Ramco-Gershenson Properties Trust Reports Financial Results for the Third Quarter of 2012; Raises FFO Guidance

FARMINGTON HILLS, Mich.--()--Ramco-Gershenson Properties Trust (NYSE:RPT) today announced its financial results for the three and nine months ended September 30, 2012 and raised its 2012 Funds from Operations (“FFO”) guidance to $1.01 to $1.03 per diluted share.

Third Quarter Highlights:

Shopping Center Operations

  • Increased same-center net operating income 3.4% over the comparable quarter in 2011.
  • Signed 67 leases encompassing 311,711 square feet achieving same-space rental growth of 5.4%.
  • Increased core portfolio leased occupancy to 94.4%, compared to 93.7% as of June 30, 2012 and 93.2% as of March 31, 2012.

Balance Sheet

  • Closed on a $360 million unsecured credit facility replacing the Company’s previous $250 million facility.
  • Ended the quarter with net debt to EBITDA of 6.7x.
  • Improved interest coverage to 3.1x and fixed charge coverage to 2.2x.

“The Company continues to successfully execute on its strategy of increasing quality and driving growth,” said Dennis Gershenson, President and Chief Executive Officer. “As a result of the continued improvement in our operating performance, the benefits of our high-quality acquisitions, and the ongoing strengthening of our balance sheet, the Company continues to build a strong foundation for long-term growth.”

Financial Results

FFO for the three months ended September 30, 2012, was $14.9 million or $0.26 per diluted share, compared to FFO of $13.4 million, or $0.28 per diluted share for the same period in 2011. FFO for the nine months ended September 30, 2012, was $35.5 million or $0.78 per diluted share, compared to FFO of $30.7 million, or $0.74 per diluted share for the same period in 2011. The weighted outstanding shares (including shares issuable upon conversion of preferred shares) for the three months ended September 30, 2012 was 56.6 million, compared to weighted outstanding shares of 48.5 million for the same period in 2011.

Net Income available to common shareholders for the three months ended September 30, 2012 was $1.4 million or $0.03 per diluted share. Net income available to common shareholders for the nine months ended September 30, 2012 was $0.2 million.

Ramco-Gershenson reports FFO in accordance with the standards established by the National Association of Real Estate Investment Trusts (“NAREIT”). A full definition of FFO is available in the Company’s financial and operating supplement.

Operating Statistics

As of September 30, 2012, the Company owned equity interests in 80 retail shopping centers and one office building consisting of 53 wholly-owned properties and 28 joint venture properties totaling 15.0 million square feet. At quarter-end, the Company’s core portfolio was 94.4% leased, compared to a core portfolio leased rate of 93.7% at June 30, 2012. Its total portfolio, which includes redevelopment properties, was 93.0% leased, compared to a total portfolio leased rate of 92.3% at June 30, 2012.

At quarter-end, the Company had 43 properties in its wholly-owned, same-center portfolio with occupancy of 93.9%, compared to 92.8% for the same period last year. Same-center net operating income for the wholly-owned portfolio increased 3.4% for the quarter and 3.1% for the nine months ended September 30, 2012.

During the quarter, the Company executed 67 lease transactions encompassing 311,711 square feet in its total portfolio achieving same-space rental growth of 5.4%.

Acquisitions and Development

During the quarter, the Company acquired its joint venture partner’s 93% equity interest in the Shoppes of Lakeland shopping center in Lakeland, Florida, for $26 million in cash. The 183,842 square foot center is currently anchored by Michaels, Staples, Ashley Furniture, Petco, and an anchor-owned Target and is 97.3% leased. The Company recently signed a lease for a 27,000 square foot TJ Maxx store, which will occupy space created by the downsizing of Ashley Furniture.

As previously announced, the Company commenced the development of Phase I of Parkway Shops, in Jacksonville, Florida earlier this year. Phase I will be anchored by a 45,000 square foot Dick’s Sporting Goods and a 25,000 square foot Marshalls. As of September 30, 2012, the project is over 98.0% leased and is on schedule to open in the spring of 2013.

Capital Markets/Balance Sheet

During the quarter, the Company closed a $360 million unsecured credit facility which replaced the Company’s previous $250 million facility. The facility consists of a four-year $240 million revolving line of credit with a one-year extension option and a $120 million five-year term loan. The facility can be upsized to $450 million through an accordion feature. Borrowings under the facility will bear interest at an annual rate of LIBOR plus 165 basis points subject to a pricing grid for changes in the Company’s leverage. This compares to the previous interest rate of LIBOR plus 200 to 275 basis points.

Also, during the quarter, the Company issued 0.9 million common shares through its controlled equity offering program, generating net cash proceeds of $12.1 million.

At September 30, 2012, the Company’s total market capitalization equaled $1.3 billion, comprised of 50.4 million shares of common stock (or equivalents) valued at $630.9 million, two million shares of convertible perpetual preferred stock valued at $102.3 million and $545.1 million of debt and capital lease obligations, net of cash. The weighted-average term of the Company’s consolidated debt was approximately 5.5 years.

At September 30, 2012, the Company’s ratio of net debt to total market capitalization was 42.6%, compared to 53.7% for the same period in 2011. Its net debt to annualized EBITDA was 6.7x.

Dividend

On October 1, 2012, the Company paid third quarter cash dividends of $0.16325 per common share (or equivalent) and $0.90625 per Series D convertible perpetual preferred share for the period from July 1, 2012 through September 30, 2012. The Company’s FFO payout ratio for the quarter was 62.8%.

2012 Guidance

The Company has raised its 2012 FFO guidance to $1.01 to $1.03 per diluted share from its previous FFO guidance of $0.97 to $1.03 per diluted share. The Company’s revised 2012 FFO guidance is the result of the continued successful execution of its business plan.

Conference Call/Webcast

Ramco-Gershenson Properties Trust will host a live broadcast of its third quarter 2012 conference call on Wednesday, October 24, 2012, at 9:00 a.m. eastern time, to discuss its financial and operating results. The live broadcast will be available online at www.rgpt.com and www.investorcalendar.com and also by telephone at (877) 407-9205, no pass code. 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 # 4011198), for one week.

Supplemental Materials

The Company’s supplemental financial package is available on its corporate web site at www.rgpt.com in the investor info section, SEC filings tab. 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 multi-anchor shopping centers in strategic, quality of life markets throughout the Eastern, Midwestern and Central United States. At September 30, 2012, the Company owned and managed a portfolio of 80 shopping centers and one office building with approximately 15.0 million square feet of gross leasable area owned by the Company or its joint ventures. The properties are located in Michigan, Florida, Ohio, Georgia, Missouri, Colorado, Wisconsin, Illinois, Indiana, New Jersey, Virginia, Maryland, and Tennessee. At September 30, 2012, the Company’s core operating portfolio was 94.4% leased. For additional information regarding Ramco-Gershenson Properties Trust visit the Company's website at www.rgpt.com.

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

September 30, 2012 (Unaudited) and December 31, 2011

(In thousands, except per share amounts)

   
September 30, December 31,
2012 2011
ASSETS
Income producing properties, at cost:
Land $ 158,985 $ 133,145
Buildings and improvements 941,321 863,763
Less accumulated depreciation and amortization   (230,068 )   (222,722 )
Income producing properties, net 870,238 774,186
Construction in progress and land held for development or sale   96,768     87,549  
Net real estate 967,006 861,735
Equity investments in unconsolidated joint ventures 96,549 97,020
Cash and cash equivalents 8,353 12,155
Restricted cash 4,949 6,063

Accounts receivable (net of allowance for doubtful accounts of $2,920 and $3,516 as of September 30, 2012 and December 31, 2011, respectively)

8,966 9,614
Note receivable 6,111 3,000
Other assets, net   74,048     59,236  
TOTAL ASSETS $ 1,165,982   $ 1,048,823  
 
LIABILITIES AND SHAREHOLDERS' EQUITY
Mortgages and notes payable:
Mortgages payable $ 294,295 $ 325,887
Unsecured revolving credit facility 45,000 29,500
Unsecured term loan facilities 180,000 135,000
Junior subordinated notes   28,125     28,125  
Total mortgages and notes payable 547,420 518,512
Capital lease obligation 6,104 6,341
Accounts payable and accrued expenses 18,762 18,662
Other liabilities 25,862 15,528
Distributions payable   10,022     8,606  
TOTAL LIABILITIES   608,170     567,649  
 
Ramco-Gershenson Properties Trust ("RPT") Shareholders' Equity:

Preferred shares, $0.01 par, 2,000 shares authorized: 7.25% Series D Cumulative Convertible Perpetual Preferred Shares, (stated at liquidation preference $50 per share), 2,000 shares issued and outstanding as of September 30, 2012 and December 31, 2011

$ 100,000 $ 100,000

Common shares of beneficial interest, $0.01 par, 80,000 shares authorized, 47,699 and 38,735 shares issued and outstanding as of September 30, 2012 and December 31, 2011, respectively

477 387
Additional paid-in capital 673,150 570,225
Accumulated distributions in excess of net income (240,659 ) (218,888 )
Accumulated other comprehensive loss   (5,639 )   (2,649 )
TOTAL SHAREHOLDERS' EQUITY ATTRIBUTABLE TO RPT 527,329 449,075
Noncontrolling interest   30,483     32,099  
TOTAL SHAREHOLDERS' EQUITY   557,812     481,174  
 
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 1,165,982   $ 1,048,823  
 
 
 
RAMCO-GERSHENSON PROPERTIES TRUST
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
       

Three months ended
September 30,

Nine months ended
September 30,

2012 2011 2012 2011
REVENUE
Minimum rent $ 23,181 $ 20,416 $ 66,340 $ 59,640
Percentage rent 170 105 378 214
Recovery income from tenants 7,826 7,201 23,270 21,419
Other property income 497 1,621 1,672 3,721
Management and other fee income   1,021     1,306     2,935     3,093  
TOTAL REVENUE   32,695     30,649     94,595     88,087  
 
EXPENSES
Real estate taxes 4,094 3,695 12,847 12,130
Recoverable operating expense 3,955 3,515 11,275 10,278
Other non-recoverable operating expense 682 946 1,956 2,268
Depreciation and amortization 10,614 8,433 28,990 25,505
General and administrative expense   4,990     5,345     14,746     15,265  
TOTAL EXPENSES   24,335     21,934     69,814     65,446  
 
INCOME BEFORE OTHER INCOME AND EXPENSES, TAX AND DISCONTINUED OPERATIONS 8,360 8,715 24,781 22,641
 
OTHER INCOME AND EXPENSES
Other income (expense), net 54 192 171 (219 )
Gain on sale of real estate - 45 69 231
Earnings from unconsolidated joint ventures 1,008 3,702 2,084 5,336
Interest expense (6,430 ) (6,320 ) (19,509 ) (20,743 )
Amortization of deferred financing fees (354 ) (387 ) (1,108 ) (1,482 )
Provision for impairment on equity investments in unconsolidated joint ventures (294 ) - (294 ) -
Deferred gain recognized upon acquisition of real estate 845 - 845 -
Loss on extinguishment of debt   -     -     -     (1,968 )
INCOME FROM CONTINUING OPERATIONS BEFORE TAX 3,189 5,947 7,039 3,796
Income tax benefit (provision)   19     (94 )   18     (984 )
INCOME FROM CONTINUING OPERATIONS   3,208     5,853     7,057     2,812  
 
DISCONTINUED OPERATIONS - - - -
(Loss) gain on sale of real estate - (33 ) 336 8,386
Gain on extinguishment of debt - - 307 -
Provision for impairment - - (2,536 ) -
Income (loss) from discontinued operations   113     (18 )   269     (120 )
INCOME (LOSS) FROM DISCONTINUED OPERATIONS   113     (51 )   (1,624 )   8,266  
 
NET INCOME 3,321 5,802 5,433 11,078
Net (income) loss attributable to noncontrolling partner interest   (158 )   (389 )   191     (739 )
NET INCOME ATTRIBUTABLE TO RPT 3,163 5,413 5,624 10,339
Preferred share dividends   (1,813 )   (1,813 )   (5,438 )   (3,432 )
NET INCOME AVAILABLE TO COMMON SHAREHOLDERS $ 1,350   $ 3,600   $ 186   $ 6,907  
 
INCOME (LOSS) PER COMMON SHARE, BASIC
Continuing operations $ 0.03 $ 0.09 $ 0.04 $ (0.02 )
Discontinued operations   -     -     (0.04 )   0.20  
$ 0.03   $ 0.09   $ -   $ 0.18  
INCOME (LOSS) PER COMMON SHARE, DILUTED

 

 

 

 

Continuing operations $ 0.03 $ 0.09 $ 0.04 $ (0.02 )
Discontinued operations   -     -     (0.04 )   0.20  
$ 0.03   $ 0.09   $ -   $ 0.18  
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING

 

 

 

 

Basic   46,911     38,596     42,834     38,351  
Diluted   47,197     38,739     43,115     38,513  
 
 
 
RAMCO-GERSHENSON PROPERTIES TRUST
FUNDS FROM OPERATIONS
For the three and nine months ended September 30, 2012 and 2011
(in thousands, except per share data)
     

Three months ended
September 30,

Nine months ended
September 30,

2012 2011 2012 2011
 
Net income available to common shareholders $ 1,350 $ 3,600 $ 186 $ 6,907
Adjustments:
Rental property depreciation and amortization expense 10,479 8,657 28,881 27,011
Pro-rata share of real estate depreciation from unconsolidated joint ventures 1,614 1,658 4,984 4,944
Add preferred share dividends (assumes if converted) (1) 1,813 1,813 - -
Loss (gain) on sale of depreciable real estate - 33 (336 ) (6,177 )
Loss (gain) on sale of joint venture depreciable real estate (2) 57 (2,718 ) 75 (2,718 )
Provision for impairment on income-producing properties (3) - - 1,976 -
Provision for impairment on joint venture income-producing properties (2) - - 50 -
Provision for impairment on equity investments in unconsolidated joint ventures 294 - 294 -
Deferred gain recognized upon acquisition of real estate (845 ) - (845 ) -
Noncontrolling interest in Operating Partnership   157     387     274     744  
FUNDS FROM OPERATIONS $ 14,919   $ 13,430   $ 35,539   $ 30,711  
 
Weighted average common shares 46,911 38,596 42,834 38,351
Shares issuable upon conversion of Operating Partnership Units 2,437 2,784 2,556 2,837
Shares issuable upon conversion of preferred shares (1) 6,940 6,940 - -
Dilutive effect of securities   286     143     281     162  
WEIGHTED AVERAGE EQUIVALENT SHARES OUTSTANDING, DILUTED   56,574     48,463     45,671     41,350  
 
FUNDS FROM OPERATIONS, PER DILUTED SHARE $ 0.26   $ 0.28   $ 0.78   $ 0.74  
 
Dividend per common share $ 0.16325 $ 0.16325 $ 0.48975 $ 0.48975
Payout ratio - FFO 62.8 % 58.3 % 62.8 % 66.2 %
 
 
(1) Series D convertible preferred shares were dilutive for the three months ended September 30, 2012 and 2011 and antidilutive for

the nine months ended September 30, 2012 and 2011

(2) Amount included in earnings from unconsolidated joint ventures.
(3) Amount represents RPT's proportionate share.

Management considers funds from operations, also known as “FFO,” an appropriate supplemental measure of the financial performance of an equity REIT. Under the NAREIT definition, FFO represents net income attributable to common shareholders, excluding extraordinary items, as defined under accounting principles generally accepted in the United States of America (“GAAP”), gains (losses) on sales of depreciable property, plus real estate related depreciation and amortization (excluding amortization of financing costs), and after adjustments for unconsolidated partnerships and joint ventures. In addition, NAREIT has recently clarified its computation of FFO to exclude impairment charges on depreciable property and equity investments in depreciable property. Management has restated FFO for prior periods accordingly. FFO should not be considered an alternative to GAAP net income attributable to common shareholders as an indication of our performance. We consider FFO as a useful measure for reviewing our comparative operating and financial performance between periods or to compare our performance to different REITs. However, our computation of FFO may differ from the methodology for calculating FFO utilized by other real estate companies, and therefore, may not be comparable to these other real estate companies.

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Contacts

Ramco-Gershenson Properties Trust
Dawn Hendershot, 248-592-6202
Director of Investor Relations and Corporate Communications

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Contacts

Ramco-Gershenson Properties Trust
Dawn Hendershot, 248-592-6202
Director of Investor Relations and Corporate Communications