Exhibit 99.1
Retail Value Inc. Quarterly Financial Supplement For the period ended September 30, 2018 rvi
R
Table of Contents
|
Section |
Page |
|
|
|
| Earnings Release & Financial Statements |
|
| 1-5 | |
|
|
|
| Company Summary |
|
| 6 | |
| 7 | |
| 8 | |
|
|
|
| Investments |
|
| 9 | |
|
|
|
| Debt Summary |
|
| 10 | |
|
|
|
| Shopping Center Summary |
|
| 11-12 | |
|
|
|
| Reporting Policies and Other |
|
| 13 | |
| 14-15 |
Retail Value Inc. considers portions of the information in this press release to be forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, both as amended, with respect to the Company's expectation for future periods. Although the Company believes that the expectations reflected in such forward-looking statements are based upon reasonable assumptions, it can give no assurance that its expectations will be achieved. For this purpose, any statements contained herein that are not historical fact may be deemed to be forward-looking statements. There are a number of important factors that could cause our results to differ materially from those indicated by such forward-looking statements, including, among other factors, the ability to execute our strategy as an independent, publicly traded company. Other risks and uncertainties that could cause our results to differ materially from those indicated by such forward-looking statements include our ability to sell assets on commercially reasonable terms; our ability to complete dispositions of assets under contract; the success of our asset sale strategy; property damage, expenses related thereto and other business and economic consequences (including the potential loss of rental revenues) resulting from extreme weather conditions in locations where we own properties, and the ability to estimate accurately the amounts thereof; sufficiency and timing of any insurance recovery payments related to damages from extreme weather conditions; local conditions such as supply of space or a reduction in demand for real estate in the area; competition from other available space; dependence on rental income from real property; the loss of, significant downsizing of or bankruptcy of a major tenant and the impact of any such event on rental income from other tenants at our properties; our ability to secure equity or debt financing on commercially acceptable terms or at all; our ability to enter into definitive agreements with regard to our financing arrangements or our failure to satisfy conditions to the completion of these arrangements; unforeseen changes to the Puerto Rican economy and government; the ability to secure and maintain management services provided to us, including pursuant to our external management agreement with one or more subsidiaries of SITE Centers; our ability to maintain our REIT status; and the finalization of the financial statements for the period ended September 30, 2018. For additional factors that could cause the results of the Company to differ materially from those indicated in the forward-looking statements, please refer to “Risk Factors” included in Amendment No. 1 to the Company’s Form 10 filed on June 14, 2018 and to the Company’s reports on Form 10-Q. The Company undertakes no obligation to publicly revise these forward-looking statements to reflect events or circumstances that arise after the date hereof.
ALUE INC. QUARTERLY FINANCIAL SUPPLEMENT FOR THE PERIOD ENDED SEPTEMBER 30, 201
For immediate release:
RETAIL VALUE INC. REPORTS THIRD QUARTER 2018 OPERATING RESULTS
BEACHWOOD, OHIO, November 5, 2018 – Retail Value Inc. (NYSE: RVI) today announced operating results for the quarter ended September 30, 2018.
“We made significant progress realizing equity value for shareholders in our first quarter as a public company, primarily through the sale of six continental U.S. properties for $162 million. We also remain focused on our operations, especially in Puerto Rico, where we expect repair and restoration work to be completed in the second half of 2019,” commented David R. Lukes, president and chief executive officer.
Results for the Quarter
|
|
• |
Third quarter net income attributable to common shareholders was $6.0 million, or $0.32 per diluted share. Third quarter operating funds from operations attributable to common shareholders (“Operating FFO” or “OFFO”) was $25.2 million, or $1.37 per diluted share. |
|
|
• |
Sold six shopping centers for an aggregate sales price of $162.2 million. |
Key Quarterly Operating Results
The following metrics are as of September 30, 2018:
|
|
|
Continental U.S. |
|
Puerto Rico |
|
Shopping Center Count |
|
30 |
|
12 |
|
Gross Leasable Area (thousands) |
|
10,399 |
|
4,431 |
|
Base Rent PSF |
|
$13.50 |
|
$20.65 |
|
Leased Rate |
|
93.1% |
|
87.0% |
|
Commenced Rate |
|
92.0% |
|
84.4% |
|
NOI (millions) |
|
$30.1 |
|
$16.9 |
About RVI
RVI is an independent publicly traded company trading under the ticker symbol “RVI” on the New York Stock Exchange. RVI holds assets in the continental U.S. and Puerto Rico and is managed by one or more subsidiaries of SITE Centers Corp. (formerly known as DDR Corp.). RVI focuses on realizing value in its business through operations and sales of its assets. Additional information about RVI is available at www.retailvalueinc.com.
Non-GAAP Measures
Funds from Operations (“FFO”) is a supplemental non-GAAP financial measure used as a standard in the real estate industry and is a widely accepted measure of real estate investment trust (“REIT”) performance. Management believes that both FFO and Operating FFO provide additional indicators of the financial performance of a REIT. The Company also believes that FFO and Operating FFO more appropriately measure the core operations of the Company and provide benchmarks to its peer group.
FFO is generally defined and calculated by the Company as net income (loss) (computed in accordance with GAAP) adjusted to exclude (i) gains and losses from disposition of depreciable real estate property, which are presented net of taxes, if any, (ii) impairment charges on depreciable real estate property and (iii) certain non-cash items. These non-cash items principally include real property depreciation and amortization of intangibles. The Company’s calculation of FFO is consistent with the
1
definition of FFO provided by the National Association of Real Estate Investment Trusts (“NAREIT”). The Company calculates Operating FFO by excluding certain non-operating charges and income. Operating FFO is useful to investors as the Company removes non-comparable charges and income to analyze the results of its operations and assess performance of the core operating real estate portfolio. Other real estate companies may calculate FFO and Operating FFO in a different manner.
The Company also uses net operating income (“NOI”), a non-GAAP financial measure, as a supplemental performance measure. NOI is calculated as property revenues less property-related expenses. The Company believes 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, reflects the impact on operations from trends in occupancy rates, rental rates, operating costs and acquisition and disposition activity on an unleveraged basis.
FFO, Operating FFO and NOI do not represent cash generated from operating activities in accordance with GAAP, are not necessarily indicative of cash available to fund cash needs and should not be considered as alternatives to net income computed in accordance with GAAP as indicators of the Company’s operating performance or as alternatives to cash flow as a measure of liquidity. Reconciliations of these non-GAAP measures to their most directly comparable GAAP measures are included in this release and the accompanying financial supplement.
Safe Harbor
RVI considers portions of the information in this press release to be forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, both as amended, with respect to the Company's expectation for future periods. Although the Company believes that the expectations reflected in such forward-looking statements are based upon reasonable assumptions, it can give no assurance that its expectations will be achieved. For this purpose, any statements contained herein that are not historical fact may be deemed to be forward-looking statements. There are a number of important factors that could cause our results to differ materially from those indicated by such forward-looking statements, including, among other factors, the ability to execute our strategy as an independent, publicly traded company. Other risks and uncertainties that could cause our results to differ materially from those indicated by such forward-looking statements include our ability to sell assets on commercially reasonable terms; our ability to complete dispositions of assets under contract; the success of our asset sale strategy; property damage, expenses related thereto and other business and economic consequences (including the potential loss of rental revenues) resulting from extreme weather conditions in locations where we own properties, and the ability to estimate accurately the amounts thereof; sufficiency and timing of any insurance recovery payments related to damages from extreme weather conditions; local conditions such as supply of space or a reduction in demand for real estate in the area; competition from other available space; dependence on rental income from real property; the loss of, significant downsizing of or bankruptcy of a major tenant and the impact of any such event on rental income from other tenants at our properties; our ability to secure equity or debt financing on commercially acceptable terms or at all; our ability to enter into definitive agreements with regard to our financing arrangements or our failure to satisfy conditions to the completion of these arrangements; unforeseen changes to the Puerto Rican economy and government; the ability to secure and maintain management services provided to us, including pursuant to our external management agreement with one or more subsidiaries of SITE Centers; our ability to maintain our REIT status; and the finalization of the financial statements for the period ended September 30, 2018. For additional factors that could cause the results of the Company to differ materially from those indicated in the forward-looking statements, please refer to “Risk Factors” included in Amendment No. 1 to the Company’s Form 10 filed on June 14, 2018 and to the Company’s reports on Form 10-Q. The Company undertakes no obligation to publicly revise these forward-looking statements to reflect events or circumstances that arise after the date hereof.
2
Retail Value Inc.
Income Statement
|
$ in thousands, except per share |
|
|
|
|
| |
|
|
|
3Q18 |
|
3Q18 |
|
Total |
|
|
|
Continental U.S. |
|
Puerto Rico |
|
3Q18 |
|
|
|
|
|
|
|
|
|
|
Revenues (1): |
|
|
|
|
|
|
|
Minimum rents (2) |
$33,173 |
|
$15,413 |
|
$48,586 |
|
|
Percentage rent |
119 |
|
239 |
|
358 |
|
|
Recoveries |
11,019 |
|
5,038 |
|
16,057 |
|
|
Other property revenues (3) |
381 |
|
1,869 |
|
2,250 |
|
|
Business interruption income |
0 |
|
2,404 |
|
2,404 |
|
|
|
44,692 |
|
24,963 |
|
69,655 |
|
|
Expenses (4): |
|
|
|
|
|
|
|
Operating and maintenance |
6,687 |
|
6,972 |
|
13,659 |
|
|
Real estate taxes |
7,944 |
|
1,118 |
|
9,062 |
|
|
|
14,631 |
|
8,090 |
|
22,721 |
|
|
|
|
|
|
|
|
|
|
Net operating income (5) |
30,061 |
|
16,873 |
|
46,934 |
|
|
|
|
|
|
|
|
|
|
Other income (expense): |
|
|
|
|
|
|
|
Asset management fees |
|
|
|
|
(3,269) |
|
|
Interest expense |
|
|
|
|
(17,050) |
|
|
Depreciation and amortization |
|
|
|
|
(22,138) |
|
|
General and administrative |
|
|
|
|
(1,009) |
|
|
Impairment charges |
|
|
|
|
(4,420) |
|
|
Hurricane property loss |
|
|
|
|
(155) |
|
|
Debt extinguishment costs, net |
|
|
|
|
(2,713) |
|
|
Transaction costs |
|
|
|
|
(179) |
|
|
Other income (expense), net |
|
|
|
|
445 |
|
|
Loss before other items |
|
|
|
|
(3,554) |
|
|
|
|
|
|
|
|
|
|
Tax expense |
|
|
|
|
(328) |
|
|
Gain on disposition of real estate, net (6) |
|
|
|
|
9,835 |
|
|
Net income |
|
|
|
|
$5,953 |
|
|
|
|
|
|
|
|
|
|
Weighted average shares – Basic & Diluted – EPS |
|
|
|
|
18,464 |
|
|
|
|
|
|
|
|
|
|
Earnings per common share – Basic & Diluted |
|
|
|
|
$0.32 |
|
|
|
|
|
|
|
|
|
|
Revenue items: |
|
|
|
|
|
|
(1) |
Lost revenue related to hurricane |
|
|
|
|
($2,401) |
|
(2) |
Ground lease revenue |
|
|
|
|
4,108 |
|
(3) |
Lease termination fees |
|
|
|
|
11 |
|
|
|
|
|
|
|
|
|
(4) |
Operating expenses: |
|
|
|
|
|
|
|
Property management fees |
|
|
|
|
(3,283) |
|
|
Bad debt expense |
|
|
|
|
(4) |
|
|
|
|
|
|
|
|
|
(5) |
NOI from assets sold in 3Q18 |
|
|
|
|
1,540 |
|
|
|
|
|
|
|
|
|
(6) |
SITE disposition fees |
|
|
|
|
(1,622) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3
Retail Value Inc.
Reconciliation: Net Income to FFO and Operating FFO
and Other Financial Information
|
$ in thousands, except per share |
| |
|
|
|
3Q18 |
|
|
|
|
|
|
Net income attributable to Common Shareholders |
$5,953 |
|
|
Depreciation and amortization of real estate |
22,100 |
|
|
Impairment of depreciable real estate |
4,420 |
|
|
Gain on disposition of depreciable real estate, net |
(9,835) |
|
|
FFO attributable to Common Shareholders |
$22,638 |
|
|
|
|
|
|
Hurricane property loss, net (1) |
152 |
|
|
Debt extinguishment, transaction, other, net |
2,447 |
|
|
Total non-operating items, net |
2,599 |
|
|
Operating FFO attributable to Common Shareholders |
$25,237 |
|
|
|
|
|
|
Weighted average shares and units – Basic & Diluted – FFO & OFFO |
18,465 |
|
|
|
|
|
|
FFO per share – Basic & Diluted |
$1.23 |
|
|
Operating FFO per share – Basic & Diluted |
$1.37 |
|
|
Common stock dividends declared, per share |
$0.00 |
|
|
|
|
|
|
Certain non-cash items: |
|
|
|
Straight-line rent, net |
$101 |
|
|
Loan cost amortization |
(1,498) |
|
|
Non-real estate depreciation expense |
(38) |
|
|
|
|
|
|
Capital expenditures: |
|
|
|
Maintenance capital expenditures |
683 |
|
|
Tenant allowances and landlord work |
1,626 |
|
|
Leasing commissions (2) |
918 |
|
|
|
|
|
(1) |
Hurricane property (income) loss: |
|
|
|
Lost tenant revenue |
2,401 |
|
|
Business interruption income |
(2,404) |
|
|
Clean up costs and other expenses |
155 |
|
|
|
152 |
|
|
|
|
|
(2) |
SITE lease commissions |
665 |
4
Retail Value Inc.
Balance Sheet
|
$ in thousands |
| |
|
|
|
At Period End |
|
|
|
3Q18 |
|
|
|
|
|
|
Assets: |
|
|
|
Land |
$658,435 |
|
|
Buildings |
1,695,770 |
|
|
Fixtures and tenant improvements |
176,391 |
|
|
|
2,530,596 |
|
|
Depreciation |
(706,700) |
|
|
|
1,823,896 |
|
|
Construction in progress and land |
44,021 |
|
|
Real estate, net |
1,867,917 |
|
|
|
|
|
|
Cash |
28,593 |
|
|
Restricted cash |
103,559 |
|
|
Receivables, net (1) |
31,479 |
|
|
Property insurance receivable |
48,467 |
|
|
Intangible assets, net |
40,810 |
|
|
Other assets, net |
12,471 |
|
|
Total Assets |
2,133,296 |
|
|
|
|
|
|
Liabilities and Equity: |
|
|
|
Secured debt |
1,128,780 |
|
|
|
1,128,780 |
|
|
Payable to SITE |
36,469 |
|
|
Other liabilities (2) |
94,685 |
|
|
Total Liabilities |
1,259,934 |
|
|
|
|
|
|
Redeemable preferred equity |
190,000 |
|
|
|
|
|
|
Common shares |
1,846 |
|
|
Paid-in capital |
675,566 |
|
|
Distributions in excess of net income |
5,953 |
|
|
Common shares in treasury at cost |
(3) |
|
|
Total Equity |
683,362 |
|
|
|
|
|
|
Total Liabilities and Equity |
$2,133,296 |
|
|
|
|
|
(1) |
Straight-line rents receivable, net |
19,594 |
|
|
|
|
|
(2) |
Below-market leases, net |
42,812 |
5
Retail Value Inc.
Portfolio Summary
|
GLA in thousands |
|
|
|
|
|
|
|
|
|
|
9/30/2018 |
|
6/30/2018 |
|
3/31/2018 |
|
|
Shopping Center Count |
|
|
|
|
|
|
|
|
Operating Centers |
|
42 |
|
48 |
|
50 |
|
|
Continental U.S. |
|
30 |
|
36 |
|
38 |
|
|
Puerto Rico |
|
12 |
|
12 |
|
12 |
|
|
|
|
|
|
|
|
|
|
|
Gross Leasable Area (GLA) |
|
|
|
|
|
|
|
|
Owned and Ground Lease |
|
14,830 |
|
15,991 |
|
16,471 |
|
|
Continental U.S. |
|
10,399 |
|
11,560 |
|
12,040 |
|
|
Puerto Rico |
|
4,431 |
|
4,431 |
|
4,431 |
|
|
Unowned |
|
3,277 |
|
3,437 |
|
3,758 |
|
|
|
|
|
|
|
|
|
|
|
Quarterly Operational Overview |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Continental U.S. |
|
|
|
|
|
|
|
|
Base Rent PSF |
|
$13.50 |
|
$13.56 |
|
$13.63 |
|
|
Leased Rate |
|
93.1% |
|
92.5% |
|
93.4% |
|
|
Leased Rate < 10K SF |
|
85.6% |
|
83.5% |
|
85.0% |
|
|
Leased Rate > 10K SF |
|
95.1% |
|
95.1% |
|
95.8% |
|
|
|
|
|
|
|
|
|
|
|
Puerto Rico |
|
|
|
|
|
|
|
|
Base Rent PSF |
|
$20.65 |
|
$20.71 |
|
$20.89 |
|
|
Leased Rate |
|
87.0% |
|
87.1% |
|
87.0% |
|
|
Leased Rate < 10K SF |
|
78.5% |
|
79.0% |
|
79.3% |
|
|
Leased Rate > 10K SF |
|
91.0% |
|
91.0% |
|
90.7% |
|
|
|
|
|
|
|
|
|
|
|
Operational Statistics |
|
|
|
|
|
|
|
|
% of Aggregate Property NOI - Continental U.S. |
|
62.8% |
|
65.5% |
|
65.8% |
|
|
% of Aggregate Property NOI Puerto Rico |
|
37.2% |
|
34.5% |
|
34.2% |
|
6
Retail Value Inc.
Top 35 Tenants
|
$ and GLA in thousands |
|
|
|
|
| |||
|
|
|
|
|
|
|
Credit Ratings | ||
|
|
|
Tenant |
Number of Units |
Base Rent |
% of Total |
Owned GLA |
% of Total |
(S&P/Moody's/Fitch) |
|
1 |
|
Walmart (1) |
11 |
$9,458 |
4.9% |
1,496 |
10.1% |
AA/A2/AA |
|
2 |
|
TJX Companies (2) |
18 |
6,683 |
3.5% |
583 |
3.9% |
A+/A2/NR |
|
3 |
|
Bed Bath & Beyond (3) |
15 |
6,012 |
3.1% |
556 |
3.7% |
BBB-/Baa2/NR |
|
4 |
|
PetSmart |
15 |
5,079 |
2.6% |
299 |
2.0% |
CCC/Caa1/NR |
|
5 |
|
Ross Stores |
16 |
4,667 |
2.4% |
454 |
3.1% |
A-/A3/NR |
|
6 |
|
Kohl's |
6 |
4,215 |
2.2% |
554 |
3.7% |
BBB-/Baa2/BBB |
|
7 |
|
Best Buy |
7 |
4,064 |
2.1% |
274 |
1.8% |
BBB/Baa1/BBB |
|
8 |
|
Gap (4) |
12 |
3,440 |
1.8% |
191 |
1.3% |
BB+/Baa2/NR |
|
9 |
|
Dick's Sporting Goods |
5 |
3,231 |
1.7% |
228 |
1.5% |
NR |
|
10 |
|
Lowe's |
3 |
2,964 |
1.5% |
385 |
2.6% |
A-/A3/NR |
|
11 |
|
Michaels |
9 |
2,904 |
1.5% |
216 |
1.5% |
BB-/NR/NR |
|
12 |
|
Rainbow Apparel |
25 |
2,787 |
1.4% |
132 |
0.9% |
NR |
|
13 |
|
Footlocker |
16 |
2,473 |
1.3% |
65 |
0.4% |
BB+/Ba1/NR |
|
14 |
|
BJ's Wholesale Club |
2 |
2,455 |
1.3% |
224 |
1.5% |
B/NR/NR |
|
15 |
|
Office Depot (5) |
6 |
2,346 |
1.2% |
129 |
0.9% |
B/B1/NR |
|
16 |
|
Ascena (6) |
22 |
2,150 |
1.1% |
129 |
0.9% |
B/Ba3/NR |
|
17 |
|
Cinemark |
2 |
2,111 |
1.1% |
136 |
0.9% |
BB/NR/NR |
|
18 |
|
AMC Theatres |
1 |
2,111 |
1.1% |
92 |
0.6% |
B/B2/B |
|
19 |
|
Regal Cinemas |
2 |
2,050 |
1.1% |
110 |
0.7% |
NR |
|
20 |
|
Ulta |
8 |
2,016 |
1.0% |
87 |
0.6% |
NR |
|
21 |
|
Claro |
15 |
2,015 |
1.0% |
26 |
0.2% |
A-/A3/A- |
|
22 |
|
Burlington |
4 |
1,845 |
1.0% |
244 |
1.6% |
BB/NR/NR |
|
23 |
|
Home Depot |
2 |
1,817 |
0.9% |
229 |
1.5% |
A/A2/A |
|
24 |
|
JC Penney |
4 |
1,791 |
0.9% |
331 |
2.2% |
B-/B3/B |
|
25 |
|
Five Below |
12 |
1,781 |
0.9% |
107 |
0.7% |
NR |
|
26 |
|
Yum! Brands |
15 |
1,650 |
0.9% |
32 |
0.2% |
BB/Ba3/NR |
|
27 |
|
Dollar Tree Stores |
13 |
1,642 |
0.9% |
139 |
0.9% |
BBB-/Baa3/NR |
|
28 |
|
Sprint |
15 |
1,635 |
0.8% |
35 |
0.2% |
B/B2/B+ |
|
29 |
|
T-Mobile |
14 |
1,612 |
0.8% |
26 |
0.2% |
BB+/NR/NR |
|
30 |
|
AT&T |
19 |
1,606 |
0.8% |
36 |
0.2% |
BBB/Baa2/A- |
|
31 |
|
Sears (7) |
3 |
1,506 |
0.8% |
281 |
1.9% |
D/Ca/D |
|
32 |
|
Walgreens |
4 |
1,430 |
0.7% |
55 |
0.4% |
BBB/Baa2/BBB |
|
33 |
|
Jo-Ann |
3 |
1,416 |
0.7% |
113 |
0.8% |
B/B2/NR |
|
34 |
|
Pier 1 Imports |
7 |
1,413 |
0.7% |
69 |
0.5% |
NR/Caa1/NR |
|
35 |
|
Tiendas Kress |
10 |
1,372 |
0.7% |
57 |
0.4% |
NR |
|
|
|
Top 35 Total |
341 |
$97,747 |
50.6% |
8,120 |
54.8% |
|
|
|
|
Total Portfolio |
|
$193,029 |
100.0% |
14,830 |
100.0% |
|
|
|
|
|
|
|
|
|
|
|
|
(1) Walmart (9) / Sam's Club (2) |
(5) Office Depot (1) / OfficeMax (5) | |||||||
|
(2) T.J. Maxx (9) / Marshalls (8) / HomeGoods (1) |
(6) Catherine's (1) / Dress Barn (6) / Justice (4) / Lane Bryant (7) / Maurice's (4) | |||||||
|
(3) Bed Bath (13) / World Market (1) / CTS (1) |
(7) Sears (1) / Kmart (2) | |||||||
|
(4) Gap (1) / Old Navy (11) |
| |||||||
7
Retail Value Inc.
Lease Expirations
|
$ and GLA in thousands |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assumes no exercise of lease options |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Greater than 10K SF |
|
Less than 10K SF |
|
Total |
||||||||||||||||||
|
Year |
# of Leases |
|
Expiring SF |
ABR |
|
Rent PSF |
% of ABR > 10K |
|
# of Leases |
|
Expiring SF |
ABR |
|
Rent PSF |
% of ABR < 10K |
|
# of Leases |
|
Expiring SF |
ABR |
|
Rent PSF |
% of ABR Total |
|
MTM |
0 |
|
0 |
$0 |
|
$0.00 |
0.0% |
|
42 |
|
112 |
$3,557 |
|
$31.76 |
4.8% |
|
42 |
|
112 |
$3,557 |
|
$31.76 |
2.0% |
|
2018 |
1 |
|
30 |
249 |
|
$8.30 |
0.2% |
|
39 |
|
84 |
2,962 |
|
$35.26 |
4.0% |
|
40 |
|
114 |
3,211 |
|
$28.17 |
1.8% |
|
2019 |
20 |
|
580 |
7,527 |
|
$12.98 |
7.5% |
|
186 |
|
497 |
13,459 |
|
$27.08 |
18.0% |
|
206 |
|
1,077 |
20,986 |
|
$19.49 |
12.0% |
|
2020 |
32 |
|
1,322 |
13,908 |
|
$10.52 |
13.8% |
|
171 |
|
400 |
12,727 |
|
$31.82 |
17.1% |
|
203 |
|
1,722 |
26,635 |
|
$15.47 |
15.2% |
|
2021 |
35 |
|
1,227 |
15,141 |
|
$12.34 |
15.0% |
|
124 |
|
334 |
9,130 |
|
$27.34 |
12.2% |
|
159 |
|
1,561 |
24,271 |
|
$15.55 |
13.8% |
|
2022 |
52 |
|
1,851 |
20,020 |
|
$10.82 |
19.8% |
|
98 |
|
243 |
8,055 |
|
$33.15 |
10.8% |
|
150 |
|
2,094 |
28,075 |
|
$13.41 |
16.0% |
|
2023 |
38 |
|
1,522 |
16,248 |
|
$10.68 |
16.1% |
|
89 |
|
316 |
8,531 |
|
$27.00 |
11.4% |
|
127 |
|
1,838 |
24,779 |
|
$13.48 |
14.1% |
|
2024 |
31 |
|
1,231 |
12,073 |
|
$9.81 |
12.0% |
|
55 |
|
229 |
6,026 |
|
$26.31 |
8.1% |
|
86 |
|
1,460 |
18,099 |
|
$12.40 |
10.3% |
|
2025 |
16 |
|
300 |
4,073 |
|
$13.58 |
4.0% |
|
36 |
|
149 |
3,926 |
|
$26.35 |
5.3% |
|
52 |
|
449 |
7,999 |
|
$17.82 |
4.6% |
|
2026 |
8 |
|
236 |
2,550 |
|
$10.81 |
2.5% |
|
35 |
|
115 |
3,503 |
|
$30.46 |
4.7% |
|
43 |
|
351 |
6,053 |
|
$17.25 |
3.4% |
|
2027 |
8 |
|
203 |
1,665 |
|
$8.20 |
1.6% |
|
11 |
|
30 |
1,059 |
|
$35.30 |
1.4% |
|
19 |
|
233 |
2,724 |
|
$11.69 |
1.6% |
|
Thereafter |
11 |
|
491 |
7,539 |
|
$15.35 |
7.5% |
|
16 |
|
77 |
1,674 |
|
$21.74 |
2.2% |
|
27 |
|
568 |
9,213 |
|
$16.22 |
5.2% |
|
Total |
252 |
|
8,993 |
$100,993 |
|
$11.23 |
100.0% |
|
902 |
|
2,586 |
$74,609 |
|
$28.85 |
100.0% |
|
1,154 |
|
11,579 |
$175,602 |
|
$15.17 |
100.0% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assumes all lease options are exercised |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Greater than 10K SF |
|
Less than 10K SF |
|
Total |
||||||||||||||||||
|
Year |
# of Leases |
|
Expiring SF |
ABR |
|
Rent PSF |
% of ABR > 10K |
|
# of Leases |
|
Expiring SF |
ABR |
|
Rent PSF |
% of ABR < 10K |
|
# of Leases |
|
Expiring SF |
ABR |
|
Rent PSF |
% of ABR Total |
|
MTM |
0 |
|
0 |
$0 |
|
$0.00 |
0.0% |
|
40 |
|
107 |
$3,433 |
|
$32.08 |
4.6% |
|
40 |
|
107 |
$3,433 |
|
$32.08 |
2.0% |
|
2018 |
0 |
|
0 |
0 |
|
$0.00 |
0.0% |
|
36 |
|
74 |
2,636 |
|
$35.62 |
3.5% |
|
36 |
|
74 |
2,636 |
|
$35.62 |
1.5% |
|
2019 |
4 |
|
96 |
1,202 |
|
$12.52 |
1.2% |
|
151 |
|
387 |
10,987 |
|
$28.39 |
14.7% |
|
155 |
|
483 |
12,189 |
|
$25.24 |
6.9% |
|
2020 |
8 |
|
140 |
1,929 |
|
$13.78 |
1.9% |
|
121 |
|
258 |
9,162 |
|
$35.51 |
12.3% |
|
129 |
|
398 |
11,091 |
|
$27.87 |
6.3% |
|
2021 |
4 |
|
78 |
1,354 |
|
$17.36 |
1.3% |
|
80 |
|
183 |
5,722 |
|
$31.27 |
7.7% |
|
84 |
|
261 |
7,076 |
|
$27.11 |
4.0% |
|
2022 |
12 |
|
180 |
2,340 |
|
$13.00 |
2.3% |
|
70 |
|
145 |
5,747 |
|
$39.63 |
7.7% |
|
82 |
|
325 |
8,087 |
|
$24.88 |
4.6% |
|
2023 |
5 |
|
98 |
1,563 |
|
$15.95 |
1.5% |
|
51 |
|
120 |
4,184 |
|
$34.87 |
5.6% |
|
56 |
|
218 |
5,747 |
|
$26.36 |
3.3% |
|
2024 |
4 |
|
117 |
1,855 |
|
$15.85 |
1.8% |
|
49 |
|
154 |
4,332 |
|
$28.13 |
5.8% |
|
53 |
|
271 |
6,187 |
|
$22.83 |
3.5% |
|
2025 |
4 |
|
159 |
1,983 |
|
$12.47 |
2.0% |
|
48 |
|
138 |
3,861 |
|
$27.98 |
5.2% |
|
52 |
|
297 |
5,844 |
|
$19.68 |
3.3% |
|
2026 |
4 |
|
88 |
1,056 |
|
$12.00 |
1.0% |
|
42 |
|
109 |
3,509 |
|
$32.19 |
4.7% |
|
46 |
|
197 |
4,565 |
|
$23.17 |
2.6% |
|
2027 |
5 |
|
144 |
1,934 |
|
$13.43 |
1.9% |
|
22 |
|
47 |
1,689 |
|
$35.94 |
2.3% |
|
27 |
|
191 |
3,623 |
|
$18.97 |
2.1% |
|
Thereafter |
202 |
|
7,893 |
85,777 |
|
$10.87 |
84.9% |
|
192 |
|
864 |
19,347 |
|
$22.39 |
25.9% |
|
394 |
|
8,757 |
105,124 |
|
$12.00 |
59.9% |
|
Total |
252 |
|
8,993 |
$100,993 |
|
$11.23 |
100.0% |
|
902 |
|
2,586 |
$74,609 |
|
$28.85 |
100.0% |
|
1,154 |
|
11,579 |
$175,602 |
|
$15.17 |
100.0% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note: Excludes ground leases |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
8
Retail Value Inc.
Dispositions
|
$ and GLA in thousands |
|
|
|
|
|
|
||
|
|
|
|
|
|
Owned |
|
|
Allocated Loan |
|
|
|
Property Name |
City, State |
|
GLA |
|
Price |
Amount (1) |
|
|
|
|
|
|
|
|
|
|
|
04/17/18 |
|
Silver Spring Square (pre spin) |
Mechanicsburg, PA |
|
343 |
|
$80,810 |
$65,730 |
|
06/27/18 |
|
The Walk at Highwoods Preserve (pre spin) |
Tampa, FL |
|
141 |
|
25,025 |
18,250 |
|
07/06/18 |
|
Tequesta Shoppes |
Tequesta, FL |
|
110 |
|
14,333 |
11,284 |
|
07/10/18 |
|
Lake Walden Square |
Plant City, FL |
|
245 |
|
29,000 |
24,915 |
|
08/01/18 |
|
East Lloyd Commons |
Evansville, IN |
|
160 |
|
23,000 |
16,610 |
|
08/13/18 |
|
Grandville Marketplace |
Grandville, MI |
|
224 |
|
16,700 |
16,333 |
|
08/29/18 |
|
Brandon Boulevard Shoppes |
Valrico, FL |
|
86 |
|
14,650 |
11,007 |
|
09/14/18 |
|
Gresham Station |
Gresham, OR |
|
342 |
|
64,500 |
53,593 |
|
10/18/18 |
|
Palm Valley Pavilions |
Goodyear, AZ |
|
233 |
|
44,800 |
41,744 |
|
|
|
|
Total 2018 YTD |
|
1,884 |
|
$312,818 |
$259,466 |
|
|
|
|
|
|
|
|
|
|
|
(1) Represents portion of CMBS loan balance allocated to specific asset. Not equivalent to amount of debt repaid when specific asset was sold. | ||||||||
9
Retail Value Inc.
Capital Structure
|
$, shares and units in thousands, except per share |
|
|
|
|
|
|
|
|
|
September 30, 2018 |
|
|
|
|
|
Capital Structure |
|
|
|
|
|
|
|
Market Value Per Share |
|
$32.69 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Shares Outstanding |
|
18,465 |
|
|
|
|
|
Common Shares Equity |
|
$603,622 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Redeemable Preferred Equity |
|
$190,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Bank Debt |
|
$0 |
|
|
|
|
|
Mortgage Debt |
|
$1,154,283 |
|
|
|
|
|
Less: Cash (including restricted cash) |
|
$132,153 |
|
|
|
|
|
Net Debt |
|
$1,022,131 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Market Capitalization |
|
$1,815,753 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Debt Detail |
|
|
|
|
|
|
|
|
|
September 30, 2018 |
|
Maturity Date (1) |
|
GAAP Interest Rate (2) |
|
Bank Debt (3) |
|
|
|
|
|
|
|
Unsecured Revolver ($30m) |
|
$0 |
|
09/22 |
|
L + 120 |
|
|
|
|
|
|
|
|
|
Mortgage Debt (3) |
|
|
|
|
|
|
|
Mortgage Debt - Class A |
|
$448,033 |
|
|
|
|
|
Mortgage Debt - Class B |
|
$136,120 |
|
|
|
|
|
Mortgage Debt - Class C |
|
$117,908 |
|
|
|
|
|
Mortgage Debt - Class D |
|
$104,228 |
|
|
|
|
|
Mortgage Debt - Class E |
|
$141,507 |
|
|
|
|
|
Mortgage Debt - Class F |
|
$137,060 |
|
|
|
|
|
Mortgage Debt - Class G |
|
$11,457 |
|
|
|
|
|
Mortgage Debt - Class HRR |
|
$57,971 |
|
|
|
|
|
Total Mortgage Debt (4) (5) |
|
$1,154,283 |
|
02/23 |
|
L + 350 |
|
|
|
|
|
|
|
|
|
Debt Subtotal |
|
$1,154,283 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Unamortized Loan Costs, Net |
|
($25,504) |
|
|
|
|
|
Total Debt |
|
$1,128,780 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Rate Type |
|
|
|
|
|
|
|
Fixed |
|
$0 |
|
0.0 years |
|
0.00% |
|
Variable |
|
$1,154,283 |
|
4.4 years |
|
5.72% |
|
|
|
$1,154,283 |
|
4.4 years |
|
5.72% |
|
|
|
|
|
|
|
|
|
Mortgage Debt Yield |
|
|
|
|
|
|
|
|
|
September 30, 2018 |
|
|
|
|
|
Adjusted Net Cash Flow (6) |
|
$109,454 |
|
|
|
|
|
Mortgage Loan Balance (7) |
|
$1,092,342 |
|
|
|
|
|
Debt Yield |
|
10.02% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Assumes borrower extension options are exercised. |
|
|
|
|
|
|
|
(2) L = LIBOR; as of September 30, 2018 1M LIBOR 2.26%. |
|
|
|
|
|
|
|
(3) Excludes loan fees and unamortized loan costs. |
|
|
|
|
|
|
|
(4) LIBOR subject to a 3.0% cap. |
|
|
|
|
|
|
|
(5) Repaid an additional $61.9 million in October 2018. |
|
|
|
|
|
|
|
(6) As defined in mortgage loan agreement. |
|
|
|
|
|
|
|
(7) Balance reflects October 2018 paydown of debt related to Gresham Station sale. |
|
|
|
| ||
10
Retail Value Inc.
Property List
|
# |
Center |
MSA |
Location |
ST |
Owned GLA |
Total GLA |
ABR PSF |
Anchor Tenants |
|
1 |
Palm Valley Pavilions West |
Phoenix-Mesa-Scottsdale, AZ |
Goodyear |
AZ |
233 |
277 |
$18.26 |
Barnes & Noble, Best Buy, Ross Dress for Less, Total Wine & More |
|
2 |
Tucson Spectrum |
Tucson, AZ |
Tucson |
AZ |
717 |
970 |
$14.55 |
Bed Bath & Beyond, Best Buy, Food City, Harkins Theatres, Home Depot (U), JCPenney, LA Fitness, Marshalls, Michaels, OfficeMax, Old Navy, Party City, PetSmart, Ross Dress for Less, Target (U) |
|
3 |
Homestead Pavilion |
Miami-Fort Lauderdale-West Palm Beach, FL |
Homestead |
FL |
300 |
391 |
$18.26 |
Bed Bath & Beyond, Kohl's (U), Michaels, Ross Dress for Less |
|
4 |
International Drive Value Center |
Orlando-Kissimmee-Sanford, FL |
Orlando |
FL |
186 |
192 |
$10.43 |
Bed Bath & Beyond, dd's Discounts, Ross Dress for Less, T.J. Maxx |
|
5 |
Millenia Plaza |
Orlando-Kissimmee-Sanford, FL |
Orlando |
FL |
412 |
412 |
$10.44 |
Ashley Furniture HomeStore, BJ's Wholesale Club, Dick's Sporting Goods, Home Depot, Ross Dress for Less, Total Wine & More |
|
6 |
Mariner Square |
Tampa-St. Petersburg-Clearwater, FL |
Spring Hill |
FL |
194 |
519 |
$9.80 |
Bealls, Ross Dress for Less, Sam's Club (U), Walmart (U) |
|
7 |
Douglasville Pavilion |
Atlanta-Sandy Springs-Roswell, GA |
Douglasville |
GA |
266 |
369 |
$12.44 |
Big Lots, Marshalls, Michaels, OfficeMax, PetSmart, Ross Dress for Less, Target (U) |
|
8 |
Newnan Crossing |
Atlanta-Sandy Springs-Roswell, GA |
Newnan |
GA |
223 |
453 |
$8.23 |
Hobby Lobby, Lowe's, Walmart (U) |
|
9 |
Green Ridge Square |
Grand Rapids-Wyoming, MI |
Grand Rapids |
MI |
216 |
407 |
$13.48 |
Bed Bath & Beyond, Best Buy, Michaels, T.J. Maxx, Target (U) |
|
10 |
Riverdale Village |
Minneapolis-St. Paul-Bloomington, MN-WI |
Coon Rapids |
MN |
788 |
968 |
$15.60 |
Bed Bath & Beyond, Best Buy, Costco (U), Dick's Sporting Goods, DSW, JCPenney, Jo-Ann, Kohl's, Old Navy, T.J. Maxx |
|
11 |
Maple Grove Crossing |
Minneapolis-St. Paul-Bloomington, MN-WI |
Maple Grove |
MN |
262 |
350 |
$13.51 |
Barnes & Noble, Bed Bath & Beyond, Cub Foods (U), Kohl's, Michaels |
|
12 |
Midway Marketplace |
Minneapolis-St. Paul-Bloomington, MN-WI |
St. Paul |
MN |
324 |
487 |
$8.66 |
Cub Foods, Herberger's (U), LA Fitness, T.J. Maxx, Walmart |
|
13 |
Crossroads Center |
Gulfport-Biloxi-Pascagoula, MS |
Gulfport |
MS |
555 |
591 |
$11.65 |
Academy Sports, Barnes & Noble, Belk, Burke's Outlet, Cinemark, Forever 21, Michaels, Ross Dress for Less, T.J. Maxx |
|
14 |
Big Oaks Crossing |
Tupelo, MS |
Tupelo |
MS |
348 |
348 |
$6.41 |
Jo-Ann, Sam's Club, Walmart |
|
15 |
Seabrook Commons |
Boston-Cambridge-Newton, MA-NH |
Seabrook |
NH |
175 |
393 |
$18.56 |
Dick's Sporting Goods, Walmart (U) |
|
16 |
Hamilton Commons |
Atlantic City-Hammonton, NJ |
Mays Landing |
NJ |
403 |
403 |
$16.30 |
Bed Bath & Beyond, Big Lots, Hobby Lobby, Marshalls, Regal Cinemas, Ross Dress for Less |
|
17 |
Wrangleboro Consumer Square |
Atlantic City-Hammonton, NJ |
Mays Landing |
NJ |
842 |
842 |
$13.81 |
Best Buy, BJ's Wholesale Club, Books-A-Million, Christmas Tree Shops, Dick's Sporting Goods, Kohl's, Michaels, PetSmart, Staples, Target |
|
18 |
Beaver Creek Crossings |
Raleigh, NC |
Apex |
NC |
321 |
321 |
$16.15 |
Burke's Outlet, Dick's Sporting Goods, Regal Beaver Creek 12, T.J. Maxx |
|
19 |
Great Northern Plazas |
Cleveland-Elyria, OH |
North Olmsted |
OH |
631 |
669 |
$13.87 |
Bed Bath & Beyond, Best Buy, Big Lots, Burlington, DSW, Home Depot, Jo-Ann, K&G Fashion Superstore, Marc's, PetSmart |
|
20 |
Uptown Solon |
Cleveland-Elyria, OH |
Solon |
OH |
182 |
182 |
$15.05 |
Bed Bath & Beyond, Mustard Seed Market & Cafe |
|
21 |
Peach Street Marketplace |
Erie, PA |
Erie |
PA |
721 |
1,001 |
$10.40 |
Bed Bath & Beyond, Best Buy (U), Burlington, Cinemark, Erie Sports, Hobby Lobby, Home Depot (U), Kohl's, Lowe's, Marshalls, PetSmart, Target (U) |
|
22 |
Noble Town Center |
Philadelphia-Camden-Wilmington, PA-NJ-DE-MD |
Jenkintown |
PA |
168 |
168 |
$16.04 |
AFC Fitness, Bed Bath & Beyond, PetSmart, Ross Dress for Less, Stein Mart |
|
23 |
Plaza Isabela |
Aguadilla-Isabela, PR |
Isabela |
PR |
259 |
259 |
$14.63 |
Selectos Supermarket, Walmart |
|
24 |
Plaza Fajardo |
Fajardo, PR |
Fajardo |
PR |
274 |
274 |
$16.26 |
Econo, Walmart |
|
25 |
Plaza Walmart |
Guayama, PR |
Guayama |
PR |
164 |
164 |
$8.24 |
Walmart |
|
26 |
Plaza del Atlántico |
San Juan-Carolina-Caguas, PR |
Arecibo |
PR |
223 |
223 |
$11.71 |
Capri, Kmart |
|
27 |
Plaza del Sol |
San Juan-Carolina-Caguas, PR |
Bayamon |
PR |
601 |
713 |
$30.94 |
Bed Bath & Beyond, Caribbean Cinemas, Dave & Buster's, H & M, Home Depot (U), Old Navy, Walmart |
|
28 |
Plaza Río Hondo |
San Juan-Carolina-Caguas, PR |
Bayamon |
PR |
555 |
555 |
$25.38 |
Best Buy, Caribbean Cinemas, Kmart, Marshalls Mega Store, Pueblo, T.J. Maxx |
|
29 |
Plaza Escorial |
San Juan-Carolina-Caguas, PR |
Carolina |
PR |
524 |
636 |
$16.32 |
Caribbean Cinemas, Home Depot (U), OfficeMax, Old Navy, Sam's Club, Walmart |
|
30 |
Plaza Cayey |
San Juan-Carolina-Caguas, PR |
Cayey |
PR |
313 |
339 |
$8.90 |
Caribbean Cinemas (U), Walmart |
11
Retail Value Inc.
Property List
|
# |
Center |
MSA |
Location |
ST |
Owned GLA |
Total GLA |
ABR PSF |
Anchor Tenants |
|
31 |
Plaza del Norte |
San Juan-Carolina-Caguas, PR |
Hatillo |
PR |
682 |
699 |
$22.42 |
Caribbean Cinemas, JCPenney, OfficeMax, Rooms To Go, Sears, T.J. Maxx |
|
32 |
Plaza Palma Real |
San Juan-Carolina-Caguas, PR |
Humacao |
PR |
449 |
449 |
$14.51 |
Capri, Marshalls, Pep Boys, Walmart |
|
33 |
Señorial Plaza |
San Juan-Carolina-Caguas, PR |
Rio Piedras |
PR |
202 |
202 |
$18.00 |
Pueblo |
|
34 |
Plaza Vega Baja |
San Juan-Carolina-Caguas, PR |
Vega Baja |
PR |
185 |
185 |
$11.36 |
Econo |
|
35 |
Harbison Court |
Columbia, SC |
Columbia |
SC |
242 |
301 |
$15.45 |
Marshalls, Nordstrom Rack, Ross Dress for Less |
|
36 |
Lowe's Home Improvement |
Nashville-Davidson-Murfreesboro-Franklin, TN |
Hendersonville |
TN |
129 |
144 |
$8.83 |
Lowe's |
|
37 |
Kyle Crossing |
Austin-Round Rock, TX |
Kyle |
TX |
121 |
375 |
$19.40 |
Kohl's (U), Ross Dress for Less, Target (U) |
|
38 |
The Marketplace at Towne Centre |
Dallas-Fort Worth-Arlington, TX |
Mesquite |
TX |
180 |
404 |
$17.25 |
Cavender's (U), Home Depot (U), Kohl's (U), PetSmart, Ross Dress for Less |
|
39 |
Willowbrook Plaza |
Houston-The Woodlands-Sugar Land, TX |
Houston |
TX |
385 |
393 |
$15.33 |
AMC Theatres, Bed Bath & Beyond, Bel Furniture, buybuy BABY, Cost Plus World Market |
|
40 |
Shoppers World of Brookfield |
Milwaukee-Waukesha-West Allis, WI |
Brookfield |
WI |
203 |
278 |
$11.72 |
Burlington, Pick 'n Save (U), Ross Dress for Less, Xperience Fitness |
|
41 |
Marketplace of Brown Deer |
Milwaukee-Waukesha-West Allis, WI |
Brown Deer |
WI |
410 |
410 |
$9.45 |
Bob's Discount Furniture, Burlington, Kohl's, Michaels, OfficeMax, Pick 'n Save, Ross Dress for Less, T.J. Maxx |
|
42 |
West Allis Center |
Milwaukee-Waukesha-West Allis, WI |
West Allis |
WI |
264 |
392 |
$6.79 |
Kohl's, Marshalls/HomeGoods, Menards (U), Pick 'n Save |
|
|
|
|
Total |
|
14,830 |
18,107 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Note: (U) indicates unowned; Anchors include tenants greater than 20K SF |
|
|
|
|
| |||
|
|
|
|
|
|
|
| ||
12
Retail Value Inc.
Notable Accounting and Supplemental Policies
The information contained in the Quarterly Financial Supplement does not purport to disclose all items required by the accounting principles generally accepted in the United States of America (“GAAP”) and is unaudited information. The Company’s Quarterly Financial Supplement should be read in conjunction with Amendment No. 1 to the Company’s Form 10 filed with the Securities and Exchange Commission on June 14, 2018, and its reports on Form 10-Q.
Revenues
|
|
• |
Percentage and overage rents are recognized after the tenants’ reported sales have exceeded the applicable sales breakpoint. |
|
|
|
• |
Tenant reimbursements are recognized in the period in which the expenses are incurred. |
|
|
|
• |
Lease termination fees are recognized upon termination of a tenant’s lease when the Company has no further obligations under the lease. |
|
General and Administrative Expenses
|
|
• |
Property management services’ direct compensation is reflected in operating and maintenance expenses. |
|
Deferred Financing Costs
|
|
• |
Costs incurred in obtaining term financing are included as a reduction of the related debt liability and costs incurred related to the revolving credit facilities are included in other assets on the consolidated balance sheets. All costs are amortized on a straight-line basis over the term of the related debt agreement; such amortization is reflected as interest expense in the consolidated income statements. |
|
Real Estate
|
|
• |
Real estate assets are stated at cost less accumulated depreciation, which, in the opinion of management, is not in excess of the individual property's estimated undiscounted future cash flows, including estimated proceeds from disposition. |
|
|
|
• |
Construction in progress includes expansions and re-tenanting. |
|
|
|
• |
Depreciation and amortization are provided on a straight-line basis over the estimated useful lives of the assets as follows: |
|
Buildings20 to 31.5 years
Building Improvements5 to 20 years
Furniture/Fixtures/ Shorter of economic life or lease terms
Tenant Improvements
Capitalization
|
|
• |
Expenditures for maintenance and repairs are charged to operations as incurred. Renovations and expenditures that improve or extend the life of the asset are capitalized. |
|
|
|
• |
The Company capitalizes interest on funds used for the construction or expansion of shopping centers. Capitalization of interest ceases when construction activities are completed and the property is available for occupancy by tenants. |
|
|
|
• |
Interest expense incurred during construction is capitalized and depreciated over the building life. |
|
Gains on Sales of Real Estate
|
|
• |
Gains on sales of real estate generally related to the sale of outlots and land adjacent to existing shopping centers are recognized at closing when the earnings process is deemed to be complete. |
|
13
Retail Value Inc.
Non-GAAP Measures
FFO and Operating FFO
The Company believes that Funds from Operations (“FFO”) and Operating FFO, both non-GAAP financial measures, provide additional and useful means to assess the financial performance of REITs. FFO and Operating FFO are frequently used by the real estate industry, as well as securities analysts, investors and other interested parties, to evaluate the performance of REITs. The Company also believes that FFO and Operating FFO more appropriately measure the core operations of the Company and provide benchmarks to its peer group
FFO excludes GAAP historical cost depreciation and amortization of real estate and real estate investments, which assume that the value of real estate assets diminishes ratably over time. Historically, however, real estate values have risen or fallen with market conditions, and many companies use different depreciable lives and methods. Because FFO excludes depreciation and amortization unique to real estate and gains and losses from depreciable property dispositions, it can provide a performance measure that, when compared year over year, reflects the impact on operations from trends in occupancy rates, rental rates, operating costs, interest costs and acquisition, disposition and development activities. This provides a perspective of the Company’s financial performance not immediately apparent from net income determined in accordance with GAAP.
FFO is generally defined and calculated by the Company as net income (loss) (computed in accordance with GAAP), adjusted to exclude (i) gains and losses from disposition of depreciable real estate property which are presented net of taxes, if any, (ii) impairment charges on depreciable real estate property and (iii) certain non-cash items. These non-cash items principally include real property depreciation and amortization of intangibles. The Company’s calculation of FFO is consistent with the definition of FFO provided by the National Association of Real Estate Investment Trusts (“NAREIT”).
The Company believes that certain charges and income recorded in its operating results are not comparable or reflective of its core operating performance. Operating FFO is useful to investors as the Company removes non-comparable charges, income and gains to analyze the results of its operations and assess performance of the core operating real estate portfolio. As a result, the Company also computes Operating FFO and discusses it with the users of its financial statements, in addition to other measures such as net income (loss) determined in accordance with GAAP and FFO. Operating FFO is generally defined and calculated by the Company as FFO excluding certain charges and income that management believes are not comparable and indicative of the results of the Company’s operating real estate portfolio. Such adjustments include gains on the sale of non-depreciable real estate, impairments of non-depreciable real estate, gains/losses on the early extinguishment of debt, net hurricane-related activity and transaction costs. The disclosure of these adjustments is regularly requested by users of the Company’s financial statements.
The adjustment for these charges and income may not be comparable to how other REITs or real estate companies calculate their results of operations, and the Company’s calculation of Operating FFO differs from NAREIT’s definition of FFO. Additionally, the Company provides no assurances that these charges and income are non-recurring. These charges and income could be reasonably expected to recur in future results of operations.
These measures of performance are used by the Company for several business purposes and by other REITs. The Company uses FFO and/or Operating FFO in part (i) as a disclosure to improve the understanding of the Company’s operating results among the investing public, (ii) as a measure of a real estate asset’s performance and (iii) to compare the Company’s performance to that of other publicly traded shopping center REITs. For the reasons described above, management believes that FFO and Operating FFO provide the Company and investors with an important indicator of the Company’s operating performance. They provide recognized measures of performance other than GAAP net income, which may include non-cash items (often significant). Other real estate companies may calculate FFO and Operating FFO in a different manner.
14
Retail Value Inc.
Non-GAAP Measures
Management recognizes the limitations of FFO and Operating FFO when compared to GAAP’s net income. FFO and Operating FFO do not represent amounts available for dividends, capital replacement or expansion, debt service obligations or other commitments and uncertainties. Management does not use FFO or Operating FFO as an indicator of the Company’s cash obligations and funding requirements for future commitments, acquisitions or development activities. Neither FFO nor Operating FFO represents cash generated from operating activities in accordance with GAAP, and neither is necessarily indicative of cash available to fund cash needs. Neither FFO nor Operating FFO should be considered an alternative to net income (computed in accordance with GAAP) or as an alternative to cash flow as a measure of liquidity. FFO and Operating FFO are simply used as additional indicators of the Company’s operating performance. The Company believes that to further understand its performance, FFO and Operating FFO should be compared with the Company’s reported net income (loss) and considered in addition to cash flows determined in accordance with GAAP, as presented in its condensed consolidated financial statements. Reconciliations of these measures to their most directly comparable GAAP measure of net income (loss) have been provided herein.
Net Operating Income (“NOI”)
The Company uses NOI, which is a non-GAAP financial measure, as a supplemental performance measure. NOI is calculated as property revenues less property-related expenses. The Company believes 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, reflects the impact on operations from trends in occupancy rates, rental rates, operating costs and acquisition and disposition activity on an unleveraged basis.
15
Retail Value Inc. 3300 Enterprise Pkwy. Beachwood, OH 44122 P.216.755.5500 F. 216.755.1500 www.retailvalueinc.com