RPT REALTY
10-Ks and 10-Qs
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Table of Contents
UNITED
STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Washington, D.C. 20549
Form 10-K
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þ
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
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For the fiscal year ended December 31, 2009
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OR
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o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
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For the transition period
from to
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Commission file number 1-10093
RAMCO-GERSHENSON PROPERTIES
TRUST
(Exact Name of Registrant as
Specified in its Charter)
| Maryland | 13-6908486 | |
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(State or Other Jurisdiction of
Incorporation or Organization) |
(I.R.S. Employer Identification No.) | |
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31500 Northwestern Highway
Farmington Hills, Michigan (Address of Principal Executive Offices) |
48334
(Zip Code) |
Registrant’s Telephone Number, Including Area Code:
248-350-9900
Securities Registered Pursuant to Section 12(b) of the
Act:
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Name of Each Exchange
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Title of Each Class
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On Which Registered
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Common Shares of Beneficial Interest,
$0.01 Par Value Per Share |
New York Stock Exchange |
Securities
Registered Pursuant to Section 12(g) of the Act:
None
None
Indicate by check mark if the registrant is a well-known
seasoned issuer, as defined in Rule 405 of the Securities
Act. Yes
o
No
þ
Indicate by check mark if the registrant is not required to file
reports pursuant to Section 13 or Section 15(d) of the
Act. Yes
o
No
þ
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of
the Securities Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been
subject to such filing requirements for the past
90 days. Yes
þ
No
o
Indicate by check mark whether the registrant has submitted
electronically and posted on its corporate Web site, if any,
every Interactive Data File required to be submitted and posted
pursuant to Rule 405 of
Regulation S-T
during the preceding 12 months (or for such shorter period
that the registrant was required to submit and post such
files). Yes
o
No
o
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of
Regulation S-K
is not contained herein, and will not be contained, to the best
of the registrant’s knowledge, in definitive proxy or
information statements incorporated by reference in
Part III of this
Form 10-K
or any amendment to this
Form 10-K.
þ
Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, a non-accelerated
filer, or a smaller reporting company. See the definitions of
“large accelerated filer,” “accelerated
filer” and “smaller reporting company” in Rule
12b-2
of the
Exchange Act. (Check one):
| Large accelerated filer o | Accelerated filer þ | Non-accelerated filer o | Smaller reporting company o |
(Do not check if a smaller reporting company)
Indicate by check mark whether the registrant is a shell company
(as defined in
Rule 12b-2
of the Exchange
Act). Yes
o
No
þ
The aggregate market value of the common equity held by
non-affiliates of the registrant as of the last business day of
the registrant’s most recently completed second fiscal
quarter (June 30, 2009) was $187,291,865.
Number of common shares outstanding as of March 9, 2010:
30,907,087
DOCUMENT
INCORPORATED BY REFERENCE
Portions of the registrant’s proxy statement for the annual
meeting of shareholders to be held June 8, 2010 are in
incorporated by reference into Part III of this
Form 10-K.
TABLE OF
CONTENTS
Table of Contents
Forward-Looking
Statements
This document contains forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of
1934, as amended. These forward-looking statements represent our
expectations, plans or beliefs concerning future events and may
be identified by terminology such as “may,”
“will,” “should,” “believe,”
“expect,” “estimate,”
“anticipate,” “continue,”
“predict” or similar terms. Although the
forward-looking statements made in this document are based on
our good-faith beliefs, reasonable assumptions and our best
judgment based upon current information, certain factors could
cause actual results to differ materially from those in the
forward-looking statements, including: our success or failure in
implementing our business strategy; economic conditions
generally and in the commercial real estate and finance markets
specifically; the cost and availability of capital, which
depends in part on our asset quality and our relationships with
lenders and other capital providers; our business prospects and
outlook; changes in governmental regulations, tax rates and
similar matters; our continuing to qualify as a real estate
investment trust (“REIT”); and other factors discussed
elsewhere in this document and our other filings with the
Securities and Exchange Commission (the “SEC”). Given
these uncertainties, you should not place undue reliance on any
forward-looking statements. Except as required by law, we assume
no obligation to update these forward-looking statements, even
if new information becomes available in the future.
| Item 1. | Business |
General
Ramco-Gershenson Properties Trust is a fully integrated,
self-administered, publicly-traded Maryland REIT organized on
October 2, 1997. The terms “Company,”
“we,” “our” or “us” refer to
Ramco-Gershenson Properties Trust, the Operating Partnership
(defined below)
and/or
its
subsidiaries, as the context may require. Our principal office
is located at 31500 Northwestern Highway, Suite 300,
Farmington Hills, Michigan 48334. Our predecessor, RPS Realty
Trust, a Massachusetts business trust, was formed on
June 21, 1988 to be a diversified growth-oriented REIT. In
May 1996, RPS Realty Trust acquired the Ramco-Gershenson
interests through a reverse merger, including substantially all
of the shopping centers and retail properties as well as the
management company and business operations of Ramco-Gershenson,
Inc. and certain of its affiliates. The resulting trust changed
its name to Ramco-Gershenson Properties Trust and
Ramco-Gershenson, Inc.’s officers assumed management
responsibility. The trust also changed its operations from a
mortgage REIT to an equity REIT and contributed certain mortgage
loans and real estate properties to Atlantic Realty Trust, an
independent, newly formed liquidating REIT. In 1997, with
approval from our shareholders, we changed our state of
organization by terminating the Massachusetts trust and merging
into a newly formed Maryland REIT.
We conduct substantially all of our business, and hold
substantially all of our interests in our properties, through
our operating partnership, Ramco-Gershenson Properties, L.P.
(the “Operating Partnership”). The Operating
Partnership, either directly or indirectly through partnerships
or limited liability companies, holds fee title to all owned
properties. As general partner of the Operating Partnership, we
have the exclusive power to manage and conduct the business of
the Operating Partnership. As of December 31, 2009, we
owned approximately 91.4% of the interests in the Operating
Partnership.
We are a REIT under the Internal Revenue Code of 1986, as
amended (the “Code”), and are therefore required to
satisfy various provisions under the Code and related Treasury
regulations. We are generally required to distribute annually at
least 90% of our “REIT taxable income” (as defined in
the Code), excluding any net capital gain, to our shareholders.
Additionally, at the end of each fiscal quarter, at least 75% of
the value of our total assets must consist of real estate assets
(including interests in mortgages on real property and interests
in other REITs) as well as cash, cash equivalents and government
securities. We are also subject to limits on the amount of
certain types of securities we can hold. Furthermore, at least
75% of our gross income for the tax year must be derived from
certain sources, which include “rents from real
property” and interest on loans secured by mortgages on
real property. Additionally, 95% of our gross income must be
derived from these same sources or from dividends and interest
from any source, gains from the sale or other disposition of
stock or securities or any combination of the foregoing.
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Table of Contents
Certain of our operations, including property management and
asset management, are conducted through taxable REIT
subsidiaries (each, a “TRS”). A TRS is a C corporation
that has not elected REIT status and, as such, is subject to
federal corporate income tax. We use the TRS format to
facilitate our ability to provide certain services and conduct
certain activities that are not generally considered as
qualifying REIT activities.
Operations
of the Company
We are a publicly-traded REIT which owns, develops, acquires,
manages and leases community shopping centers and one regional
mall, in the Midwestern, Southeastern and Mid-Atlantic regions
of the United States. At December 31, 2009, we owned
interests in 88 shopping centers, comprised of 65 community
centers, 21 power centers, one single tenant retail property,
and one enclosed regional mall, totaling approximately
19.8 million square feet of gross leaseable area
(“GLA”). We and our joint venture partners own
approximately 15.3 million square feet of such GLA, with
the remaining portion owned by various anchor stores.
Shopping centers can generally be organized in five categories:
convenience, neighborhood, community, regional and super
regional centers. Shopping centers are distinguished by various
characteristics, including center size, the number and type of
anchor tenants and the types of products sold. Community
shopping centers provide convenience goods and personal services
offered by neighborhood centers, but with a wider range of soft
and hard line goods. The community shopping center may include a
grocery store, discount department store, super drug store, and
several specialty stores. Average GLA of a community shopping
center ranges between 100,000 and 500,000 square feet. A
“power center” is a community shopping center that has
over 500,000 square feet of GLA and includes several
discount anchors of 20,000 or more square feet. These anchors
typically emphasize hard goods such as consumer electronics,
sporting goods, office supplies, home furnishings and home
improvement goods.
Strategy
We are predominantly a community shopping center company with a
focus on managing and adding value to our portfolio of centers
that are primarily anchored by grocery stores
and/or
nationally recognized discount department stores. We believe
that centers with a grocery
and/or
discount component attract consumers seeking value-priced
products. Since these products are required to satisfy everyday
needs, customers usually visit the centers on a weekly basis.
Based on annualized base rents, over 93% of our shopping centers
are grocery
and/or
value-oriented discount department store anchored. Our common
anchor tenants include TJ Maxx/Marshalls, Publix, Home Depot,
Wal-Mart, Kohl’s, Lowe’s Home Centers, Best Buy,
Target, Kroger, Jewel, and Meijer.
Our shopping centers are primarily located in major metropolitan
areas in the Midwestern, Mid-Atlantic and Southeastern regions
of the United States. By focusing our energies on these areas,
we have developed a thorough understanding of the unique
characteristics of our markets. In both of our primary regions,
we have concentrated a number of centers in reasonable proximity
to each other in order to achieve efficiencies in management,
oversight and purchasing.
In our existing centers, we focus on aggressive rental and
leasing strategies and the value-added redevelopment of such
properties. We strive to increase rental income over time
through contractual rent increases and leasing and re-leasing of
available space at higher rental levels, while balancing the
needs for an attractive and diverse tenant mix. See Item 2,
“Properties” for additional information on rental
revenue and lease expirations. In addition, we assess each of
our centers periodically to identify improvement opportunities
and proactively engage in renovation and expansion activities
based on tenant demands, market conditions and capital
availability. We also recognize the importance of customer
satisfaction and spend a significant amount of resources to
ensure that our centers have sufficient amenities, appealing
layouts and proper maintenance.
As opportunities arise and market conditions permit, we may sell
mature properties or non-core assets, which have less potential
for growth or are not viable for redevelopment. We intend to
utilize the proceeds from such sales to reduce outstanding debt,
or to fund development and redevelopment activities, or fund
selective acquisition opportunities.
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In the third quarter of 2009, the Company’s Board of
Trustees completed a review of financial and strategic
alternatives announced in the first quarter of 2009. The Company
believes it is best positioned going forward to optimize
shareholder value through a stand-alone business strategy
focused on the following initiatives:
| • | De-leverage the balance sheet and strengthen the Company’s financial position by utilizing a variety of measures including reducing debt through the sale of non-core assets, growth in shopping center operating income and other actions, where appropriate | |
| • | Increase real estate value by aggressively leasing vacant spaces and entering into new leases for occupied spaces when leases are about to expire | |
| • | Complete existing redevelopment projects and time future accretive redevelopments in a manner that allows completed projects to positively impact operating income while new projects are undertaken | |
| • | Conservatively acquire shopping centers under the appropriate economic conditions that have the potential to produce superior returns and geographic market diversification |
Significant
Transactions and De-leveraging Activities
In December 2009, the Company closed on a new $217 million
secured credit facility (the “Credit Facility”)
consisting of a $150 million secured revolving credit
facility and a $67 million amortizing secured term loan
facility. The terms of the Credit Facility provide that the
revolving credit facility may be increased by up to
$50 million at the Company’s request, dependent upon
there being one or more lenders willing to acquire the
additional commitment, for a total secured credit facility
commitment of $267 million. The secured revolving credit
facility matures in December 2012 and bears interest at LIBOR
plus 350 basis points with a 2% LIBOR floor. The amortizing
secured term loan facility also bears interest at LIBOR plus
350 basis points with a 2% LIBOR floor and requires a
$33 million payment by September 2010 and a final payment
of $34 million by June 2011. The new Credit Facility
amended and restated the Company’s former $250 million
unsecured credit facility, which was comprised of a
$150 million unsecured revolving credit facility and
$100 million unsecured term loan facility.
Also in December 2009, the Company amended its secured revolving
credit facility for The Towne Center at Aquia, reducing the
facility from $40 million to $20 million. The
revolving credit facility securing The Town Center at Aquia
bears interest at LIBOR plus 350 basis points with a 2%
LIBOR floor and matures in December 2010, with two, one-year
extension options.
In September 2009, the Company successfully completed an equity
offering of 12.075 million common shares, which included
1.575 million shares purchased pursuant to an
over-allotment option granted to the underwriters. The offering
price was $8.50 per common share ($0.01 par value per
share) generating net proceeds of $96.2 million. The net
proceeds from the equity offering were used to pay down the
Company’s outstanding debt.
During the third quarter of 2009, the Company sold three
unencumbered net leased real estate assets for net proceeds of
approximately $27.4 million. The net proceeds from these
asset sales were used to pay down the Company’s outstanding
debt.
Corporate
Governance
In 2009, the Company’s Board of Trustees made a number of
significant best practices corporate governance changes further
aligning the Company’s interests with those of its
shareholders. These changes included the expansion of the Board
with the addition of two outside trustees and the termination of
the Company’s Shareholders Rights Plan. The Board also
committed to declassify the Board of Trustees by seeking
shareholder approval to amend the Company’s declaration of
trust at the 2010 Annual Meeting of Shareholders. Furthermore,
the roles of Chairman of the Board and Chief Executive Officer
were separated with the election of a non-executive Chairman of
the Board.
Asset
Management — Value-added Redevelopment
During 2009, the redevelopment projects at certain shopping
centers remained a vital part of the Company’s business
plan. We continued to identify opportunities within our
portfolio to add value. In 2010, the Company plans
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Table of Contents
to focus on completing the eight redevelopment projects
currently in progress. All of the redevelopment projects have
signed leases for the expansion or addition of an anchor or one
or more out-lot tenants. At December 31, 2009, the
following redevelopment projects were in progress:
Wholly-Owned
| • | West Allis Towne Centre in West Allis, Wisconsin. Our redevelopment included a completed reconfiguration of the shopping center to accommodate Burlington Coat Factory, which opened in 71,000 square feet in September of 2009. Re-tenanting of small shop retail space is in progress. | |
| • | Holcomb Center in Roswell, Georgia. The Company has signed a lease for a 39,668 square foot Studio Movie Grill. Studio Movie Grill is currently under construction and is expected to open in the second quarter of 2010. | |
| • | Rivertowne Square in Deerfield Beach, Florida. Our redevelopment plans at this center include adding a regional department store, Beall’s, in 60,000 square feet. The Beall’s space is currently under construction. | |
| • | Southbay Shopping Center in Osprey, Florida. Our redevelopment plans include adding a freestanding CVS Pharmacy, relocating tenants and re-tenanting space. |
Joint
Ventures
| • | Troy Marketplace in Troy, Michigan is owned by a joint venture in which we have a 30% ownership interest. LA Fitness opened in 45,000 square feet in the space previously occupied by Home Expo. The joint venture plans on re-tenanting the remaining space with additional mid-box uses that have been identified. In addition, construction on a new outlot building is complete and the building is partially leased. | |
| • | The Shops at Old Orchard in West Bloomfield, Michigan is owned by a joint venture in which we have a 30% ownership interest. We have re-tenanted and expanded the space formerly occupied by Farmer Jack. Plum Market, a specialty grocer, opened in 37,000 square feet in May 2009. Re-tenanting the balance of the small shop space and façade and structural improvements are complete. The addition of one or more outlots is in progress. | |
| • | Marketplace of Delray in Delray Beach, Florida is owned by a joint venture in which we have a 30% ownership interest. We have added a Ross Dress For Less in 27,625 square feet, which was delivered in February 2010. In 2009, we reduced the Office Depot space and the added a Dollar Tree. Further redevelopment activity includes re-tenanting small shop retail space which is currently in progress. | |
| • | Collins Pointe Plaza in Cartersville, Georgia is part of a joint venture in which we have a 20% ownership interest. Our redevelopment plans include adding a freestanding CVS Pharmacy which is currently under construction, as well as re-tenanting small shop retail space. Additionally, the Company has a signed lease for the space formerly occupied by a Winn-Dixie store and expects to deliver the space by the second quarter of 2010. |
We estimate the total project costs of the eight redevelopment
projects in process to be $46.0 million. For the four
redevelopment projects at our wholly owned, consolidated
properties, we estimate project costs of $18.8 million of
which $11.1 million had been spent as of December 31,
2009. For the four redevelopment projects at properties held by
joint ventures, we estimate off-balance sheet project costs of
$27.2 million (our share is estimated to be
$7.9 million) of which $17.4 million had been spent as
of December 31, 2009 (our share was $5.1 million).
While we anticipate redevelopment projects will increase rental
revenue upon completion, a majority of the projects required
taking some retail space off-line to accommodate the
new/expanded tenancies. These measures have resulted in the loss
of rents and recoveries from tenants for those spaces removed
from our pool of leasable space. Based on the number of
value-added redevelopments currently in process, the revenue
loss has created a short-term negative impact on net operating
income and funds from operations (“FFO”). All of the
Company’s redevelopment projects are expected to be
substantially complete by the end of 2010.
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Developments
Given the dramatic changes in the retail and capital market
landscape, the Company is taking a selective and conservative
approach to potential developments.
At December 31, 2009, the Company had four projects in
development or pre-development, for which we have a joint
venture partner or intend to seek one or more joint venture
partners once appropriate pre-leasing has been completed. These
four projects are:
The Town Center at Aquia in Stafford, Virginia involves the
complete value-added redevelopment of an existing shopping
center owned by us and will be completed in phases in response
to tenant demand. Phase I was finished with the completion of
the first office/retail building on the site, the majority of
which is occupied by Northrop Grumman. The office building was
approximately 90% leased as of December 31, 2009 and was
included in “buildings and improvements” as part of
“investment in real estate, net” on the consolidated
balance sheets. Future phases may include a residential
component and additional retail and office space. The cost of
future phases of this project to date as of December 31,
2009 was $38.2 million, which includes our basis in the
existing shopping center.
Gateway Commons in Lakeland, Florida is planned to be developed
as a 375,000 square foot center. The project is located in
central Florida in close proximity to a number of our existing
centers. The cost to date of this project at December 31,
2009 was $20.3 million, primarily land acquisition costs,
excluding two outlot parcels held by a wholly-owned taxable REIT
subsidiary.
Parkway Shops in Jacksonville, Florida is planned to be
developed as a 350,000 square foot shopping center. The
project is located in close proximity to our River City
Marketplace center in Jacksonville. The cost to date of this
project at December 31, 2009 was $14.0 million,
primarily land acquisition costs.
Hartland Towne Square in Hartland, Michigan is being developed
through a joint venture in which we have a 20% ownership
interest. In addition, we wholly-own, through taxable REIT
subsidiaries, several land parcels that comprise part of this
project. Hartland Towne Square is planned to be developed as a
power center featuring two major anchors. Meijer, which owns its
anchor location in the center, opened a 192,000 square foot
discount department superstore in September 2009. The
development is expected to also include a 200,000 square
foot power center phase, including two to three mid-box national
retailers, retail shops, and outlots. We are currently seeking a
second anchor for the project. The total project cost to date,
excluding land held by our taxable subsidiaries, as of
December 31, 2009 was $25.6 million.
The Company plans to utilize 2010 to secure necessary
entitlements, as well as sign a critical mass of tenants before
moving forward with its planned projects. It is the
Company’s policy to only start vertical construction on new
development projects after the project has received
entitlements, significant leasing commitments, construction
financing and joint venture partner commitments, if appropriate.
In 2010, the Company expects to be active in the entitlement and
pre-leasing phases at its planned projects. The Company does not
expect to proceed to secure financing and to identify joint
venture partners until the entitlement and pre-leasing phases
are nearing completion.
As of December 31, 2009, we have spent $98.1 million
on the four development and pre-development projects.
Acquisitions
In order to focus on strengthening the Company’s balance
sheet, the Company had no significant acquisition activity in
2009. Future acquisition activity will depend upon a number of
factors, including market conditions, the availability of
capital to the Company, and the prospects for creating value at
acquired properties.
Joint
Ventures
In 2009, the Company had no joint venture acquisition or
disposition activity. The Company sold certain properties to
joint ventures in which we have an ownership interest as noted
in “Dispositions” below. In May 2008, a joint venture
in which we have a 20% ownership interest acquired the Rolling
Meadows Shopping Center in Rolling Meadows, Illinois.
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Dispositions
In August 2009, the Company sold Taylor Plaza, a stand-alone
Home Depot in Taylor, MI, to a third party for net proceeds of
$5.0 million. The Company recognized a gain on the sale of
Taylor Plaza of approximately $2.9 million. Income from
operations and the gain on the sale of Taylor Plaza are
classified in discontinued operations on the consolidated
statements of income and comprehensive income for all periods
presented.
In June 2008, the Company sold Highland Square Shopping Center
in Crossville, Tennessee, to a third party for $9.2 million
in net proceeds. The transaction resulted in a loss on the sale
of $0.4 million, net of minority interest, for the year
ended December 31, 2008. Income from operations and the
loss on sale in relation to Highland Square are classified in
discontinued operations on the consolidated statements of income
and comprehensive income for all periods presented.
In August 2008, the Company sold the Plaza at Delray shopping
center in Delray Beach, Florida, to a joint venture in which it
has a 20% ownership interest. In connection with the sale of
this center, the Company recognized a gain of $8.2 million,
net of taxes, which represents the gain attributable to the
joint venture partner’s 80% ownership interest.
Competition
See page 10 of Item 1A. “Risk Factors” for a
description of competitive conditions in our business.
Environmental
Matters
See
pages 14-15
of Item 1A. “Risk Factors” for a description of
environmental risks for our business.
Employment
As of December 31, 2009, we had 126 full-time
corporate employees and 19 full-time
on-site
shopping center maintenance personnel. None of our employees is
represented by a collective bargaining unit. We believe that our
relations with our employees are good.
Available
Information
All reports we electronically file with, or furnish to, the SEC,
including our Annual Report on
Form 10-K,
Quarterly Reports on
Form 10-Q,
Current Reports on
Form 8-K
and amendments to such reports, are available on our website at
www.rgpt.com
, as soon as reasonably practicable after we
electronically file such reports with, or furnish those reports
to, the SEC. Our Corporate Governance Guidelines, Code of
Business Conduct and Ethics and Board of Trustees’
committee charters also are available at the same location on
our website.
Shareholders may request free copies of these documents from:
Ramco-Gershenson Properties Trust
Attention: Investor Relations
31500 Northwestern Highway, Suite 300
Farmington Hills, MI 48334
| Item 1A. | Risk Factors |
You should carefully consider each of the risks and
uncertainties described below and elsewhere in this Annual
Report on
Form 10-K,
as well as any amendments or updates reflected in subsequent
filings with the SEC. We believe these risks and uncertainties,
individually or in the aggregate, could cause our actual results
to differ materially from expected and historical results and
could materially and adversely affect our business operations,
results of operations and financial condition. Further,
additional risks and uncertainties not presently known to us or
that we currently deem immaterial may also impair our results
and business operations.
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Business
Risks
Recent
disruptions in the financial markets could affect our ability to
obtain financing for development or redevelopment of our
properties and other purposes on reasonable terms and have other
adverse effects on us and the market price of our common
shares.
The United States financial and credit markets have recently
experienced significant price volatility, dislocations and
liquidity disruptions, which have caused market prices of many
financial instruments to fluctuate substantially and the spreads
on prospective debt financings to widen considerably. These
circumstances have materially impacted liquidity in the
financial markets, making terms for certain financings less
attractive, and in some cases have resulted in the
unavailability of financing.
Continued uncertainty in the stock and credit markets may
negatively impact our ability to access additional financing for
development and redevelopment of our properties and other
purposes at reasonable terms, which may negatively affect our
business. It may also be more difficult or costly for us to
raise capital through the issuance of our common shares or
preferred shares. The disruptions in the financial markets may
have a material adverse effect on the market value of our common
shares and other adverse effects on us and our business. In
addition, there can be no assurance that the actions of the
U.S. government, U.S. Federal Reserve,
U.S. Treasury and other governmental and regulatory bodies
for the purpose of stabilizing the financial markets will
achieve the intended effects or that such actions will not
result in adverse market developments.
The
recent global economic and financial market crisis has had and
may continue to have a negative effect on our business and
operations.
The recent global economic and financial market crisis has
caused, among other things, a general tightening in the credit
markets, lower levels of liquidity, increases in the rates of
default and bankruptcy, lower consumer and business spending,
and lower consumer net worth, all of which has had and may
continue to have a negative effect on our business, results of
operations, financial condition and liquidity. Many of our
tenants and vendors have been severely affected by the current
economic turmoil. Current or potential tenants and vendors may
no longer be in business, which could lead to reduced demand for
our shopping centers, reduced operating margins, and increased
tenant payment delays or defaults. We are also limited in our
ability to reduce costs to offset the results of a prolonged or
severe economic downturn given certain fixed costs associated
with our operations, difficulties if we overstrained our
resources, and our long-term business approach that necessitates
we remain in position to respond when market conditions improve.
The timing and nature of any recovery in the credit and
financial markets remains uncertain, and there can be no
assurance that market conditions will improve in the near future
or that our results will not be materially and adversely
affected. Such conditions make it very difficult to forecast
operating results, make business decisions and identify and
address material business risks. The foregoing conditions may
also impact the valuation of certain long-lived or intangible
assets that are subject to impairment testing, potentially
resulting in impairment charges which may be material to our
financial condition or results of operations.
Adverse
market conditions and tenant bankruptcies could adversely affect
our revenues.
The economic performance and value of our real estate assets are
subject to all the risks associated with owning and operating
real estate, including risks related to adverse changes in
national, regional and local economic and market conditions. Our
current properties are located in 13 states in the
Midwestern, Southeastern and Mid-Atlantic regions of the United
States. The economic condition of each of our markets may be
dependent on one or more industries. An economic downturn in one
of these industries may result in a business downturn for
existing tenants, and as a result, these tenants may fail to
make rental payments, decline to extend leases upon expiration,
delay lease commencements or declare bankruptcy. In addition, we
may have difficulty finding new tenants during economic
downturns.
Any tenant bankruptcies, leasing delays or failure to make
rental payments when due could result in the termination of the
tenant’s lease and could cause material losses to us and
adversely impact our operating results, unless we are able to
re-let the vacant space or negotiate lease cancellation income.
If our properties do not generate
8
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sufficient income to meet our operating expenses, including
future debt service, our business and results of operations
would be adversely affected.
The retail industry has experienced some financial difficulties
during the past few years and certain local, regional and
national retailers have filed for protection under bankruptcy
laws. Any bankruptcy filings by or relating to one of our
tenants or a lease guarantor is likely to delay our efforts to
collect pre-bankruptcy debts and could ultimately preclude full
collection of these sums. If a lease is assumed by the tenant in
bankruptcy, all pre-bankruptcy balances due under the lease must
be paid to us in full. However, if a lease is rejected by a
tenant in bankruptcy, we would have only a general unsecured
claim for damages. Any unsecured claim we hold may be paid only
to the extent that funds are available and only in the same
percentage as is paid to all other holders of unsecured claims.
It is possible that we may recover substantially less than the
full value of any unsecured claims we hold, if at all, which may
adversely affect our operating results and financial condition.
If any of our anchor tenants becomes insolvent, suffers a
downturn in business or decides not to renew its lease, it may
adversely impact our business at such center. In addition, a
lease termination by an anchor tenant or a failure of an anchor
tenant to occupy the premises could result in lease terminations
or reductions in rent by some of our non-anchor tenants in the
same shopping center pursuant to the terms of their leases. In
that event, we may be unable to re-let the vacated space.
Similarly, the leases of some anchor tenants may permit them to
transfer their leases to other retailers. The transfer to a new
anchor tenant could cause customer traffic in the retail center
to decrease, which would reduce the income generated by that
retail center. In addition, a transfer of a lease to a new
anchor tenant could also give other tenants the right to make
reduced rental payments or to terminate their leases with us.
Concentration
of our credit risk could reduce our operating
results.
Several of our tenants represent a significant portion of our
leasing revenues. As of December 31, 2009, we received 4.0%
of our annualized base rent from TJ Maxx/Marshalls, 3.0% of our
annualized base rent from Publix and 2.1% of our annualized base
rent from OfficeMax. No other tenant represented at least 2% of
our total annualized base rent. The concentration in our leasing
revenue from a small number of tenants creates the risk that,
should these tenants experience financial difficulties, our
operating results could be adversely affected.
REIT
distribution requirements limit our available
cash.
As a REIT, we are subject to annual distribution requirements
which limit the amount of cash we retain for other business
purposes, including amounts to fund our growth. We generally
must distribute annually at least 90% of our REIT taxable
income, excluding any net capital gain, in order for our
distributed earnings not to be subject to corporate income tax.
We intend to make distributions to our shareholders to comply
with the requirements of the Code. However, differences in
timing between the recognition of taxable income and the actual
receipt of cash could require us to sell assets or borrow funds
on a short-term or long-term basis to meet the 90% distribution
requirement.
Our
redevelopment projects may not yield anticipated returns, which
would adversely affect our operating results.
A key component of our business strategy is exploring
redevelopment opportunities at existing properties within our
portfolio and in connection with property acquisitions. To the
extent that we engage in these redevelopment activities, they
will be subject to the risks normally associated with these
projects, including, among others, cost overruns and timing
delays as a result of the lack of availability of materials and
labor, the failure of tenants to commit or live up to their
commitments, weather conditions, and other factors outside of
our control. Any substantial unanticipated delays or expenses
could adversely affect the investment returns from these
redevelopment projects and adversely impact our operating
results.
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We
face competition for the acquisition and development of real
estate properties, which may impede our ability to grow our
operations or may increase the cost of these
activities.
We compete with many other entities for the acquisition of
retail shopping centers and land that is appropriate for new
developments, including other REITs, private institutional
investors and other owner-operators of shopping centers. These
competitors may increase the price we pay to acquire properties
or may succeed in acquiring those properties themselves. In
addition, the sellers of properties we wish to acquire may find
our competitors to be more attractive buyers because they may
have greater resources, may be willing to pay more, or may have
a more compatible operating philosophy. In particular, larger
REITs may enjoy significant competitive advantages that result
from, among other things, a lower cost of capital. In addition,
the number of entities and the amount of funds competing for
suitable properties may increase. This would increase demand for
these properties and therefore increase the prices paid for
them. If we pay higher prices for properties or are unable to
acquire suitable properties at reasonable prices, our ability to
grow may be adversely affected.
Competition
may affect our ability to renew leases or re-let space on
favorable terms and may require us to make unplanned capital
improvements.
We face competition from similar retail centers within the trade
areas in which our centers operate to renew leases or re-let
space as leases expire. Some of these competing properties may
be newer and better located or have a better tenant mix than our
properties, which would increase competition for customer
traffic and creditworthy tenants. We may not be able to renew
leases or obtain replacement tenants as leases expire, and the
terms of renewals or new leases, including the cost of required
renovations or concessions to tenants, may be less favorable to
us than current lease terms. Increased competition for tenants
may also require us to make capital improvements to properties
which we would not have otherwise planned to make. In addition,
we and our tenants face competition from alternate forms of
retailing, including home shopping networks, mail order
catalogues and on-line based shopping services, which may limit
the number of retail tenants that desire to seek space in
shopping center properties generally and may decrease revenues
of existing tenants. If we are unable to re-let substantial
amounts of vacant space promptly, if the rental rates upon a
renewal or new lease are significantly lower than expected, or
if reserves for costs of re-letting prove inadequate, then our
earnings and cash flows will decrease.
We may
be restricted from re-letting space based on existing
exclusivity lease provisions with some of our
tenants.
In a number of cases, our leases contain provisions giving the
tenant the exclusive right to sell clearly identified types of
merchandise or provide specific types of services within the
particular retail center or limit the ability of other tenants
to sell that merchandise or provide those services. When
re-letting space after a vacancy, these provisions may limit the
number and types of prospective tenants suitable for the vacant
space. If we are unable to re-let space on satisfactory terms,
our operating results would be adversely impacted.
We
hold investments in joint ventures in which we do not control
all decisions, and we may have conflicts of interest with our
joint venture partners.
As of December 31, 2009, 33 of our shopping centers were
partially owned by non-affiliated partners through joint venture
arrangements, none of which we have a controlling interest in.
We do not control all decisions in our joint ventures and may be
required to take actions that are in the interest of the joint
venture partners but not our best interests. Accordingly, we may
not be able to favorably resolve any issues which arise, or we
may have to provide financial or other inducements to our joint
venture partners to obtain such resolution.
Various restrictive provisions and rights govern sales or
transfers of interests in our joint ventures. These may work to
our disadvantage because, among other things, we may be required
to make decisions as to the purchase or sale of interests in our
joint ventures at a time that is disadvantageous to us.
Bankruptcy
of our joint venture partners could adversely affect
us.
We could be adversely affected by the bankruptcy of one of our
joint venture partners. The profitability of shopping centers
held in a joint venture could also be adversely affected by the
bankruptcy of one of our joint
10
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venture partners if, because of certain provisions of the
bankruptcy laws, we were unable to make important decisions in a
timely fashion or became subject to additional liabilities.
Rising
operating expenses could adversely affect our operating
results.
Our properties are subject to increases in real estate and other
tax rates, utility costs, insurance costs, repairs and
maintenance and administrative expenses. Our current properties
and any properties we acquire in the future may be subject to
rising operating expenses, some or all of which may be out of
our control. If any property is not fully occupied or if
revenues are not sufficient to cover operating expenses, then we
could be required to expend funds for that property’s
operating expenses. In addition, while most of our leases
require that tenants pay all or a portion of the applicable real
estate taxes, insurance and operating and maintenance costs,
renewals of leases or future leases may not be negotiated on
these terms, in which event we will have to pay those costs. If
we are unable to lease properties on a basis requiring the
tenants to pay all or some of these costs, or if tenants fail to
pay such costs, it could adversely affect our operating results.
The
illiquidity of our real estate investments could significantly
impede our ability to respond to adverse changes in the
performance of our properties, which could adversely impact our
financial condition.
Because real estate investments are relatively illiquid, our
ability to promptly sell one or more properties in our portfolio
in response to changing economic, financial and investment
conditions is limited. The real estate market is affected by
many factors, such as general economic conditions, availability
of financing, interest rates and other factors, including supply
and demand, that are beyond our control. We cannot predict
whether we will be able to sell any property for the price and
other terms we seek, or whether any price or other terms offered
by a prospective purchaser would be acceptable to us. We also
cannot predict the length of time needed to find a willing
purchaser and to complete the sale of a property. We may be
required to expend funds to correct defects or to make
improvements before a property can be sold, and we cannot assure
you that we will have funds available to correct those defects
or to make those improvements. These factors and any others that
would impede our ability to respond to adverse changes in the
performance of our properties could significantly adversely
affect our financial condition and operating results.
If we
suffer losses that are not covered by insurance or that are in
excess of our insurance coverage limits, we could lose invested
capital and anticipated profits.
Catastrophic losses, such as losses resulting from wars, acts of
terrorism, earthquakes, floods, hurricanes, tornadoes or other
natural disasters, pollution or environmental matters, generally
are either uninsurable or not economically insurable, or may be
subject to insurance coverage limitations, such as large
deductibles or co-payments. Although we currently maintain
“all risk” replacement cost insurance for our
buildings, rents and personal property, commercial general
liability insurance and pollution and environmental liability
insurance, our insurance coverage may be inadequate if any of
the events described above occurred to, or caused the
destruction of, one or more of our properties. Under that
scenario, we could lose both our invested capital and
anticipated profits from that property.
Capitalization
Risks
We
have substantial debt obligations, including variable rate debt,
which may impede our operating performance and put us at a
competitive disadvantage.
Required repayments of debt and related interest can adversely
affect our operating performance. As of December 31, 2009,
we had $552.6 million of outstanding indebtedness, of which
$93.5 million bore interest at a variable rate. At
December 31, 2009, we had the ability to borrow an
additional $56.7 million under our existing secured
revolving credit facility and to increase the availability under
our secured revolving credit facility by up to $50 million
under the terms of the Credit Facility. Increases in interest
rates on our existing indebtedness would increase our interest
expense, which could adversely affect our cash flow and our
ability to pay dividends. For example, if market rates of
interest on our variable rate debt outstanding as of
December 31, 2009 increased by 1.0%, the increase in
interest expense on our existing variable rate debt would
decrease future earnings and cash flows by approximately
$0.9 million annually.
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The amount of our debt may adversely affect our business and
operating results by:
| • | requiring us to use a substantial portion of our funds from operations to pay interest, which reduces the amount available for dividends and working capital; | |
| • | placing us at a competitive disadvantage compared to our competitors that have less debt; | |
| • | making us more vulnerable to economic and industry downturns and reducing our flexibility to respond to changing business and economic conditions; | |
| • | limiting our ability to borrow more money for operations, working capital or to finance acquisitions in the future; and | |
| • | limiting our ability to refinance or repay debt obligations when they become due. |
The global economic crisis has exacerbated these risks.
Subject to compliance with the financial covenants in our
borrowing agreements, our management and Board have discretion
to increase the amount of our outstanding debt at any time. We
could become more highly leveraged, resulting in an increase in
debt service costs that could adversely affect our cash flow and
the amount available for distribution to our shareholders. If we
increase our debt, we may also increase the risk of default on
our debt.
Capital
markets are currently experiencing a period of dislocation and
instability, which has had and could continue to have a negative
impact on the availability and cost of capital.
The general disruption in the U.S. capital markets has
impacted the broader financial and credit markets and reduced
the availability of debt and equity capital for the market as a
whole. These conditions could persist for a prolonged period of
time or worsen in the future. Our ability to access the capital
markets may be restricted at a time when we would like, or need,
to access those markets, which could have an impact on our
flexibility to react to changing economic and business
conditions. The resulting lack of available credit, lack of
confidence in the financial sector, increased volatility in the
financial markets and reduced business activity could materially
and adversely affect our business, financial condition, results
of operations and our ability to obtain and manage our
liquidity. In addition, the cost of debt financing and the
proceeds of equity financing may be materially adversely
impacted by these market conditions.
Credit
market developments may reduce availability under our credit
agreements.
Due to the current volatile state of the credit markets, there
is risk that lenders, even those with strong balance sheets and
sound lending practices, could fail or refuse to honor their
legal commitments and obligations under existing credit
commitments, including but not limited to: extending credit up
to the maximum permitted by a credit facility, allowing access
to additional credit features and otherwise accessing capital
and/or
honoring loan commitments. If our lender(s) fail to honor their
legal commitments under our Credit Facility, it could be
difficult in the current environment to replace our credit
facility on similar terms. Although we believe that our
operating cash flow, access to capital markets and existing
credit facilities will give us the ability to satisfy our
liquidity needs for at least the next 12 months, the
failure of any of the lenders under our credit facility may
impact our ability to finance our operating or investing
activities.
Because
we must annually distribute a substantial portion of our income
to maintain our REIT status, we will continue to need additional
debt and/or equity capital to grow.
In general, we must annually distribute at least 90% of our REIT
taxable income, excluding net capital gain, to our shareholders
to maintain our REIT status. As a result, those earnings will
not be available to fund acquisition, development or
redevelopment activities. We have historically funded
acquisition, development and redevelopment activities by:
| • | retaining cash flow that we are not required to distribute to maintain our REIT status; | |
| • | borrowing from financial institutions; |
12
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| • | selling assets that we do not believe present the potential for significant future growth or that are no longer compatible with our business plan; | |
| • | selling common shares and preferred shares; and | |
| • | entering into joint venture transactions with third parties. |
We expect to continue to fund our development and redevelopment
activities and any acquisition activities we determine to
conduct, in this way. Our failure to obtain funds from these
sources could limit our ability to grow, which could have a
material adverse effect on the value of our securities.
Our
financial covenants may restrict our operating or acquisition
activities, which may adversely impact our financial condition
and operating results.
The financial covenants contained in our mortgages and debt
agreements reduce our flexibility in conducting our operations
and create a risk of default on our debt if we cannot continue
to satisfy them. The mortgages on our properties contain
customary negative covenants such as those that limit our
ability, without the prior consent of the lender, to further
mortgage the applicable property or to discontinue insurance
coverage. In addition, if we breach covenants in our debt
agreements, the lender can declare a default and require us to
repay the debt immediately and, if the debt is secured, can
ultimately take possession of the property securing the loan.
In particular, our outstanding Credit Facility contains
customary restrictions, requirements and other limitations on
our ability to incur indebtedness, including limitations on the
ratio of total liabilities to assets and minimum fixed charge
coverage and tangible net worth ratios. Our ability to borrow
under our Credit Facility is subject to compliance with these
financial and other covenants. We rely in part on borrowings
under our Credit Facility to finance acquisition, development
and redevelopment activities and for working capital. If we are
unable to borrow under our Credit Facility or to refinance
existing indebtedness, our financial condition and results of
operations would likely be adversely impacted.
Mortgage
debt obligations expose us to increased risk of loss of
property, which could adversely affect our financial
condition.
Incurring mortgage debt increases our risk of loss because
defaults on indebtedness secured by properties may result in
foreclosure actions by lenders and ultimately our loss of the
related property. We have entered into mortgage loans which are
secured by multiple properties and contain
cross-collateralization and cross-default provisions.
Cross-collateralization provisions allow a lender to foreclose
on multiple properties in the event that we default under the
loan. Cross-default provisions allow a lender to foreclose on
the related property in the event a default is declared under
another loan. For federal income tax purposes, a foreclosure of
any of our properties would be treated as a sale of the property
for a purchase price equal to the outstanding balance of the
debt secured by the mortgage. If the outstanding balance of the
debt secured by the mortgage exceeds our tax basis in the
property, we would recognize taxable income on foreclosure but
would not receive any cash proceeds.
Tax
Risks
Our
failure to qualify as a REIT would result in higher taxes and
reduced cash available for our shareholders.
We believe that we currently operate in a manner so as to
qualify as a REIT for federal income tax purposes. Our continued
qualification as a REIT will depend on our satisfaction of
certain asset, income, investment, organizational, distribution,
shareholder ownership and other requirements on a continuing
basis. Our ability to satisfy the asset requirements depends
upon our analysis of the fair market values of our assets, some
of which are not susceptible to a precise determination, and for
which we will not obtain independent appraisals. In addition,
our compliance with the REIT income and asset requirements
depends upon our ability to manage successfully the composition
of our income and assets on an ongoing basis. Moreover, the
proper classification of an instrument as debt or equity for
federal income tax purposes may be uncertain in some
circumstances, which could affect the application of the REIT
qualification requirements. Accordingly, there can be no
assurance that the IRS will not
13
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contend that our interests in subsidiaries or other issuers
constitute a violation of the REIT requirements. Moreover,
future economic, market, legal, tax or other considerations may
cause us to fail to qualify as a REIT.
If we were to fail to qualify as a REIT in any taxable year, we
would be subject to federal income tax, including any applicable
alternative minimum tax, on our taxable income at regular
corporate rates, and distributions to shareholders would not be
deductible by us in computing our taxable income. Any such
corporate tax liability could be substantial and would reduce
the amount of cash available for distribution to our
shareholders, which in turn could have an adverse impact on the
value of, and trading prices for, our common shares. Unless
entitled to relief under certain Code provisions, we also would
be disqualified from taxation as a REIT for the four taxable
years following the year during which we ceased to qualify as a
REIT.
We have been the subject of IRS examinations for prior years.
With respect to the IRS examination of our taxable years ended
December 31, 1991 through December 31, 1995, we
entered into a closing agreement with the IRS on
December 4, 2003. Pursuant to the terms of the closing
agreement, we agreed, among other things, to pay deficiency
dividends, and we consented to the assessment and collection of
tax deficiencies and to the assessment and collection of
interest on such tax deficiencies and deficiency dividends. All
amounts assessed by the IRS to date have been paid. We have
advised the relevant taxing authorities for the state and local
jurisdictions where we conducted business during the taxable
years ended December 31, 1991 through December 31,
1995 of the terms of the closing agreement. We believe that our
exposure to state and local tax, penalties, interest and other
miscellaneous expenses will not exceed $1.0 million as of
December 31, 2009. It is our belief that any liability for
state and local tax, penalties, interest and other miscellaneous
expenses that may exist with respect to the taxable years ended
December 31, 1991 through December 31, 1995 will be
covered under a Tax Agreement that we entered into with Atlantic
Realty Trust (“Atlantic”)
and/or
Kimco
SI 1339, Inc. (formerly known as SI 1339, Inc.), its successor
in interest. However, no assurance can be given that Atlantic or
Kimco SI, 1339, Inc. will reimburse us for future amounts paid
in connection with our taxable years ended December 31,
1991 through December 31, 1995. See Note 21 of the
Notes to the Consolidated Financial Statements in Item 8.
Even
if we qualify as a REIT, we may be subject to various federal
income and excise taxes, as well as state and local
taxes.
Even if we qualify as a REIT, we may be subject to federal
income and excise taxes in various situations, such as if we
fail to distribute all of our REIT taxable income. We also will
be required to pay a 100% tax on non-arm’s length
transactions between us and a TRS (described below) and on any
net income from sales of property that the IRS successfully
asserts was property held for sale to customers in the ordinary
course. Additionally, we may be subject to state or local
taxation in various state or local jurisdictions, including
those in which we transact business. The state and local tax
laws may not conform to the federal income tax treatment. Any
taxes imposed on us would reduce our operating cash flow and net
income.
Legislative
or other actions affecting REITs could have a negative effect on
us.
The rules dealing with federal income taxation are constantly
under review by persons involved in the legislative process and
by the IRS and the United States Treasury Department. Changes to
tax laws, which may have retroactive application, could
adversely affect our shareholders or us. We cannot predict how
changes in tax laws might affect our shareholders or us.
We are
subject to various environmental laws and regulations which
govern our operations and which may result in potential
liability.
Under various Federal, state and local laws, ordinances and
regulations relating to the protection of the environment
(“Environmental Laws”), a current or previous owner or
operator of real estate may be liable for the costs of removal
or remediation of certain hazardous or toxic substances
disposed, stored, released, generated, manufactured or
discharged from, on, at, onto, under or in such property.
Environmental Laws often impose such liability without regard to
whether the owner or operator knew of, or was responsible for,
the presence or release of such hazardous or toxic substance.
The presence of such substances, or the failure to properly
remediate such substances when present, released or discharged,
may adversely affect the owner’s ability to sell or rent
such
14
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property or to borrow using such property as collateral. The
cost of any required remediation and the liability of the owner
or operator therefore as to any property is generally not
limited under such Environmental Laws and could exceed the value
of the property
and/or
the
aggregate assets of the owner or operator. Persons who arrange
for the disposal or treatment of hazardous or toxic substances
may also be liable for the cost of removal or remediation of
such substances at a disposal or treatment facility, whether or
not such facility is owned or operated by such persons. In
addition to any action required by Federal, state or local
authorities, the presence or release of hazardous or toxic
substances on or from any property could result in private
plaintiffs bringing claims for personal injury or other causes
of action.
In connection with ownership (direct or indirect), operation,
management and development of real properties, we have the
potential to be liable for remediation, releases or injury. In
addition, Environmental Laws impose on owners or operators the
requirement of ongoing compliance with rules and regulations
regarding business-related activities that may affect the
environment. Such activities include, for example, the ownership
or use of transformers or underground tanks, the treatment or
discharge of waste waters or other materials, the removal or
abatement of asbestos-containing materials (“ACMs”) or
lead-containing paint during renovations or otherwise, or
notification to various parties concerning the potential
presence of regulated matters, including ACMs. Failure to comply
with such requirements could result in difficulty in the lease
or sale of any affected property
and/or
the
imposition of monetary penalties, fines or other sanctions in
addition to the costs required to attain compliance. Several of
our properties have or may contain ACMs or underground storage
tanks; however, we are not aware of any potential environmental
liability which could reasonably be expected to have a material
impact on our financial position or results of operations. No
assurance can be given that future laws, ordinances or
regulations will not impose any material environmental
requirement or liability, or that a material adverse
environmental condition does not otherwise exist.
| Item 1B. | Unresolved Staff Comments. |
None.
| Item 2. | Properties. |
For all tables in this Item 2, Annualized Base Rental
Revenue is equal to December 2009 base rental revenue multiplied
by 12.
The properties in which we own interests are located in
13 states throughout the Midwestern, Southeastern and
Mid-Atlantic regions of the United States as follows:
|
Annualized Base
|
||||||||||||||||
|
Number of
|
Rental Revenue At
|
Company
|
Total
|
|||||||||||||
|
State
|
Properties | December 31, 2009 | Owned GLA | GLA | ||||||||||||
|
Michigan
|
34 | $ | 62,592,647 | 6,497,054 | 8,870,507 | |||||||||||
|
Florida
|
25 | 47,904,401 | 4,365,294 | 5,048,475 | ||||||||||||
|
Georgia
|
9 | 8,162,139 | 1,210,177 | 1,210,177 | ||||||||||||
|
Ohio
|
7 | 11,799,140 | 1,164,196 | 1,872,275 | ||||||||||||
|
Illinois
|
2 | 3,538,044 | 293,490 | 293,490 | ||||||||||||
|
Indiana
|
2 | 4,401,680 | 419,045 | 622,845 | ||||||||||||
|
Tennessee
|
2 | 1,131,241 | 124,453 | 332,398 | ||||||||||||
|
Wisconsin
|
2 | 3,359,550 | 514,140 | 647,135 | ||||||||||||
|
Maryland
|
1 | 1,552,750 | 251,511 | 251,511 | ||||||||||||
|
New Jersey
|
1 | 2,653,545 | 224,153 | 224,153 | ||||||||||||
|
North Carolina
|
1 | 252,771 | 69,721 | 69,721 | ||||||||||||
|
South Carolina
|
1 | 468,813 | 33,791 | 241,236 | ||||||||||||
|
Virginia
|
1 | 2,531,940 | 138,509 | 138,509 | ||||||||||||
|
Total
|
88 | $ | 150,348,661 | 15,305,534 | 19,822,432 | |||||||||||
The above table includes 33 properties owned by joint ventures
in which we have an ownership interest and are reflected at 100%.
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Our properties, by type of center, consist of the following:
|
Annualized Base
|
||||||||||||||||
|
Number of
|
Rental Revenues At
|
Company
|
Total
|
|||||||||||||
|
Type of Tenant
|
Properties | December 31, 2009 | Owned GLA | GLA | ||||||||||||
|
Community shopping centers
|
65 | $ | 86,557,503 | 9,269,670 | 10,403,768 | |||||||||||
|
Power centers
|
21 | 60,107,342 | 5,614,166 | 8,742,724 | ||||||||||||
|
Single tenant retail properties
|
1 | 277,453 | 22,930 | 22,930 | ||||||||||||
|
Enclosed regional mall
|
1 | 3,406,363 | 398,768 | 653,010 | ||||||||||||
|
Total
|
88 | $ | 150,348,661 | 15,305,534 | 19,822,432 | |||||||||||
See Note 24 of the Notes to the Consolidated Financial
Statements in Item 8 for a description of the encumbrances
on each property. Additional information regarding the
Properties is included in the Property Schedule on the following
pages.
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Table of Contents
Portfolio
Property Summary
As of December 31, 2009
Property Summary
As of December 31, 2009
|
Year Constructed /
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
Acquired / Year of
|
Number
|
Total Shopping Center GLA: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
Latest Renovation
|
of
|
Anchors: | Company Owned GLA | Annualized Base Rent | ||||||||||||||||||||||||||||||||||||||||||||||||||||
|
Property
|
Location | Ownership % | or Expansion(1) | Units | Non-Company Owned | Company Owned | Total Anchor GLA | Non-Anchor GLA | Total | Total | Leased | Occupancy | Total | PSF | Anchors[2] | |||||||||||||||||||||||||||||||||||||||||
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Wholly-Owned Portfolio
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Florida
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Coral Creek Shops
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Coconut Creek, FL | 100 | % | 1992/2002/NA | 33 | 42,112 | 42,112 | 67,200 | 109,312 | 109,312 | 100,487 | 91.9 | % | $ | 1,519,245 | $ | 15.12 | Publix | ||||||||||||||||||||||||||||||||||||||
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Lantana Shopping Center
|
Lantana, FL | 100 | % | 1959/1996/2002 | 22 | 61,166 | 61,166 | 62,444 | 123,610 | 123,610 | 117,268 | 94.9 | % | 1,241,795 | 10.59 | Publix | ||||||||||||||||||||||||||||||||||||||||
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Naples Towne Centre
|
Naples, FL | 100 | % | 1982/1996/2003 | 14 | 32,680 | 102,027 | 134,707 | 32,680 | 167,387 | 134,707 | 128,018 | 95.0 | % | 782,707 | 6.11 | Goodwill [3], Save-A-Lot, Bealls | |||||||||||||||||||||||||||||||||||||||
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Pelican Plaza
|
Sarasota, FL | 100 | % | 1983/1997/NA | 26 | 35,768 | 35,768 | 57,389 | 93,157 | 93,157 | 78,502 | 84.3 | % | 785,068 | 10.00 | Linens ’N Things [6] | ||||||||||||||||||||||||||||||||||||||||
|
River City Marketplace
|
Jacksonville, FL | 100 | % | 2005/2005/NA | 70 | 342,501 | 323,907 | 666,408 | 221,445 | 887,853 | 545,352 | 530,150 | 97.2 | % | 8,391,824 | 15.83 | Wal-Mart [3], Lowe’s[3], Bed Bath & Beyond, Best Buy, Gander Mountain, Michaels, OfficeMax, PETsMART, Ross Dress For Less, Wallace Theaters, Ashley Furniture HomeStore | |||||||||||||||||||||||||||||||||||||||
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River Crossing Centre
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New Port Richey, FL | 100 | % | 1998/2003/NA | 16 | 37,888 | 37,888 | 24,150 | 62,038 | 62,038 | 58,538 | 94.4 | % | 709,291 | 12.12 | Publix | ||||||||||||||||||||||||||||||||||||||||
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Sunshine Plaza
|
Tamarac, FL | 100 | % | 1972/1996/2001 | 28 | 146,409 | 146,409 | 89,317 | 235,726 | 235,726 | 223,181 | 94.7 | % | 1,918,129 | 8.59 | Publix, Old Time Pottery | ||||||||||||||||||||||||||||||||||||||||
|
The Crossroads
|
Royal Palm Beach, FL | 100 | % | 1988/2002/NA | 35 | 42,112 | 42,112 | 77,980 | 120,092 | 120,092 | 103,910 | 86.5 | % | 1,602,765 | 15.42 | Publix | ||||||||||||||||||||||||||||||||||||||||
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Village Lakes Shopping Center
|
Land O’ Lakes, FL | 100 | % | 1987/1997/NA | 24 | 125,141 | 125,141 | 61,355 | 186,496 | 186,496 | 181,246 | 97.2 | % | 1,111,977 | 6.14 | Sweet Bay, Wal-Mart[4] | ||||||||||||||||||||||||||||||||||||||||
|
Total/Average
|
268 | 375,181 | 916,530 | 1,291,711 | 693,960 | 1,985,671 | 1,610,490 | 1,521,300 | 94.5 | % | $ | 18,062,802 | $ | 11.87 | ||||||||||||||||||||||||||||||||||||||||||
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Georgia
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Centre at Woodstock
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Woodstock, GA | 100 | % | 1997/2004/NA | 14 | 51,420 | 51,420 | 35,328 | 86,748 | 86,748 | 69,660 | 80.3 | % | $ | 788,379 | $ | 11.32 | Publix | ||||||||||||||||||||||||||||||||||||||
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Conyers Crossing
|
Conyers, GA | 100 | % | 1978/1998/NA | 15 | 138,915 | 138,915 | 31,560 | 170,475 | 170,475 | 170,475 | 100.0 | % | 958,471 | 5.62 | Burlington Coat Factory, Hobby Lobby | ||||||||||||||||||||||||||||||||||||||||
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Horizon Village
|
Suwanee, GA | 100 | % | 1996/2002/NA | 22 | 47,955 | 47,955 | 49,046 | 97,001 | 97,001 | 84,002 | 86.6 | % | 878,201 | 10.45 | Publix [4] | ||||||||||||||||||||||||||||||||||||||||
|
Mays Crossing
|
Stockbridge, GA | 100 | % | 1984/1997/2007 | 20 | 100,244 | 100,244 | 37,040 | 137,284 | 137,284 | 128,584 | 93.7 | % | 836,435 | 6.50 | ApplianceSmart Factory Outlet [4], Big Lots, Dollar Tree | ||||||||||||||||||||||||||||||||||||||||
|
Promenade at Pleasant Hill
|
Duluth, GA | 100 | % | 1993/2004/NA | 34 | 199,555 | 199,555 | 82,076 | 281,631 | 281,631 | 245,244 | 87.1 | % | 1,763,839 | 7.19 | Farmers Home Furniture, Old Time Pottery, Publix | ||||||||||||||||||||||||||||||||||||||||
|
Total/Average
|
105 | — | 538,089 | 538,089 | 235,050 | 773,139 | 773,139 | 697,965 | 90.3 | % | $ | 5,225,325 | $ | 7.49 | ||||||||||||||||||||||||||||||||||||||||||
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Michigan
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|
Auburn Mile, The
|
Auburn Hills, MI | 100 | % | 2000/1999/NA | 7 | 533,659 | 64,298 | 597,957 | 26,238 | 624,195 | 90,536 | 90,536 | 100.0 | % | $ | 944,457 | $ | 10.43 | Best Buy [3], Target [3], Meijer [3], Costco [3], Jo-Ann, Staples | |||||||||||||||||||||||||||||||||||||
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Beacon Square
|
Grand Haven, MI | 100 | % | 2004/2004/NA | 16 | 103,316 | — | 103,316 | 51,387 | 154,703 | 51,387 | 45,932 | 89.4 | % | 771,331 | 16.79 | Home Depot [3] | |||||||||||||||||||||||||||||||||||||||
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Clinton Pointe
|
Clinton Twp., MI | 100 | % | 1992/2003/NA | 14 | 112,876 | 65,735 | 178,611 | 69,595 | 248,206 | 135,330 | 123,280 | 91.1 | % | 1,201,151 | 9.74 | OfficeMax, Sports Authority, Target [3] | |||||||||||||||||||||||||||||||||||||||
|
Clinton Valley
|
Sterling Heights, MI | 100 | % | 1985/1996/2009 | 10 | 50,852 | 50,852 | 45,348 | 96,200 | 96,200 | 83,324 | 86.6 | % | 518,170 | 6.22 | Hobby Lobby | ||||||||||||||||||||||||||||||||||||||||
|
Clinton Valley Mall
|
Sterling Heights, MI | 100 | % | 1977/1996/2002 | 8 | 55,175 | 55,175 | 44,106 | 99,281 | 99,281 | 99,281 | 100.0 | % | 1,628,581 | 16.40 | Office Depot, DSW Shoe Warehouse | ||||||||||||||||||||||||||||||||||||||||
|
Eastridge Commons
|
Flint, MI | 100 | % | 1990/1996/2001 | 16 | 117,777 | 117,972 | 235,749 | 51,704 | 287,453 | 169,676 | 163,322 | 96.3 | % | 1,596,012 | 9.77 | Farmer Jack (A&P) [4], Office Depot[4], Target [3], TJ Maxx | |||||||||||||||||||||||||||||||||||||||
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Edgewood Towne Center
|
Lansing, MI | 100 | % | 1990/1996/2001 | 17 | 227,193 | 23,524 | 250,717 | 62,233 | 312,950 | 85,757 | 72,722 | 84.8 | % | 814,230 | 11.20 | OfficeMax, Sam’s Club [3], Target [3] | |||||||||||||||||||||||||||||||||||||||
|
Fairlane Meadows
|
Dearborn, MI | 100 | % | 1987/2003/NA | 23 | 201,300 | 56,586 | 257,886 | 80,922 | 338,808 | 137,508 | 120,223 | 87.4 | % | 1,615,197 | 13.44 | Best Buy, Citi Trends, Target [3], Burlington Coat Factory [3] | |||||||||||||||||||||||||||||||||||||||
|
Fraser Shopping Center
|
Fraser, MI | 100 | % | 1977/1996/NA | 8 | 32,384 | 32,384 | 39,163 | 71,547 | 71,547 | 51,335 | 71.8 | % | 299,648 | 5.84 | Oakridge Market | ||||||||||||||||||||||||||||||||||||||||
|
Gaines Marketplace
|
Gaines Twp., MI | 100 | % | 2004/2004/NA | 15 | 351,981 | 351,981 | 40,188 | 392,169 | 392,169 | 387,669 | 98.9 | % | 1,642,974 | 4.24 | Meijer, Staples, Target | ||||||||||||||||||||||||||||||||||||||||
17
Table of Contents
|
Year Constructed /
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
Acquired / Year of
|
Number
|
Total Shopping Center GLA: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
Latest Renovation
|
of
|
Anchors: | Company Owned GLA | Annualized Base Rent | ||||||||||||||||||||||||||||||||||||||||||||||||||||
|
Property
|
Location | Ownership % | or Expansion(1) | Units | Non-Company Owned | Company Owned | Total Anchor GLA | Non-Anchor GLA | Total | Total | Leased | Occupancy | Total | PSF | Anchors[2] | |||||||||||||||||||||||||||||||||||||||||
|
Hoover Eleven
|
Warren, MI | 100 | % | 1989/2003/NA | 47 | 153,810 | 153,810 | 130,960 | 284,770 | 284,770 | 235,230 | 82.6 | % | 2,914,308 | 12.39 | Kroger, Marshalls, OfficeMax | ||||||||||||||||||||||||||||||||||||||||
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Jackson Crossing
|
Jackson, MI | 100 | % | 1967/1996/2002 | 64 | 254,242 | 222,192 | 476,434 | 176,576 | 653,010 | 398,768 | 369,633 | 92.7 | % | 3,406,363 | 9.22 | Kohl’s, Sears [3], Target [3], TJ Maxx, Toys “R” Us, Best Buy, Bed Bath & Beyond, Jackson 10 Theater | |||||||||||||||||||||||||||||||||||||||
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Jackson West
|
Jackson, MI | 100 | % | 1996/1996/1999 | 5 | 194,484 | 194,484 | 15,837 | 210,321 | 210,321 | 190,838 | 90.7 | % | 1,357,418 | 7.11 | Lowe’s, Michaels, OfficeMax | ||||||||||||||||||||||||||||||||||||||||
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Kentwood Towne Centre
|
Kentwood, MI | 77.88 | % | 1988/1996//NA | 17 | 101,909 | 122,887 | 224,796 | 58,265 | 283,061 | 181,152 | 158,952 | 87.7 | % | 987,766 | 6.21 | Hobby Lobby, OfficeMax, Rooms Today [3] | |||||||||||||||||||||||||||||||||||||||
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Lake Orion Plaza
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Lake Orion, MI | 100 | % | 1977/1996/NA | 9 | 126,195 | 126,195 | 14,878 | 141,073 | 141,073 | 136,073 | 96.5 | % | 527,281 | 3.87 | Hollywood Super Market, Kmart | ||||||||||||||||||||||||||||||||||||||||
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Lakeshore Marketplace
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Norton Shores, MI | 100 | % | 1996/2003/NA | 21 | 126,800 | 258,638 | 385,438 | 89,015 | 474,453 | 347,653 | 337,142 | 97.0 | % | 2,577,690 | 7.65 | Barnes & Noble, Dunham’s, Elder-Beerman, Hobby Lobby, T J Maxx, Toys “R” Us, Target[3] | |||||||||||||||||||||||||||||||||||||||
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Livonia Plaza
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Livonia, MI | 100 | % | 1988/2003/NA | 20 | 93,380 | 93,380 | 43,042 | 136,422 | 136,422 | 123,378 | 90.4 | % | 1,287,187 | 10.43 | Kroger, TJ Maxx | ||||||||||||||||||||||||||||||||||||||||
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Madison Center
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Madison Heights, MI | 100 | % | 1965/1997/2000 | 15 | 167,830 | 167,830 | 59,258 | 227,088 | 227,088 | 183,957 | 81.0 | % | 1,168,960 | 6.35 | Kmart | ||||||||||||||||||||||||||||||||||||||||
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New Towne Plaza
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Canton Twp., MI | 100 | % | 1975/1996/2005 | 17 | 126,425 | 126,425 | 62,798 | 189,223 | 189,223 | 172,298 | 91.1 | % | 1,698,051 | 9.86 | Kohl’s, Jo-Ann | ||||||||||||||||||||||||||||||||||||||||
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Oak Brook Square
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Flint, MI | 100 | % | 1982/1996/NA | 20 | 79,744 | 79,744 | 72,629 | 152,373 | 152,373 | 143,773 | 94.4 | % | 1,227,216 | 8.54 | TJ Maxx, Hobby Lobby | ||||||||||||||||||||||||||||||||||||||||
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Roseville Towne Center
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Roseville, MI | 100 | % | 1963/1996/2004 | 9 | 206,747 | 206,747 | 40,221 | 246,968 | 246,968 | 246,968 | 100.0 | % | 1,702,773 | 6.89 | Marshalls, Wal-Mart, Office Depot[4] | ||||||||||||||||||||||||||||||||||||||||
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Shoppes at Fairlane Meadows
|
Dearborn, MI | 100 | % | 2007/NA/NA | 8 | — | — | 19,925 | 19,925 | 19,925 | 15,197 | 76.3 | % | 365,540 | 24.05 | |||||||||||||||||||||||||||||||||||||||||
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Southfield Plaza
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Southfield, MI | 100 | % | 1969/1996/2003 | 14 | 128,339 | 128,339 | 37,660 | 165,999 | 165,999 | 164,649 | 99.2 | % | 1,335,486 | 8.11 | Burlington Coat Factory, Marshalls, Staples | ||||||||||||||||||||||||||||||||||||||||
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Tel-Twelve
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Southfield, MI | 100 | % | 1968/1996/2005 | 21 | 479,869 | 479,869 | 43,542 | 523,411 | 523,411 | 520,411 | 99.4 | % | 5,589,278 | 10.74 | Best Buy, DSW Shoe Warehouse, Lowe’s, Meijer, Michaels, Office Depot, PETsMART | ||||||||||||||||||||||||||||||||||||||||
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West Oaks I
|
Novi, MI | 100 | % | 1979/1996/2004 | 8 | 213,717 | 213,717 | 30,270 | 243,987 | 243,987 | 243,987 | 100.0 | % | 2,384,688 | 9.77 | Best Buy, DSW Shoe Warehouse, Gander Mountain, Home Goods, Michaels, OfficeMax | ||||||||||||||||||||||||||||||||||||||||
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West Oaks II
|
Novi, MI | 100 | % | 1986/1996/2000 | 30 | 221,140 | 90,753 | 311,893 | 77,201 | 389,094 | 167,954 | 166,979 | 99.4 | % | 2,865,700 | 17.16 | Value City Furniture [3], Bed Bath & Beyond [3], Marshalls, Toys “R” Us[3], Kohl’s[3], Jo-Ann | |||||||||||||||||||||||||||||||||||||||
|
Total/Average
|
459 | 2,000,212 | 3,483,517 | 5,483,729 | 1,482,961 | 6,966,690 | 4,966,478 | 4,647,089 | 93.6 | % | $ | 42,427,457 | $ | 9.13 | ||||||||||||||||||||||||||||||||||||||||||
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North Carolina
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|
Ridgeview Crossing
|
Elkin, NC | 100 | % | 1989/1997/1995 | 7 | 58,581 | 58,581 | 11,140 | 69,721 | 69,721 | 69,721 | 100.0 | % | $ | 252,771 | $ | 3.63 | Belk Department Store, Ingles Market | ||||||||||||||||||||||||||||||||||||||
|
Total/Average
|
7 | — | 58,581 | 58,581 | 11,140 | 69,721 | 69,721 | 69,721 | 100.0 | % | $ | 252,771 | $ | 3.63 | ||||||||||||||||||||||||||||||||||||||||||
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Ohio
|
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Crossroads Centre
|
Rossford, OH | 100 | % | 2001/2001/NA | 22 | 126,200 | 244,991 | 371,191 | 99,054 | 470,245 | 344,045 | 332,505 | 96.6 | % | $ | 2,987,079 | $ | 8.98 | Home Depot, Target [3], Giant Eagle, Michaels, T J Maxx | |||||||||||||||||||||||||||||||||||||
|
OfficeMax Center
|
Toledo, OH | 100 | % | 1994/1996/NA | 1 | 22,930 | 22,930 | — | 22,930 | 22,930 | 22,930 | 100.0 | % | 277,453 | 12.10 | OfficeMax | ||||||||||||||||||||||||||||||||||||||||
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Rossford Pointe
|
Rossford, OH | 100 | % | 2006/2005/NA | 6 | 41,077 | 41,077 | 6,400 | 47,477 | 47,477 | 45,877 | 96.6 | % | 452,339 | 9.86 | PETsMART, Office Depot[4] | ||||||||||||||||||||||||||||||||||||||||
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Spring Meadows Place
|
Holland, OH | 100 | % | 1987/1996/2005 | 28 | 384,770 | 110,691 | 495,461 | 101,126 | 596,587 | 211,817 | 191,401 | 90.4 | % | 2,121,920 | 11.09 | Dick’s Sporting Goods [3], Best Buy [3], Kroger [3], Target [3], Ashley Furniture, OfficeMax, PETsMART, T J Maxx, Sam’s Club[3], Big Lots[3] | |||||||||||||||||||||||||||||||||||||||
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Troy Towne Center
|
Troy, OH | 100 | % | 1990/1996/2003 | 18 | 197,109 | 86,584 | 283,693 | 58,026 | 341,719 | 144,610 | 141,110 | 97.6 | % | 879,214 | 6.23 | Wal-Mart[3], Kohl’s | |||||||||||||||||||||||||||||||||||||||
|
Total/Average
|
75 | 708,079 | 506,273 | 1,214,352 | 264,606 | 1,478,958 | 770,879 | 733,823 | 95.2 | % | $ | 6,718,005 | $ | 9.15 | ||||||||||||||||||||||||||||||||||||||||||
18
Table of Contents
|
Year Constructed /
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
Acquired / Year of
|
Number
|
Total Shopping Center GLA: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
Latest Renovation
|
of
|
Anchors: | Company Owned GLA | Annualized Base Rent | ||||||||||||||||||||||||||||||||||||||||||||||||||||
|
Property
|
Location | Ownership % | or Expansion(1) | Units | Non-Company Owned | Company Owned | Total Anchor GLA | Non-Anchor GLA | Total | Total | Leased | Occupancy | Total | PSF | Anchors[2] | |||||||||||||||||||||||||||||||||||||||||
|
South Carolina
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Taylors Square
|
Taylors, SC | 100 | % | 1989/1997/2005 | 13 | 207,445 | — | 207,445 | 33,791 | 241,236 | 33,791 | 28,048 | 83.0 | % | $ | 468,813 | $ | 16.71 | Wal-Mart[3] | |||||||||||||||||||||||||||||||||||||
|
Total/Average
|
13 | 207,445 | — | 207,445 | 33,791 | 241,236 | 33,791 | 28,048 | 83.0 | % | $ | 468,813 | $ | 16.71 | ||||||||||||||||||||||||||||||||||||||||||
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Tennessee
|
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Northwest Crossing
|
Knoxville, TN | 100 | % | 1989/1997/NA | 10 | 207,945 | 66,346 | 274,291 | 29,933 | 304,224 | 96,279 | 94,779 | 98.4 | % | $ | 810,523 | $ | 8.55 | Wal-Mart[3], Ross Dress for Less, HH Gregg | |||||||||||||||||||||||||||||||||||||
|
Northwest Crossing II
|
Knoxville, TN | 100 | % | 1999/1999/NA | 2 | 23,500 | 23,500 | 4,674 | 28,174 | 28,174 | 28,174 | 100.0 | % | 320,719 | 11.38 | OfficeMax | ||||||||||||||||||||||||||||||||||||||||
|
Total/Average
|
12 | 207,945 | 89,846 | 297,791 | 34,607 | 332,398 | 124,453 | 122,953 | 98.8 | % | $ | 1,131,241 | $ | 9.20 | ||||||||||||||||||||||||||||||||||||||||||
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Wisconsin
|
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East Town Plaza
|
Madison, WI | 100 | % | 1992/2000/2000 | 18 | 132,995 | 144,685 | 277,680 | 64,274 | 341,954 | 208,959 | 185,551 | 88.8 | % | $ | 1,702,503 | $ | 9.18 | Burlington Coat Factory, Marshalls, Jo-Ann, Borders, Toys “R” Us[3], Shopko[3] | |||||||||||||||||||||||||||||||||||||
|
Total/Average
|
18 | 132,995 | 144,685 | 277,680 | 64,274 | 341,954 | 208,959 | 185,551 | 88.8 | % | $ | 1,702,503 | $ | 9.18 | ||||||||||||||||||||||||||||||||||||||||||
|
Wholly-Owned Subtotal/Average
|
957 | 3,631,857 | 5,737,521 | 9,369,378 | 2,820,389 | 12,189,767 | 8,557,910 | 8,006,450 | 93.6 | % | $ | 75,988,916 | $ | 9.49 | ||||||||||||||||||||||||||||||||||||||||||
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Wholly-Owned — Under Redevelopment:
|
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|
Rivertowne Square
|
Deerfield Beach, FL | 100 | % | 1980/1998/NA | 16 | 90,173 | 90,173 | 46,474 | 136,647 | 136,647 | 128,547 | 94.1 | % | $ | 1,138,496 | $ | 8.86 | Beall’s Outlet, Winn-Dixie | ||||||||||||||||||||||||||||||||||||||
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Southbay Shopping Center
|
Osprey, FL | 100 | % | 1978/1998/NA | 19 | 31,700 | 31,700 | 65,090 | 96,790 | 96,790 | 77,765 | 80.3 | % | 607,287 | 7.81 | Beall’s Clearance Store | ||||||||||||||||||||||||||||||||||||||||
|
Holcomb Center
|
Roswell, GA | 100 | % | 1986/1996/NA | 25 | 39,668 | 39,668 | 67,385 | 107,053 | 107,053 | 20,584 | 19.2 | % | 204,985 | 9.96 | |||||||||||||||||||||||||||||||||||||||||
|
The Towne Center at Aquia[5]
|
Stafford, VA | 100 | % | 1989/1998/NA | 17 | 86,184 | 86,184 | 52,325 | 138,509 | 138,509 | 126,863 | 91.6 | % | 2,531,940 | 19.96 | Northrop Grumman, Regal Cinemas | ||||||||||||||||||||||||||||||||||||||||
|
West Allis Towne Centre
|
West Allis, WI | 100 | % | 1987/1996/NA | 27 | 179,818 | 179,818 | 125,363 | 305,181 | 305,181 | 251,050 | 82.3 | % | 1,657,047 | 6.60 | Burlington Coat Factory, Kmart, Office Depot | ||||||||||||||||||||||||||||||||||||||||
|
Total/Average
|
104 | — | 427,543 | 427,543 | 356,637 | 784,180 | 784,180 | 604,809 | 77.1 | % | $ | 6,139,755 | $ | 10.15 | ||||||||||||||||||||||||||||||||||||||||||
|
Wholly-Owned Total/Average
|
1061 | 3,631,857 | 6,165,064 | 9,796,921 | 3,177,026 | 12,973,947 | 9,342,090 | 8,611,259 | 92.2 | % | $ | 82,128,670 | $ | 9.54 | ||||||||||||||||||||||||||||||||||||||||||
|
Joint Venture Portfolio at 100%
|
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Florida
|
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Cocoa Commons
|
Cocoa, FL | 30 | % | 2001/2007/NA | 23 | 51,420 | 51,420 | 38,696 | 90,116 | 90,116 | 76,920 | 85.4 | % | $ | 940,309 | $ | 12.22 | Publix | ||||||||||||||||||||||||||||||||||||||
|
Cypress Point
|
Clearwater, FL | 30 | % | 1983/2007/NA | 22 | 103,085 | 103,085 | 64,195 | 167,280 | 167,280 | 146,853 | 87.8 | % | 1,746,669 | 11.89 | Burlington Coat Factory, The Fresh Market | ||||||||||||||||||||||||||||||||||||||||
|
Kissimmee West
|
Kissimmee, FL | 7 | % | 2005/2005/NA | 17 | 184,600 | 67,000 | 251,600 | 48,586 | 300,186 | 115,586 | 110,386 | 95.5 | % | 1,343,687 | 12.17 | Jo-Ann, Marshalls,Target [3] | |||||||||||||||||||||||||||||||||||||||
|
Martin Square
|
Stuart, FL | 30 | % | 1981/2005/NA | 14 | 291,432 | 291,432 | 39,673 | 331,105 | 331,105 | 301,735 | 91.1 | % | 1,856,101 | 6.15 | Home Depot, Kmart, Staples | ||||||||||||||||||||||||||||||||||||||||
|
Mission Bay Plaza
|
Boca Raton, FL | 30 | % | 1989/2004/NA | 56 | 159,147 | 159,147 | 113,719 | 272,866 | 272,866 | 259,680 | 95.2 | % | 4,949,658 | 19.06 | Albertsons, LA Fitness Sports Club, OfficeMax, Toys “R” Us | ||||||||||||||||||||||||||||||||||||||||
|
Plaza at Delray, The
|
Delray Beach, FL | 20 | % | 1979/2004/NA | 48 | 193,967 | 193,967 | 137,529 | 331,496 | 331,496 | 255,868 | 77.2 | % | 3,977,614 | 15.55 | Books-A-Million, Marshalls, Publix, Regal Cinemas, Staples | ||||||||||||||||||||||||||||||||||||||||
|
Shenandoah Square
|
Davie, FL | 40 | % | 1989/2001/NA | 43 | 42,112 | 42,112 | 81,534 | 123,646 | 123,646 | 115,516 | 93.4 | % | 1,794,987 | 15.54 | Publix | ||||||||||||||||||||||||||||||||||||||||
|
Shoppes of Lakeland
|
Lakeland, FL | 7 | % | 1985/1996/NA | 22 | 123,400 | 122,441 | 245,841 | 66,447 | 312,288 | 188,888 | 157,072 | 83.2 | % | 1,861,295 | 11.85 | Michaels, Ashley Furniture, Target [3] | |||||||||||||||||||||||||||||||||||||||
|
Treasure Coast Commons
|
Jensen Beach, FL | 30 | % | 1996/2004/NA | 3 | 92,979 | 92,979 | — | 92,979 | 92,979 | 92,979 | 100.0 | % | 1,154,920 | 12.42 | Barnes & Noble, OfficeMax, Sports Authority | ||||||||||||||||||||||||||||||||||||||||
|
Village of Oriole Plaza
|
Delray Beach, FL | 30 | % | 1986/2005/NA | 39 | 42,112 | 42,112 | 113,640 | 155,752 | 155,752 | 151,272 | 97.1 | % | 2,107,810 | 13.93 | Publix | ||||||||||||||||||||||||||||||||||||||||
|
Village Plaza
|
Lakeland, FL | 30 | % | 1989/2004/NA | 25 | 64,504 | 64,504 | 82,251 | 146,755 | 146,755 | 114,372 | 77.9 | % | 1,442,485 | 12.61 | Staples | ||||||||||||||||||||||||||||||||||||||||
|
Vista Plaza
|
Jensen Beach, FL | 30 | % | 1998/2004/NA | 9 | 87,072 | 87,072 | 22,689 | 109,761 | 109,761 | 81,347 | 74.1 | % | 1,067,602 | 13.12 | Bed Bath & Beyond, Michaels | ||||||||||||||||||||||||||||||||||||||||
19
Table of Contents
|
Year Constructed /
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
Acquired / Year of
|
Number
|
Total Shopping Center GLA: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
Latest Renovation
|
of
|
Anchors: | Company Owned GLA | Annualized Base Rent | ||||||||||||||||||||||||||||||||||||||||||||||||||||
|
Property
|
Location | Ownership % | or Expansion(1) | Units | Non-Company Owned | Company Owned | Total Anchor GLA | Non-Anchor GLA | Total | Total | Leased | Occupancy | Total | PSF | Anchors[2] | |||||||||||||||||||||||||||||||||||||||||
|
West Broward Shopping Center
|
Plantation, FL | 30 | % | 1965/2005/NA | 19 | 81,801 | 81,801 | 74,435 | 156,236 | 156,236 | 151,242 | 96.8 | % | 1,571,483 | 10.39 | Badcock, National Pawn Shop, Save-A-Lot, US Postal Service | ||||||||||||||||||||||||||||||||||||||||
|
Total/Average
|
340 | 308,000 | 1,399,072 | 1,707,072 | 883,394 | 2,590,466 | 2,282,466 | 2,015,242 | 88.3 | % | $ | 25,814,622 | $ | 12.81 | ||||||||||||||||||||||||||||||||||||||||||
|
Georgia
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
Paulding Pavilion
|
Hiram, GA | 20 | % | 1995/2006/NA | 13 | 60,509 | 60,509 | 24,337 | 84,846 | 84,846 | 78,196 | 92.2 | % | $ | 1,201,349 | $ | 15.36 | Sports Authority, Staples | ||||||||||||||||||||||||||||||||||||||
|
Peachtree Hill
|
Duluth, GA | 20 | % | 1986/2007/NA | 35 | 87,411 | 87,411 | 63,461 | 150,872 | 150,872 | 98,120 | 65.0 | % | 1,106,524 | 11.28 | Kroger | ||||||||||||||||||||||||||||||||||||||||
|
Total/Average
|
48 | — | 147,920 | 147,920 | 87,798 | 235,718 | 235,718 | 176,316 | 74.8 | % | $ | 2,307,873 | $ | 13.09 | ||||||||||||||||||||||||||||||||||||||||||
|
Illinois
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
Market Plaza
|
Glen Ellyn, IL | 20 | % | 1965/2007/1996 | 35 | 66,079 | 66,079 | 96,975 | 163,054 | 163,054 | 154,974 | 95.0 | % | $ | 2,291,508 | $ | 14.79 | Jewel Osco, Staples | ||||||||||||||||||||||||||||||||||||||
|
Rolling Meadows
|
Rolling Meadows, IL | 20 | % | 1956/2008/1995 | 18 | 83,230 | 83,230 | 47,206 | 130,436 | 130,436 | 102,107 | 78.3 | % | 1,246,536 | 12.21 | Jewel Osco | ||||||||||||||||||||||||||||||||||||||||
|
Total/Average
|
53 | — | 149,309 | 149,309 | 144,181 | 293,490 | 293,490 | 257,081 | 87.6 | % | $ | 3,538,044 | $ | 13.76 | ||||||||||||||||||||||||||||||||||||||||||
|
Indiana
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
Merchants’ Square
|
Carmel, IN | 20 | % | 1970/2004/NA | 48 | 80,000 | 69,504 | 149,504 | 209,503 | 359,007 | 279,007 | 239,171 | 85.7 | % | $ | 2,595,632 | $ | 10.85 | Marsh [3], Cost Plus, Hobby Lobby | |||||||||||||||||||||||||||||||||||||
|
Nora Plaza
|
Indianapolis, IN | 7 | % | 1958/2007/2002 | 25 | 123,800 | 57,713 | 181,513 | 82,325 | 263,838 | 140,038 | 135,554 | 96.8 | % | 1,806,048 | 13.32 | Target [3], Marshalls, Whole Foods | |||||||||||||||||||||||||||||||||||||||
|
Total/Average
|
73 | 203,800 | 127,217 | 331,017 | 291,828 | 622,845 | 419,045 | 374,725 | 89.4 | % | $ | 4,401,680 | $ | 11.75 | ||||||||||||||||||||||||||||||||||||||||||
|
Maryland
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
Crofton Centre
|
Crofton, MD | 20 | % | 1974/1996/NA | 18 | 196,570 | 196,570 | 54,941 | 251,511 | 251,511 | 223,655 | 88.9 | % | $ | 1,552,750 | $ | 6.94 | Basics/Metro, Kmart, Gold’s Gym | ||||||||||||||||||||||||||||||||||||||
|
Total/Average
|
18 | — | 196,570 | 196,570 | 54,941 | 251,511 | 251,511 | 223,655 | 88.9 | % | $ | 1,552,750 | $ | 6.94 | ||||||||||||||||||||||||||||||||||||||||||
|
Michigan
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
Gratiot Crossing
|
Chesterfield, MI | 30 | % | 1980/2005/NA | 15 | 122,406 | 122,406 | 43,138 | 165,544 | 165,544 | 150,586 | 91.0 | % | $ | 1,317,840 | $ | 8.75 | Jo-Ann, Kmart | ||||||||||||||||||||||||||||||||||||||
|
Hunter’s Square
|
Farmington Hills, MI | 30 | % | 1988/2005/NA | 37 | 194,236 | 194,236 | 163,066 | 357,302 | 357,302 | 349,601 | 97.8 | % | 5,878,292 | 16.81 | Bed Bath & Beyond, Borders, Loehmann’s, Marshalls, T J Maxx | ||||||||||||||||||||||||||||||||||||||||
|
Millennium Park
|
Livonia, MI | 30 | % | 2000/2005/NA | 14 | 352,641 | 241,850 | 594,491 | 39,524 | 634,015 | 281,374 | 242,550 | 86.2 | % | 3,196,275 | 13.18 | Home Depot, Marshalls, Michaels, PETsMART, Costco[3], Meijer[3] | |||||||||||||||||||||||||||||||||||||||
|
Southfield Plaza Expansion
|
Southfield, MI | 50 | % | 1987/1996/2003 | 11 | — | — | 19,410 | 19,410 | 19,410 | 12,410 | 63.9 | % | 203,584 | 16.40 | |||||||||||||||||||||||||||||||||||||||||
|
West Acres Commons
|
Flint, MI | 40 | % | 1998/2001/NA | 14 | 59,889 | 59,889 | 35,200 | 95,089 | 95,089 | 82,489 | 86.7 | % | 1,033,485 | 12.53 | VG’s Food Center | ||||||||||||||||||||||||||||||||||||||||
|
Winchester Center
|
Rochester Hills, MI | 30 | % | 1980/2005/NA | 16 | 224,356 | 224,356 | 89,309 | 313,665 | 313,665 | 313,665 | 100.0 | % | 4,379,577 | 13.96 | Borders, Dick’s Sporting Goods, Linens ’N Things [6], Marshalls, Michaels, PETsMART | ||||||||||||||||||||||||||||||||||||||||
|
Total/Average
|
107 | 352,641 | 842,737 | 1,195,378 | 389,647 | 1,585,025 | 1,232,384 | 1,151,301 | 93.4 | % | $ | 16,009,053 | $ | 13.91 | ||||||||||||||||||||||||||||||||||||||||||
|
New Jersey
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
Chester Springs Shopping Center
|
Chester, NJ | 20 | % | 1970/1996/1999 | 41 | 81,760 | 81,760 | 142,393 | 224,153 | 224,153 | 194,320 | 86.7 | % | $ | 2,653,545 | $ | 13.66 | Shop-Rite Supermarket, Staples | ||||||||||||||||||||||||||||||||||||||
|
Total/Average
|
41 | — | 81,760 | 81,760 | 142,393 | 224,153 | 224,153 | 194,320 | 86.7 | % | $ | 2,653,545 | $ | 13.66 | ||||||||||||||||||||||||||||||||||||||||||
|
Ohio
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
Olentangy Plaza
|
Columbus, OH | 20 | % | 1981/2007/1997 | 41 | 116,707 | 116,707 | 114,800 | 231,507 | 231,507 | 215,899 | 93.3 | % | $ | 2,282,182 | $ | 10.57 | Eurolife Furniture, Marshalls, MicroCenter, Sunflower Market[4] | ||||||||||||||||||||||||||||||||||||||
|
The Shops on Lane Avenue
|
Upper Arlington, OH | 20 | % | 1952/2007/2004 | 40 | 46,574 | 46,574 | 115,236 | 161,810 | 161,810 | 151,399 | 93.6 | % | 2,798,954 | 18.49 | Bed Bath & Beyond, Whole Foods | ||||||||||||||||||||||||||||||||||||||||
|
Total/Average
|
81 | — | 163,281 | 20163,281 | 230,036 | 393,317 | 393,317 | 367,298 | 93.4 | % | $ | 5,081,136 | $ | 13.83 | ||||||||||||||||||||||||||||||||||||||||||
|
JV Subtotal/Average at 100%
|
761 | 864,441 | 3,107,866 | 3,972,307 | 2,224,218 | 6,196,525 | 5,332,084 | 4,759,938 | 89.3 | % | $ | 61,358,703 | $ | 12.89 | ||||||||||||||||||||||||||||||||||||||||||
20
Table of Contents
|
Year Constructed /
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
Acquired / Year of
|
Number
|
Total Shopping Center GLA: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
Latest Renovation
|
of
|
Anchors: | Company Owned GLA | Annualized Base Rent | ||||||||||||||||||||||||||||||||||||||||||||||||||||
|
Property
|
Location | Ownership % | or Expansion(1) | Units | Non-Company Owned | Company Owned | Total Anchor GLA | Non-Anchor GLA | Total | Total | Leased | Occupancy | Total | PSF | Anchors[2] | |||||||||||||||||||||||||||||||||||||||||
|
Joint Venture Under Redevelopment
:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
Marketplace of Delray
|
Delray Beach, FL | 30 | % | 1981/2005/NA | 48 | 107,190 | 107,190 | 131,711 | 238,901 | 238,901 | 181,525 | 76.0 | % | 2,281,194 | 12.57 | Office Depot, Winn-Dixie | ||||||||||||||||||||||||||||||||||||||||
|
Collins Pointe Plaza
|
Cartersville, GA | 20 | % | 1987/2006/NA | 18 | 46,358 | 46,358 | 47,909 | 94,267 | 94,267 | 35,225 | 37.4 | % | $ | 423,956 | $ | 12.04 | |||||||||||||||||||||||||||||||||||||||
|
Troy Marketplace
|
Troy, MI | 30 | % | 2000/2005/NA | 12 | 20,600 | 193,360 | 213,960 | 28,813 | 242,773 | 222,173 | 168,678 | 75.9 | % | 3,009,291 | 17.84 | Golfsmith, LA Fitness, Nordstom Rack, PETsMART, REI [3] | |||||||||||||||||||||||||||||||||||||||
|
The Shops at Old Orchard
|
W. Bloomfield, MI | 30 | % | 1972/2007/NA | 17 | 36,044 | 36,044 | 39,975 | 76,019 | 76,019 | 68,769 | 90.5 | % | 1,146,846 | 16.68 | Plum Market | ||||||||||||||||||||||||||||||||||||||||
|
Total/Average
|
95 | 20,600 | 382,952 | 403,552 | 248,408 | 651,960 | 631,360 | 454,197 | 71.9 | % | $ | 6,861,287 | $ | 15.11 | ||||||||||||||||||||||||||||||||||||||||||
|
JV Total/Average at 100%
|
856 | 885,041 | 3,490,818 | 4,375,859 | 2,472,626 | 6,848,485 | 5,963,444 | 5,214,135 | 87.4 | % | $ | 68,219,991 | $ | 13.08 | ||||||||||||||||||||||||||||||||||||||||||
|
PORTFOLIO
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
TOTAL/AVERAGE
|
1917 | 4,516,898 | 9,655,882 | 14,172,780 | 5,649,652 | 19,822,432 | 15,305,534 | 13,825,394 | 90.3 | % | $ | 150,348,661 | $ | 10.87 | ||||||||||||||||||||||||||||||||||||||||||
| [1] | Represents year constructed/acquired/year of latest renovation or expansion by either the Company or the former Ramco Group, as applicable. | |
| [2] | We define anchor tenants as single tenants which lease 19,000 square feet or more at a property. | |
| [3] | Non-Company owned anchor space | |
| [4] | Tenant closed — lease obligated. | |
| [5] | The Town Center at Aquia is considered a development project by the Company. | |
| [6] | Tenant closed in bankruptcy, though leases are guaranteed by CVS. |
21
Table of Contents
Tenant
Information
The following table sets forth, as of December 31, 2009,
information regarding space leased to tenants which,
individually account for 2% or more of total annualized base
rental revenue from our properties:
|
% of Total
|
||||||||||||||||||||
|
Total
|
Annualized
|
Annualized
|
Aggregate
|
% of Total
|
||||||||||||||||
|
Number of
|
Base Rental
|
Base Rental
|
GLA Leased
|
Company
|
||||||||||||||||
|
Tenant
|
Stores | Revenue | Revenue | by Tenant | Owned GLA | |||||||||||||||
|
TJ Maxx / Marshalls
|
20 | $ | 5,941,987 | 4.0 | % | 636,154 | 4.2 | % | ||||||||||||
|
Publix
|
12 | 4,534,891 | 3.0 | % | 574,794 | 3.8 | % | |||||||||||||
|
OfficeMax
|
12 | 3,083,183 | 2.1 | % | 273,720 | 1.8 | % | |||||||||||||
Included in the 12 Publix locations listed above is one location
(representing 47,955 square feet of GLA) which is leased to
but not currently occupied by Publix, although Publix remains
obligated under the lease agreement, which expires in 2016.
The following table sets forth the total GLA leased to anchors
(defined as tenants occupying at least 19,000 square feet),
leased to retail (non-anchor) tenants, and available space, in
the aggregate, as of December 31, 2009:
|
% of Total
|
||||||||||||||||
|
Annualized
|
Annualized
|
% of Total
|
||||||||||||||
|
Base Rental
|
Base Rental
|
Company
|
Company
|
|||||||||||||
|
Type of Tenant
|
Revenue | Revenue | Owned GLA | Owned GLA | ||||||||||||
|
Anchor
|
$ | 75,335,334 | 50.1 | % | 9,167,287 | 59.9 | % | |||||||||
|
Retail (non-anchor)
|
75,013,327 | 49.9 | % | 4,658,107 | 30.4 | % | ||||||||||
|
Available
|
— | — | 1,480,140 | 9.7 | % | |||||||||||
|
Total
|
$ | 150,348,661 | 100.0 | % | 15,305,534 | 100.0 | % | |||||||||
The following table sets forth the total GLA leased to national,
local and regional tenants, in the aggregate, as of
December 31, 2009:
|
% of Total
|
||||||||||||||||
|
Annualized
|
Annualized
|
Aggregate
|
% of Total
|
|||||||||||||
|
Base Rental
|
Base Rental
|
GLA Leased
|
Company Owned
|
|||||||||||||
|
Type of Tenant
|
Revenue | Revenue | by Tenant | GLA Leased | ||||||||||||
|
National
|
$ | 101,091,814 | 67.2 | % | 9,372,159 | 67.8 | % | |||||||||
|
Local
|
28,160,544 | 18.7 | % | 1,892,105 | 13.7 | % | ||||||||||
|
Regional
|
21,096,303 | 14.1 | % | 2,561,130 | 18.5 | % | ||||||||||
|
Total
|
$ | 150,348,661 | 100.0 | % | 13,825,394 | 100.0 | % | |||||||||
22
Table of Contents
The Company has historically renewed over 70% of expiring leases
in the past 10 years. The following table sets forth lease
expirations for the next five years and thereafter at our
properties assuming that no renewal options are exercised:
|
% of Total
|
||||||||||||||||||||||||
|
Average
|
% of Total
|
Leased
|
||||||||||||||||||||||
|
Annualized Base
|
Annualized
|
Annualized
|
Leased
|
Company
|
||||||||||||||||||||
|
Rental Revenue per
|
Base Rental
|
Base Rental
|
Company
|
Owned GLA
|
||||||||||||||||||||
|
Number of
|
square foot as of
|
Revenue as of
|
Revenue as of
|
Owned GLA
|
Under
|
|||||||||||||||||||
|
Leases
|
12/31/09 Under
|
12/31/09 Under
|
12/31/09 Under
|
Expiring
|
Expiring
|
|||||||||||||||||||
|
Lease Expiration
|
Expiring | Expiring Leases | Expiring Leases | Expiring Leases | (in square feet) | Leases | ||||||||||||||||||
|
2010
|
244 | $ | 10.73 | $ | 11,218,639 | 7.5 | % | 1,045,230 | 7.6 | % | ||||||||||||||
|
2011
|
291 | 12.61 | 18,593,707 | 12.4 | % | 1,474,552 | 10.7 | % | ||||||||||||||||
|
2012
|
276 | 12.23 | 18,166,862 | 12.1 | % | 1,485,537 | 10.7 | % | ||||||||||||||||
|
2013
|
215 | 12.00 | 19,564,551 | 13.0 | % | 1,630,464 | 11.8 | % | ||||||||||||||||
|
2014
|
173 | 9.32 | 14,753,379 | 9.8 | % | 1,582,899 | 11.5 | % | ||||||||||||||||
|
Thereafter
|
329 | 10.30 | 68,051,523 | 45.3 | % | 6,606,712 | 47.8 | % | ||||||||||||||||
| Item 3. | Legal Proceedings. |
There are no material pending legal or governmental proceedings,
or to our knowledge, threatened legal or governmental
proceedings, against or involving us or our properties.
| Item 4. | Submission of Matters to a Vote of Security Holders. |
None.
23
Table of Contents
| Item 5. | Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. |
Market Information
— Our common shares
are currently listed and traded on the New York Stock Exchange
(“NYSE”) under the symbol “RPT”. On
March 9, 2010, the closing price of our common shares on
the NYSE was $11.04.
SHAREHOLDER
RETURN PERFORMANCE GRAPH
The following line graph sets forth the cumulative total return
on a $100 investment (assuming the reinvestment of dividends) in
each of the Company’s common stock, the NAREIT Equity
Index, the MSCI US REIT Index and the S&P 500 Index, for
the period December 31, 1999 through December 31,
2009. The stock price performance shown is not necessarily
indicative of future price performance.
Comparison of Cumulative Total Return
| Period Ending | ||||||||||||||||||||||||||||||||||||||||||||
| Index | 12/31/99 | 12/31/00 | 12/31/01 | 12/31/02 | 12/31/03 | 12/31/04 | 12/31/05 | 12/31/06 | 12/31/07 | 12/31/08 | 12/31/09 | |||||||||||||||||||||||||||||||||
|
Ramco-Gershenson Properties Trust
|
100.00 | 114.99 | 158.15 | 212.20 | 327.18 | 396.35 | 348.37 | 528.16 | 314.80 | 100.67 | 171.96 | |||||||||||||||||||||||||||||||||
|
NAREIT Equity
|
100.00 | 126.37 | 143.97 | 149.47 | 204.98 | 269.70 | 302.51 | 408.57 | 344.46 | 214.50 | 274.54 | |||||||||||||||||||||||||||||||||
|
S&P 500
|
100.00 | 90.90 | 80.09 | 62.39 | 80.29 | 89.02 | 93.40 | 108.15 | 114.09 | 71.88 | 90.90 | |||||||||||||||||||||||||||||||||
|
MSCI US REIT (RMS)
|
100.00 | 126.81 | 143.08 | 148.30 | 202.79 | 266.64 | 298.99 | 406.39 | 338.05 | 209.69 | 269.68 | |||||||||||||||||||||||||||||||||
24
Table of Contents
The following table shows high and low closing prices per share
for each quarter in 2009 and 2008:
| Share Price | ||||||||
|
Quarter Ended
|
High | Low | ||||||
|
March 31, 2009
|
$ | 7.16 | $ | 3.88 | ||||
|
June 30, 2009
|
11.60 | 6.01 | ||||||
|
September 30, 2009
|
10.82 | 8.41 | ||||||
|
December 31, 2009
|
9.94 | 7.82 | ||||||
|
March 31, 2008
|
$ | 24.04 | $ | 19.48 | ||||
|
June 30, 2008
|
23.09 | 20.54 | ||||||
|
September 30, 2008
|
23.75 | 18.77 | ||||||
|
December 31, 2008
|
21.49 | 3.72 | ||||||
Holders
— The number of holders of
record of our common shares was 1,769 at March 9, 2010. A
substantially greater number of holders are beneficial owners
whose shares of record are held by banks, brokers and other
financial institutions.
Dividends
— We declared the following
cash distributions per share to our common shareholders for the
years ended December 31, 2009 and 2008:
|
Dividend
|
||||||||
|
Record Date
|
Distribution | Payment Date | ||||||
|
March 20, 2009
|
$ | 0.2313 | April 1, 2009 | |||||
|
June 20, 2009
|
$ | 0.2313 | July 1, 2009 | |||||
|
September 20, 2009
|
$ | 0.1633 | October 1, 2009 | |||||
|
December 20, 2009
|
$ | 0.1633 | January 4, 2010 | |||||
|
Dividend
|
||||||||
|
Record Date
|
Distribution | Payment Date | ||||||
|
March 20, 2008
|
$ | 0.4625 | April 1, 2008 | |||||
|
June 20, 2008
|
$ | 0.4625 | July 1, 2008 | |||||
|
September 20, 2008
|
$ | 0.4625 | October 1, 2008 | |||||
|
December 20, 2008
|
$ | 0.2313 | January 5, 2009 | |||||
Under the Code, a REIT must meet certain requirements, including
a requirement that it distribute annually to its shareholders at
least 90% of its REIT taxable income, excluding net capital
gain. Distributions paid by us are at the discretion of our
Board and depend on our actual net income available to common
shareholders, cash flow, financial condition, capital
requirements, the annual distribution requirements under REIT
provisions of the Code and such other factors as the Board deems
relevant.
We have a Dividend Reinvestment Plan (the “DRP”) which
allows our common shareholders to acquire additional common
shares by automatically reinvesting cash dividends. Shares are
acquired pursuant to the DRP at a price equal to the prevailing
market price of such common shares, without payment of any
brokerage commission or service charge. Common shareholders who
do not participate in the DRP continue to receive cash
distributions, as declared.
For information on the Company’s equity compensation plans
as of December 31, 2009, refer to Item 12 of
Part III of this filing.
25
Table of Contents
| Item 6. | Selected Financial Data (in thousands, except per share data and number of properties). |
The following table sets forth our selected consolidated
financial data and should be read in conjunction with the
Consolidated Financial Statements and Notes to the Consolidated
Financial Statements and Management’s Discussion and
Analysis of Financial Condition and Results of Operations
included elsewhere in this report.
| Year Ended December 31, | ||||||||||||||||||||
| 2009 | 2008 | 2007 | 2006 | 2005 | ||||||||||||||||
| (In thousands, except per share and Other Data not in dollars) | ||||||||||||||||||||
|
Operating Data:
|
||||||||||||||||||||
|
Total revenue
|
$ | 124,140 | $ | 134,629 | $ | 145,205 | $ | 146,418 | $ | 138,728 | ||||||||||
|
Operating income
|
6,482 | 5,265 | 10,152 | 13,626 | 14,335 | |||||||||||||||
|
Gain on sale of real estate assets, net of taxes
|
5,010 | 19,595 | 32,643 | 23,388 | 1,136 | |||||||||||||||
|
Income from continuing operations
|
12,820 | 27,366 | 45,291 | 40,016 | 17,871 | |||||||||||||||
|
Discontinued operations
|
||||||||||||||||||||
|
Gain (loss) on sale of property
|
2,886 | (463 | ) | — | 1,075 | — | ||||||||||||||
|
Income from operations
|
230 | 529 | 694 | 1,004 | 3,982 | |||||||||||||||
|
Net income
|
15,936 | 27,432 | 45,985 | 42,095 | 21,853 | |||||||||||||||
|
Net income attributable to noncontrolling interest
|
||||||||||||||||||||
|
in subsidiaries
|
(2,216 | ) | (3,931 | ) | (7,310 | ) | (6,471 | ) | (3,360 | ) | ||||||||||
|
Preferred share dividends
|
— | — | (3,146 | ) | (6,655 | ) | (6,655 | ) | ||||||||||||
|
Loss on redemption of preferred shares
|
— | — | (1,269 | ) | — | — | ||||||||||||||
|
Net income attributable to RPT common shareholders
|
$ | 13,720 | $ | 23,501 | $ | 34,260 | $ | 28,969 | $ | 11,838 | ||||||||||
|
Earnings Per Share Data:
|
||||||||||||||||||||
|
From continuing operations attributable to RPT common
|
||||||||||||||||||||
|
shareholders:
|
||||||||||||||||||||
|
Basic earnings per RPT common share
|
$ | 0.50 | $ | 1.27 | $ | 1.89 | $ | 1.63 | $ | 0.50 | ||||||||||
|
Diluted earnings per RPT common share
|
0.50 | 1.27 | 1.88 | $ | 1.63 | $ | 0.50 | |||||||||||||
|
Net income attributable to RPT common shareholders:
|
||||||||||||||||||||
|
Basic earnings per RPT common share
|
$ | 0.62 | $ | 1.27 | $ | 1.92 | $ | 1.74 | $ | 0.70 | ||||||||||
|
Diluted earnings per RPT common share
|
0.62 | 1.27 | 1.91 | 1.73 | 0.70 | |||||||||||||||
|
Cash dividends declared per RPT common share
|
$ | 0.79 | $ | 1.62 | $ | 1.85 | $ | 1.79 | $ | 1.75 | ||||||||||
|
Distributions to RPT common shareholders
|
$ | 17,974 | $ | 34,338 | $ | 32,156 | $ | 29,737 | $ | 29,167 | ||||||||||
|
Weighted average shares outstanding:
|
||||||||||||||||||||
|
Basic
|
22,193 | 18,471 | 17,851 | 16,665 | 16,837 | |||||||||||||||
|
Diluted
|
22,193 | 18,478 | 18,529 | 16,716 | 16,880 | |||||||||||||||
|
Balance Sheet Data (at December 31):
|
||||||||||||||||||||
|
Cash and cash equivalents
|
$ | 8,800 | $ | 5,295 | $ | 14,977 | $ | 11,550 | $ | 7,136 | ||||||||||
|
Accounts receivable, net
|
31,900 | 34,020 | 35,787 | 33,692 | 32,341 | |||||||||||||||
|
Investment in real estate (before accumulated depreciation)
|
995,451 | 1,005,109 | 1,045,372 | 1,048,602 | 1,047,304 | |||||||||||||||
|
Total assets
|
997,957 | 1,014,526 | 1,088,499 | 1,064,870 | 1,125,275 | |||||||||||||||
|
Mortgages and notes payable
|
552,551 | 662,601 | 690,801 | 676,225 | 724,831 | |||||||||||||||
|
Total liabilities
|
591,392 | 701,488 | 765,742 | 720,722 | 774,442 | |||||||||||||||
|
Total RPT shareholders’ equity
|
367,228 | 273,714 | 281,517 | 304,547 | 312,418 | |||||||||||||||
|
Noncontrolling interest in subsidiaries
|
39,337 | 39,324 | 41,240 | 39,601 | 38,415 | |||||||||||||||
|
Total shareholders’ equity
|
406,565 | 313,038 | 322,757 | 344,148 | 350,833 | |||||||||||||||
|
Other Data:
|
||||||||||||||||||||
|
Funds from operations available
|
||||||||||||||||||||
|
to RPT common shareholders(1)
|
$ | 45,298 | $ | 47,362 | $ | 54,975 | $ | 54,604 | $ | 47,896 | ||||||||||
|
Cash provided by operating activities
|
48,064 | 26,998 | 85,988 | 46,785 | 44,605 | |||||||||||||||
|
Cash (used in) provided by investing activities
|
(3,445 | ) | 33,602 | 23,182 | 42,113 | (86,517 | ) | |||||||||||||
|
Cash (used in) provided by financing activities
|
(41,114 | ) | (70,282 | ) | (105,743 | ) | (84,484 | ) | 41,238 | |||||||||||
|
Number of properties (at December 31)(2)
|
88 | 89 | 89 | 81 | 84 | |||||||||||||||
|
Company owned GLA (at December 31)(2)
|
15,306 | 15,914 | 16,030 | 14,645 | 15,000 | |||||||||||||||
|
Occupancy rate (at December 31)(2)
|
90.3 | % | 91.3 | % | 92.1 | % | 93.6 | % | 93.7 | % | ||||||||||
| (1) | We consider funds from operations, also known as “FFO,” an appropriate supplemental measure of the financial performance of an equity REIT. Under the National Association of Real Estate Investment Trusts (“NAREIT”) definition, FFO represents net income, excluding extraordinary items (as defined under |
26
Table of Contents
| accounting principles generally accepted in the United States of America (“GAAP”)), and gain (loss) on sales of depreciable property, plus real estate related depreciation and amortization (excluding amortization of financing costs), and after adjustments for unconsolidated partnerships and joint ventures. See “Funds From Operations” in Item 7 for a discussion of FFO and a reconciliation of FFO to net income. | ||
| (2) | Includes properties owned by us and our joint ventures. |
| Item 7. | Management’s Discussion and Analysis of Financial Condition and Results of Operations. |
The following discussion should be read in conjunction with the
Consolidated Financial Statements, the Notes thereto, and the
comparative summary of selected financial data appearing
elsewhere in this report. Discontinued operations are discussed
in Note 3 of the Notes to the Consolidated Financial
Statements in Item 8. The financial information in this
Management’s Discussion and Analysis of Financial Condition
and Results of Operations is based on results from continuing
operations.
In June 2009, the Financial Accounting Standards Board
(“FASB”) issued the FASB Accounting Standards
Codification and the Hierarchy of Generally Accepted Accounting
Principles, also known as FASB Accounting Standards Codification
(“ASC”)
105-10,
“Generally Accepted Accounting Principles”, (“ASC
105-10”).
ASC
105-10
establishes the FASB Accounting Standards Codification
(“Codification”) as the single source of authoritative
U.S. GAAP recognized by the FASB to be applied by
nongovernmental entities. Rules and interpretive releases of the
SEC under authority of federal securities laws are also sources
of authoritative GAAP for SEC registrants. The Codification
supersedes all existing non-SEC accounting and reporting
standards. All other non-grandfathered, non-SEC accounting
literature not included in the Codification will become
non-authoritative. Following the Codification, the FASB will not
issue new standards in the form of Statements, FASB Staff
Positions or Emerging Issues Task Force Abstracts. The FASB,
instead, will issue Accounting Standards Updates
(“ASU”), which will serve to update the Codification,
provide background information about the guidance and provide
the basis for conclusions on the changes to the Codification.
The FASB’s Codification project was not intended to change
GAAP, however it will change the way the guidance is organized
and presented. As a result, these changes will have a
significant impact on how companies reference GAAP in their
financial statements and in their accounting policies for
financial statements issued for interim and annual periods
ending after September 15, 2009. The Company implemented
the Codification in the third quarter 2009. Any technical
references contained in the accompanying financial statements
and notes to consolidated financial statements have been updated
to correspond to the new Codification topics, as appropriate.
New standards not yet codified have been referenced as issued
and will be updated when codified.
Overview
We are a fully integrated, self-administered, publicly-traded
REIT which owns, develops, acquires, manages and leases
community shopping centers and one enclosed regional mall in the
Midwestern, Southeastern and Mid-Atlantic regions of the United
States. At December 31, 2009, we owned interests in 88
shopping centers, comprised of 65 community centers, 21 power
centers, one single tenant retail property, and one enclosed
regional mall, totaling approximately 19.8 million square
feet of GLA. We or our joint ventures own approximately
15.3 million square feet of such GLA, with the remaining
portion owned by various anchor stores.
In the third quarter of 2009, the Company’s Board of
Trustees completed a review of financial and strategic
alternatives announced in the first quarter of 2009. The Company
believes it is best positioned going forward to optimize
shareholder value through a stand-alone business strategy
focused on the following initiatives:
| • | De-leverage the balance sheet and strengthen the Company’s financial position by utilizing a variety of measures including reducing debt through the sale of non-core assets, growth in shopping center operating income and other actions, where appropriate | |
| • | Increase real estate value by aggressively leasing vacant spaces and entering into new leases for occupied spaces when leases are about to expire | |
| • | Complete existing redevelopment projects and time future accretive redevelopments in a manner that allows completed projects to positively impact operating income while new projects are undertaken |
27
Table of Contents
| • | Conservatively acquire shopping centers under the appropriate economic conditions that have the potential to produce superior returns and geographic market diversification |
2009
Highlights include:
Significant
Transactions and De-leveraging Activities
In December 2009, the Company closed on a new $217 million
secured credit facility (the “Credit Facility”)
consisting of a $150 million secured revolving credit
facility and a $67 million amortizing secured term loan
facility. The terms of the Credit Facility provide that the
revolving credit facility may be increased by up to
$50 million at the Company’s request, dependent upon
there being one or more lenders willing to acquire the
additional commitment, for a total secured credit facility
commitment of $267 million. The secured revolving credit
facility matures in December 2012 and bears interest at LIBOR
plus 350 basis points with a 2% LIBOR floor. The amortizing
secured term loan facility also bears interest at LIBOR plus
350 basis points with a 2% LIBOR floor and requires a
$33 million payment by September 2010 and a final payment
of $34 million by June 2011. The new Credit Facility
amended and restated the Company’s former $250 million
unsecured credit facility which was comprised of a
$150 million unsecured revolving credit facility and
$100 million unsecured term loan facility.
Also in December 2009, the Company amended its secured revolving
credit facility for The Towne Center at Aquia, reducing the
facility from $40 million to $20 million. The
revolving credit facility securing The Town Center at Aquia
bears interest at LIBOR plus 350 basis points with a 2%
LIBOR floor and matures in December 2010, with two, one-year
extension options.
In September 2009, the Company successfully completed an equity
offering of 12.075 million common shares, which included
1.575 million shares purchased pursuant to an
over-allotment option granted to the underwriters. The offering
price was $8.50 per common share ($0.01 par value per
share) generating net proceeds of $96.2 million. The net
proceeds from the equity offering were used to pay down the
Company’s outstanding debt.
During the third quarter of 2009, the Company sold three
unencumbered net leased real estate assets for net proceeds of
approximately $27.4 million. The net proceeds from these
asset sales were used to pay down the Company’s outstanding
debt.
In August 2009, the Company sold Taylor Plaza, a stand-alone
Home Depot in Taylor, MI, to a third party for net proceeds of
$5.0 million. The Company recognized a gain on the sale of
Taylor Plaza of approximately $2.9 million. Income from
operations and the gain on the sale of Taylor Plaza are
classified in discontinued operations on the consolidated
statements of income and comprehensive income for all periods
presented.
In September 2009, the Company sold a 207,945 square foot
Wal-Mart at its Northwest Crossing shopping center in Knoxville,
Tennessee and a 207,445 square foot Wal-Mart at its Taylors
Square shopping center, in Greenville (Taylors), South Carolina.
The Company retained ownership of the remaining portion of both
shopping centers amounting to approximately 125,000 square
feet at Northwest Crossing and approximately 34,000 square
feet at Taylors Square. The two Wal-Mart sales to third parties
generated combined net proceeds of approximately
$22.4 million, and resulted in a net gain of approximately
$4.7 million.
During 2009, there was no significant acquisition activity.
Future acquisition activity will depend upon a number of
factors, including market conditions, the availability of
capital to the Company, and the prospects for creating value at
acquired properties.
Corporate
Governance
In 2009, the Company’s Board of Trustees made a number of
significant best practices corporate governance changes further
aligning the Company’s interests with those of its
shareholders. These changes included the expansion of the Board
with the addition of two outside trustees and the termination of
the Company’s Shareholders Rights Plan. The Board also
committed to declassify the Board of Trustees by seeking
shareholder approval to amend the Company’s declaration of
trust at the 2010 Annual Meeting of Shareholders. Furthermore,
the roles of Chairman of the Board and Chief Executive Officer
were separated with the election of a non-executive Chairman of
the Board.
28
Table of Contents
Leasing
During 2009, the Company opened 80 new stores for the year at an
average base rent of $12.60 per square foot, 15.9% above
portfolio average rent. The Company renewed 219 leases for the
year at rental rates 4.3% over prior rents paid.
The Company opened five anchor stores in 2009 at a combined
average base rent of $9.04 per square foot, a 9.9% increase over
portfolio average rents for anchor space. Additionally, we
renewed 18 anchor leases, at an average base rent of $7.52 per
square foot, achieving an increase of 5.4% over prior rental
rates. Overall portfolio average base rents for anchor tenants
increased to $8.22 per square foot in 2009 from $8.11 per square
foot in 2008.
In 2009, the Company opened 75 non-anchor stores at a combined
average base rent of $15.07 per square foot, a 6.4% decrease
over portfolio average rents for non-anchor space. Additionally,
we renewed 201 non-anchor leases, at an average base rent of
$15.11 per square foot, achieving an increase of 3.6% over prior
rental rates. Overall portfolio average base rents for
non-anchor tenants decreased to $16.10 per square foot in 2009
from $16.51 per square foot for 2008.
The Company’s core operating portfolio, which excludes
joint venture properties and properties under redevelopment, was
92.2% occupied at December 31, 2009, compared to 94.4% at
December 31, 2008. Overall portfolio occupancy, which
includes joint venture properties and properties under
redevelopment, was 90.3% at December 31, 2009, compared to
91.3% at December 31, 2008.
Redevelopment
In 2010, the Company plans to focus on completing those
redevelopment projects presently in progress. We and our joint
ventures have eight redevelopment projects currently in
progress, all with signed leases for the expansion or addition
of an anchor or one or more out-lot tenants. We estimate the
total project costs of the eight redevelopment projects in
progress to be $46.0 million. Four of the redevelopment
projects involve core operating properties included on our
balance sheet and are expected to cost approximately
$18.8 million of which $11.1 million has been spent as
of December 31, 2009. For the four redevelopment projects
at properties held by joint ventures, we estimate off-balance
sheet project costs of approximately $27.2 million (our
share is estimated to be $7.9 million) of which
$17.4 million has been spent as of December 31, 2009
(our share is $5.1 million).
While we anticipate redevelopment projects will increase rental
revenue upon completion, a majority of the projects has required
taking some retail space off-line to accommodate the
new/expanded tenancies. These measures have resulted in the loss
of minimum rents and recoveries from tenants for those spaces
removed from our pool of leasable space. The process of
value-added redevelopment resulted in a short-term temporary
reduction of net operating income and FFO. The Company expects
that revenues related to our share of these redevelopment
projects will be increased by approximately $3.4 million on
annualized basis by the end of 2010.
Development
The Company is taking a conservative approach to the development
of new shopping centers given current market conditions by
curtailing further investment until leasing, construction
financing and partnership requirements have been met. At
December 31, 2009, the Company had four projects in
development and pre-development. As of December 31, 2009,
we and one of our joint ventures have spent $98.1 million
on the four developments excluding certain land parcels we own
through taxable REIT subsidiaries:
|
Costs Incurred
|
||||
|
To Date
|
||||
|
Development Project/Location
|
(In millions) | |||
|
Hartland Towne Square — Hartland Twp., MI
|
$ | 25.6 | ||
|
The Town Center at Aquia — Stafford, VA
|
38.2 | |||
|
Gateway Commons — Lakeland, FL
|
20.3 | |||
|
Parkway Shops — Jacksonville, FL
|
14.0 | |||
|
Total
|
$ | 98.1 | ||
29
Table of Contents
We own 20% of the joint venture that is developing Hartland
Towne Square. The Company is currently providing the mezzanine
financing for the project, the balance of which was
$11.8 million at December 31, 2009, with a total
commitment of up to $58.0 million. As of December 31,
2009, the Company was also guarantor on a loan for
$8.5 million to the joint venture. The Company intends to
seek joint venture partners for The Town Center at Aquia,
Gateway Commons, and Parkway Shops. It is the Company’s
policy to only start vertical construction on new development
projects after the project has received entitlements,
significant anchor commitments, construction financing and joint
venture partner commitments, if appropriate. We are active in
the entitlement and pre-leasing phases at the development
projects listed above. The Company does not expect to secure
financing and to identify joint venture partners until the
entitlement and pre-leasing phases are complete.
Critical
Accounting Policies
Management’s Discussion and Analysis of Financial Condition
and Results of Operations is based upon our Consolidated
Financial Statements, which have been prepared in accordance
with accounting principles generally accepted in the United
States of America (“GAAP”). The preparation of these
Financial Statements requires management to make estimates and
assumptions that affect the reported amounts of assets,
liabilities, revenue and expenses, and related disclosure of
contingent assets and liabilities. Management bases its
estimates on historical experience and on various assumptions
that are believed to be reasonable under the circumstances, the
results of which form the basis for making judgments about the
carrying values of assets and liabilities that are not readily
apparent from other sources. Senior management has discussed the
development, selection and disclosure of these estimates with
the Audit Committee of our Board of Trustees. Actual results
could materially differ from these estimates.
Critical accounting policies are those that are both significant
to the overall presentation of our financial condition and
results of operations and require management to make difficult,
complex or subjective judgments. For example, significant
estimates and assumptions have been made with respect to useful
lives of assets, recovery ratios, capitalization of development
and leasing costs, recoverable amounts of receivables and
initial valuations and related amortization periods of deferred
costs and intangibles, particularly with respect to property
acquisitions. Our critical accounting policies have not
materially changed during the year ended December 31, 2009.
The following discussion relates to what we believe to be our
most critical accounting policies that require our most
subjective or complex judgment.
We provide for bad debt expense based upon the allowance method
of accounting. We continuously monitor the collectibility of our
accounts receivable (billed and unbilled, including
straight-line) from specific tenants, analyze historical bad
debts, customer credit worthiness, current economic trends and
changes in tenant payment terms when evaluating the adequacy of
the allowance for bad debts. When tenants are in bankruptcy, we
make estimates of the expected recovery of pre-petition and
post-petition claims. The period to resolve these claims can
exceed one year. Management believes the allowance is adequate
to absorb currently estimated bad debts. However, if we
experience bad debts in excess of the allowance we have
established, our operating income would be reduced.
Accounting
for the Impairment of Long-Lived Assets
The Company periodically reviews whether events and
circumstances subsequent to the acquisition or development of
long-lived assets, or intangible assets subject to amortization,
have occurred that indicate the remaining estimated useful lives
of those assets may warrant revision or that the remaining
balance of those assets may not be recoverable. If events and
circumstances, including but not limited to, declines in
occupancy and rental rates, tenant sales, net operating income
and geographic location of our shopping center properties,
indicate that the long-lived assets should be reviewed for
possible impairment, we prepare projections to assess whether
future cash flows, on a non-discounted basis, for the related
assets are likely to exceed the recorded carrying amount of
those assets to determine if an impairment of the carrying
amount is appropriate. The cash flow projections consider
factors common in the valuation of real estate, such as expected
future operating income, trends in occupancy, rental rates and
recovery ratios, as well as capitalization rates, leasing
demands and competition in the marketplace.
30
Table of Contents
At December 31, 2009, the Company prepared undiscounted
cash flow projections for eight shopping center properties that
met management’s criteria for possible impairment testing.
In all instances, the non-discounted cash flows exceeded the
recorded carrying amounts of those individual properties. The
least excess of non-discounted cash flow over recorded carrying
value was 109% of the carrying value. Therefore none of the
properties met the standards for impairment of long-lived assets.
Management is required to make subjective assessments as to
whether there are impairments in value of its long-lived assets
or intangible assets. Subsequent changes in estimated
undiscounted cash flows arising from changes in our assumptions
could affect the determination of whether impairment exists and
whether the effects could have a material impact on the
Company’s net income. To the extent impairment has
occurred, the loss will be measured as the excess of the
carrying amount of the property over the fair value of the
property as determined by valuation techniques appropriate in
the circumstances. The Company does not believe that the value
of any long-lived asset or intangible asset was impaired at
December 31, 2009.
In determining the estimated useful lives of intangible assets
with finite lives, we consider the nature, life cycle position,
and historical and expected future operating cash flows of each
asset, as well as our commitment to support these assets through
continued investment.
In 2008, the Company recognized a $5.1 million loss on the
impairment of its Ridgeview Crossing shopping center in Elkin,
North Carolina. The non-cash impairment charge is included in
“restructuring, impairment of real estate assets, and other
items” on the consolidated statements of income and
comprehensive income. There were no impairment charges for the
years ended December 31, 2009 and 2007. See Note 16 of
the Notes to the Consolidated Financial Statements for further
information.
Revenue
Recognition
Shopping center space is generally leased to retail tenants
under leases which are accounted for as operating leases. We
recognize minimum rents using the straight-line method over the
terms of the leases commencing when the tenant takes possession
of the space. Certain of the leases also provide for additional
revenue based on contingent percentage income which is recorded
on an accrual basis once the specified target that triggers this
type of income is achieved. The leases also typically provide
for recoveries from tenants of common area maintenance, real
estate taxes and other operating expenses. These recoveries are
recognized as revenue in the period the applicable costs are
incurred. Revenues from fees and management income are
recognized in the period in which the services have been
provided and the earnings process is complete. Lease termination
income is recognized when a lease termination agreement is
executed by the parties and the tenant vacates the space.
Share-Based
Compensation
All share-based payments to employees, including grants of
employee stock options, are recognized in the financial
statements as compensation expense based upon the fair value on
the grant date. We determine fair value of such awards using the
Black-Scholes option pricing model. The Black-Scholes option
pricing model incorporates certain assumptions such as risk-free
interest rate, expected volatility, expected dividend yield and
expected life of options, in order to arrive at a fair value
estimate. Expected volatilities are based on the historical
volatility of our common shares. Expected lives of options are
based on the average expected holding period of our outstanding
options and their remaining terms. The risk-free interest rate
is based upon quoted market yields for United States treasury
debt securities. The expected dividend yield is based on our
historical dividend rates. We believe the assumptions selected
by management are reasonable; however, significant changes could
materially impact the results of the calculation of fair value.
Off
Balance Sheet Arrangements
We have ten off balance sheet investments in joint ventures in
which we own 50% or less of the total ownership interests. We
provide leasing, development and property management services to
the ten joint ventures. These investments are accounted for
under the equity method. Our level of control of these joint
ventures is such that we are not required to include them as
consolidated subsidiaries. See Note 7 of the Notes to the
Consolidated Financial Statements in Item 8.
31
Table of Contents
Results
of Operations
Comparison
of the Year Ended December 31, 2009 to the Year Ended
December 31, 2008
For purposes of comparison between the years ended
December 31, 2009 and 2008, “Same Center” refers
to the shopping center properties owned by consolidated entities
for the period from January 1, 2008 through
December 31, 2009. Included in “Same Center” in
2009 is the impact of the sales of two net leased Wal-Marts
during the year.
For purposes of comparison between the years ended
December 31, 2009 and 2008, “Redevelopments”
refers to any shopping center properties under redevelopment
during the period from January 1, 2008 through
December 31, 2009.
In August 2008, we sold the Plaza at Delray shopping center to a
joint venture in which we have a 20% ownership interest. This
sale to our joint venture is referred to as the
“Disposition” in the following discussion.
Revenues
Total revenues decreased $10.5 million, or 7.8%, to
$124.1 million in 2009, as compared to $134.6 million
in 2008. The decrease in total revenues was primarily the result
of a $7.0 million decrease in minimum rents and a
$1.6 million decrease in recoveries from tenants, and a
$1.6 million decrease in fees and management income.
Minimum rents decreased $7.0 million, or 7.7%, to
$83.3 million in 2009 as follows:
| Increase (Decrease) | ||||||||
|
Amount
|
||||||||
| (In millions) | Percentage | |||||||
|
Same Center
|
$ | (3.0 | ) | (3.3 | )% | |||
|
Redevelopments
|
(1.1 | ) | (1.2 | )% | ||||
|
Disposition
|
(2.9 | ) | (3.2 | )% | ||||
| $ | (7.0 | ) | (7.7 | )% | ||||
The decrease in Same Center minimum rents from the prior year
was primarily attributable to approximately $2.2 million in
decreases related to tenant vacancies, approximately
$1.3 million in decreases related to tenant bankruptcies,
including Circuit City and Linens ’n Things, rent relief
and other concessions granted of $0.4 million, and the
impact of the sale of the two net leased Wal-Marts of
$0.6 million, all of which were partially offset by an
increase of $1.5 million due to increased rental rates on
new or renewal leases.
Bankruptcies impact our allowance for doubtful accounts and the
related bad debt expense at the time the tenant files for
bankruptcy protection. When tenants are in bankruptcy, the
Company makes estimates of the expected recovery of pre-petition
and post-petition claims and adjusts the allowance for doubtful
accounts to the appropriate estimated amount. For the year ended
December 31, 2009, there were no material adjustments made
to the allowance for doubtful accounts due to bankruptcies.
Recoveries from tenants decreased $1.6 million, or 4.6%, to
$32.7 million in 2009 from $34.3 million in 2008 as
follows:
| Increase (Decrease) | ||||||||
|
Amount
|
||||||||
| (In millions) | Percentage | |||||||
|
Same Center
|
$ | (0.9 | ) | (2.5 | )% | |||
|
Redevelopments
|
0.3 | 0.9 | % | |||||
|
Disposition
|
(1.0 | ) | (3.0 | )% | ||||
| $ | (1.6 | ) | (4.6 | )% | ||||
The decrease in recoveries from tenants for the Same Center
properties was due primarily to the bankruptcy of Circuit City
that closed a store at one of the Company’s shopping
centers in 2008, as well as the impact of the sales
32
Table of Contents
of two net leased Wal-Marts in 2009. The Company’s overall
recovery ratio was 95.7% in 2009 compared to 97.0% in 2008.
Recoverable operating expenses, which includes real estate tax
expense, are a component of our recovery ratio. These expenses
decreased $1.1 million, or 3.4%, to $34.2 million in
2009, compared to $35.3 million in 2008 as follows:
| Increase (Decrease) | ||||||||
|
Amount
|
||||||||
| (In millions) | Percentage | |||||||
|
Same Center
|
$ | (0.3 | ) | (1.1 | )% | |||
|
Redevelopments
|
0.5 | 1.4 | % | |||||
|
Disposition
|
(1.3 | ) | (3.7 | )% | ||||
| $ | (1.1 | ) | (3.4 | )% | ||||
The decrease in Same Center recoverable operating expenses is
mainly attributable to higher snow removal costs in 2008.
Fees and management income decreased $1.6 million, or
24.2%, to $4.9 million in 2009 as compared to
$6.5 million in 2008. The decrease was mainly attributable
to a net decrease in development related fees of approximately
$1.0 million. The decrease in development fees was mainly
due to fees earned in 2008 relating to the development of the
Hartland Towne Square center by our Ramco RM Hartland SC LLC
joint venture.
Other income decreased $0.5 million to $2.5 million in
2009, compared to $3.0 million in 2008. Decreases in tax
increment financing of $0.5 million and lease terminations
of $0.2 million were offset by an increase in interest
income of $0.5 million. The decrease in lease termination
income was attributable mostly to a lower number of lease
terminations in 2009 as compared to the prior year. Tax
increment financing revenue related to the Company’s River
City Marketplace shopping center in Jacksonville, Florida
decreased as bond payments commenced in 2009. Offsetting the
decreases, interest income increased primarily on advances to
the Ramco RM Hartland SC LLC joint venture relating to the
development of Hartland Towne Square.
Expenses
Total expenses decreased $11.7 million, or 9.0%, to
$117.7 million in 2009 as compared to $129.4 million
in 2008. The decrease was primarily the result of decreases in
interest expense of $5.4 million, general and
administrative expenses of $1.7 million, restructuring,
impairment of real estate assets and other items of
$1.4 million, recoverable operating expenses of
$1.1 million, and depreciation and amortization of
$1.1 million.
Depreciation and amortization expense decreased
$1.1 million, or 3.6%, in 2009 as follows:
| Increase (Decrease) | ||||||||
|
Amount
|
||||||||
| (In millions) | Percentage | |||||||
|
Same Center
|
$ | (0.2 | ) | (0.9 | )% | |||
|
Disposition
|
(0.9 | ) | (2.7 | )% | ||||
| $ | (1.1 | ) | (3.6 | )% | ||||
The $0.2 million decrease in Same Center depreciation and
amortization expense was due primarily to the disposal of assets
as a result of the bankruptcies of Circuit City and Linens
’n Things that closed stores at two of the Company’s
core operating properties in 2008, partially offset by an
increase due to redevelopment projects completed during 2009.
General and administrative expenses was $13.4 million in
2009, compared to $15.1 million in 2008, a decrease of
$1.7 million, or 11.1%. The decrease in general and
administrative expenses was primarily attributable to a decrease
in salary-related expenses of approximately $1.9 million,
mainly the result of a reduction in staff in 2009. A decrease of
$0.6 million is due to positive year-end business tax
adjustments in 2009. Additionally, the decrease is
33
Table of Contents
attributable to a $0.4 million arbitration award in 2008 to
a third-party relating to the alleged breach by the Company of a
property management agreement. These decreases in general and
administrative expenses were offset by a decrease of
approximately $1.6 million in the portion of costs charged
to development and redevelopment projects and capitalized in
2009, compared to 2008.
Restructuring, impairment of real estate assets, and other items
decreased $1.4 million, to $4.4 million in 2009,
compared to $5.8 million in 2008. Restructuring expense of
$1.6 million in 2009 included severance and other
benefit-related costs primarily related to the previously
announced resignation of the Company’s former Chief
Financial Officer in November 2009, as well as other employees
who were terminated during the year. No similar costs were
incurred in 2008. In 2009, the Company’s Board completed
its review of financial and strategic alternatives. Also during
2009, the Company resolved a proxy contest by adding two new
outside trustees to the Board. Costs incurred for the strategic
review and proxy contest in 2009 were $1.6 million with no
similar costs in 2008. As part of a continuous review of future
growth opportunities, in the fourth quarter of 2009, the Company
determined that there were better investment alternatives than
continuing to pursue the pre-development of the Northpointe Town
Center in Jackson, Michigan. As such, the Company wrote off its
land option payments, third-party due diligence expenses and
capitalized general and administrative costs for this project,
resulting in a non-recurring charge of $1.2 million. The
Company abandoned various projects totaling $0.7 million in
2008. In 2008, the Company recognized a non-recurring impairment
charge of $5.1 million relating to its Ridgeview Crossing
shopping center in Elkin, North Carolina. There were no
impairment charges on real estate assets in 2009.
Interest expense decreased $5.4 million, or 14.9%, to
$31.1 million in 2009, compared to $36.5 million in
2008. The summary below identifies the components of the net
decrease:
|
Increase
|
||||||||||||
| 2009 | 2008 | (Decrease) | ||||||||||
|
Average total loan balance
|
$ | 629,246 | $ | 677,497 | $ | (48,251 | ) | |||||
|
Average rate
|
5.1 | % | 5.6 | % | (0.5 | )% | ||||||
|
Total interest on debt
|
$ | 32,030 | $ | 38,219 | $ | (6,189 | ) | |||||
|
Amortization of loan fees
|
875 | 971 | (96 | ) | ||||||||
|
Interest on capital lease obligation
|
410 | 425 | (15 | ) | ||||||||
|
Capitalized interest and other
|
(2,227 | ) | (3,097 | ) | 870 | |||||||
| $ | 31,088 | $ | 36,518 | $ | (5,430 | ) | ||||||
Other
Gain on sale of real estate assets decreased $14.6 million,
to $5.0 million in 2009, as compared to $19.6 million
in 2008. The decrease in the gain on sale of real estate assets
is due primarily to the recognition of the gains on the sale of
the Mission Bay Plaza shopping center to our Ramco/Lion Venture
LP joint venture in the first quarter of 2008 and the sale of
the Plaza at Delray shopping center to a joint venture with an
investor advised by Heitman LLC in the third quarter of 2008. In
the third quarter 2009, the Company sold two net leased
Wal-Marts at the Northwest Crossing and Taylors Square shopping
centers.
Earnings from unconsolidated entities represent our
proportionate share of the earnings of various joint ventures in
which we have an ownership interest. Earnings from
unconsolidated entities was $1.3 million in 2009, compared
to $2.5 million in 2008, a decrease of $1.2 million.
In 2009, earnings from unconsolidated entities decreased
approximately $0.7 million from the Ramco 450 Venture LLC
joint venture and approximately $0.2 million from the
Ramco/Lion Venture LP joint venture. The decrease was primarily
the result of the bankruptcy of Linens ’n Things and
Circuit City that closed stores in the second half of 2008 at
joint venture properties in which the Company holds an ownership
interest.
Discontinued operations increased $3.0 million in 2009 due
to the gain on the sale of Taylor Plaza of $2.9 million in
2009 and the loss on the sale of Highland Square of
$0.5 million in 2008.
34
Table of Contents
Noncontrolling interest in subsidiaries represents the income
attributable to the portion of the Operating Partnership not
owned by the Company. Noncontrolling interest in subsidiaries in
2009 decreased $1.7 million, to $2.2 million, compared
to $3.9 million in 2008. The decrease is primarily
attributable to the noncontrolling interest’s proportionate
share of the lower gain on the sale of real estate assets in
2009 compared to 2008.
Comparison
of the Year Ended December 31, 2008 to the Year Ended
December 31, 2007
For purposes of comparison between the years ended
December 31, 2008 and 2007, “Same Center” refers
to the shopping center properties owned by consolidated entities
for the period from January 1, 2007 through
December 31, 2008.
For purposes of comparison between the years ended
December 31, 2008 and 2007, “Redevelopments”
refers to any shopping center properties under redevelopment
during the period from January 1, 2007 through
December 31, 2008.
In April 2007 we acquired an additional 80% ownership interest
in Ramco Jacksonville LLC, bringing our total ownership interest
to 100%, resulting in the consolidation of such entity in our
financial statements. This property is referred to as the
“Acquisition” in the following discussion.
In March 2007, we sold Chester Springs Shopping Center to Ramco
450 Venture LLC, a joint venture with an investor advised by
Heitman LLC. In June 2007, we sold two shopping centers, Shoppes
of Lakeland and Kissimmee West, to Ramco HHF KL LLC, a newly
formed joint venture. In July 2007, we sold Paulding Pavilion to
Ramco 191 LLC, our joint venture with Heitman Value Partners
Investment LLC. In late December 2007, we sold Mission Bay to
Ramco/Lion Venture LP. In August 2008, we sold the Plaza at
Delray shopping center to Ramco 450 Venture LLC. These sales to
joint ventures in which we have an ownership interest are
collectively referred to as the “Dispositions” in the
following discussion.
Revenues
Total revenues decreased $10.6 million, or 7.3%, to
$134.6 million in 2008, as compared to $145.2 million
in 2007. The decrease in total revenues was primarily the result
of a $5.7 million decrease in minimum rents and a
$3.0 million decrease in recoveries from tenants.
Minimum rents decreased $5.7 million, or 5.9%, to
$90.3 million in 2008 as follows:
| Increase (Decrease) | ||||||||
|
Amount
|
||||||||
| (In millions) | Percentage | |||||||
|
Same Center
|
$ | 0.2 | 0.2 | % | ||||
|
Acquisition
|
3.4 | 3.5 | % | |||||
|
Dispositions
|
(9.3 | ) | (9.6 | )% | ||||
| $ | (5.7 | ) | (5.9 | )% | ||||
The increase in Same Center minimum rents was principally
attributable to two major tenants signing new leases at two of
our properties in 2008, partially offset by the bankruptcy of
Linens ’n Things in 2008 that closed at one of our centers,
and an adjustment to straight-line accounts receivable rent in
2007.
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Table of Contents
Recoveries from tenants decreased $3.0 million, or 8.1%, to
$34.3 million in 2008 as follows:
| Increase (Decrease) | ||||||||
|
Amount
|
||||||||
| (In millions) | Percentage | |||||||
|
Same Center
|
$ | 0.5 | 1.3 | % | ||||
|
Acquisition
|
1.0 | 2.8 | % | |||||
|
Redevelopments
|
(0.8 | ) | (2.3 | )% | ||||
|
Dispositions
|
(3.7 | ) | (9.9 | )% | ||||
| $ | (3.0 | ) | (8.1 | )% | ||||
The increase in recoveries from tenants for the Same Center
properties was due primarily to expanding our electricity resale
program in certain of our properties, partially offset by the
impact of redevelopment activity. Our overall recovery ratio was
97.0% in 2008 compared to 98.1% in 2007.
Recoverable operating expenses, which includes real estate tax
expense, are a component of our recovery ratio. These expenses
decreased $2.7 million, or 7.1%, to $35.3 million in
2008 as follows:
| Increase (Decrease) | ||||||||
|
Amount
|
||||||||
| (In millions) | Percentage | |||||||
|
Same Center
|
$ | 0.5 | 1.5 | % | ||||
|
Acquisition
|
0.9 | 2.4 | % | |||||
|
Redevelopments
|
(0.8 | ) | (2.0 | )% | ||||
|
Dispositions
|
(3.3 | ) | (9.0 | )% | ||||
| $ | (2.7 | ) | (7.1 | )% | ||||
The increase in Same Center recoverable operating expenses is
mainly attributable to higher electricity costs from the
expansion of our electricity resale program.
Fees and management income decreased $0.3 million, or 5.1%,
to $6.5 million in 2008 as compared to $6.8 million in
2007. The decrease was primarily attributable to a decrease in
acquisition fees of approximately $2.1 million, partially
offset by an increase of $0.9 million in management fees
and an increase in leasing fees of approximately
$0.5 million. The acquisition fees earned in 2007 related
to the purchase of 13 shopping centers by joint ventures in
which we have an ownership interest. The increase in management
fees and leasing fees in 2008 was mainly due to managing the 13
shopping centers that were purchased in the prior year by our
joint venture partners. Other fees and management income
increased $0.2 million when compared to 2007.
Other income decreased $1.5 million to $3.0 million in
2008, compared to $4.5 million in 2007. The decrease was
primarily due to a $1.1 million decrease in lease
termination income, from $1.9 million in 2007 to
$0.8 million in 2008, attributable mostly to income earned
in 2007 on lease terminations from redevelopment properties.
Additionally, interest income decreased $0.7 million in
2008. In 2007, Ramco-Gershenson Properties L.P. (the
“Operating Partnership”) earned approximately
$0.5 million of interest income on advances to Ramco
Jacksonville LLC related to the River City Marketplace
development when it was a joint venture, with no similar income
earned during 2008. Offsetting the decreases was an increase of
approximately $0.7 in tax increment financing revenue in 2008,
which represents the Company’s share of a surplus earned at
our River City Marketplace development. No tax increment
financing income was earned in 2007.
Expenses
Total expenses decreased $5.7 million, or 4.2%, to
$129.4 million in 2008 as compared to $135.1 million
in 2007. The decrease was mainly driven by decreases in interest
expense of $6.1 million, depreciation and amortization of
$4.3 million, and recoverable operating expenses of
$2.7 million, partially offset by a $5.6 million loss
on restructuring charges, impairment of real estate assets and
other items and a $1.0 million increase in general and
administrative expenses.
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Table of Contents
Depreciation and amortization expense decreased
$4.3 million, or 12.0%, in 2008 as follows:
| Increase (Decrease) | ||||||||
|
Amount
|
||||||||
| (In millions) | Percentage | |||||||
|
Same Center
|
$ | 1.3 | 3.6 | % | ||||
|
Acquisition
|
1.4 | 3.9 | % | |||||
|
Redevelopments
|
(4.0 | ) | (11.0 | )% | ||||
|
Dispositions
|
(3.0 | ) | (8.5 | )% | ||||
| $ | (4.3 | ) | (12.0 | )% | ||||
Offsetting the decrease in depreciation and amortization
expense, same centers increased $1.3 million due to the
write off of assets for the bankruptcy of Linens ’n Things
and Circuit City. The $4.0 million decrease in
Redevelopments was directly related to a center we demolished in
late December 2007 in anticipation of redevelopment.
General and administrative expense was $15.1 million in
2008, as compared to $14.1 million in 2007, an increase of
$1.0 million, or 7.2%. The increase in general and
administrative expenses was primarily attributable to an
increase in salary-related expenses of approximately
$2.0 million, mainly the result of additional hiring
following the expansion of our infra-structure related to
increased joint venture activity and asset management. The
increase in general and administrative expenses was also due to
an additional $0.4 million arbitration award in 2008 to a
third-party relating to the alleged breach by the Company of a
property management agreement. These increases in general and
administrative expenses were offset by a decrease primarily due
to an increase of approximately $1.3 million in the portion
of costs charged to development and redevelopment projects and
capitalized in 2008, compared to 2007. General and
administrative expenses were also impacted by a decrease in
income tax expense of approximately $0.2 million in 2008,
mainly the result of a Michigan Business Tax adjustment.
Restructuring, impairment of real estate assets, and other items
increased $5.6 million, to $5.8 million in 2008,
compared to $0.2 million in 2007. In the fourth quarter of
2008, the Company recognized a non-recurring impairment charge
of $5.1 million relating to the Company’s Ridgeview
Crossing shopping center in Elkin, North Carolina. The
Company also abandoned various projects totaling
$0.7 million in 2008.
Interest expense decreased $6.1 million, or 14.3%, to
$36.5 million in 2008 compared to $42.6 million in
2007. The summary below identifies the components of the net
decrease:
|
Increase
|
||||||||||||
| 2008 | 2007 | (Decrease) | ||||||||||
|
Average total loan balance
|
$ | 677,497 | $ | 692,817 | $ | (15,320 | ) | |||||
|
Average rate
|
5.6 | % | 6.2 | % | (0.6 | )% | ||||||
|
Total interest on debt
|
$ | 38,219 | $ | 43,244 | $ | (5,025 | ) | |||||
|
Amortization of loan fees
|
971 | 1,166 | (195 | ) | ||||||||
|
Interest on capital lease
|
||||||||||||
|
obligation
|
425 | 439 | (14 | ) | ||||||||
|
Capitalized interest and other
|
(3,097 | ) | (2,240 | ) | (857 | ) | ||||||
| $ | 36,518 | $ | 42,609 | $ | (6,091 | ) | ||||||
Other
Gain on sale of real estate assets decreased $13.0 million,
to $19.6 million in 2008, as compared to $32.6 million
in 2007. In 2008, the Company sold the Plaza at Delray shopping
center to a joint venture in which we have an ownership
interest, sold land parcels at Hartland Towne Square, and
recognized the deferred gain of $11.7 million on the sale
of Mission Bay Plaza to a joint venture in which it has a 30%
ownership interest. In 2007, the Company sold Chester Springs
Shopping Center to our Ramco 450 Venture LLC joint venture, sold
the Shoppes of Lakeland and Kissimmee West to our Ramco HHF KL
LLC joint venture, and sold land parcels at River City
Marketplace.
37
Table of Contents
Earnings from unconsolidated entities represents our
proportionate share of the earnings of various joint ventures in
which we have an ownership interest. Earnings from
unconsolidated entities were $2.5 million in both 2008 and
2007. During 2008, earnings from unconsolidated entities
increased by approximately $0.4 million from the Ramco 450
Venture LLC, Ramco 191 LLC, Ramco HHF KL LLC, and Ramco HHF NP
LLC joint ventures, offset by a $0.4 million decrease in
earnings from the Ramco/Lion Venture LP joint venture that
resulted primarily from the bankruptcy of a certain national
retailer that closed stores at four of the joint venture
properties in which the Company holds an ownership interest. In
April 2007, we purchased the remaining 80% ownership interest in
Ramco Jacksonville LLC (“Jacksonville”) and we have
consolidated Jacksonville in our results of operations since the
date of acquisition.
Discontinued operations decreased $0.6 million in 2008 due
to the loss on the sale of Highland Square of $0.5 million.
Noncontrolling interest in subsidiaries represents the income
attributable to the portion of the Operating Partnership not
owned by the Company. Noncontrolling interest in subsidiaries in
2008 decreased $3.4 million, to $3.9 million, as
compared to $7.3 million in 2007. The decrease is primarily
attributable to the lower gain on the sale of real estate assets.
Liquidity
and Capital Resources
The principal uses of our liquidity and capital resources are
for operations, developments, redevelopments, including
expansion and renovation programs, selective acquisitions, and
debt repayment, as well as dividend payments in accordance with
REIT requirements. We anticipate that the combination of cash on
hand and cash retained from operations, the availability under
our Credit Facility, additional financings, equity offerings,
and the sale of existing properties will satisfy our expected
working capital requirements through at least the next
12 months and allow us to achieve continued growth.
Although we believe that the combination of factors discussed
above will provide sufficient liquidity, no such assurance can
be given.
As part of our business plan to de-leverage the Company and
strengthen our financial position, on September 16, 2009,
the Company issued 12.075 million common shares of
beneficial interest, at $8.50 per share. The Company received
net proceeds from the offering of approximately
$96.2 million after deducting underwriting discounts,
commissions and transaction expenses payable by the Company. The
net proceeds from the offering were used to reduce outstanding
borrowings.
As opportunities arise and market conditions permit, we will
continue to pursue the strategy of selling mature properties or
non-core assets which have less potential for growth or are not
viable for redevelopment.. Our ability to obtain acceptable
selling prices and satisfactory terms and financing will impact
the timing of future sales. The Company expects any net proceeds
from the sale of properties would be used to reduce outstanding
debt. The Company used approximately $23.5 million in net
proceeds from real estate asset sales in the third quarter of
2009 to pay down outstanding debt, and expects any net proceeds
from the future sale of properties to be used to further reduce
debt.
Development and redevelopment activity in 2009 was financed
generally through cash provided from operating activities, asset
sales, mortgage refinancings, and an increase in borrowings
under the Company’s Credit Facility.
Total debt outstanding was approximately $552.6 million at
December 31, 2009, as compared to $662.6 million at
December 31, 2008.
The following is a summary of our cash flow activities (dollars
in thousands):
| Year Ended December 31, | ||||||||||||
| 2009 | 2008 | 2007 | ||||||||||
|
Cash provided by operating activities
|
$ | 48,064 | $ | 26,998 | $ | 85,988 | ||||||
|
Cash (used in) provided by investing activities
|
(3,445 | ) | 33,602 | 23,182 | ||||||||
|
Cash used in financing activities
|
(41,114 | ) | (70,282 | ) | (105,743 | ) | ||||||
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Table of Contents
For the year ended December 31, 2009, we generated
$48.1 million in cash flows from operating activities, as
compared to $27.0 million in 2008. Cash flows from
operating activities were higher in 2009 mainly due to lower net
cash outflows for accounts payable and accrued expenses and
higher net cash inflows for accounts receivable. In 2009,
investing activities used $3.4 million of cash flows, as
compared to $33.6 million provided by investing activities
in 2008. Cash flows from investing activities were lower in
2009, due to significantly lower cash received from sales of
real estate assets, lower investments in real estate and the
repayment of a note receivable from a joint venture in 2008. In
2009, cash flows used in financing activities were
$41.1 million, as compared to $70.3 million in 2008.
In September 2009, the Company raised net proceeds of
$96.2 million in an equity offering and used the proceeds
to pay down outstanding debt. As a result, along with the
paydown of debt from net proceeds received from real estate
asset sales in 2009, the Company had higher net paydowns of
mortgages and notes payable than in the prior year.
Additionally, in 2009, the Company had significantly lower
distributions to shareholders and operating partnership unit
holders, as compared to 2008.
Dividends
Under the Code, as a REIT we must distribute annually to our
shareholders at least 90% of our REIT taxable income, excluding
net capital gain. Distributions paid are at the discretion of
our Board of Trustees and depend on our actual net income
available to common shareholders, cash flow, financial
condition, capital requirements, restrictions in financing
arrangements, the annual distribution requirements under REIT
provisions of the Code and such other factors as our Board of
Trustees deems relevant.
We declared a quarterly cash dividend distribution of $0.1633
per common share paid to shareholders of record on
December 20, 2009, as compared to the dividend paid in the
same quarter of 2008 of $0.2313 per share. The quarterly
dividend was reduced to $0.2313 per common share in the fourth
quarter of 2008, from $0.4625 per common share in each of the
first three quarters of 2008. To strengthen the Company’s
liquidity position, the Board of Trustees elected to keep the
aggregate distribution dollars relatively constant when
additional common shares were issued in September 2009.
Therefore, the distribution per common share was reduced in
proportion to the new common shares issued, to $0.1633 per
common share in the third quarter of 2009. The cash we estimate
to retain annually from the reduced dividend as compared to the
first three quarters of 2008 is approximately $17.7 million
and will be used to fund our future capital requirements. Our
dividend policy has not changed in that we expect to continue
making distributions to shareholders of at least 90% of our REIT
taxable income, excluding net capital gain, in order to maintain
qualification as a REIT. We satisfied the REIT requirement with
distributed common and preferred share cash dividends of
$18.7 million in 2009, $29.9 million in 2008 and
$36.4 million in 2007.
Distributions paid by the Company are funded from cash flows
from operating activities. To the extent that cash flows from
operating activities were insufficient to pay total
distributions for any period, alternative funding sources were
used as shown in the following table. Examples of alternative
funding sources may include proceeds from sales of real estate
assets and bank borrowings. Although the Company may use
alternative sources of cash to fund distributions in a given
period, we expect that distribution requirements for an entire
year will be met with cash flows from operating activities. The
following table presents the Company’s total distributions
compared to cash
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Table of Contents
provided by operating activities, as well as any alternative
sources of funding for distributions used if a deficiency
existed for a given period.
| Year Ended December 31, | ||||||||||||
| 2009 | 2008 | 2007 | ||||||||||
|
Cash provided by operating activities
|
$ | 48,064 | $ | 26,998 | $ | 85,988 | ||||||
|
Cash distributions to common shareholders
|
(17,974 | ) | (34,338 | ) | (32,156 | ) | ||||||
|
Cash distributions to operating partnership unit holders
|
(2,503 | ) | (6,059 | ) | (5,360 | ) | ||||||
|
Distributions to noncontrolling partners
|
(54 | ) | (53 | ) | (121 | ) | ||||||
|
Total distributions
|
(20,531 | ) | (40,450 | ) | (37,637 | ) | ||||||
|
Surplus (deficiency)
|
$ | 27,533 | $ | (13,452 | ) | $ | 48,351 | |||||
|
Alternative sources of funding for distributions:
|
||||||||||||
|
Proceeds from sales of real estate assets
|
n/a | $ | 74,269 | n/a | ||||||||
|
Total sources of alternative funding for distributions
|
n/a | $ | 74,269 | n/a | ||||||||
n/a — Not applicable
Debt
In December 2009, the Company closed on a new $217 million
secured credit facility consisting of a $150 million
secured revolving credit facility and a $67 million
amortizing secured term loan facility. The terms of the Credit
Facility provide that the revolving credit facility may be
increased by up to $50 million at the Company’s
request, dependent upon there being one or more lenders willing
to acquire the additional commitment, for a total secured credit
facility commitment of $267 million. The secured revolving
credit facility matures in December 2012 and bears interest at
LIBOR plus 350 basis points with a 2% LIBOR floor. The
amortizing secured term loan facility also bears interest at
LIBOR plus 350 basis points with a 2% LIBOR floor and
requires a $33 million payment by September 2010 and a
final payment of $34 million by June 2011. The Credit
Facility is secured by mortgages on various properties that have
an approximate net book value of $291.9 million as of
December 31, 2009. The Credit Facility amended and restated
the Company’s former $250 million unsecured credit
facility which was comprised of a $150 million unsecured
revolving credit facility and $100 million unsecured term
loan facility.
Also in December 2009, the Company amended its secured revolving
credit facility for The Towne Center at Aquia, reducing the
facility from $40.0 million to $20.0 million. The
revolving credit facility securing The Town Center at Aquia
bears interest at LIBOR plus 350 basis points with a 2%
LIBOR floor and matures in December 2010, with two, one-year
extensions at the Company’s option. Additionally in
December 2009, the Company paid off the $22.7 million loan
securing the West Oaks II and Spring Meadows shopping
centers.
It is anticipated that funds borrowed under the Company’s
credit facilities will be used for general corporate purposes,
including working capital, capital expenditures, the repayment
of indebtedness or other corporate activities. For further
information on the credit facilities and other debt refer to
Note 9 to the Consolidated Financial Statements.
The Company has $80.1 million in scheduled debt maturities
in 2010, which includes $41.3 million of scheduled
amortization payments. The $41.3 million of scheduled
amortization payments consists of $33.0 million for the
Company’s secured term loan facility, $5.0 million for
the Company’s secured revolving credit facility on The Town
Center at Aquia, and $3.3 million for various other
mortgages and notes payable. Debt principal maturities in 2010
include the Company’s secured revolving credit facility on
The Town Center at Aquia ($20.0 million outstanding at
December 31, 2009), and fixed rate mortgages on Promenade
at Pleasant Hill ($12.9 million outstanding at
December 31, 2009), Publix at River Crossing
($3.1 million outstanding at December 31,
2009) and fixed rate purchase money mortgages on Parkway
Shops ($6.9 million outstanding at December 31, 2009).
As discussed above, the Company retains the option to extend the
revolving credit facility securing The Town Center at Aquia to
December 2012. With respect to the various fixed rate mortgage
and floating
40
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rate mortgages, it is the Company’s intent to refinance
these mortgages and notes payable upon or shortly prior to their
expiration. However, there can be no assurance that the Company
will be able to refinance its debt on commercially reasonable or
any other terms.
Under terms of various debt agreements, we may be required to
maintain interest rate swap agreements to reduce the impact of
changes in interest rates on our floating rate debt. We have
interest rate swap agreements with an aggregate notional amount
of $100.0 million at December 31, 2009. Based on rates
in effect at December 31, 2009, the agreements provide for
fixed rates ranging from 6.4% to 6.7% and all expire in December
2010.
After taking into account the impact of converting our variable
rate debt into fixed rate debt by use of the interest rate swap
agreements, at December 31, 2009 our variable rate debt
accounted for approximately $93.5 million of outstanding
debt with a weighted average interest rate of 5.0%. Variable
rate debt accounted for approximately 16.9% of our total debt
and 10.7% of our total capitalization.
At December 31, 2009, the Company has $524.4 million
of mortgage loans, both fixed and floating rate, encumbering our
consolidated properties, including $179.0 million of
mortgage loans under the Company’s secured credit
facilities. We also have $537.7 million of mortgage loans
on properties held by our unconsolidated joint ventures (of
which our pro rata share is $138.7 million). Such mortgage
loans are generally non-recourse, subject to certain exceptions
for which we would be liable for any resulting losses incurred
by the lender. These exceptions vary from loan to loan but
generally include fraud or a material misrepresentation,
misstatement or omission by the borrower, intentional or grossly
negligent conduct by the borrower that harms the property or
results in a loss to the lender, filing of a bankruptcy petition
by the borrower, either directly or indirectly, and certain
environmental liabilities. In addition, upon the occurrence of
certain of such events, such as fraud or filing of a bankruptcy
petition by the borrower, we would be liable for the entire
outstanding balance of the loan, all interest accrued thereon
and certain other costs, penalties and expenses.
The unconsolidated joint ventures in which our Operating
Partnership owns an interest and which are accounted for by the
equity method of accounting are subject to mortgage
indebtedness, which in most instances is non-recourse. At
December 31, 2009, mortgage debt for the unconsolidated
joint ventures was $537.7 million, of which our pro rata
share was $138.7 million with a weighted average interest
rate of 6.5%. Fixed rate debt for the unconsolidated joint
ventures was $508.7 million at December 31, 2009. Our
pro rata share of the fixed rate debt amounted to
$133.1 million, or 95.9% of our total pro rata share of
such debt. The mortgage debt of $11.0 million at Peachtree
Hill, a shopping center owned by our Ramco 450 Venture LLC, is
recourse debt. The loan is secured by unconditional guarantees
of payment and performance by Ramco 450 Venture LLC, the
Company, and the Operating Partnership.
Investments
in Unconsolidated Entities
In 2007, we formed Ramco HHF KL LLC, a joint venture with a
discretionary fund managed by Heitman LLC that invests in core
assets. We own 7% of the joint venture and our joint venture
partner owns 93%. Subsequent to the formation of the joint
venture, we sold Shoppes of Lakeland in Lakeland, Florida and
Kissimmee West in Kissimmee, Florida to the joint venture. The
Company recognized 93% of the gain on the sale of these two
centers to the joint venture, representing the gain attributable
to the joint venture partner’s 93% ownership interest. The
remaining 7% of the gain on the sale of these two centers has
been deferred and recorded as a reduction in the carrying amount
of the Company’s equity investments in and advances to
unconsolidated entities.
In 2007, we formed Ramco HHF NP LLC, a joint venture with a
discretionary fund managed by Heitman LLC that invests in core
assets. We own 7% of the joint venture and our joint venture
partner owns 93%. In August 2007, the joint venture acquired
Nora Plaza located in Indianapolis, Indiana.
In 2007, we formed Ramco RM Hartland SC LLC (formerly Ramco
Highland Disposition LLC), a joint venture with Hartland Realty
Partners LLC to develop Hartland Towne Square, a traditional
community center in Hartland, Michigan. We own 20% of the joint
venture and our joint venture partner owns 80%. As of
December 31, 2009, the joint venture has $8.5 million
of variable rate debt and $11.8 million of fixed rate debt.
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Table of Contents
In 2007, we formed Ramco Jacksonville North Industrial LLC, a
joint venture formed to develop land adjacent to our River City
Marketplace shopping center. We own 5% of the joint venture and
our joint venture partner owns 95%. As of December 31,
2009, the joint venture has $0.7 million of variable rate
debt.
During 2007, we acquired the remaining 80% interest in Ramco
Jacksonville LLC, an entity that was formed to develop a
shopping center in Jacksonville, Florida.
Contractual
Obligations
The following are our contractual cash obligations as of
December 31, 2009 (dollars in thousands):
| Payments Due by Period | ||||||||||||||||||||
|
Less than
|
1 - 3
|
4 - 5
|
After 5
|
|||||||||||||||||
|
Contractual Obligations
|
Total | 1 year | years | years | years | |||||||||||||||
|
Mortgages and notes payable, principal
|
$ | 552,551 | $ | 80,103 | $ | 202,114 | $ | 65,901 | $ | 204,433 | ||||||||||
|
Interest on mortgages and notes payable
|
158,668 | 30,656 | 50,368 | 28,089 | 49,555 | |||||||||||||||
|
Employment contracts
|
1,203 | 466 | 737 | — | — | |||||||||||||||
|
Capital lease
|
8,663 | 677 | 1,354 | 6,632 | — | |||||||||||||||
|
Operating leases
|
5,241 | 909 | 1,854 | 1,659 | 819 | |||||||||||||||
|
Unconditional construction cost obligations
|
20,114 | 20,114 | — | — | — | |||||||||||||||
|
Total contractual cash obligations
|
$ | 746,440 | $ | 132,925 | $ | 256,427 | $ | 102,281 | $ | 254,807 | ||||||||||
We anticipate that the combination of cash on hand, cash
provided from operating activities, the availability under the
Credit Facility ($56.7 million at December 31, 2009,
plus up to an additional $50 million dependent upon there
being one or more lenders willing to acquire the additional
commitment), our access to the capital markets and the sale of
existing properties will satisfy our expected working capital
requirements through at least the next 12 months. Although
we believe that the combination of factors discussed above will
provide sufficient liquidity, no assurance can be given.
At December 31, 2009, we did not have any contractual
obligations that required or allowed settlement, in whole or in
part, with consideration other than cash.
Mortgages and notes payable
See the analysis of our debt included in “Liquidity and
Capital Resources” above.
Employment Contracts
At December 31, 2009, we had an employment contract with
our President, Chief Executive Officer that contains minimum
guaranteed compensation.
Operating and Capital Leases
We lease office space for our corporate headquarters and our
Florida office under operating leases. We also have an operating
lease at our Taylors Square shopping center and a capital ground
lease at our Gaines Marketplace shopping center.
Construction Costs
In connection with the development and expansion of various
shopping centers as of December 31, 2009, we have entered
into agreements for construction activities with an aggregate
cost of approximately $20.1 million.
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Planned
Capital Spending
The Company is focusing on its core strengths of enhancing the
value of our existing portfolio of shopping centers through
successful leasing efforts and completing those redevelopment
projects in 2010 that are currently in progress. In addition,
during 2009, there was no significant acquisition activity.
During 2009, we spent approximately $7.6 million on
revenue-generating capital expenditures, including tenant
improvements, leasing commissions paid to third-party brokers,
legal costs relative to lease documents and capitalized leasing
and construction costs. These types of investments generate a
return through rents from tenants over the terms of their
leases. Revenue-enhancing capital expenditures, including
expansions, renovations and repositionings, were approximately
$16.4 million in 2009. Revenue neutral capital
expenditures, such as roof and parking lot repairs, which are
anticipated to be recovered from tenants, amounted to
approximately $1.8 million in 2009.
In 2010, we anticipate spending approximately $19.9 million
for revenue-generating, revenue-enhancing and revenue neutral
capital expenditures, including approximately $10.5 million
for redevelopment projects.
Capitalization
At December 31, 2009, our market capitalization amounted to
$875.1 million. Market capitalization consisted of
$552.6 million of debt (including property-specific
mortgages, a secured Credit Facility consisting of a secured
term loan credit facility and a secured revolving credit
facility, the secured revolving credit facility on The Town
Center at Aquia, and a Junior Subordinated Note), and
$322.5 million of common shares (based on the closing price
of $9.54 per share on December 31, 2009) and Operating
Partnership units at market value. Our ratio of debt to total
market capitalization was 63.1% at December 31, 2009, as
compared to 83.3% at December 31, 2008. The decrease in
total debt to market capitalization was due to using proceeds
from the equity offering and real estate asset sales in the
third quarter of 2009 to pay down debt and the impact of the
increase in the price per common share from $6.18 at
December 31, 2008 to $9.54 at December 31, 2009. After
taking into account the impact of converting our variable rate
debt into fixed rate debt by use of interest rate swap
agreements, our outstanding debt at December 31, 2009 had a
weighted average interest rate of 6.0% and consisted of
$459.1 million of fixed rate debt and $93.5 million of
variable rate debt. Outstanding letters of credit issued under
the Credit Facility totaled approximately $1.3 million at
December 31, 2009.
At December 31, 2009, the noncontrolling interest in the
Operating Partnership represented a 8.6% ownership in the
Operating Partnership. The OP Units may, under certain
circumstances, be exchanged for our common shares of beneficial
interest on a
one-for-one
basis. We, as sole general partner of the Operating Partnership,
have the option, but not the obligation, to settle exchanged
OP Units held by others in cash based on the current
trading price of our common shares of beneficial interest.
Assuming the exchange of all OP Units, there would have
been 33,809,728 of our common shares of beneficial interest
outstanding at December 31, 2009, with a market value of
approximately $322.5 million.
Funds
From Operations
We consider funds from operations, also known as
“FFO,” an appropriate supplemental measure of the
financial performance of an equity REIT. Under the National
Association of Real Estate Investment Trusts (NAREIT)
definition, FFO represents net income attributable to common
shareholders, excluding extraordinary items (as defined under
GAAP) and gains (losses) on sales of depreciable property, plus
real estate related depreciation and amortization (excluding
amortization of financing costs), and after adjustments for
unconsolidated partnerships and joint ventures. FFO is intended
to exclude GAAP historical cost depreciation and amortization of
real estate investments, which assumes that the value of real
estate assets diminishes ratably over time. Historically,
however, real estate values have risen or fallen with market
conditions and many companies utilize different depreciable
lives and methods. Because FFO adds back depreciation and
amortization unique to real estate, and excludes gains and
losses from depreciable property dispositions and extraordinary
items, it provides a performance measure that, when compared
year over year, reflects the impact on operations from trends in
occupancy rates, rental rates, operating costs, acquisition and
development activities and interest costs, which provides a
perspective of our financial performance not immediately
apparent from net income attributable to
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Table of Contents
common shareholders determined in accordance with GAAP. In
addition, FFO does not include the cost of capital improvements,
including capitalized interest.
For the reasons described above we believe that FFO provides us
and our investors with an important indicator of our operating
performance. This measure of performance is used by us for
several business purposes and for REITs it provides a recognized
measure of performance other than GAAP net income attributable
to common shareholders, which may include non-cash items. Other
real estate companies may calculate FFO in a different manner.
We recognize FFO’s limitations when compared to GAAP net
income attributable to common shareholders. FFO does not
represent amounts available for needed capital replacement or
expansion, debt service obligations, or other commitments and
uncertainties. In addition, FFO does not represent cash
generated from operating activities in accordance with GAAP and
is not necessarily indicative of cash available to fund cash
needs, including the payment of dividends. FFO should not be
considered as an alternative to net income attributable to
common shareholders (computed in accordance with GAAP) or as an
alternative to cash flow as a measure of liquidity. FFO is
simply used as an additional indicator of our operating
performance.
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Table of Contents
The following table illustrates the calculations of FFO (in
thousands, except per share data):
|
Years Ended December 31,
|
||||||||||||
| 2009 | 2008 | 2007 | ||||||||||
|
Net income attributable to RPT common shareholders(1)
|
$ | 13,720 | $ | 23,501 | $ | 34,260 | ||||||
|
Add:
|
||||||||||||
|
Preferred share dividends
|
— | — | 3,146 | |||||||||
|
Loss on redemption of preferred shares
|
— | — | 1,269 | |||||||||
|
Depreciation and amortization expense
|
36,819 | 37,850 | 40,924 | |||||||||
|
Noncontrolling interest in partnership:
|
||||||||||||
|
Continuing operations
|
1,793 | 3,922 | 7,215 | |||||||||
|
Discontinued operations
|
423 | (27 | ) | 95 | ||||||||
|
Less:
|
||||||||||||
|
Gain on sale of depreciable property(2)
|
(4,571 | ) | (18,347 | ) | (29,869 | ) | ||||||
|
Discontinued operations, loss (gain) on sale of property
|
(2,886 | ) | 463 | — | ||||||||
|
Funds from operations
|
45,298 | 47,362 | 57,040 | |||||||||
|
Less:
|
||||||||||||
|
Preferred stock dividends(3)
|
— | — | (2,065 | ) | ||||||||
|
Funds from operations attributable to RPT common shareholders,
assuming conversion of OP units(4)
|
$ | 45,298 | $ | 47,362 | $ | 54,975 | ||||||
|
Weighted average equivalent shares outstanding, diluted(3)
|
25,112 | 21,397 | 21,449 | |||||||||
|
Net income per diluted share to FFO per diluted share
reconciliation:
|
||||||||||||
|
Net income per diluted share(1)
|
$ | 0.62 | $ | 1.27 | $ | 1.91 | ||||||
|
Add:
|
||||||||||||
|
Depreciation and amortization expense
|
1.47 | 1.77 | 1.91 | |||||||||
|
Noncontrolling interest in partnership:
|
||||||||||||
|
Continuing Operations
|
0.07 | 0.18 | 0.34 | |||||||||
|
Discontinued Operations
|
— | — | — | |||||||||
|
Discontinued operations, loss (gain) on sale of property
|
(0.11 | ) | 0.02 | — | ||||||||
|
Less:
|
||||||||||||
|
Gain on sale of depreciable real estate(2)
|
(0.18 | ) | (0.86 | ) | (1.39 | ) | ||||||
|
Assuming conversion of OP units
|
(0.07 | ) | (0.17 | ) | (0.11 | ) | ||||||
|
Funds from operations per diluted share
|
1.80 | 2.21 | 2.66 | |||||||||
|
Less:
|
||||||||||||
|
Preferred Stock dividends, net
|
— | — | (0.10 | ) | ||||||||
|
Funds from operations attributable to RPT common shareholders
per diluted share, assuming conversion of OP units
|
$ | 1.80 | $ | 2.21 | $ | 2.56 | ||||||
| (1) | In 2008, an impairment charge in the amount of $5,103 was included in our FFO calculations. | |
| (2) | Excludes gain on sale of undepreciated land of $439, $1,248, and $2,774, for 2009, 2008, and 2007, respectively. | |
| (3) | In 2007, the Series C Preferred Shares were dilutive and therefore, the dividends paid were not included in the calculation of our diluted FFO. | |
| (4) | In 2007, loss on redemption of preferred shares in the amount of $1,269 was not included in our FFO calculations. |
45
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Inflation
Inflation has been relatively low in recent years and has not
had a significant detrimental impact on the results of our
operations. Should inflation rates increase in the future,
substantially all of our tenant leases contain provisions
designed to partially mitigate the negative impact of inflation
in the near term. Such lease provisions include clauses that
require our tenants to reimburse us for real estate taxes and
many of the operating expenses we incur. Also, many of our
leases provide for periodic increases in base rent which are
either of a fixed amount or based on changes in the consumer
price index
and/or
percentage rents (where the tenant pays us rent based on a
percentage of its sales). Significant inflation rate increases
over a prolonged period of time may have a material adverse
impact on our business.
Recent
Accounting Pronouncements
In March 2008, the FASB updated ASC 815 “Derivatives and
Hedging”, requiring entities that utilize derivative
instruments to provide qualitative disclosures about their
objectives and strategies for using such instruments, as well as
any details of credit-risk-related contingent features contained
within derivatives. The update also requires entities to
disclose additional information about the amounts and location
of derivatives included within the financial statements, how the
provisions of the accounting guidance have been applied, and the
impact that hedges have on an entity’s financial position,
financial performance, and cash flows. The new accounting
guidance was effective for fiscal years and interim periods
beginning after November 15, 2008. The Company implemented
the provisions of the standard in the first quarter of 2009. The
application did not have a material effect on the Company’s
results of operations or financial position because it only
included new disclosure requirements. Refer to Note 11 of
the Notes to the Consolidated Financial Statements for further
information.
In June 2008, the FASB updated ASC 260 “Earnings Per
Share” to clarify that unvested share-based payment awards
that contain non-forfeitable rights to dividends or dividend
equivalents are considered participating securities and should
be included in the calculation of basic earnings per share using
the two-class method. This new accounting rule was effective for
financial statements issued for fiscal years and interim periods
beginning after December 15, 2008. All prior period
earnings per share amounts presented were required to be
adjusted retrospectively. Accordingly, the Company adopted the
provisions of this standard in the first quarter of 2009. The
adoption did not have a material effect on the Company’s
consolidated financial condition, results of operations, or cash
flows. Refer to Note 13 of the Notes to the Consolidated
Financial Statements for the calculation of earnings per share.
In April 2009, the FASB updated ASC
820-10-65
“Fair Value Measurements and Disclosures: Overall: Open
Effective Date Information”. This guidance clarifies the
application of accounting rules for fair value measurements when
the volume and level of activity for the asset or liability have
significantly decreased and on identifying circumstances that
indicate a transaction is not orderly. Additionally, the
guidance emphasizes that even if there has been a significant
decrease in the volume and level of activity for the asset or
liability and regardless of the valuation technique(s) used, the
objective of a fair value measurement remains the same. Fair
value is the price that would be received to sell an asset or
paid to transfer a liability in an orderly transaction (that is,
not a forced liquidation or distressed sale) between market
participants at the measurement date under current market
conditions. The provisions of the new accounting rule were
effective for interim and annual reporting periods ending after
June 15, 2009, to be applied prospectively. The Company
adopted the provisions in the third quarter of 2009. The
adoption of the accounting standard did not have a material
impact on the Company’s consolidated financial position,
results of operations, or cash flows.
In May 2009, the FASB issued ASC 855, “Subsequent
Events”, requiring that an entity shall recognize in the
financial statements the effects of all subsequent events that
provide additional evidence about conditions that existed at the
date of the balance sheet, including the estimates inherent in
the process of preparing financial statements. The new
accounting provisions were effective for interim or annual
financial periods ending after June 15, 2009, to be applied
prospectively. Accordingly, the Company adopted the provisions
in the second quarter of 2009. The adoption of the provisions
did not have a material effect on the Company’s
consolidated financial condition, results of operations, or cash
flows. Refer to Note 23 of the Notes to the Consolidated
Financial Statements for the Company’s disclosure on
subsequent events.
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Table of Contents
In June 2009, the FASB issued Statement of Financial Accounting
Standards No. 167 (“SFAS 167”),
“Amendments to FASB Interpretation No. 46(R)”,
which has not yet been codified. SFAS 167 amends guidance
surrounding a company’s analysis to determine whether any
of its variable interests constitute controlling financial
interests in a variable interest entity. This analysis
identifies the primary beneficiary of a variable interest entity
as the enterprise that has both of the following
characteristics; a) the power to direct the activities of a
variable interest entity that most significantly impact the
entity’s economic performance, and b) the obligation
to absorb losses of the entity that could potentially be
significant to the variable interest entity or the right to
receive benefits from the entity that could potentially be
significant to the variable interest entity. Additionally, an
enterprise is required to assess whether it has an implicit
financial responsibility to ensure that a variable interest
entity operates as designed when determining whether it has the
power to direct the activities of the variable interest entity
that most significantly impact the entity’s economic
performance. The new guidance also requires ongoing
reassessments of whether an enterprise is the primary
beneficiary of a variable interest entity. The guidance is
effective for the first annual reporting period beginning after
November 15, 2009. Accordingly, the Company will reevaluate
its interests in variable interest entities for the period
beginning January 1, 2010 to determine that the entities
are reflected properly in the financial statements as
investments or consolidated entities. The Company is currently
evaluating the application of the new accounting standard.
In June 2009, the FASB issued ASC
105-10,
“Generally Accepted Accounting Principles
”
which established the FASB Accounting Standards Codification
as the sole source of authoritative U.S. generally accepted
accounting principles recognized by the FASB. Effective
July 1, 2009 the Company adopted the provisions of ASC
105-10
and
have updated the references to GAAP in its condensed financial
statements and notes to consolidated condensed financial
statements for the period ended September 30, 2009. The
adoption of this standard did not have a material impact on the
Company’s consolidated financial position, results of
operations, or cash flows.
In August 2009, the FASB issued ASU
2009-05,
“Fair Value Measurements and Disclosures —
Measuring Liabilities at Fair Value,” which updates ASC
820-10.
The
update clarifies that in circumstances in which a quoted price
in an active market for the identical liability is not
available, a reporting entity is required to measure fair value
using one or more of the following techniques:
1. A valuation technique that uses:
a) the quoted price of an identical liability when traded
as an asset, or
b) quoted prices for similar liabilities or similar
liabilities when traded as assets.
2. Another valuation technique that is consistent with the
principles of ASC 820. Examples include an income approach, such
as a present value technique, or a market approach, such as a
technique that is based on the amount at the measurement date
that the reporting entity would pay to transfer the identical
liability or would receive to enter into the identical liability.
This standard was effective for financial statements issued for
interim and annual periods ending after August 2009. As such,
the Company adopted ASU
2009-05
effective for the quarter ending September 30, 2009. The
adoption of this new accounting standard did not have a material
impact on the Company’s disclosures.
| Item 7A. | Quantitative and Qualitative Disclosures About Market Risk |
We have exposure to interest rate risk on our variable rate debt
obligations. We are not subject to any foreign currency exchange
rate risk or commodity price risk, or other material rate or
price risks. Based on our debt and interest rates and the
interest rate swap agreements in effect at December 31,
2009, a 100 basis point change in interest rates would
affect our annual earnings and cash flows by between
approximately $0.9 million and $1.7 million. We
believe that a 100 basis point change in interest rates
would impact the fair value of our total outstanding debt at
December 31, 2009 by approximately $13.6 million.
Under terms of various debt agreements, we may be required to
maintain interest rate swap agreements to reduce the impact of
changes in interest rates on our floating rate debt. We have
interest rate swap agreements with an aggregate notional amount
of $100.0 million at December 31, 2009. Based on rates
in effect at December 31,
47
Table of Contents
2009, the interest rate swap agreements provide for fixed rates
ranging from 6.4% to 6.7% and expire December 2010.
The following table sets forth information as of
December 31, 2009 concerning our long-term debt
obligations, including principal cash flows by scheduled
maturity, weighted average interest rates of maturing amounts
and fair market value (dollars in thousands):
|
Fair
|
||||||||||||||||||||||||||||||||
| 2010 | 2011 | 2012 | 2013 | 2014 | Thereafter | Total | Value | |||||||||||||||||||||||||
|
Fixed-rate debt
|
$ | 56,637 | $ | 57,990 | $ | 74,126 | $ | 33,651 | $ | 32,250 | $ | 204,433 | $ | 459,087 | $ | 443,415 | ||||||||||||||||
|
Average interest rate
|
7.0 | % | 7.0 | % | 6.6 | % | 5.5 | % | 5.5 | % | 5.8 | % | 6.2 | % | 6.5 | % | ||||||||||||||||
|
Variable-rate debt
|
$ | 23,466 | $ | 17,962 | $ | 52,036 | $ | — | $ | — | $ | — | $ | 93,464 | $ | 93,464 | ||||||||||||||||
|
Average interest rate
|
5.5 | % | 5.4 | % | 4.7 | % | — | — | — | 5.1 | % | 5.1 | % | |||||||||||||||||||
We estimated the fair value of our fixed rate mortgages using a
discounted cash flow analysis, based on our incremental
borrowing rates for similar types of borrowing arrangements with
the same remaining maturity. Considerable judgment is required
to develop estimated fair values of financial instruments. The
table incorporates only those exposures that exist at
December 31, 2009 and does not consider those exposures or
positions which could arise after that date or firm commitments
as of such date. Therefore, the information presented therein
has limited predictive value. Our actual interest rate
fluctuations will depend on the exposures that arise during the
period and on interest rates.
| Item 8. | Financial Statements and Supplementary Data. |
Our consolidated financial statements and supplementary data are
included as a separate section in this Annual Report on
Form 10-K
commencing on
page F-1
and are incorporated herein by reference.
| Item 9. | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure. |
None.
| Item 9A. | Controls and Procedures |
Disclosure
Controls and Procedures
We maintain disclosure controls and procedures designed to
ensure that information required to be disclosed in our reports
under the Securities Exchange Act of 1934, as amended
(“Exchange Act”), such as this report on
Form 10-K,
is recorded, processed, summarized and reported within the time
periods specified in the SEC rules and forms, and that such
information is accumulated and communicated to our management,
including our Chief Executive Officer and Interim Chief
Financial Officer, as appropriate, to allow timely decisions
regarding required disclosure. In designing and evaluating the
disclosure controls and procedures, management recognizes that
any controls and procedures, no matter how well designed and
operated, can provide only reasonable assurance of achieving the
design control objectives, and management was required to apply
its judgment in evaluating the cost-benefit relationship of
possible controls and procedures.
We carried out an assessment as of December 31, 2009 of the
effectiveness of the design and operation of our disclosure
controls and procedures. This assessment was done under the
supervision and with the participation of management, including
our Chief Executive Officer and Interim Chief Financial Officer.
Based on such evaluation, our management, including our Chief
Executive Officer and Interim Chief Financial Officer, concluded
that such disclosure controls and procedures were effective at
the reasonable assurance level as of December 31, 2009.
48
Table of Contents
Management’s
Report on Internal Control Over Financial Reporting
Management is responsible for establishing and maintaining
effective internal control over financial reporting as such term
is defined under
Rule 13a-15(f)
promulgated under the Securities Exchange Act of 1934, as
amended.
Internal control over financial reporting is a process designed
to provide reasonable assurance regarding the reliability of
financial reporting and preparation of our consolidated
financial statements for external purposes in accordance with
generally accepted accounting principles.
Internal control over financial reporting includes those
policies and procedures that pertain to our ability to record,
process, summarize and report reliable financial data.
Management recognizes that there are inherent limitations in the
effectiveness of any internal control and effective internal
control over financial reporting can provide only reasonable
assurance with respect to financial statement preparation.
Additionally, because of changes in conditions, the
effectiveness of internal control over financial reporting may
vary over time.
Because of its inherent limitations, internal control over
financial reporting may not prevent or detect misstatements.
Also, projections of any evaluation of effectiveness to future
periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree
of compliance with the policies or procedures may deteriorate.
Management of the Company conducted an assessment of our
internal controls over financial reporting as of
December 31, 2009 using the framework established by the
Committee of Sponsoring Organizations of the Treadway Commission
in Internal Control — Integrated Framework. Based on
this assessment, management has concluded that our internal
control over financial reporting was effective as of
December 31, 2009.
Our independent registered public accounting firm, Grant
Thornton LLP, has issued an attestation report on our internal
control over financial reporting. Their report appears below.
49
Table of Contents
REPORT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Board of Trustees and shareholders
Ramco-Gershenson Properties Trust
We have audited Ramco-Gershenson Properties Trust and
subsidiaries’ (the “Company”) internal control
over financial reporting as of December 31, 2009, based on
criteria established in Internal Control — Integrated
Framework issued by the Committee of Sponsoring Organizations of
the Treadway Commission (COSO). The Company’s management is
responsible for maintaining effective internal control over
financial reporting and for its assessment of the effectiveness
of internal control over financial reporting, included in the
accompanying Management’s Report on Internal Control Over
Financial Reporting. Our responsibility is to express an opinion
on the Company’s internal control over financial reporting
based on our audit.
We conducted our audit in accordance with the standards of the
Public Company Accounting Oversight Board (United States). Those
standards require that we plan and perform the audit to obtain
reasonable assurance about whether effective internal control
over financial reporting was maintained in all material
respects. Our audit included obtaining an understanding of
internal control over financial reporting, assessing the risk
that a material weakness exists, testing and evaluating the
design and operating effectiveness of internal control based on
the assessed risk, and performing such other procedures as we
considered necessary in the circumstances. We believe that our
audit provides a reasonable basis for our opinion.
A company’s internal control over financial reporting is a
process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with
generally accepted accounting principles. A company’s
internal control over financial reporting includes those
policies and procedures that (1) pertain to the maintenance
of records that, in reasonable detail, accurately and fairly
reflect the transactions and dispositions of the assets of the
company; (2) provide reasonable assurance that transactions
are recorded as necessary to permit preparation of financial
statements in accordance with generally accepted accounting
principles, and that receipts and expenditures of the company
are being made only in accordance with authorizations of
management and directors of the company; and (3) provide
reasonable assurance regarding prevention or timely detection of
unauthorized acquisition, use, or disposition of the
company’s assets that could have a material effect on the
financial statements.
Because of its inherent limitations, internal control over
financial reporting may not prevent or detect misstatements.
Also, projections of any evaluation of effectiveness to future
periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree
of compliance with the policies or procedures may deteriorate.
In our opinion, Ramco-Gershenson Properties Trust and
subsidiaries maintained, in all material respects, effective
internal control over financial reporting as of
December 31, 2009, based on criteria established in
Internal Control — Integrated Framework issued by COSO.
We also have audited, in accordance with the standards of the
Public Company Accounting Oversight Board (United States), the
consolidated balance sheets of Ramco-Gershenson Properties Trust
and subsidiaries as of December 31, 2009 and 2008, and the
related consolidated statements of income and comprehensive
income, shareholders’ equity and cash flows for each of the
three years in the period ended December 31, 2009 and our
report dated March 12, 2010 expressed an unqualified
opinion.
/s/ Grant
Thornton LLP
Southfield, Michigan
March 12, 2010
50
Table of Contents
Changes
in Internal Control over Financial Reporting
There have been no changes in the Company’s internal
control over financial reporting during the most recently
completed fiscal quarter that have materially affected, or are
reasonably likely to materially affect, the Company’s
internal control over financial reporting.
| Item 9B. | Other Information. |
None.
| Item 10. | Directors, Executive Officers and Corporate Governance. |
The information required by this Item is incorporated herein by
reference to our proxy statement for the 2010 annual meeting of
shareholders (the “Proxy Statement”) under the
captions
“Proposal 1-Election
of Trustees — Trustees and Executive Officers,”
“Proposal 1-Election
of Trustees — Committees of the Board,”
“Proposal 1-Election
of Trustees — Corporate Governance,” and
“Additional Information — Section 16(a)
Beneficial Ownership Reporting Compliance.”
| Item 11. | Executive Compensation. |
The information required by this Item is incorporated herein by
reference to our Proxy Statement under the captions
“Proposal 1-Election
of Trustees — Trustee Compensation,”
“Compensation Committee Interlocks and Insider
Participation,” “Compensation Discussion and
Analysis,” “Compensation Committee Report,” and
“Executive Compensation Tables.”
| Item 12. | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters. |
The following table sets forth certain information regarding our
equity compensation plans as of December 31, 2009:
|
Number of Securities
|
||||||||||||
|
Number of Securities
|
Remaining Available
|
|||||||||||
|
to be Issued
|
Weighted-Average
|
for Future Issuances
|
||||||||||
|
Upon Exercise of
|
Exercise Price of
|
Under Equity Compensation
|
||||||||||
|
Outstanding Options,
|
Outstanding Options,
|
Plans (Excluding Securities
|
||||||||||
|
Warrants and Rights
|
Warrants and Rights
|
Reflected in Column (a))
|
||||||||||
|
Plan Category
|
(a) | (b) | (c) | |||||||||
|
Equity compensation plans approved by security holders(1)
|
513,455 | (2) | $ | 28.47 | (3) | 911,308 | (4) | |||||
|
Equity compensation plans not approved by security holders
|
— | — | — | |||||||||
|
Total
|
513,455 | $ | 28.47 | 911,308 | ||||||||
| (1) | Consists of grants made under the 1996 Share Option Plan, 1997 Non-Employee Trustee Stock Option Plan, 2003 Long-Term Incentive Plan, 2003 Non-Employee Trustee Stock Option Plan, and 2008 Restricted Share Plan for Non-employee Trustees. | |
| (2) | Consists of 324,720 options outstanding, 65,043 deferred common shares (see Note 17 of the Consolidated Financial Statements) and 123,692 shares of restricted stock issuable on the satisfaction of applicable performance measures. The number of shares of restricted stock overstates dilution to the extent we do not satisfy the applicable performance measures. In particular, subsequent to December 31, 2009, the Compensation Committee determined that we did not achieve certain performance measures underlying restricted share grants, resulting in the forfeiture of 37,800 shares of restricted stock that are listed in this column as outstanding as of December 31, 2009. |
51
Table of Contents
| (3) | Solely consists of outstanding options, as the deferred common shares and shares of restricted stock do not have an exercise price. | |
| (4) | Includes 776,308 securities available for issuance under the 2009 Omnibus Long-Term Incentive Plan and 135,000 options available for issuance under the 2008 Restricted Share Plan for Non-Employee Trustees. There were no securities available for issuance under the 2003 Long-Term Incentive Plan. |
Additional information required by this Item is incorporated
herein by reference to our Proxy Statement under the caption
“Security Ownership of Certain Beneficial Owners and
Management.”
| Item 13. | Certain Relationships and Related Transactions, and Director Independence. |
The information required by this Item is incorporated herein by
reference to our Proxy Statement under the captions
“Related Person Transactions,” and
“Proposal 1-Election
of Trustees — Committees of the Board.”
| Item 14. | Principal Accountant Fees and Services. |
The information required by this Item is incorporated herein by
reference to our Proxy Statement under the captions “Audit
Committee Disclosure,” and “Report of the Audit
Committee.”
| Item 15. | Exhibits and Financial Statement Schedules. |
(a) (1)
Consolidated financial statements. See
“Item 8 — Financial Statements and
Supplementary Data.”
(2)
Financial statement schedule. See
“Item 8 — Financial Statements and
Supplementary Data.”
(3)
Exhibits
| 3 | .1 | Amended and Restated Declaration of Trust of the Company, dated October 2, 1997, incorporated by reference to Exhibit 3.1 to the Company’s Annual Report on Form 10-K for the year ended December 31, 1997. | ||
| 3 | .2 | Articles of Amendment to Ramco-Gershenson Properties Trust Declaration of Trust, dated June 8, 2005, incorporated by reference to Exhibit 3.1 to the Company’s Form 8-K dated June 9, 2005. | ||
| 3 | .3 | Articles Supplementary to Ramco-Gershenson Properties Trust Declaration of Trust, incorporated by reference to Exhibit 3.1 to Registrant’s Form 8-K dated December 12, 2007. | ||
| 3 | .4 | By-Laws of the Company, as amended and restated as of March 10, 2008, incorporated by reference to Exhibit 3.3 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2007. | ||
| 3 | .5 | Articles Supplementary reclassifying 50,000 Series A Junior Participating Shares of Beneficial Interest as filed with the State Department of Assessment and Taxation of Maryland on or about March 31, 2009, incorporated by reference to Exhibit 3.1 to Registrant’s Form 8-K dated March 31, 2009. | ||
| 3 | .6 | Articles Supplementary Classifying 50,000 Series A Junior Participating Shares of Beneficial Interest as authorized but unissued and unclassified preferred shares of the Company, as filed with the State Department of Assessment and Taxation of Maryland on or about September 8, 2009, incorporated by reference to Exhibit 3.1 to Registrant’s Form 8-K dated September 9, 2009. | ||
| 4 | .1 | Amended and Restated Fixed Rate Note ($110 million), dated March 30, 2007, by and Between Ramco Jacksonville LLC and JPMorgan Chase Bank, N.A., incorporated by reference to Exhibit 4.1 to Registrant’s Form 8-K dated April 16, 2007. | ||
| 4 | .2 | Amended and Restated Mortgage, Assignment of Leases and Rents, Security Agreement and Fixture Filing, dated March 30, 2007, by and between Ramco Jacksonville LLC and JPMorgan Chase Bank, N.A., incorporated by reference to Exhibit 4.2 to Registrant’s Form 8-K dated April 16, 2007. | ||
| 4 | .3 | Assignment of Leases and Rents, dated March 30, 2007, by and between Ramco Jacksonville LLC and JPMorgan Chase Bank, N.A., incorporated by reference to Exhibit 4.3 to Registrant’s Form 8-K dated April 16, 2007. | ||
| 4 | .4 | Environmental Liabilities Agreement, dated March 30, 2007, by and between Ramco Jacksonville LLC and JPMorgan Chase Bank, N.A., incorporated by reference to Exhibit 4.4 to Registrant’s Form 8-K dated April 16, 2007. |
52
Table of Contents
| 4 | .5 | Acknowledgment of Property Manager, dated March 30, 2007 by and between Ramco-Gershenson, Inc. and JPMorgan Chase Bank, N.A., incorporated by reference to Exhibit 4.6 to Registrant’s Form 8-K dated April 16, 2007. | ||
| 4 | .6 | Rights Agreement, dated as of March 25, 2009 between Ramco-Gershenson Properties Trust and American Stock Transfer & Trust Company, LLC which includes as Exhibits thereto of the Articles Supplementary, Form of Rights Certificate and the Summary of Terms attached thereto as Exhibit A, B and C, respectively, incorporated by reference to Exhibit 4.1 to Registrant’s Form 8-K dated March 31, 2009. | ||
| 4 | .7 | Amendment to Rights Agreement, dated September 8, 2009, between the Company and American Stock Transfer & Trust Company, LLC, incorporated by reference to Exhibit 4.1 to Registrant’s Form 8-K dated September 9, 2009. | ||
| 10 | .1 | 1996 Share Option Plan of the Company, incorporated by reference to Exhibit 10.4 to the Company’s Quarterly Report on Form 10-Q for the period ended June 30, 1996.** | ||
| 10 | .2 | Registration Rights Agreement, dated as of May 10, 1996, among the Company, Dennis Gershenson, Joel Gershenson, Bruce Gershenson, Richard Gershenson, Michael A. Ward U/T/A dated 2/22/77, as amended, and each of the Persons set forth on Exhibit A attached thereto, incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for the period ended June 30, 1996. | ||
| 10 | .3 | Exchange Rights Agreement, dated as of May 10, 1996, by and among the Company and each of the Persons whose names are set forth on Exhibit A attached thereto, incorporated by reference to Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q for the period ended June 30, 1996. | ||
| 10 | .4 | Change of Venue Merger Agreement dated as of October 2, 1997 between the Company (formerly known as RGPT Trust, a Maryland real estate investment trust), and Ramco- Gershenson Properties Trust, a Massachusetts business trust, incorporated by reference to Exhibit 10.41 to the Company’s Annual Report on Form 10-K for the year ended December 31, 1997. | ||
| 10 | .5 | Exchange Rights Agreement dated as of September 4, 1998 between Ramco-Gershenson Properties Trust, and A.T.C., L.L.C., incorporated by reference to Exhibit 10.4 to the Company’s Quarterly Report on Form 10-Q for the period ended September 30, 1998. | ||
| 10 | .6 | Limited Liability Company Agreement of Ramco/West Acres LLC., incorporated by reference to Exhibit 10.53 to the Company’s Quarterly Report on Form 10-Q for the period ended September 30, 2001. | ||
| 10 | .7 | Assignment and Assumption Agreement dated September 28, 2001 among Flint Retail, LLC and Ramco/West Acres LLC and State Street Bank and Trust for holders of J.P. Mortgage Commercial Mortgage Pass-Through Certificates, incorporated by reference to Exhibit 10.54 to the Company’s Quarterly Report on Form 10-Q for the period ended September 30, 2001. | ||
| 10 | .8 | Limited Liability Company Agreement of Ramco/Shenandoah LLC., Incorporated by reference to Exhibit 10.41 to the Company’s on Form 10-K for the year ended December 31, 2001. | ||
| 10 | .9 | Purchase and Sale Agreement, dated May 21, 2002 between Ramco-Gershenson Properties, L.P. and Shop Invest, LLC., incorporated by reference to Exhibit 10.46 to the Company’s Quarterly Report on Form 10-Q for the period ended June 30, 2002. | ||
| 10 | .10 | Ramco-Gershenson Properties Trust 2003 Long-Term Incentive Plan, incorporated by reference to Appendix B of the Company’s 2003 Proxy Statement filed on April 28, 2003.** | ||
| 10 | .11 | Amended and Restated Limited Partnership Agreement of Ramco/Lion Venture LP, dated as of December 29, 2004, by Ramco-Gershenson Properties, L.P., as a limited partner, Ramco Lion LLC, as a general partner, CLPF-Ramco, L.P. as a limited partner, and CLPF-Ramco GP, LLC as a general partner, incorporated by reference Exhibit 10.62 to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2004. | ||
| 10 | .12* | Summary of Trustee Compensation Program.** | ||
| 10 | .13 | Form of Nonstatutory Stock Option Agreement, incorporated by reference Exhibit 10.66 to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2004.** | ||
| 10 | .14 | Second Amended and Restated Limited Liability Company Agreement of Ramco Jacksonville LLC, dated March 1, 2005, by Ramco-Gershenson Properties , L.P. and SGC Equities LLC., incorporated by reference Exhibit 10.65 to the Registrant’s Quarterly Report on Form 10-Q for the period ended March 31, 2005. | ||
| 10 | .15 | Form of Restricted Stock Award Agreement Under 2003 Long-Term Incentive Plan, incorporated by reference to Exhibit 10.1 to Registrant’s Form 8-K dated June 16, 2006.** |
53
Table of Contents
| 10 | .16 | Form of Trustee Stock Option Award Agreement Under 2003 Non-Employee Trustee Stock Option Plan, incorporated by reference to Exhibit 10.2 to Registrant’s Form 8-K dated June 16, 2006.** | ||
| 10 | .17 | Employment Agreement, dated as of August 1, 2007, between the Company and Dennis Gershenson, incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the period ended June 30, 2007.** | ||
| 10 | .18 | Restricted Share Award Agreement Under 2008 Restricted Share Plan for Non-Employee Trustee, incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the period ended June 30, 2008.** | ||
| 10 | .19 | Restricted Share Plan for Non-Employee Trustees, incorporated by reference to Appendix A of the Company’s 2008 Proxy Statement filed on April 30, 2008.** | ||
| 10 | .20 | Ramco-Gershenson Properties Trust 2009 Omnibus Long-Term Incentive Plan, incorporated by reference to Exhibit 10.1 to Registrant’s Form 8-K, dated June 15, 2009. ** | ||
| 10 | .21 | Amended and Restated Secured Master Loan Agreement, dated as of December 11, 2009, by and among Ramco-Gershenson Properties L.P., as Borrower, Ramco-Gershenson Properties Trust, as Guarantor, KeyBank National Association, as Agent, KeyBanc Capital Markets, as Sole Lead Manager and Arranger, JPMorgan Chase Bank, N.A. and Bank of America, N.A., as Co-Syndication Agents, Deutsche Bank Trust Company Americas, as Documentation Agent, and other specified banks which are a Party or may become Parties to such Agreement, incorporated by reference to Exhibit 10.1 to Registrant’s Form 8-K, dated December 17, 2009. | ||
| 10 | .22 | Amended and Restated Unconditional Guaranty of Payment and Performance, dated December 11, 2009, by Ramco-Gershenson Properties Trust, as Guarantor, in favor of KeyBank National Association and certain other lenders, incorporated by reference to Exhibit 10.2 to Registrant’s Form 8-K, dated December 17, 2009. | ||
| 10 | .23 | First Amended and Restated Revolving Credit Agreement, dated as of December 11, 2009, by and among Ramco-Gershenson Properties L.P., as Borrower, Ramco-Gershenson Properties Trust, as Guarantor, Ramco Virginia Properties, L.L.C., KeyBank National Association, as Agent, KeyBanc Capital Markets, as Sole Lead Manager and Arranger, and other specified banks which are a Party or may become Parties to such Agreement, incorporated by reference to Exhibit 10.3 to Registrant’s Form 8-K, dated December 17, 2009. | ||
| 10 | .24 | Separation Agreement and Release between Ramco-Gershenson Properties Trust and Richard J. Smith, dated December 23, 2009, incorporated by reference to Exhibit 10.1 to Registrant’s Form 8-K, dated December 29, 2009. | ||
| 10 | .25 | Employment Letter, dated February 16, 2010, between Ramco-Gershenson Properties Trust and Gregory R. Andrew, incorporated by reference to Exhibit 10.1 to Registrant’s Form 8-K, dated February 19, 2010.** | ||
| 10 | .26 | Change in Control Policy, dated March 1, 2010, incorporated by reference to Exhibit 10.1 to Registrant’s Form 8-K dated March 4, 2010. | ||
| 10 | .27 | 2010 Executive Incentive Plan, dated March 1, 2010, incorporated by reference to Exhibit 10.2 to Registrant’s Form 8-K dated March 4, 2010. | ||
| 10 | .28* | Registration Rights Agreement, dated February 17, 2010, between Ramco-Gershenson Properties Trust and JCP Realty, Inc. | ||
| 12 | .1* | Computation of Ratio of Earnings to Combined Fixed Charges and Preferred Stock Dividends. | ||
| 21 | .1* | Subsidiaries | ||
| 23 | .1* | Consent of Grant Thornton LLP. | ||
| 31 | .1* | Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | ||
| 31 | .2* | Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | ||
| 32 | .1* | Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | ||
| 32 | .2* | Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
| * | Filed herewith | |
| ** | Management contract or compensatory plan or arrangement |
The Company has not filed certain instruments with respect to
long-term debt that did not exceed 10% of the Company’s
total assets. The Company will furnish a copy of such agreements
with the SEC upon request.
15(b) The exhibits listed at item 15(a)(3) that are noted
‘filed herewith’ are hereby filed with this report.
15(c) The financial statement schedules listed at
Item 15(a)(2) are hereby filed with this report.
54
Table of Contents
SIGNATURES
Pursuant to the requirements of Section 13 or 15
(d) of the Securities Exchange Act of 1934, the registrant
has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Ramco-Gershenson Properties Trust
|
Dated: March 12, 2010
|
By:
/s/
Dennis
E. Gershenson
Dennis
E. Gershenson,
President and Chief Executive Officer |
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed by the following persons on
behalf of registrant and in the capacities and on the dates
indicated.
|
Dated: March 12, 2010
|
By:
/s/
Stephen R. Blank
Stephen
R. Blank,
Chairman |
|
|
Dated: March 12, 2010
|
By:
/s/
Dennis E. Gershenson
Dennis
E. Gershenson,
Trustee, President and Chief Executive Officer (Principal Executive Officer) |
|
|
Dated: March 12, 2010
|
By:
/s/
Arthur H. Goldberg
Arthur
H. Goldberg,
Trustee |
|
|
Dated: March 12, 2010
|
By:
/s/
Robert A. Meister
Robert
A. Meister,
Trustee |
|
|
Dated: March 12, 2010
|
By:
/s/
David J. Nettina
David
J. Nettina,
Trustee |
|
|
Dated: March 12, 2010
|
By:
/s/
Matthew L. Ostrower
Matthew
L. Ostrower,
Trustee |
|
|
Dated: March 12, 2010
|
By:
/s/
Joel M. Pashcow
Joel
M. Pashcow,
Trustee |
|
|
Dated: March 12, 2010
|
By:
/s/
Mark K. Rosenfeld
Mark
K. Rosenfeld,
Trustee |
|
|
Dated: March 12, 2010
|
By:
/s/
Michael A. Ward
Michael
A. Ward,
Trustee |
|
|
Dated: March 12, 2010
|
By:
/s/
James
H. Smith
James
H. Smith,
Interim Chief Financial Officer (Principal Financial and Accounting Officer) |
55
Table of Contents
RAMCO-GERSHENSON
PROPERTIES TRUST
Index to
Consolidated Financial Statements
| Page | ||||
| F-2 | ||||
|
Consolidated Financial Statements:
|
||||
| F-3 | ||||
| F-4 | ||||
| F-5 | ||||
| F-6 | ||||
| F-7 | ||||
F-1
Table of Contents
REPORT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Board of Trustees and shareholders
Ramco-Gershenson Properties Trust
We have audited the accompanying consolidated balance sheets of
Ramco-Gershenson Properties Trust (a Maryland corporation) and
subsidiaries as of December 31, 2009 and 2008, and the
related consolidated statements of income and comprehensive
income, shareholders’ equity, and cash flows for each of
the three years in the period ended December 31, 2009.
These financial statements are the responsibility of the
Company’s management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with the standards of the
Public Company Accounting Oversight Board (United States). Those
standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by
management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred
to above present fairly, in all material respects, the financial
position of Ramco-Gershenson Properties Trust and subsidiaries
as of December 31, 2009 and 2008, and the results of their
operations and their cash flows for each of the three years in
the period ended December 31, 2009 in conformity with
accounting principles generally accepted in the United States of
America.
We also have audited, in accordance with the standards of the
Public Company Accounting Oversight Board (United States),
Ramco-Gershenson Properties Trust and subsidiaries internal
control over financial reporting as of December 31, 2009,
based on criteria established in Internal Control —
Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO) and our report
dated March 12, 2010 expressed an unqualified opinion on
the effectiveness of the Company’s internal control over
financial reporting.
/s/ GRANT THORNTON LLP
Southfield, Michigan
March 12, 2010
F-2
Table of Contents
RAMCO-GERSHENSON
PROPERTIES TRUST
| December 31, | ||||||||
| 2009 | 2008 | |||||||
| (In thousands, except per share amounts) | ||||||||
|
ASSETS
|
||||||||
|
Investment in real estate, net
|
$ | 804,295 | $ | 830,392 | ||||
|
Cash and cash equivalents
|
8,800 | 5,295 | ||||||
|
Restricted cash
|
3,838 | 4,891 | ||||||
|
Accounts receivable, net
|
31,900 | 34,020 | ||||||
|
Notes receivable from unconsolidated entities
|
12,566 | 6,716 | ||||||
|
Equity investments in unconsolidated entities
|
97,506 | 95,867 | ||||||
|
Other assets, net
|
39,052 | 37,345 | ||||||
|
Total Assets
|
$ | 997,957 | $ | 1,014,526 | ||||
|
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
||||||||
|
Mortgages and notes payable
|
$ | 552,551 | $ | 662,601 | ||||
|
Accounts payable and accrued expenses
|
26,440 | 26,751 | ||||||
|
Distributions payable
|
5,477 | 4,945 | ||||||
|
Capital lease obligation
|
6,924 | 7,191 | ||||||
|
Total Liabilities
|
591,392 | 701,488 | ||||||
|
SHAREHOLDERS’ EQUITY
|
||||||||
|
Ramco-Gershenson Properties Trust (“RPT”)
shareholders’ equity:
|
||||||||
|
Common shares of beneficial interest, par value $0.01,
45,000 shares authorized; 30,907 and 18,583 issued and
outstanding as of December 31, 2009 and 2008, respectively
|
309 | 185 | ||||||
|
Additional paid-in capital
|
486,731 | 389,528 | ||||||
|
Accumulated other comprehensive loss
|
(2,149 | ) | (3,328 | ) | ||||
|
Cumulative distributions in excess of net income
|
(117,663 | ) | (112,671 | ) | ||||
|
Total RPT Shareholders’ Equity
|
367,228 | 273,714 | ||||||
|
Noncontrolling interest in subsidiaries
|
39,337 | 39,324 | ||||||
|
Total Shareholder’s Equity
|
406,565 | 313,038 | ||||||
|
Total Liabilities and Shareholders’ Equity
|
$ | 997,957 | $ | 1,014,526 | ||||
See notes to consolidated financial statements.
F-3
Table of Contents
RAMCO-GERSHENSON
PROPERTIES TRUST
| Year Ended December 31, | ||||||||||||
| 2009 | 2008 | 2007 | ||||||||||
|
(In thousands, except
|
||||||||||||
| per share amounts) | ||||||||||||
|
REVENUES:
|
||||||||||||
|
Minimum rents
|
$ | 83,281 | $ | 90,271 | $ | 95,935 | ||||||
|
Percentage rents
|
769 | 636 | 676 | |||||||||
|
Recoveries from tenants
|
32,694 | 34,258 | 37,279 | |||||||||
|
Fees and management income
|
4,916 | 6,484 | 6,831 | |||||||||
|
Other income
|
2,480 | 2,980 | 4,484 | |||||||||
|
Total revenues
|
124,140 | 134,629 | 145,205 | |||||||||
|
EXPENSES:
|
||||||||||||
|
Real estate taxes
|
18,280 | 18,344 | 19,666 | |||||||||
|
Recoverable operating expenses
|
15,883 | 16,974 | 18,344 | |||||||||
|
Depreciation and amortization
|
30,866 | 32,009 | 36,358 | |||||||||
|
Other operating
|
3,714 | 4,611 | 3,785 | |||||||||
|
General and administrative
|
13,448 | 15,121 | 14,108 | |||||||||
|
Restructuring costs, impairment of real estate assets and other
items
|
4,379 | 5,787 | 183 | |||||||||
|
Interest expense
|
31,088 | 36,518 | 42,609 | |||||||||
|
Total expenses
|
117,658 | 129,364 | 135,053 | |||||||||
|
Income from continuing operations before gain on sale of real
estate assets and earnings from unconsolidated entities
|
6,482 | 5,265 | 10,152 | |||||||||
|
Gain on sale of real estate assets, net of taxes of $202, $2,237
and $4,418 in
|
||||||||||||
|
2009, 2008 and 2007, respectively
|
5,010 | 19,595 | 32,643 | |||||||||
|
Earnings from unconsolidated entities
|
1,328 | 2,506 | 2,496 | |||||||||
|
Income from continuing operations
|
12,820 | 27,366 | 45,291 | |||||||||
|
Discontinued operations:
|
||||||||||||
|
Gain (loss) on sale of property
|
2,886 | (463 | ) | — | ||||||||
|
Income from operations
|
230 | 529 | 694 | |||||||||
|
Income from discontinued operations
|
3,116 | 66 | 694 | |||||||||
|
Net Income
|
15,936 | 27,432 | 45,985 | |||||||||
|
Less: Net income attributable to the noncontrolling interest in
subsidiaries
|
(2,216 | ) | (3,931 | ) | (7,310 | ) | ||||||
|
Preferred share dividends
|
— | — | (3,146 | ) | ||||||||
|
Loss on redemption of preferred shares
|
— | — | (1,269 | ) | ||||||||
|
Net income attributable to RPT common shareholders
|
$ | 13,720 | $ | 23,501 | $ | 34,260 | ||||||
|
Basic earnings per RPT common share:
|
||||||||||||
|
Income from continuing operations attributable to RPT common
shareholders
|
$ | 0.50 | $ | 1.27 | $ | 1.89 | ||||||
|
Income from discontinued operations attributable to RPT common
shareholders
|
0.12 | — | 0.03 | |||||||||
|
Net income attributable to RPT common shareholders
|
$ | 0.62 | $ | 1.27 | $ | 1.92 | ||||||
|
Diluted earnings per RPT common share:
|
||||||||||||
|
Income from continuing operations attributable to RPT common
shareholders
|
$ | 0.50 | $ | 1.27 | $ | 1.88 | ||||||
|
Income from discontinued operations attributable to RPT common
shareholders
|
0.12 | — | 0.03 | |||||||||
|
Net income attributable to RPT common shareholders
|
$ | 0.62 | $ | 1.27 | $ | 1.91 | ||||||
|
Basic weighted average common shares outstanding
|
22,193 | 18,471 | 17,851 | |||||||||
|
Diluted weighted average common shares outstanding
|
22,193 | 18,478 | 18,529 | |||||||||
|
AMOUNTS ATTRIBUTABLE TO RPT COMMON SHAREHOLDERS:
|
||||||||||||
|
Income from continuing operations attributable to RPT common
shareholders
|
$ | 11,027 | $ | 23,444 | $ | 33,661 | ||||||
|
Income from discontinued operations attributable to RPT common
shareholders
|
2,693 | 57 | 599 | |||||||||
|
Net income attributable to RPT common shareholders
|
$ | 13,720 | $ | 23,501 | $ | 34,260 | ||||||
|
COMPREHENSIVE INCOME
|
||||||||||||
|
Net income
|
$ | 15,936 | $ | 27,432 | $ | 45,985 | ||||||
|
Other comprehensive income (loss):
|
||||||||||||
|
Unrealized gain (loss) on interest rate swaps
|
1,334 | (3,006 | ) | (1,092 | ) | |||||||
|
Comprehensive income
|
17,270 | 24,426 | 44,893 | |||||||||
|
Comprehensive income attributable to the noncontrolling interest
in subsidiaries
|
(2,371 | ) | (3,531 | ) | (7,161 | ) | ||||||
|
Comprehensive income attributable to RPT common shareholders
|
$ | 14,899 | $ | 20,895 | $ | 37,732 | ||||||
See notes to consolidated financial statements.
F-4
Table of Contents
RAMCO-GERSHENSON
PROPERTIES TRUST
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
(In thousands, except share amounts)
|
Accumulated
|
Cumulative
|
|||||||||||||||||||||||||||
|
Common
|
Additional
|
Other
|
Distributions in
|
Noncontrolling
|
Total
|
|||||||||||||||||||||||
|
Preferred
|
Shares Par
|
Paid-In
|
Comprehensive
|
Excess of
|
Interest
|
Shareholders’
|
||||||||||||||||||||||
| Shares | Value | Capital | Income (Loss) | Net Income | in Subsidiaries | Equity | ||||||||||||||||||||||
|
Balance, January 1, 2007
|
$ | 75,518 | $ | 166 | $ | 335,738 | $ | 211 | $ | (107,086 | ) | $ | 39,601 | $ | 344,148 | |||||||||||||
|
Cash distributions declared
|
— | — | — | — | (33,274 | ) | (5,522 | ) | (38,796 | ) | ||||||||||||||||||
|
Preferred shares dividends declared
|
— | — | — | — | (3,146 | ) | — | (3,146 | ) | |||||||||||||||||||
|
Stock options exercised
|
— | — | 268 | — | — | — | 268 | |||||||||||||||||||||
|
Share-based compensation expense
|
— | — | 1,323 | — | — | — | 1,323 | |||||||||||||||||||||
|
Redemption of 1,000 shares of Series B Preferred stock
|
(23,804 | ) | — | (7 | ) | — | (1,234 | ) | — | (25,045 | ) | |||||||||||||||||
|
Redemption of 31 shares of Series C Preferred stock
|
(853 | ) | — | — | — | (35 | ) | — | (888 | ) | ||||||||||||||||||
|
Conversion of 1,857 shares of Series C Preferred
Shares to commom shares
|
(50,861 | ) | 19 | 50,842 | — | — | — | — | ||||||||||||||||||||
|
Net income
|
38,675 | 7,310 | 45,985 | |||||||||||||||||||||||||
|
Unrealized loss on interest rate swaps
|
— | — | — | (943 | ) | (149 | ) | (1,092 | ) | |||||||||||||||||||
|
Balance, December 31, 2007
|
— | 185 | 388,164 | (732 | ) | (106,100 | ) | 41,240 | 322,757 | |||||||||||||||||||
|
Cash distributions declared
|
— | — | — | — | (29,884 | ) | (5,437 | ) | (35,321 | ) | ||||||||||||||||||
|
Restricted stock dividends
|
— | — | — | — | (188 | ) | — | (188 | ) | |||||||||||||||||||
|
Share-based compensation expense
|
— | — | 1,325 | — | — | — | 1,325 | |||||||||||||||||||||
|
Stock options exercised
|
— | — | 39 | — | — | — | 39 | |||||||||||||||||||||
|
Net income
|
— | — | — | — | 23,501 | 3,931 | 27,432 | |||||||||||||||||||||
|
Unrealized loss on interest rate swaps
|
— | — | — | (2,596 | ) | — | (410 | ) | (3,006 | ) | ||||||||||||||||||
|
Balance, December 31, 2008
|
— | 185 | 389,528 | (3,328 | ) | (112,671 | ) | 39,324 | 313,038 | |||||||||||||||||||
|
Cash distributions declared
|
— | — | — | — | (18,559 | ) | (2,358 | ) | (20,917 | ) | ||||||||||||||||||
|
Restricted stock dividends
|
— | — | — | — | (153 | ) | — | (153 | ) | |||||||||||||||||||
|
Share-based compensation expense
|
— | — | 1,087 | — | — | — | 1,087 | |||||||||||||||||||||
|
Issuance of common shares
|
— | 124 | 96,116 | — | — | — | 96,240 | |||||||||||||||||||||
|
Net income
|
— | 13,720 | 2,216 | 15,936 | ||||||||||||||||||||||||
|
Unrealized gain on interest rate swaps
|
— | — | — | 1,179 | — | 155 | 1,334 | |||||||||||||||||||||
|
Balance, December 31, 2009
|
$ | — | $ | 309 | $ | 486,731 | $ | (2,149 | ) | $ | (117,663 | ) | $ | 39,337 | $ | 406,565 | ||||||||||||
See notes to consolidated financial statements.
F-5
Table of Contents
RAMCO-GERSHENSON
PROPERTIES TRUST
| Year Ended December 31, | ||||||||||||
| 2009 | 2008 | 2007 | ||||||||||
| (In thousands) | ||||||||||||
|
Cash Flows from Operating Activities:
|
||||||||||||
|
Net income
|
$ | 15,936 | $ | 27,432 | $ | 45,985 | ||||||
|
Adjustments to reconcile net income to net cash provided by
operating activities:
|
||||||||||||
|
Depreciation and amortization
|
30,866 | 32,009 | 36,358 | |||||||||
|
Amortization of deferred financing costs
|
875 | 971 | 1,166 | |||||||||
|
Gain on sale of real estate assets
|
(5,010 | ) | (19,595 | ) | (32,643 | ) | ||||||
|
Loss on impairment of real estate assets
|
— | 5,103 | — | |||||||||
|
Abandonment of pre-development sites
|
1,224 | 684 | 183 | |||||||||
|
Earnings from unconsolidated entities
|
(1,328 | ) | (2,506 | ) | (2,496 | ) | ||||||
|
Discontinued operations
|
(230 | ) | (529 | ) | (694 | ) | ||||||
|
Distributions received from unconsolidated entities
|
3,836 | 6,389 | 5,934 | |||||||||
|
Share-based compensation
|
1,291 | 1,325 | 1,323 | |||||||||
|
Changes in assets and liabilities that provided (used) cash:
|
||||||||||||
|
Accounts receivable
|
2,120 | (4,949 | ) | 379 | ||||||||
|
Other assets
|
165 | 1,594 | 4,473 | |||||||||
|
Accounts payable and accrued expenses
|
901 | (22,189 | ) | 24,708 | ||||||||
|
Net Cash Provided by Continuing Operating Activities
|
50,646 | 25,739 | 84,676 | |||||||||
|
(Gain) loss on sale of Discontinued Operations
|
(2,886 | ) | 463 | — | ||||||||
|
Operating Cash from Discontinued Operations
|
304 | 796 | 1,312 | |||||||||
|
Net Cash Provided by Operating Activities
|
48,064 | 26,998 | 85,988 | |||||||||
|
Cash Flows from Investing Activities:
|
||||||||||||
|
Real estate developed or acquired, net of liabilities assumed
|
(21,598 | ) | (67,880 | ) | (87,133 | ) | ||||||
|
Investment in and notes receivable from unconsolidated entities
|
(10,922 | ) | (6,079 | ) | (38,177 | ) | ||||||
|
Payments on notes receivable from joint ventures
|
— | 23,249 | 13,500 | |||||||||
|
Proceeds from sales of real estate assets
|
22,985 | 74,269 | 132,997 | |||||||||
|
Decrease in restricted cash
|
1,053 | 886 | 1,995 | |||||||||
|
Net Cash (Used in) Provided by Continuing Investing Activities
|
(8,482 | ) | 24,445 | 23,182 | ||||||||
|
Cash from Discontinued Operations Provided by Investing
Activities
|
5,037 | 9,157 | — | |||||||||
|
Net Cash (Used in) Provided by Investing Activities
|
(3,445 | ) | 33,602 | 23,182 | ||||||||
|
Cash Flows from Financing Activities:
|
||||||||||||
|
Cash distributions to common shareholders
|
(17,974 | ) | (34,338 | ) | (32,156 | ) | ||||||
|
Cash distributions to operating partnership unit holders
|
(2,503 | ) | (6,059 | ) | (5,360 | ) | ||||||
|
Cash dividends paid on preferred shares
|
— | — | (4,810 | ) | ||||||||
|
Payment for deferred financing costs
|
(6,507 | ) | (1,419 | ) | (878 | ) | ||||||
|
Distributions to noncontrolling partners
|
(54 | ) | (53 | ) | (121 | ) | ||||||
|
Paydown of mortgages and notes payable
|
(286,235 | ) | (195,758 | ) | (317,102 | ) | ||||||
|
Borrowings on mortgages and notes payable
|
176,186 | 167,558 | 280,588 | |||||||||
|
Reduction of capitalized lease obligation
|
(267 | ) | (252 | ) | (239 | ) | ||||||
|
Purchase and retirement of preferred shares
|
— | — | (25,933 | ) | ||||||||
|
Net proceeds from issuance of common shares
|
96,240 | — | — | |||||||||
|
Proceeds from exercise of stock options
|
— | 39 | 268 | |||||||||
|
Net Cash Used in Financing Activities
|
(41,114 | ) | (70,282 | ) | (105,743 | ) | ||||||
|
Net Increase (Decrease) in Cash and Cash Equivalents
|
3,505 | (9,682 | ) | 3,427 | ||||||||
|
Cash and Cash Equivalents, Beginning of Period
|
5,295 | 14,977 | 11,550 | |||||||||
|
Cash and Cash Equivalents, End of Period
|
$ | 8,800 | $ | 5,295 | $ | 14,977 | ||||||
|
Supplemental Cash Flow Disclosure, including Non-Cash Activities:
|
||||||||||||
|
Cash paid for interest during the period
|
$ | 28,783 | $ | 35,628 | $ | 41,936 | ||||||
|
Cash paid for federal income taxes
|
378 | 6,333 | 1,030 | |||||||||
|
Capitalized interest
|
2,116 | 1,577 | 2,881 | |||||||||
|
Assumed debt of acquired property and joint venture interests
|
— | — | 12,197 | |||||||||
|
Increase (decrease) in fair value of interest rate swaps
|
1,334 | (3,006 | ) | (1,092 | ) | |||||||
|
Decrease in deferred gain on sale of property
|
— | 11,678 | — | |||||||||
See notes to consolidated financial statements
F-6
Table of Contents
RAMCO-GERSHENSON
PROPERTIES TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years Ended December 31, 2009, 2008 and 2007
(Dollars in thousands)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years Ended December 31, 2009, 2008 and 2007
(Dollars in thousands)
| 1. | Organization and Summary of Significant Accounting Policies |
Ramco-Gershenson Properties Trust, together with its
subsidiaries (the “Company”), is a real estate
investment trust (“REIT”) engaged in the business of
owning, developing, acquiring, managing and leasing community
shopping centers, regional malls and single tenant retail
properties. At December 31, 2009, the Company owned
interests in and managed a portfolio of 88 shopping centers,
with approximately 19.8 million square feet of gross
leaseable area (“GLA”) of which 15.3 million is
owned by the Company, located in the Midwestern, Southeastern
and Mid-Atlantic regions of the United States. The
Company’s centers are usually anchored by discount
department stores or supermarkets and the tenant base consists
primarily of national and regional retail chains and local
retailers. The Company’s credit risk, therefore, is
concentrated in the retail industry.
The economic performance and value of the Company’s real
estate assets are subject to all the risks associated with
owning and operating real estate, including risks related to
adverse changes in national, regional and local economic and
market conditions. The economic condition of each of the
Company’s markets may be dependent on one or more
industries. An economic downturn in one of these industries may
result in a business downturn for the Company’s tenants,
and as a result, these tenants may fail to make rental payments,
decline to extend leases upon expiration, delay lease
commencements or declare bankruptcy.
In June 2009, the Financial Accounting Standards Board
(“FASB”) issued the FASB Accounting Standards
Codification and the Hierarchy of Generally Accepted Accounting
Principles, also known as FASB Accounting Standards Codification
(“ASC”)
105-10,
“Generally Accepted Accounting Principles”, (“ASC
105-10”).
ASC
105-10
establishes the FASB Accounting Standards Codification
(“Codification”) as the single source of authoritative
U.S. GAAP recognized by the FASB to be applied by
nongovernmental entities. Rules and interpretive releases of the
SEC under authority of federal securities laws are also sources
of authoritative GAAP for SEC registrants. The Codification
supersedes all existing non-SEC accounting and reporting
standards. All other non-grandfathered, non-SEC accounting
literature not included in the Codification will become
non-authoritative. Following the Codification, the FASB will not
issue new standards in the form of Statements, FASB Staff
Positions or Emerging Issues Task Force Abstracts. The FASB,
instead, will issue Accounting Standards Updates
(“ASU”), which will serve to update the Codification,
provide background information about the guidance and provide
the basis for conclusions on the changes to the Codification.
The FASB’s Codification project was not intended to change
GAAP, however it will change the way the guidance is organized
and presented. As a result, these changes will have a
significant impact on how companies reference GAAP in their
financial statements and in their accounting policies for
financial statements issued for interim and annual periods
ending after September 15, 2009. The Company implemented
the Codification in the third quarter 2009. Any technical
references contained in the accompanying financial statements
and notes to consolidated financial statements have been updated
to correspond to the new Codification topics, as appropriate.
New standards not yet codified have been referenced as issued
and will be updated when codified.
Principles
of Consolidation
The consolidated financial statements include the accounts of
the Company and its majority owned subsidiary, the Operating
Partnership, Ramco-Gershenson Properties, L.P. (91.4%, 86.4%,
and 86.4% owned by the Company at December 31, 2009, 2008
and 2007, respectively), and all wholly-owned subsidiaries,
including bankruptcy remote single purpose entities and all
majority-owned joint ventures over which the Company has
control. The presentation of consolidated financial statements
does not itself imply that assets of any consolidated entity
(including any special-purpose entity formed for a particular
project) are available to pay the liabilities of any other
consolidated entity, or that the liabilities of any other
consolidated entity (including any special-purpose entity formed
for a particular project) are obligations of any other
consolidated entity. Investments in real estate joint ventures
for which the Company has the ability to exercise significant
influence over, but for which the Company
F-7
Table of Contents
does not have financial or operating control, are accounted for
using the equity method of accounting. Accordingly, the
Company’s share of the earnings of these joint ventures is
included in consolidated net income. All intercompany accounts
and transactions have been eliminated in consolidation.
The Company owns 100% of the non-voting and voting common stock
of Ramco-Gershenson, Inc. (“Ramco”), and therefore it
is included in the consolidated financial statements. Ramco has
elected to be a taxable REIT subsidiary for federal income tax
purposes. Ramco provides property management services to the
Company and to other entities. See Note 20 for management
fees earned from related parties.
Use of
Estimates
The preparation of financial statements in conformity with
accounting principles generally accepted in the United States of
America requires management of the Company to make estimates and
assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities
at the date of the financial statements and the reported amounts
of revenues and expenses during the reporting period. The
Company bases its estimates on historical experience and on
various other assumptions that it believes to be reasonable
under the circumstances, the results of which form the basis for
making judgments about the carrying values of assets and
liabilities and reported amounts that are not readily apparent
from other sources. Actual results could differ from those
estimates.
Listed below are certain significant estimates and assumptions
used in the preparation of the Company’s consolidated
financial statements.
Reclassifications
Certain reclassifications of prior period amounts have been made
in the financial statements in order to conform to the 2009
presentation.
Allowance
for Doubtful Accounts
The Company provides for bad debt expense based upon the
allowance method of accounting. The Company monitors the
collectibility of its accounts receivable (billed and unbilled,
including straight-line) from specific tenants, and analyzes
historical bad debts, customer credit worthiness, current
economic trends and changes in tenant payment terms when
evaluating the adequacy of the allowance for bad debts. When
tenants are in bankruptcy, the Company makes estimates of the
expected recovery of pre-petition and post-petition claims. The
period to resolve these claims can exceed one year. Accounts
receivable in the accompanying balance sheets is shown net of an
allowance for doubtful accounts of $3,288 and $4,287 as of
December 31, 2009 and 2008, respectively.
| 2009 | 2008 | 2007 | ||||||||||
|
Allowance for doubtful accounts:
|
||||||||||||
|
Balance at beginning of year
|
$ | 4,287 | $ | 3,313 | $ | 2,913 | ||||||
|
Charged to expense
|
1,129 | 2,013 | 1,157 | |||||||||
|
Write offs
|
(2,128 | ) | (1,039 | ) | (757 | ) | ||||||
|
Balance at end of year
|
$ | 3,288 | $ | 4,287 | $ | 3,313 | ||||||
Accounting
for the Impairment of Long-Lived Assets and Equity
Investments
The Company periodically reviews whether events and
circumstances subsequent to the acquisition or development of
long-lived assets, or intangible assets subject to amortization,
have occurred that indicate the remaining estimated useful lives
of those assets may warrant revision or that the remaining
balance of those assets may not be recoverable. If events and
circumstances, including but not limited to, declining trends in
occupancy and rental rates, tenant sales, net operating income
and geographic location of our shopping center properties,
indicate that the long-lived assets should be reviewed for
possible impairment, we prepare projections to assess whether
future cash flows, on a non-discounted basis, for the related
assets are likely to exceed the recorded carrying amount
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of those assets to determine if an impairment of the carrying
amount is appropriate. The cash flow projections consider
factors common in the valuation of real estate, such as expected
future operating income, trends in occupancy, rental rates and
recovery ratios, as well as leasing demands and competition in
the marketplace.
The Company’s management is required to make subjective
assessments as to whether there are impairments in value of its
long-lived assets, or intangible assets. Subsequent changes in
estimated undiscounted cash flows arising from changes in our
assumptions could affect the determination of whether impairment
exists and whether the effects could have a material impact on
the Company’s net income. To the extent impairment has
occurred, the loss will be measured as the excess of the
carrying amount of the property over the fair value of the
property as determined by valuation techniques appropriate in
the circumstances. The Company does not believe that the value
of any long-lived asset, or intangible asset was impaired at
December 31, 2009.
In determining the estimated useful lives of intangibles assets
with finite lives, we consider the nature, life cycle position,
and historical and expected future operating cash flows of each
asset, as well as our commitment to support these assets through
continued investment.
In 2008, the Company recognized a $5,103 loss on the impairment
of its Ridgeview Crossing shopping center in Elkin, North
Carolina. The non-cash impairment charge is included in
“restructuring, impairment of real estate assets, and other
items” on the consolidated statements of income and
comprehensive income. There were no impairment charges for the
years ended December 31, 2009 and 2007. See Note 16 of
the Notes to the Consolidated Financial Statements for further
information.
Revenue
Recognition
Shopping center space is generally leased to retail tenants
under leases which are accounted for as operating leases. The
Company recognizes minimum rents on the straight-line method
over the terms of the leases, commencing when the tenant takes
possession of the space, as required under accounting guidance
for operating leases. Certain of the leases also provide for
additional revenue based on contingent percentage income, which
is recorded on an accrual basis once the specified target that
triggers this type of income is achieved. The leases also
typically provide for recoveries from tenants of common area
maintenance, real estate taxes and other operating expenses.
These recoveries are recognized as revenue in the period the
applicable costs are incurred. Revenue from fees and management
income are recognized in the period in which the services have
been provided and the earnings process is complete. Lease
termination income is recognized when a lease termination
agreement is executed by the parties and the tenant vacates the
space and is included in “other income” on the
consolidated statements of income and comprehensive income.
Straight line rental income was greater than the current amount
required to be paid by the Company’s tenants by $1,214,
$1,641 and $1,338 for the years ended December 31, 2009,
2008 and 2007, respectively.
Revenues from the Company’s largest tenant, TJ
Maxx/Marshalls, amounted to 4.0% of its annualized base rent for
the year ended December 31, 2009 and 3.6% for the years
ended December 31, 2008 and 2007, respectively.
Gain on sale of properties and other real estate assets are
recognized when it is determined that the sale has been
consummated, the buyer’s initial and continuing investment
is adequate, the Company’s receivable, if any, is not
subject to future subordination, and the buyer has assumed the
usual risks and rewards of ownership of the assets.
Accounting
Policies
Cash and
Cash Equivalents
The Company considers all highly liquid investments with an
original maturity of three months or less to be cash equivalents.
Income
Tax Status
The Company conducts its operations with the intent of meeting
the requirements applicable to a REIT under sections 856
through 860 of the Internal Revenue Code. In order to maintain
its qualification as a REIT, the
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Company is required to distribute annually at least 90% of its
REIT taxable income, excluding net capital gain, to its
shareholders. As long as the Company qualifies as a REIT, it
will generally not be liable for federal corporate income taxes.
Certain of the Company’s operations, including property
management and asset management, as well as ownership of certain
land, are conducted through taxable REIT subsidiaries, (each, a
“TRS”). A TRS is a C corporation that has not elected
REIT status and, as such, is subject to federal corporate income
tax. The Company uses the TRS format to facilitate its ability
to provide certain services and conduct certain activities that
are not generally considered as qualifying REIT activities.
During the years ended December 31, 2009, 2008, and 2007,
the Company sold various properties and land parcels at a gain,
resulting in both a federal and state tax liability. Tax
liabilities of $202, $2,237, and $4,418 have been netted against
the gain on sale of real estate assets in the Company’s
consolidated statements of income for the years ended
December 31, 2009, 2008, and 2007, respectively.
The Company had no unrecognized tax benefits as of
December 31, 2009. The Company expects no significant
increases or decreases in unrecognized tax benefits due to
changes in tax positions within one year of December 31,
2009. The Company has no interest or penalties relating to
income taxes recognized in the statement of operations for the
twelve months ended December 31, 2009 or in the balance
sheet as of December 31, 2009. It is the Company’s
accounting policy to classify interest and penalties relating to
unrecognized tax benefits as interest expense and tax expense,
respectively. As of December 31, 2009, returns for the
calendar years 2006 through 2008 remain subject to examination
by the Internal Revenue Service (“IRS”) and various
state and local tax jurisdictions. As of December 31, 2009,
certain returns for calendar year 2005 also remain subject to
examination by various state and local tax jurisdictions.
Real
Estate
The Company records real estate assets at cost less accumulated
depreciation. Direct costs incurred for the acquisition,
development and construction of properties are capitalized. For
redevelopment of an existing operating property, the
undepreciated net book value plus the direct costs for the
construction incurred in connection with the redevelopment are
capitalized to the extent such costs do not exceed the estimated
value when complete.
Depreciation is computed using the straight-line method and
estimated useful lives for buildings and improvements of
40 years and equipment and fixtures of 5 to 10 years.
Expenditures for improvements to tenant spaces are capitalized
as part of buildings and improvements and are amortized over the
life of the initial term of each lease or the useful life of the
asset. The Company commences depreciation of the asset once the
improvements have been completed and the premise is placed into
service. Expenditures for normal, recurring, or periodic
maintenance are charged to expense when incurred. Renovations
which improve or extend the life of the asset are capitalized.
Other
Assets
Other assets consist primarily of prepaid expenses, proposed
development and acquisition costs, financing and leasing costs.
Financing and leasing costs are amortized using the
straight-line method over the terms of the respective
agreements. Should a tenant terminate its lease, the unamortized
portion of the leasing cost is expensed. Unamortized financing
costs are expensed when the related agreements are terminated
before their scheduled maturity dates. Proposed development and
acquisition costs are deferred and transferred to construction
in progress when development commences or expensed if
development is not considered probable.
Purchase
Accounting for Acquisitions of Real Estate and Other
Assets
Acquired real estate assets have been accounted for using the
purchase method of accounting and accordingly, the results of
operations are included in the consolidated statements of income
from the respective dates of acquisition. The Company allocates
the purchase price to (i) land and buildings based on
management’s internally prepared estimates and
(ii) identifiable intangible assets or liabilities
generally consisting of above-market and below-market leases and
in-place leases, which are included in other assets or accrued
expenses in the consolidated
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balance sheets. The Company uses estimates of fair value based
on estimated cash flows, using appropriate discount rates, and
other valuation techniques, including management’s analysis
of comparable properties in the existing portfolio, to allocate
the purchase price to acquired tangible and intangible assets.
Liabilities assumed generally consist of mortgage debt on the
real estate assets acquired. Assumed debt with a stated interest
rate that is significantly different from market interest rates
for similar debt instruments is recorded at its fair value based
on estimated market interest rates at the date of acquisition.
The estimated fair value of above-market and below-market
in-place leases for acquired properties is recorded based on the
present value (using an interest rate which reflects the risks
associated with the leases acquired) of the difference between
(i) the contractual amounts to be paid pursuant to the
in-place leases and (ii) management’s estimate of fair
market lease rates for the corresponding in-place leases,
measured over a period equal to the remaining non-cancelable
term of the lease.
The aggregate fair value of other intangible assets consisting
of in-place, at market leases, is estimated based on internally
developed methods to determine the respective property values.
Factors considered by management in their analysis include an
estimate of costs to execute similar leases and operating costs
saved.
The fair value of above-market in-place leases and the fair
value of other intangible assets acquired are recorded as
identified intangible assets, included in other assets, and are
amortized as reductions of rental revenue over the remaining
term of the respective leases. The fair value of below-market
in-place leases are recorded as deferred credits and are
amortized as additions to rental income over the remaining terms
of the respective leases. Should a tenant terminate its lease,
the unamortized portion of the in-place lease value would be
expensed or taken to income immediately as appropriate.
Investments
in Unconsolidated Entities
The Company accounts for its investments in unconsolidated
entities using the equity method of accounting, as the Company
exercises significant influence over, but does not control,
these entities. In assessing whether or not the Company controls
an entity, it applies the criteria of ASC 810
“Consolidation”.
Variable interest entities
within the scope of ASC 810 are required to be consolidated by
their primary beneficiary. The primary beneficiary of a variable
interest entity is determined to be the party that absorbs a
majority of the entity’s expected losses, receives a
majority of its expected returns, or both. The Company has
evaluated the applicability of ASC 810 to its investments in and
advances to its joint ventures and has determined that these
ventures do not meet the criteria of a variable interest entity
and, therefore, consolidation of these ventures is not required.
The Company’s investments in unconsolidated entities are
initially recorded at cost, and subsequently adjusted for equity
in earnings and cash contributions and distributions.
Distributions
Received from Unconsolidated Entities
The Company considers distributions received from unconsolidated
entities as returns on investment in those entities to the
extent of cumulative net operational cash flows, and therefore
classifies these distributions as cash flows from operating
activities in the consolidated statements of cash flows.
Cumulative net operational cash flows are defined as the
cumulative earnings from unconsolidated entities adjusted for
non-cash items such as depreciation expense, bad debt expense
and gain or loss on sale of real estate assets. Other
distributions received from unconsolidated entities would be
considered a return of the investment and classified as cash
flows from investing activities on the consolidated statements
of cash flows. There was no return of investment for the years
ended December 31, 2009, 2008 and 2007.
Fair
Value Measurements
On January 1, 2008, the Company adopted the accounting
rules for fair value measurements, which defines fair value,
establishes a framework for measuring fair value under
accounting principles generally accepted in the United States,
and enhances disclosures about fair value measurements. Fair
value is defined as the exchange price that would be received to
sell an asset or paid to transfer a liability in the principal
or most advantageous market for the asset or liability in an
orderly transaction between market participants on the
measurement date. The fair value measurement standard clarifies
that fair value should be based on the assumptions market
participants would use
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when pricing an asset or liability and establishes a fair value
hierarchy that prioritizes the information used to develop those
assumptions. The fair value hierarchy gives the highest priority
to quoted prices in active markets and the lowest priority to
unobservable data. Fair value measurements are required to be
separately disclosed by level within the fair value hierarchy.
Fair value measurements for assets and liabilities where there
exists limited or no observable market data are, therefore,
based primarily upon estimates, and are often calculated based
on the economic and competitive environment, the characteristics
of the asset or liability and other factors. Therefore, fair
value cannot be determined with precision and may not be
realized in an actual sale or immediate settlement of the asset
or liability. Additionally, there may be inherent weaknesses in
any calculation technique, and changes in the underlying
assumptions used, including but not limited to estimates of
future cash flows, could impact the calculation of current or
future values. For further discussion on fair value measurement,
see Note 10.
Derivative
Financial Instruments
The Company recognizes all derivative financial instruments in
the consolidated financial statements at fair value. Changes in
fair value of derivative financial instruments that qualify for
hedge accounting are recorded in shareholders’ equity as a
component of accumulated other comprehensive income or loss.
In managing interest rate exposure on certain floating rate
debt, the Company at times enters into interest rate protection
agreements. The Company does not utilize these arrangements for
trading or speculative purposes. The differential between fixed
and variable rates to be paid or received is accrued monthly,
and recognized currently in the consolidated statements of
income. The Company is exposed to credit loss in the event of
non-performance by the counter party to the interest rate swap
agreements; however, the Company does not anticipate
non-performance by the counter party.
Recognition
of Share-based Compensation Expense
The Company recognizes the cost of its employee stock option and
restricted share awards in its consolidated statements of income
based upon the grant date fair value. The total cost of the
Company’s share-based awards is equal to their grant date
fair value and is recognized over the service periods of the
awards. Under the modified prospective transition method, the
Company began to recognize as expense the cost of unvested
awards outstanding as of January 1, 2006.
Noncontrolling
Interest in Subsidiaries
Effective January 1, 2009, the Company adopted the
provisions of the accounting standard for noncontrolling
interests, previously referred to as minority interests,
requiring noncontrolling interests to be treated as a separate
component of equity, not as a liability or other item outside of
permanent equity. Consolidated net income and comprehensive
income is required to include the noncontrolling interest’s
share. The calculation of earnings per share continues to be
based on income amounts attributable to the parent.
Noncontrolling interest in subsidiaries for the years ending
December 31 consisted of the following:
| 2009 | 2008 | 2007 | ||||||||||
|
Noncontrolling interest in subsidiaries at January 1
|
$ | 39,324 | $ | 41,240 | $ | 39,601 | ||||||
|
Net income attributable to noncontrolling interest in
subsidiaries
|
2,216 | 3,931 | 7,310 | |||||||||
|
Distributions to noncontrolling interest holders
|
(2,358 | ) | (5,437 | ) | (5,522 | ) | ||||||
|
Other comprehensive income (loss) attributable to noncontrolling
interest in subsidiaries
|
155 | (410 | ) | (149 | ) | |||||||
|
Total noncontrolling interest in subsidiaries at December 31
|
$ | 39,337 | $ | 39,324 | $ | 41,240 | ||||||
| 2. | Recent Accounting Pronouncements |
In March 2008, the FASB updated ASC 815 “Derivatives and
Hedging”, requiring entities that utilize derivative
instruments to provide qualitative disclosures about their
objectives and strategies for using such
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instruments, as well as any details of credit-risk-related
contingent features contained within derivatives. The update
also requires entities to disclose additional information about
the amounts and location of derivatives included within the
financial statements, how the provisions of the accounting
guidance have been applied, and the impact that hedges have on
an entity’s financial position, financial performance, and
cash flows. The new accounting guidance was effective for fiscal
years and interim periods beginning after November 15,
2008. The Company implemented the provisions of the standard in
the first quarter of 2009. The application did not have a
material effect on the Company’s results of operations or
financial position because it only included new disclosure
requirements. Refer to Note 11 of the Notes to the
Consolidated Financial Statements for further information.
In June 2008, the FASB updated ASC 260 “Earnings Per
Share” to clarify that unvested share-based payment awards
that contain non-forfeitable rights to dividends or dividend
equivalents are considered participating securities and should
be included in the calculation of basic earnings per share using
the two-class method. This new accounting rule was effective for
financial statements issued for fiscal years and interim periods
beginning after December 15, 2008. All prior period
earnings per share amounts presented were required to be
adjusted retrospectively. Accordingly, the Company adopted the
provisions of this standard in the first quarter of 2009. The
adoption did not have a material effect on the Company’s
consolidated financial condition, results of operations, or cash
flows. Refer to Note 13 of the Notes to the Consolidated
Financial Statements for the calculation of earnings per share.
In April 2009, the FASB updated ASC
820-10-65
“Fair Value Measurements and Disclosures: Overall: Open
Effective Date Information”. This guidance clarifies the
application of accounting rules for fair value measurements when
the volume and level of activity for the asset or liability have
significantly decreased and on identifying circumstances that
indicate a transaction is not orderly. Additionally, the
guidance emphasizes that even if there has been a significant
decrease in the volume and level of activity for the asset or
liability and regardless of the valuation technique(s) used, the
objective of a fair value measurement remains the same. Fair
value is the price that would be received to sell an asset or
paid to transfer a liability in an orderly transaction (that is,
not a forced liquidation or distressed sale) between market
participants at the measurement date under current market
conditions. The provisions of the new accounting rule were
effective for interim and annual reporting periods ending after
June 15, 2009, to be applied prospectively. The Company
adopted the provisions in the third quarter of 2009. The
adoption of the accounting standard did not have a material
impact on the Company’s consolidated financial position,
results of operations, or cash flows.
In May 2009, the FASB issued ASC 855, “Subsequent
Events”, requiring that an entity shall recognize in the
financial statements the effects of all subsequent events that
provide additional evidence about conditions that existed at the
date of the balance sheet, including the estimates inherent in
the process of preparing financial statements. The new
accounting provisions were effective for interim or annual
financial periods ending after June 15, 2009, to be applied
prospectively. Accordingly, the Company adopted the provisions
in the second quarter of 2009. The adoption of the provisions
did not have a material effect on the Company’s
consolidated financial condition, results of operations, or cash
flows. Refer to Note 23 of the Notes to the Consolidated
Financial Statements for the Company’s disclosure on
subsequent events.
In June 2009, the FASB issued Statement of Financial Accounting
Standards No. 167 (“SFAS 167”),
“Amendments to FASB Interpretation No. 46(R)”,
which has not yet been codified. SFAS 167 amends guidance
surrounding a company’s analysis to determine whether any
of its variable interests constitute controlling financial
interests in a variable interest entity. This analysis
identifies the primary beneficiary of a variable interest entity
as the enterprise that has both of the following
characteristics; a) the power to direct the activities of a
variable interest entity that most significantly impact the
entity’s economic performance, and b) the obligation
to absorb losses of the entity that could potentially be
significant to the variable interest entity or the right to
receive benefits from the entity that could potentially be
significant to the variable interest entity. Additionally, an
enterprise is required to assess whether it has an implicit
financial responsibility to ensure that a variable interest
entity operates as designed when determining whether it has the
power to direct the activities of the variable interest entity
that most significantly impact the entity’s economic
performance. The new guidance also requires ongoing
reassessments of whether an enterprise is the primary
beneficiary of a variable interest entity. The guidance is
effective for the first annual reporting period beginning after
November 15, 2009. Accordingly, the Company will reevaluate
its interests in variable interest entities for the period
beginning January 1, 2010 to determine that the entities
are reflected
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properly in the financial statements as investments or
consolidated entities. The Company is currently evaluating the
application of the new accounting standard.
In June 2009, the FASB issued ASC
105-10,
“Generally Accepted Accounting Principles
”
which established the FASB Accounting Standards Codification
as the sole source of authoritative U.S. generally accepted
accounting principles recognized by the FASB. Effective
July 1, 2009 the Company adopted the provisions of ASC
105-10
and
have updated the references to GAAP in its condensed financial
statements and notes to consolidated condensed financial
statements for the period ended September 30, 2009. The
adoption of this standard did not have a material impact on the
Company’s consolidated financial position, results of
operations, or cash flows.
In August 2009, the FASB issued ASU
2009-05,
“Fair Value Measurements and Disclosures —
Measuring Liabilities at Fair Value,” which updates ASC
820-10.
The
update clarifies that in circumstances in which a quoted price
in an active market for the identical liability is not
available, a reporting entity is required to measure fair value
using one or more of the following techniques:
1. A valuation technique that uses:
a) the quoted price of an identical liability when traded
as an asset, or
b) quoted prices for similar liabilities or similar
liabilities when traded as assets.
2. Another valuation technique that is consistent with the
principles of ASC 820. Examples include an income approach, such
as a present value technique, or a market approach, such as a
technique that is based on the amount at the measurement date
that the reporting entity would pay to transfer the identical
liability or would receive to enter into the identical liability.
This standard was effective for financial statements issued for
interim and annual periods ending after August 2009. As such,
the Company adopted ASU
2009-05
effective for the quarter ending September 30, 2009. The
adoption of this new accounting standard did not have a material
impact on the Company’s disclosures.
| 3. | Discontinued Operations |
In August 2009, the Company sold Taylor Plaza, a stand-alone
Home Depot in Taylor, Michigan, to a third party for
approximately $5,000 in net proceeds. The transaction resulted
in a gain on the sale of $2,886 for the year ended
December 31, 2009. Total revenue for Taylor Plaza was $493,
$798 and $860 for the years ended December 31, 2009, 2008,
and 2007, respectively.
In June 2008, the Company sold the Highland Square Shopping
Center in Crossville, Tennessee, to a third party for
approximately $9,200 in net proceeds. The transaction resulted
in a loss on the sale of $463, for the year ended
December 31, 2008. Total revenue for Highland Square was
$413 and $969 for the years ended December 31, 2008, and
2007, respectively. There was no revenue related to Highland
Square for the year ended December 31, 2009.
All periods presented reflect the operations of the
aforementioned properties as discontinued operations on the
consolidated statements of income and comprehensive income in
accordance with ASC
205-20
Financial Statement Presentation: Discontinued Operations
.
As of December 31, 2009 and 2008, the Company had not
classified any properties as Real Estate Assets Held for Sale in
its consolidated balance sheets.
| 4. | Accounts Receivable, Net |
Accounts receivable includes $17,474 and $17,605 of unbilled
straight-line rent receivables at December 31, 2009 and
2008.
The Company provides for bad debt expense based upon the
allowance method of accounting. The Company monitors the
collectability of its accounts receivable (billed and unbilled,
including straight-line) from specific tenants, and analyzes
historical bad debts, customer credit worthiness, current
economic trends and changes in tenant payment terms when
evaluating the adequacy of the allowance for doubtful accounts.
When tenants are in
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bankruptcy, the Company makes estimates of the expected recovery
of pre-petition and post-petition claims. The ultimate
resolution of these claims can be delayed for one year or
longer. Accounts receivable in the accompanying balance sheets
is shown net of an allowance for doubtful accounts of $3,288 and
$4,287 at December 31, 2009 and December 31, 2008,
respectively.
Accounts receivable at December 31, 2009 and 2008 included
$1,296 and $2,258, respectively, due from Atlantic Realty Trust
(“Atlantic”) for reimbursement of tax deficiencies and
interest related to the Internal Revenue Service
(“IRS”) examination of the Company’s taxable
years ended December 31, 1991 through 1995. Under terms of
the tax agreement the Company entered into with Atlantic
(“Tax Agreement”), Atlantic assumed all of the
Company’s liability for tax and interest arising out of
that IRS examination. Effective June 30, 2006, Atlantic was
merged into (acquired by) Kimco SI 1339, Inc. (formerly known as
SI 1339, Inc.), a wholly owned subsidiary of Kimco Realty
Corporation (“Kimco”), with Kimco SI 1339, Inc.
continuing as the surviving corporation. By way of the merger,
Kimco SI 1339, Inc. acquired Atlantic’s assets, subject to
its liabilities, including its obligations to the Company under
the Tax Agreement. See Note 21.
| 5. | Investment in Real Estate, Net |
Investment in real estate at December 31 consisted of the
following:
| 2009 | 2008 | |||||||
|
Land
|
$ | 141,794 | $ | 144,422 | ||||
|
Buildings and improvements
|
820,070 | 813,705 | ||||||
|
Construction in progress
|
33,587 | 46,982 | ||||||
| 995,451 | 1,005,109 | |||||||
|
Less: accumulated depreciation
|
(191,156 | ) | (174,717 | ) | ||||
|
Investment in real estate, net
|
$ | 804,295 | $ | 830,392 | ||||
| 6. | Property Acquisitions and Dispositions |
Acquisitions:
The Company had no acquisitions of wholly-owned shopping center
properties in the years ended December 31, 2009 and 2008.
However, the Company acquired various parcels of land for
development purposes totaling approximately $402 and $11,640 in
2009 and 2008, respectively.
During 2007, the Company acquired the remaining 80% interest in
Ramco Jacksonville LLC, an entity that was formed to develop a
shopping center in Jacksonville, Florida, for $5,100 in cash and
the assumption of a $75,000 mortgage note payable due April
2017. The Company has consolidated Jacksonville in its results
of operations since the date of the acquisition.
Dispositions:
In August 2009, the Company sold Taylor Plaza, a stand-alone
Home Depot in Taylor, Michigan, to a third party for
approximately $5,000 in net proceeds. The transaction resulted
in a gain on the sale of $2,886 for the year ended
December 31, 2009. Income from operations and the gain on
sale relating to Taylor Plaza are classified in discontinued
operations on the consolidated statements of income and
comprehensive income for all periods presented. See Note 3.
In June 2008, the Company sold Highland Square Shopping Center
in Crossville, Tennessee, to a third party. The transaction
resulted in a loss on the sale of $463 in 2008. Income from
operations and the loss on sale relating to Highland Square are
classified in discontinued operations on the consolidated
statements of income and comprehensive income for all periods
presented. See Note 3.
In August 2008, the Company sold the Plaza at Delray shopping
center in Delray Beach, Florida, to a joint venture in which it
has a 20% ownership interest. Permanent financing for the
shopping center was secured by the joint venture in the amount
of $48,000 for five years at an interest rate of 6.0%. The
transaction allowed the
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Company to pay down $43,000 in long-term debt. The Company
recognized a gain of $8,213, net of taxes, on the sale of this
center, which represents the gain attributable to the joint
venture partner’s 80% ownership interest.
During 2008, the Company sold various parcels of land resulting
in a total net gain of $1,477.
In March 2007, the Company sold its ownership interest in
Chester Springs Shopping Center to a joint venture in which it
has a 20% ownership interest. The joint venture assumed debt of
$23,800 in connection with the sale of this center and the
Company recognized a gain of $21,801, net of taxes, on the sale
of this center, which represents the gain attributable to the
joint venture partner’s 80% ownership interest.
In June 2007, the Company sold its ownership interest in
Kissimmee West and Shoppes of Lakeland to a joint venture in
which it has a 7% ownership interest. The Company recognized a
gain of $8,104 net of taxes, on the sale of these centers
which represents the gain attributable to the joint venture
partner’s 93% ownership interest.
In July 2007, the Company sold its ownership interest in
Paulding Pavilion to a joint venture in which it has a 20%
ownership interest. The joint venture assumed debt of $4,675 in
connection with the sale of this center and the Company
recognized a gain of $207, net of taxes on the sale of this
center, which represents the gain attributable to the joint
venture partner’s 80% ownership interest.
In December 2007, the Company sold its ownership interest in
Mission Bay Plaza to a joint venture in which it has a 30%
ownership interest. The joint venture assumed debt of $40,500 in
connection with the sale of this center. The joint
venture’s initial investment was not sufficient to allow
the Company to recognize the gain attributable to the joint
venture partner’s 70% ownership interest, therefore,
$11,700 of the gain was deferred in 2007. In January 2008, the
proceeds were received and the Company recognized the gain of
$11,700.
During 2007, the Company sold various parcels of land adjacent
to its River City Marketplace shopping center to third parties.
These land sales resulted in a total net gain of $2,774. In
addition, the Company sold other real estate during 2007 for a
loss of $243.
| 7. | Equity Investments in and Notes Receivable from Unconsolidated Entities |
As of December 31, 2009, the Company had investments in the
following unconsolidated entities:
|
Total Assets
|
Total Assets
|
|||||||||||
|
Ownership as of
|
as of
|
as of
|
||||||||||
|
December 31,
|
December 31,
|
December 31,
|
||||||||||
|
Unconsolidated Entities
|
2009 | 2009 | 2008 | |||||||||
|
S-12
Associates
|
50 | % | $ | 644 | $ | 661 | ||||||
|
Ramco/West Acres LLC
|
40 | % | 9,610 | 9,877 | ||||||||
|
Ramco/Shenandoah LLC
|
40 | % | 15,164 | 15,592 | ||||||||
|
Ramco/Lion Venture LP
|
30 | % | 534,348 | 536,446 | ||||||||
|
Ramco 450 Venture LLC
|
20 | % | 364,347 | 362,885 | ||||||||
|
Ramco 191 LLC
|
20 | % | 23,975 | 23,240 | ||||||||
|
Ramco RM Hartland SC LLC
|
20 | % | 25,630 | 19,760 | ||||||||
|
Ramco HHF KL LLC
|
7 | % | 50,991 | 52,461 | ||||||||
|
Ramco HHF NP LLC
|
7 | % | 27,086 | 28,126 | ||||||||
|
Ramco Jacksonville North Industrial LLC
|
5 | % | 1,279 | 1,257 | ||||||||
| $ | 1,053,074 | $ | 1,050,305 | |||||||||
F-16
Table of Contents
There were no acquisitions of shopping centers in 2009 by any of
the Company’s unconsolidated joint ventures. Ramco 450
Venture LLC acquired the following centers in 2008:
|
Property
|
Purchase
|
Debt
|
||||||||||||||
|
Acquisition Date
|
Property Name
|
Location
|
Price | Assumed | ||||||||||||
|
2008
|
||||||||||||||||
|
April
|
Rolling Meadows | Rolling Meadows, IL | $ | 16,750 | $ | 11,911 | ||||||||||
|
August
|
Plaza at Delray* | Delray Beach, FL | 71,800 | — | ||||||||||||
| $ | 88,550 | $ | 11,911 | |||||||||||||
| * | Acquired from the Company |
Debt
The Company’s unconsolidated entities had the following
debt outstanding at December 31, 2009:
|
Balance
|
Interest
|
|||||||||
|
Unconsolidated Entities
|
outstanding | Rate | Maturity Date | |||||||
|
S-12
Associates
|
$ | 810 | 7.3 | % | May 2016(1) | |||||
|
Ramco/West Acres LLC
|
8,572 | 8.1 | % | April 2030(2) | ||||||
|
Ramco/Shenandoah LLC
|
11,873 | 7.3 | % | February 2012 | ||||||
|
Ramco/Lion Venture LP
|
269,740 | Various | Various(3) | |||||||
|
Ramco 450 Venture LLC
|
216,916 | Various | Various(4) | |||||||
|
Ramco 191 LLC
|
8,750 | 1.7 | % | June 2010 | ||||||
|
Ramco RM Hartland SC, LLC
|
8,505 | 6.0 | % | January 2010 | ||||||
|
Ramco RM Hartland SC, LLC
|
11,818 | 13.0 | % | October 2010(5) | ||||||
|
Ramco Jacksonville North Industrial LLC
|
748 | 6.0 | % | September 2010(6) | ||||||
| $ | 537,732 | |||||||||
| (1) | Interest rate resets per formula annually. | |
| (2) | Under terms of the note, the anticipated repayment date is April 2010. | |
| (3) | Interest rates range from 4.6% to 8.3%, with maturities ranging from November 2009 to June 2020. | |
| (4) | Interest rates range from 5.3% to 6.5% with maturities ranging from February 2011 to January 2018. | |
| (5) | Represents mezzanine financing between the Company and the joint venture entity in which the Company has an ownership interest. Ramco RM Hartland SC, LLC can borrow up to $58,000 under this mezzanine financing arrangement provided by the Company. Included in “Notes receivable from unconsolidated entities” on the consolidated balance sheets. | |
| (6) | Represents mezzanine financing between the Company and the joint venture entity in which the Company has an ownership interest. Included in “Notes receivable from unconsolidated entities” on the consolidated balance sheets. |
In November 2009, RLV Cypress Pointe LP, an entity in a joint
venture in which the Company has a 30% ownership interest, had a
$14,500 loan reach maturity. The joint venture continues to
negotiate the terms of an extension of the debt with the special
servicer and anticipates having to pay a fee and pay down a
portion of the outstanding balance to extend the debt. There can
be no assurance that the joint venture entity will be able to
refinance the debt on Cypress Point on commercially reasonable
or any other terms. The Company’s share of the debt was
$4,350 at December 31, 2009.
F-17
Table of Contents
Fees
and Management Income from Transactions with Joint Ventures
Under the terms of agreements with joint ventures, Ramco is the
manager of the joint ventures and their properties, earning fees
for acquisitions, development, management, leasing, and
financing. The fees earned by Ramco, which are reported in the
Company’s consolidated statements of income and
comprehensive income as fees and management income, are
summarized as follows:
| 2009 | 2008 | 2007 | ||||||||||
|
Management fees
|
$ | 2,844 | $ | 2,848 | $ | 1,944 | ||||||
|
Leasing fees
|
794 | 958 | 585 | |||||||||
|
Acquisition fees
|
603 | 675 | 2,868 | |||||||||
|
Financing fees
|
80 | 300 | 989 | |||||||||
|
Total
|
$ | 4,321 | $ | 4,781 | $ | 6,386 | ||||||
Concurrently with the sale of The Plaza at Delray Shopping
Center to Ramco 450 Venture LLC, during 2008, the Company
entered into a Master Lease agreement for vacant tenant space at
the center. Under terms of the agreement, the Company was
responsible for minimum rent and recoveries of operating expense
for a period of one year ending August 2009. During 2009 and
2008, the Company paid $301 and $204, respectively, to the joint
venture as required under the agreements.
In 2007, as part of the sale of Kissimmee West and Shoppes of
Lakeland to Ramco HHF KL LLC, the Company entered into Master
Lease agreements for vacant tenant space at each of the two
centers. Under terms of the agreements, the Company was
responsible for minimum rent, recoveries of operating expense,
and future tenant allowance, if any, for a period ending June
2009. The Company paid $132, $414, and $197 in 2009, 2008 and
2007, respectively, to the joint venture as required under the
agreements.
Combined
Condensed Financial Information
Combined condensed financial information of the Company’s
unconsolidated entities is summarized as follows:
| 2009 | 2008 | 2007 | ||||||||||
|
ASSETS
|
||||||||||||
|
Investment in real estate, net
|
$ | 1,010,216 | $ | 1,012,752 | $ | 921,107 | ||||||
|
Other assets
|
42,858 | 37,553 | 64,805 | |||||||||
|
Total Assets
|
$ | 1,053,074 | $ | 1,050,305 | $ | 985,912 | ||||||
| LIABILITIES | ||||||||||||
|
Mortgage notes payable
|
$ | 537,732 | $ | 540,766 | $ | 472,402 | ||||||
|
Other liabilities
|
25,657 | 25,641 | 47,615 | |||||||||
|
Owners’ equity
|
489,685 | 483,898 | 465,895 | |||||||||
|
Total Liabilities and Owners’ Equity
|
$ | 1,053,074 | $ | 1,050,305 | $ | 985,912 | ||||||
|
Company’s equity investments in unconsolidated entities
|
$ | 97,506 | $ | 95,867 | $ | 117,987 | ||||||
|
Company’s notes receivable from unconsolidated entities
|
$ | 12,566 | $ | 6,716 | $ | — | ||||||
|
TOTAL REVENUES
|
$ | 99,434 | $ | 97,994 | $ | 70,445 | ||||||
|
TOTAL EXPENSES
|
93,859 | 86,894 | 61,697 | |||||||||
|
Net Income
|
$ | 5,575 | $ | 11,100 | $ | 8,748 | ||||||
|
Company’s share of earnings from unconsolidated entities
|
$ | 1,328 | $ | 2,506 | $ | 2,496 | ||||||
F-18
Table of Contents
| 8. | Other Assets, Net |
Other assets at December 31 were as follows:
| 2009 | 2008 | |||||||
|
Leasing costs
|
$ | 40,922 | $ | 38,980 | ||||
|
Intangible assets
|
5,836 | 5,836 | ||||||
|
Deferred financing costs
|
10,525 | 6,626 | ||||||
|
Other
|
6,162 | 5,904 | ||||||
| 63,445 | 57,346 | |||||||
|
Less: accumulated amortization
|
(37,766 | ) | (34,320 | ) | ||||
| 25,679 | 23,026 | |||||||
|
Prepaid expenses and other
|
13,373 | 12,967 | ||||||
|
Proposed development costs
|
— | 1,352 | ||||||
|
Other assets, net
|
$ | 39,052 | $ | 37,345 | ||||
Intangible assets at December 31, 2009 included $4,526 of
lease origination costs and $1,228 of favorable leases related
to the allocation of the purchase prices for acquisitions made
since 2002. These assets are being amortized over the lives of
the applicable leases as reductions or additions to minimum rent
revenue, as appropriate, over the initial terms of the
respective leases.
At December 31, 2009 and 2008, $1,520 and $1,994,
respectively, of intangible assets, net of accumulated
amortization of $4,234 and $3,761, respectively, were included
in other assets in the consolidated balance sheets. Of this
amount, approximately $1,192 and $1,543, respectively, was
attributable to in-place leases, principally lease origination
costs and $328 and $451, respectively, was attributable to
above-market leases. Included in accounts payable and accrued
expenses at December 31, 2009 and 2008 were intangible
liabilities related to below-market leases of $552 and $706,
respectively, and an adjustment to increase debt to fair market
value in the amount of $285 and $588, respectively. The
lease-related intangible assets and liabilities are being
amortized over the terms of the acquired leases, which resulted
in additional expense of approximately $123, $130 and $264,
respectively, and an increase in revenue of $154, $221 and $343,
respectively, for the years ended December 31, 2009, 2008,
and 2007. The adjustment of debt decreased interest expense by
$304 and $254 for the years ended December 31, 2009 and
2008, respectively and increased interest expense by $46 for the
year ended December 31, 2007.
The average amortization period for intangible assets
attributable to lease origination costs and for favorable leases
is 5.5 years and 4.5 years, respectively.
Deferred financing costs, net of accumulated amortization were
$8,056 at December 31, 2009, compared to $3,190 at
December 31, 2008. The increase in deferred financing costs
compared to 2008 was the result of the refinancing of the
Company’s Credit Facility in December 2009. The Company
disposed of fully amortized deferred financing costs of $1,204
and $611 for the years ended December 31, 2009 and 2008,
respectively. The Company recorded amortization of deferred
financing costs of $875, $971, and $1,166, respectively, during
the years ended December 31, 2009, 2008, and 2007. This
amortization has been recorded as interest expense in the
Company’s consolidated statements of income.
F-19
Table of Contents
The following table represents estimated aggregate amortization
expense related to other assets as of December 31, 2009:
|
Year Ending December 31,
|
||||
|
2010
|
$ | 7,070 | ||
|
2011
|
6,077 | |||
|
2012
|
5,192 | |||
|
2013
|
2,433 | |||
|
2014
|
1,533 | |||
|
Thereafter
|
3,374 | |||
|
Total
|
$ | 25,679 | ||
| 9. | Mortgages and Notes Payable |
Mortgages and notes payable at December 31 consisted of the
following:
| 2009 | 2008 | |||||||
|
Fixed rate mortgages with interest rates ranging from 4.8% to
8.1%, due at various dates from September 2010 through December
2019
|
$ | 330,963 | $ | 354,253 | ||||
|
Floating rate mortgages with interest rates ranging from 5.3% to
5.5%, due June 2011
|
14,427 | 15,023 | ||||||
|
Revolving Credit Facility, securing The Towne Center at Aquia,
with an interest rate at LIBOR plus 350 basis points with a
2.0% LIBOR floor, due December 2010. The effective rate at
December 31, 2009 was 5.5% and 4.3% at December 31,
2008
|
20,000 | 40,000 | ||||||
|
Secured Term Loan Facility, with an interest rate at LIBOR plus
350 basis points with a 2.0% LIBOR floor, due June 2011, maximum
borrowings $67,000. The effective rate at December 31, 2009
was 6.5%
|
67,000 | — | ||||||
|
Secured Revolving Credit Facility, with an interest rate at
LIBOR plus 350 basis points with a 2.0% LIBOR floor, due
December 2012, maximum borrowings $150,000. The effective rate
at December 31, 2009 was 5.5%
|
92,036 | — | ||||||
|
Junior subordinated notes, unsecured, due January 2038, with an
interest rate fixed until January 2013 when the notes are
redeemable or the interest rate becomes LIBOR plus
330 basis points. The effective rate at both
December 31, 2009 and December 31, 2008 was 7.9%
|
28,125 | 28,125 | ||||||
|
Unsecured Term Loan Credit Facility, with an interest rate at
LIBOR plus 130 to 165 basis points, due December 2010,
maximum borrowings
$
100,000. The effective rate at
December 31, 2008 was 5.7%
|
— | 100,000 | ||||||
|
Unsecured Revolving Credit Facility, with an interest rate at
LIBOR plus 115 to 150 basis points, due December 2009,
maximum borrowings
$
150,000. The effective rate at
December 31, 2008 was 3.0%
|
— | 125,200 | ||||||
| $ | 552,551 | $ | 662,601 | |||||
The mortgage notes, both fixed rate and floating rate, are
secured by mortgages on properties that have an approximate net
book value of $415,813 as of December 31, 2009.
In December 2009, the Company closed on a new $217,000 secured
credit facility consisting of a $150,000 secured revolving
credit facility and a $67,000 amortizing secured term loan
facility. The Credit Facility provides that the secured
revolving credit facility may be increased by up to $50,000 at
the Company’s request, dependent upon there being one or
more lenders willing to acquire the additional commitment, for a
total secured credit facility commitment of $267,000. The
secured revolving credit facility matures in December 2012 and
bears interest at LIBOR plus 350 basis points with a 2%
LIBOR floor. The amortizing secured term loan facility also
bears interest at LIBOR plus 350 basis points with a 2%
LIBOR floor and requires a $33,000 payment by September 2010 and
a final payment of $34,000 by June 2011. The Credit Facility is
secured by mortgages on various
F-20
Table of Contents
properties that have an approximate net book value of $291,942
as of December 31, 2009. The Credit Facility amended and
restated the Company’s former $250,000 credit facility
comprised of a $150,000 unsecured revolving credit facility and
a $100,000 unsecured term loan facility.
Also in December 2009, the Company amended its secured revolving
credit facility for The Towne Center at Aquia, reducing the
facility from $40,000 to $20,000. The revolving credit facility
securing The Town Center at Aquia bears interest at LIBOR plus
350 basis points with a 2% LIBOR floor and matures in
December 2010, with two, one-year extension options.
In December 2009, the Company paid off the $22,705 loan securing
the West Oaks II and Spring Meadows shopping centers.
In September 2009, the Company used $96,240 in net proceeds from
its equity offering to pay down the previous unsecured revolving
credit facility. The Company also used approximately $23,500 in
net proceeds from real estate asset sales in the third quarter
of 2009 to pay down the previous unsecured revolving credit
facility.
It is anticipated that funds borrowed under the aforementioned
credit facilities will be used for general corporate purposes,
including working capital, capital expenditures, the repayment
of indebtedness or other corporate activities.
At December 31, 2009, outstanding letters of credit issued
under the Credit Facility, not reflected in the accompanying
consolidated balance sheets, total approximately $1,300. These
letters of credit reduce the availability under the Credit
Facility.
The Credit Facility and the secured term loan contain financial
covenants relating to total leverage, fixed charge coverage
ratio, tangible net worth and various other calculations. As of
December 31, 2009, the Company was in compliance with the
covenant terms.
The mortgage loans encumbering the Company’s properties,
including properties held by its unconsolidated joint ventures,
are generally non-recourse, subject to certain exceptions for
which the Company would be liable for any resulting losses
incurred by the lender. These exceptions vary from loan to loan
but generally include fraud or a material misrepresentation,
misstatement or omission by the borrower, intentional or grossly
negligent conduct by the borrower that harms the property or
results in a loss to the lender, filing of a bankruptcy petition
by the borrower, either directly or indirectly, and certain
environmental liabilities. In addition, upon the occurrence of
certain events, such as fraud or filing of a bankruptcy petition
by the borrower, the Company would be liable for the entire
outstanding balance of the loan, all interest accrued thereon
and certain other costs, including penalties and expenses. At
December 31, 2009, the mortgage debt of $11.0 million
at Peachtree Hill, a shopping center owned by Ramco 450 Venture
LLC, a joint venture in which the Company has 20% ownership
interest, is recourse debt. The loan is secured by unconditional
guarantees of payment and performance by Ramco 450 Venture LLC,
the Company, and the Operating Partnership.
We have entered into mortgage loans which are secured by
multiple properties and contain cross-collateralization and
cross-default provisions. Cross-collateralization provisions
allow a lender to foreclose on multiple properties in the event
that we default under the loan. Cross-default provisions allow a
lender to foreclose on the related property in the event a
default is declared under another loan.
Under terms of various debt agreements, the Company may be
required to maintain interest rate swap agreements to reduce the
impact of changes in interest rates on its floating rate debt.
The Company has interest rate swap agreements with an aggregate
notional amount of $100,000 in effect at December 31, 2009.
Based on rates in effect at December 31, 2009, the
agreements provide for fixed rates ranging from 6.4% to 6.7% and
expire on December 2010.
F-21
Table of Contents
The following table presents scheduled principal payments on
mortgages and notes payable as of December 31, 2009:
|
Year Ending December 31,
|
||||
|
2010
|
$ | 80,103 | ||
|
2011
|
75,952 | |||
|
2012
|
126,162 | |||
|
2013
|
33,651 | |||
|
2014
|
32,250 | |||
|
Thereafter
|
204,433 | |||
|
Total
|
$ | 552,551 | ||
With respect to the various fixed rate mortgages due in 2010, it
is the Company’s intent to refinance these mortgages and
notes payable. However, there can be no assurance that the
Company will be able to refinance its debt on commercially
reasonable or any other terms.
| 10. | Fair Value |
The Company utilizes fair value measurements to record fair
value adjustments to certain assets and liabilities and to
determine fair value disclosures. Derivative instruments
(interest rate swaps) are recorded at fair value on a recurring
basis. Additionally, the Company, from time to time, may be
required to record other assets at fair value on a nonrecurring
basis.
Fair
Value Hierarchy
As required by accounting guidance for fair value measurements,
the Company groups assets and liabilities at fair value in three
levels, based on the markets in which the assets and liabilities
are traded and the reliability of the assumptions used to
determine fair value.
These levels are:
| Level 1 | Valuation is based upon quoted prices for identical instruments traded in active markets. | |
| Level 2 | Valuation is based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market. | |
| Level 3 | Valuation is generated from model-based techniques that use at least one significant assumption not observable in the market. These unobservable assumptions reflect estimates of assumptions that market participants would use in pricing the asset or liability. |
The following is a description of valuation methodologies used
for the Company’s assets and liabilities recorded at fair
value.
Derivative
Assets and Liabilities
All derivative instruments held by the Company are interest rate
swaps for which quoted market prices are not readily available.
For those derivatives, the Company measures fair value on a
recurring basis using valuation models that use primarily market
observable inputs, such as yield curves. The Company classifies
derivatives instruments as Level 2.
Real
Estate Assets
Real estate assets are subject to impairment testing on a
nonrecurring basis. The Company classifies impaired real estate
assets as nonrecurring Level 3. The Company reviews
investment in real estate for impairment on a
property-by-property
basis whenever events or changes in circumstances indicate that
the carrying value of the investment in real estate may not be
recoverable. These circumstances include, but are not limited
to, declining
F-22
Table of Contents
trends in occupancy and rental rates, tenant sales, net
operating income and geographic location of our shopping center
properties. The Company recognizes an impairment of a property
when the estimated undiscounted operating cash flows plus its
residual value is less than its carrying value of the property.
To the extent impairment has occurred, the Company charges to
expense the excess of the carrying value of the property over
its estimated fair valu
e.
Assets
and Liabilities Recorded at Fair Value on a Recurring
Basis
The table below presents the recorded amount of liabilities
measured at fair value on a recurring basis as of
December 31, 2009 (in thousands). The Company did not have
any material assets that were required to be measured at fair
value on a recurring basis at December 31, 2009.
|
Total
|
||||||||||||||||
| Fair Value | Level 1 | Level 2 | Level 3 | |||||||||||||
|
Liabilities
|
||||||||||||||||
|
Derivative liabilities(1)
|
$ | (2,517 | ) | $ | — | $ | (2,517 | ) | $ | — | ||||||
| (1) | Interest rate swaps |
The carrying values of cash and cash equivalents, restricted
cash, receivables and accounts payable and accrued liabilities
are reasonable estimates of their fair values because of the
short maturity of these financial instruments. As of
December 31, 2009 and 2008, the carrying amounts of the
Company’s borrowings under variable rate debt approximated
fair value.
The Company estimated the fair value of fixed rate mortgages
using a discounted cash flow analysis, based on its incremental
borrowing rates for similar types of borrowing arrangements with
the same remaining maturity. The following table summarizes the
fair value and net book value of properties with fixed rate debt
as of December 31:
| 2009 | 2008 | |||||||
|
Fair value of debt
|
$ | 443,415 | $ | 467,835 | ||||
|
Net book value
|
$ | 459,088 | $ | 482,378 | ||||
Considerable judgment is required to develop estimated fair
values of financial instruments. Although the fair value of the
Company’s fixed rate debt differs from the carrying amount,
settlement at the reported fair value may not be possible or may
not be a prudent management decision. The estimates presented
herein are not necessarily indicative of the amounts the Company
could realize on disposition of the financial instruments.
| 11. | Derivative Financial Instruments |
As of December 31, 2009, the Company has $100,000 of
interest rate swap agreements. Under the terms of certain debt
agreements, the Company is required to maintain interest rate
swap agreements in an amount necessary to ensure that the
Company’s variable rate debt does not exceed 25% of its
assets, as computed under the agreements, to reduce the impact
of changes in interest rates on its variable rate debt. Based on
rates in effect at December 31, 2009, the agreements
provide for fixed rates ranging from 6.4% to 6.7% on a portion
of the Company’s secured credit facility and expire on
December 2010.
On the date the Company enters into an interest rate swap, the
derivative is designated as a hedge against the variability of
cash flows that are to be paid in connection with a recognized
liability. Subsequent changes in the fair value of a derivative
designated as a cash flow hedge that is determined to be highly
effective are recorded in other comprehensive income
(“OCI”) until earnings are affected by the variability
of cash flows of the hedged transaction. The differential
between fixed and variable rates to be paid or received is
accrued, as interest rates change, and recognized currently as
interest expense in the consolidated statement of income.
F-23
Table of Contents
The following table summarizes the notional values and fair
values of the Company’s derivative financial instruments as
of December 31, 2009:
|
Hedge
|
Notional
|
Fixed
|
Fair
|
Expiration
|
||||||||||||||||
|
Underlying Debt
|
Type | Value | Rate | Value | Date | |||||||||||||||
|
Credit Facility
|
Cash Flow | 20,000 | 6.4 | % | (473 | ) | 12/2010 | |||||||||||||
|
Credit Facility
|
Cash Flow | 10,000 | 6.6 | % | (252 | ) | 12/2010 | |||||||||||||
|
Credit Facility
|
Cash Flow | 10,000 | 6.6 | % | (252 | ) | 12/2010 | |||||||||||||
|
Credit Facility
|
Cash Flow | 10,000 | 6.6 | % | (243 | ) | 12/2010 | |||||||||||||
|
Credit Facility
|
Cash Flow | 10,000 | 6.6 | % | (243 | ) | 12/2010 | |||||||||||||
|
Credit Facility
|
Cash Flow | 20,000 | 6.7 | % | (527 | ) | 12/2010 | |||||||||||||
|
Credit Facility
|
Cash Flow | 20,000 | 6.7 | % | (527 | ) | 12/2010 | |||||||||||||
| $ | 100,000 | $ | (2,517 | ) | ||||||||||||||||
The change in fair market value of the interest rate swap
agreements resulted in other comprehensive income of $1,334 for
the year ended December 31, 2009 and other comprehensive
loss of $3,006 and $1,092 for the years ended December 31,
2008 and 2007, respectively.
The following table presents the fair values of derivative
financial instruments in the Company’s consolidated balance
sheets as of December 31, 2009 and December 31, 2008,
respectively:
| Liability Derivatives | ||||||||||||
| December 31, 2009 | December 31, 2008 | |||||||||||
|
Derivatives Designated
|
Balance Sheet
|
Fair
|
Balance Sheet
|
Fair
|
||||||||
|
as Hedging Instruments
|
Location | Value | Location | Value | ||||||||
|
Interest rate contracts
|
Accounts payable and accrued expenses | $ | (2,517 | ) | Accounts payable and accrued expenses | $ | (3,851 | ) | ||||
|
Total
|
$ | (2,517 | ) | Total | $ | (3,851 | ) | |||||
The effect of derivative financial instruments on the
Company’s consolidated statements of income for the years
ended December 31, 2009 and 2008, is summarized as follows:
|
Amount of Gain (Loss)
|
Location of
|
Amount of Gain (Loss)
|
||||||||||||||||
|
Recognized in OCI on
|
Gain (Loss)
|
Reclassified from
|
||||||||||||||||
|
Derivative
|
Reclassified from
|
Accumulated OCI into
|
||||||||||||||||
|
Derivatives in
|
(Effective Portion) |
Accumulated OCI
|
Income (Effective Portion) | |||||||||||||||
|
Cash Flow Hedging
|
Year Ended December 31, |
into Income
|
Year Ended December 31, | |||||||||||||||
|
Relationship
|
2009 | 2008 | (Effective Portion) | 2009 | 2008 | |||||||||||||
|
Interest rate contracts
|
$ | 1,334 | $ | (3,006 | ) | Interest Expense | $ | (2,836 | ) | $ | (1,367 | ) | ||||||
|
Total
|
$ | 1,334 | $ | (3,006 | ) | Total | $ | (2,836 | ) | $ | (1,367 | ) | ||||||
F-24
Table of Contents
| 12. | Leases |
Revenues
Approximate future minimum revenues from rentals under
noncancelable operating leases in effect at December 31,
2009, assuming no new or renegotiated leases or option
extensions on lease agreements are as follows:
|
Year Ending December 31,
|
||||
|
2010
|
$ | 78,801 | ||
|
2011
|
73,134 | |||
|
2012
|
65,037 | |||
|
2013
|
55,721 | |||
|
2014
|
47,446 | |||
|
Thereafter
|
199,050 | |||
|
Total
|
$ | 519,189 | ||
Expenses
The Company has an operating lease for its corporate office
space in Michigan for a term expiring in 2014. The Company also
has operating leases for office space in Florida and land under
a portion of one of its shopping centers. In addition, the
Company has a capitalized ground lease. Total amounts expensed
relating to these leases were $1,583, $1,538 and $1,526 for the
years ended December 31, 2009, 2008, and 2007, respectively.
Approximate future minimum rental expense under the
Company’s noncancelable operating leases, assuming no
option extensions, and the capitalized ground lease at one of
its shopping centers, is as follows:
|
Operating
|
Capital
|
|||||||
|
Year Ending December 31:
|
Leases | Lease | ||||||
|
2010
|
$ | 909 | $ | 677 | ||||
|
2011
|
916 | 677 | ||||||
|
2012
|
938 | 677 | ||||||
|
2013
|
961 | 677 | ||||||
|
2014
|
698 | 5,955 | ||||||
|
Thereafter
|
819 | — | ||||||
|
Total minimum lease payments
|
5,241 | 8,663 | ||||||
|
Less: amounts representing interest
|
— | (1,739 | ) | |||||
|
Total
|
$ | 5,241 | $ | 6,924 | ||||
F-25
Table of Contents
| 13. | Earnings per Share |
The following table sets forth the computation of basic and
diluted earnings per share (“EPS”) (in thousands,
except per share data):
| 2009 | 2008 | 2007 | ||||||||||
|
Numerator:
|
||||||||||||
|
Income from continuing operations before noncontrolling interest
|
$ | 12,820 | $ | 27,366 | $ | 45,291 | ||||||
|
Noncontrolling interest in subsidiaries from continuing
operations
|
(1,793 | ) | (3,922 | ) | (7,215 | ) | ||||||
|
Preferred shares dividends
|
— | — | (3,146 | ) | ||||||||
|
Loss on redemption of preferred shares
|
— | — | (1,269 | ) | ||||||||
|
Income from continuing operations available to RPT common
shareholders
|
11,027 | 23,444 | 33,661 | |||||||||
|
Discontinued operations, net of noncontrolling interest in
subsidiaries:
|
||||||||||||
|
Gain (loss) on sale of real estate assets
|
2,494 | (400 | ) | — | ||||||||
|
Income from operations
|
199 | 457 | 599 | |||||||||
|
Net income available to RPT common shareholders —
basic(1)
|
13,720 | 23,501 | 34,260 | |||||||||
|
Add Series C Preferred Share dividends
|
— | — | 1,081 | |||||||||
|
Net income available to RPT common shareholders —
diluted(1)
|
$ | 13,720 | $ | 23,501 | $ | 35,341 | ||||||
|
Denominator:
|
||||||||||||
|
Weighted-average common shares for basic EPS
|
22,193 | 18,471 | 17,851 | |||||||||
|
Effect of dilutive securities:
|
||||||||||||
|
Preferred shares
|
— | — | 624 | |||||||||
|
Options outstanding
|
7 | 54 | ||||||||||
|
Weighted-average common shares for diluted EPS
|
22,193 | 18,478 | 18,529 | |||||||||
|
Basic EPS:
|
||||||||||||
|
Income from continuing operations attributable to RPT common
shareholders
|
$ | 0.50 | $ | 1.27 | $ | 1.89 | ||||||
|
Income (loss) from discontinued operations attributable to RPT
common shareholders
|
0.12 | — | 0.03 | |||||||||
|
Net income attributable to RPT common shareholders
|
$ | 0.62 | $ | 1.27 | $ | 1.92 | ||||||
|
Diluted EPS:
|
||||||||||||
|
Income from continuing operations attributable to RPT common
shareholders
|
$ | 0.50 | $ | 1.27 | $ | 1.88 | ||||||
|
Income (loss) from discontinued operations attributable to RPT
common shareholders
|
0.12 | — | 0.03 | |||||||||
|
Net income attributable to RPT common shareholders
|
$ | 0.62 | $ | 1.27 | $ | 1.91 | ||||||
| (1) | During 2007, the Company’s Series C Preferred Shares were dilutive and therefore the Series C Preferred Shares were included in the calculation of diluted EPS. As of June 1, 2007, all of the Company’s Series C Preferred Shares had been redeemed. |
F-26
Table of Contents
| 14. | Shareholders’ Equity |
On September 16, 2009, the Company issued
12.075 million common shares of beneficial interest (par
value $0.01 per share), at $8.50 per share. The Company received
net proceeds from the offering of $96,240 after deducting
underwriting discounts, commissions and transaction expenses
payable by the Company. The net proceeds from the offering were
used to reduce outstanding borrowings under the Company’s
unsecured revolving credit facility.
On April 2, 2007, the Company announced that it would
redeem all of its outstanding 7.95% Series C Cumulative
Convertible Preferred Shares of Beneficial Interest on
June 1, 2007. As of June 1, 2007, 1,856,846
Series C Preferred Shares, or approximately 98% of the
total outstanding as of the April 2007 redemption notice, had
been converted into common shares of beneficial interest on a
one-for-one
basis. The remaining 31,154 Series C Cumulative Convertible
Preferred Shares were redeemed on June 1, 2007, at the
preferred redemption price of $28.50 resulting in a charge to
equity of $35, plus accrued and unpaid dividends.
On October 8, 2007, the Company announced that it would
redeem all of its outstanding 9.5% Series B Cumulative
Redeemable Preferred Shares of Beneficial Interest on
November 12, 2007. The shares were redeemed at a redemption
price of $25.00 per share, resulting in a charge to equity of
approximately $1,234, plus accrued and unpaid dividends to the
redemption date without interest.
The Company has a dividend reinvestment plan that allows for
participating shareholders to have their dividend distributions
automatically invested in additional shares of beneficial
interest based on the average price of the shares acquired for
the distribution.
| 15. | Shareholder Rights Plan |
On September 8, 2009, as part of significant corporate
governance changes, the Board of Trustees terminated the
Shareholder Rights Plan.
In March 2009, consistent with their authority, the Board of
Trustees adopted for a one-year term a Shareholder Rights Plan
in which one purchase right was distributed as a dividend on
each share of common share held of record as of the close of
business on April 10, 2009.
| 16. | Restructuring Costs, Impairment of Real Estate Assets and Other Items |
The following table presents a summary of the charges recorded
of real estate assets in restructuring costs, impairment of real
estate assets and other items for the years ended at December 31:
| 2009 | 2008 | 2007 | ||||||||||
|
Restructuring expense
|
$ | 1,604 | $ | — | $ | — | ||||||
|
Strategic review and proxy contest expenses
|
1,551 | — | — | |||||||||
|
Impairment of real estate assets
|
— | 5,103 | — | |||||||||
|
Abandonment of pre-development site
|
1,224 | 684 | 183 | |||||||||
|
Total
|
$ | 4,379 | $ | 5,787 | $ | 183 | ||||||
Restructuring expense included severance and other
benefit-related costs primarily related to the previously
announced resignation of the Company’s former Chief
Financial Officer in November 2009, as well as other employees
who were terminated during the year ended December 31,
2009. No similar costs were incurred in the
F-27
Table of Contents
year ended December 31, 2008 and 2007. The Company’s
liability for restructuring costs consisted of the following for
the year ended December 31, 2009:
| 2009 | ||||
|
Liability for restructuring costs at January 1
|
$ | — | ||
|
Restructuring expenses incurred during the period
|
1,604 | |||
|
Severence payments made to employees
|
(492 | ) | ||
|
Liability for restructuring costs at December 31
|
$ | 1,112 | ||
In 2009, the Company’s Board of Trustees completed their
review of financial and strategic alternatives. Also during
2009, the Company resolved a proxy contest by adding two new
members to the Board of Trustees. Costs incurred for the
strategic review and proxy contest were $1,551 for the year
ended December 31, 2009.
In the fourth quarter of 2008, the Company recognized a
non-recurring impairment charge of $5,103 relating to its
Ridgeview Crossing shopping center in Elkin, North Carolina.
There were no impairment charges on real estate assets for the
years ended December 31, 2009 and 2007.
As part of a continuous review of future growth opportunities,
in the fourth quarter of 2009, the Company determined that there
were better investment alternatives than continuing to pursue
the pre-development of the Northpointe Town Center in Jackson,
Michigan. As such, the Company wrote-off its land option
payments, third-party due diligence expenses and capitalized
general and administrative costs for this project, resulting in
a non-recurring charge of $1,224 for the year ended
December 31, 2009. The Company abandoned various projects
totaling $684 and $183 for the years ended December 31,
2008 and 2007, respectively.
| 17. | Share-based Compensation Plans |
Incentive
Plan and Stock Option Plans
2009
Omnibus Long-Term Incentive Plan
In June 2009, the Company’s shareholders approved the 2009
Omnibus Long-Term Incentive Plan (the “Plan”). The
Plan allows the Company to grant trustees, officers, key
employees or consultants of the Company restricted shares,
restricted share units, options to purchase unrestricted shares,
share appreciation rights, unrestricted shares and other awards
to acquire up to 900,000 shares. The Plan will be
administered by the Compensation Committee of the Board of
Trustees. The right to exercise or receive a grant or award of
any performance award may be subject to the Company’s or
individual performance conditions as specified by the
Compensation Committee. The maximum number of shares that can be
awarded under the Plan to any one person, other than pursuant to
an option or share appreciation right, is 100,000 shares
per year. Options may be granted at per share prices not less
than fair market value at the date of grant, and in the case of
incentive options, must be exercisable within ten years.
2003
Long-Term Incentive Plan
The Company’s 2003 Long-Term Incentive Plan (the
“LTIP”) allowed the Company to grant employees the
following: incentive or non-qualified stock options to purchase
common shares of the Company, share appreciation rights,
restricted shares, awards of performance shares and performance
units issuable in the future upon satisfaction of certain
conditions and rights, such as financial performance based
targets and market based metrics, as well as other share-based
awards as determined by the Compensation Committee of the Board
of Trustees. Effective June 10, 2009, this plan was
terminated, except with respect to awards outstanding.
1996 Share
Option Plan
Effective March 5, 2003, this plan was terminated, except
with respect to awards outstanding. This plan allowed for the
grant of stock options to executive officers and employees of
the Company. Shares subject to outstanding awards under the
1996 Share Option Plan are not available for re-grant if
the awards are forfeited or cancelled.
F-28
Table of Contents
Option
Deferral
In December 2003, the Company amended the plan to allow vested
options to be exercised by tendering mature shares with a market
value equal to the exercise price of the options. In December
2004, seven executives executed an option deferral election with
regards to approximately 395,000 options at an average exercise
price of $15.51 per option. In November 2006, one executive
executed an option deferral election with regards to 25,000
options at an average exercise price of $16.38 per option. These
elections allowed the employees to defer the receipt of the net
shares they would receive at exercise. The deferred gain will
remain in a deferred compensation account for the benefit of the
employees for a period of five years, with up to two additional
24 month deferral periods.
The seven executives that executed an option deferral election
in 2004 exercised 395,000 options by tendering approximately
190,000 mature shares and deferring receipt of approximately
205,000 shares under the option deferral election. The one
executive that executed an option deferral election in 2006
exercised 25,000 options by tendering approximately 11,000
mature shares and deferring receipt of approximately
14,000 shares. As the Company declares dividend
distributions on its common shares, the deferred options will
receive their proportionate share of the distribution in the
form of dividend equivalent cash payments that will be accounted
for as compensation to the employees. At December 31, 2009,
there were 65,000 shares under the option deferral election
outstanding.
2008
Restricted Share Plan for Non-Employee Trustees
During 2008, the Company adopted the 2008 Restricted Share Plan
for Non-Employee Trustees (the “Trustees’ Plan”)
which provides for granting up to 160,000 restricted shares
awards to non-employee trustees of the Company. Each
non-employee trustee will be granted 2,000 restricted shares on
June 30 of each year. Each grant of 2,000 restricted shares will
vest ratably over three years on the anniversary of the grant
date. Awards under the Trustees’ Plan are granted in shares
and are not based on dollar value; therefore the dollar value of
the benefits to be received is not determinable.
2003 and
1997 Non-Employee Trustee Stock Option Plans
These plans were terminated on June 11, 2008 and
March 5, 2003, respectively, except with respect to awards
outstanding. Shares subject to outstanding awards under the two
Non-Employee Trustee Stock Option Plans are not available for
re-grant if the awards are forfeited or cancelled.
Share-based
Compensation
The Company recognized the share-based compensation expense of
$1,291, $1,251, and $660 for 2009, 2008 and 2007, respectively.
The total fair value of shares vested during the years ended
December 31, 2009, 2008 and 2007 was $267, $326 and $186,
respectively. The fair values of each option granted used in
determining the share-based compensation expense is estimated on
the date of grant using the Black-Scholes option- pricing model.
This model incorporates certain assumptions for inputs including
risk-free rates, expected dividend yield of the underlying
common shares, expected option life and expected volatility. The
Company used the following assumptions for options granted in
the following period:
| 2007 | ||||
|
Weighted average fair value of grants
|
$ | 4.46 | ||
|
Risk-free interest rate
|
4.5 | % | ||
|
Dividend yield
|
5.5 | % | ||
|
Expected life (in years)
|
5 | |||
|
Expected volatility
|
21.6 | % | ||
The options were part of the LTIP and were granted annually
based on attaining certain Company performance criteria. No
options were granted under the LTIP in the years ended
December 31, 2009 and 2008. The Company recognized $1,194,
$1,026 and $(134) of expense (income) related to restricted
share grants during the years ended December 31, 2009, 2008
and 2007, respectively.
F-29
Table of Contents
The following table reflects the stock option activity for all
plans described above:
|
Weighted
|
||||||||||||
|
Average
|
Aggregate
|
|||||||||||
|
Number of
|
Exercise
|
Intrinsic
|
||||||||||
| Shares | Price | Value | ||||||||||
| (In thousands) | ||||||||||||
|
Outstanding at January 1, 2007
|
247,304 | $ | 25.53 | |||||||||
|
Granted
|
116,585 | 34.53 | ||||||||||
|
Cancelled, expired or forfeited
|
(8,708 | ) | 31.39 | |||||||||
|
Exercised
|
(10,744 | ) | 24.99 | $ | 133 | |||||||
|
Balance at December 31, 2007
|
344,437 | $ | 28.45 | |||||||||
|
Granted
|
— | — | ||||||||||
|
Cancelled, expired or forfeited
|
(3,388 | ) | 24.92 | |||||||||
|
Exercised
|
(2,000 | ) | 19.63 | $ | 5 | |||||||
|
Balance at December 31, 2008
|
339,049 | $ | 28.53 | |||||||||
|
Granted
|
— | — | ||||||||||
|
Cancelled, expired or forfeited
|
(14,329 | ) | 29.84 | |||||||||
|
Exercised
|
— | — | $ | — | ||||||||
|
Balance at December 31, 2009
|
324,720 | $ | 28.47 | |||||||||
|
Options exercisable at December 31:
|
||||||||||||
|
2007
|
159,221 | $ | 24.20 | $ | — | |||||||
|
2008
|
243,883 | $ | 26.73 | $ | — | |||||||
|
2009
|
297,903 | $ | 27.95 | $ | — | |||||||
|
Weighted-average fair value of options granted during the year:
|
||||||||||||
|
2007
|
$ | 4.46 | ||||||||||
|
2008
|
$ | — | ||||||||||
|
2009
|
$ | — | ||||||||||
The following tables summarize information about options
outstanding at December 31, 2009:
| Options Outstanding | ||||||||||||||||||||
|
Weighted-Average
|
Options Exercisable | |||||||||||||||||||
|
Remaining
|
Weighted-Average
|
Weighted-Average
|
||||||||||||||||||
|
Range of Exercise Price
|
Outstanding | Contractual Life | Exercise Price | Exercisable | Exercise Price | |||||||||||||||
|
$14.06 — $19.63
|
37,000 | 0.8 | $ | 15.42 | 37,000 | $ | 15.42 | |||||||||||||
|
$23.77 — $27.96
|
107,533 | 4.8 | 26.72 | 107,533 | 26.72 | |||||||||||||||
|
$28.80 — $29.06
|
76,706 | 6.0 | 29.03 | 76,706 | 29.03 | |||||||||||||||
|
$34.30 — $36.50
|
103,481 | 7.1 | 34.56 | 76,664 | 34.64 | |||||||||||||||
| 324,720 | 5.4 | $ | 28.47 | 297,903 | $ | 27.95 | ||||||||||||||
F-30
Table of Contents
A summary of the activity of restricted shares under the LTIP
for the years ended December 31, 2009, 2008 and 2007 is
presented below:
|
Weighted
|
||||||||
|
Average
|
||||||||
|
Number of
|
Grant-Date
|
|||||||
| Shares | Fair Value | |||||||
|
Outstanding at January 1, 2007
|
3,703 | $ | 27.01 | |||||
|
Granted
|
13,292 | 37.18 | ||||||
|
Forfeited
|
— | |||||||
|
Outstanding at December 31, 2007
|
16,995 | |||||||
|
Granted
|
109,188 | 22.08 | ||||||
|
Forfeited
|
— | |||||||
|
Outstanding at December 31, 2008
|
126,183 | |||||||
|
Granted
|
145,839 | 5.98 | ||||||
|
Vested
|
(75,625 | ) | 19.75 | |||||
|
Forfeited
|
(7,105 | ) | 20.34 | |||||
|
Outstanding at December 31, 2009
|
189,292 | $ | 11.83 | |||||
As of December 31, 2009 there was approximately $1,098 of
total unrecognized compensation cost related to non-vested
restricted share awards granted under the Company’s various
share-based plans that it expects to recognize over a weighted
average period of 2.1 years.
The Company received cash of $0, $39 and $268 from options
exercised during the years ended December 31, 2009, 2008
and 2007, respectively. The impact of these cash receipts is
included in financing activities in the accompanying
consolidated statements of cash flows.
| 18. | 401(k) Plan |
The Company sponsors a 401(k) defined contribution plan covering
substantially all officers and employees of the Company which
allows participants to defer a percentage of compensation on a
pre-tax basis up to a statutory limit. The Company contributes
up to a maximum of 50% of the employee’s contribution, up
to a maximum of 5% of an employee’s annual compensation.
During the years ended December 31, 2009, 2008 and 2007,
the Company’s matching cash contributions were $0, $267,
and $220, respectively. For 2009 and 2010, the Company suspended
the matching of employee contributions.
F-31
Table of Contents
| 19. | Quarterly Financial Data (Unaudited) |
The following table sets forth the quarterly results of
operations for the years ended December 31, 2009 and 2008
(in thousands, except per share amounts):
| Quarters Ended 2009 | ||||||||||||||||
| March 31 | June 30 | September 30 | December 31 | |||||||||||||
|
Revenue
|
$ | 32,033 | $ | 31,518 | $ | 30,246 | $ | 30,343 | ||||||||
|
Operating income
|
1,677 | 1,488 | 2,604 | 713 | ||||||||||||
|
Income from continuing operations
|
2,545 | 1,878 | 7,706 | 691 | ||||||||||||
|
Income from discontinued operations
|
85 | 86 | 2,945 | — | ||||||||||||
|
Net income
|
$ | 2,630 | $ | 1,964 | $ | 10,651 | $ | 691 | ||||||||
|
Net income attributable to noncontrolling interest in
subsidiaries
|
(380 | ) | (401 | ) | (1,327 | ) | (108 | ) | ||||||||
|
Net income attributable to RPT common shareholders
|
$ | 2,250 | $ | 1,563 | $ | 9,324 | $ | 583 | ||||||||
|
Basic earnings per RPT common share:
|
||||||||||||||||
|
Income from continuing operations attributable to RPT common
shareholders
|
$ | 0.12 | $ | 0.08 | $ | 0.33 | $ | 0.02 | ||||||||
|
Income from discontinued operations attributable to RPT common
shareholders
|
— | — | 0.12 | — | ||||||||||||
|
Net income attributable to RPT common shareholders
|
$ | 0.12 | $ | 0.08 | $ | 0.45 | $ | 0.02 | ||||||||
|
Diluted earnings per RPT common share:
|
||||||||||||||||
|
Income from continuing operations attributable to RPT common
shareholders
|
$ | 0.12 | $ | 0.08 | $ | 0.33 | $ | 0.02 | ||||||||
|
Income from discontinued operations attributable to RPT common
shareholders
|
— | — | 0.12 | — | ||||||||||||
|
Net income attributable to RPT common shareholders
|
$ | 0.12 | $ | 0.08 | $ | 0.45 | $ | 0.02 | ||||||||
F-32
Table of Contents
| Quarters Ended 2008 | ||||||||||||||||
| March 31 | June 30 | September 30 | December 31 | |||||||||||||
|
Revenue
|
$ | 34,652 | $ | 34,096 | $ | 32,437 | $ | 33,444 | ||||||||
|
Operating income (loss)
|
2,310 | 2,973 | 3,630 | (3,648 | ) | |||||||||||
|
Income (loss) from continuing operations
|
13,391 | 3,845 | 13,160 | (3,030 | ) | |||||||||||
|
Income (loss) from discontinued operations
|
145 | (267 | ) | 90 | 98 | |||||||||||
|
Net income (loss)
|
$ | 13,536 | $ | 3,578 | $ | 13,250 | $ | (2,932 | ) | |||||||
|
Net (income) loss attributable to noncontrolling interest in
subsidiaries
|
(2,091 | ) | (594 | ) | (1,665 | ) | 419 | |||||||||
|
Net income (loss) attributable to RPT common shareholders
|
$ | 11,445 | $ | 2,984 | $ | 11,585 | $ | (2,513 | ) | |||||||
|
Basic earnings (loss) per RPT common share:
|
||||||||||||||||
|
Income (loss) from continuing operations attributable to RPT
common shareholders
|
$ | 0.61 | $ | 0.17 | $ | 0.62 | $ | (0.14 | ) | |||||||
|
Income (loss) from discontinued operations attributable to RPT
common shareholders
|
0.01 | (0.01 | ) | 0.01 | — | |||||||||||
|
Net income (loss) attributable to RPT common shareholders
|
$ | 0.62 | $ | 0.16 | $ | 0.63 | $ | (0.14 | ) | |||||||
|
Diluted earnings (loss) per RPT common share:
|
||||||||||||||||
|
Income (loss) from continuing operations attributable to RPT
common shareholders
|
$ | 0.61 | $ | 0.17 | $ | 0.62 | $ | (0.14 | ) | |||||||
|
Income (loss) from discontinued operations attributable to RPT
common shareholders
|
0.01 | (0.01 | ) | 0.01 | — | |||||||||||
|
Net income (loss) attributable to RPT common shareholders
|
$ | 0.62 | $ | 0.16 | $ | 0.63 | $ | (0.14 | ) | |||||||
Earnings per share, as reported in the above table, are based on
weighted average common shares outstanding during the quarter
and, therefore, may not agree with the earnings per share
calculated for the years ended December 31, 2009 and 2008.
F-33
Table of Contents
| 20. | Transactions With Related Parties |
The Company has management agreements with various partnerships
and performs certain administrative functions on behalf of
entities owned in part by certain trustees
and/or
officers of the Company. The following revenue was earned during
the three years ended December 31 from these related parties:
| 2009 | 2008 | 2007 | ||||||||||
|
Management fees
|
$ | 103 | $ | 114 | $ | 118 | ||||||
|
Leasing fees
|
21 | 57 | 17 | |||||||||
|
Brokerage commissions
|
— | — | 20 | |||||||||
|
Other
|
8 | — | — | |||||||||
|
Total
|
$ | 132 | $ | 171 | $ | 155 | ||||||
The Company had receivables from related parties of $25 and $34
at December 31, 2009 and 2008, respectively.
| 21. | Commitments and Contingencies |
Construction
Costs
In connection with the development and expansion of various
shopping centers as of December 31, 2009, the Company has
entered into agreements for construction costs of approximately
$20,114, including approximately $14,436 for costs related to
the development of The Towne Center at Aquia and approximately
$3,298 for costs related to the development of Hartland Towne
Square.
Internal
Revenue Service Examinations
IRS
Audit Resolution for Years 1991 to 1995
RPS Realty Trust (“RPS”), a Massachusetts business
trust, was formed on September 21, 1988 to be a diversified
growth-oriented REIT. From its inception, RPS was primarily
engaged in the business of owning and managing a participating
mortgage loan portfolio. From May 1, 1991 through
April 30, 1996, RPS acquired ten real estate properties by
receipt of deed in-lieu of foreclosure. Such properties were
held and operated by RPS through wholly-owned subsidiaries.
In May 1996, RPS acquired, through a reverse merger,
substantially all the shopping centers and retail properties as
well as the management company and business operations of
Ramco-Gershenson, Inc. and certain of its affiliates. The
resulting trust changed its name to Ramco-Gershenson Properties
Trust and Ramco-Gershenson, Inc.’s officers assumed
management responsibility for the Company. The trust also
changed its operations from a mortgage REIT to an equity REIT
and contributed certain mortgage loans and real estate
properties to Atlantic Realty Trust (“Atlantic”), an
independent, newly formed liquidating real estate investment
trust. The shares of Atlantic were immediately distributed to
the shareholders of Ramco-Gershenson Properties Trust.
For purposes of the following discussion, the terms
“Company”, “we”, “our” or
“us” refers to Ramco-Gershenson Properties Trust
and/or
its
predecessors.
On October 2, 1997, with approval from our shareholders, we
changed our state of organization from Massachusetts to Maryland
by merging into a newly formed Maryland real estate investment
trust thereby terminating the Massachusetts trust.
We were the subject of an IRS examination of our taxable years
ended December 31, 1991 through 1995. We refer to this
examination as the IRS Audit. On December 4, 2003, we
reached an agreement with the IRS with respect to the IRS Audit.
We refer to this agreement as the Closing Agreement. Pursuant to
the terms of the Closing Agreement we agreed to pay
“deficiency dividends” (that is, our declaration and
payment of a distribution that is permitted to relate back to
the year for which the IRS determines a deficiency in order to
satisfy the requirement for REIT qualification that we
distribute a certain minimum amount of our “REIT taxable
income” for such year) in amounts not less than $1,400 and
$809 for our 1992 and 1993 taxable years, respectively. We also
consented to the
F-34
Table of Contents
assessment and collection of $770 in tax deficiencies and to the
assessment and collection of interest on such tax deficiencies
and on the deficiency dividends referred to above.
In connection with the incorporation, and distribution of all of
the shares, of Atlantic in May 1996, we entered into the Tax
Agreement with Atlantic under which Atlantic assumed all of our
tax liabilities arising out of the IRS’ then ongoing
examinations (which included, but is not otherwise limited to,
the IRS Audit), excluding any tax liability relating to any
actions or events occurring, or any tax return position taken,
after May 10, 1996, but including liabilities for additions
to tax, interest, penalties and costs relating to covered taxes.
In addition, the Tax Agreement provides that, to the extent any
tax which Atlantic is obligated to pay under the Tax Agreement
can be avoided through the declaration of a deficiency dividend,
we would make, and Atlantic would reimburse us for the amount
of, such deficiency dividend.
On December 15, 2003, our Board of Trustees declared a cash
“deficiency dividend” in the amount of $2,209, which
was paid on January 20, 2004, to common shareholders of
record on December 31, 2003. On January 21, 2004,
pursuant to the Tax Agreement, Atlantic reimbursed us $2,209 in
recognition of our payment of the deficiency dividend. Atlantic
has also paid all other amounts (including the tax deficiencies
and interest referred to above), on behalf of the Company,
assessed by the IRS to date.
Pursuant to the Closing Agreement we agreed to an adjustment to
our taxable income for each of our taxable years ended
December 31, 1991 through 1995. The Company has advised the
relevant taxing authorities for the state and local
jurisdictions where it conducted business during those years of
such adjustments and the terms of the Closing Agreement. We
believe that our exposure to state and local tax, penalties and
interest will not exceed $1,000 as of December 31, 2009. It
is management’s belief that any liability for state and
local tax, penalties, interest, and other miscellaneous expenses
that may exist in relation to the IRS Audit will be covered
under the Tax Agreement.
Effective June 30, 2006, Atlantic was merged into (acquired
by) Kimco SI 1339, Inc. (formerly known as SI 1339, Inc.), a
wholly-owned subsidiary of Kimco Realty Corporation
(“Kimco”), with Kimco SI 1339, Inc. continuing as the
surviving corporation. By way of the merger, Kimco SI 1339, Inc.
acquired Atlantic’s assets, subject to its liabilities
(including its obligations to the Company under the Tax
Agreement). In a press release issued on the effective date of
the merger, Kimco disclosed that the shareholders of Atlantic
received common shares of Kimco valued at $81,800 in exchange
for their shares in Atlantic.
Litigation
The Company is currently involved in certain litigation arising
in the ordinary course of business. The Company believes that
this litigation will not have a material adverse effect on its
consolidated financial statements.
Environmental
Matters
Under various Federal, state and local laws, ordinances and
regulations relating to the protection of the environment
(“Environmental Laws”), a current or previous owner or
operator of real estate may be liable for the costs of removal
or remediation of certain hazardous or toxic substances
disposed, stored, released, generated, manufactured or
discharged from, on, at, onto, under or in such property.
Environmental Laws often impose such liability without regard to
whether the owner or operator knew of, or was responsible for,
the presence or release of such hazardous or toxic substance.
The presence of such substances, or the failure to properly
remediate such substances when present, released or discharged,
may adversely affect the owner’s ability to sell or rent
such property or to borrow using such property as collateral.
The cost of any required remediation and the liability of the
owner or operator therefore as to any property is generally not
limited under such Environmental Laws and could exceed the value
of the property
and/or
the
aggregate assets of the owner or operator. Persons who arrange
for the disposal or treatment of hazardous or toxic substances
may also be liable for the cost of removal or remediation of
such substances at a disposal or treatment facility, whether or
not such facility is owned or operated by such persons. In
addition to any action required by Federal, state or local
authorities, the presence or release of hazardous or toxic
substances on or from any property could result in private
plaintiffs bringing claims for personal injury or other causes
of action.
F-35
Table of Contents
In connection with ownership (direct or indirect), operation,
management and development of real properties, the Company may
be potentially liable for remediation, releases or injury. In
addition, Environmental Laws impose on owners or operators the
requirement of on-going compliance with rules and regulations
regarding business-related activities that may affect the
environment. Such activities include, for example, the ownership
or use of transformers or underground tanks, the treatment or
discharge of waste waters or other materials, the removal or
abatement of asbestos-containing materials (“ACMs”) or
lead- containing paint during renovations or otherwise, or
notification to various parties concerning the potential
presence of regulated matters, including ACMs. Failure to comply
with such requirements could result in difficulty in the lease
or sale of any affected property
and/or
the
imposition of monetary penalties, fines or other sanctions in
addition to the costs required to attain compliance. Several of
the Company’s properties have or may contain ACMs or
underground storage tanks (“USTs”); however, the
Company is not aware of any potential environmental liability
which could reasonably be expected to have a material impact on
its financial position or results of operations. No assurance
can be given that future laws, ordinances or regulations will
not impose any material environmental requirement or liability,
or that a material adverse environmental condition does not
otherwise exist.
| 22. | Other Taxes |
On May 12, 2009, the Michigan Court of Appeals affirmed a
decision of the Michigan Tax Tribunal that a wholly-owned
limited liability company (“LLC”) met the statutory
definition of a “person” under the former Michigan
Single Business Tax Act (“SBTA”) and was required to
file a separate return despite being classified as a disregarded
entity for federal tax purposes. The Court of Appeals ruled that
a 1999 Michigan Department of Treasury Revenue Administration
Bulletin (“RAB”) that required conformity with federal
tax laws conflicted with the SBTA, which treated various other
entities not taxable at the federal level, such as partnerships,
as taxable entities for SBTA purposes.
The Michigan Single Business Tax (“SBT”) was repealed
and replaced by the Michigan Business Tax effective for the
Company’s taxable year beginning January 1, 2008.
Prior to such repeal, the Company relied on the RAB, including
the activities of any LLC classified as a disregarded entity for
federal tax purposes in its member’s SBT return.
On June 23, 2009, the Michigan Department of Treasury
formally appealed the Court of Appeals’ decision to the
Michigan Supreme Court. On September 28, 2009, the Michigan
Supreme Court denied the appeal. On February 5, 2010, the
Michigan Department of Treasury issued a notice indicating that
they intend to apply the court’s decision retroactively.
However, this notice is not binding on the State of Michigan or
the taxpayer.
The Company could be obligated to file additional stand-alone
tax returns for each of its Michigan LLC’s and pay any
related tax, interest
and/or
penalties, for all tax years open under the applicable statute
of limitations. Any amounts owed, if this were to occur, would
be reflected as operating expenses in the Company’s
consolidated statements of income in the period of the payment.
The Company has determined that any impact as a result of
applying this decision would not be material to its results of
operations or financial position.
| 23. | Subsequent Events |
The Company has evaluated subsequent events through the date
that the consolidated financial statements were issued. There
were no subsequent events requiring disclosure as part of this
filing.
F-36
Table of Contents
| 24. | Real Estate Assets |
Years
Ended December 31, 2009 and 2008 (Dollars in
thousands)
Net
Investment in Real Estate Assets at December 31,
2009
| Initial Cost to Company |
Subsequent
|
Gross Cost at
|
||||||||||||||||||||||||||||||||||||||||||||||||
|
Building &
|
Additions
|
End of Period(b) | ||||||||||||||||||||||||||||||||||||||||||||||||
|
Year
|
Year
|
Year
|
Improvements
|
(Retirements),
|
Building &
|
Accumulated
|
||||||||||||||||||||||||||||||||||||||||||||
|
Property
|
Location
|
Constructed(a) | Acquired | Renovated | Land | (f) | Net | Land | Improvements | Total | Depreciation(c) | Encumbrances | ||||||||||||||||||||||||||||||||||||||
|
Florida
|
||||||||||||||||||||||||||||||||||||||||||||||||||
|
Coral Creek Shops
|
Coconut Creek | Florida | 1992 | 2002 | 1,565 | 14,085 | 159 | 1,572 | 14,237 | 15,809 | 2,697 | (e | ) | |||||||||||||||||||||||||||||||||||||
|
Gateway Commons
|
Lakeland | Florida | 2008 | 17,625 | — | 6,074 | 17,784 | 5,915 | 23,699 | — | ||||||||||||||||||||||||||||||||||||||||
|
Lantana Shopping Center
|
Lantana | Florida | 1959 | 1996 | 2002 | 2,590 | 2,600 | 7,012 | 2,590 | 9,612 | 12,202 | 2,827 | (e | ) | ||||||||||||||||||||||||||||||||||||
|
Naples Towne Center
|
Naples | Florida | 1982 | 1996 | 2003 | 218 | 1,964 | 5,038 | 807 | 6,413 | 7,220 | 2,017 | (d | ) | ||||||||||||||||||||||||||||||||||||
|
Parkway Shops
|
Jacksonville | Florida | 2008 | 11,265 | — | 2,694 | 11,265 | 2,694 | 13,959 | — | (e | ) | ||||||||||||||||||||||||||||||||||||||
|
Pelican Plaza
|
Sarasota | Florida | 1983 | 1997 | 710 | 6,404 | 470 | 710 | 6,874 | 7,584 | 2,118 | (d | ) | |||||||||||||||||||||||||||||||||||||
|
River City
|
Jacksonville | Florida | 2005 | 2005 | 19,768 | 73,859 | 5,612 | 11,961 | 87,278 | 99,239 | 7,893 | (e | ) | |||||||||||||||||||||||||||||||||||||
|
River Crossing Centre
|
New Port Richey | Florida | 1998 | 2003 | 728 | 6,459 | 14 | 728 | 6,473 | 7,201 | 1,082 | (e | ) | |||||||||||||||||||||||||||||||||||||
|
Rivertowne Square
|
Deerfield Beach | Florida | 1980 | 1998 | 954 | 8,587 | 1,366 | 954 | 9,953 | 10,907 | 2,255 | |||||||||||||||||||||||||||||||||||||||
|
Southbay Shopping Center
|
Osprey | Florida | 1978 | 1998 | 597 | 5,355 | 1,032 | 597 | 6,387 | 6,984 | 1,830 | |||||||||||||||||||||||||||||||||||||||
|
Sunshine Plaza
|
Tamarac | Florida | 1972 | 1996 | 2001 | 1,748 | 7,452 | 12,685 | 1,748 | 20,137 | 21,885 | 7,402 | (e | ) | ||||||||||||||||||||||||||||||||||||
|
The Crossroads
|
Royal Palm Beach | Florida | 1988 | 2002 | 1,850 | 16,650 | 158 | 1,857 | 16,801 | 18,658 | 3,250 | (e | ) | |||||||||||||||||||||||||||||||||||||
|
Village Lakes Shopping Center
|
Land O’ Lakes | Florida | 1987 | 1997 | 862 | 7,768 | 463 | 862 | 8,231 | 9,093 | 2,460 | (d | ) | |||||||||||||||||||||||||||||||||||||
|
Georgia
|
||||||||||||||||||||||||||||||||||||||||||||||||||
|
Centre at Woodstock
|
Woodstock | Georgia | 1997 | 2004 | 1,880 | 10,801 | (322 | ) | 1,987 | 10,372 | 12,359 | 1,418 | (e | ) | ||||||||||||||||||||||||||||||||||||
|
Conyers Crossing
|
Conyers | Georgia | 1978 | 1998 | 729 | 6,562 | 675 | 729 | 7,237 | 7,966 | 2,331 | (d | ) | |||||||||||||||||||||||||||||||||||||
|
Holcomb Center
|
Alpharetta | Georgia | 1986 | 1996 | 658 | 5,953 | 5,974 | 3,432 | 9,153 | 12,585 | 2,286 | (d | ) | |||||||||||||||||||||||||||||||||||||
|
Horizon Village
|
Suwanee | Georgia | 1996 | 2002 | 1,133 | 10,200 | 82 | 1,143 | 10,272 | 11,415 | 1,994 | (d | ) | |||||||||||||||||||||||||||||||||||||
|
Mays Crossing
|
Stockbridge | Georgia | 1984 | 1997 | 2007 | 725 | 6,532 | 1,738 | 725 | 8,270 | 8,995 | 2,432 | (d | ) | ||||||||||||||||||||||||||||||||||||
|
Promenade at Pleasant Hill
|
Duluth | Georgia | 1993 | 2004 | 3,891 | 22,520 | (614 | ) | 3,650 | 22,147 | 25,797 | 3,072 | (e | ) | ||||||||||||||||||||||||||||||||||||
|
Michigan
|
||||||||||||||||||||||||||||||||||||||||||||||||||
|
Auburn Mile
|
Auburn Hills | Michigan | 2000 | 1999 | 15,704 | — | (7,236 | ) | 5,917 | 2,551 | 8,468 | 1,361 | (e | ) | ||||||||||||||||||||||||||||||||||||
|
Beacon Square
|
Grand Haven | Michigan | 2004 | 2004 | 1,806 | 6,093 | 2,404 | 1,809 | 8,494 | 10,303 | 948 | (e | ) | |||||||||||||||||||||||||||||||||||||
|
Clinton Pointe
|
Clinton Township | Michigan | 1992 | 2003 | 1,175 | 10,499 | 173 | 1,175 | 10,672 | 11,847 | 1,694 | (d | ) | |||||||||||||||||||||||||||||||||||||
|
Clinton Valley Mall
|
Sterling Heights | Michigan | 1977 | 1996 | 2002 | 1,101 | 9,910 | 6,412 | 1,101 | 16,322 | 17,423 | 5,077 | (d | ) | ||||||||||||||||||||||||||||||||||||
|
Clinton Valley
|
Sterling Heights | Michigan | 1985 | 1996 | 2009 | 399 | 3,588 | 3,715 | 523 | 7,179 | 7,702 | 2,135 | (d | ) | ||||||||||||||||||||||||||||||||||||
|
Eastridge Commons
|
Flint | Michigan | 1990 | 1996 | 2001 | 1,086 | 9,775 | 2,376 | 1,086 | 12,151 | 13,237 | 4,855 | (d | ) | ||||||||||||||||||||||||||||||||||||
|
Edgewood Towne Center
|
Lansing | Michigan | 1990 | 1996 | 2001 | 665 | 5,981 | 126 | 645 | 6,127 | 6,772 | 2,133 | (d | ) | ||||||||||||||||||||||||||||||||||||
|
Fairlane Meadows
|
Dearborn | Michigan | 1987 | 2003 | 1,955 | 17,557 | 429 | 1,956 | 17,985 | 19,941 | 2,948 | (d | ) | |||||||||||||||||||||||||||||||||||||
|
Fraser Shopping Center
|
Fraser | Michigan | 1977 | 1996 | 363 | 3,263 | 917 | 363 | 4,180 | 4,543 | 1,424 | (d | ) | |||||||||||||||||||||||||||||||||||||
|
Gaines Marketplace
|
Gaines Twp. | Michigan | 2004 | 2004 | 226 | 6,782 | 8,849 | 8,343 | 7,514 | 15,857 | 946 | (e | ) | |||||||||||||||||||||||||||||||||||||
|
Hartland Towne Square
|
Hartland | Michigan | 2008 | 8,138 | 2,022 | 848 | 5,611 | 5,397 | 11,008 | — | ||||||||||||||||||||||||||||||||||||||||
|
Hoover Eleven
|
Warren | Michigan | 1989 | 2003 | 3,308 | 29,778 | 285 | 3,304 | 30,067 | 33,371 | 4,720 | (e | ) | |||||||||||||||||||||||||||||||||||||
F-37
Table of Contents
| Initial Cost to Company |
Subsequent
|
Gross Cost at
|
||||||||||||||||||||||||||||||||||||||||||||||||
|
Building &
|
Additions
|
End of Period(b) | ||||||||||||||||||||||||||||||||||||||||||||||||
|
Year
|
Year
|
Year
|
Improvements
|
(Retirements),
|
Building &
|
Accumulated
|
||||||||||||||||||||||||||||||||||||||||||||
|
Property
|
Location
|
Constructed(a) | Acquired | Renovated | Land | (f) | Net | Land | Improvements | Total | Depreciation(c) | Encumbrances | ||||||||||||||||||||||||||||||||||||||
|
Jackson Crossing
|
Jackson | Michigan | 1967 | 1996 | 2002 | 2,249 | 20,237 | 14,569 | 2,249 | 34,806 | 37,055 | 10,494 | (d | ) | ||||||||||||||||||||||||||||||||||||
|
Jackson West
|
Jackson | Michigan | 1996 | 1996 | 1999 | 2,806 | 6,270 | 4,963 | 2,691 | 11,348 | 14,039 | 3,777 | (e | ) | ||||||||||||||||||||||||||||||||||||
|
Kentwood Towne Center
|
Kentwood | Michigan | 1988 | 1996 | 2,799 | 9,484 | 68 | 2,841 | 9,510 | 12,351 | 1,590 | (e | ) | |||||||||||||||||||||||||||||||||||||
|
Lake Orion Plaza
|
Lake Orion | Michigan | 1977 | 1996 | 470 | 4,234 | 1,243 | 1,241 | 4,706 | 5,947 | 1,594 | (d | ) | |||||||||||||||||||||||||||||||||||||
|
Lakeshore Marketplace
|
Norton Shores | Michigan | 1996 | 2003 | 2006 | 2,018 | 18,114 | 1,249 | 3,402 | 17,979 | 21,381 | 3,151 | (e | ) | ||||||||||||||||||||||||||||||||||||
|
Livonia Plaza
|
Livonia | Michigan | 1988 | 2003 | 1,317 | 11,786 | 10 | 1,317 | 11,796 | 13,113 | 2,111 | (d | ) | |||||||||||||||||||||||||||||||||||||
|
Madison Center
|
Madison Heights | Michigan | 1965 | 1997 | 2000 | 817 | 7,366 | 3,086 | 817 | 10,452 | 11,269 | 3,469 | (e | ) | ||||||||||||||||||||||||||||||||||||
|
New Towne Plaza
|
Canton Twp. | Michigan | 1975 | 1996 | 2005 | 817 | 7,354 | 3,804 | 817 | 11,158 | 11,975 | 3,877 | (e | ) | ||||||||||||||||||||||||||||||||||||
|
Oak Brook Square
|
Flint | Michigan | 1982 | 1996 | 955 | 8,591 | 5,538 | 955 | 14,129 | 15,084 | 3,730 | (d | ) | |||||||||||||||||||||||||||||||||||||
|
Roseville Towne Center
|
Roseville | Michigan | 1963 | 1996 | 2004 | 1,403 | 13,195 | 7,296 | 1,403 | 20,491 | 21,894 | 6,797 | (d | ) | ||||||||||||||||||||||||||||||||||||
|
Shoppes at Fairlane
|
Dearborn | Michigan | 2007 | 2005 | 1,300 | 63 | 3,184 | 1,304 | 3,243 | 4,547 | 252 | (d | ) | |||||||||||||||||||||||||||||||||||||
|
Southfield Plaza
|
Southfield | Michigan | 1969 | 1996 | 2003 | 1,121 | 10,090 | 4,440 | 1,121 | 14,530 | 15,651 | 4,331 | (d | ) | ||||||||||||||||||||||||||||||||||||
|
Tel-Twelve
|
Southfield | Michigan | 1968 | 1996 | 2005 | 3,819 | 43,181 | 33,220 | 3,819 | 76,401 | 80,220 | 21,643 | (d | ) | ||||||||||||||||||||||||||||||||||||
|
West Oaks I
|
Novi | Michigan | 1979 | 1996 | 2004 | — | 6,304 | 11,246 | 1,768 | 15,782 | 17,550 | 4,496 | (e | ) | ||||||||||||||||||||||||||||||||||||
|
West Oaks II
|
Novi | Michigan | 1986 | 1996 | 2000 | 1,391 | 12,519 | 5,897 | 1,391 | 18,416 | 19,807 | 6,019 | ||||||||||||||||||||||||||||||||||||||
|
North Carolina
|
||||||||||||||||||||||||||||||||||||||||||||||||||
|
Ridgeview Crossing
|
Elkin | North Carolina | 1989 | 1997 | 1995 | 1,054 | 9,494 | (7,548 | ) | 390 | 2,610 | 3,000 | 91 | |||||||||||||||||||||||||||||||||||||
|
Ohio
|
||||||||||||||||||||||||||||||||||||||||||||||||||
|
Crossroads Centre
|
Rossford | Ohio | 2001 | 2001 | 5,800 | 20,709 | 1,367 | 4,903 | 22,973 | 27,876 | 5,408 | (e | ) | |||||||||||||||||||||||||||||||||||||
|
Office Max Center
|
Toledo | Ohio | 1994 | 1996 | 227 | 2,042 | — | 227 | 2,042 | 2,269 | 698 | (d | ) | |||||||||||||||||||||||||||||||||||||
|
Rossford Pointe
|
Rossford | Ohio | 2006 | 2005 | 796 | 3,087 | 2,312 | 797 | 5,398 | 6,195 | 542 | (d | ) | |||||||||||||||||||||||||||||||||||||
|
Spring Meadows Place
|
Holland | Ohio | 1987 | 1996 | 2005 | 1,662 | 14,959 | 4,946 | 1,653 | 19,914 | 21,567 | 6,417 | (d | ) | ||||||||||||||||||||||||||||||||||||
|
Troy Towne Center
|
Troy | Ohio | 1990 | 1996 | 2003 | 930 | 8,372 | (417 | ) | 813 | 8,072 | 8,885 | 2,946 | (d | ) | |||||||||||||||||||||||||||||||||||
|
South Carolina
|
||||||||||||||||||||||||||||||||||||||||||||||||||
|
Taylors Square
|
Taylors | South Carolina | 1989 | 1997 | 2005 | 1,581 | 14,237 | (12,209 | ) | 223 | 3,386 | 3,609 | 762 | (d | ) | |||||||||||||||||||||||||||||||||||
|
Tennessee
|
||||||||||||||||||||||||||||||||||||||||||||||||||
|
Northwest Crossing
|
Knoxville | Tennessee | 1989 | 1997 | 2006 | 1,284 | 11,566 | (3,220 | ) | 399 | 9,231 | 9,630 | 2,008 | (d | ) | |||||||||||||||||||||||||||||||||||
|
Northwest Crossing II
|
Knoxville | Tennessee | 1999 | 1999 | 570 | — | 1,628 | 570 | 1,628 | 2,198 | 416 | (d | ) | |||||||||||||||||||||||||||||||||||||
|
Stonegate Plaza
|
Kingsport | Tennessee | 1984 | 1997 | 1993 | 606 | 5,454 | (4,816 | ) | 606 | 638 | 1,244 | 2 | |||||||||||||||||||||||||||||||||||||
|
Virginia
|
||||||||||||||||||||||||||||||||||||||||||||||||||
|
Aqvia Towne Center
|
Stafford | Virginia | 1989 | 1998 | 2,187 | 19,776 | 44,144 | 3,509 | 62,598 | 66,107 | 6,803 | (e | ) | |||||||||||||||||||||||||||||||||||||
|
Wisconsin
|
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|
East Town Plaza
|
Madison | Wisconsin | 1992 | 2000 | 2000 | 1,768 | 16,216 | 71 | 1,768 | 16,287 | 18,055 | 3,919 | (e | ) | ||||||||||||||||||||||||||||||||||||
|
West Allis Towne Centre
|
West Allis | Wisconsin | 1987 | 1996 | 1,866 | 16,789 | 10,249 | 1,866 | 27,038 | 28,904 | 6,208 | |||||||||||||||||||||||||||||||||||||||
|
Grand Total
|
$ | 149,035 | $ | 640,488 | $ | 205,928 | $ | 141,794 | $ | 853,657 | $ | 995,451 | $ | 191,156 | ||||||||||||||||||||||||||||||||||||
| (a) | If prior to May 1996, constructed by a predecessor of the Company. | |
| (b) | The aggregate cost of land and buildings and improvements for federal income tax purposes is approximately $968 million. | |
| (c) | Depreciation for all properties is computed over the useful life which is generally forty years. | |
| (d) | The property is pledged as collateral on the secured credit facility. | |
| (e) | The property is pledged as collateral on secured mortgages. | |
| (f) | Refer to Note 1 for a summary of the Company’s capitalization policies. |
F-38
Table of Contents
The changes in real estate assets and accumulated depreciation
for the years ended December 31, 2009, and 2008 are as
follows:
|
Real Estate Assets
|
2009
|
2008
|
Accumulated Depreciation
|
2009
|
2008
|
|||||||||||||
|
Balance at beginning of period
|
$ | 1,005,109 | $ | 1,045,372 | Balance at beginning of period | $ | 174,717 | $ | 168,962 | |||||||||
|
Land Development/Acquisitions
|
(19 | ) | 20,258 | Sales/Retirements | (7,091 | ) | (11,690 | ) | ||||||||||
|
Discontinued Operations
|
(2,603 | ) | (12,624 | ) | Discontinued Operations | (859 | ) | (3,242 | ) | |||||||||
|
Capital Improvements
|
19,019 | 41,015 | Depreciation | 24,389 | 20,687 | |||||||||||||
|
Sale/Retirements of Assets
|
(26,055 | ) | (88,912 | ) | Balance at end of period | $ | 191,156 | $ | 174,717 | |||||||||
|
Balance at end of period
|
$ | 995,451 | $ | 1,005,109 | ||||||||||||||
F-39
TABLE OF CONTENTS
Part IItem 1. BusinessItem 1A. Risk FactorsItem 1B. Unresolved Staff CommentsItem 2. PropertiesItem 3. Legal ProceedingsItem 4. Submission Of Matters To A Vote Of Security HoldersPart IIItem 5. Market For Registrant S Common Equity, Related Stockholder Matters and Issuer Purchases Of Equity SecuritiesItem 6. Selected Financial Data (in Thousands, Except Per Share Data and Number Of Properties)Item 7. Management S Discussion and Analysis Of Financial Condition and Results Of OperationsItem 7A. Quantitative and Qualitative Disclosures About Market RiskItem 8. Financial Statements and Supplementary DataItem 9. Changes in and Disagreements with Accountants on Accounting and Financial DisclosureItem 9A. Controls and ProceduresItem 9B. Other InformationPart IIIItem 10. Directors, Executive Officers and Corporate GovernanceItem 11. Executive CompensationItem 12. Security Ownership Of Certain Beneficial Owners and Management and Related Stockholder MattersItem 13. Certain Relationships and Related Transactions, and Director IndependenceItem 14. Principal Accountant Fees and ServicesPart IVItem 15. Exhibits and Financial Statement Schedules