Certain statements contained herein constitute forward-looking statements as such term is defined in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements are not guarantees of future performance. They represent our intentions, plans, expectations and beliefs and are subject to numerous assumptions, risks and uncertainties. Our future results, financial condition and business may differ materially from those expressed in these forward-looking statements. You can find many of these statements by looking for words such as "approximates," "believes," "expects," "anticipates," "estimates," "intends," "plans," "projects," "will," "would," "may" or other similar expressions in this Quarterly Report on Form 10-Q. Many of the factors that will determine the outcome of these and our other forward-looking statements are beyond our ability to control or predict. For further discussion of factors that could materially affect the outcome of our forward-looking statements, see "Risk Factors" in our Annual Report on Form 10-K for the year endedDecember 31, 2019 and in Part II, Item 1A of this Quarterly Report on Form 10-Q. For these statements, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. You are cautioned not to place undue reliance on our forward-looking statements, which speak only as of the date of this Quarterly Report on Form 10-Q. All subsequent written and oral forward-looking statements attributable to us or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. We do not undertake any obligation to release publicly any revisions to our forward-looking statements to reflect events or circumstances occurring after the date of this Quarterly Report on Form 10-Q. The following discussion should be read in conjunction with the condensed consolidated financial statements and notes thereto included in Part 1 of this Quarterly Report.
Overview
We are principally engaged in the acquisition, ownership, development, redevelopment, management, and leasing of diversified retail real estate throughoutthe United States . As ofMarch 31, 2020 , the Company's portfolio consisted of interests in 208 properties totaling approximately 32.8 million square feet of gross leasable area, including 180Wholly Owned Properties totaling approximately 28.3 million square feet of GLA across 44 states andPuerto Rico , and interests in 28JV Properties totaling approximately 4.5 million square feet of GLA across 14 states. We were formed to unlock the underlying real estate value of a high-quality retail portfolio we acquired from Sears Holdings inJuly 2015 and our primary objective is to create value for our shareholders through the re-leasing and redevelopment of the majority of ourWholly Owned Properties andJV Properties . In doing so, we target meaningful growth in net operating income ("NOI") and diversification of our tenant base while transforming our portfolio from one with a single-tenant retail orientation to one comprised predominately of multi-tenant shopping centers, multifamily properties and larger-scale, mixed-use environments.
In order to achieve our objective, we intend to execute the following strategies:
• Convert single-tenant buildings into multi-tenant properties at meaningfully
higher rents • Maximize value of vast land holdings through retail and mixed-use densification;
• Leverage existing and future joint venture relationships with leading
landlords and financial partners; and
• Maintain a flexible capital structure to support value creation activities.
OnOctober 15, 2018 , Sears Holdings and certain of its affiliates filed voluntary petitions for relief under chapter 11 of title 11 ofthe United States Code with theBankruptcy Court . OnFebruary 28, 2019 , the Company and Holdco, an affiliate ofESL Investments, Inc. , executed the Holdco Master Lease with respect to 51Wholly Owned Properties , which became effective onMarch 12, 2019 , when theBankruptcy Court issued an order approving the rejection of the OriginalMaster Lease .
As of
COVID-19 Pandemic The recent COVID-19 pandemic is having a significant impact on the global economy, theU.S. economy, the local economies in which our properties are located, and the broader financial markets. Nearly every industry has been impacted directly or indirectly, and the retail, retail real estate and real estate development industries inthe United States have all come under severe pressure due to numerous factors, including preventative measures taken by local, state and federal authorities to alleviate the public health crisis such as mandatory business closures, quarantines, restrictions on travel and "shelter-in-place" or "stay-at-home" orders. - 30 - -------------------------------------------------------------------------------- These containment measures and other factors have affected operations at our properties and, with the exception of "essential" businesses, substantially all of our tenants have closed their stores. We have also paused substantially all of our construction projects as of the end of March. As a result of the rapid development, fluidity and uncertainty surrounding this situation, we expect that these conditions will change, potentially significantly, in future periods, and results for the three months endedMarch 31, 2020 may therefore not be indicative of the impact of the COVID-19 pandemic on our business for the second quarter of 2020 or for future periods. As ofMay 6, 2020 , the Company had collected approximately 47% of contractual base rent and tenant reimbursements billed for the month of April (54% from tenants other than Holdco). We have received a number of rent relief requests from tenants, most often in the form of rent deferral requests, which we are evaluating on a case-by-case basis. Absent agreement between the Company and tenants with respect to such rent relief requests, we fully intend to enforce our contractual rights under our leases. There can be no assurance that rental modifications agreements will be reached or, if agreements are reached, that tenants will meet their future obligations. There is uncertainty as to the timing and extent to which these restrictions will be relaxed or lifted, businesses will reopen and previously underway projects will recommence. As such, we cannot reasonably estimate the impact of COVID-19 on our financial condition, results of operations or cash flows over the foreseeable future. We have taken a number of proactive measures to preserve the value of our assets and our platform and manage the anticipated impact of the COVID-19 pandemic on our business and the communities in which we operate, including, but not limited to, the following:
• Adapted operations to protect employees and their families, including by
implementing a work from home policy;
• Communicated consistently with tenants, including to provide assistance in
identifying local, state and federal resources that may be available to support their businesses and employees; • Made over 180 properties available to governmental and community organizations for relief efforts at no cost;
• Implemented plans to reduce operating expenses at the property and corporate
level, each by approximately 20-25%;
• Put substantially all construction projects on hold at the end of March,
limiting capital expenditures until the Company can better assess the
duration and extent of the disruption to the economy and its business; and
• Amended our Term Loan Facility to provide increased flexibility with respect
to the deferral of interest expense, under specified circumstances, until
the Term Loan Facility matures in
lender also reaffirmed its continued support for asset dispositions, subject
to the lender's right to approve individual transactions.
Results of Operations
We derive substantially all of our revenue from rents received from tenants under existing leases at each of our properties. This revenue generally includes fixed base rents and recoveries of expenses that we have incurred and that we pass through to the individual tenants, in each case as provided in the respective leases. Our primary cash expenses consist of our property operating expenses, general and administrative expenses, interest expense, and construction and development related costs. Property operating expenses include: real estate taxes, repairs and maintenance, management fees, insurance, ground lease costs and utilities; general and administrative expenses include payroll, office expenses, professional fees, and other administrative expenses; and interest expense is on our term loan facility. In addition, we incur substantial non-cash charges for depreciation of our properties and amortization of intangible assets and liabilities. - 31 -
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Comparison of the Three Months Ended
The following table presents selected data on comparative results from the Company's condensed consolidated statements of operations for the three months endedMarch 31, 2020 , as compared to the three months endedMarch 31, 2019 (in thousands): Three Months Ended March 31, 2020 2019 $ Change Revenue Rental income$ 33,110 $ 43,578 $ (10,468 ) Expenses Property operating 10,301 10,237 64 Real estate taxes 9,225 10,192 (967 ) Depreciation and amortization 34,097 26,216 7,881 General and administrative 9,420 9,759 (339 ) Gain on sale of real estate 20,788 21,261 (473 ) Interest expense 21,513 23,454 (1,941 ) Rental Income The following table presents the results for rental income for the three months endedMarch 31, 2020 , as compared to the corresponding period in 2019 (in thousands): Three Months Ended March 31, 2020 2019 % of Total % of Total Rental Income Rental Income Rental Income Rental Income $ Change Sears or Kmart $ 7,725 23.3 %$ 20,686 47.5 %$ (12,961 ) Diversified tenants 27,989 84.5 % 19,432 44.6 % 8,557 Straight-line rent (2,701 ) (8.2 )% 3,356 7.7 % (6,057 ) Amortization of above/below market leases 97 0.3 % 104 0.2 % (7 ) Total rental income$ 33,110 100.0 %$ 43,578 100.0 %$ (10,468 ) The decrease of$13.0 million in Sears or Kmart rental income for the three months endedMarch 31, 2020 is primarily due to a reduction in the number of properties leased to Sears or Kmart under the OriginalMaster Lease and the Holdco Master Lease, as applicable, as a result of recapture and termination activity and the rejection of the OriginalMaster Lease during the three months endedMarch 31, 2019 .
The increase of
The decrease of$6.1 million in straight-line rental income for the three months endedMarch 31, 2020 is primarily due to accelerated amortization of straight-line rent receivables as a result of termination activity under the Holdco Master Lease offset by an increase in straight-line rent receivables related to diversified tenants under newly commenced leases
Property Operating Expenses and Real Estate Taxes
The Company incurs certain property operating and real estate tax expenses.
The following table presents the comparative results for property operating
expenses and real estate taxes for the three months ended
Three Months Ended March 31, 2020 2019 $
Change
Property operating expenses
64 Real estate taxes 9,225 10,192 (967 ) The increase of$0.1 million in property operating expense for the three months endedMarch 31, 2020 is primarily due to the Company directly incurring utility and certain common area maintenance expenses at properties for which Sears or Kmart paid such - 32 -
-------------------------------------------------------------------------------- expenses directly during the three months endedMarch 31, 2019 , partially offset by a decrease in property operating expenses as a result of asset sales and an increase in amounts capitalized due to development activity.
The decrease of
Depreciation and Amortization Expenses
The increase of$7.9 million in depreciation and amortization expenses for the three months endedMarch 31, 2020 was due primarily to$10.5 million of accelerated amortization attributable to certain lease intangible assets offset by the non-recurrence of$2.2 million of accelerated depreciation during the three months endedMarch 31, 2019 related to certain buildings that were demolished for redevelopment and approximately$0.4 million of lower net scheduled depreciation.
Accelerated amortization results from the recapture of space from, or the termination of space by Holdco. Such recaptures and terminations are deemed lease modifications and require related lease intangibles to be amortized over the shorter of the shortened lease term or the remaining useful life of the asset.
General and Administrative Expenses
General and administrative expenses consist of personnel costs, including share-based compensation, professional fees, office expenses and related expenses.
The decrease of
Gain on Sale of Real Estate
During the three months endedMarch 31, 2020 , the Company sold four properties for aggregate consideration of$60.4 million and recorded gains totaling$20.8 million , which are included in gain on the sale of real estate within the condensed consolidated statements of operations.
Interest Expense
The Company incurs interest expense on its debt net of capitalized costs.
The decrease of
Liquidity and Capital Resources
In response to the COVID-19 pandemic, we have taken a number of actions to manage our cash resources, including putting substantially all of our construction projects on hold, reducing operating and corporate expenses, and amending certain terms of our Term Loan Facility.
Our primary uses of cash include the payment of property operating and other expenses, including general and administrative expenses and debt service (collectively, "obligations"), and, on a limited basis given the current environment, the reinvestment in and redevelopment of our properties ("development expenditures"). As a result of a decrease in occupancy levels due to our recapture of space for redevelopment purposes and the execution of certain termination rights by Sears Holdings under the OriginalMaster Lease and Holdco under the Holdco Master Lease, property rental income, which is our primary source of operating cash flow, did not fully fund obligations incurred during the three months endedMarch 31, 2020 and we had operating cash outflows of$10.2 million . Additionally, our development expenditures during the three months endedMarch 31, 2020 drove investing cash outflows of$31.0 million . Obligations are projected to continue to exceed property rental income, and the COVID-19 pandemic has created uncertainty with respect to rent collections and the timing of our construction projects, substantially all of which are currently on hold. While we do not currently have the liquid funds available to satisfy our obligations and development expenditures, we expect to fund such obligations and any development expenditures with cash on hand and a combination of capital sources including, but not limited to the following, subject to any approvals that may be required under the Term Loan Agreement: - 33 -
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• Sales of
and generated approximately
our capital recycling program in
the Company sold one asset for gross proceeds of
total gross sales proceeds for the year to
contracts to sell assets for anticipated gross proceeds of
• Sales of Interests in
interests in 13
gross proceeds since
include rights that allow us to sell our interests in select
to our partners at fair market value;
• New joint ventures. As of
for 10 properties that generated approximately
proceeds since
new joint ventures also reduce our development expenditures by the amount of
our partners' interests in the ventures;
• Joint venture debt. We may incur property-level debt in new or existing
joint ventures, including construction financing for properties under development and longer-term mortgage debt for stabilized properties; and
• Other credit and capital markets transactions. We may raise additional
capital through the public or private issuance of debt securities, common or
preferred equity or other instruments convertible into or exchangeable for
common or preferred equity.
OnMay 5, 2020 , theOperating Partnership and Berkshire Hathaway entered into an amendment to the Senior Secured Term Loan Agreement by and among theOperating Partnership and Berkshire Hathaway as initial lender and administrative agent (the "Amendment") that permits the deferral of payment of interest under the Term Loan Agreement if, as of the first day of each applicable month, (x) the amount of unrestricted and unencumbered (other than liens created under the Term Loan Agreement) cash on hand of theOperating Partnership and its subsidiaries, minus (y) the aggregate amount of anticipated necessary expenditures for such period (such sum, "Available Cash") is equal to or less than$30.0 million . In such instances, for each interest period, theOperating Partnership is obligated to make payments of interest in an amount equal to the difference between (i) Available Cash and (ii)$20.0 million (provided that such payment shall not exceed the amount of current interest otherwise due under the Term Loan Agreement). Any deferred interest shall accrue interest at 2.0% in excess of the then applicable interest rate and shall be due and payable onJuly 31, 2023 ; provided, that theOperating Partnership is required to pay any deferred interest from Available Cash in excess of$30.0 million (unless otherwise agreed to by the administrative agent under the Term Loan Agreement in its sole discretion). In addition, repayment of any outstanding deferred interest is a condition to any borrowings under the$400.0 million incremental funding facility under the Term Loan Agreement. Additionally, the Amendment provides that the administrative agent and the lenders express their continued support for asset dispositions, subject to the administrative agent's right to approve the terms of individual transactions due to the occurrence of a Financial Metric Trigger Event, as such term is defined under the Term Loan Facility. Our Term Loan Facility includes a$400.0 million Incremental Funding Facility, access to which is subject to rental income from non-Sears Holdings tenants of at least$200.0 million , on an annualized basis and after giving effect to SNO leases expected to commence rent payment within 12 months, which we have not yet achieved. The timing of our ability to access the Incremental Funding Facility, if at all, will be adversely impacted by the COVID-19 pandemic.
Cash Flows for the Three Months Ended
The following table summarizes the Company's cash flow activities for the three
months ended
Three Months Ended March 31, 2020 2019 $ Change Net cash used in operating activities$ (10,200 ) $ (16,771 ) $ 6,571 Net cash used in investing activities (31,024 ) (56,595 ) 25,571 Net cash used in financing activities (1,299 ) (16,866
) 15,567
Cash Flows from Operating Activities
Significant changes in the components of net cash used in operating activities include:
- In 2020, increased costs accrued to accounts payable, accrued expenses and
other liabilities, and decreased rental income. - 34 -
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Cash Flows from Investing Activities
Significant components of net cash used in investing activities include:
- In 2020, development of real estate and property improvements of (
million and investments in unconsolidated joint ventures of
partially offset by$58.3 million of net proceeds from the sale of real estate; and
- In 2019, development of real estate and property improvements of (
million and investments in unconsolidated joint ventures of
partially offset by
estate.
Cash Flows from Financing Activities
Significant components of net cash used in by financing activities include:
- In 2020, cash distributions to common stockholders and holders of Operating
Partnership units,
- In 2019, cash distributions to common stockholders and holders of Operating
Partnership units,
- In 2019, cash payments of preferred dividends,
Dividends and Distributions
The Company's
Dividends per Class A and Class C Declaration Date Record Date Payment Date Common Share 2019 February 25 March 29 April 11 $ 0.25
The Company's
Series A Declaration Date Record Date Payment Date Preferred Share 2020 February 18 March 31 April 15 $ 0.43750 2019 October 23 December 31 January 15, 2020 $ 0.43750 July 23 September 30 October 15 0.43750 April 30 June 28 July 15 0.43750 February 25 March 29 April 15 0.43750 As previously disclosed, the Company declared a dividend on the Company's Class A and Class C common shares for the first quarter of 2019 and has not declared dividends on the Company's Class A and Class C common shares since that time, based on ourBoard of Trustees' assessment of the Company's investment opportunities and its expectations of taxable income for the remainder of 2020. The Company intends to, at a minimum, make distributions to our shareholders to comply with the REIT requirements of the Code, which may be satisfied by dividends on the Company's Series A Preferred shares. - 35 -
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Off-Balance Sheet Arrangements
The Company accounts for its investments in joint ventures that it does not have a controlling interest or is not the primary beneficiary using the equity method of accounting and those investments are reflected on the condensed consolidated balance sheets of the Company as investments in unconsolidated joint ventures. As ofMarch 31, 2020 andDecember 31, 2019 , we did not have any off-balance sheet financing arrangements.
Contractual Obligations
There have been no significant changes in the contractual obligations disclosed
in our Form 10-K for the year ended
Capital Expenditures
The majority of our capital expenditures, tenant improvement costs and leasing commissions are from our retenanting and redevelopment projects described under the caption "-Retenanting and Redevelopment Projects" below.
During the three months ended
During the year ended
Litigation and Other Matters
In accordance with accounting standards regarding loss contingencies, the Company accrues an undiscounted liability for those contingencies where the incurrence of a loss is probable and the amount can be reasonably estimated, and we disclose the amount accrued and the amount of a reasonably possible loss in excess of the amount accrued or disclose the fact that such a range of loss cannot be estimated. We do not record liabilities when the likelihood that the liability has been incurred is probable but the amount cannot be reasonably estimated, or when the liability is believed to be only reasonably possible or remote. In such cases, we disclose the nature of the contingency, and an estimate of the possible loss, range of loss, or disclose the fact that an estimate cannot be made. During the Sears Holdings bankruptcy proceedings, theOfficial Committee of Unsecured Creditors of Sears Holdings (the "UCC") and others, including the Restructuring Subcommittee of the Board of Directors of Sears Holdings, alleged that the 2015 Transactions between us and Sears Holdings constituted a fraudulent conveyance, and indicated an intent to pursue litigation challenging the 2015 Transactions on that and other grounds. The approval of the Holdco Acquisition by theBankruptcy Court expressly preserved claims relating to the 2015 Transactions between us and Sears Holdings. OnApril 18, 2019 , at the direction of the Restructuring Sub-Committee of the Restructuring Committee of the Board of Directors of Sears Holdings Corporation, Sears Holdings, Sears, Roebuck & Co.,Sears Development Co. ,Kmart Corporation , andKmart of Washington, LLC filed a lawsuit (the "Litigation") in theUnited States Bankruptcy Court for the Southern District of New York (the "Bankruptcy Court ") against, among others,Edward S. Lampert ,ESL Investments, Inc. and certain of its affiliates and investors,Fairholme Capital Management, L.L.C. , certain members of the Sears Holdings board of directors, the Company, theOperating Partnership , and certain of our affiliates and subsidiaries (the Company, theOperating Partnership , and certain of our affiliates and subsidiaries collectively, the "Seritage Defendants"). The Litigation is dual captioned as In re: Sears Holdings Corporation, et al., Case No. 18-23538 (RDD) and Sears Holdings Corporation et al., v. Lampert et al., Case No. 19-08250 (RDD). The Litigation alleges, among other things, that certain transactions undertaken by Sears Holdings since 2011 constituted actual and/or constructive fraudulent transfers and/or illegal dividends by Sears Holdings. The challenged transactions include theJuly 2015 transactions giving rise to Seritage, the execution of the OriginalMaster Lease with Sears Holdings, and the acquisition of real estate from Sears Holdings. The Litigation alleges, among other things, that the real estate acquired by Seritage from Sears Holdings inJuly 2015 was worth at least$649 to$749 million more than the purchase price paid. The Litigation seeks as relief, among other things, declaratory relief, avoidance of the allegedly actual and/or constructive fraudulent transfers and either (i) rescission of the transfers of real estate from Sears Holdings to Seritage in 2015, return of the proceeds of the transactions between Sears Holdings and Seritage, or (ii) in the alternative, payment by Seritage to Sears Holdings of damages at least equal to the value of the transferred property. - 36 - -------------------------------------------------------------------------------- OnOctober 15, 2019 , theBankruptcy Court entered an order (the "Confirmation Order") confirming the Modified Second Amended Joint Chapter 11 Plan of Sears Holdings and its affiliated debtors (the "Chapter 11 Plan"). Pursuant to the terms of the Confirmation Order, upon the effective date of the Chapter Plan, a liquidating trust will be formed, and the Litigation will vest in the liquidating trust. The Confirmation Order further provides that, prior to the effective date of the Chapter 11 Plan and the formation of the liquidating trust, the Litigation shall be controlled by five litigation designees selected by Sears Holdings and the Unsecured Creditors' Committee (the "UCC"). For further information, refer to the Chapter 11 Plan, Confirmation Order and liquidating trust agreement, each of which has been publicly filed with theBankruptcy Court . OnFebruary 21, 2020 , the Seritage defendants filed a partial motion to dismiss seeking dismissal of the claims in the operative complaint in the Litigation relating to the release received in the Sears Holdings derivative litigation, unjust enrichment, and equitable subordination. The Company believes that the claims against the Seritage Defendants in the Litigation are without merit and intends to defend against them vigorously. The Company is subject, from time to time, to various legal proceedings and claims that arise in the ordinary course of business. While the resolution of such matters cannot be predicted with certainty, management believes, based on currently available information, the final outcome of such ordinary course legal proceedings and claims will not have a material effect on the condensed consolidated financial position, results of operations or liquidity of the Company.
Retenanting and Redevelopment Projects
The Company put substantially all of its construction projects on hold at the end of March and reduced capital expenditures to a select handful of projects. The Company deemed this action prudent in light of the COVID-19 pandemic, the resulting economic uncertainty and the direct impacts on its business, including reductions in rental income and the potential effects on future asset sales, which have been a meaningful source of capital for the Company's development program. These decisions were also influenced by tenant and construction uncertainty, including tenants' ability to construct and open new stores and the feasibility of sustaining labor levels with safe working conditions and sourcing supplies, as well as restrictions at the state and local levels, including restrictions on construction and difficulties obtaining inspections and permits. As ofMarch 31, 2020 , the Company had originated 91 retail redevelopment projects since the Company's inception. Excluding six projects that have been sold, these projects represented an estimated total investment of$1.6-1.7 billion ($1.4-1.5 billion at share), of which an estimated$570-650 million ($520-600 million at share) remained to be spent under the original development plans. Additionally, the Company had recently announced its first three multifamily projects, each of which represented the first phase of larger, mixed-use developments and were expected to have an aggregate incremental cost of$325-350 million for the initial phases.
Critical Accounting Policies
A summary of our critical accounting policies is included in our Annual Report on Form 10-K for the year endedDecember 31, 2019 in Management's Discussion and Analysis of Financial Condition and Results of Operations. For the three months endedMarch 31, 2020 , there were no material changes to these policies.
Non-GAAP Supplemental Financial Measures and Definitions
The Company makes reference to NOI, Total NOI, FFO and Company FFO which are financial measures that include adjustments to GAAP.
Net Operating Income ("NOI") and Total NOI
NOI is defined as income from property operations less property operating expenses. Other REITs may use different methodologies for calculating NOI, and accordingly, the Company's depiction of NOI may not be comparable to other REITs. The Company believes NOI provides useful information regarding Seritage, its financial condition, and results of operations because it reflects only those income and expense items that are incurred at the property level. The Company also uses Total NOI, which includes its proportional share of unconsolidated properties. The Company believes this form of presentation offers insights into the financial performance and condition of the Company as a whole given our ownership of unconsolidated properties that are accounted for under GAAP using the equity method. - 37 -
-------------------------------------------------------------------------------- The Company also considers NOI and Total NOI to be a helpful supplemental measure of its operating performance because it excludes from NOI variable items such as termination fee income, as well as non-cash items such as straight-line rent and amortization of lease intangibles.
Due to the adjustments noted, NOI and Total NOI should only be used as an alternative measure of the Company's financial performance.
Funds from Operations ("FFO") and Company FFO
FFO is calculated in accordance withNational Association of REITs which defines FFO as net income computed in accordance with GAAP, excluding gains (or losses) from property sales, real estate related depreciation and amortization, and impairment charges on depreciable real estate assets. The Company considers FFO a helpful supplemental measure of the operating performance for equity REITs and a complement to GAAP measures because it is a recognized measure of performance by the real estate industry. The Company makes certain adjustments to FFO, which it refers to as Company FFO, to account for certain non-cash and non-comparable items, such as termination fee income, unrealized loss on interest rate cap, litigation charges, acquisition-related expenses, amortization of deferred financing costs and certain up-front-hiring costs, that it does not believe are representative of ongoing operating results.
Due to the adjustments noted, FFO and Company FFO should only be used as an alternative measure of the Company's financial performance.
Reconciliation of Non-GAAP Financial Measures to GAAP Financial Measures
None of NOI, Total NOI, FFO and Company FFO are measures that (i) represent cash flow from operations as defined by GAAP; (ii) are indicative of cash available to fund all cash flow needs, including the ability to make distributions; (iii) are alternatives to cash flow as a measure of liquidity; or (iv) should be considered alternatives to net income (which is determined in accordance with GAAP) for purposes of evaluating the Company's operating performance. Reconciliations of these measures to the respective GAAP measures we deem most comparable are presented below on a comparative basis for all periods.
The following table reconciles NOI and Total NOI to GAAP net loss for the three
months ended
Three Months Ended March 31, NOI and Total NOI 2020 2019 Net loss$ (30,975 ) $ (10,894 ) Termination fee income (990 ) - Management and other fee income (207 ) (282 ) Depreciation and amortization 34,097
26,216
General and administrative expenses 9,420
9,759
Equity in loss of unconsolidated
joint ventures 894 (1,222 ) Gain on sale of real estate (20,788 ) (21,261 ) Interest and other income (333 ) (2,598 ) Interest expense 21,513 23,454 Provision for income taxes (37 ) (23 ) Straight-line rent adjustment 2,701 (3,355 ) Above/below market rental income/expense (97 ) (104 ) NOI$ 15,198 $
19,690
NOI of unconsolidated joint ventures 1,302
4,310
Straight-line rent adjustment
(unconsolidated joint ventures) (171 )
375
Above/below market rental income/expense
(unconsolidated joint ventures) (482 ) (97 ) Total NOI$ 15,847 $ 24,278 - 38 -
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The following table reconciles FFO and Company FFO to GAAP net loss for the
three months ended
Three Months Ended March 31, FFO and Company FFO 2020 2019 Net loss$ (30,975 ) $ (10,894 ) Real estate depreciation and amortization (consolidated properties) 33,587
25,575
Real estate depreciation and amortization
(unconsolidated joint ventures) 1,844 2,627 Gain on sale of real estate (20,788 ) (21,261 ) Dividends on preferred shares (1,225 ) (1,225 ) FFO attributable to common shareholders and unitholders$ (17,557 ) $ (5,178 ) Termination fee income (990 ) - Amortization of deferred financing costs 106
118
Company FFO attributable to common
shareholders and unitholders$ (18,441 ) $
(5,060 )
FFO per diluted common share and unit $ (0.31 ) $ (0.09 ) Company FFO per diluted common share and unit $ (0.33 ) $
(0.09 )
Weighted Average Common Shares and Units Outstanding Weighted average common shares outstanding 37,232
35,671
Weighted average OP units outstanding 18,578
20,119
Weighted average common shares and
units outstanding 55,810 55,790 - 39 -
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