Retail Opportunity Investments Corp. Reports 2024 First Quarter Results
- Solid financial performance with $11.0 million net income and $37.9 million FFO
- 5.7% increase in same-center cash net operating income
- $70.1 million acquisition of a grocery-anchored shopping center
- 96.4% portfolio lease rate and 179,464 square feet of anchor space leasing lined up
- Improvement in net principal debt-to-annualized EBITDA ratio to 6.4x
- Awarded 2024 Green Lease Leader by the U.S. Department of Energy
- $0.15 per share cash dividend declared
- None.
Insights
The recent announcement by Retail Opportunity Investments Corp. (ROIC) reflects a positive performance trajectory, with an increase in net income to
The reaffirmation of FFO per diluted share guidance for 2024 indicates management's confidence in the company's stability and growth prospects. Additionally, a 5.7% increase in same-center cash NOI and a 12.2% increase in same-space cash base rents on new leases (6.7% on renewals) suggest that the company is effectively managing its properties to extract higher revenue streams. However, investors should be mindful of the debt-to-EBITDA ratio of 6.4x, which, while lower than previous year's 6.7x, still warrants attention to ensure that debt levels remain manageable and do not impede future growth.
The strategic acquisition of the Bressi Ranch Village Center for
The company's high portfolio lease rate of 96.4%, which has been consistently above 96.0% for 40 consecutive quarters, is quite impressive and speaks to the demand for ROIC's properties. Such a high occupancy rate is a testament to the company's asset management capabilities and the attractiveness of their properties to tenants. For investors, this can be seen as a sign of the portfolio's quality and the management's ability to retain and attract tenants, which is a critical aspect of real estate investing.
ROIC's recognition as a 2024 Green Lease Leader reflects its commitment to environmental stewardship and may enhance its reputation among investors with a focus on sustainability. The 'Gold' level designation may not have a direct financial impact but could provide a competitive edge in attracting tenants who prioritize green initiatives and could positively influence investor perception of the company's long-term viability in an increasingly eco-conscious market.
SAN DIEGO, April 23, 2024 (GLOBE NEWSWIRE) -- Retail Opportunity Investments Corp. (NASDAQ:ROIC) announced today financial and operating results for the three months ended March 31, 2024.
HIGHLIGHTS
$11.0 million of net income attributable to common stockholders ($0.09 per diluted share)$37.9 million in Funds From Operations (FFO)(1) ($0.28 per diluted share)- FFO per diluted share guidance for 2024 reaffirmed (
$1.03 -$1.09 per diluted share) 5.7% increase in same-center cash net operating income (1Q‘24 vs. 1Q‘23)- 383,293 square feet of leases executed during 1Q‘24 (207,172 square feet of anchor renewals)
96.4% portfolio lease rate at 3/31/24 (40th consecutive quarter above96.0% )- 179,464 square feet of anchor space leasing currently lined up
12.2% increase in same-space cash base rents on new leases (6.7% on renewals)$70.1 million dual grocery-anchored shopping center acquired in April 2024$68.2 million property dispositions currently under contract91.4% of total principal debt outstanding effectively fixed-rate at 3/31/24- 6.4x net principal debt-to-annualized EBITDA ratio for 1Q‘24 (vs. 6.7x for 1Q‘23)
$26.0 million mortgage retired in April 2024- Awarded 2024 Green Lease Leader by U.S. Department of Energy
$0.15 per share cash dividend declared
_________________________
(1) 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, “As 2024 gets underway, we are off to a solid start. Demand for space continues to be strong across our portfolio, particularly as it relates to anchor space. During the first quarter we renewed 207,172 square feet of longstanding, valued anchor tenants. Additionally, we currently have all of our available anchor space spoken for with new national tenants lined up to lease the space.” Tanz further stated, “In terms of our investment and capital recycling programs, we currently have
FINANCIAL SUMMARY
For the three months ended March 31, 2024, GAAP net income attributable to common stockholders was
Included in GAAP net income attributable to common stockholders and FFO for the first quarter of 2024 was
For the first quarter of 2024, same-center net operating income (NOI) was
At March 31, 2024, ROIC had total real estate assets (before accumulated depreciation) of approximately
ACQUISITION & DISPOSITION SUMMARY
Subsequent to the first quarter of 2024, ROIC acquired the following grocery-anchored shopping center.
Bressi Ranch Village Center
In April 2024, ROIC acquired Bressi Ranch Village Center for
ROIC currently has agreements to sell two properties, in separate transactions, for approximately
PROPERTY OPERATIONS SUMMARY
At March 31, 2024, ROIC’s portfolio was
ENVIRONMENTAL ACCOLADE
ROIC has been selected as a 2024 Green Lease Leader by the U.S. Department of Energy’s Better Buildings Alliance and the Institute for Market Transformation. For the fourth consecutive year, ROIC was awarded “Gold” level designation in recognition of its continued success in collaborating with tenants on energy efficiency, decarbonization, air quality and other critical environmental issues.
DIVIDEND SUMMARY
On April 5, 2024, ROIC distributed a
CONFERENCE CALL
ROIC will conduct a conference call to discuss its results on Wednesday, April 24, 2024 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:
https://register.vevent.com/register/BI4cf1b9c86202419e9d9f2cbfe332a738
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: https://edge.media-server.com/mmc/p/a853xbur
The conference call will be recorded and available for replay following the conclusion of the live broadcast and will be accessible up to one year on ROIC’s website, specifically on its Investor Relations Events & Presentations page:
https://investor.roicreit.com/events-presentations
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 March 31, 2024, ROIC owned 94 shopping centers encompassing approximately 10.6 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) | |||||||
| March 31, 2024 (unaudited) | December 31, 2023 | ||||||
| ASSETS | |||||||
| Real Estate Investments: | |||||||
| Land | $ | 965,516 | $ | 967,251 | |||
| Building and improvements | 2,501,886 | 2,500,647 | |||||
| 3,467,402 | 3,467,898 | ||||||
| Less: accumulated depreciation | 666,875 | 654,543 | |||||
| 2,800,527 | 2,813,355 | ||||||
| Mortgage note receivable | 4,670 | 4,694 | |||||
| Real Estate Investments, net | 2,805,197 | 2,818,049 | |||||
| Cash and cash equivalents | 1,768 | 6,302 | |||||
| Restricted cash | 2,393 | 2,116 | |||||
| Tenant and other receivables, net | 60,781 | 61,193 | |||||
| Deposit on real estate acquisition | 5,000 | — | |||||
| Acquired lease intangible assets, net | 41,787 | 42,791 | |||||
| Prepaid expenses | 4,898 | 3,354 | |||||
| Deferred charges, net | 27,199 | 27,294 | |||||
| Other assets | 17,692 | 16,541 | |||||
| Total assets | $ | 2,966,715 | $ | 2,977,640 | |||
| LIABILITIES AND EQUITY | |||||||
| Liabilities: | |||||||
| Term loan | $ | 199,805 | $ | 199,745 | |||
| Credit facility | 68,000 | 75,000 | |||||
| Senior Notes | 1,044,057 | 1,043,593 | |||||
| Mortgage notes payable | 59,831 | 60,052 | |||||
| Acquired lease intangible liabilities, net | 133,700 | 137,820 | |||||
| Accounts payable and accrued expenses | 60,807 | 50,598 | |||||
| Tenants’ security deposits | 8,340 | 8,205 | |||||
| Other liabilities | 38,529 | 39,420 | |||||
| Total liabilities | 1,613,069 | 1,614,433 | |||||
| Commitments and contingencies | |||||||
| Equity: | |||||||
| Preferred stock, | — | — | |||||
| Common stock, | 13 | 13 | |||||
| Additional paid-in capital | 1,643,300 | 1,643,908 | |||||
| Accumulated dividends in excess of earnings | (365,300 | ) | (357,160 | ) | |||
| Accumulated other comprehensive income | 521 | 559 | |||||
| Total Retail Opportunity Investments Corp. stockholders’ equity | 1,278,534 | 1,287,320 | |||||
| Non-controlling interests | 75,112 | 75,887 | |||||
| Total equity | 1,353,646 | 1,363,207 | |||||
| Total liabilities and equity | $ | 2,966,715 | $ | 2,977,640 | |||
| RETAIL OPPORTUNITY INVESTMENTS CORP. Consolidated Statements of Operations (Unaudited) (In thousands, except per share data) | ||||||||
| Three Months Ended March 31, | ||||||||
| 2024 | 2023 | |||||||
| Revenues | ||||||||
| Rental revenue | $ | 84,560 | $ | 78,999 | ||||
| Other income | 770 | 297 | ||||||
| Total revenues | 85,330 | 79,296 | ||||||
| Operating expenses | ||||||||
| Property operating | 14,083 | 14,202 | ||||||
| Property taxes | 8,560 | 8,844 | ||||||
| Depreciation and amortization | 26,269 | 25,104 | ||||||
| General and administrative expenses | 5,682 | 5,320 | ||||||
| Other expense | 152 | 172 | ||||||
| Total operating expenses | 54,746 | 53,642 | ||||||
| Operating income | 30,584 | 25,654 | ||||||
| Non-operating expenses | ||||||||
| Interest expense and other finance expenses | (18,919 | ) | (16,958 | ) | ||||
| Net income | 11,665 | 8,696 | ||||||
| Net income attributable to non-controlling interests | (647 | ) | (554 | ) | ||||
| Net Income Attributable to Retail Opportunity Investments Corp. | $ | 11,018 | $ | 8,142 | ||||
| Earnings per share – basic and diluted | $ | 0.09 | $ | 0.06 | ||||
| Dividends per common share | $ | 0.15 | $ | 0.15 | ||||
| CALCULATION OF FUNDS FROM OPERATIONS (Unaudited) (In thousands) | ||||||||
| Three Months Ended March 31, | ||||||||
| 2024 | 2023 | |||||||
| Net income attributable to ROIC | $ | 11,018 | $ | 8,142 | ||||
| Plus: Depreciation and amortization | 26,269 | 25,104 | ||||||
| Funds from operations – basic | 37,287 | 33,246 | ||||||
| Net income attributable to non-controlling interests | 647 | 554 | ||||||
| Funds from operations – diluted | $ | 37,934 | $ | 33,800 | ||||
| SAME-CENTER CASH NET OPERATING INCOME ANALYSIS (Unaudited) (In thousands, except number of shopping centers and percentages) | ||||||||||||||||
| Three Months Ended March 31, | ||||||||||||||||
| 2024 | 2023 | $ Change | % Change | |||||||||||||
| Number of shopping centers included in same-center analysis | 92 | 92 | ||||||||||||||
| Same-center leased rate | 96.3 | % | 98.3 | % | (2.0 | )% | ||||||||||
| Revenues: | ||||||||||||||||
| Base rents | $ | 57,545 | $ | 56,260 | $ | 1,285 | 2.3 | % | ||||||||
| Recoveries from tenants | 20,437 | 20,169 | 268 | 1.3 | % | |||||||||||
| Other property income | 574 | 120 | 454 | 378.3 | % | |||||||||||
| Bad debt | (529 | ) | (911 | ) | 382 | (41.9 | )% | |||||||||
| Total Revenues | 78,027 | 75,638 | 2,389 | 3.2 | % | |||||||||||
| Operating Expenses | ||||||||||||||||
| Property operating expenses | 14,018 | 14,307 | (289 | ) | (2.0 | )% | ||||||||||
| Property taxes | 8,416 | 8,751 | (335 | ) | (3.8 | )% | ||||||||||
| Total Operating Expenses | 22,434 | 23,058 | (624 | ) | (2.7 | )% | ||||||||||
| Same-Center Cash Net Operating Income | $ | 55,593 | $ | 52,580 | $ | 3,013 | 5.7 | % | ||||||||
| SAME-CENTER CASH NET OPERATING INCOME RECONCILIATION (Unaudited) (In thousands) | ||||||||
| Three Months Ended March 31, | ||||||||
| 2024 | 2023 | |||||||
| GAAP operating income | $ | 30,584 | $ | 25,654 | ||||
| Depreciation and amortization | 26,269 | 25,104 | ||||||
| General and administrative expenses | 5,682 | 5,320 | ||||||
| Other expense | 152 | 172 | ||||||
| Straight-line rent | (192 | ) | (347 | ) | ||||
| Amortization of above-market and below-market rent, net | (6,657 | ) | (2,864 | ) | ||||
| Property revenues and other expenses (1) | 106 | 36 | ||||||
| Total Company cash NOI | 55,944 | 53,075 | ||||||
| Non same-center cash NOI | (351 | ) | (495 | ) | ||||
| Same-center cash NOI | $ | 55,593 | $ | 52,580 | ||||
_________________________
(1) Includes anchor lease termination fees, net of contractual amounts, if any, expense and recovery adjustments related to prior periods and other miscellaneous adjustments.
NON-GAAP DISCLOSURES
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.
Contact:
Nicolette O’Leary
Director of Investor Relations
858-677-0900
noleary@roireit.net
FAQ
What was Retail Opportunity Investments Corp.'s net income for the first quarter of 2024?
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What award did Retail Opportunity Investments Corp. receive from the U.S. Department of Energy in 2024?
