Financial Highlights
- Net (loss) income attributable to common shareholders for the third quarter 2023 of
$(7.9) million , or$(0.09) per diluted share, compared to$11.3 million , or$0.13 per diluted share for the same period in 2022.
- Third quarter 2023 Operating funds from operations ("FFO") per diluted share of
$0.24 .
- Same property net operating income ("NOI") during the third quarter 2023 increased 2.6% compared to the same period in 2022, exceeding internal quarterly expectations.
Operational Highlights
- Signed 747,672 square feet in the third quarter 2023, representing the fifth consecutive quarter of leasing volume over 500,000 square feet and the highest quarterly amount since the first quarter 2010.
- Grew the signed not commenced rent and recovery income balance to
$13 .1 million as ofSeptember 30, 2023 , up from$9.3 million as ofJune 30, 2023 , representing an increase of over 8% above third quarter 2023 annualized NOI and increasing the total leased-to-occupied spread to 490 basis points.
- Achieved a comparable new lease spread of 49.9%, during the third quarter 2023, exceeding the trailing twelve month average of 45.7%, with expected incremental returns on leasing capex of approximately 11%.
- Reported a trailing twelve month blended comparable re-leasing spread of 11.6%, a new Company record.
- Increased essential tenant mix by signing four grocer leases at properties that do not currently have a grocer.
- Improved tenant credit by signing leases with three leading national retailers, backfilling two former Bed Bath & Beyond locations. Since the end of 2022, the Company has backfilled six of eight Bed Bath & Beyond stores, illustrating the robust demand from retailers for these spaces. Additionally, the Company is in LOI or lease negotiation regarding the remaining six locations, consisting of two former Bed Bath & Beyond stores and four buybuyBaby locations.
- Commenced leases with several high-credit tenants including:
Publix at The Crossroads, Total Wine atDedham Point , Burlington at West Oaks II and Sierra atNorthborough Crossing .
- As previously announced, during the quarter, the Company entered into a definitive merger agreement under which RPT will be acquired by Kimco Realty Corporation ("Kimco") in an all-stock transaction valued at approximately
$2 billion , including the assumption of debt and preferred stock. The transaction is expected to close in the beginning of 2024, subject to RPT shareholder approval and other customary closing conditions. See the Company's press release "Kimco Realty® toAcquire RPT Realty in All-Stock Transaction," datedAugust 28, 2023 for additional details.
"Since the announcement of our pending transaction with Kimco, the organization has remained disciplined in achieving our goals. We surpassed our internal targets for the quarter and recorded the second highest quarterly leasing volume in the Company's history, while achieving a nearly 50% new lease spread and a return on leasing capital of about 11%,” said
FINANCIAL RESULTS
Net (loss) income attributable to common shareholders for the third quarter 2023 of
FFO for the third quarter 2023 of
Operating FFO for the third quarter 2023 of
Same property NOI during the third quarter 2023 increased 2.6% compared to the same period in 2022. The increase was primarily driven by higher base rent, lower rent not probable of collection and higher net recovery income, partially offset by higher non-recoverable expense.
OPERATING RESULTS
The Company's operating results include its consolidated properties and its pro-rata share of unconsolidated joint venture properties for the aggregate portfolio.
During the third quarter 2023, the Company signed 72 leases totaling 747,672 square feet. Blended re-leasing spreads on comparable leases were 11.4% with ABR of
As of
The table below summarizes the Company's leased rate and occupancy results at
Same Property Portfolio | |||
Total | |||
Leased rate | 94.2% | 94.9% | 95.4% |
Occupancy | 89.9% | 91.6% | 90.1% |
Anchor (GLA of 10,000 square feet or more) | |||
Leased rate | 96.5% | 97.6% | 98.4% |
Occupancy | 91.3% | 93.9% | 92.3% |
Small Shop (GLA of less than 10,000 square feet) | |||
Leased rate | 88.7% | 88.3% | 88.2% |
Occupancy | 86.5% | 86.0% | 84.6% |
The impact of the remaining Bed Bath & Beyond closures detracted 130 and 220 basis points from the Company's same property leased rate and occupancy, respectively, as of
BALANCE SHEET
The Company ended the third quarter 2023 with
DIVIDEND
As previously announced, on
2023 GUIDANCE
In light of the Company's previously-announced proposed merger with Kimco Realty, the Company is not providing guidance and it is not affirming past guidance.
The Company is not hosting a webcast conference call to discuss its quarterly results and operating performance.
SUPPLEMENTAL MATERIALS
The Company’s quarterly financial and operating supplement is available on its corporate investor relations website at investors.rptrealty.com. If you wish to receive copies via email, please send requests to invest@rptrealty.com.
Company Contact:
vchao@rptrealty.com
(212) 221-1752
FORWARD-LOOKING STATEMENTS
This communication contains certain “forward-looking” statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended. We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 and includes this statement for purposes of complying with the safe harbor provisions. Forward-looking statements, which are based on certain assumptions and describe our future plans, strategies and expectations, are generally identifiable by use of the words “believe,” “expect,” “intend,” “anticipate,” “estimate,” “predict,” “may,” “will,” “should,” “target,” “plan” or similar expressions. The forward-looking statements included in this communication are based on our good faith beliefs, reasonable assumptions and our best judgment based upon current information, and, with respect to the proposed transaction with Kimco, each of the companies’ current plans, objectives, estimates, expectations and intentions, and, in each case, inherently involve significant risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. You should not rely on forward-looking statements since they involve known and unknown risks, uncertainties and other factors which, in some cases, are beyond our ability to predict or control. Factors which may cause actual results to differ materially from current expectations include, but are not limited to: our success or failure in implementing our business strategy; economic conditions generally (including supply chain disruptions and construction delays) and in the commercial real estate and finance markets, including, without limitation, as a result of disruptions and instability in the banking and financial services industries, continued high inflation rates or further increases in inflation or interest rates, such as the inability to obtain equity, debt or other sources of funding or refinancing on favorable terms to the Company and the costs and availability of capital, which depends in part on our asset quality and our relationships with lenders and other capital providers; the level and volatility of interest rates; risks associated with bankruptcies or insolvencies or general downturn in the businesses of tenants; impact of any future pandemic, epidemic or outbreak of any other highly infectious disease, on the
Important Additional Information and Where to Find It
In connection with the proposed transaction, Kimco has filed with the
Investors and security holders may obtain copies of these documents free of charge through the website maintained by the
Participants in the Solicitation
RPT and Kimco and certain of their respective trustees, directors and executive officers and other members of management and employees may be deemed to be participants in the solicitation of proxies from the shareholders of RPT in respect of the proposed transaction under the rules of the
No Offer or Solicitation
This communication shall not constitute an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. No offering of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act.
CONDENSED CONSOLIDATED BALANCE SHEETS | |||||||
(In thousands, except per share amounts) | |||||||
(unaudited) | |||||||
2023 | 2022 | ||||||
ASSETS | |||||||
Income producing properties, at cost: | |||||||
Land | $ | 301,404 | $ | 302,062 | |||
Buildings and improvements | 1,376,161 | 1,373,893 | |||||
Less accumulated depreciation and amortization | (409,263 | ) | (386,036 | ) | |||
Income producing properties, net | 1,268,302 | 1,289,919 | |||||
Construction in progress and land available for development | 37,778 | 37,772 | |||||
Real estate held for sale | 4,800 | 3,115 | |||||
Net real estate | 1,310,880 | 1,330,806 | |||||
Equity investments in unconsolidated joint ventures | 414,404 | 423,089 | |||||
Cash and cash equivalents | 4,155 | 5,414 | |||||
Restricted cash and escrows | 412 | 461 | |||||
Accounts receivable, net | 18,377 | 19,914 | |||||
Acquired lease intangibles, net | 32,496 | 40,043 | |||||
Operating lease right-of-use assets | 16,759 | 17,269 | |||||
Other assets, net | 111,694 | 109,443 | |||||
TOTAL ASSETS | $ | 1,909,177 | $ | 1,946,439 | |||
LIABILITIES AND SHAREHOLDERS' EQUITY | |||||||
Notes payable, net | $ | 847,732 | $ | 854,596 | |||
Finance lease obligation | 763 | 763 | |||||
Accounts payable and accrued expenses | 54,094 | 41,985 | |||||
Distributions payable | 15,803 | 14,336 | |||||
Acquired lease intangibles, net | 27,484 | 33,157 | |||||
Operating lease liabilities | 16,684 | 17,016 | |||||
Other liabilities | 6,361 | 5,933 | |||||
TOTAL LIABILITIES | 968,921 | 967,786 | |||||
Commitments and Contingencies | |||||||
Preferred shares of beneficial interest, | 92,427 | 92,427 | |||||
Common shares of beneficial interest, | 857 | 855 | |||||
Additional paid-in capital | 1,261,478 | 1,255,087 | |||||
Accumulated distributions in excess of net income | (456,006 | ) | (409,290 | ) | |||
Accumulated other comprehensive gain | 24,074 | 21,434 | |||||
TOTAL SHAREHOLDERS' EQUITY ATTRIBUTABLE TO RPT | 922,830 | 960,513 | |||||
Noncontrolling interest | 17,426 | 18,140 | |||||
TOTAL SHAREHOLDERS' EQUITY | 940,256 | 978,653 | |||||
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $ | 1,909,177 | $ | 1,946,439 |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||||||
(In thousands, except per share amounts) | |||||||||||||||
(unaudited) | |||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||
2023 | 2022 | 2023 | 2022 | ||||||||||||
REVENUE | |||||||||||||||
Rental income | $ | 52,413 | $ | 52,487 | $ | 150,724 | $ | 160,032 | |||||||
Other property income | 889 | 1,012 | 2,690 | 3,227 | |||||||||||
Management and other fee income | 1,586 | 1,231 | 4,772 | 2,848 | |||||||||||
TOTAL REVENUE | 54,888 | 54,730 | 158,186 | 166,107 | |||||||||||
EXPENSES | |||||||||||||||
Real estate tax expense | 6,734 | 7,329 | 20,877 | 22,731 | |||||||||||
Recoverable operating expense | 6,913 | 6,832 | 21,975 | 21,119 | |||||||||||
Non-recoverable operating expense | 2,972 | 2,817 | 8,383 | 7,792 | |||||||||||
Depreciation and amortization | 19,961 | 18,442 | 54,247 | 57,825 | |||||||||||
Transaction costs | 3 | 405 | 13 | 4,881 | |||||||||||
General and administrative expense | 9,673 | 9,372 | 27,968 | 26,394 | |||||||||||
TOTAL EXPENSES | 46,256 | 45,197 | 133,463 | 140,742 | |||||||||||
Gain on sale of real estate | — | 11,144 | 900 | 26,234 | |||||||||||
OPERATING INCOME | 8,632 | 20,677 | 25,623 | 51,599 | |||||||||||
OTHER INCOME AND EXPENSES | |||||||||||||||
Other (expense) income, net | (8,049 | ) | 530 | (7,392 | ) | 895 | |||||||||
Earnings from unconsolidated joint ventures | 1,948 | 1,779 | 3,388 | 467 | |||||||||||
Interest expense | (8,803 | ) | (9,568 | ) | (26,342 | ) | (26,650 | ) | |||||||
Loss on extinguishment of debt | — | (121 | ) | — | (121 | ) | |||||||||
(LOSS) INCOME BEFORE TAX | (6,272 | ) | 13,297 | (4,723 | ) | 26,190 | |||||||||
Income tax provision | (24 | ) | (71 | ) | (254 | ) | (142 | ) | |||||||
NET (LOSS) INCOME | (6,296 | ) | 13,226 | (4,977 | ) | 26,048 | |||||||||
Net loss (income) attributable to noncontrolling partner interest | 114 | (251 | ) | 90 | (502 | ) | |||||||||
NET (LOSS) INCOME ATTRIBUTABLE TO RPT | (6,182 | ) | 12,975 | (4,887 | ) | 25,546 | |||||||||
Preferred share dividends | (1,676 | ) | (1,676 | ) | (5,026 | ) | (5,026 | ) | |||||||
NET (LOSS) INCOME AVAILABLE TO COMMON SHAREHOLDERS | $ | (7,858 | ) | $ | 11,299 | $ | (9,913 | ) | $ | 20,520 | |||||
(LOSS) EARNINGS PER COMMON SHARE | |||||||||||||||
Basic | $ | (0.09 | ) | $ | 0.13 | $ | (0.12 | ) | $ | 0.24 | |||||
Diluted | $ | (0.09 | ) | $ | 0.13 | $ | (0.12 | ) | $ | 0.23 | |||||
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING | |||||||||||||||
Basic | 85,704 | 84,259 | 85,640 | 84,133 | |||||||||||
Diluted | 85,704 | 84,855 | 85,640 | 84,861 |
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES | |||||||||||||||
FUNDS FROM OPERATIONS | |||||||||||||||
(In thousands, except per share data) | |||||||||||||||
(unaudited) | |||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||
2023 | 2022 | 2023 | 2022 | ||||||||||||
Net (loss) income | $ | (6,296 | ) | $ | 13,226 | $ | (4,977 | ) | $ | 26,048 | |||||
Net loss (income) attributable to noncontrolling partner interest | 114 | (251 | ) | 90 | (502 | ) | |||||||||
Preferred share dividends | (1,676 | ) | (1,676 | ) | (5,026 | ) | (5,026 | ) | |||||||
Net (loss) income available to common shareholders | (7,858 | ) | 11,299 | (9,913 | ) | 20,520 | |||||||||
Adjustments: | |||||||||||||||
Rental property depreciation and amortization expense | 19,816 | 18,292 | 53,804 | 57,366 | |||||||||||
Pro-rata share of real estate depreciation from unconsolidated joint ventures(1) | 4,776 | 3,715 | 16,969 | 14,535 | |||||||||||
Gain on sale of income producing real estate | — | (11,144 | ) | (297 | ) | (25,980 | ) | ||||||||
FFO available to common shareholders | 16,734 | 22,162 | 60,563 | 66,441 | |||||||||||
Noncontrolling interest in | (114 | ) | 251 | (90 | ) | 502 | |||||||||
Preferred share dividends (assuming conversion)(3) | — | 1,676 | — | 5,026 | |||||||||||
FFO available to common shareholders and dilutive securities | $ | 16,620 | $ | 24,089 | $ | 60,473 | $ | 71,969 | |||||||
Gain on sale of land | — | — | (603 | ) | (254 | ) | |||||||||
Transaction costs | 3 | 405 | 13 | 4,881 | |||||||||||
Merger costs(4) | 8,234 | — | 8,234 | — | |||||||||||
Severance expense(5) | — | — | 1,130 | — | |||||||||||
Loss on extinguishment of debt | — | 121 | — | 121 | |||||||||||
Above and below market lease intangible write-offs | (3,571 | ) | (422 | ) | (3,571 | ) | (2,022 | ) | |||||||
Lease incentive write-offs | 156 | — | 213 | — | |||||||||||
Pro-rata share of transaction costs from unconsolidated joint ventures(1) | — | 8 | — | 8 | |||||||||||
Pro-rata share of above and below market lease intangible write-offs from unconsolidated joint ventures(1) | (1 | ) | — | (22 | ) | (984 | ) | ||||||||
Pro-rata share of loss on extinguishment of debt from unconsolidated joint ventures(1) | — | 20 | — | 20 | |||||||||||
Payment of loan amendment fees(6) | — | 958 | — | 958 | |||||||||||
Insurance proceeds, net(4) | — | — | — | (136 | ) | ||||||||||
Operating FFO available to common shareholders and dilutive securities | $ | 21,441 | $ | 25,179 | $ | 65,867 | $ | 74,561 | |||||||
Weighted average common shares | 85,704 | 84,259 | 85,640 | 84,133 | |||||||||||
Shares issuable upon conversion of Operating Partnership Units (“OP Units”)(2) | 1,604 | 1,635 | 1,604 | 1,685 | |||||||||||
Dilutive effect of restricted stock | 2,249 | 596 | 2,091 | 728 | |||||||||||
Shares issuable upon conversion of preferred shares(3) | — | 7,017 | — | 7,017 | |||||||||||
Weighted average equivalent shares outstanding, diluted | 89,557 | 93,507 | 89,335 | 93,563 | |||||||||||
FFO available to common shareholders and dilutive securities per share, diluted | $ | 0.19 | $ | 0.26 | $ | 0.68 | $ | 0.77 | |||||||
Operating FFO available to common shareholders and dilutive securities per share, diluted | $ | 0.24 | $ | 0.27 | $ | 0.74 | $ | 0.80 | |||||||
Dividend per common share | $ | 0.14 | $ | 0.13 | $ | 0.42 | $ | 0.39 | |||||||
Payout ratio - Operating FFO | 58.3 | % | 48.1 | % | 56.8 | % | 48.8 | % | |||||||
(1) | Amounts noted are included in Earnings from unconsolidated joint ventures. |
(2) | The total noncontrolling interest reflects OP Units convertible on a one-of-one basis into common shares. |
(3) | 7.25% Series D Cumulative Convertible Perpetual Preferred Shares of Beneficial Interest, |
(4) | Amounts noted are included in Other (expense) income, net. |
(5) | For the nine months ended |
(6) | Amounts noted are included in General and administrative expense. |
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES | |||||||||||||||
(amounts in thousands) | |||||||||||||||
(unaudited) | |||||||||||||||
Reconciliation of net (loss) income available to common shareholders to Same Property Net Operating Income (NOI) | |||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||
2023 | 2022 | 2023 | 2022 | ||||||||||||
Net (loss) income available to common shareholders | $ | (7,858 | ) | $ | 11,299 | $ | (9,913 | ) | $ | 20,520 | |||||
Preferred share dividends | 1,676 | 1,676 | 5,026 | 5,026 | |||||||||||
Net (loss) income attributable to noncontrolling partner interest | (114 | ) | 251 | (90 | ) | 502 | |||||||||
Income tax provision | 24 | 71 | 254 | 142 | |||||||||||
Interest expense | 8,803 | 9,568 | 26,342 | 26,650 | |||||||||||
Earnings from unconsolidated joint ventures | (1,948 | ) | (1,779 | ) | (3,388 | ) | (467 | ) | |||||||
Gain on sale of real estate | — | (11,144 | ) | (900 | ) | (26,234 | ) | ||||||||
Other expense (income), net | 8,049 | (530 | ) | 7,392 | (895 | ) | |||||||||
Management and other fee income | (1,586 | ) | (1,231 | ) | (4,772 | ) | (2,848 | ) | |||||||
Depreciation and amortization | 19,961 | 18,442 | 54,247 | 57,825 | |||||||||||
Transaction costs | 3 | 405 | 13 | 4,881 | |||||||||||
General and administrative expenses | 9,673 | 9,372 | 27,968 | 26,394 | |||||||||||
Pro-rata share of NOI from | 7,108 | 5,547 | 21,125 | 14,590 | |||||||||||
Pro-rata share of NOI from | 300 | 276 | 909 | 757 | |||||||||||
Lease termination fees | (5 | ) | — | (66 | ) | (154 | ) | ||||||||
Amortization of lease inducements | 306 | 190 | 743 | 618 | |||||||||||
Amortization of acquired above and below market lease intangibles, net | (3,979 | ) | (907 | ) | (4,843 | ) | (3,766 | ) | |||||||
Straight-line ground rent expense | 77 | 77 | 230 | 230 | |||||||||||
Straight-line rental income | (262 | ) | (362 | ) | (374 | ) | (1,151 | ) | |||||||
NOI at Pro-Rata | 40,228 | 41,342 | 119,903 | 122,741 | |||||||||||
NOI from Other Investments | (2,657 | ) | (4,726 | ) | (8,548 | ) | (13,897 | ) | |||||||
Pro-rata share of NOI from | (300 | ) | (276 | ) | (909 | ) | (757 | ) | |||||||
Same Property NOI | $ | 37,271 | $ | 36,340 | $ | 110,446 | $ | 108,087 | |||||||
(1) | Represents 51.5% of the NOI from the properties owned by |
(2) | Represents 6.4% of the NOI from the properties owned by |
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES | |||||||
(amounts in thousands) | |||||||
(unaudited) | |||||||
Three Months Ended | |||||||
2023 | 2022 | ||||||
Reconciliation of net (loss) income to annualized proforma adjusted EBITDA | |||||||
Net (loss) income | $ | (6,296 | ) | $ | 13,226 | ||
Interest expense | 8,803 | 9,568 | |||||
Income tax provision | 24 | 71 | |||||
Depreciation and amortization | 19,961 | 18,442 | |||||
Gain on sale of income producing real estate | — | (11,144 | ) | ||||
Pro-rata share of interest expense from unconsolidated entities | 555 | 489 | |||||
Pro-rata share of depreciation and amortization from unconsolidated entities | 4,776 | 3,715 | |||||
EBITDAre | 27,823 | 34,367 | |||||
Merger costs | 8,234 | — | |||||
Above and below market lease intangible write-offs | (3,571 | ) | (422 | ) | |||
Lease incentive write-offs | 156 | — | |||||
Transaction costs | 3 | 405 | |||||
Loss on extinguishment of debt | — | 121 | |||||
Pro-rata share of transaction costs from unconsolidated entities | — | 8 | |||||
Pro-rata share of above and below market lease intangible write-offs from unconsolidated entities | (1 | ) | — | ||||
Pro-rata share of loss on extinguishment of debt from unconsolidated entities | — | 20 | |||||
Payment of loan amendment fees | — | 958 | |||||
Adjusted EBITDA | 32,644 | 35,457 | |||||
Annualized adjusted EBITDA | $ | 130,576 | $ | 141,828 | |||
Reconciliation of Notes Payable, net to Net Debt | |||||||
Notes payable, net | $ | 847,732 | $ | 946,758 | |||
Unamortized premium | (49 | ) | (97 | ) | |||
Deferred financing costs, net | 4,490 | 5,531 | |||||
Consolidated notional debt | 852,173 | 952,192 | |||||
Pro-rata share of notional debt from unconsolidated entities | 53,823 | 53,698 | |||||
Finance lease obligation | 763 | 821 | |||||
Cash, cash equivalents and restricted cash | (4,567 | ) | (8,562 | ) | |||
Pro-rata share of unconsolidated entities cash, cash equivalents and restricted cash | (3,734 | ) | (4,473 | ) | |||
Net debt | $ | 898,458 | $ | 993,676 | |||
Reconciliation of interest expense to total fixed charges | |||||||
Interest expense | $ | 8,803 | $ | 9,568 | |||
Pro-rata share of interest expense from unconsolidated entities | 555 | 489 | |||||
Preferred share dividends | 1,676 | 1,676 | |||||
Scheduled mortgage principal payments | 209 | 339 | |||||
Pro-rata share of mortgage principal payments from unconsolidated entities | 7 | 7 | |||||
Total fixed charges | $ | 11,250 | $ | 12,079 | |||
Net debt to annualized adjusted EBITDA | 6.9 | x | 7.0 | x | |||
Interest coverage ratio (adjusted EBITDA / interest expense) | 3.5 | x | 3.5 | x | |||
Fixed charge coverage ratio (adjusted EBITDA / fixed charges) | 2.9 | x | 2.9 | x | |||
Non-GAAP Financial Definitions
Certain of our key performance indicators are considered non-GAAP financial measures. Management uses these measures along with our GAAP financial statements in order to evaluate our operations results. We believe these measures provide additional and useful means to assess our performance. These measures do not represent alternatives to GAAP measures as indicators of performance and a comparison of the Company's presentations to similarly titled measures of other REITs may not necessarily be meaningful due to possible differences in definition and application by such REITs.
Funds From Operations (FFO)
As defined by the
Operating FFO
In addition to FFO, we include Operating FFO as an additional measure of our financial and operating performance. Operating FFO excludes transactions costs and periodic items such as gains (or losses) from sales of non-operating real estate assets and impairment provisions on non-operating real estate assets, bargain purchase gains, severance expense, merger costs, accelerated amortization of debt premiums, gains or losses on extinguishment of debt, insured proceeds, net, accelerated write-offs of above and below market lease intangibles, accelerated write-offs of lease incentives and payment of loan amendment fees that are not adjusted under the current NAREIT definition of FFO. We provide a reconciliation of FFO to Operating FFO. In future periods, Operating FFO may also include other adjustments, which will be detailed in the reconciliation for such measure, that we believe will enhance comparability of Operating FFO from period to period. FFO and Operating FFO should not be considered alternatives to GAAP net income available to common shareholders or as alternatives to cash flow as measures of liquidity.
While we consider FFO available to common shareholders and Operating FFO available to common shareholders useful measures for reviewing our comparative operating and financial performance between periods or to compare our performance to different REITs, our computations of FFO and Operating FFO may differ from the computations utilized by other real estate companies, and therefore, may not be comparable. We recognize the limitations of FFO and Operating FFO when compared to GAAP net income available to common shareholders. FFO and Operating FFO available to common shareholders do not represent amounts available for needed capital replacement or expansion, debt service obligations, or other commitments and uncertainties. In addition, FFO and Operating FFO do not represent cash generated from operating activities in accordance with GAAP and are not necessarily indicative of cash available to fund cash needs, including the payment of dividends.
Net Operating Income (NOI) / Same Property NOI / NOI from Other Investments
NOI consists of (i) rental income and other property income, before straight-line rental income, amortization of lease inducements, amortization of acquired above and below market lease intangibles and lease termination fees less (ii) real estate taxes and all recoverable and non-recoverable operating expenses other than straight-line ground rent expense, in each case, including our share of these items from our
NOI, Same Property NOI and NOI from Other Investments are supplemental non-GAAP financial measures of real estate companies' operating performance. Same Property NOI is considered by management to be a relevant performance measure of our operations because it includes only the NOI of comparable multi-tenant operating properties for the reporting period. Same Property NOI for the three and nine months ended
NOI, Same Property NOI and NOI from Other Investments should not be considered as alternatives to net income in accordance with GAAP or as measures of liquidity. Our method of calculating these measures may differ from methods used by other REITs and, accordingly, may not be comparable to such other REITs.
Non-GAAP Financial Definitions (continued)
Net Debt
Net Debt represents (i) our total debt principal, which excludes unamortized premium and deferred financing costs, net, plus (ii) our finance lease obligation, plus (iii) our pro-rata share of total debt principal, which excludes unamortized discount and deferred financing costs, net, of each of our unconsolidated entities, less (iv) our cash, cash equivalents and restricted cash, less (v) our pro-rata share of cash, cash equivalents and restricted cash of each of our unconsolidated entities. We present net debt to show the ratio of our net debt to our proforma Adjusted EBITDA.
EBITDAre/Adjusted EBITDA/Proforma Adjusted EBITDA
NAREIT defines EBITDAre as net income computed in accordance with GAAP, plus interest expense, income tax expense (benefit), depreciation and amortization and impairment of depreciable real estate and in substance real estate equity investments; plus or minus gains or losses from sales of operating real estate assets and interests in real estate equity investments; and adjustments to reflect our share of unconsolidated real estate joint ventures and partnerships for these items. The Company calculates EBITDAre in a manner consistent with the NAREIT definition. The Company also presents Adjusted EBITDA which is EBITDAre net of other items that we believe enhance comparability of Adjusted EBITDA across periods and are listed as adjustments in the applicable reconciliation. EBITDAre and Adjusted EBITDA should not be considered an alternative measure of operating results or cash flow from operations as determined in accordance with GAAP.
Pro-Rata
We present certain financial information on a “pro-rata” basis or including “pro-rata” adjustments. Unless otherwise specified, pro-rata financial information includes our proportionate economic ownership of each of our unconsolidated joint ventures derived on an entity-by-entity basis by applying the ownership percentage interest used to arrive at our share of the net operations for the period consistent with the application of the equity method of accounting to each of our unconsolidated joint ventures. See page 33 of our quarterly financial and operating supplement for a discussion of important considerations and limitations that you should be aware of when reviewing financial information that we present on a pro-rata basis or include pro-rata adjustments.
Occupancy
Occupancy is defined, for a property or group of properties, as the ratio, expressed as a percentage, of (a) the number of square feet of such property economically occupied by tenants under leases with an initial term of greater than one year, to (b) the aggregate number of square feet for such property.
Leased Rate
Leased Rate is defined, for a property or group of properties, as the ratio, expressed as a percentage, of (a) the number of square feet of such property under leases with an initial term of greater than one year, including signed leases not yet commenced, to (b) the aggregate number of square feet for such property.
Metropolitan Statistical Area (MSA)
Metropolitan Statistical Area (MSA) information is sourced from the
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