OAK BROOK, Ill., Feb. 14, 2017 /PRNewswire/ -- Retail
Properties of America, Inc. (NYSE: RPAI) (the
"Company") today reported financial and operating results
for the quarter and year ended December 31,
2016.
FINANCIAL RESULTS
For the quarter ended December 31, 2016, the Company reported:
- Net income attributable to common shareholders of $15.9 million, or $0.07 per share, compared to $0.6 million, or $0.00 per share, for the same period in
2015;
- Funds from operations (FFO) attributable to common shareholders
of $52.9 million, or $0.22 per share, compared to $59.5 million, or $0.25 per share, for the same period in 2015;
and
- Operating funds from operations (Operating FFO) attributable to
common shareholders of $59.9 million,
or $0.25 per share, compared to
$62.6 million, or $0.26 per share, for the same period in
2015.
For the year ended December 31,
2016, the Company reported:
- Net income attributable to common shareholders of $157.4 million, or $0.66 per share, compared to $115.6 million, or $0.49 per share, for 2015;
- FFO attributable to common shareholders of $268.0 million, or $1.13 per share, compared to $227.9 million, or $0.96 per share, for 2015; and
- Operating FFO attributable to common shareholders of
$257.2 million, or $1.09 per share, compared to $251.3 million, or $1.06 per share, for 2015.
OPERATING RESULTS
For the quarter ended December 31, 2016, the Company's portfolio
results were as follows:
- 1.9% increase in same store net operating income (NOI) over the
comparable period in 2015;
- Total same store portfolio percent leased, including leases
signed but not commenced: 95.7% at December
31, 2016, up 30 basis points from 95.4% at September 30, 2016 and up 10 basis points from
95.6% at December 31, 2015;
- Retail portfolio percent leased, including leases signed but
not commenced: 95.0% at December 31,
2016, up 50 basis points from 94.5% at September 30, 2016 and up 10 basis points from
94.9% at December 31,
2015;
- Retail portfolio annualized base rent (ABR) per occupied square
foot of $17.11 at December 31, 2016, up 5.2% from $16.27 ABR per occupied square foot at
December 31, 2015;
- 502,000 square feet of retail leasing transactions comprised of
136 new and renewal leases; and
- Positive comparable cash leasing spreads of 27.4% on new leases
and 4.5% on renewal leases for a blended spread of 6.8%.
For the year ended December 31,
2016, the Company's portfolio results were as follows:
- 3.5% increase in same store NOI over the comparable period in
2015;
- 3,332,000 square feet of retail leasing transactions comprised
of 540 new and renewal leases; and
- Positive comparable cash blended leasing spreads of 7.5%,
consisting of 6.6% on renewal leases and 13.8% on new leases.
Excluding the impact from eight Rite Aid leases within the
Company's single-user retail portfolio that were extended to
effectuate the planned 2016 disposition of these assets, all of
which were sold during the second and third quarters, comparable
cash blended leasing spreads were 7.8%.
"Our tremendous team here at RPAI delivered strong results in
2016," stated Steve Grimes,
president and chief executive officer. "With same store NOI growth
of 3.5%, nearly $1.0 billion in
portfolio transaction volume, a compelling Investor Day, and
recently the defeasance of the IW JV portfolio of mortgages
payable, 2016 by all measures was an outperformance year and our
foundation is healthier than ever going into 2017."
INVESTMENT ACTIVITY
Acquisitions
In
2016, the Company completed $408.3
million of acquisitions, primarily on an unencumbered basis,
with a weighted average ABR per occupied square foot of
$22.20. These acquisitions included
seven high quality, multi-tenant retail assets, the fee interest in
an existing multi-tenant retail property and the anchor space
improvements, which were previously subject to a ground lease with
the Company, at an existing multi-tenant retail property. The
acquisitions are located in the Chicago, New
York, Dallas and Seattle
Metropolitan Statistical Areas (MSA) and the greater Washington, D.C. area, expanding the Company's
multi-tenant retail footprint in its target markets by 1.0 million
square feet. These properties possess strong demographic
profiles, with weighted average household income of $109,000 and weighted average population of
84,000 within a three-mile radius.
During the quarter, the Company closed on the first phase of the
previously announced acquisition of One Loudoun Downtown, located
in the Washington, D.C. MSA, for a
gross purchase price of $125.0
million. The Company remains under contract for the
remaining phases at One Loudoun Downtown, representing an aggregate
gross purchase price of up to $35.5
million. These transactions are expected to close throughout
the first three quarters of 2017 as the seller completes
construction on stand-alone buildings at the property.
Subsequent to year end, the Company completed the previously
announced acquisition of Main Street Promenade, located in the
heart of Downtown Naperville,
Illinois in the Chicago MSA, for a gross purchase price of
$88.0 million. Main Street Promenade
is a 182,000 square foot mixed-use project that includes
approximately 103,000 square feet of retail and approximately
79,000 square feet of office, as well as an adjacent vacant parcel
identified for future redevelopment that is entitled for up to
80,000 square feet of mixed-use space. Downtown Naperville is located just 30 miles
from Chicago and is the
destination of choice for shopping, dining and relaxation with over
100 national and boutique stores, 40 national and local restaurants
and 300 businesses, epitomizing the work, shop, play lifestyle. The
property is currently 93.1% occupied and is located within a
"super-zip", one of the most affluent and well-educated zip codes
in the country, and boasts average household income of $130,000 and population of 215,000 within a
five-mile radius.
Dispositions
In 2016, the Company completed
$543.0 million of dispositions, which
included the sales of 10 non-target multi-tenant retail assets for
$386.6 million, 35 single-user retail
assets for $151.5 million, one
single-user outparcel for $2.6
million and one development property, which was not under
active development, for $2.3
million.
During the quarter, the Company completed $149.7 million of dispositions, which included
the sales of 14 single-user retail assets for $54.8 million, three non-target multi-tenant
retail assets for $92.6 million and
one development property, which was not under active development,
for $2.3 million.
Subsequent to year end, the Company disposed of a single-user
retail asset for $0.5 million.
Additionally, the Company is under contract to sell $166.9 million of dispositions, including seven
non-target multi-tenant retail assets for $158.9 million and two single-user retail assets
for $8.0 million. These transactions
are expected to close in the first quarter of 2017, subject to
satisfaction of customary closing conditions.
SCHAUMBURG TOWERS
On
January 19, 2017, the Company
announced that the office property formerly known as Zurich Towers
has been renamed Schaumburg Towers. Additionally, the Company
signed two new leases with Great American Insurance Group and Swiss
Re for approximately 78,000 square feet. Schaumburg Towers is an
office building with twin 20-story towers totaling approximately
895,000 square feet. The property is located in Schaumburg, Illinois and situated adjacent to
Woodfield Mall, a Class A shopping mall easily accessible from two
major highways. To date, the Company has re-leased approximately
397,000 square feet of the available 895,000 square feet.
BALANCE SHEET AND CAPITAL MARKETS ACTIVITY
As of
December 31, 2016, the Company had
approximately $2.0 billion of
consolidated indebtedness, which resulted in a net debt to adjusted
EBITDA ratio of 5.6x, or a net debt and preferred stock to adjusted
EBITDA ratio of 6.0x. Consolidated indebtedness had a weighted
average contractual interest rate of 4.44% and a weighted average
maturity of 5.3 years.
During 2016, the Company executed on numerous significant
capital markets initiatives, including the following:
- In January 2016, closed on a
$1.2 billion amended and restated
unsecured credit facility, which increased total capacity by
$200.0 million, extended the weighted
average term by 2.2 years and lowered the weighted average interest
rate by 13 basis points;
- In September 2016, entered into
an agreement to issue $200.0 million
of senior unsecured notes, consisting of $100.0 million of 10-year 4.08% senior unsecured
notes (Notes Due 2026) and $100.0
million of 12-year 4.24% senior unsecured notes (Notes Due
2028), resulting in a weighted average fixed interest rate of
4.16%. The issuance of the Notes Due 2026 occurred on September 30, 2016 and the issuance of the Notes
Due 2028 occurred on December 28,
2016;
- In November 2016, entered into an
agreement for a seven-year $200.0
million senior unsecured term loan (Term Loan Due 2023) with
an interest rate of London Interbank Offered Rate (LIBOR) plus a
credit spread of between 1.70% and 2.55%, based on the Company's
leverage ratio. In January 2017, the
Company drew the full balance of the Term Loan Due 2023. In
addition, in January 2017, the
Company entered into two interest rate swap agreements to
effectively fix the interest rate on the Term Loan Due 2023 at
1.2628% plus a credit spread through November 22, 2018;
- Throughout 2016, repaid or extinguished $321.5 million of mortgage debt without
prepayment penalties, excluding amortization, with a weighted
average interest rate of 5.47%, of which $191.8 million was repaid during the fourth
quarter with a weighted average interest rate of 5.14%;
- During the fourth quarter, defeased or incurred prepayment
penalties related to the extinguishment of $36.4 million of mortgage debt with a weighted
average interest rate of 5.55%; and
- During the fourth quarter, repurchased 591,488 shares of common
stock under the Company's stock repurchase program at an average
price per share of $14.93 for a total
of approximately $8.8 million.
Subsequent to year end, the Company defeased the $379.4 million IW JV cross-collateralized
portfolio of mortgages payable that were scheduled to mature in
2019 and had an interest rate of 7.50%. In connection with this
transaction, the Company incurred approximately $60.2 million in defeasance costs. The fair value
of these mortgages was approximately $45.1
million higher than the outstanding principal balance as of
December 31, 2016.
2017 GUIDANCE
The Company expects to generate net
income attributable to common shareholders of $1.15 to $1.20 per share in 2017. The Company
expects to generate Operating FFO of $1.00
to $1.05 per share in 2017, based, in part, on the following
assumptions:
- Generate same store NOI growth of 2.0% to 3.0%;
- Acquire approximately $375 to $475
million of strategic acquisitions in the Company's target
markets;
- Dispose of approximately $800 to $900
million of assets, including the sale of Schaumburg Towers;
and
- Incur approximately $42 to $44
million of general and administrative expenses.
The following table reconciles the Company's reported 2016
Operating FFO to the Company's 2017 Operating FFO guidance
range.
|
Low
|
High
|
2016 Operating FFO
per common share outstanding
|
$1.09
|
$1.09
|
|
|
|
2016 net retail
investment activity
|
(0.04)
|
(0.04)
|
2017 net retail
investment activity(1)
|
(0.12)
|
(0.08)
|
Schaumburg Towers
(expected sale in the fourth quarter of 2017)
|
(0.07)
|
(0.07)
|
Subtotal
|
0.86
|
0.90
|
|
|
|
Same store NOI
growth
|
0.025
|
0.035
|
Interest
expense(1)
|
0.14
|
0.13
|
General and
administrative expenses
|
0.00
|
0.01
|
Redevelopment
assets(2)
|
(0.01)
|
(0.01)
|
Non-cash
items(3)
|
(0.01)
|
(0.01)
|
Lease termination fee
income(4)
|
(0.005)
|
(0.005)
|
2017 estimated
Operating FFO per common share outstanding
|
$1.00
|
$1.05
|
|
(1) Reflects the
relative timing of acquisitions and dispositions during the
year
|
|
(2) Represents three
properties where the Company has begun redevelopment and/or
activities in anticipation of future redevelopment: Reisterstown
Road Plaza, Towson Circle and Boulevard at the Capital
Centre
|
|
(3) Non-cash items
include straight-line rental income, amortization of above and
below market lease intangibles and lease inducements, and non-cash
ground rent expense
|
|
(4) The Company has
not forecasted speculative lease termination fee income for
2017
|
DIVIDEND
On February 13,
2017, the Company declared the first quarter 2017 Series A
preferred stock cash dividend of $0.4375 per preferred share, for the period
beginning January 1, 2017, which will
be paid on March 31, 2017 to
preferred shareholders of record on March
20, 2017.
On February 13, 2017, the Company
also declared the first quarter 2017 quarterly cash dividend of
$0.165625 per share on its
outstanding Class A common stock, which will be paid on
April 10, 2017 to Class A common
shareholders of record on March 27,
2017.
WEBCAST AND SUPPLEMENTAL INFORMATION
The Company's
management team will hold a webcast on Wednesday, February 15, 2017 at 11:00 AM (ET), to discuss its quarterly and full
year financial results and operating performance, as well as
business highlights and outlook. In addition, the Company may
discuss business and financial developments and trends and other
matters affecting the Company, some of which may not have been
previously disclosed.
A live webcast will be available online on the Company's website
at www.rpai.com in the INVEST section. The conference call can be
accessed by dialing (877) 705-6003 or (201) 493-6725 for
international participants. Please dial in at least ten minutes
prior to the start of the call to register.
A replay of the webcast will be available. To listen to the
replay, please go to www.rpai.com in the INVEST section of the
website and follow the instructions. A replay of the call will be
available from 2:00 PM (ET) on
February 15, 2017 until midnight (ET)
on March 1, 2017. The replay can be
accessed by dialing (844) 512-2921 or (412) 317-6671 for
international callers and entering pin number 13650424.
The Company has also posted supplemental financial and operating
information and other data in the INVEST section of its
website.
ABOUT RPAI
Retail Properties of America, Inc. is a
REIT that owns and operates high quality, strategically located
shopping centers in the United
States. As of December 31,
2016, the Company owned 156 retail operating properties
representing 25.8 million square feet. The Company is publicly
traded on the New York Stock Exchange under the ticker symbol RPAI.
Additional information about the Company is available at
www.rpai.com.
SAFE HARBOR LANGUAGE
The statements and certain other
information contained in this press release, which can be
identified by the use of forward-looking terminology such as
"believes", "expects", "may", "should", "intends", "plans",
"estimates", "continue" or "anticipates" and variations of such
words or similar expressions or the negative of such words,
constitute "forward-looking statements" within the meaning of
Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as
amended, and are subject to the safe harbors created
thereby. These forward-looking statements reflect the
Company's current views about its plans, intentions, expectations,
strategies and prospects, which are based on the information
currently available to the Company and on assumptions it has made.
Although the Company believes that its plans, intentions,
expectations, strategies and prospects as reflected in or suggested
by those forward-looking statements are reasonable, the Company can
give no assurance that such plans, intentions, expectations or
strategies will be attained or achieved. Furthermore, these
forward-looking statements should be considered as subject to the
many risks and uncertainties that exist in the Company's operations
and business environment. Such risks and uncertainties could
cause actual results to differ materially from those
projected. These uncertainties include, but are not limited
to, economic, business and financial conditions, and changes in the
Company's industry and changes in the real estate markets in
particular, rental rates and/or vacancy rates, frequency and
magnitude of defaults on, early terminations of or non-renewal of
leases by tenants, bankruptcy or insolvency of a major tenant or a
significant number of smaller tenants, interest rates or operating
costs, real estate valuations, the availability, terms and
deployment of capital, general volatility of the capital and credit
markets and the market price of the Company's Class A common stock,
risks generally associated with real estate acquisitions and
dispositions, including the Company's ability to identify and
pursue acquisition and disposition opportunities, risks generally
associated with redevelopment, including the impact of construction
delays and cost overruns, the Company's ability to lease
redeveloped space and the Company's ability to identify and pursue
redevelopment opportunities, competitive and cost factors, the
Company's ability to enter into new leases or renew leases on
favorable terms, the Company's ability to create long-term
shareholder value, satisfaction of closing conditions to the
pending transactions described herein, the Company's failure to
successfully execute its non-target disposition program and capital
recycling efforts, regulatory changes and other risk factors,
including those detailed in the sections of the Company's most
recent Forms 10-K and 10-Q filed with the SEC titled "Risk
Factors". The Company assumes no obligation to update publicly any
forward-looking statements, whether as a result of new information,
future events or otherwise.
NON-GAAP FINANCIAL MEASURES
As defined by the National
Association of Real Estate Investment Trusts (NAREIT), an industry
trade group, Funds From Operations (FFO) means net income (loss)
computed in accordance with generally accepted accounting
principles (GAAP), excluding gains (or losses) from sales of
depreciable real estate, plus depreciation and amortization and
impairment charges on depreciable real estate. The Company has
adopted the NAREIT definition in its computation of FFO
attributable to common shareholders. The Company believes that,
subject to the following limitations, FFO attributable to common
shareholders provides a basis for comparing its performance and
operations to those of other real estate investment trusts (REITs).
The Company believes that FFO attributable to common shareholders,
which is a supplemental non-GAAP financial measure, provides an
additional and useful means to assess the operating performance of
REITs. FFO attributable to common shareholders does not represent
an alternative to (i) "Net income" or "Net income attributable to
common shareholders" as an indicator of the Company's financial
performance, or (ii) "Cash flows from operating activities" in
accordance with GAAP as a measure of the Company's capacity to fund
cash needs, including the payment of dividends.
The Company also reports Operating FFO attributable to common
shareholders, which is defined as FFO attributable to common
shareholders excluding the impact of discrete non-operating
transactions and other events which the Company does not consider
representative of the comparable operating results of its real
estate operating portfolio, which is its core business platform.
Specific examples of discrete non-operating transactions and other
events include, but are not limited to, the financial statement
impact of gains or losses associated with the early extinguishment
of debt or other liabilities, impairment charges to write down the
carrying value of assets other than depreciable real estate, actual
or anticipated settlement of litigation involving the Company and
executive and realignment separation charges, which are otherwise
excluded from the Company's calculation of FFO attributable to
common shareholders. The Company believes that Operating FFO
attributable to common shareholders, which is a supplemental
non-GAAP financial measure, provides an additional and useful means
to assess the operating performance of REITs. Operating FFO
attributable to common shareholders does not represent an
alternative to (i) "Net income" or "Net income attributable to
common shareholders" as an indicator of the Company's financial
performance, or (ii) "Cash flows from operating activities" in
accordance with GAAP as a measure of the Company's capacity to fund
cash needs, including the payment of dividends. Comparison of the
Company's presentation of Operating FFO attributable to common
shareholders to similarly titled measures for other REITs may not
necessarily be meaningful due to possible differences in definition
and application by such REITs.
The Company also reports Net Operating Income (NOI), which it
defines as all revenues other than straight-line rental income,
amortization of lease inducements, amortization of acquired above
and below market lease intangibles and lease termination fee
income, less real estate taxes and all operating expenses other
than straight-line ground rent expense and amortization of acquired
ground lease intangibles, which are non-cash items. NOI consists of
Same Store NOI and NOI from Other Investment Properties. Same Store
NOI for the year ended December 31, 2016 represents NOI from
the Company's same store portfolio consisting of 140 retail
operating properties acquired or placed in service and stabilized
prior to January 1, 2015. NOI from Other Investment Properties
for the year ended December 31, 2016 represents NOI primarily
from properties acquired during 2015 and 2016, the Company's one
remaining office property, three properties where the Company has
begun redevelopment and/or activities in anticipation of future
redevelopment, the properties that were sold or held for sale in
2015 and 2016, the net income from the Company's wholly-owned
captive insurance company and the historical ground rent expense
related to an existing same store investment property that was
subject to a ground lease with a third party prior to the Company's
acquisition of the fee interest on April 29,
2016. For the three months ended December 31, 2016, the
Company's same store portfolio consists of 147 retail operating
properties inclusive of the same store portfolio for the year ended
December 31, 2016 and seven additional retail operating
properties that were acquired during the nine months ended
September 30, 2015. The financial
results reported in Other Investment Properties for the three
months ended December 31, 2016 are inclusive of the topics
described above for the year ended December 31, 2016 excluding
the seven investment properties that were acquired during the nine
months ended September 30, 2015. The
Company believes that NOI, Same Store NOI and NOI from Other
Investment Properties, which are supplemental non-GAAP financial
measures, provide an additional and useful operating perspective
not immediately apparent from "Operating income" or "Net income
attributable to common shareholders" in accordance with GAAP. The
Company uses these measures to evaluate its performance on a
property-by-property basis because they allow management to
evaluate the impact that factors such as lease structure, lease
rates and tenant base have on the Company's operating results. NOI,
Same Store NOI and NOI from Other Investment Properties do not
represent alternatives to "Net income" or "Net income attributable
to common shareholders" in accordance with GAAP as indicators of
the Company's financial performance. Comparison of the Company's
presentation of NOI, Same Store NOI and NOI from Other Investment
Properties to similarly titled measures for other REITs may not
necessarily be meaningful due to possible differences in definition
and application by such REITs.
Adjusted EBITDA is a supplemental non-GAAP financial measure and
represents net income attributable to common shareholders before
interest, income taxes, depreciation and amortization, as further
adjusted to eliminate the impact of certain items that the Company
does not consider indicative of its ongoing performance. The
Company believes that Adjusted EBITDA is useful because it allows
investors and management to evaluate and compare the Company's
performance from period to period in a meaningful and consistent
manner in addition to standard financial measurements under GAAP.
Adjusted EBITDA should not be considered an alternative to "Net
income attributable to common shareholders" as an indicator of the
Company's financial performance. Comparison of the Company's
presentation of Adjusted EBITDA to similarly titled measures for
other REITs may not necessarily be meaningful due to possible
differences in definition and application by such REITs.
Net Debt to Adjusted EBITDA is a supplemental non-GAAP financial
measure and represents (i) the Company's total notional debt,
excluding unamortized premium, discount and capitalized loan fees,
less cash and cash equivalents divided by (ii) Adjusted EBITDA
for the prior three months, annualized. The Company believes that
this ratio is useful because it provides investors with information
regarding its total notional debt net of cash and cash equivalents,
which could be used to repay debt, compared to its performance as
measured using Adjusted EBITDA. Comparison of the Company's
presentation of Net Debt to Adjusted EBITDA to similarly titled
measures for other REITs may not necessarily be meaningful due to
possible differences in definition and application by such
REITs.
Net Debt and Preferred Stock to Adjusted EBITDA is a
supplemental non-GAAP financial measure and represents (i) the
Company's total notional debt, excluding unamortized premium,
discount and capitalized loan fees, plus preferred stock, less cash
and cash equivalents divided by (ii) Adjusted EBITDA for the
prior three months, annualized. The Company believes that this
ratio is useful because it provides investors with information
regarding its total notional debt and preferred stock, net of cash
and cash equivalents, which could be used to repay debt, compared
to its performance as measured using Adjusted EBITDA. Comparison of
the Company's presentation of Net Debt and Preferred Stock to
Adjusted EBITDA to similarly titled measures for other REITs may
not necessarily be meaningful due to possible differences in
definition and application by such REITs.
CONTACT INFORMATION
For Investors:
Michael Fitzmaurice
VP – Capital Markets & Investor Relations
Retail Properties of America,
Inc.
(630) 634-4233
For Media Inquiries:
Kimberly Freely
AVP – Director of Public Relations & Communications
Retail Properties of America, Inc.
(630) 634-4319
|
Retail Properties
of America, Inc.
Consolidated
Balance Sheets
(amounts in
thousands, except par value amounts)
(unaudited)
|
|
|
|
December
31,
2016
|
|
December
31,
2015
|
Assets
|
|
|
|
|
Investment
properties:
|
|
|
|
|
Land
|
|
$
|
1,191,403
|
|
|
$
|
1,254,131
|
|
Building and other
improvements
|
|
4,284,664
|
|
|
4,428,554
|
|
Developments in
progress
|
|
23,439
|
|
|
5,157
|
|
|
|
5,499,506
|
|
|
5,687,842
|
|
Less accumulated
depreciation
|
|
(1,443,333)
|
|
|
(1,433,195)
|
|
Net investment
properties
|
|
4,056,173
|
|
|
4,254,647
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
53,119
|
|
|
51,424
|
|
Accounts and notes
receivable (net of allowances of $6,886 and $7,910,
respectively)
|
|
78,941
|
|
|
82,804
|
|
Acquired lease
intangible assets, net
|
|
142,015
|
|
|
138,766
|
|
Assets associated
with investment properties held for sale
|
|
30,827
|
|
|
—
|
|
Other assets,
net
|
|
91,898
|
|
|
93,610
|
|
Total
assets
|
|
$
|
4,452,973
|
|
|
$
|
4,621,251
|
|
|
|
|
|
|
Liabilities and
Equity
|
|
|
|
|
Liabilities:
|
|
|
|
|
Mortgages payable,
net (includes unamortized premium of $1,437 and $1,865,
respectively, unamortized discount of
$(622) and $(1), respectively, and unamortized capitalized loan fees of $(5,026) and
$(7,233), respectively)
|
|
$
|
769,184
|
|
|
$
|
1,123,136
|
|
Unsecured notes
payable, net (includes unamortized discount of $(971) and
$(1,090), respectively, and
unamortized capitalized loan fees of $(3,886) and $(3,334),
respectively)
|
|
695,143
|
|
|
495,576
|
|
Unsecured term loans,
net (includes unamortized capitalized loan fees of $(2,402)
and $(2,474), respectively)
|
|
447,598
|
|
|
447,526
|
|
Unsecured revolving
line of credit
|
|
86,000
|
|
|
100,000
|
|
Accounts payable and
accrued expenses
|
|
83,085
|
|
|
69,800
|
|
Distributions
payable
|
|
39,222
|
|
|
39,297
|
|
Acquired lease
intangible liabilities, net
|
|
105,290
|
|
|
114,834
|
|
Liabilities
associated with investment properties held for sale
|
|
864
|
|
|
—
|
|
Other
liabilities
|
|
74,501
|
|
|
75,745
|
|
Total
liabilities
|
|
2,300,887
|
|
|
2,465,914
|
|
|
|
|
|
|
Commitments and
contingencies
|
|
|
|
|
|
|
|
|
|
Equity:
|
|
|
|
|
Preferred stock,
$0.001 par value, 10,000 shares authorized, 7.00% Series A
cumulative redeemable preferred
stock, 5,400 shares issued and outstanding as of December
31, 2016 and 2015; liquidation
preference $135,000
|
|
5
|
|
|
5
|
|
Class A common
stock, $0.001 par value, 475,000 shares authorized,
236,770 and 237,267 shares issued and
outstanding as of December 31, 2016 and 2015, respectively
|
|
237
|
|
|
237
|
|
Additional paid-in
capital
|
|
4,927,155
|
|
|
4,931,395
|
|
Accumulated
distributions in excess of earnings
|
|
(2,776,033)
|
|
|
(2,776,215)
|
|
Accumulated other
comprehensive income (loss)
|
|
722
|
|
|
(85)
|
|
Total
equity
|
|
2,152,086
|
|
|
2,155,337
|
|
Total liabilities
and equity
|
|
$
|
4,452,973
|
|
|
$
|
4,621,251
|
|
|
Retail Properties
of America, Inc.
Consolidated
Statements of Operations
(amounts in
thousands, except per share amounts)
(unaudited)
|
|
|
|
Three Months
Ended
December
31,
|
|
Year
Ended
December
31,
|
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
Revenues
|
|
|
|
|
|
|
|
|
Rental
income
|
|
$
|
111,577
|
|
|
$
|
116,819
|
|
|
$
|
455,658
|
|
|
$
|
472,344
|
|
Tenant recovery
income
|
|
29,429
|
|
|
29,919
|
|
|
118,569
|
|
|
119,536
|
|
Other property
income
|
|
1,746
|
|
|
2,182
|
|
|
8,916
|
|
|
12,080
|
|
Total
revenues
|
|
142,752
|
|
|
148,920
|
|
|
583,143
|
|
|
603,960
|
|
|
|
|
|
|
|
|
|
|
Expenses
|
|
|
|
|
|
|
|
|
Operating
expenses
|
|
22,457
|
|
|
23,191
|
|
|
85,895
|
|
|
94,780
|
|
Real estate
taxes
|
|
20,808
|
|
|
20,853
|
|
|
81,774
|
|
|
82,810
|
|
Depreciation and
amortization
|
|
60,828
|
|
|
51,361
|
|
|
224,430
|
|
|
214,706
|
|
Provision for
impairment of investment properties
|
|
9,328
|
|
|
15,824
|
|
|
20,376
|
|
|
19,937
|
|
General and
administrative expenses
|
|
11,233
|
|
|
14,708
|
|
|
44,522
|
|
|
50,657
|
|
Total
expenses
|
|
124,654
|
|
|
125,937
|
|
|
456,997
|
|
|
462,890
|
|
|
|
|
|
|
|
|
|
|
Operating
income
|
|
18,098
|
|
|
22,983
|
|
|
126,146
|
|
|
141,070
|
|
|
|
|
|
|
|
|
|
|
Gain on
extinguishment of debt
|
|
—
|
|
|
—
|
|
|
13,653
|
|
|
—
|
|
Gain on
extinguishment of other liabilities
|
|
—
|
|
|
—
|
|
|
6,978
|
|
|
—
|
|
Interest
expense
|
|
(31,387)
|
|
|
(28,328)
|
|
|
(109,730)
|
|
|
(138,938)
|
|
Other (expense)
income, net
|
|
(386)
|
|
|
302
|
|
|
63
|
|
|
1,700
|
|
(Loss) income from
continuing operations
|
|
(13,675)
|
|
|
(5,043)
|
|
|
37,110
|
|
|
3,832
|
|
Gain on sales of
investment properties
|
|
31,970
|
|
|
8,578
|
|
|
129,707
|
|
|
121,792
|
|
Net income
|
|
18,295
|
|
|
3,535
|
|
|
166,817
|
|
|
125,624
|
|
Net income
attributable to noncontrolling interest
|
|
—
|
|
|
(528)
|
|
|
—
|
|
|
(528)
|
|
Net income
attributable to the Company
|
|
18,295
|
|
|
3,007
|
|
|
166,817
|
|
|
125,096
|
|
Preferred stock
dividends
|
|
(2,363)
|
|
|
(2,363)
|
|
|
(9,450)
|
|
|
(9,450)
|
|
Net income
attributable to common shareholders
|
|
$
|
15,932
|
|
|
$
|
644
|
|
|
$
|
157,367
|
|
|
$
|
115,646
|
|
|
|
|
|
|
|
|
|
|
Earnings per
common share — basic and diluted
|
|
|
|
|
|
|
|
|
Net income per common
share attributable to common shareholders
|
|
$
|
0.07
|
|
|
$
|
—
|
|
|
$
|
0.66
|
|
|
$
|
0.49
|
|
|
|
|
|
|
|
|
|
|
Weighted average
number of common shares outstanding — basic
|
|
236,528
|
|
|
236,477
|
|
|
236,651
|
|
|
236,380
|
|
|
|
|
|
|
|
|
|
|
Weighted average
number of common shares outstanding — diluted
|
|
236,852
|
|
|
236,479
|
|
|
236,951
|
|
|
236,382
|
|
|
Retail Properties
of America, Inc.
Reconciliation of
Non-GAAP Financial Measures
(amounts in
thousands, except per share amounts)
(unaudited)
|
|
Funds From
Operations (FFO) Attributable to Common Shareholders
and
Operating FFO
Attributable to Common Shareholders
|
|
|
|
Three Months
Ended
December
31,
|
|
Year
Ended
December
31,
|
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
|
|
|
|
|
|
|
|
Net income
attributable to common shareholders
|
|
$
|
15,932
|
|
|
$
|
644
|
|
|
$
|
157,367
|
|
|
$
|
115,646
|
|
Depreciation and
amortization of depreciable real estate
|
|
60,441
|
|
|
51,082
|
|
|
223,018
|
|
|
213,602
|
|
Provision for
impairment of investment properties
|
|
8,485
|
|
|
15,824
|
|
|
17,369
|
|
|
19,937
|
|
Gain on sales of
depreciable investment properties, net of noncontrolling interest
|
|
(31,970)
|
|
|
(8,050)
|
|
|
(129,707)
|
|
|
(121,264)
|
|
FFO attributable
to common shareholders
|
|
$
|
52,888
|
|
|
$
|
59,500
|
|
|
$
|
268,047
|
|
|
$
|
227,921
|
|
|
|
|
|
|
|
|
|
|
FFO attributable to
common shareholders per common
share outstanding
|
|
$
|
0.22
|
|
|
$
|
0.25
|
|
|
$
|
1.13
|
|
|
$
|
0.96
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FFO attributable to
common shareholders
|
|
$
|
52,888
|
|
|
$
|
59,500
|
|
|
$
|
268,047
|
|
|
$
|
227,921
|
|
Impact on earnings
from the early extinguishment of debt, net
|
|
5,814
|
|
|
1,229
|
|
|
(7,028)
|
|
|
18,864
|
|
Provision for hedge
ineffectiveness
|
|
14
|
|
|
—
|
|
|
(21)
|
|
|
(25)
|
|
Provision for
impairment of non-depreciable investment property
|
|
843
|
|
|
—
|
|
|
3,007
|
|
|
—
|
|
Gain on
extinguishment of other liabilities
|
|
—
|
|
|
—
|
|
|
(6,978)
|
|
|
—
|
|
Executive and
realignment separation charges (a)
|
|
—
|
|
|
1,193
|
|
|
—
|
|
|
4,730
|
|
Other (b)
|
|
321
|
|
|
685
|
|
|
132
|
|
|
(224)
|
|
Operating FFO
attributable to common shareholders
|
|
$
|
59,880
|
|
|
$
|
62,607
|
|
|
$
|
257,159
|
|
|
$
|
251,266
|
|
|
|
|
|
|
|
|
|
|
Operating FFO
attributable to common shareholders per common share outstanding
|
|
$
|
0.25
|
|
|
$
|
0.26
|
|
|
$
|
1.09
|
|
|
$
|
1.06
|
|
|
|
(a)
|
Included in "General
and administrative expenses" in the consolidated statements of
operations.
|
(b)
|
Consists of the
impact on earnings from net settlements and easement proceeds,
which are included in "Other (expense) income, net" in the
consolidated statements of operations.
|
|
|
|
FFO Attributable
to Common Shareholders and Operating FFO Attributable to Common
Shareholders Guidance
|
|
|
|
Per Share Guidance
Range
Full Year
2017
|
|
|
Low
|
|
High
|
|
|
|
|
|
Net income
attributable to common shareholders
|
|
$
|
1.15
|
|
|
$
|
1.20
|
|
Depreciation and
amortization of depreciable real estate
|
|
0.88
|
|
|
0.88
|
|
Provision for
impairment of investment properties
|
|
—
|
|
|
—
|
|
Gain on sales of
depreciable investment properties
|
|
(1.35)
|
|
|
(1.35)
|
|
FFO attributable
to common shareholders
|
|
$
|
0.68
|
|
|
$
|
0.73
|
|
|
|
|
|
|
Impact on earnings
from the early extinguishment of debt, net
|
|
0.30
|
|
|
0.30
|
|
Provision for hedge
ineffectiveness
|
|
—
|
|
|
—
|
|
Preferred stock
redemption in excess of carrying value
|
|
0.02
|
|
|
0.02
|
|
Other
|
|
—
|
|
|
—
|
|
Operating FFO
attributable to common shareholders
|
|
$
|
1.00
|
|
|
$
|
1.05
|
|
|
Retail Properties
of America, Inc.
Reconciliation of
Non-GAAP Financial Measures (continued)
(amounts in
thousands)
(unaudited)
|
|
Reconciliation of
Net Income Attributable to Common Shareholders to Same Store
NOI
|
|
|
|
Three Months
Ended December
31,
|
|
Year Ended
December 31,
|
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
|
|
|
|
|
|
|
|
Net income
attributable to common shareholders
|
|
$
|
15,932
|
|
|
$
|
644
|
|
|
$
|
157,367
|
|
|
$
|
115,646
|
|
Adjustments to
reconcile to Same Store NOI:
|
|
|
|
|
|
|
|
|
Preferred stock
dividends
|
|
2,363
|
|
|
2,363
|
|
|
9,450
|
|
|
9,450
|
|
Net income
attributable to noncontrolling interest
|
|
—
|
|
|
528
|
|
|
—
|
|
|
528
|
|
Gain on sales of
investment properties
|
|
(31,970)
|
|
|
(8,578)
|
|
|
(129,707)
|
|
|
(121,792)
|
|
Depreciation and
amortization
|
|
60,828
|
|
|
51,361
|
|
|
224,430
|
|
|
214,706
|
|
Provision for
impairment of investment properties
|
|
9,328
|
|
|
15,824
|
|
|
20,376
|
|
|
19,937
|
|
General and
administrative expenses
|
|
11,233
|
|
|
14,708
|
|
|
44,522
|
|
|
50,657
|
|
Gain on
extinguishment of debt
|
|
—
|
|
|
—
|
|
|
(13,653)
|
|
|
—
|
|
Gain on
extinguishment of other liabilities
|
|
—
|
|
|
—
|
|
|
(6,978)
|
|
|
—
|
|
Interest
expense
|
|
31,387
|
|
|
28,328
|
|
|
109,730
|
|
|
138,938
|
|
Straight-line rental
income, net
|
|
(1,547)
|
|
|
(1,201)
|
|
|
(4,601)
|
|
|
(3,498)
|
|
Amortization of
acquired above and below market lease intangibles, net
|
|
(579)
|
|
|
(2,275)
|
|
|
(2,991)
|
|
|
(3,621)
|
|
Amortization of lease
inducements
|
|
216
|
|
|
211
|
|
|
1,033
|
|
|
847
|
|
Lease termination
fees
|
|
(269)
|
|
|
(45)
|
|
|
(3,339)
|
|
|
(3,757)
|
|
Straight-line ground
rent expense
|
|
881
|
|
|
925
|
|
|
3,253
|
|
|
3,722
|
|
Amortization of
acquired ground lease intangibles
|
|
(140)
|
|
|
(140)
|
|
|
(560)
|
|
|
(560)
|
|
Other expense
(income), net
|
|
386
|
|
|
(302)
|
|
|
(63)
|
|
|
(1,700)
|
|
NOI
|
|
98,049
|
|
|
102,351
|
|
|
408,269
|
|
|
419,503
|
|
NOI from Other
Investment Properties
|
|
(11,822)
|
|
|
(17,711)
|
|
|
(81,483)
|
|
|
(103,832)
|
|
Same Store
NOI
|
|
$
|
86,227
|
|
|
$
|
84,640
|
|
|
$
|
326,786
|
|
|
$
|
315,671
|
|
|
Retail Properties
of America, Inc.
Reconciliation of
Non-GAAP Financial Measures (continued)
(amounts in
thousands, except ratios and per share amounts)
(unaudited)
|
|
Reconciliation of
Net Income Attributable to Common Shareholders to Adjusted
EBITDA
|
|
|
|
Three Months Ended
December 31,
|
|
|
2016
|
|
2015
|
|
|
|
|
|
Net income
attributable to common shareholders
|
|
$
|
15,932
|
|
|
$
|
644
|
|
Preferred stock
dividends
|
|
2,363
|
|
|
2,363
|
|
Interest
expense
|
|
31,387
|
|
|
28,328
|
|
Depreciation and
amortization
|
|
60,828
|
|
|
51,361
|
|
Gain on sales of
investment properties, net of noncontrolling interest
|
|
(31,970)
|
|
|
(8,050)
|
|
Provision for
impairment of investment properties
|
|
9,328
|
|
|
15,824
|
|
Realignment
separation charges (a)
|
|
—
|
|
|
1,193
|
|
Adjusted
EBITDA
|
|
$
|
87,868
|
|
|
$
|
91,663
|
|
Annualized
|
|
$
|
351,472
|
|
|
$
|
366,652
|
|
|
Reconciliation of
Mortgages Payable, Net, Unsecured Notes Payable, Net, Unsecured
Term Loans, Net and Unsecured Revolving Line of Credit to Total Net
Debt and Total Net Debt and Preferred Stock
|
|
|
|
December
31,
2016
|
|
December
31,
2015
|
|
|
|
|
|
Mortgages payable,
net
|
|
$
|
769,184
|
|
|
$
|
1,123,136
|
|
Unsecured notes
payable, net
|
|
695,143
|
|
|
495,576
|
|
Unsecured term loans,
net
|
|
447,598
|
|
|
447,526
|
|
Unsecured revolving
line of credit
|
|
86,000
|
|
|
100,000
|
|
Total
|
|
1,997,925
|
|
|
2,166,238
|
|
Mortgage premium, net
of accumulated amortization
|
|
(1,437)
|
|
|
(1,865)
|
|
Mortgage discount,
net of accumulated amortization
|
|
622
|
|
|
1
|
|
Unsecured notes
payable discount, net of accumulated amortization
|
|
971
|
|
|
1,090
|
|
Capitalized loan
fees, net of accumulated amortization
|
|
11,314
|
|
|
13,041
|
|
Total notional
debt
|
|
2,009,395
|
|
|
2,178,505
|
|
Less: consolidated
cash and cash equivalents
|
|
(53,119)
|
|
|
(51,424)
|
|
Total net
debt
|
|
1,956,276
|
|
|
2,127,081
|
|
Series A preferred
stock
|
|
135,000
|
|
|
135,000
|
|
Total net debt and
preferred stock
|
|
$
|
2,091,276
|
|
|
$
|
2,262,081
|
|
Net Debt to
Adjusted EBITDA (b)
|
|
5.6x
|
|
|
5.8x
|
|
Net Debt and
Preferred Stock to Adjusted EBITDA (b)
|
|
6.0x
|
|
|
6.2x
|
|
|
|
(a)
|
Included in "General
and administrative expenses" in the consolidated statements of
operations.
|
(b)
|
For purposes of these
ratio calculations, annualized three months ended figures were
used.
|
|
|
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/retail-properties-of-america-inc-reports-fourth-quarter-and-full-year-2016-results-300407353.html
SOURCE Retail Properties of America, Inc.