Retail Opportunity Investments Corp. (ROIC +0.00%) announced fourth-quarter 2017 results on Wednesday after the market closed, capping another impressive year in which it added more than 1 million square feet of grocery-anchored shopping centers to its portfolio.
With shares up slightly as investors peruse the news, let's take a closer look at what the specialty real estate investment trust (REIT) accomplished over the past few months.
IMAGE SOURCE: RETAIL OPPORTUNITY INVESTMENTS.
Retail Opportunity Investments results: The raw numbers
| Metric |
Q4 2017 |
Q4 2016 |
Year-Over-Year Growth |
|---|---|---|---|
|
Revenue |
$72.8 million |
$63.1 million |
15.4% |
|
GAAP net income attributable to Retail Opportunity Investments |
$10.8 million |
$9.6 million |
12.5% |
|
GAAP net income per share (diluted) |
$0.10 |
$0.09 |
11.1% |
|
Funds from operations (FFO) |
$37.0 million |
$33.2 million |
11.4% |
|
FFO per share |
$0.30 | $0.27 | 11.1% |
DATA SOURCE: RETAIL OPPORTUNITY INVESTMENTS.
What happened with Retail Opportunity Investments this quarter?
- Revenue growth included a 15.1% increase in base rents to $55.7 million and 13.8% growth in recoveries from tenants to $15.7 million.
- Full-year FFO arrived at $1.14 per diluted share, at the high end of guidance provided last quarter for a range of $1.12 to $1.14.
- Ended the year with a portfolio lease rate of 97.5%, up from 97.3% last quarter and marking its fourth straight year above 97%.
- Same-center net operating income grew 2.9% to $43.2 million.
- Same-space comparative base rents increased 14.1% year over year on 38 new leases totaling 95,806 square feet, and grew 9% on 64 renewed leases totaling 297,400 square feet.
- Retail Opportunity Investments acquired $155.8 million of grocery-anchored shopping centers during the fourth quarter, including:
- A two-property portfolio for $96.5 million, encompassing Riverstone Marketplace, a 98.5%-leased, 96,000-square-foot property in Vancouver, Washington, and Fullerton Crossroads, a 99.4%-leased, 220,000-square-foot property in Fullerton, California.
- North Lynnwood Shopping Center, a 91.3%-leased, 64,000-square-foot property in North Lynnwood, Washington, for $13.3 million.
- The Village at Nellie Gail Ranch, a 98.5%-leased, 88,000-square-foot property in Laguna Hills, California, for $46.0 million.
- So far in 2018, the company has acquired two properties including:
- King City Plaza, a 100%-leased, 63,000-square-foot property in King City, Oregon, for $15.6 million.
- Stadium Center, a 100%-leased, 49,000-square-foot property in Tacoma, Washington, for $19.0 million.
What management had to say
Retail Opportunity Investments CEO Stuart Tanz said:
During 2017 we continued to execute our business plan, posting another solid year of portfolio growth and performance. We added over one million square feet to our portfolio through acquiring $357.6 million of grocery-anchored shopping centers in 2017. Additionally, we leased approximately 1.4 million square feet of space during the year, maintained our portfolio lease rate at over 97%, and again achieved solid releasing spreads and same-center NOI growth. The underlying fundamentals remain strong across our portfolio and core West Coast markets. Going forward, we intend to continue working hard at capitalizing on these strong fundamentals to further enhance the value of our business.
Looking forward
For the full year of 2018, Retail Opportunity Investments expects FFO per diluted share in the range of $1.16 to $1.20, up from $1.14 in 2017, with earnings per share in the range of $0.39 to $0.41.
All things considered -- and as per usual -- there were no significant surprises in this report from Retail Opportunity Investments. Instead, the company continued to maintain its enviable portfolio lease rates, growing base rents, and executing on its strategy of acquiring and revitalizing necessity-based shopping centers in the western regions of the U.S. For that steady performance and consistent growth, I think investors should be more than pleased.
