Retail Opportunity Investments (ROIC) - 2022 Q4 - Annual Report

Property Portfolio - As of December 31, 2022, Retail Opportunity Investments Corp. (ROIC) owned 94 properties totaling approximately 10.6 million square feet of gross leasable area (GLA) [35] - The retail portfolio was approximately 98.1% leased as of December 31, 2022, with 1.6 million square feet leased or renewed during the year [161] - The Company's properties in California, Washington, and Oregon accounted for 64%, 22%, and 14% of its consolidated property operating income for the year ended December 31, 2022 [118] - The Company’s properties are impacted by general retail market conditions, including consumer spending and competition from online retailers, which could affect tenant performance [95] Acquisitions and Sales - The company acquired several properties in 2022, including Olympia Square North for approximately $18.4 million, Powell Valley Junction for approximately $17.7 million, and Village Oaks Shopping Center for approximately $24.1 million [44][45][46] - ROIC sold Aurora Square for $36.2 million, resulting in net proceeds of approximately $34.4 million and a gain on sale of approximately $7.7 million [48] - The Company expects to acquire additional properties, but may face competition and increased acquisition costs, which could affect financial performance [90] - The Company intends to use net proceeds from share sales for general corporate purposes, including funding acquisitions and working capital [233] Financial Performance - The company generated property operating income of approximately $227.2 million for the year ended December 31, 2022, representing an increase of approximately $21.2 million compared to $206.0 million in 2021 [195] - Funds from operations (FFO) for the year ended December 31, 2022, was $145.3 million, a 13.5% increase from $127.9 million in 2021 [204] - Total Company cash NOI for 2022 was $211.2 million, compared to $195.6 million in 2021 [209] - Net income attributable to stockholders for 2022 was $51.9 million, slightly down from $53.5 million in 2021 [204] Debt and Financing - As of December 31, 2022, ROIC had $300.0 million and $88.0 million outstanding under its term loan and credit facility, respectively, with weighted average interest rates of 2.7% and 3.1% [53] - The Company has an unsecured revolving credit facility with a borrowing capacity of $600.0 million, which can be increased to $1.2 billion under certain conditions [51] - The Company issued $250.0 million aggregate principal amount of unsecured senior notes due 2027, $200.0 million due 2026, $250.0 million due 2024, and $250.0 million due 2023, all fully guaranteed by ROIC [128] - The Company may incur additional indebtedness at higher rates if it needs to repay existing debt during periods of rising interest rates [132] Tenant and Lease Information - The Company derives significant revenues from major tenants, with Albertsons/Safeway, Kroger, and Rite Aid accounting for 5.7%, 3.2%, and 1.7% of annualized base rent, respectively, as of December 31, 2022 [104] - The largest tenant, Albertsons/Safeway Supermarkets, accounts for 5.7% of the total ABR, with no single tenant exceeding 5.7% [166][167] - The company has a diversified tenant mix, with 105 tenants contributing to 19.5% of the total ABR [167] - In 2023, 282 leases are set to expire, representing 10.3% of the total ABR, amounting to $24,088,000 [168] Environmental and Social Responsibility - The Company achieved a 15% year-over-year reduction in energy usage from 2020 to 2021 at like-for-like properties [79] - Solar agreements are in place at nine properties, representing approximately 18% of the portfolio by gross leasable area [79] - The Company was awarded the "Gold" level designation for energy efficiency for the second consecutive year by the U.S. Department of Energy [75] - The Company is in compliance with state laws and exchange requirements regarding board diversity, but future compliance cannot be guaranteed [158] Risks and Challenges - The Company faces competition from larger entities with greater resources, which may limit its ability to acquire desirable assets [68][81] - Economic conditions, including inflation or deflation, could materially affect the Company's income, cash flow, and ability to service debt obligations [88] - The Company faces risks associated with security breaches and disruptions of its IT networks, which could materially impact its financial condition and operations [108] - A prolonged economic slowdown or recession could adversely affect the Company's income, cash flow, and ability to service its debt obligations [112] Shareholder Distributions - Dividends paid and payable to stockholders for the year ended December 31, 2022, totaled approximately $92.4 million, an increase from $62.2 million in 2021 [234] - The Company must distribute at least 90% of its REIT taxable income annually to maintain its REIT status, or face U.S. federal corporate income tax on undistributed income [147] - The Company's ability to make distributions to its stockholders is contingent upon the Operating Partnership's cash flow, which is dependent on its subsidiaries' performance [138] - The Company’s ability to pay distributions may be materially affected by various risk factors, including its financial condition and debt covenants [156]