14229 Cover.qxd:Layout 1 4/10/12 5:07 PM Page 1
2011 Annual Report
Commitment to Quality
Corporate Office
31500 Northwestern Highway
Suite 300
Farmington Hills, MI 48334
Tel: (248) 350-9900
Fax: (248) 350-9925
www.rgpt.com
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14229 Cover.qxd:Layout 1 4/10/12 5:07 PM Page 2
Corporate Profile
Ramco-Gershenson Properties Trust (NYSE:RPT) is a fully integrated, self-administered, publicly-traded real
estate investment trust (REIT) based in Farmington Hills, Michigan. Our primary business is the ownership
and management of shopping centers in targeted metropolitan markets in the Eastern and Midwestern
United States. At December 31, 2011, the Company owned and managed a portfolio of 83 shopping centers
and one office building with approximately 15.2 million square feet of gross leasable area owned by the
Company and its joint ventures. The properties are located in Michigan, Florida, Ohio, Georgia, Missouri,
Wisconsin, Illinois, Indiana, New Jersey, Virginia, Maryland, and Tennessee.
Selected Financial Highlights
(dollars in thousands, except per share amounts)
Years Ended December 31
2011
2010
2009
2008
2007
Total Revenues
Net (Loss) Income Available to
Common Shareholders
Funds from Operations Available to
$121,320
$113,217
$114,876
$124,150
$135,047
$(32,002)
$(20,148)
$13,720
$23,501
$34,260
Common Shareholders
$41,727(1)
$40,138(1)
$45,263
$47,362
$54,975
Funds from Operations Available to
Common Shareholders, per diluted share
Cash Distributions Declared, per common share
$1.01(1)
$0.65
$1.05(1)
$0.65
$1.80
$0.79
$2.21
$1.62
$2.56
$1.85
Total Assets
Mortgages and Notes Payable
Total Liabilities
Shareholders Equity
Number of Properties
(1)Excludes certain one-time, non-cash items.
$1,048,823
$518,512
$567,649
$449,075
84
$1,052,829
$571,694
$613,463
$402,273
90
$997,957
$552,836
$591,392
$367,228
88
$1,014,526
$663,189
$701,488
$273,714
89
$1,088,499
$691,644
$765,742
$281,517
89
Dear Fellow Shareholders,
Ramco-Gershenson is committed to increasing quality in all aspects of our
business. We believe that improving the credit-quality of our income stream,
upgrading the quality of our shopping center portfolio and strengthening our
balance sheet will be significant drivers of shareholder value. This strategic
initiative has several aspects. First, we have worked to increase the quality of
our rental income by filling both large and small vacancies as well as replacing
underperforming tenants with national creditworthy retailers. Second, we have
undertaken a capital recycling program to improve the quality profile of our
shopping centers and their trade areas. And third, we have made substantial
progress in building a strong balance sheet which promotes both financial
flexibility and a solid foundation for future growth. I am pleased to report that
this commitment to quality is paying real dividends for our shareholders as
evidenced by our achievements during 2011.
A Focus on Quality in our Core Shopping Center Portfolio
In 2011, I challenged the asset management team to make significant progress
in filling our remaining anchor vacancies. They succeeded in leasing half of
these large format boxes to national creditworthy retailers, reducing the number
of anchor vacancies to eight spaces. They also retenanted five dark, but rent
paying mid-box locations with vibrant, destination oriented national and regional
tenants. These new additions to our tenant roster include Bed, Bath & Beyond,
Marshalls, DSW Shoe Warehouse, Whole Foods, LA Fitness, buybuy Baby,
Michaels and PetSmart. Our new anchors are having a positive impact on the
composition of our top tenant line-up; they are serving as a catalyst to attract
additional smaller format national retailers who have begun store expansion
programs; and they will provide sustainable drawing power for our shopping
centers over the long term. All of this leasing activity with both large and
smaller retailers resulted in the execution of agreements for over two million
square feet and a leased occupancy rate of 93.5%, a significant
over 2010. These results validate the conclusion that our shopping centers are
the dominant retail destinations within their respective trade areas.
improvement
Dennis Gershenson, President and CEO
64.9%
22.7%
12.4%
•
•
•
Diversified Tenant Mix
(percent of annualized rents)
Promoting Quality through Capital Recycling
National
Regional
Local
Total
64.9%
12.4%
22.7%
100.0%
During 2011, we commenced a program to build an even higher quality
shopping center portfolio by selling non-core assets that no longer fit our
long-term strategy and acquiring multi-anchored centers, preferably with the
dominant grocer in strong metropolitan markets. Those assets we have
identified as non-core properties include shopping centers that have reached
their maximum potential; centers in markets where we’ve determined to reduce
our exposure; assets in states where we have a limited presence and do not
plan to expand our footprint; as well as centers where the capital and energy
RAMCO-GERSHENSON PROPERTIES TRUST 1
Town & Country Crossing, Town and Country, Missouri.
investment to reinvigorate the properties do not justify the expenditure. During
the year we sold four non-core shopping centers, including three centers in
Florida and our only property in South Carolina. We replaced their income
contribution by acquiring two high-quality, multiple-anchored shopping centers,
each with a market dominant grocer, in St. Louis, Missouri. Our asset sales
combined with the acquisition of these centers contributed to an improvement
in the quality of our core portfolio demographic profile promoting an average
household income of $83,000 and a population density of 66,000. Our
acquisitions are also contributing to the broadening of our tenant roster with
the addition of Whole Foods as one of the top tenants. Each also present the
opportunity for us to add value through the lease up of current vacancies, a
reconfiguration or downsizing of certain mid-box spaces, and the expansion of
one center by constructing additional retail buildings. During our 2011 year-end
conference call we indicated that the capital recycling program would continue
into 2012, as we had already executed contracts for the sale of three additional
non-core assets and we had identified a shopping center for purchase.
Strengthening the Balance Sheet
Our efforts to promote a transformational change in our capital structure saw
real progress in 2011. Our most significant achievements included:
• Raising approximately $100 million through a convertible preferred stock
8.4%
40.1%
•
•
•
•
•
••
Capital Structure
(dollars in millions)
32.0%
13.3%
2.9%
2.8%
0.6%
Mortgage Loans
Term Loans
Credit Facility
Jr. Subordinated Note
Capital Lease Obligation
Convertible Preferred Stock
Common Equity
32.0% $325.8
13.3% $135.0
2.9% $ 29.5
2.8% $ 28.1
0.6% $
6.3
8.4% $ 85.3
40.1% $407.9
Total Capitalization
100.0% $1,017.9
offering.
• Closing on a new three-year $175 million unsecured line of credit.
• Negotiating $135 million in unsecured, fixed-rate term loans.
• Producing a net debt to EBITDA ratio of 7.0x, compared to 8.5x at the end
of 2010.
2 RAMCO-GERSHENSON PROPERTIES TRUST
46.0%
54.0%
•
•
Unencumbered Real Estate to
Total Real Estate
Unencumbered Assets
Encumbered Assets
Total
46.0%
54.0%
100.0%
*Based on Credit Facility calculations and excluding land
held for development or sale.
5.7%
94.3%
•
•
Fixed vs. Variable Rate Debt
Variable Rate Debt
Fixed Rate Debt
Total
5.7%
94.3%
100.0%
Heritage Place, Creve Coeur, Missouri.
• Increasing our pool of unencumbered assets from under $100 million in 2010
to approximately $565 million by year end.
• Extending the weighted average term of our consolidated debt to 6.1 years,
compared to 4.7 years at the end of 2010.
The Company’s balance sheet improvements in 2011 have produced a flexible
capital structure with the liquidity to act upon future strategic opportunities as
they arise.
All of our team members are proud of the results we achieved in 2011. Our
efforts to promote quality in every aspect of our business will have a long
lasting effect on our income growth, the stability of our assets, and will provide
a solid foundation on which we will build in 2012 and beyond.
Our Plans for 2012
The leasing momentum built by our asset management team last year has
accelerated in the first quarter of 2012. Currently, we are experiencing an
increase in commitments with national retail tenants who occupy 4,000 to
10,000 square feet. These retailers include Rue 21, Five Below, Dress Barn,
Dots, Charming Charlie and ULTA Beauty. Agreements with these larger users
produce two benefits. Principally, they provide the opportunity to combine
1,000 to 2,500 square foot spaces which previously had been populated by
local tenants who now find it difficult to access capital. These larger retailers
also allow us to be proactive in working with those national anchors that
are downsizing their prototypes as they respond to the challenge of a
multi-channel retail environment.
RAMCO-GERSHENSON PROPERTIES TRUST 3
Town & Country Crossing, Town and Country, Missouri.
Our leasing efforts in 2011 will drive an ever increasing percentage of our
Funds from Operations (FFO) being generated from core shopping center
operations this year with a full year effect being achieved in 2013. In addition,
we expect to post increases in occupancy, same center net operating income,
and leasing spreads as our shopping centers benefit from the addition of the
highest quality and most relevant retailers in the marketplace.
Our focus on growing a portfolio of high-quality shopping centers also
continues. In addition to the contemplated sale of the three centers, we have
identified a limited number of properties that also qualify as non-core which
we plan to market in 2012. As a complement to the disposition program, we
are currently seeing an increase in the number of quality shopping centers
available for purchase. It is our intention to work diligently to match the timing
of prospective acquisitions and dispositions to limit an increase in leverage
and manage dilution.
Further, our plans for 2012 include a commitment to reduce by 20% the
unproductive land held for development or sale we carry on the balance sheet.
Toward this goal, we have recently announced the commencement of Phase I
of our Parkway Shops, a 100,000 square foot development anchored by Dick’s
Sporting Goods and Marshalls in Jacksonville, Florida. The development is
adjacent to our 900,000 square foot River City Marketplace and solidifies our
dominance in the rapidly growing North Jacksonville area. Our goals for further
development will be undertaken with the same objectives we considered upon
undertaking the Parkway project. These include the prospect of building the
market dominant center in a particular trade area, the ability to add multiple
national creditworthy retailers to our tenant line-up, and the positive long-term
4 RAMCO-GERSHENSON PROPERTIES TRUST
Heritage Place, Creve Coeur, Missouri.
contribution the center will make to our core shopping center line-up in terms
of both value and growth.
All of this year’s activities will be undertaken with an eye to preserving the
advances we’ve made in strengthening our balance sheet. Further, our capital
structure goals for 2012 include a continuation in the reduction of overall
leverage, an increase in our unencumbered asset base, and a further
improvement in our debt metrics.
In Conclusion
Our commitment to quality is already contributing to the long-term growth of
the Company. The gains from our leasing activities are generating predictable,
sustainable earnings and provide a vehicle for increased asset value. Our
capital recycling program is producing positive changes to the quality of our
trade area demographic profile and the competitiveness of our shopping
centers. Further, the improvements to our capital structure have positioned our
Company solidly among our peers. Thus, with the wind at our back, and a true
commitment to quality, Ramco-Gershenson is positioned to deliver lasting
growth in shareholder value.
Sincerely,
Dennis Gershenson
President and CEO
RAMCO-GERSHENSON PROPERTIES TRUST 5
Property Summary
PROPERTY
Florida
LOCATION
OWNERSHIP %
TOTAL COMPANY
OWNED GLA
90,116
109,312
167,280
115,586
238,901
331,105
263,721
134,707
105,873
551,428
62,038
148,643
181,988
83,890
120,092
326,763
92,979
186,496
155,770
146,755
109,761
156,073
86,748
101,637
170,475
107,053
97,001
137,284
84,846
112,407
280,225
Cocoa Commons
Coral Creek Shops
Cypress Point
Kissimmee West
Marketplace of Delray
Martin Square
Mission Bay Plaza
Naples Towne Centre
Pelican Plaza
River City Marketplace
River Crossing Centre
Rivertowne Square
Shoppes of Lakeland
Southbay Shopping Center
The Crossroads
The Plaza at Delray
Treasure Coast Commons
Village Lakes Shopping Center
Village of Oriole Plaza
Village Plaza
Vista Plaza
West Broward Shopping Center Plantation
30%
Cocoa
100%
Coconut Creek
30%
Clearwater
7%
Kissimmee
30%
Delray Beach
30%
Stuart
30%
Boca Raton
100%
Naples
100%
Sarasota
100%
Jacksonville
100%
New Port Richey
100%
Deerfield Beach
7%
Lakeland
Osprey
100%
Royal Palm Beach 100%
20%
Delray Beach
30%
Jensen Beach
100%
Land O’ Lakes
30%
Delray Beach
30%
Lakeland
30%
Jensen Beach
30%
Woodstock
Cartersville
Conyers
Roswell
Suwanee
Stockbridge
Hiram
Duluth
Duluth
100%
20%
100%
100%
100%
100%
20%
20%
100%
Georgia
Centre at Woodstock
Collins Pointe Plaza
Conyers Crossing
Holcomb Center
Horizon Village
Mays Crossing
Paulding Pavilion
Peachtree Hill
Promenade at Pleasant Hill
Illinois
Liberty Square
Market Plaza
Rolling Meadows
Shopping Center
Indiana
Wauconda
Glen Ellyn
100%
20%
107,369
163,054
Ohio
Rolling Meadows
20%
134,236
PROPERTY
Michigan
Beacon Square
Clinton Pointe
Clinton Valley
Eastridge Commons
Edgewood Towne Center
Fairlane Meadows
Fraser Shopping Center
Gaines Marketplace
Gratiot Crossing
Hoover Eleven
Hunter’s Square
Jackson Crossing
Jackson West
Kentwood Towne Centre
Lake Orion Plaza
Lakeshore Marketplace
Livonia Plaza
Millennium Park
New Towne Plaza
Oak Brook Square
Roseville Towne Center
Southfield Plaza
Southfield Plaza Expansion
Tel-Twelve
The Auburn Mile
The Shops at Old Orchard
Troy Marketplace
West Acres Commons
West Oaks I
West Oaks II
Winchester Center
New Jersey
LOCATION
OWNERSHIP %
TOTALCOMPANY
OWNED GLA
Grand Haven
Clinton Township
Sterling Heights
Flint
Lansing
Dearborn
Fraser
Gaines Township
Chesterfield
Warren
Farmington Hills
Jackson
Jackson
Kentwood
Lake Orion
Norton Shores
Livonia
Livonia
Canton Township
Flint
Roseville
Southfield
Southfield
Southfield
Auburn Hills
West Bloomfield
Troy
Flint Township
Novi
Novi
Rochester Hills
100%
100%
100%
100%
100%
100%
100%
100%
30%
100%
30%
100%
100%
77.9%
100%
100%
100%
30%
100%
100%
100%
100%
50%
100%
100%
30%
30%
40%
100%
100%
30%
51,387
135,330
201,282
169,676
85,757
157,246
68,326
392,169
165,544
288,184
354,323
398,526
210,321
184,152
141,073
346,854
136,422
281,374
192,587
152,373
246,968
165,999
19,410
523,411
90,553
96,994
222,193
95,089
243,987
167,954
314,734
Chester Springs Shopping Center Chester
20%
223,201
Crossroads Centre
OfficeMax Center
Olentangy Plaza
Rossford Pointe
Spring Meadows Place
The Shops on Lane Avenue
Troy Towne Center
Rossford
Toledo
Columbus
Rossford
Holland
Upper Arlington
Troy
100%
100%
20%
100%
100%
20%
100%
344,045
22,930
253,474
47,477
211,817
134,876
144,485
Merchants’ Square
Nora Plaza
Carmel
Indianapolis
100%
7%
278,875
139,905
Maryland
Tennessee
Crofton Centre
Crofton
20%
252,491
Northwest Crossing
Knoxville
100%
124,453
Missouri
Virginia
Heritage Place
Town & Country Crossing
Creve Coeur
100%
Town and Country 100%
269,254
141,996
The Town Center at Aquia Office Stafford
Stafford
The Town Center at Aquia
Wisconsin
East Town Plaza
The Shoppes at Fox River
West Allis Towne Centre
Madison
Waukesha
West Allis
100%
100%
100%
100%
100%
98,147
40,518
208,675
135,566
326,271
6 RAMCO-GERSHENSON PROPERTIES TRUST
61.8%
38.2%
•
•
Geographic Concentration
(percent of annualized rents)
Midwest
East
Total
61.8%
38.2%
100.0%
RAMCO-GERSHENSON PROPERTIES TRUST 7
Executive Officers:
Dennis Gershenson
President and CEO
Gregory R. Andrews
Chief Financial Officer,
Secretary
Fred A. Zantello
Executive Vice President,
Assistant Secretary
Catherine Clark
Senior Vice President
Acquisitions
Michael J. Sullivan
Senior Vice President
Asset Management
Certifications
On June 28, 2011, the Company
submitted the Annual CEO Certification
to the NYSE, pursuant to Section 303A.12
of the NYSE's listing standards, whereby
our CEO certified that he is not aware of
any violation by the Trust of the NYSE's
corporate governance listing standards as
of the date of the certification. In addition,
we have filed with the Securities and
Exchange Commission, as exhibits to our
Quarterly Reports on Form 10-Q for the
quarters ended March 31, June 30 and
September 30, 2011, and our Annual
Report on Form 10-K for the year ended
December 31, 2011, certifications by
our CEO and CFO in accordance
with Sections 302 and 906 of the
Sarbanes-Oxley Act of 2002.
Board of Trustees:
Stephen R. Blank, Chairman
Senior Fellow, Finance
Urban Land Institute
Audit Committee-
Financial Expert
Compensation Committee-Member
Nominating and Governance
Committee-Chairman
Dennis Gershenson
Trustee, President and CEO
Ramco-Gershenson Properties Trust
Executive Committee-Member
Arthur H. Goldberg
Managing Director
Corporate Solutions Group LLC
Audit Committee-
Financial Expert and Member
Compensation Committee-Chairman
Robert A. Meister
Vice Chairman, Emeritus
Aon Group, Inc.
Compensation Committee-Member
Nominating and Governance
Committee-Member
Corporate Information
Corporate Headquarters
31500 Northwestern Highway
Suite 300
Farmington Hills, MI 48334
Tel: (248) 350-9900
Fax: (248) 350-9925
www.rgpt.com
Stock Exchange Listing
New York Stock Exchange
NYSE: RPT
Independent Accountants
Grant Thornton LLP
Southfield, MI
Corporate Counsel
Honigman Miller Schwartz and
Cohn LLP
Detroit, MI
Corporate Information
Mathew L. Ostrower
Managing Director
Morgan Stanley
Audit Committee-Member
Nominating and Governance
Committee-Member
Joel M. Pashcow
Managing Member
Nassau Capital LLC
Executive Committee-Chairman
Nominating and Governance
Committee-Member
Mark K. Rosenfeld
Chairman and CEO
Wilherst Developers, Inc.
Audit Committee-
Financial Expert and Chairman
Michael A. Ward
Private Investor
Executive Committee-Member
Nominating and Governance
Committee-Member
Compensation Committee-Member
Transfer Agent and Registrar
American Stock Transfer & Trust
Company
Dividend Paying and Reinvestment
Plan Agent
59 Maiden Lane, Plaza Level
New York, NY 10038
Shareholder Services and Information:
(800) 937-5449
Shareholder Information
Current and prospective investors can
receive a copy of the Company’s
proxy statement, earnings announce-
ments as well as quarterly and annual
reports via the corporate web site,
www.rgpt.com or by contacting:
Dawn L. Hendershot
Director of Investor Relations
31500 Northwestern Highway
Suite 300
Farmington Hills, MI 48334
(248) 592-6202
dhendershot@rgpt.com
Member
National Association of
Real Estate Investment Trusts, Inc.
International Council of Shopping
Centers
8 RAMCO-GERSHENSON PROPERTIES TRUST
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
________________
Form 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2011
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 1-10093
RAMCO-GERSHENSON PROPERTIES TRUST
(Exact Name of Registrant as Specified in its Charter)
Maryland
(State or Other Jurisdiction of
Incorporation or Organization)
13-6908486
(I.R.S. Employer Identification No.)
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:
Title of Each Class
Common Shares of Beneficial Interest,
$0.01 Par Value Per Share
Name of Each Exchange
On Which Registered
New York Stock Exchange
Securities Registered Pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes [ ] No [X]
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 [ ] No [X]
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 [X] No [ ]
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 [X ] No [ ]
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. [ X ]
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 definition of “large accelerated filer,” “accelerated filer" and “smaller reporting company” in Rule 12b-2
of the Exchange Act.
Large Accelerated Filer [ ]
Non-Accelerated Filer [ ] (Do not check if small reporting company)
Accelerated Filer [X]
Small Reporting Company [ ]
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes [ ] No [X]
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, 2011) was $464,590,794.
Number of common shares outstanding as of March 1, 2012: 39,091,805
DOCUMENT INCORPORATED BY REFERENCE
Portions of the registrant’s proxy statement for the annual meeting of shareholders to be held June 1, 2012 are in incorporated
by reference into Part III of this Form 10-K.
TABLE OF CONTENTS
Item
PART I
Page
1.
1A.
1B.
2.
3.
4.
5.
6.
7.
7A.
8.
9.
9A.
9B.
10.
11.
12.
13.
14.
Business
Risk Factors
Unresolved Staff Comments
Properties
Legal Proceedings
Mine Safety Disclosures
PART II
Market for Registrant’s Common Equity, Related Stockholder Matters and
Issuer Purchases of Equity Securities
Selected Financial Data
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Quantitative and Qualitative Disclosures About Market Risk
Financial Statements and Supplementary Data
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Controls and Procedures
Other Information
PART III
Directors, Executive Officers and Corporate Governance
Executive Compensation
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
Certain Relationships and Related Transactions, and Director Independence
Principal Accountant Fees and Services
15.
Exhibits and Financial Statement Schedules
Consolidated Financial Statements and Notes
PART IV
2
4
11
12
19
19
20
22
23
40
41
41
41
44
44
44
44
44
44
45
F-1
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.
PART I
Item 1. Business
The terms “Company,” “we,” “our” or “us” refer to Ramco-Gershenson Properties Trust, Ramco-Gershenson Properties,
L.P., and/or its subsidiaries, as the context may require.
General
Ramco-Gershenson Properties Trust is a fully integrated, self-administered, publicly-traded equity real estate investment trust
(“REIT”). Our primary business is the ownership and management of shopping centers located in targeted metropolitan
markets in the Eastern and Midwestern United States. At December 31, 2011, we owned interests in 83 shopping centers and
one office building with approximately 15.2 million square feet of gross leasable area (“GLA”) owned by us and joint
ventures. During 2011, in three instances, we combined two adjacent centers that were previously reported separately into a
single center. We also owned interests in various parcels of land held for development or for sale, the majority of which are
adjacent to certain of our existing developed properties.
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 our 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. On October 2, 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 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, 2011, we owned approximately
93.7% of the interests in the Operating Partnership. The limited partners are reflected as noncontrolling interests in our
financial statements and are generally individuals or entities that contributed interests in certain assets or entities to the
Operating Partnership in exchange for units of limited partnership interest (“OP Units”). OP units are generally exchangeable
for our common shares on a 1:1 basis or for cash, at our election.
We operate in a manner intended to qualify as a REIT pursuant to the provisions of the Internal Revenue Code of 1986, as
amended (the “Code”). Certain of our operations, including property and asset management, as well as ownership of certain
land parcels, are conducted through taxable REIT subsidiaries, (“TRSs”), which are subject to federal and state income taxes.
1
Business Objectives and Strategies
Our primary business objective is to own and manage a portfolio of high quality shopping centers that generate cash flow for
distribution to our shareholders and that have the potential for capital appreciation. To achieve this objective, we seek to
acquire, develop, or redevelop shopping centers that meet our investment criteria. We also seek to recycle capital through the
sale of land or shopping centers that we deem to be fully valued or that no longer meet our investment criteria. We use debt to
finance our activities and focus on managing the amount, structure, and terms of our debt to limit the risks inherent in debt
financing. From time to time, we enter into joint venture arrangements where we believe we can benefit by owning a partial
interest in a shopping center investment and by earning fees for managing the centers for our partners.
We invest in primarily large, multi-anchor shopping centers that include national chain store tenants and market dominant
supermarket tenants selling products that satisfy everyday needs. National chain anchor tenants for our centers include, among
others, TJ Maxx/Marshalls, Home Depot, Wal-Mart, Kohl’s, Lowe’s Home Centers, Best Buy, and Target. Supermarket
anchor tenants for our centers include, among others, Publix Super Market, Jewel-Osco, Kroger and Whole Foods. Our
shopping centers are primarily located in targeted metropolitan markets in the Eastern and Midwestern regions of the United
States, such as Detroit, Fort Lauderdale-Palm Beach, Jacksonville, Tampa, Atlanta, Chicago and St. Louis.
Our property portfolio consists of wholly-owned shopping centers and interests in joint ventures that own shopping centers.
We own controlling interest in 52 shopping centers and one office building comprising approximately 9.6 million square feet.
In addition, we are co-investor in and manager of two significant joint ventures that own portfolios of shopping centers. We
own 30% of Ramco/Lion Venture L.P., an entity that owns 16 shopping centers comprising approximately 3.2 million square
feet. We own 20% of Ramco 450 Venture LLC, an entity that owns eight shopping centers comprising approximately 1.6
million square feet. We also have ownership interests in five smaller joint ventures that each owns one or two shopping
centers. Our joint ventures are not consolidated and are reported using equity method accounting. We earn fees from the joint
ventures for managing, leasing, and redeveloping the shopping centers they own.
We also own various parcels of developable land. Approximately 30% of our developable land’s net book value is available
for sale to end users such as retailers that prefer to own their sites or to developers who seek to develop non-retail uses. The
remaining 70% of our land is held for development. The timing of future development will depend on our ability to obtain
approvals, pre-lease our proposed projects, and identify a source of construction financing.
Operating Strategies
Our operating objective is to maximize the risk-adjusted return on invested capital at our shopping centers. We seek to do so
by increasing the net operating income of our centers, controlling our capital expenditures, and monitoring our tenants’ credit
risk. Our operating strategies include:
Leasing our shopping centers to increase occupancy, maximize rental income, and attract more creditworthy and
productive retail tenants;
Managing and maintaining our centers to appeal to retail tenants and shoppers while ensuring we garner appropriate
value for our operating expenses and capital expenditures;
Redeveloping our centers to increase leasable area, reconfigure space for creditworthy tenants, and create outparcels;
and
Generating temporary and ancillary income from non-rental agreements to use our parking lots, signage, rooftops, and
other portions of our real estate.
Investing Strategies
Our investing objective is to generate an attractive risk-adjusted return on capital invested in acquisitions and developments. In
addition, we seek to sell land or shopping centers that we deem to be fully valued or that no longer meet our investment criteria.
We underwrite acquisitions based upon current cash flow, projections of future cash flow, and scenario analyses that take into
account the risks and opportunities of ownership. We underwrite development of new shopping centers on the same basis, but
also take into account the unique risks of entitling land, constructing buildings, and leasing newly built space. Our investing
strategies include:
Acquiring shopping centers that are located in targeted metropolitan markets, anchored by stable and productive
supermarkets, discounters, or national chain stores, surrounded by trade areas with appealing demographic
characteristics, sited with suitable visibility and access, and featuring opportunities to add value through intensive
leasing, management, and/or redevelopment;
2
Developing our existing land held for development into income-producing investment property, subject to market
demand, availability of capital and adequate returns on our incremental capital;
Selling non-core shopping centers and redeploying the proceeds into investments that meet our investment criteria;
and
Selling land parcels and using the proceeds to pay down debt or reinvest in our business.
Financing Strategies
Our financing objective is to maintain a strong and flexible balance sheet in order to ensure access to capital at a competitive
cost. In general, we seek to increase our financial flexibility by increasing our pool of unencumbered properties and borrowing
on an unsecured basis. In keeping with our objective, we routinely benchmark our balance sheet on a variety of measures to
our peers in the shopping center sector and to REITs in general. Our financing strategies include:
Capitalizing our business with a moderate ratio of net debt to EBITDA;
Using primarily fixed-rate debt, staggering our debt maturities, monitoring our liquidity and near-term capital
requirements, and managing the average term of our debt;
Maintaining a line of credit to fund operating and investing needs on a short-term basis;
Monitoring compliance with debt covenants and maintaining a regular dialogue with our lenders; and
Financing our investment activities with various forms and sources of capital to reduce reliance on any one source of
capital.
At December 31, 2011, our consolidated net debt to EBITDA was 7.0X, a decrease from 8.5X at the end of 2010. In addition,
we had $144.1 million available to draw under our unsecured bank line of credit, compared to $28.7 million at the end of 2010.
Competition
See page 6 of Item 1A. “Risk Factors” for a description of competitive conditions in our business.
Environmental Matters
See page 10 of Item 1A. “Risk Factors” for a description of environmental risks for our business.
Employment
As of December 31, 2011, we had 106 full-time employees. None of our employees are 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, free of charge, 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 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
3
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.
Operating Risks
National economic conditions and retail sales trends may adversely affect the performance of our properties.
Demand to lease space in our shopping centers generally fluctuates with the overall economy. Economic downturns often
result in a lower rate of retail sales growth, or even declines in retail sales. In response, retailers that lease space in shopping
centers typically reduce their demand for retail space during such downturns. As a result, economic downturns and unfavorable
retail sales trends may diminish the income, cash flow, and value of our properties. Although the U.S. economy is no longer in
recession, the rate of recovery has been slower than anticipated and economic conditions in the U.S. continue to be challenging
with tight credit conditions, high levels of unemployment and modest growth.
Our concentration of properties in Michigan, Florida, Georgia and other states makes us more susceptible to adverse market
conditions in these states.
Our performance depends on the economic conditions in the markets in which we operate. In 2011, our wholly-owned and pro
rata share of joint venture properties located in Michigan, Florida, and Ohio accounted for 44.6%, 22.2%, and 7.3%,
respectively, of our annualized base rent. To the extent that market conditions in these or other states in which we operate
deteriorate, the performance or value of our properties may be adversely affected.
Changes in the supply and demand for the type of space we lease to our tenants could affect the income, cash flow, and value of
our properties.
Our shopping centers generally compete for tenants with similar properties located in the same neighborhood, community, or
region. Competing centers may be newer, better located, or have a better tenant mix. In addition, new centers or retail stores
may be developed, increasing the supply of retail space competing with our centers or taking retail sales from our tenants. Our
properties also compete with alternate forms of retailing, including on-line shopping, home shopping networks, and mail order
catalogs. Alternate forms of retailing may reduce the demand for space in our shopping centers.
As a result, we may not be able to renew leases or attract replacement tenants as leases expire. When we do renew tenants or
attract replacement tenants, the terms of renewals or new leases may be less favorable to us than current lease terms. In order
to lease our vacancies, we often incur costs to reconfigure or modernize our properties or to fit out our space to suit the needs of
a particular tenant. Under competitive circumstances, such costs may exceed our budgets. If we are unable to lease vacant
space promptly, if the rental rates upon a renewal or new lease are lower than expected, or if the costs incurred to lease space
exceed our expectations, then the income and cash flow of our properties will decrease.
Our reliance on key tenants for significant portions of our revenues exposes us to increased risk of tenant bankruptcies that
could adversely affect our income and cash flow.
As of December 31, 2011, we received 36% of our combined annualized base rents from our top 25 tenants, including our top
two tenants: TJ Maxx/Marshalls (4.4%) and Home Depot (2.0%). No other tenant represented more than 2.0% of our total
annualized base rent. The credit risk posed by our major tenants varies.
If any of our major tenants experience financial difficulties or files bankruptcy, our operating results could be adversely
affected. Bankruptcy filings by our tenants or lease guarantors generally delay our efforts to collect pre-bankruptcy receivables
and could ultimately preclude full collection of these sums. If a tenant rejects a lease, we would have only a general unsecured
claim for damages, which may be collectible only to the extent that funds are available and only in the same percentage as is
paid to all other holders of unsecured claims.
4
Our properties generally rely on anchor tenants to attract customers. The loss of anchor tenants may adversely impact the
performance of our properties.
If any of our anchor tenants becomes insolvent, suffers a downturn in business, abandons occupancy, or decides not to renew its
lease, such event may adversely impact the performance of the affected center. An abandonment or lease termination by an
anchor tenant may give other tenants in the same shopping center the right to terminate their leases or pay less rent pursuant to
the terms of their leases. Our leases with anchor tenants may, in certain circumstances, permit them to transfer their leases to
other retailers. The transfer to a new anchor tenant could result in lower customer traffic to the center, which could affect our
other tenants. In addition, a transfer of a lease to a new anchor tenant could give other tenants the right to make reduced rental
payments or to terminate their leases.
We may be restricted from leasing vacant space based on existing exclusivity lease provisions with some of our tenants.
In a number of cases, our leases give a tenant the exclusive right to sell clearly identified types of merchandise or provide
specific types of services at a particular shopping center. In other cases, leases with a tenant may limit the ability of other
tenants to sell similar merchandise or provide similar services to that tenant. When leasing a vacant space, these restrictions
may limit the number and types of prospective tenants suitable for that space. If we are unable to lease space on satisfactory
terms, our operating results would be adversely impacted.
Increases in operating expenses could adversely affect our operating results.
Our operating expenses include, among other items, property taxes, insurance, utilities, repairs, and the maintenance of the
common areas of our shopping centers. We may experience increases in our operating expenses, some or all of which may be
out of our control. Most of our leases require that tenants pay for a share of property taxes, insurance and common area
maintenance costs. However, if any property is not fully occupied or if revenues are not sufficient to cover operating expenses,
then we could be required to expend our own funds for operating expenses. In addition, we may be unable to renew leases or
negotiate new leases with terms requiring our tenants to pay all the property tax, insurance, and common area maintenance
costs that tenants currently pay, which could adversely affect our operating results.
If we suffer losses that are uninsured or 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, and 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
occurs to, or causes 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.
Our real estate assets may be subject to additional impairment provisions based on market and economic conditions.
On a periodic basis, we assess whether there are any indicators that the value of our real estate properties and other investments
may be impaired. These assessments have a direct impact on our earnings because recording an impairment provision results in
an immediate negative non-cash adjustment to earnings.
A property’s value is impaired only if the estimate of the aggregate future cash flows (undiscounted and without interest
charges) to be generated by the property are less than the carrying value of the property. In our estimate of cash flows, we
consider factors such as expected future operating income, trends and prospects, the effects of demand, competition and other
factors. We are required to make subjective assessments as to whether there are impairments in the value of our real estate
properties and other investments.
Ongoing adverse market and economic conditions and market volatility continue to make it challenging to value properties and
investments owned by us and our unconsolidated joint ventures. There may be uncertainty in the valuation, or in the stability of
the value of a property, that could result in a substantial decrease in the value. In addition, in the fourth quarter of 2011, we
decided to sell several income producing properties that no longer met our investing strategy. The decision to sell these assets
triggered an impairment provision of $16.3 million due to the estimated sales price was lower than the properties carrying
values. In addition, one of our joint ventures recorded an impairment provision of $5.5 million on one of its properties. Our
share of this impairment was $1.6 million. No assurance can be given that we will be able to recover the current carrying
5
amount of all of our properties and those of our unconsolidated joint ventures. There can be no assurance that we will not take
additional charges in the future related to the impairment of our assets. Any future impairment could have a material adverse
effect on our results of operations in the period in which the charge is taken. Refer to Note 7 of the notes to the consolidated
financial statements for further information regarding impairment provisions.
We do not control all decisions related to the activities of joint ventures in which we are invested, and we may have conflicts of
interest with our joint venture partners.
As of December 31, 2011, we had interests in seven unconsolidated joint ventures that collectively own 31 shopping centers.
Although we manage the properties owned by these joint ventures, we do not control all decisions for the joint ventures and
may be required to take actions that are in the interest of our joint venture partners but not our best interests. Accordingly, we
may not be able to resolve in our favor any issues which arise, or we may have to provide financial or other inducements to our
joint venture partners to obtain such favorable 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. In addition, a bankruptcy filing of one of our joint venture partners could
adversely affect us because we may make commitments that rely on our partners to fund capital from time to time. The
profitability of shopping centers held in a joint venture could also be adversely affected by the bankruptcy of one of our joint
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.
We may invest in additional joint ventures, the terms of which may differ from our existing joint ventures. In general, we
would expect to share the rights and obligations to make major decisions regarding the venture with our partners, which would
expose us to the risks identified above.
Our equity investment in each of our unconsolidated joint ventures is subject to impairment testing in the event of certain
triggering events, such a change in market conditions or events at properties held by those joint ventures. If the fair value of
our equity investment is less than our net book value on an other than temporary basis, impairment is required under generally
accepted accounting principles. We recorded an impairment provision of $9.6 million and $2.7 million in 2011 and 2010,
respectively, related to our equity investments in unconsolidated joint ventures. Refer to Note 7 of the notes to the consolidated
financial statements for further information.
Market and economic conditions may impact our partners’ ability to perform in accordance with our real estate joint venture
and partnership agreements resulting in a change in control.
Changes in control of our investments could result from events such as amendments to our real estate joint venture and
partnership agreements, changes in debt guarantees or changes in ownership due to required capital contributions. Any changes
in control will result in the revaluation of our investments to fair value, which could lead to impairment. We are unable to
predict whether, or to what extent, a change in control may result or the impact of adverse market and economic conditions may
have to our partners.
Our redevelopment projects may not yield anticipated returns, which would adversely affect our operating results.
Our redevelopment activities generally call for a capital commitment and project scope greater than that required to lease
vacant space. To the extent a significant amount of construction is required, we are susceptible to risks such as permitting, cost
overruns and timing delays as a result of the lack of availability of materials and labor, the failure of tenants to commit or fulfill
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.
Investing Risks
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 shopping centers and land that is appropriate for new developments,
including other REITs, private institutional investors and other owner-operators of shopping centers. In particular, larger
REITs may enjoy competitive advantages that result from, among other things, a lower cost of capital. These competitors may
6
increase the market prices we would have to pay in order to acquire properties. If we are unable to acquire properties that meet
our criteria at prices we deem reasonable, our ability to grow may be adversely affected.
Commercial real estate investments are relatively illiquid, which could hamper our ability to dispose of properties that no
longer meet our investment criteria or respond to adverse changes in the performance of our properties.
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, supply and demand, availability of financing, interest rates and other factors that
are beyond our control. We cannot be certain that we will be able to sell any property for the price and other terms we seek, or
that any price or other terms offered by a prospective purchaser would be acceptable to us. We also cannot estimate with
certainty 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. Factors that impede our ability to
dispose of properties could adversely affect our financial condition and operating results.
We are seeking to develop new properties, an activity that has inherent risks including cost overruns related to entitling land,
improving the site, and constructing buildings, and the challenges of leasing new space.
We are pursuing development and construction of retail properties at several land parcels we own. Our development and
construction activities are subject to the following risks:
The pre-construction phase for a development project typically extends over several years, and the time to obtain
anchor commitments, zoning and regulatory approvals, and financing can vary significantly from project to project;
We may not be able to obtain the necessary zoning or other governmental approvals for a project, or we may
determine that the expected return on a project is not sufficient. If we abandon our development activities with respect
to a particular project, we may incur an impairment loss on our investment;
Construction and other project costs may exceed our original estimates because of increases in material and labor
costs, delays and costs to obtain anchor and other tenant commitments;
We may not be able to obtain financing or to refinance construction loans, which are generally recourse to us;
Occupancy rates and rents, as well as occupancy costs and expenses, at a completed project may not meet our
projections, and the costs of development activities that we explore but ultimately abandon will, to some extent,
diminish the overall return on our completed development projects; and
The time frame required for development, construction and lease-up of these properties means that we may have to
wait years for a significant cash return.
If any of these events occur, our development activities may have an adverse effect on our results of operations, including
additional impairment provisions. We recorded impairment provisions of $11.5 million and $28.8 million in 2011 and 2010,
respectively, related to developable land. For a detailed discussion of development projects, refer to Notes 4 and 7 of the notes
to the consolidated financial statements.
Financing Risks
We have no corporate debt limitations.
Our management and Board of Trustees (“Board”) have discretion to increase the amount of our outstanding debt at any time.
Subject to existing financial covenants, 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.
Our debt must be refinanced upon maturity, which makes us reliant on the capital markets on an ongoing basis.
We are not structured in a manner to generate sufficient cash flow from operations to repay our debt at maturity. Instead, we
expect to refinance our debt by raising equity, debt, or other capital at the time or prior to the time that our debt matures. As of
December 31, 2011, we had $524.9 million of outstanding indebtedness, including $6.3 million of capital lease obligations. Of
this, $10.7 million matures in 2012. In addition, our joint ventures had $396.4 million of outstanding indebtedness, of which
our share is $102.0 million. The availability and price of capital can vary significantly. If we seek to refinance maturing debt
when capital market conditions are restrictive, we may find capital scarce, costly, or unavailable. Refinancing debt at a higher
cost would affect our operating results and cash available for distribution. The failure to refinance our debt at maturity would
7
result in default and the exercise by our lenders of the remedies available to them, including foreclosure and, in the case of
recourse debt, liability for unpaid amounts.
Increases in interest rates may affect the cost of our variable-rate borrowings, our ability to refinance maturing debt, and the
cost of any such refinancings.
As of December 31, 2011, we had four interest rate swap agreements in effect for an aggregate notional amount of $135.0
million converting our floating rate corporate debt to fixed rate debt. After taking into account the impact of converting our
variable rate debt to fixed rate debt by use of the interest rate swap agreements we had $29.5 million of variable rate debt
outstanding. Increases in interest rates on our existing indebtedness would increase our interest expense, which could adversely
affect our cash flow and our ability to distribute cash to our shareholders. For example, if market rates of interest on our
variable rate debt outstanding as of December 31, 2011 increased by 1.0%, the increase in interest expense on our existing
variable rate debt would decrease future earnings and cash flows by approximately $0.3 million annually. Interest rate
increases could also constrain our ability to refinance maturing debt because lenders may reduce their advance rates in order to
maintain debt service coverage ratios.
Our mortgage debt exposes us to the risk of loss of property, which could adversely affect our financial condition.
As of December 31, 2011, we had $325.8 million of mortgage debt encumbering our properties. A default on any of our
mortgage debt may result in foreclosure actions by lenders and ultimately our loss of the mortgaged 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.
For instance, in October 2011 we conveyed title to and our interest in our wholly-owned center in Madison Heights, Michigan
after the default on a $9.1 million non-recourse mortgage note that was due May 1, 2011. The transaction resulted in a non-
cash gain on debt extinguishment of approximately $1.2 million.
Financial covenants may restrict our operating, investing, or financing 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.
Our outstanding line of credit contains customary restrictions, requirements and other limitations on our ability to incur
indebtedness, including limitations on the maximum ratio of total liabilities to assets, the minimum fixed charge coverage, and
the minimum tangible net worth ratio. Our ability to borrow under our line of credit is subject to compliance with these
financial and other covenants. We rely on our ability to borrow under our line of credit to finance acquisition, development,
and redevelopment activities and for working capital. If we are unable to borrow under our line of credit, our financial
condition and results of operations would likely be adversely impacted.
Because we must annually distribute a substantial portion of our income to maintain our REIT status, we may not retain
sufficient cash from operations to fund our investing needs.
As a REIT, we are subject to annual distribution requirements under the Code. In general, we must distribute at least 90% of
our REIT taxable income annually, excluding net capital gains, to our shareholders to maintain our REIT status. We intend to
make distributions to our shareholders to comply with the requirements of the Code.
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. In addition, the distribution
requirement reduces the amount of cash we retain for use in funding our capital requirements and our growth. As a result, we
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have historically funded our acquisition, development and redevelopment activities by any of the following: selling assets that
no longer meet our investment criteria; selling common shares and preferred shares; borrowing from financial institutions; and
entering into joint venture transactions with third parties. 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.
There may be future dilution of our common shares
Our Declaration of Trust authorizes our Board to, among other things, issue additional common or preferred shares, or
securities convertible or exchangeable into equity securities, without shareholder approval. We may issue such additional
equity or convertible securities to raise additional capital. The issuance of any additional common or preferred shares or
convertible securities could be substantially dilutive to holders of our common shares. Moreover, to the extent that we issue
restricted shares, options or warrants to purchase our common shares in the future and those options or warrants are exercised
or the restricted shares vest, our shareholders may experience further dilution. Holders of our common shares have no
preemptive rights that entitle them to purchase a pro rata share of any offering of shares of any class or series and, therefore,
such sales or offerings could result in increased dilution to our shareholders.
We may issue debt and equity securities or securities convertible into equity securities, any of which may be senior to our
common shares as to distributions and in liquidation, which could negatively affect the value of our common shares.
During 2011 we issued 2.0 million cumulative convertible perpetual preferred shares, and we issued 683,000 common shares
through a controlled equity offering. In addition, we have outstanding 229,722 shares of unvested restricted stock and 272,201
options to purchase shares of common stock at December 31, 2011.
Corporate Risks
The price of our common shares may fluctuate significantly.
The market price of our common shares fluctuates based upon numerous factors, many of which are outside of our control. A
decline in our share price, whether related to our operating results or not, may constrain our ability to raise equity in pursuit of
our business objectives. In addition, a decline in price may affect the perceptions of lenders, tenants, or others with whom we
transact. Such parties may withdraw from doing business with us as a result. An inability to raise capital at a suitable cost or at
any cost, or to do business with certain tenants or other parties, could affect our operations and financial condition.
Our failure to qualify as a REIT would result in higher taxes and reduced cash available for distribution to our shareholders.
We intend to 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 Internal Revenue Service
(“IRS”) will not 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.
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 our TRS 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
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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.
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 party to litigation in the ordinary course of business, and an unfavorable court ruling could have a negative effect on
us.
We are the defendant in a number of claims brought by various parties against us. Although we intend to exercise due care and
consideration in all aspects of our business, it is possible additional claims could be made against us. We maintain insurance
coverage including general liability coverage to help protect us in the event a claim is awarded; however, some claims may be
uninsured. In the event that claims against us are successful and uninsured or underinsured, or we elect to settle claims that we
determine are in our interest to settle, our operating results and cash flow could be adversely impacted. In addition, an increase
in claims and/or payments could result in higher insurance premiums, which could also adversely affect our operating results
and cash flow.
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, 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.
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.
Restrictions on the ownership of our common shares are in place to preserve our REIT status.
Our Declaration of Trust restricts ownership by any one shareholder to no more than 9.8% of our outstanding common shares,
subject to certain exceptions granted by our Board. The ownership limit is intended to ensure that we maintain our REIT status
given that the Code imposes certain limitations on the ownership of the stock of a REIT. Not more than 50% in value of our
outstanding shares of beneficial interest may be owned, directly or indirectly by five or fewer individuals (as defined in the
Code) during the last half of any taxable year. If an individual or entity were found to own constructively more than 9.8% in
value of our outstanding shares, then any excess shares would be transferred by operation of our Declaration of Trust to a
charitable trust, which would sell such shares for the benefit of the shareholder in accordance with procedures specified in our
Declaration of Trust.
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The ownership limit may discourage a change in control, may discourage tender offers for our common shares, and may limit
the opportunities for our shareholders to receive a premium for their shares. Upon due consideration, our Board previously had
granted a limited exception to this restriction for certain shareholders who requested an increase in their ownership limit,
however the Board has no obligation to grant such limited exceptions in the future.
Certain anti-takeover provisions of our Declaration of Trust and Bylaws may inhibit a change of our control.
Certain provisions contained in our Declaration of Trust and Bylaws and the Maryland General Corporation Law, as applicable
to Maryland REITs, may discourage a third party from making a tender offer or acquisition proposal to us. These provisions
and actions may delay, deter or prevent a change in control or the removal of existing management. These provisions and
actions also may delay or prevent the shareholders from receiving a premium for their common shares of beneficial interest
over then-prevailing market prices.
These provisions and actions include:
•
•
•
•
•
•
the REIT ownership limit described above;
authorization of the issuance of our preferred shares of beneficial interest with powers, preferences or rights to be
determined by our Board;
special meetings of our shareholders may be called only by the chairman of our Board, the president, one-third of the
Trustees, or the secretary upon the written request of the holders of shares entitled to cast not less than a majority of all
the votes entitled to be cast at such meeting;
a two-thirds shareholder vote is required to approve some amendments to our Declaration of Trust;
our Bylaws contain advance-notice requirements for proposals to be presented at shareholder meetings; and
our Board, without the approval of our shareholders, may from time to time (i) amend our Declaration of Trust to increase
or decrease the aggregate number of shares of beneficial interest, or the number of shares of beneficial interest of any
class, that we have authority to issue, and (ii) reclassify any unissued shares of beneficial interest into one or more classes
or series of shares of beneficial interest.
In addition, the Trust, by Board action, may elect to be subject to certain provisions of the Maryland General Corporation Law
that inhibit takeovers such as the provision that permits the Board by way of resolution to classify itself, notwithstanding any
provision our Declaration of Trust or Bylaws.
Certain officers and trustees may have potential conflicts of interests with respect to properties contributed to the Operating
Partnership in exchange for OP Units.
Certain of our officers and members of our Board of Trustees own OP Units obtained in exchange for contributions of their
partnership interests in properties to the Operating Partnership. By virtue of this exchange, these individuals may have been
able to defer some, if not all, of the income tax liability they could have incurred if they sold the properties for cash. As a
result, these individuals may have potential conflicts of interest with respect to these properties, such as sales or refinancings
that might result in federal income tax consequences.
Item 1B. Unresolved Staff Comments.
None.
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Item 2. Properties
As of December 31, 2011, we owned and managed a portfolio of 83 shopping centers and one office building with
approximately 15.2 million square feet of gross leasable area owned directly by us or our unconsolidated joint ventures. Our
combined portfolio reflected in Item 2 represents consolidated properties and unconsolidated joint venture properties at 100%.
Of our consolidated properties, 17 are encumbered by mortgage loans aggregating $325.8 million. Of our unconsolidated joint
venture partner’s properties, 20 are encumbered by mortgage loans totaling $396.4 million, of which $102.0 million is our
proportionate share.
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Property NameOwnership %Year Built/ Acquired/ RedevelopedTotalGLA % Leased Average base rent per leased SFAnchor Tenants (1)CONSOLIDATED PORTFOLIOFLORIDA (7)Coral Creek Shops100%1992/2002/NA109,312 96.6%16.33$ PublixNaples Towne Centre100%1982/1996/2003134,707 89.8%5.62 Beall's, Save-A-Lot, (Goodwill)River City Marketplace 100%2005/2005/NA551,428 98.8%16.18 Ashley Furniture Home Store, Bed Bath & Beyond, Best Buy, Gander Mountain, Michaels, OfficeMax, PETsMART, Ross Dress For Less, Wallace Theaters, (Lowe's), (Wal-Mart Supercenter)River Crossing Centre100%1998/2003/NA62,038 100.0%12.37 PublixRivertowne Square100%1980/1998/2010148,643 89.3%8.24 Beall's Outlet, Winn-DixieThe Crossroads100%1988/2002/NA120,092 94.3%14.54 PublixVillage Lakes Shopping Center100%1987/1997/NA186,496 69.2%8.61 Beall's Outlet, Sweet Bay (2)Total / Average1,312,716 92.1%13.10$ GEORGIA (5)Centre at Woodstock100%1997/2004/NA86,748 88.6%11.51$ PublixConyers Crossing100%1978/1998/NA170,475 99.4%5.14 Burlington Coat Factory, Hobby LobbyHolcomb Center100%1986/1996/2010107,053 77.0%11.40 Studio Movie Grill Horizon Village100%1996/2002/NA97,001 75.2%10.99 Movie Tavern (3)Mays Crossing100%1984/1997/2007137,284 94.8%6.67 Big Lots, Dollar Tree, Value Village-Sublease of ARCA Inc.Total / Average598,561 88.8%8.22$ ILLINOIS (1)Liberty Square100%1987/2010/2008107,369 85.8%12.74$ Jewel-OscoTotal / Average107,369 85.8%12.74$ INDIANA (1)Merchants' Square 100%1970/2010/NA278,875 84.1%10.53$ Cost Plus, Hobby Lobby (2), (Marsh Supermarket)Total / Average278,875 84.1%10.53$
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Property NameOwnership %Year Built/ Acquired/ RedevelopedTotalGLA % Leased Average base rent per leased SFAnchor Tenants (1)MICHIGAN (22)Beacon Square 100%2004/2004/NA51,387 91.8%16.78$ (Home Depot)Clinton Pointe100%1992/2003/NA135,330 96.8%9.89 OfficeMax, Sports Authority, (Target)Clinton Valley 100%1977/1996/2009201,282 96.4%11.90 DSW Shoe Warehouse, Hobby Lobby, Office DepotEdgewood Towne Center100%1990/1996/200185,757 93.1%10.34 OfficeMax, (Sam's Club), (Target)Fairlane Meadows100%1987/2003/2007157,246 98.3%14.37 Best Buy, Citi Trends, (Burlington Coat Factory), (Target)Fraser Shopping Center100%1977/1996/NA68,326 100.0%6.78 Oakridge MarketGaines Marketplace 100%2004/2004/NA392,169 100.0%4.66 Meijer, Staples, Target Hoover Eleven100%1989/2003/NA288,184 92.8%12.62 Kroger, Marshalls, OfficeMaxJackson Crossing100%1967/1996/2002398,526 93.9%9.85 Bed Bath & Beyond, Best Buy, Jackson 10 Theater, Kohl's, T.J. Maxx, Toys "R" Us, (Sears), (Target)Jackson West100%1996/1996/1999210,321 97.5%7.17 Lowe's, Michaels, OfficeMaxKentwood Towne Centre77.9%1988/1996//NA184,152 93.0%6.06 Hobby Lobby-Sublease of Rubloff Development Group, OfficeMax, (Rooms Today), (BuyBuyBaby)Lake Orion Plaza100%1977/1996/NA141,073 100.0%4.04 Hollywood Super Market, KmartLakeshore Marketplace100%1996/2003/NA346,854 96.9%8.24 Barnes & Noble, Dunham's, Elder-Beerman, Hobby Lobby, T.J. Maxx, Toys "R" Us, (Target)Livonia Plaza100%1988/2003/NA136,422 94.9%10.40 Kroger, TJ MaxxNew Towne Plaza100%1975/1996/2005192,587 100.0%10.48 DSW Shoe Warehouse, Jo-Ann, Kohl'sOak Brook Square100%1982/1996/2008152,373 96.3%8.81 Hobby Lobby, T.J. MaxxRoseville Towne Center100%1963/1996/2004246,968 100.0%7.04 Marshalls, Office Depot (2), Wal-MartSouthfield Plaza100%1969/1996/2003165,999 98.0%7.62 Big Lots, Burlington Coat Factory, MarshallsTel-Twelve100%1968/1996/2005523,411 100.0%10.82 Best Buy, DSW Shoe Warehouse, Lowe's, Meijer, Michaels, Office Depot, PETsMARTThe Auburn Mile100%2000/1999/NA90,553 100.0%10.79Jo-Ann, Staples, (Best Buy), (Costco), (Meijer), (Target)West Oaks I100%1979/1996/2004243,987 100.0%9.70 Best Buy, DSW Shoe Warehouse, Gander Mountain, Old Navy, Home Goods & Michaels-Sublease of JLPK-Novi LLCWest Oaks II100%1986/1996/2000167,954 97.6%16.52 Jo-Ann, Marshalls, (Bed Bath & Beyond), (Big Lots), (Kohl's), (Toys "R" Us), (Value City Furniture)Total / Average4,580,861 97.4%9.39$ MISSOURI (2)Heritage Place100%1989/2011/2005269,254 90.9%13.26$ Dierberg's Market, Marshalls, Office Depot, T.J. MaxxTown & Country Crossing100%2008/2011/2011141,996 84.4%24.51Whole Foods, (Target)Total / Average411,250 88.6%16.96$ OHIO (5)Crossroads Centre100%2001/2001/NA344,045 92.3%9.11$ Giant Eagle, Home Depot, Michaels, T.J. Maxx, (Target)OfficeMax Center100%1994/1996/NA22,930 100.0%12.10 OfficeMaxRossford Pointe100%2006/2005/NA47,477 100.0%10.18 MC Sporting Goods, PETsMARTSpring Meadows Place100%1987/1996/2005211,817 93.2%11.27 Ashley Furniture, OfficeMax, PETsMART, T.J. Maxx, (Best Buy), (Big Lots), (Dick's Sporting Goods), (Guitar Center), (Kroger), (Sam's Club), (Target)Troy Towne Center100%1990/1996/2003144,485 99.0%6.42 Kohl's, (Wal-Mart Supercenter)Total / Average770,754 94.5%9.33$ TENNESSEE (1)Northwest Crossing100%1989/1999/2006124,453 100.0%9.58$ HH Gregg, OfficeMax, Ross Dress For Less, (Wal-Mart Supercenter) Total / Average124,453 100.0%9.58$ VIRGINIA (2)The Town Center at Aquia Office (5)100%1989/1998/NA98,147 91.8%26.06$ Northrop GrummanThe Town Center at Aquia100%1989/1998/NA40,518 100.0%10.64 Regal CinemasTotal / Average138,665 94.2%21.28$ WISCONSIN (3)East Town Plaza100%1992/2000/2000208,675 84.3%8.40$ Burlington Coat Factory, Jo-Ann, Marshalls, (Menards), (Shopko), (Toys "R" Us)The Shoppes at Fox River100%2009/2010/2011135,566 95.7%16.44 Pick N' Save, (Target)West Allis Towne Centre100%1987/1996/2011326,271 91.3%8.29 Burlington Coat Factory, Kmart, Office DepotTotal / Average670,512 90.0%10.10$ CONSOLIDATED PORTFOLIO SUBTOTAL / AVERAGE8,994,016 94.3%10.48$
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Property NameOwnership %Year Built/ Acquired/ RedevelopedTotal GLA % Leased Average base rent per leased SFAnchor Tenants (1)JOINT VENTURE PORTFOLIO (AT 100%)FLORIDA (13)Cocoa Commons 30%2001/2007/200890,116 78.9%11.88$ PublixCypress Point 30%1983/2007/NA167,280 93.8%11.75 Burlington Coat Factory, The Fresh MarketKissimmee West 7%2005/2005/NA115,586 92.7%11.61 Jo-Ann, Marshalls, (SuperTarget)Marketplace of Delray 30%1981/2005/2010238,901 90.2%12.47 Office Depot, Ross Dress For Less, Winn-DixieMartin Square 30%1981/2005/NA331,105 91.2%6.27 Home Depot, Sears, StaplesMission Bay Plaza 30%1989/2004/NA263,721 93.0%21.29 The Fresh Market, Golfsmith, LA Fitness Sports Club, OfficeMax, Toys "R" UsShoppes of Lakeland 7%1985/1996/NA181,988 96.3%12.02 Ashley Furniture, Michaels, Staples, (Target)The Plaza at Delray20%1979/2004/NA326,763 93.8%15.79 Books-A-Million, Marshalls, Publix, Regal Cinemas, Ross Dress For Less, StaplesTreasure Coast Commons 30%1996/2004/NA92,979 100.0%12.42 Barnes & Noble, OfficeMax, Sports AuthorityVillage of Oriole Plaza 30%1986/2005/NA155,770 95.2%12.85 PublixVillage Plaza 30%1989/2004/NA146,755 72.1%13.17 Big LotsVista Plaza 30%1998/2004/NA109,761 96.4%13.08 Bed Bath & Beyond, Michaels, Total Wine & More West Broward Shopping Center 30%1965/2005/NA156,073 97.6%10.84 Badcock, DD's Discounts, Save-A-Lot, US Postal ServiceTotal / Average2,376,798 91.9%12.89$ GEORGIA (2)Collins Pointe Plaza 20%1987/2006/2010101,637 91.7%8.55$ Goodwill Paulding Pavilion 20%1995/2006/200884,846 100.0%13.94Sports Authority, StaplesTotal / Average186,483 95.5%11.10$ ILLINOIS (2)Market Plaza 20%1965/2007/2009163,054 89.1%15.04$ Jewel Osco, StaplesRolling Meadows Shopping Center20%1956/2008/1995134,236 89.9%11.59 Jewel Osco, Northwest Community Hospital Total / Average297,290 89.5%13.50$ INDIANA (1)Nora Plaza 7%1958/2007/2002139,905 96.8%13.19$ Marshalls, Whole Foods, (Target)Total / Average139,905 96.8%13.19$ MARLAND (1)Crofton Centre 20%1974/1996/NA252,491 93.7%7.71$ Basics/Metro, Gold's Gym, KmartTotal / Average252,491 93.7%7.71$ MICHIGAN (8)Gratiot Crossing 30%1980/2005/NA165,544 91.0%8.49$ Jo-Ann, KmartHunter's Square 30%1988/2005/NA354,323 92.3%16.64 Bed Bath & Beyond, BuyBuyBaby, Loehmann's, Marshalls, T.J. MaxxMillennium Park 30%2000/2005/NA281,374 89.7%13.97 Home Depot, Marshalls, Michaels, PETsMART, (Costco), (Meijer)Southfield Plaza Expansion 50%1987/1996/200319,410 81.5%14.78 The Shops at Old Orchard 30%1972/2007/201196,994 90.8%18.97 Plum MarketTroy Marketplace 30%2000/2005/2010222,193 97.5%14.69 Famous Furniture, Golfsmith, LA Fitness, Nordstrom Rack, PETsMART, (REI)West Acres Commons 40%1998/2001/NA95,089 87.4%8.15 Family FareWinchester Center 30%1980/2005/NA314,734 90.3%12.19 Dick's Sporting Goods, Linens 'N Things (4), Marshalls, Michaels, PETsMART, (Kmart)Total / Average1,549,661 91.5%13.70$ NEW JERSEY (1)Chester Springs Shopping Center 20%1970/1996/1999223,201 89.6%13.95$ Marshalls, Shop-Rite Supermarket, StaplesTotal / Average223,201 89.6%13.95$ OHIO (1)Olentangy Plaza 20%1981/2007/1997253,474 95.1%10.17$ Eurolife Furniture, Marshalls, Micro Center, Columbus Asia Market-Sublease of SuperValu, Tuesday MorningTotal / Average253,474 95.1%10.17$ JV SUBTOTAL / AVERAGE AT 100%5,279,303 92.1%12.77$ PORTFOLIO TOTAL / AVERAGE14,273,319 93.5%11.32$
Our leases for tenant space under 19,000 square feet generally have terms ranging from three to five years. Tenant leases
greater than 19,000 square feet generally have lease terms in excess of five years or more, mostly comprised of anchor tenants.
Many of the anchor leases contain provisions allowing the tenant the option of extending the lease term at expiration at
contracted rental rates that often include fixed rent increases, consumer price index adjustments or other market rate
adjustments from the prior base rent. The majority of our leases provide for monthly payment of base rent in advance,
percentage rent based on the tenant’s sales volume, reimbursement of the tenant’s allocable real estate taxes, insurance and
common area maintenance (“CAM”) expenses and reimbursement for utility costs if not directly metered.
15
Property NameOwnership %Year Built/ Acquired/ RedevelopedTotal GLA % Leased Average base rent per leased SFAnchor Tenants (1)CONSOLIDATED PORTFOLIO FUTURE REDEVELOPMENTS/ AVAILABLE FOR SALE (4):Eastridge Commons100%1990/1996/2001169,676 50.4%8.57$ Office Depot (2), T.J. Maxx, (Target)Pelican Plaza100%1983/1997/NA105,873 35.1%9.56 Promenade at Pleasant Hill100%1993/2004/NA280,225 51.9%9.63 Farmers Home Furniture, PublixSouthbay Shopping Center100%1978/1998/NA83,890 26.7%11.71 Total / Average639,664 45.4%9.47$ JOINT VENTURE PORTFOLIOUNDER REDEVELOPMENT (2):Peachtree Hill 20%1986/2007/NA112,407 86.8%10.34$ Kroger, LA Fitness (6)The Shops on Lane Avenue20%1952/2007/2004134,876 99.0%20.57Bed Bath & Beyond, Whole Foods (7)Total / Average247,283 93.5%16.29$ 15,160,266 91.4%11.36$ Footnotes(1) Anchor tenants are any tenant over 19,000 square feet. Tenants in parenthesis represent non-company owned GLA.(2) Tenant closed - lease obligated.(3) Space delivered to tenant.(4) Tenant closed in Bankruptcy, lease guaranteed by CVS.(5) Represents the Office Building at The Town Center at Aquia.(6) Current construction of new 45,000 square foot LA Fitness replaces 41,000 square feet of vacant non-anchor space.(7) Current construction of new 35,000 square foot Whole Foods replaces former 21,000 square foot store.COMBINED PORTFOLIO TOTAL / AVERAGE
Major Tenants
The following table sets forth as of December 31, 2011 the gross leasable area, or GLA, of our existing properties leased to
tenants in our combined properties portfolio:
The following table depicts as of December 31, 2011 information regarding leases with the 25 largest tenants in our combined
properties portfolio:
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Type of TenantAnnualized Base Rent% of Total Annualized Base Rent GLA (2)% of Total GLA (2)Anchor (1)78,063,259$ 50.1%9,389,16461.9%Retail (non-anchor)77,617,30049.9%5,771,10238.1% Total155,680,559$ 100.0%15,160,266100.0%(1) We define anchor tenants as tenants occupying a space consisting of 19,000 square feet or more.(2) GLA owned directly by us or our unconsolidated joint ventures.Tenant NameCredit RatingS&P/Moody's (1)Number of LeasesGLA % of Total GLA (2)Total AnnualizedBaseRent AnnualizedBaseRentPSF % of Annualized Base RentT.J. Maxx/MarshallsA/A323 720,738 4.8%6,825,036$ 9.47$ 4.4%Home DepotA-/A33 384,690 2.5%3,110,250 8.09 2.0%Dollar TreeNR/NR31 328,967 2.2%2,935,412 8.92 1.9%Publix Super MarketNR/NR8 372,141 2.5%2,790,512 7.50 1.8%OfficeMaxB-/B111 252,045 1.7%2,710,828 10.76 1.7%Jo-Ann FabricsB/B26 218,993 1.4%2,542,174 11.61 1.6%Burlington Coat FactoryNR/NR5 360,867 2.4%2,376,333 6.59 1.5%PETsMARTBB+/NR7 160,428 1.1%2,367,142 14.76 1.5%Bed Bath & Beyond/Buy Buy BabyBBB+/NR6 192,753 1.3%2,245,794 11.65 1.4%Best BuyBBB-/Baa25 176,677 1.2%2,238,008 12.67 1.4%StaplesBBB/Baa29 181,569 1.2%2,142,437 11.80 1.4%Michaels StoresB-/B39 199,724 1.3%2,124,876 10.64 1.4%Kmart/SearsCCC+/B35 475,511 3.1%2,086,159 4.39 1.3%Gander MountainNR/NR2 159,791 1.1%1,899,745 11.89 1.2%Office DepotB-/B27 173,550 1.1%1,847,145 10.64 1.2%Lowe's Home CentersA-/A32 270,394 1.8%1,822,956 6.74 1.2%MeijerNR/NR2 397,428 2.6%1,731,560 4.36 1.1%KrogerBBB/Baa23 201,469 1.3%1,676,417 8.32 1.1%Hobby LobbyNR/NR5 276,173 1.8%1,640,038 5.94 1.1%Whole FoodsBB+/NR3 92,675 0.6%1,585,908 17.11 1.0%Jewel-OscoB+/B13 162,982 1.1%1,584,293 9.72 1.0%LA Fitness Sports ClubNR/NR2 76,833 0.5%1,581,552 20.58 1.0%Kohl'sBBB+/Baa15 276,972 1.8%1,491,739 5.39 1.0%The Sports AuthorityB-/NR3 126,653 0.8%1,383,219 10.92 0.9%Ross StoresBBB+/NR5 138,058 0.9%1,339,880 9.71 0.9%Sub-Total top 25 tenants170 6,378,081 42.1%56,079,4138.7936.0%Remaining tenants1,382 7,324,095 48.3%99,601,146 13.60 64.0%Sub-Total all tenants1,552 13,702,176 90.4%155,680,55911.36$ 100.0%Vacant356 1,458,090 9.6%N/AN/AN/ATotal including vacant1,908 15,160,266 100.0%155,680,559$ N/A100.0%(1) Latest company filings per Credit Risk Monitor.(2) GLA owned directly by us or our unconsolidated joint ventures.
Lease Expirations
The following tables set forth a schedule of lease expirations for the next ten years and thereafter, assuming that no renewal
options are exercised for our combined portfolio:
ALL TENANTS
ANCHOR TENANTS (greater than 19,000 square feet)
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YearNumber of LeasesAverage Annualized Base RentTotal Annualized Base Rent% of Total Annualized Base RentGLA(2)% of GLA (per square foot)(1)34 9.77$ 1,629,190$ 1.1%166,799 1.1%2012232 12.62 13,655,511 8.8%1,081,675 7.1%2013273 11.77 18,230,147 11.7%1,548,646 10.2%2014273 10.72 18,252,623 11.7%1,702,156 11.2%2015206 11.45 18,890,808 12.1%1,650,402 10.9%2016217 11.94 23,352,311 15.0%1,955,492 12.9%201798 12.26 14,085,417 9.0%1,149,264 7.6%201844 11.64 7,462,381 4.8%640,867 4.2%201936 10.46 7,415,502 4.8%708,974 4.7%202036 9.88 5,038,604 3.2%509,891 3.4%202145 10.79 8,762,886 5.6%812,038 5.4%2022+58 10.64 18,905,179 12.2%1,775,972 11.7%Sub-Total1,552 11.36155,680,559100.0%13,702,176 90.4%Leased (3)22 N/AN/AN/A160,486 1.0%Vacant334 N/AN/AN/A1,297,604 8.6%Total1,908 11.36$ 155,680,559$ 100.0%15,160,266 100.0%(1) Tenants currently under month to month lease or in the process of renewal.(2) GLA owned directly by us or our unconsolidated joint ventures.(3) Lease has been executed, but space has not yet been delivered.Expiring Leases As of December 31, 2011YearNumber of LeasesAverage Annualized Base RentTotal Annualized Base Rent% of Total Annualized Base RentGLA(2)% of GLA (per square foot)(1)3 7.71$ 648,658$ 0.8%84,143 0.9%20128 5.86 2,052,805 2.6%350,548 3.7%201322 7.62 5,938,753 7.6%779,162 8.3%201420 6.54 5,906,658 7.6%902,836 9.6%201527 8.62 9,102,319 11.7%1,055,498 11.2%201631 8.85 10,898,584 14.0%1,231,620 13.1%201724 10.58 8,989,764 11.5%849,341 9.0%201813 9.92 5,105,945 6.5%514,468 5.5%201912 9.22 5,553,053 7.1%602,164 6.4%20206 6.56 2,321,861 3.0%354,080 3.8%202119 9.75 6,642,399 8.5%681,160 7.3%2022+23 9.53 14,902,460 19.1%1,563,445 16.7%Sub-Total208 8.7078,063,259100.0%8,968,465 95.5%Leased (3)1 N/AN/AN/A40,461 0.4%Vacant8 N/AN/AN/A380,238 4.0%Total217 8.70$ 78,063,259$ 100.0%9,389,164 100.0%(1) Tenants currently under month to month lease or in the process of renewal.(2) GLA owned directly by us or our unconsolidated joint ventures.(3) Lease has been executed, but space has not yet been delivered.Expiring Anchor Leases As of December 31, 2011
NON-ANCHOR TENANTS (less than 19,000 square feet)
Land Held for Development and/or Sale
At December 31, 2011, we owned three projects under pre-development and various parcels of land adjacent to certain of our
existing developed properties located in Florida, Georgia, Michigan, Tennessee and Virginia. It is our policy to start vertical
construction on new development projects only after the project has received entitlements, significant anchor leasing
commitments, construction financing and joint venture partner commitments, if appropriate.
During the fourth quarter of 2011, we commenced Phase I construction on our ground up development in Jacksonville, Florida
which will be anchored by a 45,000 square foot Dick’s Sporting Goods and a 25,000 square foot Marshalls and will also
include approximately 20,000 square feet of non-anchor space. As of December 31, 2011 Phase I was 79.0% leased. Our
intention remains to hold the remaining land for the project as well as the other two development sites until it is economically
feasible to develop the planned retail sites.
Our development and construction activities are subject to risks such as inability to obtain the necessary zoning or other
governmental approvals for a project, determination that the expected return on a project is not sufficient to warrant
continuation of the planned development or change in plan or scope for the development. If any of these events occur, we may
record an impairment provision.
During the fourth quarter of 2011, we concluded that our estimated sales prices at multiple locations were lower than previously
estimated, and as a result we recorded an impairment provision of $5.0 million. In addition, we decided to forego our plans to
develop a mixed-use project located in Stafford County, Virginia and determined that our best alternative is to sell the property
in parcels. Our change in plan triggered an impairment provision of $6.5 million. In 2010, we recorded an impairment
provision of $28.8 million related to developable land that we decided to market for sale. There was no impairment provision
for the year ended December 31, 2009. For a detailed discussion of these projects, refer to Notes 1 and 7 of the notes to the
consolidated financial statements.
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YearNumber of LeasesAverage Annualized Base RentAnnualized Base Rent% of Total Annualized Base RentGLA(2)% of GLA (per square foot)(1)31 11.86$ 980,531$ 1.3%82,656 1.4%2012224 15.87 11,602,706 14.9%731,127 12.7%2013251 15.97 12,291,394 15.8%769,484 13.3%2014253 15.45 12,345,966 15.9%799,320 13.9%2015179 16.45 9,788,489 12.6%594,904 10.3%2016186 17.20 12,453,726 16.0%723,872 12.5%201774 16.99 5,095,654 6.6%299,923 5.2%201831 18.64 2,356,437 3.0%126,399 2.2%201924 17.44 1,862,449 2.4%106,810 1.9%202030 17.44 2,716,743 3.5%155,811 2.7%202126 16.20 2,120,487 2.7%130,878 2.3%2022+35 18.83 4,002,718 5.3%212,527 3.6%Sub-Total1,344 16.4077,617,300100.0%4,733,711 82.0%Leased (3)21 N/AN/AN/A120,025 2.1%Vacant326 N/AN/AN/A917,366 15.9%Total1,691 16.40$ 77,617,300$ 100.0%5,771,102 100.0%(1) Tenants currently under month to month lease or in the process of renewal.(2) GLA owned directly by us or our unconsolidated joint ventures.(3) Lease has been executed, but space has not yet been delivered.Expiring Non-Anchor Leases As of December 31, 2011
Insurance
Our tenants are generally responsible under their leases for providing adequate insurance on the spaces they lease. We believe
that our properties are adequately covered by commercial general liability, fire, flood, terrorism, environmental, and where
necessary, hurricane and windstorm insurance coverages, which are all provided by reputable companies, with commercially
reasonable exclusions, deductibles and limits.
Item 3. Legal Proceedings.
We are currently involved in certain litigation arising in the ordinary course of business.
In December 2008, John Carlo, Inc. (“Carlo”) filed a lawsuit against us and J. Raymond Construction Company (“JRCC”) in
the Circuit Court of the Fourth Judicial Circuit in Duval, Florida related to a dispute regarding final payment for concrete and
road work for a development project in Florida. On March 10, 2011, a settlement was reached as a result of which Carlo was
paid an additional amount for concrete and road work improvements relating to the 2008 River City Marketplace development
project. That amount was added to our investment in income producing property for accounting purposes. In connection with
that settlement, the Carlo suit was dismissed with prejudice.
Item 4. Mine Safety Disclosures
Not Applicable
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PART II
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 1, 2012, the closing price of our common shares on the NYSE was $11.12.
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 our common shares, the NAREIT Equity Index, and the S&P 500 Index for the period December 31, 2001 through
December 31, 2011. The stock price performance shown is not necessarily indicative of future price performance.
The following table depicts high and low closing prices per share for each quarter in 2011 and 2010:
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Period EndingIndex12/31/0112/31/0212/31/0312/31/0412/31/0512/31/0612/31/0712/31/0812/31/0912/31/1012/31/11Ramco-Gershenson Properties Trust100.00134.18206.87250.61220.27333.96199.0563.65108.73150.50126.23NAREIT Equity100.00103.82142.37187.33210.12283.78239.25148.99190.69244.01264.25S&P 500100.0077.90100.24111.15116.61135.03142.4589.75113.50130.59133.3505010015020025030035040012/31/0112/31/0212/31/0312/31/0412/31/0512/31/0612/31/0712/31/0812/31/0912/31/1012/31/11Index ValueComparison of Cumulative Total ReturnRamco-Gershenson Properties TrustNAREIT EquityS&P 500Quarter EndedHighLowMarch 31, 2011$13.51$12.43June 30, 201113.1412.04September 30, 201112.688.19December 31, 20119.977.60March 31, 2010$11.71$8.91June 30, 201012.979.62September 30, 201011.949.69December 31, 201012.4510.82
Holders
The number of holders of record of our common shares was 1,611 at March 1, 2012. 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, 2011 and
2010:
Under the Code, a REIT must meet certain requirements, including a requirement that it distribute to its shareholders at least
90% of its REIT taxable income annually, 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 “DRIP”) which allows our common shareholders to acquire additional common
shares by automatically reinvesting cash dividends. Shares are acquired pursuant to the DRIP 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 DRIP continue to receive cash distributions as declared.
Distributions on our 7.25% Series D Cumulative Convertible Perpetual Preferred Shares declared in 2011 totaled $2.67 per
share and reflected the period commencing on the issuance date of April 6, 2011 through year end. We do not believe that the
preferential rights available to the holders of our preferred shares or the financial covenants contained in our debt agreements
had or will have an adverse effect on our ability to pay dividends in the normal course of business to our common shareholders
or to distribute amounts necessary to maintain our qualification as a REIT.
For information on our equity compensation plans as of December 31, 2011, refer to Item 12 of Part III of this report and Note
19 of the notes to the consolidated financial statements.
21
DividendRecord DateDistributionPayment DateMarch 20, 20110.1633$ April 1, 2011June 20, 20110.1633July 1, 2011September 20, 20110.1633October 1, 2011December 20, 20110.1633January 3, 2012DividendRecord DateDistributionPayment DateMarch 20, 20100.1633$ April 1, 2010June 20, 20100.1633July 1, 2010September 20, 20100.1633October 1, 2010December 20, 20100.1633January 3, 2011
Item 6. Selected Financial Data
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 (“MD&A”) included elsewhere in this report.
(1)
Property operating income is a non-GAAP measure that consists of rental income and other property income, less real estate taxes, recoverable and non-
recoverable operating expenses. This measure is used internally to evaluate the performance of property operations and we consider it to be a significant
measure. Property operating income should not be considered an alternative measure of operating results or cash flow from operations as determined in
accordance with GAAP.
(2) 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 accounting principles generally accepted in the United States of America (“GAAP”), 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. In addition, NAREIT has recently clarified its definition of FFO to exclude impairment
provisions on depreciable property and equity investments in depreciable property. See “Funds From Operations” in Item 7 for a discussion of FFO and
a reconciliation of FFO to net income.
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20112010200920082007Operating Data:Total revenue121,320$ 113,217$ 114,876$ 124,150$ 135,047$ Property operating income (1)80,79975,26076,53981,58991,706(Loss) income from continuing operations(37,308)(21,765)11,77530,03142,519Gain on sale of real estate assets9,638467,89619,13232,643Net (loss) income (28,500)(23,724)15,93627,43245,985Net loss (income) attributable to noncontrolling interest in subsidiaries1,7423,576(2,216)(3,931)(7,310)Preferred share dividends(5,244) - - - (3,146) Loss on redemption of preferred shares- - - - (1,269) Net (loss) income available to common shareholders(32,002)$ (20,148)$ 13,720$ 23,501$ 34,260$ (Loss) earnings per common share, basic Continuing operarations(1.05)$ (0.51)$ 0.43$ 1.41$ 1.74$ Discontinued operations0.21(0.06)0.19(0.14)0.18Basic (loss) earnings (0.84)$ (0.57)$ 0.62$ 1.27$ 1.92$ (Loss) earnings per common share, diluted Continuing operarations(1.05)$ (0.51)$ 0.43$ 1.41$ 1.73$ Discontinued operations0.21(0.06)0.19(0.14)0.18Diluted (loss) earnings (0.84)$ (0.57)$ 0.62$ 1.27$ 1.91$ Weighted average shares outstanding: Basic 38,46635,04622,19318,47117,851 Diluted38,46635,04622,19318,47818,529Cash dividends declared per RPT preferred share2.67$ -$ -$ -$ -$ Cash dividends declared per RPT common share0.65$ 0.65$ 0.79$ 1.62$ 1.85$ Cash distributions to RPT preferred shareholders3,432$ -$ -$ -$ -$ Cash distributions to RPT common shareholders25,203$ 22,501$ 17,974$ 34,338$ 32,156$ Balance Sheet Data (at December 31):Cash and cash equivalents12,155$ 10,175$ 8,432$ 4,816$ 14,483$ Investment in real estate (before accumulated depreciation)1,084,4571,074,0951,002,8551,010,7141,049,764Total assets1,048,8231,052,829997,9571,014,5261,088,499Mortgages and notes payable518,512571,694552,836663,189691,644Total liabilities567,649613,463591,392701,488765,742Total RPT shareholders' equity449,075402,273367,228273,714281,517Noncontrolling interest in subsidiaries32,09937,09339,33739,32441,240Total shareholders' equity481,174439,366406,565313,038322,757Other Data:Funds from operations available to RPT common shareholders (2)29,509$ 20,945$ 45,263$ 47,362$ 54,975$ Net cash provided by operating activities44,70343,24948,06426,99885,988Net cash (used in) provided by investing activities(79,747)(101,935)(3,334)33,61723,182Net cash provided by (used in) financing activities37,02460,385(41,114)(70,282)(105,743)Year Ended December 31,(In thousands, except per share)
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 6 of the notes to the consolidated financial statements in Item 8. The financial information in this MD&A is based on
results from continuing operations.
Overview
We are a fully integrated, self-administered, publicly-traded REIT specializing in the ownership, management, development
and redevelopment of community shopping centers located in the Eastern and Midwestern regions of the United States. Most
of our properties are multi-anchored by supermarkets and/or national chain stores. Our primary business is managing and
leasing space to tenants in the shopping centers we own. We also manage centers for our unconsolidated joint ventures for
which we charge fees. Our credit risk, therefore, is concentrated in the retail industry.
At December 31, 2011, we owned and managed, either directly or through our interest in real estate joint ventures, a total of 83
shopping centers and one office building, with approximately 15.2 million square feet of gross leasable area owned by us and
our joint ventures. We also owned interests in three parcels of land held for development and five parcels of land adjacent to
certain of our existing developed properties located in Florida, Georgia, Michigan, Tennessee and Virginia.
We are predominantly a community shopping center company with a focus on managing and adding value to our portfolio of
centers that are primarily multi-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. Over 53% of our
shopping centers are anchored by tenants or non-owned anchors that sell groceries. Supermarket anchor tenants for our centers
include, among others, Publix Supermarket, Jewel-Osco, Kroger and Whole Foods. National chain anchors for our centers
include, among others, TJ Maxx/Marshalls, Home Depot, Wal-Mart, Kohl’s, Lowe’s Home Centers, Best Buy, and Target.
Our shopping centers are primarily located in targeted metropolitan markets areas in the Eastern and Midwestern regions of the
United States. Our focus on these markets has enabled us to develop 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, leasing and acquiring new properties.
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 fund development and redevelopment activities, or fund selective acquisition opportunities.
We intend to maximize shareholder value through a well-defined business strategy that incorporates the following elements:
Leasing and managing our shopping centers to increase occupancy, maximize rental income, and control operating
expenses and capital expenditures;
Redeveloping our centers to increase gross leasable area, reconfigure space for credit tenants, create outparcels, sell
excess land, and generally make the centers more desirable for our tenants and their shoppers;
Acquiring new shopping centers that are located in targeted metropolitan markets and that provide opportunities to add
value through intensive leasing, management, or redevelopment;
Developing our land held for development into income-producing investment property, subject to market demand,
availability of capital and adequate returns on our incremental capital;
Selling non-core shopping centers and redeploying the proceeds into investments that meet our criteria;
Selling available-for-sale land parcels and using the proceeds to pay down debt or reinvest in our business;
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Maintaining a strong and flexible balance sheet by capitalizing our Company with a moderate ratio of debt to equity
and by financing our investment activities with various forms and sources of capital; and
Managing our overall enterprise to create an efficient organization with a strong corporate culture and transparent
disclosure for all stakeholders.
The economic performance and value of our shopping centers are dependent on various factors. The general economic
environment in the United States and credit availability began to see improvement during 2011 but continued high
unemployment and the slower rate of growth may affect our tenant’s abilities to pay base rent, percentage rent or other charges,
which may adversely affect our financial condition and results of operations. Further, our ability to re-lease vacant spaces may
be negatively impacted by the slow national economic recovery. These factors may impact the valuation of certain long-lived or
intangible assets that are subject to impairment testing, potentially resulting in impairment provisions which may be material to
our financial condition or results of operations. While we believe the locations of our centers and our diverse tenant base
should mitigate the negative impact of the economic environment, we may experience an increase in vacancy that will have a
negative impact on our revenue and bad debt expense. We continue to monitor our tenants’ operating performance as well as
trends in the retail industry to evaluate any future impact.
Significant Operating, Investing and Financing Transactions
Operating Activity
During 2011, we improved our portfolio of shopping centers through aggressive leasing. Specifically, we completed the
following:
Renewed 82% of the leases that expired during the year, comprised of 233 renewal leases totaling 1.2 million square
feet at an average base rent of $13.25 per square foot, a 1.5% increase over the average expiring base rent;
Executed 152 new leases comprised of 0.9 million square feet at an average base rent of $12.20 per square foot. For
new leases for space which had previously been leased on a comparable basis, the average base rent was $12.78 per
square foot, a 10.5% decrease over the prior rent period;
Reduced the number of vacant anchor spaces (spaces > 19,000 square feet) from fifteen to eight; and
Reduced the number of anchor tenants that were lease obligated, but not in occupancy, from nine to six.
Also, during 2011, we continued our strategy of redeveloping centers on a selective basis. In particular, we completed two
redevelopment projects for which our proportionate share of costs was $15.6 million and commenced two redevelopment
projects for which our proportionate share of cost to be $2.4 million. We expect to identify new redevelopment projects
periodically provided such projects are driven by market demand and generate suitable returns on our investment.
Investment Activity
During 2011, we entered St. Louis, Missouri, a new market for us, through the acquisition of two high-quality grocery-
anchored shopping centers located in high-income trade areas for an aggregate investment of $77.3 million. Specifically, we
acquired:
Town and Country Crossing, a 141,996 square foot grocery-anchored shopping center located in suburban St. Louis,
Missouri for $37.9 million; and
Heritage Place, a 269,254 square foot grocery-anchored shopping center located in suburban St. Louis, Missouri for
$39.4 million.
Also during 2011, we sold three shopping centers and three outparcels where we believed we had maximized value for
aggregate net proceeds to us of $28.8 million. Specifically, we sold:
A shopping center located in Tamarac, Florida for $15.0 million, resulting in a small loss while generating
approximately $14.3 million in net cash proceeds;
A shopping center located in Lantana, Florida for $16.9 million, resulting in a net gain of $6.2 million and generating
$6.9 million in net proceeds;
A shopping center located in Taylors, South Carolina for $4.3 million, resulting in a net gain of $1.0 million and
generating $3.8 million in net proceeds; and
Three outparcels located in Florida for an aggregate of approximately $4.0 million, resulting in a net gain of $2.4
million and generating $3.8 million in net proceeds.
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Financing Activity
During 2011, we strengthened our capital structure by raising common and preferred equity, replacing short-term secured bank
debt with longer-term unsecured bank debt, lengthening our debt maturities, and locking in interest rates for 5-7 years through
interest rate swaps that qualify as cash flow hedges. As a result, we believe our debt maturities to be well-staggered over
through 2018.
Specifically, we completed the following transactions:
Issued 2.0 million shares of 7.25% Series D cumulative convertible preferred stock for net proceeds of $96.6 million.
Each share of preferred stock has a liquidation value of $50.00 and is convertible at any time into 3.4699 shares of
common stock (subject to change upon the occurrence of certain events), equating to an effective strike price of $14.41
per common share;
Issued 0.683 million shares of common stock through a controlled equity offering for net proceeds of $8.8 million;
Closed a $175 million syndicated bank revolving line of credit that matures in April 2014, with a one-year extension
option available at our option provided we are in compliance with the terms of the agreement. The revolving line is
unsecured;
Closed a $75 million syndicated bank term loan that matures in April 2015, with a one-year extension option available
at our option provided we are in compliance with the terms of the agreement. The term loan is unsecured;
Closed a $60 million syndicated bank term loan that matures in September 2018. The term loan is unsecured; and
Closed a $24.7 million mortgage loan secured by our Jackson Crossing shopping center located in Jackson, Michigan.
Also during 2011, we repaid the following debt:
Three wholly owned property mortgages secured by our Lakeshore Marketplace, Beacon Square, and Gaines
Marketplace shopping centers and three land loans totaling $38.6 million;
One joint venture mortgage for which our proportionate share was $3.7 million secured by our Martin Square
shopping center; and
A $30 million secured bank bridge loan and a $30 million balance on an amortizing secured bank term loan.
In addition, we conveyed title to our Madison Center shopping center in Madison Heights, Michigan to the lender in exchange
for release from our $9.1 million non-recourse mortgage obligation.
As of result of our financing activities, we ended the year with $29.5 million outstanding under our bank line of credit, a
decrease of $90.3 million from the $119.8 million outstanding at the end of 2010. We believe our lower debt levels, extended
debt maturities, and enhanced liquidity available through our bank line resulted in a stronger financial position during 2011.
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 other assumptions that are
believed to be reasonable under the circumstances. Management has discussed the development, selection and disclosure of
these estimates with the Audit Committee of our Board. Actual results could differ from these estimates under different
assumptions or conditions.
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, capitalization of development and leasing costs,
recoverable amounts of receivables and initial valuations and related amortization periods of deferred costs and intangibles.
The following discussion relates to what we believe to be our most critical accounting policies that require our most subjective
or complex judgment.
25
Revenue Recognition
Our shopping center space is generally leased to retail tenants under leases that are classified 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 and when construction of landlord funded improvements is substantially complete. Certain of the leases also provide for
contingent percentage rental income which is recorded on an accrual basis once the specified target that triggers this type of
income is achieved. The leases also provide for recoveries from tenants of common area maintenance (“CAM”), real estate
taxes and other operating expenses. The majority of our recoveries are estimated and recognized as revenue in the period the
recoverable costs are incurred or accrued. Revenues from management, leasing, and other fees 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. When a lease is terminated early but
the tenant continues to control the space under a modified lease agreement, the lease termination fee is generally recognized
evenly over the remaining term of the modified lease agreement.
Current accounts receivable from tenants primarily relate to contractual minimum rent, percentage rent, real estate taxes, and
CAM or other operating expense reimbursements.
Accounts Receivable and Accrued Rent
We provide for bad debt expense based upon the allowance method of accounting. We continuously monitor the collectability
of our accounts receivable 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. Allowances are
taken for those balances that we have reason to believe will be uncollectible. 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 for doubtful accounts 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. At
December 31, 2011 and 2010, our a accounts receivable were $9.6 million and $10.5 million, respectively, net of allowances
for doubtful accounts of $3.5 million and $3.9 million, respectively.
In addition, many of our leases contain non-contingent rent escalations for which we recognize income on a straight-line basis
over the non-cancelable lease term. This method results in rental income in the early years of a lease being higher than actual
cash received, creating a straight-line rent receivable asset which is included in the “Other Assets” line item in our consolidated
balance sheets. We review our unbilled straight-line rent receivable balance to determine the future collectability of revenue
that will not be billed to or collected from tenants due to early lease terminations, lease modifications, bankruptcies and other
factors. Our evaluation is based on our assessment of tenant credit risk changes indicating that expected future straight-line rent
may not be realized. Depending on circumstances, we may provide a reserve against the previously recognized straight-line
rent receivable asset for a portion, up to its full value, that we estimate may not be received. The balance of straight-line rent
receivable at December 31, 2011 and 2010, net of allowances was $16.0 million and $17.9 million, respectively and is included
in other assets on our consolidated balance sheets. To the extent any of the tenants under these leases become unable to pay
their contractual cash rents, we may be required to write down the straight-line rent receivable from those tenants, which would
reduce our operating income.
Real Estate Investment
Income Producing
Real estate assets that we own directly are stated at cost less accumulated depreciation. Depreciation is computed using the
straight-line method. The estimated useful lives for computing depreciation are generally 25 – 40 years for buildings and 10 –
20 years for parking lot surfacing and equipment. We capitalize all capital improvement expenditures associated with
replacements and improvements to real property that extend the property’s useful life and depreciate such improvements over
their estimated useful lives ranging from 5 – 30 years. In addition, we capitalize tenant leasehold improvements and depreciate
them over the shorter of the useful life of the improvements or the term of the related tenant lease. We consider a number of
different factors to evaluate whether we or the tenant is the owner of the tenant improvement for accounting purposes. These
factors include: 1) whether the lease stipulates how and on what a tenant improvement allowance may be spent; 2) whether the
tenant or landlord retains legal title to the improvements; 3) the uniqueness of the improvements; 4) the expected economic life
of the tenant improvements relative to the term of the lease; and 5) who constructs or directs the construction of the
improvements. We depreciate all tenant improvements over the shorter of the useful life of the improvements or the term of the
related tenant lease. We charge maintenance and repair costs that do not extend an asset’s life to expense as incurred.
26
Sale of a real estate asset is recognized when it is determined that the sale has been consummated, the buyer’s initial and
continuing investment is adequate, our receivable, if any, is not subject to future subordination, and the buyer has assumed the
usual risks and rewards of ownership of the assets.
Development and Redevelopment
Real estate also includes costs incurred in the development of new operating properties and the redevelopment of existing
operating properties. These properties are carried at cost and no depreciation is recorded on these assets until the
commencement of rental revenue or no later than one year from the completion of major construction. These costs include pre-
development costs directly identifiable with the specific project, development and construction costs, interest, real estate taxes
and insurance. Interest is capitalized on land under development and buildings under construction based on the weighted
average rate applicable to our borrowings outstanding during the period and the weighted average balance of qualified assets
under development/redevelopment during the period. Indirect project costs associated with development or construction of a
real estate project are capitalized until the earlier of one year following substantial completion of construction or when the
property becomes available for occupancy.
The capitalized costs associated with development and redevelopment projects are depreciated over the useful life of the
improvements. If we determine a development or redevelopment project is no longer probable, we expense all capitalized costs
which are not recoverable.
Acquisitions
Acquisitions of properties are accounted for utilizing the acquisition method and, accordingly, the results of operations of an
acquired property are included in our results of operations from the date of acquisition. Estimates of fair values are based upon
future cash flows and other valuation techniques in accordance with our fair value measurements policy, which are used to
record the purchase price of acquired property among land, buildings on an “as if vacant” basis, tenant improvements, other
identifiable intangibles and any gain on purchase. Other identifiable intangible assets and liabilities include the effect of above-
and below-market leases, the value of having leases in place (“as-is” versus “as if vacant” and absorption costs), out-of-market
assumed mortgages and tenant relationships, if any. Initial valuations are subject to change until such information is finalized,
no later than twelve months from the acquisition date. The impact of these estimates, including incorrect estimates in
connection with acquisition values and estimated useful lives, could result in significant differences related to the purchased
assets, liabilities and resulting gain on purchase, depreciation or amortization. For the years ended December 31, 2011 and
2010, we recorded in general and administrative expenses approximately $0.1 and $0.3 million, respectively, in costs associated
with the closing of our acquisitions.
The estimated fair value of acquired in-place leases are the costs we would have incurred to lease the properties to the
occupancy level of the properties at the date of acquisition. Such estimates include the fair value of leasing commissions, legal
costs and other direct costs that would be incurred to lease the properties to such occupancy levels. Additionally, we will
evaluate the time period over which such occupancy levels would be achieved. Such evaluation will include an estimate of the
net market-based rental revenues and net operating costs (primarily consisting of real estate taxes, insurance and CAM) that
would be incurred during the lease-up period. Acquired in-place leases as of the date of acquisition are amortized over the
remaining lease term.
Acquired above-and below-market lease values are recorded based on the present value (using an interest rate that reflects the
risks associated with the lease acquired) of the difference between the contractual amounts to be paid pursuant to the in-place
leases and management’s estimate of fair market value lease rates for the corresponding in-place leases. The capitalized above-
and below-market lease values are amortized as adjustments to rental revenue over the remaining terms of the respective leases,
which includes periods covered by bargain renewal options. Should a tenant terminate its lease prior to expiration, the
unamortized portion of the in-place lease value is charged to amortization expense and the unamortized portion of out-of-
market lease value is charged to rental revenue.
Impairment
We review our investment in real estate, including any related intangible assets, for impairment on a property-by-property basis
whenever events or changes in circumstances indicate that the remaining estimated useful lives of those assets may warrant
revision or that the carrying value of the property may not be recoverable. For operating properties, these changes in
circumstances include, but are not limited to, changes in occupancy, rental rates, tenant sales, net operating income, geographic
location, and real estate values. The viability of all projects under construction or development, including those owned by
unconsolidated joint ventures, are regularly evaluated under applicable accounting requirements, including requirements
27
relating to abandonment of assets or changes in use. To the extent a project, or individual components of the project, are no
longer considered to have value, the related capitalized costs are charged against operations.
Determining whether an investment in real estate is impaired and the amount of any such impairment requires considerable
management judgment. In the event that management changes its intended holding period for an investment in real estate,
impairment may result even without any other event or change in circumstances related to that investment. For example, a
determination to sell land held for development rather than to develop the land and hold the developed asset may result in
impairment. Similarly, a decision to sell an income producing property rather than to hold it may result in impairment. Under
certain circumstances, management may use probability-weighted scenarios related to an investment in real estate, and the use
of such analysis may also result in impairment. Impairment provisions resulting from any event or change in circumstances,
including changes in management’s intentions or management’s analysis of varying scenarios, could be material to our
consolidated financial statements.
We recognize an impairment of an investment in real estate when the estimated undiscounted cash flow is less than the net
carrying value of the property. If it is determined that an investment in real estate is impaired, then the carrying value is
reduced to the estimated fair value as determined by cash flow models and discount rates or comparable sales in accordance
with our fair value measurement policy.
In 2011, we recorded $11.5 million of impairment provisions triggered by changes in the estimated fair market value on land
held for sale and a change in plan at one of our development projects. In addition, our decision to sell several income
producing properties triggered $16.3 million of impairment provisions due to the estimated sales price being lower than the net
book value of each property. We recorded a $9.6 million impairment provision for our investment in several joint ventures due
to other-than-temporary estimated fair value changes. Also, one of our joint ventures recorded an impairment provision of $5.5
million, of which our share was $1.6 million, as a result of the expectation that cash flow will be insufficient to service a non-
recourse mortgage and the likelihood that the partners will be unwilling to fund the shortfall. See Note 7 of the notes to the
consolidated financial statements for further information regarding impairment provisions.
Off Balance Sheet Arrangements
We have seven equity investments in unconsolidated joint venture entities in which we own 50% or less of the total ownership
interest. Because we can influence but not make significant decisions without our partner’s approval these investments are
accounted for under the equity method of accounting. We provide leasing, development, asset and property management
services to these joint ventures for which we are paid fees. Entities identified as variable interest entities are consolidated if we
are determined to be the primary beneficiary of the partially owned real estate joint venture. Refer to Note 8 of the notes to the
consolidated financial statements for further information.
We review our equity investments in unconsolidated entities for impairment on a venture-by-venture basis whenever events of
changes in circumstances indicate that the carrying value of the equity investment may not be recoverable. These changes in
circumstances include, but are not limited to, declines in real estate values in general, increases in interest rates in general, or
decreases in net operating income and occupancy of the properties held in the unconsolidated joint venture.
In testing for impairment of equity investments in unconsolidated entities, we primarily use cash flow models, discount rates,
and capitalization rates to estimate the fair values of properties held in joint ventures, and mark the debt of the joint ventures to
market. Determining whether an equity investment in an unconsolidated entity is impaired and, if so, the amount of the
impairment requires considerable management judgment. Changes to assumptions regarding cash flows, discount rates, or
capitalization rates could be material to our consolidated financial statements. We record an impairment provision when it is
determined that a decline in value is other than temporary. In 2011, we recorded a non-cash impairment provision of $9. 6
million resulting from other-than-temporary declines in the fair market value of various equity investments in unconsolidated
joint ventures. Refer to Note 7 of the notes to the consolidated financial statements for further information.
Fair Value Measurements
Certain financial instruments, estimates and transactions are required to be calculated, reported and/or recorded at fair value.
The estimated fair values of such financial items, including, debt instruments, impairments, acquisitions and derivatives, have
been determined using a market-based measurement. This measurement is determined based on the assumptions that
management believes market participants would use in pricing an asset or liability. As a basis for considering market
participant assumptions in fair value measurements, GAAP establishes three fair value levels, based on the markets in which
the assets and liabilities are traded and the reliability of the assumptions used to determine fair value. The assessed inputs used
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in determining any fair value measurement could result in incorrect valuations that could be material to our consolidated
financial statements. These levels are:
Level 1
Level 2
Level 3
Valuation is based upon quoted prices for identical instruments traded in active markets.
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.
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.
We utilize 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, from time
to time, we may be required to record certain assets, such as impaired real estate assets, at fair value on a nonrecurring basis.
Deferred Charges
Debt financing costs are amortized primarily on a straight-line basis, which approximates the effective interest method, over the
terms of the debt. Lease costs represent the initial direct costs incurred in origination, negotiation and processing of a lease
agreement. Such costs include outside broker commissions, legal, and other independent third party costs, as well as salaries
and benefits, travel, and other internal costs directly related to completing a lease and are amortized over the life of the lease on
a straight-line basis. Costs related to supervision, administration, unsuccessful originations efforts and other activities not
directly related to the execution of leases are charged to expense as incurred.
Results of Operations
Comparison of the Year Ended December 31, 2011 to the Year Ended December 31, 2010
The following summarizes certain line items from our audited statements of operations which we believe are important in
understanding our operations and/or those items that have significantly changed during the year ended December 31, 2011 as
compared to 2010:
29
20112010% ChangeTotal revenue121,320$ 113,217$ 7.2%Recoverable operating expense32,691 30,606 6.8%Other non-recoverable operating expense3,704 3,159 17.3%Depreciation and amortization36,255 30,590 18.5%General and administrative expense19,650 18,994 3.5%Other expense(257) (973) -73.6%Gain on sale of real estate2,441 2,096 16.5%Earnings (loss) from unconsolidated joint ventures1,669 (221) -855.2%Interest expense(28,138) (30,785) -8.6%Amortization of deferred financing fees(1,869) (2,612) -28.4%Provision for impairments(37,411) (31,440) 19.0%Bargain purchase gain on acquisition of real estate- 9,836 NMDeferred gain recognized upon acquisition of real estate- 1,796 NMLoss on early debt extinguishment(1,968) - NMIncome tax (provision) benefit(795) 670 -218.7%Income (loss) from discontinued operations8,808 (1,959) -549.6%Net loss attributable to noncontrolling intererst1,742 3,576 -51.3%Preferred share dividends(5,244) - NMNet loss available to common shareholders(32,002)$ (20,148)$ 58.8%NM - Not meaningfulYear EndedDecember 31, (In thousands)
Total revenue increased $8.1 million, or 7.2%, to $121.3 million for the year ended December 31, 2011 from $113.2 million in
2010. The increase is primarily due to the following:
$7.0 million increase in minimum rent and tenant recovery income primarily related to our acquisitions in 2011 and
2010; and
$1.1 million increase in lease termination income.
Recoverable operating expenses increased by $2.1 million, or 6.8%, to $32.7 million in 2011 from $30.6 million in 2010,
primarily due to our acquisitions in 2011 and 2010.
Other non-recoverable operating expenses increased $0.5 million, or 17.3%, to $3.7 million in 2011 from $3.2 million. The
increase was primarily due to our acquisitions in 2010 and 2011.
Depreciation and amortization expense increased by $5.7 million, or 18.5%, to $36.3 million in 2011 from $30.6 million in
2010. Of that increase $4.9 million was related to our acquisitions in 2011 and 2010 and approximately $0.8 million was
associated with accelerated depreciation for building demolition in 2011 at two properties.
General and administrative expenses increased by $0.7 million, or 3.5%, to $19.7 million in 2011 from $19.0 million in 2010.
The increase in 2011 was primarily related to the following:
an increase of $1.8 million in net compensation expense due primarily to higher severance expense, annual pay
increases, lower capitalization of development and leasing salaries and related costs in 2011, and a $0.5 million
reduction to long-term incentive expense in 2010 for not meeting performance measures; partially offset by
a decrease in legal fees of approximately $0.8 million related to our defense against a lawsuit with a subcontractor in
2010 as well as lower corporate legal expense in 2011; and
a decrease in acquisition, non-viable redevelopment expense and D&O insurance costs of approximately $0.3 million.
Other expense decreased $0.7 million to $(0.3) million in 2011 from $(1.0) million in 2010. The decrease was primarily related
to a $0.5 million easement fee earned in 2011 at one of our development projects located in Jacksonville, Florida and a $0.2
million decrease in real estate tax expense in 2011 on development projects that were placed on hold in 2010.
Gain on sale of real estate increased slightly in 2011 to $2.4 million in 2011 from $2.1 million in 2010.
Earnings (loss) from unconsolidated joint ventures increased in 2011 by $1.9 million primarily due the following:
the sale of Shenandoah Square shopping center resulted in our proportionate share of the gain of $2.7 million, plus
$0.2 million of promote fee income;
2010 included higher default interest expense, bad debt expense and impairment provision of $1.6 million; partially
offset by
an increase in depreciation expense of $2.6 million due to the commencement of two redevelopment projects, resulting
in a reduction to the useful lives of certain buildings that were subsequently demolished to prepare for the properties’
redevelopment.
Interest expense decreased $2.6 million, or 8.6%, to $28.1 million in 2011 from $30.8 million in 2010 due primarily to the
payoff of several mortgages and a lower revolving line of credit balance.
Amortization of deferred financing fees expense decreased $0.7 million, or 28.4%, to $1.9 million in 2011 from $2.6 million in
2010 which was primarily due to the refinancing of our revolving line of credit.
Impairment provisions of $37.4 million were recorded in the fourth quarter of 2011 related to the decision to market certain
income-producing properties for sale, adjustments to the sales price assumptions for certain undeveloped land parcels available
for sale at several of our development properties and other-than-temporary declines in the fair market value of various equity
investments in unconsolidated joint ventures. During 2010 impairment provisions of $31.4 million were recorded related to the
marketing of certain undeveloped land parcels for sale and other-than-temporary declines in the fair market value of various
equity investments in unconsolidated joint ventures. Refer to Note 7 of the notes to the consolidated financial statements for a
detailed discussion of these charges.
30
In 2010, we recorded a bargain purchase gain of $9.8 million and a previously deferred gain of $1.8 million related to the
transfer of ownership interest in the Merchants’ Square Shopping Center. There were no similar activities in 2011.
Loss on extinguishment of debt was $2.0 million in 2011 related to a one-time write-off of unamortized deferred financing
costs related to the prior secured revolving line of credit and term loan. There were no comparable activities in 2010.
The income tax provision was $0.8 million in 2011 as compared to a tax benefit of $0.7 million in 2010. The increase in
income tax expense was primarily due to the repeal of the Michigan Business Tax that resulted in a one-time write-off of net
deferred tax assets of $0.8 million. Refer to Note 20 of the notes to the condensed consolidated financial statements for further
information.
Income from discontinued operations was $8.8 million in 2011 compared to a loss from discontinued operations of $2.0 million
in 2010. In 2011, we sold the Lantana Shopping Center located in Lantana, Florida, the Sunshine Plaza Shopping Center
located in Tamarac, Florida and the Taylor’s Square shopping center located in Greenville, South Carolina which generated an
aggregate gain on sale of $7.2 million. Also in 2011, we conveyed interest and title on our Madison Center located in Madison
Heights, Michigan to the lender thereby satisfying the debt obligation. The transaction resulted in a gain on debt
extinguishment of $1.2 million which is included in income from discontinued operations. In 2010, we sold one shopping
center located in Elkin, North Carolina for a net loss of $2.1 million.
Net income attributable to noncontrolling interest decreased $1.8 million primarily due to the acquisition of our partner’s 80%
interest in the Ramco RM Hartland SC LLC joint venture in the first quarter 2011, and was partially offset by higher net loss in
2011.
For the year ended December 31, 2011, we declared dividends of $5.2 million to preferred shareholders resulting from the April
2011 preferred equity offering. There were no preferred shares outstanding in 2010.
Comparison of the Year Ended December 31, 2010 to the Year Ended December 31, 2009
The following summarizes certain line items from our audited statements of operations which we believe are important in
understanding our operations and/or those items which have significantly changed during the year ended December 31, 2010 as
compared to 2009:
31
20102009% ChangeTotal revenue113,217$ 114,876$ -1.4%Recoverable operating expense30,606 31,324 -2.3%Other non-recoverable operating expense3,159 2,099 50.5%Depreciation and amortization30,590 29,156 4.9%General and administrative expense18,994 14,971 26.9%Other (expense) income (973) 870 -211.8%Gain on sale of real estate2,096 5,010 -58.2%(Loss) earnings from unconsolidated joint ventures(221) 1,328 -116.6%Interest expense(30,785) (28,185) 9.2%Amortization of deferred financing fees(2,612) (828) 215.5%Provision for impairments(31,440) - NMBargain purchase gain on acquisition of real estate9,836 - NMDeferred gain recognized upon acquisition of real estate1,796 - NMRestructuring costs and other items- (4,379) NMIncome tax benefit670 633 5.8%(Loss) income from discontinued operations(1,959) 4,161 -147.1%Net loss (income) attributable to noncontrolling intererst3,576 (2,216) -261.4%Net (loss) income avaiable to common shareholders(20,148)$ 13,720$ -246.9%NM - Not meaningful(In thousands)Year EndedDecember 31,
Total revenue decreased $1.7 million, or 1.4%, to $113.2 million for the year ended December 31, 2010 from $114.9 million in
2009. The decrease is primarily attributable to the following:
a decrease in minimum rent of $2.0 million due primarily to the sale of two net leased Wal-Marts in 2009 and tenant
vacancies, tenant bankruptcies, rent relief and other concessions granted in 2010, partially offset by minimum rent
from acquisitions of $1.1 million in 2010;
a decrease in recovery income from tenants of approximately $1.1 million due to lower real estate tax expense partly
offset by 2010 acquisitions;
a decrease of $0.7 million in development fees earned in 2010 due to completed construction at our joint venture
properties; partially offset by
increases of $0.6 million in lease termination fees and $0.7 million of lease rejection income from a bankruptcy claim
in 2010.
Recoverable operating expenses decreased by $0.7 million, or 2.3%, to $30.6 million in 2010 from $31.3 million in 2009,
primarily due to a decrease in real estate tax expense.
Other non-recoverable operating expenses increased $1.1 million, or 50.5%, to $3.2 million in 2010 from $2.1 million due to
higher bad debt expense, primarily resulting from the bankruptcy of A&P.
Depreciation and amortization expense increased $1.4 million or 4.9%, to $30.6 million in 2010 from $29.2 million. Of that
increase $1.1 million was due to our acquisitions in 2010 and $0.3 million related to an increase in unamortized lease costs
associated with tenants that vacated prior to their lease expiration.
General and administrative expenses increased by $4.0 million, or 26.9%, to $19.0 million in 2010 from $15.0 million in 2009.
The increase in 2010 was primarily related to the following:
an increase of $1.2 million in net compensation expense which included lower capitalization of leasing and
development salary and related costs of $0.3 million;
an increase in legal fees of $1.0 million primarily related to our defense against litigation;
an increase of $0.6 million due to a settlement with four former executives for health benefit costs;
an increase of $0.4 million related to higher benefits and personnel related costs;
an increase in acquisition costs of $0.3 million related to our 2010 property acquisitions; and
an increase of $0.2 million related to recruitment fees associated with the hire of one new executive.
Other (expense) income decreased $1.9 million to $(1.0) million in 2010 from $0.9 million in 2009. The decrease was primarily
related to real estate tax expense being capitalized in 2009 on development projects that were temporarily placed on hold in
2010, therefore expensed in 2010.
Gain on sale of real estate decreased $2.9 million, or 58.2%, to $2.1 million in 2010 from $5.0 million in 2009. The decrease is
mostly attributable to the sale of two net leased Wal-Mart pads at Northwest Crossing and Taylors Square shopping centers in
2009.
(Loss) earnings from unconsolidated joint ventures decreased in 2010 primarily due to our equity in a $9.1 million impairment
loss at a property in one of our joint ventures, of which our share was $1.8 million. In the fourth quarter of 2010, the property’s
interest was transferred to us.
Interest expense increased $2.6 million, or 9.2%, to $30.8 million in 2010 from $28.2 million in 2009 attributable to the
following:
an increase of $1.2 million associated with higher interest expense and unused line fees associated with our new credit
facilities which closed in the fourth quarter of 2009;
lower capitalized interest of $1.0 million due to the temporary deferment of our development projects; and
the consolidation of Hartland Towne Square increased interest expense by approximately $0.4 million.
Amortization of deferred financing fees expense increased $1.8 million, or 215.5%, to $2.6 million in 2010 from $0.8 million in
2009 primarily related to our new credit and term loan facilities which closed in the fourth quarter of 2009.
An impairment provision of $28.8 million was recorded in the third quarter of 2010 related to a decision to market certain land
parcels for sale at several of our development properties. Refer to Note 7 of the notes to the consolidated financial statements
32
for a detailed discussion of these charges. Also, in the first quarter of 2010, we recorded a non-cash impairment provision of
$2.7 million resulting from other-than-temporary declines in the fair market value of various equity investments in
unconsolidated joint ventures.
In 2010, we recorded a bargain purchase gain of $9.8 million and a previously deferred gain of $1.8 million related to the
transfer of ownership interest in the Merchants’ Square Shopping Center in the fourth quarter of 2010. There were no similar
sales activities in 2009.
Restructuring costs and other items included $1.6 million related to our strategic review and proxy contest in 2009 and $1.6
million of severance and other compensation-related costs associated with employees who were terminated in 2009.
Additionally, in the fourth quarter of 2009, we abandoned the Northpointe Town Center project in Jackson, Michigan resulting
in a one-time charge of $1.2 million. Refer to Note 18 of the notes to the consolidated financial statements for additional
information.
The income tax benefit was $0.7 million in 2010 and was slightly higher than the tax benefit of $0.6 million in 2009.
For the year ended December 31, 2010, we recorded a net loss of $2.0 million from discontinued operations related to the sale
of one income producing property, as compared to a net gain of $4.2 million for the same period in 2009 related to the sale of
Taylor Plaza, a stand-alone Home Depot store located in Taylor, Michigan.
Noncontrolling interest represents the portion of the Operating Partnership and 80% of the Ramco RM Hartland SC LLC joint
venture not owned by us. The loss attributable to noncontrolling interest in the year ended December 31, 2010 of $3.6 million
compares to income of $2.2 million for the year ended December 31, 2009. The decrease of $5.8 million reflects the
noncontrolling interest’s proportionate share of our net loss in 2010 as compared to net income in 2009, as well as the
noncontrolling interest’s share of the net loss related to the Ramco RM Hartland SC LLC joint venture developing a portion of
Hartland Towne Square. We consolidated this variable interest entity joint venture effective January 1, 2010 and attributed
80% of the net loss in the joint venture to the noncontrolling interest. In January 2011, we executed an agreement with our
joint venture partner that transferred the partner’s interest in the Ramco Hartland SC, LLC joint venture to us for $1.0 million,
which approximated the partner’s equity in the joint venture.
Liquidity and Capital Resources
The majority of our cash is generated from operations and is dependent on the rents that we are able to charge and collect from
our tenants. The principal uses of our liquidity and capital resources are for operations, developments, redevelopments,
including expansion and renovation programs, acquisitions, and debt repayment. In addition, we make dividend payments in
accordance with REIT requirements for distributing the substantial majority of our taxable income on an annual basis. We
anticipate that the combination of cash on hand, cash from operations, availability under our credit facilities, additional
financings, equity offerings, 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 such assurance can be given.
At December 31, 2011 and 2010, we had $18.2 million and $15.9 million in cash and cash equivalents and restricted cash,
respectively. Restricted cash was comprised primarily of funds held in escrow to pay real estate taxes, insurance premiums,
and certain capital expenditures.
Short-Term Liquidity Requirements
Our short-term liquidity needs consist primarily of funds necessary to pay operating expenses associated with our operating
properties, interest and scheduled principal payments on our debt, expected dividend payments (including distributions to
Operating Partnership unit holders) and capital expenditures related to tenant improvements and redevelopment activities.
We have no debt maturities until August 2012, when a $10.7 million mortgage loan matures.
We continually search for investment opportunities that may require additional capital and/or liquidity. As of December 31,
2011, we had no proposed property acquisitions under contract.
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Long-Term Liquidity Requirements
Our long-term liquidity needs consist primarily of funds necessary to pay indebtedness at maturity, potential acquisitions of
properties, redevelopment of existing properties, the development of land held and non-recurring capital expenditures.
During 2011, we closed on a new seven-year $60.0 million unsecured term loan, due in September 2018, and a new $250.0
million unsecured bank facility comprised of a $175.0 million revolving line of credit and a $75.0 million term loan. The
facility replaced our prior secured line which was scheduled to mature in December 2012. The new revolving line of credit and
term loan have terms of three and four years, respectively. Subject to customary conditions, both the revolving line and the
term loan can be extended for one year at our option. Borrowings under the facility are priced at LIBOR plus 200 to 275 basis
points depending on our leverage ratio. As of December 31, 2011, $144.1 million was available to be drawn on our unsecured
revolving credit facility subject to certain covenants that may affect availability.
The replacement of our prior secured bank facility with our new unsecured bank facility enhances our financial flexibility by
providing for additions to and removals from the pool of unencumbered properties that comprise a borrowing base, subject to
certain criteria. Our financing strategy is to maintain ample liquidity, financial strength, and financial flexibility by sourcing
equity and debt capital in appropriate balance, managing our debt maturity schedule, and monitoring our exposure to interest
rate risk.
The following is a summary of our cash flow activities:
Operating Activities:
We generated $44.7 million in cash provided by operating activities compared to $43.2 million in 2010. In 2011, we received
$5.5 million more operating cash flow from rent, recovery income, and other property income, net of operating expenses, than
we did in 2010. We also had $0.7 million less in other expense than in 2010. In addition, we received $1.5 million more in
distributions from unconsolidated entities. Partly offsetting these increases was a $8.3 million decrease in cash generated from
changes in accounts receivable, other assets, and accounts payables and accruals.
Investing Activities:
We used $79.7 million of cash in investing activities compared to $101.9 million in 2010. During 2011, we invested $21.5
million more in property acquisitions, but invested $7.5 million less on development, redevelopment, and capital expenditures,
$3.4 million less into unconsolidated joint ventures, $3.0 million less in notes receivable, and $1.2 million less in restricted
cash. We also generated $28.5 million more from property sales (including our share of proceeds from joint venture property
sales).
Financing Activities:
We generated $37.0 million in cash from financing activities compared to $60.4 million in 2010. During 2011, we received
$29.8 million more from common and preferred equity offerings, but paid $6.1 million more in common and preferred
distributions. We also reduced our debt, net of borrowings, by $45.1 million from 2010.
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201120102009Cash provided by operating activities44,703$ 43,249$ 48,064$ Cash used in investing activities(79,747)(101,935)(3,334)Cash provided by (used in) financing activities37,02460,385(41,114)Year Ended December 31,(In thousands)
Dividends and Equity
We believe that we currently qualify, and intend to continue to qualify in the future as a REIT under the Internal Revenue Code
of 1986, as amended (“the Code”). Under the Code, as a REIT we must distribute to our shareholders at least 90% of our REIT
taxable income annually, excluding net capital gain. Distributions paid are at the discretion of our Board 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 deems relevant.
We paid cash dividends of $0.653 per common share to shareholders in 2011, unchanged from dividends paid in 2010. 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. On an annualized basis, our current
dividend is above our estimated minimum required distribution. Distributions paid by us 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 are used as shown in the following table. Examples of alternative funding sources may
include proceeds from sales of real estate and bank borrowings. Although we 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.
During 2011, we issued 0.683 million common shares through a controlled equity offering generating $8.8 million in net
proceeds. Additionally, in the second quarter of 2011, we issued 2.0 million convertible cumulative perpetual preferred shares
generating $96.6 million in net proceeds.
Debt
The following financing activity occurred during 2011:
A new seven-year $60.0 million unsecured term loan. The net proceeds were used to repay four property mortgages
aggregating approximately $22.0 million and to repay the $33.0 million outstanding balance (as of September 30,
2011) on our unsecured revolving line of credit;
Closed a new $24.7 million mortgage secured by the Jackson Crossing shopping center in Jackson, Michigan. The
mortgage bears a fixed rate of 5.8% and matures in April 2018;
Repaid in full the $30.0 million secured term loan facility from borrowings under our secured Credit Facility, and used
net proceeds from our cumulative convertible perpetual preferred share offering to repay our $30.0 million secured
bridge loan and reduce borrowings on our Credit Facility; and
Repaid three wholly owned property mortgages secured by our Lakeshore Marketplace, Beacon Square, and Gaines
Marketplace shopping centers and three land loans totaling $38.6 million.
Additionally, a $9.1 million non-recourse mortgage note that was secured by our wholly-owned Madison Center property
located in Madison Heights, Michigan, was due May 1, 2011. The note entered default status in May when we did not repay
the note at maturity. On October 19, 2011 we conveyed titled to and our interest in the Madison Center property to the lender
and were released of our obligation.
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201120102009Cash provided by operating activities44,703$ 43,249$ 48,064$ Cash distributions to preferred shareholders(3,432)$ -$ -$ Cash distributions to common shareholders(25,203) (22,501) (17,974) Cash distributions to operating partnership unit holders(2,159) (1,906) (2,503) Distributions to noncontrolling interests- - (54) Total distributions(30,794)$ (24,407)$ (20,531)$ Surplus (deficiency)13,909$ 18,842$ 27,533$ Alternative sources of funding for distributions: Proceeds from sales of real estate assets28,803$ 4,023$ 28,022$ Total sources of alternative funding for distributionsn/an/an/aYear Ended December 31,(In thousands)
It is anticipated that funds borrowed under our 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 11 of the consolidated financial statements.
At December 31, 2011, we had four interest rate swap agreements in effect for an aggregate notional amount of $135.0 million
converting our floating rate corporate debt to fixed rate debt. After taking into account the impact of converting our variable
rate debt to fixed rate debt by use of the interest rate swap agreements, at December 31, 2011, we had $29.5 million of variable
rate debt outstanding.
At December 31, 2011, we had $325.8 million of fixed rate mortgage loans encumbering certain consolidated properties. Such
mortgage loans are 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.
Off Balance Sheet Arrangements
Real Estate Joint Ventures
We consolidate entities in which we own less than 100% equity interest if we have a controlling interest or are the primary
beneficiary in a variable interest entity, as defined in the Consolidation Topic of FASB ASC 810. From time to time, we enter
into joint venture arrangements from which we believe we can benefit by owning a partial interest in a property.
As of December 31, 2011, we had seven equity investments in unconsolidated joint venture entities in which we owned 50% or
less of the total ownership interest and accounted for these entities under the equity method. Refer to Note 8 of the notes to the
consolidated financial statements for more information.
We have a 30% ownership interest in our Ramco Lion joint venture which owns a portfolio of 16 properties totaling 3.2 million
square feet of GLA. As of December 31, 2011, the properties had consolidated equity of $300.5 million. Our total investment
in the venture at December 31, 2011 was $76.4 million. The Ramco Lion joint venture has total debt obligations of
approximately $209.0 million with maturity dates ranging from 2012 through 2020. Our proportionate share of the total debt is
$62.7 million. Such debt is non-recourse to the venture, subject to carve-outs customary to such types of mortgage financing.
We have a 20% ownership interest in our Ramco 450 joint venture which is a portfolio of eight properties totaling 1.6 million
square feet of GLA. As of December 31, 2011, the properties in the portfolio had consolidated equity of $124.1 million. Our
total investment in the venture at December 31, 2011 was $14.5 million. The Ramco 450 venture has total debt obligations of
approximately $170.6 million with maturity dates ranging from 2013 through 2017. Our proportionate share of the total debt is
$34.1 million. Such debt is non-recourse to the venture, subject to carve-outs customary to such types of mortgage financing.
We also have ownership interests ranging from 7% - 50% in five smaller joint ventures that each own one or two properties.
As of December 31, 2011, our total investment in these ventures was $6.0 million and our proportionate share of the total non-
recourse debt was $5.4 million with maturity dates ranging from 2012 through 2016. One of these joint ventures was in default
on its $8.4 million non-recourse mortgage loan in which we had a 40% interest. On February 10, 2012, the joint venture
completed a transfer of the property’s ownership to the lender in consideration for the repayment of the outstanding mortgage
loan. In addition, one of our single property joint ventures sold its sole property to a third party in the third quarter of 2011
which generated a $6.8 million gain on sale of which $2.7 million was our proportionate share. Refer to Note 8 of the notes to
the consolidated financial statements for more information related to our real estate joint ventures.
Additionally, we review our equity investments in unconsolidated entities for impairment on a venture-by-venture basis
whenever events or changes in circumstances indicate that the carrying value of the equity investment may not be recoverable.
In testing for impairment of these equity investments, we primarily use cash flow models, discount rates, and capitalization
rates to estimate the fair value of properties held in joint ventures, and we also estimate the fair value of the debt of the joint
ventures based on borrowing rates for similar types of borrowing arrangements with the same remaining maturity.
Considerable judgment by management is applied when determining whether an equity investment in an unconsolidated entity
is impaired and, if so, the amount of the impairment. Changes to assumptions regarding cash flows, discount rates, or
capitalization rates could be material to our consolidated financial statements.
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As a result of our impairment testing, we recorded non-cash impairment provisions of $9.6 million and $2.7 million in 2011
and 2010, respectively. These amounts related to the other-than-temporary declines in the fair market value of various equity
investments in our unconsolidated joint ventures. Refer to Note 7 of the notes to the consolidated financial statements for more
information.
Contractual Obligations
The following are our contractual cash obligations as of December 31, 2011:
(1) Excludes $47,000 of unamortized mortgage debt premium.
We anticipate that the combination of cash on hand, cash provided from operating activities, the availability under our credit
facility ($144.1 million at December 31, 2011 subject to covenants), 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, 2011, 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, 2011, we had employment contracts with our Chief Executive Officer and Chief Financial Officer that contain
minimum guaranteed compensation. All other employees are subject to at-will employment.
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 adjacent to our former Taylors Square shopping center and a capital ground lease at our Gaines Marketplace shopping
center that provides the option to purchase the land parcel in October 2014 for approximately $5.4 million.
Construction Costs
In connection with the development and expansion of various shopping centers as of December 31, 2011, we have entered into
agreements for construction activities with an aggregate cost of approximately $3.0 million.
Planned Capital Spending
We are focused on our core strengths of enhancing the value of our existing portfolio of shopping centers through successful
leasing efforts and the completion of our redevelopment projects currently in process. In addition, we spent $77.3 million in
connection with the acquisitions of Heritage Place and Town and Country Crossing, both in suburban St. Louis, Missouri.
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Contractual ObligationsTotalLess than 1 year 1-3 years3-5 yearsMore than 5 yearsMortgages and notes payable:Scheduled amortization24,919$ 5,009$ 12,418$ 3,730$ 3,762$ Payments due at maturity493,546 10,602 153,493 185,000 144,451 Total mortgages and notes payable (1)518,465 15,611 165,911 188,730 148,213 Employment contracts1,001 641 360 - - Capital lease7,309 677 6,632 - - Operating leases5,017 729 1,432 958 1,898 Construction commitments3,005 3,005 - - - Total contractual obligations534,797$ 20,663$ 174,335$ 189,688$ 150,111$ Payments due by period(In thousands)
For 2012, we anticipate spending approximately $24.3 million for capital expenditures which includes development and
redevelopment projects as well as planned spending for tenant improvements and leasing costs.
Capitalization
At December 31, 2011 our total market capitalization was $1.0 billion. Our market capitalization consisted of $512.7 million
of net debt (including property-specific mortgages, an unsecured credit facility consisting of a revolving line of credit and term
loan, a new unsecured term loan, junior subordinated notes and a capital lease obligation), $407.9 million of common shares
and OP Units (including dilutive securities and based on a market price of $9.83 at December 31, 2011), and $85.3 million of
convertible perpetual preferred shares (based on a market price of $42.63 per share at December 31, 2011). Our net debt to
total market capitalization was 51.0% at December 31, 2011, as compared to 52.8% at December 31, 2010. The decrease in
total net debt to market capitalization was due primarily to the impact of the April 2011 preferred equity offering and the
repayment of various property mortgages in 2011, partially offset by the decrease in our common share price from $12.45 at
December 31, 2010 to $9.83 at December 31, 2011. Our outstanding debt at December 31, 2011 had a weighted average
interest rate of 5.14%, and consisted of $490.0 million of fixed rate debt, including the impact of interest rate swap agreements.
Outstanding letters of credit issued under the credit facility totaled approximately $1.4 million at December 31, 2011.
At December 31, 2011, the noncontrolling interest in the Operating Partnership represented a 6.3% 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 41,353,851 of our common shares of beneficial interest
outstanding at December 31, 2011, with a market value of approximately $406.5 million.
Funds From Operations
We consider funds from operations ("FFO") an appropriate supplemental measure of the financial performance of an equity
REIT. Under the NAREIT definition, FFO represents net income attributable to common shareholders, excluding extraordinary
items, as defined under accounting principles generally accepted in the United States of America ("GAAP"), 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. In addition, NAREIT has recently clarified its
computation of FFO to exclude impairment provisions on depreciable property and equity investments in depreciable property.
Management has restated FFO for prior periods accordingly. FFO should not be considered an alternative to GAAP net income
available to common shareholders as an indication of our performance. We consider FFO as a useful measure for reviewing
our comparative operating and financial performance between periods or to compare our performance to different REITs.
However, our computation of FFO may differ from the methodology for calculating FFO utilized by other real estate
companies, and therefore, may not be comparable to these other real estate companies.
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 available 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.
38
The following table illustrates the calculations of FFO:
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 June 2009, the Financial Accounting Standards Board (“FASB”) issued a new accounting standard which provided certain
changes to the evaluation of a variable interest entity including requiring a qualitative rather than quantitative analysis to
determine the primary beneficiary of a VIE, continuous assessments of whether an enterprise is the primary beneficiary of a
VIE, and enhanced disclosures about an enterprise’s involvement with a VIE. Under the new standard, the primary beneficiary
has both the power to direct the activities that most significantly impact economic performance of the VIE and the obligation to
absorb losses or the right to receive benefits that could potentially be significant to the VIE.
We adopted the standard effective January 1, 2010. The adoption did not have a material impact to our financial statements.
The required balance sheet disclosures regarding assets and liabilities of a consolidated VIE have been parenthetically included
in our consolidated balance sheets. These parenthetical amounts relate to The Ramco Hartland SC, LLC, an undeveloped land
parcel in Hartland, Michigan that was a consolidated VIE in 2010. In January 2011, we purchased our partner’s interest in the
joint venture. Refer to Note 9 of the notes to the consolidated financial statements.
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201120102009Net (loss) income available to common shareholders (32,002)$ (20,148)$ 13,720$ Adjustments: Rental property depreciation and amortization expense36,271 31,213 30,141 Pro-rata share of real estate depreciation from unconsolidated joint ventures9,310 6,798 6,678 (Gain) loss on sale of depreciable real estate(7,197) 241 (7,457) (Gain) on sale of joint venture depreciable real estate(2,718) - - Provision for impairment on income-producing properties16,332 - - Provision for impairment on equity investments in unconsolidated joint ventures (1)9,611 2,653 - Provision for impairment on joint venture income-producing properties (1)1,644 1,820 - Noncontrolling interest in Operating Partnership(1,742) (1,632) 2,181Funds from operations29,509$ 20,945$ 45,263$ Weighted average common shares38,466 35,046 22,193 Shares issuable upon conversion of Operating Partnership Units2,785 2,902 2,919 Dilutive effect of securities145 178 - Weighted average equivalent shares outstanding, diluted41,39638,12625,112Funds from operations per diluted share0.71$ 0.55$ 1.80$ Provision for impairment for land available for sale0.28$ 0.76$ -$ Bargain purchase gain on acquisition of real estate-$ (0.26)$ -$ Gain on extinguishment of debt0.02$ -$ -$ FFO, excluding items above, per diluted share1.01$ 1.05$ 1.80$ (1) Amount included in (loss) earnings from unconsolidated joint ventures.Years Ended December 31,(In thousands, except per share data)
In July 2010, the FASB updated ASC 310 “Receivables” with ASU 2010-20 “Disclosures about the Credit Quality of
Financing Receivables and the Allowance for Credit Losses,” which requires enhanced disclosures about financing receivables,
including the allowance for credit losses, credit quality, and impaired loans. This standard is effective for fiscal years ending
after December 15, 2010. We adopted the standard in the fourth quarter of 2010 and it did not have a material impact on our
consolidated financial statements.
In May 2011, the FASB updated ASC 820 “Fair Value Measurements and Disclosures” with ASU 2011-04 “Amendments to
Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRS.” The amendments change
the wording used to describe many of the requirements in U.S. GAAP for measuring fair value and for disclosing information
about fair value measurements. We adopted the standard in the fourth quarter of 2011 and it did not have a material impact on
our consolidated financial statements.
In June 2011, the FASB updated ASC 220 “Comprehensive Income” with ASU 2011-05 “Presentation of Comprehensive
Income,” which requires an entity to present the total of comprehensive income, the components of net income, and the
components of other comprehensive income either in a single continuous statement of comprehensive income or in two
separate but consecutive statements. We adopted the standard in the fourth quarter of 2011 and it did not have a material
impact on our consolidated financial statements.
In September 2011, the FASB updated ASC 350 “Intangibles - Goodwill and Other” with ASU 2011-08 “Testing Goodwill for
Impairment.” Under this update, an entity has the option to first assess qualitative factors to determine whether the existence of
events or circumstances leads to a determination that it is more likely than not that the fair value of a reporting unit is less than
its carrying amount. If, after assessing the totality of events or circumstances, an entity determines it is not more likely than not
that the fair value of a reporting unit is less than its carrying amount, then performing the two-step impairment test is
unnecessary. We do not expect this update to have a material impact on our consolidated financial statements.
In December 2011, the FASB updated ASC 210 “Balance Sheet” with ASU 2011-11 “Disclosures about Offsetting Assets and
Liabilities.” Under this update companies are required to provide new disclosures about offsetting and related arrangements for
financial instruments and derivatives. The provisions of ASU 2011-11 are effective for annual reporting periods beginning on
or after January 1, 2013, and are required to be applied retrospectively. We do not expect this update to have a material impact
on our consolidated financial statements.
In December 2011, the FASB updated ASC 220 “Comprehensive Income” with ASU 2011-12 “Deferral of the Effective Date
for Amendments to the Presentation of Reclassifications of Items Out of Accumulated Other Comprehensive Income in ASU
2011-05.” This update requires that all non-owner changes in stockholders’ equity be presented in either a single continuous
statement of comprehensive income or in two separate but consecutive statements. ASU 2011-12 defers only those changes in
ASU 2011-05 that relate to the presentation of reclassification adjustments out of accumulated other comprehensive income.
The provisions of ASU 2011-12 are effective for public companies in fiscal years beginning after December 15, 2011. We do
not expect this update to have a material impact on our consolidated financial statements.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
We have exposure to interest rate risk on our variable rate debt obligations. Based on market conditions, we may manage our
exposure to interest rate risk by entering into interest rate swap agreements to hedge our variable rate debt. 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 interest rate swap agreements in effect at December 31, 2011, a 100 basis point change in interest rates would
impact our future earnings and cash flows by approximately $0.3 million annually. We believe that a 100 basis point change in
interest rates would have a minimal impact the fair value of our total outstanding debt at December 31, 2011.
40
We had interest rate swap agreements with an aggregate notional amount of $135.0 million as of December 31, 2011. The
agreements provided for fixed rates ranging from 1.2% to 2.0% and had expirations ranging from April 2016 to October 2018.
The following table sets forth information as of December 31, 2011 concerning our long-term debt obligations, including
principal cash flows by scheduled maturity, weighted average interest rates of maturing amounts and fair market:
We estimated the fair value of our fixed rate mortgages using a discounted cash flow analysis, based on 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, 2011 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 market interest rates at that time.
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 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, 2011 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 Chief Financial Officer. Based on such evaluation, our management, including our Chief
Executive Officer and Chief Financial Officer, concluded that such disclosure controls and procedures were effective at the
reasonable assurance level as of December 31, 2011.
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Fair20122013201420152016ThereafterTotalValue Fixed-rate debt 15,611$ 25,821$ 33,647$ 151,943$ 1,894$ 260,049$ 488,965$ 473,651$ Average interest rate6.4%5.9%5.5%4.4%6.6%5.6%5.3%6.2%Variable-rate debt -$ -$ 29,500$ -$ -$ -$ 29,500$ 29,500$ Average interest rate- - 2.8%- - - 2.8%2.8%(In thousands)
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.
Our management conducted an assessment of our internal controls over financial reporting as of December 31, 2011 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, 2011.
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.
42
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Board of Trustees and Shareholders
Ramco-Gershenson Properties Trust
We have audited Ramco-Gershenson Properties Trust (a Maryland corporation) and subsidiaries’ (the “Company”) internal
control over financial reporting as of December 31, 2011, 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, 2011, 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, 2011 and 2010, and
the related consolidated statements of operations and comprehensive income, shareholders’ equity and cash flows for each of
the three years in the period ended December 31, 2011, and our report dated March 8, 2012 expressed an unqualified opinion.
/s/ GRANT THORNTON LLP
Southfield, Michigan
March 8, 2012
43
Changes in Internal Control over Financial Reporting
There have been no changes in our internal control over financial reporting during the most recently completed fiscal quarter
that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Item 9B. Other Information.
None.
Item 10. Directors, Executive Officers and Corporate Governance.
PART III
Incorporated by reference from our definitive proxy statement to be filed within 120 days after the end of our fiscal year
covered by this Form 10-K.
Item 11. Executive Compensation.
Incorporated by reference from our definitive proxy statement to be filed within 120 days after the end of our fiscal year
covered by this Form 10-K.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
The following table sets forth information regarding our equity compensations plans as of December 31, 2011:
The total in Column (A) above consisted of options to purchase 272,201 shares of common stock, 65,043 deferred common
shares (see Note 19 of the notes to the consolidated financial statements for further information) and 196,835 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.
Additional information required by this Item is incorporated by reference from our definitive proxy statement to be filed within
120 days after the end of our fiscal year covered by this Form 10-K.
Item 13. Certain Relationships and Related Transactions, and Director Independence.
Incorporated by reference from our definitive proxy statement to be filed within 120 days after the end of our fiscal year
covered by this Form 10-K.
Item 14. Principal Accountant Fees and Services.
Incorporated by reference from our definitive proxy statement to be filed within 120 days after the end of our fiscal year
covered by this Form 10-K.
44
(A)(B)(C)Plan CategoryNumber of securities to be issued upon exercise of outstanding options, warrants and rightsWeighted-average exercise price of outstanding options, warrants and rightsNumber of securities remaining available for future issuances under equity compensation plans (excluding securities reflected in column (A))Equity compensation plans approved by security holders534,079$25.98551,930Equity compensation plans not approved by security holders---Total534,079$25.98551,930
PART IV
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
3.2
3.3
3.4
3.5
Articles of Restatement of Declaration of Trust of the Company, effective June 8, 2010, incorporated
by reference to Exhibit 3.1 to the Company's Form 8-K dated June 8, 2010.
Amended and Restated Bylaws of the Company, effective June 8, 2010, incorporated by reference
to Exhibit 3.2 to the Company's Form 8-K dated June 8, 2010.
Articles of Amendment, as filed with the State Department of Assessments and Taxation of Maryland
on April 5, 2011, incorporated by reference to Exhibit 3.1 to the Company’s Form 8-K dated April 6,
2011.
Articles Supplementary, as filed with the State Department of Assessments and Taxation of Maryland
on April 5, 2011, incorporated by reference to Exhibit 3.2 to the Company’s Form 8-K dated April 6,
2011.
Articles Supplementary, as filed with the State Department of Assessments and Taxation of Maryland
on April 28, 2011, incorporated by reference to Exhibit 3.1 to the Company’s Form 8-K dated April
28, 2011.
3.6*
Amended and Restated Bylaws of the Company, effective February 23, 2012.
4.1
4.2
4.3
4.4
4.5
4.6
4.7
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.
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.
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.
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.
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.
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.
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.
45
10.1
10.2
10.3
10.4
10.5
10.6
10.7
10.8
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.
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.
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.
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.
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.
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.
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.
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.
10.9*
Summary of Trustee Compensation Program.**
10.10
10.11
10.12
10.13
10.14
10.15
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.
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.**
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.**
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.**
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. **
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
46
10.16
10.17
10.18
10.19
10.20
10.21
10.22
10.23
10.24
10.25
10.26
10.27
10.28
Exhibit 10.1 to Registrant’s Form 8-K, dated December 17, 2009.
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.
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.
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.
Employment Letter, dated February 16, 2010, between Ramco-Gershenson Properties Trust and
Gregory R. Andrews, incorporated by reference to Exhibit 10.1 to Registrant’s Form 8-K, dated
February 19, 2010.**
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.
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.
Registration Rights Agreement, dated February 17, 2010, between Ramco-Gershenson Properties
Trust and JCP Realty, Inc., incorporated by reference to Exhibit 10.28 to the Registrant's Annual
Report on Form 10-K for the year ended December 31, 2009.
First Amendment to First Amended and Restated Revolving Credit Agreement and Guaranty, dated
March 30, 2010, by and among Ramco-Gershenson Properties, L.P., as Borrower, Ramco-
Gershenson Properties Trust and Ramco Virginia Properties, L.L.C. as Guarantors and KeyBank
National Association as Agent, incorporated by reference to Exhibit 10.1 to Registrant’s Form 8-K,
dated April 1, 2010.
Form of Non-Qualified Option Agreement Under 2009 Omnibus Long-Term Incentive Plan,
incorporated by reference to Exhibit 10.1 to Registrant’s Form 8-K dated June 15, 2009**
Form of Restricted Stock Award Agreement Under 2009 Omnibus Long-Term Incentive Plan,
incorporated by reference to Exhibit 10.1 to Registrant’s Form 8-K dated June 15, 2009**
Bridge Loan Agreement, dated as of December 29, 2010, among Ramco-Gershenson Properties, L.P.,
as Borrower, Ramco-Gershenson Properties Trust, Ramco Liberty Square LLC, and Ramco Fox
River LLC, as Guarantors and KeyBank National Association, as a bank, the other banks which may
become Parties to such Agreement, KeyBank National Association, as Agent, and KeyBanc Capital
Markets as Sole Lead Manager and Arranger incorporated by reference to Exhibit 10.26 to the
Registrant’s Annual Report on Form 10-K for the year ended December 31, 2010.
Unsecured Term Loan Agreement, dated as of September 30, 2011 among Ramco-Gershenson
Properties, L.P., as Borrower, Ramco-Gershenson Properties Trust, as Guarantor, KeyBank National
Association, The Huntington National Bank, PNC Bank, National Association, KeyBank National
Association, as Agent, and KeyBanc Capital Markets, as Sole Lead Manager and Arranger
incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the
period ended September 30, 2011.
Unconditional Guaranty of Payment and Performance, dated as of September 30, 2011, by Ramco-
Gershenson Properties Trust, in favor of KeyBank National Association and the other lenders under
the Unsecured Term Loan Agreement incorporated by reference to Exhibit 10.2 to the Company’s
Quarterly Report on Form 10-Q for the period ended September 30, 2011.
47
12.1*
Computation of Ratio of Earnings to Combined Fixed Charges and Preferred Share 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.
101.INS(1) XRL Instance Document
101.SCH(1) XBRL Taxonomy Extension Schema
101.CAL(1) XBRL Extension Calculation
101.DEF(1)
XBRL Extension Definition
101.LAB(1)
XBRL Taxonomy Extension Label
101.PRE(1)
XBRL Taxonomy Extension Presentation
__________
* Filed herewith
** Management contract or compensatory plan or arrangement
(1) Pursuant to Rule 406T of Regulations S-T, these interactive data files are deemed not filed or part of a registration statement
or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, are deemed not filed for purposes of Sections 18
of the Securities Exchange Act of 1924 and otherwise are not subject to liability thereunder.
We have not filed certain instruments with respect to long-term debt that did not exceed 10% of our total assets. We 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.
48
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.
Dated: March 8, 2012
Ramco-Gershenson Properties Trust
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 8, 2012
By: /s/ Stephen R. Blank
Stephen R. Blank,
Chairman
Dated: March 8, 2012
Dated: March 8, 2012
Dated: March 8, 2012
Dated: March 8, 2012
Dated: March 8, 2012
Dated: March 8, 2012
Dated: March 8, 2012
Dated: March 8, 2012
Dated: March 8, 2012
By: /s/ Dennis E. Gershenson
Dennis E. Gershenson,
Trustee, President and Chief Executive Officer
(Principal Executive Officer)
By: /s/ Arthur H. Goldberg
Arthur H. Goldberg,
Trustee
By: /s/ Robert A. Meister
Robert A. Meister,
Trustee
By: /s/ David J. Nettina
David J. Nettina
Trustee
By: /s/ Matthew L. Ostrower
Matthew L. Ostrower,
Trustee
By: /s/ Joel M. Pashcow
Joel M. Pashcow
Trustee
By: /s/ Mark K. Rosenfeld
Mark K. Rosenfeld
Trustee
By: /s/ Michael A. Ward
Michael A. Ward,
Trustee
By: /s/ Gregory R. Andrews
Gregory R. Andrews,
Chief Financial Officer and Secretary
(Principal Financial and Accounting Officer)
49
RAMCO-GERSHENSON PROPERTIES TRUST
Index to Consolidated Financial Statements
Report of Independent Registered Public Accounting Firm
Consolidated Financial Statements:
Consolidated Balance Sheets - December 31, 2011 and 2010
Consolidated Statements of Operations and Comprehensive Income - Years Ended
December 31, 2011, 2010, and 2009
Page
F-2
F-3
F-4
Consolidated Statements of Shareholders’ Equity - Years Ended December 31, 2011, 2010, and 2009
F-5
Consolidated Statements of Cash Flows – Years Ended December 31, 2011, 2010, and 2009
F-6
Notes to Consolidated Financial Statements
Schedules to Consolidated Financial Statements
F-7
F-35
F-1
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 (the “Company”) as of December 31, 2011 and 2010, and the related consolidated statements of
operations and comprehensive income, shareholders’ equity, and cash flows for each of the three years in the period ended
December 31, 2011. Our audits of the basic financial statements included the financial statement schedules listed in the index
appearing under Item 15. These financial statements and financial statement schedules are the responsibility of the
Company’s management. Our responsibility is to express an opinion on these financial statements and financial statement
schedules 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, 2011 and 2010, and the results of their
operations and their cash flows for each of the three years in the period ended December 31, 2011 in conformity with
accounting principles generally accepted in the United States of America. Also, in our opinion, the related financial statement
schedules, when considered in relation to the basic financial statements taken as a whole, present fairly, in all material
respects, the information set forth therein.
As discussed in Note 2 to the consolidated financial statements, the Company adopted new accounting guidance for the
consolidation of variable interest entities effective January 1, 2010.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States),
the Company’s internal control over financial reporting as of December 31, 2011, 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 8, 2012 expressed an unqualified opinion.
/s/GRANT THORNTON LLP
Southfield, Michigan
March 8, 2012
F-2
F-3
20112010ASSETSIncome producing properties, at cost:Land 133,145$ 114,814$ Buildings and improvements863,763 863,225 Less accumulated depreciation and amortization(222,722) (213,915) Income producing properties, net 774,186 764,124 Construction in progress and land held for development or sale(including $0 and $25,812 of consolidated variable interest entities, respectively)87,549 96,056 Net real estate861,735860,180Equity investments in unconsolidated joint ventures97,020 105,189 Cash and cash equivalents12,155 10,175 Restricted cash6,063 5,726 Accounts receivable, net 9,614 10,534 Note receivable3,000 3,000 Other assets, net59,236 58,025 TOTAL ASSETS1,048,823$ 1,052,829$ LIABILITIES AND SHAREHOLDERS' EQUITYMortgages and notes payable:Mortgages payable (including $0 and $4,605 of 325,887$ 363,819$ consolidated variable interest entities, respectively)Unsecured/secured revolving credit facility29,500119,750Unsecured/secured term loan facilities, including secured bridge loan135,00060,000Junior subordinated notes28,12528,125Total morgages and notes payable518,512571,694Capital lease obligation6,341 6,641 Accounts payable and accrued expenses31,546 24,986 Other liabilities2,644 3,462 Distributions payable8,606 6,680 TOTAL LIABILITIES567,649613,463Ramco-Gershenson Properties Trust ("RPT") Shareholders' Equity: Preferred shares, $0.01 par, 2,000 shares authorized: 7.25% Series D 100,000$ -$ Cumulative Convertible Perpetual Preferred Shares, (stated at liquidation preference $50 per share), 2,000 and 0 issued and outstanding as of December 31, 2011 and December 31, 2010, respectivelyCommon shares of beneficial interest, $0.01 par, 60,000 shares authorized,38,735 and 37,947 shares issued and outstanding as of December 31, 2011and 2010, respectively387 379 Additional paid-in capital 570,225 563,370 Acumulated distributions in excess of net income(218,888) (161,476) Accumulated other comprehensive loss(2,649) - TOTAL SHAREHOLDERS' EQUITY ATTRIBUTABLE TO RPT449,075 402,273 Noncontrolling interest32,099 37,093 TOTAL SHAREHOLDERS' EQUITY481,174 439,366 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY1,048,823$ 1,052,829$ RAMCO-GERSHENSON PROPERTIES TRUSTCONSOLIDATED BALANCE SHEETS(In thousands, except per share amounts)December 31,The accompanying notes are an integral part of these consolidated financial statements.
F-4
201120102009REVENUEMinimum rent81,958$ 76,703$ 77,599$ Percentage rent256 387 722 Recovery income from tenants30,813 28,865 30,055 Other property income4,167 3,070 1,586 Management and other fee income4,126 4,192 4,914 TOTAL REVENUE121,320 113,217 114,876 EXPENSESReal estate taxes17,253 15,989 16,714 Recoverable operating expense15,438 14,617 14,610 Other non-recoverable operating expense3,704 3,159 2,099 Depreciation and amortization36,255 30,590 29,156 General and administrative19,650 18,994 14,971 TOTAL EXPENSES92,300 83,349 77,550 INCOME BEFORE OTHER INCOME AND EXPENSES, TAX AND DISCONTINUED OPERATIONS29,020 29,868 37,326 OTHER INCOME AND EXPENSESOther (expense) income(257) (973) 870 Gain on sale of real estate2,441 2,096 5,010 Earnings (loss) from unconsolidated joint ventures1,669 (221) 1,328 Interest expense(28,138) (30,785) (28,185) Amortization of deferred financing fees(1,869) (2,612) (828) Provision for impairment(27,800) (28,787) - Provision for impairment on equity investments in unconsolidated joint ventures(9,611) (2,653) - Bargain purchase gain on acquisition of real estate- 9,836 - Deferred gain recognized upon acquisition of real estate- 1,796 - Loss on early extinguishment of debt(1,968) - - Restructuring costs and other items- - (4,379) (LOSS) INCOME FROM CONTINUING OPERATIONS BEFORE TAX (36,513) (22,435) 11,142 Income tax (provision) benefit(795) 670 633 (LOSS) INCOME FROM CONTINUING OPERATIONS(37,308) (21,765) 11,775 DISCONTINUED OPERATIONSGain (loss) on sale of real estate7,197 (2,050) 2,886 Gain (loss) on extinguishment of debt1,218 (242) - Income from discontinued operations393 333 1,275 INCOME (LOSS) FROM DISCONTINUED OPERATIONS8,808 (1,959) 4,161 NET (LOSS) INCOME (28,500) (23,724) 15,936 Net loss (income) attributable to noncontrolling partner interest1,742 3,576 (2,216) NET (LOSS) INCOME ATTRIBUTABLE TO RAMCO-GERSHENSON PROPERTIES TRUST(26,758)(20,148)13,720Preferred share dividends(5,244)- - NET (LOSS) INCOME AVAILABLE TO COMMON SHAREHOLDERS(32,002)$ (20,148)$ 13,720$ (LOSS) EARNINGS PER COMMON SHARE, BASICContinuing operations(1.05)$ (0.51)$ 0.43$ Discontinued operations0.21 (0.06) 0.19 (0.84)$ (0.57)$ 0.62$ (LOSS) EARNINGS PER COMMON SHARE, DILUTEDContinuing operations(1.05)$ (0.51)$ 0.43$ Discontinued operations0.21 (0.06) 0.19 (0.84)$ (0.57)$ 0.62$ WEIGHTED AVERAGE COMMON SHARES OUTSTANDINGBasic38,466 35,046 22,193 Diluted38,466 35,046 22,193 OTHER COMPREHENSIVE INCOMENet (loss) income(28,500)$ (23,724)$ 15,936$ Other comprehensive (loss) income:(Loss) gain on interest rate swaps(2,828) 2,517 1,334 Comprehensive (loss) income(31,328) (21,207) 17,270 Comprehensive loss (income) attributable to noncontrolling interest179 (3,207) (2,371)Comprehensive (loss) income attributable to Ramco-Gershenson Properties Trust(31,149)$ (24,414)$ 14,899$ The accompanying notes are an integral part of these consolidated financial statements.Year Ended December 31,RAMCO-GERSHENSON PROPERTIES TRUST CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME(In thousands, except per share amounts)
F-5
AccumulatedAccumulatedAdditionalDistributions Other TotalPreferredCommon Paid-inin Excess of ComprehensiveNoncontrollingShareholders’SharesSharesCapitalNet IncomeIncome (Loss)InterestEquityBalance, December 31, 2008-$ 185$ 389,528$ (112,671)$ (3,328)$ 39,324$ 313,038$ Issuance of common stock- 124 96,116 - - - 96,240 Conversion and redemption of OP unit holders- - - (1) - - (1) Share-based compensation and other expense- - 1,087- - - 1,087 Dividends declared to common shareholders- - - (18,558)- - (18,558) Distributions declared to noncontrolling interests- - - - - (2,358)(2,358) Dividends paid on restricted shares- - - (153)- - (153) Other comprehensive income adjustment- - - - 1,179 155 1,334 Net income- - - 13,720 - 2,216 15,936 Balance, December 31, 2009- 309486,731(117,663)(2,149)39,337406,565 Issuance of common stock- 70 75,623 - - - 75,693 Conversion and redemption of OP unit holders- - - - - (41) (41) Share-based compensation and other expense- - 1,016 - - - 1,016 Dividends declared to common shareholders- - - (23,498) - - (23,498) Distributions declared to noncontrolling interests- - - - - (1,895) (1,895) Dividends paid on restricted shares- - - (167) - - (167) Consolidation of variable interest entity- - - - - 2,900 2,900 Other comprehensive income adjustment- - - - 2,149368 2,517 Net loss- - - (20,148) - (3,576) (23,724) Balance, December 31, 2010- 379563,370(161,476)- 37,093439,366 Issuance of common stock- 8 8,329 - - - 8,337 Issuance of preferred shares100,000 - (3,358) - - - 96,642 Conversion and redemption of OP unit holders- - - - - (3) (3) Share-based compensation and other expense- - 1,884 - - - 1,884 Dividends declared to common shareholders- - - (25,203) - - (25,203) Dividends declared to preferred shareholders- - - (5,244) - - (5,244) Distributions declared to noncontrolling interests- - - - - (2,077) (2,077) Dividends paid on restricted shares- - - (207) - - (207) Purchase of partner's interest in consolidated variable interest entity- - - - - (993) (993) Other comprehensive loss adjustment- - - - (2,649) (179) (2,828) Net loss- - - (26,758) - (1,742) (28,500) Balance, December 31, 2011100,000$ 387$ 570,225$ (218,888)$ (2,649)$ 32,099$ 481,174$ RAMCO-GERSHENSON PROPERTIES TRUSTCONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITYThe accompanying notes are an integral part of these consolidated financial statements.(In thousands, except share amounts)Shareholders' Equity of Ramco-Gershenson Properties Trust
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Year Ended December 31, 201120102009OPERATING ACTIVITIES Net (loss) income(28,500)$ (23,724)$ 15,936$ Adjustments to reconcile net (loss) income to net cash provided by operating activities: Depreciation and amortization, including discontinued operations37,02632,02630,990 Amortization of deferred financing fees, including discontinued operations1,8792,663875 Income tax provision (benefit)795(670)(633) (Earnings) loss from unconsolidated entities(1,669)221(1,328) Distributions received from operations of unconsolidated entities4,4132,9043,836 Provision for impairment27,80028,787- Provision for impairment on unconsolidated joint ventures9,6112,653- Loss on extinguishment of debt, net750242- Abandonment of pre-development sites- - 1,224 Gain on sale of real estate(9,638)(46)(7,896) Bargain purchase gain on acquisition of real estate- (9,836)- Deferred gain recognized upon acquisition of real estate- (1,796)- Amortization of premium on mortgages and notes payable, net(35)(202)(303) Share-based compensation expense1,8491,2791,291 Changes in assets and liabilities: Accounts receivable(252)5,1122,397 Other assets4,5773,758(162) Accounts payable and accrued expenses(3,903) (122) 1,837 Net cash provided by operating activities44,703 43,249 48,064 INVESTING ACTIVITIES Additions to real estate(101,690)$ (87,718)$ (21,598)$ Proceeds from sales of real estate28,8034,02328,022 Distributions from sale of joint venture property3,756- - (Increase) decrease in restricted cash(337)(1,520)1,164 Investment in and notes receivable from unconsolidated joint ventures(9,279)(13,720)(10,922) Purchase of partner's equity in consolidated joint ventures(1,000)- - Note receivable from third party- (3,000)- Net cash used in investing activities(79,747)(101,935)(3,334)FINANCING ACTIVITIES Proceeds on mortgages and notes payable250,150$ 154,700$ 176,186$ Repayment of mortgages and notes payable(284,654) (144,145) (286,235) Payment of deferred financing costs(2,839)(1,173)(6,507) Proceeds from issuance of preferred shares96,642- - Proceeds from issuance of common stock8,819 75,693 96,240 Repayment of capitalized lease obligation(300) (283) (267) Distributions paid to noncontrolling interests- - (54) Dividends paid to preferred shareholders(3,432) - - Dividends paid to common shareholders(25,203)(22,501)(17,974) Distributions paid to operating partnership unit holders(2,159)(1,906)(2,503)Net cash provided by (used in) financing activities37,02460,385(41,114)Net increase in cash and cash equivalents1,9801,6993,616 Cash from consolidated variable interest entity- 44- Cash and cash equivalents at beginning of period10,1758,4324,816 Cash and cash equivalents at end of period12,155$ 10,175$ 8,432$ SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION Cash paid for interest (net of capitalized interest of $325, $1,158 and $2,116 in 2011, 2010 and 2009 respectively)28,747$ 29,746$ 28,783$ Cash paid for federal income taxes6328378 (Decrease) increase in fair value of interest rate swaps(2,828)2,5171,334The accompanying notes are an integral part of these consolidated financial statementsRAMCO-GERSHENSON PROPERTIES TRUSTCONSOLIDATED STATEMENTS OF CASH FLOWS(In thousands)
RAMCO-GERSHENSON PROPERTIES TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years Ended December 31, 2011, 2010 and 2009
1. Organization and Summary of Significant Accounting Policies
Ramco-Gershenson Properties Trust, together with our subsidiaries (the “Company”), is a real estate investment trust (“REIT”)
engaged in the business of owning, developing, redeveloping, acquiring, managing and leasing community shopping centers
located in the Eastern and Midwestern regions of the United States. At December 31, 2011, we owned and managed, either
directly or through our interest in joint ventures, a total of 83 shopping centers and one office building, with approximately 15.2
million square feet of gross leasable area (“GLA). We also owned interests in three parcels of land held for development and
five parcels of land adjacent to certain of our existing developed properties located in Florida, Georgia, Michigan, Tennessee
and Virginia.
We made an election to qualify as a REIT for federal income tax purposes. Accordingly, we generally will not be subject to
federal income tax, provided that we annually distribute at least 90% of our taxable income to our shareholders and meet other
conditions.
Principles of Consolidation and Estimates
The consolidated financial statements include the accounts of us and our majority owned subsidiary, the Operating Partnership,
Ramco-Gershenson Properties, L.P. (93.7%, 92.9%, and 91.4% owned by us at December 31, 2011, 2010 and 2009,
respectively), and all wholly-owned subsidiaries, including entities in which we have a controlling interest or have been
determined to be the primary beneficiary of a variable interest entity (“VIE”). 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 over which we have the ability to exercise significant influence,
but for which we do not have financial or operating control, are accounted for using the equity method of accounting.
Accordingly, our share of the earnings (loss) of these joint ventures is included in consolidated net income (loss). All
intercompany transactions and balances are eliminated in consolidation.
We own 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 us and to other entities, including our real estate joint venture partners. We
had one related party agreement for management fees that was terminated in August 2011 due to the sale of the joint venture’s
sole property. Refer to Note 21 of the notes to the consolidated financial statements for more information.
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of
America (“GAAP”) requires our management 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. We base our estimates on historical experience and on various other
assumptions that we believe 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.
Reclassifications
Certain reclassifications of prior period amounts have been made in the financial statements in order to conform to the 2011
presentation.
Revenue Recognition and Accounts Receivable
Our shopping center space is generally leased to retail tenants under leases that are classified 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 and when construction of landlord funded improvements is substantially complete. Certain of the leases also provide for
contingent percentage rental income which is recorded on an accrual basis once the specified target that triggers this type of
income is achieved. The leases also provide for recoveries from tenants of CAM, real estate taxes and other operating expenses.
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These recoveries are estimated and recognized as revenue in the period the recoverable costs are incurred or accrued. 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. When a lease is terminated early but the tenant continues to control the space under a modified
lease agreement, the lease termination fee is generally recognized evenly over the remaining term of the modified lease
agreement.
Current accounts receivable from tenants primarily relate to contractual minimum rent, percentage rent, real estate taxes and
CAM or other operating expense reimbursements.
We provide for bad debt expense based upon the allowance method of accounting. We continuously monitor the collectability
of our accounts receivable 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. Allowances are
taken for those balances that we have reason to believe will be uncollectible. 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 for doubtful accounts 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. At
December 31, 2011 and 2010, our accounts receivable were $9.6 million and $10.5 million, respectively, net of allowances for
doubtful accounts of $3.5 million and $3.9 million, respectively.
In addition, many of our leases contain non-contingent rent escalations for which we recognize income on a straight-line basis
over the non-cancelable lease term. This method results in rental income in the early years of a lease being higher than actual
cash received, creating a straight-line rent receivable asset which is included in the “Other Assets” line item in our consolidated
balance sheets. We review our unbilled straight-line rent receivable balance to determine the future collectability of revenue
that will not be billed to or collected from tenants due to early lease terminations, lease modifications, bankruptcies and other
factors. Our evaluation is based on our assessment of tenant credit risk changes indicating that expected future straight-line rent
may not be realized. Depending on circumstances, we may provide a reserve against the previously recognized straight-line
rent receivable asset for a portion, up to its full value, that we estimate may not be received. The balance of straight-line rent
receivable at December 31, 2011 and 2010, net of allowances was $16.0 million and $17.9 million, respectively and is included
in other assets on our consolidated balance sheets. To the extent any of the tenants under these leases become unable to pay
their contractual cash rents, we may be required to write down the straight-line rents receivable from those tenants, which
would reduce our operating income.
Real Estate
Real estate assets that we own directly are stated at cost less accumulated depreciation. Depreciation is computed using the
straight-line method. The estimated useful lives for computing depreciation are generally 25 – 40 years for buildings and 10 –
20 years for parking lot surfacing and equipment. We capitalize all capital improvement expenditures associated with
replacements and improvements to real property that extend its useful life and depreciate them over their estimated useful lives
ranging from 5 – 30 years. In addition, we capitalize qualifying tenant leasehold improvements and depreciate them over the
shorter of the useful life of the improvements or the term of the related tenant lease. We also capitalize direct internal and
external costs of procuring leases and amortize them over the base term of the lease. If a tenant vacates before the expiration of
its lease, we charge unamortized leasing costs and undepreciated tenant leasehold improvement of no future value to expense.
We charge maintenance and repair costs that do not extend an asset’s life to expense as incurred.
Sale of a real estate asset is recognized when it is determined that the sale has been consummated, the buyer’s initial and
continuing investment is adequate, our receivable, if any, is not subject to future subordination, and the buyer has assumed the
usual risks and rewards of ownership of the assets.
We allocate the costs of acquisitions to assets acquired and liabilities assumed based on estimated fair values, replacement costs
and appraised values. The purchase price of the acquired property is allocated to land, building, improvements and other
identifiable intangibles such as in-place leases, above/below market leases, out-of-market assumed mortgages, tenant
relationships and gain on purchase, if any. The value allocated to above-below market leases is amortized over the related lease
term and included in rental income in our consolidated statements of operations. Should a tenant terminate its lease prior to its
stated expiration, all unamortized amounts relating to that lease would be written off.
Real estate also includes costs incurred in the development of new operating properties and the redevelopment of existing
operating properties. These properties are carried at cost and no depreciation is recorded on these assets until the
commencement of rental revenue or no later than one year from the completion of major construction. These costs include pre-
F-8
development costs directly identifiable with the specific project, development and construction costs, interest, real estate taxes
and insurance. Interest is capitalized on land under development and buildings under construction based on the weighted
average rate applicable to our borrowings outstanding during the period and the weighted average balance of qualified assets
under development/redevelopment during the period. Indirect project costs associated with development or construction of a
real estate project are capitalized until the earlier of one year following substantial completion of construction or when the
property becomes available for occupancy.
The capitalized costs associated with development and redevelopment projects are depreciated over the useful life of the
improvements. If we determine a development or redevelopment project is no longer probable, we expense all capitalized costs
which are not recoverable.
It is our policy to start vertical construction on new development projects only after the project has received entitlements,
significant anchor leasing commitments, construction financing and joint venture partner commitments, if appropriate. We are
in the entitlement and pre-leasing phases at our pre-development projects and do not expect to secure financing and to identify
joint venture partners until the entitlement and pre-leasing phases are complete.
At December 31, 2011, we had three projects under pre-development. Our land held for development consisted of:
(1) We acquired our partner’s 80% equity interest in Ramco RM Hartland SC LLC joint venture that owned a portion of
Hartland Towne Square for $1.0 million during the first quarter 2011.
(2) During the fourth quarter 2011 we commenced construction of Phase I of Parkway Shops. Phase I will be anchored by a
45,000 square foot Dick’s Sporting Goods and a 25,000 square foot Marshalls and will also include approximately 20,000
square feet of non-anchor space. The net cost to complete Phase I is approximately $11.3 million. Costs shown here relate
to Phase II.
Accounting for the Impairment of Long-Lived Assets
We review our investment in real estate, including any related intangible assets, for impairment on a property-by-property basis
whenever events or changes in circumstances indicate that the remaining estimated useful lives of those assets may warrant
revision or that the carrying value of the property may not be recoverable. For operating properties, these changes in
circumstances include, but are not limited to, changes in occupancy, rental rates, tenant sales, net operating income, geographic
location, and real estate values. The viability of all projects under construction or development, including those owned by
unconsolidated joint ventures, are regularly evaluated under applicable accounting requirements, including requirements
relating to abandonment of assets or changes in use. To the extent a project, or individual components of the project, are no
longer considered to have value, the related capitalized costs are charged against operations.
Determining whether an investment in real estate is impaired and the amount of any such impairment requires considerable
management judgment. In the event that management changes its intended holding period for an investment in real estate,
impairment may result even without any other event or change in circumstances related to that investment. For example, a
determination to sell land held for development rather than to develop the land and hold the developed asset may result in
impairment. Similarly, a decision to sell an income producing property rather than to hold it may result in impairment. Under
certain circumstances, management may use probability-weighted scenarios related to an investment in real estate, and the use
of such analysis may also result in impairment. Impairment provisions resulting from any event or change in circumstances,
including changes in management’s intentions or management’s analysis of varying scenarios, could be material to our
consolidated financial statements.
F-9
Costs IncurredTo DateDevelopment Project/Location(In thousands)Hartland Towne Square - Hartland Twp., MI (1)25,210$ Lakeland Park Center - Lakeland, FL21,140Parkway Shops - Phase II - Jacksonville, FL (2)7,199Total53,549$
We recognize an impairment of an investment in real estate when the estimated undiscounted cash flow is less than the net
carrying value of the property. If it is determined that an investment in real estate is impaired, then the carrying value is
reduced to the estimated fair value as determined by cash flow models and discount rates or comparable sales in accordance
with our fair value measurement policy.
In 2011, we recorded $11.5 million of impairment provisions triggered by changes in the estimated fair market value on land
held for sale and a change in plan at one of our development projects. In addition, our decision to sell several income
producing properties triggered $16.3 million of impairment provisions due to the estimated sales price being lower than the net
book value of each property. Also, one of our joint ventures recorded an impairment provision of $5.5 million, of which our
share was $1.6 million, as a result of the expectation that cash flow will be insufficient to service a non-recourse mortgage and
the likelihood that the partners will be unwilling to fund the shortfall. See Note 7 of the notes to the consolidated financial
statements for further information.
Investments in Real Estate Joint Ventures
We have seven equity investments in unconsolidated joint venture entities in which we own 50% or less of the total ownership
interest. Because we can influence but not control these joint ventures, these investments are accounted for under the equity
method. We provide leasing, development, asset and property management services to these joint ventures for which we are
paid fees. Refer to Note 8 of the notes to the consolidated financial statements for further information.
We review our equity investments in unconsolidated entities for impairment on a venture-by-venture basis whenever events or
changes in circumstances indicate that the carrying value of the equity investment may not be recoverable. In testing for
impairment of these equity investments, we primarily use cash flow models, discount rates, and capitalization rates to estimate
the fair value of properties held in joint ventures, and mark the debt of the joint ventures to market. Considerable judgment by
management is applied when determining whether an equity investment in an unconsolidated entity is impaired and, if so, the
amount of the impairment. Changes to assumptions regarding cash flows, discount rates, or capitalization rates could be
material to our consolidated financial statements.
As a result of our impairment testing, we recorded non-cash impairment provisions of $9.6 million and $2.7 million in 2011
and 2010, respectively. These amounts related to the other-than-temporary declines in the fair market value of various equity
investments in our unconsolidated joint ventures. Refer to Note 7 of the notes to the consolidated financial statements for more
information.
Other Assets, net
Other assets consist primarily of acquired lease intangibles, straight-line rent receivable, deferred leasing costs and deferred
financing costs. Deferred 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.
We review our unbilled straight-line rent receivable balance to determine the future collectability of revenue that will not be
billed to or collected from tenants due to early lease terminations, lease modifications, bankruptcies and other factors. Our
evaluation is based on our assessment of tenant credit risk changes indicating that expected future straight-line rent may not be
realized. Depending on circumstances, we may provide a reserve against the previously recognized straight-line rent receivable
asset for a portion, up to its full value, that we estimate may not be received.
Cash and Cash Equivalents
We consider all highly liquid investments with an original maturity of three months or less to be cash equivalents. Cash
balances in individual banks may exceed the federally insured limit by the Federal Deposit Insurance Corporation (the
“FDIC”). At December 31, 2011, we had $10.7 million in excess of the FDIC insured limit.
Recognition of Share-based Compensation Expense
We grant share-based compensation awards to employees and trustees in the form of restricted common shares and stock
options. Our share-based award costs are equal to each grant date fair value and are recognized over the service periods of the
awards. See Note 19 of the notes to the consolidated financial statements for further information.
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Income Tax Status
We made an election to qualify, and believe our operating activities qualify as a REIT for federal income tax purposes.
Accordingly, we generally will not be subject to federal income tax, provided that we distribute at least 90% of our taxable
income annually to our shareholders and meet other conditions. We are obligated to pay state taxes, generally consisting of
franchise or gross receipts taxes in certain states which are not material to our consolidated financial statements.
Certain of our operations, including property and asset management, as well as ownership of certain land parcels, are conducted
through taxable REIT subsidiaries, (“TRSs”) which are subject to federal and state income taxes. During the years ended
December 31, 2011, 2010, and 2009, we sold various properties and land parcels at a gain, resulting in both a federal and state
tax liability. See Note 20 of the notes to the consolidated financial statements for further information.
Variable Interest Entities
Certain entities that do not have sufficient equity at risk for the entity to finance its activities without additional subordinated
financial support from other parties or in which equity investors do not have the characteristics of a controlling financial
interest qualify as VIEs. VIEs are required to be consolidated by their primary beneficiary. Effective January 1, 2010, with the
adoption of a new accounting pronouncement, the primary beneficiary of a VIE has both (i) the power to direct the activities
that most significantly impact economic performance of the VIE, and (ii) the obligation to absorb losses or the right to receive
benefits that could potentially be significant to the VIE. Prior to January 1, 2010, the primary beneficiary of a VIE was
determined to be the party that absorbs a majority of the entity’s expected losses, receives a majority of its expected returns, or
both. Refer to Note 9 of the notes to the consolidated financial statements for more information.
We have evaluated our investments in joint ventures and determined that the joint ventures do not meet the requirements of a
VIE and, therefore, consolidation of these ventures is not required. Accordingly, these investments are accounted for using the
equity method.
Noncontrolling Interest in Subsidiaries
We have certain noncontrolling interest in subsidiaries that are generally exchangeable for our common shares on a 1:1 basis or
cash, at our election. Noncontrolling interest is classified as a separate component of equity outside of the permanent equity
section of our consolidated balance sheets. Consolidated net income and comprehensive income includes the noncontrolling
interest’s share and the calculation of earnings per share is based on income available to common shareholders.
Segment Information
Our primary business is the ownership, management, redevelopment, development and operation of retail shopping centers.
We do not distinguish our primary business or group our operations on a geographical basis for purposes of measuring
performance. We review operating and financial data for each property on an individual basis and define an operating segment
as an individual property. The individual properties have been aggregated into one reportable segment based upon their
similarities with regard to both the nature and economics of the centers, tenants and operational processes, as well as long-term
financial performance. No one individual property constitutes more than 10% of our revenue or property operating income and
none of our shopping centers are located outside the United States. Accordingly, we have a single reportable segment for
disclosure purposes.
F-11
2. Recent Accounting Pronouncements
In June 2009, the Financial Accounting Standards Board (“FASB”) issued a new accounting standard which provided certain
changes to the evaluation of a variable interest entity including requiring a qualitative rather than quantitative analysis to
determine the primary beneficiary of a VIE, continuous assessments of whether an enterprise is the primary beneficiary of a
VIE, and enhanced disclosures about an enterprise’s involvement with a VIE. Under the new standard, the primary beneficiary
has both the power to direct the activities that most significantly impact economic performance of the VIE and the obligation to
absorb losses or the right to receive benefits that could potentially be significant to the VIE.
We adopted the standard effective January 1, 2010. The adoption did not have a material impact to our financial statements.
The required balance sheet disclosures regarding assets and liabilities of a consolidated VIE have been parenthetically included
in our consolidated balance sheets. These parenthetical amounts relate to The Ramco Hartland SC, LLC, an undeveloped land
parcel in Hartland, Michigan that was a consolidated VIE in 2010. In January 2011, we purchased our partner’s interest in the
joint venture. Refer to Note 9 of the notes to the consolidated financial statements.
In July 2010, the FASB updated ASC 310 “Receivables” with ASU 2010-20 “Disclosures about the Credit Quality of
Financing Receivables and the Allowance for Credit Losses,” which requires enhanced disclosures about financing receivables,
including the allowance for credit losses, credit quality, and impaired loans. This standard is effective for fiscal years ending
after December 15, 2010. We adopted the standard in the fourth quarter of 2010 and it did not have a material impact on our
consolidated financial statements.
In May 2011, the FASB updated ASC 820 “Fair Value Measurements and Disclosures” with ASU 2011-04 “Amendments to
Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRS.” The amendments change
the wording used to describe many of the requirements in U.S. GAAP for measuring fair value and for disclosing information
about fair value measurements. We adopted the standard in the fourth quarter of 2011 and it did not have a material impact on
our consolidated financial statements.
In June 2011, the FASB updated ASC 220 “Comprehensive Income” with ASU 2011-05 “Presentation of Comprehensive
Income,” which requires an entity to present the total of comprehensive income, the components of net income, and the
components of other comprehensive income either in a single continuous statement of comprehensive income or in two
separate but consecutive statements. We adopted the standard in the fourth quarter of 2011 and it did not have a material
impact on our consolidated financial statements.
In September 2011, the FASB updated ASC 350 “Intangibles - Goodwill and Other” with ASU 2011-08 “Testing Goodwill for
Impairment.” Under this update, an entity has the option to first assess qualitative factors to determine whether the existence of
events or circumstances leads to a determination that it is more likely than not that the fair value of a reporting unit is less than
its carrying amount. If, after assessing the totality of events or circumstances, an entity determines it is not more likely than not
that the fair value of a reporting unit is less than its carrying amount, then performing the two-step impairment test is
unnecessary. We do not expect this update to have a material impact on our consolidated financial statements.
In December 2011, the FASB updated ASC 210 “Balance Sheet” with ASU 2011-11 “Disclosures about Offsetting Assets and
Liabilities.” Under this update companies are required to provide new disclosures about offsetting and related arrangements for
financial instruments and derivatives. The provisions of ASU 2011-11 are effective for annual reporting periods beginning on
or after January 1, 2013, and are required to be applied retrospectively. We do not expect this update to have a material impact
on our consolidated financial statements.
In December 2011, the FASB updated ASC 220 “Comprehensive Income” with ASU 2011-12 “Deferral of the Effective Date
for Amendments to the Presentation of Reclassifications of Items Out of Accumulated Other Comprehensive Income in ASU
2011-05.” This update requires that all non-owner changes in stockholders’ equity be presented in either a single continuous
statement of comprehensive income or in two separate but consecutive statements. ASU 2011-12 defers only those changes in
ASU 2011-05 that relate to the presentation of reclassification adjustments out of accumulated other comprehensive income.
The provisions of ASU 2011-12 are effective for public companies in fiscal years beginning after December 15, 2011. We do
not expect this update to have a material impact on our consolidated financial statements.
F-12
3. Accounts Receivable, Net and Note Receivable
We provide for bad debt expense based upon the allowance method of accounting. We monitor the collectability of our
accounts receivable for billed and unbilled charges, including straight-line rent from specific tenants, and analyze historical bad
debt write-offs, 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 bankruptcy, we make 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 consolidated balance sheets includes amounts billed to tenants and accrued expense
recoveries due from tenants and is shown net of an allowance for doubtful accounts of $3.5 million and $3.9 million at
December 31, 2011 and 2010, respectively.
We have a note receivable of $3.0 million at December 31, 2011 and 2010, respectively. The note receivable was recorded in
conjunction with the acquisition of The Shoppes at Fox River in 2010. We provided interest-only financing to the seller for an
undeveloped land parcel not owned by us adjacent to the shopping center property we purchased. The note bears interest at an
annual fixed rate of 7.5% and matures in January 2013. This is our only financing receivable attributable to commercial real
estate at December 31, 2011. We evaluate the financing receivable using payment activity (performing or non-performing) as a
credit quality indicator. No amount of the financing receivable is past due and the evaluation of the quality indicator has been
updated through December 31, 2011.
4. Real Estate
Included in our net real estate are income producing shopping center properties that are recorded at cost less accumulated
depreciation and amortization.
Land held for development or sale includes real estate projects where vertical construction has yet to commence, but which
have been identified by us and are available for future development when market conditions dictate the demand for a new
shopping center. Land held for development or sale was $76.7 million and $93.4 million at December 31, 2011 and 2010,
respectively. The decrease in land held for development or sale from December 31, 2010 to December 31, 2011 was primarily
attributable to the impairment provision recorded on certain land parcels. Refer to Note 7 of the notes to the consolidated
financial statements for information on impairment provisions.
Construction in progress represents existing development and redevelopment projects. When projects are substantially complete
and ready for their intended use, balances are transferred to land, buildings or improvements as appropriate. Construction in
progress was $10.8 million and $2.7 million at December 31, 2011 and December 31, 2010, respectively. The increase in
construction in progress from December 31, 2010 to December 31, 2011 was due primarily to the commencement of Phase I
construction at Parkway Shops located in Jacksonville, Florida.
F-13
5. Property Acquisitions and Dispositions
Acquisitions
The following table provides a summary of income producing properties acquired during 2011 and 2010:
(1)
In the third quarter of 2010, we acquired the $32.7 million mortgage note securing Merchants’ Square, a shopping center
entity that was part of the Ramco 450 Venture LLC joint venture, for $16.8 million. During the fourth quarter of 2010, our
joint venture partner transferred its interest in the property to us for nominal consideration. See Note 8 of the notes to the
consolidated financial statements for additional information.
The total aggregate fair value of the acquisitions was allocated and is reflected in the following table in accordance with
accounting guidance for business combinations. At the time of acquisition, these assets and liabilities were considered Level 2
fair value measurements:
F-14
Property NameLocationGLA / AcreageDate AcquiredPurchase PriceDebtTown & Country Crossing Town and Country (St. Louis), MO141,996 11/30/1137,850$ -$ Heritage PlaceCreve Coeur (St. Louis), MO269,254 05/19/1139,410 - 77,260$ -$ The Shoppes at Fox RiverWaukesha (Milwaukee), WI135,610 12/29/1023,840$ -$ Merchants' Square (1)Carmel (Indianapolis), IN278,875 10/01/1016,739- Liberty SquareWauconda (Chicago), IL107,369 08/10/1015,200- 55,779$ -$ Gross20112010Land22,294$ 12,331$ Buildings and improvements48,97149,051Above market leases996 1,910 Lease origination costs7,733 7,576 Other assets2,099 467 Below market leases(4,833)(3,392)Other liabilities- (492) Deferred liability- (1,836) Total fair value77,260 65,615 Bargain purchase gain- (9,836) Total purchase price allocated77,260$ 55,779$ December 31,(In thousands)
Dispositions
The following table provides a summary of our disposition activity during 2011, 2010, and 2009:
6. Discontinued Operations
We will classify properties as held for sale when executed purchase and sales agreement contingencies have been satisfied
thereby signifying that the sale is guaranteed and legally binding. As of December 31, 2011, we did not have any properties
held for sale.
The following table provides a summary of selected operating results for those properties sold during the years ended
December 31, 2011, 2010 and 2009:
(1)
In October 2011 we conveyed title to and our interest in our wholly-owned center in Madison Heights, Michigan after
the default on a $9.1 million non-recourse mortgage note that was due May 1, 2011. The transaction resulted in a non-
cash gain on debt extinguishment of approximately $1.2 million.
F-15
Property NameLocationGLA / AcreageDate SoldSales PriceDebtRepaidGain (loss) on SaleTaylors SquareGreenville, SC33,791 12/20/114,300$ -$ 1,020$ Sunshine PlazaTamarac, FL237,026 07/11/1115,000 - (32) Lantana Shopping CenterLantana, FL123,014 04/29/1116,942 - 6,209 2011 income producing dispositions36,242$ -$ 7,197$ Southbay Shopping Center - outparcelOsprey, FL1.31106/29/112,625$ -$ 2,240$ River City Shopping Center - outparcelJacksonville, FL0.9503/02/11678 - 74 River City Shopping Center - outparcelJacksonville, FL1.0201/21/11663 - 127 2011 land / outparcel dispositions3,966$ -$ 2,441$ Total 2011 dispositions40,208$ -$ 9,638$ Ridgeview Crossing Shopping CenterElkin, NC211,524 05/12/10900$ -$ (2,050)$ 2010 income producing dispositions900$ -$ (2,050)$ Promenade at Pleasant Hill - outparcelDuluth, GA2.5509/30/101,900$ -$ 1,611$ Ramco Hartland - outparcelHartland, MI0.9309/23/10435 - 25 Ramco Jacksonville - outparcelJacksonville, FL1.2906/20/101,069 - 460 2010 land / outparcel dispositions3,404$ -$ 2,096$ Total 2010 dispositions4,304$ -$ 46$ Northwest Crossing - Wal-MartKnoxville, TN207,945 09/02/0911,650$ -$ 5,286$ Taylors Square - Wal-MartGreenville, SC207,445 09/01/0910,850 - (276) Taylor Plaza - Home Depot outparcelTaylor, MI122,374 08/26/095,100 - 2,886 2009 income producing / outparcel dispositions27,600$ -$ 7,896$ Gross(In thousands)201120102009Total revenue3,682$ 6,373$ 8,623$ Expenses: Recoverable operating expenses1,2402,3112,915 Other non-recoverable property operating expenses302328450 Depreciation and amortization 7711,4361,907 Interest expense9761,9652,076Operating income (loss) of properties sold3933331,275Gain (loss) on extinguishment of debt (1)1,218(242)- Gain (loss) on sale of properties7,197(2,050)2,886Income (loss) from discontinued operations8,808$ (1,959)$ 4,161$ December 31,(In thousands)
7. Impairment Provisions
We established provisions for impairment during the years ended December 31, for the following consolidated assets and
unconsolidated joint venture investments:
(1) During the fourth quarter of 2011, changes to estimated sales price assumptions and tenant requirements at several land
held for sale locations triggered an impairment provision of $5.0 million. In addition, we decided to forego our plans to
develop a mixed-use project located in Stafford County, Virginia and determined that our best alternative is to sell the
property in parcels. Our change in plan triggered an impairment provision of $6.5 million. In 2010, we recorded an
impairment provision of $28.8 million related to developable land that we decided to market for sale. No such impairment
was recorded for 2009. Refer to Note 1 under Accounting for the Impairment of Long-Lived Assets for a discussion of
inputs used in determining the fair value of long-lived assets.
(2)
In the fourth quarter of 2011, impairment provisions were triggered at several of our wholly-owned income producing
properties due to our decision to market and sell these properties. The impairment provision was recorded based on our
assessment of the likely proceeds from such sales. Refer to Note 1 under Accounting for the Impairment of Long-Lived
Assets for a discussion of inputs used in determining the fair value of long-lived assets.
(3) During the fourth quarter of 2011, we determined that potential decreases in the cash flow prospects of certain joint venture
properties and potentially lower market values for certain joint venture properties warranted an analysis of whether the fair
values of our equity investments in unconsolidated joint ventures, analyzed on a venture-by-venture basis, were less than
their carrying value and, if so, whether any such decreases in value were other-than-temporary. As a result of our fair
value assessment, we recorded a $9.6 million other-than-temporary decline in the fair market values of our investment in
several unconsolidated joint ventures. In the first quarter of 2010, we recorded similar provisions for impairment of $2.7
million. Refer to Note 8 of the notes to the consolidated financial statements and Off Balance Sheet Arrangements in Note
1 for more information.
Our impairment provisions for our land held for sale and our income producing properties available for sale were based upon
the difference between the present value of estimated sales prices of the available-for-sale parcels or properties and our
allocated or net book basis of those parcels and properties. Future sales prices were estimated based upon comparable market
transactions for similar land parcels or properties, market rates of return, and other market data relevant to valuing each land
parcel or property. Our valuation in these investments are classified as Level 3 of the fair value hierarchy under GAAP. Refer
to Note 13 of the notes to the consolidated financial statements for a discussion of fair value measurements.
F-16
201120102009Land held for development or sale (1)11,468$ 28,787$ -$ Income producing properties available for sale (2)16,332 - - Investments in unconsolidated joint ventures (3)9,611 2,653 - Total37,411$ 31,440$ -$ Year EndedDecember 31,(In thousands)
8. Equity Investments in Unconsolidated Entities
We have seven joint venture agreements whereby we own between 7% and 50% of the equity in the joint venture. We and the
joint venture partners have joint approval rights for major decisions, including those regarding property operations. We cannot
make significant decisions without our partner’s approval. Accordingly, we account for our interest in the joint ventures using
the equity method of accounting.
Combined financial information of our unconsolidated entities is summarized as follows:
(1) During the fourth quarter of 2011 an 87,000 square foot anchor tenant notified our venture of the tenant’s plan to vacate
upon lease expiration in early 2012. The joint venture has a $13.4 million mortgage note secured by the shopping center.
The mortgage note matures on June 1, 2016 and bears an interest rate of 5.125%. Net operating income (“NOI”) will be
insufficient to make the monthly debt service on the loan when the anchor tenant vacates. The joint venture partners have
deemed it unlikely that they will commit to additional funds to re-tenant the vacant space or cover monthly debt service
shortfalls. Accordingly, the joint venture recorded an impairment provision of $5.6 million. In 2010, an impairment
provision was recorded related to our partner’s assessment of fair value for Merchant’s Square which was transferred to us
in the fourth quarter of 2010. Our proportionate share of the 2011 and 2010 impairment provision which is included in
earnings (loss) from unconsolidated joint ventures on our consolidated statements of operations was $1.6 million and $1.8
million, respectively.
(2) The Ramco/Shenandoah LLC joint venture sold its only shopping center in August 2011 resulting in a gain of $6.8 million
of which our proportionate share was $2.7 million which is included in earnings (loss) from unconsolidated joint ventures
on our consolidated statements of operations.
F-17
Balance Sheets201120102009ASSETSInvestment in real estate, net866,184$ 923,910$ 1,010,216$ Other assets61,37740,97542,858 Total Assets927,561$ 964,885$ 1,053,074$ LIABILITIES AND OWNERS' EQUITYMortgage notes payable396,792$ 436,650$ 537,732$ Other liabilities16,54716,43625,657Owners' equity514,222511,799489,685 Total Liabilities and Owners' Equity927,561$ 964,885$ 1,053,074$ RPT's equity investments in unconsolidated entities97,020$ 105,189$ 97,506$ December 31,(In thousands)Statements of Operations201120102009Total Revenue86,150$ 93,945$ 95,665$ Total Expenses94,53987,06690,090(Loss) income before other income and expenses(8,389)6,8795,575Provision for impairment of long-lived assets (1)5,6079,102- Gain on sale of shopping center (2)6,796- - Net earnings (loss)(7,200)$ (2,223)$ 5,575$ RPT's share of earnings (loss) from unconsolidated entities1,669$ (221)$ 1,328$ Year Ended December 31,(In thousands)
As of December 31, we had investments in the following unconsolidated entities:
(1) The joint venture owned one shopping center, Shenandoah Square, which was sold to a third party in the third quarter of
2011. The total assets of the joint venture were $0.6 million at December 31, 2011 and were mostly comprised of cash.
There were no acquisitions of shopping centers in 2011 and 2010 by any of our unconsolidated joint ventures.
Debt
Our unconsolidated entities had the following debt outstanding at December 31, 2011:
(1) Default interest rate effective July 1, 2010. Original maturity was April 2030. The lender accelerated the maturity of the
mortgage note in February 2011. See below for additional information.
Interest rate is variable based on LIBOR, plus 1.45%.
(2)
(3) Maturities range from October 2012 to June 2020.
(4) Maturities range from January 2013 to January 2017.
(5)
Interest rate resets annually each June 1.
At December 31, 2011, the Ramco/West Acres LLC joint venture, in which we own a 40% interest, was in default on its $8.4
million non-recourse mortgage loan of which our proportionate share was $3.4 million. On February 10, 2011, the lender
accelerated the maturity of the loan. Accordingly, the joint venture has been in discussion with the lender to transfer the
property ownership to the lender in consideration for repayment of the loan. The joint venture recorded an impairment loss of
$0.1 million which was the extent of the joint venture’s equity balance as of March 31, 2011. On February 10, 2012 the joint
venture conveyed titled to and their interest in the West Acres Common shopping center to the lender and was released of its
obligation.
F-18
Total AssetsTotal AssetsOwnership as of as ofas ofUnconsolidated EntitiesDecember 31, 2011December 31, 2011December 31, 2010Ramco/Lion Venture LP30%517,344$ 524,160$ Ramco 450 Venture LLC20%300,380313,596Ramco HHF KL LLC7%49,73151,224Ramco HHF NP LLC7%26,14026,540Ramco 191 LLC20%23,27224,243Ramco/West Acres LLC40%9,4879,504Ramco/Shenandoah LLC (1)40%62814,990S-12 Associates50%579628927,561$ 964,885$ (In thousands)BalanceInterestEntity NameOutstandingRateMaturity Date(In thousands)Ramco/West Acres LLC (1)8,401$ 13.1%Ramco 191 LLC (2)8,2251.7%June 2012 Ramco/Lion Venture LP (3)208,0645.0% - 8.2%Various Ramco 450 Venture LLC (4)171,0655.3% - 6.0%Various S-12 Associates (5)5975.6%May 2016 396,352Unamortized premium440Total mortgage debt396,792$
During 2011, the following joint ventures had mortgage loan repayment activity:
Ramco/Lion Venture LP joint venture, in which we own a 30% interest, repaid one property mortgage in the amount
of $12.2 million. Our proportionate share of the debt repayment was approximately $3.7 million; and
Ramco 450 Venture LLC joint venture, in which we own a 20% interest, repaid one property mortgage in the amount
of $11.0 million. Our proportionate share of the debt repayment was approximately $2.2 million.
Joint Venture Management and Other Fee Income
We are engaged by certain of our joint ventures to provide asset management, property management, leasing and investing
services for such venture’s respective properties. We receive fees for our services, including property management fees
calculated as a percentage of gross revenues received and recognize these fees as the services are rendered.
The following table provides information for our fees earned which are reported in our consolidated statements of operations:
9. Consolidated Variable Interest Entity
At December 31, 2010, the Ramco Hartland SC, LLC joint venture was reported as a consolidated VIE. In January 2011, we
purchased our partner’s interest in the Ramco Hartland SC, LLC joint venture for $1.0 million, which approximated the
partner’s equity interest in the joint venture at October 1, 2010. As a result, we now own and control 100% of this project.
The total project, including the portion we purchased, is comprised of land held for development or sale and construction in
progress of approximately $30.8 million at December 31, 2011.
10. Other Assets, Net
Other assets consisted of the following:
The remaining weighted-average amortization period as of December 31, 2011, is 4.5 years for intangible assets attributable to
lease origination costs and for above market leases. These assets are being amortized over the lives of the applicable leases to
amortization expense and as a reduction to minimum rent revenue, respectively, over the initial terms of the respective leases.
Amortization of the intangible lease asset resulted in an expense and reduction of revenue of approximately $0.6 million, $0.3
million, and $0.1 million for the years ended December 31, 2011, 2010, and 2009, respectively.
F-19
201120102009Management fees2,633$ 2,792$ 2,844$ Leasing fees918 908 794 Acquisition fees66 251 603 Construction fees364 95 80 Total3,981$ 4,046$ 4,321$ Year Ended December 31,(In thousands)20112010Deferred leasing costs, net14,895$ 14,575$ Deferred financing costs, net5,565 6,703 Lease intangible assets, net13,702 7,969 Straight-line rent receivable, net16,030 17,864 Prepaid expenses and other deferred expenses, net6,702 8,242 Other, net2,342 2,672 Other assets, net59,236$ 58,025$ (In thousands)December 31,
Included in accounts payable and accrued expenses at December 31, 2011 and 2010 were intangibles related to below market
leases of $7.7 million and $3.5 million, respectively. The lease-related intangible liabilities are being accreted over the
applicable terms of the acquired leases, which resulted in an increase of revenue of $0.6 million, $0.4 million, and $0.2 million
for the years ended December 31, 2011, 2010 and 2009, respectively.
The following table represents estimated aggregate amortization expense related to other assets as of December 31, 2011:
(1) Excludes straight-line rent receivable of $16.0 million.
11. Debt
The following table summarizes our mortgages and notes payable and capital lease obligation as of December 31, 2011 and
2010:
Mortgages and notes payable
Our fixed rate mortgages have interest rates ranging from 5.1% to 7.6%, and are due at various maturity dates from August
2012 through July 2032. Included in fixed rate mortgages at December 31, 2011 and December 31, 2010 were unamortized
premium balances related to the fair market value of debt of $0.1 million. The fixed rate mortgage notes are secured by
mortgages on properties that have an approximate net book value of $309.7 million as of December 31, 2011.
On April 29, 2011, we closed on a new $250.0 million unsecured bank facility (the “Credit Facility”) comprised of a $175.0
million revolving line of credit and a $75.0 million term loan. The Credit Facility replaced our prior secured line and secured
term loan. The new revolving line of credit and term loan are due in April 2014 and April 2015, respectively. Subject to
customary conditions, both the revolving line and the term loan can be extended for one year at our option. Borrowings under
the facility are priced at LIBOR plus 200 to 275 basis points depending on our leverage ratio. It is anticipated that funds
borrowed under the Credit Facility will be used for general corporate purposes, including working capital, capital expenditures,
F-20
(In thousands) 20129,013$ 20137,681 20145,106 20153,268 20162,099 Thereafter9,336 Total (1)36,503$ Year Ending December 31,Mortgages and Notes Payable20112010Fixed rate mortgages325,840$ 341,259$ Variable rate mortgages- 22,478 Unsecured / secured revolving credit facility29,500 119,750 Unsecured / secured term loan facility135,000 30,000 Secured bridge loan- 30,000 Junior subordinated notes28,125 28,125 518,465571,612Unamortized premium47 82 $ 518,512 $ 571,694 Capital lease obligation $ 6,341 $ 6,641 December 31,(In thousands)
repayment of indebtedness or other corporate activities. As of December 31, 2011, $29.5 million is outstanding under the
revolving line of credit.
In connection with closing the new $250.0 million Credit Facility, we recorded a one-time write-off of $2.0 million of
unamortized deferred financing costs related to the prior secured revolving line of credit and term loan. This amount is included
in loss on early extinguishment of debt on our consolidated statements of operations. The remaining $1.5 million in
unamortized deferred financing costs relating to the prior credit facility will be amortized over the term of the new facility.
On September 30, 2011, we closed on a new seven-year $60.0 million unsecured term loan. The new loan is due in 2018 and
bears interest at a rate of LIBOR plus 2.25%. The loan also includes an accordion feature allowing up to $150.0 million in total
borrowings, subject to lenders’ approval. Proceeds from the loan were used to pay off approximately $22.2 million of mortgage
loans due in 2011 and 2012 and the outstanding balance of (as of September 30, 2011) $33.0 million under our $175.0 million
unsecured revolving line of credit as well as for general corporate purposes.
Also, to reduce the impact of changes in interest rates on our floating rate debt, we entered into interest rate swap agreements
with an aggregate notional amount of $135.0 million whereby we pay a fixed rate and receive one-month LIBOR. The interest
rate swaps have expirations ranging from April 2016 to October 2018.
Additionally, the following financing activity occurred during 2011:
Closed a new $24.7 million mortgage secured by the Jackson Crossing shopping center in Jackson, Michigan. The
mortgage bears a fixed rate of 5.8% and matures in April 2018;
Repaid in full a $30.0 million secured term loan facility and a $30.0 million secured bridge loan; and
Repaid three wholly-owned property mortgages in the amount of $27.9 million and repaid three land loans in the
amount of $10.7 million.
A $9.1 million non-recourse mortgage note that was secured by our wholly-owned Madison Center property located in
Madison Heights, Michigan, was due May 1, 2011. The note entered default status in May when we did not repay the note at
maturity. On October 19, 2011 we conveyed title to and our interest in the Madison Center property to the lender and were
released of our obligation.
At December 31, 2011, outstanding letters of credit issued under the Credit Facility, not reflected in the accompanying
consolidated balance sheets, were $1.4 million. These letters of credit reduce the availability under the Credit Facility.
The Credit Facility contains financial covenants relating to total leverage, fixed charge coverage ratio, tangible net worth,
unencumbered properties, and various other calculations. As of December 31, 2011, we were in compliance with these
covenants.
The mortgage loans encumbering our properties, including properties held by our unconsolidated joint ventures, 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 events, such as fraud or filing of a bankruptcy petition by the borrower, we or our joint ventures
would be liable for the entire outstanding balance of the loan, all interest accrued thereon and certain other costs, including
penalties and expenses.
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.
F-21
The following table presents scheduled principal payments on mortgages and notes payable as of December 31, 2011:
(1) Scheduled maturities in 2014 include $29.5 million which represents the balance of the unsecured revolving credit
facility drawn as of 12/31/11 due at maturity in April 2014.
(2) Scheduled maturities in 2015 include $75.0 million of unsecured term loan that includes a one-year extension option
through April 2016.
We have one mortgage due in 2012. It is our intent to refinance or repay the mortgage.
Capital lease
We have a capital ground lease at our Gaines Marketplace shopping center. Total amounts expensed as interest relating to this
lease were $0.4 million for each of the years ended December 31, 2011, 2010 and 2009.
Approximate future rental payments under our capital ground lease are as follows:
F-22
(In thousands)201215,611$ 201325,8212014 (1)63,1472015 (2)151,94320161,894Thereafter260,049Subtotal debt518,465Unamortized premium47Total debt (including unamortized premium)518,512$ Year Ending December 31,CapitalYear Ending December 31,Lease(1) 2012677$ 2013677 20145,955 2015- 2016- Thereafter- Total lease payments7,309 Less: amounts representing interest(968) Total6,341$ (1)AmountsrepresentagroundleaseatoneofourshoppingcentersthatprovidestheoptionforustopurchasethelandinOctober2014forapproximately $5.4 million.
12. Other Liabilities
Other liabilities were $2.6 million and $3.5 million at December 31, 2011 and 2010, respectively. In December 2010, we
acquired The Shoppes at Fox River in Waukesha, Wisconsin. As part of the transaction, we recorded a $1.8 million deferred
liability related to the fair value of an earn-out provision if certain spaces that were vacant at acquisition were to become leased
on or before June 30, 2012. In 2011, several of the vacant spaces included in the earn-out provision were leased, reducing the
$1.8 million deferred liability by $1.1 million, to $0.7 million remaining at December 31, 2011.
Also in the fourth quarter of 2010, we recorded a deferred liability of $1.5 million related to a tax increment financing
agreement with the City of West Allis, Wisconsin (“City”) for the redevelopment of the West Allis Towne Centre. The City
reimbursed us for certain costs incurred to improve the shopping center which will be repaid to the City over ten years in the
form of increased property tax assessments, not to exceed $0.2 million per year until 2020, beginning March 2012.
13. Fair Value
We utilize 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, we, from
time to time, may be required to record other assets at fair value on a nonrecurring basis. As a basis for considering market
participant assumptions in fair value measurements, GAAP establishes three fair value levels, based on the markets in which
the assets and liabilities are traded and the reliability of the assumptions used to determine fair value. The assessed inputs used
in determining any fair value measurement could result in incorrect valuations that could be material to our consolidated
financial statements. These levels are:
The following is a description of valuation methodologies used for our assets and liabilities recorded at fair value.
Derivative Assets and Liabilities
All of our derivative instruments are interest rate swaps for which quoted market prices are not readily available. For those
derivatives, we measure fair value on a recurring basis using valuation models that use primarily market observable inputs, such
as yield curves. We classify derivative instruments as Level 2. Refer to Note 14 for additional information on our derivative
financial instruments.
The table below presents the recorded amount of liabilities measured at fair value on a recurring basis as of December 31, 2011.
We did not have any material assets or liabilities that were required to be measured at fair value on a recurring basis at
December 31, 2010.
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.
F-23
Level 1Valuation is based upon quoted prices for identical instruments traded in active markets. Level 2Valuationisbaseduponquotedpricesforsimilarinstrumentsinactivemarkets,quotedpricesforidenticalorsimilarinstrumentsinmarketsthatarenotactive,andmodel-basedvaluationtechniquesforwhichallsignificantassumptionsare observable in the market. Level 3Valuationisgeneratedfrommodel-basedtechniquesthatuseatleastonesignificantassumptionnotobservableinthemarket.Theseunobservableassumptionsreflectestimatesofassumptionsthatmarketparticipantswoulduseinpricingthe asset or liability.TotalLiabilitiesFair ValueLevel 1Level 2Level 3Derivative liabilities (1)(2,828)$ -$ (2,828)$ -$ (1) Interest rate swaps.
We estimated the fair value of our debt based on our incremental borrowing rates for similar types of borrowing arrangements
with the same remaining maturity and on the discounted estimated future cash payments to be made for other debt. The
discount rates used approximate current lending rates for loans or groups of loans with similar maturities and credit quality,
assumes the debt is outstanding through maturity and considers the debt’s collateral (if applicable). Since such amounts are
estimates that are based on limited available market information for similar transactions, there can be no assurance that the
disclosed value of any financial instrument could be realized by immediate settlement of the instrument. Fixed rate debt
(including variable rate debt swapped to fixed through derivatives) with carrying values of $489.0 million and $369.4 million
as of December 31, 2011 and 2010, respectively, has fair values of approximately $473.7 million and $389.3 million,
respectively. Variable rate debt’s fair value is estimated to be the carrying values of $29.5 million and $202.2 million as of
December 31, 2011 and 2010, respectively.
Net Real Estate
Our net real estate, including any identifiable intangible assets, is subject to impairment testing on a nonrecurring basis. To
estimate fair value, we use discounted cash flow models that include assumptions of the discount rates that market participants
would use in pricing the asset. To the extent impairment has occurred, we charge to expense the excess of the carrying value of
the property over its estimated fair value. We classify impaired real estate assets as nonrecurring Level 3.
Equity Investments in Unconsolidated Entities
Our equity investments in unconsolidated joint venture entities are subject to impairment testing on a nonrecurring basis if a
decline in the fair value of the investment below the carrying amount is determined to be a decline that is other-than-temporary.
To estimate the fair value of properties held by unconsolidated entities, we use cash flow models, discount rates, and
capitalization rates based upon assumptions of the rates that market participants would use in pricing the asset. To the extent
other-than-temporary impairment has occurred, we charge to expense the excess of the carrying value of the equity investment
over its estimated fair value. We classify other-than-temporarily impaired equity investments in unconsolidated entities as
nonrecurring Level 3.
The table below presents the recorded amount of assets at the time they were marked to fair value during the year ended
December 31, 2011 on a nonrecurring basis. We did not have any material liabilities that were required to be measured at fair
value on a nonrecurring basis during the year ended December 31, 2011.
14. Derivative Financial Instruments
We utilize interest rate swap agreements for risk management purposes to reduce the impact of changes in interest rates on our
variable rate debt. On the date we enter 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 our consolidated
statements of operations. We assess effectiveness of our cash flow hedges both at inception and on an ongoing basis. Our cash
flow hedges become ineffective if critical terms of the hedging instrument and the debt do not perfectly match such as notional
amounts, settlement dates, reset dates, calculation period and LIBOR rate.
At December 31, 2011, we had four interest rate swap agreements in effect for an aggregate notional amount of $135.0 million
that were designated as cash flow hedges. The agreements provide for swapping one-month LIBOR interest rates ranging from
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TotalTotalAssetsFair ValueLevel 1Level 2Level 3Losses Income producing properties available for sale39,442$ -$ -$ 39,442$ (16,332)$ Land available for sale28,188- - 28,188(11,468) Investments in unconsolidated entities81,482- - 81,482 (9,611)Total149,112$ -$ -$ 149,112$ (37,411)$ (In thousands)
1.2% to 2.0% on our $75.0 million and $60.0 million unsecured term loans, and have expirations ranging from April 2016 to
October 2018. As of December 31, 2010, we had no interest rate swap agreements in effect.
The following table summarizes the notional values and fair values of our derivative financial instruments as of December 31,
2011:
The following table presents the fair values of derivative financial instruments in our consolidated balance sheets as of
December 31, 2011 and December 31, 2010, respectively:
The effect of derivative financial instruments on our consolidated statements of operations for the year ended December 31,
2011 and 2010 is summarized as follows:
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HedgeNotionalFixedFairExpirationUnderlying DebtTypeValueRateValueDate(in thousands)(in thousands)Unsecured term loan facilityCash Flow75,000$ 1.2175%(922)$ 04/2016Unsecured term loan facilityCash Flow30,0002.0480%(1,173) 10/2018Unsecured term loan facilityCash Flow25,0001.8500%(607) 10/2018Unsecured term loan facilityCash Flow5,0001.8400%(126) 10/2018135,000$ (2,828)$ Balance SheetFairBalance SheetFairDerivatives designated as hedging instrumentsLocationValueLocationValue Interest rate contractsAccounts payable and Accounts payable and accrued expenses(2,828)$ accrued expenses-$ Total(2,828)$ Total-$ Liability DerivativesDecember 31, 2011December 31, 2010(In thousands)Location ofGain (Loss)Reclassified fromAccumulated OCIinto IncomeDerivatives in Cash Flow Hedging Relationship20112010(Effective Portion)20112010Interest rate contracts(2,828)$ 2,517$ Interest Expense(563)$ (2,706)$ Total(2,828)$ 2,517$ Total(563)$ (2,706)$ Year Ended December 31,Amount of (Loss) GainAmount of (Loss) Gain Reclassified fromRecognized in OCI on DerivativeAccumulated OCI into(In thousands)(In thousands)(Effective Portion)Income (Effective Portion)Year Ended December 31,
15. Leases
Revenues
Approximate future minimum revenues from rentals under non-cancelable operating leases in effect at December 31, 2011,
assuming no new or renegotiated leases or option extensions on lease agreements were as follows:
Expenses
We have an operating lease for our corporate office space in Michigan for a term expiring in 2019. We also have operating
leases for office space in Florida. Approximate future rental payments under our non-cancelable leases, assuming no option
extensions are as follows:
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(In thousands) 201285,906$ 201378,305 201467,992 201558,006 201646,720 Thereafter173,134 Total510,063$ Year Ending December 31,(In thousands) 2012729$ 2013742 2014690 2015489 2016469 Thereafter1,898 Total 5,017$ Year Ending December 31,
16. Earnings per Common Share
The following table sets forth the computation of basic earnings per share (“EPS”):
The following table sets forth the computation of diluted EPS:
(1)
Stock options, restricted stock awards and the assumed conversion of convertible units and preferred shares are anti-dilutive for all periods presented and
accordingly, have been excluded from the weighted average common shares used to compute diluted EPS.
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201120102009(Loss) income from continuing operations (37,308)$ (21,765)$ 11,775$ Net loss (income) from continuing operations attributable to noncontrolling interest1,928 3,495 (2,045) Preferred share dividends(5,244) - - Allocation of continuing loss (income) to restricted share awards 333 235 (52) (Loss) income from continuing operations attributable to RPT $ (40,291) $ (18,035)9,678$ Income (loss) from discontinued operations $ 8,808 $ (1,959)4,161$ Net (income) loss from discontinued operations attributable to noncontrolling interest (186) 81 (171)Allocation of discontinued (income) loss to restricted share awards (73) 19 (48)Income (loss) from discontinued operations attributable to RPT $ 8,549 $ (1,859)3,942$ Net (loss) income available to common shareholders(31,742)$ (19,894)$ 13,620$ Weighted Average Shares Outstanding, Basic38,466 35,046 22,193 (Loss) earnings Per Common Share, BasicContinuing operations $ (1.05) $ (0.51) $ 0.43 Discontinued operations 0.21 (0.06) 0.19 Net (loss) income available to common shareholders $ (0.84) $ (0.57) $ 0.62 Year Ended December 31,(In thousands, except per share data)201120102009(Loss) income from continuing operations (37,308)$ (21,765)$ 11,775$ Net loss (income) from continuing operations attributable to noncontrolling interest1,928 3,495 (2,045) Preferred share dividends(5,244) - - Allocation of continuing loss (income) to restricted share awards333 235 (52) Allocation of overdistributed continuing loss to restricted share awards (44) (9)- (Loss) income from continuing operations attributable to RPT $ (40,335) $ (18,044) $ 9,678 Income (loss) from discontinued operations $ 8,808 $ (1,959)4,161$ Net (income) loss attributable to noncontrolling interest (186) 81 (171)Allocation of discontinued income to restricted share awards (6) - - Income (loss) from discontinued operations attributable to RPT $ 8,616 $ (1,878)3,990$ Net (loss) income available to common shareholders(31,719)$ (19,922)$ 13,668$ Weighted Average Shares Outstanding, Basic38,466 35,046 22,193 Dilutive effect of securities (1)- - - Weighted average shares outstanding, diluted38,466 35,046 22,193 (Loss) earnings Per Common Share, DilutedContinuing operations $ (1.05) $ (0.51) $ 0.43 Discontinued operations 0.21 (0.06) 0.19 Net (loss) income available to common shareholders $ (0.84) $ (0.57) $ 0.62 Year Ended December 31,(In thousands, except per share data)
17. Shareholders’ Equity
On April 6, 2011, we completed an $80.0 million (1,600,000 shares) offering of 7.25% Series D Cumulative Convertible
Perpetual Preferred Shares of beneficial interest (the “Series D Preferred Shares”). The annual dividend on each Series D
Preferred Share is $3.625 per share and is payable quarterly as declared by our board of trustees. Each preferred share has a
liquidation preference of $50.00 per share and is convertible, at the holder’s option at any time. The Series D Preferred Shares
are not redeemable by us for seven years, and then only upon the occurrence of certain events. On April 29, 2011, we closed on
an additional $20.0 million, or 400,000 preferred shares, through a re-opening of the same security. Net proceeds from the two
offerings of $96.6 million were used to repay our $30.0 million secured bridge loan and reduce borrowings on our secured
revolving credit facility.
Additionally, during 2011, we issued 683,000 common shares through a controlled equity offering generating $8.8 million in
net proceeds.
In May 2010, we completed an equity offering of 6.9 million common shares, which included 0.9 million shares purchased
pursuant to an over-allotment option granted to the underwriters. The offering price was $11.50 per common share (par value
$0.01 per share) generating net proceeds of approximately $75.7 million. The net proceeds from the offering were used to
repay debt and for other corporate purposes.
We have 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.
18. Restructuring Costs and Other Items
In 2009, our Board of Trustees completed their review of financial and strategic alternatives. Also during 2009, we resolved a
proxy contest. Costs incurred for the strategic review and proxy contest were $3.2 million which included costs for severance
and other salary related costs for employees who were terminated for the year ended December 31, 2009. In addition, we
abandoned the Northpointe Town Center project in Jackson, Michigan in the fourth quarter of 2009, resulting in a non-recurring
charge of $1.2 million for the year ended December 31, 2009.
There were no similar costs incurred in 2011 or 2010.
19. Share-Based Compensation and Other Benefit Plans
Incentive and Stock Option Plans
As of December 31, 2011, we had the following share-based compensation plans in effect:
2009 Omnibus Long-Term Incentive Plan
In June 2009, our shareholders approved the 2009 Omnibus Long-Term Incentive Plan (“LTIP”) under which our
compensation committee may grant, subject to our performance conditions as specified by the compensation committee,
restricted shares, restricted share units, options and other awards to trustees, officers and other key employees. The LTIP
allows us to issue up to 900,000 shares of our common stock or stock options. The maximum number of shares that can be
awarded under the LTIP to any one person is 100,000 shares per year. Vesting periods for restricted stock and stock options are
determined by our compensation committee. We measure compensation costs for restricted stock awards based on the fair
value of our common stock at the date of the grant and recognize the expense over the vesting period. The fair values of each
stock option granted used in determining the share-based compensation expense are estimated on the date of grant using the
Black-Scholes option-pricing model. The performance-based restricted stock is earned based on the achievement of specific
performance measures established by our compensation committee over a period of three years. As of December 31, 2011, the
LTIP had 381,887 shares remaining and available for future awards.
2008 Restricted Share Plan for Non-Employee Trustees
In 2008, we 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 our non-employee trustees. Each non-employee trustee is granted 2,000
restricted shares on June 30 of each year that vest ratably over three years. Awards under the Trustee’s Plan are granted in
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shares and are not based on dollar value; therefore the dollar value of the benefits to be received is not determinable. As of
December 31, 2011, the Trustees’ Plan had 105,000 shares remaining and available for future awards.
The following share-based compensation plans have been terminated, except with respect to awards outstanding under each
plan:
2003 LTIP - allowed for the grant of stock options to our executive officers and employees. As of December 31, 2011, there
were 184,948 options exercisable.
2003 and 1997 Non-Employee Trustee Stock Option Plans – these plans provided for the annual grant of options to purchase
our shares to our non-employee trustees. As of December 31, 2011, there were 37,253 options exercisable.
We recognized total share-based compensation expense of $1.8 million, $1.2 million, and $1.5 million for 2011, 2010, and
2009, respectively.
Restricted Stock Share-Based Compensation
In 2011 and 2010, the compensation committee determined that the LTIP award for those years would consist of 50% service-
based restricted stock and 50% performance-based grants to our senior management. The service-based restricted stock awards
include a five year vesting period and the compensation expense is recognized on a graded vesting basis. The performance-
based awards are earned subject to a future performance measurement based on our three-year total shareholder return
compared to a peer group (“TSR Grant”). Once the performance criterion is met and the actual number of shares earned is
determined, certain shares will vest immediately while others will vest over an additional service period. We determine the
grant date fair value of TSR Grants based upon a Monte Carlo Simulation model and recognize the compensation expense
ratably over the vesting periods.
In 2009, the compensation committee only granted service-based restricted stock awards to certain executives and key
employees. The awards include two or three year vesting periods and the compensation expense is recognized on a graded
vesting basis.
We recognized $1.7 million, $1.1 million, and $1.2 million of expense related to restricted share grants during the years ended
December 31, 2011, 2010, and 2009, respectively.
A summary of the activity of service based restricted shares under the LTIP for the years ended December 31, 2011, 2010 and
2009 is presented below:
As of December 31, 2011 there was approximately $3.0 million of total unrecognized compensation cost related to non-vested
restricted share awards granted under our various share-based plans that we expect to recognize over a weighted average period
of 4.3 years.
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2009Number of SharesWeighted-Average Grant Date Fair ValueNumber of SharesWeighted-Average Grant Date Fair ValueNumber of SharesWeighted-Average Grant Date Fair ValueOutstanding at the beginning of the year264,657 10.78$ 189,292 11.83$ 126,183 -$ Granted119,964 13.34 182,410 10.16 145,839 5.98 Vested(109,638) 11.04 (88,843) 10.49 (75,625) 19.75 Forfeited or expired(45,261) 13.12 (18,202) 11.99 (7,105) 20.38 Outstanding at the end of the year229,722 12.40$ 264,657 10.78$ 189,292 11.83$ 20112010
Stock Option Share-Based Compensation
We recognized approximately $0.1 million, $0.1 million, and $0.3 million of expense related to the vesting of options during
the years ended December 31, 2011, 2010, and 2009, 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.
In connection with the employment of an executive officer, during 2010 we issued options to purchase 75,000 of our common
shares that vest ratably over three years. We used the following assumptions for those options:
No options, except those noted above, were granted under the LTIP in the years ended December 31, 2011, 2010 and 2009.
The following table reflects the stock option activity for all plans described above:
The following tables summarize information about options outstanding at December 31, 2011:
We received cash of approximately $0.2 million from options exercised during the year ended December 31, 2011. The impact
of the cash receipt is included in financing activities in the accompanying consolidated statements of cash flows. No options
were exercised for the years ended December 31, 2010 and 2009.
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Weighted average fair value of grants9.61$ Risk-free interest rate2.9%Dividend yield6.8%Expected life (in years)6.5 Expected volatility41.0%Shares Under OptionWeighted-Average Exercise PriceShares Under OptionWeighted-Average Exercise PriceShares Under OptionWeighted-Average Exercise PriceOutstanding at the beginning of the year323,948 25.06$ 324,720 28.47$ 339,049 28.53$ Granted- - 75,000 9.61 - - Exercised(25,000) 9.61 - - - - Forfeited or expired(26,747) 30.18(75,772) 29.64(14,329) 29.84Outstanding at the end of the year272,201 25.98$ 323,948 25.06$ 324,720 28.47$ Exercisable at the end of year222,20129.67$ 248,94829.72$ 297,90327.95$ Weighted average fair value of optionsgranted during the year-$ 2.06$ -$ 201120102009Weighted-AverageRemainingWeighted-AverageWeighted-AverageRange of Exercise PriceOutstandingContractual LifeExercise PriceExercisableExercise Price$ 9.61 - $ 9.6150,0008.19.61$ --$ $19.35 - $19.358,0000.419.358,00019.35$23.77 - $27.9684,6832.926.5484,68326.54$28.80 - $29.0652,8184.029.0152,81829.01$34.30 - $36.5076,7005.234.6476,700 34.64 272,2014.725.98$ 222,20129.67$ Options OutstandingOptions Exercisable
20. Income Taxes
We conduct our 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 our qualification as a REIT, we are required to distribute annually at least 90%
of our REIT taxable income, excluding net capital gain, to our shareholders. As long as we qualify as a REIT, we will generally
not be liable for federal corporate income taxes.
Certain of our operations, including property management and asset management, as well as ownership of certain land, are
conducted through our TRSs which allows us to provide certain services and conduct certain activities that are not generally
considered as qualifying REIT activities.
Deferred tax assets and liabilities reflect the impact of temporary differences between the amounts of assets and liabilities for
financial reporting purposes and the bases of such assets and liabilities as measured by tax laws. Deferred tax assets are reduced
by a valuation allowance to the amount where realization is more likely than not assured after considering all available
evidence, including expected taxable earnings and potential tax planning strategies. Our temporary differences primarily relate
to deferred compensation, depreciation and net operating loss carryforwards.
In May 2011, the State of Michigan signed bills into law that replaced the Michigan Business Tax (“MBT”) with a six percent
Corporate Income Tax that became effective January 1, 2012. The repeal of the MBT resulted in the de-recognition of our
related deferred tax assets and liabilities. Therefore, we recorded additional income tax expense of approximately $0.8 million
in the year ended December 31, 2011 as a result of this tax law change. These amounts are included in income tax (provision)
benefit in our consolidated statements of operations.
As of December 31, 2011, we had a federal and state deferred tax asset of $0.2 million and $0, respectively, net of a valuation
allowance of $8.9 million. We believe that it is more likely than not that the results of future operations will generate sufficient
taxable income to recognize the net deferred tax assets. These future operations are primarily dependent upon the profitability
of our TRSs, the timing and amounts of gains on land sales, and other factors affecting the results of operations of the TRSs.
The valuation allowances relate to net operating loss carryforwards and tax basis differences where there is uncertainty
regarding their realizability.
During the years ended December 31, 2011 and 2010, we recorded an income tax (provision) benefit of approximately ($0.8)
million and $0.7 million, respectively.
We had no unrecognized tax benefits as of or during the three year period ended December 31, 2011. We expect no significant
increases or decreases in unrecognized tax benefits due to changes in tax positions within one year of December 31, 2011. No
material interest or penalties relating to income taxes were recognized in the statement of operations for the years ended
December 31, 2011, 2010, and 2009 or in the consolidated balance sheets as of December 31, 2011, 2010, and 2009. It is our
accounting policy to classify interest and penalties relating to unrecognized tax benefits as tax expense. As of December 31,
2011, returns for the calendar years 2008 through 2010 remain subject to examination by the Internal Revenue Service (“IRS”)
and various state and local tax jurisdictions. As of December 31, 2011, certain returns for calendar year 2007 also remain
subject to examination by various state and local tax jurisdictions.
21. Transactions with Related Parties
During 2011, 2010 and 2009 we had agreements with various partnerships and performed management services on behalf of
entities owned in part by certain of our trustees and/or officers. The following revenue was earned during the three years ended
December 31 from these related parties:
We had receivables from related parties of $0 and $28,000 at December 31, 2011 and 2010, respectively. These agreements
were terminated with the sale of the joint venture’s sole property, Shenandoah Shopping Center, in August 2011.
F-31
201120102009Management fees72$ 102$ 103$ Leasing fees12 26 21 Other110 7 8 Total194$ 135$ 132$ Year Ended December 31,(In thousands)
22. Commitments and Contingencies
Construction Costs
In connection with the development and expansion of various shopping centers as of December 31, 2011, we had entered into
agreements for construction costs of approximately $3.0 million.
Deferred Liabilities
At December 31, 2011, we had certain deferred liability arrangements totaling $2.6 million. See Note 12 for further
information.
Litigation
We are currently involved in certain litigation arising in the ordinary course of business.
In December 2008, John Carlo, Inc. (“Carlo”) filed a lawsuit against us and J. Raymond Construction Company (“JRCC”) in
the Circuit Court of the Fourth Judicial Circuit in Duval, Florida related to a dispute regarding final payment for concrete and
road work for a development project in Florida. On March 10, 2011, a settlement was reached as a result of which Carlo was
paid an additional amount for concrete and road work improvements relating to the 2008 River City Marketplace development
project. That amount was added to our investment in income producing property for accounting purposes. In connection with
that settlement, the Carlo suit was dismissed with prejudice.
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.
In connection with ownership (direct or indirect), operation, management and development of real properties, we 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 our properties have or may contain ACMs or underground storage tanks (“USTs”); 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.
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23. Subsequent Events
We have evaluated subsequent events through the date that the consolidated financial statements were issued.
Subsequent to December 31, 2011, a joint venture in which we held a 40% interest conveyed title to and its interest in West
Acres Commons, a shopping center located in Flint, Michigan, to the lender in exchange for release from a non-recourse
mortgage loan with a principal balance of $8.4 million, of which our share was $3.4 million.
Also subsequent to December 31, 2011, we completed the sale of two properties, Eastridge Commons in Flint, Michigan and an
undeveloped land parcel in Roswell, Georgia, for combined net proceeds of $3.3 million. We also executed separate
agreements to sell four wholly-owned shopping center properties and one center owned through a joint venture, in which our
ownership is 50%, for an aggregate price of $14.9 million. The agreements are subject to contingencies for due diligence on
the part of the buyers.
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24. Quarterly Financial Data (Unaudited)
The following table sets forth the quarterly results of operations for the year ended December 31, 2011:
The following table sets forth the quarterly results of operations for the years ended December 31, 2010:
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March 31 (1)June 30 (1)September 30 (1)December 31 (1)Total revenue29,954$ 29,483$ 31,517$ 30,366$ Income before other income and expenses, tax and discontinued operations7,214$ 6,547$ 8,817$ 6,442$ (Loss) income from continuing operations(522)$ (733)$ 5,828$ (41,881)$ Income (loss) from discontinued operations269$ 6,261$ (26)$ 2,304$ Net (loss) income (253)$ 5,528$ 5,802$ (39,577)$ Net loss (income) attributable to noncontrolling partner interest 21(371)(389) 2,481 Preferred share dividends- (1,618)(1,813) (1,813) Net (loss) income available to common shareholders(232)$ 3,539$ 3,600$ (38,909)$ (Loss) earnings per common share, basic: (2)Continuing operations(0.01)$ (0.06)$ 0.09$ (1.05)$ Discontinued operations- 0.15 - 0.05 Net (loss) income available to common shareholders(0.01)$ 0.09$ 0.09$ (1.00)$ (Loss) earnings per common share, diluted:(2)Continuing operations(0.01)$ (0.06)$ 0.09$ (1.05)$ Discontinued operations- 0.15 - 0.05 Net (loss) income available to common shareholders(0.01)$ 0.09$ 0.09$ (1.00)$ (In thousands, except per share amounts)Quarters Ended 2011(2) EPS amounts are based on weighted average common shares outstanding during the quarter and, therefore, may not agree with the EPS calculated for the year ended December 31, 2011.(1) Amounts are reclassified to reflect the reporting of discontinued operations.March 31 (1)June 30 (1)September 30 (1)December 31 (1)Total revenue28,854$ 28,207$ 26,972$ 29,184$ Income before other income and expenses, tax and discontinued operations8,757$ 8,221$ 7,594$ 5,296$ (Loss) income from continuing operations(1,442)$ 80$ (29,422)$ 9,019$ Income (loss) from discontinued operations89$ (1,882)$ (20)$ (146)$ Net (loss) income(1,353)$ (1,802)$ (29,442)$ 8,873$ Net loss (income) attributable to noncontrolling partner interest 6707602,701 (555) Net (loss) income available to common shareholders(683)$ (1,042)$ (26,741)$ 8,318$ (Loss) earnings per common share, basic: (2)Continuing operations(0.02)$ 0.02$ (0.70)$ 0.22$ Discontinued operations- (0.05) - - Net (loss) income available to common shareholders(0.02)$ (0.03)$ (0.70)$ 0.22$ (Loss) earnings per common share, diluted:(2)Continuing operations(0.02)$ 0.02$ (0.70)$ 0.22$ Discontinued operations- (0.05) - - Net (loss) income available to common shareholders(0.02)$ (0.03)$ (0.70)$ 0.22$ (1) Amounts are reclassified to reflect the reporting of discontinued operations.(2) EPS amounts are based on weighted average common shares outstanding during the quarter and, therefore, may not agree with the EPS calculated for the year ended December 31, 2010.(In thousands, except per share amounts)Quarters Ended 2010
F-35
CapitalizedSubsequent toAcquisition orBuilding & Improvements, NetBuilding & Accumulated Date ofDatePropertyLocationEncumbrancesLandImprovementsof ImpairmentsLand ImprovementsTotalDepreciationConstructed AcquiredAuburn MileMI6,967$ 15,704$ -$ (7,036)$ 5,917$ 2,751$ 8,668$ 1,717$ 20001999Beacon SquareMI1,8066,0932,4051,8098,49510,3041,43120042004Centre at WoodstockGA3,5441,88010,801(316)1,98710,37812,3651,96119972004Clinton Pointe MI1,17510,4991961,17510,69511,8702,29819922003Clinton Valley MI1,50013,49810,1741,62523,54725,1728,7331977 / 19851996Conyers CrossingGA7296,5629287297,4908,2192,75619781998Coral Creek ShopsFL9,0161,56514,0854791,57214,55716,1293,59819922002Crossroads CentreOH28,1015,80020,7092,6634,90424,26829,1727,24220012001East Town PlazaWI10,4911,76816,216981,76816,31418,0824,73719922000Eastridge CommonsMI1,0869,775(3,540)5896,7327,3215,89619901996Edgewood Towne CenterMI6655,9816956456,6967,3412,76719901996Fairlane MeadowsMI3,25517,6204,1373,26021,75225,0124,5111987 / 20072003 / 2005Fraser Shopping CenterMI3633,2631,0393634,3024,6651,65219771996Gaines MarketplaceMI2266,7828,9958,3437,66016,0031,35220042004Heritage PlaceMO13,89922,506- 13,89922,50636,405591 19892011Holcomb CenterGA6585,9539,49365815,44616,1043,36819861996Hoover Eleven MI5,6903,30829,7781,1393,30430,92134,2256,65019892003Horizon VillageGA1,13310,2001,7931,14311,98313,1262,56419962002Jackson CrossingMI24,4572,24920,23715,6552,24935,89238,14112,63519671996Jackson WestMI16,9272,8066,2705,4202,69111,80514,4964,31119961996Kentwood Towne Centre (1)MI8,5802,7999,4842802,8419,72212,5632,16719881996Lake Orion PlazaMI4704,2341,2659934,9765,9691,95219771996Lakeshore MarketplaceMI2,01818,1143,1353,40219,86523,2674,58819962003Liberty SquareIL2,67011,862(54)2,67011,80814,47860819872010Livonia PlazaMI1,31711,7862161,31712,00213,3192,80719882003Mays CrossingGA7256,5322,2537258,7859,5102,98819841997Merchants' SquareIN4,99718,346(133)4,99718,21323,2101,72619702010Naples Towne CentreFL2181,9645,4928076,8677,6742,52919821996New Towne PlazaMI19,5278177,3545,94581713,29914,1164,94619751996Northwest CrossingTN1,85411,566(1,493)96910,95811,9272,9651989 / 19991997 / 1999Oak Brook SquareMI9558,5915,74295514,33315,2884,85119821996OfficeMax CenterOH2272,042- 2272,0422,26980019941996Pelican PlazaFL7106,404(1,607)6414,8665,5072,45319831997Promenade at Pleasant HillGA3,89122,520(271)3,44022,70026,1404,35519932004River City MarketplaceFL110,00019,76873,8597,27411,14089,761100,90113,129 20052005River Crossing CentreFL7286,459357286,4947,2221,43719982003Rivertowne Square FL9548,5871,54095410,12711,0812,74019801998Roseville Towne CenterMI1,40313,1957,1321,40320,32721,7307,85019631996Rossford PointeOH7963,0872,6527975,7386,53598920062005Southbay Shopping CenterFL5975,355(1,794)4923,6664,1581,90519781998Southfield PlazaMI1,12110,090(11)1,04210,15811,2005,09419691996Spring Meadows Place (2)OH16,0661,66214,9595,8431,65320,81122,4647,96719871996Tel-TwelveMI3,81943,18133,1973,81976,37880,19725,97819681996The Crossroads FL10,7361,85016,6506241,85717,26719,1244,13619882002The Shoppes at Fox RiverWI4,66418,913- 4,66418,91323,57777320092010The Town Center at Aquia Office BuildingVA14,434- - 22,335 3,68518,65022,3351,75520091998Town & Country CrossingMO8,39526,465- 8,39526,46534,8603920082011Troy Towne CenterOH9308,372(401)8138,0888,9013,44019901996Village Lakes Shopping CenterFL8627,7683,29686211,06411,9263,00819871997West Allis Towne CentreWI1,86616,78913,7041,86630,49332,3597,85219871996West Oaks IMI26,898- 6,30412,2141,76816,75018,5185,61019791996West Oaks II (3)MI14,4061,39112,5196,2321,39118,75120,1427,15319861996Land Held for Future Development (4)Various28,266- 32,59527,13733,72460,861- N/AN/ALand Available for Sale (5)Various10,93127,252(9,874)6,77021,53928,3091,362N/AN/ATOTALS325,840$ 175,246$ 697,431$ 211,780$ 164,667$ 919,790$ 1,084,457$ 222,722$ .(1) We own a 77.9% interest in this property.(2) The property's mortgage loan is cross-collateralized with West Oaks II.(3) The property's mortgage loan is cross-collateralized with Spring Meadows Place.(4) Land held for future development includes three parcels of land located in Florida and Michigan.(5) Land available for sale includes five parcels of land adjacent to certain of our existing developed properties located in Florida, Georgia, Michigan, Tennessee and Virginia. TO COMPANYINITIAL COST GROSS AMOUNTS AT WHICHCARRIED AT CLOSE OF PERIODRAMCO-GERSHENSON PROPERTIES TRUSTSCHEDULE IIISUMMARY OF REAL ESTATE AND ACCUMULATED DEPRECIATIONDecember 31, 2011(in thousands of dollars)
F-36
SCHEDULE IIIDecember 31, 2011201120102009(In thousands)Reconcilation of total real estate carrying value:Balance at beginning of year1,074,095$ 1,003,091$ 1,011,008$ Additions during period: Improvements21,240 23,840 20,760 Acquisition71,265 62,575 (19) Consolidation of variable interest entity- 23,797 - Deductions during period: Cost of real estate sold/written off(54,343) (10,421) (28,658) Impairment(27,800) (28,787) - Balance at end of year1,084,457$ 1,074,095$ 1,003,091$ Reconcilation of accumulated depreciation:Balance at beginning of year213,919$ 194,181$ 177,013$ Depreciation Expense28,242 26,326 25,118 Cost of real estate sold/written off(19,439) (6,588) (7,950) Balance at end of year222,722$ 213,919$ 194,181$ Aggregate cost for federal income tax purposes1,057,194$ 1,026,629$ 968,000$ REAL ESTATE INVESTMENT AND ACCUMULATED DEPRECIATIONYear ended December 31,
F-37
PrincipalAmount ofLoans SubjectCarrying to delinquentPeriodic PaymentPriorFace AmountAmountPrincipalDescription of LienInterest RateMaturity DateTermsLiensof Mortgagesof Mortgagesor interestNote on land in Waukesha, WI7.5%1/1/2013 Interest only monthly, balloon payment due at maturity -$ 3,000$ 3,000$ -$ SCHEDULE IVMORTGAGE LOANS ON REAL ESTATEYear Ended December 31, 2011(Dollars in thousands)
I, Dennis E. Gershenson, certify that:
CERTIFICATIONS
Exhibit 31.1
1.
I have reviewed this annual report on Form 10-K of Ramco-Gershenson Properties Trust;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements made, in light of the circumstances under which such statements were
made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly
present in all material respects the financial condition, results of operations and cash flows of the registrant as of,
and for, the periods presented in this report;
4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls
and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial
reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be
designed under our supervision, to ensure that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those entities, particularly during the period
in which this report is being prepared;
b) designed such internal control over financial reporting, or caused such internal control over financial
reporting to be designed under our supervision, 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;
c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report
our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period
covered by this report based upon such evaluation; and
d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred
during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual
report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control
over financial reporting; and
5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal
control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of
directors (or persons performing the equivalent functions):
a) all significant deficiencies and material weaknesses in the design or operation of internal control over
financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process,
summarize and report financial information; and
b) any fraud, whether or not material, that involves management or other employees who have a significant role
in the registrant’s internal control over financial reporting.
Date: March 8, 2012
_/s/ Dennis E. Gershenson_________
Dennis E. Gershenson
President and Chief Executive Officer
I, Gregory R. Andrews, certify that:
CERTIFICATIONS
Exhibit 31.2
1.
I have reviewed this annual report on Form 10-K of Ramco-Gershenson Properties Trust;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly
present in all material respects the financial condition, results of operations and cash flows of the registrant as of,
and for, the periods presented in this report;
4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure
controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over
financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be
designed under our supervision, to ensure that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those entities, particularly during the
period in which this report is being prepared;
b) designed such internal control over financial reporting, or caused such internal control over financial
reporting to be designed under our supervision, 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;
c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this
report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the
period covered by this report based upon such evaluation; and
d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred
during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an
annual report) that has materially affected , or is reasonably likely to materially affect, the registrant’s
internal control over financial reporting; and
5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal
control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of
directors (or persons performing the equivalent functions):
a) all significant deficiencies and material weaknesses in the design or operation of internal control over
financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process,
summarize and report financial information; and
b) any fraud, whether or not material, that involves management or other employees who have a significant
role in the registrant’s internal control over financial reporting.
Date: March 8, 2012
_ /s/ Gregory R. Andrews ________
Gregory R. Andrews
Chief Financial Officer and Secretary
Exhibit 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report of Ramco-Gershenson Properties Trust (the “Company”) on Form 10-K for the period
ended December 31, 2011, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Dennis
E. Gershenson, President and Chief Executive Officer of the Company, certify pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act, that:
1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of
operations of the Company.
_/s/ Dennis E. Gershenson_________
Dennis E. Gershenson
President and Chief Executive Officer
March 8, 2012
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
Exhibit 32.2
In connection with the Annual Report of Ramco-Gershenson Properties Trust (the “Company”) on Form 10-K for the period
ended December 31, 2011, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Gregory
R. Andrews, Chief Financial Officer of the Company, certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act, that:
1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of
operations of the Company.
_ /s/ Gregory R. Andrews _________
Gregory R. Andrews
Chief Financial Officer and Secretary
March 8, 2012
14229 Cover.qxd:Layout 1 4/10/12 5:07 PM Page 1
2011 Annual Report
Commitment to Quality
Corporate Office
31500 Northwestern Highway
Suite 300
Farmington Hills, MI 48334
Tel: (248) 350-9900
Fax: (248) 350-9925
www.rgpt.com
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Distribution Reinvestment Plan (“DRIP”)
The DRIP offers shareholders the opportunity to automatically reinvest distributions toward
the purchase of additional Shares of Ramco-Gershenson Properties Trust common stock.
To receive additional information on the DRIP, please return this reply card by mail.
____ Yes, please send me information on the Company’s DRIP.
Note: To participate in the DRIP, you must be a registered shareholder or arrange with your
broker to participate on your behalf.
Please Print:
Name:
Address:
City:
Daytime Phone:
State:
Zip:
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