− FFO per Share and Recurring FFO per Share
Both Increase 4.3% −
Inland Real Estate Corporation (NYSE: IRC), a publicly traded
real estate investment trust that owns and operates high-quality,
necessity and value-based retail centers primarily in select
markets within the Central and Southeastern United States, today
announced financial and operational results for the three and six
months ended June 30, 2015.
Highlights
- Funds from Operations (FFO) per
weighted average common share (basic and diluted) was $0.24 for the
three months ended June 30, 2015, an increase of 4.3% over $0.23
for the second quarter of 2014.
- Recurring FFO (defined as FFO adjusted
for the impact of lease termination income, certain gains and
non-cash impairment charges of non-depreciable real estate, net of
taxes) per weighted average common share (basic and diluted) was
$0.24 for the three months ended June 30, 2015, an increase of 4.3%
over $0.23 for the second quarter of 2014.
- Same-store net operating income (NOI)
for the consolidated portfolio increased 5.7% for the quarter and
6.5% for the six months ended June 30, 2015, over the comparable
periods in 2014.
- Total portfolio leased occupancy was
95.3%, the seventh consecutive quarter with a rate of 95% or
above.
- Executed 82 leases within the total
portfolio for 303,197 square feet of leasable space.
- Average base rent for new and renewal
leases signed in the total portfolio increased by 15.0% and 4.1%,
respectively, over expiring average rents.
- IRC’s joint venture with PGGM acquired
the Cedar Center North and Creekside Commons shopping centers in
the Cleveland MSA for $15.4 million and $28.3 million,
respectively, and the Eastgate Crossing shopping center in the
Cincinnati market for $21.1 million. The IRC-PGGM venture was fully
invested at the close of the quarter, excluding development
projects.
“We believe our strong second quarter results, including a 4.3%
increase in FFO per share, demonstrate that we are continuing to
execute on our strategic plan to enhance portfolio performance and
quality, and strengthen our financial position,” said Mark
Zalatoris, president and chief executive officer of Inland Real
Estate Corporation. “Our pro-active portfolio management and
leasing initiatives drove healthy rent increases and gains in same
store net operating income, which have supported significant
improvements in key financial metrics such as net debt-to-recurring
EBITDA. In addition, during the quarter we completed the investment
allocation for our unconsolidated PGGM joint venture, which now
represents a $900 million pipeline of future high-quality additions
to our consolidated portfolio.”
Financial Results for the Quarter
FFO attributable to common stockholders was $24.4 million for
the quarter ended June 30, 2015, compared to $22.9 million for
the second quarter of 2014. On a per share basis, FFO was $0.24
(basic and diluted) for the second quarter of 2015, compared to
$0.23 for the same period of 2014. The increases in FFO and FFO per
share were primarily due to higher net operating income from the
consolidated same store portfolio, lower interest expense, and
increased equity in earnings of unconsolidated joint ventures.
Recurring FFO (defined as FFO adjusted for the impact of lease
termination income, certain gains and non-cash impairment charges
of non-depreciable real estate, net of taxes) was $24.4 million for
the second quarter of 2015, compared to $22.9 million for the prior
year quarter. On a per share basis, recurring FFO was $0.24 (basic
and diluted) for the three months ended June 30, 2015, compared to
$0.23 for the three months ended June 30, 2014. The increases in
recurring FFO and recurring FFO per share were due to the same
items that impacted FFO for the quarter.
Net income attributable to common stockholders for the three
months ended June 30, 2015 was $4.7 million, compared to $10.4
million for the second quarter of 2014. On a per common share
basis, net income attributable to common stockholders (basic and
diluted) was $0.05 for the second quarter of 2015, compared to
$0.10 for the prior year quarter. Net income for the quarter
decreased year over year primarily due to lower gains on sales of
investment properties compared to the second quarter of 2014. The
decrease was partially offset by the same items that impacted FFO,
plus lower depreciation and amortization expense.
Financial Results for the Six Months Ended June 30,
2015
For the six months ended June 30, 2015, FFO attributable to
common stockholders was $52.4 million, compared to $46.0 million
for the same period in 2014. On a per share basis, FFO for the
first six months of 2015 was $0.52 (basic and diluted), compared to
$0.46 for the six months ended June 30, 2014. The increases in FFO
and FFO per share were primarily due to the same items that
impacted FFO performance for the quarter, as well as increased
lease termination income recorded during the first half of 2015
compared to the first six months of 2014.
Recurring FFO was $49.7 million for the six months ended June
30, 2015, compared to $46.0 million for the prior year period. On a
per share basis, recurring FFO was $0.50 (basic) and $0.49
(diluted) for the first six months of 2015, compared to $0.46
(basic and diluted) for the same period of 2014. The increases in
recurring FFO and recurring FFO per share were due to the same
items that impacted FFO for the six-month period, excluding the
impact of lease termination income.
Net income attributable to common stockholders for the six
months ended June 30, 2015, was $3.7 million, compared to $23.6
million for the same period in 2014. On a per share basis, net
income attributable to common stockholders was $0.04 (basic and
diluted), compared to $0.24 for the same period of 2014. Net income
and net income per share decreased primarily due to decreased
disposition activity compared to the first half of 2014, which
resulted in lower gains on sales of investment properties, as well
as impairments recorded during the first quarter of 2015 on assets
sold or under contract for sale at prices that were below carrying
values. The decrease in net income was partially offset by the same
items that impacted FFO, plus lower depreciation and amortization
expense.
Reconciliations of FFO and Recurring FFO to net income
attributable to common stockholders, calculated in accordance with
U.S. GAAP, as well as FFO and Recurring FFO per share to net income
attributable to common stockholders per share, are provided at the
end of this news release.
Portfolio Performance
Consolidated same-store NOI was $28.9 million for the quarter,
representing an increase of 5.7% over the second quarter of 2014.
The increase in same-store NOI for the quarter was primarily due to
increased rental income and tenant recovery income true-up
adjustments the Company recorded during the quarter, as well as
lower real estate tax expense. For the six months ended June 30,
2015, consolidated same-store NOI was $58.1 million, representing
an increase of 6.5% over the comparable period of 2014. The
increase in same-store NOI for the first six months of 2015 was
primarily due to the same items that impacted same-store NOI for
the quarter, plus lower snow removal costs compared to the first
half of 2014.
Same-store financial occupancy was 93.6% for the consolidated
portfolio, representing a decrease of 10 basis points over one year
ago.
The Company evaluates its overall portfolio by analyzing the
operating performance of properties that have been owned and
operated for the same three and six-month periods during each year.
A total of 92 of the Company’s investment properties within the
consolidated portfolio satisfied this criterion during the period
and are referred to as “same-store” properties. Same-store NOI is a
supplemental non-GAAP measure used to monitor the performance of
the Company’s investment properties.
A reconciliation of consolidated same-store NOI to net income
attributable to common stockholders, calculated in accordance with
U.S. GAAP, is provided at the end of this news release.
Leasing
For the quarter, the Company executed 82 leases within the total
portfolio aggregating 303,197 square feet of gross leasable area
(GLA). Total leases executed included:
- Sixty-two renewal leases comprising
233,505 square feet, with an average rental rate of $16.59 per
square foot, representing an increase of 4.1% over the average
expiring rent;
- Thirteen new leases comprising 43,554
square feet, with an average rental rate of $16.39 per square foot,
representing an increase of 15.0% over the expiring rent; and
- Seven non-comparable leases comprising
26,138 square feet, with an average rental rate of $15.99 per
square foot. The Company defines non-comparable leases as leases
signed for expansion square footage or for space in which there was
no former tenant in place for a period of twelve months or
more.
On a blended basis, the 75 new and renewal leases executed
during the quarter had an average rental rate of $16.56 per square
foot, representing an increase of 5.7% over the average expiring
rent. The calculations of former and new average base rents are
adjusted for rent abatements on the included leases.
For the total portfolio as of June 30, 2015, leased
occupancy was 95.3% and financial occupancy was 93.7%, representing
decreases of 50 basis points and 60 basis points, respectively,
over one year ago. The decreases are primarily due to vacancies
related to in-process redevelopment projects. Leased occupancy is
defined as the percentage of total gross leasable area for which
there is a signed lease regardless of whether the tenant is
currently obligated to pay rent under the lease agreement.
Financial occupancy is defined as the percentage of total gross
leasable area for which a tenant is obligated to pay rent under the
terms of the lease agreement, regardless of the actual use or
occupation by that tenant of the area being leased, and excludes
tenants in abatement periods.
EBITDA, Balance Sheet, Liquidity and Market Value
The Company reported recurring EBITDA (earnings before interest,
taxes, depreciation and amortization), which is EBITDA adjusted for
the impact of lease termination income, certain gains and non-cash
impairment charges of non-depreciable real estate, of $38.2 million
for the second quarter of 2015, compared to $36.0 million for the
second quarter of 2014. Recurring EBITDA for the six months ended
June 30, 2015, was $77.5 million, compared to $72.7 million for the
same period in 2014.
Definitions and reconciliations of EBITDA and recurring EBITDA
to net income attributable to Inland Real Estate Corporation are
provided at the end of this news release.
Recurring EBITDA coverage of interest expense was 4.0 times for
the quarter ended June 30, 2015 compared to 3.3 times for the
second quarter of 2014. Net debt-to-recurring EBITDA, pro-rata
consolidation, was 6.8 times for the quarter, compared to 7.0 times
for the comparable prior year quarter. The Company has provided
EBITDA and related non-GAAP coverage ratios because it believes
EBITDA and the related ratios provide useful supplemental measures
in evaluating the Company’s operating performance because expenses
that may not be indicative of operating performance are
excluded.
As of June 30, 2015, the Company had an equity market
capitalization (common shares) of $0.9 billion, outstanding
preferred stock of $210.0 million (at face value), and total debt
outstanding of $1.1 billion (including the pro-rata share of debt
in unconsolidated joint ventures), for a total market
capitalization of approximately $2.2 billion. The Company’s
debt-to-total market capitalization was 48.1% as of June 30,
2015. Approximately 54.0% of total debt bears interest at fixed
rates. As of June 30, 2015, the weighted average interest rate
on the fixed rate debt was 5.09% and the overall weighted average
interest rate, including variable rate debt, was 3.57%.
Dispositions
During the quarter, the Company sold one shopping center, one
single-user retail property, and an outlot parcel for a total price
of $6.5 million. The dispositions included the 129,101-square-foot
Eastgate Center in Lombard, Ill., for $4.1 million; the
5,620-square-foot Park Square Outlot in Brooklyn Park, Minn., for
$1.6 million; and a 1.2-acre outlot parcel at Mokena Marketplace in
Mokena, Ill., for $0.8 million.
Joint Venture Activity
The Company has formed joint ventures with institutions and
established developers to advance its strategic goal to further
enhance the size, quality and diversification of its operating
platform.
On April 2, 2015, the Company’s joint venture with PGGM acquired
the 61,420-square-foot Cedar Center North retail center anchored by
PetSmart and located in the Cleveland suburb of South Euclid, Ohio,
for $15.4 million, excluding closing costs and adjustments and
subject to future earnout payments. On May 7, 2015, the IRC-PGGM
joint venture purchased the 201,893-square-foot Creekside Commons
shopping center anchored by Kohl’s, Gordmans, Home Goods and Party
City, and located in the Cleveland suburb of Mentor, Ohio, for
$28.3 million, excluding closing costs and adjustments. On May 29,
2015, the IRC-PGGM joint venture acquired the Eastgate Crossing
shopping center in Cincinnati, Ohio, for $21.1 million, excluding
closing costs and adjustments and subject to future earnout
payments. Eastgate Crossing is anchored by Kroger, Marshalls,
Ashley Furniture, and Jo-Ann Fabrics.
On June 5, 2015, the Company’s joint venture with Inland Private
Capital Corporation (IPCC) acquired for $15.8 million the
University Center retail property in Jacksonville, Fla., which is
anchored by Dollar Tree, TJMaxx, LA Fitness and Beall’s Outlet.
Distributions
In April, May, June and July of 2015, the Company paid a monthly
cash dividend of $0.169271 per share on the outstanding shares of
its 8.125% Series A Cumulative Redeemable Preferred Stock (Series A
Preferred Stock), and a monthly cash dividend of $0.144791667 per
share on the outstanding shares of its 6.95% Series B Cumulative
Redeemable Preferred Stock (Series B Preferred Stock). In July, the
Company declared a cash dividend of $0.169271 per share on the
outstanding shares of its Series A Preferred Stock, and a cash
dividend of $0.144791667 per share on the outstanding shares of its
Series B Preferred Stock, both dividends payable on August 17,
2015, to Series A and Series B Preferred Stockholders of record at
the close of business on August 3, 2015.
In April, May, June and July of 2015, the Company paid monthly
cash distributions to Common Stockholders of $0.0475 per common
share. In July, the Company declared a cash distribution of $0.0475
per common share, payable on August 17, 2015, to common
stockholders of record at the close of business on July 31,
2015.
Guidance
For fiscal year 2015, the Company continues to expect recurring
FFO per common share (basic and diluted) to range from $0.96 to
$1.00. The Company’s guidance incorporates assumptions for an
increase in consolidated same-store NOI to range from 2% to 3%, and
consolidated same-store financial occupancy at year-end 2015 to
range from 92.5% to 93.5%.
Conference Call/Webcast
Management will host a conference call to discuss the Company’s
financial and operational results for the quarter and six months
ended June 30, 2015, on Thursday, August 6, 2015, at 1:00 p.m.
CT (2:00 p.m. ET). Hosting the conference call will be Mark
Zalatoris, President and Chief Executive Officer; Brett Brown,
Chief Financial Officer; and Scott Carr, Chief Investment Officer.
The live conference call can be accessed by dialing 1-877-509-5836
for callers within the United States, 1-855-669-9657 for callers
dialing from Canada, or 1-412-902-4131 for other international
callers. A live webcast also will be available on the Company’s
website at www.inlandrealestate.com. The conference call will be
recorded and available for replay one hour after the end of the
live event until 12:01 a.m. ET on August 20, 2015. Interested
parties can access the replay of the conference call by dialing
1-877-344-7529 or 1-412-317-0088 for international callers, and
entering the conference number 10068517. An online playback of the
webcast will be archived for approximately one year within the
investor relations section of the Company’s website.
About Inland Real Estate Corporation
Inland Real Estate Corporation is a self-advised and
self-managed publicly traded real estate investment trust (REIT)
focused on owning and operating open-air neighborhood, community,
and power shopping centers located in well-established markets
primarily in the Central and Southeastern United States. As of
June 30, 2015, the Company owned interests in 135 fee simple
investment properties, including 36 owned through its
unconsolidated joint ventures, with aggregate leasable space of
approximately 15 million square feet. Additional information on
Inland Real Estate Corporation, including a copy of the Company’s
supplemental financial information for the three and six months
ended June 30, 2015, is available at www.inlandrealestate.com.
Certain information in this supplemental information may
constitute “forward-looking statements” within the meaning of the
Federal Private Securities Litigation Reform Act of 1995.
Forward-looking statements are statements that do not reflect
historical facts and instead reflect our management’s intentions,
beliefs, expectations, plans or predictions of the future.
Forward-looking statements can often be identified by words such as
“seek,” “believe,” “expect,” “anticipate,” “intend,” “estimate,”
“may,” “will,” “should” and “could.” Examples of forward-looking
statements include, but are not limited to, statements that
describe or contain information related to matters such as
management’s intent, belief or expectation with respect to our
financial performance, investment strategy or our portfolio, our
ability to address debt maturities, our cash flows, our growth
prospects, the value of our assets, our joint venture commitments
and the amount and timing of anticipated future cash distributions.
Forward-looking statements reflect the intent, belief or
expectations of our management based on their knowledge and
understanding of our business and industry and their assumptions,
beliefs and expectations with respect to the market for commercial
real estate, the U.S. economy and other future conditions.
Forward-looking statements are not guarantees of future
performance, and investors should not place undue reliance on them.
Actual results may differ materially from those expressed or
forecasted in forward-looking statements due to a variety of risks,
uncertainties and other factors, including but not limited to the
risks listed and described under Item 1A“Risk Factors” in our
Annual Report on Form 10-K for the year ended December 31, 2014, as
filed with the Securities and Exchange Commission (the “SEC”) on
February 27, 2015, as they may be revised or supplemented by us in
subsequent Reports on Form 10-Q and other filings with the SEC.
Except as otherwise required by applicable law, the Company
disclaims any obligation or undertaking to publicly release any
updates or revisions to any forward-looking statement in this
release to reflect any change in the Company’s expectations or any
change in events, conditions or circumstances on which any such
statement is based.
Consolidated Balance Sheets
(in thousands, except per share
data)
June 30, 2015 December 31, 2014 Assets:
(unaudited) Investment properties: Land $ 382,806 385,432
Construction in progress 41,143 23,812 Building and improvements
1,126,728 1,110,360 Total Investment Properties
1,550,677 1,519,604 Less accumulated depreciation 345,715
338,141 Net investment properties 1,204,962 1,181,463 Cash
and cash equivalents 14,579 18,385 Accounts receivable, net 41,028
38,211 Mortgages receivable 24,750 24,750 Investment in and
advances to unconsolidated joint ventures 169,212 170,720 Acquired
lease intangibles, net 84,207 85,858 Deferred costs, net 17,956
18,674 Other assets 35,460 34,890 Total assets $
1,592,154 1,572,951 Liabilities: Accounts
payable and accrued expenses $ 64,432 56,188 Acquired below market
lease intangibles, net 42,689 41,108 Distributions payable 5,435
5,420 Mortgages payable 380,339 384,769 Unsecured credit facilities
475,000 440,000 Other liabilities 21,346 22,290 Total
liabilities 989,241 949,775 Stockholders’
Equity: Preferred stock, $0.01 par value, 12,000 Shares authorized:
8.125% Series A Cumulative Redeemable shares, with a $25.00 per
share Liquidation Preference, 4,400 issued and outstanding at June
30, 2015 and December 31, 2014, respectively 110,000 110,000 6.95%
Series B Cumulative Redeemable shares, with a $25.00 per share
Liquidation Preference, 4,000 issued and outstanding at June 30,
2015 and December 31, 2014, respectively 100,000 100,000 Common
stock, $0.01 par value, 500,000 shares authorized; 100,517 and
100,151 Shares issued and outstanding at June 30, 2015 and December
31, 2014, respectively 1,005 1,002 Additional paid-in capital (net
of offering costs of $78,544 and $78,372 at June 30, 2015 and
December 31, 2014, respectively) 878,046 874,154 Accumulated
distributions in excess of net income (481,084 ) (456,120 )
Accumulated other comprehensive loss (5,966 ) (6,338 ) Total
stockholders’ equity 602,001 622,698 Noncontrolling interest
912 478 Total equity 602,913 623,176
Total liabilities and equity $ 1,592,154 1,572,951
Consolidated Statements of Operations
and Comprehensive Income (unaudited)
(in thousands, except per share
data)
Three months ended June 30, Six months ended June
30, 2015 2014 2015
2014 Revenues: Rental income $ 34,276 34,914 68,231 70,212
Tenant recoveries 13,189 12,127 29,928 32,170 Other property income
430 459 4,069 965 Fee income from unconsolidated joint ventures
1,441 1,307 2,874 2,566 Total revenues
49,336 48,807 105,102 105,913
Expenses: Property operating expenses 6,452 6,580 15,372 18,954
Real estate tax expense 9,364 9,558 19,726 19,639 Depreciation and
amortization 16,069 17,817 32,244 36,931 Provision for asset
impairment 27 222 9,355 222 General and administrative expenses
5,958 5,993 12,017 12,085 Total
expenses 37,870 40,170 88,714 87,831
Operating income 11,466 8,637 16,388 18,082 Other income 372
666 785 768 Gain on sale of investment properties, net 1,319 9,978
2,933 22,828 Gain on sale of joint venture interest 80 6 189 114
Interest expense (7,254 ) (8,900 ) (14,532 ) (17,890 ) Income
before income tax expense of taxable REIT subsidiaries, equity in
earnings of unconsolidated joint ventures and discontinued
operations 5,983 10,387 5,763 23,902 Income tax expense of
taxable REIT subsidiaries (176 ) (45 ) (1,013 ) (439 ) Equity in
earnings of unconsolidated joint ventures 2,836 2,263
6,926 4,057 Income from continuing operations 8,643
12,605 11,676 27,520 Income from discontinued operations —
31 — 521 Net income 8,643 12,636 11,676
28,041 Less: Net (income) loss attributable to the
noncontrolling interest 18 10 (75 ) 30 Net
income attributable to Inland Real Estate Corporation 8,661 12,646
11,601 28,071 Dividends on preferred shares (3,972 ) (2,234
) (7,944 ) (4,469 ) Net income attributable to common stockholders
$ 4,689 10,412 3,657 23,602
Basic and diluted earnings attributable to common shares per
weighted average common share: Income from continuing
operations $ 0.05 0.10 0.04 0.23 Income from discontinued
operations — — — 0.01 Net income
attributable to common stockholders per weighted average common
share — basic and diluted $ 0.05 0.10 0.04
0.24 Weighted average number of common shares
outstanding — basic 100,000 99,455 99,966
99,433 Weighted average number of common shares
outstanding — diluted 100,444 99,817 100,410
99,780 Comprehensive income: Net income attributable
to common stockholders $ 4,689 10,412 3,657 23,602 Unrealized gain
(loss) on derivative instruments 1,004 (706 ) 372
(1,206 ) Comprehensive income attributable to common stockholders $
5,693 9,706 4,029 22,396
Funds From Operations
(unaudited)
(in thousands, except per share
data)
Non-GAAP Financial Measures
We consider FFO a widely accepted and appropriate measure of
performance for a REIT. FFO provides a supplemental measure to
compare our performance and operations to other REITs. Due to
certain unique operating characteristics of real estate companies,
NAREIT has promulgated a standard known as FFO, which it believes
more accurately reflects the operating performance of a REIT such
as ours. As defined by NAREIT, FFO means net income computed in
accordance with U.S. GAAP, excluding gains (or losses) from sales
of operating property, plus depreciation and amortization and after
adjustments for unconsolidated entities in which the REIT holds an
interest. In addition, NAREIT has further clarified the FFO
definition to add-back impairment write-downs of depreciable real
estate or of investments in unconsolidated entities that are driven
by measurable decreases in the fair value of depreciable real
estate. Under U.S. GAAP, impairment charges reduce net income.
While impairment charges are added back in the calculation of FFO,
we caution that because impairments to the value of any property
are typically based on reductions in estimated future undiscounted
cash flows compared to current carrying value, declines in the
undiscounted cash flows which led to the impairment charges reflect
declines in property operating performance that may be permanent.
We have adopted the NAREIT definition for computing FFO. Recurring
FFO includes adjustments to FFO for the impact of lease termination
income, certain gains and non-cash impairment charges of
non-depreciable real estate, net of taxes recorded in comparable
periods, in order to present the performance of our core portfolio
operations. Management uses the calculation of FFO and Recurring
FFO for several reasons. Recurring FFO per weighted average common
share outstanding is used in the employment agreements we have with
our executives to determine a portion of incentive compensation
payable to them. Additionally, we use FFO and Recurring FFO to
compare our performance to that of other REITs in our peer group.
The calculation of FFO and Recurring FFO may vary from entity to
entity because capitalization and expense policies tend to vary
from entity to entity. Items that are capitalized do not impact FFO
and Recurring FFO whereas items that are expensed reduce FFO and
Recurring FFO. Consequently, our presentation of FFO and Recurring
FFO may not be comparable to other similarly titled measures
presented by other REITs. FFO and Recurring FFO do not represent
cash flows from operations as defined by U.S. GAAP, are not
indicative of cash available to fund cash flow needs and liquidity,
including our ability to pay distributions, and should not be
considered as an alternative to net income, as determined in
accordance with U.S. GAAP, for purposes of evaluating our operating
performance. The following table reflects our FFO and Recurring FFO
for the periods presented, reconciled to net income (loss)
attributable to common stockholders for these periods:
Three months ended June 30, Six months
ended June 30, 2015 2014 2015
2014 Net income attributable to common stockholders $
4,689 10,412 3,657 23,602 Gain on sale of investment properties
(1,319 ) (9,978 ) (2,753 ) (23,321 ) Impairment of depreciable
operating property 27 222 9,355 222 Equity in depreciation and
amortization of unconsolidated joint ventures 4,967 4,420 9,945
8,612 Amortization on in-place lease intangibles 3,710 4,853 7,520
11,264 Amortization on leasing commissions 483 512 972 965
Depreciation, net of noncontrolling interest 11,876 12,452
23,752 24,702 Funds From Operations
attributable to common stockholders $ 24,433 22,893 52,448 46,046
Lease termination income (2 ) (10 ) (2,673 ) (14 ) Lease
termination income included in equity in earnings of unconsolidated
joint ventures — — (106 ) (77 ) Recurring Funds From
Operations attributable to common stockholders $ 24,431
22,883 49,669 45,955 Net income
attributable to common stockholders per weighted average common
share — basic and diluted $ 0.05 0.10 0.04
0.24 Funds From Operations attributable to common
stockholders, per weighted average common share — basic and diluted
$ 0.24 0.23 0.52 0.46 Recurring
Funds From Operations attributable to common stockholders, per
weighted average common share — basic $ 0.24 0.23
0.50 0.46 Recurring Funds From Operations
attributable to common stockholders, per weighted average common
share — diluted $ 0.24 0.23 0.49 0.46
Weighted average number of common shares outstanding — basic
100,000 99,455 99,966 99,433 Weighted average number of common
shares outstanding — diluted 100,444 99,817 100,410 99,780
Earnings Before Interest, Taxes,
Depreciation and Amortization (unaudited)
(in thousands, except per share
data)
EBITDA is defined as earnings (losses) from operations
excluding: (1) interest expense; (2) income tax benefit
or expenses; (3) depreciation and amortization expense; and
(4) gains (loss) on non-operating property. We believe EBITDA
is useful to us and to an investor as a supplemental measure in
evaluating our financial performance because it excludes expenses
that we believe may not be indicative of our operating performance.
By excluding interest expense, EBITDA measures our financial
performance regardless of how we finance our operations and capital
structure. By excluding depreciation and amortization expense, we
believe we can more accurately assess the performance of our
portfolio. Because EBITDA is calculated before recurring cash
charges such as interest expense and taxes and is not adjusted for
capital expenditures or other recurring cash requirements, it does
not reflect the amount of capital needed to maintain our properties
nor does it reflect trends in interest costs due to changes in
interest rates or increases in borrowing. EBITDA should be
considered only as a supplement to net earnings and may be
calculated differently by other REITs.
We believe EBITDA is an important supplemental non-GAAP measure.
We utilize EBITDA to calculate our interest expense coverage ratio,
which equals EBITDA divided by total interest expense. We believe
that using EBITDA, which excludes the effect of non-operating
expenses and non-cash charges, all of which are based on historical
cost and may be of limited significance in evaluating current
performance, facilitates comparison of core operating profitability
between periods and between REITs, particularly in light of the use
of EBITDA by a seemingly large number of REITs in their reports on
Forms 10-Q and 10-K. We believe that investors should consider
EBITDA in conjunction with net income and the other required U.S.
GAAP measures of our performance to improve their understanding of
our operating results. Recurring EBITDA includes adjustments to
EBITDA for the impact of lease termination income and non-cash
impairment charges in comparable periods in order to present the
performance of our core portfolio operations.
Three months ended June 30, Six months
ended June 30, 2015 2014 2015
2014 Net income attributable to Inland Real Estate
Corporation $ 8,661 12,646 11,601 28,071 Gain on sale of investment
properties (1,319 ) (9,978 ) (2,753 ) (23,321 ) Gain on sale of
development properties — — (72 ) — Income tax expense of taxable
REIT subsidiaries 176 45 1,013 439 Interest expense 7,254 8,900
14,532 17,890 Interest expense associated with unconsolidated joint
ventures 2,351 1,977 4,428 3,967 Depreciation and amortization
16,069 17,817 32,244 36,931 Depreciation and amortization
associated with unconsolidated joint ventures 4,967 4,420
9,945 8,612 EBITDA 38,159 35,827 70,938 72,589
Lease termination income (2 ) (10 ) (2,673 ) (14 ) Lease
termination income included in equity in earnings of unconsolidated
joint ventures — — (106 ) (77 ) Impairment loss, net of taxes:
Provision for asset impairment 27 222 9,355
222 Recurring EBITDA $ 38,184 36,039 77,514
72,720 Total Interest Expense $ 9,605
10,877 18,960 21,857 EBITDA: Interest
Expense Coverage Ratio 4.0 x 3.3 x 3.7 x 3.3 x Recurring
EBITDA: Interest Expense Coverage Ratio 4.0 x 3.3 x 4.1 x 3.3 x
Same Store Net Operating Income
(unaudited)
(in thousands, except per share
data)
Same store net operating income, which is the net operating
income of properties owned during the same periods during each year
("same store" properties), is considered a non-GAAP financial
measure because it does not include straight-line rental income,
amortization of lease intangibles, lease termination income,
interest, depreciation, amortization and bad debt expense. We
provide same store net operating income as another metric to
compare the results of property operations for the three and six
months ended June 30, 2015 and 2014. We also provide a
reconciliation of these amounts to the most comparable U.S. GAAP
measure, net income attributable to common stockholders.
Three months ended June 30,
Six months ended June 30, Consolidated
2015 2014 % Change 2015
2014 % Change Rental income and tenant recoveries:
"Same store" investment properties, 92 properties Rental income $
30,163 29,839 1.1 % 60,086 59,246 1.4 % Tenant recovery income
11,490 10,874 5.7 % 26,291 26,808 -1.9 % Other property income 385
305 26.2 % 1,158 686 68.8 % "Other investment properties” Rental
income 3,899 4,898 7,866 10,129 Tenant recovery income 1,699 1,253
3,637 5,362 Other property income 43 144 238
265
Total property income $ 47,679
47,313 99,276 102,496
Property operating expenses: "Same store" investment
properties, 92 properties Property operating expenses $ 4,930 4,927
0.1 % 12,134 14,757 -17.8 % Real estate tax expense 8,237 8,785
-6.2 % 17,341 17,488 -0.8 % "Other investment properties" Property
operating expenses 1,137 1,140 2,544 3,493 Real estate tax expense
1,127 773 2,385 2,151
Total property
operating expenses $ 15,431 15,625
34,404 37,889 Property
net operating income "Same store" investment properties 28,871
27,306 5.7 % 58,060 54,495 6.5 % "Other investment properties"
3,377 4,382 6,812 10,112
Total
property net operating income $ 32,248
31,688 64,872 64,607
Other income: Straight-line rents $ 166 275 172 1,010
Amortization of lease intangibles 48 (98 ) 107 (173 ) Lease
termination income 2 10 2,673 14 Other income 372 666 785 768 Fee
income from unconsolidated joint ventures 1,441 1,307 2,874 2,566
Gain on sale of investment properties, net 1,319 9,978 2,933 22,828
Gain on sale of joint venture interest 80 6 189 114 Equity
in earnings of unconsolidated joint ventures 2,836 2,263 6,926
4,057 Other expenses: Income tax expense of taxable REIT
subsidiaries (176 ) (45 ) (1,013 ) (439 ) Bad debt expense (385 )
(513 ) (694 ) (704 ) Depreciation and amortization (16,069 )
(17,817 ) (32,244 ) (36,931 ) General and administrative expenses
(5,958 ) (5,993 ) (12,017 ) (12,085 ) Interest expense (7,254 )
(8,900 ) (14,532 ) (17,890 ) Provision for asset impairment (27 )
(222 ) (9,355 ) (222 ) Income from continuing operations
8,643 12,605 11,676 27,520 Income from discontinued operations —
31 — 521 Net income 8,643 12,636 11,676
28,041 Less: Net (income) loss attributable to the
noncontrolling interest 18 10 (75 ) 30 Net
income attributable to Inland Real Estate Corporation 8,661 12,646
11,601 28,071 Dividends on preferred shares (3,972 ) (2,234
) (7,944 ) (4,469 )
Net income attributable to common
stockholders $ 4,689 10,412
3,657 23,602
Pro Rata Consolidated Information
(unaudited)
(in thousands, except per share
data)
These schedules present certain Non-GAAP pro-rata consolidated
information as of and for the three and six months ended
June 30, 2015. These schedules are considered Non-GAAP because
they include financial information related to consolidated joint
ventures with an adjustment for the portion related to
noncontrolling interests and unconsolidated joint ventures
accounted for under the equity method of accounting. Because we
incur expenses to manage properties that are not on our balance
sheet, we believe providing this information allows investors to
better compare our overall performance, size and operating metrics
to those of other REITs in our peer group. The Company believes
this Non-GAAP information provides supplementary information that
is both useful to and has been requested by investors and analysts.
Investors should not consider Non-GAAP information as a substitute
for, or as superior to, U.S. GAAP information. Rather, Non-GAAP
information may provide useful information in addition to
information presented in accordance with U.S. GAAP.
Reconciliation of GAAP Reported to Selected Non-GAAP Pro Rata
Consolidated Information
At June 30, 2015
IPCC Non-GAAP Pro-rata Noncontrolling
INP Retail LP Development Unconsolidated
Consolidated GAAP Reported Interest
(PGGM) Properties properties
Information Total investment properties $
1,534,587 (1,222 ) 413,764 2,092 360 1,949,581 Total assets
1,592,154 (2,860 ) 299,203 2,468 243 1,891,208 Mortgages payable
380,339 (530 ) 218,993 — 228 599,030 Total liabilities 989,241 (518
) 244,092 1,613 229 1,234,657
At December 31, 2014
IPCC Non-GAAP
Pro-rata Noncontrolling INP Retail LP
Development Unconsolidated Consolidated
GAAP Reported Interest (PGGM)
Properties properties Information
Total investment properties $ 1,519,604 (325 ) 364,463 2,062
12,790 1,898,594 Total assets 1,572,951 (1,886 ) 251,697 2,455
7,640 1,832,857 Mortgages payable 384,769 — 168,689 — 6,267 559,725
Total liabilities 949,775 19 196,082 1,607 6,823 1,154,306
For the three months ended June 30, 2015
IPCC Non-GAAP Pro-rata
Noncontrolling INP Retail LP Development
Unconsolidated Consolidated GAAP Reported
Interest (PGGM) Properties properties
Information Total revenues $ 49,336 — 12,767 — 21
62,124 Total expenses 37,870 (18 ) 8,797 2 10 46,661 Operating
income (loss) 11,466 18 3,970 (2 ) 11 15,463
For the
three months ended June 30, 2014
IPCC Non-GAAP Pro-rata Noncontrolling
INP Retail LP Development Unconsolidated
Consolidated GAAP Reported Interest
(PGGM) Properties properties
Information Total revenues $ 48,807 — 11,175 — 122
60,104 Total expenses 40,170 (10 ) 7,415 (1 ) 58 47,632 Operating
income 8,637 10 3,760 1 64 12,472
For the six months
ended June 30, 2015 IPCC
Non-GAAP Pro-rata Noncontrolling INP Retail
LP Development Unconsolidated Consolidated
GAAP Reported Interest (PGGM)
Properties properties Information Total
revenues $ 105,102 — 26,827 (1 ) 182 132,110 Total expenses 88,714
(33 ) 18,556 8 91 107,336 Operating income (loss) 16,388 33 8,271
(9 ) 91 24,774
For the six months ended June 30, 2014
IPCC Non-GAAP
Pro-rata Noncontrolling INP Retail LP
Development Unconsolidated Consolidated
GAAP Reported Interest (PGGM)
Properties properties Information Total
revenues $ 105,913 — 24,217 — 180 130,310 Total expenses 87,831 (30
) 17,133 1 93 105,028 Operating income (loss) 18,082 30 7,084 (1 )
87 25,282
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version on businesswire.com: http://www.businesswire.com/news/home/20150806005336/en/
Inland Real Estate Corporation Contact:Dawn Benchelt, Director
of Investor Relations(888) 331-4732ir@inlandrealestate.com
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