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Section 1: 8-K (8-K)

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): July 31, 2019

RPT Realty
(Exact name of registrant as specified in its Charter)

Maryland
 
1-10093
 
13-6908486
(State of other jurisdiction of incorporation)
 
(Commission File Number)
 
(I.R.S Employer Identification No.)
19 W 44th Street,
Suite 1002
 
 
 
New York,
New York
 
10036
(Address of principal executive offices)
 
(Zip Code)

Registrant’s telephone number, including area code: (212) 221-1261

Not applicable
(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities Registered Pursuant to Section 12(b) of the Act:
 
Title of Each Class
 
Trading Symbol(s)
 
Name of Each Exchange
On Which Registered
Common Shares of Beneficial Interest, ($0.01 Par Value Per Share)
 
RPT
 
New York Stock Exchange
7.25% Series D Cumulative Convertible Perpetual Preferred Shares of Beneficial Interest ($0.01 Par Value Per Share)
 
RPT.PRD
 
New York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o







Item 2.02    Results of Operations and Financial Condition.

On July 31, 2019, RPT Realty (the “Company”) announced its financial results for the quarter ended June 30, 2019. A copy of the Company’s July 31, 2019 press release is furnished as Exhibit 99.1 to this report on Form 8-K. A copy of the Company’s Quarterly Financial and Operating Supplement Package is available on the Company's corporate website at www.rptrealty.com. The information contained in this report on Form 8-K, including Exhibit 99.1 shall not be deemed “filed” with the Securities and Exchange Commission nor incorporated by reference in any registration statement filed or to be filed by the Company under the Securities Act of 1933, as amended.

Item 7.01    Regulation FD Disclosure.

On July 31, 2019, the Company announced its financial results for the quarter ended June 30, 2019. A copy of the Company’s press release is furnished as Exhibit 99.1 to this report on Form 8-K. A copy of the Company’s Quarterly Financial and Operating Supplement Package is available on the Company's corporate website at www.rprtrealty.com. The information contained in this report on Form 8-K, including Exhibit 99.1 shall not be deemed “filed” with the Securities and Exchange Commission nor incorporated by reference in any registration statement filed or to be filed by the Company under the Securities Act of 1933, as amended.


Item 9.01    Financial Statements and Exhibits.

(d)
Exhibits

99.1         Press release of RPT Realty dated July 31, 2019.






SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 
 
RPT REALTY
 
 
 
 
 
 
Date:
July 31, 2019
By: /s/ MICHAEL P. FITZMAURICE
 
 
       Michael P. Fitzmaurice
 
 
       Executive Vice President and Chief Financial Officer





(Back To Top)

Section 2: EX-99.1 (EXHIBIT 99.1)

Exhibit

399000074_logoa14.jpg     News Release (NYSE:RPT)
    

 
 
 
 
 
RPT REALTY REPORTS SECOND QUARTER 2019 RESULTS; RAISES FULL YEAR 2019 OUTLOOK

Net income attributable to common shareholders for the second quarter 2019 of $1.2 million, or $0.01 per diluted share, compared to $2.6 million, or $0.03 per diluted share for the same period in 2018.

Raised the midpoint of 2019 guidance assumptions for Same property NOI growth by 100 basis points to 3.75% and operating FFO per share by 2.5 cents to $1.08 per share.

Same property net operating income ("Same property NOI") increased 3.9% in the second quarter compared to the same period in 2018.

Same property NOI growth was driven by a 4.0% increase in base rent, the third consecutive quarter of 4% or better growth.

Ended the second quarter with signed leases on 18 of 20 previously vacant targeted remerchandising spaces.

NEW YORK, New York – July 31, 2019 - RPT Realty (NYSE:RPT) (the "Company") today announced its financial and operating results for the quarter ended June 30, 2019.

"We recently had our one-year anniversary as a new management team. I am confident that we established a strong foundation to consistently grow earnings and create value for shareholders as evidenced by our third consecutive quarter of 4% or better base rent growth,” said Brian Harper, President and Chief Executive Officer. "With a solid foundation, we are positioned to play offense through our earnings and leverage neutral capital recycling initiative. We are actively scouring our target markets for attractive buying opportunities that meet our disciplined investment criteria, while we underwrite all sources of capital to maximize value."

FINANCIAL RESULTS

Net income attributable to common shareholders for the second quarter 2019 of $1.2 million, or $0.01 per diluted share, compared to $2.6 million, or $0.03 per diluted share for the same period in 2018.

FFO for the second quarter 2019 of $23.5 million, or $0.26 per diluted share, compared to $27.9 million, or $0.32 per diluted share for the same period in 2018. The change in FFO was primarily driven by the Company's non-core asset disposition program that concluded in the first quarter 2019.

Operating FFO for the second quarter 2019 of $24.5 million, or $0.27 per diluted share, compared to $35.7 million or $0.40 per diluted share for the same period in 2018. Operating FFO for the second quarter 2019 excludes certain net non-recurring costs that totaled $0.9 million, primarily attributable to executive management reorganization costs and costs associated with the early extinguishment of debt that were partially offset by a gain on a land sale. The change in Operating FFO was primarily driven by the Company's non-core asset disposition program that concluded in the first quarter 2019.




i




OPERATING RESULTS

Same property NOI during the second quarter 2019 increased 3.9% compared to the same period in 2018. Same property NOI growth for the second quarter 2019 was primarily driven by higher base rent of 4.0%.

During the second quarter 2019, the Company signed 62 leases totaling 339,253 square feet. Blended re-leasing spreads on comparable leases were 6.2% with an ABR of $17.63 per square foot. Re-leasing spreads on comparable new and renewal leases were 19.7% and 5.5%, respectively. Excluding one strategic anchor renewal, blended and renewal re-leasing spreads were 8.7% and 8.2%, respectively.

As of June 30, 2019, the Company had $4.5 million of signed not commenced Annualized Base Rent ("ABR") that is scheduled to commence over the next twelve months.

The table below summarizes the Company's leased rate and occupancy results at June 30, 2019, March 31, 2019, and June 30, 2018.
 
June 30, 2019
March 31, 2019
June 30, 2018
Consolidated Portfolio
 
 
 
Leased rate
94.9%
94.8%
93.9%
Occupancy
92.4%
91.8%
90.8%
Anchor (GLA of 10,000 square feet or more)
 
 
 
Leased rate
97.5%
97.1%
96.6%
Occupancy
95.3%
94.7%
93.6%
Small Shop (GLA of less than 10,000 square feet)
 
 
 
Leased rate
88.8%
89.6%
87.2%
Occupancy
85.7%
85.0%
84.2%

BALANCE SHEET

The Company ended the second quarter 2019 with liquidity of $396.9 million, including $47.1 million in cash and cash equivalents and $349.8 million of availability on its unsecured revolving credit facility. At June 30, 2019, the Company had approximately $935.2 million of consolidated debt and finance lease obligations, which resulted in a net debt to annualized proforma adjusted EBITDA ratio of 6.6x. Consolidated debt had a weighted average interest rate of 4.07% and a weighted average maturity, excluding scheduled amortization, of 4.9 years.

DIVIDEND

On July 30, 2019, the Company’s Board of Trustees declared a third quarter 2019 regular cash dividend of $0.22 per common share. The Board of Trustees also approved a third quarter 2019 Series D convertible preferred share dividend of $0.90625 per share. The dividends for the period July 1, 2019 through September 30, 2019 are payable on October 1, 2019 for shareholders of record on September 20, 2019.

ORGANIZATIONAL UPDATE

On June 27, 2019, the Company's Board of Trustees elected David J. Nettina as Chairman of the Board. Mr. Nettina's election reflects his years of public company, real estate and finance experience in addition to his dedicated leadership during his 10 year tenure on the Board. Also, as previously-announced, Joanna Lau, an expert in the technology and retail industries, was elected to the Company's Board of Trustees, effective April 29, 2019. Since September 2018, the Company has elected three new Trustees who complement the experience and backgrounds of the existing Board while adding diversity to the independent Board.

As previously announced, the Company has appointed Courtney A. Smith to the role of Senior Vice President of Investments. Mr. Smith will be responsible for the evaluation and execution of all acquisitions and dispositions. Mr. Smith has 13 years of experience in the real estate industry and most recently served as Vice President of Investments for Retail Properties of America where he executed approximately $2.3 billion of acquisitions and dispositions. Mr. Smith joined the Company on July 22, 2019.

ii




2019 GUIDANCE

The Company's previously provided 2019 earnings guidance has been updated as shown in the table below.
Guidance item
Prior 2019 Guidance Range
Updated 2019 Guidance Range
2Q 2019
YTD
Net income per common share (diluted)
$0.16
to
$0.19
$0.20
to
$0.22
$0.01
$0.12
Same property NOI growth
2.25%
to
3.25%
3.25%
to
4.25%
3.9%
4.2%
General and administrative expenses (in millions)(1)
$23.75
to
$25.00
$23.75
to
$25.00
$5.8
$12.1
Dispositions (in millions)(2)
$68.5
$68.5
$0.0
$68.5
Operating FFO per diluted share
$1.04
to
$1.07
$1.07
to
$1.09
$0.27
$0.54
(1} Excludes the impact of non-recurring executive transition and employee severance charges and gains as noted in the Reconciliation of Non-GAAP Financial Measures Funds from Operations section of the release
(2) Excludes land / outparcel dispositions

CONFERENCE CALL/WEBCAST:

The Company will host a live broadcast of its second quarter 2019 conference call on Thursday, August 1, 2019 at 10:00 a.m. (ET) to discuss its financial and operating results.
Date:
Thursday, August 1, 2019
Time:
10:00 a.m. ET
Dial in #:
(877) 705-6003
International Dial in #
(201) 493-6725
Webcast:
investors.rptrealty.com

A telephonic replay of the call will be available through August 8, 2019.  The replay can be accessed by dialing (844) 512-2921 or (412) 317-6671 for international callers and entering passcode 13690847.  A webcast replay will also be archived on the Company’s website for twelve months.


iii



SUPPLEMENTAL MATERIALS

The Company’s quarterly financial and operating supplement is available on its corporate web site at rptrealty.com. If you wish to receive a copy via email, please send requests to invest@rptrealty.com.

RPT Realty owns and operates a national portfolio of open-air shopping destinations principally located in top U.S. markets. The Company's locally-curated consumer experiences reflect the lifestyles of its diverse neighborhoods and match the modern expectations of its retail partners. The Company is a fully integrated and self-administered REIT publicly traded on the New York Stock Exchange under the ticker symbol RPT. As of June 30, 2019, the Company's portfolio consisted of 49 shopping centers (including 1 shopping center owned through a joint venture) representing 11.9 million square feet. As of June 30, 2019, the Company’s aggregate portfolio was 95.0% leased. For additional information about the Company please visit rptrealty.com.

This press release may contain forward-looking statements that represent the Company’s expectations and projections for the future. Management of the Company believes the expectations reflected in any forward-looking statements made in this press release are based on reasonable assumptions. Certain factors could occur that might cause actual results to vary, including deterioration in national economic conditions, weakening of real estate markets, decreases in the availability of credit, increases in interest rates, adverse changes in the retail industry, our continuing ability to qualify as a REIT and other factors discussed in the Company’s reports filed with the Securities and Exchange Commission. Forward-looking statements speak only as of the date hereof and the Company expressly disclaims any obligation to update any forward-looking statements.


Company Contact:
Vin Chao, Vice President - Finance
19 W 44th St. 10th Floor, Ste 1002
New York, New York 10036
vchao@rptrealty.com
(212) 221-1752

iv



RPT REALTY
OPERATING FFO ATTRIBUTABLE TO COMMON AND OP UNIT HOLDERS GUIDANCE
 
Per Share Guidance Range
 
Full Year 2019
 
Low
 
High
Net income available to common shareholders
$0.20
to
$0.22
 Depreciation and amortization
0.85
to
0.85
 Convertible preferred dividend
0.08
to
0.08
 Net income attributable to noncontrolling interests
0.01
to
0.01
 Share count adjustment(1)
(0.02)
to
(0.02)
 (Gain)/Loss on sale of investment properties
(0.06)
to
(0.06)
  Non-recurring costs/(gains) excluded from OFFO
0.01
to
0.01
OFFO available to common shareholders and dilutive securities
$1.07
to
$1.09
(1) OP Units and Convertible Preferred shares are excluded from the diluted share count for Net Income, but included for OFFO


v


RPT REALTY
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except per share amounts)
 
 
 
 
 
June 30,
2019
 
December 31, 2018
 
 
ASSETS
(unaudited)
 
 
Income producing properties, at cost:
 
 
 
Land
$
361,973

 
$
373,490

Buildings and improvements
1,605,354

 
1,652,283

Less accumulated depreciation and amortization
(364,314
)
 
(358,195
)
Income producing properties, net
1,603,013

 
1,667,578

Construction in progress and land available for development
49,597

 
53,222

Net real estate
1,652,610

 
1,720,800

Equity investments in unconsolidated joint ventures
1,492

 
1,572

Cash and cash equivalents
47,072

 
41,064

Restricted cash and escrows
4,274

 
3,658

Accounts receivable, net
22,203

 
23,802

Acquired lease intangibles, net
38,096

 
44,432

Operating lease right-of-use assets
17,425

 

Other assets, net
90,722

 
93,112

TOTAL ASSETS
$
1,873,894

 
$
1,928,440

 
 
 
 
LIABILITIES AND SHAREHOLDERS' EQUITY
 
 
 
Notes payable, net
$
934,223

 
$
963,149

Finance lease obligation
975

 
975

Accounts payable and accrued expenses
48,356

 
56,355

Distributions payable
19,766

 
19,728

Acquired lease intangibles, net
43,648

 
48,647

Operating lease liabilities
16,188

 

Other liabilities
7,274

 
8,043

TOTAL LIABILITIES
1,070,430

 
1,096,897

 
 
 
 
Commitments and Contingencies
 
 
 
 
 
 
 
RPT Realty ("RPT") Shareholders' Equity:
 
 
 

Preferred shares, $0.01 par, 2,000 shares authorized: 7.25% Series D Cumulative Convertible Perpetual Preferred Shares, (stated at liquidation preference $50 per share), 1,849 shares issued and outstanding as of June 30, 2019 and December 31, 2018, respectively
92,427

 
92,427

Common shares of beneficial interest, $0.01 par, 120,000 shares authorized, 79,816 and 79,734 shares issued and outstanding as of June 30, 2019 and December 31, 2018, respectively
798

 
797

Additional paid-in capital
1,167,060

 
1,164,848

Accumulated distributions in excess of net income
(475,819
)
 
(450,130
)
Accumulated other comprehensive income
42

 
4,020

TOTAL SHAREHOLDERS' EQUITY ATTRIBUTABLE TO RPT
784,508

 
811,962

Noncontrolling interest
18,956

 
19,581

TOTAL SHAREHOLDERS' EQUITY
803,464

 
831,543

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
$
1,873,894

 
$
1,928,440









Page 1



RPT REALTY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(unaudited)
 
Three Months Ended
 
Six Months Ended
 
June 30,
 
June 30,
 
2019
 
2018
 
2019
 
2018
REVENUE
 
 
 
 
 
 
 
Rental income
$
56,641

 
$
68,872

 
$
114,999

 
$
130,690

Other property income
681

 
1,047

 
1,980

 
1,861

Management and other fee income
39

 
48

 
90

 
134

TOTAL REVENUE
57,361

 
69,967

 
117,069

 
132,685

 
 
 
 
 
 
 
 
EXPENSES
 
 
 
 
 
 
 
Real estate tax expense
8,722

 
10,602

 
18,544

 
20,759

Recoverable operating expense
5,343

 
6,141

 
12,024

 
12,947

Non-recoverable operating expense
2,709

 
1,759

 
5,199

 
3,471

Depreciation and amortization
20,628

 
23,457

 
39,847

 
44,569

Acquisition costs

 
233

 

 
233

General and administrative expense
6,530

 
12,730

 
12,596

 
17,906

Provision for impairment

 
216

 

 
216

TOTAL EXPENSES
43,932

 
55,138

 
88,210

 
100,101

 
 
 
 
 
 
 
 
OPERATING INCOME
13,429

 
14,829

 
28,859

 
32,584

 
 
 
 
 
 
 
 
OTHER INCOME AND EXPENSES
 
 
 
 
 
 
 
Other (expense) income, net
(123
)
 
(68
)
 
(231
)
 
185

Gain on sale of real estate
371

 
181

 
6,073

 
181

Earnings from unconsolidated joint ventures
26

 
202

 
80

 
273

Interest expense
(10,084
)
 
(10,708
)
 
(20,433
)
 
(21,309
)
Loss on extinguishment of debt
(622
)
 

 
(622
)
 

INCOME BEFORE TAX
2,997

 
4,436

 
13,726

 
11,914

Income tax provision
(35
)
 
(33
)
 
(71
)
 
(51
)
NET INCOME
2,962

 
4,403


13,655


11,863

Net income attributable to noncontrolling partner interest
(69
)
 
(101
)
 
(319
)
 
(275
)
NET INCOME ATTRIBUTABLE TO RPT
2,893

 
4,302


13,336

 
11,588

Preferred share dividends
(1,675
)
 
(1,675
)
 
(3,350
)
 
(3,350
)
NET INCOME AVAILABLE TO COMMON SHAREHOLDERS
$
1,218

 
$
2,627


$
9,986

 
$
8,238

 
 
 
 
 
 
 
 
EARNINGS PER COMMON SHARE
 
 
 
 
 
 
 
Basic
$
0.01

 
$
0.03

 
$
0.12

 
$
0.10

Diluted
$
0.01

 
$
0.03

 
$
0.12

 
$
0.10

 
 
 
 
 
 
 
 
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
 
 
 
 
 
 
 
Basic
79,764

 
79,519

 
79,754

 
79,471

Diluted
80,156

 
79,621

 
80,148

 
79,574







Page 2



RPT REALTY
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
FUNDS FROM OPERATIONS
(In thousands, except per share data)
(unaudited)
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2019
 
2018
 
2019
 
2018
Net income
$
2,962

 
$
4,403

 
$
13,655

 
$
11,863

Net income attributable to noncontrolling partner interest
(69
)
 
(101
)
 
(319
)
 
(275
)
Preferred share dividends
(1,675
)
 
(1,675
)
 
(3,350
)
 
(3,350
)
Net income available to common shareholders
1,218

 
2,627


9,986

 
8,238

Adjustments:
 
 
 
 
 

 
 

Rental property depreciation and amortization expense
20,527

 
23,425

 
39,649

 
44,475

Pro-rata share of real estate depreciation from unconsolidated joint ventures
14

 
73

 
28

 
145

Gain on sale of depreciable real estate

 

 
(5,702
)
 

FFO available to common shareholders
21,759

 
26,125

 
43,961

 
52,858

 
 
 
 
 
 
 
 
Noncontrolling interest in Operating Partnership (1)
69

 
101

 
319

 
275

Preferred share dividends (assuming conversion) (2)
1,675

 
1,675

 
3,350

 
3,350

FFO available to common shareholders and dilutive securities
$
23,503

 
$
27,901

 
$
47,630

 
$
56,483

 
 
 
 
 
 
 
 
Gain on sale of land
(371
)
 
(181
)
 
(371
)
 
(181
)
Provision for impairment on land available for development

 
216

 

 
216

Severance expense (3)

 
55

 
98

 
69

Executive management reorganization, net (3)(4)
698

 
7,523

 
446

 
7,942

Acquisition costs

 
233

 

 
233

Cost associated with early extinguishment of debt
622

 

 
622

 

Other gain

 

 

 
(398
)
Operating FFO available to common shareholders and dilutive securities
$
24,452

 
$
35,747

 
$
48,425

 
$
64,364

 
 
 
 
 
 
 
 
Weighted average common shares
79,764

 
79,519

 
79,754

 
79,471

Shares issuable upon conversion of Operating Partnership Units (1)
1,909

 
1,916

 
1,909

 
1,916

Dilutive effect of restricted stock
392

 
102

 
394

 
103

Shares issuable upon conversion of preferred shares (2)
6,923

 
6,803

 
6,923

 
6,803

Weighted average equivalent shares outstanding, diluted
88,988

 
88,340

 
88,980

 
88,293

 
 
 
 
 
 
 
 
FFO available to common shareholders and dilutive securities per share, diluted
$
0.26

 
$
0.32

 
$
0.54

 
$
0.64

 
 
 
 
 
 
 
 
Operating FFO available to common shareholders and dilutive securities per share, diluted
$
0.27

 
$
0.40

 
$
0.54

 
$
0.73

 
 
 
 
 
 
 
 
Dividend per common share
$
0.22

 
$
0.22

 
$
0.44

 
$
0.44

Payout ratio - Operating FFO
78.6%

 
55.0%


80.0%

 
60.3%

 
 
 
 
 
 
 
 
(1) 
The total noncontrolling interest reflects OP units convertible 1:1 into common shares.
(2) 
Series D convertible preferred shares are paid annual dividends of $6.7 million and are currently convertible into approximately 6.9 million shares of common stock. They are dilutive only when earnings or FFO exceed approximately $0.24 per diluted share per quarter and $0.97 per diluted share per year. The conversion ratio is subject to adjustment based upon a number of factors, and such adjustment could affect the dilutive impact of the Series D convertible preferred shares on FFO and earning per share in future periods.
(3) 
Amounts noted are included in General and Administrative expense on the Condensed Consolidated Statements of Operations
(4) 
2Q19 includes severance and accelerated vesting of restricted stock associated with our former Executive Vice President of Transactions and performance award expense related to the Company's former Chief Executive Officer. 2Q18 includes severance, accelerated vesting of restricted stock and performance award charges and the benefit from the forfeiture of unvested restricted stock and performance awards associated with our former Chief Executive, Chief Operating and Chief Financial officers, in addition to recruiting fees and cash inducement bonuses related to the June 2018 hiring of our current Chief Executive and Chief Financial officers.

Page 3



RPT REALTY
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(amounts in thousands)
(unaudited)
 
Reconciliation of net income available to common shareholders to Same Property NOI
 
 
 
 
 
 
 
 
 
Three Months Ended
June 30,
 
Six Months Ended
June 30,
 
2019
 
2018
 
2019
 
2018
Net income available to common shareholders
$
1,218

 
$
2,627

 
$
9,986

 
$
8,238

Preferred share dividends
1,675

 
1,675

 
3,350

 
3,350

Net income attributable to noncontrolling partner interest
69

 
101

 
319

 
275

Income tax provision
35

 
33

 
71

 
51

Interest expense
10,084

 
10,708

 
20,433

 
21,309

Costs associated with early extinguishment of debt
622

 

 
622

 

Earnings from unconsolidated joint ventures
(26
)
 
(202
)
 
(80
)
 
(273
)
Gain on sale of real estate
(371
)
 
(181
)
 
(6,073
)
 
(181
)
Other expense (income), net
123

 
68

 
231

 
(185
)
Management and other fee income
(39
)
 
(48
)
 
(90
)
 
(134
)
Depreciation and amortization
20,628

 
23,457

 
39,847

 
44,569

Acquisition costs

 
233

 

 
233

General and administrative expenses
6,530

 
12,730

 
12,596

 
17,906

Provision for impairment

 
216

 

 
216

Lease termination fees
(83
)
 
(105
)
 
(232
)
 
(105
)
Amortization of lease inducements
128

 
43

 
224

 
86

Amortization of acquired above and below market lease intangibles, net
(2,463
)
 
(6,266
)
 
(3,372
)
 
(7,388
)
Straight-line ground rent expense
76

 
76

 
153

 
153

Straight-line rental income
(574
)
 
(684
)
 
(1,384
)
 
(1,562
)
NOI
37,632

 
44,481

 
76,601

 
86,558

NOI from Other Investments
1,457

 
(6,861
)
 
1,257

 
(11,861
)
Same Property NOI
$
39,089

 
$
37,620

 
$
77,858

 
$
74,697

 
 
 
 
 
 
 
 










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RPT REALTY
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(amounts in thousands)
(unaudited)
 
 
 
 
 
Three Months Ended June 30,
 
2019
 
2018
Reconciliation of net income to annualized proforma adjusted EBITDA
 
 
 
Net income
$
2,962

 
$
4,403

Interest expense
10,084

 
10,708

Income tax provision
35

 
33

Depreciation and amortization
20,628

 
23,457

Gain on sale of depreciable real estate

 
(181
)
Provision for impairment on depreciable real estate

 
216

Pro-rata adjustments from unconsolidated entities
14

 
73

EBITDAre
33,723

 
38,709

 
 
 
 
Severance expense

 
55

Executive management reorganization, net
698

 
7,523

Gain on sale of land
(371
)
 

Costs associated with early extinguishment of debt
622

 

Adjusted EBITDA
34,672

 
46,287

Proforma adjustments (1)
(839
)
 
(5,233
)
Proforma adjusted EBITDA
$
33,833

 
$
41,054

Annualized proforma adjusted EBITDA
$
135,332

 
$
164,216

 
 
 
 
Reconciliation of Notes Payable, net to Net Debt
 
 
 
Notes payable, net
$
934,223

 
$
1,027,803

Unamortized premium
(2,464
)
 
(3,449
)
Deferred financing costs, net
2,083

 
3,448

Consolidated notional debt
933,842

 
1,027,802

Finance lease obligation
975

 
1,022

Cash and cash equivalents
(47,072
)
 
(5,252
)
Net debt
$
887,745

 
$
1,023,572

 
 
 
 
Reconciliation of interest expense to total fixed charges
 
 
 
Interest expense
$
10,084

 
$
10,708

Preferred share dividends
1,675

 
1,675

Scheduled mortgage principal payments
638

 
625

Total fixed charges
$
12,397

 
$
13,008

 
 
 
 
Net debt to annualized proforma adjusted EBITDA
6.6
x
 
6.2
x
Interest coverage ratio (proforma adjusted EBITDA / interest expense)
3.4
x
 
4.3
x
Fixed charge coverage ratio (proforma adjusted EBITDA / fixed charges)
2.7
x
 
3.6
x
 
 
 
 
(1) 
2Q19 excludes $1.4 million from the acceleration of a below market lease, offset by $0.6 million of loss from dispositions. 2Q18 includes $5.2 million from the acceleration of a below market lease. The proforma adjustments treat the activity as if they occurred at the start of each quarter.


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RPT Realty
Non-GAAP Financial Definitions
 
Certain of our key performance indicators are considered non-GAAP financial measures. Management uses these measures along with our GAAP financial statements in order to evaluate our operations results. We believe these additional measures provide users of our financial information additional comparable indicators of our industry, as well as our performance.

Funds From Operations (FFO) Available to Common Shareholders
As defined by the National Association of Real Estate Investment Trusts (NAREIT), Funds From Operations (FFO) represents net income computed in accordance with generally accepted accounting principles, excluding gains (or losses) from sales of depreciable property and impairment provisions on depreciable real estate or on investments in non-consolidated investees that are driven by measurable decreases in the fair value of depreciable real estate held by the investee, plus depreciation and amortization of depreciable real estate, (excluding amortization of financing costs). Adjustments for unconsolidated partnerships and joint ventures are calculated to reflect funds from operations on the same basis. We have adopted the NAREIT definition in our computation of FFO available to common shareholders.

Operating FFO Available to Common Shareholders
In addition to FFO available to common shareholders, we include Operating FFO available to common shareholders as an additional measure of our financial and operating performance. Operating FFO excludes acquisition costs and periodic items such as gains (or losses) from sales of land and impairment provisions on land available for development, bargain purchase gains, severance expense, executive management reorganization costs, net, accelerated amortization of debt premiums and gains or losses on extinguishment of debt that are not adjusted under the current NAREIT definition of FFO. We provide a reconciliation of FFO to Operating FFO. FFO and Operating FFO should not be considered alternatives to GAAP net income available to common shareholders or as alternatives to cash flow as measures of liquidity.

While we consider FFO available to common shareholders and Operating FFO available to common shareholders useful measures for reviewing our comparative operating and financial performance between periods or to compare our performance to different REITs, our computations of FFO and Operating FFO may differ from the computations utilized by other real estate companies, and therefore, may not be comparable. We recognize the limitations of FFO and Operating FFO when compared to GAAP net income available to common shareholders. FFO and Operating FFO available to common shareholders do not represent amounts available for needed capital replacement or expansion, debt service obligations, or other commitments and uncertainties. In addition, FFO and Operating FFO do not represent cash generated from operating activities in accordance with GAAP and are not necessarily indicative of cash available to fund cash needs, including the payment of dividends. FFO and Operating FFO are simply used for reviewing our comparative operating and financial performance between periods or to compare our performance to different REITs. Our computations of FFO and Operating FFO may differ from the computations utilized by other real estate companies, and therefore, may not be comparable.

Net Operating Income (NOI)
Net Operating Income (NOI) is calculated using consolidated net income available to common shareholders and adjusted to exclude preferred share dividends, net income/loss attributable to noncontrolling partner interest, income tax provisions, interest expense and other associated debt costs, earnings from unconsolidated joint ventures, management and other fee income, depreciation and amortization, acquisition costs, general and administrative expenses, provisions for impairments, lease termination fees, straight-line rent/expense, amortization of above/below market rent and lease inducements. NOI consists of Same Property NOI and NOI from Other Investment Properties.

Same Property NOI and NOI from Other Investments
Same Property NOI and NOI from Other Investments are supplemental non-GAAP financial measures of real estate companies' operating performance. Same Property NOI is considered by management to be a relevant performance measure of our operations because it includes only the NOI of comparable consolidated operating properties for the reporting period. Same Property NOI for the three and six months ended June 30, 2019 represents NOI from the Company's same property portfolio consisting of 46 consolidated operating properties acquired or placed in service and stabilized prior to January 1, 2018. Same Property NOI excludes properties under redevelopment or where activities have started in preparation for redevelopment. A property is designated as a redevelopment when planned improvements significantly impact the property. Same Property NOI is calculated using consolidated operating income and adjusted to exclude management and other fee income, depreciation and amortization, general and administrative expense, provision for impairment and non-comparable income and expense adjustments such as straight-line rents, lease termination fees, above/below market rents, and other non-comparable operating income and expense adjustments. NOI from Other Investments for the three and six months ended June 30, 2019 and 2018 represents NOI primarily from (i) properties disposed of during 2018 and 2019, (ii) Webster Place and Rivertowne Square where the Company has begun activities in anticipation of future redevelopment, (iii) certain property related employee compensation and benefits expense and (iv) non-comparable operating income and expense adjustments.

Same Property NOI and NOI from Other Investments should not be considered an alternative to net income in accordance with GAAP or as a measure of liquidity. Our method of calculating Same Property NOI and NOI from Other Investments may differ from methods used by other REITs and, accordingly, may not be comparable to such other REITs.







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RPT Realty
Non-GAAP Financial Definitions (continued)
 
EBITDAre/Adjusted EBITDA/Proforma Adjusted EBITDA
NAREIT defines EBITDAre as net income computed in accordance with GAAP, plus interest expense, income tax expense (benefit), depreciation and amortization and impairment of depreciable real estate and in substance real estate equity investments; plus or minus gains or losses from sales of operating real estate assets and interests in real estate equity investments; and adjustments to reflect our share of unconsolidated real estate joint ventures and partnerships for these items. The Company calculates EBITDAre in a manner consistent with the NAREIT definition. The Company also presents Adjusted EBITDA which is EBITDAre net of severance expense and other non-recurring items. EBITDAre and Adjusted EBITDA should not be considered an alternative measure of operating results or cash flow from operations as determined in accordance with GAAP. Proforma Adjusted EBITDA further adjusts for the effect of the acquisition or disposition of properties during the period.

Occupancy
Occupancy is defined, for a property or group of properties, as the ratio, expressed as a percentage, of (a) the number of square feet of such property economically occupied by tenants under leases with an initial term of greater than one year, to (b) the aggregate number of square feet for such property.

Leased Rate
Lease Rate is defined, for a property or group of properties, as the ratio, expressed as a percentage, of (a) the number of square feet of such property occupied by tenants at the time the lease was executed with an initial term of greater than one year, to (b) the aggregate number of square feet for such property.

Metropolitan Statistical Area (MSA)
Metropolitan Statistical Area (MSA) information is sourced from the United States Census Bureau and rank is determined based on the most recently available population estimates.


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