RPT REALTY Management’s Discussion and Analysis of Financial Condition and Results of Operations (Form 10-Q)
Where we say “company,” “we,” “us,” or “our,” we mean
The following discussion and analysis of the financial condition and results of operations should be read in conjunction with the condensed consolidated financial statements, including the respective notes thereto, which are included in this Form 10-Q. Forward-Looking Statements This document contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements represent our expectations, plans or beliefs concerning future events and may be identified by terminology such as "may," "will," "should," "believe," "expect," "estimate," "anticipate," "continue," "predict" or similar terms. Although the forward-looking statements made in this document are based on our good faith beliefs, reasonable assumptions and our best judgment based upon current information, certain factors could cause actual results to differ materially from those in the forward-looking statements. Factors which may cause actual results to differ materially from current expectations included, but are not limited to: our success or failure in implementing our business strategy; economic conditions generally and in the commercial real estate and finance markets such as the inability to obtain equity, debt or other sources of funding or refinancing on favorable terms to the Company and the costs and availability of capital, which depends in part on our asset quality and our relationships with lenders and other capital providers; changes in the interest rate and/or other changes in the interest rate environment; the discontinuance of LIBOR; risks associated with bankruptcies or insolvencies or general downturn in the businesses of tenants; the ongoing impact of the novel coronavirus ("COVID-19"), or the impact of any future pandemic, epidemic or outbreak of any other highly infectious disease, on the
U.S., regional and global economies and on the Company's business, financial condition and results of operations and that of its tenants; the potential adverse impact from tenant defaults generally or from the unpredictability of the business plans and financial condition of the Company's tenants, which are heightened as a result of COVID-19; the execution of deferral or rent concession agreements by tenants; our business prospects and outlook; acquisition, disposition, development and joint venture risks; our insurance costs and coverages; increases in cost of operations; risks related to cybersecurity and loss of confidential information and other business interruptions; changes in governmental regulations, tax rates and similar matters; our continuing to qualify as a REIT; and other factors detailed from time to time in our filings with the Securities and Exchange Commission("SEC"), including in particular those set forth under "Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2021. Given these uncertainties, you should not place undue reliance on any forward-looking statements. Except as required by law, we assume no obligation to update these forward-looking statements, even if new information becomes available in the future. Overview RPT Realtyowns and operates a national portfolio of open-air shopping destinations principally located in top U.S.markets. The Company's shopping centers offer diverse, locally-curated consumer experiences that reflect the lifestyles of their surrounding communities and meet the modern expectations of the Company's retail partners. The Company is a fully integrated and self-administered REIT publicly traded on the NYSE. The common shares of beneficial interest of the Company, par value $0.01per share, are listed and traded on the NYSE under the ticker symbol "RPT". As of March 31, 2022, the Company's property portfolio (the "aggregate portfolio") consisted of 47 wholly-owned shopping centers, ten shopping centers owned through its grocery anchored joint venture and 40 retail properties owned through its net lease joint venture which together represent 14.6 million square feet of GLA. As of March 31, 2022, the Company's pro-rata share of the aggregate portfolio was 93.2% leased.
Effects of COVID-19
The Company continues to closely monitor the COVID-19 pandemic, including the impact on our business, our tenants, our vendors and our partners, and implement policies to mitigate the impact of COVID-19 on the Company's business as well as for the safety and protection of its employees, tenants and communities. The spread of COVID-19, including variants thereof, has caused significant market volatility and adverse impacts on the
U.S.retail market, the U.S.economy, the global economy, and financial markets.. While the overall economy continues to recover, several issues, including the changes in consumer behavior, lack of qualified employees, inflation risk, supply chain bottlenecks and COVID-19 variants have impacted, and may continue to impact, the pace of the recovery.
The Company’s primary source of income is rent and reimbursable expenses received from tenants under lease agreements. As a result, the Company’s financial results may be adversely affected if our tenants are unable to pay
Page 26 -------------------------------------------------------------------------------- rental payments due to the COVID-19 pandemic. Starting in the first quarter of 2021, current rent collections approached pre-pandemic levels, and starting in the first quarter of 2022, rental income not probable of collection returned to pre-pandemic levels, however, a worsening or resurgence of the COVID-19 pandemic could adversely impact the ability of tenants to pay rent. The factors described above, as well as additional factors that the Company may not currently be aware of, could materially negatively impact the Company's ability to collect rent and could lead to tenant bankruptcies, rejection of tenant leases in bankruptcy, difficulties in renewing or re-leasing retail space, difficulties in accessing capital, impairment of the Company's assets and other effects that could materially and adversely affect the Company's business, results of operations, financial condition and ability to pay distributions to shareholders. See "Risk Factors" in our Annual Report on Form 10-K for the year ended
December 31, 2021.
Over the past three years, the Company entered two strategic joint ventures, positioning itself to meaningfully transform its portfolio, primarily focusing on major metropolitan
U.S.markets in the Northeast and Southeast regions, which are supported by strong demographics, educational attainment, tech/life science/university adjacencies, pro-business environments and job growth. As of March 31, 2022, the Company derived 96.2% of its annualized base rent from the top 40 national markets, such as Boston, Atlanta, Detroitand Nashville, in addition to several markets in Florida, including Tampa, Miamiand Jacksonville.
Our primary business objectives are to increase operating cash flow and deliver superior relative shareholder returns. Specifically, we pursue the following methods to achieve these goals:
•Capitalize on accretive acquisition opportunities of open-air shopping centers through our complimentary joint venture platforms and balance sheet. We intend to pursue growth through the strategic acquisition of attractively priced open-air shopping centers and, in certain cases, sell certain separately subdivided single tenant parcels in the shopping center to our single tenant, net lease joint venture platform, RGMZ, highlighting the meaningful arbitrage opportunities that we can create for our shareholders. •Acquire high quality open-air shopping centers and single tenant, net lease retail assets in the top
U.S.metropolitan statistical areas ("MSA"). Our data-driven and stringent criteria for acquisition opportunities include a strong demographic profile, educational attainment, tech/life science/university adjacencies, pro-business environments, job growth, high exposure to essential tenants, tenant credit/term and an attractive risk-adjusted return. •Disciplined capital recycling strategy. We employ a data-driven and rigorous investment management strategy by selectively selling assets with returns and value that have been maximized and redeploying the capital into leasing, redevelopment, and acquisition of properties.
•Resale and redevelopment of our assets. Our strategy is to strategically remarket and redevelop certain of our existing properties where we have significant pre-leases, improve tenant credit quality and tenure, improve the merchandising mix or consumer experience through an alternative use outside of retail while generating attractive returns. and drive meaningful value creation.
•Hands-on active asset management. We proactively manage our properties, employ data-driven targeted leasing strategies, maintain strong tenant relationships, drive rent and occupancy, focus on reducing operating expenses and property capital expenditures, and attract high quality and creditworthy tenants; all of which we believe enhances the value of our properties. •Curate our real estate to align with the current and future shopping center landscape. We intend to leverage technology and data, optimize distribution points for brick-and-mortar and e-commerce purchases, engage in best-in-class sustainability programs and create an optimal merchandising mix to continue to attract and engage our shoppers. •Maintain a strong, flexible and investment grade balance sheet. Our strategy is to maintain low leverage and high liquidity, proactively manage and stagger our debt maturities, and retain access to diverse sources of capital to support the business in any environment. •Retain motivated, talented and high performing employees. To facilitate the attraction, retention and promotion of a talented and diverse workforce, we provide competitive compensation, best-in-class benefits and health and wellness programs, and champion programs that build connections between our employees and the communities where they live and at the properties we own. Page 27
A significant portion of our operating expenses are sensitive to inflation. Our operating expenses are typically recoverable through our lease arrangements, which allow us to pass through substantially all operating expenses to our tenants. As of
March 31, 2022, approximately 70% of our existing leases (on a gross leasable area basis) were triple net leases, which allow us to recover operating expenses. Of our remaining leases approximately 26% provide for recoveries of operating expenses at a fixed amount which have annual escalations ranging from 3% to 5%. During inflationary periods, we expect to recover increases in operating expenses from approximately 97% of our existing leases. As a result, we do not believe that inflation would result in a significant adverse effect on our net operating income, results of operations, and operating cash flows at the property level. Our general and administrative expenses consist primarily of compensation costs and professional service fees. Annually, our employee compensation is adjusted to reflect merit increases; however, to maintain our ability to successfully compete for the best talent, rising inflation rates may require us to provide compensation increases beyond historical annual merit increases, which may significantly increase our compensation costs. Similarly, professional service fees are also subject to the impact of inflation and expected to increase proportionately with increasing market prices for such services. Consequently, inflation is expected to increase our general and administrative expenses over time and may adversely impact our results of operations and operating cash flows. Also, during inflationary periods, interest rates have historically increased, which would have a direct effect on the interest expense of our borrowings. Our exposure to increases in interest rates in the short term is limited to our variable-rate borrowings. We had no outstanding variable-rate borrowings as of March 31, 2022. Therefore, we do not expect that the effect of inflation on our interest expense would have a material adverse impact on our financing costs in the short term, but it could increase our financing costs over time as we refinance our existing long-term borrowings, or incur additional interest related to the issuance of incremental debt. We have long-term lease agreements with our tenants, of which 6% - 13% (based on occupied gross leasable area) expire each year over the next three years. We believe these annual lease expirations allow us to reset these leases to market rents upon renewal or re-leasing and that annual rent escalations within our long-term leases are generally sufficient to offset the effect of inflation. However, it is possible that during higher inflationary periods, the impact of inflation will not be adequately offset by the resetting of rents from our renewal and re-leasing activities or our annual rent escalations. As a result, during inflationary periods in which the inflation rate exceeds the annual rent escalation percentages within our lease contracts, we may not adequately mitigate the impact of inflation, which may adversely affect our business, financial condition, results of operations, and cash flows. Additionally, inflationary pricing may have a negative effect on construction costs necessary to complete our development and redevelopment projects, including costs of construction materials, labor, and services from third-party contractors and suppliers. Higher construction costs could adversely impact our net investments in real estate and expected yields on our development and redevelopment projects, which over time may adversely affect our financial condition, results of operations, and cash flows. Page 28
The table below summarizes our aggregated multi-tenant operations portfolio by market as of date
Market Summary (1) MSA Number of Properties GLA (in thousands) Leased % Occupied % ABR/SF % of ABR Multi-Tenant Retail Top 40 MSAs: Atlanta 5 1,027 87.3 % 87.3 %
$ 13.156.7 % Austin 1 76 95.3 % 94.1 % 27.04 1.1 % Baltimore 1 252 98.7 % 71.4 % 11.43 1.2 % Boston 4 1,325 93.8 % 92.5 % 16.89 7.7 % Chicago 2 437 87.3 % 87.3 % 12.29 2.7 % Cincinnati 3 1,156 91.8 % 91.1 % 16.61 9.9 % Columbus 2 436 93.0 % 92.5 % 19.25 4.4 % Denver 1 472 97.6 % 96.3 % 20.26 5.2 % Detroit 9 1,985 91.2 % 88.9 % 16.32 16.1 % Indianapolis 1 232 94.6 % 94.6 % 14.85 1.9 % Jacksonville 2 725 98.7 % 90.0 % 16.66 6.2 % Miami 6 983 88.8 % 87.2 % 16.42 6.0 % Milwaukee 2 546 91.7 % 91.2 % 13.04 3.7 % Minneapolis 2 445 92.3 % 92.0 % 24.81 5.8 % Nashville 2 700 98.0 % 96.3 % 13.67 5.2 % St. Louis 4 828 97.2 % 94.2 % 14.41 5.7 % Tampa 7 1,097 97.9 % 90.8 % 13.46 6.7 %
Top 40 MSA subtotal 54 12,722 93.2 % 90.5 %
$ 15.8996.2 % Non Top 40 MSA 3 516 91.3 % 91.3 % 12.46 3.3 % Subtotal 57 13,238 93.2 % 90.5 % $ 15.7599.5 %
Net Leased Retail - RGMZ 40 1,355 96.9 % 96.9 % 11.19 0.5 % Total 97 14,593 93.2 % 90.6 %
$ 15.71100.0 %
(1) Prorated except for number of properties and GLA.
We have conducted the following activity during the past three months
Our properties reported the following rental activity, which is prorated except for number of rental transactions and square feet:
Leasing Transactions Square Footage Base Rent/SF (1) Prior Rent/SF (2) Tenant Improvements/SF (3) Leasing Commissions/SF Renewals 52 398,224
$15.45 $14.57 $0.06 $0.00New Leases - Comparable 4 11,795 $27.81 $23.17 $56.16 $14.84Non-Comparable Transactions (4) 26 306,298 $15.27N/A $58.87 $4.67Total 82 716,317 $15.57N/A $25.81 $2.21(1) Base rent represents contractual minimum rent under the new lease for the first 12 months of the term. (2) Prior rent represents minimum rent, if any, paid by the prior tenant in the final 12 months of the term. (3) Includes estimated tenant improvement cost, tenant allowances, and landlord costs. (4) Non-comparable lease transactions include (i) leases for space vacant for greater than 12 months and (ii) leases signed where the previous and current lease do not have a consistent lease structure. Page 29
During the three months ended
March 31, 2022, the Company contributed two properties to RGMZ that had been created by us upon the subdivision of certain parcels from our existing open-air shopping centers, valued at $11.6 millionto RGMZ. Refer to Note 3 of the notes to our condensed consolidated financial statements in this report for additional information related to dispositions. Financing Activity Debt As of March 31, 2022, we had net debt of $888.4 million, reflecting net debt to total market capitalization of 40.3%, as compared to 42.9% at March 31, 2021. Net debt increased by $101.8 millioncompared to March 31, 2021, primarily as a result of a decrease in cash and cash equivalents from the Company's consolidated acquisition activities and investment in unconsolidated joint ventures, partially offset by proceeds received from the Company's consolidated disposition activities, including the contribution of properties to RGMZ since the end of the prior period, and proceeds from the issuance of common shares under the Company's equity distribution agreements.
During the three months ended
March 31, 2022, the Company entered into forward sale agreements under the Prior ATM Program to sell an aggregate of 75,000 shares of common shares. The Company subsequently settled all forward sale agreements under the Prior ATM Program, receiving $1.0 millionof gross proceeds before issuance costs, which were used for working capital and general corporate purposes. In February 2022, the Company entered into the 2022 Equity Distribution Agreement pursuant to which the Company may offer and sell, from time to time, the Company's common shares having an aggregate gross sales price of up to $150.0 million. Sales of the shares of common shares may be made, in the Company's discretion, from time to time in "at-the-market" offerings as defined in Rule 415 of the Securities Act of 1933, as amended. The 2022 Equity Distribution Agreement also provides that the Company may enter into forward sale agreements for shares of its common shares with forward sellers and forward purchasers. During the three months ended March 31, 2022, the Company entered into forward sale agreements to sell an aggregate of 1,226,271 shares of its common shares, at a weighted average offering price of $13.85before underwriting discount and offering expenses. The Company has not settled any shares pursuant to these forward sale agreements as of March 31, 2022, and is required to settle the outstanding shares of common shares by March 2023. As of March 31, 2022, $133.0 millionof common shares remained available for issuance under the Current ATM Program after reducing the program capacity for shares currently under contract on a forward basis. The sale of such shares issuable pursuant to the Current ATM Program was registered with the SECpursuant to a prospectus supplement filed in February 2022and the accompanying base prospectus statement forming part of the Company's shelf registration statement on Form S-3ASR (No. 333-262871) which was filed with the SECin February 2022.
Land available for development
March 31, 2022, our three largest development sites are Parkway Shops, Lakeland Park Center and Hartland Towne Square. We continue to evaluate the best use for land available for development, portions of which are adjacent to our existing shopping centers. It is our policy to start vertical construction on new development projects only after the project has received entitlements, significant anchor commitments and construction financing, if appropriate. Our development and construction activities are subject to risks such as our inability to obtain the necessary governmental approvals for a project, our determination that the expected return on a project is not sufficient to warrant continuation of the planned development, or our change in plan or scope for the development. If any of these events occur, we may record an impairment provision. Page 30
Critical Accounting Estimates
Management's Discussion and Analysis of Financial Condition and Results of Operations is based on our consolidated financial statements, which have been prepared in accordance with GAAP. The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosure of contingent assets and liabilities. Our estimates are based on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. Actual results could differ from these estimates under different assumptions or conditions.
We believe that the following critical accounting principles require our most subjective judgment and the use of estimates in the preparation of our consolidated financial statements.
Revenue recognition and accounts receivable
Most of our leases contain non-contingent rent escalations for which we recognize income on a straight-line basis over the non-cancelable lease term. This method results in rental income in the early years of a lease being higher than actual cash received, creating a straight-line rent receivable asset which is included in the "Other Assets" line item in our consolidated balance sheets. We review our unbilled straight-line rent receivable balance to determine the future collectability of revenue that will not be billed to or collected from tenants due to early lease terminations, lease modifications, bankruptcies and other factors. Our evaluation is based on our assessment of tenant credit risk changes indicating that expected future straight-line rent may not be realized. Depending on circumstances, we may provide a reserve against the previously recognized straight-line rent receivable asset for a portion, up to its full value, that we estimate may not be received. Additionally, we monitor the collectability of our accounts receivable from specific tenants on an ongoing basis, analyze historical experience, customer creditworthiness, current economic trends and changes in tenant payment terms when evaluating the likelihood of tenant payment. For operating leases in which collectability of rental income is not considered probable, rental income is recognized on a cash basis and allowances are taken for those balances that we have reason to believe may be uncollectible in the period it is determined not to be probable of collection.
Acquisitions of properties are accounted for utilizing the acquisition method (which requires all assets acquired and liabilities assumed be measured at acquisition date fair value) and, accordingly, the results of operations of an acquired property are included in our results of operations from the date of acquisition. Estimates of fair values are based upon future cash flows and other valuation techniques in accordance with our fair value measurements policy, which are used to allocate the purchase price of acquired property among land, buildings, tenant improvements and identifiable intangibles. Identifiable intangible assets and liabilities include the effect of above-and below-market leases, the value of having leases in place ("as-is" versus "as if vacant" and absorption costs), other intangible assets such as assumed tax increment revenue bonds and out-of-market assumed mortgages. Depreciation and amortization are computed using the straight-line method over the estimated useful lives of 40 years for buildings, and over the remaining terms of any intangible asset contracts and the respective tenant leases, which may include bargain renewal options. The impact of these estimates, including estimates in connection with acquisition values and estimated useful lives, could result in significant differences related to the purchased assets, liabilities and subsequent depreciation or amortization expense. For more information, refer to Note 1 of the notes to the consolidated financial statements in this report.
Impairment of real estate investments
We review our investment in real estate, including any related intangible assets, for impairment on a property-by-property basis whenever events or changes in circumstances indicate that the carrying value of the property may not be recoverable. These changes in circumstances include, but are not limited to, changes in occupancy, rental rates, tenant sales, net operating income, geographic location, real estate values and expected holding period. The viability of all projects under construction or development, including those owned by unconsolidated joint ventures, is regularly evaluated under applicable accounting requirements, including requirements relating to abandonment of assets or changes in use. To the extent a project or an individual component of the project, is no longer considered to have value, the related capitalized costs are charged against operations. We recognize an impairment of an investment in real estate when the estimated undiscounted cash flows are less than the net carrying value of the property. If it is determined that an investment in real estate or an equity investment is impaired, then the carrying value is reduced to the estimated fair value as determined by cash flow models and discount rates or comparable sales in accordance with our fair value measurement policy. Page 31 -------------------------------------------------------------------------------- We have equity investments in unconsolidated joint venture entities which own multi-tenant shopping centers and net lease retail properties. We review our equity investments in unconsolidated entities for impairment on a nonrecurring basis if a decline in the fair value of the investment below the carrying amount is determined to be a decline that is other-than-temporary. In testing for impairment of these equity investments, we primarily use cash flow models, discount rates, and capitalization rates to estimate the fair value of properties held in joint ventures. Considerable judgment by management is applied when determining whether an equity investment in an unconsolidated entity is impaired and, if so, the amount of the impairment. Impairment provisions resulting from any event or change in circumstances, including changes in our intentions or our analysis of varying scenarios, could be material to our consolidated financial statements. Impairment may be impacted by macroeconomic conditions which may result in property operational disruption and indicate that the carrying amount may not be recoverable. Our Annual Report on Form 10-K for the year ended
December 31, 2021, contains a description of our critical accounting policies, including policies for the initial adoption of accounting policies, revenue recognition and accounts receivable, real estate investment acquisitions and impairment of real estate investments.
Comparison of three months ended
The following summarizes certain line items from our unaudited condensed consolidated statements of operations and comprehensive income that we believe are important in understanding our operations and/or have significantly changed in the three months ended
March 31, 2022as compared to the same period in 2021: Three Months Ended March 31, Dollar Percent 2022 2021 Change Change (In thousands) Total revenue $ 56,089 $ 50,093 $ 5,99612.0 % Real estate taxes 8,171 8,489 (318) (3.7) % Recoverable operating expense 7,208 6,193 1,015 16.4 % Non-recoverable operating expense 2,630 2,557 73 2.9 % Depreciation and amortization 20,211 18,379 1,832 10.0 % Transaction costs 114 - 114 NM General and administrative expense 8,348 7,370 978 13.3 % Gain on sale of real estate 3,547 19,003 (15,456) NM Earnings from unconsolidated joint ventures 1,101 801 300 37.5 % Interest expense 8,312 9,406 (1,094) (11.6) % Preferred share dividends 1,675 1,675 - - % NM - Not meaningful Total revenue for the three months ended March 31, 2022increased $6.0 million, or 12.0%, from the same period in 2021. The increase is primarily due to the following:
• $4.3 million increase due to properties acquired since the previous period;
•$2.8 million increase due to decreased rental income not probable of collection in the current period primarily due to the impact of the COVID-19 pandemic in the prior period; •$1.6 million increase from acceleration of below market leases in the current period attributable to tenants who vacated prior to the original estimated lease end date;
• An increase of $0.4 million related to management and lease fees charged by our unconsolidated joint ventures; and
• $0.3 million increase in bankruptcy proceeds; partially offset by
• A $3.4 million decrease related to properties sold since the previous period, including those properties contributed to RGMZ.
Page 32 -------------------------------------------------------------------------------- Real estate tax expense for the three months ended
March 31, 2022decreased $0.3 million, or (3.7)% from the same period in 2021, primarily due to properties disposed since the prior period, including those properties that were contributed to RGMZ. These decreases were partially offset by increases associated with properties acquired since the prior period. Recoverable operating expense for the three months ended March 31, 2022increased $1.0 million, or 16.4% from the same period in 2021, primarily due to increases associated with properties acquired since the prior period, as well as higher common area maintenance expenses at existing properties. These increases were partially offset by properties disposed since the prior period.
Non-reimbursable business expenses for the past three months
Depreciation and amortization expense for the three months ended
March 31, 2022increased $1.8 million, or 10.0%, from the same period in 2021. The increase is primarily a result of increased expense associated with properties acquired since the prior period and higher asset write offs in the current period for tenant lease terminations prior to their original estimated term, partially offset by properties disposed since the prior period. General and administrative expense for the three months ended March 31, 2022increased $1.0 million, or 13.3% from the same period in 2021, primarily as a result of higher wages and payroll related expenses in the current period. The Company had gains on real estate disposals of $3.5 millionduring the three months ended March 31, 2022, as compared to $19.0 millionfrom the same period in 2021. The current period activity is primarily related to contributions to RGMZ. Refer to Note 3 of the notes to the condensed consolidated financial statements in this report for further detail on dispositions. Earnings from unconsolidated joint ventures for the three months ended March 31, 2022increased $0.3 million, or 37.5% from the same period in 2021, primarily due to acquisition activity by our unconsolidated joint ventures since the prior period. Interest expense for the three months ended March 31, 2022decreased $1.1 million, or (11.6)%, from the same period in 2021. The Company had a 10.5% decrease in our average outstanding debt, as well as a 10 basis point decrease in our weighted average interest rate. The decrease in our average outstanding debt is the result of net repayments of mortgages, senior unsecured notes, and amounts outstanding on our unsecured revolving credit facility since the prior period.
liquidity and capital resources
Our primary uses of capital include principal and interest payments on our outstanding indebtedness, ongoing capital expenditures such as leasing capital expenditures and building improvements, shareholder distributions, operating expenses of our business, debt maturities, acquisitions, investments in equity interests in unconsolidated joint ventures and discretionary capital expenditures such as targeted remerchandising, expansions, redevelopment and development. We generally strive to cover our principal and interest payments, operating expenses, shareholder distributions, and ongoing capital expenditures from cash flow from operations, although from time to time we have borrowed or sold assets to finance a portion of those uses. We believe the combination of cash flow from operations, cash balances, favorable relationships with our lenders, issuance of debt, property dispositions and issuance of equity securities will provide adequate capital resources to fund all of our expected uses over at least the next 12 months. Although we believe that the combination of factors discussed above will provide sufficient liquidity, no such assurance can be given and changing future business conditions related to COVID-19 could have an adverse impact on our future cash flows, which would adversely impact our liquidity and the achievement of our financial forecast. We believe our current capital structure provides us with the financial flexibility to fund our current capital needs. We intend to continue to enhance our financial and operational flexibility by extending the duration of our debt, laddering our debt maturities, expanding our unencumbered asset base, and improving our leverage profile. In addition, we believe we have access to multiple forms of capital which includes unsecured corporate debt, secured mortgage debt, and preferred and common equity. However, there can be no assurances in this regard and additional financing and capital may not ultimately be available to us going forward, on favorable terms or at all. At
March 31, 2022and 2021, we had $12.9 millionand $143.4 million, respectively, in cash and cash equivalents and restricted cash. Restricted cash generally consists of funds held in escrow by mortgage lenders to pay real estate taxes, insurance premiums and certain capital expenditures. As of March 31, 2022, we had no remaining debt maturing in 2022, and we had $350.0 millionof unused capacity under our $350.0 millionunsecured revolving credit facility that could be borrowed subject to compliance with applicable financial covenants. Refer to Note 5 of the notes to the condensed consolidated financial statements for further discussion on our covenants. Page 33 -------------------------------------------------------------------------------- We consolidate entities in which we own less than 100% equity interest if we have a controlling interest or are the primary beneficiary in a variable interest entity, as defined in the Consolidation Topic of FASB ASC 810. From time to time, we enter into joint venture arrangements from which we believe we can benefit by owning a partial interest in one or more properties. As of March 31, 2022, our investments in unconsolidated joint ventures were approximately $237.7 millionrepresenting our ownership interest in three joint ventures. We accounted for these entities under the equity method. Refer to Note 4 of the notes to the condensed consolidated financial statements in this report for further information regarding our equity investments in unconsolidated joint ventures. We are engaged by certain of our joint ventures to provide asset management, property management, construction management, leasing and investing services for such ventures' respective properties. We receive fees for our services, including a property management fee calculated as a percentage of gross revenues received. Our liquidity needs consist primarily of funds necessary to pay indebtedness at maturity, potential acquisitions of properties, redevelopment of existing properties, the development of land and discretionary capital expenditures. We continually search for investment opportunities that may require additional capital and/or liquidity. We will continue to pursue the strategy of selling non-core properties or land that no longer meet our investment criteria or advance our business strategy. Our ability to obtain acceptable selling prices and satisfactory terms and financing will impact the timing of future sales. We anticipate using net proceeds from the sale of properties or land to reduce outstanding debt and support current and future growth-oriented initiatives. To the extent that asset sales are not sufficient to meet our long-term liquidity needs, we expect to meet such needs by raising debt or issuing equity. We have on file with the SECan automatic shelf registration statement relating to the offer and sale of an indeterminable amount of debt securities, preferred shares, common shares, depository shares, warrant and rights. From time to time, we may issue securities under this registration statement for working capital and other general corporate purposes.
For the past three months
Three Months Ended March 31, 2022 2021 (In thousands) Net cash provided by operating activities
Net cash provided by investing activities
Net cash used in financing activities
$ (21,058) $ (110,965)Operating Activities Net cash provided by operating activities decreased $5.0 millionin the three months ended March 31, 2022compared to the same period in 2021 primarily due to the following:
•Properties disposed of since prior period, including contribution of net lease retail assets to RGMZ; and
•Higher changes in working capital in the current period due to the timing of payment of liabilities and accrued expenses; partially offset by
•Increase in operating cash from properties acquired since the prior period; and
•Increased cash distributions from our unconsolidated joint ventures.
Net cash provided by investing activities was
$6.0 millionin the three months ended March 31, 2022, compared to net cash provided by investing activities of $24.0 millionin the same period in 2021. The $17.9 millionchange in net cash provided by investing activities was primarily due to a decrease in the proceeds from sale of real estate of $18.0 million. Page 34
Net cash used in financing activities was
•Net repayments on our revolving credit facility from
•Increase in cash distributions from financing activities of our unconsolidated joint ventures
For further information on our unsecured revolving credit facility and other debt, refer to Note 5 of the notes to the condensed consolidated financial statements. Dividends and Equity We and our subsidiary REITs currently qualify, and intend to continue to qualify in the future, as a REIT under the Internal Revenue Code ("Code"). As a REIT, we must distribute to our shareholders at least 90% of our REIT taxable income annually, excluding net capital gains. Distributions paid are at the discretion of our
Board of Trusteesand depend on our actual net income available to common shareholders, cash flow, financial condition, capital requirements, restrictions in financing arrangements, the annual distribution requirements under REIT provisions of the Code and such other factors as our Board of Trusteesdeems relevant. On February 10, 2022, our Board of Trusteesdeclared a quarterly cash dividend of $0.13per common shares to shareholders of record as of March 18, 2022. Additionally, we declared a quarterly cash dividend of $0.90625per Series D Cumulative Convertible Perpetual Preferred Share to preferred shareholders of record as of March 18, 2022. Our dividend policy is to make distributions to shareholders of at least 90% of our REIT taxable income, excluding net capital gains, in order to maintain qualification as a REIT. Distributions paid by us are generally expected to be funded from cash flows from operating activities. To the extent that cash flows from operating activities are insufficient to pay total distributions for any period, alternative funding sources are used. Examples of alternative funding sources include proceeds from sales of real estate and bank borrowings. The Board of Trusteeswill continue to evaluate the Company's dividend policy throughout the remainder of 2022 based upon the Company's financial performance and economic outlook and intends to maintain a quarterly common dividend of at least the amount required to continue qualifying as a REIT for U.S.federal income tax requirements. In February 2022, the Company entered into the 2022 Equity Distribution Agreement pursuant to which the Company may offer and sell, from time to time, the Company's common shares having an aggregate gross sales price of up to $150.0 million. Sales of the shares of common shares may be made, in the Company's discretion, from time to time, in "at-the-market" offerings as defined in Rule 415 of the Securities Act, as amended. The 2022 Equity Distribution Agreement also provides that the Company may enter into forward sale agreements for shares of its common shares with forward sellers and forward purchasers. During the three months ended March 31, 2022, the Company entered into forward sale agreements to sell an aggregate of 1,226,271 shares of its common shares, at a weighted average offering price of $13.85before discount and offering expenses. The Company has not settled any shares pursuant to these forward sale agreements as of March 31, 2022, and is required to settle the outstanding shares of common shares by March 2023. As of March 31, 2022, $133.0 millionof shares of common shares remained available for issuance under the Current ATM Program after reducing the program capacity for shares currently under contract on a forward basis. The sale of such shares issuable under the Current ATM Program was registered with the SECpursuant to a prospectus supplement filed in February 2022and the accompanying base prospectus statement forming part of the Company's shelf registration statement on Form S-3ASR (No. 333-262871) which was filed with the SECin February 2022.
March 31, 2022, we had $852.9 millionof debt outstanding consisting of $511.5 millionin senior unsecured notes, $310.0 millionof unsecured term loan facilities and $31.4 millionof fixed rate mortgage loans encumbering certain properties.
Page 35 -------------------------------------------------------------------------------- Our
$31.4 millionof fixed rate mortgages have interest rates ranging from 3.76% to 5.80% and are due at various maturity dates from January 2023through June 2026. The fixed rate mortgage notes are secured by mortgages on properties that have an approximate net book value of $71.7 millionas of March 31, 2022.
In addition, we have ten interest rate swap agreements in effect with an aggregate principal amount of
A redevelopment agreement was entered into between the
City of Jacksonville, the Jacksonville Economic Development Commissionand the Company, to construct and develop River City Marketplacein 2005. As part of the agreement, the city agreed to finance up to $12.2 millionof bonds. Repayment of the bonds is to be made in accordance with a level-payment amortization schedule over 20 years, and repayments are made out of tax revenues generated by the redevelopment. The remaining debt service payments due over the life of the bonds, including principal and interest, are $6.8 million. As part of the redevelopment, the Company executed a guaranty agreement whereby the Company would fund debt service payments if incremental tax revenues were not sufficient to fund repayment. There have been no payments made by the Company under this guaranty agreement to date. Our revolving credit facility, senior unsecured notes and term loan facilities contain representations, warranties and covenants, and events of default. These include financial covenants such as total leverage, fixed charge coverage ratio, unsecured leverage ratio, tangible net worth and various other calculations, which are detailed in the specific agreements governing our indebtedness, many of which are exhibits to our most recent Annual Report on Form 10-K. Additionally, our senior unsecured notes only permitted us to include an unencumbered real estate asset in the measurement of our unsecured leverage ratio if such asset satisfied 80% and 85% occupancy tests for the prior quarter. Such occupancy tests were generally based on the percentage of tenants operating, paying rent and not otherwise in default based on leases requiring current rental payments. Accordingly, as a result of the various uncertainties and factors surrounding the COVID-19 pandemic and its impact on our tenants and their businesses, and, therefore, its potential impact on our ability to maintain compliance with our loan covenants, on June 30, 2020, we entered into amendments to the note purchase agreements governing all of our outstanding senior unsecured notes. The amendments still in effect as of March 31, 2022were specific to the occupancy tests relating to the minimum ratio of consolidated total unencumbered asset value to unsecured indebtedness which were eliminated during the period from June 30, 2020through and including September 30, 2021and were otherwise reduced during the fiscal quarters ended December 31, 2021and March 31, 2022.
In connection to
Material Cash Commitments The Company believes that our current capital structure provides us with the financial flexibility to fund our current capital needs. We incur certain operating expenses in the ordinary course of business, such as real estate taxes, common area maintenance, insurance, general and administrative expenses and capital expenditures related to the maintenance of our properties, which are generally all covered through our cash flow from operations. In order to continue to qualify as a REIT for federal income tax purposes, we must meet several organizational and operational requirements, including a requirement that we annually distribute to our stockholders at least 90% of our REIT taxable income. We intend to continue to satisfy this requirement and maintain our REIT status by making annual distributions to our shareholders. In addition, we intend to pursue growth through the strategic acquisition of attractively priced open-air shopping centers and by remerchandising and redeveloping certain of our existing properties. We may also selectively dispose of properties that have returns and value that have been maximized. The Company believes its anticipated cash flow from operations, cash on hand, Current ATM Program and borrowing capacity under the current credit facility will be adequate to meet all short-term and long-term commitments. The Company's ability to leverage its balance sheet through the sale of properties or the issuance of debt provides the flexibility to take advantage of strategic opportunities which may require additional funding. Page 36 -------------------------------------------------------------------------------- The Company's other material cash commitments include debt maturities, interest payment obligations, obligations under non-cancelable operating and financing leases, construction commitments, and development obligations. The following table shows these other material cash commitments as of
March 31, 2022: Payments due by period Less than More than Material Cash Commitments Total 1 year (1) 1-3 years 4-5 years 5 years (In thousands) Mortgages and notes payable: Scheduled amortization $ 4,307 $ 1,017
848,559 - 137,059 306,500 405,000 Total mortgages and notes payable (2) 852,866 1,017 138,767 308,082 405,000 Interest expense (3) 159,111 23,705 56,900 41,400 37,106 Finance lease (4) 1,100 100 200 200 600 Operating leases 97,438 1,254 2,613 1,757 91,814 Construction commitments 5,332 5,332 - - - Development obligations (5) 2,005 208 401 380 1,016
Total Contractual Obligations
(1)Amounts represent balance of obligation for the remainder of 2022. (2)Excludes
$0.1 millionof unamortized mortgage debt premium and $4.0 millionin net deferred financing costs. (3)Variable-rate debt interest is calculated using rates at March 31, 2022. (4)Includes interest payments associated with the finance lease obligation of $0.3 million. (5)Includes interest payments associated with the development obligations of $0.3 million.
Mortgages and bills payable
See the analysis of our debt in “Liquidity and Capital Resources”.
Operating and finance leasing
We have a basic company rental agreement
We have an operating lease for our 12,572 square foot corporate office in
Southfield, Michigan, which commenced in August 2019, and an operating lease for our 5,629 square foot corporate office in New York, New York. These leases are set to expire in December 2024and January 2024, respectively. Our Southfield, Michigancorporate office lease includes two additional five year renewal options to extend the lease through December 2034and our New York, New Yorkcorporate office lease includes an additional five year renewal to extend the lease through January 2029. We also have a ground finance lease at our Buttermilk Towne Center with the City of Crescent Springs, Kentucky. The lease provides for fixed annual payments of $0.1 millionthrough maturity in December 2032, at which time we can acquire the land for one dollar. Construction Costs In connection with the leasing and targeted remerchandinsing of various shopping centers as of March 31, 2022, we have entered into agreements for construction activities with an aggregate remaining cost of approximately $5.3 million. Page 37
We are focused on adding value to our existing shopping center portfolio through successful leasing efforts, including anchor space reconfiguration and small store leasing.
For the remainder of 2022, we anticipate spending between
$40.0 millionand $50.0 millionfor capital expenditures, of which $5.3 millionis reflected in the construction commitments in the material cash commitments table. Our 2022 estimate includes ongoing capital expenditure spending between $20.0 millionand $25.0 millionand discretionary capital expenditure spending between $20.0 millionand $25.0 million. Ongoing capital expenditures relates to leasing costs and building improvements whereas discretionary capital expenditures relate to targeted remerchandising, outlots/expansion, and development/redevelopment. Estimates for future spending will change as new projects are approved.
March 31, 2022our total market capitalization was $2.2 billion. The table below reconciles total debt to net debt and sets forth our calculation of our total market capitalization as of March 31, 2022and 2021: March 31, 2022 2021 (In thousands) Notes payable, net $ 849,033 $ 927,112Add: Unamortized premiums and deferred financing costs 3,833 2,518 Pro-rata share of debt from unconsolidated joint venture 50,543 1,386 Finance lease obligation 821 875 Cash, cash equivalents and restricted cash (12,900)
Share of non-consolidated companies Cash, cash equivalents and restricted cash
(2,978) (2,022) Net debt (1)
$ 888,352 $ 786,514Common shares outstanding 84,162 80,156 Operating Partnership Units outstanding 1,683 1,909 Restricted share awards (treasury method) 1,607 1,021 Total common shares and equivalents 87,452 83,086
Market price per ordinary share (at
$ 11.41Equity market capitalization $ 1,204,214
7.25% Series D Cumulative Convertible Perpetual Preferred Stock
Market price per convertible preferred share (at
$ 59.29 $ 54.29Convertible perpetual preferred shares (at market) $ 109,627 $ 100,382Total market capitalization $ 2,202,193 $ 1,834,907Net debt to total market capitalization 40.3 % 42.9 % (1)Net debt represents (i) our total debt principal, which excludes unamortized premium and deferred financing costs, net, plus (ii) our finance lease obligation, plus (iii) our pro-rata share of total debt principal of each of our unconsolidated joint entities, less (iv) our cash, cash equivalents and restricted cash, less (v) our pro-rata share of cash, cash equivalents and restricted cash of each of our unconsolidated entities. We believe this calculation is useful to understand our financial condition. Our method of calculating net debt may be different from methods used by other companies and may not be comparable. At March 31, 2022, the non-controlling interest in the Operating Partnershipwas approximately 1.9%. The OP Units outstanding may, under certain circumstances, be exchanged for our common shares of beneficial interest on a one-for-one basis. We, as sole general partner of the Operating Partnership, have the option, but not the obligation, to settle exchanged OP Units held by others in cash based on the current trading price of our common shares of beneficial interest. Assuming the exchange of all non-controlling interest OP Units, there would have been approximately 85.8 million common shares of beneficial interest outstanding at March 31, 2022, with a market value of approximately $1.2 billion. Page 38
Non-GAAP Financial Measures
Certain of our key performance indicators are considered non-GAAP financial measures. Management uses these measures along with our GAAP financial statements in order to evaluate our operating results. We believe these additional measures provide users of our financial information additional comparable indicators of our industry, as well as, our performance. However, these measures do not represent alternatives to GAAP measures as indicators of performance and a comparison of the Company's presentations to similarly titled measures of other REITs may not necessarily be meaningful due to possible differences in definitions and application by such REITs.
funds from operations
We consider funds from operations, also known as "FFO," to be an appropriate supplemental measure of the financial performance of an equity REIT.
The National Association of Real Estate Investment Trusts("NAREIT") is an industry body public REITs participate in and provides guidance to its members. Under the NAREIT definition, FFO represents net income (computed in accordance with GAAP), excluding gains (or losses) from sales of depreciable property and impairment provisions on operating real estate assets or on investments in non-consolidated investees that are driven by measurable decreases in the fair value of operating real estate assets held by the investee, plus depreciation and amortization, (excluding amortization of financing costs). Adjustments for unconsolidated partnerships and joint ventures are calculated to reflect funds from operations on the same basis. We have adopted the NAREIT definition in our computation of FFO. In addition to FFO, we include Operating FFO as an additional measure of our financial and operating performance. Operating FFO excludes transactions costs and periodic items such as gains (or losses) from sales of non-operating real estate assets and impairment provisions on non-operating real estate assets, bargain purchase gains, severance expense, accelerated amortization of debt premiums, gains or losses on extinguishment of debt, insured proceeds, net, accelerated write-offs of above and below market lease intangibles, accelerated write-offs of lease incentives and bond interest proceeds that are not adjusted under the current NAREIT definition of FFO. We provide a reconciliation of FFO to Operating FFO. In future periods, Operating FFO may also include other adjustments, which will be detailed in the reconciliation for such measure, that we believe will enhance comparability of Operating FFO from period to period. FFO and Operating FFO should not be considered alternatives to GAAP net income available to common shareholders or as alternatives to cash flow as measures of liquidity. While we consider FFO and Operating FFO useful measures for reviewing our comparative operating and financial performance between periods or to compare our performance to different REITs, our computations of FFO and Operating FFO may differ from the computations utilized by other real estate companies, and therefore, may not be comparable. We recognize the limitations of FFO and Operating FFO when compared to GAAP net income available to common shareholders. FFO and Operating FFO do not represent amounts available for needed capital replacement or expansion, debt service obligations, or other commitments and uncertainties. In addition, FFO and Operating FFO do not represent cash generated from operating activities in accordance with GAAP and are not necessarily indicative of cash available to fund cash needs, including the payment of dividends. Page 39
The table below illustrates the FFO and Operating FFO calculations:
Three Months Ended March 31, 2022 2021 (In thousands, except per share data) Net income $ 5,892
$ 17,308Net income attributable to noncontrolling partner interest (116) (398) Preferred share dividends (1,675) (1,675) Net income available to common shareholders 4,101 15,235
Rental property depreciation and amortization expense 20,056 18,230
Pro rata depreciation of property of unconsolidated joint ventures (1)
3,414 1,255 Gain on sale of depreciable real estate (3,454) (19,003) FFO available to common shareholders 24,117 15,717 Noncontrolling interest in Operating Partnership (2) 116 398 Preferred share dividends (assuming conversion) (3) 1,675 - FFO available to common shareholders and dilutive securities 25,908 16,115 Gain on sale of land (93) - Transaction costs 114 - Severance expense (4) - 28 Above and below market lease intangible write-offs (1,624) (99)
Pro rata amortization of above and below market value intangible leases from unconsolidated joint ventures (1)
(90) 10 Insurance proceeds, net (5) (136) -
Operating FFO available to common shareholders and dilutive securities
Weighted average common shares 83,975 80,102 Shares issuable upon conversion of OP Units (2) 1,739 - Dilutive effect of restricted stock 1,607 1,021 Shares issuable upon conversion of preferred shares (3) 7,017 - Weighted average equivalent shares outstanding, diluted 94,338 81,123 Diluted earnings per share (6) $
Per share adjustments for FFO available to common shareholders and dilutive securities
FFO available to common shareholders and dilutive securities per share, diluted
Per share adjustments for operating FFO available to common shareholders and dilutive securities
Operating FFO and dilutive securities per share available to common shareholders, diluted
(1) Amounts shown are included in income from unconsolidated joint ventures.
(2)The total noncontrolling interest reflects OP Units convertible on a one-to-one basis into common shares. The Company's net income for the three months ended
March 31, 2021(largely driven by gain on sale of real estate), resulted in an income allocation to OP Units which drove an OP Unit ratio of $0.21(based on 1,909 weighted average OP Units outstanding). In instances when the OP Unit ratio exceeds basic FFO, the OP Units are considered anti-dilutive, and as a result are not included in the calculation of fully diluted FFO and Operating FFO for the three months ended March 31, 2021. (3)7.25% Series D Cumulative Convertible Perpetual Preferred Shares of Beneficial Interest, $0.01par value per share paid annual dividends of $6.7 millionand are currently convertible into approximately 7.0 million common shares. They are dilutive only when earnings or FFO exceed approximately $0.24per diluted share per quarter and $0.96per diluted share per year. The conversion ratio is subject to adjustment based upon a number of factors, and such adjustment could affect the dilutive impact of the Series D convertible preferred shares on FFO and earnings per share in future periods. In instances when the Preferred Share ratio exceeds basic FFO, the Preferred Shares are considered anti-dilutive, and as a result are not included in the calculation of fully diluted FFO and Operating FFO for the three months ended March 31, 2021.
(4)The amounts shown are included in general and administrative expenses.
(5) The amounts shown are included in other income (expenses), net.
(6)The denominator to calculate diluted earnings per share includes weighted average common shares and restricted stock for the three months ended
March 31, 2022and 2021. Page 40
NOI, Same Property NOI and NOI from other investments
NOI consists of (i) rental income and other property income, before straight-line rental income, amortization of lease inducements, amortization of acquired above and below market lease intangibles and lease termination fees less (ii) real estate taxes and all recoverable and non-recoverable operating expenses other than straight-line ground rent expense, in each case, including our share of these items from our R2G and RGMZ unconsolidated joint ventures. NOI, Same Property NOI and NOI from Other Investments are supplemental non-GAAP financial measures of real estate companies' operating performance. Same Property NOI is considered by management to be a relevant performance measure of our operations because it includes only the NOI of comparable operating properties for the reporting period. Same Property NOI for the three months ended
March 31, 2022and 2021 represents NOI from the Company's same property portfolio consisting of 40 consolidated operating properties and our 51.5% pro-rata share of four properties owned by our R2G unconsolidated joint venture and 100% of the 25 properties owned by our RGMZ unconsolidated joint venture (excludes seven properties that are part of our Marketplace of Delray multi-tenant property where activities have started in preparation for redevelopment). All properties included in Same Property NOI were either acquired or placed in service and stabilized prior to January 1, 2021. We present Same Property NOI primarily to show the percentage change in our NOI from period to period across a consistent pool of properties. The properties contributed to RGMZ had previously been parts of larger shopping centers that we own. Accordingly, 100.0% of the NOI from these properties is included in our results for periods on or prior to March 4, 2021and, for these prior periods, we had not separately allocated expenses attributable to the larger shopping centers between these properties and the remainder of these shopping centers. As a result, in order to help ensure the comparability of our Same Property NOI for the periods presented, we are continuing to include 100.0% of the NOI from these properties in our Same Property NOI following their contribution even though our pro rata share following March 4, 2021is only 6.4%. Same Property NOI excludes properties under redevelopment or where activities have started in preparation for redevelopment. A property is designated as a redevelopment when planned improvements significantly impact the property. NOI from Other Investments for the three months ended March 31, 2022and 2021 represents pro-rata NOI primarily from (i) properties disposed of and acquired during 2021, (ii) Hunter's Square, Marketplace of Delray and The Crossroads (R2G) where the Company has begun activities in anticipation of future redevelopment, (iii) certain property related employee compensation, benefits, and travel expense and (iv) noncomparable operating income and expense adjustments. Non-RPT NOI from RGMZ represents 93.6% of the properties contributed to RGMZ after March 4, 2021, which is our partners' share of RGMZ. NOI, Same Property NOI and NOI from Other Investments should not be considered as alternatives to net income in accordance with GAAP or as measures of liquidity. Our method of calculating these measures may differ from methods used by other REITs and, accordingly, may not be comparable to such other REITs. The following is a summary of our properties for the periods noted with consistent classification in the prior period for presentation of Same Property NOI: Three Months Ended March 31, Property Designation 2022 2021 Wholly-owned and R2G retail properties: Same-property 44 44 Acquisitions (1) 10 - Redevelopment (2) 3 3 Total wholly-owned and R2G properties: 57 47 RGMZ retail properties: Same-property 25 25 Acquisitions 8 - Redevelopment 7 7 Total properties 97 79 (1)Includes the following wholly-owned properties for the three ended March 31, 2022: Northborough Crossing, Bellevue Place, Woodstock Square, Newnan Pavilionand Highland Lakes Shopping Plaza. Also includes the following properties owned by R2G: East Lake Woodlands, South Pasadena, Village Shoppes of Canton, Bedford Marketplaceand Dedham. (2)Includes the following wholly-owned properties for the three months ended March 31, 2022and 2021: Hunter's Square and Marketplace of Delray. Also includes The Crossroads owned by R2G. The entire property indicated for each period is completely excluded from Same Property NOI. Page 41
The following is a reconciliation of our net income available to common shareholders on Same Property NOI:
Three Months Ended March 31, 2022 2021 (in thousands) Net income available to common shareholders
$ 4,101 $ 15,235Adjustments to reconcile to Same Property NOI: Preferred share dividends 1,675 1,675 Net income attributable to noncontrolling partner interest 116 398 Income tax provision 35 88 Interest expense 8,312 9,406 Earnings from unconsolidated joint ventures (1,101) (801) Gain on sale of real estate (3,547) (19,003) Other (income) expense, net (184) 107 Management and other fee income (741) (316) Depreciation and amortization 20,211 18,379 Transaction costs 114 - General and administrative expenses 8,348 7,370 Pro-rata share of NOI from R2G Venture LLC (1) 4,559 2,031 Pro-rata share of NOI from RGMZ Venture REIT LLC (2) 223 10 Lease termination fees (154) (24) Amortization of lease inducements 213 211
Depreciation of purchased intangible leased items above and below the market, net
(2,263) (737) Straight-line ground rent expense 77 77 Straight-line rental income (263) (396) NOI 39,731 33,710 NOI from Other Investments (6,113) (1,815) Non-RPT NOI from RGMZ Venture REIT LLC (3) 1,588 151 Same Property NOI
$ 35,206 $ 32,046Period-end Occupancy 91.2 % 90.9 %
(1) Represents 51.5% of the NOI of the five properties that contributed to R2G for all periods presented.
(2) Represents 6.4% of the NOI from the properties owned by RGMZ thereafter
(3) Represents 93.6% of the RGMZ properties included in Same Property NOI after
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