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Retail Value Inc. Reports Fourth Quarter 2021 Operating Results

Retail Value Inc. (NYSE: RVI) today announced operating results for the quarter and year ended December 31, 2021.

Financial Results for the Quarter

  • Fourth quarter 2021 net income attributable to common shareholders was $27.7 million, or $1.31 per diluted share, as compared to net loss of $9.5 million, or $0.48 per diluted share, in the year-ago period. The period-over-period increase in net income is primarily attributable to higher gain on disposition of real estate, lower impairment charges and lower interest expense due to the debt repayment partly offset by the impact of asset sales.
  • Fourth quarter 2021 operating funds from operations attributable to common shareholders (“Operating FFO” or “OFFO”) was a loss of $0.1 million, or $0.00 per diluted share, compared to income of $14.8 million, or $0.75 per diluted share, in the year-ago period. The period-over-period decrease in OFFO is primarily attributable to the impact of asset sales and lower interest expense. Fourth quarter results included $0.5 million of net revenue related to prior periods primarily from cash basis tenants.

Financial Results for the Year

  • Net loss attributable to common shareholders for the year ended December 31, 2021 was $17.7 million, or $0.84 per diluted share which compares to net loss of $93.6 million, or $4.72 per diluted share for the full year 2020.
  • Generated Operating FFO of $52.1 million, or $2.48 per diluted share for the full year of 2021, which compares to $61.8 million, or $3.12 per diluted share for the full year 2020.

Significant Fourth Quarter and Recent Transaction Activity

  • In October 2021, the Company sold a portfolio of five assets in the continental U.S. for a gross sale price of $264.0 million.
  • In October 2021, the Company paid a distribution on the Company’s Series A Preferred Shares (the “RVI Preferred Shares”) in the aggregate amount of $190.0 million.
  • In October 2021, the Company paid a cash dividend of $22.04 per common share ($465.4 million in the aggregate).
  • In December 2021, the Company sold Green Ridge Square in Grand Rapids, Michigan and Willowbrook Plaza in Houston, Texas for an aggregate sales price of $60.4 million.
  • In December 2021, the Company repurchased all of the outstanding RVI Preferred Shares from SITE Centers Corp. (“SITE Centers”) for an aggregate purchase price of $1.00.
  • On December 15, 2021, the Company entered into an External Management Agreement with affiliates of SITE Centers which specifies the responsibilities and fees applicable to managing the Company’s remaining property (Crossroads Centers located in Gulfport, Mississippi, which is subject to a ground lease) and administering a wind-up of the Company’s operations. The External Management Agreement took effect on January 1, 2022.
  • In January 2022, the Company paid a cash dividend of $3.27 per common share ($69.1 million in the aggregate).

Significant Full-Year Activity

  • Sold 21 shopping centers for an aggregate gross sales price of $933.6 million.
  • Repaid the outstanding balance on the Company’s mortgage loan. Upon repayment of the mortgage loan, the Company’s Revolving Credit Agreement also terminated.
  • The sale of the Puerto Rico assets is reflected as “discontinued operations” on the Company’s financial statements on a retrospective basis.

Key Fourth Quarter Operating Results

The operating metrics as of December 31, 2021, for the Company’s remaining property (Crossroads Center in Gulfport, Mississippi, which is subject to a ground lease) are as follows:

Gross Leasable Area - Owned (thousands)

 

555

Annualized Base Rent PSF

 

$13.47

Leased Rate

 

92.1%

Commenced Rate

 

91.2%

Impact of the COVID-19 Pandemic

  • At December 31, 2021, the balance sheet reflects $0.5 million of net deferred rents outstanding for tenants with payment plans that are not accounted for on the cash basis. This includes balances due from tenants at sold properties.

About RVI

RVI is an independent publicly traded company trading under the ticker symbol “RVI” on the New York Stock Exchange. RVI owns one property in the continental U.S. and is managed by one or more subsidiaries of SITE Centers Corp. RVI focuses on realizing value in its business through operations and sales of its assets. Additional information about RVI is available at www.retailvalueinc.com.

Non-GAAP Measures

Funds from Operations (“FFO”) is a supplemental non-GAAP financial measure used as a standard in the real estate industry and is a widely accepted measure of real estate investment trust (“REIT”) performance. Management believes that both FFO and Operating FFO provide additional indicators of the financial performance of a REIT. The Company also believes that FFO and Operating FFO more appropriately measure the core operations of the Company and provide benchmarks to its peer group.

FFO is generally defined and calculated by the Company as net income (loss) (computed in accordance with generally accepted accounting principles in the United States (“GAAP”)) adjusted to exclude (i) gains and losses from disposition of real estate property and related investments, which are presented net of taxes, if any, (ii) impairment charges on real estate property and related investments and (iii) certain non-cash items. These non-cash items principally include real property depreciation and amortization of intangibles. The Company’s calculation of FFO is consistent with the definition of FFO provided by NAREIT. The Company calculates Operating FFO by excluding certain non-operating charges and income. Operating FFO is useful to investors as the Company removes non-comparable charges and income to analyze the results of its operations and assess performance of the core operating real estate portfolio. Other real estate companies may calculate FFO and Operating FFO in a different manner.

The Company also uses net operating income (“NOI”), a non-GAAP financial measure, as a supplemental performance measure. NOI is calculated as property revenues less property-related expenses. The Company believes NOI provides useful information to investors regarding the Company’s financial condition and results of operations because it reflects only those income and expense items that are incurred at the property level and, when compared across periods, reflects the impact on operations from trends in occupancy rates, rental rates, operating costs and acquisition and disposition activity on an unleveraged basis.

FFO, Operating FFO and NOI do not represent cash generated from operating activities in accordance with GAAP, are not necessarily indicative of cash available to fund cash needs and should not be considered as alternatives to net income computed in accordance with GAAP as indicators of the Company’s operating performance or as alternatives to cash flow as a measure of liquidity. Reconciliations of these non-GAAP measures to their most directly comparable GAAP measures are included in this release herein.

Safe Harbor

RVI considers portions of the information in this press release to be forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, both as amended, with respect to the Company's expectation for future periods. Although the Company believes that the expectations reflected in such forward-looking statements are based upon reasonable assumptions, it can give no assurance that its expectations will be achieved. For this purpose, any statements contained herein that are not historical fact may be deemed to be forward-looking statements. There are a number of important factors that could cause our results to differ materially from those indicated by such forward-looking statements, including, among other factors, the impact of the COVID-19 pandemic on our ability to manage our properties and finance our operations and on tenants’ ability to operate their businesses, generate sales and meet their financial obligations, including the obligation to pay rent; our ability to sell the remaining property on commercially reasonable terms; property damage, expenses related thereto and other business and economic consequences (including the potential loss of rental revenues) resulting from extreme weather conditions and natural disasters affecting our remaining property, and the ability to estimate accurately the amounts thereof; sufficiency and timing of any insurance recovery payments related to damages from extreme weather conditions and natural disasters; local conditions such as an increase in the supply of, or a reduction in demand for, retail real estate in the area; the impact of e-commerce; dependence on rental income from real property; the loss of, significant downsizing of or bankruptcy of a major tenant and the impact of any such event on rental income from other tenants at our remaining property; impairment charges; the ability to secure and maintain management services provided to us, including pursuant to our external management agreement with one or more subsidiaries of SITE Centers; and our ability to maintain our REIT status. For additional factors that could cause the results of the Company to differ materially from those indicated in the forward-looking statements, please refer to the Company’s most recent report on Form 10-K. The impacts of the COVID-19 pandemic may also exacerbate the risks described therein, any of which could have a material effect on the Company. The Company undertakes no obligation to publicly revise these forward-looking statements to reflect events or circumstances that arise after the date hereof.

 

Retail Value Inc.

Income Statement

 

 

in thousands, except per share

 

 

 

 

 

 

 

 

 

4Q21

 

4Q20

 

12M21

 

12M20

 

 

 

 

 

 

 

 

 

 

Revenues:

 

 

 

 

 

 

 

 

Rental income (1)

$5,382

 

$17,124

 

$55,603

 

$81,781

 

Straight-line rent (1)

0

 

194

 

0

 

(1,089)

 

Other property revenues

17

 

14

 

55

 

45

 

 

5,399

 

17,332

 

55,658

 

80,737

 

Expenses:

 

 

 

 

 

 

 

 

Operating and maintenance

801

 

2,513

 

7,286

 

11,460

 

Property Management fees

674

 

850

 

2,750

 

3,899

 

Real estate taxes

404

 

3,079

 

8,966

 

15,957

 

 

1,879

 

6,442

 

19,002

 

31,316

 

 

 

 

 

 

 

 

 

 

Net operating income (1)

3,520

 

10,890

 

36,656

 

49,421

 

 

 

 

 

 

 

 

 

 

Other income (expense):

 

 

 

 

 

 

 

 

Asset management fees

(731)

 

(997)

 

(3,156)

 

(4,630)

 

Interest expense, net

0

 

(3,537)

 

(7,899)

 

(18,334)

 

Depreciation and amortization

(1,090)

 

(5,666)

 

(17,217)

 

(28,395)

 

General and administrative

(582)

 

(751)

 

(3,577)

 

(3,612)

 

Impairment charges

0

 

(10,910)

 

(1,573)

 

(54,370)

 

Debt extinguishment costs, net

0

 

(1,456)

 

(6,307)

 

(5,873)

 

Other income, net

0

 

0

 

0

 

0

 

Gain on disposition of real estate, net

27,714

 

1,754

 

29,596

 

23,710

 

Income (loss) before other items

28,831

 

(10,673)

 

26,523

 

(42,083)

 

Tax benefit (expense)

45

 

(674)

 

(148)

 

(858)

 

Income (loss) from continuing operations

28,876

 

(11,347)

 

26,375

 

(42,941)

 

(Loss) income from discontinued operations (2)

(1,212)

 

1,851

 

(44,074)

 

(50,613)

 

Net income (loss)

$27,664

 

($9,496)

 

($17,699)

 

($93,554)

 

 

 

 

 

 

 

 

 

 

Weighted average shares – Basic & Diluted – EPS

21,117

 

19,829

 

21,062

 

19,806

 

 

 

 

 

 

 

 

 

 

Basic and Diluted:

 

 

 

 

 

 

 

 

Income (loss) per common share – Continuing operations

$1.37

 

$(0.57)

 

$1.25

 

$(2.17)

 

(Loss) income per common share – Discontinued operations

(0.06)

 

0.09

 

(2.09)

 

(2.55)

 

Net income (loss) per common share

$1.31

 

$(0.48)

 

$(0.84)

 

$(4.72)

 

 

 

 

 

 

 

 

 

(1)

Activity for Crossroads Center:

 

 

 

Uncollectible revenue (included in rental income)

$8

 

($10)

 

$353

 

($613)

 

Straight-line rent

(16)

 

(16)

 

(73)

 

(34)

 

Net operating income

1,490

 

1,273

 

5,818

 

5,269

 

 

 

 

 

 

 

 

 

(2)

Puerto Rico segment classified as a "discontinued operation" for financial reporting purposes on a retrospective basis. See additional detail on page 6.

 

Retail Value Inc.

Other Financial Information

 

 

in thousands, except per share

 

 

 

 

 

 

 

4Q21

 

4Q20

 

12M21

 

12M20

 

 

 

 

 

 

 

 

 

 

Net income (loss) attributable to Common Shareholders

$27,664

 

($9,496)

 

($17,699)

 

($93,554)

 

Depreciation and amortization of real estate

1,090

 

12,559

 

33,675

 

56,986

 

Impairment of real estate

0

 

10,910

 

82,633

 

115,525

 

Gain on disposition of real estate, net

(28,855)

 

(844)

 

(54,542)

 

(22,800)

 

FFO attributable to Common Shareholders

($101)

 

$13,129

 

$44,067

 

$56,157

 

Debt extinguishment, transaction, other, net

0

 

1,695

 

8,061

 

5,671

 

Operating FFO attributable to Common Shareholders

($101)

 

$14,824

 

$52,128

 

$61,828

 

 

 

 

 

 

 

 

 

 

Weighted average shares and units – Basic & Diluted – FFO & OFFO

21,117

 

19,829

 

21,062

 

19,806

 

 

 

 

 

 

 

 

 

 

FFO per share – Basic & Diluted

$0.00

 

$0.66

 

$2.09

 

$2.84

 

Operating FFO per share – Basic & Diluted

$0.00

 

$0.75

 

$2.48

 

$3.12

 

Common stock dividends declared, per share

$25.31

 

$1.16

 

$25.31

 

$1.16

 

 

 

 

 

 

 

 

 

 

Certain non-cash items (including properties reported as discontinued operations):

 

 

 

 

 

Loan cost amortization

0

 

(786)

 

(1,923)

 

(3,602)

 

 

 

 

 

 

 

 

 

 

Capital expenditures (including properties reported as discontinued operations):

 

 

 

 

 

Maintenance capital expenditures

608

 

551

 

2,425

 

1,685

 

Tenant allowances and landlord work

595

 

1,954

 

4,150

 

5,183

 

Leasing commissions - SITE Centers

(14)

 

762

 

1,687

 

2,755

 

Leasing commissions - external

59

 

53

 

557

 

278

 

Hurricane restorations

(1)

 

1,456

 

2,420

 

11,343

 

Retail Value Inc.

Other Financial Information

 

 

in thousands, except per share

 

 

 

 

 

 

 

 

 

Continental U.S.

 

 

4Q21

 

4Q20

 

12M21

 

12M20

 

Revenues:

 

 

 

 

 

 

 

 

Minimum rents

$2,992

 

$11,987

 

$34,633

 

$58,881

 

Ground lease minimum rents

171

 

861

 

2,602

 

4,247

 

Percentage and overage rent

45

 

44

 

320

 

294

 

Recoveries

1,551

 

4,554

 

13,601

 

22,535

 

Uncollectible revenue

538

 

(353)

 

3,711

 

(6,631)

 

Ancillary and other rental income

85

 

140

 

589

 

781

 

Lease termination fees

0

 

85

 

147

 

585

 

Other property revenues

17

 

14

 

55

 

45

 

 

5,399

 

17,332

 

55,658

 

80,737

 

Expenses:

 

 

 

 

 

 

 

 

Operating and maintenance

801

 

2,513

 

7,286

 

11,460

 

Property management fees

674

 

850

 

2,750

 

3,899

 

Real estate taxes

404

 

3,079

 

8,966

 

15,957

 

 

1,879

 

6,442

 

19,002

 

31,316

 

 

 

 

 

 

 

 

 

 

Net operating income

3,520

 

10,890

 

36,656

 

49,421

 

 

 

 

 

 

 

 

 

 

Other income (expense):

 

 

 

 

 

 

 

 

Asset management fees

(731)

 

(997)

 

(3,156)

 

(4,630)

 

Interest expense, net

0

 

(3,537)

 

(7,899)

 

(18,334)

 

Depreciation and amortization

(1,090)

 

(5,666)

 

(17,217)

 

(28,395)

 

General and administrative (not allocated to segment)

N/A

 

N/A

 

N/A

 

N/A

 

Impairment charges

0

 

(10,910)

 

(1,573)

 

(54,370)

 

Debt extinguishment costs, net

0

 

(1,456)

 

(6,307)

 

(5,873)

 

Other expense, net

 

 

 

 

 

 

 

 

Gain on disposition of real estate, net (1)

27,714

 

1,754

 

29,596

 

23,710

 

Tax benefit (expense)

45

 

(674)

 

(148)

 

(858)

 

Net income (loss)

$29,458

 

($10,596)

 

$29,952

 

($39,329)

 

 

 

 

 

 

 

 

 

(1)

SITE Centers disposition fees for assets sold

3,244

 

21

 

3,587

 

2,642

 

 

Puerto Rico (Discontinued Operations)

 

 

4Q21

 

4Q20

 

12M21

 

12M20

 

Revenues:

 

 

 

 

 

 

 

 

Minimum rents

$170

 

$14,122

 

$34,390

 

$58,325

 

Ground lease minimum rents

0

 

1,946

 

4,472

 

8,008

 

Percentage and overage rent

(56)

 

796

 

1,984

 

2,025

 

Recoveries

120

 

6,491

 

15,037

 

24,621

 

Uncollectible revenue

83

 

(2,387)

 

1,400

 

(9,927)

 

Ancillary and other rental income

7

 

1,846

 

3,844

 

5,962

 

Lease termination fees

0

 

0

 

3,097

 

19

 

Other property revenues

(17)

 

(15)

 

0

 

38

 

 

307

 

22,799

 

64,224

 

89,071

 

Expenses:

 

 

 

 

 

 

 

 

Operating and maintenance

312

 

8,030

 

19,349

 

29,343

 

Property management fees

1,404

 

1,583

 

5,937

 

6,060

 

Real estate taxes

19

 

1,153

 

2,827

 

4,795

 

 

1,735

 

10,766

 

28,113

 

40,198

 

 

 

 

 

 

 

 

 

 

Net operating (loss) income

(1,428)

 

12,033

 

36,111

 

48,873

 

 

 

 

 

 

 

 

 

 

Other income (expense):

 

 

 

 

 

 

 

 

Asset management fees

(890)

 

(1,006)

 

(3,626)

 

(4,023)

 

Interest expense, net

0

 

(1,078)

 

(2,055)

 

(4,408)

 

Depreciation and amortization

0

 

(6,909)

 

(16,503)

 

(28,658)

 

General and administrative (not allocated to segment)

N/A

 

N/A

 

N/A

 

N/A

 

Impairment charges

0

 

0

 

(81,060)

 

(61,155)

 

Debt extinguishment costs, net

0

 

(49)

 

(1,951)

 

(49)

 

Other expense, net

0

 

(190)

 

197

 

251

 

Gain on disposition of real estate, net (1)

1,141

 

(910)

 

24,946

 

(910)

 

Tax expense

(35)

 

(40)

 

(133)

 

(534)

 

Net (loss) income

($1,212)

 

$1,851

 

($44,074)

 

($50,613)

 

 

 

 

 

 

 

 

 

(1)

SITE Centers disposition fees for assets sold

0

 

500

 

5,749

 

500

 

Retail Value Inc.

Balance Sheet

 

 

$ in thousands

 

 

 

 

 

At Period End

 

 

4Q21

 

4Q20

 

 

 

 

 

 

Assets:

 

 

 

 

Land

$0

 

$106,708

 

Buildings

51,261

 

421,401

 

Fixtures and tenant improvements

8,260

 

68,795

 

 

59,521

 

596,904

 

Depreciation

(36,195)

 

(253,565)

 

 

23,326

 

343,339

 

Construction in progress

0

 

321

 

Real estate, net

23,326

 

343,660

 

 

 

 

 

 

Cash

110,470

 

56,849

 

Restricted cash

1,993

 

115,939

 

Receivables and straight-line (1)

3,891

 

15,007

 

Intangible assets, net (2)

1,098

 

9,452

 

Other assets, net (3)

3,620

 

5,767

 

Assets related to discontinued operations

0

 

649,202

 

Total Assets

144,398

 

1,195,876

 

 

 

 

 

 

Liabilities and Equity:

 

 

 

 

Secured debt

0

 

258,795

 

Dividends payable

69,053

 

23,002

 

Other liabilities (4)

8,331

 

25,848

 

Liabilities related to discontinued operations

0

 

98,445

 

Total Liabilities

77,384

 

406,090

 

 

 

 

 

 

Redeemable preferred equity

0

 

190,000

 

 

 

 

 

 

Common shares

2,112

 

1,983

 

Paid-in capital

740,517

 

721,234

 

Distributions in excess of net income

(675,602)

 

(123,428)

 

Common shares in treasury at cost

(13)

 

(3)

 

Total Equity

67,014

 

599,786

 

 

 

 

 

 

Total Liabilities and Equity

$144,398

 

$1,195,876

 

 

 

 

 

 

All amounts include Discontinued Operation assets:

 

 

 

(1)

Tenant receivables, net - continental U.S.

693

 

N/A

 

Tenant receivables, net - Puerto Rico

841

 

N/A

 

SL rents (including fixed CAM), net - continental U.S.

287

 

N/A

 

Property insurance receivable

906

 

N/A

 

Other receivables

1,164

 

N/A

 

 

 

 

 

(2)

Operating lease right of use asset

1,098

 

N/A

 

 

 

 

 

(3)

Note receivable

3,000

 

N/A

 

 

 

 

 

(4)

Operating lease liabilities

2,126

 

N/A

 

Below-market leases, net

0

 

N/A

 

 

 

 

 

 

Prior year footnote amounts are not presented due to impact of discontinued operations.

 

 

 

 

Contacts

Christa Vesy, EVP and

Chief Financial Officer

216-755-5500

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