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Ramco-Gershenson Properties Trust Reports Financial and Operating Results for the Second Quarter 2015

FARMINGTON HILLS, Mich., July 21, 2015 (GLOBE NEWSWIRE) -- Ramco-Gershenson Properties Trust (NYSE:RPT) today announced its financial and operating results for the three and six months ended June 30, 2015.

SECOND QUARTER 2015 HIGHLIGHTS:

  • Reported Operating Funds from Operations ("Operating FFO") of $0.31.
  • Announced the acquisition of its partners' interests in seven high quality shopping centers in major metropolitan markets for $185.9 million.
  • Commenced three new value-add improvement projects, including the addition of Saks Fifth Avenue OFF 5TH at Hunter's Square in Farmington Hills, MI.
  • Ended the quarter with core portfolio leased occupancy of 95.3%.

"Our activities this quarter focused on the acquisition of our partners' interest in seven high-quality shopping centers, the disposition of non-core properties, and transitioning our new Chief Operating Officer, John Hendrickson," said Dennis Gershenson, President and Chief Executive Officer. "The seven centers present a number of opportunities to grow NOI, primarily through out parcel development and re-leasing space to creditworthy retailers at higher rents. John and his team will be instrumental in executing on these opportunities over the next 12-18 months."

FINANCIAL RESULTS:

For the three months ended June 30, 2015:

  • Operating FFO of $27.7 million, or $0.31 per diluted share, compared to $24.2 million, or $0.31 per diluted share for the same period in 2014.
  • FFO of $28.3 million, or $0.32 per diluted share, compared to $22.9 million, or $0.29 per diluted share for the same period in 2014.
  • Net income available to common shareholders of $4.9 million, or $0.06 per diluted share, compared to net loss of $0.7 million, or $0.01 per share for the same period in 2014.

For the six months ended June 30, 2015:

  • Operating FFO of $58.9 million, or $0.67 per diluted share, compared to $47.2 million, or $0.61 per diluted share for the same period in 2014.
  • FFO of $57.0 million, or $0.65 per diluted share, compared to $45.9 million, or $0.59 per diluted share for the same period in 2014.
  • Net income available to common shareholders of $12.8 million, or $0.16 per diluted share, compared to $0.1 million, or $0.00 per diluted share for the same period in 2014.

OPERATING RESULTS:

  • Same-center NOI growth of 2.3% and 2.8% year-to-date.
  • Core portfolio leased occupancy of 95.3% and physical occupancy of 94.2%.
  • Signed 76 leases encompassing 485,304 square feet at comparable rental growth of 9.1%, including 50 renewals totaling 290,356 square feet at comparable rental growth of 8.2%.

BALANCE SHEET METRICS (as of June 30, 2015):

  • Net debt to total market capitalization of 38.3%.
  • Net debt to EBITDA of 5.9x, interest coverage of 3.7x, and fixed charge coverage of 2.9x.
  • Weighted average debt maturity of 6.1 years.

INVESTMENT ACTIVITY:

Acquisitions

Subsequent to quarter end, the Company announced its intent to acquire its partners' ownership interests in seven high quality shopping centers for $185.9 million, including the assumption of its partner's pro rata share of debt of $48.1 million. The centers are located in major metropolitan markets and are anchored by best-in-class national retailers. The Company closed on the acquisition of six of the properties on July 21, 2015. The closing on the seventh property is expected to occur on or before August 31, 2015.

Dispositions

The Company sold the shopping center portion of The Town Center at Aquia, which included a Regal Theater and Rite Aid, as well as residual commercial and residential land at the property for $13.4 million recording a gain on sale of $0.3 million, which is excluded from FFO.

Subsequent to quarter-end, the Company sold to its partner its 20% interest in The Plaza at Delray, a 314,000 square foot shopping center in Delray Beach, Florida.

Redevelopment

The Company commenced three new value-add improvement projects anchored by high-quality national retailers in shopping centers located in high-income trade areas.

  • Hunter's Square, a 355,000 square foot, market dominant shopping center located in Farmington Hills, Michigan, is being redeveloped to include two new anchors: a 34,000 square foot Saks Fifth Avenue OFF 5TH, which upon opening will be one of only two Saks OFF 5TH stores in Michigan, as well as a 21,000 square foot DSW.
  • Mission Bay Plaza, a 97% leased, 265,000 square foot market dominant shopping center located in Boca Raton, Florida, is being repositioned to accommodate a 6,500 square foot expansion of LA Fitness as well as the re-leasing of under-performing anchor space.
  • Town & Country Crossing, a 150,000 square foot, upscale shopping center located in Town & Country, Missouri, is being expanded to add a 31,000 square foot Stein Mart. Town & Country Crossing is also anchored by Whole Foods and Target (shadow).

The Company completed the redevelopment of Merchants' Square in Carmel, Indiana, which included adding a newly constructed 39,000 square foot Flix Brewhouse. The project totaled approximately $6.6 million and is expected to produce a stabilized return on incremental costs of between 10%-11% upon completion.

At June 30, 2015, the Company had 10 redevelopment, expansion and/or re-anchoring projects underway with an estimated total cost of $72.2 million, which are expected to produce a return on incremental costs of between 9%-10%.

FINANCING ACTIVITY:

The Company paid off two mortgages at Florida shopping centers totaling $18.1 million.

Subsequent to quarter-end, the Company closed a $50 million private placement of 10-year unsecured notes at a fixed interest rate of 4.20%, which was used to partially fund the Company's acquisitions.

DIVIDEND:

The Company declared a regular cash dividend of $0.20 per common share for the period of April 1, 2015 through June 30, 2015 and a Series D convertible perpetual preferred share dividend of $0.90625 per share for the same period. The dividends were paid on July 1, 2015 to shareholders of record as of June 19, 2015. The Operating FFO payout ratio was 64.5%.

2015 GUIDANCE:

The Company has narrowed its 2015 guidance for Operating FFO to a range of $1.28 to $1.32 per diluted share.

CONFERENCE CALL/WEBCAST:

Ramco-Gershenson Properties Trust will host a live broadcast of its first quarter conference call on Wednesday, July 22, 2015, at 9:00 a.m. eastern time, to discuss its financial and operating results. The live broadcast will be available online at www.rgpt.com and www.investorcalendar.com and also by telephone at (877) 407-9205, no pass code needed. A replay will be available shortly after the call on the aforementioned websites (for ninety days) or by telephone at (877) 660-6853, (Conference ID: 13612212), for one week.

SUPPLEMENTAL MATERIALS:

The Company's quarterly financial and operating supplement is available on its corporate web site at www.rgpt.com. If you wish to receive a copy via email, please send requests to dhendershot@rgpt.com.

ABOUT RAMCO-GERSHENSON PROPERTIES TRUST:

Ramco-Gershenson Properties Trust (NYSE:RPT) is a fully integrated, self-administered, publicly-traded real estate investment trust (REIT) based in Farmington Hills, Michigan. The Company's business is the ownership and management of large, multi-anchor shopping centers primarily in a dozen of the largest metropolitan markets in the United States. At June 30, 2015, the Company owned interests in and managed a portfolio of 78 shopping centers and one office building with approximately 16.7 million square feet of gross leasable area. At June 30, 2015, the Company's core operating portfolio was 95.3% leased. Additional information regarding the Company is available on its corporate website: www.rgpt.com.

This press release may contain forward-looking statements that represent the Company's expectations and projections for the future. Management of Ramco-Gershenson believes the expectations reflected in any forward-looking statements made in this press release are based on reasonable assumptions. Certain factors could occur that might cause actual results to vary, including deterioration in national economic conditions, weakening of real estate markets, decreases in the availability of credit, increases in interest rates, adverse changes in the retail industry, our continuing ability to qualify as a REIT and other factors discussed in the Company's reports filed with the Securities and Exchange Commission.

RAMCO-GERSHENSON PROPERTIES TRUST
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except per share amounts)
June
30,
2015
December 31,
2014
(unaudited)
ASSETS
Income producing properties, at cost:
Land $346,925 $341,388
Buildings and improvements 1,616,326 1,592,644
Less accumulated depreciation and amortization (311,207) (287,177)
Income producing properties, net 1,652,044 1,646,855
Construction in progress and land available for development or sale 56,710 74,655
Net real estate 1,708,754 1,721,510
Equity investments in unconsolidated joint ventures 22,373 28,733
Cash and cash equivalents 6,932 9,335
Restricted cash 9,386 8,163
Accounts receivable (net of allowance for doubtful accounts of $2,616 and $2,292 as of June 30, 2015 and December 31, 2014, respectively) 12,814 11,997
Acquired lease intangibles, net 69,464 77,045
Other assets, net 91,596 91,596
TOTAL ASSETS $1,921,319 $1,948,379
LIABILITIES AND SHAREHOLDERS' EQUITY
Notes payable 906,167 921,705
Capital lease obligation 1,148 1,828
Accounts payable and accrued expenses 38,135 44,232
Acquired lease intangibles, net 51,492 54,278
Other liabilities 9,902 10,106
Distributions payable 18,034 17,951
TOTAL LIABILITIES 1,024,878 1,050,100
Commitments and Contingencies
Ramco-Gershenson Properties Trust ("RPT") Shareholders' Equity:
Preferred shares, $0.01 par, 2,000 shares authorized: 7.25% Series D Cumulative Convertible Perpetual Preferred Shares, (stated at liquidation preference $50 per share), 1,849 and 2,000 shares issued and outstanding as of June 30, 2015 and December 31, 2014, respectively $92,427 $100,000
Common shares of beneficial interest, $0.01 par, 120,000 shares authorized, 79,149 and 77,573 shares issued and outstanding as of June 30, 2015 and December 31, 2014, respectively 791 776
Additional paid-in capital 1,155,556 1,130,262
Accumulated distributions in excess of net income (375,512) (356,715)
Accumulated other comprehensive loss (2,271) (1,966)
TOTAL SHAREHOLDERS' EQUITY ATTRIBUTABLE TO RPT 870,991 872,357
Noncontrolling interest 25,450 25,922
TOTAL SHAREHOLDERS' EQUITY 896,441 898,279
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $1,921,319 $1,948,379

RAMCO-GERSHENSON PROPERTIES TRUST
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended June 30, Six Months Ended June 30,
2015 2014 2015 2014
REVENUE
Minimum rent $44,327 $37,054 $87,678 $73,321
Percentage rent 18 5 371 153
Recovery income from tenants 13,962 11,857 28,284 24,104
Other property income 850 578 1,709 1,539
Management and other fee income 578 436 1,110 946
TOTAL REVENUE 59,735 49,930 119,152 100,063
EXPENSES
Real estate taxes 9,126 7,347 18,121 14,714
Recoverable operating expense 6,846 5,739 14,124 11,898
Other non-recoverable operating expense 994 835 1,707 1,684
Depreciation and amortization 21,120 23,658 41,483 41,399
Acquisition costs 265 451 307 533
General and administrative expense 5,474 5,168 10,348 10,700
Provision for impairment 2,521
TOTAL EXPENSES 43,825 43,198 88,611 80,928
OPERATING INCOME 15,910 6,732 30,541 19,135
OTHER INCOME AND EXPENSES
Other income (expense), net 27 (239) (191) (372)
Gain on sale of real estate 273 2,672 3,469 2,672
Earnings (loss) from unconsolidated joint ventures 335 816 2,995 (791)
Interest expense (10,058) (7,632) (20,027) (15,231)
Amortization of deferred financing fees (330) (370) (664) (773)
Deferred gain recognized on real estate 117
Gain (loss) on extinguishment of debt 1,387 (860) 1,387 (860)
INCOME BEFORE TAX 7,544 1,119 17,510 3,897
Income tax (provision) benefit (255) 1 (277) (16)
NET INCOME 7,289 1,120 17,233 3,881
Net income attributable to noncontrolling partner interest (199) (34) (476) (123)
NET INCOME ATTRIBUTABLE TO RPT 7,090 1,086 16,757 3,758
Preferred share dividends (1,675) (1,813) (3,487) (3,625)
Preferred share conversion costs (500) (500)
NET INCOME (LOSS) AVAILABLE TO COMMON SHAREHOLDERS $4,915 $(727) $12,770 $133
EARNINGS (LOSS) PER COMMON SHARE
Basic $0.06 $(0.01) $0.16 $—
Diluted $0.06 $(0.01) $0.16 $—
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
Basic 79,124 68,853 78,528 67,966
Diluted 79,319 69,097 78,731 68,209

RAMCO-GERSHENSON PROPERTIES TRUST
FUNDS FROM OPERATIONS
(In thousands, except per share data)
Three Months Ended
June 30,
Six Months Ended
June 30,
2015 2014 2015 2014
Net income (loss) available to common shareholders $4,915 $(727) $12,770 $133
Adjustments:
Rental property depreciation and amortization expense 21,080 23,531 41,407 41,145
Pro-rata share of real estate depreciation from unconsolidated joint ventures 702 682 1,398 3,445
Gain on sale of depreciable real estate (298) (2,466) (298) (2,466)
Gain on sale of joint venture depreciable real estate (1) (2,239)
Deferred gain recognized on real estate (117)
Noncontrolling interest in Operating Partnership (2) 199 34 476 123
Subtotal 26,598 21,054 53,514 42,263
Add preferred share dividends (if converted) 1,675 1,813 3,487 3,625
FFO $28,273 $22,867 $57,001 $45,888
Provision for impairment on land available for development or sale 2,521
(Gain ) loss on extinguishment of debt (1,387) 860 (1,387) 860
Gain on extinguishment of joint venture debt (1) (106)
Acquisition costs 265 451 307 533
Preferred share conversion costs 500 500
Operating FFO $27,651 $24,178 $58,942 $47,175
Weighted average common shares 79,124 68,853 78,528 67,966
Shares issuable upon conversion of Operating Partnership Units (2) 2,247 2,252 2,247 2,252
Dilutive effect of securities 195 244 203 243
Subtotal 81,566 71,349 80,978 70,461
Shares issuable upon conversion of preferred shares 6,538 6,990 6,792 6,990
Weighted average equivalent shares outstanding, diluted 88,104 78,339 87,770 77,451
FFO, per diluted share (3) $0.32 $0.29 $0.65 $0.59
Operating FFO, per diluted share $0.31 $0.31 $0.67 $0.61
Dividend per common share $0.2000 $0.18750 $0.4000 $0.3750
Payout ratio - Operating FFO 64.5% 60.5% 59.7% 61.5%
(1) Amount included in earnings (loss) from unconsolidated joint ventures.
(2) The total non-controlling interest reflects OP units convertible 1:1 into common shares.
(3) Six months ended June 30, 2015 includes $0.04 per share attributable to gain on sale of land at Gaines Marketplace.

We consider funds from operations, also known as "FFO", to be an appropriate supplemental measure of the financial performance of an equity REIT. Under the NAREIT definition, FFO represents net income (computed in accordance with generally accepted accounting principles), excluding gains (or losses) from sales of depreciable property and excluding impairment provisions on depreciable real estate or on investments in non-consolidated investees that are driven by measurable decreases in the fair value of depreciable real estate held by the investee, plus depreciation and amortization, (excluding amortization of financing costs). Adjustments for unconsolidated partnerships and joint ventures are calculated to reflect funds from operations on the same basis. Also, we consider "Operating FFO" a meaningful, additional measure of financial performance because it excludes acquisition costs and periodic items such as impairment provisions on land available for development or sale, bargain purchase gains, and gains or losses on extinguishment of debt that are not adjusted under the current NAREIT definition of FFO. We provide a reconciliation of FFO to Operating FFO. FFO and Operating FFO should not be considered alternatives to GAAP net income available to common shareholders or as alternatives to cash flow as measures of liquidity. While we consider FFO and Operating FFO useful measures for reviewing our comparative operating and financial performance between periods or to compare our performance to different REITs, our computations of FFO and Operating FFO may differ from the computations utilized by other real estate companies, and therefore, may not be comparable.

CONTACT: Company Contact: Dawn L. Hendershot, Vice President of Investor Relations and Corporate Communications 31500 Northwestern Highway, Suite 300 Farmington Hills, MI 48334 dhendershot@rgpt.com (248) 592-6202Source:Ramco-Gershenson Properties Trust