Retail Value Inc. (NYSE: RVI) today announced operating results
for the quarter ended June 30, 2021.
Results for the Quarter and Recent Activity
- Second quarter 2021 net loss attributable to common
shareholders was $69.6 million, or $3.30 per diluted share, as
compared to net loss of $1.9 million, or $0.10 per share, in the
year-ago period. The period-over-period increase in net loss is
primarily attributable to impairment charges and asset sales
recorded in 2021 partially offset by lower interest expense and the
impact of the COVID-19 pandemic.
- Second quarter 2021 operating funds from operations
attributable to common shareholders (“Operating FFO” or “OFFO”) was
$20.2 million, or $0.96 per diluted share, compared to $12.2
million, or $0.61 per diluted share, in the year-ago period. The
period-over-period increase in OFFO is primarily attributable to
the COVID‑19 pandemic and lower interest expense offset by the
impact of asset sales. Second quarter results included $2.3 million
of net revenue related to prior year primarily from cash basis
tenants.
- The Continental U.S. leased rate was 89.6% at June 30, 2021 as
compared to 86.7% at March 31, 2021. The increase in the leased
rate primarily related to the sale of three shopping centers with
lower leased rates and new leasing activity.
- The Puerto Rico leased rate was 92.2% at June 30, 2021 as
compared to 88.3% at March 31, 2021 primarily due to the sale of
two shopping centers with lower leased rates.
- Sold three Continental U.S. assets and two Puerto Rico assets
for an aggregate sales price of $59.2 million. Net proceeds from
the sales along with unrestricted cash on hand aggregating $68.5
million were used to repay a portion of the mortgage loan.
- Funded additional voluntary prepayment of $20.0 million on the
mortgage loan in June 2021. The balance of the mortgage loan was
$214.5 million at June 30, 2021.
- In June 2021, entered into an agreement to sell the remaining
nine assets in Puerto Rico for an aggregate sales price of $550
million. In July 2021, the general due diligence period expired,
and the purchaser posted a deposit of $15 million with the escrow
agent. Closing of the transaction is expected to occur by the end
of the third quarter of 2021 subject to satisfaction of various
closing conditions.
Key Quarterly Operating Results
The following metrics are as of June 30, 2021:
Continental U.S.
Puerto Rico
Shopping Center Count
8
9
Gross Leasable Area (thousands)
3,779
3,537
Base Rent PSF
$13.41
$19.40
Leased Rate
89.6%
92.2%
Commenced Rate
87.7%
91.7%
NOI-Quarter (millions)
$11.8
$14.9
Impact of the COVID-19 Pandemic
The impact to the portfolio as of July 23, 2021 is as
follows:
Continental U.S.
Puerto Rico
% of Tenants open and operating (average
base rent)
100%
100%
% of Second quarter 2020 rent paid
94%
81%
% of Third quarter 2020 rent paid
98%
93%
% of Fourth quarter 2020 rent paid
97%
93%
% of First quarter 2021 rent paid
99%
97%
% of Second quarter 2021 rent paid
99%
97%
- The Company calculates the aggregate percentage of rents paid
for assets owned as of June 30, 2021, by comparing the amount of
tenant payments received as of the date presented to the amount
billed to tenants during the period, which billed amount includes
abated rents, rents subject to deferral arrangements and rents
owing from bankrupt tenants that were in possession of the space
and billed. For the purposes of reporting the percentage of
aggregate base rents collected for a given period, when rents
subject to deferral arrangements are later paid, those payments are
allocated to the period in which the rent was originally owed.
- As of July 23, 2021, agreed upon rent deferral arrangements and
abatements that remain unpaid represented approximately 8% of
second quarter 2020 rents (primarily abatements), 2% of third
quarter 2020 rents and 2% of fourth quarter 2020 rents. There are
no outstanding rent deferral arrangements with respect to 2021
rents.
- At June 30, 2021, the balance sheet reflects $1.0 million of
deferred rents for tenants with payment plans that are not
accounted for on the cash basis.
- During the second quarter of 2021, the Company’s rental revenue
and net operating income (“NOI”) benefited from $2.3 million of
payments related to 2020 rental income received from cash-basis
tenants.
Property Net Operating Income Projection
The Company has updated its projection of 2021 NOI. The Company
projects, based on the assumptions below, 2021 property level NOI
to be as follows:
Portfolio
NOI Projection
Continental U.S.
$38 – $41 million
Puerto Rico (9 assets under contract)
$50 – $53 million
These Projections:
- Exclude all properties sold to date and assume all properties
owned by the Company on August 3, 2021 are held through year
end;
- Reflect payment of property management fees;
- Assume tenant collections at 100% for the second half of 2021
(as compared to the actual first and second quarter 2021 rent
collection rates reflected above) and
- Assume no reserve reversals related to 2020 rents for the
second half of 2021.
Because these projections are based on assumptions that are
subject to change, including, without limitation, the Company’s
actual tenant collections and potential future sales of properties,
they should not be viewed as guidance.
About RVI
RVI is an independent publicly traded company trading under the
ticker symbol “RVI” on the New York Stock Exchange. RVI holds
assets in the continental U.S. and Puerto Rico and is managed by
one or more subsidiaries of SITE Centers Corp. RVI focuses on
realizing value in its business through operations and sales of its
assets. Additional information about RVI is available at
www.retailvalueinc.com.
Non-GAAP Measures
Funds from Operations (“FFO”) is a supplemental non-GAAP
financial measure used as a standard in the real estate industry
and is a widely accepted measure of real estate investment trust
(“REIT”) performance. Management believes that both FFO and
Operating FFO provide additional indicators of the financial
performance of a REIT. The Company also believes that FFO and
Operating FFO more appropriately measure the core operations of the
Company and provide benchmarks to its peer group.
FFO is generally defined and calculated by the Company as net
income (loss) (computed in accordance with generally accepted
accounting principles in the United States (“GAAP”)) adjusted to
exclude (i) gains and losses from disposition of real estate
property and related investments, which are presented net of taxes,
if any, (ii) impairment charges on real estate property and related
investments and (iii) certain non-cash items. These non-cash items
principally include real property depreciation and amortization of
intangibles. The Company’s calculation of FFO is consistent with
the definition of FFO provided by NAREIT. The Company calculates
Operating FFO by excluding certain non-operating charges and
income. Operating FFO is useful to investors as the Company removes
non-comparable charges and income to analyze the results of its
operations and assess performance of the core operating real estate
portfolio. Other real estate companies may calculate FFO and
Operating FFO in a different manner.
The Company also uses net operating income (“NOI”), a non-GAAP
financial measure, as a supplemental performance measure. NOI is
calculated as property revenues less property-related expenses. The
Company believes NOI provides useful information to investors
regarding the Company’s financial condition and results of
operations because it reflects only those income and expense items
that are incurred at the property level and, when compared across
periods, reflects the impact on operations from trends in occupancy
rates, rental rates, operating costs and acquisition and
disposition activity on an unleveraged basis.
FFO, Operating FFO and NOI do not represent cash generated from
operating activities in accordance with GAAP, are not necessarily
indicative of cash available to fund cash needs and should not be
considered as alternatives to net income computed in accordance
with GAAP as indicators of the Company’s operating performance or
as alternatives to cash flow as a measure of liquidity.
Reconciliations of these non-GAAP measures to their most directly
comparable GAAP measures are included in this release herein.
Reconciliation of 2021 projected NOI to the most directly
comparable GAAP financial measure is not provided because the
Company is unable to provide such reconciliation without
unreasonable effort.
Safe Harbor
RVI considers portions of the information in this press release
to be forward-looking statements within the meaning of Section 27A
of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934, both as amended, with respect to the
Company's expectation for future periods. Although the Company
believes that the expectations reflected in such forward-looking
statements are based upon reasonable assumptions, it can give no
assurance that its expectations will be achieved. For this purpose,
any statements contained herein that are not historical fact may be
deemed to be forward-looking statements. There are a number of
important factors that could cause our results to differ materially
from those indicated by such forward-looking statements, including,
among other factors, the Company’s actual property NOI for 2021,
which could differ materially from the NOI projections included in
this press release; the impact of the COVID-19 pandemic on the
Company’s ability to manage its properties and finance its
operations and on tenants’ ability to operate their businesses,
generate sales and meet their financial obligations, including the
obligation to pay ongoing and deferred rents; our ability to sell
assets on commercially reasonable terms; our ability to complete
the sale of the remaining nine assets in Puerto Rico pursuant to
the agreement entered into in June 2021 and dispositions of other
assets under contract; property damage, expenses related thereto
and other business and economic consequences (including the
potential loss of rental revenues) resulting from extreme weather
conditions and natural disasters in locations where we own
properties, and the ability to estimate accurately the amounts
thereof; sufficiency and timing of any insurance recovery payments
related to damages from extreme weather conditions and natural
disasters; local conditions such as an increase in the supply of,
or a reduction in demand for, retail real estate in the area; the
impact of e-commerce; dependence on rental income from real
property; the loss of, significant downsizing of or bankruptcy of a
major tenant and the impact of any such event on rental income from
other tenants at our properties; our ability to secure equity or
debt financing on commercially acceptable terms or at all;
impairment charges; our ability to enter into definitive agreements
with regard to our financing arrangements and our ability to
satisfy conditions to the completion or extension of these
arrangements; changes with respect to the Puerto Rican economy and
government; the ability to secure and maintain management services
provided to us, including pursuant to our external management
agreement with one or more subsidiaries of SITE Centers; and our
ability to maintain our REIT status. For additional factors that
could cause the results of the Company to differ materially from
those indicated in the forward-looking statements, please refer to
the Company’s most recent report on Forms 10-K and 10-Q. The
impacts of the COVID-19 pandemic may also exacerbate the risks
described therein, any of which could have a material effect on the
Company. The Company undertakes no obligation to publicly revise
these forward-looking statements to reflect events or circumstances
that arise after the date hereof.
Retail Value Inc.
Income Statement
in thousands, except per share
2Q21
2Q20
6M21
6M20
Revenues:
Rental income (1)
$41,857
$39,299
$83,279
$89,629
Other property revenues
54
(7)
91
32
41,911
39,292
83,370
89,661
Expenses:
Operating and maintenance (2)
11,433
12,193
23,304
25,807
Real estate taxes
3,757
5,483
8,023
11,202
15,190
17,676
31,327
37,009
Net operating income (3)
26,721
21,616
52,043
52,652
Other income (expense):
Asset management fees
(1,770)
(2,324)
(3,541)
(4,648)
Interest expense, net
(3,437)
(5,660)
(7,428)
(12,952)
Depreciation and amortization
(11,204)
(14,211)
(24,562)
(30,681)
General and administrative
(1,258)
(924)
(2,123)
(2,001)
Impairment charges
(79,050)
(10,910)
(81,060)
(26,820)
Debt extinguishment costs, net
(1,112)
(12)
(1,242)
(3,977)
Other income, net
197
0
197
334
Gain on disposition of real estate, net
(4)
1,420
10,958
1,541
13,632
Loss before other items
(69,493)
(1,467)
(66,175)
(14,461)
Tax expense
(88)
(519)
(197)
(592)
Net loss
($69,581)
($1,986)
($66,372)
($15,053)
Weighted average shares – Basic &
Diluted – EPS
21,094
19,816
21,006
19,782
Loss per common share – Basic &
Diluted
($3.30)
$(0.10)
($3.16)
($0.76)
(1)
Revenue items:
Minimum rents
23,161
30,348
48,057
61,738
Ground lease minimum rents
2,400
3,112
5,043
6,318
Percentage and overage rent
639
38
2,095
1,055
Recoveries
9,574
11,819
19,869
24,716
Uncollectible revenue
2,840
(6,820)
3,078
(7,678)
Ancillary and other rental income
1,455
783
3,264
2,961
Lease termination fees
1,788
19
1,873
519
(2)
Operating expenses:
Property management fees
(2,264)
(2,566)
(4,528)
(5,118)
(3)
NOI from assets sold through June 30,
2021
172
3,705
2,044
10,445
(4)
SITE Centers disposition fees
(592)
(210)
(592)
(1,766)
Retail Value Inc.
Other Financial Information
in thousands, except per share
2Q21
2Q20
6M21
6M20
Net loss attributable to Common
Shareholders
($69,581)
($1,986)
($66,372)
($15,053)
Depreciation and amortization of real
estate
11,187
14,193
24,528
30,646
Impairment of real estate
79,050
10,910
81,060
26,820
Gain on disposition of real estate,
net
(1,420)
(10,958)
(1,541)
(13,632)
FFO attributable to Common
Shareholders
$19,236
$12,159
$37,675
$28,781
Debt extinguishment, transaction, other,
net
915
12
1,045
3,644
Total non-operating items, net
915
12
1,045
3,644
Operating FFO attributable to Common
Shareholders
$20,151
$12,171
$38,720
$32,425
Weighted average shares and units –
Basic & Diluted – FFO & OFFO
21,094
19,816
21,006
19,782
FFO per share – Basic &
Diluted
$0.91
$0.61
$1.79
$1.45
Operating FFO per share – Basic &
Diluted
$0.96
$0.61
$1.84
$1.64
Common stock dividends declared, per
share
N/A
N/A
N/A
N/A
Certain non-cash items:
Straight-line rent
(258)
590
(822)
(517)
Straight-line fixed CAM
75
99
146
200
Loan cost amortization
(712)
(914)
(1,494)
(1,933)
Non-real estate depreciation expense
(17)
(18)
(34)
(35)
Capital expenditures:
Maintenance capital expenditures
899
645
1,227
663
Tenant allowances and landlord work
665
1,020
1,273
1,611
Leasing commissions - SITE Centers
617
473
1,395
1,704
Leasing commissions - external
54
68
187
155
Hurricane restorations
486
4,538
2,334
8,012
Retail Value Inc.
Other Financial Information
in thousands, except per share
Continental U.S.
2Q21
2Q20
6M21
6M20
Revenues:
Minimum rents
10,215
15,089
21,782
32,100
Ground lease minimum rents
797
1,099
1,636
2,304
Percentage and overage rent
236
6
253
103
Recoveries
3,918
5,932
8,379
12,579
Uncollectible revenue
2,152
(3,199)
3,144
(4,050)
Ancillary and other rental income
91
150
282
472
Lease termination fees
1
0
86
500
Other property revenues
52
(26)
69
(2)
17,462
19,051
35,631
44,006
Expenses:
Operating and maintenance
2,179
2,755
4,563
6,544
Property management fees
701
1,099
1,401
2,198
Real estate taxes
2,767
4,299
5,901
8,787
5,647
8,153
11,865
17,529
Net operating income (1)
11,815
10,898
23,766
26,477
Other income (expense):
Asset management fees
(846)
(1,318)
(1,694)
(2,637)
Interest expense, net
(2,707)
(4,513)
(5,858)
(10,689)
Depreciation and amortization
(4,700)
(6,961)
(11,688)
(16,191)
General and administrative (not allocated
to segment)
N/A
N/A
N/A
N/A
Impairment charges
0
(10,910)
0
(26,820)
Debt extinguishment costs, net
(1,076)
(12)
(1,149)
(3,977)
Other expense, net
0
0
0
0
Gain on disposition of real estate,
net
1,696
10,958
1,845
13,632
Tax expense
(77)
(52)
(143)
(125)
Net loss
4,105
(1,910)
5,079
(20,330)
(1)
NOI from assets sold through June 30,
2021
43
2,804
1,589
8,576
Puerto Rico
2Q21
2Q20
6M21
6M20
Revenues:
Minimum rents
12,946
15,259
26,275
29,638
Ground lease minimum rents
1,603
2,013
3,407
4,014
Percentage and overage rent
403
32
1,842
952
Recoveries
5,656
5,887
11,490
12,137
Uncollectible revenue
688
(3,621)
(66)
(3,628)
Ancillary and other rental income
1,364
633
2,982
2,489
Lease termination fees
1,787
19
1,787
19
Other property revenues
2
19
22
34
24,449
20,241
47,739
45,655
Expenses:
Operating and maintenance
6,990
6,872
14,213
14,145
Property management fees
1,563
1,467
3,127
2,920
Real estate taxes
990
1,184
2,122
2,415
9,543
9,523
19,462
19,480
Net operating income (1)
14,906
10,718
28,277
26,175
Other income (expense):
Asset management fees
(924)
(1,006)
(1,847)
(2,011)
Interest expense, net
(730)
(1,147)
(1,570)
(2,263)
Depreciation and amortization
(6,504)
(7,250)
(12,874)
(14,490)
General and administrative (not allocated
to segment)
N/A
N/A
N/A
N/A
Impairment charges
(79,050)
0
(81,060)
0
Debt extinguishment costs, net
(36)
0
(93)
0
Other expense, net
197
0
197
334
Gain on disposition of real estate,
net
(276)
0
(304)
0
Tax expense
(11)
(467)
(54)
(467)
Net loss
(72,428)
848
(69,328)
7,278
(1)
NOI from assets sold through June 30,
2021
129
901
455
1,869
Retail Value Inc.
Balance Sheet
$ in thousands
At Period End
2Q21
4Q20
Assets:
Land
$337,869
$397,699
Buildings
918,294
1,031,886
Fixtures and tenant improvements
114,580
134,335
1,370,743
1,563,920
Depreciation
(554,434)
(593,691)
816,309
970,229
Construction in progress
2,489
1,515
Real estate, net
818,798
971,744
Cash
67,185
56,849
Restricted cash (1)
59,048
115,939
Receivables and straight-line (2)
17,501
25,302
Intangible assets, net (3)
7,078
9,452
Other assets, net (4)
10,882
16,590
Total Assets
980,492
1,195,876
Liabilities and Equity:
Secured debt (5)
207,243
344,485
Dividends payable
0
23,002
Other liabilities (6)
30,420
38,603
Total Liabilities
237,663
406,090
Redeemable preferred equity
190,000
190,000
Common shares
2,110
1,983
Paid-in capital
740,548
721,234
Distributions in excess of net income
(189,800)
(123,428)
Common shares in treasury at cost
(29)
(3)
Total Equity
552,829
599,786
Total Liabilities and Equity
$980,492
$1,195,876
(1)
Asset sale proceeds
0
51,168
Hurricane related escrows
37,169
38,469
Other lender required escrows
21,879
26,302
(2)
SL rents (including fixed CAM), net
11,337
13,683
(3)
Operating lease right of use asset
1,402
1,509
(4)
Note receivable
3,000
3,000
(5)
Unamortized loan costs
(7,302)
(9,718)
(6)
Operating lease liabilities
2,476
2,602
Below-market leases, net
11,828
13,829
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210803006017/en/
Retail Value Inc. Christa Vesy, EVP and Chief Financial
Officer 216-755-5500
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