GlobeNewswire Inc | Oct 26, 2020 04:15PM EDT

October 26, 2020

SAN DIEGO, Oct. 26, 2020 (GLOBE NEWSWIRE) -- Retail Opportunity Investments Corp. (NASDAQ:ROIC) announced today financial and operating results for the three and nine months ended September 30, 2020.

HIGHLIGHTS

-- $6.5 million of net income attributable to common stockholders for 3Q20 ($0.06 per diluted share) -- $31.6 million of Funds From Operations (FFO)(1) for 3Q20 ($0.25 per diluted share) -- 88.7% of total 3Q20 billed base rent has been paid to date -- 96.8% portfolio lease rate at September 30, 2020 -- 94.8% of total tenants are currently open, based on annualized base rent (ABR) -- 441,148 square feet of leases executed in 3Q20 (comparable to pre-pandemic leasing volume) -- 12.2% increase in same-space comparative cash rents on new leases in 3Q20 (11.6% on renewals) -- 3.5% decrease in same-center cash net operating income (3Q20 vs. 3Q19) -- $130.0 million liquidity borrowing repaid in full -- $49.1million of operational cash flow conserved since 1Q20 -- $62.2million in cash & cash equivalents currently -- Awarded investment grade rating from Fitch Ratings, Inc. -- Quarterly cash dividend expected to be reinstated starting in 1Q21

________________________________________(1) A reconciliation of GAAP net income to FFO is provided at the end of this press release.

Stuart A. Tanz, President and Chief Executive Officer of Retail Opportunity Investments Corp. stated, Our business, portfolio and tenants continue to exhibit remarkable resiliency. Notwithstanding ongoing state safeguards on the West Coast, that continue to limit operational capacity for a number of businesses, consumer activity across our grocery-anchored shopping center portfolio is strong. Accordingly, demand for space from a broad range of retailers has ramped up considerably. Our leasing activity during the third quarter totaled over 441,000 square feet, which is close to a new record in terms of our historical third quarter leasing activity. Additionally, we achieved double-digit rent growth on both new leases signed during the quarter and renewals. Tanz added, We intend to continue making the most of the demand, along with working diligently and collaboratively with existing tenants toward returning to full operations, with the goal of achieving a solid finish to 2020.

FINANCIAL RESULTS SUMMARY

For the three months ended September 30, 2020, GAAP net income attributable to common stockholders was $6.5 million, or $0.06 per diluted share, as compared to GAAP net income attributable to common stockholders of $17.9 million, or $0.16 per diluted share, for the three months ended September 30, 2019. For the nine months ended September 30, 2020, GAAP net income attributable to common stockholders was $23.1 million, or $0.20 per diluted share, as compared to GAAP net income attributable to common stockholders of $38.7 million, or $0.34 per diluted share, for the nine months ended September 30, 2019.

FFO for the third quarter of 2020 was $31.6 million, or $0.25 per diluted share, as compared to $33.4 million in FFO, or $0.27 per diluted share for the third quarter of 2019. FFO for the first nine months of 2020 was $98.2 million, or $0.77 per diluted share, as compared to $102.7 million in FFO, or $0.82 per diluted share for the first nine months of 2019. ROIC reports FFO as a supplemental performance measure in accordance with the definition set forth by the National Association of Real Estate Investment Trusts. A reconciliation of GAAP net income to FFO is provided at the end of this press release.

For the third quarter of 2020, same-center net operating income (NOI) was $47.0 million, as compared to $48.7 million in same-center NOI for the third quarter of 2019, representing a 3.5% decrease. For the first nine months of 2020, same-center NOI decreased 3.2% as compared to same-center NOI for the first nine months of 2019. ROIC reports same-center comparative NOI on a cash basis. A reconciliation of GAAP operating income to same-center comparative NOI is provided at the end of this press release.

2020 financial results for the three and nine months ended September 30, 2020, as compared to 2019, reflect $62.6 million in net property dispositions completed during 2019, and the impact to date in 2020 from the ongoing pandemic, including $2.2 million of bad debt in the third quarter of 2020, as compared $0.4 million of bad debt in the third quarter of 2019, and $8.8 million of bad debt in the first nine months of 2020, as compared to $1.7 million of bad debt in the first nine months of 2019.

BALANCE SHEET SUMMARY

During the third quarter 2020, ROIC repaid in full the liquidity borrowings that it had previously drawn on its unsecured credit facility at the outset of the pandemic, in March and April 2020, totaling $130.0 million. At September 30, 2020, ROIC had total real estate assets (before accumulated depreciation) of approximately $3.1 billion and approximately $1.4 billion of principal debt outstanding (net of cash and cash equivalents), including $103.5 million outstanding on its $600.0 million unsecured credit facility. As of September 30, 2020, 94.0% of ROICs principal debt outstanding was unsecured, and 92.8% was effectively fixed-rate. Additionally, ROICs interest coverage for the third quarter 2020 was 3.1 times and 94.5% of its portfolio was unencumbered at September 30, 2020, based on GLA.

Since the pandemic was declared in mid-March, ROIC has conserved approximately $49.1million of operational cash flow to date. ROIC currently has $62.2million in cash and cash equivalents. In terms of future debt maturities, ROIC has no unsecured debt maturing for the next three years, through late 2023. Additionally, ROIC has no secured debt maturing in 2020 and 2021, $23.1 million maturing in mid-2022, and no secured debt maturing in 2023.

Subsequent to third quarter, Fitch Ratings, Inc. (Fitch) assigned a BBB- long-term issuer default rating to ROIC with a stable outlook. According to Fitch, the rating and outlook reflect ROICs high-quality, grocery-anchored shopping center portfolio located in densely populated, high barrier-to-entry west coast U.S. markets. Additionally, Fitch stated that ROICs best-in-class historical occupancy levels, and investment-grade credit metrics are key factors supporting the rating.

PROPERTY OPERATIONS SUMMARY

During the third quarter of 2020, ROIC executed 77 leases, totaling 441,148 square feet, including 37 new leases, totaling 134,031 square feet, achieving a 12.2% increase in same-space comparative base rent, and 40 renewed leases, totaling 307,117 square feet, achieving an 11.6% increase in base rent. ROIC reports same-space comparative base rent on a cash basis.

At September 30, 2020, ROICs portfolio was 96.8% leased. In terms of ROICs tenant base, 94.8% (based on ABR) are currently open and operating. To date, ROIC has received 88.7% of total third quarter 2020 billed base rent.

DIVIDEND

ROICs board of directors currently expects to reinstate distributing quarterly cash dividends to stockholders in the first quarter of 2021. ROIC intends to continue maintaining its compliance with REIT taxable income distribution requirements.

CONFERENCE CALL

ROIC will conduct a conference call and audio webcast to discuss its results on Tuesday, October 27, 2020 at 12:00 p.m. Eastern Time / 9:00 a.m. Pacific Time. Those interested in participating in the conference call should dial (877) 312-8783 (domestic), or (408) 940-3874 (international) at least ten minutes prior to the scheduled start of the call. When prompted, provide the Conference ID: 3892546. A live webcast will also be available in listen-only mode at http://www.roireit.net/. The conference call will be recorded and available for replay beginning at 3:00 p.m. Eastern Time on October 27, 2020 and will be available until 2:00 p.m. Eastern Time on November 3, 2020. To access the conference call recording, dial (855) 859-2056 (domestic) or (404) 537-3406 (international) and use the Conference ID: 3892546. The conference call will also be archived on http://www.roireit.net/ for approximately 90 days.

ABOUT RETAIL OPPORTUNITY INVESTMENTS CORP.

Retail Opportunity Investments Corp. (NASDAQ: ROIC), is a fully-integrated, self-managed real estate investment trust (REIT) that specializes in the acquisition, ownership and management of grocery-anchored shopping centers located in densely populated, metropolitan markets across the West Coast. As of September 30, 2020, ROIC owned 88 shopping centers encompassing approximately 10.1 million square feet. ROIC is the largest publicly-traded, grocery-anchored shopping center REIT focused exclusively on the West Coast. ROIC is a member of the S&P SmallCap 600 Index and has investment-grade corporate debt ratings from Moody's Investor Services, S&P Global Ratings, and Fitch Ratings, Inc. Additional information is available at: www.roireit.net.

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

RETAIL OPPORTUNITY INVESTMENTS CORP.Consolidated Balance Sheets(In thousands, except share data) September 30, 2020 (unaudited) December 31, 2019ASSETS Real Estate Investments: Land $ 881,764 $ 879,540 Building and improvements 2,262,430 2,252,301 3,144,194 3,131,841 Less:accumulated depreciation 440,541 390,916 2,703,653 2,740,925 Mortgage note receivable 4,979 13,000 Real Estate Investments, net 2,708,632 2,753,925 Cash and cash equivalents 58,458 3,800 Restricted cash 1,990 1,658 Tenant and other receivables, net 56,122 45,821 Acquired lease intangible assets, net 53,320 59,701 Prepaid expenses 1,285 3,169 Deferred charges, net 24,026 27,652 Other assets 17,543 18,031 Total assets $ 2,921,376 $ 2,913,757 LIABILITIES AND EQUITY Liabilities: Term loan $ 298,433 $ 298,330 Credit facility 100,544 80,743 Senior Notes 943,267 942,850 Mortgage notes payable 86,766 87,523 Acquired lease intangible liabilities, net 133,590 144,757 Accounts payable and accrued expenses 28,755 17,562 Tenants? security deposits 6,977 7,177 Other liabilities 45,370 42,987 Total liabilities 1,643,702 1,621,929 Commitments and contingencies Equity: Preferred stock, $0.0001 par value 50,000,000 ? ? shares authorized; none issued and outstandingCommon stock, $0.0001 par value, 500,000,000shares authorized; 117,940,155 and 116,496,016 12 12 shares issued and outstanding at September30,2020 and December31, 2019, respectivelyAdditional paid-in capital 1,493,989 1,481,466 Dividends in excess of earnings (298,212 ) (297,998 )Accumulated other comprehensive loss (10,230 ) (4,132 )Total Retail Opportunity Investments Corp. 1,185,559 1,179,348 stockholders? equityNon-controlling interests 92,115 112,480 Total equity 1,277,674 1,291,828 Total liabilities and equity $ 2,921,376 $ 2,913,757

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

Three Months Ended Nine Months Ended September 30, September 30, 2020 2019 2020 2019Revenues Rental revenue $ 69,066 $ 71,793 $ 208,997 $ 218,981 Other income 706 645 2,199 2,440 Total revenues 69,772 72,438 211,196 221,421 Operating expenses Property operating 10,313 10,995 30,203 32,766 Property taxes 8,510 8,113 25,265 24,183 Depreciation and 24,649 24,163 73,041 73,367 amortizationGeneral and administrative 4,101 4,448 11,974 13,674 expensesOther expense 165 47 525 1,364 Total operating expenses 47,738 47,766 141,008 145,354 Gain on sale of real estate ? 10,357 ? 13,175 Operating income 22,034 35,029 70,188 89,242 Non-operating expenses Interest expense and other (15,065 ) (15,401 ) (45,047 ) (46,685 )finance expensesNet income 6,969 19,628 25,141 42,557 Net income attributable to (503 ) (1,770 ) (2,026 ) (3,864 )non-controlling interestsNet Income Attributable toRetail Opportunity $ 6,466 $ 17,858 $ 23,115 $ 38,693 Investments Corp. Earnings per share ? basic $ 0.06 $ 0.16 $ 0.20 $ 0.34 and diluted Dividends per common share $ ? $ 0.1970 $ 0.2000 $ 0.5910

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

Three Months Ended Nine Months Ended September 30, September 30, 2020 2019 2020 2019Net income attributable to ROIC $ 6,466 $ 17,858 $ 23,115 $ 38,693 Plus:Depreciation and 24,649 24,163 73,041 73,367 amortizationLess: Gain on sale of real ? (10,357 ) ? (13,175 )estateFunds from operations ? basic 31,115 31,664 96,156 98,885 Net income attributable to 503 1,770 2,026 3,864 non-controlling interestsFunds from operations ? diluted $ 31,618 $ 33,434 $ 98,182 $ 102,749

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

Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 $ Change % 2020 2019 $ Change % Change ChangeNumber ofshoppingcenters 87 87 87 87 included insame-centeranalysisSame-center 96.9 % 97.7 % (0.8 ) 96.9 % 97.7 % (0.8 )occupancy % % Revenues: Base rents $ 50,986 $ 50,994 $ (8 ) ? % $ 154,261 $ 151,949 $ 2,312 1.5 %Percentage 55 183 (128 ) (69.9 ) 268 316 (48 ) (15.2 )rent % %Recoveriesfrom 16,611 16,348 263 1.6 % 50,520 49,536 984 2.0 %tenantsOther )property 481 455 26 5.7 % 1,163 1,895 (732 ) (38.6 %incomeBad debt (2,073 ) (209 ) (1,864 ) 891.9 % (8,251 ) (1,112 ) (7,139 ) 642.0 %Total 66,060 67,771 (1,711 ) (2.5 ) 197,961 202,584 (4,623 ) (2.3 )Revenues % %Operating ExpensesProperty ) )operating 10,652 11,075 (423 ) (3.8 % 31,615 32,958 (1,343 ) (4.1 %expensesProperty 8,411 7,990 421 5.3 % 25,090 23,673 1,417 6.0 %taxesTotalOperating 19,063 19,065 (2 ) ? % 56,705 56,631 74 0.1 %ExpensesSame-CenterCash Net $ 46,997 $ 48,706 $ (1,709 ) (3.5 ) $ 141,256 $ 145,953 $ (4,697 ) (3.2 )Operating % %Income

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

Three Months Ended Nine Months Ended September 30, September 30, 2020 2019 2020 2019GAAP operating income $ 22,034 $ 35,029 $ 70,188 $ 89,242 Depreciation and amortization 24,649 24,163 73,041 73,367 General and administrative 4,101 4,448 11,974 13,674 expensesOther expense 165 47 525 1,364 Gain on sale of real estate ? (10,357 ) ? (13,175 )Straight-line rent (333 ) (924 ) (563 ) (2,650 )Amortization of above- and (2,756 ) (3,087 ) (10,756 ) (13,025 )below-market rentProperty revenues and other (114 ) (161 ) (363 ) 135 expenses ^(1)Total Company cash NOI 47,746 49,158 144,046 148,932 Non same-center cash NOI (749 ) (452 ) (2,790 ) (2,979 )Same-center cash NOI $ 46,997 $ 48,706 $ 141,256 $ 145,953

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(1)Includes anchor lease termination fees, net of contractual amounts, if any, expense and recovery adjustments related to prior periods and other miscellaneous adjustments.

NON-GAAP DISCLOSURES

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

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

Contact:Carol Merriman, Investor Relations858-255-7426cmerriman@roireit.net

Source: Retail Opportunity Investments Corp.