Retail Opportunity Investments Corp (ROIC)

[Enterprising Investor]

Retail Opportunity Investments Corp. Reports Strong Second Quarter Results (7/27/16)

SAN DIEGO, July 27, 2016 (GLOBE NEWSWIRE) -- Retail Opportunity Investments Corp. (NASDAQ:ROIC) announced today financial and operating results for the second quarter ended June 30, 2016.

HIGHLIGHTS

Net income of $8.6 million, or $0.08 per diluted share

17.4% increase in FFO(1) per diluted share to $0.27 (2Q’16 vs. 2Q’15)

$181.8 million of grocery-anchored shopping centers acquired during 2Q’16

$289.4 million of grocery-anchored acquisitions committed year-to-date

97.2% portfolio leased rate at June 30, 2016

4.9% increase in same-center cash net operating income (2Q’16 vs. 2Q’15)

6.3% increase in same-center cash net operating income (1st 6 months)

24.7% increase in same-space comparative cash rents on new leases

15.9% increase in cash rents on renewed leases

$224.2 million of common equity raised year-to-date

$200 million of senior unsecured notes private placement committed (3.95%, 2026 maturity)

32.8% debt-to-total market capitalization ratio at June 30, 2016

4.1x interest coverage for 2Q’16

Quarterly cash dividend of $0.18 per share declared
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(1) A reconciliation of GAAP net income to Funds From Operations (FFO) is provided at the end of this press release.

Stuart A. Tanz, President and Chief Executive Officer of Retail Opportunity Investments Corp. stated, “2016 is shaping up thus far to be an outstanding year for the company. We are fully on track to achieve and possibly exceed our key growth and operating objectives for the year. We are already approaching $300 million in grocery-anchored shopping center acquisitions, enhancing our strong presence across our core metropolitan markets. Additionally, we continue to maintain our portfolio above 97% leased, and we continue to achieve solid growth in our same-center and same-space comparative numbers.” Tanz further stated, “While steadily growing our portfolio, we are at the same time enhancing our financial strength and flexibility. Thus far we have secured over $400 million of equity and debt capital, which we have lined up through a variety of sources, efficiently and seamlessly funding our growth, while also enhancing our conservative financial metrics.”

FINANCIAL SUMMARY

For the three months ended June 30, 2016, GAAP net income applicable to common shareholders was $8.6 million, or $0.08 per diluted share, as compared to GAAP net income of $5.4 million, or $0.05 per diluted share for the three months ended June 30, 2015. FFO for the second quarter of 2016 was $30.5 million, or $0.27 per diluted share, as compared to $22.3 million in FFO, or $0.23 per diluted share for the second quarter of 2015, representing a 17.4% increase on a per diluted share basis. ROIC reports FFO as a supplemental performance measure in accordance with the definition set forth by the National Association of Real Estate Investment Trusts. A reconciliation of GAAP net income to FFO is provided at the end of this press release.

At June 30, 2016, ROIC had a total market capitalization of approximately $3.7 billion with approximately $1.2 billion of principal debt outstanding, equating to a 32.8% debt-to-total market capitalization ratio. ROIC’s debt outstanding was comprised of $72.0 million of mortgage debt and approximately $1.1 billion of unsecured debt, with $333.5 million outstanding on its unsecured revolving credit facility at June 30, 2016. Subsequent to the second quarter, ROIC completed an underwritten public offering (see below), utilizing the net proceeds to reduce borrowings outstanding on its unsecured revolving credit facility. Accordingly, ROIC currently has $190.5 million outstanding on its unsecured revolving credit facility.

For the second quarter of 2016, ROIC’s interest coverage was 4.1 times and 94.3% of its portfolio was unencumbered (based on gross leasable area) at June 30, 2016.

ACQUISITION SUMMARY

Year-to-date, ROIC has committed a total of $289.4 million in grocery-anchored shopping center acquisitions. During the first quarter of 2016, ROIC acquired a two-property portfolio for $63.3 million. During the second quarter, ROIC acquired the following two grocery-anchored shopping centers, in separate transactions, totaling $181.8 million.

Bouquet Center

In April 2016, ROIC acquired Bouquet Center for $59.0 million. The shopping center is approximately 149,000 square feet and is anchored by Safeway (Vons) Supermarket, CVS Pharmacy and Ross Dress For Less. The property is located in Santa Clarita, California, within the Los Angeles metropolitan area, and is currently 96.0% leased.

North Ranch Shopping Center

In June 2016, ROIC acquired North Ranch Shopping Center for $122.8 million. The shopping center is approximately 147,000 square feet and is anchored by Kroger (Ralph’s) Supermarket, Trade Joe’s and Rite Aid Pharmacy. The property is located in Westlake Village, California, within the Los Angeles metropolitan area, and is currently 98.7% leased.

Subsequent to the second quarter, ROIC acquired the following grocery-anchored shopping center.

Monterey Center

In July 2016, ROIC acquired Monterey Center for $12.1 million. The shopping center is approximately 26,000 square feet and is anchored by Trader Joe’s and Pharmaca Pharmacy. The property is located in downtown Monterey, California and is currently 100% leased.

In addition, ROIC currently has a binding contract to acquire the following grocery-anchored shopping center.

Bridle Trails Shopping Center

ROIC has a binding contract to acquire Bridle Trails Shopping Center for $32.2 million. The shopping center is approximately 106,000 square feet and is anchored by Red Apple (Unified) Supermarket and Bartell Drugs, a Seattle-based regional pharmacy. The property is located in Kirkland, Washington, within the Seattle metropolitan area, and is currently 100% leased.

PROPERTY OPERATIONS SUMMARY

At June 30, 2016, ROIC’s portfolio was 97.2% leased. For the second quarter of 2016, same-center net operating income (NOI) was $32.2 million, as compared to $30.7 million in same-center NOI for the second quarter of 2015, representing a 4.9% increase. The second quarter comparative same-center NOI includes all of the properties owned by ROIC as of April 1, 2015, totaling 64 shopping centers. For the first six months of 2016, same-center NOI was $62.3 million, as compared to $58.6 million in same-center NOI for the first six months of 2015, representing a 6.3% increase. The first six months comparative same-center NOI includes all of the properties owned by ROIC as of January 1, 2015, totaling 61 shopping centers. ROIC reports same-center NOI on a cash basis. A reconciliation of GAAP operating income to same-center NOI is provided at the end of this press release.

During the second quarter of 2016, ROIC executed 83 leases, totaling 151,062 square feet, achieving an 18.9% increase in same-space comparative base rent, including 46 new leases, totaling 76,006 square feet, achieving a 24.7% increase in same-space comparative base rent, and 37 renewed leases, totaling 75,056 square feet, achieving a 15.9% increase in base rent. ROIC reports same-space comparative base rent on a cash basis.

CAPITAL MARKETS SUMMARY

Year-to-date, ROIC has raised a total of approximately $224.2 million in common equity. In March 2016, ROIC issued $46.1 million of ROIC common equity in the form of operating partnership units in connection with a shopping center acquisitions. Additionally, thus far in 2016 ROIC has issued approximately 2.2 million shares of common stock through its ATM program, raising approximately $45.0 million in net proceeds. Furthermore, in July 2016, ROIC issued approximately 6.6 million shares of common stock through an underwritten public offering, raising approximately $133.1 million in net proceeds. ROIC utilized the net proceeds to reduce borrowings outstanding on its unsecured revolving credit facility.

On July 26, 2016, ROIC entered into an agreement to sell $200 million principal amount of 3.95% senior unsecured notes due 2026 in a direct private placement. ROIC expects to close the transaction in September 2016 and intends to utilize the proceeds to reduce borrowings outstanding on its unsecured revolving credit facility, fund shopping center acquisitions and for general corporate purposes.

CASH DIVIDEND

On June 29, 2016, ROIC distributed to stockholders an $0.18 per share cash dividend. On July 27, 2016, ROIC’s board of directors declared a cash dividend of $0.18 per share, payable on September 29, 2016 to stockholders of record on September 15, 2016.

2016 FFO GUIDANCE

ROIC currently estimates that FFO for the full year 2016 will be within the range of $1.03 to $1.07 per diluted share, and net income to be within the range of $0.38 to $0.39 per diluted share. The following table provides a reconciliation of GAAP net income to FFO.

[tables deleted]

ROIC’s estimates are based on numerous underlying assumptions. ROIC’s management will discuss the company’s guidance and underlying assumptions on its July 28, 2016 conference call. ROIC’s guidance is a forward-looking statement and is subject to risks and other factors described elsewhere in this press release.

CONFERENCE CALL

ROIC will conduct a conference call and audio webcast to discuss its quarterly results on Thursday, July 28, 2016 at 11:00 a.m. Eastern Time / 8:00 a.m. Pacific Time. Those interested in participating in the conference call should dial [phone] (domestic), or [phone] (international) at least ten minutes prior to the scheduled start of the call. When prompted, provide the Conference ID: 9535671. A live webcast will also be available in listen-only mode at http://www.roireit.net/. The conference call will be recorded and available for replay beginning at 2:00 p.m. Eastern Time on July 28, 2016 and will be available until 11:59 p.m. Eastern Time on August 4, 2016. To access the conference call recording, dial [phone] (domestic) or [phone] (international) and use the Conference ID: 9535671. The conference call will also be archived on http://www.roireit.net/ for approximately 90 days.

ABOUT RETAIL OPPORTUNITY INVESTMENTS CORP.

Retail Opportunity Investments Corp. (NASDAQ: ROIC), is a fully-integrated, self-managed real estate investment trust (REIT) that specializes in the acquisition, ownership and management of grocery-anchored shopping centers located in densely-populated, metropolitan markets across the West Coast. As of June 30, 2016, ROIC owned 77 shopping centers encompassing approximately 9.1 million square feet. ROIC is the largest publicly-traded, grocery-anchored shopping center REIT focused exclusively on the West Coast. ROIC is a member of the S&P SmallCap 600 Index and has investment-grade corporate debt ratings from Moody's Investor Services and Standard & Poor's. Additional information is available at: www.roireit.net.

https://globenewswire.com/news-release/2016/07/27/859422/0/en/Retail-Opportunity-Investments-Corp-Reports-Strong-Second-Quarter-Results.html