Retail Opportunity Investments (US:ROIC)2022-04-26 18:11Financial Data and Key Metrics Changes - For Q1 2022, total revenues were $76.5 million, up from $69.2 million in Q1 2021, representing a 19% increase [12] - GAAP operating income for Q1 2022 was $26.7 million compared to $22.5 million in Q1 2021, marking an increase of 18.7% [12] - GAAP net income attributable to common shareholders was $11.6 million, or $0.09 per diluted share, compared to $7.4 million, or $0.06 per diluted share in Q1 2021 [12] - Same-center net operating income (NOI) on a cash basis increased by 7.5% to $49.5 million from $46 million in Q1 2021 [13] - Funds from operations (FFO) totaled $36.2 million, or $0.28 per diluted share, compared to $31 million, or $0.24 per diluted share in Q1 2021 [13] - Interest coverage ratio improved to 3.6x from 3.2x a year ago, and net debt to annualized EBITDA decreased to 6.4x from 7.3x [17] Business Line Data and Key Metrics Changes - The company leased over 416,000 square feet in Q1 2022, marking the second most active quarter for first-quarter leasing activity [7] - Achieved double-digit rent growth on same-space new leases and solid increases in renewal rents [7] - Renewal rents increased by over 7% on average in Q1 2022, returning to historical growth levels [24] Market Data and Key Metrics Changes - The portfolio lease rate stood at 97.2% leased, up from 96.9% a year ago, with anchor space fully leased at 100% [21] - Non-anchor space ended Q1 at 93.9% leased, with significant activity in renewing anchor leases [21] Company Strategy and Development Direction - The company is focused on capitalizing on strong tenant demand and enhancing the value of its portfolio through strategic acquisitions [11][28] - Recently acquired two grocery-anchored shopping centers for $36 million and has another under contract for $24 million, indicating a strong acquisition pipeline [8][10] - The company aims to continue raising equity to support acquisition activities, with a total market capitalization of approximately $3.9 billion [16] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the ongoing demand for space and the potential for a strong leasing year in 2022 [26] - The company raised its FFO guidance range for 2022 to between $1.04 and $1.10 per share, reflecting confidence in future performance [31] - Management noted that inflation and interest rate issues have not significantly impacted their affluent market segments [76] Other Important Information - The company retired two mortgages totaling $23.5 million, increasing unencumbered gross leasable area (GLA) to a record high of 96.5% [15] - The company has a limited balance on its credit facility, with only $10 million outstanding on a $600 million unsecured line [16] Q&A Session Summary Question: Will acquisitions in 2022 be back-end loaded? - Management indicated that acquisitions are expected to be mostly back-end loaded as the year progresses [33] Question: Update on densification initiatives? - Progress is being made, with plans to break ground on projects later this year [36] Question: Pricing levels on the acquisition pipeline? - Management modeled cap rates around 5.5% to 5.75% for acquisitions, with current acquisitions achieving around 6% cap rates [39] Question: Dividend outlook? - The company has a low payout ratio and may consider raising the dividend if performance continues to improve [89] Question: Update on tenant retention rates? - Tenant retention rates remain in the high-80% range, supported by successful renewals [94]