WRI Weingarten Realty Investors

Weingarten Realty (NYSE: WRI) announced today the results of its operations for the quarter ended June 30, 2021. The supplemental financial package with additional information can be found on the Company's website under the Investor Relations tab.

Second Quarter Financial Highlights

• Net income attributable to common shareholders (“Net Income”) for the second quarter was $0.10 per diluted share (hereinafter “per share”) compared to $0.09 per share in the second quarter of 2020 and $0.22 per share in the first quarter of 2021;

• Core Funds From Operations Attributable to Common Shareholders ("Core FFO") for the quarter was $0.50 per share compared to $0.34 per share in the second quarter of 2020 and $0.48 per share in the first quarter of 2021;

• Cash collections of rent and billable expenses were 97% of the total billed for the second quarter;

• Dispositions in the quarter were $15.1 million bringing the year-to-date total to $70.9 million; and,

• During the quarter, the Company signed a definitive merger agreement with Kimco Realty Corporation (“Kimco”) to create the premier open-air shopping center and mixed-use real estate company with 559 properties primarily concentrated in the top major metropolitan markets in the United States. The merger is currently scheduled to close on August 3, 2021, subject to customary closing conditions, including the approval of both Kimco’s and the Company’s shareholders. Subsequent to quarter-end, a special cash distribution of $0.69 per common share was declared which is payable on August 2, 2021 to shareholders of record on July 28, 2021. The special distribution is being paid in connection with the anticipated merger with Kimco and to satisfy the REIT taxable income distribution requirements. Under the terms of the merger agreement, the Company’s payment of the special distribution adjusts the cash consideration to be paid by Kimco at the closing of the merger from $2.89 per share to $2.20 per share, and does not affect the payment of the share consideration of 1.408 newly issued shares of common stock of Kimco for each WRI common share owned immediately prior to the effective time of the merger.

Financial Results

The Company reported Net Income of $12.7 million or $0.10 per share for the second quarter of 2021, as compared to $11.4 million or $0.09 per share for the same period in 2020. Revenue increased $0.16 per share due to a reduction in COVID related reserves and the initial write-offs of receivables for cash basis tenants. This increase was also enhanced by contributions to NOI from both our 2020 acquisitions and new development projects. This increase has been offset by an increase in expenses related to the merger of $.07 per share, as well as reductions of net income due to lower gain ($.06) on sale of property from the Company’s disposition program and a decrease in capitalized interest as new development projects approach completion.

The decrease in net income when compared to the prior quarter was due primarily to costs related to the merger of $0.07 per share and a reduction of gain on sale of property of $0.07 per share. Offsetting these decreases were higher revenues.

Year-to-date, Net Income was $40.7 million or $0.32 per share for 2021 compared to $64.0 million or $0.50 per share for 2020.

Funds From Operations attributable to common shareholders in accordance with the National Association of Real Estate Investment Trusts definition (“NAREIT FFO”) was $56.0 million or $0.43 per share for the second quarter of 2021 compared to $43.9 million or $0.34 per share for the second quarter of 2020. Included in NAREIT FFO is $8.4 million of transaction costs and other expenses related to the pending merger with Kimco.

Core FFO was $64.4 million or $0.50 per share for the second quarter of 2021 compared to $43.9 million or $0.34 for the second quarter of 2020.

A reconciliation of Net Income to NAREIT FFO and Core FFO is included herein.

Operating Results

For the period ending June 30, 2021, the Company’s operating highlights were as follows:

 

 

 

 

 

 

 

 

 

 

 

Q2 2021

YTD 2021

Occupancy (Signed Basis):

 

 

 

 

 

 

 

 

Occupancy - Total

 

 

93.9

%

 

 

 

 

Occupancy - Small Shop Spaces

 

 

89.6

%

 

 

 

 

Occupancy - Same Property Portfolio

 

 

94.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Same Property Net Operating Income, with redevelopments

 

 

24.1

%

 

 

10.6

%

 

 

 

 

 

 

 

 

 

Rental Rate Growth - Total:

 

 

2.1

%

 

 

3.5

%

New Leases

 

 

2.1

%

 

 

4.8

%

Renewals

 

 

2.2

%

 

 

3.0

%

 

 

 

 

 

 

 

 

 

Leasing Transactions:

 

 

 

 

 

 

 

 

Number of New Leases

 

 

89

 

 

 

167

 

New Leases - Annualized Revenue (in millions)

 

$

8.1

 

 

$

14.0

 

Number of Renewals

 

 

104

 

 

 

217

 

Renewals - Annualized Revenue (in millions)

 

$

8.8

 

 

$

22.7

 

A reconciliation of Net Income to SPNOI is included herein.

About Weingarten Realty Investors

Weingarten Realty Investors (NYSE: WRI) is a shopping center owner, manager and developer. At June 30, 2021, the Company owned or operated under long-term leases, either directly or through its interest in real estate joint ventures or partnerships, a total of 155 properties which are located in 15 states spanning the country from coast to coast. These properties represent approximately 29.7 million square feet of which our interests in these properties aggregated approximately 20.3 million square feet of leasable area. To learn more about the Company, please visit www.weingarten.com.

Forward-Looking Statements

This communication contains certain “forward-looking” statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Exchange Act. Kimco and the Company intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 and include this statement for purposes of complying with the safe harbor provisions. Words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “will,” “should,” “may,” “projects,” “could,” “estimates” or variations of such words and other similar expressions are intended to identify such forward-looking statements, which generally are not historical in nature, but not all forward-looking statements include such identifying words. Forward-looking statements regarding Kimco and the Company include, but are not limited to, statements related to the anticipated acquisition of the Company and the anticipated timing and benefits thereof; Kimco’s expected financing for the transaction; Kimco’s ability to deleverage and its projected target net leverage; and other statements that are not historical facts. These forward-looking statements are based on each of the companies’ current plans, objectives, estimates, expectations and intentions and inherently involve significant risks and uncertainties. Actual results and the timing of events could differ materially from those anticipated in such forward-looking statements as a result of these risks and uncertainties, which include, without limitation, risks and uncertainties associated with: Kimco’s and the Company’s ability to complete the acquisition on the proposed terms or on the anticipated timeline, or at all, including risks and uncertainties related to securing the necessary shareholder approvals and satisfaction of other closing conditions to consummate the acquisition; the occurrence of any event, change or other circumstance that could give rise to the termination of the definitive transaction agreement relating to the proposed transaction; risks related to diverting the attention of the Company and Kimco management from ongoing business operations; failure to realize the expected benefits of the acquisition; significant transaction costs and/or unknown or inestimable liabilities; the risk of shareholder litigation in connection with the proposed transaction, including resulting expense or delay; the risk that the Company’s business will not be integrated successfully or that such integration may be more difficult, time-consuming or costly than expected; Kimco’s ability to obtain the expected financing to consummate the acquisition; risks related to future opportunities and plans for the combined company, including the uncertainty of expected future financial performance and results of the combined company following completion of the acquisition; effects relating to the announcement of the acquisition or any further announcements or the consummation of the acquisition on the market price of Kimco’s common stock or the Company’s common shares; the possibility that, if Kimco does not achieve the perceived benefits of the acquisition as rapidly or to the extent anticipated by financial analysts or investors, the market price of Kimco common stock could decline; general adverse economic and local real estate conditions; the inability of major tenants to continue paying their rent obligations due to bankruptcy, insolvency or a general downturn in their business; local real estate conditions; increases in interest rates; foreign currency exchange rates; increases in operating costs and real estate taxes; changes in the dividend policy for Kimco common stock or preferred stock or Kimco’s ability to pay dividends; impairment charges; unanticipated changes in the company’s intention or ability to prepay certain debt prior to maturity and/or hold certain securities until maturity; pandemics or other health crises, such as coronavirus disease 2019 (COVID-19); and other risks and uncertainties affecting Kimco and the Company, including those described from time to time under the caption “Risk Factors” and elsewhere in Kimco’s and the Company’s SEC filings and reports, including Kimco’s Annual Report on Form 10-K for the year ended December 31, 2020, the Company’s Annual Report on Form 10-K for the year ended December 31, 2020, and subsequent filings and reports by either company. Moreover, other risks and uncertainties of which Kimco or the Company are not currently aware may also affect each of the companies’ forward-looking statements and may cause actual results and the timing of events to differ materially from those anticipated. The forward-looking statements made in this communication are made only as of the date hereof or as of the dates indicated in the forward-looking statements, even if they are subsequently made available by Kimco or the Company on their respective websites or otherwise. Neither Kimco nor the Company undertakes any obligation to update or supplement any forward-looking statements to reflect actual results, new information, future events, changes in its expectations or other circumstances that exist after the date as of which the forward-looking statements were made.

Important Additional Information and Where to Find It

In connection with the proposed merger, Kimco has filed with the SEC a registration statement on Form S-4 to register the shares of Kimco common stock to be issued in connection with the merger, which was declared effective by the SEC on June 25, 2021. The registration statement includes a joint proxy statement/prospectus which was sent on or about June 29, 2021 to the common stockholders of Kimco and the shareholders of the Company seeking their approval of their respective transaction-related proposals. Kimco and the Company also plan to file other documents with the SEC with respect to the proposed merger. INVESTORS AND SECURITY HOLDERS ARE URGED TO READ THE REGISTRATION STATEMENT ON FORM S-4 AND THE RELATED JOINT PROXY STATEMENT/PROSPECTUS, AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO THOSE DOCUMENTS AND ANY OTHER RELEVANT DOCUMENTS FILED WITH THE SEC IN CONNECTION WITH THE PROPOSED MERGER BECAUSE THEY CONTAIN IMPORTANT INFORMATION ABOUT KIMCO, THE COMPANY AND THE PROPOSED TRANSACTION.

Investors and security holders may obtain copies of these documents free of charge through the website maintained by the SEC at www.sec.gov or from Kimco at its website, www.kimcorealty.com, or from the Company at its website, www.weingarten.com. Documents filed with the SEC by Kimco will be available free of charge by accessing Kimco’s website at www.kimcorealty.com under the heading Investors or, alternatively, by directing a request to Kimco at IR@kimcorealty.com or 500 North Broadway Suite 201, Jericho, New York 11753, telephone: (866) 831-4297, and documents filed with the SEC by the Company will be available free of charge by accessing the Company’s website at www.weingarten.com under the heading Investors or, alternatively, by directing a request to the Company at ir@weingarten.com or 2600 Citadel Plaza Drive, Houston, TX 77008, telephone: (800) 298-9974.

Participants in the Solicitation

Kimco and the Company and certain of their respective directors and executive officers and other members of management and employees may be deemed to be participants in the solicitation of proxies from the common stockholders of Kimco and the shareholders of the Company in respect of the proposed transaction under the rules of the SEC. Information about Kimco’s directors and executive officers is available in Kimco’s proxy statement dated March 17, 2021 for its 2021 Annual Meeting of Stockholders. Information about the Company’s directors and executive officers is available in the Company’s proxy statement dated March 15, 2021 for its 2021 Annual Meeting of Shareholders. Other information regarding the participants in the proxy solicitation and a description of their direct and indirect interests, by security holdings or otherwise, is contained in the joint proxy statement/prospectus and other relevant materials filed with the SEC regarding the merger when they become available. Investors should read the joint proxy statement/prospectus carefully before making any voting or investment decisions. You may obtain free copies of these documents from Kimco or the Company using the sources indicated above.

No Offer or Solicitation

This communication shall not constitute an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. No offering of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act.

 

Weingarten Realty Investors

(in thousands, except per share amounts)

Financial Statements

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Six Months Ended

 

 

June 30,

 

June 30,

 

 

2021

 

2020

 

2021

 

2020

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

 

(Unaudited)

 

(Unaudited)

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

Rentals, net

 

$

119,770

 

 

$

95,813

 

 

$

238,091

 

 

$

203,863

 

Other

 

 

2,895

 

 

 

2,322

 

 

 

5,945

 

 

 

5,624

 

Total Revenues

 

 

122,665

 

 

 

98,135

 

 

 

244,036

 

 

 

209,487

 

Operating Expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

40,022

 

 

 

37,627

 

 

 

78,578

 

 

 

74,283

 

Operating

 

 

22,767

 

 

 

19,978

 

 

 

46,054

 

 

 

43,138

 

Real estate taxes, net

 

 

16,285

 

 

 

15,733

 

 

 

33,020

 

 

 

30,741

 

Impairment loss

 

 

122

 

 

 

—

 

 

 

447

 

 

 

44

 

General and administrative

 

 

11,691

 

 

 

12,920

 

 

 

22,295

 

 

 

15,227

 

Total Operating Expenses

 

 

90,887

 

 

 

86,258

 

 

 

180,394

 

 

 

163,433

 

Other Income (Expense):

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense, net

 

 

(17,303

)

 

 

(15,776

)

 

 

(33,922

)

 

 

(30,378

)

Interest and other (expense) income, net

 

 

(4,713

)

 

 

5,293

 

 

 

(3,059

)

 

 

(535

)

Gain on sale of property

 

 

480

 

 

 

7,898

 

 

 

9,611

 

 

 

21,474

 

Total Other Expense

 

 

(21,536

)

 

 

(2,585

)

 

 

(27,370

)

 

 

(9,439

)

Income Before Income Taxes and Equity in Earnings of Real Estate Joint Ventures and Partnerships

 

 

10,242

 

 

 

9,292

 

 

 

36,272

 

 

 

36,615

 

Provision for Income Taxes

 

 

(86

)

 

 

(343

)

 

 

(324

)

 

 

(515

)

Equity in Earnings of Real Estate Joint Ventures and Partnerships, net

 

 

4,285

 

 

 

3,428

 

 

 

8,372

 

 

 

30,525

 

Net Income

 

 

14,441

 

 

 

12,377

 

 

 

44,320

 

 

 

66,625

 

Less: Net Income Attributable to Noncontrolling Interests

 

 

(1,749

)

 

 

(1,009

)

 

 

(3,591

)

 

 

(2,635

)

Net Income Attributable to Common Shareholders -- Basic

 

$

12,692

 

 

$

11,368

 

 

$

40,729

 

 

$

63,990

 

Net Income Attributable to Common Shareholders -- Diluted

 

$

12,692

 

 

$

11,368

 

 

$

40,729

 

 

$

63,990

 

Earnings Per Common Share -- Basic

 

$

0.10

 

 

$

0.09

 

 

$

0.32

 

 

$

0.50

 

Earnings Per Common Share -- Diluted

 

$

0.10

 

 

$

0.09

 

 

$

0.32

 

 

$

0.50

 

   

Weingarten Realty Investors

(in thousands)

Financial Statements

 

 

 

 

 

 

 

 

 

June 30,

 

December 31,

 

 

2021

 

2020

 

 

(Unaudited)

 

(Audited)

CONDENSED CONSOLIDATED BALANCE SHEETS

 

 

 

 

 

 

ASSETS

 

 

 

 

 

 

Property

 

$

4,187,531

 

 

$

4,246,334

 

Accumulated Depreciation

 

 

(1,193,095

)

 

 

(1,161,970

)

Investment in Real Estate Joint Ventures and Partnerships, net

 

 

362,132

 

 

 

369,038

 

Unamortized Lease Costs, net

 

 

161,040

 

 

 

174,152

 

Accrued Rent, Accrued Contract Receivables and Accounts Receivable, net

 

 

70,039

 

 

 

81,016

 

Cash and Cash Equivalents

 

 

73,344

 

 

 

35,418

 

Restricted Deposits and Escrows

 

 

11,702

 

 

 

12,338

 

Other, net

 

 

209,080

 

 

 

205,074

 

Total Assets

 

$

3,881,773

 

 

$

3,961,400

 

 

 

 

 

 

 

 

LIABILITIES AND EQUITY

 

 

 

 

 

 

Debt, net

 

$

1,786,962

 

 

$

1,838,419

 

Accounts Payable and Accrued Expenses

 

 

95,979

 

 

 

104,990

 

Other, net

 

 

218,369

 

 

 

217,489

 

Total Liabilities

 

 

2,101,310

 

 

 

2,160,898

 

 

 

 

 

 

 

 

Commitments and Contingencies

 

 

—

 

 

 

—

 

 

 

 

 

 

 

 

EQUITY

 

 

 

 

 

 

Common Shares of Beneficial Interest

 

 

3,876

 

 

 

3,866

 

Additional Paid-In Capital

 

 

1,763,163

 

 

 

1,755,770

 

Net Income Less Than Accumulated Dividends

 

 

(155,730

)

 

 

(128,813

)

Accumulated Other Comprehensive Loss

 

 

(11,947

)

 

 

(12,050

)

Shareholders' Equity

 

 

1,599,362

 

 

 

1,618,773

 

Noncontrolling Interests

 

 

181,101

 

 

 

181,729

 

Total Liabilities and Equity

 

$

3,881,773

 

 

$

3,961,400

 

 

Non-GAAP Financial Measures

Certain aspects of our key performance indicators are considered non-GAAP financial measures. Management uses these measures along with our Generally Accepted Accounting Principles ("GAAP") financial statements in order to evaluate our operating results. Management believes these additional measures provide users of our financial information additional comparable indicators of our industry, as well as, our performance.

Funds from Operations Attributable to Common Shareholders

The National Association of Real Estate Investment Trusts ("NAREIT") defines NAREIT FFO as net income (loss) attributable to common shareholders computed in accordance with GAAP, excluding gains or losses from sales of certain real estate assets (including: depreciable real estate with land, land, development property and securities), changes in control of real estate equity investments, and interests in real estate equity investments and their applicable taxes, plus depreciation and amortization related to real estate and impairment of certain real estate assets and in substance real estate equity investments, including our share of unconsolidated real estate joint ventures and partnerships. The Company calculates NAREIT FFO in a manner consistent with the NAREIT definition.

Management believes NAREIT FFO is a widely recognized measure of REIT operating performance, which provides our shareholders with a relevant basis for comparison among other REITs. Management uses NAREIT FFO as a supplemental internal measure to conduct and evaluate our business because there are certain limitations associated with using GAAP net income by itself as the primary measure of our operating performance. Historical cost accounting for real estate assets in accordance with GAAP implicitly assumes that the value of real estate assets diminishes predictably over time. Since real estate values instead have historically risen or fallen with market conditions, management believes that the presentation of operating results for real estate companies that uses historical cost accounting is insufficient by itself. There can be no assurance that NAREIT FFO presented by the Company is comparable to similarly titled measures of other REITs.

The Company also presents Core FFO as an additional supplemental measure as it is more reflective of the core operating performance of our portfolio of properties. Core FFO is defined as NAREIT FFO excluding charges and gains related to non-cash, non-operating assets and other transactions or events that hinder the comparability of operating results. Specific examples of items excluded from Core FFO include, but are not limited to, gains or losses associated with the extinguishment of debt or other liabilities and transactional costs associated with unsuccessful development activities.

NAREIT FFO and Core FFO should not be considered as alternatives to net income or other measurements under GAAP as indicators of operating performance or to cash flows from operating, investing or financing activities as measures of liquidity. NAREIT FFO and Core FFO do not reflect working capital changes, cash expenditures for capital improvements or principal payments on indebtedness.

NAREIT FFO and Core FFO is calculated as follows (in thousands):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Six Months Ended

 

 

June 30,

 

June 30,

 

 

2021

 

2020

 

2021

 

2020

 

 

(Unaudited)

 

(Unaudited)

Net income attributable to common shareholders

 

$

12,692

 

 

$

11,368

 

 

$

40,729

 

 

$

63,990

 

Depreciation and amortization of real estate

 

 

39,841

 

 

 

37,520

 

 

 

78,256

 

 

 

73,995

 

Depreciation and amortization of real estate of unconsolidated real estate joint ventures and partnerships

 

 

4,145

 

 

 

4,322

 

 

 

8,306

 

 

 

8,119

 

Impairment of properties and real estate equity investments

 

 

122

 

 

 

—

 

 

 

447

 

 

 

44

 

(Gain) on sale of property, investment securities and interests in real estate equity investments

 

 

(429

)

 

 

(7,903

)

 

 

(9,526

)

 

 

(21,477

)

(Gain) on dispositions of unconsolidated real estate joint ventures and partnerships

 

 

(7

)

 

 

(1,044

)

 

 

(31

)

 

 

(23,416

)

Provision for income taxes (1)

 

 

—

 

 

 

—

 

 

 

20

 

 

 

—

 

Noncontrolling interests and other (2)

 

 

(634

)

 

 

(652

)

 

 

(1,190

)

 

 

(1,227

)

NAREIT FFO – basic

 

 

55,730

 

 

 

43,611

 

 

 

117,011

 

 

 

100,028

 

Income attributable to operating partnership units

 

 

302

 

 

 

241

 

 

 

703

 

 

 

769

 

NAREIT FFO – diluted

 

 

56,032

 

 

 

43,852

 

 

 

117,714

 

 

 

100,797

 

Adjustments for Core FFO:

 

 

 

 

 

 

 

 

 

 

 

 

Contract terminations

 

 

—

 

 

 

—

 

 

 

—

 

 

 

340

 

Merger costs

 

 

8,411

 

 

 

—

 

 

 

8,411

 

 

 

—

 

Other

 

 

1

 

 

 

—

 

 

 

1

 

 

 

—

 

Core FFO – diluted

 

$

64,444

 

 

$

43,852

 

 

$

126,126

 

 

$

101,137

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FFO weighted average shares outstanding – basic

 

 

126,600

 

 

 

127,242

 

 

 

126,559

 

 

 

127,552

 

Effect of dilutive securities:

 

 

 

 

 

 

 

 

 

 

 

 

Share options and awards

 

 

1,039

 

 

 

861

 

 

 

1,096

 

 

 

899

 

Operating partnership units

 

 

1,409

 

 

 

1,432

 

 

 

1,419

 

 

 

1,432

 

FFO weighted average shares outstanding – diluted

 

 

129,048

 

 

 

129,535

 

 

 

129,074

 

 

 

129,883

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NAREIT FFO per common share – basic

 

$

0.44

 

 

$

0.34

 

 

$

0.92

 

 

$

0.78

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NAREIT FFO per common share – diluted

 

$

0.43

 

 

$

0.34

 

 

$

0.91

 

 

$

0.78

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Core FFO per common share – diluted

 

$

0.50

 

 

$

0.34

 

 

$

0.98

 

 

$

0.78

 

___________________

(1)

The applicable taxes related to gains and impairments of operating and non-operating real estate assets.

(2)

Related to gains, impairments and depreciation on operating properties and unconsolidated real estate joint ventures, where applicable.

Same Property Net Operating Income

Management considers SPNOI an important additional financial measure because it reflects only those income and expense items that are incurred at the property level and when compared across periods, reflects the impact on operations from trends in occupancy rates, rental rates and operating costs. The Company calculates this most useful measurement by determining its proportional share of SPNOI from all owned properties, including the Company’s share of SPNOI from unconsolidated joint ventures and partnerships, which cannot be readily determined under GAAP measurements and presentation. Although SPNOI (see page 1 of the supplemental disclosure regarding this presentation and limitations thereof) is a widely used measure among REITs, there can be no assurance that SPNOI presented by the Company is comparable to similarly titled measures of other REITs. Additionally, the Company does not control these unconsolidated joint ventures and partnerships, and the assets, liabilities, revenues or expenses of these joint ventures and partnerships, as presented, do not represent its legal claim to such items.

Properties are included in the SPNOI calculation if they are owned and operated for the entirety of the most recent two fiscal year periods, except for properties for which significant redevelopment or expansion occurred during either of the periods presented, and properties that have been sold. While there is judgment surrounding changes in designations, management moves new development and redevelopment properties once they have stabilized, which is typically upon attainment of 90% occupancy. A rollforward of the properties included in the Company’s same property designation is as follows:

 

 

 

 

 

 

 

Three Months Ended

 

Six Months Ended

 

 

June 30, 2021

 

June 30, 2021

Beginning of the period

 

145

 

 

142

 

Properties added:

 

 

 

 

Acquisitions

 

—

 

 

6

 

Properties removed:

 

 

 

 

Dispositions

 

(1

)

 

(4

)

End of the period

 

144

 

 

144

 

The Company calculates SPNOI using net income attributable to common shareholders excluding net income attributable to noncontrolling interests, other income (expense), income taxes and equity in earnings of real estate joint ventures and partnerships. Additionally to reconcile to SPNOI, the Company excludes the effects of property management fees, certain non-cash revenues and expenses such as straight-line rental revenue and the related reversal of such amounts upon early lease termination, depreciation and amortization, impairment losses, general and administrative expenses and other items such as lease cancellation income, environmental abatement costs, demolition expenses and lease termination fees. Consistent with the capital treatment of such costs under GAAP, tenant improvements, leasing commissions and other direct leasing costs are excluded from SPNOI. A reconciliation of net income attributable to common shareholders to SPNOI is as follows (in thousands):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Six Months Ended

 

 

June 30,

 

June 30,

 

 

2021

 

2020

 

2021

 

2020

 

 

(Unaudited)

 

(Unaudited)

Net income attributable to common shareholders

 

$

12,692

 

 

$

11,368

 

 

$

40,729

 

 

$

63,990

 

Add:

 

 

 

 

 

 

 

 

 

 

 

 

Net income attributable to noncontrolling interests

 

 

1,749

 

 

 

1,009

 

 

 

3,591

 

 

 

2,635

 

Provision for income taxes

 

 

86

 

 

 

343

 

 

 

324

 

 

 

515

 

Interest expense, net

 

 

17,303

 

 

 

15,776

 

 

 

33,922

 

 

 

30,378

 

Property management fees

 

 

947

 

 

 

829

 

 

 

2,128

 

 

 

1,907

 

Depreciation and amortization

 

 

40,022

 

 

 

37,627

 

 

 

78,578

 

 

 

74,283

 

Impairment loss

 

 

122

 

 

 

—

 

 

 

447

 

 

 

44

 

General and administrative

 

 

11,691

 

 

 

12,920

 

 

 

22,295

 

 

 

15,227

 

Other (1)

 

 

98

 

 

 

79

 

 

 

149

 

 

 

167

 

Less:

 

 

 

 

 

 

 

 

 

 

 

 

Gain on sale of property

 

 

(480

)

 

 

(7,898

)

 

 

(9,611

)

 

 

(21,474

)

Equity in earnings of real estate joint ventures and partnership interests, net

 

 

(4,285

)

 

 

(3,428

)

 

 

(8,372

)

 

 

(30,525

)

Interest and other expense (income), net

 

 

4,713

 

 

 

(5,293

)

 

 

3,059

 

 

 

535

 

Other (2)

 

 

(4,517

)

 

 

866

 

 

 

(9,860

)

 

 

3,991

 

Adjusted income

 

 

80,141

 

 

 

64,198

 

 

 

157,379

 

 

 

141,673

 

Less: Adjusted income related to consolidated entities not defined as same property and noncontrolling interests

 

 

(7,395

)

 

 

(5,970

)

 

 

(13,872

)

 

 

(12,321

)

Add: Pro rata share of unconsolidated entities defined as same property

 

 

6,487

 

 

 

5,603

 

 

 

12,873

 

 

 

12,014

 

Same Property Net Operating Income

 

$

79,233

 

 

$

63,831

 

 

$

156,380

 

 

$

141,366

 

___________________

(1)

Other includes items such as environmental abatement costs, demolition expenses and lease termination fees.

(2)

Other consists primarily of straight-line rentals, lease cancellation income and fee income primarily from real estate joint ventures and partnerships.

Earnings Before Interest, Taxes, Depreciation and Amortization for Real Estate

NAREIT defines EBITDAre as net income computed in accordance with GAAP, plus interest expense, income tax expense (benefit), depreciation and amortization and impairment of depreciable real estate and in substance real estate equity investments; plus or minus gains or losses from sales of certain real estate assets and interests in real estate equity investments; and adjustments to reflect our share of unconsolidated real estate joint ventures and partnerships for these items. The Company calculates EBITDAre in a manner consistent with the NAREIT definition.

As mentioned above, NAREIT FFO is a widely recognized measure of REIT operating performance which provides our shareholders with a relevant basis for comparing earnings performance among other REITs based upon the unique capital structure of each REIT. However as a basis of comparability that is independent of a company's capital structure, management believes that since EBITDA is a widely known and understood measure of performance, EBITDAre will represent an additional supplemental non-GAAP performance measure that will provide investors with a relevant basis for comparing REITs. There can be no assurance that EBITDAre as presented by the Company is comparable to similarly titled measures of other REITs.

The Company also presents Core EBITDAre as an additional supplemental measure as it is more reflective of the core operating performance of our portfolio of properties. Core EBITDAre is defined as NAREIT EBITDAre excluding charges and gains related to non-cash and non-operating transactions and other events that hinder the comparability of operating results. Specific examples of items excluded from Core EBITDAre include, but are not limited to, gains or losses associated with the extinguishment of debt or other liabilities, and transactional costs associated with unsuccessful development activities. EBITDAre and Core EBITDAre should not be considered as alternatives to net income or other measurements under GAAP as indicators of operating performance or to cash flows from operating, investing or financing activities as measures of liquidity. EBITDAre and Core EBITDAre do not reflect working capital changes, cash expenditures for capital improvements or principal payments on indebtedness.

EBITDAre and Core EBITDAre is calculated as follows (in thousands):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Six Months Ended

 

 

June 30,

 

June 30,

 

 

2021

 

2020

 

2021

 

2020

Earnings Before Interest, Taxes, Depreciation and Amortization for Real Estate (EBITDAre):

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

14,441

 

 

$

12,377

 

 

$

44,320

 

 

$

66,625

 

Interest expense, net

 

 

17,303

 

 

 

15,776

 

 

 

33,922

 

 

 

30,378

 

Provision for income taxes

 

 

86

 

 

 

343

 

 

 

324

 

 

 

515

 

Depreciation and amortization of real estate

 

 

40,022

 

 

 

37,627

 

 

 

78,578

 

 

 

74,283

 

Impairment loss on operating properties and real estate equity investments

 

 

122

 

 

 

—

 

 

 

447

 

 

 

44

 

Gain on sale of property and investment securities (1)

 

 

(480

)

 

 

(7,903

)

 

 

(9,613

)

 

 

(21,477

)

EBITDAre adjustments of unconsolidated real estate joint ventures and partnerships, net (2)

 

 

4,535

 

 

 

4,195

 

 

 

9,170

 

 

 

(13,442

)

Total EBITDAre

 

 

76,029

 

 

 

62,415

 

 

 

157,148

 

 

 

136,926

 

Adjustments for Core EBITDAre:

 

 

 

 

 

 

 

 

 

 

 

 

Contract terminations

 

 

—

 

 

 

—

 

 

 

—

 

 

 

340

 

Merger costs

 

 

8,411

 

 

 

—

 

 

 

8,411

 

 

 

—

 

Other

 

 

1

 

 

 

—

 

 

 

1

 

 

 

—

 

Total Core EBITDAre

 

$

84,441

 

 

$

62,415

 

 

$

165,560

 

 

$

137,266

 

___________________

(1)

Includes a $.4 million and $.5 million gain on sale of non-operating assets for the three and six months ended June 30, 2021, respectively, and a $.1 million gain on sale of non-operating assets for both the three and six months ended June 30, 2020.

(2)

Includes a $1.0 million and $23.4 million gain on sale of property for the three and six months ended June 30, 2020, respectively.

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20210729005783/en/

Information: Michelle Wiggs, Phone: (713) 866-6050