RPT(RPT) - 2021 Q1 - Quarterly Report

PART I – FINANCIAL INFORMATION Item 1. Condensed Consolidated Financial Statements This section presents RPT Realty's unaudited condensed consolidated financial statements, detailing changes in financial position, operations, equity, and cash flows, notably a significant net income increase from real estate sales Condensed Consolidated Balance Sheets As of March 31, 2021, RPT Realty's total assets were $1.86 billion, a decrease from $1.95 billion at year-end 2020, primarily due to a reduction in cash and cash equivalents; total liabilities decreased to $1.04 billion from $1.15 billion, largely driven by a reduction in notes payable, consequently, total shareholders' equity increased to $818.9 million from $801.4 million Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2021 | December 31, 2020 | | :--- | :--- | :--- | | Total Assets | $1,857,817 | $1,950,040 | | Cash and cash equivalents | $133,002 | $208,887 | | Net real estate | $1,442,873 | $1,463,248 | | Total Liabilities | $1,038,881 | $1,148,671 | | Notes payable, net | $927,112 | $1,027,751 | | Total Shareholders' Equity | $818,936 | $801,369 | Condensed Consolidated Statements of Operations and Comprehensive Income For the three months ended March 31, 2021, total revenue decreased to $50.1 million from $52.9 million year-over-year; however, net income attributable to RPT surged to $16.9 million from $0.3 million in the prior-year period, primarily due to a $19.0 million gain on the sale of real estate, resulting in a diluted earnings per share of $0.19, a significant improvement from a loss of ($0.02) per share in Q1 2020, with the dividend per common share reduced to $0.075 from $0.220 Q1 2021 vs Q1 2020 Performance (in thousands, except per share data) | Metric | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :--- | :--- | :--- | | Total Revenue | $50,093 | $52,876 | | Operating Income | $7,105 | $9,165 | | Gain on sale of real estate | $19,003 | $— | | Net Income Attributable to RPT | $16,910 | $334 | | Net Income (Loss) Available to Common Shareholders | $15,235 | $(1,341) | | Diluted Earnings (Loss) Per Common Share | $0.19 | $(0.02) | | Cash Dividend Declared per Common Share | $0.075 | $0.220 | Condensed Consolidated Statements of Shareholders' Equity Total shareholders' equity increased from $801.4 million at December 31, 2020, to $818.9 million at March 31, 2021, primarily driven by net income of $17.3 million and other comprehensive income of $7.5 million, partially offset by dividends declared to common and preferred shareholders totaling $7.7 million - Key changes in shareholders' equity for Q1 2021 include net income of $16.9 million and a positive other comprehensive income adjustment of $7.4 million, offset by common and preferred dividends of $6.0 million and $1.7 million, respectively[16] Condensed Consolidated Statements of Cash Flows For Q1 2021, net cash from operating activities increased to $18.9 million from $10.3 million in Q1 2020; investing activities provided $24.0 million in cash, a reversal from a $5.7 million use in the prior year, driven by $29.3 million in net proceeds from real estate sales; financing activities used $111.0 million, primarily for a $100.0 million repayment of the revolving credit facility, compared to providing $203.6 million in Q1 2020; overall cash, cash equivalents, and restricted cash decreased by $68.1 million during the quarter Cash Flow Summary (in thousands) | Activity | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :--- | :--- | :--- | | Net cash provided by operating activities | $18,885 | $10,321 | | Net cash provided by (used in) investing activities | $23,951 | $(5,671) | | Net cash (used in) provided by financing activities | $(110,965) | $203,642 | | Net change in cash, cash equivalents and restricted cash | $(68,129) | $208,292 | Notes to Condensed Consolidated Financial Statements The notes detail the company's organization, accounting policies, and significant events, including the impact of COVID-19 on operations and rent collections, the formation of the RGMZ joint venture for net lease retail properties, disposition activities generating a $19.0 million gain, debt structure and covenant compliance, and details on leases and share-based compensation - As of March 31, 2021, the company's portfolio consisted of 49 multi-tenant shopping centers and 13 net lease retail properties, with a pro-rata leased rate of 92.0%[24] - The COVID-19 pandemic is identified as a significant risk, leading to numerous rent relief requests and uncertainty about future financial impact[29] - In Q1 2021, the company sold 13 properties and land parcels for gross proceeds of $36.2 million, resulting in a gain on sale of $19.0 million[42] - On March 4, 2021, RPT formed the RGMZ joint venture, contributing 13 net lease retail properties valued at $36.2 million; RPT received $29.3 million in net cash proceeds and retained a 6.4% stake[44] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses COVID-19's impact on operations and rent collection, highlights capital recycling, analyzes Q1 2021 results showing revenue decline offset by property sales, and details liquidity improvements and non-GAAP performance - As of April 26, 2021, 100% of the company's 62 retail properties were open, and 92% of first quarter 2021 rents had been paid on a pro-rata basis[111] - The Board of Trustees reinstated the quarterly common dividend at $0.075 per share for Q1 2021 after suspending it in Q2 2020 due to the pandemic[111] - Total revenue for Q1 2021 decreased by $2.8 million (5.3%) YoY, primarily due to a $3.0 million increase in uncollectible rental income and rent abatements related to the COVID-19 pandemic[127][135] Capitalization and Leverage | Metric | March 31, 2021 | March 31, 2020 | | :--- | :--- | :--- | | Net Debt (in thousands) | $786,514 | $831,584 | | Total Market Capitalization (in thousands) | $1,834,907 | $1,384,571 | | Net debt to total market capitalization | 42.9% | 60.1% | FFO and Operating FFO per Share (Diluted) | Metric | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :--- | :--- | :--- | | FFO per share, diluted | $0.19 | $0.25 | | Operating FFO per share, diluted | $0.19 | $0.26 | Same Property NOI (in thousands) | Metric | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | Change | | :--- | :--- | :--- | :--- | | Same Property NOI | $34,728 | $37,954 | (8.5)% | Item 3. Quantitative and Qualitative Disclosures About Market Risk The company's primary market risk is interest rate risk on its variable rate debt, managed through interest rate swap agreements, effectively fixing all debt as of March 31, 2021, and mitigating near-term earnings impact from rate fluctuations, while actively monitoring the transition from LIBOR to alternative reference rates like SOFR - The company uses interest rate swaps to manage exposure to interest rate risk; as of March 31, 2021, derivative instruments with a notional amount of $385.0 million were outstanding, effectively converting all variable rate debt to fixed rate[180][181] - A 100 basis point increase in interest rates would decrease the fair value of the company's total outstanding debt by approximately $25.0 million as of March 31, 2021[180] - The company acknowledges the upcoming cessation of LIBOR and is monitoring the transition to alternative rates like SOFR, as it has material contracts indexed to USD-LIBOR[182] Item 4. Controls and Procedures Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective at a reasonable assurance level as of March 31, 2021, with no material changes in internal control over financial reporting during the quarter - Based on an assessment as of March 31, 2021, the CEO and CFO concluded that the company's disclosure controls and procedures were effective at the reasonable assurance level[185] - There were no material changes in the company's internal control over financial reporting during the first quarter of 2021[186] PART II – OTHER INFORMATION Item 1. Legal Proceedings The company is involved in certain litigation arising in the ordinary course of business but does not believe any of these proceedings will have a material effect on its consolidated financial statements - The company states that it is not involved in any litigation expected to have a material effect on its financial statements[188] Item 1A. Risk Factors There have been no material changes to the company's risk factors during the first quarter of 2021 compared to those disclosed in its Annual Report on Form 10-K for the year ended December 31, 2020 - No material changes to risk factors were reported for the three months ended March 31, 2021, compared to the 2020 Form 10-K[189] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds During the quarter ended March 31, 2021, the company did not repurchase shares as part of a publicly announced program; however, it withheld 72,787 common shares from employees at an average price of $10.57 per share to satisfy statutory income tax obligations related to the vesting of restricted share awards - In Q1 2021, the company withheld 72,787 shares from employees to cover tax obligations from vesting restricted share awards[192] Item 6. Exhibits This section lists the exhibits filed with the Form 10-Q, which include the CEO and CFO certifications pursuant to the Sarbanes-Oxley Act of 2002 and the Inline XBRL financial data files - Exhibits filed include CEO and CFO certifications (31.1, 31.2, 32.1, 32.2) and Inline XBRL documents (101 series)[194]