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Retail Opportunity Investments Corp. Reports 2024 Second Quarter Results

SAN DIEGO, July 23, 2024 (GLOBE NEWSWIRE) — Retail Opportunity Investments Corp. (NASDAQ:ROIC) announced today financial and operating results for the three and six months ended June 30, 2024.

HIGHLIGHTS

_____________________________________

(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 propel our business.   During the first six months of 2024, we have already leased over 776,000 square feet of space. In addition, we continue to consistently drive releasing base rents higher, achieving a 12.4% increase in same-space new leases during the second quarter, representing our 50th consecutive quarter of achieving releasing rent growth.” Tanz added “Looking ahead, given our leasing success thus far, we are on track to post another strong, potentially record-setting year of leasing activity and solid portfolio operational results.”

FINANCIAL SUMMARY

For the three months ended June 30, 2024, GAAP net income attributable to common stockholders was $7.4 million, or $0.06 per diluted share, as compared to GAAP net income attributable to common stockholders of $9.9 million, or $0.08 per diluted share, for the three months ended June 30, 2023.   For the six months ended June 30, 2024, GAAP net income attributable to common stockholders was $18.4 million, or $0.14 per diluted share, as compared to GAAP net income attributable to common stockholders of $18.1 million, or $0.14 per diluted share, for the six months ended June 30, 2023.

FFO for the second quarter of 2024 was $34.1 million, or $0.25 per diluted share, as compared to $35.6 million in FFO, or $0.27 per diluted share for the second quarter of 2023.   FFO for the first six months of 2024 was $72.1 million, or $0.54 per diluted share, as compared to $69.4 million in FFO, or $0.52 per diluted share for the first six months of 2023. 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 second quarter of 2024, same-center net operating income (NOI) was $55.6 million, as compared to $54.7 million in same-center NOI for the second quarter of 2023, representing a 1.7% increase.   For the first six months of 2024, same-center NOI increased 3.7% as compared to same-center NOI for the first six months of 2023.   ROIC reports same-center NOI on a cash basis.   A reconciliation of GAAP operating income to same-center NOI is provided at the end of this press release.

At June 30, 2024, ROIC had total real estate assets (before accumulated depreciation) of approximately $3.5 billion and approximately $1.4 billion of principal debt outstanding, including $164.0 million outstanding on its $600.0 million unsecured credit facility.   For the second quarter of 2024, ROIC’s net principal debt-to-annualized EBITDA ratio was 6.6 times.   During the second quarter of 2024, ROIC retired a $26.0 million mortgage.   As a result, ROIC has one mortgage loan currently outstanding, totaling $33.6 million, maturing in October 2025.   At June 30, 2024, 98.7% of ROIC’s total gross leasable area was unencumbered.

ACQUISITION & DISPOSITION SUMMARY

Bressi Ranch Village Center

In April 2024, ROIC acquired Bressi Ranch Village Center for $70.1 million. The property is approximately 116,000 square feet and is anchored by two supermarkets, Trader Joe’s and Stater Brothers Supermarket. The shopping center is part of a master-planned community, located in Carlsbad, California, within the San Diego metropolitan area. The property is currently 98.4% leased.

Subsequent to the second quarter, in July 2024 ROIC sold one property for $56.6 million.

PROPERTY OPERATIONS SUMMARY

At June 30, 2024, ROIC’s portfolio was 97.0% leased.   During the second quarter of 2024, ROIC executed 131 leases, totaling 392,746 square feet, including 40 new leases, totaling 116,651 square feet, achieving a 12.4% increase in same-space comparative base rent, and 91 renewed leases, totaling 276,095 square feet, achieving a 5.8% increase in base rent.    ROIC reports same-space comparative base rent on a cash basis.

ENVIRONMENTAL, SOCIAL & GOVERNANCE SUMMARY

In April 2024, ROIC was selected, for the fourth consecutive year, as a Green Lease Leader by the U.S. Department of Energy’s Better Buildings Alliance and the Institute for Market Transformation. Specifically, ROIC was awarded 2024 Green Lease Leader “Gold” level designation in recognition of its continued success in collaborating with tenants on energy efficiency, decarbonization, air quality and other environmental and social issues.

In June 2024, ROIC issued its fifth Environmental, Social and Governance (ESG) annual report, detailing its ESG achievements during 2023, as well as its ongoing initiatives and 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/esg

DIVIDEND SUMMARY

On July 10, 2024, ROIC distributed a $0.15 per share cash dividend. On July 23, 2024, the Board declared a cash dividend of $0.15 per share, payable on October 4, 2024 to stockholders of record on September 20, 2024.

2024 GUIDANCE SUMMARY

ROIC currently estimates that GAAP net income for 2024 will be within the range of $0.25 to $0.28 per diluted share, and FFO will be within the range of $1.04 to $1.07 per diluted share.

    Year Ended December 31, 2024
    Initial (2/14/24)   Current
    Low End   High End   Low End   High End
  (unaudited, amounts in thousands except per share and percentage data)
GAAP net income applicable to stockholders   $ 29,400     $ 45,300     $ 31,374     $ 35,336  
Funds From Operations – diluted   $ 136,500     $ 152,600     $ 139,360     $ 143,380  
                 
GAAP net income per diluted share   $ 0.24     $ 0.34     $ 0.25     $ 0.28  
Funds From Operations per diluted share   $ 1.03     $ 1.09     $ 1.04     $ 1.07  
                 
Key Drivers                
General and administrative expenses   $ 23,000     $ 22,500     $ 23,000     $ 22,500  
Interest expense and other finance expenses   $ 80,000     $ 78,000     $ 80,000     $ 78,000  
Straight-line rent   $     $ 1,500     $ 600     $ 1,500  
Amortization of above-market and below-market rent   $ 14,000     $ 14,000     $ 14,300     $ 14,300  
Bad debt   $ 5,000     $ 3,000     $ 4,000     $ 3,000  
Acquisitions (net of dispositions)   $ 100,000     $ 300,000     $ 13,500     $ 13,500  
Equity issued   $ 60,000     $ 180,000     $     $  
Same-center NOI growth     1.0 %     2.0 %     1.0 %     2.0 %
                 

ROIC’s management will discuss guidance, and the underlying assumptions, on ROIC’s July 24, 2024 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, July 24, 2024 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:
https://register.vevent.com/register/BI692eaed31e884afba881ed8019ea4cae

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: https://edge.media-server.com/mmc/p/jen6w4d4

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:
https://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 June 30, 2024, ROIC owned 95 shopping centers encompassing approximately 10.7 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)
       
  June 30, 2024
(unaudited)
  December 31, 2023
ASSETS      
Real Estate Investments:      
Land $ 986,857     $ 967,251  
Building and improvements   2,555,541       2,500,647  
    3,542,398       3,467,898  
Less:  accumulated depreciation   689,352       654,543  
    2,853,046       2,813,355  
Mortgage note receivable   4,647       4,694  
Real Estate Investments, net   2,857,693       2,818,049  
Cash and cash equivalents   2,114       6,302  
Restricted cash         2,116  
Tenant and other receivables, net   59,410       61,193  
Acquired lease intangible assets, net   44,694       42,791  
Prepaid expenses   2,760       3,354  
Deferred charges, net   27,660       27,294  
Other assets   17,199       16,541  
Total assets $ 3,011,530     $ 2,977,640  
       
LIABILITIES AND EQUITY      
Liabilities:      
Term loan $ 199,866     $ 199,745  
Credit facility   164,000       75,000  
Senior Notes   1,044,523       1,043,593  
Mortgage notes payable   33,648       60,052  
Acquired lease intangible liabilities, net   133,561       137,820  
Accounts payable and accrued expenses   44,579       50,598  
Tenants’ security deposits   8,571       8,205  
Other liabilities   38,783       39,420  
Total liabilities   1,667,531       1,614,433  
       
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; 127,454,354 and 126,904,085 shares issued and outstanding at June 30, 2024 and December 31, 2023, respectively   13       13  
Additional paid-in capital   1,646,267       1,643,908  
Accumulated dividends in excess of earnings   (377,091 )     (357,160 )
Accumulated other comprehensive income   234       559  
Total Retail Opportunity Investments Corp. stockholders’ equity   1,269,423       1,287,320  
Non-controlling interests   74,576       75,887  
Total equity   1,343,999       1,363,207  
Total liabilities and equity $ 3,011,530     $ 2,977,640  
       
RETAIL OPPORTUNITY INVESTMENTS CORP.
Consolidated Statements of Operations
(Unaudited)
(In thousands, except per share data)
       
  Three Months Ended June 30,   Six Months Ended June 30,
    2024       2023       2024       2023  
Revenues              
Rental revenue $ 82,219     $ 79,630     $ 166,779     $ 158,629  
Other income   1,101       2,410       1,871       2,707  
Total revenues   83,320       82,040       168,650       161,336  
               
Operating expenses              
Property operating   14,472       13,581       28,555       27,783  
Property taxes   8,488       8,924       17,048       17,768  
Depreciation and amortization   26,331       25,126       52,600       50,230  
General and administrative expenses   5,682       5,776       11,364       11,096  
Other expense   505       482       657       654  
Total operating expenses   55,478       53,889       110,224       107,531  
               
Operating income   27,842       28,151       58,426       53,805  
Non-operating expenses              
Interest expense and other finance expenses   (20,043 )     (17,633 )     (38,962 )     (34,591 )
Net income   7,799       10,518       19,464       19,214  
Net income attributable to non-controlling interests   (433 )     (589 )     (1,080 )     (1,143 )
Net Income Attributable to Retail Opportunity Investments Corp. $ 7,366     $ 9,929     $ 18,384     $ 18,071  
               
Earnings per share – basic and diluted $ 0.06     $ 0.08     $ 0.14     $ 0.14  
               
Dividends per common share $ 0.15     $ 0.15     $ 0.30     $ 0.30  
               
CALCULATION OF FUNDS FROM OPERATIONS
(Unaudited)
(In thousands)

 
  Three Months Ended June 30,   Six Months Ended June 30,
    2024     2023     2024     2023
Net income attributable to ROIC $ 7,366   $ 9,929   $ 18,384   $ 18,071
Plus:  Depreciation and amortization   26,331     25,126     52,600     50,230
Funds from operations – basic   33,697     35,055     70,984     68,301
Net income attributable to non-controlling interests   433     589     1,080     1,143
Funds from operations – diluted $ 34,130   $ 35,644   $ 72,064   $ 69,444
               
  SAME-CENTER CASH NET OPERATING INCOME ANALYSIS
(Unaudited)
(In thousands, except number of shopping centers and percentages)
    Three Months Ended June 30,   Six Months Ended June 30,
      2024       2023     $ Change   % Change     2024       2023     $ Change   % Change
Number of shopping centers included in same-center analysis   92       92                 92       92          
Same-center leased rate   97.0 %     98.3 %       (1.3) %     97.0 %     98.3 %       (1.3) %
                                     
Revenues:                                  
  Base rents $ 57,606     $ 57,008     $ 598     1.0 %   $ 115,112     $ 113,229     $ 1,883     1.7 %
  Recoveries from tenants   20,414       19,812       602     3.0 %     40,846       39,981       865     2.2 %
  Other property income   882       1,289       (407 )   (31.6) %     1,456       1,409       47     3.3 %
  Bad debt   (544 )     (864 )     320     (37.0) %     (1,074 )     (1,775 )     701     (39.5) %
Total Revenues   78,358       77,245       1,113     1.4 %     156,340       152,844       3,496     2.3 %
Operating Expenses                              
  Property operating expenses   14,549       13,713       836     6.1 %     28,567       28,020       547     2.0 %
  Property taxes   8,184       8,851       (667 )   (7.5) %     16,600       17,601       (1,001 )   (5.7) %
Total Operating Expenses   22,733       22,564       169     0.7 %     45,167       45,621       (454 )   (1.0) %
Same-Center Cash Net Operating Income $ 55,625     $ 54,681     $ 944     1.7 %   $ 111,173     $ 107,223     $ 3,950     3.7 %
                                 
SAME-CENTER CASH NET OPERATING INCOME RECONCILIATION
(Unaudited)
(In thousands)

  Three Months Ended June 30,   Six Months Ended June 30,
    2024       2023       2024       2023  
GAAP operating income $ 27,842     $ 28,151     $ 58,426     $ 53,805  
Depreciation and amortization   26,331       25,126       52,600       50,230  
General and administrative expenses   5,682       5,776       11,364       11,096  
Other expense   505       482       657       654  
Straight-line rent   (231 )     (979 )     (423 )     (1,326 )
Amortization of above-market and below-market rent, net   (2,664 )     (2,609 )     (9,321 )     (5,473 )
Property revenues and other expenses (1)   68       (564 )     129       (566 )
Total Company cash NOI   57,533       55,383       113,432       108,420  
Non same-center cash NOI   (1,908 )     (702 )     (2,259 )     (1,197 )
Same-center cash NOI $ 55,625     $ 54,681     $ 111,173     $ 107,223  
               

____________________

(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

PDF available: http://ml.globenewswire.com/Resource/Download/ba903cd9-8b48-4ce5-86eb-f26e05c9b43b


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