− FFO per Share and Recurring FFO per Share
Increase 21.7% and 8.7%, Respectively −
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 months
ended March 31, 2015.
Highlights
- Funds from Operations (FFO) per
weighted average common share (basic and diluted) was $0.28 for the
three months ended March 31, 2015, an increase of 21.7% over $0.23
for the first 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
$0.25 for the three months ended March 31, 2015, an increase of
8.7% over $0.23 for the first quarter of 2014.
- Same-store net operating income (NOI)
for the consolidated portfolio increased 7.6% for the quarter, over
the comparable period in 2014.
- Total portfolio leased occupancy was
95.0%, the sixth consecutive quarter with a rate of 95% or
above.
- Executed 80 leases within the total
portfolio for 533,343 square feet of leasable space, an increase in
square feet leased of nearly 46% over prior year quarter and nearly
31% over the average of the trailing four quarters.
- Average base rent for new and renewal
leases signed in the total portfolio increased by 19.4% and 8.8%,
respectively, over expiring average rents.
- IRC acquired the Westbury Square
shopping center in Huntsville, Alabama for $23.4 million in
cash.
- IRC’s joint venture with PGGM acquired
the Argonne Village shopping center in the Minneapolis-St. Paul MSA
for $26.3 million during the quarter and the Cedar Center North
retail center in the Cleveland MSA for $15.4 million after the
close of the quarter.
“We begin 2015 in a strong position, reporting solid first
quarter results that represent continued execution of our strategic
plan to further enhance the growth potential and value of our
company,” said Mark Zalatoris, president and chief executive
officer of Inland Real Estate Corporation. “Recurring FFO per share
of $0.25 increased 8.7% over the prior year quarter, primarily the
result of higher consolidated same store NOI and equity in earnings
of unconsolidated joint ventures, which were driven by robust
leasing activity and rent increases that reflect strong retailer
demand for space in our centers. We continue to benefit from our
internal and external growth initiatives, as we diversify and grow
our portfolio through acquisitions, development joint ventures and
redevelopment opportunities.”
Financial Results for the Quarter
FFO attributable to common stockholders was $28.0 million for
the quarter ended March 31, 2015, compared to $23.2 million
for the first quarter of 2014. On a per share basis, FFO was $0.28
(basic and diluted) for the first quarter of 2015, compared to
$0.23 (basic and diluted) 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,
increased lease termination income, 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 $25.2 million for
the first quarter of 2015, compared to $23.1 million for the prior
year quarter. On a per share basis, Recurring FFO was $0.25 (basic
and diluted) for the three months ended March 31, 2015, compared to
$0.23 for the three months ended March 31, 2014. The increases in
Recurring FFO and Recurring FFO per share were due to the same
items that impacted FFO, excluding the impact of lease termination
income.
Net loss attributable to common stockholders for the three
months ended March 31, 2015 was $1.0 million, compared to net
income of $13.2 million for the first quarter of 2014. On a per
common share basis, net loss attributable to common stockholders
(basic and diluted) was $0.01 for the first quarter of 2015,
compared to net income per common share of $0.13 (basic and
diluted) for the prior year quarter. Net income for the quarter
decreased year over year primarily due to impairments recorded
during the quarter on assets currently under contract for sale, and
lower gains on sales of investment properties compared to the first
quarter of 2014. The decrease 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 $29.3 million for the quarter,
representing an increase of 7.6% over the first quarter of 2014.
The increase in same-store NOI was primarily driven by increased
rental income from gains in occupancy and lower property operating
expenses, compared to the first quarter of last year. Property
operating expenses decreased due to lower snow removal costs year
over year. The corresponding decline in tenant recovery income was
partially offset by income true-up adjustments the Company recorded
upon completion of annual tenant reconciliations.
Same-store financial occupancy was 93.0% for the consolidated
portfolio, representing an increase of 60 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-month period during each year. A total
of 94 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 80 leases within the total
portfolio aggregating 533,343 square feet of gross leasable area
(GLA). Total leases executed included:
- Fifty-nine renewal leases comprising
350,148 square feet, with an average rental rate of $16.44 per
square foot, representing an increase of 8.8% over the average
expiring rent;
- Eleven new leases comprising 47,780
square feet, with an average rental rate of $19.07 per square foot,
representing an increase of 19.4% over the expiring rent; and
- Ten non-comparable leases comprising
135,415 square feet, with an average rental rate of $11.32 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 70 new and renewal leases executed
during the quarter had an average rental rate of $16.75 per square
foot, representing an increase of 10.2% 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 March 31, 2015, leased
occupancy was 95.0% and financial occupancy was 93.0%, representing
decreases of 20 basis points and 50 basis points, respectively,
over one year ago. The decreases are primarily due to vacancies at
Joliet Commons in Joliet, Illinois, and Dunkirk Square in Maple
Grove, Minnesota, which are related to redevelopment projects
currently underway at those properties. 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 $39.3 million
for the first quarter of 2015, compared to $36.7 million for the
first quarter of 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 4.2 times for
the quarter ended March 31, 2015 compared to 3.3 times for the
first quarter of 2014. 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 March 31, 2015, the Company had an equity market
capitalization (common shares) of $1.1 billion, outstanding
preferred stock of $210.0 million (at face value), and total debt
outstanding of $1.0 billion (including the pro-rata share of debt
in unconsolidated joint ventures), for a total market
capitalization of approximately $2.3 billion. The Company’s
debt-to-total market capitalization was 44.3% as of March 31,
2015. Approximately 54.5% of total debt bears interest at fixed
rates. As of March 31, 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 3.59%.
Acquisitions
On March 10, 2015, the Company acquired for its
wholly-owned portfolio the 114,904-square-foot Westbury Square
community center in Huntsville, Alabama, for $23.4 million in cash.
The 100% leased center is anchored by Stein Mart, TJMaxx and
Michaels, and features a vibrant blend of national and local
retailers, restaurants and service providers, including Jimmy
John’s, Moe’s Southwest Grill, Jenny Craig, and BB&T.
Dispositions
On February 26, 2015, the Company sold a 4,305-square-foot
outlot currently leased to Chase Bank at the Mokena Marketplace
shopping center in Mokena, Ill., for $5.3 million, and recorded a
gain on sale of $1.4 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 February 2, 2015, the Company’s joint venture with PGGM
purchased the 109,869-square-foot Argonne Village neighborhood
shopping center in Lakeville, Minn., a suburb of Minneapolis, for
$26.3 million in cash. Argonne Village is anchored by a
71,800-square-foot Cub Foods grocery store, with a complementary
mix of co-tenants that includes Dollar Tree, Taco Bell, Starbucks,
FedEx Kinko’s, Little Caesars Pizza, Great Clips, and others.
In February, the Company’s development joint venture with North
American Real Estate purchased for $4.5 million a land parcel in
Schaumburg, Ill., which it expects to develop into multi-tenant
retail.
After the close of the quarter in April, the Company's joint
venture with PGGM acquired the 61,400-square-foot Cedar Center
North retail center in the Cleveland suburb of South Euclid, Ohio,
for a purchase price of $15.4 million, excluding closing costs and
adjustments and subject to future earnout payments. The center is
90% leased to PetSmart, Panera, Starbucks, Five Guys, Chipotle, and
other national and local retailers.
Distributions
In January, February, March and April 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 April, 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 May 15, 2015, to Series A and Series B Preferred
Stockholders of record at the close of business on May 1, 2015.
In January, February, March and April of 2015, the Company paid
monthly cash distributions to Common Stockholders of $0.0475 per
common share. In April, the Company declared a cash distribution of
$0.0475 per common share, payable on May 18, 2015, to common
stockholders of record at the close of business on April 30,
2015.
Guidance
For fiscal year 2015, the Company expects 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 ended
March 31, 2015, on Thursday, May 7, 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 May 22, 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 10062965. 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
March 31, 2015, the Company owned interests in 134 fee simple
investment properties, including 33 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 months ended March
31, 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)
March 31, 2015 December 31, 2014 Assets:
(unaudited) Investment properties: Land $ 383,005 385,432
Construction in progress 31,900 23,812 Building and improvements
1,117,402 1,110,360 Total Investment Properties
1,532,307 1,519,604 Less accumulated depreciation 338,053
338,141 Net investment properties 1,194,254 1,181,463 Cash
and cash equivalents 10,086 18,385 Accounts receivable, net 44,746
38,211 Mortgages receivable 24,750 24,750 Investment in and
advances to unconsolidated joint ventures 160,003 170,720 Acquired
lease intangibles, net 83,794 85,858 Deferred costs, net 18,673
18,674 Other assets 34,847 34,890 Total assets $
1,571,153 1,572,951 Liabilities: Accounts
payable and accrued expenses $ 58,907 56,188 Acquired below market
lease intangibles, net 42,269 41,108 Distributions payable 5,433
5,420 Mortgages payable 376,129 384,769 Unsecured credit facilities
455,000 440,000 Other liabilities 22,638 22,290 Total
liabilities 960,376 949,775 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 March
31, 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 March 31,
2015 and December 31, 2014, respectively. 100,000 100,000 Common
stock, $0.01 par value, 500,000 shares authorized; 100,423 and
100,151 Shares issued and outstanding at March 31, 2015 and
December 31, 2014, respectively 1,004 1,002 Additional paid-in
capital (net of offering costs of $78,497 and $78,372 at March 31,
2015 and December 31, 2014, respectively) 877,341 874,154
Accumulated distributions in excess of net income (471,459 )
(456,120 ) Accumulated other comprehensive loss (6,970 ) (6,338 )
Total stockholders’ equity 609,916 622,698 Noncontrolling
interest 861 478 Total equity 610,777 623,176
Total liabilities and equity $ 1,571,153
1,572,951
Consolidated Statements of Operations
and Comprehensive Income (unaudited)
(in thousands, except per share
data)
Three months ended March 31, 2015
2014 Revenues: Rental income $ 33,955 35,298 Tenant
recoveries 16,739 20,043 Other property income 3,639 506 Fee income
from unconsolidated joint ventures 1,434 1,259 Total
revenues 55,767 57,106 Expenses: Property
operating expenses 8,920 12,374 Real estate tax expense 10,362
10,080 Depreciation and amortization 16,175 19,114 Provision for
asset impairment 9,328 — General and administrative expenses 6,059
6,092 Total expenses 50,844 47,660
Operating income 4,923 9,446 Other income 413 102 Gain on
sale of investment properties, net 1,614 12,850 Gain on sale of
joint venture interest 109 108 Interest expense (7,278 ) (8,991 )
Income (loss) before income tax expense of taxable REIT
subsidiaries, equity in earnings of unconsolidated joint ventures
and discontinued operations (219 ) 13,515 Income tax expense
of taxable REIT subsidiaries (837 ) (395 ) Equity in earnings of
unconsolidated joint ventures 4,089 1,794 Income from
continuing operations 3,033 14,914 Income from discontinued
operations — 490 Net income 3,033 15,404 Less:
Net (income) loss attributable to the noncontrolling interest (93 )
20 Net income attributable to Inland Real Estate Corporation
2,940 15,424 Dividends on preferred shares (3,972 ) (2,234 )
Net income (loss) attributable to common stockholders $ (1,032 )
13,190 Basic and diluted earnings attributable to
common shares per weighted average common share: Income
(loss) from continuing operations $ (0.01 ) 0.13 Net
income (loss) attributable to common stockholders per weighted
average common share — basic and diluted $ (0.01 ) 0.13
Weighted average number of common shares outstanding — basic
99,932 99,411 Weighted average number of
common shares outstanding — diluted 100,376 99,742
Comprehensive income: Net income (loss) attributable to
common stockholders $ (1,032 ) 13,190 Unrealized loss on derivative
instruments (632 ) (500 ) Comprehensive income (loss) $ (1,664 )
12,690
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 March 31, 2015 2014 Net income
(loss) attributable to common stockholders $ (1,032 ) 13,190 Gain
on sale of investment properties (1,434 ) (13,343 ) Impairment of
depreciable operating property 9,328 — Equity in depreciation and
amortization of unconsolidated joint ventures 4,978 4,192
Amortization on in-place lease intangibles 3,810 6,410 Amortization
on leasing commissions 489 454 Depreciation, net of noncontrolling
interest 11,876 12,250 Funds From Operations
attributable to common stockholders $ 28,015 23,153 Lease
termination income (2,671 ) (4 ) Lease termination income included
in equity in earnings of unconsolidated joint ventures (106 ) (77 )
Recurring Funds From Operations attributable to common stockholders
$ 25,238 23,072 Net income (loss) attributable
to common stockholders per weighted average common share — basic
and diluted $ (0.01 ) 0.13 Funds From Operations
attributable to common stockholders, per weighted average common
share — basic and diluted $ 0.28 0.23
Recurring Funds From Operations attributable to common
stockholders, per weighted average common share — basic and diluted
$ 0.25 0.23 Weighted average number of common
shares outstanding — basic 99,932 99,411 Weighted average number of
common shares outstanding — diluted 100,376 99,742
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 March 31,
2015 2014 Net income attributable to Inland Real Estate
Corporation $ 2,940 15,424 Gain on sale of investment properties
(1,434 ) (13,343 ) Gain on sale of development properties (72 ) —
Income tax expense of taxable REIT subsidiaries 837 395 Interest
expense 7,278 8,991 Interest expense associated with unconsolidated
joint ventures 2,077 1,989 Depreciation and amortization 16,175
19,114 Depreciation and amortization associated with unconsolidated
joint ventures 4,978 4,192 EBITDA 32,779 36,762
Lease termination income (2,671 ) (4 ) Lease termination
income included in equity in earnings of unconsolidated joint
ventures (106 ) (77 ) Impairment loss, net of taxes: Provision for
asset impairment 9,328 — Recurring EBITDA $ 39,330
36,681 Total Interest Expense $ 9,355
10,980 EBITDA: Interest Expense Coverage Ratio 3.5 x
3.3 x Recurring EBITDA: Interest Expense Coverage Ratio 4.2
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 months ended March 31, 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 March 31, %
Consolidated 2015 2014 Change Rental income and tenant
recoveries: "Same store" investment properties, 94 properties
Rental income $ 30,144 29,618 1.8 % Tenant recovery income 14,889
16,146 -7.8 % Other property income 785 392 100.3 % "Other
investment properties” Rental income 3,746 5,020 Tenant recovery
income 1,850 3,897 Other property income 183 110
Total property income $ 51,597
55,183 Property operating expenses: "Same
store" investment properties, 94 properties Property operating
expenses $ 7,358 10,169 -27.6 % Real estate tax expense 9,159 8,757
4.6 % "Other investment properties" Property operating expenses
1,255 2,014 Real estate tax expense 1,203 1,323
Total property operating expenses $ 18,975
22,263 Property net operating income
"Same store" investment properties 29,301 27,230 7.6 % "Other
investment properties" 3,321 5,690
Total property
net operating income $ 32,622
32,920 Other income: Straight-line rents $ 6
735 Amortization of lease intangibles 59 (75 ) Lease termination
income 2,671 4 Other income 413 102 Fee income from unconsolidated
joint ventures 1,434 1,259 Gain on sale of investment properties,
net 1,614 12,850 Gain on sale of joint venture interest 109 108
Equity in earnings of unconsolidated joint ventures 4,089
1,794 Other expenses: Income tax expense of taxable REIT
subsidiaries (837 ) (395 ) Bad debt expense (307 ) (191 )
Depreciation and amortization (16,175 ) (19,114 ) General and
administrative expenses (6,059 ) (6,092 ) Interest expense (7,278 )
(8,991 ) Provision for asset impairment (9,328 ) —
Income from continuing operations 3,033 14,914 Income from
discontinued operations — 490 Net income 3,033 15,404
Less: Net (income) loss attributable to the noncontrolling
interest (93 ) 20 Net income attributable to Inland Real
Estate Corporation 2,940 15,424 Dividends on preferred
shares (3,972 ) (2,234 )
Net income (loss) attributable
to common stockholders $ (1,032 )
13,190
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 months
ended March 31, 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 March 31, 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 (816 ) 377,974 2,067 4,169
1,917,981 Total assets 1,571,153 (2,451 ) 272,480 2,450 2,323
1,845,955 Mortgages payable 376,129 (47 ) 192,636 — 1,735 570,453
Total liabilities 960,376 (108 ) 217,120 1,610 1,980 1,180,978
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 March 31, 2015
IPCC Non-GAAP
Pro-rata Noncontrolling INP Retail LP
Development Unconsolidated Consolidated
GAAP Reported Interest (PGGM)
Properties properties
Information Total revenues $ 55,767 —
14,061 (1 ) 162 69,989 Total expenses 50,844 (15 )
9,757 5 81 60,672 Operating income (loss) 4,923 15 4,304 (6 ) 81
9,317
For the three months ended March 31, 2014
IPCC Non-GAAP
Pro-rata Noncontrolling INP Retail LP
Development Unconsolidated Consolidated
GAAP Reported Interest (PGGM)
Properties properties
Information Total revenues $ 57,106 —
13,043 — 59 70,208 Total expenses 47,660 (20 ) 9,719 2 81
57,442 Operating income (loss) 9,446 20 3,324 (2 ) (22 ) 12,766
Inland Real Estate Corporation Contact:Dawn Benchelt, Director
of Investor Relations(888) 331-4732ir@inlandrealestate.com
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