Form: 8-K

Current report

Documents

Exhibit 99.1
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450 Lexington Avenue : New York, NY 10017 : 800.468.7526





FOR IMMEDIATE RELEASE

CONTACT:
Stacy Slater                            
Senior Vice President, Investor Relations            
800.468.7526                             
stacy.slater@brixmor.com

BRIXMOR PROPERTY GROUP REPORTS FOURTH QUARTER AND FULL YEAR 2016 RESULTS

NEW YORK, February 13, 2017 - Brixmor Property Group Inc. (NYSE: BRX) (“Brixmor” or the “Company”) announced today its operating results for the three and twelve months ended December 31, 2016. For the three and twelve months ended December 31, 2016, net income attributable to common stockholders was $0.31 and $0.91 per diluted share, respectively, compared with $0.18 and $0.65 per diluted share, respectively, in the comparable 2015 period.

Key highlights for the twelve months ended December 31, 2016 include:

•
Grew FFO per diluted share 7.0% year-over-year, excluding non-cash GAAP rental adjustments and lease termination fees
•
Generated same property NOI growth of 2.5%
•
Executed 7.9 million square feet of new and renewal leases at comparable rent spreads of 16.5%
•
Increased leased occupancy by 20 basis points year-over-year to 92.8%
•
Increased small shop leased occupancy by 80 basis points year-over-year to 85.1%
•
Completed 28 anchor space repositioning projects, 12 outparcel developments and one redevelopment project for a total investment of $67 million at an average incremental NOI yield of 12%
•
Completed $48 million of acquisitions and $107 million of dispositions
•
Provided NAREIT FFO guidance for 2017 of $2.05 - $2.12 per diluted share, representing an increase of 3.3 to 6.3% over 2016, excluding non-cash GAAP rental adjustments and lease termination fees

“2016 results demonstrate the strength of our core fundamentals and enhanced operating capabilities. With 7.9 million square feet of new and renewal leases executed during the year at blended rent spreads of 16.5%, we continue to see strong demand from dynamic and expanding retailers,” commented James Taylor, Chief Executive Officer and President. “Importantly, we set new records in average base rent per square foot achieved, small shop occupancy and overall leasing volume, while also successfully ramping-up our value accretive redevelopment and capital recycling activity. We also refinanced over $900 million of debt and amended our $2.75 billion credit facility, extending our weighted average maturity and increasing our unencumbered asset base to 73% of the portfolio. I couldn’t be more pleased with how this team has performed.”

FINANCIAL HIGHLIGHTS
Net Income
•
For the three months ended December 31, 2016 and 2015, net income attributable to common stockholders was $93.1 million, or $0.31 per diluted share, and $55.3 million, or $0.18 per diluted share, respectively.

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450 Lexington Avenue : New York, NY 10017 : 800.468.7526



•
For the twelve months ended December 31, 2016 and 2015, net income attributable to common stockholders was $275.5 million, or $0.91 per diluted share, and $193.6 million, or $0.65 per diluted share, respectively.

NAREIT FFO
•
For the three months ended December 31, 2016 and 2015, NAREIT FFO was $163.0 million, or $0.53 per diluted share and $155.8 million, or $0.51 per diluted share, respectively.
•
For the twelve months ended December 31, 2016 and 2015, NAREIT FFO was $632.0 million, or $2.07 per diluted share and $600.2 million, or $1.97 per diluted share, respectively. Results for the twelve months ended December 31, 2016 include expenses related to the previously disclosed Audit Committee review, executive severance expenses, litigation and other non-routine legal expenses and other items that impact FFO comparability of ($10.1) million, or ($0.03) per diluted share. Results for the twelve months ended December 31, 2015 include a non-recurring charge related to pre-IPO compensation programs, transaction expenses and executive severance expenses, offset by an adjustment of tax reserves for pre-IPO transactions and a gain on extinguishment of debt, and other items that impact FFO comparability of ($7.7) million, or ($0.03) per diluted share.

Same Property NOI Growth
•
Same property NOI for the three and twelve months ended December 31, 2016 increased 1.6% and 2.5%, respectively from the comparable 2015 periods.
•
Same property base rent for the three and twelve months ended December 31, 2016 contributed 240 basis points and 250 basis points, respectively, to same property NOI growth.
•
Same property NOI growth for the three months ended December 31, 2016 was impacted by adjustments made in the three months ended December 31, 2015 related to the previously disclosed Audit Committee review. In addition, results were negatively impacted by a 50 basis point decline in billed occupancy, primarily driven by tenant bankruptcies, as well as by one-time ancillary and other income items in the three months ended December 31, 2015.

Dividend
•
The Company’s Board of Directors declared a quarterly cash dividend of $0.26 per common share (equivalent to $1.04 per annum) for the first quarter of 2017.
•
The dividend is payable on April 17, 2017 to stockholders of record on April 5, 2017, representing an ex-dividend date of April 3, 2017.

PORTFOLIO AND INVESTMENT ACTIVITY
Value Enhancing Reinvestment Opportunities
•
During the three months ended December 31, 2016, the Company completed four anchor space repositioning projects and added five new projects to its pipeline.  At December 31, 2016, the anchor space repositioning pipeline was comprised of 16 projects with an aggregate expected cost of approximately $35 million at expected average incremental NOI yields of 12 to 14%.






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450 Lexington Avenue : New York, NY 10017 : 800.468.7526



•
During the three months ended December 31, 2016, the Company completed four outparcel developments. At December 31, 2016, the outparcel development pipeline was comprised of seven projects with an aggregate expected cost of approximately $10 million at an expected average incremental NOI yield of 15%. In addition, the new development pipeline was comprised of one project, with an expected cost of approximately $33 million and an expected incremental NOI yield of 10%.
•
During the three months ended December 31, 2016, the Company completed one redevelopment project and added two new projects to its pipeline.  At December 31, 2016, the redevelopment pipeline was comprised of nine projects with an aggregate expected cost of approximately $113 million at an expected average incremental NOI yield of 9%.

Acquisitions
•
During the three months ended December 31, 2016, the Company acquired Felicita Town Center, a 127,000 square foot open-air shopping center located in Escondido, California (San Diego MSA), for $40.1 million. Felicita Town Center is anchored by a newly expanded and highly productive Trader Joe’s and is located directly across from the Company’s Felicita Plaza.
•
During the twelve months ended December 31, 2016, the Company completed five acquisitions, comprised of Felicita Town Center, as well as outparcels and land, for an aggregate purchase price of $48.0 million.

Dispositions
•
During the three months ended December 31, 2016, the Company generated approximately $74.8 million of gross proceeds through the sale of three properties including:
◦
Plymouth Plaza, a 30,000 square foot office building in Plymouth Meeting, Pennsylvania;
◦
Shopper’s Haven Shopping Center, a 207,000 square foot asset located in Pompano Beach, Florida; and
◦
Midway Market Square, a 224,000 square foot shopping center located in Elyria, Ohio.
•
During the twelve months ended December 31, 2016, the Company generated approximately $106.8 million of gross proceeds through asset sales.

CAPITAL STRUCTURE
•
During the three months ended December 31, 2016, the Company repaid an aggregate of $48.6 million of secured indebtedness, including amortization, at a weighted average stated interest rate of 6.6%, increasing its unencumbered asset base to 73% of the portfolio.
•
During the twelve months ended December 31, 2016, the Company repaid an aggregate of $914.5 million of secured indebtedness, including amortization, at a weighted average stated interest rate of 5.6%.
•
During the twelve months ended December 31, 2016, the Company issued an aggregate $1.1 billion of senior notes and executed an amendment and restatement to its $2.75 billion credit facility, extending its weighted average maturity and lowering the aggregate pricing.








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450 Lexington Avenue : New York, NY 10017 : 800.468.7526



GUIDANCE
•
The Company’s NAREIT FFO per diluted share expectations for 2017 and underlying assumptions follow:

2017E  (dollars in millions, except per share amounts)
 
 
NAREIT FFO per diluted share
 
$2.05 - $2.12
Key Underlying Assumptions
 
 
Same property NOI growth
 
2.0 - 3.0%
Straight-line rental income, amortization of above- and below-market rent and tenant inducements and straight-line ground rent expense
 
$38 - $42
General and administrative expenses (1)
 
 $86 - $90
GAAP interest expense
 
$224 - $230
Value enhancing capital expenditures
 
$120 - $150
(1) Does not include any expectations of additional one-time items, including, but not limited to, litigation, investigative and other non-routine legal expenses.

•
The following table provides a bridge from the Company’s 2016 NAREIT FFO per diluted share to the range of the Company’s 2017 estimated NAREIT FFO per diluted share:

  
 
Low
 
High
2016 NAREIT FFO per diluted share
 
$2.07
 
$2.07
Same property NOI growth
 
$0.06
 
$0.09
Straight-line rental income, amortization of above- and below-market rent and tenant inducements and straight-line ground rent expense
 
($0.04)
 
($0.03)
Lease termination fees
 
($0.04)
 
($0.04)
General and administrative expenses
 
$0.01
 
$0.02
GAAP interest expense
 
($0.01)
 
$0.01
Capital recycling, gain on extinguishment of debt and other
 
$0.00
 
$0.00
2017E NAREIT FFO per diluted share
 
$2.05
 
$2.12
Growth excluding non-cash GAAP rental adjustments and lease termination fees
 
3.3%
 
6.3%

•
The following table provides a reconciliation of the range of the Company’s 2017 estimated net income attributable to common stockholders to NAREIT FFO:

(Unaudited, dollars in millions, except per share amounts)
 
2017E
 
2017E Per Diluted Share
Net income attributable to common stockholders
 
$275 - $296
 
$0.90 - $0.97
Depreciation and amortization
 
 $351
 
$1.15
NAREIT FFO
 
$626 - $647
 
$2.05 - $2.12









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450 Lexington Avenue : New York, NY 10017 : 800.468.7526



CONNECT WITH BRIXMOR
•
For additional information, please visit www.brixmor.com;
•
Follow Brixmor on Twitter at www.twitter.com/Brixmor;
•
Find Brixmor on LinkedIn at www.linkedin.com/company/brixmor.

CONFERENCE CALL AND SUPPLEMENTAL INFORMATION
The Company will host a teleconference on Tuesday, February 14, 2017 at 10:00 AM ET.   To participate, please dial 888.317.6003 (domestic) or 412.317.6061 (international) at least ten minutes prior to the scheduled start of the call (Passcode: 6718936).  The teleconference can also be accessed via a live webcast at www.brixmor.com in the Investors section. A replay of the teleconference will be available through midnight ET on February 28, 2017 by dialing 877.344.7529 (domestic) or 412.317.0088 (international) (Passcode: 10097244) or via the web through February 14, 2018 at www.brixmor.com in the Investors section.

The Company’s Supplemental Disclosure will be posted at www.brixmor.com in the Investors section.  These materials are also available to all interested parties upon request to the Company at investorrelations@brixmor.com or 800.468.7526.

NON-GAAP DISCLOSURES
NAREIT FFO
NAREIT FFO is a supplemental non-GAAP performance measure utilized to evaluate the operating performance of real estate companies. The National Association of Real Estate Investment Trusts (“NAREIT”) defines FFO as net income (loss) in accordance with GAAP excluding (i) gain (loss) on disposition of operating properties, and (ii) extraordinary items, plus (iii) depreciation and amortization of operating properties, (iv) impairment of operating properties and real estate equity investments, and (v) after adjustments for joint ventures calculated to reflect FFO on the same basis. 
 
The Company presents NAREIT FFO as it considers it an important supplemental measure of its operating performance and the Company believes it is frequently used by securities analysts, investors and other interested parties in the evaluation of REITs. The Company believes NAREIT FFO assists investors  in analyzing Brixmor’s comparative operating and financial performance because, by excluding gains and losses related to dispositions of previously depreciated operating properties, real estate-related depreciation and amortization of continuing operations, impairment of operating properties, and after adjustments for joint ventures calculated to reflect FFO on the same basis, investors can compare the operating performance of a company’s real estate between periods. 
 
NAREIT FFO should not be considered as an alternative to net income (determined in accordance with GAAP) as an indicator of financial performance and is not an alternative to cash flow from operating activities (determined in accordance with GAAP) as a measure of liquidity.
 
Non-GAAP performance measures have limitations as they do not include all items of income and expense that affect operations and, accordingly, should always be considered as supplemental to financial results presented in accordance with GAAP. Computation of NAREIT FFO may differ in certain respects from the methodology utilized by other REITs and, therefore, may not be comparable to similarly titled measures presented by such other REITs. Investors are cautioned that items excluded from NAREIT FFO are significant components in understanding and addressing financial performance.  A reconciliation of NAREIT FFO to Net income is presented in the attached table.



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450 Lexington Avenue : New York, NY 10017 : 800.468.7526



Same Property NOI
Same property NOI is calculated (using properties owned for the entirety of both periods excluding properties under development or pending stabilization), as revenues (base rent, ancillary and other, expense reimbursements and percentage rents) less rental operating expenses (operating costs, real estate taxes and provision for doubtful accounts). Same Property NOI includes unconsolidated joint venture, Montecito Marketplace, at pro rata share.  Same property NOI excludes corporate level income (including management, transaction and other fees), lease termination fees, straight-line rental income, amortization of above- and below-market rent and tenant inducements, straight-line ground rent expense and income / expense associated with the captive insurance entity.

Same property NOI is a supplemental, non-GAAP performance measure utilized to evaluate the operating performance of real estate companies and the Company believes it is frequently used by securities analysts, investors and other interested parties in understanding business and operating results regarding the underlying economics of Brixmor's business operations.

It includes only the net operating income of properties owned and stabilized for the full period presented, which eliminates disparities in net income due to the acquisition, disposition or stabilization of development properties during the period presented, and therefore, provides a more consistent metric for comparing the performance of properties. Management uses same property NOI to review operating results for comparative purposes with respect to previous periods or forecasts, and also to evaluate future prospects. Same property NOI is not intended to be a performance measure that should be regarded as an alternative to, or more meaningful than, net income (determined in accordance with GAAP) or other GAAP financial measures. Non-GAAP financial measures have limitations as they do not include all items of income and expense that affect operations, and accordingly, should always be considered as supplemental to financial results presented in accordance with GAAP.  Computation of same property NOI may differ in certain respects from the methodology utilized by other REITs and, therefore, may not be comparable to such other REITs. 

ABOUT BRIXMOR PROPERTY GROUP
Brixmor Property Group, a real estate investment trust (REIT), is a leading owner and operator of high-quality, open-air shopping centers. The Company’s more than 500 retail centers comprise 86 million square feet in market-dominant locations across the nation and are supported by a diverse mix of highly productive non-discretionary and value-oriented retailers, as well as service and entertainment users. Brixmor is committed to maximizing the value of its portfolio by prioritizing investments, cultivating relationships and capitalizing on embedded growth opportunities through driving rents, increasing occupancy and pursuing repositioning and redevelopment projects. Headquartered in New York City, Brixmor is a partner to more than 5,500 best-in-class national, regional and local tenants and is the largest landlord to The TJX Companies and The Kroger Company.

SAFE HARBOR LANGUAGE
This press release may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These statements include, but are not limited to, statements related to the Company’s expectations regarding the performance of its business, its financial results, its liquidity and capital resources and other non-historical statements. You can identify these forward-looking statements by the use of words such as “outlook,” “believes,” “expects,” “potential,” “continues,” “may,” “will,” “should,” “seeks,” “approximately,” “projects,” “predicts,” “intends,” “plans,” “estimates,” “anticipates” or the negative version of these words or other comparable words. Such forward-looking statements are subject to various risks and uncertainties, including those described under the section entitled “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016, as such factors may be updated from time to time in our periodic filings with the SEC, which are accessible on the SEC’s website at www.sec.gov.

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450 Lexington Avenue : New York, NY 10017 : 800.468.7526



Accordingly, there are or will be important factors that could cause actual outcomes or results to differ materially from those indicated in these statements. These factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included in this release and in the Company’s filings with the SEC. The Company undertakes no obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise, except as required by law.

###


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CONSOLIDATED BALANCE SHEETS
 
 
 
 
Unaudited, dollars in thousands, except share information
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
12/31/16
 
12/31/15
 
 
Assets
 
 
 
 
 
 
Real estate
 
 
 
 
 
 
 
Land
$
2,006,655

 
$
2,011,947

 
 
 
 
Buildings and tenant improvements
8,043,855

 
7,976,529

 
 
 
 
Construction in process
121,817

 
66,797

 
 
 
 
Lease intangibles
836,731

 
877,577

 
 
 
 
 
 
11,009,058

 
10,932,850

 
 
 
 
Accumulated depreciation and amortization
(2,167,054
)
 
(1,880,685
)
 
 
 
Real estate, net
8,842,004

 
9,052,165

 
 
 
Investments in and advances to unconsolidated joint venture
7,921

 
5,019

 
 
 
Cash and cash equivalents
51,402

 
69,528

 
 
 
Restricted cash
51,467

 
41,462

 
 
 
Marketable securities
25,573

 
23,001

 
 
 
Receivables, net of allowance for doubtful accounts of $16,756 and $16,587
178,216

 
180,486

 
 
 
Deferred charges and prepaid expenses, net
122,787

 
109,149

 
 
 
Other assets
40,315

 
17,197

 
 
Total assets
$
9,319,685

 
$
9,498,007

 
 
 
 
 
 
 
 
 
 
 
Liabilities
 
 
 
 
 
 
Debt obligations, net
$
5,838,889

 
$
5,974,266

 
 
 
Accounts payable, accrued expenses and other liabilities
553,636

 
603,439

 
 
Total liabilities
6,392,525

 
6,577,705

 
 
 
 
 
 
 
 
 
 
 
Equity
 
 
 
 
 
 
Common stock, $0.01 par value; authorized 3,000,000,000 shares;
 
 
 
 
 
 
 
304,343,141 and 299,138,450 shares outstanding
3,043

 
2,991

 
 
 
Additional paid in capital
3,324,874

 
3,270,246

 
 
 
Accumulated other comprehensive income (loss)
21,519

 
(2,509
)
 
 
 
Distributions in excess of net income
(426,552
)
 
(400,945
)
 
 
Total stockholders' equity
2,922,884

 
2,869,783

 
 
 
Non-controlling interests
4,276

 
50,519

 
 
Total equity
2,927,160

 
2,920,302

 
 
Total liabilities and equity
$
9,319,685

 
$
9,498,007

 









 
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CONSOLIDATED STATEMENTS OF OPERATIONS
Unaudited, dollars in thousands, except per share amounts
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
Twelve Months Ended
 
 
 
 
 
12/31/16
 
12/31/15
 
12/31/16
 
12/31/15
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenues
 
 
 
 
 
 
 
 
 
Rental income
$
253,538

 
$
251,119

 
$
998,118

 
$
984,548

 
 
Expense reimbursements
69,604

 
75,462

 
270,548

 
276,032

 
 
Other revenues
892

 
(1,030
)
 
7,106

 
5,400

 
Total revenues
324,034

 
325,551

 
1,275,772

 
1,265,980

 
 
 
 
 
 
 
 
 
 
 
 
 
Operating expenses
 
 
 
 
 
 
 
 
 
Operating costs
35,922

 
35,698

 
133,429

 
129,477

 
 
Real estate taxes
43,601

 
47,276

 
174,487

 
180,911

 
 
Depreciation and amortization
92,668

 
102,511

 
387,302

 
417,935

 
 
Provision for doubtful accounts
2,603

 
2,567

 
9,182

 
9,540

 
 
Impairment of real estate assets
3,183

 
198

 
5,154

 
1,005

 
 
General and administrative
22,539

 
25,424

 
92,248

 
98,454

 
Total operating expenses
200,516

 
213,674

 
801,802

 
837,322

 
 
 
 
 
 
 
 
 
 
 
 
 
Other income (expense)
 
 
 
 
 
 
 
 
 
Dividends and interest
61

 
74

 
542

 
315

 
 
Interest expense
(55,189
)
 
(58,723
)
 
(226,671
)
 
(245,012
)
 
 
Gain on sale of real estate assets
25,381

 
2,520

 
35,613

 
11,744

 
 
Gain (loss) on extinguishment of debt, net
117

 
798

 
(832
)
 
1,720

 
 
Other
(699
)
 
(233
)
 
(4,957
)
 
(348
)
 
Total other expense
(30,329
)
 
(55,564
)
 
(196,305
)
 
(231,581
)
 
 
 
 
 
 
 
 
 
 
 
 
 
Income before equity in income of unconsolidated joint venture
93,189

 
56,313

 
277,665

 
197,077

 
Equity in income of unconsolidated joint venture
129

 
101

 
477

 
459

 
Net income
93,318

 
56,414

 
278,142

 
197,536

 
Net (income) attributable to non-controlling interests
(115
)
 
(1,002
)
 
(2,514
)
 
(3,816
)
 
Net income attributable to Brixmor Property Group, Inc.
93,203

 
55,412

 
275,628

 
193,720

 
Preferred stock dividends
(150
)
 
(150
)
 
(150
)
 
(150
)
 
Net income attributable to common stockholders
$
93,053

 
$
55,262

 
$
275,478

 
$
193,570

 
 
 
 
 
 
 
 
 
 
 
 
 
Per common share:
 
 
 
 
 
 
 
 
 
Net income attributable to common stockholders:
 
 
 
 
 
 
 
 
 
 
Basic
$
0.31

 
$
0.18

 
$
0.91

 
$
0.65

 
 
 
Diluted
$
0.31

 
$
0.18

 
$
0.91

 
$
0.65

 
 
Weighted average shares:
 
 
 
 
 
 
 
 
 
 
Basic
              304,292

 
              298,868

 
                301,601

 
              298,004

 
 
 
Diluted
               305,192

 
              299,697

 
              305,060

 
               305,017









 
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FUNDS FROM OPERATIONS (FFO)
Unaudited, dollars in thousands, except per share amounts
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
Twelve Months Ended
 
 
 
 
 
12/31/16
 
12/31/15
 
12/31/16
 
12/31/15
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income
$
93,318

 
$
56,414

 
$
278,142

 
$
197,536

 
 
Gain on disposition of operating properties
(25,381
)
 
(2,520
)
 
(35,613
)
 
(11,744
)
 
 
Depreciation and amortization- real estate related- continuing operations
91,892

 
101,833

 
384,187

 
413,470

 
 
Depreciation and amortization- real estate related- unconsolidated joint venture
20

 
26

 
88

 
85

 
 
Impairment of operating properties
3,183

 
—

 
5,154

 
807

 
NAREIT FFO
$
163,032

 
$
155,753

 
$
631,958

 
$
600,154

 
 
 
 
 
 
 
 
 
 
 
 
 
NAREIT FFO per share/OP Unit - diluted
$
0.53

 
$
0.51

 
$
2.07

 
$
1.97

 
Weighted average shares/OP Units outstanding - basic and diluted (1)
305,191

 
305,105

 
305,059

 
305,023

 
 
 
 
 
 
 
 
 
 
 
 
 
Items that impact FFO comparability
 
 
 
 
 
 
 
 
 
Gain (loss) on extinguishment of debt, net
$
117

 
$
798

 
$
(832
)
 
$
1,720

 
 
Litigation and other non-routine legal expenses
(852
)
 
—

 
(1,810
)
 
—

 
 
Transaction expenses
(209
)
 
(652
)
 
(505
)
 
(2,139
)
 
 
Shareholder equity offering expenses
(84
)
 
(112
)
 
(848
)
 
(718
)
 
 
Executive severance expenses
—

 
(1,405
)
 
(2,260
)
 
(1,405
)
 
 
Executive equity based compensation (2)
—

 
—

 
(88
)
 
—

 
 
Audit committee review expenses
—

 
—

 
(3,711
)
 
—

 
 
Non-recurring charge related to pre-IPO compensation programs
—

 
—

 
—

 
(9,875
)
 
 
Adjustment of tax reserves for pre-IPO transactions
—

 
781

 
—

 
4,730

 
Total items that impact FFO comparability
$
(1,028
)
 
$
(590
)
 
$
(10,054
)
 
$
(7,687
)
 
Items that impact FFO comparability, net per share
$
0.00

 
$
0.00

 
$
(0.03
)
 
$
(0.03
)
 
 
 
 
 
 
 
 
 
 
 
 
 
Additional Disclosures
 
 
 
 
 
 
 
 
 
Straight-line rental income, net (3)
$
4,625

 
$
3,762

 
$
14,463

 
$
17,576

 
 
Amortization of above- and below-market rent and tenant inducements, net (4)
7,982

 
13,195

 
36,748

 
47,584

 
 
Straight-line ground rent (expense) income (5)
(60
)
 
11

 
(1,035
)
 
46

 
 
 
 
 
 
 
 
 
 
 
 
 
Dividends declared per share/OP Unit
$
0.260

 
$
0.245

 
$
0.995

 
$
0.920

 
Shares/OP Unit dividends declared
$
79,245

 
$
74,570

 
$
303,177

 
$
279,968

 
Share/OP Unit dividend payout ratio (as % of NAREIT FFO)
48.6
%
 
47.9
%
 
48.0
%
 
46.6
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1) Basic and diluted shares/OP Units outstanding reflects an assumed conversion of vested OP Units to common stock of the Company and the vesting of certain equity awards.
 
(2) Represents equity based compensation expense associated with executive departures for the twelve months ended December 31, 2016.
 
 
 
 
(3) Includes unconsolidated joint venture Montecito Marketplace straight-line rental income of $14 and $19 at pro rata share for the three and twelve months ended December 31, 2016,
 respectively; and straight-line rental expense of $11 and $19 at pro rata share for the three and twelve months ended December 31, 2015, respectively.
 
 
 
 
(4) Includes unconsolidated joint venture Montecito Marketplace amortization of above- and below-market rent and tenant inducements of $7 and $29 at pro rata share for the three and twelve
months ended December 31, 2016, respectively; and $8 and $30 at pro rata share for the three and twelve months ended December 31, 2015, respectively.
 
 
 
(5) Straight-line ground rent (expense) income is included in Operating costs on the Consolidated Statements of Operations.
 
 
 
 
 
 









 
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SAME PROPERTY NOI ANALYSIS
Unaudited, dollars in thousands
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
 
 
Twelve Months Ended
 
 
 
 
 
 
 
 
12/31/16
 
12/31/15
 
Change
 
12/31/16
 
12/31/15
 
Change
 
Same Property NOI Analysis
 
 
 
 
 
 
 
 
 
 
 
 
 
Number of properties
 
511

 
511

 
—
 
509

 
509

 
—
 
Percent billed
 
90.4
%
 
90.9
%
 
(0.5%)
 
90.6
%
 
90.9
%
 
(0.3%)
 
Percent leased
 
92.8
%
 
92.6
%
 
0.2%
 
92.8
%
 
92.6
%
 
0.2%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenues
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Base rent
 
$
230,673

 
$
225,673

 
 
 
$
907,375

 
$
885,952

 
 
 
 
Ancillary and other
 
3,951

 
5,252

 
 
 
16,078

 
18,157

 
 
 
 
Expense reimbursements
 
69,381

 
74,814

 
 
 
267,871

 
273,189

 
 
 
 
Percentage rents
 
526

 
(1,473
)
 
 
 
5,861

 
3,608

 
 
 
 
 
 
 
 
304,531

 
304,266

 
0.1%
 
1,197,185

 
1,180,906

 
1.4%
 
Operating expenses
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating costs
 
(37,010
)
 
(36,834
)
 
 
 
(132,597
)
 
(130,895
)
 
 
 
 
Real estate taxes
 
(43,354
)
 
(46,814
)
 
 
 
(172,473
)
 
(178,959
)
 
 
 
 
Provision for doubtful accounts
 
(2,686
)
 
(2,557
)
 
 
 
(9,113
)
 
(9,366
)
 
 
 
 
 
 
 
 
(83,050
)
 
(86,205
)
 
(3.7)%
 
(314,183
)
 
(319,220
)
 
(1.6%)
 
Same property NOI (1)
 
$
221,481

 
$
218,061

 
1.6%
 
$
883,002

 
$
861,686

 
2.5%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Same property NOI excluding redevelopments (2)
 
$
211,961

 
$
208,834

 
1.5%
 
$
845,636

 
$
825,226

 
2.5%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
NOI margin
 
72.7
%
 
71.7
%
 
 
 
73.8
%
 
73.0
%
 
 
 
Expense recovery ratio
 
86.3
%
 
89.4
%
 
 
 
87.8
%
 
88.2
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Percent contribution to same property NOI growth:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Change
 
Percent Contribution
 
 
 
Change
 
Percent Contribution
 
 
 
 
Base rent
 
$
5,000

 
2.4%
 
 
 
$
21,423

 
2.5%
 
 
 
 
Ancillary and other
 
(1,301
)
 
(0.6%)
 
 
 
(2,079
)
 
(0.2%)
 
 
 
 
Net recoveries
 
(2,149
)
 
(1.0%)
 
 
 
(534
)
 
(0.1%)
 
 
 
 
Percentage rents
 
1,999

 
0.9%
 
 
 
2,253

 
0.3%
 
 
 
 
Provision for doubtful accounts
 
(129
)
 
(0.1%)
 
 
 
253

 
0.0%
 
 
 
 
 
 
 
 
 
 
1.6%
 
 
 
 
 
2.5%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Reconciliation of Net Income Attributable to Common Stockholders to Same Property NOI
 
 
 
 
 
 
 
 
 
Same property NOI (1)
 
$
221,481

 
$
218,061

 
 
 
$
883,002

 
$
861,686

 
 
 
Adjustments:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-same property NOI
 
2,331

 
3,445

 
 
 
12,135

 
14,559

 
 
 
 
Lease termination fees
 
5,383

 
1,264

 
 
 
12,920

 
3,530

 
 
 
 
Straight-line rental income, net
 
4,611

 
3,773

 
 
 
14,444

 
17,595

 
 
 
 
Amortization of above- and below-market rent and tenant inducements, net
 
7,975

 
13,187

 
 
 
36,719

 
47,554

 
 
 
 
Fee Income
 
366

 
454

 
 
 
1,221

 
1,834

 
 
 
 
Straight-line ground rent (expense) income
 
(60
)
 
11

 
 
 
(1,035
)
 
46

 
 
 
 
Depreciation and amortization
 
(92,668
)
 
(102,511
)
 
 
 
(387,302
)
 
(417,935
)
 
 
 
 
Impairment of real estate assets
 
(3,183
)
 
(198
)
 
 
 
(5,154
)
 
(1,005
)
 
 
 
 
General and administrative
 
(22,539
)
 
(25,424
)
 
 
 
(92,248
)
 
(98,454
)
 
 
 
 
Total other expense
 
(30,329
)
 
(55,564
)
 
 
 
(196,305
)
 
(231,581
)
 
 
 
 
Pro rata share of same property NOI of unconsolidated joint venture
 
(179
)
 
(185
)
 
 
 
(732
)
 
(752
)
 
 
 
 
Equity in income of unconsolidated joint venture
 
129

 
101

 
 
 
477

 
459

 
 
 
 
Net income attributable to non-controlling interests
 
(115
)
 
(1,002
)
 
 
 
(2,514
)
 
(3,816
)
 
 
 
 
Preferred stock dividends
 
(150
)
 
(150
)
 
 
 
(150
)
 
(150
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income attributable to common stockholders
 
$
93,053

 
$
55,262

 
 
 
$
275,478

 
$
193,570

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1) Includes unconsolidated joint venture, Montecito Marketplace, at pro rata share.
 
 
 
 
 
 
 
 
 
 
 
 
(2) Excludes ten redevelopment properties for the three and twelve months ended December 31, 2016.
 
 
 
 
 
 
 
 
 
 





 
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