RPT REALTY Where we say "Company," "we," "us," or "our," we mean
The following discussion and analysis of the financial condition and results of operations should be read in conjunction with the condensed consolidated financial statements, including the respective notes thereto, which are included in this Form 10-Q. Forward-Looking Statements This document contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements represent our expectations, plans or beliefs concerning future events and may be identified by terminology such as "may," "will," "should," "believe," "expect," "estimate," "anticipate," "continue," "predict" or similar terms. Although the forward-looking statements made in this document are based on our good faith beliefs, reasonable assumptions and our best judgment based upon current information, certain factors could cause actual results to differ materially from those in the forward-looking statements. Many of the factors that will determine the outcome of forward-looking statements are beyond our ability to predict or control. Currently, one of the most significant factors is the potential adverse effect of the current COVID-19 pandemic on the financial condition, results of operations, cash flows and performance of the Company and our tenants (including their ability to timely make rent payments), the real estate market (including the local markets where our properties are located), the financial markets and general global economy as well as the potential adverse impact on our ability to enter into new leases or renew leases with existing tenants on favorable terms or at all. The impact COVID-19 has, and will continue to have, on the Company and its tenants is highly uncertain, cannot be predicted and will vary based upon the duration, magnitude and scope of the COVID-19 pandemic, the short-term and long-term effect of COVID-19 on consumer behaviors, the availability of vaccines or cures for COVID-19, as well as the actions taken by federal, state and local governments to mitigate the impact of COVID-19, including social distancing protocols and restrictions on business activities and "shelter-in-place" and "stay at home" mandates, and the effect of any relaxation or revocation of current restrictions. Additional factors which may cause actual results to differ materially from current expectations include, but are not limited to: our success or failure in implementing our business strategy; economic conditions generally and in the commercial real estate and finance markets specifically; the cost and availability of capital, which depends in part on our asset quality and our relationships with lenders and other capital providers; risks associated with bankruptcies or insolvencies or general downturn in the businesses of tenants; the potential adverse impact from tenant defaults generally or from the unpredictability of the business plans and financial condition of the Company's tenants, which are heightened as a result of the COVID-19 pandemic; the execution of deferral or rent concession agreements by tenants; our business prospects and outlook; acquisition, disposition, development and joint venture risks; our insurance costs and coverages; risks related to cybersecurity an loss of confidential information and other business interruptions; changes in governmental regulations, tax rates and similar matters; our continuing to qualify as a REIT; and other factors detailed from time to time in our filings with theSecurities and Exchange Commission ("SEC"), including in particular those set forth under "Risk Factors" in our Annual Report on Form 10-K for the year endedDecember 31, 2020 . Given these uncertainties, you should not place undue reliance on any forward-looking statements. Except as required by law, we assume no obligation to update these forward-looking statements, even if new information becomes available in the future. OverviewRPT Realty owns and operates a national portfolio of open-air shopping destinations principally located in topU.S. markets. The Company's shopping centers offer diverse, locally-curated consumer experiences that reflect the lifestyles of their surrounding communities and meet the modern expectations of the Company's retail partners. The Company is a fully integrated and self-administered REIT publicly traded on the NYSE. The common shares of beneficial interest of the Company, par value$0.01 per share, are listed and traded on the NYSE under the ticker symbol "RPT". As ofMarch 31, 2021 , the Company's portfolio consisted of 49 multi-tenant shopping centers (including five shopping centers owned through our joint venture,R2G Venture LLC "R2G") and 13 net lease retail properties (all of which are owned through a separate joint venture) which together represent 11.9 million square feet of GLA. As ofMarch 31, 2021 , the Company's pro-rata share of the aggregate portfolio was 92.0% leased.
Impact of COVID-19
The Company continues to closely monitoring the COVID-19 pandemic, including the
impact on our business, our tenants, our vendors and our partners. The following
summary is intended to provide shareholders with information pertaining to the
impacts of the COVID-19 pandemic on the Company's business and management's
strategy and actions to respond to these impacts. Unless otherwise specified,
the statistical and other information regarding the Company's portfolio and
tenants included in this subsection are based on information available to the
Company and includes its consolidated properties and its
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pro-rata share of unconsolidated joint ventures. Due to the uncertainty and
rapidly changing nature of the COVID-19 situation, the Company anticipates that
any such statistics and information will potentially change significantly. As a
result, the information provided may not be indicative of the actual impact of
the COVID-19 pandemic on the Company's business, operations, cash flows and
financial condition for the first quarter of 2021 and future periods.
The spread of COVID-19 has caused significant market volatility and adverse
impacts on the U.S. retail market, the U.S. economy, the global economy, and
financial markets. In order to mitigate the spread of COVID-19, federal, state
and local governments have issued recommendations and mandatory business
closures, quarantines, restrictions on travel and "shelter-in-place" or "stay at
home" orders and social distancing protocols. These measures have impacted our
tenants in various ways based upon their business classifications. For example,
many jurisdictions have permitted only "essential" businesses to continue to
fully operate, have required all "non-essential" businesses to cease or
significantly modify operations and have limited restaurants to take-out and
delivery services. While the Company is actively monitoring each jurisdiction's
plans, it is impossible to predict when restrictions will be partially or
completely lifted or relaxed, when tenants will fully re-open or what
restrictions will remain in place when re-opening occurs, how such re-opening
restrictions will continue to impact, or the effect of any re-opening or
relaxation of such restrictions will have on, the business of our tenants and
whether consumer demand and spending will return to the same levels as prior to
the COVID-19 pandemic. COVID-19 has impacted the Company's properties and
tenants by these and other factors as follows:
•100% of the Company's 62 retail properties remain open and operating as of
April 26, 2021 .
•95% of our total tenants were open and operating, on a pro-rata basis, as of
April 26, 2021 based on ABR.
•66% of the Company's properties by ABR had a grocery or grocer component and
87% of ABR stemmed from national or regional tenants, on a pro-rata basis, as of
March 31, 2021 .
•92% of first quarter 2021 rents have been paid, on a pro-rata basis, as of
April 26, 2021 .
•92% of fourth quarter 2020 rents have been paid, on a pro-rata basis, as of
April 26, 2021 .
The Company has taken a number of proactive measures to maintain the strength of
its business and manage the impact of COVID-19 on the Company's operations and
liquidity, including the following:
•The health and safety of our employees and their families, our tenants and our
shopping center customers is our priority. Employees were required to work from
home pursuant to the Company's pre-existing work-from-home infrastructure
already in-place, mitigating concerns regarding the loss of employee
productivity, cybersecurity concerns, and greater difficulty in maintaining
internal controls over financial reporting.
•The Company maintains continuous communication with its tenants and is
providing resources and assisting tenants in identifying local, state and
federal aid that may be available to support their businesses and employees
during the pandemic. The Company created a dedicated COVID-19 page containing
resources for tenants, including with respect to information on the Coronavirus
Aid, Relief, and Economic Security Act, including the historic Paycheck
Protection Program, and Families First Coronavirus Response Act; information on
the Small Business Administration ("SBA") loan and debt relief programs and
references to state-by-state resources to help our tenants understand specific
directives that may impact their businesses.
•During the second quarter of 2020, the Company completed a workforce reduction
and instituted temporary compensation reductions for the executive officers
ranging from 10% to 20% of their annual base salaries. Certain executive
officers also agreed to further reductions of 10% to 20% of their annual base
salaries in exchange for restricted common shares with an equal value. The
temporary compensation reductions ended as of December 27, 2020 .
•To enhance its liquidity position and maintain financial flexibility, the
Company borrowed $225.0 million on its unsecured revolving credit facility in
March 2020 . As of March 31, 2021 , the Company had repaid the amounts borrowed
and we had full capacity under our $350.0 million unsecured revolving credit
facility subject to compliance with financial covenants.
•We have suspended all new development and redevelopment project starts until
further notice and currently have no committed development or redevelopment
projects in progress.
•In light of the disruption caused by the COVID-19 pandemic, the Board of
Trustees temporarily suspended the quarterly common dividend to retain cash
starting with the second quarter of 2020. On February 11, 2021 , the Company's
Board of Trustees reinstated the first quarter 2021 common dividend at $0.075
per share payable on April 1, 2021 , to the holders of record of Common Shares as
of the close of business on March 19, 2021 . In addition, we paid our first
quarter preferred dividend in the amount of $1.7 million on March 31, 2021 to
shareholders of record as of March 19, 2021 .
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The Company's predominant source of revenue is from rents and reimbursable
expenses received from tenants pursuant to lease agreements. Therefore, the
Company's financial results may be adversely impacted in the event our tenants
are unable to make rental payments due to the COVID-19 pandemic. The ability of
tenants to pay rent is highly uncertain and cannot be predicted based upon the
uncertainty surrounding the magnitude, duration and scope of the COVID-19
pandemic. As a result, the full impact of COVID-19 on our business is currently
unknown. Our strong balance sheet and operational flexibility allowed us to
successfully manage through the initial impact of COVID-19 while protecting our
cash flow and liquidity. The factors described above, as well as additional
factors that the Company may not currently be aware of, could materially
negatively impact the Company's ability to collect rent and could lead to tenant
bankruptcies, rejection of tenant leases in bankruptcy, difficulties in renewing
or re-leasing retail space, difficulties in accessing capital, impairment of the
Company's assets and other effects that could materially and adversely affect
the Company's business, results of operations, financial condition and ability
to pay distributions to shareholders. See "Risk Factors" in our Annual Report on
Form 10-K for the year ended December 31, 2020 .
Our Strategy
Our primary business goals are to increase operating cash flows and deliver above average relative shareholder return. Specifically, we pursue the following methods to achieve these goals:
•Capitalize on accretive acquisition opportunities of open-air shopping centers through our complimentary joint venture platforms and balance sheet. We intend to pursue growth through the strategic acquisition of attractively priced open-air shopping centers and subdivide the asset between our balance sheet and our single tenant, net lease joint venture platform, highlighting the meaningful arbitrage opportunities that we can create for our shareholders. •Acquire high quality open-air shopping centers and single tenant, net lease retail assets in the topU.S. metropolitan statistical areas ("MSA"). Our stringent criteria for acquisition opportunities include a strong demographic profile, educational attainment, tech/life science/university adjacencies, pro-business environments, job growth, high exposure to essential tenants, tenant credit/term and an attractive risk-adjusted return. •Disciplined capital recycling strategy. We employ a rigorous investment management strategy by selectively selling assets with returns and value that have been maximized and redeploy the capital into leasing, redevelopment, and acquisition of properties.
•Remerchandise and redevelop our assets. Our strategy is to strategically remerchandise and redevelop several of our existing properties where we have significant pre-leasing and can improve tenant credit and term, enhance the merchandising mix, augment the consumer experience with an alternative non-retail use, generate attractive returns, and drive meaningful value creation.
•Hands-on active asset management. We proactively manage our properties, employ
targeted leasing strategies, maintain strong tenant relationships, drive rent
and occupancy, focus on reducing operating expenses and property capex, and
attract high quality and creditworthy tenants; all of which enhance the value of
our properties.
•Curate our real estate to align with the current and future shopping center
landscape. We intend to leverage technology and data, optimize distribution
points for brick-and-mortar and e-commerce purchases, engage in best-in-class
sustainability programs and create an optimal merchandising mix to continue to
attract and engage our shoppers.
•Maintain a strong, flexible and investment grade balance sheet. Our strategy is
to maintain low leverage and high liquidity, proactively manage our liability
management and stagger debt maturities, and retain access to diverse sources of
capital to support the business in any environment.
•Retain motivated, talented and high performing employees. To facilitate the
attraction, retention and promotion of a talented and diverse workforce, we
provide competitive compensation, best in class benefits and health and wellness
programs, and by championing programs that build connections between our
employees and the communities where they live and at the properties we own.
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The following table summarizes our aggregate multi-tenant operating portfolio by
market as of
Market Summary (1)
MSA Number of Properties GLA (in thousands) Leased % Occupied % ABR/SF % of ABR
Multi-Tenant Retail
Top 40 MSAs:
Atlanta 3 524 87.5 % 87.5 % $ 12.75 3.7 %
Austin 1 76 89.6 % 89.6 % 26.19 1.1 %
Baltimore 1 252 91.6 % 90.7 % 9.70 1.4 %
Chicago 4 759 84.4 % 83.9 % 14.67 5.9 %
Cincinnati 3 1,156 92.0 % 91.7 % 16.70 11.1 %
Columbus 2 435 94.5 % 93.6 % 18.46 4.7 %
Denver 1 495 96.8 % 89.6 % 19.88 5.5 %
Detroit 9 2,322 92.1 % 90.1 % 14.95 19.2 %
Indianapolis 1 232 95.4 % 86.9 % 14.16 1.8 %
Jacksonville 2 751 92.5 % 90.6 % 16.76 7.1 %
Miami 6 1,027 87.8 % 87.4 % 16.81 7.2 %
Milwaukee 2 546 91.9 % 90.8 % 12.73 4.0 %
Minneapolis 2 445 89.7 % 89.2 % 25.67 6.4 %
Nashville 1 633 96.5 % 95.7 % 13.20 5.0 %
St. Louis 4 827 94.5 % 93.3 % 14.61 6.3 %
Tampa 4 744 97.2 % 96 % 12.90 5.8 %
Top 40 MSA subtotal 46 11,224 92.1 % 90.6 % $ 15.62 96.2 %
Non Top 40 MSA 3 516 91.3 % 91.3 % 12.43 3.7 %
Subtotal 49 11,740 92.0 % 90.6 % $ 15.48 99.9 %Net Leased Retail - RGMZ 13 169 98.2 % 98.2 % 14.04 0.1 % Total 62 11,909 92.0 % 90.6 %$ 15.47 100.0 %
(1) Shown at pro-rata except for number of properties and GLA.
We accomplished the following activity during the three months ended
Leasing Activity
Our properties reported the following leasing activity, which is shown at pro-rata except for number of leasing transactions and square feet:
Leasing Transactions Square Footage Base Rent/SF (1) Prior Rent/SF (2) Tenant Improvements/SF (3) Leasing Commissions/SF
Renewals 38 418,666 $14.57 $14.03 $0.66 $0.03
New Leases - Comparable 10 55,251 $20.24 $13.43 $116.58 $7.77
Non-Comparable Transactions (4) 14 82,318 $15.01 N/A $18.31 $2.85
Total 62 556,235 $15.19 N/A $14.66 $1.20
(1) Base rent represents contractual minimum rent under the new lease for the
first 12 months of the term.
(2) Prior rent represents minimum rent, if any, paid by the prior tenant in the
final 12 months of the term.
(3) Includes estimated tenant improvement cost, tenant allowances, and landlord
costs. Excludes first generation space and leases related to development and
redevelopment activity.
(4) Non-comparable lease transactions include (i) leases for space vacant for
greater than 12 months and (ii) leases signed where the previous and current
lease do not have a consistent lease structure.
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--------------------------------------------------------------------------------Investing Activity
OnMarch 4, 2021 , we formed a new core net lease retail real estate joint venture,RGMZ Venture REIT LLC ("RGMZ"), with an affiliate ofGIC Private Limited ("GIC"), an affiliate ofZimmer Partners ("Zimmer") and an affiliate ofMonarch Alternative Capital LP ("Monarch"). The Company has initially contributed 13 net lease retail properties, that had been created by us upon the subdivision of certain parcels from our existing open-air shopping centers, valued at$36.2 million to RGMZ. Upon contribution, the Company received$32.4 million in gross cash proceeds ($29.3 million in net cash proceeds), as well as a combined$2.6 million preferred equity investment stake in the Zimmer and Monarch affiliates, in exchange for the 93.6% stake in RMGZ that was acquired by the other joint venture partners. The Company retained a 6.4% stake in RGMZ, maintains day-to-day management of the portfolio and earns management, leasing and construction fees. The Company is also responsible for sourcing future acquisitions for RGMZ. GIC, Zimmer, Monarch and the Company have committed to fund$470.0 million in RGMZ over the next three years for approved acquisitions, including the initial investment portfolio that was contributed by the Company. RGMZ will target the acquisition of over$1.2 billion of strategic assets, with 60-65% target leverage, creating a scalable, stable-growth investment platform. RGMZ has a$21.7 million secured credit facility that includes an accordion feature allowing it to increase future potential commitments up to a total capacity of$500.0 million . RPT and certain of the other joint venture partners will have consent rights for all future acquisitions, and also have approval rights in connection with annual budgets and other specified major decisions. We cannot make significant decisions without our partner's approval. Accordingly, we account for our interest in the joint ventures using the equity method.
Refer to Note 3 of the notes to our condensed consolidated financial statements in this report for additional information related to acquisitions and dispositions.
Financing Activity
Debt
As ofMarch 31, 2021 , we had net debt of$786.5 million , reflecting net debt to total market capitalization of 42.9% as compared to 60.1% atMarch 31, 2020 . Net debt decreased by$45.1 million compared toMarch 31, 2020 , primarily as a result of an increase in cash and cash equivalents from proceeds received upon the contribution of properties to the newly formed RGMZ joint venture inMarch 2021 , the temporary suspension of the common dividend by theBoard of Trustees in response to the economic impact of COVID-19 and positive cash flow from operations. Equity InFebruary 2020 , the Company entered into an Equity Distribution Agreement ("Equity Distribution Agreement") pursuant to which the Company may offer and sell, from time to time, the Company's common shares having an aggregate gross sales price of up to$100.0 million . Sales of the shares of common stock may be made, in the Company's discretion, from time to time in "at-the-market" offerings as defined in Rule 415 of the Securities Act of 1933. The Equity Distribution Agreement also provides that the Company may enter into forward contracts for shares of its common stock with forward sellers and forward purchasers. For the three months endedMarch 31, 2021 , we did not issue any common shares through the arrangement. As ofMarch 31, 2021 , we have full capacity remaining under the agreement. The sale of such shares issuable pursuant to the Equity Distribution Agreement was registered with theSEC pursuant to a prospectus supplement filed inFebruary 2020 and the accompanying base prospectus statement forming part of the Company's shelf registration statement on Form S-3 (No. 333-232007) which was filed with theSEC inJune 2019 .
Land Available for Development
AtMarch 31, 2021 , our three largest development sites areParkway Shops , Lakeland Park Center andHartland Towne Square . We continue to evaluate the best use for land available for development, portions of which are adjacent to our existing shopping centers. It is our policy to start vertical construction on new development projects only after the project has received entitlements, significant anchor commitments and construction financing, if appropriate. Our development and construction activities are subject to risks such as our inability to obtain the necessary governmental approvals for a project, our determination that the expected return on a project is not sufficient to warrant continuation of the planned development, or our change in plan or scope for the development. If any of these events occur, we may record an impairment provision. Page 30 --------------------------------------------------------------------------------
Accounting Policies and Estimates
Our Annual Report on Form 10-K for the year endedDecember 31, 2020 , contains a description of our critical accounting policies, including policies for the initial adoption of accounting policies, revenue recognition and accounts receivable, real estate investment, off balance sheet arrangements, fair value measurements and deferred charges. As discussed above, the COVID-19 pandemic has impacted states and cities where the Company's tenants operate their businesses and where the Company's properties are located, and, accordingly our tenants may be unable to operate their businesses, maintain profitability and make timely rental payments to the Company under their leases. Under such circumstances it is possible our estimates for rental income not probable of collection for future periods may be higher than our recent historical trends. Also, the worsening of estimated future cash flows could result in the recognition of an impairment charge on certain of the Company's long-lived assets. Management does not believe that the value of any of the Company's real estate investments was impaired as ofMarch 31, 2021 . InApril 2020 , theFinancial Accounting Standards Board ("FASB") issued a staff question-and-answer document ("Q&A") focused on the application of the lease guidance in ASC 842, Leases, for lease concessions related to the effects of the COVID-19 pandemic. Included in this Q&A, the FASB staff determined that it would be acceptable for entities to make an election to account for lease concessions related to the effects of the COVID-19 pandemic consistent with how those concessions would be accounted for under Topic 842 and Topic 840 as though enforceable rights and obligations for those concessions existed (regardless of whether those enforceable rights and obligations for the concessions explicitly exist in the contract). Consequently, for concessions related to the effects of the COVID-19 pandemic, an entity will not have to analyze each contract to determine whether enforceable rights and obligations for concessions exist in the contract and can elect to apply or not apply the lease modification guidance in Topic 842 and Topic 840 to those contracts. The FASB also acknowledged that some concessions would provide a deferral of payments with no substantive changes to the consideration in the original contract. The FASB indicated that a deferral affects the timing, but the amount of the consideration is substantially the same as that required by the original contract. In cases where we grant a deferral for future periods, as a result of COVID-19, we account for the concessions as if no changes to the lease contract were made. Under that accounting, we increase our lease receivable as receivables accrue. In our income statement, we continue to recognize income during the deferral period.
Comparison of three months ended
The following summarizes certain line items from our unaudited condensed consolidated statements of operations and comprehensive income that we believe are important in understanding our operations and/or have significantly changed in the three months endedMarch 31, 2021 as compared to the same period in 2020: Three Months Ended March 31, Dollar Percent 2021 2020 Change Change (In thousands) Total revenue$ 50,093 $ 52,876 $ (2,783) (5.3) % Real estate taxes 8,489 8,151 338 4.1 % Recoverable operating expense 6,193 5,979 214 3.6 % Non-recoverable operating expense 2,557 2,277 280 12.3 % Depreciation and amortization 18,379 20,848 (2,469) (11.8) % Transaction costs - 174 (174) NM General and administrative expense 7,370
6,222 1,148 18.5 %
Gain on sale of real estate 19,003 - 19,003 NM
Earnings from unconsolidated joint ventures 801 256 545 NM
Interest expense 9,406 9,401 5 0.1 %
Preferred share dividends 1,675 1,675 - - %
NM - Not meaningful
Page 31-------------------------------------------------------------------------------- Total revenue for the three months endedMarch 31, 2021 decreased$2.8 million , or (5.3)%, from the same period in 2020. The decrease is primarily due to the following: •$3.0 million decrease due to increased rental income not probable of collection as well as rent abatements in the current period, primarily due to the COVID-19 pandemic; •$0.8 million decrease in minimum rent billings at existing properties due to decreased occupancy as compared to the prior period; and •$0.3 million decrease from acceleration of a below market lease in the prior period attributable to a tenant who vacated prior to the original estimated lease end date; partially offset by •$0.9 million increase in recovery income at existing properties due to higher net recoverable expenses and higher recovery rates as compared to the prior year.
Real estate tax expense for the three months ended
Recoverable operating expense for the three months ended
Non-recoverable operating expense for the three months endedMarch 31, 2021 increased$0.3 million , or 12.3% from the same period in 2020, primarily due to higher legal fees associated with bankruptcy and collection efforts due to the COVID-19 pandemic. Depreciation and amortization expense for the three months endedMarch 31, 2021 decreased$2.5 million , or (11.8)%, from the same period in 2020. The decrease is primarily a result of higher asset write offs in the prior period for tenant lease terminations prior to their original estimated term. During the three months endedMarch 31, 2020 , the Company recorded transaction costs of$0.2 million related to legal and professional fees associated with a property acquisition and property sale of a center that were terminated during the prior period. General and administrative expense for the three months endedMarch 31, 2021 increased$1.1 million , or 18.5%, from the same period in 2020, primarily as a result of higher stock-based compensation expense. The Company had gains on real estate disposals of$19.0 million during the three months ended March 31, 2021. Refer to Note 3 of the notes to the condensed consolidated financial statements in this report for further detail on dispositions. Earnings from unconsolidated joint ventures for the three months endedMarch 31, 2021 increased$0.5 million from the same period in 2020 primarily due to transaction costs associated with terminated acquisitions that were incurred by our R2G joint venture during the prior period which did not recur. Interest expense for the three months endedMarch 31, 2021 was flat from the same period in 2020. We had a 3.7% increase in our average outstanding debt, which was offset by a 50 basis point decrease in our weighted average interest rate. The increase in our average outstanding debt was the result of$100.0 million of borrowings made inMarch 2020 on our unsecured revolving credit facility to strengthen the Company's liquidity position due to the COVID-19 pandemic. The Company repaid the full amount of the borrowings inFebruary 2021 .
The comparability of the Company's results of operations for the three months
ended
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--------------------------------------------------------------------------------Liquidity and Capital Resources
Our primary uses of capital include principal and interest payments on our outstanding indebtedness, ongoing capital expenditures such as leasing capital expenditures and building improvements, shareholder distributions, operating expenses of our business, debt maturities, acquisitions and discretionary capital expenditures such as targeted remerchandising, expansions, redevelopment and development. We generally strive to cover our principal and interest payments, operating expenses, shareholder distributions, and ongoing capital expenditures from cash flow from operations, although from time to time we have borrowed or sold assets to finance a portion of those uses. We believe the combination of cash flow from operations, cash balances, favorable relationships with our lenders, issuance of debt, property dispositions, reducing our planned capital expenditures, suspension of our quarterly common share dividend and issuance of equity securities will provide adequate capital resources to fund all of our expected uses over at least the next 12 months. Although we believe that the combination of factors discussed above will provide sufficient liquidity, no such assurance can be given. As discussed above, the COVID-19 pandemic outbreak has adversely impacted states and cities where the Company's tenants operate their businesses and where the Company's properties are located. The effects of COVID-19 and attempts to mitigate its outbreak have had an adverse impact on our short-term cash flow due to a significant number of tenants not paying rent for the period ofApril 2020 throughMarch 2021 and could continue to have a material adverse effect on our financial condition, results of operations and cash flows as the reduced economic activity severely impacts certain of our tenants' businesses, financial condition and liquidity and may cause certain tenants to be unable to meet their obligations to us in full, timely or at all. Continued nonpayment of rent or closures by our tenants of their stores could reduce our cash flows, which would adversely impact our liquidity and the achievement of our financial forecast. We believe our current capital structure provides us with the financial flexibility to fund our current capital needs. We intend to continue to enhance our financial and operational flexibility by extending the duration of our debt, laddering our debt maturities, expanding our unencumbered asset base, and improving our leverage profile. In addition, we believe we have access to multiple forms of capital which includes unsecured corporate debt, secured mortgage debt, and preferred and common equity. However, there can be no assurances in this regard and additional financing and capital may not ultimately be available to us going forward, on favorable terms or at all. AtMarch 31, 2021 and 2020, we had$143.4 million and$322.8 million , respectively, in cash and cash equivalents and restricted cash. Restricted cash generally consists of funds held in escrow by mortgage lenders to pay real estate taxes, insurance premiums and certain capital expenditures. As ofMarch 31, 2021 , we had$37.0 million of debt maturing in 2021, and we had full unused capacity under our$350.0 million unsecured revolving credit facility that could be borrowed subject to compliance with applicable financial covenants. Refer to Note 5 of the notes to the condensed consolidated financial statements for further discussion on our covenants. Our long-term, post-COVID-19 pandemic, liquidity needs consist primarily of funds necessary to pay indebtedness at maturity, potential acquisitions of properties, redevelopment of existing properties, the development of land and discretionary capital expenditures. We continually search for investment opportunities that may require additional capital and/or liquidity. We will continue to pursue the strategy of selling non-core properties or land that no longer meet our investment criteria or advance our business strategy. Our ability to obtain acceptable selling prices and satisfactory terms and financing will impact the timing of future sales. We anticipate using net proceeds from the sale of properties or land to reduce outstanding debt and support current and future growth oriented initiatives. To the extent that asset sales are not sufficient to meet our long-term liquidity needs, we expect to meet such needs by raising debt or issuing equity. We have on file with theSEC an automatic shelf registration statement relating to the offer and sale of an indeterminable amount of debt securities, preferred shares, common shares, depository shares, warrant and rights. From time to time, we may issue securities under this registration statement for working capital and other general corporate purposes.
For the three months ended
Three Months Ended March 31,
2021 2020
(In thousands)
Net cash provided by operating activities $ 18,885 $ 10,321
Net cash provided by (used in) investing activities $ 23,951 $ (5,671)
Net cash (used in) provided by financing activities $ (110,965) $ 203,642
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Operating Activities
Net cash provided by operating activities increased$8.6 million in the three months endedMarch 31, 2021 compared to the same period in 2020 primarily due to the following: •Higher working capital changes in the prior period due to the timing of payments of accounts payable and accrued expenses; and •Cash distributions from our unconsolidated joint ventures increased$2.2 million ; partially offset by •Lower rental income receipts of$3.6 million as a result of the COVID-19 pandemic.
Investing Activities
Net cash provided by investing activities was$24.0 million in the three months endedMarch 31, 2021 , compared to net cash used in investing activities of$5.7 million for the same period in 2020. The$29.6 million change in net cash from investing activities was primarily due to net proceeds from the sale of real estate in the current period. OnMarch 4, 2021 , we formed RGMZ and subsequently contributed properties valued at$36.2 million to RGMZ and received net cash proceeds of$29.3 million for the 93.6% stake in RGMZ that was acquired by our joint venture partners. Refer to
Note 3 of the notes to the condensed consolidated financial statements in this report for additional information related to dispositions.
Financing Activities
Net cash used in financing activities was$111.0 million in the three months endedMarch 31, 2021 , compared to net cash provided by financing activities of$203.6 million in 2020. The change of$314.6 million was primarily the result of the following: •net payments on our revolving credit facility of$100.0 million in 2021, compared to net borrowings of$225.0 million in 2020; partially offset by •a decrease of$10.4 million in distributions made to our common shareholders, operating partnership unit holders, and preferred shareholders. For further information on our unsecured revolving credit facility and other debt, refer to Note 5 of the notes to the condensed consolidated financial statements. Dividends and Equity We currently qualify, and intend to continue to qualify in the future, as a REIT under the Internal Revenue Code ("Code"). As a REIT, we must distribute to our shareholders at least 90% of our REIT taxable income annually, excluding net capital gains. Distributions paid are at the discretion of ourBoard of Trustees and depend on our actual net income available to common shareholders, cash flow, financial condition, capital requirements, restrictions in financing arrangements, the annual distribution requirements under REIT provisions of the Code and such other factors as ourBoard of Trustees deems relevant. OnFebruary 11, 2021 , ourBoard of Trustees declared a quarterly cash dividend of$0.075 per common shares to shareholders of record as ofMarch 19, 2021 . Additionally, we declared a quarterly cash dividend of$0.90625 per Series D Cumulative Convertible Perpetual Preferred Share to preferred shareholders of record as ofMarch 19, 2021 . Our dividend policy is to make distributions to shareholders of at least 90% of our REIT taxable income, excluding net capital gains, in order to maintain qualification as a REIT. Distributions paid by us are generally expected to be funded from cash flows from operating activities. To the extent that cash flows from operating activities are insufficient to pay total distributions for any period, alternative funding sources are used. Examples of alternative funding sources include proceeds from sales of real estate and bank borrowings.The Board of Trustees will continue to evaluate the Company's dividend policy throughout the remainder of 2021 based upon the Company's financial performance and economic outlook and intends to maintain a quarterly common dividend of at least the amount required to continue qualifying as a REIT forU.S. federal income tax requirements. Page 34 -------------------------------------------------------------------------------- InFebruary 2020 , the Company entered into an Equity Distribution Agreement ("Equity Distribution Agreement") pursuant to which the Company may offer and sell, from time to time, the Company's common shares having an aggregate gross sales price of up to$100.0 million . Sales of the shares of common stock may be made, in the Company's discretion, from time to time, in "at-the-market" offerings as defined in Rule 415 of the Securities Act. The Equity Distribution Agreement also provides that the Company may enter into forward contracts for shares of its common stock with forward sellers and forward purchasers. For the three months endedMarch 31, 2021 , we did not issue any common shares through the arrangement. As ofMarch 31, 2021 , we have full capacity remaining under the agreement. The sale of such shares issuable pursuant to the Equity Distribution Agreement was registered with theSEC pursuant to a prospectus supplement filed inFebruary 2020 and the accompanying base prospectus statement forming part of the Company's shelf registration statement on Form S-3 (No. 333-232007) which was filed with theSEC inJune 2019 .
Debt
AtMarch 31, 2021 , we had$929.6 million of debt outstanding consisting of$535.0 million in senior unsecured notes,$310.0 million of unsecured term loan facilities and$84.6 million of fixed rate mortgage loans encumbering certain properties.
Our
Our$84.6 million of fixed rate mortgages have interest rates ranging from 3.76% to 5.80% and are due at various maturity dates fromFebruary 2022 throughJune 2026 . The fixed rate mortgage notes are secured by mortgages on properties that have an approximate net book value of$145.4 million as ofMarch 31, 2021 . In addition, we have eleven interest rate swap agreements in effect for an aggregate notional amount of$310.0 million and two forward starting interest rate swap agreements for an aggregate notional amount of$75.0 million converting our floating rate corporate debt to fixed rate debt. After taking into account the impact of converting our variable rate debt to fixed rate debt by use of the interest rate swap agreements, atMarch 31, 2021 , we had no variable rate debt outstanding. Our revolving credit facility, senior unsecured notes and term loan facilities contain representations, warranties and covenants, and events of default. These include financial covenants such as total leverage, fixed charge coverage ratio, unsecured leverage ratio, tangible net worth and various other calculations, which are detailed in the specific agreements governing our indebtedness, many of which are exhibits to our most recent Annual Report on Form 10-K. Additionally, our senior unsecured notes only permitted us to include an unencumbered real estate asset in the measurement of our unsecured leverage ratio if such asset satisfied 80% and 85% occupancy tests for the prior quarter. Such occupancy tests were generally based on the percentage of tenants operating, paying rent and not otherwise in default based on leases requiring current rental payments. Accordingly, as a result of the various uncertainties and factors surrounding COVID-19 and its impact on our tenants and their businesses, and, therefore, its potential impact on our ability to maintain compliance with our loan covenants, onJune 30, 2020 , we entered into amendments to the note purchase agreements governing all of our outstanding senior unsecured notes. The following is a summary of the material amendments to the note purchase agreements: •The occupancy tests relating to the minimum ratio of consolidated total unencumbered asset value to unsecured indebtedness were eliminated during the period fromJune 30, 2020 through and includingSeptember 30, 2021 (the "Specified Period") and were otherwise reduced during the fiscal quarters endedDecember 31, 2021 andMarch 31, 2022 ; •The minimum ratio of consolidated total unencumbered asset value to unsecured indebtedness that theOperating Partnership is required to maintain was reduced during the Specified Period; and •The Operating Partnership agreed to a minimum liquidity requirement during the Specified Period.
Off Balance Sheet Arrangements
We consolidate entities in which we own less than 100% equity interest if we have a controlling interest or are the primary beneficiary in a variable interest entity, as defined in the Consolidation Topic of FASB ASC 810. From time to time, we enter into joint venture arrangements from which we believe we can benefit by owning a partial interest in one or more properties. As ofMarch 31, 2021 , our investments in unconsolidated joint ventures were approximately$126.0 million representing our ownership interest in four joint ventures. We account for these entities under the equity method. Refer to Note 4 of the notes to the condensed consolidated financial statements for more information. Page 35 -------------------------------------------------------------------------------- We review our equity investments in unconsolidated entities for impairment on a venture-by-venture basis whenever events or changes in circumstances indicate that the carrying value of the equity investment may not be recoverable. In testing for impairment of these equity investments, we primarily use cash flow models, discount rates, and capitalization rates to estimate the fair value of properties held in joint ventures, and we also estimate the fair value of the debt of the joint ventures based on borrowing rates for similar types of borrowing arrangements with the same remaining maturity. Considerable judgment by management is applied when determining whether an equity investment in an unconsolidated entity is impaired and, if so, the amount of the impairment. Changes to assumptions regarding cash flows, discount rates, or capitalization rates could be material to our condensed consolidated financial statements. We are engaged by our joint ventures to provide asset management, property management, leasing and investing services for such venture's respective properties. We receive fees for our services, including a property management fee calculated as a percentage of gross revenues received or as a percentage of gross asset value of property held.
Guarantee
A redevelopment agreement was entered into between theCity of Jacksonville , theJacksonville Economic Development Commission and the Company, to construct and developRiver City Marketplace in 2005. As part of the agreement, the city agreed to finance up to$12.2 million of bonds. Repayment of the bonds is to be made in accordance with a level-payment amortization schedule over 20 years, and repayments are made out of tax revenues generated by the redevelopment. The remaining debt service payments due over the life of the bonds, including principal and interest, are$8.0 million . As part of the redevelopment, the Company executed a guaranty agreement whereby the Company would fund debt service payments if incremental tax revenues were not sufficient to fund repayment. There have been no payments made by the Company under this guaranty agreement to date. Contractual Obligations
The following are our contractual cash obligations as of
Payments due by period
Less than More than
Contractual Obligations Total 1 year (1) 1-3 years 4-5 years 5 years
(In thousands)
Mortgages and notes payable:
Scheduled amortization $ 6,622 $ 1,884
923,008 37,000 304,508 306,500 275,000
Total mortgages and notes payable
(2) 929,630 38,884 307,664 308,082 275,000
Interest expense (3) 160,769 26,509 85,880 32,248 16,132
Finance lease (4) 1,200 100 300 200 600
Operating leases 98,768 1,102 4,095 1,757 91,814
Construction commitments 6,475 6,475 - - -
Development obligations (5) 2,390 206 589 369 1,226
Total contractual obligations
(1)Amounts represent balance of obligation for the remainder of 2021. (2)Excludes$0.9 million of unamortized mortgage debt premium and$3.4 million in net deferred financing costs. (3)Variable-rate debt interest is calculated using rates atMarch 31, 2021 . (4)Includes interest payments associated with the finance lease obligation of$0.3 million . (5)Includes interest payments associated with the development obligations of$0.5 million .
At
Debt
See the analysis of our debt included in "Liquidity and Capital Resources."
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--------------------------------------------------------------------------------Operating and Finance Leases
We have an operating ground lease at
We have an operating lease for our 12,572 square foot corporate office inSouthfield, Michigan , which commenced inAugust 2019 , and an operating lease for our 5,629 square foot corporate office inNew York, New York . These leases are set to expire inDecember 2024 andJanuary 2024 , respectively. OurSouthfield, Michigan corporate office lease includes two additional five year renewal options to extend the lease throughDecember 2034 and ourNew York, New York corporate office lease includes an additional five year renewal to extend the lease throughJanuary 2029 . We also have a ground finance lease at our Buttermilk Towne Center with theCity of Crescent Springs, Kentucky . The lease provides for fixed annual payments of$0.1 million through maturity inDecember 2032 , at which time we can acquire the land forone dollar . Construction Costs In connection with the leasing and targeted remerchandinsing of various shopping centers as ofMarch 31, 2021 , we had entered into agreements for construction activities with an aggregate remaining cost of approximately$6.5 million .
Planned Capital Spending
We are focused on enhancing the value of our existing portfolio of shopping centers through successful leasing efforts, including the reconfiguration of anchor-space and small shop lease-up.
For the remainder of 2021, we anticipate spending between$25.0 million and$35.0 million for capital expenditures, of which$6.5 million is reflected in the construction commitments in the contractual obligations table. Our 2021 estimate includes ongoing capital expenditure spending between$17.0 million and$23.0 million and discretionary capital expenditure spending between$8.0 million and$12.0 million . Ongoing capital expenditures relates to leasing costs and building improvements whereas discretionary capital expenditures relate to targeted remerchandising, outlots/expansion, and development/redevelopment. Estimates for future spending will change as new projects are approved. Page 37 --------------------------------------------------------------------------------
Capitalization
AtMarch 31, 2021 our total market capitalization was$1.8 billion . The table below reconciles total debt to net debt and sets forth our calculation of our total market capitalization as ofMarch 31, 2021 and 2020: March 31, 2021 2020 (In thousands) Notes payable, net$ 927,112 $ 1,155,176 Add: Unamortized premiums and deferred financing costs 2,518 1,863 Pro-rata share of debt from unconsolidated joint venture 1,386 - Finance lease obligation 875 926 Cash, cash equivalents and restricted cash (143,355)
(322,844)
Pro-rata share of unconsolidated entities cash, cash equivalents and restricted cash
(2,022) (3,537)
Net debt (1) $ 786,514 $ 831,584
Common shares outstanding 80,156 79,969
Operating Partnership Units outstanding 1,909 1,909
Restricted share awards (treasury method) 1,021 445
Total common shares and equivalents 83,086 82,323
Market price per common share (at
$ 6.03 Equity market capitalization$ 948,011
7.25% Series D Cumulative Convertible Perpetual Preferred Shares
1,849 1,849
Market price per convertible preferred share (at
$ 54.29 $ 30.60 Convertible perpetual preferred shares (at market)$ 100,382 $ 56,579 Total market capitalization$ 1,834,907 $ 1,384,571 Net debt to total market capitalization 42.9 % 60.1 % (1)Net debt represents (i) our total debt principal, which excludes unamortized premium and deferred financing costs, net, plus (ii) our finance lease obligation, plus (iii) our pro-rata share of total debt principal of each of our unconsolidated joint entities, less (iv) our cash, cash equivalents and restricted cash, less (v) our pro-rata share of cash, cash equivalents and restricted cash of each of our unconsolidated entities. We believe this calculation is useful to understand our financial condition. Our method of calculating net debt may be different from methods used by other companies and may not be comparable. AtMarch 31, 2021 , the non-controlling interest in theOperating Partnership was approximately 2.3%. The OP Units outstanding may, under certain circumstances, be exchanged for our common shares of beneficial interest on a one-for-one basis. We, as sole general partner of theOperating Partnership , have the option, but not the obligation, to settle exchanged OP Units held by others in cash based on the current trading price of our common shares of beneficial interest. Assuming the exchange of all non-controlling interest OP Units, there would have been approximately 82.1 million common shares of beneficial interest outstanding atMarch 31, 2021 , with a market value of approximately$936.4 million .
Inflation
Inflation has been relatively low in recent years and has not had a significant
detrimental impact on the results of our operations. Should inflation rates
increase in the future, substantially all of our tenant leases contain
provisions designed to mitigate the negative impact of inflation in the near
term. Such lease provisions include clauses that require our tenants to
reimburse us for real estate taxes and many of the operating expenses we
incur. Also, many of our leases provide for periodic increases in base rent
which are either of a fixed amount or based on changes in the consumer price
index and/or percentage rents (where the tenant pays us rent based on percentage
of its sales). Significant inflation rate increases over a prolonged period of
time may have a material adverse impact on our business.
Page 38
--------------------------------------------------------------------------------Non-GAAP Financial Measures
Certain of our key performance indicators are considered non-GAAP financial measures. Management uses these measures along with our GAAP financial statements in order to evaluate our operating results. We believe these additional measures provide users of our financial information additional comparable indicators of our industry, as well as, our performance. However, these measures do not represent alternatives to GAAP measures as indicators of performance and a comparison of the Company's presentations to similarly titled measures of other REITs may not necessarily be meaningful due to possible differences in definitions and application by such REITs.
Funds from Operations
We consider funds from operations, also known as "FFO," to be an appropriate supplemental measure of the financial performance of an equity REIT.The National Association of Real Estate Investment Trusts ("NAREIT") is an industry body public REITs participate in and provides guidance to its members. Under the NAREIT definition, FFO represents net income (computed in accordance with GAAP), excluding gains (or losses) from sales of operating real estate assets and impairment provisions on operating real estate assets or on investments in non-consolidated investees that are driven by measurable decreases in the fair value of operating real estate assets held by the investee, plus depreciation and amortization, (excluding amortization of financing costs). Adjustments for unconsolidated partnerships and joint ventures are calculated to reflect funds from operations on the same basis. We have adopted the NAREIT definition in our computation of FFO. In addition to FFO, we include Operating FFO as an additional measure of our financial and operating performance. Operating FFO excludes transactions costs and periodic items such as gains (or losses) from sales of non-operating real estate assets and impairment provisions on non-operating real estate assets, bargain purchase gains, severance expense, accelerated amortization of debt premiums, gains or losses on extinguishment of debt, insured expenses, net, accelerated write-offs of above and below market lease intangibles, accelerated write-offs of lease incentives and bond interest proceeds that are not adjusted under the current NAREIT definition of FFO. We provide a reconciliation of FFO to Operating FFO. In future periods, Operating FFO may also include other adjustments, which will be detailed in the reconciliation for such measure, that we believe will enhance comparability of Operating FFO from period to period. FFO and Operating FFO should not be considered alternatives to GAAP net income available to common shareholders or as alternatives to cash flow as measures of liquidity. While we consider FFO and Operating FFO useful measures for reviewing our comparative operating and financial performance between periods or to compare our performance to different REITs, our computations of FFO and Operating FFO may differ from the computations utilized by other real estate companies, and therefore, may not be comparable. We recognize the limitations of FFO and Operating FFO when compared to GAAP net income available to common shareholders. FFO and Operating FFO do not represent amounts available for needed capital replacement or expansion, debt service obligations, or other commitments and uncertainties. In addition, FFO and Operating FFO do not represent cash generated from operating activities in accordance with GAAP and are not necessarily indicative of cash available to fund cash needs, including the payment of dividends.
The following table illustrates the calculations of FFO and Operating FFO:
Page 39
--------------------------------------------------------------------------------
Three Months Ended
March 31,
2021 2020
(In thousands, except per share data)
Net income $ 17,308 $ 342
Net income attributable to noncontrolling partner interest (398) (8)
Preferred share dividends (1,675) (1,675)
Net income (loss) available to common shareholders 15,235 (1,341)
Adjustments:
Rental property depreciation and amortization expense 18,230 20,720
Pro-rata share of real estate depreciation from unconsolidated joint ventures (1)
1,255 1,412
Gain on sale of depreciable real estate (19,003) -
FFO available to common shareholders 15,717 20,791
Noncontrolling interest in Operating Partnership (2) - 8
Preferred share dividends (assuming conversion) (3) - 1,675
FFO available to common shareholders and dilutive securities 15,717 22,474
Transaction costs (4) - 174
Insured expenses, net - 60
Severance expense (5) 28 62
Above and below market lease intangible write-offs (99) (401)
Pro-rata share of acquisition costs from unconsolidated joint ventures (1)
- 617
Pro-rata share of above and below market lease intangible write-offs from unconsolidated joint ventures (1)
10 -
Bond interest proceeds (6) - (213)
Operating FFO available to common shareholders and dilutive securities
$ 15,656 $ 22,773
Weighted average common shares 80,102 79,909
Shares issuable upon conversion of OP Units (2) - 1,909
Dilutive effect of restricted stock 1,021 445
Shares issuable upon conversion of preferred shares (3) - 7,014
Weighted average equivalent shares outstanding, diluted 81,123 89,277
Diluted earnings (loss) per share (7) $ 0.19 $ (0.02) Per share adjustments for FFO available to common shareholders and dilutive securities
- 0.27
FFO available to common shareholders and dilutive securities per share, diluted
$ 0.19 $ 0.25 Per share adjustments for Operating FFO available to common shareholders and dilutive securities
- 0.01
Operating FFO available to common shareholders and dilutive securities per share, diluted
$ 0.19 $ 0.26
(1)Amounts noted are included in Earnings from unconsolidated joint ventures.
(2)The total noncontrolling interest reflects OP Units convertible on a
one-to-one basis into common shares. The Company's net income for the three
months ended March 31, 2021 (largely driven by gain on sale of real estate),
resulted in an income allocation to OP Units which drove an OP Unit ratio of
$0.21 (based on 1,909 weighted average OP Units outstanding). In instances when
the OP Unit ratio exceeds basic FFO, the OP Units are considered anti-dilutive,
and as a result are not included in the calculation of fully diluted FFO and
Operating FFO for the three months ended March 31, 2021 .
(3)7.25% Series D Cumulative Convertible Perpetual Preferred Shares of
Beneficial Interest, $0.01 par value per share paid annual dividends of $6.7
million and are currently convertible into approximately 7.0 million common
shares. They are dilutive only when earnings or FFO exceed approximately $0.24
per diluted share per quarter and $0.96 per diluted share per year. The
conversion ratio is subject to adjustment based upon a number of factors, and
such adjustment could affect the dilutive impact of the Series D convertible
preferred shares on FFO and earnings per share in future periods. In instances
when the Preferred Share ratio exceeds basic FFO, the Preferred Shares are
considered anti-dilutive, and as a result are not included in the calculation of
fully diluted FFO and Operating FFO for the three months ended March 31, 2021 .
(4)For 2020, costs associated with a terminated acquisition and a terminated
disposition.
(5)Amounts noted are included in General and administrative expense.
(6)Amounts noted are included in Other income (expense), net.
(7)The denominator to calculate diluted earnings (loss) per share includes
weighted average common shares and restricted stock only for the three months
ended March 31, 2021 and includes weighted average common shares only for the
three months ended March 31, 2020 .
Page 40
--------------------------------------------------------------------------------NOI, Same Property NOI and NOI from Other Investments
NOI consists of (i) rental income and other property income, before straight-line rental income, amortization of lease inducements, amortization of acquired above and below market lease intangibles and lease termination fees less (ii) real estate taxes and all recoverable and non-recoverable operating expenses other than straight-line ground rent expense, in each case, including our share of these items from ourR2G Venture LLC andRGMZ Venture REIT LLC unconsolidated joint ventures. NOI, Same Property NOI and NOI from Other Investments are supplemental non-GAAP financial measures of real estate companies' operating performance. Same Property NOI is considered by management to be a relevant performance measure of our operations because it includes only the NOI of comparable operating properties for the reporting period. Same Property NOI for the three months endedMarch 31, 2021 and 2020 represents NOI from the Company's same property portfolio consisting of 42 consolidated operating properties and our 51.5% pro-rata share of five properties owned by ourR2G Venture LLC unconsolidated joint venture and 100% of the 12 properties owned by ourRGMZ Venture REIT LLC unconsolidated joint venture (excludes one property that is part of ourRivertowne Square multi-tenant property where activities have started in preparation for redevelopment). All properties included in Same Property NOI were either acquired or placed in service and stabilized prior toJanuary 1, 2020 . We present Same Property NOI primarily to show the percentage change in our NOI from period to period across a consistent pool of properties. The properties contributed toRGMZ Venture REIT LLC had previously been parts of larger shopping centers that we own. Accordingly, 100.0% of the NOI from these properties is included in our results for periods on or prior toMarch 4, 2021 and, for these prior periods, we had not separately allocated expenses attributable to the larger shopping centers between these properties and the remainder of these shopping centers. As a result, in order to help ensure the comparability of our Same Property NOI for the periods presented, we are continuing to include 100.0% of the NOI from these properties in our Same Property NOI following their contribution even though our pro rata share followingMarch 4, 2021 is only 6.4%. Same Property NOI excludes properties under redevelopment or where activities have started in preparation for redevelopment. A property is designated as a redevelopment when planned improvements significantly impact the property. NOI from Other Investments for the three months endedMarch 31, 2021 and 2020 represents NOI primarily from (i)Webster Place andRivertowne Square where the Company has begun activities in anticipation of future redevelopment, (ii) certain property related employee compensation, benefits, and travel expense and (iii) noncomparable operating income and expense adjustments. Non-RPT NOI fromRGMZ Venture REIT LLC represents 93.6% of the properties contributed toRGMZ Venture REIT LLC afterMarch 4, 2021 , which is our partners' share ofRGMZ Venture REIT LLC . NOI, Same Property NOI and NOI from Other Investments should not be considered alternatives to net income in accordance with GAAP or as measures of liquidity. Our method of calculating these measures may differ from methods used by other REITs and, accordingly, may not be comparable to such other REITs. The following is a summary of our properties for the periods noted with consistent classification in the prior period for presentation of Same Property NOI: Three Months Ended March 31, Property Designation 2021 2020 Same-property 47 47 Acquisitions - - Redevelopment (1) 2 2 Total properties 49 49
(1)Includes the following properties:
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--------------------------------------------------------------------------------The following is a reconciliation of our net income available to common shareholders to Same Property NOI:
Three Months Ended
March 31,
2021 2020
(in thousands)
Net income (loss) available to common shareholders $ 15,235 $ (1,341)
Adjustments to reconcile to Same Property NOI:
Preferred share dividends 1,675 1,675
Net income attributable to noncontrolling interest 398 8
Income tax provision 88 31
Interest expense 9,406 9,401
Earnings from unconsolidated joint ventures (801) (256)
Gain on sale of real estate (19,003) -
Insured expenses, net - 60
Other expense (income), net 107 (353)
Management and other fee income (316) (351)
Depreciation and amortization 18,379 20,848
Transaction costs - 174
General and administrative expenses 7,370 6,222
Pro-rata share of NOI from R2G Venture LLC (1) 2,031 2,232
Pro-rata share of NOI from RGMZ Venture REIT LLC (2) 10 -
Lease termination fees (24) (141)
Amortization of lease inducements 211 137
Amortization of acquired above and below market lease intangibles
(737) (1,095)
Straight-line ground rent expense 77 77
Straight-line rental income (396) (301)
NOI 33,710 37,027
NOI from Other Investments 874 927
Non-RPT NOI from RGMZ Venture REIT LLC (3) 144 -
Same Property NOI $ 34,728 $ 37,954
Period-end Occupancy 91.0 % 93.5 %
(1)Represents 51.5% of the NOI from the five properties contributed to R2G
Venture LLC for all periods presented.
(2)Represents 6.4% of the NOI from the properties contributed to RGMZ Venture
REIT LLC after March 4, 2021 .
(3)Represents 93.6% of the NOI from the properties contributed to RGMZ Venture
REIT LLC after March 4, 2021 .
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