EX-99.1 2 roic-93023xpressreleasexex.htm EX-99.1 Document

Retail Opportunity Investments Corp.                 TRADED: NASDAQ: ROIC
11250 El Camino Real, Suite 200
San Diego, CA 92130

FOR IMMEDIATE RELEASE
Tuesday, October 24, 2023

Retail Opportunity Investments Corp. Reports
2023 Third Quarter Results

San Diego, CA, October 24, 2023 - Retail Opportunity Investments Corp. (NASDAQ:ROIC) announced today financial and operating results for the three and nine months ended September 30, 2023.

HIGHLIGHTS
•$8.4 million of net income attributable to common stockholders ($0.07 per diluted share)
•$36.0 million in Funds From Operations (FFO)(1) ($0.27 per diluted share)
•FFO per diluted share guidance for 2023 narrowed ($1.05 - $1.07 per diluted share)
•8.2% increase in same-center cash net operating income (3Q‘23 vs. 3Q‘22)
•98.2% portfolio lease rate at 9/30/23 (vs. 97.8% at 9/30/22)
•465,187 square feet of leases executed during 3Q‘23 (new and renewed)
•36.0% increase in same-space cash base rents on new leases (7.2% increase on renewals)
•1.5 million square feet of leases executed during first nine months of ‘23 (record activity)
•$350.0 million senior unsecured notes issued (due October 2028, 6.75% coupon)
•96.8% of total principal debt outstanding effectively fixed-rate at 9/30/23
•6.4x net principal debt-to-annualized EBITDA ratio for 3Q‘23
•$0.15 per share cash dividend declared
_____________________________________
(1) A reconciliation of GAAP net income to FFO is provided at the end of this press release.

Stuart A. Tanz, President and Chief Executive Officer of Retail Opportunity Investments Corp. stated, “During the third quarter, we continued to build on the leasing momentum that we established in the first of half of 2023. As a result, through the first nine months, we leased a record amount of space. Additionally, we continued to achieve solid releasing rent growth, with the third quarter being our strongest year-to-date in terms of same-space rent increases on both new leases and renewals.” Tanz added, “Looking ahead, we are working towards achieving a solid finish to 2023 and positioning our business and grocery-anchored portfolio for a strong start to 2024.”
FINANCIAL RESULTS SUMMARY
For the three months ended September 30, 2023, GAAP net income attributable to common stockholders was $8.4 million, or $0.07 per diluted share, as compared to GAAP net income attributable to common stockholders of $18.5 million, or $0.15 per diluted share, for the three months ended September 30, 2022. For the nine months ended September 30, 2023, GAAP net income attributable to common stockholders was $26.5 million, or $0.21 per diluted share, as compared to GAAP net income attributable to common stockholders of $41.7 million, or $0.33 per diluted share, for the nine months ended September 30, 2022. Included in 2022 GAAP net income was a $7.7 million gain on sale of real estate for both the three and nine months ended September 30, 2022.

FFO for the third quarter of 2023 was $36.0 million, or $0.27 per diluted share, as compared to $36.5 million in FFO, or $0.27 per diluted share for the third quarter of 2022. FFO for the first nine months of 2023 was $105.4 million, or $0.79


per diluted share, as compared to $109.4 million in FFO, or $0.83 per diluted share for the first nine months of 2022. ROIC reports FFO as a supplemental performance measure in accordance with the definition set forth by the National Association of Real Estate Investment Trusts. A reconciliation of GAAP net income to FFO is provided at the end of this press release.

For the third quarter of 2023, same-center net operating income (NOI) was $55.5 million, as compared to $51.2 million in same-center NOI for the third quarter of 2022, representing an 8.2% increase. For the first nine months of 2023, same-center NOI increased 3.6% as compared to same-center NOI for the first nine months of 2022. ROIC reports same-center comparative NOI on a cash basis. A reconciliation of GAAP operating income to same-center comparative NOI is provided at the end of this press release.

In September 2023, ROIC issued, through its operating partnership, $350.0 million of senior unsecured notes. The notes bear interest at a fixed rate of 6.75% and mature in October 2028. ROIC expects to utilize a portion of the net proceeds to fully retire its operating partnership’s $250.0 million senior notes (due December 2023). Additionally, ROIC utilized a portion of the net proceeds to reduce borrowings outstanding on its unsecured term loan and unsecured revolving credit facility.

At September 30, 2023, ROIC had total real estate assets (before accumulated depreciation) of approximately $3.4 billion and approximately $1.4 billion of net principal debt outstanding (total principal debt less cash and equivalents). For the third quarter of 2023, ROIC’s net principal debt-to-annualized EBITDA ratio was 6.4 times, and 96.8% of its total principal debt outstanding was effectively fixed-rate at September 30, 2023.
PROPERTY OPERATIONS SUMMARY
At September 30, 2023, ROIC’s portfolio was 98.2% leased. During the third quarter of 2023, ROIC executed 95 leases, totaling 465,187 square feet, including 34 new leases, totaling 155,585 square feet, achieving a 36.0% increase in same-space comparative base rent, and 61 renewed leases, totaling 309,602 square feet, achieving a 7.2% increase in base rent. ROIC reports same-space comparative new lease and renewal base rents on a cash basis.
DIVIDEND SUMMARY
On October 6, 2023, ROIC distributed a $0.15 per share cash dividend. On October 24, 2023, the Board declared a cash dividend of $0.15 per share, payable on January 5, 2024 to stockholders of record on December 15, 2023.


2023 GUIDANCE SUMMARY
ROIC currently estimates that GAAP net income for 2023 will be within the range of $0.28 to $0.30 per diluted share, and FFO will be within the range of $1.05 to $1.07 per diluted share.

Year Ended December 31, 2023
Initial (2/15/23)Current
Low EndHigh EndLow EndHigh End
(unaudited, amounts in thousands except per share and percentage data)
GAAP net income applicable to stockholders$43,709 $54,526 $34,693 $37,316 
Funds from operations (FFO) – diluted$139,650 $150,700 $139,860 $142,524 
GAAP net income per diluted share$0.35 $0.43 $0.28 $0.30 
FFO per diluted share$1.05 $1.11 $1.05 $1.07 
Key Drivers
General and administrative expenses$23,000 $22,000 $23,000 $22,000 
Interest expense and other finance expenses$68,000 $73,000 $73,250 $73,250 
Straight-line rent$1,000 $1,000 $2,000 $2,500 
Amortization of above- and below-market rent$10,000 $10,000 $10,000 $10,500 
Bad debt$5,000 $3,000 $4,000 $3,500 
Acquisitions$100,000 $200,000 $— $— 
Dispositions$200,000 $50,000 $15,000 $— 
Same-center cash NOI growth2.0 %5.0 %3.0 %4.0 %
ROIC’s management will discuss guidance, and the underlying assumptions, on ROIC’s October 25, 2023 conference call. ROIC’s guidance is a forward-looking statement and is subject to risks and other factors noted elsewhere in this press release.
CONFERENCE CALL
ROIC will conduct a conference call to discuss its results on Wednesday, October 25, 2023 at 9:00 a.m. Eastern Time / 6:00 a.m. Pacific Time.

To participate in the conference call, click on the following link (ten minutes prior to the call) to register:
https://register.vevent.com/register/BI38ddda3155334a659306e46354049ebd

Once registered, participants will have the option of: 1) dialing in from their phone (using a PIN); or 2) clicking the “Call Me” option to receive an automated call directly to their phone.

The conference call will also be available live (in a listen-only mode) at: https://edge.media-server.com/mmc/p/2hpfahit

The conference call will be recorded and available for replay following the conclusion of the live broadcast and will be accessible up to one year on ROIC’s website, specifically on its Investor Relations Events & Presentations page:
https://investor.roicreit.com/events-presentations
ABOUT RETAIL OPPORTUNITY INVESTMENTS CORP.
Retail Opportunity Investments Corp. (NASDAQ: ROIC), is a fully-integrated, self-managed real estate investment trust (REIT) that specializes in the acquisition, ownership and management of grocery-anchored shopping centers located in densely-populated, metropolitan markets across the West Coast. As of September 30, 2023, ROIC owned 93 shopping centers encompassing approximately 10.6 million square feet. ROIC is the largest publicly-traded, grocery-anchored


shopping center REIT focused exclusively on the West Coast. ROIC is a member of the S&P SmallCap 600 Index and has investment-grade corporate debt ratings from Moody's Investor Services, S&P Global Ratings and Fitch Ratings, Inc. Additional information is available at: www.roireit.net.

When used herein, the words "believes," "anticipates," "projects," "should," "estimates," "expects," “guidance” and similar expressions are intended to identify forward-looking statements with the meaning of that term in Section 27A of the Securities Act of 1933, as amended, and in Section 21F of the Securities and Exchange Act of 1934, as amended. Certain statements contained herein may constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results of ROIC to differ materially from future results expressed or implied by such forward-looking statements. Information regarding such risks and factors is described in ROIC's filings with the SEC, including its most recent Annual Report on Form 10-K, which is available at: www.roireit.net.


RETAIL OPPORTUNITY INVESTMENTS CORP.
Consolidated Balance Sheets
(In thousands, except share data)
September 30, 2023
(unaudited)		December 31, 2022
ASSETS  
Real Estate Investments:  
Land$958,419 $958,236 
Building and improvements2,476,389 2,452,857 
 3,434,808 3,411,093 
Less:  accumulated depreciation632,087 578,593 
2,802,721 2,832,500 
Mortgage note receivable4,718 4,786 
Real Estate Investments, net2,807,439 2,837,286 
Cash and cash equivalents205,260 5,598 
Restricted cash2,252 1,861 
Tenant and other receivables, net58,923 57,546 
Deposits— 500 
Acquired lease intangible assets, net45,636 52,428 
Prepaid expenses1,627 5,957 
Deferred charges, net28,585 26,683 
Other assets17,465 16,420 
Total assets$3,167,187 $3,004,279 
LIABILITIES AND EQUITY  
Liabilities:  
Term loan$199,684 $299,253 
Credit facility— 88,000 
Senior Notes1,293,012 946,849 
Mortgage notes payable60,271 60,917 
Acquired lease intangible liabilities, net142,356 152,117 
Accounts payable and accrued expenses64,466 22,885 
Tenants’ security deposits7,993 7,701 
Other liabilities39,500 41,959 
Total liabilities1,807,282 1,619,681 
Commitments and contingencies
Equity:  
Preferred stock, $0.0001 par value 50,000,000 shares authorized; none issued and outstanding— — 
Common stock, $0.0001 par value, 500,000,000 shares authorized; 126,001,795 and 124,538,811 shares issued and outstanding at September 30, 2023 and December 31, 2022, respectively
13 12 
Additional paid-in capital1,628,663 1,612,126 
Accumulated dividends in excess of earnings(346,260)(315,984)
Accumulated other comprehensive income1,270 14 
Total Retail Opportunity Investments Corp. stockholders’ equity1,283,686 1,296,168 
Non-controlling interests76,219 88,430 
Total equity1,359,905 1,384,598 
Total liabilities and equity$3,167,187 $3,004,279 


RETAIL OPPORTUNITY INVESTMENTS CORP.
Consolidated Statements of Operations
(Unaudited)
(In thousands, except per share data)

 Three Months Ended September 30,Nine Months Ended September 30,
 2023202220232022
Revenues  
Rental revenue$78,273 $77,420 $236,902 $229,675 
Other income3,472 618 6,179 3,061 
Total revenues81,745 78,038 243,081 232,736 
Operating expenses
Property operating13,210 12,705 40,993 37,468 
Property taxes8,909 8,876 26,677 25,812 
Depreciation and amortization27,050 24,332 77,280 72,444 
General and administrative expenses5,492 5,203 16,588 16,145 
Other expense157 111 811 778 
Total operating expenses54,818 51,227 162,349 152,647 
Gain on sale of real estate— 7,653 — 7,653 
Operating income26,927 34,464 80,732 87,742 
Non-operating expenses  
Interest expense and other finance expenses(17,998)(14,678)(52,589)(43,176)
Net income8,929 19,786 28,143 44,566 
Net income attributable to non-controlling interests(501)(1,264)(1,644)(2,896)
Net Income Attributable to Retail Opportunity Investments Corp.$8,428 $18,522 $26,499 $41,670 
Earnings per share – basic$0.07 $0.15 $0.21 $0.34 
Earnings per share – diluted
$0.07 $0.15 $0.21 $0.33 
Dividends per common share$0.15 $0.15 $0.45 $0.41 





CALCULATION OF FUNDS FROM OPERATIONS
(Unaudited)
(In thousands)

Three Months Ended September 30,Nine Months Ended September 30,
2023202220232022
Net income attributable to ROIC$8,428 $18,522 $26,499 $41,670 
Plus:  Depreciation and amortization27,050 24,332 77,280 72,444 
Less: Gain on sale of real estate— (7,653)— (7,653)
Funds from operations – basic35,478 35,201 103,779 106,461 
Net income attributable to non-controlling interests501 1,264 1,644 2,896 
Funds from operations – diluted$35,979 $36,465 $105,423 $109,357 

SAME-CENTER CASH NET OPERATING INCOME ANALYSIS
(Unaudited)
(In thousands, except number of shopping centers and percentages)

Three Months Ended September 30,Nine Months Ended September 30,
20232022$ Change% Change20232022$ Change% Change
Number of shopping centers included in same-center analysis90 90 87 87 
Same-center leased rate98.1 %98.1 %— %98.1 %98.0 %0.1 %
Revenues:
Base rents$55,324 $53,990 $1,334 2.5 %$162,912 $158,652 $4,260 2.7 %
Percentage rent419 199 220 110.6 %1,055 554 501 90.4 %
Recoveries from tenants19,327 18,520 807 4.4 %57,545 54,346 3,199 5.9 %
Other property income3,090 441 2,649 600.7 %4,497 2,314 2,183 94.3 %
Bad debt(767)(568)(199)35.0 %(2,416)(1,287)(1,129)87.7 %
Total Revenues77,393 72,582 4,811 6.6 %223,593 214,579 9,014 4.2 %
Operating Expenses
Property operating expenses13,261 12,646 615 4.9 %40,122 37,158 2,964 8.0 %
Property taxes8,682 8,701 (19)(0.2)%25,616 25,084 532 2.1 %
Total Operating Expenses21,943 21,347 596 2.8 %65,738 62,242 3,496 5.6 %
Same-Center Cash Net Operating Income$55,450 $51,235 $4,215 8.2 %$157,855 $152,337 $5,518 3.6 %



SAME-CENTER CASH NET OPERATING INCOME RECONCILIATION
(Unaudited)
(In thousands)

 Three Months Ended September 30,Nine Months Ended September 30,
 2023202220232022
GAAP operating income$26,927 $34,464 $80,732 $87,742 
Depreciation and amortization27,050 24,332 77,280 72,444 
General and administrative expenses5,492 5,203 16,588 16,145 
Other expense157 111 811 778 
Gain on sale of real estate— (7,653)— (7,653)
Straight-line rent(362)(922)(1,688)(2,288)
Amortization of above- and below-market rent(2,118)(2,906)(7,591)(9,218)
Property revenues and other expenses (1)
138 (16)(523)(176)
Total Company cash NOI57,284 52,613 165,609 157,774 
Non same-center cash NOI(1,834)(1,378)(7,754)(5,437)
Same-center cash NOI$55,450 $51,235 $157,855 $152,337 
____________________
(1)Includes anchor lease termination fees, net of contractual amounts, if any, expense and recovery adjustments related to prior periods and other miscellaneous adjustments.

NON-GAAP DISCLOSURES
Funds from operations (“FFO”), is a widely recognized non-GAAP financial measure for REITs that the Company believes when considered with financial statements presented in accordance with GAAP, provides additional and useful means to assess its financial performance. FFO is frequently used by securities analysts, investors and other interested parties to evaluate the performance of REITs, most of which present FFO along with net income as calculated in accordance with GAAP. The Company computes FFO in accordance with the “White Paper” on FFO published by the National Association of Real Estate Investment Trusts (“NAREIT”), which defines FFO as net income attributable to common stockholders (determined in accordance with GAAP) excluding gains or losses from debt restructuring, sales of depreciable property and impairments, plus real estate related depreciation and amortization, and after adjustments for partnerships and unconsolidated joint ventures.

The Company uses cash net operating income (“NOI”) internally to evaluate and compare the operating performance of the Company’s properties. The Company believes cash NOI provides useful information to investors regarding the Company’s financial condition and results of operations because it reflects only those income and expense items that are incurred at the property level, and when compared across periods, can be used to determine trends in earnings of the Company’s properties as this measure is not affected by the non-cash revenue and expense recognition items, the cost of the Company’s funding, the impact of depreciation and amortization expenses, gains or losses from the acquisition and sale of operating real estate assets, general and administrative expenses or other gains and losses that relate to the Company’s ownership of properties. The Company believes the exclusion of these items from operating income is useful because the resulting measure captures the actual revenue generated and actual expenses incurred in operating the Company’s properties as well as trends in occupancy rates, rental rates and operating costs. Cash NOI is a measure of the operating performance of the Company’s properties but does not measure the Company’s performance as a whole and is therefore not a substitute for net income or operating income as computed in accordance with GAAP. The Company defines cash NOI as operating revenues (base rent and recoveries from tenants), less property and related expenses (property operating expenses and property taxes), adjusted for non-cash revenue and operating expense items such as straight-line rent and amortization of lease intangibles, debt-related expenses and other adjustments. Cash NOI also excludes general and administrative expenses, depreciation and amortization, acquisition transaction costs, other expense, interest expense, gains and losses from property acquisitions and dispositions, extraordinary items, tenant improvements


and leasing commissions. Other REITs may use different methodologies for calculating cash NOI, and accordingly, the Company’s cash NOI may not be comparable to other REITs.

Contact:
Nicolette O’Leary
Director of Investor Relations
858-677-0900
noleary@roireit.net