Retail Value Inc. (NYSE: RVI) today announced operating results
for the quarter ended September 30, 2021.
Financial Results for the Quarter
- Third quarter 2021 net income attributable to common
shareholders was $21.0 million, or $0.99 per diluted share, as
compared to net loss of $69.0 million, or $3.48 per diluted share,
in the year-ago period. The period-over-period increase in net
income is primarily attributable to the reduction of impairment
charges in 2021 compared to 2020, higher gain on disposition of
real estate, lower interest expense and the impact of the COVID-19
pandemic.
- Third quarter 2021 operating funds from operations attributable
to common shareholders (“Operating FFO” or “OFFO”) was $13.5
million, or $0.64 per diluted share, compared to $14.6 million, or
$0.74 per diluted share, in the year-ago period. The
period-over-period decrease in OFFO is primarily attributable to
the impact of asset sales offset by the impact of the COVID‑19
pandemic and lower interest expense. Third quarter results included
$1.4 million of net revenue related to prior periods primarily from
cash basis tenants.
- The continental U.S. leased rate was 89.5% at September 30,
2021 as compared to 89.6% at June 30, 2021.
Significant Third Quarter and Recent Transaction
Activity
- Sold the Company’s remaining interests in nine assets in Puerto
Rico for $550.0 million (Puerto Rico operating results reflected as
“discontinued operations” on a retrospective basis).
- Repaid the outstanding balance on its mortgage loan of $214.5
million and all restricted cash balances were released to the
Company by the loan’s servicer.
- In October 2021, sold five assets in the continental U.S. for
$264.0 million.
- In October 2021, the Company paid a dividend on the Company’s
Series A Preferred Shares (the “RVI Preferred Shares”) in the
aggregate amount of $190.0 million.
- In October 2021, the Company paid a cash dividend of $22.04 per
common share. The total dividend paid on account of the common
shares was $465.4 million.
- In November 2021, the Company entered into a contract to sell
Green Ridge Square in Grand Rapids, Michigan for $23.3 million in
cash, subject to adjustment for certain closing pro-rations,
allocations, credits, closing costs and escrows. Closing remains
subject to customary conditions and is expected to occur by the end
of 2021.
Key Third Quarter Operating Results
The operating metrics as of September 30, 2021, for the
Company’s three remaining assets (Green Ridge Square, Crossroads
Centers and Willowbrook Plaza) are as follows:
Shopping Center Count
3
Gross Leasable Area - Owned
(thousands)
1,156
Base Rent PSF
$14.02
Leased Rate
87.6%
Commenced Rate
84.8%
3Q21 Net Operating Income
excluding $0.2 of uncollectible
revenue (millions)
$2.9
Impact of the COVID-19 Pandemic
- At September 30, 2021, the balance sheet reflects $0.6 million
of net deferred rents outstanding for tenants with payment plans
that are not accounted for on the cash basis. This includes
balances due from tenants at sold properties.
About RVI
RVI is an independent publicly traded company trading under the
ticker symbol “RVI” on the New York Stock Exchange. RVI holds three
assets in the continental U.S. and is managed by one or more
subsidiaries of SITE Centers Corp. RVI focuses on realizing value
in its business through operations and sales of its assets.
Additional information about RVI is available at
www.retailvalueinc.com.
Non-GAAP Measures
Funds from Operations (“FFO”) is a supplemental non-GAAP
financial measure used as a standard in the real estate industry
and is a widely accepted measure of real estate investment trust
(“REIT”) performance. Management believes that both FFO and
Operating FFO provide additional indicators of the financial
performance of a REIT. The Company also believes that FFO and
Operating FFO more appropriately measure the core operations of the
Company and provide benchmarks to its peer group.
FFO is generally defined and calculated by the Company as net
income (loss) (computed in accordance with generally accepted
accounting principles in the United States (“GAAP”)) adjusted to
exclude (i) gains and losses from disposition of real estate
property and related investments, which are presented net of taxes,
if any, (ii) impairment charges on real estate property and related
investments and (iii) certain non-cash items. These non-cash items
principally include real property depreciation and amortization of
intangibles. The Company’s calculation of FFO is consistent with
the definition of FFO provided by NAREIT. The Company calculates
Operating FFO by excluding certain non-operating charges and
income. Operating FFO is useful to investors as the Company removes
non-comparable charges and income to analyze the results of its
operations and assess performance of the core operating real estate
portfolio. Other real estate companies may calculate FFO and
Operating FFO in a different manner.
The Company also uses net operating income (“NOI”), a non-GAAP
financial measure, as a supplemental performance measure. NOI is
calculated as property revenues less property-related expenses. The
Company believes NOI provides useful information to investors
regarding the Company’s financial condition and results of
operations because it reflects only those income and expense items
that are incurred at the property level and, when compared across
periods, reflects the impact on operations from trends in occupancy
rates, rental rates, operating costs and acquisition and
disposition activity on an unleveraged basis.
FFO, Operating FFO and NOI do not represent cash generated from
operating activities in accordance with GAAP, are not necessarily
indicative of cash available to fund cash needs and should not be
considered as alternatives to net income computed in accordance
with GAAP as indicators of the Company’s operating performance or
as alternatives to cash flow as a measure of liquidity.
Reconciliations of these non-GAAP measures to their most directly
comparable GAAP measures are included in this release herein.
Safe Harbor
RVI considers portions of the information in this press release
to be forward-looking statements within the meaning of Section 27A
of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934, both as amended, with respect to the
Company's expectation for future periods. Although the Company
believes that the expectations reflected in such forward-looking
statements are based upon reasonable assumptions, it can give no
assurance that its expectations will be achieved. For this purpose,
any statements contained herein that are not historical fact may be
deemed to be forward-looking statements. There are a number of
important factors that could cause our results to differ materially
from those indicated by such forward-looking statements, including,
among other factors, the impact of the COVID-19 pandemic on our
ability to manage our properties and finance our operations and on
tenants’ ability to operate their businesses, generate sales and
meet their financial obligations, including the obligation to pay
ongoing and deferred rents; our ability to sell our remaining
assets on commercially reasonable terms; property damage, expenses
related thereto and other business and economic consequences
(including the potential loss of rental revenues) resulting from
extreme weather conditions and natural disasters in locations where
we own properties, and the ability to estimate accurately the
amounts thereof; sufficiency and timing of any insurance recovery
payments related to damages from extreme weather conditions and
natural disasters; local conditions such as an increase in the
supply of, or a reduction in demand for, retail real estate in the
area; the impact of e-commerce; dependence on rental income from
real property; the loss of, significant downsizing of or bankruptcy
of a major tenant and the impact of any such event on rental income
from other tenants at our properties; impairment charges; the
ability to secure and maintain management services provided to us,
including pursuant to our external management agreement with one or
more subsidiaries of SITE Centers; and our ability to maintain our
REIT status. For additional factors that could cause the results of
the Company to differ materially from those indicated in the
forward-looking statements, please refer to the Company’s most
recent report on Forms 10-K and 10-Q. The impacts of the COVID-19
pandemic may also exacerbate the risks described therein, any of
which could have a material effect on the Company. The Company
undertakes no obligation to publicly revise these forward-looking
statements to reflect events or circumstances that arise after the
date hereof.
Retail Value Inc.
Income Statement
in thousands, except per share
3Q21
3Q20
9M21
9M20
Revenues:
Rental income (1)
$14,718
$18,988
$50,479
$63,774
Straight-line rent (1)
(59)
378
(258)
(400)
Other property revenues
(31)
33
38
31
14,628
19,399
50,259
63,405
Expenses:
Operating and maintenance
1,922
2,403
6,485
8,947
Property Management fees
675
850
2,076
3,049
Real estate taxes
2,661
4,091
8,562
12,878
5,258
7,344
17,123
24,874
Net operating income (1)
9,370
12,055
33,136
38,531
Other income (expense):
Asset management fees
(731)
(997)
(2,425)
(3,633)
Interest expense, net
(2,039)
(4,109)
(7,897)
(14,797)
Depreciation and amortization
(4,439)
(6,538)
(16,127)
(22,729)
General and administrative
(874)
(860)
(2,997)
(2,861)
Impairment charges
(1,573)
(16,640)
(1,573)
(43,460)
Debt extinguishment costs, net
(5,158)
(440)
(6,307)
(4,417)
Other income, net
0
0
0
0
Gain on disposition of real estate,
net
37
8,324
1,882
21,956
Loss before other items
(5,407)
(9,205)
(2,308)
(31,410)
Tax expense
(50)
(59)
(193)
(184)
Loss from continuing operations
(5,457)
(9,264)
(2,501)
(31,594)
Income (loss) from discontinued operations
(2)
26,466
(59,741)
(42,862)
(52,464)
Net income (loss)
$21,009
($69,005)
($45,363)
($84,058)
Weighted average shares – Basic &
Diluted – EPS
21,117
19,829
21,043
19,798
Basic and Diluted:
Loss per common share – Continuing
operations
$(0.26)
$(0.47)
$(0.12)
$(1.60)
Income (loss) per common share –
Discontinued operations
1.25
(3.01)
(2.04)
(2.65)
Net income (loss) per common
share
$0.99
$(3.48)
$(2.16)
$(4.25)
(1)
Activity for the three remaining
properties was as follows (Green Ridge Square, Crossroads Center
and Willowbrook Plaza):
Uncollectible revenue (included in rental
income)
($208)
($1,177)
$2,600
($3,057)
Straight-line rent
(15)
50
(54)
(558)
Net operating income
2,683
2,048
11,390
6,397
(2)
Puerto Rico segment classified as a
"discontinued operation" for financial reporting purposes on a
retrospective basis. See additional detail on page 6.
Retail Value Inc.
Other Financial Information
in thousands, except per share
3Q21
3Q20
9M21
9M20
Net income (loss) attributable to
Common Shareholders
$21,009
($69,005)
($45,363)
($84,058)
Depreciation and amortization of real
estate
8,057
13,780
32,585
44,427
Impairment of real estate
1,573
77,795
82,633
104,615
Gain on disposition of real estate,
net
(24,146)
(8,324)
(25,687)
(21,956)
FFO attributable to Common
Shareholders
$6,493
$14,246
$44,168
$43,028
Debt extinguishment, transaction, other,
net
7,016
333
8,061
3,976
Operating FFO attributable to Common
Shareholders
$13,509
$14,579
$52,229
$47,004
Weighted average shares and units –
Basic & Diluted – FFO & OFFO
21,117
19,829
21,043
19,798
FFO per share – Basic &
Diluted
$0.31
$0.72
$2.10
$2.17
Operating FFO per share – Basic &
Diluted
$0.64
$0.74
$2.48
$2.37
Common stock dividends declared, per
share
N/A
N/A
N/A
N/A
Certain non-cash items (including
properties reported as discontinued operations):
Loan cost amortization
(429)
(883)
(1,923)
(2,817)
Capital expenditures (including
properties reported as discontinued operations):
Maintenance capital expenditures
590
471
1,817
1,134
Tenant allowances and landlord work
2,282
1,618
3,555
3,229
Leasing commissions - SITE Centers
306
288
1,701
1,992
Leasing commissions - external
311
71
498
226
Hurricane restorations
87
1,875
2,421
9,887
Retail Value Inc.
Other Financial Information
in thousands, except per share
Continental U.S.
3Q21
3Q20
9M21
9M20
Revenues:
Minimum rents
$9,859
$14,795
$31,641
$46,895
Ground lease minimum rents
795
1,082
2,431
3,386
Percentage and overage rent
22
147
275
250
Recoveries
3,671
5,402
12,050
17,981
Uncollectible revenue
29
(2,229)
3,173
(6,279)
Ancillary and other rental income
222
169
504
641
Lease termination fees
61
0
147
500
Other property revenues
(31)
33
38
31
14,628
19,399
50,259
63,405
Expenses:
Operating and maintenance
1,922
2,403
6,485
8,947
Property management fees
675
850
2,076
3,049
Real estate taxes
2,661
4,091
8,562
12,878
5,258
7,344
17,123
24,874
Net operating income (1)
9,370
12,055
33,136
38,531
Other income (expense):
Asset management fees
(731)
(997)
(2,425)
(3,633)
Interest expense, net
(2,039)
(4,109)
(7,897)
(14,797)
Depreciation and amortization
(4,439)
(6,538)
(16,127)
(22,729)
General and administrative (not allocated
to segment)
N/A
N/A
N/A
N/A
Impairment charges
(1,573)
(16,640)
(1,573)
(43,460)
Debt extinguishment costs, net
(5,158)
(440)
(6,307)
(4,417)
Gain on disposition of real estate, net
(2)
37
8,324
1,882
21,956
Tax expense
(50)
(59)
(193)
(184)
Net (loss) income
($4,583)
($8,404)
$496
($28,733)
(1)
NOI from assets sold or held for sale
6,745
10,156
21,820
32,033
(2)
SITE Centers disposition fees for assets
sold
0
856
547
2,622
Puerto Rico (Discontinued
Operations)
3Q21
3Q20
9M21
9M20
Revenues:
Minimum rents
$7,945
$14,565
$34,220
$44,203
Ground lease minimum rents
1,065
2,048
4,472
6,062
Percentage and overage rent
198
277
2,040
1,229
Recoveries
3,427
5,993
14,917
18,130
Uncollectible revenue
1,383
(3,912)
1,317
(7,540)
Ancillary and other rental income
855
1,627
3,837
4,116
Lease termination fees
1,310
0
3,097
19
Other property revenues
(5)
19
17
53
16,178
20,617
63,917
66,272
Expenses:
Operating and maintenance
4,824
7,168
19,037
21,313
Property management fees
1,406
1,558
4,533
4,477
Real estate taxes
686
1,227
2,808
3,642
6,916
9,953
26,378
29,432
Net operating income (1)
9,262
10,664
37,539
36,840
Other income (expense):
Asset management fees
(889)
(1,005)
(2,736)
(3,017)
Interest expense, net
(485)
(1,066)
(2,055)
(3,330)
Depreciation and amortization
(3,629)
(7,259)
(16,503)
(21,749)
General and administrative (not allocated
to segment)
N/A
N/A
N/A
N/A
Impairment charges
0
(61,155)
(81,060)
(61,155)
Debt extinguishment costs, net
(1,858)
0
(1,951)
0
Other expense, net
0
107
197
441
Gain on disposition of real estate, net
(2)
24,109
0
23,805
0
Tax expense
(44)
(27)
(98)
(494)
Net income (loss)
$26,466
($59,741)
($42,862)
($52,464)
(1)
NOI from assets sold
9,262
10,664
37,539
36,840
(2)
SITE Centers disposition fees for assets
sold
5,500
0
5,545
0
Retail Value Inc.
Balance Sheet
$ in thousands
At Period End
3Q21
4Q20
Assets:
Land
$10,442
$106,708
Buildings
99,141
421,401
Fixtures and tenant improvements
22,755
68,795
132,338
596,904
Depreciation
(67,377)
(253,565)
64,961
343,339
Construction in progress
2,341
321
Real estate, net
67,302
343,660
Cash
460,949
56,849
Restricted cash
0
115,939
Receivables and straight-line (1)
7,960
15,007
Intangible assets, net (2)
4,391
9,452
Other assets, net (3)
4,672
5,767
Assets related to discontinued
operations
0
649,202
Real estate assets and other assets held
for sale
240,682
0
Total Assets
785,956
1,195,876
Liabilities and Equity:
Secured debt
0
258,795
Dividends payable
0
23,002
Other liabilities (4)
17,433
25,848
Liabilities related to discontinued
operations
0
98,445
Liabilities held for sale
4,698
0
Total Liabilities
22,131
406,090
Redeemable preferred equity
190,000
190,000
Common shares
2,112
1,983
Paid-in capital
740,517
721,234
Distributions in excess of net income
(168,791)
(123,428)
Common shares in treasury at cost
(13)
(3)
Total Equity
573,825
599,786
Total Liabilities and Equity
$785,956
$1,195,876
(1)
Tenant receivables - continental U.S.
550
N/A
Tenant receivables - Puerto Rico
588
N/A
SL rents (including fixed CAM), net -
continental U.S.
867
N/A
Property insurance receivable
2,615
N/A
Other receivables
3,340
N/A
(2)
Operating lease right of use asset
1,108
N/A
(3)
Note receivable
3,000
N/A
(4)
Operating lease liabilities
2,140
N/A
Below-market leases, net
6,876
N/A
Prior year footnote amounts are not
presented due to impact of discontinued operations and held for
sale classification.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20211103006070/en/
Retail Value Inc. Christa Vesy, EVP and Chief Financial
Officer 216-755-5500
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