RPT - Earnings call transcript Q3 2019

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Greetings, and welcome to the RPT Realty Third Quarter 2019 Earnings Call. [Operator Instructions] It is now my pleasure to introduce your host, Vin Chao, Vice President of Finance. Thank you.

You may begin.

Vin Chao

Good morning, and thank you for joining us for RPT's Third Quarter 2019 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

we expectations assumptions, statements and actual Although the are based expectations. risks cause forward-looking that in any from believe reflected could differ on factors results reasonable to that

is measures after Certain and of definitions directed Certain to those now reconciliations statements financial measures Harper; release, made and risk XX-K in are which remarks, in over I turn these our section. also press the which like measures. includes open Fitzmaurice, non-GAAP on our most to call Listeners nearest today's of our these call report as involve XX-Q. factors annual recent non-GAAP our to would report the CEO, Form Form are Mike factors their quarter on the quarterly for to GAAP website of and and we'll questions. Brian Investors call third opening in and described available which President for the CFO, on on

Brian Harper

the third my provide the our transactions you about thank Vin. our remarks some and will update you, highlights This the quarter, takeaways and activity from end comments morning, from our I financing brief Good quarter, quarter. key initiatives, with small morning, on the in discuss prepared shop provide

and regarding Mike review the our drivers depth our over call in guidance more will the markets increased of financial results, our turn then quarter third XXXX. provide to more Fitzmaurice, activities for CFO, discuss our who capital will I details

results. with start our Let's

organization. our our portfolio, strong reflects the platform embedded third within and reenergized our performance execution value revamped Our quarter and rigorous

Nowhere for of this same-property our more NOI growth NOI was our growth in X.X%. and X.X% quarter same-property the evident than year-to-date

to we stabilize the while over markets NOI remerchandising deliver shop next seeds growth and the We small percentage few rent targeted above-trend increasing the assets. initiatives through escalators, expect growth tenants growth same-property targeted sustainable contractual portfolio for our lease-up shop planting investments of and through years and small high-quality the as in

square We leasing leases now Turning of rent signed XX totaling a comparable generated spreads blended Spreads X.X%. of including activity. and comparable quarter's modestly feet, renewal noncomparable X.X%, respectively. XXX,XXX new to X.X% leases and XXX,XXX last feet and XX comparable on leases were square that covering ahead X.X%, healthy

from We asset year-over-year broad-based ended but up geographic third generally last modest the quarter. XX The leased, lease points in type rate points at basis was quarter perspective. XX basis from a increase XX.X% down year-over-year and the a

Our small given three decline Charming XX rate up XX.X% basis down forecast points expected four lease our sequential points Avenue was but The Charlies consistent shop with of sequentially of was leases. and XX year-over-year. recapture the basis

$XX.XX roughly the to Charming about tenancy to and of was Our XX,XXX at square four feet a per centers. uplift top opportunity tremendous total at exposure our Charlies and foot square represents rent

a space at square which active $XX.XX to lease average foot, at the at actively negotiations of tenant backfill with spaces per currently are are national are XX,XXX and the tenants we tenant. several are totaled backfill square spaces, Avenue lease one a one negotiating former of with those We with rents national In to in and others. on feet

the In year. made to addition, on our expect re-leasing progress that at the end we two great have locations we Dressbarn of recapture

location one strong with on re-leasing spreads. other, tenants at national at at, under the lease LOI on are We and each

Small points XX.X%, Avenue offset shop sequentially quarter year-over-year and impact Occupancy XX.X%, up the Charlies basis but Charming points was new XXX XX basis commencements. the quarter-over-quarter year-over-year. occupancy flat of was up as was basis lease up for and points XXX

of and quarter's Some shop Diamonds this Bar Lakes. Cycle Lane Helzberg on small Woodbury at commencements and at Shops included Athleta

achieve few XX% We on shop goal of occupancy target to small to will our XX% small track which us market mix the curate over ratio but years, help already of demand. our our Raising our a shop will ABR. our while remain drive XX% help rent shop recovery better also boost portfolio escalators, not tenant tenant us will only healthy improve it and experience average meeting next

quarter's continue build to operating track strong we this performance, With record. our and executional

spread a we XX.X% XX on rent generated XXX comparable spread have X.X% XXX,XXX deals the square blended deals. lease almost new on Over comparable months, covering a past including feet, lease

also the quarterly NOI growth over of have XXX average our key which rent increased in year, has of same-property basis been same-property growth industry-leading points past over of the driving months. occupancy turn We past average driver XX X%, the base by X.X%

online versus XXXX. base but the months, rent highlighting $X.X fourth of at commenced quarter, activity last strong between quarter that next basis leasing, expected versus teams leased is to The spread leasing us in not represents current and that the management annualized X.X%, most turn points Our quickly earnings. XX to the our commence XX leased spread occupied occupied million down the quarter signed asset construction allow into collaboration which ended from will over of come

third are plan already our us confidence into also year on XX% visibility the in should what the XXXX XXXX. be of XXXX and at organic leasing signed with of the quarter, strong actively growth working providing end another plan We

Turning to redevelopments.

our highlight but Jacksonville, Florida. I make continue to activity of in to We progress number on property a at Parkway Shops fronts, wanted

new are in site a lease work pad ground preparation we for with completing ALDI. Here,

ground add completing units a very lease working to doing undeveloped land use modification utilizing and residential that we with residential a site, the on on Additionally, a and the concurrently to manner land best XXX are highest so will for a partner use low-risk RPT. approximately in

development additional this think great space, and development is value maximizes small towards shop pool different for which an returns. will and We a opportunity a our for create approach example while will risk. densification that limiting allow This higher redevelopment of tenant

last during million, we quarter, further noncore remaining venture $X front, in our exposure Nora sold Plaza, the for disposition markets. reducing property, stake, X% receiving our the On our million in $XX for Indianapolis joint

past, match-funded, future noted As the be dispositions financial in proceeds redeployed earnings-neutral will underwriting that and property, we and from rigorous a market have into our basis. criteria acquisitions on meet leverage

markets Richmond few. for investment combing Raleigh, Minneapolis, in We Austin, Orlando, a are Nashville, off-market actively our to and just name target opportunities

which to will extend drive XXXX. quarter executing debt refinancing and through debt needs and in thunder, significantly final earnings wanted Without did stealing this reduce highlight finance on Mike's upon duration team close the accretion, job negotiating million I of transactions, the also that terrific our $XXX

And with the that, call over to Mike. I'll turn

Mike Fitzmaurice

by was contributed growth growth, of basis growth lower contributing X.X%, Today, our ahead Starting NOI morning. X.X% our results internal more results. improved discuss quarter XX detail, our projections Thanks, about which outlook. quarter I growth. same-property expenses will our with in Same-property Brian, additional base of above-plan points the financing NOI rent XXXX activities our color end at for financial and of to driven and third with quarter regarding X.X% in with good the the non-recoverable

raising again XXXX. As we outlined are growth in last same-property assumption our release, night's NOI for

in The year end the over high the reflects X.XX% NOI close with leasing uplift growth our to our outperformance quarter balance XX have expect visibility point the to outlook increase a X.XX%, between X remaining in year in basis we the to XXXX. the now and same-property midpoint. We at speculative of risk

XX remain same-property closures growth possibility, a While we continue of range, points basis we fourth unplanned end store a reserve our the are of optimistic quarter. NOI high to in model at loss the and credit

the Moving for internal Upside higher-than-expected the for the ahead quarter same-property Charlie to leases. our earnings. plan and of recapture Charming below-market related our $X.X quarter lease acceleration Operating share, was was of $X.XX was driven FFO which our of NOI to a third a own million projection. per by to

better-than-expected midpoint. we $X.XX the the are to a to up performance from Given guidance share the XXXX $X.XX FFO raising at $X.XX, operating increase our in to $X.XX, per $X.XX quarter,

plans to fund million ended almost total our $XX business million full with million Turning $XXX briefly and balance third of quarter the cash. liquidity, We $XXX to our on ample sheet. credit the with availability line liquidity of including of

forma pro longer-term last quarter of near execute consistent expectation our on quarter, and with of re-merchandising from initiatives as shop Xx. our goal end at targeted the unchanged was remaining debt-to-annualized small the towards and EBITDA net Our our leasing X.Xx we falling the adjusted mid-Xs level before of

Now moment to like activities. our a financing I'd discussing spend

rate interest support conservative on flexible during taking strategies and maintain to as sheet well this growth times. the balance very the report still One advantage great that while company to of we initiatives of to our I'm made happy protect more as a low challenging is progress front our to environment.

our of amount will the provided that release weeks. in financing we next I separate in once the closes takeaways only the press highlight key Given activities, few the our detail transaction regarding

we our First, maturity to the average almost X.X at X the from years will third year X.X of up extend end years, quarter. debt

XXXX have this our will debt $XX million through Second, we all roughly we of maturities X% while done reduced savings. have $X.XX to And X generating total our next about interest just debt the of of will or significantly over years. annualized expense lastly,

banking all a thank for achieve parties. our for helping I what I want partners win-win is believe to us

for opportunities, and reduce we today's lock to maturities, with While rates. look results, in risk happy I'm attractive these will continue push refinancing out

model to items. I'd earnings, point XXXX few like begin to a As you out

rent in First, in base which of of a growth. $XX.X roughly XXXX, base annualized incremental that keep NOI we that $X.X in mind $X.X base same-property will XXXX generate million million for another should year new strong and contribute already of signed leases an rent, million XXXX in have providing solid

not a experienced leases Second, below-market revenue expense activities we approximately from my of to we lastly, mentioned this that XXXX expect the $X.XX our refinancing remarks, termination benefit fourth XXXX. in in in $X.XX quarter interest expect a acceleration the as total related the as to of in have noncash of earlier savings leases of year. to of recur result we of few a And I of

in out supplemental. want quarter's over to Before turning a call the this operator, to the I point change

helpful. And this You on consolidated We are CapEx from items noncash our based that we find expense on with and investor supplemental. please nondiscretionary line may new spending Though that, this open you revenue breakout Page providing the we change these and analyst our questions. page for not and operator, is community. now with discretionary information, have the hope of XX feedback one along our on noticed

Operator

coming [Operator Our is question Derek you. Thank Bank. Johnston Instructions] of Deutsche first from

Derek Johnston

Can you a talk portfolio. few I you the print about assets? the same-store nimble guys pretty Was mean run a NOI driven strength? by

Brian Harper

geography the were the top was one at platform Colorado the, Columbus list, to Minneapolis pleased. was assets, footprint. our in extremely our say Atlanta And not performers. anomaly really if an really across properties, of and It assets I'm But was really I'm two the assets. that and broad-based two and our highest I that broad-based were asset across one pleased with or Minneapolis,

this our every we're is studying I leasing Now troubled these for I'll or expenses. is of management we laser mean these really assets. in team and on say team we're, these portfolio they're and can these tenants, asset approaching to personally, of where have, our territories to we this in I is square tenants maximize say decentralized value can. inch And is of trying focused even proactively and our XX% these assets, decentralized, team

Derek Johnston

front, are just what there How opportunities investors? cap rates are then now? markets. other And deals trending? And acquisition with to seeing How are out right competitive guys on specifically kind you of shifting the private

Brian Harper

Yes.

They're Let under, me more people seeing at Depending table. asset on holding. rate competitively the questions. cap show million really $XX and up the more we're your and size, answer it at

opportunity for of to lay that couldn't north an $XX us that, off-market of transactions. could an under that be million So for opportunity but get

of I'm such with seeing my encouraging. Tim's Courtney's pipeline. Richmond. is off-market Tampa, really with Minneapolis, with and is Miami, we're really lot Orlando, the which off-market activity, Rolodex, Raleigh With as in And Nashville, growth that these pleased Rolodex, Rolodex, a markets activity Austin,

on as potential with retail focused down retail neighborhood the grocery really we're road. street well as convenient So some

Operator

Bank of Schmidt Craig America. from coming is of question next Our

Craig Schmidt

to to raise number obviously on curation boosting you shops. and I that want better for focus heard also a obviously Yes. the tenant wanted just I small benefit the experience. but

type your the tenants the outline you that of to looking or you to target add If themselves are tenants centers. to either could

Brian Harper

Craig. Thanks, Yes.

We've Bluemercuries looking of a fast service providers, Sephora really service have be the institutions. some with be And the and of whole ULTA. cleaners. do focused to and with X and doing feel or financial certainly and deals done then We be deals and talked That could fitness casual some deals of sitdown host we're that cosmetics. medical dry on food, a we're well. really your as the we're about others restaurants, world and So the lot could with food bank, could doing and Fs

really mix So on. appropriate the that's really focused right we're asset, having those where and between by really each

Mike Fitzmaurice

Craig, year get X I back you Based thing that on quarters, And have end quarter, goal. only today, per look to us about the to the to the around shop at quarter. ended And small would positioning XX%, end if last we right XX%, the we've at net is we we the XX,XXX XX.X%. of positive should absorption XX% the add at visibility of done occupancy that

midpoint X XX% put and over and the So if between right years, that out you next extrapolate assume at that XX%. that'll the us

Craig Schmidt

like provider between Okay. merchandise a is service just rent? out versus much tenant general difference curiosity, rent a And then of there

Brian Harper

every say I Really market. try depends. to we create we in mean we, the to day, take, like tension

on space, it the depends and depends on the it So center.

you could shop under really the institutions. have whole we that's where on financial demand square really shop this point ratio, more getting the demand. some of space. depends X,XXX the So it this And small into our feet Yes, portfolio small is really, of market

Operator

from is Point. van coming of Compass Our next Dijkum Floris question

Floris van Dijkum

outstanding I what currently forward? but of shares you about to about comprehensive preferreds. price a do in is that dilution? are reducing wanted at. going And think do believe, the that leverage terms ask at obviously How conversion where also below a feature, your your could I you There

Mike Fitzmaurice

to that in entire leasing the and the credit side portfolio Like see Mike. you everything do pretty side, sheet that capital we've we're on the activity markets fourth what we're the going about balance to done quarter here. experience facility. with the we is with And proactive recast here This that the

future, associated possibly on are So price to above. which lower-cost the we're limits exploring below with some $XX.XX, the rate that still It's mind can, the we the those definitely we're and about that instrument. the of back get the at top isn't see into trading debt. at But forced higher opportunity to what opportunity tender actually But recycle preferreds in those. if those, given It's point conversion today.

Floris van Dijkum

The, talked drives follow-up a which in then you Craig question, seen your side? before. more you same-store the And job you a Great. nice anchor related there's in guys But, guess, occupancy room increasing on juice there's think more I to done going obviously what the have really about anchor occupancy, numbers. do much, think how any on largest increase The anchor in, Do occupancy gains. has your forward? the

Brian Harper

that in mean We that And I our you've digits overall. targeted kind a remerchandising. XX% our really, do. I have lot result yields yields for heard really our this or seen growth mean And see a NOI double a been about on we of has number same-property sector-leading. of on of

balance out looking extremely the the recapture might best be best we or sales centers. that sheets to to tenants We're have XXXX, these not proactive. not of certain doing at some are So trying might

is in a that, and our for place goal XX%. plan have We

Operator

[Operator Our coming Collin is from Raymond question James. Instructions] of next Mings

Collin Mings

Shops? pipeline beyond Brian, comments going on expand just commit that year? can ahead on next you to you regarding just redevelopment Can your on potential just that the to looking capital front elaborate you're Parkway

Brian Harper

at looking to we Yes. side. this, I say the mean don't capital get being But are would I Collin, risk. mitigate want that in I a,

I is much why redevelopment. master it so planning like as And where, it Parkway was as

acres will square units Most done be going residential owner service. a feet have we'll build build we've a ancillary of retail. leading So that never we're unit taken or is been there to of and XX,XXX used and ground-leasing XXX what we've that is few that to

entitlements be We're Beach ground-leasing potentially at units, partner. in same leading to the to now. That we're again at parcel residential thing Rivertowne of much Deerfield in where doing right number looking that could a residential selling the even larger or a that giving

Shops Delray potentially Ohio. on We and have pipeline of shadow in the same at in Columbus, Lane the thing

versus So that. balance faster can does. faster attract. we usually the double-digit love through longer-term a than getting where the flows we'll that a precision cash targeted and until remerchandising final with yields, that's have But for really, this numbers, development plan. until We're share then we much hitting it's we of development I get cost entitlements, our

Collin Mings

enough. Fair

right a fair? you significant sounds of development. what ground So capital redevelopment on focus Is a just standpoint, that strategic of can there's putting it like opposed maybe now, sort lot from into a from as standpoint any or of a do leasing to lot

Brian Harper

Correct. this redevelopment to I that sell even it can't gives lease at and optionality that And attractive potentially for either risk rate. we master do much as look XX-year and as cap us or planning a extract a would lease. where an hold as a

Collin Mings

And could Brian. kind just, trade-off think potential with that of remind versus between you cash move be as there, point you some Can just ground optionality the lower-risk argue of you that's an the maybe about can selling lease Maybe that how interesting along? something projects opportunities. of about us trade-off just these talk flow you would further what

Brian Harper

very company, look We're ground of some a at you and we where and I can an bottom-up cap X% earnings-focused, a have CAGRs, maybe we're or leases IRR we X% if can accretive those cap a X% we or that Yes. perspective. that's X% higher mean where trade trade look X% argue at. a CAGR, annual can and something or we'll much into

and IRR-driven accretively So it's deploy we really capital. can where

Operator

Brian the session. back This the turn I floor over to brings our now us would to comments. for like end Q&A to of closing

Brian Harper

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

us and quarterly NOI year-to-date growth both OFFO the evidenced continued once our same-property third our business NOI in momentum guidance. our share in and the as same-property raise leading per strong again growth, operating to by First, our quarter

of setting given annualization expect XX% into already year continue XXXX XXXX. in RPT we our with leasing for is XXXX our organic of growth XXXX of this up another leasing plan above-trend activity to and momentum the signed. Second,

same-property third, financing we this activities. in on We've a our closing constantly highlighted including business by started. at for growth forward of of is reduce excited getting of We're just a many us best year for over made are million couple our scouring NAREIT. short seeing XX quarter of in of I'm looking of And But proactive Halloween. our about years. most NOI that to opportunities that in this you weeks are Happy time, and we a you in a period what to Thank company risk, morning. drive is joining lot progress $XXX growth

Operator

gentlemen, thank participation. you and Ladies your for

You your day. may disconnect and lines this wonderful have at time, a

RPT Realty (KIM+N) 2 Nov 192019 Q3 Earnings call transcript