Rithm Property Trust (RPT) Q1 2025 Earnings Call April 28, 2025 05:07 PM ET Speaker0 Thank you for standing by and welcome to the Rhythm Property Trust First Quarter twenty twenty five Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer Thank you. I'd now like to turn the call over to Emma Bola, Associate General Counsel of Rhythm Capital. You may begin. Speaker1 Thank you and good morning everyone. I ...

Quarterly Supplement Q1 2025 Disclaimers Rithm Property Trust $1bn+ $296mm $298mm ~$97mm ~ ~ • – • – – Q1'25 Financial Highlights Q1'25 Business Highlights Earnings Growth Looking Ahead at the Opportunity Why CRE Debt? ✓ Why Rithm Property Trust? What to Expect? Driving Growth ✓ ✓ ✓ – ✓ – ✓ ✓ ✓ Illustrative Future State Portfolio(1) | Category | | Description | Target Levered Yield(2) | | --- | --- | --- | --- | | A Securities | Commercial Mortgage-Backed | Lower-risk, highly liquid, mostly senior bonds acr ...

Rithm Property Trust (RPT) Q1 2025 Earnings Call April 28, 2025 08:00 AM ET Company Participants Emma Bolla - Associate General CounselMichael Nierenberg - Interim CEO and Chairman, President & CEO - Rithm CapitalJason Stewart - Director - Mortgage FinanceThomas Catherwood - MD & REITs Equity ResearchRandy Binner - Managing DirectorJade Rahmani - Managing Director Conference Call Participants Douglas Harter - Equity Research Analyst Operator Thank you for standing by and welcome to the Rhythm Property Trust ...

Rithm Property Trust (RPT) Q1 2025 Earnings Call April 28, 2025 08:00 AM ET Company Participants Emma Bolla - Associate General CounselMichael Nierenberg - Interim CEO and Chairman, President & CEO - Rithm CapitalJason Stewart - Director - Mortgage FinanceThomas Catherwood - MD & REITs Equity ResearchRandy Binner - Managing DirectorJade Rahmani - Managing Director Conference Call Participants Douglas Harter - Equity Research Analyst Operator Thank you for standing by and welcome to the Rhythm Property Trust ...

Group 1 - The focus is on income-producing asset classes such as REITs, ETFs, Preferreds, and 'Dividend Champions' that target premium dividend yields up to 10% [1] - iREIT®+HOYA Capital is highlighted as a premier income-focused investing service that emphasizes sustainable portfolio income, diversification, and inflation hedging [2] - The service offers a Free Two-Week Trial to explore top ideas across exclusive income-focused portfolios [2] Group 2 - The Retired Investor has a background in data analysis and pension fund management, providing insights for retirement preparation through investments in CEFs, ETFs, BDCs, and REITs [3] - The Retired Investor shares long-only investment strategies and options trading strategies with a focus on cash-secured puts [3]

Group 1 - The focus is on closed-end funds, with an emphasis on identifying directional and arbitrage opportunities due to market price deviations [1] - Timing is highlighted as a crucial factor in executing trades related to closed-end funds [1] Group 2 - The article is part of a series analyzing exchange-traded fixed-income security IPOs, specifically focusing on Rithm Property Trust Inc. (NYSE: RPT) [2] - The author discloses no current stock or derivative positions in the mentioned companies and has no plans to initiate any within the next 72 hours [2]

Property Portfolio and Leasing - As of September 30, 2023, the company's property portfolio consisted of 43 wholly-owned shopping centers, 13 shopping centers owned through a grocery-anchored joint venture, and 49 retail properties owned through a net lease joint venture, totaling 14.9 million square feet of GLA, with a pro-rata share of 93.5% leased[120]. - The company derives 96.7% of its multi-tenant retail annualized base rent from the top 40 national markets, including cities like Boston, Atlanta, Detroit, and Nashville[127]. - Approximately 66% of existing leases are triple net leases, allowing the company to recover operating expenses, with 97% of leases expected to recover increases in operating expenses during inflationary periods[130]. - The company has long-term lease agreements with 7% - 12% of leases expiring each year over the next three years, allowing for potential rent resets to market rates[133]. - As of September 30, 2023, the total Gross Leasable Area (GLA) for multi-tenant retail properties was 13,295,402 square feet, with an overall leased percentage of 93.4% and an occupied percentage of 88.6%[136]. - The company reported 229 leasing transactions during the nine months ended September 30, 2023, totaling 1,781,230 square feet, with a base rent of $17.32 per square foot[137]. Financial Performance - Total revenue for the three months ended September 30, 2023 was $54.7 million, a slight increase of $0.2 million or 0.3% compared to the same period in 2022[152]. - Total revenue for the nine months ended September 30, 2023 decreased by $7.9 million or 4.8% compared to the same period in 2022[166]. - Funds from operations (FFO) available to common shareholders for the three months ended September 30, 2023, was $16.6 million, compared to $24.1 million for the same period in 2022[214]. - Operating FFO available to common shareholders for the nine months ended September 30, 2023, was $65.9 million, down from $74.6 million in 2022[214]. - The company reported a net loss attributable to common shareholders for the three months ended September 30, 2023, was $7.9 million, compared to a net income of $11.3 million in 2022[214]. - The company reported a net loss available to common shareholders of $7.858 million for Q3 2023, compared to a net income of $11.299 million in Q3 2022[218]. Debt and Capital Structure - As of September 30, 2023, the company had net debt of $898.5 million, representing a net debt to total market capitalization ratio of 46.4%, down from 57.5% a year earlier[139]. - The company had $852.2 million in total debt outstanding as of September 30, 2023, which includes $511.5 million in senior unsecured notes and $310.0 million in unsecured term loan facilities[190]. - The company maintains a strong, flexible, and investment-grade balance sheet, with only 3% of total debt being variable-rate borrowings as of September 30, 2023[132]. - The company has $472.0 million of unused capacity under its $500.0 million unsecured revolving credit facility as of September 30, 2023[179]. - The company anticipates using net proceeds from property sales to reduce outstanding debt and support growth initiatives, subject to restrictions in the Merger Agreement[181]. Merger and Strategic Initiatives - The proposed merger with Kimco is expected to close in early 2024, subject to shareholder approval and customary closing conditions[126]. - Each common share of RPT will be converted into the right to receive 0.6049 shares of common stock of Kimco upon the merger[123]. - The company aims to capitalize on accretive acquisition opportunities and maintain a disciplined capital recycling strategy to enhance shareholder value[129]. - The company intends to pursue growth through strategic acquisitions and redevelopment of existing properties, while selectively disposing of maximized return properties[197]. Operating Expenses and Cost Management - Inflation has significantly increased operating expenses, but long-term leases with contractual rent escalations help mitigate some adverse impacts[130]. - Non-recoverable operating expense increased by $0.2 million or 5.5% for the three months ended September 30, 2023, mainly due to increased legal fees associated with tenant bankruptcies[155]. - General and administrative expense increased by $0.3 million or 3.2% for the three months ended September 30, 2023, mainly due to higher bonus and stock-based compensation expenses[158]. - Recoverable operating expense increased by $0.9 million or 4.1% for the nine months ended September 30, 2023, primarily due to higher common area maintenance expenses[167]. - Non-recoverable operating expense increased by $0.6 million or 7.6% for the nine months ended September 30, 2023, mainly due to increased property-related employee compensation[168]. Cash Flow and Investments - The company reported net cash provided by operating activities of $71.9 million for the nine months ended September 30, 2023, a decrease of $9.4 million compared to $81.3 million in 2022[183][184]. - Net cash used in investing activities decreased significantly by $110.2 million, totaling $(23.2) million for the nine months ended September 30, 2023, compared to $(133.5) million in 2022[183][184]. - The company recorded merger costs of $8.2 million for the three and nine months ended September 30, 2023, related to financial, legal, and tax advisory services[185]. Market and Economic Conditions - The company continues to face risks related to obtaining necessary governmental approvals and potential impairments for development projects[142]. - A 100 basis point increase in interest rates would decrease the fair value of the company's total outstanding debt by approximately $17.3 million as of September 30, 2023[219]. - The company’s fixed-rate debt totaled $824.173 million, with a weighted average interest rate of 3.7%[220]. Occupancy and NOI - Same Property NOI for Q3 2023 was $37.271 million, a 2.6% increase from $36.340 million in Q3 2022[218]. - Total NOI for Q3 2023 was $40.228 million, compared to $41.342 million in Q3 2022, reflecting a decrease of 2.7%[218]. - The period-end occupancy rate for Q3 2023 was 89.9%, slightly down from 90.1% in Q3 2022[218].

Property Portfolio and Leasing - As of June 30, 2023, the company's property portfolio consisted of 43 wholly-owned shopping centers, 13 shopping centers owned through a grocery-anchored joint venture, and 49 retail properties owned through a net lease joint venture, totaling 14.9 million square feet of GLA[111]. - The company's pro-rata share of the aggregate portfolio was 93.2% leased as of June 30, 2023[111]. - The company reported a total of 155 leasing transactions for 1,033,558 square feet, with a base rent of $17.40 per square foot[122]. - The company derives 96.5% of its multi-tenant retail annualized base rent from the top 40 national markets, including cities like Boston, Atlanta, and Detroit[113]. - The company has long-term lease agreements with tenants, with 7% - 13% of leases expiring each year over the next three years, allowing for potential rent resets[118]. Financial Performance - Total revenue for the three months ended June 30, 2023, decreased by $4.2 million, or 7.7%, compared to the same period in 2022, primarily due to the impact of properties disposed[140][141]. - Total revenue for the six months ended June 30, 2023 decreased by $8.1 million, or 7.3%, compared to the same period in 2022, totaling $103.3 million[149]. - Net income available to common shareholders for Q2 2023 was $(1,644) thousand, a decrease from $5,120 thousand in Q2 2022[196]. - The company reported a net loss of $(1,644) thousand for the first half of 2023, compared to a net income of $9,221 thousand for the same period in 2022[196]. - Funds from Operations (FFO) available to common shareholders for Q2 2023 was $24,113 thousand, compared to $21,972 thousand in Q2 2022, representing an increase of 5.2%[196]. - Operating FFO available to common shareholders and dilutive securities for the first half of 2023 was $47,776 thousand, down from $49,382 thousand in the first half of 2022[196]. Expenses and Cash Flow - Recoverable operating expenses increased by $0.4 million, or 6.0%, for the three months ended June 30, 2023, primarily due to higher common area maintenance expenses[142]. - Non-recoverable operating expenses rose by $0.2 million, or 9.9%, for the three months ended June 30, 2023, mainly due to increased property-related employee compensation[143]. - General and administrative expenses increased by $1.3 million, or 7.5%, primarily due to one-time employee termination benefits and higher stock-based compensation[156]. - Net cash provided by operating activities increased by $9.0 million, totaling $45.9 million for the six months ended June 30, 2023[166]. - Net cash used in investing activities decreased by $93.1 million compared to the same period in 2022[168]. Debt and Capital Structure - Net debt as of June 30, 2023, was $898.6 million, with a net debt to total market capitalization ratio of 46.9%, down from 51.2% a year earlier[124]. - The Company had $133.0 million of common shares remaining available for issuance under the Current ATM Program as of June 30, 2023[125]. - As of June 30, 2023, the company had $853.4 million in outstanding debt, including $511.5 million in senior unsecured notes and $310.0 million in unsecured term loan facilities[174]. - The interest rates on the senior unsecured notes and term loan facilities range from 2.50% to 4.74%, with maturity dates from June 2025 to November 2031[174]. - The company has $1.1 billion in total contractual obligations, including scheduled amortization and interest payments[182]. Inflation and Operating Expenses - Approximately 66% of existing leases are triple net leases, allowing the company to recover operating expenses, mitigating some inflation impacts[115]. - The company expects to recover increases in operating expenses from approximately 97% of existing leases during inflationary periods[115]. - Inflationary pressures may increase general and administrative expenses, impacting results of operations and operating cash flows over time[116]. Strategic Growth and Investments - The company plans to pursue growth through strategic acquisitions of attractively priced open-air shopping centers and disciplined capital recycling strategies[114]. - The company plans to pursue growth through strategic acquisitions of attractively priced open-air shopping centers and redeveloping existing properties[181]. - The company anticipates capital expenditures between $20.0 million and $30.0 million for the remainder of 2023, with ongoing expenditures of $13.0 million to $18.0 million and discretionary expenditures of $7.0 million to $12.0 million[188]. Interest Rate and Fair Value - A 100 basis point increase in interest rates would decrease the fair value of the company's total outstanding debt by approximately $18.3 million as of June 30, 2023[201]. - The company has entered into 11 interest rate swap agreements with an aggregate notional amount of $310.0 million to convert floating rate corporate debt to fixed rate debt[176]. - The fixed-rate debt obligations total $824.381 million, with a weighted average interest rate of 3.7%[202]. - The company has variable-rate debt obligations amounting to $29.000 million, with an average interest rate of 6.3%[202].

Property Portfolio and Leasing - As of March 31, 2023, the company's property portfolio consisted of 43 wholly-owned shopping centers, 13 shopping centers owned through a grocery-anchored joint venture, and 49 retail properties owned through a net lease joint venture, totaling 14.9 million square feet of GLA[106]. - The company's pro-rata share of the aggregate portfolio was 93.3% leased as of March 31, 2023[106]. - Approximately 66% of existing leases are triple net leases, allowing the company to recover operating expenses, with 97% of leases expected to recover increases in operating expenses during inflationary periods[108]. - The company reported a total of 67 leasing transactions during the three months ended March 31, 2023, with a total square footage of 506,118 and a base rent of $15.06 per square foot[115]. - The company derives 96.5% of its multi-tenant retail annualized base rent from the top 40 national markets, including cities like Boston, Atlanta, and Detroit[107]. - The company has long-term lease agreements with 7% - 13% of leases expiring each year over the next three years, allowing for potential rent resets to market rates[111]. Financial Performance - Total revenue for the three months ended March 31, 2023, decreased by $3.8 million, or 6.8%, compared to the same period in 2022, totaling $52.2 million[133]. - Funds from operations (FFO) available to common shareholders for the three months ended March 31, 2023, was $21.4 million, compared to $24.1 million for the same period in 2022, representing a decrease of approximately 11.3%[179]. - Operating FFO available to common shareholders for the same period was $24.3 million, slightly up from $24.1 million in 2022, indicating a marginal increase of about 0.8%[179]. - The company reported a net loss available to common shareholders of $0.4 million for the three months ended March 31, 2023, compared to a net income of $4.1 million in the same period of 2022[179]. - The market price per common share decreased from $13.77 in 2022 to $9.51 in 2023, reflecting a decline of approximately 30.5%[171]. - Same Property NOI for the three months ended March 31, 2023, includes 39 consolidated operating properties, with no new acquisitions in the same period[181]. - Same Property NOI for Q1 2023 was $36,918,000, representing a 3.8% increase from $35,581,000 in Q1 2022[183]. - Period-end occupancy remained stable at 91.2% for both Q1 2023 and Q1 2022[183]. Expenses and Costs - The company’s general and administrative expenses are expected to increase due to rising inflation rates impacting compensation and professional service fees[109]. - General and administrative expenses increased by $1.0 million, or 11.6%, primarily due to one-time employee termination benefits[138]. - Non-recoverable operating expenses increased by $0.2 million, or 7.8%, primarily due to increased property-related employee compensation[136]. - General and administrative expenses for Q1 2023 were $9,315,000, an increase from $8,348,000 in Q1 2022[183]. Debt and Liquidity - As of March 31, 2023, variable-rate borrowings accounted for 4% of total debt, limiting short-term exposure to interest rate increases[110]. - The company aims to maintain a strong, flexible, and investment-grade balance sheet, with low leverage and high liquidity[108]. - As of March 31, 2023, net debt was $904.2 million, reflecting a net debt to total market capitalization of 49.3%, up from 40.3% a year earlier[117]. - The company had $861.6 million of debt outstanding as of March 31, 2023, including $511.5 million in senior unsecured notes and $310.0 million in unsecured term loan facilities[155]. - The company has $463.0 million of unused capacity under its $500.0 million unsecured revolving credit facility as of March 31, 2023[144]. - The company had derivative instruments with an aggregate notional amount of $310 million as of March 31, 2023, with fixed interest rates ranging from 1.17% to 3.36%[185]. - A 100 basis point increase in interest rates would decrease the fair value of total outstanding debt by approximately $19.7 million as of March 31, 2023[184]. Capital Expenditures and Growth Strategy - For the remainder of 2023, the company anticipates capital expenditures between $40.0 million and $50.0 million, with ongoing expenditures of $27.0 million to $32.0 million and discretionary expenditures of $13.0 million to $18.0 million[169]. - The company plans to pursue growth through strategic acquisitions of attractively priced open-air shopping centers and redevelopment of existing properties[162]. - The company has entered into agreements for construction activities with an aggregate remaining cost of approximately $6.6 million as of March 31, 2023[167]. Market Capitalization and Shareholder Returns - As of March 31, 2023, the total market capitalization was $1.8 billion, down from $2.2 billion in 2022, reflecting a decrease of approximately 18.7%[171]. - The company intends to maintain a quarterly common dividend of at least $0.14 per share, having declared this amount for the quarter ending March 31, 2023[152][153]. - The company had 85.6 million common shares outstanding as of March 31, 2023, an increase from 84.2 million in 2022[171].

Property Portfolio and Acquisitions - As of December 31, 2022, RPT Realty's property portfolio consisted of 44 wholly-owned shopping centers and represented 15.0 million square feet of gross leasable area, with a pro-rata share of 93.8% leased[13]. - In 2022, RPT Realty closed on two shopping center acquisitions for an aggregate amount of $110.2 million and three shopping center dispositions for $100.4 million[23]. - RPT Realty's strategy includes acquiring high-quality open-air shopping centers in top U.S. metropolitan areas, focusing on strong demographics and job growth[19]. - The company intends to pursue growth through strategic acquisitions of attractively priced open-air shopping centers[151]. - The company has a diversified tenant mix with major tenants including Dick's Sporting Goods, Publix, and LA Fitness across various properties[121]. Financial Performance - Net income available to common shareholders was $77.3 million, or $0.89 per diluted share, for the year ended December 31, 2022, compared to $61.9 million, or $0.75 per diluted share, for the same period in 2021[154]. - FFO was $95.8 million, or $1.02 per diluted share, for the year ended December 31, 2022, compared to $70.2 million, or $0.85 per diluted share, for the same period in 2021[154]. - Total revenue for the year ended December 31, 2022, was $217.7 million, an increase of $4.2 million or 2.0% compared to 2021[171]. - Same property net operating income increased 4.3% for the year ended December 31, 2022, compared to the same period in 2021[154]. - Cash provided by operating activities for the year ended December 31, 2022, was $97.7 million, up from $92.9 million in 2021[206]. Leasing and Occupancy - The company reported 307 leasing transactions in 2022, totaling 2,208,591 square feet, with a total base rent of $17.18 per square foot[21]. - As of December 31, 2022, the Company's aggregate portfolio leased rate was 93.8%, up from 93.1% at December 31, 2021[154]. - The average base rent for properties in the portfolio is $16.12 per leased square foot, with significant variations across locations[118]. - The average annualized base rent for small shop tenants (less than 10,000 square feet) in 2023 is $26.26, contributing $9,007,199 to total annualized base rent[130]. - The total number of expiring leases for small shop tenants in 2024 is 165, with a total annualized base rent of $10,305,129, representing 13.5% of total annualized base rent[130]. Financial Risks and Challenges - The company faces competition from larger REITs and private institutional investors, which may affect property acquisition costs and growth potential[38]. - Economic challenges such as inflation and labor shortages may adversely impact tenants' ability to pay rent, affecting the company's financial performance[53]. - The company may incur additional operating costs due to compliance with new regulations and sanitation measures, affecting overall profitability[73]. - The reliance on anchor tenants is critical, as their insolvency or lease termination could adversely impact the performance of the company's properties[59]. - The company is susceptible to risks associated with joint ventures, including lack of sole decision-making authority and potential conflicts with partners[65]. Sustainability and Corporate Governance - The company published its second annual Corporate Sustainability Report in 2022, highlighting its ESG initiatives and goals[33]. - The company is focused on environmental sustainability initiatives to reduce its carbon footprint and improve energy efficiency, which may lower operating costs[35]. - The company engages with stakeholders regularly to discuss important issues, including ESG topics, enhancing transparency and accountability[35]. - The company’s governance structure emphasizes integrity and transparency, which is believed to contribute to long-term success[35]. - The company supports philanthropic initiatives and encourages employee volunteerism through its "Act Locally Give Globally" program[37]. Employee and Workforce - RPT Realty's workforce consisted of 138 full-time employees as of December 31, 2022, with 56% being female[34]. - The company offers a comprehensive benefits package, including health insurance, paid time off, and wellness programs, promoting employee satisfaction and work-life balance[37]. - The company emphasizes a commitment to diversity and inclusion, requiring all employees to complete training on business conduct and ethics[35]. Debt and Financing - As of December 31, 2022, the company had $855.4 million of outstanding indebtedness, net of deferred financing costs, including $0.8 million of finance lease obligations[81]. - The company is reliant on capital markets for refinancing debt upon maturity, with potential adverse effects if market conditions are restrictive[81]. - The company must distribute at least 90% of its REIT taxable income annually to maintain its REIT status, which may limit cash available for growth[86]. - The discontinuation of LIBOR may lead to higher borrowing costs as contracts transition to alternative reference rates[91]. - The company had ten interest rate swap agreements in effect for an aggregate notional amount of $310.0 million, converting floating rate corporate debt to fixed rate debt[79].