OAK BROOK, Ill., Feb. 16, 2016 /PRNewswire/ -- Retail
Properties of America, Inc. (NYSE: RPAI) (the "Company")
today reported financial and operating results for the quarter and
year ended December 31, 2015.
FINANCIAL RESULTS
For the quarter ended December 31, 2015, the Company reported:
- Operating funds from operations (Operating FFO) attributable to
common shareholders of $62.6 million,
or $0.26 per share, compared to
$62.7 million, or $0.27 per share, for the same period in
2014;
- Funds from operations (FFO) attributable to common shareholders
of $59.5 million, or $0.25 per share, compared to $61.2 million, or $0.26 per share, for the same period in 2014;
and
- Net income attributable to common shareholders of $0.6 million, or $0.00 per share, compared to $23.5 million, or $0.10 per share, for the same period in
2014.
For the year ended December 31,
2015, the Company reported:
- Operating FFO attributable to common shareholders of
$251.3 million, or $1.06 per share, compared to $257.2 million, or $1.09 per share, for 2014;
- FFO attributable to common shareholders of $227.9 million, or $0.96 per share, compared to $255.7 million, or $1.08 per share, for 2014, the decrease being
primarily attributable to non-operating transactions; and
- Net income attributable to common shareholders of $115.6 million, or $0.49 per share, compared to $33.9 million, or $0.14 per share, for 2014.
OPERATING RESULTS
For the quarter ended December 31, 2015, the Company's portfolio
results were as follows:
- 2.1% increase in same store net operating income (NOI) over the
comparable period in 2014;
- Total portfolio percent leased, including leases signed but not
commenced: 95.1% at December 31,
2015, down 50 basis points from 95.6% at December 31, 2014 and up 30 basis points from
94.8% at September 30, 2015;
- Retail portfolio percent leased, including leases signed but
not commenced: 94.9% at December 31,
2015, down 50 basis points from 95.4% at December 31, 2014 and up 30 basis points from
94.6% at September 30, 2015;
- Retail portfolio annualized base rent (ABR) per occupied square
foot of $16.27 at December 31, 2015, up 5.6% from $15.41 ABR per occupied square foot at
December 31, 2014;
- 517,000 square feet of retail leasing transactions comprised of
109 new and renewal leases; and
- Positive comparable cash leasing spreads of 27.0% on new leases
and 6.3% on renewal leases for a blended spread of 9.9%.
For the year ended December 31,
2015, the Company's portfolio results were as follows:
- 2.9% increase in same store NOI over the comparable period in
2014;
- 2,730,000 square feet of retail leasing transactions comprised
of 521 new and renewal leases; and
- Positive comparable cash leasing spreads of 23.2% on new leases
and 6.5% on renewal leases for a blended spread of 8.7%.
"2015 was another year of outperformance as we exceeded our
financial, operational and transactional goals, further showcasing
our strong and reliable track record," stated Steve Grimes, president and chief executive
officer. "As we look back on 2015, we made tremendous progress on
all elements of our strategic plan, including improving portfolio
quality through our capital recycling initiatives, addressing
longer term risks to our tenant base through our remerchandising
efforts, driving embedded rent growth in a constrained supply
environment and making enhancements to our robust operating
platform. Looking forward to 2016, we expect continued progress on
our efforts to become a dominant pure play multi-tenant retail
company, while continuing to deliver solid same store NOI growth
and long-term shareholder value."
2015 INVESTMENT ACTIVITY
In 2015, the Company made
substantial progress refining its portfolio with total transaction
activity of $979.5 million,
consisting of $463.1 million of
acquisitions and $516.4 million of
dispositions.
Acquisitions
In 2015, the Company completed
$463.1 million of acquisitions, on an
unencumbered basis, with a weighted average ABR per occupied square
foot of $21.54 with annual
contractual rent increases of approximately 130 basis points. These
acquisitions included eight high quality, multi-tenant retail
assets and three strategically adjacent assets located in the
Washington, D.C./Baltimore corridor, and the Seattle, Austin, Dallas and Houston Metropolitan Statistical
Areas (MSAs), expanding the Company's multi-tenant retail footprint
in these target markets by 1.2 million square feet. These
properties possess strong demographic profiles, with weighted
average household income of $128,000
and weighted average population of 103,000 within a three-mile
radius.
During the quarter, the Company completed the previously
announced acquisition of Towson Square through an off-market
negotiation for a gross purchase price of $39.7 million. Towson
Square is a 138,000 square foot entertainment-based center
located in the Washington,
D.C./Baltimore corridor.
The property is anchored by a newly constructed Cinemark Theatre
and includes a variety of national and regional restaurant concepts
such as BJ's Restaurant and Brewhouse, World of Beer, Bobby's
Burger Palace, Bonefish Grill and Nando's Peri-Peri. Towson Square is a new development that opened
in 2014 and is currently 96.6% occupied. The property is adjacent
to the Company's existing center, Towson
Circle.
Additionally, the Company acquired an outparcel at one of its
neighborhood centers, Royal Oaks Village II located in the Houston
MSA, for a gross purchase price of $6.8
million. The building is leased to Trader Joe's, which is
expected to open in the second quarter of 2016.
Dispositions
In 2015, the Company completed
$516.4 million of dispositions, which
included the sale of 16 non-target multi-tenant retail assets, five
of its six remaining office assets, three single-user retail assets
and two non-target development assets. The retail assets have
weighted average ABR per occupied square foot of $12.38, weighted average household income of
$64,000 and weighted average
population of 74,000 within a three-mile radius.
During the quarter, the Company completed $111.1 million of dispositions, including the
sales of two non-target development assets for $50.8 million, two non-target multi-tenant retail
assets for $49.6 million and two
single-user retail assets for $10.7
million.
Subsequent to year end, the Company closed on the disposition of
The Gateway through a lender-directed sale in full satisfaction of
its mortgage obligation of approximately $94.4 million. The mortgage had an interest rate
of 6.57%. Immediately prior to the disposition, the lender reduced
the Company's loan obligation to $75.0
million which was assumed by the buyer in connection with
the disposition, resulting in an anticipated gain on extinguishment
of debt of approximately $13.7
million and an anticipated gain on sale of approximately
$3.9 million. In addition, the
Company sold a non-target multi-tenant retail asset for
$17.5 million.
2016 ACQUISITION ACTIVITY
In 2016, the Company has
completed or is under contract to purchase $203.0 million of acquisitions. These assets are
located in the greater Washington,
D.C./Baltimore area and the
New York and Chicago MSAs.
Greater Washington,
D.C./Baltimore
Area
As previously announced, subsequent to year
end, the Company acquired a two-property portfolio consisting of
Merrifield Town Center II and Shoppes at Hagerstown, both located in the greater
Washington, D.C./Baltimore area. These assets were acquired
through an off-market negotiation, on an unencumbered basis, for a
combined gross purchase price of $72.7
million.
New York MSA
The Company entered into a
purchase agreement to acquire a 92,000 square foot lifestyle center
located in the New York MSA for a gross purchase price of
$63.1 million. The Company expects to
assume approximately $16.1 million of
in-place mortgage financing at an interest rate of 3.75%. The
property generates inline sales productivity of over $535 per square foot and features a strong
demographic profile, with average household income of $125,000 and population of 158,000 within a
five-mile radius. The property is 93.1% occupied and leased to an
impressive mix of national retail tenants, including Talbots,
Chico's, Banana Republic,
bluemercury, Francesca's Collections, Jos A. Banks, Five Guys
Burger and Fries and Panera Bread. This transaction is expected to
close during the first quarter of 2016, subject to satisfaction of
customary closing conditions.
Chicago MSA
The Company entered into a purchase
agreement to acquire a 183,000 square foot mixed-use center located
in the Chicago MSA, on an unencumbered basis, for a gross purchase
price of $67.2 million. The property
is comprised of 119,000 square feet of retail space and 64,000
square feet of office space. The property sits in the heart of the
retail corridor within a well-populated and affluent area, with
average household income of $112,000
and population of 259,000 within a five-mile radius. The property
generates inline sales productivity of approximately $475 per square foot and is 88.0% leased to a mix
of national and regional retailers, in addition to medical use and
service-oriented office tenants. This transaction is expected to
close during the first quarter of 2016, subject to satisfaction of
customary closing conditions.
BALANCE SHEET AND CAPITAL MARKETS ACTIVITY
As of
December 31, 2015, the Company had
approximately $2.2 billion of
consolidated indebtedness, which resulted in a net debt to adjusted
EBITDA ratio of 5.8x, or a net debt and preferred stock to adjusted
EBITDA ratio of 6.2x, as compared to 5.8x and 6.1x, respectively,
as of December 31, 2014. Consolidated
indebtedness had a weighted average contractual interest rate of
4.61% and a weighted average maturity of 4.5 years.
During 2015, the Company executed on numerous, significant
capital markets initiatives, including the following:
- In March, completed a public offering of $250.0 million in aggregate principal amount of
its 4.00% senior unsecured notes due 2025;
- In December, obtained commitments on a $1.2 billion amended and restated credit
facility, which increased total capacity by $200.0 million, extended the term by a weighted
average of 2.2 years and lowered the interest rate by a weighted
average of 13 basis points. The Company closed on this transaction
on January 6, 2016;
- In December, established a new "at-the-market" equity offering
program through which the Company may issue and sell shares of its
Class A common stock having an aggregate offering price of up to
$250.0 million;
- In December, established a common stock repurchase program
under which the Company may repurchase shares of its Class A common
stock up to a maximum of $250.0
million;
- Throughout 2015, repaid $425.4
million of mortgage and construction debt, excluding
amortization, with a weighted average interest rate of 5.54%, of
which $91.4 million was repaid during
the fourth quarter with a weighted average interest rate of 4.48%;
and
- Throughout 2015, defeased $70.1
million of mortgage debt with an interest rate of 7.50% in
connection with its 2015 disposition activity, of which
$4.8 million was defeased during the
fourth quarter. Defeasance costs totaled $17.7 million in 2015.
2016 EARNINGS GUIDANCE
The Company expects to generate
Operating FFO per share of $1.01 to
$1.05 in 2016, as detailed below:
- Generate same store NOI growth of 2.5% to 3.5%;
- Acquire approximately $375 to $475
million of strategic acquisitions in the Company's target
markets;
- Dispose of approximately $525 to $625
million of assets;
- Incur approximately $45 to $47
million of general and administrative expenses; and
- Issue $250 million of unsecured
debt capital during the first half of 2016, which is dependent on
market conditions.
The following table reconciles the Company's reported 2015
Operating FFO to the Company's 2016 Operating FFO guidance
range.
|
Low
|
High
|
2015 Operating FFO
per common share outstanding
|
$1.06
|
$1.06
|
|
|
|
Same store NOI
growth
|
0.03
|
0.05
|
Interest
expense(1)
|
0.06
|
0.07
|
Impact of 2015 net
investment activity
Impact of 2016 net
investment activity
Redevelopment assets
and Zurich Towers(2)
|
(0.05)
(0.05)
(0.02)
|
(0.05)
(0.04)
(0.02)
|
Lease termination fee
income(3)
|
(0.01)
|
(0.01)
|
Non-cash
items(4)
|
(0.01)
|
(0.01)
|
2016 estimated
Operating FFO per common share outstanding
|
$1.01
|
$1.05
|
|
(1) The low end of
the range assumes a $250.0 million issuance of unsecured debt
capital during the first half of 2016
|
(2) Represents the
Company's three anticipated redevelopment assets: Boulevard at the
Capital Centre, Towson Circle and Reisterstown, as well as its one
remaining office asset, Zurich Towers
|
(3) The Company has
not forecasted speculative lease termination fee income for
2016
|
(4) Represents
straight-line rental income, amortization of above and below market
lease intangibles and lease inducements, and non-cash ground rent
expense
|
DIVIDEND
On February 11,
2016, the Company's Board of Directors declared the first
quarter 2016 Series A preferred stock distribution of $0.4375 per preferred share, for the period
beginning January 1, 2016, which will
be paid on March 31, 2016 to
preferred shareholders of record on March
21, 2016.
On February 11, 2016, the
Company's Board of Directors also declared the first quarter 2016
quarterly cash dividend of $0.165625
per share on the Company's outstanding Class A common stock, which
will be paid on April 8, 2016 to
Class A common shareholders of record on March 28, 2016.
WEBCAST AND SUPPLEMENTAL INFORMATION
The Company's
management team will hold a webcast on Wednesday, February 17, 2016 at 11:00 AM EST, 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 Investor Relations 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 Investor Relations section
of the website and follow the instructions. A replay of the call
will be available from 2:00 PM (EST)
on February 17, 2016 until midnight
(EST) on March 2, 2016. The replay
can be accessed by dialing (877) 870-5176 or (858) 384-5517 for
international callers and entering pin number 13626263.
The Company has also posted supplemental financial and operating
information and other data in the Investor Relations section of its
website.
ABOUT RPAI
Retail Properties of America, Inc. is a
REIT and is one of the largest owners and operators of high
quality, strategically located shopping centers in the United States. As of December 31, 2015, the Company owned 198 retail
operating properties representing 28.9 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," "continues" 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, potentially resulting in impairment
charges, 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, dispositions and redevelopment,
including the impact of construction delays and cost overruns, the
Company's ability to effectively manage growth, competitive and
cost factors, the ability of the Company 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, including amounts
from continuing and discontinued operations, as well as adjustments
for unconsolidated joint ventures in which the reporting entity
holds an interest. 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 non-GAAP
performance 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 "Net
Income" or "Net Income Attributable to Common Shareholders" as an
indicator of the Company's performance or "Cash Flows from
Operating Activities" as determined by 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 the Company's
core business platform, its real estate operating portfolio.
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, actual or anticipated settlement of
litigation involving the Company, executive and realignment
separation charges and impairment charges to write down the
carrying value of assets other than depreciable real estate, 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
non-GAAP performance 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 "Net Income" or "Net Income Attributable to Common
Shareholders" as an indicator of the Company's performance or "Cash
Flows from Operating Activities" as determined by GAAP as a measure
of the Company's capacity to fund cash needs, including the payment
of dividends. Further, 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 NOI and same store NOI. The Company
defines NOI as operating revenues (rental income, tenant recovery
income and other property income, excluding straight-line rental
income, amortization of lease inducements, amortization of acquired
above and below market lease intangibles and lease termination fee
income) less property operating expenses (real estate tax expense
and property operating expense, excluding straight-line ground rent
expense, amortization of acquired ground lease intangibles and
straight-line bad debt expense). Same Store NOI for the year ended
December 31, 2015 represents NOI from the Company's same store
portfolio consisting of 180 operating properties acquired or placed
in service and stabilized prior to January 1, 2014. NOI from
Other Investment Properties for the year ended December 31,
2015 represents NOI primarily from properties acquired during 2014
and 2015, the Company's development property, two properties where
the Company has begun activities in anticipation of future
redevelopment, one property that was impaired below its debt
balance during 2014, the properties that were sold or held for sale
in 2014 and 2015 that did not qualify for discontinued operations
treatment 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 during the first quarter of 2014. In addition,
the financial results reported in Other Investment Properties for
the year ended December 31, 2015 include the net income from
the Company's wholly-owned captive insurance company, which was
formed on December 1, 2014, and the
financial results reported in Other Investment Properties for the
year ended December 31, 2014 include the historical
intercompany expense elimination related to the Company's former
insurance captive unconsolidated joint venture investment, in which
the Company terminated its participation effective December 1, 2014. For the year ended
December 31, 2014, the historical captive insurance expense
related to the Company's portfolio was recorded in equity in loss
of unconsolidated joint ventures, net. For the three months ended
December 31, 2015, the Company's same store portfolio consists
of 187 operating properties inclusive of the same store portfolio
for the year ended December 31, 2015 and seven additional
operating properties acquired during the nine months ended
September 30, 2014. The financial
results reported in Other Investment Properties for the three
months ended December 31, 2015 are inclusive of the topics
described above for the year ended December 31, 2015 excluding
the seven investment properties acquired during the nine months
ended September 30, 2014. NOI
consists of the sum of Same Store NOI and NOI from Other Investment
Properties. The Company believes that NOI, Same Store NOI and NOI
from Other Investment Properties are useful measures of the
Company's operating performance. Other REITs may use
different methodologies for calculating these metrics, and
accordingly, the Company's NOI metrics may not be comparable to
other REITs. The Company believes that these metrics provide an
operating perspective not immediately apparent from Operating
income or Net income attributable to common shareholders as defined
within GAAP. The Company uses these metrics to evaluate its
performance on a property-by-property basis because these measures
allow management to evaluate the impact that factors such as lease
structure, lease rates and tenant base, which vary by property,
have on the Company's operating results. However, these measures
should only be used as alternative measures of the Company's
financial performance.
Adjusted EBITDA 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 its performance from period to period in a meaningful and
consistent manner in addition to standard financial measurements
under GAAP. Adjusted EBITDA is not a measurement of financial
performance under GAAP and should not be considered as an
alternative to net income attributable to common shareholders as an
indicator of operating performance or any measure of performance
derived in accordance with GAAP. The Company's calculation of
Adjusted EBITDA may be different from the calculation used by other
companies and, accordingly, comparability may be limited.
Net Debt to Adjusted EBITDA represents (i) the Company's
total borrowed 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 total borrowed debt net of
cash and cash equivalents, which could be used to repay borrowed
debt, compared to the Company's performance as measured using
Adjusted EBITDA.
Net Debt and Preferred Stock to Adjusted EBITDA represents
(i) the Company's total borrowed 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 total borrowed debt and preferred stock, net of cash and
cash equivalents, which could be used to repay borrowed debt,
compared to the Company's performance as measured using Adjusted
EBITDA.
Contact Information
Michael
Fitzmaurice, VP - Finance
Retail Properties of America,
Inc.
(630) 634-4233
Retail Properties
of America, Inc.
Consolidated
Balance Sheets
(amounts in
thousands, except par value amounts)
(unaudited)
|
|
|
December 31,
2015
|
|
December 31,
2014
|
Assets
|
|
|
|
Investment
properties:
|
|
|
|
Land
|
$
|
1,254,131
|
|
$
|
1,195,369
|
Building and other
improvements
|
4,428,554
|
|
4,442,446
|
Developments in
progress
|
5,157
|
|
42,561
|
|
5,687,842
|
|
5,680,376
|
Less accumulated
depreciation
|
(1,433,195)
|
|
(1,365,471)
|
Net investment
properties
|
4,254,647
|
|
4,314,905
|
|
|
|
|
Cash and cash
equivalents
|
51,424
|
|
112,292
|
Accounts and notes
receivable (net of allowances of $7,910 and $7,497,
respectively)
|
82,804
|
|
86,013
|
Acquired lease
intangible assets, net
|
138,766
|
|
125,490
|
Assets associated
with investment properties held for sale
|
—
|
|
33,499
|
Other assets,
net
|
93,610
|
|
115,790
|
Total
assets
|
$
|
4,621,251
|
|
$
|
4,787,989
|
|
|
|
|
Liabilities and
Equity
|
|
|
|
Liabilities:
|
|
|
|
Mortgages payable,
net (includes unamortized premium of $1,865 and $3,972,
respectively, unamortized discount of $(1) and $(470),
respectively, and unamortized capitalized loan fees of $(7,233) and
$(10,736), respectively)
|
$
|
1,123,136
|
|
$
|
1,623,729
|
Unsecured notes
payable, net (includes unamortized discount of $(1,090) and $0,
respectively, and unamortized capitalized loan fees of $(3,334) and
$(1,459), respectively)
|
495,576
|
|
248,541
|
Unsecured term loan,
net (includes unamortized capitalized loan fees of $(2,474)
and $(3,535), respectively)
|
447,526
|
|
446,465
|
Unsecured revolving
line of credit
|
100,000
|
|
—
|
Accounts payable and
accrued expenses
|
69,800
|
|
61,129
|
Distributions
payable
|
39,297
|
|
39,187
|
Acquired lease
intangible liabilities, net
|
114,834
|
|
100,641
|
Liabilities
associated with investment properties held for sale, net (includes
unamortized capitalized loan fees of $0 and $(141),
respectively)
|
—
|
|
8,062
|
Other
liabilities
|
75,745
|
|
70,860
|
Total
liabilities
|
2,465,914
|
|
2,598,614
|
|
|
|
|
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, 2015 and 2014; liquidation
preference $135,000
|
5
|
|
5
|
Class A common stock,
$0.001 par value, 475,000 shares authorized, 237,267 and 236,602
shares issued and outstanding as of December 31, 2015 and 2014,
respectively
|
237
|
|
237
|
Additional paid-in
capital
|
4,931,395
|
|
4,922,864
|
Accumulated
distributions in excess of earnings
|
(2,776,215)
|
|
(2,734,688)
|
Accumulated other
comprehensive loss
|
(85)
|
|
(537)
|
Total shareholders'
equity
|
2,155,337
|
|
2,187,881
|
Noncontrolling
interest
|
—
|
|
1,494
|
Total
equity
|
2,155,337
|
|
2,189,375
|
Total liabilities
and equity
|
$
|
4,621,251
|
|
$
|
4,787,989
|
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,
|
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
Revenues:
|
|
|
|
|
|
|
|
|
Rental
income
|
|
$
|
116,819
|
|
$
|
119,592
|
|
$
|
472,344
|
|
$
|
474,684
|
Tenant recovery
income
|
|
29,919
|
|
29,633
|
|
119,536
|
|
115,719
|
Other property
income
|
|
2,182
|
|
4,306
|
|
12,080
|
|
10,211
|
Total
revenues
|
|
148,920
|
|
153,531
|
|
603,960
|
|
600,614
|
|
|
|
|
|
|
|
|
|
Expenses:
|
|
|
|
|
|
|
|
|
Property operating
expenses
|
|
23,191
|
|
24,492
|
|
94,780
|
|
96,798
|
Real estate
taxes
|
|
20,853
|
|
20,718
|
|
82,810
|
|
78,773
|
Depreciation and
amortization
|
|
51,361
|
|
52,385
|
|
214,706
|
|
215,966
|
Provision for
impairment of investment properties
|
|
15,824
|
|
11,825
|
|
19,937
|
|
72,203
|
General and
administrative expenses
|
|
14,708
|
|
11,435
|
|
50,657
|
|
34,229
|
Total
expenses
|
|
125,937
|
|
120,855
|
|
462,890
|
|
497,969
|
|
|
|
|
|
|
|
|
|
Operating
income
|
|
22,983
|
|
32,676
|
|
141,070
|
|
102,645
|
|
|
|
|
|
|
|
|
|
Gain on
extinguishment of other liabilities
|
|
—
|
|
—
|
|
—
|
|
4,258
|
Equity in loss of
unconsolidated joint ventures, net
|
|
—
|
|
(645)
|
|
—
|
|
(2,088)
|
Gain on change in
control of investment properties
|
|
—
|
|
—
|
|
—
|
|
24,158
|
Interest
expense
|
|
(28,328)
|
|
(32,743)
|
|
(138,938)
|
|
(133,835)
|
Other income,
net
|
|
302
|
|
76
|
|
1,700
|
|
5,459
|
(Loss) income from
continuing operations
|
|
(5,043)
|
|
(636)
|
|
3,832
|
|
597
|
|
|
|
|
|
|
|
|
|
Discontinued
operations:
|
|
|
|
|
|
|
|
|
Loss, net
|
|
—
|
|
—
|
|
—
|
|
(148)
|
Gain on sales of
investment properties
|
|
—
|
|
—
|
|
—
|
|
655
|
Income from
discontinued operations
|
|
—
|
|
—
|
|
—
|
|
507
|
Gain on sales of
investment properties
|
|
8,578
|
|
26,501
|
|
121,792
|
|
42,196
|
Net income
|
|
3,535
|
|
25,865
|
|
125,624
|
|
43,300
|
Net income
attributable to noncontrolling interest
|
|
(528)
|
|
—
|
|
(528)
|
|
—
|
Net income
attributable to the Company
|
|
3,007
|
|
25,865
|
|
125,096
|
|
43,300
|
Preferred stock
dividends
|
|
(2,363)
|
|
(2,363)
|
|
(9,450)
|
|
(9,450)
|
Net income
attributable to common shareholders
|
|
$
|
644
|
|
$
|
23,502
|
|
$
|
115,646
|
|
$
|
33,850
|
|
|
|
|
|
|
|
|
|
Earnings per
common share — basic and diluted
|
|
|
|
|
|
|
|
|
Continuing
operations
|
|
$
|
—
|
|
$
|
0.10
|
|
$
|
0.49
|
|
$
|
0.14
|
Discontinued
operations
|
|
—
|
|
—
|
|
—
|
|
—
|
Net income per common
share attributable to common shareholders
|
|
$
|
—
|
|
$
|
0.10
|
|
$
|
0.49
|
|
$
|
0.14
|
|
|
|
|
|
|
|
|
|
Weighted average
number of common shares outstanding — basic
|
|
236,477
|
|
236,204
|
|
236,380
|
|
236,184
|
|
|
|
|
|
|
|
|
|
Weighted average
number of common shares outstanding — diluted
|
|
236,479
|
|
236,207
|
|
236,382
|
|
236,187
|
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 (a)
|
|
|
Three Months
Ended
December
31,
|
|
Year
Ended
December
31,
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
|
|
|
|
|
|
|
Net income
attributable to common shareholders
|
$
|
644
|
|
$
|
23,502
|
|
$
|
115,646
|
|
$
|
33,850
|
Depreciation and
amortization
|
51,082
|
|
52,385
|
|
213,602
|
|
216,676
|
Provision for
impairment of investment properties
|
15,824
|
|
11,825
|
|
19,937
|
|
72,203
|
Gain on sales of
investment properties, net of noncontrolling interest
|
(8,050)
|
|
(26,501)
|
|
(121,264)
|
|
(67,009)
|
FFO attributable
to common shareholders
|
$
|
59,500
|
|
$
|
61,211
|
|
$
|
227,921
|
|
$
|
255,720
|
|
|
|
|
|
|
|
|
FFO attributable to
common shareholders per common
share outstanding
|
$
|
0.25
|
|
$
|
0.26
|
|
$
|
0.96
|
|
$
|
1.08
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FFO attributable to
common shareholders
|
$
|
59,500
|
|
$
|
61,211
|
|
$
|
227,921
|
|
$
|
255,720
|
Impact on earnings
from the early extinguishment of debt, net
|
1,229
|
|
1,494
|
|
18,864
|
|
10,479
|
Provision for hedge
ineffectiveness
|
—
|
|
25
|
|
(25)
|
|
12
|
Reversal of excise
tax accrual
|
—
|
|
—
|
|
—
|
|
(4,594)
|
Gain on
extinguishment of other liabilities
|
—
|
|
—
|
|
—
|
|
(4,258)
|
Executive and
realignment separation charges (b)
|
1,193
|
|
—
|
|
4,730
|
|
—
|
Other (c)
|
685
|
|
—
|
|
(224)
|
|
(199)
|
Operating FFO
attributable to common shareholders
|
$
|
62,607
|
|
$
|
62,730
|
|
$
|
251,266
|
|
$
|
257,160
|
|
|
|
|
|
|
|
|
Operating FFO
attributable to common shareholders per common share outstanding
|
$
|
0.26
|
|
$
|
0.27
|
|
$
|
1.06
|
|
$
|
1.09
|
|
|
(a)
|
Results for the year
ended December 31, 2014 include amounts from discontinued
operations and our pro rata share from our unconsolidated joint
ventures. All of our unconsolidated joint venture arrangements were
dissolved prior to December 31, 2014.
|
(b)
|
Included in "General
and administrative expenses" in the consolidated statements of
operations.
|
(c)
|
Consists of the
impact on earnings from net settlements and easement proceeds,
which are included in "Other income, net" in the consolidated
statements of operations.
|
Retail Properties
of America, Inc.
Reconciliation of
Non-GAAP Financial Measures
(amounts in
thousands)
(unaudited)
|
|
Reconciliation of
Net Income Attributable to Common Shareholders to
NOI
|
|
|
Three Months
Ended
December
31,
|
|
Year
Ended
December
31,
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
Operating
revenues
|
|
|
|
|
|
|
|
Same store investment
properties (187 and 180 properties, respectively):
|
|
|
|
|
|
|
|
Rental
income
|
$
|
102,545
|
|
$
|
101,529
|
|
$
|
385,502
|
|
$
|
378,201
|
Tenant
recovery income
|
26,551
|
|
26,174
|
|
95,574
|
|
94,054
|
Other property
income
|
1,038
|
|
985
|
|
4,051
|
|
3,475
|
Other investment
properties:
|
|
|
|
|
|
|
|
Rental
income
|
11,009
|
|
16,574
|
|
80,570
|
|
90,333
|
Tenant
recovery income
|
3,368
|
|
3,459
|
|
23,962
|
|
21,665
|
Other property
income
|
1,099
|
|
933
|
|
4,272
|
|
4,069
|
Operating
expenses
|
|
|
|
|
|
|
|
Same store investment
properties (187 and 180 properties, respectively):
|
|
|
|
|
|
|
|
Property operating
expenses
|
(19,022)
|
|
(19,923)
|
|
(71,804)
|
|
(74,763)
|
Real estate
taxes
|
(18,831)
|
|
(18,340)
|
|
(66,823)
|
|
(64,333)
|
Other investment
properties:
|
|
|
|
|
|
|
|
Property operating
expenses
|
(3,384)
|
|
(3,754)
|
|
(19,814)
|
|
(18,706)
|
Real estate
taxes
|
(2,022)
|
|
(2,378)
|
|
(15,987)
|
|
(14,440)
|
|
|
|
|
|
|
|
|
NOI from
continuing operations
|
|
|
|
|
|
|
|
Same store investment
properties
|
92,281
|
|
90,425
|
|
346,500
|
|
336,634
|
Other investment
properties
|
10,070
|
|
14,834
|
|
73,003
|
|
82,921
|
Total NOI from
continuing operations
|
102,351
|
|
105,259
|
|
419,503
|
|
419,555
|
|
|
|
|
|
|
|
|
Other income
(expense)
|
|
|
|
|
|
|
|
Straight-line rental
income, net
|
1,201
|
|
802
|
|
3,498
|
|
4,781
|
Amortization of
acquired above and below market lease intangibles, net
|
2,275
|
|
861
|
|
3,621
|
|
2,076
|
Amortization of lease
inducements
|
(211)
|
|
(174)
|
|
(847)
|
|
(707)
|
Lease termination
fees
|
45
|
|
2,388
|
|
3,757
|
|
2,667
|
Straight-line ground
rent expense
|
(925)
|
|
(955)
|
|
(3,722)
|
|
(3,889)
|
Amortization of
acquired ground lease intangibles
|
140
|
|
140
|
|
560
|
|
560
|
Depreciation and
amortization
|
(51,361)
|
|
(52,385)
|
|
(214,706)
|
|
(215,966)
|
Provision for
impairment of investment properties
|
(15,824)
|
|
(11,825)
|
|
(19,937)
|
|
(72,203)
|
General and
administrative expenses
|
(14,708)
|
|
(11,435)
|
|
(50,657)
|
|
(34,229)
|
Gain on
extinguishment of other liabilities
|
—
|
|
—
|
|
—
|
|
4,258
|
Equity in loss of
unconsolidated joint ventures, net
|
—
|
|
(645)
|
|
—
|
|
(2,088)
|
Gain on change in
control of investment properties
|
—
|
|
—
|
|
—
|
|
24,158
|
Interest
expense
|
(28,328)
|
|
(32,743)
|
|
(138,938)
|
|
(133,835)
|
Other income,
net
|
302
|
|
76
|
|
1,700
|
|
5,459
|
Total other
expense
|
(107,394)
|
|
(105,895)
|
|
(415,671)
|
|
(418,958)
|
|
|
|
|
|
|
|
|
(Loss) income from
continuing operations
|
(5,043)
|
|
(636)
|
|
3,832
|
|
597
|
|
|
|
|
|
|
|
|
Discontinued
operations:
|
|
|
|
|
|
|
|
Loss, net
|
—
|
|
—
|
|
—
|
|
(148)
|
Gain on sales of
investment properties
|
—
|
|
—
|
|
—
|
|
655
|
Income from
discontinued operations
|
—
|
|
—
|
|
—
|
|
507
|
Gain on sales of
investment properties
|
8,578
|
|
26,501
|
|
121,792
|
|
42,196
|
Net income
|
3,535
|
|
25,865
|
|
125,624
|
|
43,300
|
Net income
attributable to noncontrolling interest
|
(528)
|
|
—
|
|
(528)
|
|
—
|
Net income
attributable to the Company
|
3,007
|
|
25,865
|
|
125,096
|
|
43,300
|
Preferred stock
dividends
|
(2,363)
|
|
(2,363)
|
|
(9,450)
|
|
(9,450)
|
Net income
attributable to common shareholders
|
$
|
644
|
|
$
|
23,502
|
|
$
|
115,646
|
|
$
|
33,850
|
Retail Properties
of America, Inc.
Reconciliation of
Non-GAAP Financial Measures
(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,
|
|
2015
|
|
2014
|
|
|
|
|
Net income
attributable to common shareholders
|
$
|
644
|
|
$
|
23,502
|
Preferred stock
dividends
|
2,363
|
|
2,363
|
Interest
expense
|
28,328
|
|
32,743
|
Depreciation and
amortization
|
51,361
|
|
52,385
|
Gain on sales of
investment properties, net of noncontrolling interest
|
(8,050)
|
|
(26,501)
|
Provision for
impairment of investment properties
|
15,824
|
|
11,825
|
Realignment
separation charges (a)
|
1,193
|
|
—
|
Adjusted
EBITDA
|
$
|
91,663
|
|
$
|
96,317
|
Annualized
|
$
|
366,652
|
|
$
|
385,268
|
|
Reconciliation of
Borrowed Debt to Total Net Debt and Net Debt and Preferred
Stock
|
|
|
December 31,
2015
|
|
December 31,
2014
|
|
|
|
|
Total borrowed
debt
|
$
|
2,178,505
|
|
$
|
2,339,038
|
Less: consolidated
cash and cash equivalents
|
(51,424)
|
|
(112,292)
|
Total net debt
(b)
|
$
|
2,127,081
|
|
$
|
2,226,746
|
Preferred
stock
|
135,000
|
|
135,000
|
Net debt and
preferred stock
|
$
|
2,262,081
|
|
$
|
2,361,746
|
Net Debt to
Adjusted EBITDA (c)
|
5.8x
|
|
5.8x
|
Net Debt and
Preferred Stock to Adjusted EBITDA (c)
|
6.2x
|
|
6.1x
|
|
FFO Attributable
to Common Shareholders and Operating FFO Attributable to Common
Shareholders Guidance
|
|
|
Per Share Guidance
Range
Full Year
2016
|
|
Low
|
|
High
|
|
|
|
|
Net income
attributable to common shareholders
|
$
|
0.85
|
|
$
|
0.89
|
Depreciation and
amortization
|
0.85
|
|
0.85
|
Provision for
impairment of investment properties
|
—
|
|
—
|
Gain on sales of
investment properties
|
(0.70)
|
|
(0.70)
|
FFO attributable
to common shareholders
|
$
|
1.00
|
|
$
|
1.04
|
|
|
|
|
Impact on earnings
from the early extinguishment of debt, net
|
0.01
|
|
0.01
|
Other
|
—
|
|
—
|
Operating FFO
attributable to common shareholders
|
$
|
1.01
|
|
$
|
1.05
|
|
|
(a)
|
Included in "General
and administrative expenses" in the consolidated statements of
operations.
|
(b)
|
Total net debt as of
December 31, 2014 has been recast to exclude unamortized mortgage
premium and discount. The current presentation does not change the
Net Debt to Adjusted EBITDA and Net Debt and Preferred Stock to
Adjusted EBITDA ratios previously presented.
|
(c)
|
For purposes of these
ratio calculations, annualized three months ended figures were
used.
|
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SOURCE Retail Properties of America, Inc.