Ramco-Gershenson Properties Trust

 Press Release
October 24, 2007 - 10:00 AM Eastern
Third Quarter 2007 Earnings Conference Call
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Ramco-Gershenson Properties Trust Reports Results for Third Quarter 2007


FARMINGTON HILLS, Mich.--Ramco-Gershenson Properties Trust (NYSE:RPT - News) announced today results for the third quarter ended September 30, 2007.

Financial Information for the Third Quarter 2007:

  • Diluted FFO per share of $0.66, an increase of 4.8%
  • Diluted FFO of $14.1 million
  • Total revenues of $37.8 million
  • Diluted EPS from continuing operations of $0.15

Company Highlights for the Third Quarter 2007:

  • Acquired Nora Plaza in Indianapolis, IN and Old Orchard shopping center in West Bloomfield, MI through joint ventures
  • Identified new development in central Florida
  • Commenced three additional value-added redevelopment projects
  • Increased same center net operating income by 2.3%
  • Opened 20 new non-anchor stores, 19.5% over portfolio rental averages
  • Renewed 21 non-anchor leases, 11.6% over prior rental rates

Financial Results

For the three months ended September 30, 2007, diluted Funds from Operations (FFO) increased 4.4% to $14.1 million compared with $13.5 million for the three months ended September 30, 2006. On a per share basis, diluted FFO increased 4.8% to $0.66, compared with $0.63 in 2006. Total revenues decreased 2.6% to $37.8 million, compared to $38.8 million in 2006, as a result of transferring assets to a number of the Companys joint ventures. Income from continuing operations for the quarter was $3.3 million, or $0.15 per diluted share, compared to $4.5 million, or $0.17 per diluted share in 2006, as a result of decrease in the gains on sale of real estate assets.

For the nine months ended September 30, 2007, diluted FFO increased 1.7% to $41.3 million compared with $40.6 million for the nine months ended September 30, 2006. On a per share basis, diluted FFO increased 2.1% to $1.92, compared with $1.88 in 2006. Total revenues increased 1.1% to $115.1 million, compared to $113.8 million in 2006. Income from continuing operations was $38.2 million, or $1.96 per diluted share, compared to $13.5 million, or $0.51 per diluted share in 2006. Income from continuing operations was positively impacted by a $26.7 million (net of minority interest) gain on the sale of real estate assets in 2007.

I am pleased to report positive earnings and solid operational results for the quarter, said Dennis Gershenson, President and Chief Executive Officer. The Company continues to source acquisitions for its joint ventures and during the quarter we completed our $450 million commitment with ING Clarion. Our development pipeline now includes four projects that are all moving through the entitlement process. We are very enthusiastic about the value-added redevelopment opportunities in our core portfolio and have identified 14 additional projects, which will commence throughout the remainder of 2007 and into 2008. Our goal is to continue to execute a business plan this year and next that generates long-term growth and maximizes shareholder value.

Operating Highlights

Joint Venture Acquisitions

During the quarter, the Company acquired the Old Orchard shopping center in West Bloomfield, Michigan, as part of its joint venture with ING Clarion. Old Orchard is a 95,000 square foot shopping center previously anchored by a 54,000 square foot Farmer Jack (A & P) Supermarket. The centers location in an affluent, densely populated trade area creates a unique opportunity to completely redevelop the property. The purchase of this asset plus the redevelopment capital anticipated for the center will fill the $450 million commitment for the ING Clarion joint venture, which was formed in December 2004. Additional acquisitions for this joint venture will be subject to the approval of the partnership on an asset by asset basis.

During the quarter, the Company also acquired Nora Plaza in Indianapolis, Indiana, through a newly formed joint venture with Heitman LLC. Nora Plaza is a 264,000 square foot community shopping center anchored by Wild Oats Natural Marketplace, Marshalls and Target, a shadow anchor. Ramco-Gershenson holds a 7% interest in the joint venture.

Development

As previously announced, the Company is in various stages of development on a number of new projects, each located at major highway interchanges in metropolitan markets:

  • The Town Center at Aquia in Stafford, Virginia (a suburb of Washington D.C.), involves the complete demolition of an existing 200,000 square foot shopping center currently owned by the Company and the development of a 730,000 square foot mixed-use complex, including retail, entertainment and office as well as approximately 350 residential units. The Company is nearing completion on the construction of the first retail/office building on the site. Northrop Grumman has signed a lease to occupy 49,000 square feet or approximately half of the office building and will take possession of its space in the fourth quarter of 2007. The total project cost is estimated at $165 million.
  • Hartland Towne Square in Hartland Township, Michigan, is being developed as a 550,000 square foot open-air power center, strategically located an equal commuting distance between four major business centers in the state. The Meijer discount department store chain has committed to build a 192,000 square foot superstore at the shopping center. Ramco-Gershenson is currently in negotiations with a major home improvement operator as the second anchor for the project. Plans also include at least three mid-box national retailers as well as a number of outlots. An entertainment component is also being considered for the development. The project is currently in the governmental approval stage and site work is expected to commence within the next 120 days. The project is being developed through a joint venture and is expected to cost $50 million.
  • Northpointe Town Center in Jackson, Michigan, is being developed in a power/town center format and will encompass approximately 575,000 square foot of retail, entertainment and office space. Negotiations are currently underway with a number of national anchor retailers for the shopping center. The project is on schedule for ground breaking in the spring of 2008. The site is located at two expressway interchanges in close proximity to two other successful Ramco-Gershenson properties. The overwhelming tenant demand at these existing centers was the driving force for an additional shopping center in the market. The total project cost is estimated at $70 million.

During the quarter, the Company made substantial progress on one additional development. The project is located in central Florida in close proximity to a number of the Companys existing shopping centers. The planned development will encompass approximately 300,000 square feet of retail space in a traditional power center format. The estimated project cost is $45 million.

Also during the quarter, the Company completed the sale of a 2.5 acre parcel adjacent to its River City Marketplace in Jacksonville, Florida, to a joint venture of which the Company is a partner. Ramco-Gershenson will develop and lease the parcel earning market fees for its services. After this sale, only four outlots and 13,000 square feet of in-line space, in a project encompassing over 900,000 square feet, remain to be leased at the property.

Redevelopment

During the quarter, the Company commenced three additional value-added redevelopment projects. Two of the projects are at shopping centers purchased this year through the Companys ING Clarion joint venture. At the Old Orchard shopping center in West Bloomfield, Michigan, a complete shopping center revitalization including the retenanting of a 54,000 square foot anchor space previously occupied by a Farmer Jack (A & P) Supermarket is currently underway. At Cocoa Commons in Cocoa Beach, Florida, construction has begun for 15,000 square foot of additional small shop space, doubling the amount currently available at the center. The third project at Holcomb Center in Roswell, Georgia, involves the retenanting of a vacant 40,000 square foot A & P Supermarket. Façade and structural improvements will accompany the retenanting at this wholly-owned asset.

At September 30, 2007, including the projects mentioned above, the Company was actively redeveloping seven shopping centers impacting approximately 415,000 square feet with a total estimated project cost of $34.7 million. In addition, the Company has identified 14 new value-added redevelopment projects at Company owned or joint venture assets, which should commence over the next 15 months.

Leasing

During the third quarter, for both core and joint venture properties, 20 new non-anchor stores opened in 63,134 square feet, at an average base rent of $18.77 per square foot, an increase of 19.5% over portfolio average rents. In addition, 21 non-anchor leases were renewed impacting 83,947 square feet, at an average base rent of $14.95 per square foot, an increase of 11.6% over prior rental rates. Same center property operating income for the quarter increased 2.3%. At September 30, 2007, the portfolio was 93.7% occupied.

Debt and Market Capitalization

Total debt at quarter-end was approximately $676.4 million with an average interest rate of 6.1% and an average maturity of 52 months. Of that total, $557.2 million was fixed rate debt and $119.2 million was variable rate debt. As of September 30, 2007, debt to market capitalization was 49.4% and total capitalization approximated $1.4 billion.

Preferred Share Redemption/Dividend

Subsequent to quarter-end, the Company announced that it will redeem all of its outstanding 9.5% Series B cumulative convertible preferred shares of beneficial interest, (NYSE:RPT.PRB - News) on November 12, 2007. The 1,000,000 Series B preferred shares will be redeemed at $25.00 per share, plus accrued and unpaid dividends.

On October 2, 2007, the Company paid a third quarter common share dividend of $0.4625 per share and a third quarter dividend of $0.5938 per Series B cumulative redeemable preferred share for the period of July 1, 2007 through September 30, 2007, to shareholders of record on September 20, 2007.

Earnings Guidance/Conference Call

The Company expects 2007 annual diluted FFO per share to be between $2.61 and $2.69. In addition, the Company expects earnings per diluted common share to be between $2.10 and $2.20.

Management considers funds from operations, also known as FFO to be an appropriate supplemental measure of financial performance for a REIT. Please see the reconciliation of funds from operations to net income later in this press release.

Ramco-Gershenson will host a live broadcast of its third quarter conference call on Wednesday, October 24, 2007, at 10:00 a.m. eastern time, to discuss its financial results. The live broadcast will be available online at www.rgpt.com and www.streetevents.com and also by telephone at (866) 202-4683, passcode 82236307. A replay will be available shortly after the call on the aforementioned websites (for ninety days) or by telephone at (888) 286-8010, passcode 76829975 (for one week).

Supplemental financial information is available via e-mail by sending requests to dhendershot@rgpt.com and is also available at the investor section of our web page.

Ramco-Gershenson Properties Trust, headquartered in Farmington Hills, Michigan, is a fully integrated, self-administered, publicly-traded real estate investment trust (REIT), which owns, develops, acquires, manages and leases community shopping centers, regional malls and single tenant retail properties, nationally. The Trust owns interests in 86 shopping centers totaling approximately 19.2 million square feet of gross leasable area in Michigan, Florida, Georgia, Ohio, Wisconsin, Tennessee, Indiana, New Jersey, Virginia, South Carolina, North Carolina, and Maryland. For further information on Ramco-Gershenson Properties Trust visit the Trusts website at www.rgpt.com.

This press release contains forward-looking statements with respect to the operation of certain of the Trusts properties. Management of Ramco-Gershenson believes the expectations reflected in the forward-looking statements made in this press release are based on reasonable assumptions. Certain factors could occur that might cause actual results to vary. These include general economic conditions, the strength of key industries in the cities in which the Trusts properties are located, the performance of the Trusts tenants at the Trusts properties and elsewhere and other factors discussed in the Trusts reports filed with the Securities and Exchange Commission.

RAMCO-GERSHENSON PROPERTIES TRUST
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(In thousands, except per share amounts)
(Unaudited)
     
For the Three Months For the Nine Months
Ended September 30, Ended September 30,
  2007     2006     2007     2006  
REVENUES:
Minimum rents $ 24,102 $ 25,328 $ 72,870 $ 75,113
Percentage rents 117 225 525 610
Recoveries from tenants 10,452 10,738 32,921 30,920
Fees and management income 1,132 1,312 5,162 4,073
Other income   1,949     1,212     3,625     3,092  
Total revenues   37,752     38,815     115,103     113,808  
EXPENSES:
Real estate taxes 5,072 5,025 15,304 14,793
Recoverable operating expenses 5,968 6,000 18,225 17,236
Depreciation and amortization 8,132 8,105 24,600 24,058
Other operating 770 1,263 2,044 2,882
General and administrative 4,043 3,328 10,950 10,724
Interest expense   9,887     11,767     31,649     33,326  
Total expenses   33,872     35,488     102,772     103,019  

Income from continuing operations before gain (loss) on sale of real estate assets, minority interest and earnings from unconsolidated entities

3,880 3,327 12,331 10,789
Gain (loss) on sale of real estate assets (107 ) 1,204 31,269 2,937
Minority interest (1,177 ) (877 ) (7,212 ) (2,549 )
Earnings from unconsolidated entities   688     864     1,806     2,356  
Income from continuing operations   3,284     4,518     38,194     13,533  
Discontinued operations, net of minority interest:
Gain (loss) on sale of real estate assets - (28 ) - 926
Income from operations   -     9     -     402  
Income (loss) from discontinued operations   -     (19 )   -     1,328  
Net income 3,284 4,499 38,194 14,861
Preferred stock dividends (593 ) (1,664 ) (2,863 ) (4,991 )
Loss on redemption of preferred shares   -     -     (35 )   -  
Net income available to common shareholders $ 2,691   $ 2,835   $ 35,296   $ 9,870  
 
Basic earnings per common share:
Income from continuing operations $ 0.15 $ 0.17 $ 2.00 $ 0.51
Income from discontinued operations   -     -     -     0.08  
Net income $ 0.15   $ 0.17   $ 2.00   $ 0.59  
 
Diluted earnings per common share:
Income from continuing operations $ 0.15 $ 0.17 $ 1.96 $ 0.51
Income from discontinued operations   -     -     -     0.08  
Net income $ 0.15   $ 0.17   $ 1.96   $ 0.59  
 
Basic weighted average common shares outstanding   18,469     16,569     17,642     16,698  
Diluted weighted average common shares outstanding   18,520     16,621     18,544     16,739  
 
COMPREHENSIVE INCOME
Net income $ 3,284 $ 4,499 $ 38,194 $ 14,861

Other comprehensive income:

Unrealized gain (loss) on interest rate swaps   (727 )   (1,005 )   (530 )   190  
Comprehensive income $ 2,557   $ 3,494   $ 37,664   $ 15,051  
RAMCO-GERSHENSON PROPERTIES TRUST
CALCULATION OF FUNDS FROM OPERATIONS (1)
(In thousands, except per share amounts)
(Unaudited)
     
Three Months Ended Nine Months Ended
September 30, September 30,
  2007     2006     2007     2006  
 
Net Income $ 3,284 $ 4,499 $ 38,194 $ 14,861
Add:
Depreciation and amortization expense 9,192 8,713 27,445 25,838
Minority interest in partnership:
Continuing operations 1,222 877 7,212 2,549
Discontinued operations -

-

- 69
Less:
Loss (gain) on sale of real estate (2) 1,017 (25 ) (29,797 ) (25 )

Discontinued operations, gain (loss) on sale of real estate, net of minority interest

  -     28     -     (926 )
Funds from operations 14,715 14,092 43,054 42,366
Less:
Series B Preferred Stock dividends   (593 )   (593 )   (1,781 )   (1,781 )
Funds from operations available to common shareholders $ 14,122   $ 13,499   $ 41,273   $ 40,585  
 
Weighted average equivalent shares outstanding, diluted   21,439     21,439     21,464     21,557  
 

Funds from operations available to common shareholders per diluted share

$ 0.66   $ 0.63   $ 1.92   $ 1.88  
 

(1)  Management considers funds from operations, also known as FFO, an appropriate supplemental measure of the financial performance of an equity REIT.  Under the NAREIT definition, FFO represents income before minority interest, excluding extraordinary items, as defined under accounting principles generally accepted in the United States of America (GAAP), gains on sales of depreciable property, plus real estate related depreciation and amortization (excluding amortization of financing costs), and after adjustments for unconsolidated partnerships and joint ventures.  FFO should not be considered an alternative to GAAP net income as an indication of our performance.   We consider FFO as a useful measure for reviewing our comparative operating and financial performance between periods or to compare our performance to different REITs.  However, our computation of FFO may differ from the methodology for calculating FFO utilized by other real estate companies, and therefore, may not be comparable to these other real estate companies.

 
(2) Excludes gain on sale of undepreciated land of $1,472 in 2007 and $2,911 in 2006.
RAMCO-GERSHENSON PROPERTIES TRUST
CONSOLIDATED BALANCE SHEETS
(In thousands, except per share amounts)
 
September 30, December 31,
  2007     2006  
(Unaudited)
 
ASSETS
Investment in real estate, net $ 916,901 $ 897,975
Cash and cash equivalents 7,662 11,550
Restricted cash 9,664 7,772
Accounts receivable, net 34,736 33,692
Equity investments in and advances to unconsolidated entities 79,020 75,824
Other assets, net   39,073     38,057  
 
Total Assets $ 1,087,056   $ 1,064,870  
 
LIABILITIES
Mortgages and notes payable $ 676,383 $ 676,225
Accounts payable and accrued expenses 36,036 26,424
Distributions payable 10,478 10,391
Capital lease obligation   7,504     7,682  
 
Total Liabilities 730,401 720,722
Minority Interest 42,653 39,565
 
SHAREHOLDERS' EQUITY

Preferred Shares of Beneficial Interest, par value $0.01, 10,000 shares authorized:

9.5% Series B Cumulative Redeemable Preferred Shares; 1,000 shares issued and outstanding, liquidation value of $25,000

23,804 23,804

7.95% Series C Cumulative Convertible Preferred Shares; 1,889 shares issued and 1,888 shares outstanding and liquidation value of $53,808, as of December 31, 2006

- 51,714

Common Shares of Beneficial Interest, par value $0.01, 45,000 shares authorized; 18,469 and 16,580 issued and outstanding as of September 30, 2007 and December 31, 2006, respectively

185 166
Additional paid-in capital 386,824 335,738
Accumulated other comprehensive income (loss) (283 ) 247
Cumulative distributions in excess of net income   (96,528 )   (107,086 )
Total Shareholders Equity   314,002     304,583  
Total Liabilities and Shareholders Equity $ 1,087,056   $ 1,064,870  


 
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