EQNX::TICKER_START (NASDAQ:ROIC), EQNX::TICKER_END Retail Opportunity Investments Corp. (NASDAQ:ROIC) announced today financial and operating results for the three and six months ended June 30, 2022.
-- $11.5 million of net income attributable to common stockholders ($0.09 per diluted share)
-- $36.7 million in Funds From Operations (FFO) ($0.28 per diluted share)
-- FFO guidance for 2022 raised ($1.08 - $1.12 per diluted share)
-- $120.2 million of acquisitions lined up ($60.0 million closed, $60.2 million under contract)
-- $37.1 million property disposition under contract
-- 714,380 square feet of leases executed during first six months of '22 (record activity)
-- 97.6% portfolio lease rate at 6/30/22 (vs. 97.2% at 3/31/22 and 96.9% at 6/30/21)
-- 16.7% increase in same-space cash base rents on 2Q'22 new leases (10.5% renewal increase)
-- 3.7% increase in same-center cash net operating income (2Q'22 vs. 2Q'21)
-- 5.6% increase in same-center cash net operating income (first six months '22 vs. '21)
-- $25.2 million of common equity raised through ATM program during first six months
-- 6.7x net principal debt-to-annualized EBITDA ratio for 2Q'22
-- Awarded 2022 Green Lease Leader in recognition of ESG initiatives
-- $0.15 per share cash dividend declared
A reconciliation of GAAP net income to FFO is provided at the end of this press release.
Stuart A. Tanz, President and Chief Executive Officer of Retail Opportunity Investments Corp. stated, "Strong demand for space across our portfolio continues to drive our business forward. Building on our leasing momentum from the first quarter, we increased our portfolio lease rate during the second quarter and again posted solid double-digit rent growth on both same-space new leases and renewals. Additionally, we continue to steadily grow and enhance our portfolio. Year-to-date, we have lined up $120.2 million of grocery-anchored shopping center acquisitions." Tanz added, "With our success during the first half of the year, we are well-positioned and firmly on track to achieve our key objectives for 2022."
FINANCIAL RESULTS SUMMARY
For the three months ended June 30, 2022, GAAP net income attributable to common stockholders was $11.5 million, or $0.09 per diluted share, as compared to GAAP net income attributable to common stockholders of $16.5 million, or $0.14 per diluted share, for the three months ended June 30, 2021. For the six months ended June 30, 2022, GAAP net income attributable to common stockholders was $23.1 million, or $0.19 per diluted share, as compared to GAAP net income attributable to common stockholders of $23.9 million, or $0.20 per diluted share, for the six months ended June 30, 2021. Included in 2021 GAAP net income was a $9.5 million gain on sale of real estate.
FFO for the second quarter of 2022 was $36.7 million, or $0.28 per diluted share, as compared to $31.7 million in FFO, or $0.25 per diluted share for the second quarter of 2021. FFO for the first six months of 2022 was $72.9 million, or $0.55 per diluted share, as compared to $62.7 million in FFO, or $0.49 per diluted share for the first six months of 2021. ROIC reports FFO as a supplemental performance measure in accordance with the definition set forth by the National Association of Real Estate Investment Trusts. A reconciliation of GAAP net income to FFO is provided at the end of this press release.
For the second quarter of 2022, same-center net operating income (NOI) was $49.6 million, as compared to $47.8 million in same-center NOI for the second quarter of 2021, representing a 3.7% increase. For the first six months of 2022, same-center NOI increased 5.6% as compared to same-center NOI for the first six months of 2021. ROIC reports same-center comparative NOI on a cash basis. A reconciliation of GAAP operating income to same-center comparative NOI is provided at the end of this press release.
At June 30, 2022, ROIC had total market capitalization of approximately $3.4 billion and approximately $1.4 billion of principal debt outstanding. As of June 30, 2022, 95.5% of ROIC's principal debt outstanding was unsecured, including $46.0 million outstanding on its $600.0 million unsecured revolving credit facility. Additionally, ROIC's interest coverage ratio and net principal debt-to-annualized EBITDA ratio for the second quarter of 2022 was 3.6 times and 6.7 times, respectively, and 96.6% of its portfolio was unencumbered at June 30, 2022, based on gross leasable area.
Year to date, ROIC has issued approximately 1.3 million shares of common stock through its ATM program, raising $25.2 million in gross proceeds, including issuing approximately 0.7 million shares of common stock during the first quarter, and approximately 0.6 million shares during the second quarter.
ACQUISITION & DISPOSITION SUMMARY
Year-to-date, ROIC has lined up $120.2 million of grocery-anchored shopping center acquisitions, including the following three grocery-anchored shopping centers acquired during the second quarter, totaling $60.0 million.
Powell Valley Junction
In April 2022, ROIC acquired Powell Valley Junction for $17.6 million. The shopping center is approximately 109,000 square feet and is anchored by Walmart Neighborhood Market. The property is located in Gresham, Oregon, within the Portland metropolitan area, and is currently 99.0% leased.
Olympia Square North
In April 2022, ROIC acquired Olympia Square North for $18.4 million. The shopping center is approximately 90,000 square feet and is anchored by Albertsons Supermarket. The property is located in Olympia, Washington, within the Seattle metropolitan area, and is currently 100% leased.
Village Oaks Shopping Center
In May 2022, ROIC acquired Village Oaks Shopping Center for $24.0 million. The shopping center is approximately 80,000 square feet and is anchored by Save Mart (Lucky California) Supermarket and Rite Aid Pharmacy (NAP). The property is located in Martinez, California, within the San Francisco metropolitan area, and is currently 97.9% leased.
Additionally, ROIC currently has a contract involving a three property transaction, including selling one ROIC property for $37.1 million, while acquiring the following two grocery-anchored shopping centers for a total of $60.2 million.
ROIC has a contract to acquire Ballinger Village for $29.2 million. The shopping center is approximately 113,000 square feet and is anchored by Thriftway Supermarket and Rite Aid Pharmacy. The property is located in Shoreline, Washington, within the Seattle metropolitan area, and is currently 89.1% leased.
Thomas Lake Shopping Center
ROIC has a contract to acquire Thomas Lake Shopping Center for $31.0 million. The shopping center is approximately 111,000 square feet and is anchored by Albertsons Supermarket and Rite Aid Pharmacy. The property is located in Mill Creek, Washington, within the Seattle metropolitan area, and is currently 100% leased.
PROPERTY OPERATIONS SUMMARY
At June 30, 2022, ROIC's portfolio was 97.6% leased. During the second quarter of 2022, ROIC executed 93 leases, totaling 297,741 square feet, including 38 new leases, totaling 83,276 square feet, achieving a 16.7% increase in same-space comparative base rent, and 55 renewed leases, totaling 214,465 square feet, achieving a 10.5% increase in base rent. ROIC reports same-space comparative new lease and renewal base rents on a cash basis.
ENVIRONMENTAL, SOCIAL & GOVERNANCE SUMMARY
In May 2022, ROIC was selected as a 2022 Green Lease Leader by the U.S. Department of Energy's Better Buildings Alliance and the Institute for Market Transformation. Specifically, ROIC was awarded "Gold" level designation in recognition of its continued success in collaborating with tenants on energy efficiency, decarbonization, air quality and other environmental and social issues.
Subsequent to the second quarter, in July 2022, ROIC released its annual Environmental, Social and Governance (ESG) report, detailing the company's ESG achievements during 2021, as well as its ongoing initiatives and long term strategic goals. The report was prepared in accordance with the Sustainability Accounting Standards Board (SASB) standards, the Task Force on Climate-related Financial Disclosures (TCFD) framework, and the United Nations Sustainable Development Goals (SDG). The report is available at: http://www.roireit.net/assets/001/5927.pdf.
On July 8, 2022, ROIC distributed a $0.13 per share cash dividend. On July 26, 2022, ROIC's board of directors declared a cash dividend of $0.15 per share, payable on October 7, 2022 to stockholders of record on September 16, 2022.
2022 GUIDANCE SUMMARY
ROIC currently estimates that GAAP net income for 2022 will be within the range of $0.31 to $0.36 per diluted share, and FFO will be within the range of $1.08 to $1.12 per diluted share.
Year Ended December 31, 2022 Previous Current Low End High End Low End High End (unaudited, amounts in thousands except per share and percentage data) GAAP net income applicable to stockholders $ 29,501 $ 40,494 $ 37,546 $ 44,907 Funds from operations (FFO) - diluted $ 137,280 $ 148,500 $ 142,560 $ 150,080 GAAP net income per diluted share $ 0.24 $ 0.32 $ 0.31 $ 0.36 FFO per diluted share $ 1.04 $ 1.10 $ 1.08 $ 1.12 Key Drivers General and administrative expenses $ 22,000 $ 21,000 $ 22,500 $ 21,500 Straight-line rent $ 500 $ 500 $ 2,400 $ 2,400 Amortization of above- and below-market rent $ 10,400 $ 10,400 $ 11,300 $ 11,300 Bad debt $ 3,000 $ 2,000 $ 3,000 $ 2,000 Acquisitions $ 100,000 $ 300,000 $ 120,000 $ 200,000 Dispositions $ 50,000 $ 30,000 $ 70,000 $ 100,000 Same-center cash NOI growth (vs. 2021) 3.0 % 4.0 % 4.0 % 5.0 %
ROIC's management will discuss guidance, and the underlying assumptions, on ROIC's July 27, 2022 conference call. ROIC's guidance is a forward-looking statement and is subject to risks and other factors noted elsewhere in this press release.
ROIC will conduct a conference call to discuss its results on Wednesday, July 27, 2022 at 9:00 a.m. Eastern Time / 6:00 a.m. Pacific Time. To participate in the conference call, click on the following link (ten minutes prior to the call) to register:
Once registered, participants will have the option of: 1) dialing in from their phone (using a PIN); or 2) clicking the "Call Me" option to receive an automated call directly to their phone.
The conference call will also be available live (in a listen-only mode) at: http://edge.media-server.com/mmc/p/ehpn5ywt
The conference call will be archived and available for replay for approximately 90 days at: http://www.roireit.net/
ABOUT RETAIL OPPORTUNITY INVESTMENTS CORP.
Retail Opportunity Investments Corp. (NASDAQ: ROIC), is a fully-integrated, self-managed real estate investment trust (REIT) that specializes in the acquisition, ownership and management of grocery-anchored shopping centers located in densely-populated, metropolitan markets across the West Coast. As of June 30, 2022, ROIC owned 92 shopping centers encompassing approximately 10.4 million square feet. ROIC is the largest publicly-traded, grocery-anchored shopping center REIT focused exclusively on the West Coast. ROIC is a member of the S&P SmallCap 600 Index and has investment-grade corporate debt ratings from Moody's Investor Services, S&P Global Ratings and Fitch Ratings, Inc. Additional information is available at: www.roireit.net.
When used herein, the words "believes," "anticipates," "projects," "should," "estimates," "expects," "guidance" and similar expressions are intended to identify forward-looking statements with the meaning of that term in Section 27A of the Securities Act of 1933, as amended, and in Section 21F of the Securities and Exchange Act of 1934, as amended. Certain statements contained herein may constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results of ROIC to differ materially from future results expressed or implied by such forward-looking statements. Information regarding such risks and factors is described in ROIC's filings with the SEC, including its most recent Annual Report on Form 10-K, which is available at: www.roireit.net.
RETAIL OPPORTUNITY INVESTMENTS CORP.
Consolidated Balance Sheets
(In thousands, except share data)
June 30, 2022 December 31, 2021 (unaudited) ASSETS Real Estate Investments: Land $ 934,687 $ 915,861 Building and improvements 2,419,177 2,350,294 3,353,864 3,266,155 Less: accumulated depreciation 546,043 510,836 2,807,821 2,755,319 Mortgage note receivable 4,831 4,875 Real Estate Investments, net 2,812,652 2,760,194 Cash and cash equivalents 5,632 13,218 Restricted cash 1,730 2,145 Tenant and other receivables, net 52,619 55,787 Acquired lease intangible assets, net 52,296 50,139 Prepaid expenses 1,950 5,337 Deferred charges, net 25,358 25,017 Other assets 16,473 17,007 Total assets $ 2,968,710 $ 2,928,844 LIABILITIES AND EQUITY Liabilities: Term loan $ 299,071 $ 298,889 Credit facility 46,000 -- Senior Notes 946,035 945,231 Mortgage notes payable 61,339 85,354 Acquired lease intangible liabilities, net 141,577 136,608 Accounts payable and accrued expenses 38,632 48,598 Tenants' security deposits 7,561 7,231 Other liabilities 40,271 40,580 Total liabilities 1,580,486 1,562,491 Commitments and contingencies Equity: Preferred stock, $0.0001 par value 50,000,000 shares authorized; none issued and outstanding -- -- Common stock, $0.0001 par value, 500,000,000 shares authorized; 124,341,618 and 122,685,266 shares issued and outstanding at June 30, 2022 and December 31, 2021, respectively 12 12 Additional paid-in capital 1,604,495 1,577,837 Dividends in excess of earnings (307,039 ) (297,801 ) Accumulated other comprehensive loss (5 ) (3,154 ) Total Retail Opportunity Investments Corp. stockholders' equity 1,297,463 1,276,894 Non-controlling interests 90,761 89,459 Total equity 1,388,224 1,366,353 Total liabilities and equity $ 2,968,710 $ 2,928,844
RETAIL OPPORTUNITY INVESTMENTS CORP.
Consolidated Statements of Operations
(In thousands, except per share data)
Three Months Ended June 30, Six Months Ended June 30, 2022 2021 2022 2021 Revenues Rental revenue $ 77,218 $ 70,114 $ 152,255 $ 139,018 Other income 1,007 616 2,443 899 Total revenues 78,225 70,730 154,698 139,917 Operating expenses Property operating 12,672 10,766 24,763 21,325 Property taxes 8,416 8,332 16,936 16,938 Depreciation and amortization 24,350 23,507 48,112 46,547 General and administrative expenses 5,702 5,232 10,942 9,607 Other expense 488 331 667 484 Total operating expenses 51,628 48,168 101,420 94,901 Gain on sale of real estate -- 9,460 -- 9,460 Operating income 26,597 32,022 53,278 54,476 Non-operating expenses Interest expense and other finance expenses (14,283 ) (14,337 ) (28,498 ) (28,817 ) Net income 12,314 17,685 24,780 25,659 Net income attributable to non-controlling interests (807 ) (1,201 ) (1,632 ) (1,760 ) Net Income Attributable to Retail Opportunity Investments Corp. $ 11,507 $ 16,484 $ 23,148 $ 23,899 Earnings per share - basic and diluted $ 0.09 $ 0.14 $ 0.19 $ 0.20 Dividends per common share $ 0.13 $ 0.11 $ 0.26 $ 0.22
CALCULATION OF FUNDS FROM OPERATIONS
Three Months Ended June 30, Six Months Ended June 30, 2022 2021 2022 2021 Net income attributable to ROIC $ 11,507 $ 16,484 $ 23,148 $ 23,899 Plus: Depreciation and amortization 24,350 23,507 48,112 46,547 Less: Gain on sale of real estate -- (9,460 ) -- (9,460 ) Funds from operations - basic 35,857 30,531 71,260 60,986 Net income attributable to non-controlling interests 807 1,201 1,632 1,760 Funds from operations - diluted $ 36,664 $ 31,732 $ 72,892 $ 62,746
SAME-CENTER CASH NET OPERATING INCOME ANALYSIS
(In thousands, except number of shopping centers and percentages)
Three Months Ended June 30, Six Months Ended June 30, 2022 2021 $ Change % Change 2022 2021 $ Change % Change Number of shopping centers included in same-center analysis 85 85 85 85 Same-center occupancy 97.6 % 97.0 % 0.6 % 97.6 % 97.0 % 0.6 % Revenues: Base rents $ 51,589 $ 49,619 $ 1,970 4.0 % $ 102,816 $ 99,069 $ 3,747 3.8 % Percentage rent 142 (9 ) 151 (1,677.8 )% 330 174 156 89.7 % Recoveries from tenants 17,416 16,445 971 5.9 % 34,992 33,157 1,835 5.5 % Other property income 825 445 380 85.4 % 1,854 554 1,300 234.7 % Bad debt (136 ) 127 (263 ) (207.1 )% (700 ) (1,425 ) 725 (50.9 )% Total Revenues 69,836 66,627 3,209 4.8 % 139,292 131,529 7,763 5.9 % Operating Expenses Property operating expenses 12,365 10,636 1,729 16.3 % 24,120 21,100 3,020 14.3 % Property taxes 7,887 8,195 (308 ) (3.8 )% 16,094 16,604 (510 ) (3.1 )% Total Operating Expenses 20,252 18,831 1,421 7.5 % 40,214 37,704 2,510 6.7 % Same-Center Cash Net Operating Income $ 49,584 $ 47,796 $ 1,788 3.7 % $ 99,078 $ 93,825 $ 5,253 5.6 %
SAME-CENTER CASH NET OPERATING INCOME RECONCILIATION
Three Months Ended June 30, Six Months Ended June 30, 2022 2021 2022 2021 GAAP operating income $ 26,597 $ 32,022 $ 53,278 $ 54,476 Depreciation and amortization 24,350 23,507 48,112 46,547 General and administrative expenses 5,702 5,232 10,942 9,607 Other expense 488 331 667 484 Gain on sale of real estate -- (9,460 ) -- (9,460 ) Straight-line rent (915 ) (294 ) (1,366 ) (312 ) Amortization of above- and below-market rent (3,254 ) (2,214 ) (6,311 ) (4,446 ) Property revenues and other expenses (265 ) (52 ) (589 ) (181 ) Total Company cash NOI 52,703 49,072 104,733 96,715 Non same-center cash NOI (3,119 ) (1,276 ) (5,655 ) (2,890 ) Same-center cash NOI $ 49,584 $ 47,796 $ 99,078 $ 93,825
(1) Includes anchor lease termination fees, net of contractual amounts, if any, expense and recovery adjustments related to prior periods and other miscellaneous adjustments.
Funds from operations ("FFO"), is a widely recognized non-GAAP financial measure for REITs that the Company believes when considered with financial statements presented in accordance with GAAP, provides additional and useful means to assess its financial performance. FFO is frequently used by securities analysts, investors and other interested parties to evaluate the performance of REITs, most of which present FFO along with net income as calculated in accordance with GAAP. The Company computes FFO in accordance with the "White Paper" on FFO published by the National Association of Real Estate Investment Trusts ("NAREIT"), which defines FFO as net income attributable to common stockholders (determined in accordance with GAAP) excluding gains or losses from debt restructuring, sales of depreciable property and impairments, plus real estate related depreciation and amortization, and after adjustments for partnerships and unconsolidated joint ventures.
The Company uses cash net operating income ("NOI") internally to evaluate and compare the operating performance of the Company's properties. The Company believes cash 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, can be used to determine trends in earnings of the Company's properties as this measure is not affected by the non-cash revenue and expense recognition items, the cost of the Company's funding, the impact of depreciation and amortization expenses, gains or losses from the acquisition and sale of operating real estate assets, general and administrative expenses or other gains and losses that relate to the Company's ownership of properties. The Company believes the exclusion of these items from operating income is useful because the resulting measure captures the actual revenue generated and actual expenses incurred in operating the Company's properties as well as trends in occupancy rates, rental rates and operating costs. Cash NOI is a measure of the operating performance of the Company's properties but does not measure the Company's performance as a whole and is therefore not a substitute for net income or operating income as computed in accordance with GAAP. The Company defines cash NOI as operating revenues (base rent and recoveries from tenants), less property and related expenses (property operating expenses and property taxes), adjusted for non-cash revenue and operating expense items such as straight-line rent and amortization of lease intangibles, debt-related expenses and other adjustments. Cash NOI also excludes general and administrative expenses, depreciation and amortization, acquisition transaction costs, other expense, interest expense, gains and losses from property acquisitions and dispositions, extraordinary items, tenant improvements and leasing commissions. Other REITs may use different methodologies for calculating cash NOI, and accordingly, the Company's cash NOI may not be comparable to other REITs.
Director of Investor Relations