end million of achieve XXXX. about future the of by activity economic trajectory with this good year, our us in commence our occupancy base performance of

sequentially, Turning a of targeted but down XX ended up shop small small and to remerchandising points We shop basis lease rate initiatives. with basis the our year-over-year. XX.X%, points XXX our quarter

was in expectations, given particularly our consistent shoe rate store. move-outs, This sequential decline expected lease with Payless our

to points shop occupancy XX.X% up next years. was small second few of our XX% remain to and occupancy basis the hit points year-over-year. to in XXX up sequentially over track the XX quarter economic on basis goal Importantly, XX% We

these activity which capital. return remerchandising XX on that our consumer replacing I’m now experience with front, former lease the categories a of the signed attractive have add happy we to properties. of With XX that Mountain at at tenant signed enhance XX% Marketplace, River on an a Burlington projects, identified report lease, this On City we remerchandising Gander at dynamic half leasing

expect not with any to is program by It do from projects up upside also already all the declines pick remerchandising of rent further that from fully almost in they’ll in XXXX. targeted are rate our early as run significantly vacant our remerchandising rent fourth XXXX, noting quarter be commencement XX worth we the

of quarter driven While over second quarters. I’m our performance, several pleased what The estate our consistent made I’m about consistency most and quarterly we in the is improvements platform operating real XXXX and proud past the performance. of results have that strong

almost which, growth the our X blended that a our spread this rent, in growth new same-property over XX deals. in has rent turn, lease feet, third at a XXX including leasing the deals, quarter past X.X% X% we’ve driver generated period. been spread X.X% averaged least an has XX.X% base key on million has behind months, Over comparable on comparable consecutive square This of fueled covering NOI same-property over

Last quarter, was disposition program, we our on portfolio focused sheet and which completed balance de-risking.

investment in sale River we’ve earnings with future Fox the With the at of focus dilutive activities. capital on page sales now QX, Shoppes recycling our turned net asset the on

of XX% program, completion now derive of disposition Following is where XX our the focused. the retailer over from rent base demand our annual MSAs, we top

potential be the and these target markets want household our into greater fund Charlotte, and it growth population, discussed, to we retailers Minneapolis. Miami, as sales Nashville, be. Tampa driven and to Orlando, we’ve long-term and such trends markets, that wealth We growth will for slower match by these coming looking exit to In pro-business quarters, Raleigh, where is previously properties see markets and in

with an profile investment long-term on portfolio improving activities toward near-term our and growth leverage and earnings-neutral viewed eye basis. the a be will of quality Our

as more Courtney brings experience over Smith, announce organization. I started could President for As we our cultural a be on of who fit transaction July He’s recycling Investments. the industry career. regarded most of phase Senior the perfect importantly, wealth a highly move capital Courtney investment XX, Vice into to of the hiring and is his within our of pleased program, not

to many over XX to thank service. her Clark, I Cathy years want moment her transactions contributions also RPT a of EVP of former for take to our

forward board. change since from vacant board the I September also the the that of to leadership Board an within is average our new to years Chairman his independent years on with board continued our to and look bring of marks our XXXX. a position balance, RPT on report that refresh, happy years XX, X industry. Board, and as June David this benefited new gender Nettina, XX his David’s appointment end XX brought members, saw has which which us unique and tremendously Board the want Board been to has reduced the highlight we This as Chairman. elected Counsel into I’m X our organizational independent in tenure from

earlier this year we and continued experienced In the has upside. remains optimistic our outlook summary, that in the to strength

XXXX, assets continue beyond leasing the and we higher-growth while redevelopment growth thoughtfully improving Moving business. recycle opportunities are of objective to the drive with our and markets we into risk growth harvesting of of plenty profile to

I – over our call turn to would to like CFO, Fitzmaurice. like With the now that, Mike

Mike Fitzmaurice

comparison morning. due color Brian, quarter. rent lower and Same-property X.X% that to year-over-year more our growth offset I of a in Thanks, regarding some improved partially for mentioned detail last we financial X%, base provide discuss XXXX growth will our good outlook. by Today, recoveries driven additional quarter, above and net tough quarterly plan, by results NOI the was

credit driven internal better-than-expected earlier-than-expected ahead losses. was lease rent, of net recoveries percentage commencements, by higher projections, our growth NOI tenant Same-property and

growth to leasing last As our release, our balance year of complete, plan of with range our of leasing to same-property as we the X.XX% new result increased a at speculative the a direct visibility of assumption strong increase increase quarterly XXX NOI over are raising X.XX%, basis as our risk midpoint. XX% is well to night’s outlined This our performance a regarding in estimates. the limiting point

notable year. quarterly over cadence We balance do not of anticipate any the abnormal the

model loss reserve basis XXXX of over However, we account the points per of unplanned to XX quarter store continue closures. balance credit to for a

leases another mind $X.X As you to for about annualized up an contribute $X.X keep this XXXX, of in XXXX, that of solid already start we’ve additional base year rent, will realized us million million XXXX, of think is setting base should fully that generate in leaving year same-property roughly $X.X NOI be rent in new that to growth. million which scheduled commenced

$X.XX plan of Upside internal Turning earnings. higher-than-expected Center. $X.X second was driven a by per FFO and the of Deerfield to at lease our quarter and a quarter plan. below-market million acceleration was the our NOI share Operating for Towne to same-property for ahead our

to enabled our to $X.XX. operating has share $X.XX outperformance to at raise us per to from XXXX up Our the increase midpoint. guidance A FFO $X.XX $X.XX, $X.XXX

on in the foot square win of to the will spread proactive X is the market recover XX% the XXX% $XX and nature second reflective facilitate were is the acceleration costs. that It team. portfolio. of dark We per below believe a of of item, in our a lease it nearly our expiration, quarter ahead is we leasing opening collectively noncash able Clearly, X new that incremental rent noting worth a space while earlier a return months re-leasing generate tenants at the for of

to sheet. Turning the briefly balance

leasing the proceeds notes, debt our subordinated disposition ample of our and liquidity use $XX of quarter our on second $XXX current rate a million reducing X. to on million repay this $XX cash, discussed the our million ended fund plans Despite line floating during last availability quarter, of the As of to second we of cash. portion call, with exposure we junior utilized X%, our credit to with

from to annualized last adjusted EBITDA pro quarter X.Xx, the debt We quarter. ended at flat with forma net

to we we of maturities, goal continue half reducing volatility. to expect longer-term sheet in Xx about leverage XXXX rates range and attractive few recasting the XXXX position, refinancing goal loans our today’s risk, over about locking to our years with the Xx. credit We of and feel good line out second pushing mid of the before in term balance expense our interest our hover refinancing in XXXX moderating anticipate next and the reducing of Though

operator, open questions. line for With that, please the

Operator

is of question the line first Thomas from Our Instructions] [Operator KeyBanc. with Todd

Todd Thomas

The the First running is question. is same-store X.X% X.XX%. to X.XX% year-to-date. range Mike,

at you’re So high the end.

any below the there’s move-outs – year? curious anything impact known or the even any about, NOI line, throughout balance think that are might should if rent the Just minimum closures we growth same-store there or of

Mike Fitzmaurice

the so, right half as to the think the X.X% you pointed around a out, don’t around range in we’re year. the would back math suggest of I midpoint be going Todd. No, that And of

We don’t prepared in at the mentioned are in optimistic expect end in half. significant the the point high his year. Brian the we of deceleration range As second this to remarks,

out, But And comp which cycling fourth that growth. X things would loss was through credit XXk. a reflected expense number quarter only of fourth about point quarter in ‘XX, tougher a we’re X.X% I the of

And we $XXX,XXX prepared have per mentioned my remarks, about as in I quarter.

there. not that’s So that, there’s of much But a more. headwind outside

within range. to the be So we pretty expect consistent

Brian Harper

couple want a And things. this to Todd, of is I add Brian. just

see We great Charming on those $XXX,XXX in modeled relating Charlie $XX.XX. visibility closures is that. already Just in That’s upside which the August. ABR, we’ve particular, end for gross to in of of

So square I’m think get boxes. those those divide square $XX foot, a minimum, a foot, eager some we to $XX We keys. re-leasing assumptions, if even

Todd Thomas

your Okay. And about That’s then Mike, helpful. comments also, XXXX.

think growth close to there will that the I be you million is XXXX said alone commencements. running base $X.X of impact That from XXXX incremental will ABR positively X% rent. for

seems right anything read? Or range, to So you’re place it be That’s range. toward Is should a in similar is to maybe there we trending the for like XXXX. specific thinking X.XX% about? X.XX% that

Mike Fitzmaurice

of sign a is within in next those that’s any to or in continue I else fall Todd. we read, we or X% of terms the to gave year leasing and happening anything portfolio at company the think the activity and that pretty right absent into the numbers be new reason half minimum be yet the And XXXX, close No, year. to out, second why that’s signed should our we’ll

Brian Harper

the early the of And already into ’XX SNO of is they’re the Todd, end ‘XX, that, of XX which us a signed great now. XX ‘XX as lot and opening gives that of of too, visibility boxes

to excited ‘XX very eager future more about we’re So in the and quarter. talk about ‘XX

Todd Thomas

part out Right. $X.X you and And have break attributable anchor XX then, us SNO the addressed can the of XX sort between that remind to or redevelopment million not the been of what’s redevelopment? of bucket, which what’s versus of the boxes, from ABR

Mike Fitzmaurice

can I about Sure. XX talk the boxes.

get like $X.X rent or increment so quarterly XX in million, those, base million of at Brian hit had thus annualized $X.X the you on said, quarter, about a the about quarter from about of $XXX,XXX. stabilize, so ‘XX $XXX,XXX within then first to it’s we And that the about basis. of far should boxes With an coming number

Operator

from is the Mings with question Collin Raymond The next line of James.

Collin Mings

just me kind First question on for of Todd’s following a up is bit.

the quarters, few year-end. again, the commence Just before I the referenced think discuss But commencing of Can move-ins? in you heard that last expected some a just your that of a bit to $X you have remarks, prepared – reasons. issues it of you get different we’ve – over just many confidence was maybe for million in delayed rents little of I these more variety of timing

Brian Harper

this that. answer Collin, Yes. Brian. I’ll is

experienced So departments. of I we between any that And coordination attribute and tenant the to leasing collaboration our really haven’t construction delays. the and

with the even proactive leases We’re signed. are tenants before

We’re negotiating where spending know money multiple leases. where the we and TJX have those execute Ross’ and we they’ll

seeing tenants actually on opening some uptick we’re So sooner.

almost it’s So reverse the here.

assets and think XX weeds space these we a that that. with contributes institutional putting I Now in in did of place space lot and very practices to the by day that X,

and ‘XX. certainly So we’re sit, very well we again, for XXXX where confident. And into

Mike Fitzmaurice

in River we quarter Yes. experienced in this a is deal last down that Florida. Burlington And a that was city great with example what of

quarter between able addition the given the construction tenant, tenant that But get tenant to and of fall expected fourth XXXX. this year. the leasing, coordination to We in open collaboration open in we’re that the in with

Collin Mings

Okay. there. forward. prepared That’s to just remarks Brian, helpful going then, color back far And funding match moving opportunities the for as as

you pipeline there? your are anything actively right specifically any now? pursuing acquisitions Is in Just there

discussed but we’ve as cleaning targeted know in done articulated lot going of heavy the forward. some with the just, a markets in again, and lifting longer-term strategy of portfolio I you of terms before, the up those

of path how the kind these curious, you Just of pursuing moved here some far down of opportunities?

Brian Harper

good that as Courtney, a he’s a wealth knowledge, into remarks pipeline. in mean, with database. brings his pretty I walking darn mentioned But No. of in prepared my I said,

markets want the to identified expand. where we’ve So we further

just I these markets Charlotte, natural, from Orlando, Minneapolis. be Miami, There’ll concentration. those Tampa, market a And are of examples. in Raleigh, outside believe

of assets tenants market too. a classes know be we at spectrum there be some moving So the we could look have where in asset do we here. there’ll And deals, where it opportunistic say, are where we

core. and opportunistic So

active. We’re

where said We’re company. again, and and time are playing offense assets at we’re time we a IRR I’ve ups looking bottom

higher asset there where a we’ll that asset be or trade a growth might rate. for at cap portfolio, higher-growth cap slower an attractive So within equal our rate at

I So and be neutral earnings may just at certainly leverage be neutral. this again, want will least accretive to – earnings emphasize,

Collin Mings

to Okay. position feel team balance be that that, the juncture, in this the on everything the And you’re and you sheet, a you’re bidding in market where given and assets currently?

Brian Harper

Yes. win. Again, this a is

will carefully they weighed So if there’s with be dispositions acquisitions.

without disposition. buying be to going not it’s So a

Collin Mings

understood. it, Got

Brian Harper

That’s our currency.

today. As of

Collin Mings

I maybe remarks, that in press me on prepared the and apologize I but Can already. reference One just apologize Understood. expand strategic I missed a there last one release, was weighed in for believe that I if I that? on you missed one just Again, the to renewal if anchor results.

Brian Harper

and it reduce an renewal at Chicago at renewal option, lease. cost-of-capital at was look later and it’s our a perspective. It renew just a It to one just tenant an felt other capital was We in expenditure office office assets date. prudent of spread, alternatives lower above-market from a it our

Operator

Johnston Deutsche Derek the of next line Bank. with The from is Instructions] [Operator question

Shivani Sood

for changes of thinking the the This your Can remarks, or you some to in recent opening vision? be might on some color how is composition give RPT the Brian, how the Shivani strategy Derek. you Sood new us about mentioned Board. company’s influencing is on

Brian Harper

on across Yes, our gaps to really skill sure, a very out the search those excellent excited Committee Board. then about I’m identified used thorough Board job innings, the I gaps Shivani. did those Early and we country. hi seek individuals. very, a the skill and nominating thought really Governance

the estate need that and already Board have skill and with With said, were retail. Those expertise finance. certainly hospitality, gaps were digital real that we in on

major hospitality, retail. those either sectors of current So digital former leaders we within leading or companies and of added X

new equally with Board I these David say the he gender X a balance. I a years is leader, the Chairman. appointment independent impactful as Board, highly mentioned our about as of XX previously, as I’m into for Board. excited David as bring, And very can we of Nettina our member demonstrated a

management to in to very come. years a to figure RPT. him excited and and myself very, alongside him here with our be be relationship initiatives very working I’m strong established working governance for We’ve important will the He at advancing extremely

Shivani Sood

at pipeline there? were they’re and color you was discussion noticed then And think mentioned. I not can redevelopments, in there the Great. share But just yet. some that of I Rivertowne place active if wondering Webster potential NAREIT, included some incremental

Brian Harper

Yes. Sure.

So depending down just beach, mean, in of really both and – process Boca. about on figure I it’s Rivertowne is those Miami – process outside we’re at, of than Florida through where Chicago, through entitlements XX-month entitlement but Deerfield faster a

the in midst entitling. We’re of

and or resi We’re looking did retail, that for partner. or demand their of great multifamily be square we at There’s there. to XX,XXX demand lease which a of XXX redeveloping from feet the there’s residential units, XX,XXX we will ground great sell

I with towards don’t end that. some a we’ll precision It’s just – end you – always entitlements, we of think at this believe the on giving the in accuracy for do numbers get know be year, early And you – to start ‘XX. you come really We ‘XX expect that. project actually late out. in and But that accuracy with we’re excited don’t you here. until true open

As which tenants Phase there. to a Barnes are would floating around be in as potentially number backfill X then there Chicago, we’re & of the X of far Noble box there entitlement Phase innings early as and residential, really the

be at another more asset later quarters. giving again, that we’ll So color

Operator

of Our Bank Craig Schmidt America. next question is line from the with of

Craig Schmidt

down space. the was the but looking I occupancy bps. leased up bps, occupancy And just was was at the small XX XX shop

SNOs of lease where of Shop. by Small whatever? explain the whether end just be expect then do components the could that year? or you it the to And If and you

Brian Harper

Yes.

We really, ascena we and mean, as let bps some weaker knew quarter-over-quarter. on this color, you give Francesca’s. Craig, me XX Payless, such coming. was tenants, I recaptured decrease So the the

portfolio on had saying, be there’s was at greater and to this as value leasing I So effectively de-risked, look that. our as

We Arlington, at Lane, X did on also which Upper Whole is center Columbus. in recapture Shops our spaces Food

We’re to redevelopment execute there. on plan our

points to we of next increase over the achieve XX% to XX.X%, which track again signals our XX% shop years. small on sequential said, I of to of target basis occupancy couple XX As are we’re

Mike Fitzmaurice

Yes.

the you end of can the the will year, but occupancy what going by rate the by be. XX% give prognosis be, point, at not said, the So on to think I like lease to XX% give rate going I Craig, the end I’m the any is you you of At what XX.X%, quarter between occupied to we we’re going this be ended and year.

Craig Schmidt

includes out? taking Charlie’s And the Charming that

Brian Harper

That’s correct.

Mike Fitzmaurice

That’s correct

Operator

next from JPMorgan. comes question with Michael of Our the line Mueller

Michael Mueller

A question.

So $X.X next on on rent of base million going be year. coming the that’s to

You in also should embedded of about above how I $X.X and is $X.X XX million, tied we much that boxes. Or the that? mentioned guess, to I million? $X.X -- is mean, million How it beyond

Mike Fitzmaurice

sure, number $X.X that Mike. embedded The prepared is in that we $X.X entire mentioned Sure, in million our remarks. million

additional We million contribute $X.X ‘XX, rent have of and in $X.X million have contributed we in ‘XX.

the the of run recognized that terms in with quarter $X we In for associated rate what million.

$X We at in quarter will next quarter, to million QX in the and million XXXX stabilize year and $X $X.X had X in million. stabilize we that about expect of

incremental between have $X.X we million what million. is of So $X.X versus the quarter $X running the through million the today

Michael Mueller

at Got it, occupancy? your that of occupancy, shop take were know on but at occupancy put and you the beginning that next is your I just that would where year? would XX.X%, overall

Mike Fitzmaurice

Yes.

of year I the the XX% close by to end think then. it’s pretty

Brian Harper

Overall, shop. not small

Operator

to remarks. questions. no Brian are I back would floor the additional closing turn there Harper for time, like this At to

Brian Harper

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

quarters posted now of rent base same-property consecutive X or X% better growth. we’ve First,

years execution and by is RPT that our at in date. not measured we While encouraged to consistency I’m quarters. understand

forward redeveloping sales healthy recycling now selectively we earnings our and our dilution further portfolio centers the sheet. are our Second, is looking behind improving and to balance our maintaining us capital strategic while by asset from

year outlook spaces second our drivers only the for and another remerchandising And XXXX up NOI consecutive XX set X finally, results, of The previously our with share lease, FFO of left are us the our benefit quarter. not XXXX to strong we vacant beyond. well in per for in and same-property but targeted raising only upside will confident for

morning. this Thank you Enjoy for us rest your of summers. the joining

Operator

has Thank participation. concluded. for you conference Today’s your

lines You time. may your disconnect now this at

RPT Realty (KIM+N) 2 Aug 192019 Q2 Earnings call transcript