Excel Trust Announces Results For The Quarter Ended September 30, 2012, Declares Dividend

Excel Trust, Inc. (the "Company") announced today financial and operating results for the quarter ended September 30, 2012. A supplemental financial package with additional information can be found on Excel Trust's website under the Investor Relations tab.

Highlights for the Third Quarter 2012
  • Reported Adjusted Funds from Operations (AFFO) for the quarter of $7.3 million, or $0.21 per diluted share
  • Reported Funds from Operations (FFO) for the quarter of $0.20 per diluted share before transaction related costs of $0.02 per diluted share. Including transaction costs, FFO was $6.2 million, or $0.18 cents per diluted share.
  • Declared a fourth quarter 2012 dividend of $0.1625 per share, which equates to an annualized dividend rate of $0.65 per share
  • Acquired Chimney Rock Shopping Center for approximately $23.8 million
  • Entered into joint venture partnership for the La Costa Town Center with GEM Realty Capital, Inc.
  • Increased unsecured credit facility to $250 million and improved terms

Subsequent Events
  • Acquired Pavilion Crossing for approximately $13.1 million
  • Acquired Florida/Virginia portfolio for approximately $262.8 million
  • Completed a public offering of 9,775,000 shares of common at $12.00 per share, resulting in net proceeds of approximately $113.1 million

“The progress we made in the third quarter will benefit the company for years to come,” noted Gary Sabin, Chairman and CEO of Excel Trust. “We successfully added another quality property in Texas to our portfolio and put the finishing touches on our $263 million portfolio acquisition, which ultimately closed in October. We have now acquired over $1.1 billion in quality assets since our 2010 IPO and have significantly strengthened our balance sheet.”

Excel Trust reported Adjusted Funds From Operations (AFFO) for the third quarter of $7.3 million, or $0.21 per diluted share. Excel Trust reported Funds From Operations (FFO) for the three-month period ended September 30, 2012 of $6.2 million, or $0.18 per diluted share, which includes a deduction for transaction related costs of $0.02 cents. Net loss attributable to the common stockholders for the three-month period ended September 30, 2012 was $2.2 million, or $0.07 per diluted share. This compares to AFFO of $5.3 million, or $0.17 per diluted share, FFO of $3.6 million or $0.11 per diluted share and net loss attributable to the common stockholders of $2.6 million, or $0.09 per diluted share in the three-month period ended September 30, 2011.

Excel Trust reported AFFO for the nine months ended September 30, 2012 of $20.1 million, or $0.58 per diluted share and FFO of $18.7 million, or $0.54 per diluted share. Net loss attributable to the common stockholders for the nine months ended September 30, 2012 was $6.3 million, or $0.21 per diluted share. This compares to AFFO of $12.9 million, or $0.57 per diluted share, FFO of $10.1 million, or $0.45 per diluted share and net loss attributable to the common stockholders of $2.2 million and $0.13 per diluted share in the nine-month period ended September 30, 2011.

Included in FFO for the quarter ended September 30, 2012 were transaction costs of $637,000 related to acquisitions, or $0.02 per diluted share, and $1.2 million or $0.03 per diluted share in the nine months ended September 30, 2012. Included in FFO was non-cash compensation expense of approximately $817,000, or $0.02 per diluted share in the quarter ended September 30, 2012 and $2.4 million or $0.07 per diluted share in the nine months ended September 30, 2012, resulting from the Company’s incentive stock award plan. FFO was also impacted by a non-cash gain related to changes in the fair value of financial instruments and the redemption of certain OP units of approximately $61,000. For the nine months ended September 30, 2012, this gain was $1.1 million, or approximately $0.03 per diluted share. The change in the fair value of financial instruments was a reduction of the liability recorded for the fair value of a redemption provision related to the OP Units issued in connection with the acquisition of the Edwards Theatres property in March 2011.

Excel Trust considers AFFO and FFO important supplemental measures of its operating performance and believes that they are frequently used by securities analysts, investors and other interested parties in the evaluation of real estate investment trusts (REITs), many of which present AFFO and FFO when reporting their results. A complete reconciliation containing adjustments from GAAP net income available to common shareholders to AFFO and FFO and a definition of both are included at the end of this release.

Summary of Significant Activities During Third Quarter 2012

On July 20, 2012, Excel Trust amended its unsecured credit facility, increasing the borrowing capacity from $200 million to $250 million and lowering its interest rate. The facility now bears interest at a rate per annum equal to LIBOR plus 165 to 225 basis points (down from 220 to 300 basis points), depending on the company’s leverage ratio. If the Company is given an investment-grade credit rating by S&P or Moody’s in the future, the interest rate per annum will improve to LIBOR plus 100 basis points to 185 basis points. The facility includes an accordion feature that allows for an increase up to $450 million under specified circumstances. The maturity date of the credit facility is July 19, 2016 and can be extended for one year at the Company’s option.

On August 31, 2012, Excel Trust acquired Chimney Rock Shopping Center in Odessa, TX. The Company purchased this 151,339 square foot retail shopping center for approximately $23.8 million. The property is approximately 98% leased with another 205,019 square feet of retail space entitled but not constructed. Major tenants include Academy Sports, Best Buy, Marshalls, Kirkland’s and Ulta. Constructed in 2011, the center is well located at a busy intersection in Odessa, and benefits from the region’s low unemployment rate of 3.9% (Source: Bureau of Labor Statistics – September, 2012 preliminary).

On September 7, 2012, Excel Trust contributed the La Costa Town Center, a 121,429 square foot retail shopping center located in Carlsbad, California, to a newly formed joint venture with GEM Realty Capital, Inc. for proceeds of approximately $21.2 million. The Company owns a 20% ownership interest in the joint venture and acts as the day-to-day property manager for the shopping center. The Company receives fees for providing these management services and other construction and development services related to the property.

Events Subsequent to Third Quarter 2012

On October 1, 2012, Excel Trust acquired Pavilion Crossing in Brandon, Florida. The Company purchased this 68,400 square foot retail shopping center for approximately $13.1 million. Constructed in 2012, the property is approximately 97% leased and is anchored by Publix.

On October 19, 2012 Excel Trust acquired a portfolio of six shopping centers for approximately $262.8 million as outlined below.

Florida Portfolio – Orlando, FL: Five of the shopping centers are in the Orlando, Florida area (four centers are wholly owned and a 50% interest was acquired in a fifth center) which together comprise 319,264 square feet. Major tenants include Walgreens, CVS Pharmacy, Fifth Third Bank, Regions Bank, Fleming’s, Cantina Laredo, Big Fin, JoS. A. Bank and Ruth’s Chris Steak House. The shopping centers are approximately 96% leased and the weighted average household income in a three mile radius is estimated to be $127,286 (Source: AGS 2012).

West Broad Village – Richmond, Virginia: The sixth center is in Richmond, Virginia and comprises 385,897 square feet of retail and commercial space, with an additional 339 apartment units above the center. The retail portion is approximately 80% leased with another 35,000 square feet entitled but not constructed. Major tenants include Whole Foods, HomeGoods, REI, Wells Fargo, First Market Bank, Dave & Busters, Mimi’s Cafe, Kona Grill and Bonefish Grill. The apartments have experienced strong demand and are currently 98% leased. In a three mile radius the average household income is estimated to be $106,356 (Source: AGS 2012).

On October 30, 2012 Excel Trust completed the issuance of a public offering of 9,775,000 shares of its common stock, including the exercise of an overallotment option of 1,275,000 shares, at a public offering price of $12.00 per share, resulting in net proceeds of approximately $113.1 million after deducting the underwriters’ discount and estimated commissions and offering expenses. The Company intends to use the net proceeds from the offering to repay existing indebtedness under its unsecured revolving credit facility incurred in connection with the recent acquisitions, and for other general corporate and working capital purposes.

Fourth Quarter 2012 Dividends Declared

The Board of Directors declared a fourth quarter 2012 cash dividend of $0.1625 per common share payable on January 15, 2013 to shareholders of record as of December 31, 2012.

The Board of Directors has also declared a dividend of $0.4375 per share on the Company's Series A Cumulative Convertible Perpetual Preferred Shares, and a dividend of $0.5078 on its Series B Cumulative Redeemable Preferred Shares. The dividend on Excel Trust’s outstanding Series A and Series B Preferred Shares will be payable on January 15, 2013 to the Series A and Series B Preferred shareholders of record as of December 31, 2012.

Guidance

Excel Trust expects its AFFO per share for fiscal year 2013 to be between $0.80 and $0.88 and its’ FFO per share to be between $0.76 and $0.84. The above excludes transaction costs, leasing commissions and tenant improvement allowances. Excel Trust believes that AFFO is the most helpful indicator of the Company's ability to pay recurring dividends since it adjusts for certain non-cash and non-recurring items.

The foregoing estimates are forward-looking and reflect management's view of current and future market conditions, including certain assumptions with respect to leasing activity, rental rates, occupancy levels, interest rates, and the amount and timing of acquisitions and development activities. Excel Trust's actual results may differ materially from these estimates.

Conference Call

In conjunction with Excel Trust's results, you are invited to listen to its conference call on Thursday, November 8, 2012 at 1:00 p.m. Eastern Time.

PHONE: Conference call access information is as follows:Dial in number: (800) 299-8538International Dial in number: (617) 786-2902Pass code: 34697712

INTERNET: A live webcast of the conference call will be available through Excel Trust's web site at www.exceltrust.com. The conference call will be recorded and available for replay for seven days beginning at 4:00 p.m. ET on November 8, 2012. Replay access information is as follows:Dial in number: (888) 286-8010International Dial in number: (617) 801-6888Pass code: 30082346

About Excel Trust

Excel Trust, Inc. is a retail focused REIT that primarily targets community and power centers, grocery anchored neighborhood centers and freestanding retail properties. The Company has elected to be treated as a REIT, for U.S. federal income tax purposes. Excel Trust trades publicly on the NYSE under the symbol "EXL". For more information on Excel Trust, Inc., please visit www.exceltrust.com.

Forward Looking Statements

This press release may contain statements that are forward-looking, as that term is defined by the Private Securities Litigation Reform Act of 1995 or by the Securities and Exchange Commission in its rules, regulations and releases. These statements include, but are not limited to, discussions related to the Company's expectations regarding the performance of its business, its liquidity and capital resources and other non-historical statements. These forward-looking statements are based on management's beliefs, as well as assumptions made by, and information currently available to, management. When used in this release, the words "believe," "anticipate," "estimate," "expect," "intend" and similar expressions are intended to identify forward-looking statements. Although management believes that the expectations reflected in these forward-looking statements are reasonable, it can give no assurance that these expectations will prove to have been correct.

Funds From Operations (FFO) and Adjusted Funds From Operations (AFFO)

Excel Trust considers FFO and AFFO to be important supplemental measures of its operating performance and believes they are frequently used by securities analysts, investors and other interested parties in the evaluation of REITs, many of which present FFO and AFFO when reporting their results. FFO and AFFO are intended to exclude GAAP historical cost depreciation and amortization of real estate and related assets, which assumes that the value of real estate assets diminishes ratably over time. Historically, however, real estate values have risen or fallen with market conditions. Because FFO and AFFO exclude depreciation and amortization unique to real estate, gains and losses from property dispositions and extraordinary items, they provide a performance measure that, when compared year-over-year, reflects the impact to operations from trends in occupancy rates, rental rates, operating costs, development activities and interest costs, providing perspective not immediately apparent from net income.

Excel Trust computes FFO in accordance with standards established by the National Association of Real Estate Investment Trusts, or NAREIT. As defined by NAREIT, FFO represents net income (loss) (computed in accordance with generally accepted accounting principles, or GAAP), excluding real estate-related depreciation and amortization, impairment charges and net gains (losses) on the disposition of assets and after adjustments for unconsolidated partnerships and joint ventures. Excel Trust computes AFFO by adding to FFO the non-cash compensation expense, amortization of prepaid financing costs and non-recurring transaction costs, and other one-time items, then subtracting or adding straight-line rents, amortization of above and below market leases and non-incremental capital expenditures. Excel Trust's computation of FFO and AFFO may differ from the methodology for calculating FFO and AFFO utilized by other equity REITs and, accordingly, may not be comparable to such other REITs. Further, FFO and AFFO do not represent amounts available for management's discretionary use because of needed capital replacement or expansion, debt service obligations, or other commitments and uncertainties.

FFO and AFFO should not be considered alternatives to net income (loss) (computed in accordance with GAAP) as an indicator of Excel Trust's financial performance or to cash flow from operating activities (computed in accordance with GAAP) as an indicator of Excel Trust's liquidity, nor are they indicative of funds available to fund Excel Trust's cash needs, including Excel Trust's ability to pay dividends or make distributions.

Summarized Financial Statements

Reported results are preliminary and not final until the filing of Excel Trust's Form 10-Q or 10-K with the Securities and Exchange Commission and, therefore, remain subject to adjustment. The accompanying notes to follow in the Form 10-Q or 10-K are an integral part of these consolidated financial statements.

Balance Sheets
           
EXCEL TRUST, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
 
September 30, 2012 December 31, 2011
ASSETS:
 
Property:
Land $ 262,960 $ 236,941
Buildings 395,338 287,226
Site improvements 43,283 28,257
Tenant improvements 35,003 28,517
Construction in progress 262 21,312
Less accumulated depreciation   (31,074 )   (18,294 )
Property, net 705,772 583,959
Cash and cash equivalents 16,037 5,292
Restricted cash 5,265 3,680
Tenant receivables, net 4,270 4,174
Lease intangibles, net 68,946 68,556
Mortgage loan receivable - 2,000
Deferred rent receivable 4,920 2,997
Other assets 20,676 17,013
Investment in unconsolidated entities   1,348     -  
Total assets $ 827,234   $ 687,671  
 
LIABILITIES AND EQUITY:
 
Liabilities:
Mortgages payable, net $ 285,069 $ 244,961
Notes payable - 21,000
Accounts payable and other liabilities 18,798 21,080
Lease intangibles, net 16,122 13,843
Dividends/distributions payable   8,125     5,801  
Total liabilities 328,114 306,685
 
Equity:
Stockholders’ equity
Preferred stock 136,423 47,703
Common stock 348 302
Additional paid-in capital 352,282 319,875
Cumulative deficit   (1,970 )   (3,277 )
487,083 364,603
Accumulated other comprehensive loss   (567 )   (811 )
Total stockholders’ equity 486,516 363,792
Non-controlling interests   12,604     17,194  
Total equity   499,120     380,986  
Total liabilities and equity $ 827,234   $ 687,671  
 

Statements of Operations
                     
EXCEL TRUST, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data and dividends per share)
 
 

Three Months EndedSeptember 30, 2012

Three Months EndedSeptember 30, 2011

Nine Months EndedSeptember 30, 2012

Nine Months EndedSeptember 30, 2011
 
Revenues:
Rental revenue $ 17,382 $ 12,538 $ 50,550 $ 31,481
Tenant recoveries 4,084 2,702 10,536 6,821
Other income 287 143 975 349
Total revenues 21,753 15,383 62,061 38,651
 
Expenses:
Maintenance and repairs 1,435 932 4,110 2,351
Real estate taxes 2,579 1,724 7,104 4,236
Management fees 197 155 585 405
Other operating expenses 990 732 2,772 2,294
Changes in fair value of contingent consideration (121) - (121) (328)
General and administrative 3,321 3,187 10,136 8,977
Depreciation and amortization 8,602 6,375 25,432 16,937
Total expenses 17,003 13,105 50,018 34,872
 
Net operating income 4,750 2,278 12,043 3,779
 
Interest expense (4,169) (3,561) (11,829) (9,629)
Interest income 19 144 125 228
Loss from equity in unconsolidated entities (158) - - -
Gain on acquisition of real estate and sale of land parcel - - - 937
Changes in fair value of financial instruments and gain on OP unit redemption 61 (596) 1,112 (84)
       
Net income (loss) from continuing operations 503 (1,735) 1,451 (4,769)
 

Income from discontinued operations before gain on sale of real estate assets
- - - 1,023
Gain on sale of real estate assets - - - 3,976
       
Income from discontinued operations - - - 4,999
 
Net income (loss) 503 (1,735) 1,451 230
Net (income) loss attributable to non-controlling interests (2) (2) 14 (60)
       
Net income (loss) attributable to Excel Trust, Inc. 501 (1,737) 1,465 170
Preferred stock dividends (2,744) (875) (7,609) (2,353)
 
Net loss attributable to the common stockholders $ (2,243) $ (2,612) $ (6,144) $ (2,183)
 
Basic and diluted net loss per share $ (0.07) $ (0.09) $ (0.21) $ (0.13)
Weighted-average common shares outstanding - basic and diluted 33,294 29,634 32,616 20,386
Dividends declared per common share $ 0.1625 $ 0.155 $ 0.488 $ 0.445
 

Reconciliation of Net Income to FFO and AFFO
           
For the Periods Ended September 30, 2012
(In thousands, except per share data)
 
Excel Trust, Inc.'s FFO and AFFO available to common stockholders and operating partnership unitholders and a reconciliation to net income(loss) for the three and nine months ended September 30, 2012 is as follows:
 

Three Months EndedSeptember 30, 2012

Three Months EndedSeptember 30, 2011

Nine Months EndedSeptember 30, 2012

Nine Months EndedSeptember 30, 2011
 
Net loss attributable to the common stockholders $ (2,243 ) $ (2,612 ) $ (6,302 ) $ (2,183 )
 
Add:
Non-controlling interests in operating partnership (73 ) (118 ) (230 ) (25 )
Preferred stock dividends - -
Depreciation and amortization 8,602 6,375 25,432 17,352
Deduct:
Depreciation and amortization related to joint venture (41 ) (59 ) (165 ) (134 )
Gain on acquisition of real estate and sale of land parcel - - - (937 )
Gain on sale of real estate assets   -     -     -     (3,976 )
Funds from operations $ 6,245 $ 3,586 $ 18,735 $ 10,097
 
Adjustments:
Transaction costs 637 160 1,186 522
Deferred financing costs 451 387 1,410 956
Stock-based and other non-cash compensation expense 817 1,349 2,406 3,126
Changes in fair value of contingent consideration (121 ) - (121 ) (328 )
Changes in fair value of financial instruments (61 ) 596 (1,112 ) 84
Straight-line effects of lease revenue (632 ) (777 ) (2,009 ) (1,575 )
Amortization of above and below market leases 158 49 (12 ) 74
Non-incremental capital expenditures   (233 )   (11 )   (372 )   (65 )
Adjusted funds from operations $ 7,261   $ 5,339   $ 20,111   $ 12,891  
 
Weighted average common shares outstanding 33,294 29,634 32,616 20,386
Add:
OP units 1,057 1,405 1,218 1,212
Restricted stock 286 - 323 830
Contingent consideration related to business combinations 90 348 91 232
LTIP restricted stock - - - -
Common stock issuable upon conversion of preferred stock   -     -     -     -  
Weighted average common shares outstanding - diluted (FFO and AFFO)   34,727     31,387     34,248     22,660  
 
Funds from operations per share (diluted) $ 0.18 $ 0.11 $ 0.54 $ 0.45
Adjusted funds from operations per share (diluted) $ 0.21 $ 0.17 $ 0.58 $ 0.57
           
 
Other Information:
Leasing commissions paid $ 200 $ 231 $ 468 $ 422
Tenant improvements paid $ 947 $ 775 $ 1,805 $ 1,440

Copyright Business Wire 2010

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