Maryland (Retail Opportunity Investments Corp.) Delaware (Retail Opportunity Investments Partnership, LP) (State or other jurisdiction of incorporation or organization) | 26-0500600 (Retail Opportunity Investments Corp.) 94-2969738 (Retail Opportunity Investments Partnership, LP) (I.R.S. Employer Identification No.) |
11250 El Camino Real, Suite 200 San Diego, California (Address of principal executive offices) | 92130 (Zip code) |
Retail Opportunity Investments Corp. | Yes [X] No [_] | |
Retail Opportunity Investments Partnership, LP | Yes [X] No [_] |
Retail Opportunity Investments Corp. | Yes [X] No [_] | |
Retail Opportunity Investments Partnership, LP | Yes [X] No [_] |
Large accelerated filer [X] | Accelerated filer [_] | Non-accelerated filer [_] (Do not check if a smaller reporting company) | Smaller reporting company [_] |
Emerging growth company [_] | If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [_] |
Large accelerated filer [_] | Accelerated filer [_] | Non-accelerated filer [X] (Do not check if a smaller reporting company) | Smaller reporting company [_] |
Emerging growth company [_] | If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [_] |
Retail Opportunity Investments Corp. | Yes [_] No [X] | |
Retail Opportunity Investments Partnership, LP | Yes [_] No [X] |
March 31, 2018 (unaudited) | December 31, 2017 | ||||||
ASSETS | |||||||
Real Estate Investments: | |||||||
Land | $ | 896,573 | $ | 878,797 | |||
Building and improvements | 2,238,793 | 2,230,600 | |||||
3,135,366 | 3,109,397 | ||||||
Less: accumulated depreciation | 275,708 | 260,115 | |||||
Real Estate Investments, net | 2,859,658 | 2,849,282 | |||||
Cash and cash equivalents | 13,012 | 11,553 | |||||
Restricted cash | 1,998 | 5,412 | |||||
Tenant and other receivables, net | 43,560 | 43,257 | |||||
Deposits | 500 | 500 | |||||
Acquired lease intangible assets, net | 81,262 | 82,778 | |||||
Prepaid expenses | 2,941 | 2,853 | |||||
Deferred charges, net | 37,151 | 37,167 | |||||
Other | 9,641 | 6,396 | |||||
Total assets | $ | 3,049,723 | $ | 3,039,198 | |||
LIABILITIES AND EQUITY | |||||||
Liabilities: | |||||||
Term loan | $ | 298,879 | $ | 298,816 | |||
Credit facility | 156,544 | 140,329 | |||||
Senior Notes | 940,422 | 940,086 | |||||
Mortgage notes payable | 98,201 | 107,915 | |||||
Acquired lease intangible liabilities, net | 177,212 | 178,984 | |||||
Accounts payable and accrued expenses | 30,607 | 18,638 | |||||
Tenants’ security deposits | 6,919 | 6,771 | |||||
Other liabilities | 18,508 | 18,018 | |||||
Total liabilities | 1,727,292 | 1,709,557 | |||||
Commitments and contingencies | |||||||
Equity: | |||||||
Preferred stock, $.0001 par value 50,000,000 shares authorized; none issued and outstanding | — | — | |||||
Common stock, $0.0001 par value, 500,000,000 shares authorized; 112,721,459 and 112,347,451 shares issued and outstanding at March 31, 2018 and December 31, 2017, respectively | 11 | 11 | |||||
Additional paid-in capital | 1,413,887 | 1,412,590 | |||||
Dividends in excess of earnings | (221,841 | ) | (210,490 | ) | |||
Accumulated other comprehensive income | 5,664 | 1,856 | |||||
Total Retail Opportunity Investments Corp. stockholders’ equity | 1,197,721 | 1,203,967 | |||||
Non-controlling interests | 124,710 | 125,674 | |||||
Total equity | 1,322,431 | 1,329,641 | |||||
Total liabilities and equity | $ | 3,049,723 | $ | 3,039,198 |
Three Months Ended March 31, | |||||||
2018 | 2017 | ||||||
Revenues | |||||||
Base rents | $ | 55,377 | $ | 51,479 | |||
Recoveries from tenants | 16,161 | 13,668 | |||||
Other income | 2,857 | 753 | |||||
Total revenues | 74,395 | 65,900 | |||||
Operating expenses | |||||||
Property operating | 10,478 | 9,300 | |||||
Property taxes | 7,819 | 7,068 | |||||
Depreciation and amortization | 25,217 | 23,058 | |||||
General and administrative expenses | 3,531 | 3,499 | |||||
Other expense | 69 | 49 | |||||
Total operating expenses | 47,114 | 42,974 | |||||
Operating income | 27,281 | 22,926 | |||||
Non-operating expenses | |||||||
Interest expense and other finance expenses | (15,457 | ) | (11,675 | ) | |||
Net income | 11,824 | 11,251 | |||||
Net income attributable to non-controlling interests | (1,122 | ) | (1,081 | ) | |||
Net Income Attributable to Retail Opportunity Investments Corp. | $ | 10,702 | $ | 10,170 | |||
Earnings per share – basic and diluted | $ | 0.09 | $ | 0.09 | |||
Dividends per common share | $ | 0.1950 | $ | 0.1875 | |||
Comprehensive income: | |||||||
Net income | $ | 11,824 | $ | 11,251 | |||
Other comprehensive income: | |||||||
Unrealized swap derivative gain arising during the period | 3,390 | 161 | |||||
Reclassification adjustment for amortization of interest expense included in net income | 418 | 555 | |||||
Other comprehensive income | 3,808 | 716 | |||||
Comprehensive income | 15,632 | 11,967 | |||||
Comprehensive income attributable to non-controlling interests | (1,122 | ) | (1,081 | ) | |||
Comprehensive income attributable to Retail Opportunity Investments Corp | $ | 14,510 | $ | 10,886 |
Common Stock | Additional paid-in capital | Accumulated dividends in excess of earnings | Accumulated other comprehensive loss | Non- controlling interests | Equity | |||||||||||||||||||||
Shares | Amount | |||||||||||||||||||||||||
Balance at December 31, 2017 | 112,347,451 | $ | 11 | $ | 1,412,590 | $ | (210,490 | ) | $ | 1,856 | $ | 125,674 | $ | 1,329,641 | ||||||||||||
Shares issued under the 2009 Plan | 373,861 | — | — | — | — | — | — | |||||||||||||||||||
Shares withheld for employee taxes | (70,168 | ) | — | (1,400 | ) | — | — | — | (1,400 | ) | ||||||||||||||||
Cancellation of restricted stock | (4,999 | ) | — | — | — | — | — | — | ||||||||||||||||||
Stock based compensation expense | — | — | 1,428 | — | — | — | 1,428 | |||||||||||||||||||
Adjustment to non-controlling interests ownership in Operating Partnership | — | — | (191 | ) | — | — | 191 | — | ||||||||||||||||||
Proceeds from the issuance of common stock | 75,314 | 1,508 | — | — | — | 1,508 | ||||||||||||||||||||
Registration expenditures | — | — | (48 | ) | — | — | — | (48 | ) | |||||||||||||||||
Cash dividends ($0.1950 per share) | — | — | — | (21,981 | ) | — | (2,277 | ) | (24,258 | ) | ||||||||||||||||
Dividends payable to officers | — | — | — | (72 | ) | — | — | (72 | ) | |||||||||||||||||
Net income attributable to Retail Opportunity Investments Corp. | — | — | — | 10,702 | — | — | 10,702 | |||||||||||||||||||
Net income attributable to non-controlling interests | — | — | — | — | — | 1,122 | 1,122 | |||||||||||||||||||
Other comprehensive income | — | — | — | — | 3,808 | — | 3,808 | |||||||||||||||||||
Balance at March 31, 2018 | 112,721,459 | $ | 11 | $ | 1,413,887 | $ | (221,841 | ) | $ | 5,664 | $ | 124,710 | $ | 1,322,431 |
Three Months Ended March 31, | |||||||
2018 | 2017 | ||||||
CASH FLOWS FROM OPERATING ACTIVITIES | |||||||
Net income | $ | 11,824 | $ | 11,251 | |||
Adjustments to reconcile net income to cash provided by operating activities: | |||||||
Depreciation and amortization | 25,217 | 23,058 | |||||
Amortization of deferred financing costs and mortgage premiums, net | 449 | 532 | |||||
Straight-line rent adjustment | (1,471 | ) | (1,066 | ) | |||
Amortization of above and below market rent | (4,075 | ) | (6,049 | ) | |||
Amortization relating to stock based compensation | 1,428 | 1,217 | |||||
Provisions for tenant credit losses | 323 | 636 | |||||
Other noncash interest expense | 535 | 535 | |||||
Change in operating assets and liabilities: | |||||||
Tenant and other receivables | 845 | 304 | |||||
Prepaid expenses | (89 | ) | 837 | ||||
Accounts payable and accrued expenses | 9,701 | 7,416 | |||||
Other assets and liabilities, net | (264 | ) | 980 | ||||
Net cash provided by operating activities | 44,423 | 39,651 | |||||
CASH FLOWS FROM INVESTING ACTIVITIES | |||||||
Investments in real estate | (19,337 | ) | (88,187 | ) | |||
Improvements to properties | (8,441 | ) | (7,337 | ) | |||
Deposits on real estate acquisitions, net | — | (2,000 | ) | ||||
Net cash used in investing activities | (27,778 | ) | (97,524 | ) | |||
CASH FLOWS FROM FINANCING ACTIVITIES | |||||||
Principal repayments on mortgages | (10,317 | ) | (189 | ) | |||
Proceeds from draws on credit facility | 45,000 | 99,000 | |||||
Payments on credit facility | (29,000 | ) | (10,000 | ) | |||
Distributions to OP Unitholders | (2,277 | ) | (2,099 | ) | |||
Deferred financing and other costs | — | (3 | ) | ||||
Proceeds from the sale of common stock | 1,508 | — | |||||
Registration expenditures | (48 | ) | (256 | ) | |||
Dividends paid to common shareholders | (22,066 | ) | (20,709 | ) | |||
Common shares issued under the 2009 Plan | — | 43 | |||||
Shares withheld for employee taxes | (1,400 | ) | (1,571 | ) | |||
Net cash (used in) provided by financing activities | (18,600 | ) | 64,216 | ||||
Net (decrease) increase in cash, cash equivalents and restricted cash | (1,955 | ) | 6,343 | ||||
Cash, cash equivalents and restricted cash at beginning of period | 16,965 | 13,250 | |||||
Cash, cash equivalents and restricted cash at end of period | $ | 15,010 | $ | 19,593 | |||
Other non-cash investing and financing activities: | |||||||
Issuance of OP Units in connection with acquisitions | $ | — | $ | 3,559 | |||
Intangible lease liabilities | $ | — | $ | 1,118 | |||
Interest rate swap asset | $ | 3,273 | $ | 181 | |||
Accrued real estate improvement costs | $ | 2,196 | $ | 1,531 |
Three Months Ended March 31, | |||||||
2018 | 2017 | ||||||
Cash and cash equivalents | $ | 13,012 | $ | 19,430 | |||
Restricted cash | 1,998 | 163 | |||||
Total cash, cash equivalents and restricted cash shown in Statements of Cash Flow | $ | 15,010 | $ | 19,593 |
March 31, 2018 (unaudited) | December 31, 2017 | ||||||
ASSETS | |||||||
Real Estate Investments: | |||||||
Land | $ | 896,573 | $ | 878,797 | |||
Building and improvements | 2,238,793 | 2,230,600 | |||||
3,135,366 | 3,109,397 | ||||||
Less: accumulated depreciation | 275,708 | 260,115 | |||||
Real Estate Investments, net | 2,859,658 | 2,849,282 | |||||
Cash and cash equivalents | 13,012 | 11,553 | |||||
Restricted cash | 1,998 | 5,412 | |||||
Tenant and other receivables, net | 43,560 | 43,257 | |||||
Deposits | 500 | 500 | |||||
Acquired lease intangible assets, net | 81,262 | 82,778 | |||||
Prepaid expenses | 2,941 | 2,853 | |||||
Deferred charges, net | 37,151 | 37,167 | |||||
Other | 9,641 | 6,396 | |||||
Total assets | $ | 3,049,723 | $ | 3,039,198 | |||
LIABILITIES AND CAPITAL | |||||||
Liabilities: | |||||||
Term loan | $ | 298,879 | $ | 298,816 | |||
Credit facility | 156,544 | 140,329 | |||||
Senior Notes | 940,422 | 940,086 | |||||
Mortgage notes payable | 98,201 | 107,915 | |||||
Acquired lease intangible liabilities, net | 177,212 | 178,984 | |||||
Accounts payable and accrued expenses | 30,607 | 18,638 | |||||
Tenants’ security deposits | 6,919 | 6,771 | |||||
Other liabilities | 18,508 | 18,018 | |||||
Total liabilities | 1,727,292 | 1,709,557 | |||||
Commitments and contingencies | |||||||
Capital: | |||||||
Partners’ capital, unlimited partnership units authorized: | |||||||
ROIC capital | 1,192,057 | 1,202,111 | |||||
Limited partners’ capital | 124,710 | 125,674 | |||||
Accumulated other comprehensive income | 5,664 | 1,856 | |||||
Total capital | 1,322,431 | 1,329,641 | |||||
Total liabilities and capital | $ | 3,049,723 | $ | 3,039,198 |
Three Months Ended March 31, | |||||||
2018 | 2017 | ||||||
Revenues | |||||||
Base rents | $ | 55,377 | $ | 51,479 | |||
Recoveries from tenants | 16,161 | 13,668 | |||||
Other income | 2,857 | 753 | |||||
Total revenues | 74,395 | 65,900 | |||||
Operating expenses | |||||||
Property operating | 10,478 | 9,300 | |||||
Property taxes | 7,819 | 7,068 | |||||
Depreciation and amortization | 25,217 | 23,058 | |||||
General and administrative expenses | 3,531 | 3,499 | |||||
Other expense | 69 | 49 | |||||
Total operating expenses | 47,114 | 42,974 | |||||
Operating income | 27,281 | 22,926 | |||||
Non-operating expenses | |||||||
Interest expense and other finance expenses | (15,457 | ) | (11,675 | ) | |||
Net Income Attributable to Retail Opportunity Investments Partnership, LP | $ | 11,824 | $ | 11,251 | |||
Earnings per unit - basic and diluted | $ | 0.09 | $ | 0.09 | |||
Distributions per unit | $ | 0.1950 | $ | 0.1875 | |||
Comprehensive income: | |||||||
Net income attributable to Retail Opportunity Investments Partnership, LP | $ | 11,824 | $ | 11,251 | |||
Other comprehensive income: | |||||||
Unrealized swap derivative gain arising during the period | 3,390 | 161 | |||||
Reclassification adjustment for amortization of interest expense included in net income | 418 | 555 | |||||
Other comprehensive income | 3,808 | 716 | |||||
Comprehensive income attributable to Retail Opportunity Investments Partnership, LP | $ | 15,632 | $ | 11,967 |
Limited Partner’s Capital (1) | ROIC Capital (2) | Accumulated other comprehensive loss | |||||||||||||||||||
Units | Amount | Units | Amount | Capital | |||||||||||||||||
Balance at December 31, 2017 | 11,678,991 | $ | 125,674 | 112,347,451 | $ | 1,202,111 | $ | 1,856 | $ | 1,329,641 | |||||||||||
OP units issued under the 2009 Plan | — | — | 373,861 | — | — | — | |||||||||||||||
OP Units withheld for employee taxes | — | — | (70,168 | ) | (1,400 | ) | — | (1,400 | ) | ||||||||||||
Cancellation of OP Units | — | — | (4,999 | ) | — | — | — | ||||||||||||||
Stock based compensation expense | — | — | — | 1,428 | — | 1,428 | |||||||||||||||
Adjustment to non-controlling interests ownership in Operating Partnership | — | 191 | — | (191 | ) | — | — | ||||||||||||||
Issuance of OP Units in connection with sale of common stock | — | — | 75,314 | 1,508 | — | 1,508 | |||||||||||||||
Registration expenditures | — | — | — | (48 | ) | — | (48 | ) | |||||||||||||
Cash distributions ($0.1950 per unit) | — | (2,277 | ) | — | (21,981 | ) | — | (24,258 | ) | ||||||||||||
Distributions payable to officers | — | — | — | (72 | ) | — | (72 | ) | |||||||||||||
Net income attributable to Retail Opportunity Investments Partnership, LP | — | 1,122 | — | 10,702 | — | 11,824 | |||||||||||||||
Other comprehensive income | — | — | — | — | 3,808 | 3,808 | |||||||||||||||
Balance at March 31, 2018 | 11,678,991 | $ | 124,710 | 112,721,459 | $ | 1,192,057 | $ | 5,664 | $ | 1,322,431 |
(1) | Consists of limited partnership interests held by third parties. |
(2) | Consists of general and limited partnership interests held by ROIC. |
Three Months Ended March 31, | |||||||
2018 | 2017 | ||||||
CASH FLOWS FROM OPERATING ACTIVITIES | |||||||
Net income | $ | 11,824 | $ | 11,251 | |||
Adjustments to reconcile net income to cash provided by operating activities: | |||||||
Depreciation and amortization | 25,217 | 23,058 | |||||
Amortization of deferred financing costs and mortgage premiums, net | 449 | 532 | |||||
Straight-line rent adjustment | (1,471 | ) | (1,066 | ) | |||
Amortization of above and below market rent | (4,075 | ) | (6,049 | ) | |||
Amortization relating to stock based compensation | 1,428 | 1,217 | |||||
Provisions for tenant credit losses | 323 | 636 | |||||
Other noncash interest expense | 535 | 535 | |||||
Change in operating assets and liabilities: | |||||||
Tenant and other receivables | 845 | 304 | |||||
Prepaid expenses | (89 | ) | 837 | ||||
Accounts payable and accrued expenses | 9,701 | 7,416 | |||||
Other assets and liabilities, net | (264 | ) | 980 | ||||
Net cash provided by operating activities | 44,423 | 39,651 | |||||
CASH FLOWS FROM INVESTING ACTIVITIES | |||||||
Investments in real estate | (19,337 | ) | (88,187 | ) | |||
Improvements to properties | (8,441 | ) | (7,337 | ) | |||
Deposits on real estate acquisitions, net | — | (2,000 | ) | ||||
Net cash used in investing activities | (27,778 | ) | (97,524 | ) | |||
CASH FLOWS FROM FINANCING ACTIVITIES | |||||||
Principal repayments on mortgages | (10,317 | ) | (189 | ) | |||
Proceeds from draws on credit facility | 45,000 | 99,000 | |||||
Payments on credit facility | (29,000 | ) | (10,000 | ) | |||
Deferred financing and other costs | — | (3 | ) | ||||
Proceeds from the issuance of OP Units in connection with issuance of common stock | 1,508 | — | |||||
Registration expenditures | (48 | ) | (256 | ) | |||
Distributions to OP Unitholders | (24,343 | ) | (22,808 | ) | |||
Issuance of OP Units under the 2009 Plan | — | 43 | |||||
OP Units withheld for employee taxes | (1,400 | ) | (1,571 | ) | |||
Net cash (used in) provided by financing activities | (18,600 | ) | 64,216 | ||||
Net (decrease) increase in cash, cash equivalents and restricted cash | (1,955 | ) | 6,343 | ||||
Cash, cash equivalents and restricted cash at beginning of period | 16,965 | 13,250 | |||||
Cash, cash equivalents and restricted cash at end of period | $ | 15,010 | $ | 19,593 | |||
Other non-cash investing and financing activities: | |||||||
Issuance of OP Units in connection with acquisitions | $ | — | $ | 3,559 | |||
Intangible lease liabilities | $ | — | $ | 1,118 | |||
Interest rate swap asset | $ | 3,273 | $ | 181 | |||
Accrued real estate improvement costs | $ | 2,196 | $ | 1,531 |
Three Months Ended March 31, | |||||||
2018 | 2017 | ||||||
Cash and cash equivalents | $ | 13,012 | $ | 19,430 | |||
Restricted cash | 1,998 | 163 | |||||
Total cash, cash equivalents and restricted cash shown in Statements of Cash Flow | $ | 15,010 | $ | 19,593 |
Three Months Ended March 31, | |||||||
2018 | 2017 | ||||||
Numerator: | |||||||
Net income | $ | 11,824 | $ | 11,251 | |||
Less income attributable to non-controlling interests | (1,122 | ) | (1,081 | ) | |||
Less earnings allocated to unvested shares | (101 | ) | (80 | ) | |||
Net income available for common stockholders, basic | $ | 10,601 | $ | 10,090 | |||
Numerator: | |||||||
Net income | $ | 11,824 | $ | 11,251 | |||
Less earnings allocated to unvested shares | (101 | ) | (80 | ) | |||
Net income available for common stockholders, diluted | $ | 11,723 | $ | 11,171 | |||
Denominator: | |||||||
Denominator for basic EPS – weighted average common equivalent shares | 112,162,943 | 109,226,809 | |||||
OP units | 11,678,991 | 11,569,171 | |||||
Restricted stock awards – performance-based | 174,150 | 122,234 | |||||
Stock options | 111,206 | 135,837 | |||||
Denominator for diluted EPS – weighted average common equivalent shares | 124,127,290 | 121,054,051 |
Three Months Ended March 31, | |||||||
2018 | 2017 | ||||||
Numerator: | |||||||
Net income | $ | 11,824 | $ | 11,251 | |||
Less earnings allocated to unvested shares | (101 | ) | (80 | ) | |||
Net income available to unitholders, basic and diluted | $ | 11,723 | $ | 11,171 | |||
Denominator: | |||||||
Denominator for basic earnings per unit – weighted average common equivalent units | 123,841,934 | 120,795,980 | |||||
Restricted stock awards – performance-based | 174,150 | 122,234 | |||||
Stock options | 111,206 | 135,837 | |||||
Denominator for diluted earnings per unit – weighted average common equivalent units | 124,127,290 | 121,054,051 |
March 31, 2018 | |||
Assets | |||
Land | $ | 3,867 | |
Building and improvements | 15,470 | ||
Assets acquired | $ | 19,337 |
Three Months Ended March 31, 2018 | |||
Statement of operations: | |||
Revenues | $ | 145 | |
Net income attributable to Retail Opportunity Investments Corp. | $ | 78 |
Minimum Rents | |||
Remaining 2018 | $ | 147,768 | |
2019 | 182,380 | ||
2020 | 161,502 | ||
2021 | 139,138 | ||
2022 | 113,478 | ||
Thereafter | 469,005 | ||
Total minimum lease payments | $ | 1,213,271 |
Property | Maturity Date | Interest Rate | March 31, 2018 | December 31, 2017 | ||||||||
Santa Teresa Village | February 2018 | 6.20 | % | — | 10,138 | |||||||
Magnolia Shopping Center | October 2018 | 5.50 | % | 8,903 | 8,951 | |||||||
Casitas Plaza Shopping Center | June 2022 | 5.32 | % | 7,271 | 7,307 | |||||||
Riverstone Marketplace | July 2022 | 4.96 | % | 18,329 | 18,424 | |||||||
Fullerton Crossroads | April 2024 | 4.73 | % | 26,000 | 26,000 | |||||||
Diamond Hills Plaza | October 2025 | 3.55 | % | 35,500 | 35,500 | |||||||
$ | 96,003 | $ | 106,320 | |||||||||
Mortgage premiums | 2,509 | 1,921 | ||||||||||
Net unamortized deferred financing costs | (311 | ) | (326 | ) | ||||||||
Total mortgage notes payable | $ | 98,201 | $ | 107,915 |
March 31, 2018 | December 31, 2017 | ||||||
Term loan | $ | 300,000 | $ | 300,000 | |||
Net unamortized deferred financing costs | (1,121 | ) | (1,184 | ) | |||
Term loan | $ | 298,879 | $ | 298,816 |
March 31, 2018 | December 31, 2017 | ||||||
Credit facility | $ | 159,500 | $ | 143,500 | |||
Net unamortized deferred financing costs | (2,956 | ) | (3,171 | ) | |||
Credit facility | $ | 156,544 | $ | 140,329 |
March 31, 2018 | December 31, 2017 | ||||||
Principal amount | $ | 250,000 | $ | 250,000 | |||
Net unamortized deferred financing costs | (1,217 | ) | (1,249 | ) | |||
Senior Notes Due 2027 | $ | 248,783 | $ | 248,751 |
March 31, 2018 | December 31, 2017 | ||||||
Principal amount | $ | 200,000 | $ | 200,000 | |||
Net unamortized deferred financing costs | (241 | ) | (248 | ) | |||
Senior Notes Due 2026 | $ | 199,759 | $ | 199,752 |
March 31, 2018 | December 31, 2017 | ||||||
Principal amount | $ | 250,000 | $ | 250,000 | |||
Unamortized debt discount | (2,498 | ) | (2,578 | ) | |||
Net unamortized deferred financing costs | (1,479 | ) | (1,535 | ) | |||
Senior Notes Due 2024 | $ | 246,023 | $ | 245,887 |
March 31, 2018 | December 31, 2017 | ||||||
Principal amount | $ | 250,000 | $ | 250,000 | |||
Unamortized debt discount | (2,642 | ) | (2,737 | ) | |||
Net unamortized deferred financing costs | (1,501 | ) | (1,567 | ) | |||
Senior Notes Due 2023 | $ | 245,857 | $ | 245,696 |
Shares | Weighted Average Grant Date Fair Value | |||||
Non-vested at December 31, 2017 | 781,467 | $ | 18.14 | |||
Granted | 514,972 | $ | 16.09 | |||
Vested | (274,608 | ) | $ | 18.46 | ||
Forfeited | (14,998 | ) | $ | 17.59 | ||
Non-vested at March 31, 2018 | 1,006,833 | $ | 17.02 |
Swap Counterparty | Notional Amount | Effective Date | Maturity Date | ||||
Bank of Montreal | $ | 50,000 | 1/29/2016 | 1/31/2019 | |||
Regions Bank | $ | 50,000 | 2/29/2016 | 1/31/2019 | |||
Bank of Montreal | $ | 100,000 | 12/29/2017 | 8/31/2022 | |||
U.S. Bank | $ | 100,000 | 12/29/2017 | 8/31/2022 |
Quoted Prices in Active Markets for Identical Assets and Liabilities (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Total | ||||||||||||
March 31, 2018: | |||||||||||||||
Assets | |||||||||||||||
Derivative financial instruments | $ | — | $ | 7,594 | $ | — | $ | 7,594 | |||||||
December 31, 2017: | |||||||||||||||
Assets | |||||||||||||||
Derivative financial instruments | $ | — | $ | 4,321 | $ | — | $ | 4,321 |
Derivatives designed as hedging instruments | Balance sheet location | March 31, 2018 Fair Value | December 31, 2017 Fair Value | |||||||
Interest rate products | Other assets | $ | 7,594 | $ | 4,321 |
Three Months Ended March 31, | |||||||
2018 | 2017 | ||||||
Amount of gain recognized in OCI on derivatives | $ | 3,390 | $ | 161 | |||
Amount of gain reclassified from AOCI into interest | $ | 418 | $ | 555 |
Operating Leases | |||
Remaining 2018 | $ | 954 | |
2019 | 1,278 | ||
2020 | 1,286 | ||
2021 | 1,282 | ||
2022 | 1,304 | ||
Thereafter | 35,347 | ||
Total minimum lease payments | $ | 41,451 |
• | the conditions in the local markets in which we operate and our concentration in those markets, as well as changes in national economic and market conditions; |
• | our ability to enter into new leases or to renew leases with existing tenants at the properties we own or acquire at favorable rates; |
• | our use of debt as part of our financing strategy and our ability to make payments or to comply with any covenants under our senior unsecured notes, our unsecured credit facilities or other debt facilities we currently have or subsequently obtain; |
Three Months Ended March 31, | ||||||||
2018 | 2017 | |||||||
Operating income per GAAP | $ | 27,281 | $ | 22,926 | ||||
Plus: | Depreciation and amortization | 25,217 | 23,058 | |||||
General and administrative expenses | 3,531 | 3,499 | ||||||
Other expenses | 69 | 49 | ||||||
Property operating income | $ | 56,098 | $ | 49,532 |
Three Months Ended March 31, 2018 | ||||||||||||
Same-Center | Non Same-Center | Total | ||||||||||
Operating income per GAAP | $ | 25,617 | $ | 1,664 | $ | 27,281 | ||||||
Plus: | Depreciation and amortization | 21,792 | 3,425 | 25,217 | ||||||||
General and administrative expenses (1) | — | 3,531 | 3,531 | |||||||||
Other expenses (1) | — | 69 | 69 | |||||||||
Property operating income | $ | 47,409 | $ | 8,689 | $ | 56,098 |
(1) | For illustration purposes, general and administrative expenses and other expenses are included in non same-center because the Company does not allocate these types of expenses between same-center and non same-center. |
Three Months Ended March 31, 2017 | ||||||||||||
Same-Center | Non Same-Center | Total | ||||||||||
Operating income (loss) per GAAP | $ | 26,283 | $ | (3,357 | ) | $ | 22,926 | |||||
Plus: | Depreciation and amortization | 22,488 | 570 | 23,058 | ||||||||
General and administrative expenses (1) | — | 3,499 | 3,499 | |||||||||
Other expenses (1) | — | 49 | 49 | |||||||||
Property operating income | $ | 48,771 | $ | 761 | $ | 49,532 |
(1) | For illustration purposes, general and administrative expenses and other expenses are included in non same-center because the Company does not allocate these types of expenses between same-center and non same-center. |
• | does not represent cash flows from operating activities in accordance with GAAP (which, unlike FFO, generally reflects all cash effects of transactions and other events in the determination of net income); and |
• | should not be considered an alternative to net income as an indication of our performance. |
Three Months Ended March 31, | |||||||
2018 | 2017 | ||||||
Net income attributable to ROIC | $ | 10,702 | $ | 10,170 | |||
Plus: Depreciation and amortization | 25,217 | 23,058 | |||||
Funds from operations – basic | 35,919 | 33,228 | |||||
Net income attributable to non-controlling interests | 1,122 | 1,081 | |||||
Funds from operations – diluted | $ | 37,041 | $ | 34,309 |
Three Months Ended March 31, | |||||||
2018 | 2017 | ||||||
GAAP operating income | $ | 27,281 | $ | 22,926 | |||
Depreciation and amortization | 25,217 | 23,058 | |||||
General and administrative expenses | 3,531 | 3,499 | |||||
Other expense | 69 | 49 | |||||
Property revenues and other expenses (1) | (5,509 | ) | (6,889 | ) | |||
Total Company cash NOI | 50,589 | 42,643 | |||||
Non same-center cash NOI | (7,737 | ) | (800 | ) | |||
Same-center cash NOI | $ | 42,852 | $ | 41,843 |
(1) | Includes straight-line rents, amortization of above and below-market lease intangibles, anchor lease termination fees, net of contractual amounts, and expense and recovery adjustments related to prior periods. |
Buildings (years) | 39 | — | 40 | ||||||
Building Improvements (years) | 10 | — | 20 | ||||||
Furniture/Fixtures (years) | 3 | — | 10 | ||||||
Tenant Improvements | Shorter of lease term or their useful life |
Three Months Ended March 31, | |||||||
2018 | 2017 | ||||||
Net Cash Provided by (Used in): | |||||||
Operating Activities | $ | 44,423 | $ | 39,651 | |||
Investing Activities | $ | (27,778 | ) | $ | (97,524 | ) | |
Financing Activities | $ | (18,600 | ) | $ | 64,216 |
Remaining 2018 | 2019 | 2020 | 2021 | 2022 | Thereafter | Total | |||||||||||||||||||||
Contractual obligations: | |||||||||||||||||||||||||||
Mortgage Notes Payable Principal (1) | $ | 9,295 | $ | 551 | $ | 577 | $ | 717 | $ | 24,132 | $ | 60,731 | $ | 96,003 | |||||||||||||
Mortgage Notes Payable Interest | 3,164 | 3,796 | 3,774 | 3,737 | 3,170 | 5,100 | 22,741 | ||||||||||||||||||||
Term loan (2) | — | — | — | — | 300,000 | — | 300,000 | ||||||||||||||||||||
Credit facility (3) | — | — | — | 159,500 | — | — | 159,500 | ||||||||||||||||||||
Senior Notes Due 2027 (4) | 10,475 | 10,475 | 10,475 | 10,475 | 10,475 | 302,375 | 354,750 | ||||||||||||||||||||
Senior Notes Due 2026 (4) | 3,950 | 7,900 | 7,900 | 7,900 | 7,900 | 231,600 | 267,150 | ||||||||||||||||||||
Senior Notes Due 2024 (4) | 10,000 | 10,000 | 10,000 | 10,000 | 10,000 | 270,000 | 320,000 | ||||||||||||||||||||
Senior Notes Due 2023 (4) | 12,500 | 12,500 | 12,500 | 12,500 | 12,500 | 262,500 | 325,000 | ||||||||||||||||||||
Operating lease obligations | 954 | 1,278 | 1,286 | 1,282 | 1,304 | 35,347 | 41,451 | ||||||||||||||||||||
Total | $ | 50,338 | $ | 46,500 | $ | 46,512 | $ | 206,111 | $ | 369,481 | $ | 1,167,653 | $ | 1,886,595 |
(1) | Does not include unamortized mortgage premium of $2.5 million as of March 31, 2018. |
(2) | For the purpose of the above table, the Company has assumed that borrowings under the term loan accrue interest at the interest rate on the term loan as of March 31, 2018 which was 3.0%. Borrowings under the term loan accrue interest at a rate equal to an applicable rate based on the credit rating level of the Company, plus, as applicable (i) the Eurodollar Rate, or (ii) a base rate determined by reference to the highest of (a) the federal funds rate plus 0.50%, (b) the rate of interest announced by the KeyBank National Association as its “prime rate,” and (c) the Eurodollar Rate plus 1.10%. |
(3) | For the purpose of the above table, the Company has assumed that borrowings under the credit facility accrue interest at the interest rate on the credit facility as of March 31, 2018 which was 2.9%. Borrowings under the credit facility accrue interest at a rate equal to an applicable rate based on the credit rating level of the Company, plus, as applicable (i) the Eurodollar Rate, or (ii) a base rate determined by reference to the highest of (a) the federal funds rate plus 0.50%, (b) the rate of interest announced by KeyBank National Association as its “prime rate,” and (c) the Eurodollar Rate plus 1.00%. |
(4) | Represents payments of interest only in years 2018 through 2022 and payments of both principal and interest thereafter. |
Swap Notional | Less 100 basis points | Less 50 basis points | March 31, 2018 Value | Increase 50 basis points | Increase 100 basis points | |||||||||||||||
$50,000 | $ | 120 | $ | 309 | $ | 497 | $ | 684 | $ | 871 | ||||||||||
$50,000 | $ | 158 | $ | 347 | $ | 536 | $ | 722 | $ | 909 | ||||||||||
$100,000 | $ | (804 | ) | $ | 1,275 | $ | 3,299 | $ | 5,272 | $ | 7,203 | |||||||||
$100,000 | $ | (804 | ) | $ | 1,275 | $ | 3,299 | $ | 5,272 | $ | 7,203 |
Total Number of Shares Purchased (1) | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Maximum Number of Shares That May Yet be Purchased Under the Plans or Programs | ||||||||||
January 1, 2018 to January 31, 2018 | 70,168 | $ | 19.95 | — | — | ||||||||
February 1, 2018 to February 28, 2018 | — | — | — | — | |||||||||
March 1, 2018 to March 31, 2018 | — | — | — | — | |||||||||
Total | 70,168 | $ | 19.95 | — | — |
(1) | Represents shares repurchased by the Company in connection with the net share settlement to cover the minimum taxes on vesting of restricted stock issued under the Company’s 2009 Equity Incentive Plan that vested. |
101.INS | XBRL Instance Document. |
101.SCH | XBRL Taxonomy Extension Schema Document. |
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document. |
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document. |
101.LAB | XBRL Taxonomy Extension Label Linkbase Document. |
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document. |
RETAIL OPPORTUNITY INVESTMENTS CORP. | RETAIL OPPORTUNITY INVESTMENTS PARTNERSHIP, LP, by Retail Opportunity Investments GP, LLC, its sole general partner | |
Registrant | Registrant | |
/s/ Stuart A. Tanz | /s/ Stuart A. Tanz | |
Name: Stuart A. Tanz | Name: Stuart A. Tanz | |
Title: Chief Executive Officer | Title: Chief Executive Officer | |
Date: April 26, 2018 | Date: April 26, 2018 | |
/s/ Michael B. Haines | /s/ Michael B. Haines | |
Name: Michael B. Haines | Name: Michael B. Haines | |
Title: Chief Financial Officer | Title: Chief Financial Officer | |
Date: April 26, 2018 | Date: April 26, 2018 | |
1. | I have reviewed this quarterly report on Form 10-Q of Retail Opportunity Investments Corp.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c. | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d. | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: April 26, 2018 | By: | /s/ Stuart A. Tanz | |
Name: Stuart A. Tanz | |||
Title: Chief Executive Officer |
1. | I have reviewed this quarterly report on Form 10-Q of Retail Opportunity Investments Partnership, LP; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c. | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d. | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: April 26, 2018 | By: | /s/ Stuart A. Tanz | |
Name: Stuart A. Tanz | |||
Title: Chief Executive Officer |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: April 26, 2018 | By: | /s/ Michael B. Haines | |
Name: Michael B. Haines | |||
Title: Chief Financial Officer |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: April 26, 2018 | By: | /s/ Michael B. Haines | |
Name: Michael B. Haines | |||
Title: Chief Financial Officer |
Date: April 26, 2018 | By: | /s/ Stuart A. Tanz | |
Name: Stuart A. Tanz | |||
Title: Chief Executive Officer | |||
Date: April 26, 2018 | By: | /s/ Michael B. Haines | |
Name: Michael B. Haines | |||
Title: Chief Financial Officer | |||
Date: April 26, 2018 | By: | /s/ Stuart A. Tanz | |
Name: Stuart A. Tanz | |||
Title: Chief Executive Officer | |||
Date: April 26, 2018 | By: | /s/ Michael B. Haines | |
Name: Michael B. Haines | |||
Title: Chief Financial Officer | |||
Document And Entity Information - shares |
3 Months Ended | |
---|---|---|
Mar. 31, 2018 |
Apr. 20, 2018 |
|
Document Information [Line Items] | ||
Entity Registrant Name | RETAIL OPPORTUNITY INVESTMENTS CORP | |
Trading Symbol | roic | |
Document Type | 10-Q | |
Current Fiscal Year End Date | --12-31 | |
Entity Common Stock, Shares Outstanding | 112,720,459 | |
Amendment Flag | false | |
Entity Central Index Key | 0001407623 | |
Entity Current Reporting Status | Yes | |
Entity Voluntary Filers | No | |
Entity Filer Category | Large Accelerated Filer | |
Entity Well-known Seasoned Issuer | Yes | |
Document Period End Date | Mar. 31, 2018 | |
Document Fiscal Year Focus | 2018 | |
Document Fiscal Period Focus | Q1 | |
Retail Opportunity Investments Partnership L.P. | ||
Document Information [Line Items] | ||
Entity Registrant Name | Retail Opportunity Investments Partnerships L.P. | |
Current Fiscal Year End Date | --12-31 | |
Entity Central Index Key | 0001577230 | |
Entity Filer Category | Non-accelerated Filer |
Consolidated Balance Sheets (Parentheticals) - $ / shares |
Mar. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Preferred stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Preferred stock, shares authorized (in shares) | 50,000,000 | 50,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized (in shares) | 500,000,000 | 500,000,000 |
Common stock, shares issued (in shares) | 112,721,459 | 112,347,451 |
Common stock, shares outstanding (in shares) | 112,721,459 | 112,347,451 |
Consolidated Statement of Equity (Parentheticals) - $ / shares |
3 Months Ended | |
---|---|---|
Mar. 31, 2018 |
Mar. 31, 2017 |
|
Dividends per share (in dollars per share) | $ 0.1950 | $ 0.1875 |
Consolidated Statement of Partners' Capital - 3 months ended Mar. 31, 2018 - USD ($) $ in Thousands |
Total |
Officer |
Retail Opportunity Investments Partnership L.P. |
Retail Opportunity Investments Partnership L.P.
Officer
|
Retail Opportunity Investments Partnership L.P.
Limited Partner’s Capital
|
[2] |
Retail Opportunity Investments Partnership L.P.
ROIC Capital
|
Retail Opportunity Investments Partnership L.P.
ROIC Capital
Officer
|
[1] |
Retail Opportunity Investments Partnership L.P.
Accumulated other comprehensive loss
|
2009 stock plan
Retail Opportunity Investments Partnership L.P.
ROIC Capital
|
||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Balance (in shares) at Dec. 31, 2017 | [1] | 112,347,451 | |||||||||||||||
Balance at Dec. 31, 2017 | $ 1,329,641 | $ 125,674 | $ 1,202,111 | [1] | $ 1,856 | ||||||||||||
Increase (Decrease) in Partners' Capital [Roll Forward] | |||||||||||||||||
OP units issued under the 2009 Plan (in shares) | [1] | 373,861 | |||||||||||||||
OP Units withheld for employee taxes (in shares) | [1] | (70,168) | |||||||||||||||
OP Units withheld for employee taxes | $ (1,400) | (1,400) | $ (1,400) | [1] | |||||||||||||
Cancellation of OP Units (in shares) | [1] | (4,999) | |||||||||||||||
Cancellation of OP Units | 0 | $ 0 | [1] | ||||||||||||||
Stock based compensation expense | 1,428 | 1,428 | 1,428 | [1] | |||||||||||||
Adjustment to non-controlling interests ownership in Operating Partnership | 191 | $ (191) | [1] | ||||||||||||||
Issuance of OP Units in connection with sale of common stock (in shares) | [1] | 75,314 | |||||||||||||||
Issuance of OP Units in connection with sale of common stock | 1,508 | 1,508 | $ 1,508 | [1] | |||||||||||||
Registration expenditures | (48) | (48) | (48) | [1] | |||||||||||||
Cash distributions ($0.1950 per unit) | (24,258) | (2,277) | (21,981) | [1] | |||||||||||||
Dividends payable to officers | (24,258) | $ (72) | $ (72) | $ (72) | |||||||||||||
Net income attributable to Retail Opportunity Investments Partnership, LP | 11,824 | 11,824 | $ 1,122 | $ 10,702 | [1] | ||||||||||||
Other comprehensive income | $ 3,808 | 3,808 | 3,808 | ||||||||||||||
Balance (in shares) at Mar. 31, 2018 | 124,400,450 | 11,678,991 | 112,721,459 | [1] | |||||||||||||
Balance at Mar. 31, 2018 | $ 1,322,431 | $ 124,710 | $ 1,192,057 | [1] | $ 5,664 | ||||||||||||
|
Consolidated Statement of Partners' Capital (Parentheticals) |
3 Months Ended |
---|---|
Mar. 31, 2018
$ / shares
| |
Cash distributions per unit (in dollars per share) | $ 0.195 |
Retail Opportunity Investments Partnership L.P. | |
Cash distributions per unit (in dollars per share) | $ 0.195 |
Organization, Basis of Presentation and Summary of Significant Accounting Policies |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Organization, Basis of Presentation and Summary of Significant Accounting Policies | Organization, Basis of Presentation and Summary of Significant Accounting Policies Business Retail Opportunity Investments Corp., a Maryland corporation (“ROIC”), is a fully integrated and self-managed real estate investment trust (“REIT”). ROIC specializes in the acquisition, ownership and management of necessity-based community and neighborhood shopping centers on the west coast of the United States anchored by supermarkets and drugstores. ROIC is organized in a traditional umbrella partnership real estate investment trust (“UpREIT”) format pursuant to which Retail Opportunity Investments GP, LLC, its wholly-owned subsidiary, serves as the general partner of, and ROIC conducts substantially all of its business through, its operating partnership subsidiary, Retail Opportunity Investments Partnership, LP, a Delaware limited partnership (the “Operating Partnership”), together with its subsidiaries. Unless otherwise indicated or unless the context requires otherwise, all references to the “Company”, “we,” “us,” “our,” or “our company” refer to ROIC together with its consolidated subsidiaries, including the Operating Partnership. With the approval of its stockholders, ROIC reincorporated as a Maryland corporation on June 2, 2011. ROIC began operations as a Delaware corporation, known as NRDC Acquisition Corp., which was incorporated on July 10, 2007, for the purpose of acquiring assets or operating businesses through a merger, capital stock exchange, stock purchase, asset acquisition or other similar business combination. On October 20, 2009, ROIC’s stockholders and warrantholders approved, among other things, the steps to be taken by ROIC to continue its business as a corporation that has elected to qualify as a REIT for U.S. federal income tax purposes. ROIC’s only material asset is its ownership of direct or indirect partnership interests in the Operating Partnership and membership interest in Retail Opportunity Investments GP, LLC, which is the sole general partner of the Operating Partnership. As a result, ROIC does not conduct business itself, other than acting as the parent company and issuing equity from time to time. The Operating Partnership holds substantially all the assets of the Company and directly or indirectly holds the ownership interests in the Company’s real estate ventures. The Operating Partnership conducts the operations of the Company’s business and is structured as a partnership with no publicly traded equity. Except for net proceeds from equity issuances by ROIC, which are contributed to the Operating Partnership, the Operating Partnership generates the capital required by the Company’s business through the Operating Partnership’s operations, by the Operating Partnership’s incurrence of indebtedness (directly and through subsidiaries) or through the issuance of operating partnership units (“OP Units”) of the Operating Partnership. Recent Accounting Pronouncements In November 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) No. 2016-18, Restricted Cash. ASU No. 2016-18 requires companies to include restricted cash and restricted cash equivalents with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. Additionally, ASU No. 2016-18 requires a disclosure of a reconciliation between the statement of financial position and the statement of cash flows when the balance sheet includes more than one line item for cash, cash equivalents, restricted cash, and restricted cash equivalents. ASU No. 2016-18 is effective for reporting periods beginning after December 15, 2017, with early adoption permitted, and will be applied retrospectively to all periods presented. The Company adopted ASU No. 2018-16 effective January 1, 2018. The adoption of ASU No. 2016-18 impacted the presentation of cash flows with inclusion of restricted cash flows for each of the presented periods. In February 2016, the FASB issued ASU No. 2016-2, “Leases.” ASU No. 2016-2 is expected to result in the recognition of a right-to-use asset and related liability to account for future obligations under ground lease agreements for which the Company is the lessee. As of March 31, 2018, the remaining contractual payments under ground lease agreements aggregated approximately $41.5 million. In addition, ASU No. 2016-2 will require that lessees and lessors capitalize, as initial direct costs, only those costs that are incurred due to the execution of a lease. Allocated payroll costs and other costs that are incurred regardless of whether the lease is obtained will no longer be capitalized as initial direct costs and instead will be expensed as incurred. As a lessor, under current accounting standards, the Company recognizes rental revenue from its operating leases on a straight-line basis over the respective lease terms. The Company commences recognition of rental revenue at the date the property is ready for its intended use and the tenant takes possession of or controls the physical use of the property. Under current accounting standards, tenant recoveries related to payments of real estate taxes, insurance, utilities, repairs and maintenance, common area expenses, and other operating expenses are considered lease components. The Company recognizes these tenant recoveries as revenue when services are rendered in an amount equal to the related operating expenses incurred that are recoverable under the terms of the applicable lease. Under ASU No. 2016-2, each lease agreement will be evaluated to identify the lease components and nonlease components at lease inception. The total consideration in the lease agreement will be allocated to the lease and nonlease components based on their relative standalone selling prices. Lessors will continue to recognize the lease revenue component using an approach that is substantially equivalent to existing guidance for operating leases (straight-line basis). In January 2018, the FASB issued a proposed amendment to ASU No. 2016-2 that would allow lessors to elect, as a practical expedient, not to allocate the total consideration to lease and nonlease components based on their relative standalone selling prices. If adopted, this practical expedient will allow lessors to elect a combined single lease component presentation if (i) the timing and pattern of the revenue recognition of the combined single lease component is the same, and (ii) the related lease component and, the combined single lease component would be classified as an operating lease. The pronouncement is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2018, with early adoption permitted. The Company plans to adopt the provisions of ASU No. 2016-2 effective January 1, 2019 using the modified retrospective approach. The Company continues to evaluate the impact this pronouncement will have on the Company’s consolidated financial statements. In May 2014, the FASB issued ASU No. 2014-9, “Revenue from Contracts with Customers.” The pronouncement was issued to clarify the principles for recognizing revenue and to develop a common revenue standard and disclosure requirements for U.S. GAAP and International Financial Reporting Standards. The pronouncement is effective for reporting periods beginning after December 15, 2017. As discussed above, leases are specifically excluded from ASU No. 2014-9 and will be governed by the applicable lease codification; however, this update may have implications on certain variable payment terms included in lease agreements. Upon adoption of ASU No. 2016-2 in 2019, the Company may be required to classify its tenant recoveries into lease and nonlease components, whereby the nonlease components would be subject to ASU No. 2014-9, pending the resolution of the proposed amendment issued by the FASB in January 2018. Property services categorized as nonlease components that are reimbursed by the Company’s tenants may need to be presented on a net basis if it is determined that the Company holds an agent arrangement. The Company adopted the provisions of ASU No. 2014-9 effective January 1, 2018 using the modified retrospective approach. The Company evaluated the revenue recognition for all contracts within this scope under existing accounting standards and under ASU No. 2014-9 and confirmed that there were no differences in the amounts recognized or the pattern of recognition. Therefore, the adoption of ASU 2014-9 did not result in an adjustment to the Company’s retained earnings on January 1, 2018. Principles of Consolidation The accompanying consolidated financial statements are prepared on the accrual basis in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the disclosures required by GAAP for complete financial statement disclosures. In the opinion of management, the consolidated financial statements include all adjustments necessary, which are of a normal and recurring nature, for the fair presentation of the Company’s financial position and the results of operations and cash flows for the periods presented. Results of operations for the three month period ended March 31, 2018 are not necessarily indicative of the results that may be expected for the year ending December 31, 2018. It is suggested that these financial statements be read in conjunction with the financial statements and notes thereto included in the Company’s annual report on Form 10-K for the fiscal year ended December 31, 2017. The consolidated financial statements include the accounts of the Company and those of its subsidiaries, which are wholly-owned or controlled by the Company. Entities which the Company does not control through its voting interest and entities which are variable interest entities (“VIEs”), but where it is not the primary beneficiary, are accounted for under the equity method. All significant intercompany balances and transactions have been eliminated. The Company follows the FASB guidance for determining whether an entity is a VIE and requires the performance of a qualitative rather than a quantitative analysis to determine the primary beneficiary of a VIE. Under this guidance, an entity would be required to consolidate a VIE if it has (i) the power to direct the activities that most significantly impact the entity’s economic performance and (ii) the obligation to absorb losses of the VIE or the right to receive benefits from the VIE that could be significant to the VIE. The Company has concluded that the Operating Partnership is a VIE, and because they have both the power and the rights to control the Operating Partnership, they are the primary beneficiary and are required to continue to consolidate the Operating Partnership. A non-controlling interest in a consolidated subsidiary is defined as the portion of the equity (net assets) in a subsidiary not attributable, directly or indirectly, to a parent. Non-controlling interests are required to be presented as a separate component of equity in the consolidated balance sheet and modify the presentation of net income by requiring earnings and other comprehensive income to be attributed to controlling and non-controlling interests. Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the disclosure of contingent assets and liabilities, the reported amounts of assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the periods covered by the financial statements. The most significant assumptions and estimates relate to the purchase price allocations, depreciable lives, revenue recognition and the collectability of tenant receivables, other receivables, notes receivables, the valuation of performance-based restricted stock, stock options, and derivatives. Actual results could differ from these estimates. Federal Income Taxes The Company has elected to qualify as a REIT under Sections 856-860 of the Internal Revenue Code (the “Code”). Under those sections, a REIT that, among other things, distributes at least 90% of its REIT taxable income (determined without regard to the dividends paid deduction and excluding net capital gains) and meets certain other qualifications prescribed by the Code, will not be taxed on that portion of its taxable income that is distributed. Although it may qualify as a REIT for U.S. federal income tax purposes, the Company is subject to state income or franchise taxes in certain states in which some of its properties are located. In addition, taxable income from non-REIT activities managed through the Company’s taxable REIT subsidiary (“TRS”), if any, is fully subject to U.S. federal, state and local income taxes. For all periods from inception through September 26, 2013 the Operating Partnership had been an entity disregarded from its sole owner, ROIC, for U.S. federal income tax purposes and as such had not been subject to U.S. federal income taxes. Effective September 27, 2013, the Operating Partnership issued OP Units in connection with the acquisitions of two shopping centers. Accordingly, the Operating Partnership ceased being a disregarded entity and instead is being treated as a partnership for U.S. federal income tax purposes. The Company follows the FASB guidance that defines a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The FASB also provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. The Company records interest and penalties relating to unrecognized tax benefits, if any, as interest expense. As of March 31, 2018, the statute of limitations for the tax years 2014 through and including 2016 remain open for examination by the Internal Revenue Service (“IRS”) and state taxing authorities. ROIC intends to make regular quarterly distributions to holders of its common stock. U.S. federal income tax law generally requires that a REIT distribute annually at least 90% of its REIT taxable income, without regard to the deduction for dividends paid and excluding net capital gains, and that it pay U.S. federal income tax at regular corporate rates to the extent that it annually distributes less than 100% of its net taxable income. ROIC intends to pay regular quarterly dividends to stockholders in an amount not less than its net taxable income, if and to the extent authorized by its board of directors. Before ROIC pays any dividend, whether for U.S. federal income tax purposes or otherwise, it must first meet both its operating requirements and its debt service on debt. If ROIC’s cash available for distribution is less than its net taxable income, it could be required to sell assets or borrow funds to make cash distributions or it may make a portion of the required distribution in the form of a taxable stock distribution or distribution of debt securities. On December 22, 2017, the Tax Cuts and Jobs Act (H.R. 1, the “TCJA”) was signed into law, which makes significant changes to U.S. federal income tax laws applicable to businesses and their owners, including REITs and their stockholders. The Company continues to evaluate the impact the TCJA will have on its consolidated financial statements. Real Estate Investments All costs related to the improvement or replacement of real estate properties are capitalized. Additions, renovations and improvements that enhance and/or extend the useful life of a property are also capitalized. Expenditures for ordinary maintenance, repairs and improvements that do not materially prolong the normal useful life of an asset are charged to operations as incurred. The Company expenses transaction costs associated with business combinations and unsuccessful property asset acquisitions in the period incurred and capitalizes transaction costs associated with successful property asset acquisitions. During the three months ended March 31, 2018 and 2017, capitalized costs related to the improvement or replacement of real estate properties were approximately $10.6 million and $8.9 million, respectively. The Company evaluates each acquisition of real estate to determine if the acquired property meets the definition of a business and needs to be accounted for as a business combination. Under ASU No. 2017-1, the Company first determines whether substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or group of similar identifiable assets. If this threshold is met, the acquired property does not meet the definition of a business and is accounted for as an asset acquisition. The Company expects that acquisitions of real estate properties will not meet the revised definition of a business because substantially all of the fair value is concentrated in a single identifiable asset or group of similar identifiable assets (i.e. land, buildings, and related intangible assets). The Company recognizes the acquisition of real estate properties, including acquired tangible assets (consisting of land, buildings and improvements), and acquired intangible assets and liabilities (consisting of above-market and below-market leases and acquired in-place leases) at their fair value (for acquisitions meeting the definition of a business) and relative fair value (for acquisitions not meeting the definition of a business). The relative fair values used to allocate the cost of an asset acquisition are determined using the same methodologies and assumptions the Company utilizes to determine fair value in a business combination. Acquired lease intangible assets include above-market leases and acquired in-place leases, and acquired lease intangible liabilities represent below-market leases, in the accompanying consolidated balance sheets. The fair value of the tangible assets of an acquired property is determined by valuing the property as if it were vacant, which value is then allocated to land, buildings and improvements based on management’s determination of the relative fair values of these assets. In valuing an acquired property’s intangibles, factors considered by management include an estimate of carrying costs during the expected lease-up periods, and estimates of lost rental revenue during the expected lease-up periods based on management’s evaluation of current market demand. Management also estimates costs to execute similar leases, including leasing commissions, tenant improvements, legal and other related costs. Leasing commissions, legal and other related costs (“lease origination costs”) are classified as deferred charges in the accompanying consolidated balance sheets. The value of in-place leases is measured by the excess of (i) the purchase price paid for a property after adjusting existing in-place leases to market rental rates, over (ii) the estimated fair value of the property as if vacant. Above-market and below-market lease values are recorded based on the present value (using a discount rate which reflects the risks associated with the leases acquired) of the difference between the contractual amounts to be received and management’s estimate of market lease rates, measured over the terms of the respective leases that management deemed appropriate at the time of acquisition. Such valuations include a consideration of the non-cancellable terms of the respective leases as well as any applicable renewal periods. The fair values associated with below-market rental renewal options are determined based on the Company’s experience and the relevant facts and circumstances that existed at the time of the acquisitions. The value of the above-market and below-market leases is amortized to base rental income, over the terms of the respective leases including option periods, if applicable. The value of in-place leases are amortized to expense over the remaining non-cancellable terms of the respective leases. If a lease were to be terminated prior to its stated expiration, all unamortized amounts relating to that lease would be recognized in operations at that time. The Company expenses transaction costs associated with business combinations and unsuccessful property asset acquisitions in the period incurred and capitalizes transaction costs associated with successful property asset acquisitions. In conjunction with the Company’s pursuit and acquisition of real estate investments, the Company did not expense any acquisition transaction costs during the three months ended March 31, 2018 or 2017. Asset Impairment The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of the asset to aggregate future net cash flows (undiscounted and without interest) expected to be generated by the asset. If such assets are considered impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceed the fair value. Management does not believe that the value of any of the Company’s real estate investments was impaired at March 31, 2018. Cash and Cash Equivalents The Company considers all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents. Cash and cash equivalents are maintained at financial institutions and, at times, balances may exceed the federally insured limit by the Federal Deposit Insurance Corporation. The Company has not experienced any losses related to these balances. Restricted Cash The terms of the Company’s mortgage loans payable may require the Company to deposit certain replacement and other reserves with its lenders. Such “restricted cash” is generally available only for property-level requirements for which the reserves have been established and is not available to fund other property-level or Company-level obligations. Revenue Recognition Management has determined that all of the Company’s leases with its various tenants are operating leases. Rental income is generally recognized based on the terms of leases entered into with tenants. In those instances in which the Company funds tenant improvements and the improvements are deemed to be owned by the Company, revenue recognition will commence when the improvements are substantially completed and possession or control of the space is turned over to the tenant. When the Company determines that the tenant allowances are lease incentives, the Company commences revenue recognition and lease incentive amortization when possession or control of the space is turned over to the tenant for tenant work to begin. Minimum rental income from leases with scheduled rent increases is recognized on a straight-line basis over the lease term. Percentage rent is recognized when a specific tenant’s sales breakpoint is achieved. Property operating expense recoveries from tenants of common area maintenance, real estate taxes and other recoverable costs are recognized in the period the related expenses are incurred. Lease incentives are amortized as a reduction of rental revenue over the respective tenant lease terms. Termination fees (included in other income) are fees that the Company has agreed to accept in consideration for permitting certain tenants to terminate their lease prior to the contractual expiration date. The Company recognizes termination fees when the following conditions are met: (a) the termination agreement is executed; (b) the termination fee is determinable; (c) all landlord services pursuant to the terminated lease have been rendered; and (d) collectability of the termination fee is assured. Interest income is recognized as it is earned. Gains or losses on disposition of properties are recorded when the criteria for recognizing such gains or losses have been met. The Company must make estimates as to the collectability of its accounts receivable related to base rent, straight-line rent, expense reimbursements and other revenues. Management analyzes accounts receivable by considering tenant creditworthiness, current economic trends, and changes in tenants’ payment patterns when evaluating the adequacy of the allowance for doubtful accounts receivable. The Company also provides an allowance for future credit losses of the deferred straight-line rents receivable. The provision for doubtful accounts at both March 31, 2018 and December 31, 2017 was approximately $6.4 million. Depreciation and Amortization The Company uses the straight-line method for depreciation and amortization. Buildings are depreciated over the estimated useful lives which the Company estimates to be 39-40 years. Property improvements are depreciated over the estimated useful lives that range from 10 to 20 years. Furniture and fixtures are depreciated over the estimated useful lives that range from 3 to 10 years. Tenant improvements are amortized over the shorter of the life of the related leases or their useful life. Deferred Leasing and Internal Capitalized Leasing Costs Costs incurred in obtaining tenant leases (principally leasing commissions and acquired lease origination costs) are amortized ratably over the life of the tenant leases. The amortization of deferred leasing costs is included in Depreciation and amortization in the Consolidated Statements of Operations. The Company capitalizes a portion of payroll-related costs related to its leasing personnel associated with new leases and lease renewals. These costs are amortized over the life of the respective leases. During the three months ended March 31, 2018 and 2017, the Company capitalized approximately $334,000 and $312,000, respectively. Concentration of Credit Risk Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents and tenant receivables. The Company places its cash and cash equivalents in excess of insured amounts with high quality financial institutions. The Company performs ongoing credit evaluations of its tenants and requires tenants to provide security deposits. Earnings Per Share Basic earnings per share (“EPS”) excludes the impact of dilutive shares and is computed by dividing net income by the weighted average number of shares of common stock outstanding for the period. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue shares of common stock were exercised or converted into shares of common stock and then shared in the earnings of the Company. For the three months ended March 31, 2018 and 2017, basic EPS was determined by dividing net income allocable to common stockholders for the applicable period by the weighted average number of shares of common stock outstanding during such period. Net income during the applicable period is also allocated to the time-based unvested restricted stock as these grants are entitled to receive dividends and are therefore considered a participating security. Time-based unvested restricted stock is not allocated net losses and/or any excess of dividends declared over net income; such amounts are allocated entirely to the common stockholders other than the holders of time-based unvested restricted stock. The performance-based restricted stock awards outstanding under the 2009 Plan described in Note 7 are excluded from the basic EPS calculation, as these units are not participating securities until they vest. The following table sets forth the reconciliation between basic and diluted EPS for ROIC (in thousands, except share data):
Earnings Per Unit The following table sets forth the reconciliation between basic and diluted earnings per unit for the Operating Partnership (in thousands, except unit data):
Stock-Based Compensation The Company has a stock-based employee compensation plan, which is more fully described in Note 7. The Company accounts for its stock-based compensation plans based on the FASB guidance which requires that compensation expense be recognized based on the fair value of the stock awards less estimated forfeitures. Restricted stock grants vest based upon the completion of a service period (“time-based grants”) and/or the Company meeting certain established market-specific financial performance criteria (“performance-based grants”). Time-based grants are valued according to the market price for the Company’s common stock at the date of grant. For performance-based grants, a Monte Carlo valuation model is used, taking into account the underlying contingency risks associated with the performance criteria. It is the Company’s policy to grant options with an exercise price equal to the quoted closing market price of stock on the grant date. Awards of stock options and time-based grants of stock are expensed as compensation on a straight-line basis over the vesting period. Depending on the terms of the agreement, certain awards of performance-based grants are expensed as compensation under the accelerated attribution method while certain are expensed as compensation on a straight-line basis over the vesting period. All awards of performance-based grants are recognized in income regardless of the results of the performance criteria. Derivatives The Company records all derivatives on the balance sheets at fair value. The accounting for changes in the fair value of derivatives depends on the intended use of the derivative, whether the Company has elected to designate a derivative in a hedging relationship and apply hedge accounting and whether the hedging relationship has satisfied the criteria necessary to apply hedge accounting. Derivatives designated and qualifying as a hedge of the exposure to changes in the fair value of an asset, liability, or firm commitment attributable to a particular risk, such as interest rate risk, are considered fair value hedges. Derivatives designated and qualifying as a hedge of the exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges. Hedge accounting generally provides for the matching of the timing of gain or loss recognition on the hedging instrument with the recognition of the changes in the fair value of the hedged asset or liability that are attributable to the hedged forecasted transactions in a cash flow hedge. When the Company terminates a derivative for which cash flow hedging was being applied, the balance which was recorded in Other Comprehensive Income is amortized to interest expense over the remaining contractual term of the swap as long as the hedged forecasted transactions continue to be probable of occurring. The Company includes cash payments made to terminate interest rate swaps as an operating activity on the statement of cash flows, given the nature of the underlying cash flows that the derivative was hedging. Segment Reporting The Company’s primary business is the ownership, management, and redevelopment of retail real estate properties. The Company reviews operating and financial information for each property on an individual basis and therefore, each property represents an individual operating segment. The Company evaluates financial performance using property operating income, defined as operating revenues (base rent and recoveries from tenants), less property and related expenses (property operating expenses and property taxes). The Company has aggregated the properties into one reportable segment as the properties share similar long-term economic characteristics and have other similarities including the fact that they are operated using consistent business strategies, are typically located in major metropolitan areas, and have similar tenant mixes. Reclassifications Certain reclassifications have been made to the prior period consolidated financial statements and notes to conform to the current year presentation. |
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Real Estate Investments | Real Estate Investments The following real estate investment transactions have occurred during the three months ended March 31, 2018. Property Asset Acquisitions On February 23, 2018, the Company acquired the property known as Stadium Center located in Tacoma, Washington, within the Seattle metropolitan area, for an adjusted purchase price of approximately $19.3 million. Stadium Center is approximately 49,000 square feet and is anchored by Thriftway Supermarket. The property was acquired with borrowings under the credit facility and restricted cash that was previously held by a qualified intermediary for the acquisition of a replacement property in a tax-free exchange under Section 1031 of the Code. Any reference to the number of properties and square footage are unaudited and outside the scope of the Company’s independent registered public accounting firm’s review of its financial statements in accordance with the standards of the United States Public Company Accounting Oversight Board. The financial information set forth below summarizes the Company’s purchase price allocation for the properties acquired during the three months ended March 31, 2018 (in thousands).
The following table summarizes the operating results included in the Company’s historical consolidated statement of operations for the three months ended March 31, 2018, for the properties acquired during the three months ended March 31, 2018 (in thousands).
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Tenant Leases | Tenant Leases Space in the Company’s shopping centers is leased to various tenants under operating leases that usually grant tenants renewal options and generally provide for additional rents based on certain operating expenses as well as tenants’ sales volume. Future minimum rents to be received under non-cancellable leases as of March 31, 2018 are summarized as follows (in thousands):
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Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Mortgage Notes Payable, Credit Facilities and Senior Notes | Mortgage Notes Payable, Credit Facilities and Senior Notes ROIC does not hold any indebtedness. All debt is held directly or indirectly by the Operating Partnership; however, ROIC has guaranteed the Operating Partnership’s term loan, unsecured revolving credit facility, carve-out guarantees on property-level debt, and the Senior Notes. Costs incurred in obtaining long-term financing are amortized ratably over the related debt agreement. The amortization of deferred financing costs is included in Interest expense and other finance expenses in the Consolidated Statements of Operations. Mortgage Notes Payable On February 1, 2018, the Company repaid in full the Santa Teresa Village mortgage note related to Santa Teresa Village for a total of approximately $10.1 million, without penalty, in accordance with the prepayment provisions of the note. The mortgage notes payable collateralized by respective properties and assignment of leases at March 31, 2018 and December 31, 2017, respectively, were as follows (in thousands):
Term Loan and Credit Facility The carrying values of the Company’s term loan (the “term loan”) were as follows (in thousands):
On September 29, 2015, the Company entered into an unsecured term loan agreement under which the lenders agreed to provide a $300.0 million unsecured term loan facility. Effective September 8, 2017, the Company entered into a First Amended and Restated Term Loan Agreement (the “Term Loan Agreement”) pursuant to which the maturity date of the term loan was extended from January 31, 2019 to September 8, 2022, without further options for extension. The Term Loan Agreement also provides that the Company may from time to time request increased aggregate commitments of $200.0 million under certain conditions set forth in the Term Loan Agreement, including the consent of the lenders for the additional commitments. Borrowings under the Term Loan Agreement accrue interest on the outstanding principal amount at a rate equal to an applicable rate based on the credit rating level of the Company, plus, as applicable, (i) a LIBOR rate determined by reference to the cost of funds for U.S. dollar deposits for the relevant period (the “Eurodollar Rate”), or (ii) a base rate determined by reference to the highest of (a) the federal funds rate plus 0.50%, (b) the rate of interest announced by KeyBank National Association as its “prime rate,” and (c) the Eurodollar Rate plus 1.10%. The carrying values of the Company’s unsecured revolving credit facility were as follows (in thousands):
The Operating Partnership has an unsecured revolving credit facility with several banks. Effective September 8, 2017, the Company entered into a Second Amended and Restated Credit Agreement (the “Credit Facility Agreement”) pursuant to which the borrowing capacity under the credit facility was increased from $500.0 million to $600.0 million. The maturity date of the credit facility was extended from January 31, 2019 to September 8, 2021, with two six-month extension options, which may be exercised by the Operating Partnership upon satisfaction of certain conditions including the payment of extension fees. Additionally, the credit facility contains an accordion feature, which allows the Operating Partnership to increase the borrowing capacity under the credit facility up to an aggregate of $1.2 billion, subject to lender consents and other conditions. Borrowings under the credit facility accrue interest on the outstanding principal amount at a rate equal to an applicable rate based on the credit rating level of the Company, plus, as applicable, (i) the Eurodollar Rate, or (ii) a base rate determined by reference to the highest of (a) the federal funds rate plus 0.50%, (b) the rate of interest announced by KeyBank National Association as its “prime rate,” and (c) the Eurodollar Rate plus 1.00%. Additionally, the Operating Partnership is obligated to pay a facility fee at a rate based on the credit rating level of the Company, currently 0.20%, and a fronting fee at a rate of 0.125% per year with respect to each letter of credit issued under the credit facility. The Company has investment grade credit ratings from Moody’s Investors Service (Baa2) and Standard & Poor’s Ratings Services (BBB-). Both the term loan and credit facility contain customary representations, financial and other covenants. The Operating Partnership’s ability to borrow under the term loan and credit facility is subject to its compliance with financial covenants and other restrictions on an ongoing basis. The Operating Partnership was in compliance with such covenants at March 31, 2018. As of March 31, 2018, $300.0 million and $159.5 million were outstanding under the term loan and credit facility, respectively. The weighted average interest rate on the term loan during the three months ended March 31, 2018 was 2.7%. The weighted average interest rate on the credit facility during the three months ended March 31, 2018 was 2.6%. The Company had no available borrowings under the term loan at March 31, 2018. The Company had $440.5 million available to borrow under the credit facility at March 31, 2018. Senior Notes Due 2027 The carrying value of the Company’s unsecured Senior Notes Due 2027 is as follows (in thousands):
On November 10, 2017, the Operating Partnership entered into a Note Purchase Agreement which provided for the issuance of $250.0 million principal amount of 4.19% Senior Notes Due 2027 (the “Senior Notes Due 2027”) in a private placement effective December 15, 2017. The Senior Notes Due 2027 pay interest on June 15 and December 15 of each year, commencing on June 15, 2018, and mature on December 15, 2027, unless prepaid earlier by the Operating Partnership. The Operating Partnership’s performance of the obligations under the Note Purchase Agreement, including the payment of any outstanding indebtedness thereunder, are guaranteed, jointly and severally, by ROIC. The net proceeds were used to reduce borrowings under the credit facility. The interest expense recognized on the Senior Notes Due 2027 during the three months ended March 31, 2018 included approximately $2.6 million for the contractual coupon interest. In connection with the issuance of the Senior Notes Due 2027, the Company incurred approximately $1.3 million of deferred financing costs which are being amortized over the term of the Senior Notes Due 2027. Senior Notes Due 2026 The carrying value of the Company’s unsecured Senior Notes Due 2026 is as follows (in thousands):
On July 26, 2016, the Operating Partnership entered into a Note Purchase Agreement, as amended, which provided for the issuance of $200.0 million principal amount of 3.95% Senior Notes Due 2026 (the “Senior Notes Due 2026”) in a private placement effective September 22, 2016. The Senior Notes Due 2026 pay interest on March 22 and September 22 of each year, commencing on March 22, 2017, and mature on September 22, 2026, unless prepaid earlier by the Operating Partnership. The Operating Partnership’s performance of the obligations under the Note Purchase Agreement, including the payment of any outstanding indebtedness thereunder, are guaranteed, jointly and severally, by ROIC. The interest expense recognized on the Senior Notes Due 2026 during both the three months ended March 31, 2018 and 2017 included approximately $2.0 million for the contractual coupon interest. In connection with the issuance of the Senior Notes Due 2026, the Company incurred approximately $283,000 of deferred financing costs which are being amortized over the term of the Senior Notes Due 2026. Senior Notes Due 2024 The carrying value of the Company’s unsecured Senior Notes Due 2024 is as follows (in thousands):
On December 3, 2014, the Operating Partnership completed a registered underwritten public offering of $250.0 million aggregate principal amount of 4.000% Senior Notes due 2024 (the “Senior Notes Due 2024”), fully and unconditionally guaranteed by ROIC. The Senior Notes Due 2024 pay interest semi-annually on June 15 and December 15, commencing on June 15, 2015, and mature on December 15, 2024, unless redeemed earlier by the Operating Partnership. The Senior Notes Due 2024 are the Operating Partnership’s senior unsecured obligations that rank equally in right of payment with the Operating Partnership’s other unsecured indebtedness, and effectively junior to (i) all of the indebtedness and other liabilities, whether secured or unsecured, and any preferred equity of the Operating Partnership’s subsidiaries, and (ii) all of the Operating Partnership’s indebtedness that is secured by its assets, to the extent of the value of the collateral securing such indebtedness outstanding. ROIC fully and unconditionally guaranteed the Operating Partnership’s obligations under the Senior Notes Due 2024 on a senior unsecured basis, including the due and punctual payment of principal of, and premium, if any, and interest on, the notes, whether at stated maturity, upon acceleration, notice of redemption or otherwise. The guarantee is a senior unsecured obligation of ROIC and ranks equally in right of payment with all other senior unsecured indebtedness of ROIC. ROIC’s guarantee of the Senior Notes Due 2024 is effectively subordinated in right of payment to all liabilities, whether secured or unsecured, and any preferred equity of its subsidiaries (including the Operating Partnership and any entity ROIC accounts for under the equity method of accounting). The interest expense recognized for the contractual coupon interest on the Senior Notes Due 2024 during the both three months ended March 31, 2018 and 2017 was $2.5 million. The interest expense recognized for the accretion of the debt discount on the Senior Notes Due 2024 during the three months ended March 31, 2018 and 2017 was approximately $80,000 and $77,000, respectively. In connection with the Senior Notes Due 2024 offering, the Company incurred approximately $2.2 million of deferred financing costs which are being amortized over the term of the Senior Notes Due 2024. Senior Notes Due 2023 The carrying value of the Company’s unsecured Senior Notes Due 2023 is as follows (in thousands):
On December 9, 2013, the Operating Partnership completed a registered underwritten public offering of $250.0 million aggregate principal amount of 5.000% Senior Notes due 2023 (the “Senior Notes Due 2023”), fully and unconditionally guaranteed by ROIC. The Senior Notes Due 2023 pay interest semi-annually on June 15 and December 15, commencing on June 15, 2014, and mature on December 15, 2023, unless redeemed earlier by the Operating Partnership. The Senior Notes Due 2023 are the Operating Partnership’s senior unsecured obligations that rank equally in right of payment with the Operating Partnership’s other unsecured indebtedness, and effectively junior to (i) all of the indebtedness and other liabilities, whether secured or unsecured, and any preferred equity of the Operating Partnership’s subsidiaries, and (ii) all of the Operating Partnership’s indebtedness that is secured by its assets, to the extent of the value of the collateral securing such indebtedness outstanding. ROIC fully and unconditionally guaranteed the Operating Partnership’s obligations under the Senior Notes Due 2023 on a senior unsecured basis, including the due and punctual payment of principal of, and premium, if any, and interest on, the notes, whether at stated maturity, upon acceleration, notice of redemption or otherwise. The guarantee is a senior unsecured obligation of ROIC and will rank equally in right of payment with all other senior unsecured indebtedness of ROIC. ROIC’s guarantee of the Senior Notes Due 2023 is effectively subordinated in right of payment to all liabilities, whether secured or unsecured, and any preferred equity of its subsidiaries (including the Operating Partnership and any entity ROIC accounts for under the equity method of accounting). The interest expense recognized for the contractual coupon interest on the Senior Notes Due 2023 during both the three months ended March 31, 2018 and 2017 was $3.1 million. The interest expense recognized for the accretion of the debt discount on the Senior Notes Due 2023 during the three months ended March 31, 2018 and 2017 was approximately and $95,000 and $94,000, respectively. In connection with the Senior Notes Due 2023 offering, the Company incurred approximately $2.6 million of deferred financing costs which are being amortized over the term of the Senior Notes Due 2023. |
Preferred Stock of ROIC |
3 Months Ended |
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Mar. 31, 2018 | |
Equity [Abstract] | |
Preferred Stock of ROIC | Preferred Stock of ROIC ROIC is authorized to issue 50,000,000 shares of preferred stock with such designations, voting and other rights and preferences as may be determined from time to time by the board of directors. As of March 31, 2018 and December 31, 2017, there were no shares of preferred stock outstanding. |
Common Stock of ROIC |
3 Months Ended |
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Mar. 31, 2018 | |
Equity [Abstract] | |
Common Stock of ROIC | Common Stock of ROIC ATM On September 19, 2014, ROIC entered into three separate Sales Agreements (the “Original Sales Agreements”) with each of Jefferies LLC, KeyBanc Capital Markets Inc., and Raymond James & Associates, Inc. (each individually, an “Original Agent” and collectively, the “Original Agents”) pursuant to which ROIC may sell, from time to time, shares of ROIC’s common stock, par value $0.0001 per share, having an aggregate offering price of up to $100.0 million through the Original Agents either as agents or principals. On May 23, 2016, ROIC entered into two additional sales agreements (the “Additional Sales Agreements”, and together with the Original Sales Agreements, the “Sales Agreements”) with each of Canaccord Genuity Inc. and Robert W. Baird & Co. Incorporated (the “Additional Agents”, and together with the Original Agents, the “Agents”) pursuant to which the Company may sell shares of ROIC’s common stock through the Additional Agents either as agents or principals. In addition, on February 21, 2018, the Company terminated the Additional Sales Agreement with Canaccord Genuity, Inc. During the three months ended March 31, 2018, ROIC sold a total of 75,314 shares of common stock under the Sales Agreements, which resulted in gross proceeds of approximately $1.5 million and commissions of approximately $19,000 paid to the Agents. Since the Original Sales Agreements were entered into through March 31, 2018, ROIC has sold a total of 2,856,136 shares under the Sales Agreements, which resulted in gross proceeds of approximately $57.7 million and commissions of approximately $761,000 paid to the Agents. Stock Repurchase Program On July 31, 2013, the Company’s board of directors authorized a stock repurchase program to repurchase up to a maximum of $50.0 million of the Company’s common stock. During the three months ended March 31, 2018, the Company did not repurchase any shares of common stock under this program. |
Stock Compensation for ROIC |
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Mar. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock Compensation for ROIC | Stock Compensation for ROIC ROIC follows the FASB guidance related to stock compensation which establishes financial accounting and reporting standards for stock-based employee compensation plans, including all arrangements by which employees receive shares of stock or other equity instruments of the employer, or the employer incurs liabilities to employees in amounts based on the price of the employer’s stock. The guidance also defines a fair value-based method of accounting for an employee stock option or similar equity instrument. In 2009, ROIC adopted the 2009 Plan. The 2009 Plan provides for grants of restricted common stock and stock option awards up to an aggregate of 7.5% of the issued and outstanding shares of ROIC’s common stock at the time of the award, subject to a ceiling of 4,000,000 shares. Restricted Stock During the three months ended March 31, 2018, ROIC awarded 514,972 shares of restricted common stock under the 2009 Plan, of which 180,200 shares are performance-based grants and the remainder of the shares are time-based grants. The performance-based grants vest based on pre-defined market-specific performance criteria with a vesting date on January 1, 2021. A summary of the status of ROIC’s non-vested restricted stock awards as of March 31, 2018, and changes during the three months ended March 31, 2018 are presented below:
For the three months ended March 31, 2018 and 2017, the amounts charged to expenses for all stock-based compensation arrangements totaled approximately $1.4 million and $1.2 million, respectively. |
Capital of the Operating Partnership |
3 Months Ended |
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Mar. 31, 2018 | |
Equity [Abstract] | |
Capital of the Operating Partnership | Capital of the Operating Partnership As of March 31, 2018, the Operating Partnership had 124,400,450 OP Units outstanding. ROIC owned an approximate 90.6% partnership interest in the Operating Partnership at March 31, 2018, or 112,721,459 OP Units. The remaining 11,678,991 OP Units are owned by other limited partners. A share of ROIC’s common stock and an OP unit have essentially the same economic characteristics as they share equally in the total net income or loss and distributions of the Operating Partnership. As of March 31, 2018, subject to certain exceptions, holders are able to redeem their OP Units, at the option of ROIC, for cash or for unregistered shares of ROIC common stock on a one-for-one basis. If cash is paid in the redemption, the redemption price is equal to the average closing price on the NASDAQ Stock Market for shares of ROIC’s common stock over the ten consecutive trading days immediately preceding the date a redemption notice is received by ROIC. The redemption value of outstanding OP Units owned by the limited partners as of March 31, 2018, not including ROIC, had such units been redeemed at March 31, 2018, was approximately $202.2 million, calculated based on the average closing price on the NASDAQ Stock Market of ROIC common stock for the ten consecutive trading days immediately preceding March 31, 2018, which amounted to $17.31 per share. Retail Opportunity Investments GP, LLC, ROIC’s wholly-owned subsidiary, is the sole general partner of the Operating Partnership, and as the parent company, ROIC has the full and complete authority over the Operating Partnership’s day-to-day management and control. As the sole general partner of the Operating Partnership, ROIC effectively controls the ability to issue common stock of ROIC upon redemption of any OP Units. The redemption provisions that permit ROIC to settle the redemption of OP Units in either cash or common stock, in the sole discretion of ROIC, are further evaluated in accordance with applicable accounting guidance to determine whether temporary or permanent equity classification on the balance sheet is appropriate. The Company evaluated this guidance, including the ability, in its sole discretion, to settle in unregistered shares of common stock, and determined that the OP Units meet the requirements to qualify for presentation as permanent equity. |
Fair Value of Financial Instruments |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value of Financial Instruments | Fair Value of Financial Instruments The Company follows the FASB guidance that defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. The guidance applies to reported balances that are required or permitted to be measured at fair value under existing accounting pronouncements; accordingly, the standard does not require any new fair value measurements of reported balances. The guidance emphasizes that fair value is a market-based measurement, not an entity-specific measurement. Therefore, a fair value measurement should be determined based on the assumptions that market participants would use in pricing the asset or liability. As a basis for considering market participant assumptions in fair value measurements, the guidance establishes a fair value hierarchy that distinguishes between market participant assumptions based on market data obtained from sources independent of the reporting entity (observable inputs that are classified within Levels 1 and 2 of the hierarchy) and the reporting entity’s own assumptions about market participant assumptions (unobservable inputs classified within Level 3 of the hierarchy). Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access. Level 2 inputs are inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs may include quoted prices for similar assets and liabilities in active markets, as well as inputs that are observable for the asset or liability (other than quoted prices), such as interest rates, foreign exchange rates, and yield curves that are observable at commonly quoted intervals. Level 3 inputs are unobservable inputs for the asset or liability, which are typically based on an entity’s own assumptions, as there is little, if any, related market activity. In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the asset or liability. The following disclosures of estimated fair value were determined by management, using available market information and appropriate valuation methodologies as discussed in Note 1. Considerable judgment is necessary to interpret market data and develop estimated fair value. Accordingly, the estimates presented herein are not necessarily indicative of the amounts realizable upon disposition of the financial instruments. The use of different market assumptions or estimation methodologies may have a material effect on the estimated fair value amounts. The carrying values of cash and cash equivalents, restricted cash, tenant and other receivables, deposits, prepaid expenses, other assets, accounts payable and accrued expenses are reasonable estimates of their fair values because of the short-term nature of these instruments. The carrying values of the term loan and credit facility are deemed to be at fair value since the outstanding debt is directly tied to monthly LIBOR contracts. The fair value of the outstanding Senior Notes Due 2027 and Senior Notes Due 2026 at March 31, 2018 was approximately $232.3 million and $184.0 million, respectively, calculated using significant inputs which are not observable in the market. The fair value of the outstanding Senior Notes Due 2024 and Senior Notes Due 2023 at March 31, 2018 was approximately $241.4 million and $259.6 million, respectively, based on inputs not quoted on active markets, but corroborated by market data, or Level 2. Assumed mortgage notes payable were recorded at their fair value at the time they were assumed. The Company’s outstanding mortgage notes payable were estimated to have a fair value of approximately $93.9 million with an interest rate range of 4.3% to 5.3% and a weighted average interest rate of 4.7% as of March 31, 2018. These fair value measurements fall within level 3 of the fair value hierarchy. Derivative and Hedging Activities The Company’s objectives in using interest rate derivatives are to add stability to interest expense and to manage its exposure to interest rate movements. To accomplish this objective, the Company primarily uses interest rate swaps as part of its interest rate risk management strategy. Interest rate swaps designated as cash flow hedges involve the receipt of variable-rate amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount. The following is a summary of the terms of the Company’s interest rate swaps as of March 31, 2018 (in thousands):
The changes in the fair value of derivatives that are designated as cash flow hedges are recorded in accumulated other comprehensive income (“AOCI”) and will be subsequently reclassified into earnings during the period in which the hedged forecasted transaction affects earnings. The valuation of these instruments is determined using widely accepted valuation techniques including discounted cash flow analysis on the expected cash flows of the derivative. This analysis reflects the contractual terms of the derivative, including the period to maturity, and uses observable market-based inputs, including interest rate curves, and implied volatilities. The fair value of interest rate swaps is determined using the market standard methodology of netting the discounted future fixed cash receipts (or payments) and the discounted expected variable cash payments (or receipts). The variable cash payments (or receipts) are based on an expectation of future interest rates (forward curves) derived from observable market interest rate curves. The Company incorporated credit valuation adjustments to appropriately reflect both its own non-performance risk and the respective counterparties’ non-performance risk in the fair value measurements. In adjusting the fair value of its derivative contract for the effect of non-performance risk, the Company considered the impact of netting and any applicable credit enhancements, such as collateral postings, thresholds, mutual puts, and guarantees. Although the Company has determined that the majority of the inputs used to value its derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with its derivatives utilize Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by the Company and its counterparties. However, as of March 31, 2018, the Company has assessed the significance of the impact of the credit valuation adjustments on the overall valuation of its derivative position and has determined that the credit valuation adjustments are not significant to the overall valuation of its derivatives. As a result, the Company has determined that its derivative valuation in its entirety is classified in Level 2 of the fair value hierarchy. The table below presents the Company’s assets and liabilities measured at fair value on a recurring basis, aggregated by the level in the fair value hierarchy within which those measurements fall (in thousands).
Amounts paid, or received, to cash settle interest rate derivatives prior to their maturity date are recorded in AOCI at the cash settlement amount, and will be reclassified to interest expense as interest expense is recognized on the hedged debt. During the next twelve months, the Company estimates that $375,000 will be reclassified as a non-cash increase to interest expense. The table below presents the fair value of the Company’s derivative financial instruments as well as their classification on the balance sheet as of March 31, 2018 and December 31, 2017, respectively (in thousands):
Derivatives in Cash Flow Hedging Relationships The table below details the location in the financial statements of the gain or loss recognized on interest rate derivatives designated as cash flow hedges for the three months ended March 31, 2018 and 2017, respectively (in thousands).
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Commitments and Contingencies |
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Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies | Commitments and Contingencies In the normal course of business, from time to time, the Company is involved in legal actions relating to the ownership and operations of its properties. In management’s opinion, the liabilities, if any, that ultimately may result from such legal actions are not expected to have a material adverse effect on the consolidated financial position, results of operations or liquidity of the Company. The following table represents the Company’s future minimum annual lease payments under operating leases as of March 31, 2018 (in thousands):
Tax Protection Agreements In connection with certain acquisitions in September 2013, the Company entered into Tax Protection Agreements with certain limited partners of the Operating Partnership. The Tax Protection Agreements require the Company, subject to certain exceptions, for a period of 12 years from closing, to indemnify the respective sellers receiving OP Units against certain tax liabilities incurred by them, as calculated pursuant to the respective Tax Protection Agreements. Further, in connection with certain acquisitions from December 2014 through March 2017, the Company entered into Tax Protection Agreements with certain limited partners of the Operating Partnership that require the Company, subject to certain exceptions, for a period of 10 years from closing, to indemnify the respective sellers receiving OP Units against certain tax liabilities incurred by them, as calculated pursuant to the respective Tax Protection Agreements. If the Company were to trigger the tax protection provisions under these agreements, the Company would be required to pay damages in the amount of the taxes owed by these limited partners (plus additional damages in the amount of the taxes incurred as a result of such payment). |
Related Party Transactions |
3 Months Ended |
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Mar. 31, 2018 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Related Party Transactions The Company has entered into several lease agreements with an officer of the Company, whereby pursuant to the lease agreements, the Company is provided the use of storage space. For the three months ended March 31, 2018 and 2017, the Company incurred approximately $15,000 and $13,000, respectively, of expenses relating to the agreements. These expenses were included in general and administrative expenses in the accompanying consolidated statements of operations. |
Subsequent Events |
3 Months Ended |
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Mar. 31, 2018 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events On April 25, 2018, ROIC’s board of directors declared a cash dividend on its common stock and a distribution on the Operating Partnership’s OP Units of $0.1950 per share and per OP Unit, payable on June 28, 2018 to holders of record on June 14, 2018. |
Organization, Basis of Presentation and Summary of Significant Accounting Policies (Policies) |
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Mar. 31, 2018 | |
Accounting Policies [Abstract] | |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In November 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) No. 2016-18, Restricted Cash. ASU No. 2016-18 requires companies to include restricted cash and restricted cash equivalents with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. Additionally, ASU No. 2016-18 requires a disclosure of a reconciliation between the statement of financial position and the statement of cash flows when the balance sheet includes more than one line item for cash, cash equivalents, restricted cash, and restricted cash equivalents. ASU No. 2016-18 is effective for reporting periods beginning after December 15, 2017, with early adoption permitted, and will be applied retrospectively to all periods presented. The Company adopted ASU No. 2018-16 effective January 1, 2018. The adoption of ASU No. 2016-18 impacted the presentation of cash flows with inclusion of restricted cash flows for each of the presented periods. In February 2016, the FASB issued ASU No. 2016-2, “Leases.” ASU No. 2016-2 is expected to result in the recognition of a right-to-use asset and related liability to account for future obligations under ground lease agreements for which the Company is the lessee. As of March 31, 2018, the remaining contractual payments under ground lease agreements aggregated approximately $41.5 million. In addition, ASU No. 2016-2 will require that lessees and lessors capitalize, as initial direct costs, only those costs that are incurred due to the execution of a lease. Allocated payroll costs and other costs that are incurred regardless of whether the lease is obtained will no longer be capitalized as initial direct costs and instead will be expensed as incurred. As a lessor, under current accounting standards, the Company recognizes rental revenue from its operating leases on a straight-line basis over the respective lease terms. The Company commences recognition of rental revenue at the date the property is ready for its intended use and the tenant takes possession of or controls the physical use of the property. Under current accounting standards, tenant recoveries related to payments of real estate taxes, insurance, utilities, repairs and maintenance, common area expenses, and other operating expenses are considered lease components. The Company recognizes these tenant recoveries as revenue when services are rendered in an amount equal to the related operating expenses incurred that are recoverable under the terms of the applicable lease. Under ASU No. 2016-2, each lease agreement will be evaluated to identify the lease components and nonlease components at lease inception. The total consideration in the lease agreement will be allocated to the lease and nonlease components based on their relative standalone selling prices. Lessors will continue to recognize the lease revenue component using an approach that is substantially equivalent to existing guidance for operating leases (straight-line basis). In January 2018, the FASB issued a proposed amendment to ASU No. 2016-2 that would allow lessors to elect, as a practical expedient, not to allocate the total consideration to lease and nonlease components based on their relative standalone selling prices. If adopted, this practical expedient will allow lessors to elect a combined single lease component presentation if (i) the timing and pattern of the revenue recognition of the combined single lease component is the same, and (ii) the related lease component and, the combined single lease component would be classified as an operating lease. The pronouncement is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2018, with early adoption permitted. The Company plans to adopt the provisions of ASU No. 2016-2 effective January 1, 2019 using the modified retrospective approach. The Company continues to evaluate the impact this pronouncement will have on the Company’s consolidated financial statements. In May 2014, the FASB issued ASU No. 2014-9, “Revenue from Contracts with Customers.” The pronouncement was issued to clarify the principles for recognizing revenue and to develop a common revenue standard and disclosure requirements for U.S. GAAP and International Financial Reporting Standards. The pronouncement is effective for reporting periods beginning after December 15, 2017. As discussed above, leases are specifically excluded from ASU No. 2014-9 and will be governed by the applicable lease codification; however, this update may have implications on certain variable payment terms included in lease agreements. Upon adoption of ASU No. 2016-2 in 2019, the Company may be required to classify its tenant recoveries into lease and nonlease components, whereby the nonlease components would be subject to ASU No. 2014-9, pending the resolution of the proposed amendment issued by the FASB in January 2018. Property services categorized as nonlease components that are reimbursed by the Company’s tenants may need to be presented on a net basis if it is determined that the Company holds an agent arrangement. The Company adopted the provisions of ASU No. 2014-9 effective January 1, 2018 using the modified retrospective approach. The Company evaluated the revenue recognition for all contracts within this scope under existing accounting standards and under ASU No. 2014-9 and confirmed that there were no differences in the amounts recognized or the pattern of recognition. Therefore, the adoption of ASU 2014-9 did not result in an adjustment to the Company’s retained earnings on January 1, 2018. |
Principles of Consolidation | Principles of Consolidation The accompanying consolidated financial statements are prepared on the accrual basis in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the disclosures required by GAAP for complete financial statement disclosures. In the opinion of management, the consolidated financial statements include all adjustments necessary, which are of a normal and recurring nature, for the fair presentation of the Company’s financial position and the results of operations and cash flows for the periods presented. Results of operations for the three month period ended March 31, 2018 are not necessarily indicative of the results that may be expected for the year ending December 31, 2018. It is suggested that these financial statements be read in conjunction with the financial statements and notes thereto included in the Company’s annual report on Form 10-K for the fiscal year ended December 31, 2017. The consolidated financial statements include the accounts of the Company and those of its subsidiaries, which are wholly-owned or controlled by the Company. Entities which the Company does not control through its voting interest and entities which are variable interest entities (“VIEs”), but where it is not the primary beneficiary, are accounted for under the equity method. All significant intercompany balances and transactions have been eliminated. The Company follows the FASB guidance for determining whether an entity is a VIE and requires the performance of a qualitative rather than a quantitative analysis to determine the primary beneficiary of a VIE. Under this guidance, an entity would be required to consolidate a VIE if it has (i) the power to direct the activities that most significantly impact the entity’s economic performance and (ii) the obligation to absorb losses of the VIE or the right to receive benefits from the VIE that could be significant to the VIE. The Company has concluded that the Operating Partnership is a VIE, and because they have both the power and the rights to control the Operating Partnership, they are the primary beneficiary and are required to continue to consolidate the Operating Partnership. A non-controlling interest in a consolidated subsidiary is defined as the portion of the equity (net assets) in a subsidiary not attributable, directly or indirectly, to a parent. Non-controlling interests are required to be presented as a separate component of equity in the consolidated balance sheet and modify the presentation of net income by requiring earnings and other comprehensive income to be attributed to controlling and non-controlling interests. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the disclosure of contingent assets and liabilities, the reported amounts of assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the periods covered by the financial statements. The most significant assumptions and estimates relate to the purchase price allocations, depreciable lives, revenue recognition and the collectability of tenant receivables, other receivables, notes receivables, the valuation of performance-based restricted stock, stock options, and derivatives. Actual results could differ from these estimates. |
Federal Income Taxes | Federal Income Taxes The Company has elected to qualify as a REIT under Sections 856-860 of the Internal Revenue Code (the “Code”). Under those sections, a REIT that, among other things, distributes at least 90% of its REIT taxable income (determined without regard to the dividends paid deduction and excluding net capital gains) and meets certain other qualifications prescribed by the Code, will not be taxed on that portion of its taxable income that is distributed. Although it may qualify as a REIT for U.S. federal income tax purposes, the Company is subject to state income or franchise taxes in certain states in which some of its properties are located. In addition, taxable income from non-REIT activities managed through the Company’s taxable REIT subsidiary (“TRS”), if any, is fully subject to U.S. federal, state and local income taxes. For all periods from inception through September 26, 2013 the Operating Partnership had been an entity disregarded from its sole owner, ROIC, for U.S. federal income tax purposes and as such had not been subject to U.S. federal income taxes. Effective September 27, 2013, the Operating Partnership issued OP Units in connection with the acquisitions of two shopping centers. Accordingly, the Operating Partnership ceased being a disregarded entity and instead is being treated as a partnership for U.S. federal income tax purposes. The Company follows the FASB guidance that defines a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The FASB also provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. The Company records interest and penalties relating to unrecognized tax benefits, if any, as interest expense. As of March 31, 2018, the statute of limitations for the tax years 2014 through and including 2016 remain open for examination by the Internal Revenue Service (“IRS”) and state taxing authorities. ROIC intends to make regular quarterly distributions to holders of its common stock. U.S. federal income tax law generally requires that a REIT distribute annually at least 90% of its REIT taxable income, without regard to the deduction for dividends paid and excluding net capital gains, and that it pay U.S. federal income tax at regular corporate rates to the extent that it annually distributes less than 100% of its net taxable income. ROIC intends to pay regular quarterly dividends to stockholders in an amount not less than its net taxable income, if and to the extent authorized by its board of directors. Before ROIC pays any dividend, whether for U.S. federal income tax purposes or otherwise, it must first meet both its operating requirements and its debt service on debt. If ROIC’s cash available for distribution is less than its net taxable income, it could be required to sell assets or borrow funds to make cash distributions or it may make a portion of the required distribution in the form of a taxable stock distribution or distribution of debt securities. |
Real Estate Investments | Real Estate Investments All costs related to the improvement or replacement of real estate properties are capitalized. Additions, renovations and improvements that enhance and/or extend the useful life of a property are also capitalized. Expenditures for ordinary maintenance, repairs and improvements that do not materially prolong the normal useful life of an asset are charged to operations as incurred. The Company expenses transaction costs associated with business combinations and unsuccessful property asset acquisitions in the period incurred and capitalizes transaction costs associated with successful property asset acquisitions. During the three months ended March 31, 2018 and 2017, capitalized costs related to the improvement or replacement of real estate properties were approximately $10.6 million and $8.9 million, respectively. The Company evaluates each acquisition of real estate to determine if the acquired property meets the definition of a business and needs to be accounted for as a business combination. Under ASU No. 2017-1, the Company first determines whether substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or group of similar identifiable assets. If this threshold is met, the acquired property does not meet the definition of a business and is accounted for as an asset acquisition. The Company expects that acquisitions of real estate properties will not meet the revised definition of a business because substantially all of the fair value is concentrated in a single identifiable asset or group of similar identifiable assets (i.e. land, buildings, and related intangible assets). The Company recognizes the acquisition of real estate properties, including acquired tangible assets (consisting of land, buildings and improvements), and acquired intangible assets and liabilities (consisting of above-market and below-market leases and acquired in-place leases) at their fair value (for acquisitions meeting the definition of a business) and relative fair value (for acquisitions not meeting the definition of a business). The relative fair values used to allocate the cost of an asset acquisition are determined using the same methodologies and assumptions the Company utilizes to determine fair value in a business combination. Acquired lease intangible assets include above-market leases and acquired in-place leases, and acquired lease intangible liabilities represent below-market leases, in the accompanying consolidated balance sheets. The fair value of the tangible assets of an acquired property is determined by valuing the property as if it were vacant, which value is then allocated to land, buildings and improvements based on management’s determination of the relative fair values of these assets. In valuing an acquired property’s intangibles, factors considered by management include an estimate of carrying costs during the expected lease-up periods, and estimates of lost rental revenue during the expected lease-up periods based on management’s evaluation of current market demand. Management also estimates costs to execute similar leases, including leasing commissions, tenant improvements, legal and other related costs. Leasing commissions, legal and other related costs (“lease origination costs”) are classified as deferred charges in the accompanying consolidated balance sheets. The value of in-place leases is measured by the excess of (i) the purchase price paid for a property after adjusting existing in-place leases to market rental rates, over (ii) the estimated fair value of the property as if vacant. Above-market and below-market lease values are recorded based on the present value (using a discount rate which reflects the risks associated with the leases acquired) of the difference between the contractual amounts to be received and management’s estimate of market lease rates, measured over the terms of the respective leases that management deemed appropriate at the time of acquisition. Such valuations include a consideration of the non-cancellable terms of the respective leases as well as any applicable renewal periods. The fair values associated with below-market rental renewal options are determined based on the Company’s experience and the relevant facts and circumstances that existed at the time of the acquisitions. The value of the above-market and below-market leases is amortized to base rental income, over the terms of the respective leases including option periods, if applicable. The value of in-place leases are amortized to expense over the remaining non-cancellable terms of the respective leases. If a lease were to be terminated prior to its stated expiration, all unamortized amounts relating to that lease would be recognized in operations at that time. |
Asset Impairment | Asset Impairment The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of the asset to aggregate future net cash flows (undiscounted and without interest) expected to be generated by the asset. If such assets are considered impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceed the fair value. |
Cash and Cash Equivalents | Cash and Cash Equivalents The Company considers all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents. Cash and cash equivalents are maintained at financial institutions and, at times, balances may exceed the federally insured limit by the Federal Deposit Insurance Corporation. |
Restricted Cash | Restricted Cash The terms of the Company’s mortgage loans payable may require the Company to deposit certain replacement and other reserves with its lenders. Such “restricted cash” is generally available only for property-level requirements for which the reserves have been established and is not available to fund other property-level or Company-level obligations. |
Revenue Recognition | Revenue Recognition Management has determined that all of the Company’s leases with its various tenants are operating leases. Rental income is generally recognized based on the terms of leases entered into with tenants. In those instances in which the Company funds tenant improvements and the improvements are deemed to be owned by the Company, revenue recognition will commence when the improvements are substantially completed and possession or control of the space is turned over to the tenant. When the Company determines that the tenant allowances are lease incentives, the Company commences revenue recognition and lease incentive amortization when possession or control of the space is turned over to the tenant for tenant work to begin. Minimum rental income from leases with scheduled rent increases is recognized on a straight-line basis over the lease term. Percentage rent is recognized when a specific tenant’s sales breakpoint is achieved. Property operating expense recoveries from tenants of common area maintenance, real estate taxes and other recoverable costs are recognized in the period the related expenses are incurred. Lease incentives are amortized as a reduction of rental revenue over the respective tenant lease terms. Termination fees (included in other income) are fees that the Company has agreed to accept in consideration for permitting certain tenants to terminate their lease prior to the contractual expiration date. The Company recognizes termination fees when the following conditions are met: (a) the termination agreement is executed; (b) the termination fee is determinable; (c) all landlord services pursuant to the terminated lease have been rendered; and (d) collectability of the termination fee is assured. Interest income is recognized as it is earned. Gains or losses on disposition of properties are recorded when the criteria for recognizing such gains or losses have been met. The Company must make estimates as to the collectability of its accounts receivable related to base rent, straight-line rent, expense reimbursements and other revenues. Management analyzes accounts receivable by considering tenant creditworthiness, current economic trends, and changes in tenants’ payment patterns when evaluating the adequacy of the allowance for doubtful accounts receivable. The Company also provides an allowance for future credit losses of the deferred straight-line rents receivable. |
Depreciation and Amortization | Depreciation and Amortization The Company uses the straight-line method for depreciation and amortization. Buildings are depreciated over the estimated useful lives which the Company estimates to be 39-40 years. Property improvements are depreciated over the estimated useful lives that range from 10 to 20 years. Furniture and fixtures are depreciated over the estimated useful lives that range from 3 to 10 years. Tenant improvements are amortized over the shorter of the life of the related leases or their useful life. |
Deferred Leasing | Costs incurred in obtaining tenant leases (principally leasing commissions and acquired lease origination costs) are amortized ratably over the life of the tenant leases. The amortization of deferred leasing costs is included in Depreciation and amortization in the Consolidated Statements of Operations. |
Internal Capitalized Leasing Costs | The Company capitalizes a portion of payroll-related costs related to its leasing personnel associated with new leases and lease renewals. These costs are amortized over the life of the respective leases |
Concentration Credit Risk | Concentration of Credit Risk Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents and tenant receivables. The Company places its cash and cash equivalents in excess of insured amounts with high quality financial institutions. The Company performs ongoing credit evaluations of its tenants and requires tenants to provide security deposits. |
Earnings Per Share | Earnings Per Share Basic earnings per share (“EPS”) excludes the impact of dilutive shares and is computed by dividing net income by the weighted average number of shares of common stock outstanding for the period. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue shares of common stock were exercised or converted into shares of common stock and then shared in the earnings of the Company. For the three months ended March 31, 2018 and 2017, basic EPS was determined by dividing net income allocable to common stockholders for the applicable period by the weighted average number of shares of common stock outstanding during such period. Net income during the applicable period is also allocated to the time-based unvested restricted stock as these grants are entitled to receive dividends and are therefore considered a participating security. Time-based unvested restricted stock is not allocated net losses and/or any excess of dividends declared over net income; such amounts are allocated entirely to the common stockholders other than the holders of time-based unvested restricted stock. The performance-based restricted stock awards outstanding under the 2009 Plan described in Note 7 are excluded from the basic EPS calculation, as these units are not participating securities until they vest. |
Share-Based Compensation | Stock-Based Compensation The Company has a stock-based employee compensation plan, which is more fully described in Note 7. The Company accounts for its stock-based compensation plans based on the FASB guidance which requires that compensation expense be recognized based on the fair value of the stock awards less estimated forfeitures. Restricted stock grants vest based upon the completion of a service period (“time-based grants”) and/or the Company meeting certain established market-specific financial performance criteria (“performance-based grants”). Time-based grants are valued according to the market price for the Company’s common stock at the date of grant. For performance-based grants, a Monte Carlo valuation model is used, taking into account the underlying contingency risks associated with the performance criteria. It is the Company’s policy to grant options with an exercise price equal to the quoted closing market price of stock on the grant date. Awards of stock options and time-based grants of stock are expensed as compensation on a straight-line basis over the vesting period. Depending on the terms of the agreement, certain awards of performance-based grants are expensed as compensation under the accelerated attribution method while certain are expensed as compensation on a straight-line basis over the vesting period. All awards of performance-based grants are recognized in income regardless of the results of the performance criteria. |
Derivatives | Derivatives The Company records all derivatives on the balance sheets at fair value. The accounting for changes in the fair value of derivatives depends on the intended use of the derivative, whether the Company has elected to designate a derivative in a hedging relationship and apply hedge accounting and whether the hedging relationship has satisfied the criteria necessary to apply hedge accounting. Derivatives designated and qualifying as a hedge of the exposure to changes in the fair value of an asset, liability, or firm commitment attributable to a particular risk, such as interest rate risk, are considered fair value hedges. Derivatives designated and qualifying as a hedge of the exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges. Hedge accounting generally provides for the matching of the timing of gain or loss recognition on the hedging instrument with the recognition of the changes in the fair value of the hedged asset or liability that are attributable to the hedged forecasted transactions in a cash flow hedge. When the Company terminates a derivative for which cash flow hedging was being applied, the balance which was recorded in Other Comprehensive Income is amortized to interest expense over the remaining contractual term of the swap as long as the hedged forecasted transactions continue to be probable of occurring. The Company includes cash payments made to terminate interest rate swaps as an operating activity on the statement of cash flows, given the nature of the underlying cash flows that the derivative was hedging. |
Segment Reporting | Segment Reporting The Company’s primary business is the ownership, management, and redevelopment of retail real estate properties. The Company reviews operating and financial information for each property on an individual basis and therefore, each property represents an individual operating segment. The Company evaluates financial performance using property operating income, defined as operating revenues (base rent and recoveries from tenants), less property and related expenses (property operating expenses and property taxes). The Company has aggregated the properties into one reportable segment as the properties share similar long-term economic characteristics and have other similarities including the fact that they are operated using consistent business strategies, are typically located in major metropolitan areas, and have similar tenant mixes. |
Organization, Basis of Presentation and Summary of Significant Accounting Policies (Tables) |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of reconciliation between basic and diluted earnings | The following table sets forth the reconciliation between basic and diluted EPS for ROIC (in thousands, except share data):
Earnings Per Unit The following table sets forth the reconciliation between basic and diluted earnings per unit for the Operating Partnership (in thousands, except unit data):
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Real Estate Investments (Tables) |
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Real Estate [Abstract] | |||||||||||||||||||||||||||||
Schedule of the Company’s purchase price allocation for the properties acquired | The financial information set forth below summarizes the Company’s purchase price allocation for the properties acquired during the three months ended March 31, 2018 (in thousands).
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Summary the operating results included in the Company’s historical consolidated statement of operations | The following table summarizes the operating results included in the Company’s historical consolidated statement of operations for the three months ended March 31, 2018, for the properties acquired during the three months ended March 31, 2018 (in thousands).
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Tenant Leases (Tables) |
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Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||
Future minimum rents to be received under non-cancellable leases | Future minimum rents to be received under non-cancellable leases as of March 31, 2018 are summarized as follows (in thousands):
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Mortgage Notes Payable, Credit Facilities and Senior Notes (Tables) |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Debt | The mortgage notes payable collateralized by respective properties and assignment of leases at March 31, 2018 and December 31, 2017, respectively, were as follows (in thousands):
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Schedule of Long-term Debt Instruments | The carrying value of the Company’s unsecured Senior Notes Due 2024 is as follows (in thousands):
The carrying values of the Company’s term loan (the “term loan”) were as follows (in thousands):
The carrying value of the Company’s unsecured Senior Notes Due 2023 is as follows (in thousands):
The carrying values of the Company’s unsecured revolving credit facility were as follows (in thousands):
The carrying value of the Company’s unsecured Senior Notes Due 2027 is as follows (in thousands):
The carrying value of the Company’s unsecured Senior Notes Due 2026 is as follows (in thousands):
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Stock Compensation for ROIC (Tables) |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Nonvested Restricted Stock Units Activity | A summary of the status of ROIC’s non-vested restricted stock awards as of March 31, 2018, and changes during the three months ended March 31, 2018 are presented below:
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Fair Value of Financial Instruments (Tables) |
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Mar. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of summary of the terms of the Company’s interest rate swaps | The following is a summary of the terms of the Company’s interest rate swaps as of March 31, 2018 (in thousands):
|
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Company’s assets and liabilities measured at fair value on a recurring basis | The table below presents the Company’s assets and liabilities measured at fair value on a recurring basis, aggregated by the level in the fair value hierarchy within which those measurements fall (in thousands).
|
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Schedule of Company’s derivative financial instruments as well as their classification on the balance sheet | The table below presents the fair value of the Company’s derivative financial instruments as well as their classification on the balance sheet as of March 31, 2018 and December 31, 2017, respectively (in thousands):
|
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Details the location in the financial statements of the gain or loss recognized on interest rate derivatives designated as cash flow hedges | The table below details the location in the financial statements of the gain or loss recognized on interest rate derivatives designated as cash flow hedges for the three months ended March 31, 2018 and 2017, respectively (in thousands).
|
Commitments and Contingencies (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||
Schedule of Future Minimum Rental Payments for Operating Leases | The following table represents the Company’s future minimum annual lease payments under operating leases as of March 31, 2018 (in thousands):
|
Real Estate Investments (Details Textual) - Stadium Center - Tacoma, Washington ft² in Thousands, $ in Millions |
Feb. 23, 2018
USD ($)
ft²
|
---|---|
Real Estate Properties [Line Items] | |
Purchase price | $ | $ 19.3 |
Area of real estate property acquired | ft² | 49 |
Real Estate Investments (Purchase Price Allocation of Properties Acquired) (Details) $ in Thousands |
Mar. 31, 2018
USD ($)
|
---|---|
Assets | |
Land | $ 3,867 |
Building and improvements | 15,470 |
Assets acquired | $ 19,337 |
Real Estate Investments (Operating Results Included in the Company's Historical Consolidated Statement of Operations for Properties Acquired During the Reported Periods) (Details) $ in Thousands |
3 Months Ended |
---|---|
Mar. 31, 2018
USD ($)
| |
Real Estate [Abstract] | |
Revenues | $ 145 |
Net income attributable to Retail Opportunity Investments Corp. | $ 78 |
Tenant Leases Minimum Future Rentals to be Received under Non-cancellable Leases (Details) $ in Thousands |
Mar. 31, 2018
USD ($)
|
---|---|
Leases [Abstract] | |
Remaining 2018 | $ 147,768 |
2019 | 182,380 |
2020 | 161,502 |
2021 | 139,138 |
2022 | 113,478 |
Thereafter | 469,005 |
Total minimum lease payments | $ 1,213,271 |
Mortgage Notes Payable, Credit Facilities and Senior Notes (Carrying Value of Debt) (Details) - USD ($) |
Mar. 31, 2018 |
Dec. 31, 2017 |
Nov. 10, 2017 |
Jul. 26, 2016 |
Sep. 29, 2015 |
Dec. 03, 2014 |
Dec. 09, 2013 |
---|---|---|---|---|---|---|---|
Debt Instrument [Line Items] | |||||||
Credit Facility | $ 156,544,000 | $ 140,329,000 | |||||
Senior Notes | 940,422,000 | 940,086,000 | |||||
Term Loan Agreement | |||||||
Debt Instrument [Line Items] | |||||||
Principal amount | 300,000,000 | 300,000,000 | $ 300,000,000 | ||||
Net unamortized deferred financing costs | (1,121,000) | (1,184,000) | |||||
Term Loan | 298,879,000 | 298,816,000 | |||||
Senior Notes Due 2024 | |||||||
Debt Instrument [Line Items] | |||||||
Principal amount | 250,000,000 | 250,000,000 | $ 250,000,000.0 | ||||
Unamortized debt discount | (2,498,000) | (2,578,000) | |||||
Net unamortized deferred financing costs | (1,479,000) | (1,535,000) | |||||
Senior Notes | 246,023,000 | 245,887,000 | |||||
Senior Notes Due 2023 | |||||||
Debt Instrument [Line Items] | |||||||
Principal amount | 250,000,000 | 250,000,000 | $ 250,000,000.0 | ||||
Unamortized debt discount | (2,642,000) | (2,737,000) | |||||
Net unamortized deferred financing costs | (1,501,000) | (1,567,000) | |||||
Senior Notes | 245,857,000 | 245,696,000 | |||||
Revolving Credit Facility | |||||||
Debt Instrument [Line Items] | |||||||
Credit facility | 159,500,000 | 143,500,000 | |||||
Net unamortized deferred financing costs | (2,956,000) | (3,171,000) | |||||
Credit Facility | 156,544,000 | 140,329,000 | |||||
Senior Notes | Senior Notes Due 2027 | |||||||
Debt Instrument [Line Items] | |||||||
Principal amount | 250,000,000 | 250,000,000 | $ 250,000,000 | ||||
Net unamortized deferred financing costs | (1,217,000) | (1,249,000) | |||||
Senior Notes | 248,783,000 | 248,751,000 | |||||
Senior Notes | Senior Notes Due 2026 | |||||||
Debt Instrument [Line Items] | |||||||
Principal amount | 200,000,000 | 200,000,000 | $ 200,000,000.0 | ||||
Net unamortized deferred financing costs | (241,000) | (248,000) | |||||
Senior Notes | $ 199,759,000 | $ 199,752,000 |
Preferred Stock of ROIC (Details Textual) - shares |
Mar. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Equity [Abstract] | ||
Preferred stock, shares authorized (in shares) | 50,000,000 | 50,000,000 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Common Stock of ROIC (Details Textual) |
3 Months Ended | 42 Months Ended | ||||
---|---|---|---|---|---|---|
Sep. 19, 2014
USD ($)
agreement
$ / shares
|
Mar. 31, 2018
USD ($)
$ / shares
shares
|
Mar. 31, 2017
USD ($)
|
Mar. 31, 2018
USD ($)
$ / shares
shares
|
Dec. 31, 2017
$ / shares
|
Jul. 31, 2013
USD ($)
|
|
Class of Stock [Line Items] | ||||||
Common stock, par value (in dollars per share) | $ / shares | $ 0.0001 | $ 0.0001 | $ 0.0001 | |||
Proceeds from the sale of common stock | $ 1,508,000 | $ 0 | ||||
Registration expenditures | $ 48,000 | $ 256,000 | ||||
Stock repurchase program, authorized amount | $ 50,000,000.0 | |||||
Sales Agreement | ||||||
Class of Stock [Line Items] | ||||||
Number of sales agreements entered into | agreement | 3 | |||||
Common stock, par value (in dollars per share) | $ / shares | $ 0.0001 | |||||
Common shares that may be sold under a sales agreement, aggregate offering price, maximum | $ 100,000,000.0 | |||||
Shares sold during the year (shares) | shares | 75,314 | 2,856,136 | ||||
Proceeds from the sale of common stock | $ 1,500,000 | $ 57,700,000 | ||||
Registration expenditures | $ 19,000 | $ 761,000 |
Stock Compensation for ROIC (Details Textual) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2018 |
Mar. 31, 2017 |
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Share-based compensation expense | $ 1.4 | $ 1.2 |
Restricted Stock | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Granted (shares) | 514,972 | |
Performance Shares | Vesting on January 1, 2021 | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Granted (shares) | 180,200 | |
The 2009 Plan | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Outstanding stock maximum (percentage) | 7.50% | |
Maximum number of shares (shares) | 4,000,000 |
Stock Compensation for ROIC (Status of Non-vested Restricted Stock Awards) (Details) - Restricted Stock |
3 Months Ended |
---|---|
Mar. 31, 2018
$ / shares
shares
| |
Shares | |
Beginning balance (shares) | shares | 781,467 |
Granted (shares) | shares | 514,972 |
Vested (shares) | shares | (274,608) |
Forfeited (shares) | shares | (14,998) |
Ending balance (shares) | shares | 1,006,833 |
Weighted Average Grant Date Fair Value | |
Beginning balance (in dollars per share) | $ / shares | $ 18.14 |
Granted (in dollars per share) | $ / shares | 16.09 |
Vested (in dollars per share) | $ / shares | 18.46 |
Forfeited (in dollars per share) | $ / shares | 17.59 |
Ending balance (in dollars per share) | $ / shares | $ 17.02 |
Capital of the Operating Partnership (Details Textual) - USD ($) $ / shares in Units, $ in Millions |
3 Months Ended | |||
---|---|---|---|---|
Mar. 31, 2018 |
Dec. 31, 2017 |
|||
Limited Partners' Capital Account [Line Items] | ||||
Partnership units (in shares) | 124,400,450 | |||
Limited Partnership (LP), ownership interest (percentage) | 90.60% | |||
Common stock, shares outstanding (in shares) | 112,721,459 | 112,347,451 | ||
Common Stock | ||||
Limited Partners' Capital Account [Line Items] | ||||
Common stock, shares outstanding (in shares) | 112,721,459 | 112,347,451 | ||
OP Units | ||||
Limited Partners' Capital Account [Line Items] | ||||
Non-controlling interest redemption value | $ 202.2 | |||
Redemption value (usd per share) | $ 17.31 | |||
Limited Partner’s Capital | Retail Opportunity Investments Partnership L.P. | ||||
Limited Partners' Capital Account [Line Items] | ||||
Partnership units (in shares) | [1] | 11,678,991 | ||
|
Fair Value of Financial Instruments (Interest Rate Swaps) (Details) - Derivatives designed as hedging instruments |
Mar. 31, 2018
USD ($)
|
---|---|
Bank of Montreal | Interest Rate Swap Maturing 1/31/2019 | |
Derivatives, Fair Value [Line Items] | |
Notional Amount | $ 50,000,000 |
Bank of Montreal | Interest Rate Swap Maturing 8/31/2022 | |
Derivatives, Fair Value [Line Items] | |
Notional Amount | 100,000,000 |
Regions Bank | Interest Rate Swap Maturing 1/31/2019 | |
Derivatives, Fair Value [Line Items] | |
Notional Amount | 50,000,000 |
U.S. Bank | Interest Rate Swap Maturing 8/31/2022 | |
Derivatives, Fair Value [Line Items] | |
Notional Amount | $ 100,000,000 |
Fair Value of Financial Instruments (Assets and Liabilities Measured at Fair Value on a Recurring Basis) (Details) - Interest Rate Swap - Fair Value, Measurements, Recurring - USD ($) $ in Thousands |
Mar. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Fair Value Inputs, Assets, Quantitative Information [Line Items] | ||
Derivative financial instruments | $ 7,594 | $ 4,321 |
Quoted Prices in Active Markets for Identical Assets and Liabilities (Level 1) | ||
Fair Value Inputs, Assets, Quantitative Information [Line Items] | ||
Derivative financial instruments | 0 | 0 |
Significant Other Observable Inputs (Level 2) | ||
Fair Value Inputs, Assets, Quantitative Information [Line Items] | ||
Derivative financial instruments | 7,594 | 4,321 |
Significant Unobservable Inputs (Level 3) | ||
Fair Value Inputs, Assets, Quantitative Information [Line Items] | ||
Derivative financial instruments | $ 0 | $ 0 |
Fair Value of Financial Instruments (Balance Sheet Classification) (Details) - USD ($) $ in Thousands |
Mar. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Other assets | Derivatives designed as hedging instruments | Interest Rate Swap | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Interest rate products | $ 7,594 | $ 4,321 |
(Location of Gain or Loss on Interest Rate Derivatives Designated as Cash Flow Hedges) (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2018 |
Mar. 31, 2017 |
|
Fair Value Disclosures [Abstract] | ||
Amount of gain recognized in OCI on derivatives | $ 3,390 | $ 161 |
Amount of gain reclassified from AOCI into interest | $ (418) | $ (555) |
Commitments and Contingencies (Details Textual) |
1 Months Ended | 28 Months Ended |
---|---|---|
Sep. 30, 2013 |
Mar. 31, 2017 |
|
Income Tax Contingency [Line Items] | ||
Tax protection agreements period (in years) | 10 years | |
Terranomics Crossroads Associates LP Member and SARM Five Points LLC | ||
Income Tax Contingency [Line Items] | ||
Tax protection agreements period (in years) | 12 years |
Commitments and Contingencies (Future Minimum Annual Lease Payments Under Operating Leases) (Details) $ in Thousands |
Mar. 31, 2018
USD ($)
|
---|---|
Future Minimum Annual Lease Payments | |
Remaining 2018 | $ 954 |
2019 | 1,278 |
2020 | 1,286 |
2021 | 1,282 |
2022 | 1,304 |
Thereafter | 35,347 |
Total minimum lease payments | $ 41,451 |
Related Party Transactions (Details Textual) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2018 |
Mar. 31, 2017 |
|
General and Administrative Expense | Related Party Lease Agreements | ||
Related Party Transaction [Line Items] | ||
SG&A expense | $ 15 | $ 13 |
Subsequent Events (Details Textual) |
Apr. 25, 2018
$ / shares
|
---|---|
Subsequent Event | |
Subsequent Event [Line Items] | |
Dividend declared (usd per share) | $ 0.1950 |
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