Ramco-Gershenson Properties Trust Reports Financial And Operating Results For The Third Quarter 2016

FARMINGTON HILLS, Mich., Nov. 01, 2016 (GLOBE NEWSWIRE) -- Ramco-Gershenson Properties Trust (NYSE:RPT) today announced its financial and operating results for the three and nine months ended September 30, 2016.

THIRD QUARTER 2016 HIGHLIGHTS AND SUBSEQUENT TRANSACTIONS:
  • Net income attributable to common shareholders for the third quarter of $0.15 per diluted share.
  • Operating Funds from Operations ("Operating FFO") of $0.34 per diluted share.
  • Sold two Michigan shopping centers for $40.1 million.
  • Signed 65 comparable leases totaling 352,886 square feet at comparable rent growth of 11.2%.
  • Ended the quarter with a net debt to adjusted EBITDA of 6.1X.
  • Acquired Centennial Shops in affluent Minneapolis suburb of Edina for $32.1 million on October 11, 2016.

"Based on our solid performance in the quarter and year to date we are on track to meet our stated business objectives for 2016," said Dennis Gershenson, President and Chief Executive Officer. "Our two Michigan shopping center sales and subsequent purchase of Centennial Shops in metropolitan Minneapolis reflect our continued focus on selling lower-growth centers and redeploying that capital into high-quality shopping centers, that have significant internal growth potential and the ability to add long-term value through strategic redevelopments, in attractive first ring metropolitan sub-markets."

FINANCIAL RESULTS:

For the three months ended September 30, 2016:
  • Net income available to common shareholders of $11.9 million, or $0.15 per diluted share, compared to $32.0 million, or $0.38 per diluted share for the same period in 2015.
  • Operating FFO of $29.7 million, or $0.34 per diluted share, compared to $31.9 million, or $0.36 per diluted share for the same period in 2015.
  • FFO of $27.8 million, or $0.32 per diluted share, compared to $32.4 million, or $0.37 per diluted share for the same period in 2015.

For the Nine months ended September 30, 2016
  • Net income available to common shareholders of $47.7 million, or $0.60 per diluted share, compared to $44.8 million, or $0.57 per diluted share for the same period in 2015.  
  • Operating FFO of $90.0 million, or $1.02 per diluted share, compared to $87.7 million, or $1.00 per diluted share for the same period in 2015.
  • FFO of $89.6 million, or $1.02 per diluted share, compared to $89.4 million, or $1.02 per diluted share for the same period in 2015.

OPERATING RESULTS:
  • Consolidated portfolio leased occupancy of 94.2% and physical occupancy of 93.6%.
  • Signed 90 leases in the consolidated portfolio encompassing 464,812 square feet, including 65 leases totaling 352,886 square feet at comparable rental growth of 11.2%.

BALANCE SHEET METRICS (as of September 30, 2016):
  • Net debt to total market capitalization of 37.5%.
  • Net debt to adjusted EBITDA of 6.1X, interest coverage of 3.8X, and fixed charge coverage of 3.1X.
  • Weighted average debt maturity of 6.2 years.

INVESTMENT ACTIVITY:

Dispositions

The Company sold two Michigan shopping centers for $40.1 million.  The shopping centers sold were:
  • Shoppes at Fairlane Meadows, Dearborn, Michigan (100% ownership), a 157,000 square foot shopping center anchored by Best Buy and Citi Trends, with ABR per square foot of $13.85.
  • Livonia Plaza, Livonia, Michigan (100% ownership), a 137,000 square foot shopping center anchored by T.J. Maxx and Kroger, with ABR per square foot of $11.11.

Dispositions of income producing properties year-to-date totaled $121.9 million.

Acquisitions

Subsequent to quarter end, the Company purchased the 85,000 square foot upscale Centennial Shops in the affluent Minneapolis sub-market of Edina, Minnesota for $32.1 million. Centennial Shops is anchored by The Container Store, West Elm and Pinstripes, each of which operates its only Minneapolis location at the shopping center.  The center is 100% occupied and benefits from solid in-place tenancies, its infill location in a high income trade area and the opportunity to produce strong internal growth through mark-to-market of existing leases.  Additionally, the Company believes there is opportunity for future investment and long-term value creation at the shopping center.  Centennial Shops is the Company's second shopping center in metropolitan Minneapolis.

Redevelopment

The Company commenced two redevelopment projects, including the expansion of Buttermilk Towne Center in metropolitan Cincinnati for a new 12,500 square foot national anchor tenant and the expansion of River City Marketplace for a new 6,000 square foot tenant for a total cost of $4.4 million.  At September 30, 2016, the Company had 11 properties under redevelopment, expansion and/or re-anchoring with an estimated total cost of $79.4 million, which are expected to be completed in 2016 and 2017 producing a return on incremental costs of between 9.0 - 10.0%.

FINANCING ACTIVITY:

The Company entered into agreements to issue $75.0 million of senior unsecured notes in a private placement with two high-quality institutional investors.  The financing proceeds, as well as proceeds from recent asset sales, will be used to pay off debt maturities through 2017, including mortgages for Crofton Centre and River City Marketplace.  The notes have a 12-year term and are priced at a fixed interest rate of 3.64%.  The transaction is expected to close on November 30, 2016.

At quarter-end, the Company had $339.9 million available under its $350.0 million revolving line of credit.

DIVIDEND:

The Company declared a regular cash dividend of $0.22 per common share for the period of July 1, 2016 through September 30, 2016 and a Series D convertible perpetual preferred share dividend of $0.90625 per share for the same period.  The dividends were paid on October 3, 2016 to shareholders of record as of September 20, 2016.  The Operating FFO payout ratio was 64.7%.

2016 GUIDANCE:

The Company has narrowed its 2016 Operating FFO guidance range to $1.34 - $1.36 per share from $1.33 - $1.37.

CONFERENCE CALL/WEBCAST:Ramco-Gershenson Properties Trust will host a live broadcast of its third quarter conference call on Wednesday, November 2, 2016, 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.  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: 13646918), for one week.

SUPPLEMENTAL MATERIALS:The Company's quarterly financial and operating supplement is available on its corporate website 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 number of the largest metropolitan markets in the central United States.  At September 30, 2016, the Company owned interests in and managed a portfolio of 66 shopping centers with approximately 14.8 million square feet of gross leasable area.  At September 30, 2016, the Company's consolidated operating portfolio was 94.2% leased. For additional information about the Company please visit www.rgpt.com or follow Ramco-Gershenson on Twitter @RamcoGershenson and facebook.com/ramcogershenson/.

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)
       
  September 30,  2016   December 31,  2015
  (unaudited)    
ASSETS      
Income producing properties, at cost:      
Land $ 376,285     $ 392,352  
Buildings and improvements 1,729,737     1,792,129  
Less accumulated depreciation and amortization (342,749 )   (331,520 )
Income producing properties, net 1,763,273     1,852,961  
Construction in progress and land available for development or sale 66,362     60,166  
Real estate held for sale     453  
Net real estate 1,829,635     1,913,580  
Equity investments in unconsolidated joint ventures 3,154     4,325  
Cash and cash equivalents 3,630     6,644  
Restricted cash 25,948     8,708  
Accounts receivable (net of allowance for doubtful accounts of $2,355 and $2,790 as of September 30, 2016 and December 31, 2015, respectively) 15,884     18,705  
Acquired lease intangibles, net 72,430     88,819  
Other assets, net 83,045     87,890  
TOTAL ASSETS $ 2,033,726     $ 2,128,671  
       
LIABILITIES AND SHAREHOLDERS' EQUITY      
Notes payable, net $ 997,494     $ 1,083,711  
Capital lease obligation 1,108     1,108  
Accounts payable and accrued expenses 45,161     44,480  
Acquired lease intangibles, net 59,964     64,193  
Other liabilities 12,576     10,035  
Distributions payable 19,628     18,807  
TOTAL LIABILITIES $ 1,135,931     $ 1,222,334  
       
Commitments and Contingencies      
       
Ramco-Gershenson Properties Trust ("RPT") Shareholders' Equity:      
7.25% Series D Cumulative Convertible Perpetual Preferred Shares, $50 par $ 92,427     $ 92,427  
Common shares of beneficial interest, $0.01 par 793     792  
Additional paid-in capital 1,157,809     1,156,345  
Accumulated distributions in excess of net income (367,809 )   (363,937 )
Accumulated other comprehensive loss (6,528 )   (1,404 )
TOTAL SHAREHOLDERS' EQUITY ATTRIBUTABLE TO RPT 876,692     884,223  
Noncontrolling interest 21,103     22,114  
TOTAL SHAREHOLDERS' EQUITY 897,795     906,337  
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 2,033,726     $ 2,128,671  
               

 
RAMCO-GERSHENSON PROPERTIES TRUST
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
               
  Three Months Ended September30,   Nine Months Ended September30,
  2016   2015   Inc (Dec)   2016   2015   Inc (Dec)
REVENUE                      
Minimum rent $ 47,591     $ 47,324     $ 267     $ 144,540     $ 135,002     $ 9,538  
Percentage rent 71     25     46     511     396     115  
Recovery income from tenants 15,289     15,238     51     48,067     43,522     4,545  
Other property income 1,055     1,161     (106 )   2,927     2,870     57  
Management and other fee income 73     312     (239 )   429     1,422     (993 )
TOTAL REVENUE 64,079     64,060     19     196,474     183,212     13,262  
                       
EXPENSES                      
Real estate taxes 10,269     9,670     599     31,710     27,791     3,919  
Recoverable operating expense 6,475     7,234     (759 )   21,227     21,358     (131 )
Other non-recoverable operating expense 603     1,101     (498 )   2,560     2,808     (248 )
Depreciation and amortization 23,245     22,914     331     69,806     64,397     5,409  
Acquisition costs 55     267     (212 )   118     574     (456 )
General and administrative expense 5,787     4,020     1,767     17,075     14,368     2,707  
Provision for impairment 977         977     977     2,521     (1,544 )
TOTAL EXPENSES 47,411     45,206     2,205     143,473     133,817     9,656  
                       
OPERATING INCOME 16,668     18,854     (2,186 )   53,001     49,395     3,606  
                       
OTHER INCOME AND EXPENSES                      
Other expense, net (158 )   (171 )   13     (307 )   (362 )   55  
Gain on sale of real estate 9,359     4,536     4,823     35,684     8,005     27,679  
Earnings from unconsolidated joint ventures 119     13,977     (13,858 )   337     16,972     (16,635 )
Interest expense (10,795 )   (10,091 )   (704 )   (32,719 )   (30,118 )   (2,601 )
Amortization of deferred financing fees (345 )   (389 )   44     (1,099 )   (1,053 )   (46 )
Other gain on unconsolidated joint ventures     7,892     (7,892 )   215     7,892     (7,677 )
(Loss) gain on extinguishment of debt (847 )   27     (874 )   (847 )   1,414     (2,261 )
INCOME BEFORE TAX 14,001     34,635     (20,634 )   54,265     52,145     2,120  
Income tax provision (133 )   (29 )   (104 )   (234 )   (306 )   72  
NET INCOME 13,868     34,606     (20,738 )   54,031     51,839     2,192  
Net income attributable to noncontrolling partner interest (326 )   (940 )   614     (1,282 )   (1,416 )   134  
NET INCOME ATTRIBUTABLE TO RPT 13,542     33,666     (20,124 )   52,749     50,423     2,326  
Preferred share dividends (1,675 )   (1,675 )       (5,026 )   (5,162 )   136  
Preferred share conversion costs                 (500 )   500  
NET INCOME AVAILABLE TO COMMON SHAREHOLDERS $ 11,867     $ 31,991     $ (20,124 )   $ 47,723     $ 44,761     $ 2,962  
                       
EARNINGS PER COMMON SHARE                      
Basic $ 0.15     $ 0.39     $ (0.24 )   $ 0.60     $ 0.57     $ 0.03  
Diluted $ 0.15     $ 0.38     $ (0.23 )   $ 0.60     $ 0.57     $ 0.03  
                       
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING                      
Basic 79,249     79,162     87     79,226     78,742     484  
Diluted 79,437     85,881     (6,444 )   79,404     78,939     465  
                                   

 
RAMCO-GERSHENSON PROPERTIES TRUST
FUNDS FROM OPERATIONS
(In thousands, except per share data)
                 
    Three Months Ended September 30,   Nine Months Ended September 30,
    2016   2015   2016   2015
                 
Net income   $ 13,868     $ 34,606     $ 54,031     $ 51,839  
Net income attributable to noncontrolling partner interest   (326 )   (940 )   (1,282 )   (1,416 )
Preferred share dividends   (1,675 )   (1,675 )   (5,026 )   (5,162 )
Preferred share conversion costs               (500 )
Net income available to common shareholders   11,867     31,991     47,723     44,761  
Adjustments:                
Rental property depreciation and amortization expense   23,201     22,878     69,680     64,285  
Pro-rata share of real estate depreciation from unconsolidated joint ventures   74     296     237     1,694  
Gain on sale of depreciable real estate   (9,359 )   (3,871 )   (34,108 )   (4,169 )
Gain on sale of joint venture depreciable real estate (1)       (13,645 )   (26 )   (15,884 )
Other gain on unconsolidated joint ventures (2)       (7,892 )   (215 )   (7,892 )
FFO available to common shareholders   25,783     29,757     83,291     82,795  
Noncontrolling interest in Operating Partnership (3)   326     940     1,282     1,416  
Preferred share dividends (assuming conversion)   1,675     1,675     5,026     5,162  
FFO available to common shareholders and dilutive securities   $ 27,784     $ 32,372     $ 89,599     $ 89,373  
                 
(Gain) on sale of land       (666 )   (1,576 )   (3,837 )
Provision for impairment on land available for development or sale   977         977     2,521  
Loss (gain)  on extinguishment of debt   847     (27 )   847     (1,414 )
Acquisition costs   55     267     118     574  
Preferred share conversion costs               500  
Operating FFO available to common shareholders and dilutive securities   $ 29,663     $ 31,946     $ 89,965     $ 87,717  
                 
Weighted average common shares   79,249     79,162     79,226     78,742  
Shares issuable upon conversion of Operating Partnership Units (3)   1,917     2,226     1,951     2,240  
Dilutive effect of restricted stock   188     184     178     197  
Shares issuable upon conversion of preferred shares (4)   6,592     6,535     6,592     6,719  
Weighted average equivalent shares outstanding, diluted   87,946     88,107     87,947     87,898  
                 
FFO available to common shareholders and dilutive securities per share, diluted   $ 0.32     $ 0.37     $ 1.02     $ 1.02  
Operating FFO available to common shareholders and dilutive securities per share, diluted   $ 0.34     $ 0.36     $ 1.02     $ 1.00  
                 
Dividend per common share   $ 0.22     $ 0.21     $ 0.64     $ 0.61  
Payout ratio - Operating FFO   64.7 %   58.3 %   62.7 %   61.0 %
                 

  (1 ) Amount included in earnings from unconsolidated joint ventures.
  (2 ) The gain represents the difference between the carrying value and the fair value of our previously held equity investment in the joint properties triggered by disposals of joint venture properties.
  (3 ) The total non-controlling interest reflects OP units convertible 1:1 into common shares.
  (4 ) Series D convertible preferred shares are paid annual dividends of $6.7 million and are currently convertible into approximately 6.6 million shares of common stock.  They are dilutive only when earnings or FFO exceed approximately $0.26 per diluted share per quarter, which was the case for FFO for the three and nine months ended September 30, 2016 and 2015.  The conversion ratio is subject to adjustment based upon a number of factors, and such adjustment could affect the dilutive impact of the Series D convertible preferred shares on FFO and earnings per share in future periods.

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 gains (or losses) from sales of land and 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.
Company Contact:Dawn L. Hendershot, Vice President of Investor Relationsand Corporate Communications31500 Northwestern Highway, Suite 300Farmington Hills, MI 48334dhendershot@rgpt.com(248) 592-6202

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