EX-99.1 2 roic-93022xpressreleasexex.htm EX-99.1 Document

Retail Opportunity Investments Corp.                 TRADED: NASDAQ: ROIC
11250 El Camino Real, Suite 200
San Diego, CA 92130

FOR IMMEDIATE RELEASE
Tuesday, October 25, 2022

Retail Opportunity Investments Corp. Reports
2022 Third Quarter Results

San Diego, CA, October 25, 2022 - Retail Opportunity Investments Corp. (NASDAQ:ROIC) announced today financial and operating results for the three and nine months ended September 30, 2022.

HIGHLIGHTS
•$18.5 million of net income attributable to common stockholders ($0.15 per diluted share)
•$36.5 million in Funds From Operations (FFO)(1) ($0.27 per diluted share)
•FFO guidance range for 2022 narrowed ($1.09 - $1.11 per diluted share)
•1.2 million square feet of leases executed during first nine months of ‘22 (record activity)
•97.8% portfolio lease rate at 9/30/22 (vs. 97.6% at 6/30/22 and 97.4% at 9/30/21)
•47.7% increase in same-space cash base rents on new leases (6.8% renewal increase)
•2.1% increase in same-center cash net operating income (3Q‘22 vs. 3Q‘21)
•4.4% increase in same-center cash net operating income (first nine months ‘22 vs. ‘21)
•$120.2 million of grocery-anchored shopping centers acquired
•$36.2 million property sold
•3.5x interest coverage ratio for 3Q‘22
•6.6x net principal debt-to-annualized EBITDA ratio for 3Q‘22
•$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, “Demand for space continues to be strong across our portfolio and we continue to make the most of it, leasing space at a record pace with the third quarter being our most active and strongest year-to-date. During the third quarter, we leased over 480,000 square feet, increased our portfolio lease rate to 97.8%, and achieved a 47.7% increase in same-space base rents on new leases signed during the quarter.” Tanz added, “Overall, our West Coast grocery-anchored portfolio continues to perform well and we are poised to finish the year strong and with good momentum as we head towards 2023.”
FINANCIAL RESULTS SUMMARY
For the three months ended September 30, 2022, GAAP net income attributable to common stockholders was $18.5 million, or $0.15 per diluted share, as compared to GAAP net income attributable to common stockholders of $21.1 million, or $0.17 per diluted share, for the three months ended September 30, 2021. For the nine months ended September 30, 2022, GAAP net income attributable to common stockholders was $41.7 million, or $0.33 per diluted share, as compared to GAAP net income attributable to common stockholders of $45.0 million, or $0.38 per diluted share, for the nine months ended September 30, 2021. Included in 2021 GAAP net income was a $12.9 million and a $22.3 million gain on sale of real estate for the three and nine months ended September 30, 2021, respectively, as compared to a $7.7 million gain on sale of real estate for both the three and nine months ended September 30, 2022.



FFO for the third quarter of 2022 was $36.5 million, or $0.27 per diluted share, as compared to $32.6 million in FFO, or $0.25 per diluted share for the third quarter of 2021. FFO for the first nine months of 2022 was $109.4 million, or $0.83 per diluted share, as compared to $95.3 million in FFO, or $0.74 per diluted share for the first nine months of 2021. ROIC reports FFO as a supplemental performance measure in accordance with the definition set forth by the National Association of Real Estate Investment Trusts. A reconciliation of GAAP net income to FFO is provided at the end of this press release.

For the third quarter of 2022, same-center net operating income (NOI) was $48.5 million, as compared to $47.5 million in same-center NOI for the third quarter of 2021, representing a 2.1% increase. For the first nine months of 2022, same-center NOI increased 4.4% as compared to same-center NOI for the first nine months of 2021. ROIC reports same-center comparative NOI on a cash basis. A reconciliation of GAAP operating income to same-center comparative NOI is provided at the end of this press release.

At September 30, 2022, ROIC had total real estate assets (before accumulated depreciation) of approximately $3.4 billion and approximately $1.4 billion of principal debt outstanding. As of September 30, 2022, 95.5% of ROIC’s principal debt outstanding was unsecured, including $52.0 million outstanding on its $600.0 million unsecured revolving credit facility. Additionally, ROIC’s interest coverage ratio and net principal debt-to-annualized EBITDA ratio for the third quarter of 2022 was 3.5 times and 6.6 times, respectively, and 96.6% of its portfolio was unencumbered at September 30, 2022, based on gross leasable area.
ACQUISITION & DISPOSITION SUMMARY
Year-to-date, ROIC has acquired $120.2 million of grocery-anchored shopping centers, including three grocery-anchored shopping centers acquired during the second quarter, totaling $60.0 million, and the following two grocery-anchored shopping centers acquired during the third quarter, totaling $60.2 million.

Ballinger Village
In August 2022, ROIC acquired Ballinger Village for $29.2 million. The shopping center is approximately 111,000 square feet and is anchored by Thriftway Supermarket and Rite Aid Pharmacy. The property is located in Shoreline, Washington, within the Seattle metropolitan area, and is currently 92.1% leased.
Thomas Lake Shopping Center
In August 2022, ROIC acquired Thomas Lake Shopping Center for $31.0 million. The shopping center is approximately 111,000 square feet and is anchored by Albertsons Supermarket and Rite Aid Pharmacy. The property is located in Mill Creek, Washington, within the Seattle metropolitan area, and is currently 100% leased.
In terms of property dispositions, during the third quarter ROIC sold one property for $36.2 million.
PROPERTY OPERATIONS SUMMARY
At September 30, 2022, ROIC’s portfolio was 97.8% leased. During the third quarter of 2022, ROIC executed 133 leases, totaling 480,458 square feet, including 48 new leases, totaling 131,422 square feet, achieving a 47.7% increase in same-space comparative base rent, and 85 renewed leases, totaling 349,036 square feet, achieving a 6.8% increase in base rent. ROIC reports same-space comparative new lease and renewal base rents on a cash basis.
ENVIRONMENTAL, SOCIAL & GOVERNANCE
During the third quarter, ROIC issued its annual Environmental, Social and Governance (ESG) report, detailing its ESG achievements during 2021, as well as its ongoing initiatives and long term strategic goals. The report was prepared in accordance with the Sustainability Accounting Standards Board (SASB) standards, the Task Force on Climate-related Financial Disclosures (TCFD) framework, and the United Nations Sustainable Development Goals (SDG). The report is available at: https://www.roireit.net/assets/001/5927.pdf.



CASH DIVIDEND
On October 7, 2022, ROIC distributed a $0.15 per share cash dividend. On October 25, 2022, ROIC’s board of directors declared a cash dividend of $0.15 per share, payable on December 29, 2022 to stockholders of record on December 15, 2022.
2022 GUIDANCE SUMMARY
ROIC currently estimates that GAAP net income for 2022 will be within the range of $0.37 to $0.39 per diluted share, and FFO will be within the range of $1.09 to $1.11 per diluted share.

Year Ended December 31, 2022
PreviousCurrent
Low EndHigh EndLow EndHigh End
(unaudited, amounts in thousands except per share and percentage data)
GAAP net income applicable to stockholders$37,546 $44,907 $45,128 $47,708 
Funds from operations (FFO) – diluted$142,560 $150,080 $144,425 $147,075 
GAAP net income per diluted share$0.31 $0.36 $0.37 $0.39 
FFO per diluted share$1.08 $1.12 $1.09 $1.11 
Key Drivers
General and administrative expenses$22,500 $21,500 $22,000 $21,500 
Straight-line rent$2,400 $2,400 $3,000 $3,000 
Amortization of above- and below-market rent$11,300 $11,300 $11,900 $11,900 
Bad debt$3,000 $2,000 $2,500 $2,000 
Acquisitions$120,000 $200,000 $120,200 $120,200 
Dispositions$70,000 $100,000 $36,200 $36,200 
Same-center cash NOI growth (vs. 2021)4.0 %5.0 %4.0 %5.0 %
ROIC’s management will discuss guidance, and the underlying assumptions, on ROIC’s October 26, 2022 conference call. ROIC’s guidance is a forward-looking statement and is subject to risks and other factors noted elsewhere in this press release.
CONFERENCE CALL
ROIC will conduct a conference call to discuss its results on Wednesday, October 26, 2022 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:

http://register.vevent.com/register/BI1623ee85efbe4f19a4a0cdf6f20f99fa

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: http://edge.media-server.com/mmc/p/bqnpah2h

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:
http://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 September 30, 2022, ROIC owned 93 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)
September 30, 2022
 (unaudited)		December 31, 2021
ASSETS  
Real Estate Investments:  
Land$942,276 $915,861 
Building and improvements2,453,763 2,350,294 
 3,396,039 3,266,155 
Less:  accumulated depreciation556,930 510,836 
2,839,109 2,755,319 
Mortgage note receivable4,808 4,875 
Real Estate Investments, net2,843,917 2,760,194 
Cash and cash equivalents7,439 13,218 
Restricted cash1,997 2,145 
Tenant and other receivables, net54,177 55,787 
Deposits500 — 
Acquired lease intangible assets, net50,496 50,139 
Prepaid expenses1,504 5,337 
Deferred charges, net25,221 25,017 
Other assets16,437 17,007 
Total assets$3,001,688 $2,928,844 
LIABILITIES AND EQUITY  
Liabilities:  
Term loan$299,162 $298,889 
Credit facility52,000 — 
Senior Notes946,440 945,231 
Mortgage notes payable61,130 85,354 
Acquired lease intangible liabilities, net146,178 136,608 
Accounts payable and accrued expenses56,585 48,598 
Tenants’ security deposits7,525 7,231 
Other liabilities41,591 40,580 
Total liabilities1,610,611 1,562,491 
Commitments and contingencies
Equity:  
Preferred stock, $0.0001 par value 50,000,000 shares authorized; none issued and outstanding— — 
Common stock, $0.0001 par value, 500,000,000 shares authorized; 124,541,618 and 122,685,266 shares issued and outstanding at September 30, 2022 and December 31, 2021, respectively
12 12 
Additional paid-in capital1,609,588 1,577,837 
Accumulated dividends in excess of earnings(307,394)(297,801)
Accumulated other comprehensive income (loss)27 (3,154)
Total Retail Opportunity Investments Corp. stockholders’ equity1,302,233 1,276,894 
Non-controlling interests88,844 89,459 
Total equity1,391,077 1,366,353 
Total liabilities and equity$3,001,688 $2,928,844 


RETAIL OPPORTUNITY INVESTMENTS CORP.
Consolidated Statements of Operations
(Unaudited)
(In thousands, except per share data)

Three Months Ended September 30,Nine Months Ended September 30,
 2022202120222021
Revenues  
Rental revenue$77,420 $69,907 $229,675 $208,925 
Other income618 1,478 3,061 2,377 
Total revenues78,038 71,385 232,736 211,302 
Operating expenses
Property operating12,705 11,009 37,468 32,334 
Property taxes8,876 8,564 25,812 25,502 
Depreciation and amortization24,332 22,854 72,444 69,401 
General and administrative expenses5,203 4,746 16,145 14,353 
Other expense111 147 778 631 
Total operating expenses51,227 47,320 152,647 142,221 
Gain on sale of real estate7,653 12,880 7,653 22,340 
Operating income34,464 36,945 87,742 91,421 
Non-operating expenses  
Interest expense and other finance expenses(14,678)(14,356)(43,176)(43,173)
Net income19,786 22,589 44,566 48,248 
Net income attributable to non-controlling interests(1,264)(1,494)(2,896)(3,254)
Net Income Attributable to Retail Opportunity Investments Corp.$18,522 $21,095 $41,670 $44,994 
Earnings per share – basic$0.15 $0.17 $0.34 $0.38 
Earnings per share – diluted
$0.15 $0.17 $0.33 $0.38 
Dividends per common share$0.15 $0.11 $0.41 $0.33 





CALCULATION OF FUNDS FROM OPERATIONS
(Unaudited)
(In thousands)

Three Months Ended September 30,Nine Months Ended September 30,
2022202120222021
Net income attributable to ROIC$18,522 $21,095 $41,670 $44,994 
Plus:  Depreciation and amortization24,332 22,854 72,444 69,401 
Less: Gain on sale of real estate(7,653)(12,880)(7,653)(22,340)
Funds from operations – basic35,201 31,069 106,461 92,055 
Net income attributable to non-controlling interests1,264 1,494 2,896 3,254 
Funds from operations – diluted$36,465 $32,563 $109,357 $95,309 

SAME-CENTER CASH NET OPERATING INCOME ANALYSIS
(Unaudited)
(In thousands, except number of shopping centers and percentages)

Three Months Ended September 30,Nine Months Ended September 30,
20222021$ Change% Change20222021$ Change% Change
Number of shopping centers included in same-center analysis84 84 84 84 
Same-center occupancy97.8 %97.3 %0.5 %97.8 %97.3 %0.5 %
Revenues:
Base rents$51,309 $49,868 $1,441 2.9 %$153,292 $148,192 $5,100 3.4 %
Percentage rent193 90 103 114.4 %526 179 347 193.9 %
Recoveries from tenants17,441 16,352 1,089 6.7 %52,157 49,258 2,899 5.9 %
Other property income414 939 (525)(55.9)%2,268 1,493 775 51.9 %
Bad debt(610)(513)(97)18.9 %(1,310)(1,924)614 (31.9)%
Total Revenues68,747 66,736 2,011 3.0 %206,933 197,198 9,735 4.9 %
Operating Expenses
Property operating expenses11,959 10,850 1,109 10.2 %35,826 31,727 4,099 12.9 %
Property taxes8,256 8,363 (107)(1.3)%24,245 24,855 (610)(2.5)%
Total Operating Expenses20,215 19,213 1,002 5.2 %60,071 56,582 3,489 6.2 %
Same-Center Cash Net Operating Income$48,532 $47,523 $1,009 2.1 %$146,862 $140,616 $6,246 4.4 %



SAME-CENTER CASH NET OPERATING INCOME RECONCILIATION
(Unaudited)
(In thousands)

Three Months Ended September 30,Nine Months Ended September 30,
 2022202120222021
GAAP operating income$34,464 $36,945 $87,742 $91,421 
Depreciation and amortization24,332 22,854 72,444 69,401 
General and administrative expenses5,203 4,746 16,145 14,353 
Other expense111 147 778 631 
Gain on sale of real estate(7,653)(12,880)(7,653)(22,340)
Straight-line rent(922)(126)(2,288)(438)
Amortization of above- and below-market rent(2,906)(2,125)(9,218)(6,571)
Property revenues and other expenses (1)
(245)(183)(833)(364)
Total Company cash NOI52,384 49,378 157,117 146,093 
Non same-center cash NOI(3,852)(1,855)(10,255)(5,477)
Same-center cash NOI$48,532 $47,523 $146,862 $140,616 
____________________
(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