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Retail Value Inc. Reports First Quarter 2019 Operating Results
BEACHWOOD, Ohio–(BUSINESS WIRE)–Retail Value Inc. (NYSE: RVI) today announced operating results for the
quarter ended March 31, 2019.
Results for the Quarter
-
First quarter net loss attributable to common shareholders was $10
thousand, or $0.00 per diluted share. First quarter operating funds
from operations attributable to common shareholders (“Operating FFO”
or “OFFO”) was $24.3 million, or $1.29 per diluted share. -
Sold three shopping centers and two outparcels for an aggregate sales
price of $110.0 million. -
Refinanced previous $1.35 billion mortgage loan with a new $900
million mortgage loan. The new loan facility provides a lower interest
rate, an extended maturity date, a lower allocation of loan principal
to the Company’s continental U.S. assets as a result of the mortgage
on one Puerto Rico property and a lower debt yield requirement with
respect to the Company’s ability to maintain control of excess cash
flow from its properties. RVI paid $1.8 million refinancing fee to
SITE Centers in connection with new loan. -
The Continental U.S. leased rate was 92.2% as compared to 92.9% at
December 31, 2018 with the decline driven by the impact of asset sales. -
The Puerto Rico leased rate was 85.3% as compared to 87.0% at December
31, 2018, the decline primarily was due to the expiration of a
JC Penney lease at Plaza Palma Real.
Key Quarterly Operating Results
The following metrics are as of March 31, 2019:
Continental U.S. | Puerto Rico | |||
Shopping Center Count | 23 | 12 | ||
Gross Leasable Area (thousands) | 8,717 | 4,428 | ||
Base Rent PSF | $13.55 | $20.59 | ||
Leased Rate | 92.2% | 85.3% | ||
Commenced Rate | 91.1% | 83.1% | ||
NOI (millions) | $24.7 | $15.9 | ||
Financial Statement Presentation Change
On January 1, 2019, the Company adopted the accounting framework for
leases, ASU No. 2016-02, Leases (“Topic 842”). The following is a
summary of the presentation changes within the 2019 Consolidated
Statement of Operations required by the adoption of the new standard:
-
All income related to tenant leases is reflected in a single “Rental
income” line item. -
The impact of bad debt is now a component of the single Rental income
line item and is no longer a component of Operating and Maintenance
expenses. This change is reflected in 2019 reporting periods but was
not made to 2018 historical results. -
Real estate taxes paid by certain major tenants directly to the taxing
authority are no longer reflected in Rental Income and Real estate tax
expense. This change is reflected in 2019 reporting periods but was
not made to 2018 historical results.
The Company’s Net income, Net operating income and Operating FFO were
not impacted by these presentation changes.
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.
In December 2018, the National Association of Real Estate Investment
Trusts (“NAREIT”) issued NAREIT Funds From Operations White Paper –
2018 Restatement (“the 2018 FFO White Paper”). The purpose of the
2018 FFO White Paper was not to change the fundamental definition of FFO
but to clarify existing guidance and to consolidate into a single
document, alerts and policy bulletins issued by NAREIT since the last
FFO white paper was issued in 2002. The 2018 FFO White Paper was
effective starting with first quarter 2019 reporting. The Company did
not report any changes in the calculation of FFO in 2019 related to the
clarification in the 2018 FFO White Paper.
FFO is generally defined and calculated by the Company as net income
(loss) (computed in accordance with 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 and the accompanying financial supplement.
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 ability to execute our strategy as
an independent, publicly traded company. Other risks and uncertainties
that could cause our results to differ materially from those indicated
by such forward-looking statements include our ability to sell assets on
commercially reasonable terms; our ability to complete dispositions of
assets under contract; the success of our asset sale strategy; property
damage, expenses related thereto and other business and economic
consequences (including the potential loss of rental revenues) resulting
from extreme weather conditions 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; local conditions such as supply of space or
a reduction in demand for real estate in the area; competition from
other available space; 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; our ability to enter into
definitive agreements with regard to our financing arrangements and our
ability to satisfy conditions to the completion of these arrangements;
unforeseen changes 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 “Risk Factors” included in the Company’s
report on Form 10-K for the year ended December 31, 2018. 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 | ||||||||
1Q19 | 1Q19 | Total | ||||||
Continental U.S. | Puerto Rico | 1Q19 | ||||||
Revenues (1): | ||||||||
Rental income (2) | $36,970 | $24,600 | $61,570 | |||||
Other property revenues | 22 | 19 | 41 | |||||
Business interruption income | 0 | 0 | 0 | |||||
36,992 | 24,619 | 61,611 | ||||||
Expenses: | ||||||||
Operating and maintenance (3) | 5,950 | 7,548 | 13,498 | |||||
Real estate taxes | 6,312 | 1,198 | 7,510 | |||||
12,262 | 8,746 | 21,008 | ||||||
Net operating income (4) | 24,730 | 15,873 | 40,603 | |||||
Other income (expense): | ||||||||
Asset management fees | (2,820) | |||||||
Interest expense | (13,974) | |||||||
Depreciation and amortization | (19,355) | |||||||
General and administrative | (885) | |||||||
Impairment charges | (6,090) | |||||||
Hurricane property loss | (183) | |||||||
Debt extinguishment costs, net | (14,482) | |||||||
Transaction costs | (18) | |||||||
Other expense, net | (850) | |||||||
Gain on disposition of real estate, net (5) | 18,219 | |||||||
Income before other items | 165 | |||||||
Tax expense | (175) | |||||||
Net loss | ($10) | |||||||
Weighted average shares – Basic & Diluted – EPS | 18,882 | |||||||
Earnings per common share – Basic & Diluted | $0.00 | |||||||
Revenue items: | ||||||||
(1) | Lost revenue related to hurricane | ($1,625) | ||||||
(2) | Minimum rents | 25,301 | 14,070 | 39,371 | ||||
Ground lease minimum rents | 1,940 | 1,872 | 3,812 | |||||
Percentage rent | 263 | 1,157 | 1,420 | |||||
Recoveries | 9,342 | 5,607 | 14,949 | |||||
Lease termination fees | 0 | 0 | 0 | |||||
Ancillary rental income | 261 | 1,906 | 2,167 | |||||
Bad debt | (137) | (12) | (149) | |||||
(3) | Operating expenses: | |||||||
Property management fees | (1,409) | (1,587) | (2,996) | |||||
(4) | NOI from assets sold | 1,256 | 0 | 1,256 | ||||
(5) | SITE Centers disposition fees | (1,100) | ||||||
Retail Value Inc. | ||||
Reconciliation: Net Income to FFO and Operating FFO |
||||
and Other Financial Information |
||||
$ in thousands, except per share | ||||
|
1Q19 | |||
Net income attributable to Common Shareholders | ($10) | |||
Depreciation and amortization of real estate | 19,329 | |||
Impairment of real estate | 6,090 | |||
Gain on disposition of real estate, net | (18,219) | |||
FFO attributable to Common Shareholders | $7,190 | |||
Hurricane property loss, net (1) | 1,808 | |||
Debt extinguishment, transaction, other, net | 15,350 | |||
Total non-operating items, net | 17,158 | |||
Operating FFO attributable to Common Shareholders | $24,348 | |||
Weighted average shares and units – Basic & Diluted – FFO & OFFO | 18,882 | |||
FFO per share – Basic & Diluted | $0.38 | |||
Operating FFO per share – Basic & Diluted | $1.29 | |||
Common stock dividends declared, per share | N/A | |||
Certain non-cash items: | ||||
Straight-line rent | (211) | |||
Straight-line fixed CAM | 161 | |||
Loan cost amortization | (1,302) | |||
Non-real estate depreciation expense | (26) | |||
Capital expenditures: | ||||
Maintenance capital expenditures | 24 | |||
Tenant allowances and landlord work | 2,401 | |||
Leasing commissions (2) | 904 | |||
Hurricane restorations | 21,687 | |||
(1) | Hurricane property (income) loss: | |||
Lost tenant revenue | 1,625 | |||
Business interruption income | 0 | |||
Clean up costs and other expenses | 183 | |||
1,808 | ||||
(2) | SITE Centers lease commissions | 772 | ||
Retail Value Inc. |
||||||
Balance Sheet |
||||||
$ in thousands | ||||||
At Period End | ||||||
1Q19 | 4Q18 | |||||
Assets: | ||||||
Land | $588,801 | $622,827 | ||||
Buildings | 1,554,766 | 1,629,862 | ||||
Fixtures and tenant improvements | 172,192 | 172,679 | ||||
2,315,759 | 2,425,368 | |||||
Depreciation | (705,058) | (704,401) | ||||
1,610,701 | 1,720,967 | |||||
Construction in progress and land | 45,411 | 26,070 | ||||
Real estate, net | 1,656,112 | 1,747,037 | ||||
Cash | 37,560 | 44,565 | ||||
Restricted cash (1) | 71,556 | 66,634 | ||||
Receivables and straight-line (2) | 28,546 | 31,426 | ||||
Property insurance receivable | 15,953 | 29,422 | ||||
Intangible assets, net (3) | 24,339 | 31,882 | ||||
Other assets, net | 9,078 | 11,678 | ||||
Total Assets | 1,843,144 | 1,962,644 | ||||
Liabilities and Equity: | ||||||
Secured debt | 873,663 | 967,569 | ||||
Payable to SITE | 34,070 | 33,985 | ||||
Dividends payable | 0 | 24,005 | ||||
Other liabilities (4) | 65,252 | 84,832 | ||||
Total Liabilities | 972,985 | 1,110,391 | ||||
Redeemable preferred equity | 190,000 | 190,000 | ||||
Common shares | 1,904 | 1,846 | ||||
Paid-in capital | 692,771 | 675,566 | ||||
Distributions in excess of net income | (14,507) | (15,153) | ||||
Common shares in treasury at cost | (9) | (6) | ||||
Total Equity | 680,159 | 662,253 | ||||
Total Liabilities and Equity | $1,843,144 | $1,962,644 | ||||
(1) | Asset sale proceeds | 30,452 | 26,969 | |||
Other escrows | 41,104 | 39,665 | ||||
(2) | Straight-line rents receivable | 19,235 | 18,757 | |||
(3) |
Operating lease right of use assets (related to adoption of Topic 842) |
1,859 | 0 | |||
(4) | Operating lease liabilities (related to adoption of Topic 842) | 2,995 | 0 | |||
Below-market leases, net | 21,502 | 33,914 | ||||
Contacts
Matthew Ostrower, 216-755-5500
EVP and Chief Financial Officer
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Humboldt
Humboldt Seed Company partners with Apollo Green to bring California cannabis genetics to the global marketplace
Apollo Green to distribute Humboldt Seed Company clonal cannabis genetics to Germany, Portugal and Australia
SAN FRANCISCO, April 30, 2024 /PRNewswire/ — Humboldt Seed Company (HSC), California’s leading cannabis seed producer, has announced a partnership with Canadian-based Apollo Green to make eight breeder cuts available to researchers, licensed commercial cultivators and home growers in legal markets worldwide. This first-to-market clonal genetics release is a significant milestone and will expand access to distinctive, high-quality cannabis genetics in both established and emerging global markets including Germany, Portugal and Australia.
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Media contact
Jaana Prall
[email protected]
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