EX-99.1 2 rvi-ex991_70.htm EX-99.1 rvi-ex991_70.htm

 

Exhibit 99.1

Retail Value Inc. Quarterly Financial Supplement For the period ended September 30, 2021 rvi

R

 

 

 

Retail Value Inc.

Table of Contents

 

Section

Page

 

 

Earnings Release & Financial Statements

 

Press Release

1-7

 

 

Company Summary

 

Portfolio Summary

8

Property List

9

Top 10 Tenants

9

 

Investments

 

Dispositions

10

 

 

Debt Summary

 

Capital Structure

11

 

 

Reporting Policies and Other

 

Notable Accounting and Supplemental Policies

12-13

Non-GAAP Measures

14-15

 

 

 

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

 

 

 

 

 

 

 

 

Retail Value Inc.

For additional information:

 

 

3300 Enterprise Parkway

Christa Vesy, EVP and

Beachwood, OH 44122
216-755-5500

Chief Financial Officer

 

 

Retail Value Inc. Reports Third Quarter 2021 Operating Results

 

BEACHWOOD, OHIO, November 3, 2021 – Retail Value Inc. (NYSE: RVI) today announced operating results for the quarter ended September 30, 2021.  

 

Financial Results for the Quarter

 

•

Third quarter 2021 net income attributable to common shareholders was $21.0 million, or $0.99 per diluted share, as compared to net loss of $69.0 million, or $3.48 per diluted share, in the year-ago period. The period-over-period increase in net income is primarily attributable to the reduction of impairment charges in 2021 compared to 2020, higher gain on disposition of real estate, lower interest expense and the impact of the COVID-19 pandemic.  

 

•

Third quarter 2021 operating funds from operations attributable to common shareholders (“Operating FFO” or “OFFO”) was $13.5 million, or $0.64 per diluted share, compared to $14.6 million, or $0.74 per diluted share, in the year-ago period. The period-over-period decrease in OFFO is primarily attributable to the impact of asset sales offset by the impact of the COVID‑19 pandemic and lower interest expense. Third quarter results included $1.4 million of net revenue related to prior periods primarily from cash basis tenants.

 

•

The continental U.S. leased rate was 89.5% at September 30, 2021 as compared to 89.6% at June 30, 2021.

 

Significant Third Quarter and Recent Transaction Activity

 

•

Sold the Company’s remaining interests in nine assets in Puerto Rico for $550.0 million (Puerto Rico operating results reflected as “discontinued operations” on a retrospective basis).

 

•

Repaid the outstanding balance on its mortgage loan of $214.5 million and all restricted cash balances were released to the Company by the loan’s servicer.

 

•

In October 2021, sold five assets in the continental U.S. for $264.0 million.

 

•

In October 2021, the Company paid a dividend on the Company’s Series A Preferred Shares (the “RVI Preferred Shares”) in the aggregate amount of $190.0 million.

 

•

In October 2021, the Company paid a cash dividend of $22.04 per common share. The total dividend paid on account of the common shares was $465.4 million.

 

•

In November 2021, the Company entered into a contract to sell Green Ridge Square in Grand Rapids, Michigan for $23.3 million in cash, subject to adjustment for certain closing pro-rations, allocations, credits, closing costs and escrows. Closing remains subject to customary conditions and is expected to occur by the end of 2021.

 

Key Third Quarter Operating Results

The operating metrics as of September 30, 2021, for the Company’s three remaining assets (Green Ridge Square, Crossroads Centers and Willowbrook Plaza) are as follows:

 

Shopping Center Count

 

3

Gross Leasable Area - Owned (thousands)

 

1,156

Base Rent PSF

 

$14.02

Leased Rate

 

87.6%

Commenced Rate

 

84.8%

3Q21 Net Operating Income

   excluding $0.2 of uncollectible

   revenue (millions)

 

$2.9

1

 

 

 

Impact of the COVID-19 Pandemic

 

•

At September 30, 2021, the balance sheet reflects $0.6 million of net deferred rents outstanding for tenants with payment plans that are not accounted for on the cash basis. This includes balances due from tenants at sold properties.

About RVI

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

Non-GAAP Measures

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

 

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

 

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

 

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

 

Safe Harbor

RVI considers portions of the information in this press release to be forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, both as amended, with respect to the Company's expectation for future periods. Although the Company believes that the expectations reflected in such forward-looking statements are based upon reasonable assumptions, it can give no assurance that its expectations will be achieved. For this purpose, any statements contained herein that are not historical fact may be deemed to be forward-looking statements. There are a number of important factors that could cause our results to differ materially from those indicated by such forward-looking statements, including, among other factors, the impact of the COVID-19 pandemic on our ability to manage our properties and finance our operations and on tenants’ ability to operate their businesses, generate sales and meet their financial obligations, including the obligation to pay ongoing and deferred rents; our ability to sell our remaining assets on commercially reasonable terms; property damage, expenses related thereto and other business and economic consequences (including the potential loss of rental revenues) resulting from extreme weather conditions and natural disasters in locations where we own properties, and the ability to estimate accurately the amounts thereof; sufficiency and timing of any insurance recovery payments related to damages from extreme weather conditions and natural disasters; local conditions such as an increase in the supply of, or a reduction in demand for, retail real estate in the area; the impact of e-commerce; dependence on rental income from real property; the loss of, significant downsizing of or bankruptcy of a major tenant and the impact of any such event on rental income from other tenants at our properties; impairment charges; the ability to secure and maintain management services provided to us, including pursuant to our external management

2

 

 

agreement with one or more subsidiaries of SITE Centers; and our ability to maintain our REIT status. For additional factors that could cause the results of the Company to differ materially from those indicated in the forward-looking statements, please refer to the Company’s most recent report on Forms 10-K and 10-Q. The impacts of the COVID-19 pandemic may also exacerbate the risks described therein, any of which could have a material effect on the Company. The Company undertakes no obligation to publicly revise these forward-looking statements to reflect events or circumstances that arise after the date hereof.

 

3

 

Retail Value Inc.

Income Statement

 

 

 

 

in thousands, except per share

 

 

 

 

 

 

 

 

 

3Q21

 

3Q20

 

9M21

 

9M20

 

 

 

 

 

 

 

 

 

 

Revenues:

 

 

 

 

 

 

 

 

Rental income (1)

$14,718

 

$18,988

 

$50,479

 

$63,774

 

Straight-line rent (1)

(59)

 

378

 

(258)

 

(400)

 

Other property revenues

(31)

 

33

 

38

 

31

 

 

14,628

 

19,399

 

50,259

 

63,405

 

Expenses:

 

 

 

 

 

 

 

 

Operating and maintenance

1,922

 

2,403

 

6,485

 

8,947

 

Property Management fees

675

 

850

 

2,076

 

3,049

 

Real estate taxes

2,661

 

4,091

 

8,562

 

12,878

 

 

5,258

 

7,344

 

17,123

 

24,874

 

 

 

 

 

 

 

 

 

 

Net operating income (1)

9,370

 

12,055

 

33,136

 

38,531

 

 

 

 

 

 

 

 

 

 

Other income (expense):

 

 

 

 

 

 

 

 

Asset management fees

(731)

 

(997)

 

(2,425)

 

(3,633)

 

Interest expense, net

(2,039)

 

(4,109)

 

(7,897)

 

(14,797)

 

Depreciation and amortization

(4,439)

 

(6,538)

 

(16,127)

 

(22,729)

 

General and administrative

(874)

 

(860)

 

(2,997)

 

(2,861)

 

Impairment charges

(1,573)

 

(16,640)

 

(1,573)

 

(43,460)

 

Debt extinguishment costs, net

(5,158)

 

(440)

 

(6,307)

 

(4,417)

 

Other income, net

0

 

0

 

0

 

0

 

Gain on disposition of real estate, net

37

 

8,324

 

1,882

 

21,956

 

Loss before other items

(5,407)

 

(9,205)

 

(2,308)

 

(31,410)

 

Tax expense

(50)

 

(59)

 

(193)

 

(184)

 

Loss from continuing operations

(5,457)

 

(9,264)

 

(2,501)

 

(31,594)

 

Income (loss) from discontinued operations (2)

26,466

 

(59,741)

 

(42,862)

 

(52,464)

 

Net income (loss)

$21,009

 

($69,005)

 

($45,363)

 

($84,058)

 

 

 

 

 

 

 

 

 

 

Weighted average shares – Basic & Diluted – EPS

21,117

 

19,829

 

21,043

 

19,798

 

 

 

 

 

 

 

 

 

 

Basic and Diluted:

 

 

 

 

 

 

 

 

Loss per common share – Continuing operations

$(0.26)

 

$(0.47)

 

$(0.12)

 

$(1.60)

 

Income (loss) per common share – Discontinued operations

1.25

 

(3.01)

 

(2.04)

 

(2.65)

 

Net income (loss) per common share

$0.99

 

$(3.48)

 

$(2.16)

 

$(4.25)

 

 

 

 

 

 

 

 

 

(1)

Activity for the three remaining properties was as follows (Green Ridge Square, Crossroads Center and Willowbrook Plaza):

 

 

 

Uncollectible revenue (included in rental income)

($208)

 

($1,177)

 

$2,600

 

($3,057)

 

Straight-line rent

(15)

 

50

 

(54)

 

(558)

 

Net operating income

2,683

 

2,048

 

11,390

 

6,397

 

 

 

 

 

 

 

 

 

(2)

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

 

4

 

Retail Value Inc.

Other Financial Information

 

 

 

in thousands, except per share

 

 

 

 

 

 

 

3Q21

 

3Q20

 

9M21

 

9M20

 

 

 

 

 

 

 

 

 

 

Net income (loss) attributable to Common Shareholders

$21,009

 

($69,005)

 

($45,363)

 

($84,058)

 

Depreciation and amortization of real estate

8,057

 

13,780

 

32,585

 

44,427

 

Impairment of real estate

1,573

 

77,795

 

82,633

 

104,615

 

Gain on disposition of real estate, net

(24,146)

 

(8,324)

 

(25,687)

 

(21,956)

 

FFO attributable to Common Shareholders

$6,493

 

$14,246

 

$44,168

 

$43,028

 

Debt extinguishment, transaction, other, net

7,016

 

333

 

8,061

 

3,976

 

Operating FFO attributable to Common Shareholders

$13,509

 

$14,579

 

$52,229

 

$47,004

 

 

 

 

 

 

 

 

 

 

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

21,117

 

19,829

 

21,043

 

19,798

 

 

 

 

 

 

 

 

 

 

FFO per share – Basic & Diluted

$0.31

 

$0.72

 

$2.10

 

$2.17

 

Operating FFO per share – Basic & Diluted

$0.64

 

$0.74

 

$2.48

 

$2.37

 

Common stock dividends declared, per share

N/A

 

N/A

 

N/A

 

N/A

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

Loan cost amortization

(429)

 

(883)

 

(1,923)

 

(2,817)

 

 

 

 

 

 

 

 

 

 

Capital expenditures (including properties reported as discontinued operations):

 

 

 

 

 

Maintenance capital expenditures

590

 

471

 

1,817

 

1,134

 

Tenant allowances and landlord work

2,282

 

1,618

 

3,555

 

3,229

 

Leasing commissions - SITE Centers

306

 

288

 

1,701

 

1,992

 

Leasing commissions - external

311

 

71

 

498

 

226

 

Hurricane restorations

87

 

1,875

 

2,421

 

9,887

 

5

 

Retail Value Inc.

Other Financial Information

 

 

 

in thousands, except per share

 

 

 

 

 

 

 

 

 

Continental U.S.

 

 

3Q21

 

3Q20

 

9M21

 

9M20

 

Revenues:

 

 

 

 

 

 

 

 

Minimum rents

$9,859

 

$14,795

 

$31,641

 

$46,895

 

Ground lease minimum rents

795

 

1,082

 

2,431

 

3,386

 

Percentage and overage rent

22

 

147

 

275

 

250

 

Recoveries

3,671

 

5,402

 

12,050

 

17,981

 

Uncollectible revenue

29

 

(2,229)

 

3,173

 

(6,279)

 

Ancillary and other rental income

222

 

169

 

504

 

641

 

Lease termination fees

61

 

0

 

147

 

500

 

Other property revenues

(31)

 

33

 

38

 

31

 

 

14,628

 

19,399

 

50,259

 

63,405

 

Expenses:

 

 

 

 

 

 

 

 

Operating and maintenance

1,922

 

2,403

 

6,485

 

8,947

 

Property management fees

675

 

850

 

2,076

 

3,049

 

Real estate taxes

2,661

 

4,091

 

8,562

 

12,878

 

 

5,258

 

7,344

 

17,123

 

24,874

 

 

 

 

 

 

 

 

 

 

Net operating income (1)

9,370

 

12,055

 

33,136

 

38,531

 

 

 

 

 

 

 

 

 

 

Other income (expense):

 

 

 

 

 

 

 

 

Asset management fees

(731)

 

(997)

 

(2,425)

 

(3,633)

 

Interest expense, net

(2,039)

 

(4,109)

 

(7,897)

 

(14,797)

 

Depreciation and amortization

(4,439)

 

(6,538)

 

(16,127)

 

(22,729)

 

General and administrative (not allocated to segment)

N/A

 

N/A

 

N/A

 

N/A

 

Impairment charges

(1,573)

 

(16,640)

 

(1,573)

 

(43,460)

 

Debt extinguishment costs, net

(5,158)

 

(440)

 

(6,307)

 

(4,417)

 

Gain on disposition of real estate, net (2)

37

 

8,324

 

1,882

 

21,956

 

Tax expense

(50)

 

(59)

 

(193)

 

(184)

 

Net (loss) income

($4,583)

 

($8,404)

 

$496

 

($28,733)

 

 

 

 

 

 

 

 

 

(1)

NOI from assets sold or held for sale

6,745

 

10,156

 

21,820

 

32,033

(2)

SITE Centers disposition fees for assets sold

0

 

856

 

547

 

2,622

 

 

Puerto Rico (Discontinued Operations)

 

 

3Q21

 

3Q20

 

9M21

 

9M20

 

Revenues:

 

 

 

 

 

 

 

 

Minimum rents

$7,945

 

$14,565

 

$34,220

 

$44,203

 

Ground lease minimum rents

1,065

 

2,048

 

4,472

 

6,062

 

Percentage and overage rent

198

 

277

 

2,040

 

1,229

 

Recoveries

3,427

 

5,993

 

14,917

 

18,130

 

Uncollectible revenue

1,383

 

(3,912)

 

1,317

 

(7,540)

 

Ancillary and other rental income

855

 

1,627

 

3,837

 

4,116

 

Lease termination fees

1,310

 

0

 

3,097

 

19

 

Other property revenues

(5)

 

19

 

17

 

53

 

 

16,178

 

20,617

 

63,917

 

66,272

 

Expenses:

 

 

 

 

 

 

 

 

Operating and maintenance

4,824

 

7,168

 

19,037

 

21,313

 

Property management fees

1,406

 

1,558

 

4,533

 

4,477

 

Real estate taxes

686

 

1,227

 

2,808

 

3,642

 

 

6,916

 

9,953

 

26,378

 

29,432

 

 

 

 

 

 

 

 

 

 

Net operating income (1)

9,262

 

10,664

 

37,539

 

36,840

 

 

 

 

 

 

 

 

 

 

Other income (expense):

 

 

 

 

 

 

 

 

Asset management fees

(889)

 

(1,005)

 

(2,736)

 

(3,017)

 

Interest expense, net

(485)

 

(1,066)

 

(2,055)

 

(3,330)

 

Depreciation and amortization

(3,629)

 

(7,259)

 

(16,503)

 

(21,749)

 

General and administrative (not allocated to segment)

N/A

 

N/A

 

N/A

 

N/A

 

Impairment charges

0

 

(61,155)

 

(81,060)

 

(61,155)

 

Debt extinguishment costs, net

(1,858)

 

0

 

(1,951)

 

0

 

Other expense, net

0

 

107

 

197

 

441

 

Gain on disposition of real estate, net (2)

24,109

 

0

 

23,805

 

0

 

Tax expense

(44)

 

(27)

 

(98)

 

(494)

 

Net income (loss)

$26,466

 

($59,741)

 

($42,862)

 

($52,464)

 

 

 

 

 

 

 

 

 

(1)

NOI from assets sold

9,262

 

10,664

 

37,539

 

36,840

(2)

SITE Centers disposition fees for assets sold

5,500

 

0

 

5,545

 

0

 

 

 

6

 

Retail Value Inc.

Balance Sheet

 

 

 

$ in thousands

 

 

 

 

 

At Period End

 

 

3Q21

 

4Q20

 

Assets:

 

 

 

 

Land

$10,442

 

$106,708

 

Buildings

99,141

 

421,401

 

Fixtures and tenant improvements

22,755

 

68,795

 

 

132,338

 

596,904

 

Depreciation

(67,377)

 

(253,565)

 

 

64,961

 

343,339

 

Construction in progress

2,341

 

321

 

Real estate, net

67,302

 

343,660

 

 

 

 

 

 

Cash

460,949

 

56,849

 

Restricted cash

0

 

115,939

 

Receivables and straight-line (1)

7,960

 

15,007

 

Intangible assets, net (2)

4,391

 

9,452

 

Other assets, net (3)

4,672

 

5,767

 

Assets related to discontinued operations

0

 

649,202

 

Real estate assets and other assets held for sale

240,682

 

0

 

Total Assets

785,956

 

1,195,876

 

 

 

 

 

 

Liabilities and Equity:

 

 

 

 

Secured debt

0

 

258,795

 

Dividends payable

0

 

23,002

 

Other liabilities (4)

17,433

 

25,848

 

Liabilities related to discontinued operations

0

 

98,445

 

Liabilities held for sale

4,698

 

0

 

Total Liabilities

22,131

 

406,090

 

 

 

 

 

 

Redeemable preferred equity

190,000

 

190,000

 

 

 

 

 

 

Common shares

2,112

 

1,983

 

Paid-in capital

740,517

 

721,234

 

Distributions in excess of net income

(168,791)

 

(123,428)

 

Common shares in treasury at cost

(13)

 

(3)

 

Total Equity

573,825

 

599,786

 

 

 

 

 

 

Total Liabilities and Equity

$785,956

 

$1,195,876

 

 

 

 

 

(1)

Tenant receivables - continental U.S.

550

 

N/A

 

Tenant receivables - Puerto Rico

588

 

N/A

 

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

867

 

N/A

 

Property insurance receivable

2,615

 

N/A

 

Other receivables

3,340

 

N/A

 

 

 

 

 

(2)

Operating lease right of use asset

1,108

 

N/A

 

 

 

 

 

(3)

Note receivable

3,000

 

N/A

 

 

 

 

 

(4)

Operating lease liabilities

2,140

 

N/A

 

Below-market leases, net

6,876

 

N/A

 

 

 

 

 

 

Prior year footnote amounts are not presented due to impact of discontinued operations and held for sale classification.

 

 

 

 

7

 

Retail Value Inc.

Portfolio Summary

 

 

 

GLA in thousands

 

 

 

 

 

 

 

 

 

 

 

9/30/2021

 

6/30/2021

 

3/31/2021

 

12/31/2020

 

9/30/2020

 

Shopping Center Count

 

 

 

 

 

 

 

 

 

 

Operating Centers

8

 

17

 

22

 

22

 

23

 

Continental U.S.

8

 

8

 

11

 

11

 

11

 

Puerto Rico

0

 

9

 

11

 

11

 

12

 

 

 

 

 

 

 

 

 

 

 

 

Gross Leasable Area (GLA)

 

 

 

 

 

 

 

 

 

 

Owned and Ground Lease

3,779

 

7,316

 

8,451

 

8,451

 

8,905

 

Continental U.S.

3,779

 

3,779

 

4,533

 

4,533

 

4,539

 

Puerto Rico

N/A

 

3,537

 

3,918

 

3,918

 

4,366

 

Unowned

865

 

1,131

 

1,131

 

1,131

 

1,125

 

 

 

 

 

 

 

 

 

 

 

 

Quarterly Operational Overview

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Continental U.S.

 

 

 

 

 

 

 

 

 

 

Base Rent PSF

$13.43

 

$13.41

 

$13.17

 

$13.35

 

$13.31

 

Leased Rate

89.5%

 

89.6%

 

86.7%

 

88.9%

 

90.7%

 

Leased Rate < 10K SF

69.2%

 

69.8%

 

67.2%

 

68.8%

 

70.4%

 

Leased Rate > 10K SF

94.1%

 

94.1%

 

90.9%

 

93.2%

 

95.1%

 

 

 

 

 

 

 

 

 

 

 

 

Puerto Rico

 

 

 

 

 

 

 

 

 

 

Base Rent PSF

N/A

 

$19.40

 

$19.60

 

$19.95

 

$19.72

 

Leased Rate

N/A

 

92.2%

 

88.3%

 

89.2%

 

87.6%

 

Leased Rate < 10K SF

N/A

 

77.0%

 

76.1%

 

79.2%

 

79.5%

 

Leased Rate > 10K SF

N/A

 

99.5%

 

94.0%

 

94.0%

 

91.4%

 

 

 

 

 

 

 

 

 

 

 

 

Operational Statistics

 

 

 

 

 

 

 

 

 

 

% of Aggregate Property NOI - Continental U.S.

50.3%

 

44.2%

 

47.2%

 

47.5%

 

53.1%

 

% of Aggregate Property NOI Puerto Rico

49.7%

 

55.8%

 

52.8%

 

52.5%

 

46.9%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

8

 

Retail Value Inc.

Property List

For Properties Owned as of November 3, 2021

 

 

 

 

 

 

Owned

Total

ABR

 

 

 

 

Center

MSA

 

GLA

GLA

PSF (1)

Leased Rate %

Anchor Tenants (1)

 

 

 

 

 

 

 

 

 

 

 

 

Green Ridge Square

Grand Rapids-Wyoming, MI

216

407

$12.66

93.1%

Bed Bath & Beyond, Best Buy, Chuck E Cheese (U), Michaels, Target (U)

Crossroads Center(2)

Gulfport-Biloxi-Pascagoula, MS

555

591

$12.16

91.9%

Academy Sports, Barnes & Noble, Belk, Burke's Outlet, Cinemark, Michaels, Ross Dress for Less, T.J. Maxx

Willowbrook Plaza

Houston-The Woodlands-Sugar Land, TX

385

393

$15.62

78.4%

AMC Theatres, Bed Bath & Beyond, Bel Furniture, buybuy BABY, Cost Plus World Market

 

 

 

 

1,156

1,391

 

 

 

 

 

 

(U) Indicates unowned.  Anchors include tenants greater than 20K SF

 

 

 

 

 

 

 

(1) Based upon commenced occupancy as of September 30, 2021

 

 

 

 

 

 

 

(2) Asset is subject to a ground lease.

 

 

 

 

 

 

 

 

 

Top 10 Tenants

 

 

 

 

 

 

 

 

$ and GLA in thousands

 

 

 

 

 

 

 

 

 

 

Credit Ratings

 

Tenant

Number of Units

Base Rent

% of Total

Owned GLA

% of Total

(S&P/Moody's/Fitch)

 

AMC Theatres

1

$2,203

16.9%

92

8.0%

CCC+/Caa3/NR

 

Cinemark

1

1,068

8.2%

63

5.4%

B/NR/B+

 

Bed Bath & Beyond (1)

3

833

6.4%

127

11.0%

B+/Ba3/NR

 

Michaels

2

542

4.1%

48

4.2%

B/B1/NR

 

Best Buy

1

516

3.9%

45

3.9%

BBB+/A3/NR

 

Five Below

3

446

3.4%

27

2.3%

NR

 

Academy Sports

1

378

2.9%

50

4.3%

NR

 

Ross Stores

1

339

2.6%

30

2.6%

BBB+/A2/NR

 

TJX Companies

1

278

2.1%

30

2.6%

A/A2/NR

 

Office Depot

1

271

2.1%

17

1.5%

NR

 

Top 10 Total

15

$6,874

52.6%

529

45.8%

 

 

Total Portfolio

 

$13,068

100.0%

1,156

100.0%

 

 

 

 

 

 

 

 

 

 

(1) Bed Bath (2) / buybuy BABY (1)

 

 

 

 

 

 

 

Note:  All data and metrics as of September 30, 2021. 

 

 

 

9

 

Retail Value Inc.

Dispositions

 

 

$ and GLA in thousands

 

 

 

 

 

 

 

 

 

 

Owned

 

 

 

 

Property Name

City, State

 

GLA

 

Price

 

 

 

 

 

 

 

 

04/17/18

 

Silver Spring Square (pre spin)

Mechanicsburg, PA

 

343

 

$80,810

06/27/18

 

The Walk at Highwoods Preserve (pre spin)

Tampa, FL

 

138

 

25,025

07/06/18

 

Tequesta Shoppes

Tequesta, FL

 

110

 

14,333

07/10/18

 

Lake Walden Square

Plant City, FL

 

245

 

29,000

08/01/18

 

East Lloyd Commons

Evansville, IN

 

160

 

23,000

08/13/18

 

Grandville Marketplace

Grandville, MI

 

224

 

16,700

08/29/18

 

Brandon Boulevard Shoppes

Valrico, FL

 

86

 

14,650

09/14/18

 

Gresham Station

Gresham, OR

 

342

 

64,500

10/18/18

 

Palm Valley Pavilions

Goodyear, AZ

 

233

 

44,800

11/13/18

 

I-Drive Value Center

Orlando, FL

 

186

 

26,157

11/20/18

 

Douglasville Pavilion

Douglasville, GA

 

266

 

35,120

12/14/18

 

Kyle Crossing

Kyle, TX

 

121

 

27,600

 

 

 

Total 2018

 

2,454

 

$401,695

 

 

 

 

 

 

 

 

02/08/19

 

Millenia Plaza

Orlando, FL

 

412

 

$56,400

02/27/19

 

Homestead Pavilion (TD Bank)

Homestead, FL

 

4

 

4,091

03/01/19

 

West Allis Center (Chick-Fil-A)

Milwaukee, WI

 

5

 

2,211

03/04/19

 

Lowe's Home Improvement

Hendersonville, TN

 

129

 

16,058

03/26/19

 

Midway Marketplace

St. Paul, MN

 

324

 

31,210

04/05/19

 

Mariner Square

Spring Hill, FL

 

194

 

17,000

05/23/19

 

Shoppers World of Brookfield

Brookfield, WI

 

203

 

19,450

05/31/19

 

Homestead Pavilion

Homestead, FL

 

295

 

62,250

06/13/19

 

Beaver Creek Crossings

Apex, NC

 

321

 

52,750

08/07/19

 

Harbison Court

Columbia, SC

 

242

 

36,500

08/09/19

 

West Allis Center

West Allis, WI

 

259

 

18,100

12/19/19

 

Marketplace at Towne Centre

Mesquite, TX

 

180

 

19,150

 

 

 

Total 2019

 

2,568

 

$335,170

 

 

 

 

 

 

 

 

01/15/20

 

Newnan Crossing S.C. Parcel (excluding Lowe's)

Newnan, GA

 

92

 

$11,600

02/19/20

 

Hamilton Commons

Mays Landing, NJ

 

403

 

60,000

02/26/20

 

Tucson Spectrum

Tucson, AZ

 

717

 

84,000

06/30/20

 

Big Oaks Crossing

Tupelo, MS

 

348

 

21,000

07/27/20

 

Newnan Crossing -Lowe's Parcel

Newnan, GA

 

130

 

15,550

09/24/20

 

Riverdale Village

Coon Rapids, MN

 

788

 

70,000

12/21/20

 

Peach Street Marketplace -LongHorn Steakhouse

Erie, PA

 

5

 

2,075

12/22/20

 

Plaza Palma Real

Humacao, PR

 

448

 

50,000

 

 

 

Total 2020

 

2,931

 

$314,225

 

 

 

 

 

 

 

 

04/09/21

 

Marketplace of Brown Deer

Brown Deer, WI

 

405

 

$10,250

04/13/21

 

Noble Town Center

Jenkintown, PA

 

168

 

14,000

04/14/21

 

Plaza Vega Baja

Vega Baja, PR

 

185

 

4,500

04/21/21

 

Uptown Solon

Solon, OH

 

182

 

10,100

06/03/21

 

Señorial Plaza

Rio Piedras, PR

 

202

 

20,350

08/27/21

 

Puerto Rico Portfolio (9 Assets)

Puerto Rico

 

3,538

 

550,000

10/01/21

 

Continental U.S. Portfolio (5 Assets)

Various

 

2,623

 

264,000

 

 

 

Total 2021 YTD

 

7,303

 

$873,200

 

 

 

 

 

 

 

 

 

 

 

Asset sales (Post Spin)

 

 

 

$1,818,455

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10

 

Retail Value Inc.

Capital Structure

 

 

$, shares and units in thousands, except per share

 

 

 

 

 

 

 

 

September 30, 2021

 

December 31, 2020

 

December 31, 2019

Capital Structure

 

 

 

 

 

 

Market Value Per Share (1)

 

$26.33

 

$14.87

 

$36.80

 

 

 

 

 

 

 

Common Shares Outstanding

 

21,117

 

21,083

 

19,052

Common Shares Equity

 

$556,015

 

$313,508

 

$701,119

 

 

 

 

 

 

 

Redeemable Preferred Equity (2)

 

$190,000

 

$190,000

 

$190,000

 

 

 

 

 

 

 

Bank Debt

 

$0

 

$0

 

$0

Mortgage Debt

 

$0

 

$354,202

 

$674,331

Less: Cash (including restricted cash)

 

$460,949

 

$172,788

 

$183,294

Net Debt

 

($460,949)

 

$181,415

 

$491,037

 

 

 

 

 

 

 

Total Market Capitalization

 

$285,066

 

$684,923

 

$1,382,155

 

 

 

 

 

 

 

 

 

 

 

 

(1) On October 28, 2021, the Company paid a common dividend of $22.04 per share.

 

 

 

 

(2) On October 6, 2021, the Company paid a dividend of $190.0 million to SITE Centers.

 

 

 

 

 

 

 

11

 

Retail Value Inc.

Notable Accounting and Supplemental Policies

 

 

 

The information contained in the Quarterly Financial Supplement does not purport to disclose all items required by the accounting principles generally accepted in the United States of America (“GAAP”) and is unaudited information.  The Company’s Quarterly Financial Supplement should be read in conjunction with the Company’s Form 10-K and Form 10-Q.

 

Rental Income (Revenues)

 

•

Percentage and overage rents are recognized after the tenants’ reported sales have exceeded the applicable sales breakpoint.  

 

 

•

Tenant reimbursements are recognized in the period in which the expenses are incurred.  

 

 

•

Lease termination fees are recognized upon termination of a tenant’s lease when the Company has no further obligations under the lease.

 

 

Lease Modification Accounting

 

•

Elected not to apply lease modification accounting to lease amendments in which the total amount of rent due under the lease is substantially the same and there has been no increase in the lease term.  A majority of the Company’s concession amendments within this category provide for the deferral of rental payments to a later date within the remaining lease term.  

 

 

•

If abatements are granted as part of a lease amendment, the Company has elected to not treat the abatements as variable rent and instead will record the concession’s impact over the tenant’s remaining lease term on a straight-line basis. Modifications to leases that involve an increase in the lease term have been treated as a lease modification.  

 

 

•

For those tenants where the Company is unable to assert that collection of amounts due over the lease term is probable, regardless if the Company has entered into a deferral agreement to extend the payment terms, the Company has categorized these tenants on the cash basis of accounting.  As a result, no rental income is recognized from such tenants once they have been placed on the cash basis of accounting until payments are received and all existing accounts receivable relating to these tenants have been reserved in full, including straight-line rental income.  The Company will remove the cash basis designation and resume recording rental income from such tenants during the period earned at such time it believes collection from the tenants is probable based upon a demonstrated payment history or recapitalization event.

 

 

Deferred Financing Costs

 

•

Costs incurred in obtaining term financing are included as a reduction of the related debt liability and costs incurred related to the revolving credit facilities are included in other assets on the consolidated balance sheets.  All costs are amortized on a straight-line basis over the term of the related debt agreement; such amortization is reflected as interest expense in the consolidated income statements.

 

 

Real Estate

 

•

Real estate assets are stated at cost less accumulated depreciation, which, in the opinion of management, is not in excess of the individual property's estimated undiscounted future cash flows, including estimated proceeds from disposition.

 

 

•

Construction in progress includes expansions and re-tenanting.  

 

 

•

Depreciation and amortization are provided on a straight-line basis over the estimated useful lives of the assets as follows:

 

 

Buildings20 to 31.5 years

Building Improvements3 to 20 years

Furniture/Fixtures/ Shorter of economic life or lease terms

Tenant Improvements

 

12

 

Retail Value Inc.

Notable Accounting and Supplemental Policies

 

Capitalization

 

•

Expenditures for maintenance and repairs are charged to operations as incurred.  Renovations and expenditures that improve or extend the life of the asset are capitalized.

 

 

•

The Company capitalizes interest on funds used for the construction or expansion of shopping centers.  Capitalization of interest ceases when construction activities are completed and the property is available for occupancy by tenants.

 

 

•

Interest expense incurred during construction is capitalized and depreciated over the building life.

 

 

Discontinued Operations

 

•

A discontinued operation includes only the disposal of a component of an entity and represents a strategic shift of the Company’s geographical concentration and business.  The disposition of all of the Company’s Puerto Rico assets qualified for discontinued operations presentation.  The sale of the individual continental U.S assets did not qualify for discontinued operations presentation, and thus, the results of the properties that have been sold to date remain in Income from Continuing Operations, and any associated gains or losses from the disposition are included in Gain on Disposition of Real Estate.

 

 

13

 

Retail Value Inc.

Non-GAAP Measures

 

 

FFO and Operating FFO

The Company believes that Funds from Operations (“FFO”) and Operating FFO, both non-GAAP financial measures, provide additional and useful means to assess the financial performance of REITs.  FFO and Operating FFO are frequently used by the real estate industry, as well as securities analysts, investors and other interested parties, to evaluate the performance of REITs. The Company also believes that FFO and Operating FFO more appropriately measure the core operations of the Company and provide benchmarks to its peer group

 

FFO excludes GAAP historical cost depreciation and amortization of real estate and real estate investments, which assume that the value of real estate assets diminishes ratably over time.  Historically, however, real estate values have risen or fallen with market conditions, and many companies use different depreciable lives and methods.  Because FFO excludes depreciation and amortization unique to real estate and gains and losses from depreciable property dispositions, it can provide a performance measure that, when compared year over year, reflects the impact on operations from trends in occupancy rates, rental rates, operating costs, interest costs and acquisition, disposition and development activities.  This provides a perspective of the Company’s financial performance not immediately apparent from net income determined in accordance with GAAP.

 

FFO is generally defined and calculated by the Company as net income (loss) (computed in accordance with GAAP), adjusted to exclude (i) gains and losses from disposition of real estate property and related investments, which are presented net of taxes, if any, (ii) impairment charges on real estate property and related investments and (iii) certain non-cash items.  These non-cash items principally include real property depreciation and amortization of intangibles.  The Company’s calculation of FFO is consistent with the definition of FFO provided by NAREIT.  

 

The Company believes that certain charges and income recorded in its operating results are not comparable or reflective of its core operating performance.  Operating FFO is useful to investors as the Company removes non-comparable charges, income and gains to analyze the results of its operations and assess performance of the core operating real estate portfolio.  As a result, the Company also computes Operating FFO and discusses it with the users of its financial statements, in addition to other measures such as net income (loss) determined in accordance with GAAP and FFO.  Operating FFO is generally defined and calculated by the Company as FFO excluding certain charges and income that management believes are not comparable and indicative of the results of the Company’s operating real estate portfolio.  Such adjustments include gains/losses on the early extinguishment of debt and transaction costs.  The disclosure of these adjustments is regularly requested by users of the Company’s financial statements.

 

The adjustment for these charges and income may not be comparable to how other REITs or real estate companies calculate their results of operations, and the Company’s calculation of Operating FFO differs from NAREIT’s definition of FFO.  Additionally, the Company provides no assurances that these charges and income are non-recurring.  These charges and income could be reasonably expected to recur in future results of operations.

 

These measures of performance are used by the Company for several business purposes and by other REITs.  The Company uses FFO and/or Operating FFO in part (i) as a disclosure to improve the understanding of the Company’s operating results among the investing public, (ii) as a measure of a real estate asset’s performance and (iii) to compare the Company’s performance to that of other publicly traded shopping center REITs.  For the reasons described above, management believes that FFO and Operating FFO provide the Company and investors with an important indicator of the Company’s operating performance.  They provide recognized measures of performance other than GAAP net income, which may include non-cash items (often significant).  Other real estate companies may calculate FFO and Operating FFO in a different manner.

 

14

 

Retail Value Inc.

Non-GAAP Measures

 

Management recognizes the limitations of FFO and Operating FFO when compared to GAAP’s net income.  FFO and Operating FFO do not represent amounts available for dividends, capital replacement or expansion, debt service obligations or other commitments and uncertainties.  Management does not use FFO or Operating FFO as an indicator of the Company’s cash obligations and funding requirements for future commitments, acquisitions or development activities.  Neither FFO nor Operating FFO represents cash generated from operating activities in accordance with GAAP, and neither is necessarily indicative of cash available to fund cash needs.  Neither FFO nor Operating FFO should be considered an alternative to net income (computed in accordance with GAAP) or as an alternative to cash flow as a measure of liquidity.  FFO and Operating FFO are simply used as additional indicators of the Company’s operating performance.  The Company believes that to further understand its performance, FFO and Operating FFO should be compared with the Company’s reported net income (loss) and considered in addition to cash flows determined in accordance with GAAP, as presented in its condensed consolidated financial statements. Reconciliations of these measures to their most directly comparable GAAP measure of net income (loss) have been provided herein.

 

Net Operating Income (“NOI”)

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

15

 

 

 

 

Retail Value Inc. 3300 Enterprise Pkwy. Beachwood, OH 44122 P.216.755.5500 F. 216.755.1500 www.retailvalueinc.com