NEW YORK, — Brixmor Property Group Inc. (NYSE: BRX) (“Brixmor” or the “Company”) announced today its operating results for the three and twelve months ended December 31, 2018. For the three months ended December 31, 2018 and 2017, net income attributable to common stockholders was $0.26 per diluted share and $0.23 per diluted share, respectively.
Key highlights for the three months ended December 31, 2018 include:
Key highlights for the twelve months ended December 31, 2018 include:
“I’m pleased to report that our team’s accomplishments in 2018, which exceeded the plan we set forth at our Investor Day in 2017, have set the table for accelerating growth in 2019 and beyond,” commented James Taylor, Chief Executive Officer and President. “We achieved record levels of leasing during the year at sector leading releasing spreads, capitalized on favorable private market valuations to sell nearly $1 billion of non-core assets, delivered $131 million in value enhancing reinvestments, expanded our accretive reinvestment pipeline to $352 million to capitalize on the embedded value in our well located centers, and substantially improved the financial and operating flexibility of our capital structure.”
FINANCIAL HIGHLIGHTS
Net Income
NAREIT FFO
Same Property NOI Growth
Dividend
Other Matters
PORTFOLIO AND INVESTMENT ACTIVITY
Value Enhancing Reinvestment Opportunities
Dispositions
Acquisitions and Share Repurchases
CAPITAL STRUCTURE
GUIDANCE
Low |
High |
||||
2018 NAREIT FFO per diluted share |
$1.85 |
$1.85 |
|||
Gain (loss) on extinguishment of debt, net |
0.12 |
0.12 |
|||
SEC settlement |
0.02 |
0.02 |
|||
Litigation and other non-routine legal expenses |
0.01 |
0.01 |
|||
2018 NAREIT FFO per diluted share, adjusted |
$2.00 |
$2.00 |
|||
Same property NOI growth |
0.07 |
0.08 |
|||
Non-cash GAAP rental adjustments 1 |
(0.04) |
(0.03) |
|||
Impact of lease accounting change, ASC 842 (recognized through General & Administrative) |
(0.03) |
(0.03) |
|||
NOI dilution associated with 2018 asset sales |
(0.18) |
(0.18) |
|||
Impact of leverage reduction, share repurchase activity and other |
0.07 |
0.10 |
|||
2019E NAREIT FFO per diluted share, before prospective capital recycling 2
|
$1.89 |
$1.94 |
|||
Prospective capital recycling |
(0.03) |
– |
|||
2019E NAREIT FFO per diluted share 2 |
$1.86 |
$1.94 |
|||
1 Includes straight-line rental income, amortization of above- and below-market rent and tenant inducements and straight-line ground rent expense. |
|||||
2 Does not include any expectations of one-time items, including, but not limited to, litigation and other non-routine legal expenses. |
The following table provides a reconciliation of the range of the Company’s 2019 estimated net income attributable to common stockholders to NAREIT FFO:
(Unaudited, dollars in millions, except per share amounts) |
2019E |
2019E Per Diluted Share |
||
Net income attributable to common stockholders |
$238 – $261 |
$0.80 – $0.88 |
||
Depreciation and amortization |
315 |
1.06 |
||
NAREIT FFO |
$553 – $576 |
$1.86 – $1.94 |
CONNECT WITH BRIXMOR
CONFERENCE CALL AND SUPPLEMENTAL INFORMATION
The Company will host a teleconference on Tuesday, February 12, 2019 at 10:00 AM ET. To participate, please dial 877.705.6003 (domestic) or 201.493.6725 (international) within 15 minutes of the scheduled start of the call. The teleconference can also be accessed via a live webcast at www.brixmor.com in the Investors section. A replay of the teleconference will be available through midnight ET on February 26, 2019 by dialing 844.512.2921 (domestic) or 412.317.6671 (international) (Passcode: 13685137) or via the web through February 12, 2020 at www.brixmor.com in the Investors section.
The Company’s Supplemental Disclosure will be posted at www.brixmor.com in the Investors section. These materials are also available to all interested parties upon request to the Company at investorrelations@brixmor.com or 800.468.7526.
NON-GAAP DISCLOSURES
The Company presents the non-GAAP performance measures set forth below. These measures should not be considered as alternatives to, or more meaningful than, net income (presented in accordance with GAAP) or other GAAP financial measures, as an indicator of financial performance and are not alternatives to, or more meaningful than, cash flow from operating activities (presented in accordance with GAAP) as a measure of liquidity. Non-GAAP performance measures have limitations as they do not include all items of income and expense that affect operations, and accordingly, should always be considered as supplemental financial results to those presented in accordance with GAAP. The Company’s computation of these non-GAAP performance measures may differ in certain respects from the methodology utilized by other REITs and, therefore, may not be comparable to similarly titled measures presented by such other REITs. Investors are cautioned that items excluded from these non-GAAP performance measures are relevant to understanding and addressing financial performance. A reconciliation of these non-GAAP performance measures to net income is presented in the attached table.
NAREIT FFO
NAREIT FFO is a supplemental non-GAAP performance measure utilized to evaluate the operating and financial performance of real estate companies. The National Association of Real Estate Investment Trusts (“NAREIT”) defines FFO as net income (loss) presented in accordance with GAAP excluding (i) gain (loss) on disposition of operating properties, plus (ii) depreciation and amortization of operating properties, (iii) impairment of operating properties and real estate equity investments and (iv) after adjustments for unconsolidated joint ventures calculated to reflect FFO on the same basis. The Company believes NAREIT FFO assists investors in analyzing and comparing the operating and financial performance of a company’s real estate between periods.
Same Property NOI
Same property NOI is a supplemental, non-GAAP performance measure utilized to evaluate the operating performance of real estate companies. Same property NOI is calculated (using properties owned for the entirety of both periods excluding properties under development and completed development properties which have been stabilized for less than one year), as total property revenues ((i) base rent, ancillary and other, (ii) expense reimbursements, and (iii) percentage rents) less direct property operating expenses ((i) operating costs, (ii) real estate taxes, and (iii) provision for doubtful accounts). Same property NOI excludes (i) corporate level expenses (including G&A), (ii) lease termination fees, (iii) straight-line rental income, (iv) amortization of above- and below-market leases and tenant inducements, (v) straight-line ground rent expense, and (vi) income or expense associated with the Company’s captive insurance entity. The Company believes same property NOI assists investors in analyzing Brixmor’s comparative operating and financial performance because it eliminates disparities in NOI due to the acquisition, disposition or stabilization of development properties during the period presented and therefore provides a more consistent metric for comparing the operating performance of a company’s real estate between periods.
ABOUT BRIXMOR PROPERTY GROUP
Brixmor (NYSE: BRX) is a real estate investment trust (REIT) that owns and operates a high-quality, national portfolio of open-air shopping centers. Its 425 retail centers comprise approximately 74 million square feet of prime retail space in established trade areas. The Company strives to own and operate shopping centers that reflect Brixmor’s vision “to be the center of the communities we serve” and are home to a diverse mix of thriving national, regional and local retailers. Brixmor is a proud real estate partner to more than 5,000 retailers including The TJX Companies, The Kroger Co., Publix Super Markets, Wal-Mart, Ross Stores and L.A. Fitness.
Brixmor announces material information to its investors in SEC filings and press releases and on public conference calls, webcasts and the “Investor” page of its website at www.brixmor.com. The Company also uses social media to communicate with its investors and the public, and the information Brixmor posts on social media may be deemed material information. Therefore, Brixmor encourages investors and others interested in the Company to review the information that it posts on its website and on its social media channels.
SAFE HARBOR LANGUAGE
This press release may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These statements include, but are not limited to, statements related to the Company’s expectations regarding the performance of its business, its financial results, its liquidity and capital resources and other non-historical statements. You can identify these forward-looking statements by the use of words such as “outlook,” “believes,” “expects,” “potential,” “continues,” “may,” “will,” “should,” “seeks,” “approximately,” “projects,” “predicts,” “intends,” “plans,” “estimates,” “anticipates” or the negative version of these words or other comparable words. Such forward-looking statements are subject to various risks and uncertainties, including those described under the sections entitled “Forward-Looking Statements” and “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018, as such factors may be updated from time to time in our periodic filings with the SEC, which are accessible on the SEC’s website at www.sec.gov. Accordingly, there are or will be important factors that could cause actual outcomes or results to differ materially from those indicated in these statements. These factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included in this release and in the Company’s filings with the SEC. The Company undertakes no obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise, except as required by law.
CONSOLIDATED BALANCE SHEETS |
|||||||
Unaudited, dollars in thousands, except share information |
|||||||
As of |
As of |
||||||
12/31/18 |
12/31/17 |
||||||
Assets |
|||||||
Real estate |
|||||||
Land |
$ 1,804,504 |
$ 1,984,309 |
|||||
Buildings and tenant improvements |
7,535,985 |
8,063,871 |
|||||
Construction in progress |
90,378 |
81,214 |
|||||
Lease intangibles |
667,910 |
792,097 |
|||||
10,098,777 |
10,921,491 |
||||||
Accumulated depreciation and amortization |
(2,349,127) |
(2,361,070) |
|||||
Real estate, net |
7,749,650 |
8,560,421 |
|||||
Cash and cash equivalents |
41,745 |
56,938 |
|||||
Restricted cash |
9,020 |
53,839 |
|||||
Marketable securities |
30,243 |
28,006 |
|||||
Receivables, net of allowance for doubtful accounts of $21,724 and $17,205 |
228,297 |
232,111 |
|||||
Deferred charges and prepaid expenses, net |
145,662 |
147,508 |
|||||
Real estate assets held for sale |
2,901 |
27,081 |
|||||
Other assets |
34,903 |
48,022 |
|||||
Total assets |
$ 8,242,421 |
$ 9,153,926 |
|||||
Liabilities |
|||||||
Debt obligations, net |
$ 4,885,863 |
$ 5,676,238 |
|||||
Accounts payable, accrued expenses and other liabilities |
520,459 |
569,340 |
|||||
Total liabilities |
5,406,322 |
6,245,578 |
|||||
Equity |
|||||||
Common stock, $0.01 par value; authorized 3,000,000,000 shares; |
|||||||
305,130,472 and 304,947,144 shares issued and 298,488,516 and 304,620,186 |
|||||||
shares outstanding |
2,985 |
3,046 |
|||||
Additional paid-in capital |
3,233,329 |
3,330,466 |
|||||
Accumulated other comprehensive income |
15,973 |
24,211 |
|||||
Distributions in excess of net income |
(416,188) |
(449,375) |
|||||
Total equity |
2,836,099 |
2,908,348 |
|||||
Total liabilities and equity |
$ 8,242,421 |
$ 9,153,926 |
|||||
CONSOLIDATED STATEMENTS OF OPERATIONS |
|||||||||||
Unaudited, dollars in thousands, except per share amounts |
|||||||||||
Three Months Ended |
Twelve Months Ended |
||||||||||
12/31/18 |
12/31/17 |
12/31/18 |
12/31/17 |
||||||||
Revenues |
|||||||||||
Rental income |
$ 229,541 |
$ 247,113 |
$ 956,090 |
$ 997,089 |
|||||||
Expense reimbursements |
67,082 |
71,918 |
271,671 |
278,636 |
|||||||
Other revenues |
1,032 |
1,029 |
6,579 |
7,455 |
|||||||
Total revenues |
297,655 |
320,060 |
1,234,340 |
1,283,180 |
|||||||
Operating expenses |
|||||||||||
Operating costs |
34,877 |
35,137 |
136,217 |
136,092 |
|||||||
Real estate taxes |
42,018 |
43,490 |
177,401 |
179,097 |
|||||||
Depreciation and amortization |
85,345 |
89,988 |
352,245 |
375,028 |
|||||||
Provision for doubtful accounts |
3,624 |
1,300 |
10,082 |
5,323 |
|||||||
Impairment of real estate assets |
9,094 |
12,721 |
53,295 |
40,104 |
|||||||
General and administrative |
28,641 |
25,204 |
93,596 |
92,247 |
|||||||
Total operating expenses |
203,599 |
207,840 |
822,836 |
827,891 |
|||||||
Other income (expense) |
|||||||||||
Dividends and interest |
163 |
131 |
519 |
365 |
|||||||
Interest expense |
(49,290) |
(56,076) |
(215,025) |
(226,660) |
|||||||
Gain on sale of real estate assets |
50,125 |
13,927 |
209,168 |
68,847 |
|||||||
Gain (loss) on extinguishment of debt, net |
(16,914) |
10 |
(37,096) |
498 |
|||||||
Other |
(586) |
(316) |
(2,786) |
(2,907) |
|||||||
Total other expense |
(16,502) |
(42,324) |
(45,220) |
(159,857) |
|||||||
Income before equity in income of unconsolidated joint venture |
77,554 |
69,896 |
366,284 |
295,432 |
|||||||
Equity in income of unconsolidated joint venture |
– |
– |
– |
381 |
|||||||
Gain on disposition of unconsolidated joint venture interest |
– |
– |
– |
4,556 |
|||||||
Net income |
77,554 |
69,896 |
366,284 |
300,369 |
|||||||
Net income attributable to non-controlling interests |
– |
– |
– |
(76) |
|||||||
Net income attributable to Brixmor Property Group Inc. |
77,554 |
69,896 |
366,284 |
300,293 |
|||||||
Preferred stock dividends |
– |
– |
– |
(39) |
|||||||
Net income attributable to common stockholders |
$ 77,554 |
$ 69,896 |
$ 366,284 |
$ 300,254 |
|||||||
Per common share: |
|||||||||||
Net income attributable to common stockholders: |
|||||||||||
Basic |
$ 0.26 |
$ 0.23 |
$ 1.21 |
$ 0.98 |
|||||||
Diluted |
$ 0.26 |
$ 0.23 |
$ 1.21 |
$ 0.98 |
|||||||
Weighted average shares: |
|||||||||||
Basic |
299,112 |
304,892 |
302,074 |
304,834 |
|||||||
Diluted |
299,438 |
305,265 |
302,339 |
305,281 |
|||||||
FUNDS FROM OPERATIONS (FFO) |
|||||||||||
Unaudited, dollars in thousands, except per share amounts |
|||||||||||
Three Months Ended |
Twelve Months Ended |
||||||||||
12/31/18 |
12/31/17 |
12/31/18 |
12/31/17 |
||||||||
Net income |
$ 77,554 |
$ 69,896 |
$ 366,284 |
$ 300,369 |
|||||||
Gain on disposition of operating properties |
(50,125) |
(13,927) |
(209,168) |
(68,847) |
|||||||
Gain on disposition of unconsolidated joint venture interest |
– |
– |
– |
(4,556) |
|||||||
Depreciation and amortization- real estate related- continuing operations |
84,246 |
89,015 |
347,862 |
371,255 |
|||||||
Depreciation and amortization- real estate related- unconsolidated joint venture |
– |
– |
– |
56 |
|||||||
Impairment of operating properties |
9,094 |
12,721 |
53,295 |
40,104 |
|||||||
NAREIT FFO |
$ 120,769 |
$ 157,705 |
$ 558,273 |
$ 638,381 |
|||||||
NAREIT FFO per share/OP Unit – diluted |
$ 0.40 |
$ 0.52 |
$ 1.85 |
$ 2.09 |
|||||||
Weighted average shares/OP Units outstanding – basic and diluted |
299,438 |
305,265 |
302,339 |
305,281 |
|||||||
Items that impact FFO comparability |
|||||||||||
Gain (loss) on extinguishment of debt, net |
$ (16,914) |
$ 10 |
$ (37,096) |
$ 498 |
|||||||
SEC settlement |
(7,000) |
– |
(7,000) |
– |
|||||||
Litigation and other non-routine legal expenses |
(851) |
(2,184) |
(2,506) |
(5,813) |
|||||||
Transaction expenses |
(173) |
(167) |
(467) |
(371) |
|||||||
Total items that impact FFO comparability |
$ (24,938) |
$ (2,341) |
$ (47,069) |
$ (5,686) |
|||||||
Items that impact FFO comparability, net per share |
$ (0.08) |
$ (0.01) |
$ (0.16) |
$ (0.02) |
|||||||
Additional Disclosures |
|||||||||||
Straight-line rental income, net (1) |
$ 3,456 |
$ 3,965 |
$ 15,352 |
$ 18,449 |
|||||||
Amortization of above- and below-market leases and tenant inducements, net (2) |
5,063 |
6,011 |
23,313 |
27,460 |
|||||||
Straight-line ground rent expense (3) |
(31) |
(30) |
(131) |
(134) |
|||||||
Dividends declared per share/OP Unit |
$ 0.280 |
$ 0.275 |
$ 1.105 |
$ 1.055 |
|||||||
Share/OP Unit dividends declared |
$ 83,577 |
$ 83,771 |
$ 332,547 |
$ 321,610 |
|||||||
Share/OP Unit dividend payout ratio (as % of NAREIT FFO) |
69.2% |
53.1% |
59.6% |
50.4% |
|||||||
(1) Includes unconsolidated joint venture Montecito Marketplace straight-line rental expense, net of $2 at pro rata share for the twelve months ended December 31, 2017. Montecito Marketplace was sold on August 8, 2017. |
|||||||||||
(2) Includes unconsolidated joint venture Montecito Marketplace amortization of above- and below-market leases and tenant inducements, net of $15 at pro rata share for the twelve months ended December 31, 2017. Montecito Marketplace was sold on August 8, 2017. |
|||||||||||
(3) Straight-line ground rent expense is included in Operating costs on the Consolidated Statements of Operations. |
SAME PROPERTY NOI ANALYSIS |
||||||||||||||||
Unaudited, dollars in thousands |
||||||||||||||||
Three Months Ended |
Twelve Months Ended |
|||||||||||||||
12/31/18 |
12/31/17 |
Change |
12/31/18 |
12/31/17 |
Change |
|||||||||||
Same Property NOI Analysis |
||||||||||||||||
Number of properties |
420 |
420 |
– |
417 |
417 |
– |
||||||||||
Percent billed |
88.4% |
89.9% |
(1.5%) |
88.4% |
89.9% |
(1.5%) |
||||||||||
Percent leased |
91.9% |
91.9% |
-% |
91.9% |
91.9% |
-% |
||||||||||
Revenues |
||||||||||||||||
Base rent |
$ 209,513 |
$ 205,672 |
$ 822,778 |
$ 806,190 |
||||||||||||
Ancillary and other |
4,278 |
4,087 |
16,145 |
14,371 |
||||||||||||
Expense reimbursements |
65,065 |
64,636 |
248,541 |
245,158 |
||||||||||||
Percentage rents |
838 |
924 |
6,014 |
6,609 |
||||||||||||
279,694 |
275,319 |
1.6% |
1,093,478 |
1,072,328 |
2.0% |
|||||||||||
Operating expenses |
||||||||||||||||
Operating costs |
(35,336) |
(34,035) |
(125,878) |
(121,064) |
||||||||||||
Real estate taxes |
(40,776) |
(39,416) |
(162,455) |
(158,844) |
||||||||||||
Provision for doubtful accounts |
(3,248) |
(1,165) |
(8,608) |
(4,503) |
||||||||||||
(79,360) |
(74,616) |
6.4% |
(296,941) |
(284,411) |
4.4% |
|||||||||||
Same property NOI |
$ 200,334 |
$ 200,703 |
(0.2%) |
$ 796,537 |
$ 787,917 |
1.1% |
||||||||||
NOI margin |
71.6% |
72.9% |
72.8% |
73.5% |
||||||||||||
Expense recovery ratio |
85.5% |
88.0% |
86.2% |
87.6% |
||||||||||||
Percent contribution to same property NOI growth: |
||||||||||||||||
Change |
Percent Contribution |
Change |
Percent Contribution |
|||||||||||||
Base rent |
$ 3,841 |
1.9% |
$ 16,588 |
2.1% |
||||||||||||
Ancillary and other |
191 |
0.1% |
1,774 |
0.2% |
||||||||||||
Net recoveries |
(2,232) |
(1.2%) |
(5,042) |
(0.6%) |
||||||||||||
Percentage rents |
(86) |
(0.0%) |
(595) |
(0.1%) |
||||||||||||
Provision for doubtful accounts |
(2,083) |
(1.0%) |
(4,105) |
(0.5%) |
||||||||||||
(0.2%) |
1.1% |
|||||||||||||||
Reconciliation of Net Income Attributable to Common Stockholders to Same Property NOI |
||||||||||||||||
Same property NOI |
$ 200,334 |
$ 200,703 |
$ 796,537 |
$ 787,917 |
||||||||||||
Adjustments: |
||||||||||||||||
Non-same property NOI |
7,005 |
28,418 |
71,897 |
122,127 |
||||||||||||
Lease termination fees |
1,309 |
1,066 |
3,672 |
6,542 |
||||||||||||
Straight-line rental income, net |
3,456 |
3,965 |
15,352 |
18,451 |
||||||||||||
Amortization of above- and below-market leases and tenant inducements, net |
5,063 |
6,011 |
23,313 |
27,445 |
||||||||||||
Fee income |
– |
– |
– |
320 |
||||||||||||
Straight-line ground rent expense |
(31) |
(30) |
(131) |
(134) |
||||||||||||
Depreciation and amortization |
(85,345) |
(89,988) |
(352,245) |
(375,028) |
||||||||||||
Impairment of real estate assets |
(9,094) |
(12,721) |
(53,295) |
(40,104) |
||||||||||||
General and administrative |
(28,641) |
(25,204) |
(93,596) |
(92,247) |
||||||||||||
Total other expense |
(16,502) |
(42,324) |
(45,220) |
(159,857) |
||||||||||||
Equity in income of unconsolidated joint venture |
– |
– |
– |
381 |
||||||||||||
Gain on disposition of unconsolidated joint venture interest |
– |
– |
– |
4,556 |
||||||||||||
Net income attributable to non-controlling interests |
– |
– |
– |
(76) |
||||||||||||
Preferred stock dividends |
– |
– |
– |
(39) |
||||||||||||
Net income attributable to common stockholders |
$ 77,554 |
$ 69,896 |
$ 366,284 |
$ 300,254 |
||||||||||||