Retail Opportunity Investments (ROIC) - 2024 Q1 - Quarterly Results

Q1 2024 Performance and Outlook Highlights ROIC reported strong Q1 2024 results with increased net income and FFO, reaffirmed guidance, and robust same-center cash NOI growth Q1 2024 Key Performance Indicators | Metric | Value | | :--- | :--- | | Net Income (Common Stockholders) | $11.0 million ($0.09/share) | | Funds From Operations (FFO) | $37.9 million ($0.28/share) | | 2024 FFO Guidance (reaffirmed) | $1.03 - $1.09 per diluted share | | Same-Center Cash NOI Increase (YoY) | 5.7% | | Portfolio Lease Rate (as of 3/31/24) | 96.4% | | New/Renewed Leases (Q1'24) | 383,293 sq. ft. | | Same-Space Cash Base Rent Increase (New) | 12.2% | | Same-Space Cash Base Rent Increase (Renewals) | 6.7% | | Net Debt-to-Annualized EBITDA Ratio | 6.4x | CEO Commentary CEO Stuart A. Tanz highlighted a solid start to 2024, emphasizing strong demand for portfolio space and active capital recycling - Demand for space remains strong, particularly for anchor locations, with 207,172 square feet of anchor renewals completed in Q1[3] - All available anchor space is currently spoken for by new national tenants[3] - The company is engaged in capital recycling, with $68.2 million in property dispositions under contract and a recent $70.1 million acquisition in the San Diego market[3] Financial Performance ROIC reported increased Q1 2024 GAAP net income and FFO, with same-center net operating income growing by 5.7% Q1 Financial Results Comparison (YoY, in millions, except per share data) | Metric | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | GAAP Net Income (to common) | $11.0 ($0.09/share) | $8.1 ($0.06/share) | | Funds From Operations (FFO) | $37.9 ($0.28/share) | $33.8 ($0.25/share) | | Same-Center NOI | $55.6 | $52.6 | - Non-cash rental revenue amortization increased to $6.7 million in Q1 2024 from $2.9 million in Q1 2023, largely due to an anchor space lease expiration[7] Capital Management and Debt Profile ROIC maintained a strong balance sheet with $1.4 billion in principal debt, 91.4% fixed-rate, and an improved net debt-to-annualized EBITDA ratio Debt Profile as of March 31, 2024 | Metric | Value | | :--- | :--- | | Total Principal Debt | ~$1.4 billion | | Unsecured Debt | ~$1.3 billion | | Fixed-Rate Debt Percentage | 91.4% | | Net Debt-to-Annualized EBITDA | 6.4x | - In April 2024, the company retired a $26.0 million mortgage, reducing its outstanding mortgage loans to one, totaling $33.8 million[9] Portfolio and Leasing Activity ROIC actively managed its portfolio through acquisitions and dispositions, maintaining a high lease rate and achieving strong rent increases Acquisitions and Dispositions ROIC acquired a $70.1 million dual supermarket-anchored property and has agreements to sell two properties for $68.2 million - Acquired Bressi Ranch Village Center for $70.1 million in April 2024, anchored by Trader Joe's and Stater Brothers Supermarket[12] - The company currently has two properties under contract to be sold for a total of $68.2 million[13] Leasing Operations ROIC's portfolio was 96.4% leased at Q1 2024, with 87 leases executed, resulting in strong cash base rent increases - The portfolio lease rate was 96.4% at March 31, 2024[15] Q1 2024 Leasing Activity | Lease Type | Number of Leases | Total Square Feet (sq. ft.) | Same-Space Rent Increase (%) | | :--- | :--- | :--- | :--- | | New Leases | 26 | 43,968 | 12.2 | | Renewed Leases | 61 | 339,325 | 6.7 | | Total | 87 | 383,293 | N/A | Corporate and Shareholder Information ROIC received the 2024 Green Lease Leader award for the fourth consecutive year and declared a quarterly cash dividend of $0.15 per share Environmental Recognition ROIC was recognized as a 'Gold' level 2024 Green Lease Leader for the fourth consecutive year, highlighting its commitment to sustainability - Awarded 'Gold' level 2024 Green Lease Leader by the U.S. Department of Energy's Better Buildings Alliance and the Institute for Market Transformation[17] - This marks the fourth consecutive year ROIC has received this recognition for its collaboration with tenants on environmental issues[17] Dividend Summary The Board of Directors declared a cash dividend of $0.15 per share, payable on July 10, 2024 - A cash dividend of $0.15 per share was declared by the Board[19] - The dividend is payable on July 10, 2024, to stockholders of record on June 14, 2024[19] Financial Statements and Reconciliations Consolidated Balance Sheets As of March 31, 2024, ROIC's balance sheet shows total assets of $2.97 billion, stable liabilities, and $1.35 billion in total equity Key Balance Sheet Items (in thousands) | Account | March 31, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Total Real Estate Investments, net | $2,805,197 | $2,818,049 | | Cash and cash equivalents | $1,768 | $6,302 | | Total Assets | $2,966,715 | $2,977,640 | | Total Liabilities | $1,613,069 | $1,614,433 | | Total Equity | $1,353,646 | $1,363,207 | | Total Liabilities and Equity | $2,966,715 | $2,977,640 | Consolidated Statements of Operations For Q1 2024, ROIC generated $85.3 million in total revenues, leading to a net income of $11.0 million or $0.09 per share Q1 Statement of Operations Highlights (in thousands, except per share data) | Account | Three Months Ended Mar 31, 2024 | Three Months Ended Mar 31, 2023 | | :--- | :--- | :--- | | Total Revenues | $85,330 | $79,296 | | Operating Income | $30,584 | $25,654 | | Net Income Attributable to ROIC | $11,018 | $8,142 | | Earnings per share – basic and diluted | $0.09 | $0.06 | | Dividends per common share | $0.15 | $0.15 | Non-GAAP Reconciliations The report provides reconciliations for key non-GAAP metrics, including FFO of $37.9 million and Same-Center Cash NOI of $55.6 million Funds From Operations (FFO) Diluted FFO for Q1 2024 was $37.9 million, a significant increase from $33.8 million in Q1 2023, after adding back depreciation and amortization FFO Reconciliation (in thousands) | Line Item | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Net income attributable to ROIC | $11,018 | $8,142 | | Plus: Depreciation and amortization | $26,269 | $25,104 | | Plus: Net income attributable to non-controlling interests | $647 | $554 | | Funds from operations – diluted | $37,934 | $33,800 | Same-Center Cash Net Operating Income (NOI) Same-Center Cash NOI increased by 5.7% year-over-year to $55.6 million, driven by higher revenues and decreased operating expenses Same-Center Cash NOI Analysis (in thousands) | Component | Q1 2024 | Q1 2023 | % Change | | :--- | :--- | :--- | :--- | | Total Revenues | $78,027 | $75,638 | 3.2% | | Total Operating Expenses | $22,434 | $23,058 | (2.7)% | | Same-Center Cash NOI | $55,593 | $52,580 | 5.7% | - A reconciliation from GAAP operating income of $30.6 million to Same-Center Cash NOI of $55.6 million is provided, adjusting for various non-cash and non-same-center items[35]