Tak i n g re Ta i l To n e w h e i g h T s
A n n u A l R e p o R t 2 0 13
aBou T r am co - g ers h e n so n ProPer T i es TrusT
Differentiated by:
■ High-Quality Shopping Centers
■ Measured Growth Strategy
■ Strong Balance Sheet
■ Experienced Management Team
ramco-gershenson Properties Trust (NYSE:RPT) is a fully
integrated, self-administered, publicly-traded real estate investment trust
(REIT) based in Farmington Hills, Michigan. The Company’s business is the
ownership and management of multi-anchor shopping centers in strategic
metropolitan markets throughout the Southeastern, Midwestern and Central
United States. At December 31, 2013, the Company owned and managed a
portfolio of 80 shopping centers and one office building with approximately
15.9 million square feet of gross leasable area owned by the Company or
its joint ventures. The properties are located in Michigan, Florida, Ohio,
Georgia, Missouri, Colorado, Wisconsin, Illinois, Indiana, New Jersey,
Virginia, Maryland, and Tennessee. At December 31, 2013, the Company’s
core operating portfolio was 96.0% leased.
H i gH li g Ht s of 2 013
96%core portfolio leased
occupancy
$2.0 billion
total market
capitalization
$567 million
in shopping
centers acquired
8.2%
leasing
spreads
36%
increase in
revenues
$1.3 billion
in unencumBered
assets
264923_cc_narr_r2.indd 1
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1
d E Ar fEllow s HArEH oldEr
The driving philosophy behind our Company’s success over the last
several years has been our commitment to owning and managing
one of the highest quality shopping center portfolios. The benefits of
this commitment can be seen in our exceptional 2013 operating and
financial results which cap a five-year period of outperformance in
total shareholder return at 251% compared to our shopping center
peer group average of 65%. This consistent superior performance
has allowed us to reward those shareholders who invested in our
strategic vision.
diversified
tenant mix
By A n n uA l i z e d R e n T s
73.8%
NatioNal
15.7%
RegioNal
10.5%
local
2013—An Exceptional Year
in 2013 we grew our asset base to over $2 billion by acquiring $567 million of
high-quality community shopping centers in demographically desirable
metropolitan markets. the average size of the centers we acquired approximated
225,000 square feet and each is anchored by three or more major, large format
retailers. these anchors typically include a soft line retailer, a general
merchandiser, and a market dominant grocer. restaurants, fashion specialty
uses, and often an entertainment component all help to position our centers
as the focal point of their trade areas from early morning through the day and
into the evening.
complementing our 2013 acquisition growth initiatives was a healthy
improvement in all our operating metrics. these metrics, which are indicative
of a highly productive shopping center portfolio, include:
• An increase in total revenues to $170 million, compared to $125 million
in 2012.
• An increase in same-center net operating income (“NOI”) of 3.0%.
• An increase in core portfolio leased occupancy to 96.0%, compared to
94.6% in 2012.
• The signing of 338 leases generating comparable leasing spreads of
8.2%, compared to 330 leases at a leasing spread of 4.6% in 2012.
2
264923_cc_narr_r2.indd 2
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dennis gershenson
President and CEO
• An increase in average base rent per square foot to $12.35, compared to
$11.54 in 2012.
our robust acquisition program amplified by real growth in our core portfolio’s
net income enabled us to drive our operating funds from operations by 13%
from $1.04 in 2012 to $1.17 in 2013. a unique aspect of our 2013 results is that
while substantial growth in a company’s asset base and outsized income
growth will typically occur at the expense of balance sheet strength, in our
case, we were able to achieve both of these goals while simultaneously
improving all of our balance sheet metrics:
• An improvement in net debt to total market capitalization to 38.3% as of
December 31, 2013, compared to 40.7% as of December 31, 2012.
• An improvement in net debt to EBITDA to 6.3x as of December 31, 2013,
compared to 6.6x as of december 31, 2012.
• An improvement in interest coverage to 3.7x and fixed charge coverage to
2.7x as of december 31, 2013, compared to 3.2x and 2.2x, respectively,
as of december 31, 2012.
• An increase in the Company’s unencumbered operating real estate, as
valued under its credit agreements, to approximately $1.3 billion as of
December 31, 2013, compared to $0.8 billion as of December 31, 2012.
2014 and beyond—A Plan for the future
as we begin the new year, what can you expect from us in 2 014? you can
expect that we will continue to produce outsized returns as we execute on both
the external and internal opportunities generated in 2013. first, we have
initiated the execution of our asset management plans for last year’s
acquisitions. this involves both filling vacancies with high-quality national
retailers, as in the case of deer grove centre and mount prospect plaza in
3
A unique aspect
of our 2013 results
is that while
substantial growth
in a company’s
asset base and
outsized income
growth will
typically occur
at the expense
of balance sheet
strength, in our
case, we were able
to achieve both of
these goals while
simultaneously
improving all of
our balance sheet
metrics.”
264923_cc_narr_r2.indd 3
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Revenues
Revenues
2009
2010
2011
2012
2013
Assets
Assets
2009
2010
2011
2012
2013
2009
2010
2011
2012
2013
250000
250000
200000
200000
150000
150000
100000
100000
50000
50000
0
0
2500000
2500000
2000000
2000000
1500000
1500000
1000000
1000000
500000
500000
0
0
total revenues
under management
(d o l l A R s i n M i l l i o n s)
$99.4
$52.0
$99.4
$122.9
$122.9
$93.9
$86.2
$93.9
$86.2
$113.2
$117.6
$113.2
$117.6
$83.1
$83.1
$125.2
$125.2
$52.0
$170.1
$170.1
2009
2010
2011
2012
2013
2009
2010
2011
2012
2013
metropolitan chicago, as well as undertaking the expansion of a number of
recent shopping center acquisitions onto adjacent land parcels as with the
shoppes at fox river in milwaukee, Wisconsin and harvest Junction in
Boulder, colorado. additionally, we have an extensive pipeline of value-add
redevelopment projects in our core shopping center portfolio that involves
adding leading national anchors, which will improve the quality of our tenant
mix, drive net income and provide the benefit of bringing additional best-in-
class retailers to our shopping centers.
our 2014 business plan also includes the acquisition of a number of shopping
centers that will complement our existing portfolio. each new center should
present the possibility of adding real value similar to the growth opportunities
that were present in our 2013 purchases. these centers will be large, destination
oriented, multi-anchored properties often with a strong grocery component.
We will purchase these centers with funds provided by the appropriate mix of
equity and debt as well as capital recycled from the sale of non-core assets,
2011
2010
2009
■ J o i n T V e n T u R e P R o P e R T i e s
■ W h o l ly o W n e d P R o P e R T i e s
2012
2013
which we estimate will be approximately $40 million in 2014.
our 2014 growth will also come from:
total asse ts
under management
(d o l l A R s i n M i l l i o n s)
$437.7
$437.7
$1,652.2
$1,652.2
$1,053.1
$964.9
$927.6
$853.2
$1,053.1
$964.9
$927.6
$853.2
$998.0
$998.0
$1,052.8
$1,048.8
$1,052.8
$1,048.8
$1,165.3
$1,165.3
• The completion of our 210,000 square foot 96% pre-leased Lakeland Park
development in lakeland, florida,
• Growth in our same-center net operating income of 3–4%, and
• The improvement in our releasing and new tenant rental spreads comparable
to those achieved in 2013.
thus, we start 2014 in the enviable position of owning a portfolio of high-quality
superior performing shopping centers tenanted by best-in-class retailers located
primarily in major metropolitan markets. We have identified avenues for growth
in our acquisitions and core portfolio that include expansions, redevelopments,
and leasing/releasing opportunities. additionally, we will continue to improve
our already strong, flexible balance sheet. We are excited about our prospects
for 2014 as we continue “taking retail to new heights.”
thank you for your investment and support.
2011
2010
2009
■ J o i n T V e n T u R e P R o P e R T i e s
■ W h o l ly o W n e d P R o P e R T i e s
2009
2010
2012
2012
2011
2013
2013
dennis gershenson
President and CEO
4
264923_cc_narr_r2.indd 4
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rAmco - gErsHEnson is focusEd on owning dYnAmic sHoPPing
c E n t E r s — w H E r E c o m m u n i t Y A n d r E tA i l m E E t— c r E At i n g A
rEwArding ExPEriEncE for tHE customEr AnYtimE, dAY or EVEning.
264923_cc_narr_r2.indd 5
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5
r Am co - gErs HEn so n ’s ProPEr t iEs
81
properties
13 states
$2.0 billion
in oWned and
managed assets
2013 WAs A TRAnsfoRMATiVe
yeAR foR The CoMPAny—
inCluding The ACquisiTion
of $567 million of high-
quAliTy shoPPing CenTeRs
in TARgeTed MeTRoPoliTAn
MARkeTs.
CO
2
WI
4
MI
24
IL
5
IN
2
OH
7
MO
4
NJ
1
MD
1
VA
2
TN
1
GA
7
FL
21
numbers shown in states
represent total properties owned.
264923_cc_narr_r2.indd 6
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6
n E w ProPEr t iEs
Ad d Ed i n 2 013 :
Nagawaukee Center, Delafield, WI
Mount Prospect Plaza, Mount Prospect, IL
CO
2
WI
4
MI
24
IL
5
IN
2
OH
7
MO
4
NJ
1
MD
1
VA
2
Deer Grove Centre, Palatine, IL
12 Property Clarion Portfolio
(7 in SE Florida, 5 in SE Michigan)
TN
1
GA
7
FL
21
Troy Marketplace, Troy, MI (representative property)
Deerfield Towne Center, Mason, OH
Deer Creek Shopping Center, Maplewood, MO
7
264923_cc_narr_r2.indd 7
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sElEc tEd fi nAn c iAl H i g Hli g Ht s
(dollars in thousands, except per share amounts)
2013
2012
2011
2010
2009
years ended december 31
400
Total Revenues
net income Available to Common shareholders
350
funds from operations (“ffo”)
300
operating funds from operations (“operating ffo”)
250
Per share
200
ffo, Per diluted share
150
operating ffo, Per diluted share
Cash distributions declared
100
$ 170,068
$ 125,225
$ 117,574
$ 113,217
$ 122,854
$
$
$
$
$
$
3,747
79,861
80,528
1.16
1.17
0.71
$
$
$
$
$
$
(46) $
(32,002) $
(20,148) $ 13,720
47,816
49,025
1.02
1.04
0.66
$
$
$
$
$
29,509
41,727
0.71
1.01
0.65
$
$
$
$
$
20,945
$ 45,263
40,138
$ 45,263
0.55
1.05
0.65
$
$
$
1.80
1.80
0.79
50
Total Assets
Mortgages and notes Payable
12/31/08
12/31/09
$ 1,652,248
12/31/10
$ 753,174
$ 1,165,291
12/31/11
$ 541,281
$ 1,048,823
12/31/12
$ 518,512
$ 1,052,829
$ 997,957
12/31/13
$ 571,694
$ 552,836
Total liabilities
shareholders equity
number of Properties
$ 854,288
$ 605,459
$ 567,649
$ 613,463
$ 591,392
$ 770,097
$ 529,783
$ 449,075
$ 402,273
$ 367,228
81
79
84
90
88
5 -YE Ar cu m ul At iVE totAl rE t ur n
The performance graph compares the cumulative total shareholder return on Ramco-gershenson’s shares with the cumulative
return on the nAReiT equity index, the s&P 500, and the MsCi us ReiT index (RMs) for the five fiscal years commencing
december 31, 2008 and ending december 31, 2013, assuming an investment of $100 and the reinvestment of all dividends
into additional common shares during the holding period.
l
e
u
a
V
x
e
d
n
I
400
350
300
250
200
150
100
50
Ramco-Gershenson Properties Trust
NAREIT Equity
S&P 500
MSCI US REIT (RMS)
12/31/08
12/31/09
12/31/10
12/31/11
12/31/12
12/31/13
264923_CC_Narr_R2.indd 8
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8
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, 2013
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)
31500 Northwestern Highway
Farmington Hills, Michigan
(Address of Principal Executive Offices)
13-6908486
(I.R.S. Employer Identification No.)
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
Securities Registered Pursuant to Section 12(g) of the Act: None
Name of Each Exchange
On Which Registered
New York Stock Exchange
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes [X] No [ ]
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 [X]
Accelerated Filer [ ]
Non-Accelerated Filer [ ]
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]
(Do not check if small reporting company)
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, 2013) was $914,993,387. As of February 14, 2014 there were outstanding 66,828,516 shares
of Common Stock.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the proxy statement for the annual meeting of shareholders to be held May 6, 2014 are in incorporated by reference into Part III.
TABLE OF CONTENTS
PART I
Page
Item
1.
1A.
1B.
2.
3.
4.
5.
6.
7.
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
7A.
Quantitative and Qualitative Disclosures About Market Risk
8.
9.
9A.
9B.
10.
11.
12.
13.
14.
Financial Statements and Supplementary Data
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Controls and Procedures
Other Information
Directors, Executive Officers and Corporate Governance
Executive Compensation
PART III
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 Schedule
Consolidated Financial Statements and Notes
PART IV
1
6
13
14
21
21
22
24
25
39
40
40
40
43
43
43
43
43
43
44
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”) organized in Maryland. Our primary business is the ownership and management of multi-anchored shopping centers
in strategic metropolitan markets throughout the Eastern, Midwestern and Central United States. Our property portfolio consists
of 66 wholly owned shopping centers and one office building comprising approximately 13.1 million square feet. In addition, we
are co-investor in and manager of two institutional joint ventures that own portfolios of shopping centers. We own 20% of Ramco
450 Venture LLC, an entity that owns eight shopping centers comprising approximately 1.7 million square feet, and 30% of Ramco/
Lion Venture L.P., an entity that owns three shopping centers comprising approximately 0.8 million square feet. We also have
ownership interests in three smaller joint ventures that each own a shopping center. Our joint ventures 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 land held for development or for sale, the majority of which are adjacent to certain of our
existing developed properties.
We conduct substantially all of our business through our operating partnership, Ramco-Gershenson Properties, L.P. (the “Operating
Partnership”), a Delaware limited 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, 2013, we owned
approximately 96.8% 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”). The holders of OP units are entitled to
exchange them for our common shares on a 1:1 basis or for cash. The form of payment is 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, Strategies and Significant Transactions
Our business objective is to own and manage 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 shopping centers 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 in our centers include, among
others, TJ Maxx/Marshalls, Bed Bath and Beyond, Home Depot and Kohl’s. Supermarket anchor tenants in our centers include,
among others, Publix Super Market, Whole Foods, Supervalu and Kroger. Our shopping centers are primarily located in
metropolitan markets throughout the Eastern, Midwestern and Central United States, such as Southeast Michigan, Southeast
Florida, Jacksonville, St. Louis, Milwaukee, Cincinnati, Tampa/Lakeland and Chicago.
We also own parcels of developable land. Approximately 29% of our developable land by 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 71%
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. At December 31, 2013 we had one development project
under construction with costs to date, excluding land cost, of $6.6 million and expected remaining costs of $27.0 million.
Operating Strategies and Significant Transactions
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 property operating income of our centers, controlling our capital expenditures, and monitoring our tenants’ credit
risk.
During 2013, for the combined portfolio including wholly-owned and joint venture properties, we:
• Executed 159 new leases comprised of approximately 0.9 million square feet at an average base rent of $13.10 per
square foot; and
• Executed 179 renewal leases comprised of approximately 0.8 million square feet at an average base rent of $15.09 per
square foot.
Also, during 2013, we continued our strategy of redeveloping centers on a selective basis. Redevelopment or expansion projects
currently in process include:
• Redevelopment on our portion of the Roseville Towne Center whereby we have relocated Marshalls into a new 25,000
square foot store and are constructing additional space for a 12,000 square foot Five Below. The total projected cost
for the redevelopment is approximately $2.6 million and is expected to be completed by the second quarter of 2014;
• Redevelopment at Merchants' Square shopping center where we have executed a lease for a 37,000 square foot Flix
Brewhouse to replace the former Hobby Lobby space. The total projected cost is estimated to be approximately $6.4
million and is expected to be completed by the fourth quarter of 2014;
• Expansion at Village Plaza with a 55,000 square foot Hobby Lobby to replace existing vacant and small shop space
and expansion by an additional 12,000 square feet. The total projected cost is estimated to be approximately $4.4
million and is expected to be completed by the first quarter of 2015;
• Expansion at The Shoppes at Fox River II with the execution of a lease with Hobby Lobby for a 55,000 square foot
space. The expansion will include an additional anchor and retail tenants. The total projected cost is estimated to be
approximately $14.6 million and is expected to be completed by the third quarter of 2015; and
• Expansion at Harvest Junction North on an adjacent 15.0 acres which will include approximately 25,000 square feet
of new small shop retail, along with multiple ground leases and outparcel sales. The total projected cost is estimated
to be approximately $6.9 million and is expected to be completed by the third quarter of 2015.
In addition to our redevelopment and expansion activities we completed Phase I of the Parkway Shops development at a cost of
approximately $17.5 million. Located in Jacksonville, Florida the center was 100% leased and occupied as of December 31, 2013.
2
Investing Strategies and Significant Transactions
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.
During 2013, we completed $566.5 million in wholly-owned acquisitions. Specifically we acquired the following:
Property Name
Location
Deerfield Towne Center
Deer Creek Shopping Center
Deer Grove Centre
Mount Prospect Plaza
The Shoppes at Nagawaukee
Clarion Partners Portfolio -
12 Income Producing Properties
Total 2013 Acquisitions
Mason (Cincinnati), OH
Maplewood (St. Louis), MO
Palatine (Chicago), IL
Mt. Prospect (Chicago), IL
Delafield, WI
FL & MI
GLA Purchase Price
(In thousands)
$
461
208
236
301
106
96,500
23,878
20,000
36,100
22,650
2,246
3,558
$
367,415
566,543
In addition, we sold three wholly-owned income-producing properties and six outparcels for net proceeds to us of $33.9
million. Specifically, we sold:
Property Name
Location
Sales Price
on Sale Net Proceeds
Gain (loss)
Beacon Square
Edgewood Towne Center
Grand Haven, MI
Lansing, MI
Mays Crossing
Total consolidated income producing dispositions
Stockbridge, GA
Hunter's Square - Land Parcel
Farmington Hills, MI
Parkway Phase I - Moe's Southwest Grill
Outparcel
Jacksonville North Industrial - The Learning
Experience Outparcel
Jacksonville, FL
Jacksonville, FL
Parkway Phase I - Mellow Mushroom Outparcel
Jacksonville, FL
Roseville Towne Center - Wal-Mart parcel
Roseville, MI
Parkway Phase I - BJ's Restaurant Outparcel
Total consolidated land / outparcel dispositions
Jacksonville, FL
Total 2013 consolidated dispositions
$
$
$
$
$
(In thousands)
8,600
$
5,480
8,400
22,480
$
104
1,000
510
1,200
7,500
2,600
12,914
$
35,394
(74) $
657
1,537
2,120
72
306
(13)
332
3,030
552
4,279
6,399
$
$
$
$
8,293
5,158
8,033
21,484
104
950
576
1,153
7,158
2,491
12,432
33,916
3
Financing Strategies and Significant Transactions
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.
During 2013, we continued to strengthen our capital structure by completing two underwritten public offerings of newly issued
common shares and various debt transactions.
Specifically, we completed the following debt transactions:
Debt
•
•
•
$110.0 million private placement of senior unsecured notes. The notes were issued in three tranches maturing in 2021,
2023 and 2025. The weighted average interest rate on the notes is 4.0%;
$50.0 million, seven year unsecured term loan that included an accordion feature to borrow up to an additional $25.0
million. In conjunction with the closing of the loan, we entered into a seven year swap agreement with an interest rate
at December 31, 2013 of 3.2%; and
exercised the accordion feature associated with the $50.0 million loan, increasing the loan to $75.0 million. In conjunction
with the closing, we entered into two additional swap agreements, totaling $25.0 million, with an interest rate at December
31, 2013 of 3.9%.
The gross proceeds from these debt financings repaid maturing mortgage debt. Specifically, we repaid:
• Mission Bay Plaza in the amount of $42.2 million with an interest rate of 6.6%;
• Hunter's Square in the amount of $33.0 million with an interest rate of 8.2%;
• Winchester Center in the amount of $25.3 million with an interest rate of 8.1%;
• East Town Plaza in the amount of $10.1 million with an interest rate of 5.5%;
• Centre at Woodstock in the amount of $3.0 million with an interest rate of 6.9%.;
• Hoover Eleven I in the amount of $1.3 million with an interest rate of 7.2%; and
• Hoover Eleven II in the amount of $2.2 million with an interest rate of 7.6%.
Equity
• Completed two underwritten public offerings issuing a total of 12.6 million common shares of beneficial interest. Our
•
total net proceeds, after deducting expenses, were approximately $192.6 million; and
Issued 5.4 million common shares through controlled equity offerings, at an average share price of $15.10, and received
approximately $81.7 million in net proceeds.
The proceeds from the equity transactions were used to fund a portion of the consideration for the acquisitions during the year,
pay down debt, as well as for general corporate purposes.
As of December 31, 2013, our unencumbered assets had a capitalized value of approximately $1.3 billion and we had net debt to
total market capitalization of 38.3% as compared to $765.3 million and 40.7%, at December 31, 2012. At December 31, 2013
and 2012 we had $204.8 million and $198.8 million, respectively, available to draw under our unsecured revolving line of credit.
Competition
See page 6 of Item 1A. “Risk Factors” for a description of competitive conditions in our business.
Environmental Matters
See page 12 of Item 1A. “Risk Factors” for a description of environmental risks for our business.
Employment
As of December 31, 2013, we had 108 full-time employees. None of our employees is represented by a collective bargaining unit.
We believe that our relations with our employees are good.
4
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
5
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.
Our concentration of properties in Michigan and Florida 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 2013, our wholly-owned and pro
rata share of joint venture properties located in Michigan and Florida accounted for approximately 35%, and 25%, 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. Although we believe we own high quality centers, 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 tenants 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 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, 2013, we received 38.9% of our combined annualized base rents from our top 25 tenants, including our top
four tenants: TJ Maxx/Marshalls (5.0%), Bed Bath & Beyond (2.3%), Office Depot (2.1%) and LA Fitness (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 experiences 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. In 2013, no key tenant of ours filed for bankruptcy protection.
6
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 recovery income from tenants is 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. Under generally accepted accounting principles (“GAAP”) 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.
No assurance can be given that we will be able to recover the current carrying amount of all of our properties and those of our
unconsolidated joint ventures. There can be no assurance that we will not take 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. We recorded an impairment provision of $9.7 million in 2013 related to our real estate properties and other
investments. Refer to Note 6 of the notes to the consolidated financial statements for further information regarding impairment
provisions.
7
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, 2013, we had interests in five unconsolidated joint ventures that collectively own 14 shopping
centers. Although we manage the properties owned by these joint ventures, we do not control the decisions for the joint
ventures. 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. 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, an impairment charge is required to be recognized
under generally accepted accounting principles. Refer to Note 6 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 suitable 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 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
8
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, constructing buildings, and leasing new space.
We are seeking to develop and construct 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 for construction;
• Occupancy rates and rents at a completed project may not meet our projections; 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. For a detailed discussion of development projects, refer to Notes 3 and 6 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 and retain 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 prior to the time that it matures. As of December 31, 2013,
we had $758.9 million of outstanding indebtedness, including $5.7 million of capital lease obligations. Of this, $39.1 million
matures in 2014. In addition, our joint ventures had $178.7 million of outstanding indebtedness, of which our share is $38.8
million. $7.5 million of joint venture debt matures in 2014, of which our share is $1.5 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 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, 2013, we had seven interest rate swap agreements in effect for an aggregate notional amount of $210.0 million
converting our floating rate corporate debt to fixed rate debt. After accounting for these interest rate swap agreements, we had
$100.1 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
9
rates of interest on our variable rate debt outstanding as of December 31, 2013 increased by 1.0%, the increase in interest expense
on our existing variable rate debt would decrease future earnings and cash flows by approximately $1.0 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, 2013, we had $333.0 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.
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 distribute a substantial portion of our income annually in order 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 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 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.
10
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 2013 we completed two underwritten public offering totaling 12.6 million common shares and issued 5.4 million common
shares through controlled equity offerings. In addition, there were 375,813 shares of unvested restricted common shares and
options to purchase 190,993 common shares outstanding at December 31, 2013.
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 TRSs 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 of business. Additionally, we may be subject to state or local taxation in various state or local
jurisdictions, including those in which we transact business. The state and local tax laws may not conform to the federal income
tax treatment. Any taxes imposed on us would reduce our operating cash flow and net income.
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.
11
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.
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 has granted
limited exceptions 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.
12
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.
13
Item 2. Properties
As of December 31, 2013, we owned and managed a portfolio of 80 shopping centers and one office building with approximately
15.9 million square feet of gross leasable area ("GLA"). Our wholly-owned properties consist of 66 shopping centers and one office
building comprising approximately 13.1 million square feet ("SF").
Location
City
State
Ownership
%
Year Built /
Acquired /
Redeveloped
Total GLA
%
Leased
Average
base
rent per
leased
SF Anchor Tenants (1)
Property Name
CORE PORTFOLIO (2)
Harvest Junction North
Longmont
Harvest Junction South
Longmont
Cocoa Commons
Cocoa
Coral Creek Shops
Cypress Point
Coconut
Creek
Clearwater
Kissimmee West
Kissimmee
Marketplace of Delray
Delray
Beach
Mission Bay Plaza
Boca Raton
Naples Towne Centre
Naples
Parkway Shops
Jacksonville
River City Marketplace
Jacksonville
River Crossing Centre
Rivertowne Square
Shoppes of Lakeland
The Crossroads
The Plaza at Delray
Treasure Coast Commons
Village Lakes Shopping
Center
Village of Oriole Plaza
Village Plaza
Vista Plaza
New Port
Richey
Deerfield
Beach
Lakeland
Royal Palm
Beach
Delray
Beach
Jensen
Beach
Land O'
Lakes
Delray
Beach
Lakeland
Jensen
Beach
CO
CO
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
100% 2006/2012/NA
159,397
98.3% $
15.67 Best Buy, Dick's Sporting
Goods, Staples
100% 2006/2012/NA
176,960
98.0%
14.72 Bed Bath & Beyond,
Marshalls, Michaels, Ross
Dress for Less, (Lowe's)
100% 2001/2007/2008
90,116
85.2%
11.92
Publix
100% 1992/2002/NA
109,312
97.1%
16.93
Publix
100% 1983/2007/NA
167,280
95.7%
11.98 Burlington Coat Factory,
The Fresh Market
7% 2005/2005/NA
115,586
93.7%
11.72
Jo-Ann, Marshalls, (Super
Target)
100% 1981/2005/2010
238,196
94.4%
12.44 Office Depot, Ross Dress for
Less, Winn-Dixie
100% 1989/2004/NA
263,714
94.7%
21.93 The Fresh Market,
100% 1982/1996/2003
134,707
91.3%
Golfsmith, LA Fitness,
OfficeMax, Toys "R" Us
6.04 Beall's, Save-A-Lot,
(Goodwill)
100%
2013/2011/NA
89,114
100.0%
13.34 Dick's Sporting Goods,
Marshalls
100% 2005/2005/NA
557,087
99.1%
16.91 Ashley Furniture
HomeStore, Bed Bath &
Beyond, Best Buy,
Gander Mountain, Michaels,
OfficeMax, PetSmart, Ross
Dress for Less,
Hollywood Theaters,
(Lowe's), (Wal-Mart
Supercenter)
100% 1998/2003/NA
62,038
92.9%
12.15
Publix
100% 1980/1998/2010
144,907
93.0%
9.08 Beall's Outlet, Winn-Dixie
100% 1985/1996/NA
183,842
98.4%
12.67 Ashley Furniture
HomeStore, Michaels,
Staples, T.J. Maxx, (Target)
100% 1988/2002/NA
120,092
93.2%
15.37
Publix
20% 1979/2004/NA
313,913
97.8%
16.95 Marshalls, Michaels, Publix,
Ross Dress for Less, T.J.
Maxx
100% 1996/2004/NA
92,979
100.0%
12.26 Barnes & Noble, OfficeMax,
100% 1987/1997/NA
168,751
84.2%
Sports Authority
8.61 Beall's Outlet, Marshalls (4),
Ross Dress for Less
30% 1986/2005/NA
155,770
97.2%
13.37
Publix
100% 1989/2004/NA
146,755
94.8%
13.03 Big Lots
100% 1998/2004/NA
109,761
100.0%
13.42 Bed Bath & Beyond,
Michaels, Total Wine &
More
14
Location
City
State
Ownership
%
Year Built /
Acquired /
Redeveloped
Total GLA
%
Leased
Average
base
rent per
leased
SF Anchor Tenants (1)
Plantation
FL
100% 1965/2005/NA
152,973
97.6% $
10.65 Badcock, DD's Discounts,
Property Name
West Broward Shopping
Center
Centre at Woodstock
Conyers Crossing
Woodstock
Conyers
Holcomb Center
Horizon Village
Paulding Pavilion
Peachtree Hill
Deer Grove Centre
Liberty Square
Market Plaza
Mount Prospect Plaza
Roswell
Suwanee
Hiram
Duluth
Palatine
Wauconda
Glen Ellyn
Mount
Prospect
Rolling Meadows Shopping
Center
Rolling
Meadows
Nora Plaza
Indianapolis
GA
GA
GA
GA
GA
GA
IL
IL
IL
IL
IL
IN
100% 1997/2004/NA
86,748
94.5%
11.50
Publix
100% 1978/1998/NA
170,475
100.0%
5.22 Burlington Coat Factory,
Save-A-Lot, US Postal
Service
100% 1986/1996/2010
106,003
100% 1996/2002/NA
20% 1995/2006/2008
20% 1986/2007/NA
100% 1997/2013/2013
100% 1987/2010/2008
20% 1965/2007/2009
100% 1962/2013/2013
97,001
84,846
154,700
235,936
107,427
163,054
301,138
85.7%
97.0%
88.3%
91.2%
82.3%
85.0%
97.0%
86.3%
Hobby Lobby
11.71
Studio Movie Grill
11.02 Movie Tavern
15.70
Sports Authority, Staples
13.07 Kroger, LA Fitness
11.70 Dominick's Supermarkets
(3), Staples, T J Maxx,
(Target)
13.68
Jewel-Osco
15.24
Jewel Osco, Staples
11.86 Aldi, LA Fitness, Marshalls,
Ross Dress for Less,
Walgreens (Wal-Mart
Supercenter)
20% 1956/2008/1995
134,012
85.0%
11.20
Jewel Osco, Northwest
Community Hospital
7% 1958/2007/2002
139,788
100.0%
13.60 Marshalls, Whole Foods,
(Target)
Crofton Centre
Crofton
MD
20% 1974/1996/NA
252,230
98.7%
8.29 Gold's Gym, Kmart,
Shoppers Food Warehouse
Clinton Pointe
Clinton Valley
Fraser Shopping Center
Gaines Marketplace
Hoover Eleven
Hunter's Square
Clinton
Township
Sterling
Heights
Fraser
Gaines
Township
Warren
Farmington
Hills
MI
MI
MI
MI
MI
MI
100% 1992/2003/NA
135,330
100.0%
9.59 OfficeMax, Sports
Authority, (Target)
100% 1977/1996/2009
201,115
97.8%
11.47 DSW Shoe Warehouse,
Hobby Lobby, Office Depot
100% 1977/1996/NA
68,326
100.0%
7.17 Oakridge Market
100% 2004/2004/NA
392,169
100.0%
4.70 Meijer, Staples, Target
100% 1989/2003/NA
280,719
94.7%
11.52 Dunham's, Kroger,
Marshalls, OfficeMax
100% 1988/2005/NA
354,323
98.3%
16.23 Bed Bath & Beyond, Buy
Jackson Crossing
Jackson
MI
100% 1967/1996/2002
402,326
95.0%
Jackson West
Jackson
Lake Orion Plaza
Lake Orion
Lakeshore Marketplace
Livonia Plaza
Millennium Park
New Towne Plaza
Oak Brook Square
Norton
Shores
Livonia
Livonia
Canton
Township
Flint
Roseville Towne Center
Roseville
MI
MI
MI
MI
MI
MI
MI
MI
Buy Baby, Loehmann's,
Marshalls, T.J. Maxx
10.28 Bed Bath & Beyond, Best
Buy, Jackson 10 Theater,
Kohl's, T.J. Maxx,
Toys "R" Us, (Sears),
(Target)
7.41 Lowe's, Michaels,
OfficeMax
100% 1996/1996/1999
209,800
97.7%
100% 1977/1996/NA
141,073
100.0%
4.07 Hollywood Super Market,
100% 1996/2003/NA
342,959
98.0%
100% 1988/2003/NA
30% 2000/2005/NA
137,391
272,568
94.6%
99.2%
Kmart
8.71 Barnes & Noble, Dunham's,
Gordmans (4), Hobby
Lobby, T.J. Maxx,
Toys "R" Us, (Target)
10.38 Kroger, T.J. Maxx
14.20 Home Depot, Marshalls,
Michaels, PetSmart,
(Costco), (Meijer)
100% 1975/1996/2005
192,587
100.0%
10.74
Jo-Ann, Kohl's
100% 1982/1996/2008
152,073
100.0%
9.59 Hobby Lobby, T.J. Maxx
100% 1963/1996/2004
76,998
100.0%
12.08 Marshalls, (Wal-Mart)
15
Property Name
Shoppes at Fairlane
Meadows
Southfield Plaza
Tel-Twelve
Southfield
Southfield
The Auburn Mile 1
Auburn Hills
The Shops at Old Orchard
Troy Marketplace
West
Bloomfield
Troy
Location
City
State
Ownership
%
Year Built /
Acquired /
Redeveloped
Total GLA
%
Leased
Dearborn
MI
100% 1987/2003/2007
157,246
100.0% $
SF Anchor Tenants (1)
14.25 Best Buy, Citi Trends,
Average
base
rent per
leased
MI
MI
MI
MI
MI
100% 1969/1996/2003
185,409
98.2%
8.16 Big Lots, Burlington Coat
Factory, Marshalls (3)
100% 1968/1996/2005
523,411
100.0%
11.17 Best Buy, DSW Shoe
(Burlington Coat Factory),
(Target)
100% 2000/1999/NA
90,553
100.0%
11.08
Warehouse, Lowe's, Meijer,
Michaels, Office Depot,
PetSmart
Jo-Ann, Staples, (Best Buy),
(Costco), (Meijer), (Target)
100% 1972/2007/2011
96,768
100.0%
17.34
Plum Market
100% 2000/2005/2010
217,754
100.0%
16.65 Airtime Trampoline,
Golfsmith, LA Fitness,
Nordstrom Rack, PetSmart,
(REI)
West Oaks I
Novi
MI
100% 1979/1996/2004
243,987
100.0%
9.70 Best Buy, DSW Shoe
West Oaks II
Novi
MI
100% 1986/1996/2000
167,954
100.0%
17.32
Warehouse, Gander
Mountain, Old Navy, Home
Goods & Michaels-Sublease
of JLPK-Novi LLC
Jo-Ann, Marshalls, (Bed
Bath & Beyond), (Big Lots),
(Kohl's), (Toys "R" Us),
(Value City Furniture)
Winchester Center
Rochester
Hills
MI
100% 1980/2005/NA
314,575
94.4%
9.48 Bed Bath & Beyond, Dick's
Sporting Goods, Famous
Furniture, Marshalls,
Michaels, PetSmart, (Kmart)
Central Plaza
Ballwin
MO
100% 1970/2012/2012
166,431
100.0%
11.15 Buy Buy Baby, Jo-Ann,
OfficeMax, Ross Dress for
Less
Deer Creek Shopping
Center
Heritage Place
Maplewood
MO
100% 1975/2013/2013
208,144
99.3%
10.12 Buy Buy Baby, Jo-Ann,
Marshalls, Ross Dress for
Less, State of Missouri
Creve Coeur
(St Louis)
MO
100% 1989/2011/2005
269,105
92.5%
13.35 Dierbergs Markets,
Marshalls, Office Depot, T.J.
Maxx
100% 2008/2011/2011
148,630
86.4%
25.83 Whole Foods, (Target)
Town & Country Crossing
Chester Springs Shopping
Center
Town &
Country
Chester
MO
NJ
20%
1970/1996/1999
96.6%
223,068
Crossroads Centre 1
Rossford
OH
100% 2001/2001/NA
344,045
97.6%
14.41 Marshalls, Shop-Rite
Supermarket, Staples
8.87 Giant Eagle, Home Depot,
Michaels, T.J. Maxx,
(Target)
Deerfield Towne Center
Mason
OH
100% 2004/2013/2013
460,675
93.9%
19.43 Ashley Furniture
HomeStore, Bed Bath &
Beyond, Buy Buy Baby,
Regal Cinemas, Dick's
Sporting Goods, Whole
Foods Market
Olentangy Plaza
Columbus
OH
20% 1981/2007/1997
253,474
94.5%
10.60 Eurolife Furniture,
Marshalls, Micro Center,
Columbus Asia Market-
Sublease
of SuperValu, Tuesday
Morning
Rossford Pointe
Rossford
Spring Meadows Place
Holland
OH
OH
100% 2006/2005/NA
47,477
100.0%
10.35 MC Sporting Goods,
PetSmart
100% 1987/1996/2005
259,362
93.9%
10.33 Ashley Furniture
HomeStore, Big Lots, Guitar
Center, OfficeMax,
PetSmart, T.J. Maxx, (Best
Buy), (Dick's Sporting
Goods), (Kroger), (Sam's
Club), (Target)
The Shops on Lane Avenue
Upper
Arlington
OH
20% 1952/2007/2004
170,719
89.7%
21.44 Bed Bath & Beyond, Whole
Foods Market
16
Property Name
Troy Towne Center
Location
City
State
Ownership
%
Year Built /
Acquired /
Redeveloped
Total GLA
%
Leased
Troy
OH
100% 1990/1996/2003
144,485
92.4 % $
Average
base
rent per
leased
SF Anchor Tenants (1)
6.69 Kohl's, (Wal-Mart
Supercenter)
Northwest Crossing
Knoxville
TN
100% 1989/1999/2006
124,453
100.0 %
9.85 HH Gregg, OfficeMax, Ross
The Town Center at Aquia
Stafford
The Town Center at Aquia
Office (5)
East Town Plaza
Stafford
Madison
Nagawaukee Center
Delafield
The Shoppes at Fox River
Waukesha
West Allis Towne Centre
West Allis
FUTURE REDEVELOPMENTS (6):
Martin Square
Merchants' Square
Stuart
Carmel
VA
VA
WI
WI
WI
WI
FL
IN
Dress for Less, (Wal-Mart
Supercenter)
100% 1989/1998/NA
40,518
100.0 %
11.14 Regal Cinemas
100% 1989/1998/2009
98,147
91.8 %
27.53 TASC, Inc.
100% 1992/2000/2000
208,472
86.5 %
100% 1994/2012-13/NA
219,538
98.9 %
10.09 Burlington Coat Factory, Jo-
Ann, Marshalls, (Menards),
(Shopko), (Toys "R" Us)
13.66 Kohl's, Marshalls, Sports
Authority, (Sentry Foods)
100% 2009/2010/2011
182,392
100.0 %
15.72
Pick N' Save, T.J. Maxx,
(Target)
100% 1987/1996/2011
326,271
98.0 %
8.52 Burlington Coat Factory,
Kmart, Office Depot,
Xperience Fitness
30% 1981/2005/NA
331,105
65.7 % $
100% 1970/2010/NA
277,728
74.7 %
6.61 Home Depot, Paradise
Home & Patio, Staples
10.53 Cost Plus, Hobby Lobby (3),
(Marsh Supermarket)
Promenade at Pleasant Hill
Duluth
GA
100% 1993/2004/NA
261,982
71.7 %
9.63
Farmers Home Furniture,
Publix
PORTFOLIO TOTAL / AVERAGE (CORE AND UNDER REDEV)
15,910,243
94.6% $
12.22
Footnotes
(1) Anchor tenants are any tenant over 19,000 square feet. Tenants in parenthesis represent non-company owned GLA.
(2) We define Core Portfolio as stabilized assets that are not currently under development/redevelopment.
(3) Tenant closed - lease obligated.
(4) Space delivered to tenant.
(5) Represents the Office Building at The Town Center at Aquia.
(6) Represents 2.8% of combined portfolio annual base rent.
Our leases for tenant space under 19,000 square feet generally have terms ranging from three to five years. Tenant leases greater
than or equal to 19,000 square feet generally have lease terms in excess of five years or more, and are considered anchor leases. 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.
Major Tenants
The following table sets forth as of December 31, 2013 the gross leasable area, or GLA, of our existing properties leased to tenants
in our combined properties portfolio:
Type of Tenant
Anchor (1)
Retail (non-anchor)
Total
% of Total
Annualized Base
Rent
GLA (2) % of Total GLA (2)
Annualized Base
Rent
$
89,167,928
92,018,576
$ 181,186,504
100.0%
15,910,243
49.2%
50.8%
9,867,251
6,042,992
62.0%
38.0%
100.0%
(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.
17
The following table depicts as of December 31, 2013 information regarding leases with the 25 largest retail tenants in our combined
properties portfolio:
Tenant Name
TJX Companies (3)
Bed Bath & Beyond (4)
Office Depot, Inc.
LA Fitness
Home Depot
Dollar Tree
Publix Super Market
Best Buy
Jo-Ann Stores
Whole Foods Market
Regal Cinemas (5)
Michaels Stores
PetSmart
Burlington Coat Factory
Staples
Ross Stores
Kohl's
Ulta Salon
Dick's Sporting Goods
Ascena Retail (6)
Gander Mountain
Credit Rating
S&P/Moody's (1)
A+/A3
BBB+/NR
B-/B2
NR/NR
A-/A2
NR/NR
NR/NR
BB/Baa2
B/Caa1
BBB-/NR
NR/NR
B/B3
BB+/NR
NR/NR
BBB/Baa2
A-/NR
BBB+/Baa1
NR/NR
NR/NR
NR/NR
NR/NR
DSW Designer Shoe Warehouse
NR/NR
Sports Authority
Lowe's Home Centers
Meijer
NR/NR
A-/A3
NR/NR
Number
of Leases
32
13
14
5
3
30
8
6
7
4
3
11
8
5
9
10
6
9
4
19
2
7
4
2
2
GLA
972,921
391,327
332,433
176,943
384,690
306,347
372,141
206,677
233,947
152,657
143,080
240,993
174,661
360,867
187,354
266,046
363,081
93,772
203,365
113,196
159,791
130,233
166,733
270,394
397,428
% of
Total
GLA (2)
Total
Annualized
Base Rent
Annualized
Base Rent
PSF
% of
Annualized
Base Rent
6.1 % $
9,078,580
$
2.5 %
2.1 %
1.1 %
2.4 %
1.9 %
2.3 %
1.3 %
1.5 %
1.0 %
0.9 %
1.5 %
1.1 %
2.3 %
1.2 %
1.7 %
2.3 %
0.6 %
1.3 %
0.7 %
1.0 %
0.8 %
1.0 %
1.7 %
2.5 %
4,171,704
3,820,086
3,675,870
3,110,250
2,986,440
2,790,512
2,743,757
2,697,429
2,691,637
2,672,623
2,604,198
2,537,182
2,390,179
2,321,601
2,276,222
2,244,522
2,062,215
2,029,373
1,993,688
1,981,282
1,949,858
1,924,299
1,919,646
1,858,060
9.33
10.66
11.49
20.77
8.09
9.75
7.50
13.28
11.53
17.63
18.68
10.81
14.53
6.62
12.39
8.56
6.18
21.99
9.98
17.61
12.40
14.97
11.54
7.10
4.68
5.0 %
2.3 %
2.1 %
2.0 %
1.7 %
1.6 %
1.5 %
1.5 %
1.5 %
1.5 %
1.5 %
1.4 %
1.4 %
1.3 %
1.3 %
1.3 %
1.2 %
1.2 %
1.1 %
1.1 %
1.1 %
1.1 %
1.1 %
1.1 %
1.0 %
Sub-Total top 25 tenants
223
6,801,077
42.8 % $ 70,531,213
$
10.37
38.9 %
Remaining tenants
1,440
8,031,098
50.5 % 110,655,291
13.78
61.1 %
Sub-Total all tenants
1,663
14,832,175
93.3% $ 181,186,504
$
12.22
100.0%
Vacant
249
1,078,068
6.7 %
N/A
N/A
N/A
Total including vacant
1,912
15,910,243
100.0% $ 181,186,504
N/A
100.0%
(1) Source: Latest Company filings per CreditRiskMonitor.
(2) GLA owned directly by us or our unconsolidated joint ventures.
(3) Marshalls (20), T J Maxx (12).
(4) Bed Bath & Beyond (8), Buy Buy Baby (4), Cost Plus (1).
(5) Regal (2), Hollywood (1).
(6) Catherine's (3), Maurices (4), Justice (3), Dress Barn (5), Lane Bryant (4).
18
Lease Expirations
The following tables set forth a schedule of lease expirations, for our combined portfolio, for the next ten years and thereafter,
assuming that no renewal options are exercised:
ALL TENANTS
Year
(3)
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024+
Sub-Total
Leased (4)
Vacant
Total
Expiring Leases As of December 31, 2013
Number of Leases
GLA (1)
Average Annualized
Base Rent
(per square foot)
Total
Annualized
Base Rent (2)
% of Total Annualized
Base Rent
46
218
282
299
222
197
107
48
55
52
70
67
1,663
22
227
1,912
232,002
$
9.71
$
931,594
2,028,131
1,972,146
1,872,123
1,345,642
1,344,611
723,334
913,971
758,100
1,132,351
1,578,170
14,832,175
213,172
864,896
15,910,243
$
11.98
11.65
13.51
13.27
13.61
10.45
10.53
10.82
13.24
12.23
11.97
12.22
N/A
N/A
12.22
2,253,047
11,163,688
23,632,324
26,643,415
24,848,320
18,309,414
14,046,562
7,615,507
9,892,784
10,039,735
13,845,072
18,896,636
181,186,504
N/A
N/A
$
181,186,504
1.2 %
6.2 %
13.0 %
14.7 %
13.7 %
10.1 %
7.8 %
4.2 %
5.5 %
5.5 %
7.6 %
10.5 %
100.0%
N/A
N/A
100.0%
(1) GLA owned directly by us or our unconsolidated joint ventures.
(2) Annualized Base Rent in based upon rents currently in place.
(3) Tenants currently under month to month lease or in the process of renewal.
(4) Lease has been executed, but space has not yet been delivered.
ANCHOR TENANTS (greater than or equal to 19,000 square feet)
Year
(3)
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024+
Sub-Total
Leased (4)
Vacant
Total
Expiring Anchor Leases As of December 31, 2013
Number of Leases
GLA (1)
Average Annualized
Base Rent
(per square foot)
Total
Annualized
Base Rent (2)
% of Total Annualized
Base Rent
4
4
32
29
33
20
24
11
19
13
21
25
235
3
5
243
126,781
$
307,405
1,203,346
1,065,547
1,182,119
699,584
976,659
534,445
718,814
545,621
812,338
1,345,947
9,518,606
120,454
228,191
9,867,251
$
6.51
3.49
8.11
9.80
10.92
9.62
8.39
7.96
9.23
11.43
9.99
10.39
9.37
N/A
N/A
9.37
824,980
1,073,760
9,755,566
10,447,217
12,913,873
6,726,669
8,196,345
4,254,484
6,637,191
6,239,076
8,111,364
13,987,403
89,167,928
N/A
N/A
89,167,928
0.9 %
1.2 %
10.9 %
11.7 %
14.5 %
7.5 %
9.2 %
4.8 %
7.4 %
7.0 %
9.1 %
15.8 %
100.0%
N/A
N/A
100.0%
(1) GLA owned directly by us or our unconsolidated joint ventures.
(2) Annualized Base Rent in based upon rents currently in place.
(3) Tenants currently under month to month lease or in the process of renewal.
(4) Lease has been executed, but space has not yet been delivered.
19
NON-ANCHOR TENANTS (less than 19,000 square feet)
Expiring Non-Anchor Leases As of December 31, 2013
Average
Annualized
Base Rent
(per square foot)
13.57
$
16.16
16.82
17.86
17.30
17.93
15.90
17.79
16.68
17.89
17.92
21.14
17.32
N/A
N/A
17.32
$
$
Total
Annualized
Base Rent (1)
% of Total
Annualized
Base Rent
$
$
$
1,428,067
10,089,928
13,876,758
16,196,198
11,934,447
11,582,745
5,850,217
3,361,023
3,255,593
3,800,659
5,733,708
4,909,233
92,018,576
N/A
N/A
92,018,576
1.6 %
11.0 %
15.1 %
17.6 %
13.0 %
12.6 %
6.4 %
3.7 %
3.5 %
4.1 %
6.2 %
5.2 %
100.0%
N/A
N/A
100.0%
Year
(3)
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024+
Sub-Total
Leased (4)
Vacant
Total
Number of
Leases
42
214
250
270
189
177
83
37
36
39
49
42
1,428
19
222
1,669
GLA (2)
105,221
624,189
824,785
906,599
690,004
646,058
367,952
188,889
195,157
212,479
320,013
232,223
5,313,569
92,718
636,705
6,042,992
(1) GLA owned directly by us or our unconsolidated joint ventures.
(2) Annualized Base Rent is based upon rents currently in place.
(3) Tenants currently under month to month lease or in the process of renewal.
(4) Lease has been executed, but space has not yet been delivered.
Land Held for Development and/or Available for Sale
At December 31, 2013, we had three projects in pre-development and various parcels of land held for development or available for
sale 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 and an identified source of construction financing.
During 2013, we completed Phase I construction on Parkway Shops, our ground-up development of an 89,114 square foot retail
shopping center located in Jacksonville, Florida for a total project cost of $17.5 million. In additions we began construction on
Phase I of Lakeland Park Center, located adjacent to our existing Shoppes of Lakeland shopping center in Lakeland, Florida. The
total projected cost of the project, excluding land cost, is $33.6 million and is expected to be substantially complete in the fourth
quarter of 2014.
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 2013, we recorded an impairment provision of $0.3 million primarily due to changes in estimated
market value of various parcels. We recorded impairment provisions of $1.4 million and $11.5 million in 2012 and 2011,
respectively, related to developable land that we decided to market for sale. For a detailed discussion of our development projects,
refer to Notes 3 and 6 of the notes to the consolidated financial statements.
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.
20
Item 3. Legal Proceedings
We are currently involved in certain litigation arising in the ordinary course of business.
Item 4. Mine Safety Disclosures
Not Applicable
21
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
PART II
Market Information
Our common shares are currently listed and traded on the New York Stock Exchange (“NYSE”) under the symbol “RPT”. On
February 14, 2014, the closing price of our common shares on the NYSE was $16.39.
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, 2008 through
December 31, 2013. The stock price performance shown is not necessarily indicative of future price performance.
The following table depicts high and low closing prices and dividends declared per share for each quarter in 2013 and
2012:
Quarter Ended
December 31, 2013
September 30, 2013
June 30, 2013
March 31, 2013
December 31, 2012
September 30, 2012
June 30, 2012
March 31, 2012
(1) Paid on January 2, 2014
(2) Paid on January 2, 2013
Stock Price
High
Low
Dividends
$
$
$
$
$
$
$
$
16.57
16.11
17.68
16.82
13.63
13.57
12.58
12.23
$
$
$
$
$
$
$
$
14.77
14.24
14.48
13.72
12.31
12.01
11.29
9.98
$
$
$
$
$
$
$
$
0.18750
0.18750
0.16825
0.16825
0.16825
0.16325
0.16325
0.16325
(1)
(2)
22
Holders
The number of holders of record of our common shares was 1,417 at February 14, 2014. A substantially greater number of holders
are beneficial owners whose shares of record are held by banks, brokers and other financial institutions.
Dividends
Under the Code, a REIT must meet 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.
Distributions on our 7.25% Series D Cumulative Convertible Perpetual Preferred Shares declared in 2013 totaled $3.625 per
share. 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, 2013, refer to Item 12 of Part III of this report and Note
16 of the notes to the consolidated financial statements.
23
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.
Year Ended December 31,
2013
2012
2011
2010
2009
(In thousands, except per share)
Operating Data:
Total revenue
Property net operating income (1)
Income (loss) from continuing operations
Gain (loss) on sale of real estate assets
Net income (loss)
Net (income) loss attributable to noncontrolling partner interest
Preferred share dividends
Net income (loss) available to common shareholders
Earnings (loss) per common share, basic
Continuing operations
Discontinued operations
Basic earnings (loss)
Earnings (loss) per common share, basic
Continuing operations
Discontinued operations
Diluted earnings (loss)
Weighted average shares outstanding:
Basic
Diluted
Cash dividends declared per RPT preferred share
Cash dividends declared per RPT common share
Cash distributions to RPT preferred shareholders
Cash distributions to RPT common shareholders
Balance Sheet Data (at December 31):
Cash and cash equivalents
Investment in real estate (before accumulated depreciation)
Total assets
Total notes payable
Total liabilities
Total RPT shareholders' equity
Noncontrolling interest
Total shareholders' equity
$
$
$
$
$
$
$
$
$
$
170,068
121,372
8,371
2,120
11,462
(465)
(7,250)
3,747
0.01
0.05
0.06
0.01
0.05
0.06
59,336
59,728
3.63
0.71
7,250
40,108
$
$
$
$
$
$
$
$
$
$
125,225
86,213
7,171
336
7,092
112
(7,250)
(46)
— $
—
— $
— $
—
— $
44,101
44,101
3.63
0.66
7,250
28,333
$
$
$
$
114,386
76,833
(29,418)
9,406
(28,500)
1,742
(5,244)
(32,002)
(0.85)
0.01
(0.84)
(0.85)
0.01
(0.84)
38,466
38,466
2.67
0.65
3,432
25,203
$
$
$
$
$
$
$
$
$
$
$
$
$
$
104,333
70,010
(24,063)
(2,050)
(23,724)
3,576
—
(20,148)
(0.58)
0.01
(0.57)
(0.58)
0.01
(0.57)
35,046
35,046
0.65
— $
$
— $
$
22,501
105,172
70,130
8,228
2,886
15,936
(2,216)
—
—
0.30
0.32
0.62
0.30
0.32
0.62
22,004
22,193
—
0.79
—
17,974
5,795
$
4,233
$
12,155
$
10,175
$
8,432
1,625,217
1,652,248
753,174
854,288
770,097
27,863
797,960
1,119,171
1,165,291
541,281
605,459
529,783
30,049
559,832
996,908
1,048,823
518,512
567,649
449,075
32,099
481,174
1,074,095
1,052,829
571,694
613,463
402,273
37,093
439,366
Other Data:
Funds from operations ("FFO") available to RPT common shareholders (2)
Net cash provided by operating activities
Net cash used in investing activities
Net cash provided by (used in) financing activities
$
79,861
$
47,816
$
29,509
$
20,945
$
85,583
(355,752)
271,731
62,194
(173,210)
103,094
44,703
(79,747)
37,024
43,249
(101,935)
60,385
(1) Property net operating income is a non-GAAP measure that is used internally to evaluate the performance of property operations and we consider it to be a significant measure. Property
net operating income should not be considered an alternative measure of operating results or cash flow from operations as determined in accordance with GAAP. The reconciliation
of property net operating income to net income is as follows:
Property net operating income from continuing operations
$
121,372
$
86,213
$
76,833
$
70,010
$
Management and other fee income
Depreciation and amortization
General and administrative expenses
Other expenses, net
Income tax (provision) benefit
Income (loss) from discontinued operations
Net income (loss)
2,335
(56,305)
(22,273)
(36,694)
(64)
3,091
4,064
(38,673)
(19,446)
(25,021)
34
(79)
4,125
(33,842)
(19,646)
(56,093)
(795)
918
4,191
(28,592)
(18,986)
(51,356)
670
339
$
11,462
$
7,092
$
(28,500)
$
(23,724)
$
70,130
4,911
(27,160)
(14,928)
(25,358)
633
7,708
15,936
(2) Under the NAREIT definition, FFO represents net income available 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 adjustments for unconsolidated partnerships and joint ventures. In addition, in October 2011, NAREIT clarified its definition of FFO to exclude impairment
provisions on depreciable property and equity investments in depreciable property. Management has restated FFO for prior periods accordingly. See “Funds From Operations” in
Item 7 for a discussion of FFO and a reconciliation of FFO to net income.
24
1,002,855
997,957
552,836
591,392
367,228
39,337
406,565
45,263
48,064
(3,334)
(41,114)
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
5 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. 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, 2013, we owned and managed, either directly or through our interest in real estate joint ventures, a total of 80
shopping centers and one office building, with approximately 15.9 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 47% of the GLA of our shopping
centers are anchored by tenants that sell groceries. Supermarket anchor tenants in our centers include, among others, Publix Super
Market, Whole Foods, Supervalu and Kroger. National chain anchor tenants in our centers include, among others, TJ Maxx/
Marshalls, Bed Bath and Beyond, Home Depot and Kohl’s.
Our shopping centers are primarily located in strategic, metropolitan markets areas throughout the Eastern, Midwestern and Central
United States. Our focus on these markets has enabled us to develop a thorough understanding of the unique characteristics of
our markets. Throughout 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.
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 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 or 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 reimbursement from tenants for common area maintenance (“CAM”), insurance, real
estate taxes and other operating expenses ("Recovery Income"). The majority of our Recovery Income is 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 and Recovery Income.
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 creditworthiness, 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, 2013 and 2012,
our accounts receivable were $9.6 million and $8.0 million respectively, net of allowances for doubtful accounts of $2.4 million
and $2.6 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, 2013 and 2012, net of allowances was $15.1 million and $14.8 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 10 – 40 years for buildings and improvements
and 5 – 30 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 15 – 25 years. In addition, we capitalize tenant leasehold improvements and depreciate
them over 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 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, identifiable
intangibles and any gain on purchase. 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), and out-of-market assumed
mortgages. 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.
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 may include periods covered by bargain renewal options, if any. 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 carrying value of the property may not be recoverable. These
changes in circumstances include, but are not limited to, changes in occupancy, rental rates, tenant sales, net operating income,
geographic location, real estate values and expected holding period. 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.
27
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 discounted or 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. Refer to Note 6 of the notes to the consolidated financial statements for further information.
Off Balance Sheet Arrangements
We have five equity investments in unconsolidated joint venture entities in which we own 30% 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 7 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.
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 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 and other internal costs directly related to executing 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.
28
Results of Operations
Comparison of the Year Ended December 31, 2013 to the Year Ended December 31, 2012
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, 2013 as
compared to 2012:
Total revenue
Recoverable operating expense
Other non-recoverable operating expense
Depreciation and amortization
General and administrative expense
Other expense, net
Gain on sale of real estate
(Loss) earnings from unconsolidated joint ventures
Interest expense
Amortization of deferred financing fees
Provision for impairment
Provision for impairment on equity investments in
unconsolidated joint ventures
Deferred gain recognized upon acquisition of real estate
Loss on extinguishment of debt
Income tax (provision) benefit
Income (loss) from discontinued operations
Net (income) loss attributable to noncontrolling interest
Preferred share dividends
Net income (loss) available to common shareholders
NM - Not Meaningful
Year Ended December 31,
2013
(In thousands)
2012
Dollar
Change
Percent
Change
$
$
170,068
43,355
3,006
56,305
22,273
(965)
4,279
(4,759)
(29,075)
(1,447)
(9,669)
—
5,282
(340)
(64)
3,091
(465)
(7,250)
3,747
$
$
125,225
32,146
2,802
38,673
19,446
(66)
69
3,248
(25,895)
(1,449)
(1,387)
(386)
845
—
34
(79)
112
(7,250)
$
(46) $
44,843
11,209
204
17,632
2,827
(899)
4,210
(8,007)
(3,180)
2
(8,282)
386
4,437
(340)
(98)
3,170
(577)
—
3,793
35.8 %
34.9 %
7.3 %
45.6 %
14.5 %
NM
NM
(246.5)%
12.3 %
(0.1)%
NM
NM
NM
NM
(288.2)%
NM
NM
— %
8,245.7 %
Total revenue in 2013 increased $44.8 million, or 35.8% from 2012. The increase is primarily due to the following:
•
•
•
•
•
•
$30.0 million increase related to the Clarion Acquisition completed in March 2013;
$13.6 million increase related to our acquisitions completed in 2013 and 2012;
$3.1 million increase income related to increases at existing centers;
$1.0 million increase related to the completion of Phase I of the Parkway Shops development;
higher lease termination income of $0.2 million; offset in part by
lower fee income of $1.8 million due to our acquisition of the Clarion properties from a joint venture in which we hold a
30% interest and $1.2 million decrease in revenue at properties that are currently under redevelopment.
Recoverable operating expense and real estate taxes in 2013 increased $11.2 million, or 34.9% from 2012. The increase is primarily
due to the following:
•
•
$8.8 million related to our 2013 acquisitions; and
$1.8 million related to our 2012 acquisitions.
Other non-recoverable operating expense in 2013 increased $0.2 million, or 7.3% from 2012 primarily due to an increase in non-
recoverable repairs and maintenance.
Depreciation and amortization expense in 2013 increased $17.6 million, or 45.6%, from 2012. The increase was primarily due
to our acquisitions in 2012 and 2013.
29
General and administrative expense 2013 increased $2.8 million or 14.5% from 2012. The increase was primarily due to:
•
•
$1.8 million associated with an increase in compensation expense related to an increase in costs associated with our long-
term incentive plans which are based on our stock price performance relative to a group of our peers (see Note 16 for
additional information) offset in part by higher capitalization of development and leasing salaries and related costs in 2013.
Salaries capitalized in 2013 and 2012 represented approximately 18% of total salaries; and
$1.0 million in acquisition costs.
Other expense, net in 2013 increased $0.9 million from 2012. In 2012 expenses were offset by insurance proceeds of $0.8 million
related to a tenant fire.
Gain on sale of real estate was $4.3 million in 2013 primarily due to a $3.0 million gain on sale of land at our Roseville Towne
Center to Wal-Mart, an anchor tenant, and a net gain on the sale of multiple outparcels at several other properties. Refer to Note
4 of the notes to the consolidated financial statements for detail of the individual outparcel sales. In the comparable period in
2012 we had a gain of $0.1 million related to the sale on one outparcel.
Earnings from unconsolidated joint ventures in 2013 decreased $8.0 million from 2012. The decrease was related to the acquisition
of our partner's 70% interest in 12 shopping centers held in the Ramco/Lion Venture LP. The sale resulted in a loss of $21.5 million
to the joint venture of which our share was $6.4 million.
Interest expense in 2013 increased $3.2 million, or 12.3%, from 2012 primarily due to the following:
•
•
•
•
•
$1.1 million increase in mortgage interest related to the assumption of loans as part our 2013 acquisitions;
$3.4 million increase in loan interest due to the issuance of senior unsecured notes in July 2013; offset in part by
$1.1 million decrease in interest related to our junior subordinated notes. In January, 2013 the notes converted from a fixed
interest rate of 7.9% to a variable interest rate of LIBOR plus 3.3% (3.5% at December 31, 2013);
lower average balances on our revolving credit facility; and
$0.2 million increase in capitalized interest due to our development/redevelopment projects.
Impairment provisions of $9.7 million recorded in 2013 related to the decision to market certain income-producing properties for
sale, and adjustments to the sales price assumptions for certain undeveloped land parcels available for sale at several of our
development properties. In 2012 our impairment provisions totaled $1.4 million. Refer to Note 6 of the notes to the consolidated
financial statements for a detailed discussion of these charges.
In 2013 we recorded a deferred gain of $5.3 million which related to our proportional 30% equity interest in a property sold to
the Ramco/Lion Venture LP in 2007. In 2012, we recorded a deferred gain of $0.8 million related to our proportional 7% equity
interest when a property was sold to a joint venture in 2007.
Loss on extinguishment of debt of approximately $0.3 million in 2013 related to a prepayment penalty incurred to repay two
mortgages.
Income from discontinued operations was $3.1 million in 2013 compared to a loss of $0.1 million in 2012. In 2013 we recorded
a gain on sale of real estate of $2.1 million compared to a $0.3 million gain in 2012. The subject properties recorded net operating
income of $1.1 million in 2013 compared to $2.4 million in 2012. In 2012 a gain on extinguishment of debt of $0.3 million was
the result of completing a deed-in-lieu transfer to the lender in exchange for full release of a mortgage loan obligation at a property.
Higher operating net income in 2012 was offset by a non-cash provision for impairment of $2.9 million. No such impairment was
recorded in 2013.
30
Comparison of the Year Ended December 31, 2012 to the Year Ended December 31, 2011
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, 2012 as
compared to 2011:
Year Ended December 31,
2012
2011
(In thousands)
Dollar
Change
Percent
Change
Total revenue
$
125,225
$
114,386
$
10,839
Recoverable operating expense
Other non-recoverable operating expense
Depreciation and amortization
General and administrative expense
Other expense, net
Gain on sale of real estate
Earnings from unconsolidated joint ventures
Interest expense
Amortization of deferred financing fees
Provision for impairment
Provision for impairment on equity investments in
unconsolidated joint ventures
Deferred gain recognized upon acquisition of real estate
Loss on extinguishment of debt
Income tax benefit (provision)
(Loss) income from discontinued operations
Net loss attributable to noncontrolling interest
Preferred share dividends
32,146
2,802
38,673
19,446
(66)
69
3,248
(25,895)
(1,449)
(1,387)
(386)
845
—
34
(79)
112
(7,250)
Net loss available to common shareholders
$
(46) $
NM - Not meaningful
29,974
3,454
33,842
19,646
(257)
231
1,669
(27,413)
(1,827)
(16,917)
(9,611)
—
(1,968)
(795)
918
1,742
(5,244)
(32,002) $
2,172
(652)
4,831
(200)
191
(162)
1,579
1,518
378
15,530
9,225
845
1,968
829
(997)
(1,630)
(2,006)
31,956
9.5 %
7.2 %
(18.9)%
14.3 %
(1.0)%
(74.3)%
NM
94.6 %
(5.5)%
(20.7)%
NM
NM
NM
(100.0)%
104.3 %
NM
(93.6)%
38.3 %
(99.9)%
Total revenue in 2012 increased $10.8 million, or 9.5% from 2011. The increase is primarily due to the following:
•
•
•
$12.6 million increase related to our acquisitions completed in 2012 and 2011;
$0.1 million increase income related to increases at existing centers; offset by
lower lease termination income of $1.9 million.
Recoverable operating expenses in 2012 increased by $2.2 million, or 7.2% from 2011. The increase is primarily due to the
following:
•
•
$2.9 million related to our 2012 and 2011 acquisitions; offset in part by
$0.7 million related to decreases at existing centers.
Other non-recoverable operating expenses in 2012 decreased $0.7 million, or 18.9% from 2011 primarily due to lower allowance
for bad debts.
Depreciation and amortization expense in 2012 increased by $4.8 million, or 14.3% from 2011. The increase was primarily due
to our acquisitions in 2011 and 2012.
Other expense, net in 2012 decreased $0.2 million, or 74.3% from 2011. The decrease in net expense was primarily due to
insurance proceeds of $0.8 million received in 2012 for a tenant fire, partly offset by lower real estate tax expense related to land
held for development or available for sale.
31
Earnings from unconsolidated joint ventures increased in 2012 by $1.6 million from 2011 which represents our share of a joint
venture's impairment provision of $5.5 million.
Interest expense in 2012 decreased $1.5 million, or 5.5%, from 2011 primarily due to the following:
•
•
•
•
payoff of several higher interest rate mortgages;
lower revolving credit facility interest;
increased capitalized interest due to our development projects; offset by
increased term loan interest related to a $45 million term loan balance.
Amortization of deferred financing fees expense in 2012 decreased $0.4 million, or 20.7% from 2011. The decrease is primarily
due to the refinancing of our revolving credit facility in the second quarter of 2011 which resulted in the write-off of associated
deferred financing costs.
Impairment provisions of $1.8 million were recorded in 2012 related to 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. In 2011 our impairment provisions totaled $26.5
million. Refer to Note 6 of the notes to the consolidated financial statements for a detailed discussion of these charges.
In 2011 we recorded a one-time write-off of unamortized deferred financing costs related to the extinguishment of debt of
approximately $2.0 million. There was no similar charge in 2012.
The income tax benefit was $34,000 in 2012 compared to a tax provision of $0.8 million in 2011. The decrease is due to the 2011
repeal of the Michigan Business Tax which resulted in a one-time write-off of net deferred tax assets of $0.8 million.
Loss from discontinued operations was $0.1 million in 2012 compared to income of $0.9 million in 2011. In 2012 we recorded
a gain on sale of real estate of $0.3 million compared to $9.4 million in 2011 and the subject properties recorded net operating
income of $2.2 million in 2012 compared to $1.2 million in 2011. In addition, in 2012 a non-cash provision for impairment of
$2.9 and a $0.3 million gain on extinguishment of debt was recorded related to a property that was previously held in a consolidated
joint venture compared to a non-cash provision of $10.9 million and a $1.2 million gain on extinguishment of debt in 2011. In
both 2012 and 2011 the gain on extinguishment of debt was the result of completing a deed-in-lieu transfer to the lender in exchange
for full release under mortgage loan obligations at each property.
Preferred share dividends in 2012 increased $2.0 million or 38.3% from 2011 due to the preferred equity offering that was completed
in April 2011.
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 quarterly 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, 2013 and 2012, we had $9.2 million and $8.1 million, respectively, in cash and cash equivalents and restricted
cash. Restricted cash was comprised primarily of funds held in escrow by lenders to pay real estate taxes, insurance premiums,
and certain capital expenditures.
Short-Term Liquidity Requirements
Our short-term liquidity needs are met primarily from rental income and recoveries and consist primarily of funds necessary to
pay operating expenses associated with our operating properties, interest and scheduled principal payments on our debt, quarterly
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 May 2014, when two mortgage loans mature totaling $33.5 million, which includes scheduled
amortization payments.
We continually search for investment opportunities that may require additional capital and/or liquidity. As of December 31, 2013,
we had no proposed property acquisitions under contract.
32
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 and non-recurring capital expenditures.
The following is a summary of our cash flow activities:
Cash provided by operating activities
Cash used in investing activities
Cash provided by financing activities
Operating Activities
$
2011
2013
Year Ended December 31,
2012
(In thousands)
62,194
$
(173,210)
103,094
85,583
(355,752)
271,731
$
44,703
(79,747)
37,024
We anticipate that cash on hand, operating cash flows, borrowings under our revolving credit facility, issuance of equity, as well
as other debt and equity alternatives, will provide the necessary capital that we require to operate. Net cash flow provided by
operating activities increased $23.4 million in 2013 compared to 2012 primarily due to:
• Net operating income increased $32.9 million as a result of our acquisitions (net of dispositions) and leasing activity at
our shopping centers; offset by
• Net accounts receivable increase of $2.8 million; and
• An increase in interest expense of approximately $3.2 million primarily due to the issuance of senior notes and
additional term loans, offset by lower interest on mortgage debt due to payoffs.
Investing Activities
Net cash used for investing activities increased $182.5 million compared to 2012 primarily due to:
• Acquisitions of real estate increased $192.2 million;
• Additions to real estate increased $6.2 million, as a result of an increase in development funding by $5.7 million and
capital expenditures of $3.4 million, offset by a decrease of $1.7 million in deferred leasing costs and $1.2 million decrease
in expenditures on land held for development; and
Investment in unconsolidated joint ventures increased $1.1 million due to funding for debt repayment.
•
These increases were offset by additional net proceeds from sales of real estate and distributions from the sale of joint venture
properties of $21.7 million.
Financing Activities
Cash flows provided by financing activities were $271.7 million as compared to $103.1 million in 2012. This difference of $168.6
million is primarily explained by:
•
•
•
an increase in net proceeds of $162.8 million from common share issuances;
an increase in our net borrowing of $18.6 million for debt and deferred financing costs; offset by
an increase in cash dividends to common shareholders of $11.8 million due to additional shares issued as well as an
increase in our per share quarterly dividend payment.
As of December 31, 2013, $204.8 million was available to be drawn on our $240 million unsecured revolving credit facility subject
to certain covenants. It is anticipated that additional 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 9 of the consolidated financial statements.
33
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 $0.6923 per common share to shareholders in 2013. In the third quarter we increased our quarterly
dividend 11.4% to $0.18750 per share, or an annualized amount of $0.75 per share. Cash dividends for 2012 and 2011 were $0.653
per common share. Our dividend policy is to make 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 would be used. 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.
Cash provided by operating activities
Cash distributions to preferred shareholders
Cash distributions to common shareholders
Cash distributions to operating partnership unit holders
Total distributions
Surplus
$
$
$
2013
Year Ended December 31,
2012
(In thousands)
62,194
$
$
85,583
2011
44,703
(7,250)
(40,108)
(1,580)
(48,938) $
(7,250)
(28,333)
(1,814)
(37,397) $
(3,432)
(25,203)
(2,159)
(30,794)
36,645
$
24,797
$
13,909
During 2013, we completed two underwritten public offerings of common shares. In March 2013, we issued 8.05 million common
shares of beneficial interest. Our total net proceeds, after deducting expenses, were approximately $122.2 million and were used
to fund a portion of the consideration for the acquisition of the Clarion Partners Portfolio, a 12 property shopping center portfolio. In
November 2013, we issued 4.5 million common shares of beneficial interest. Our total net proceeds, after deducting expenses,
were approximately $70.4 million and were used to fund a portion of the consideration for two acquisitions that were completed
in the fourth quarter 2013 as well as for other general corporate purposes. Both offerings of the shares was made pursuant to
registration statements on Form S-3.
In addition, during 2013, we issued 5.4 million common shares through our controlled equity offerings generating $81.7 million
in net proceeds, after sales commissions and fees of $1.2 million. We used the net proceeds for general corporate purposes including
the repayment of debt. The shares issued in the controlled equity offering are registered with the Securities and Exchange
Commission (“SEC”) on our registration statement on Form S-3.
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, 2013, we had five equity investments in unconsolidated joint venture entities in which we owned 30% or less
of the total ownership interest and accounted for these entities under the equity method. Refer to Note 7 of the notes to the
consolidated financial statements for more information.
34
We have a 20% ownership interest in our Ramco 450 joint venture which owns a portfolio of eight properties totaling 1.7 million
square feet of GLA. As of December 31, 2013, the properties in the portfolio had consolidated equity of $147.1 million. Our
total investment in the venture at December 31, 2013 was $19.1 million. The Ramco 450 venture has total debt obligations of
approximately $140.9 million with maturity dates ranging from December 2015 through September 2023. Our proportionate
share of the total debt is $28.2 million. Such debt is non-recourse to the venture, subject to carve-outs customary to such types
of mortgage financing.
We have a 30% ownership interest in our Ramco Lion joint venture which owns a portfolio of three properties totaling 0.8 million
square feet of GLA. As of December 31, 2013, the properties had consolidated equity of $58.9 million. Our total investment in
the venture at December 31, 2013 was $9.1 million. The Ramco Lion joint venture has one property with a mortgage payable
obligation of approximately $30.5 million with maturity date of October 2015. Our proportionate share of the total debt is $9.2
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% - 20% in three smaller joint ventures that each own one property. As of
December 31, 2013, these properties have combined equity of $45.1 million. Our total investment in these ventures was $2.7
million. One joint venture has non-recourse debt in the amount of $7.5 million with a maturity date of January 2014. Our
proportionate share of the debt is $1.5 million. The joint venture is in discussion with the lender to transfer the property ownership
to the lender in consideration for repayment of the loan.
Refer to Note 7 of the notes to the consolidated financial statements for more information regarding our equity investments in
joint ventures.
Contractual Obligations
The following are our contractual cash obligations as of December 31, 2013:
Contractual Obligations
Mortgages and notes payable:
Scheduled amortization
Payments due at maturity
Total mortgages and notes payable (1)
Interest expense (2)
Employment contracts
Capital lease (3)
Operating leases
Construction commitments
Total contractual obligations
Payments due by period
Less than 1
year
Total
1-3 years
(In thousands)
3-5 years
More than
5 years
$
$
21,595
728,405
750,000
186,258
763
5,955
3,407
13,086
959,469
$
$
3,780
29,676
33,456
32,073
763
5,955
579
13,086
85,912
$
$
7,912
359,270
367,182
78,037
—
—
1,405
—
446,624
$
$
4,235
85,195
89,430
30,070
—
—
817
—
120,317
$
$
5,668
254,264
259,932
46,078
—
—
606
—
306,616
(1) Excludes $3.2 million of unamortized mortgage debt premium.
(2) Variable rate debt interest is calculated using rates at December 31, 2013.
(3) 99 year ground lease expires September 2103. However, an anchor tenant’s exercise of its option to purchase its parcel in
October 2014 would require us to purchase the real estate that is subject to the ground lease.
We anticipate that the combination of cash on hand, cash provided from operating activities, the availability under our credit
facility ($204.8 million at December 31, 2013 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, 2013, we did not have any contractual obligations that required or allowed settlement, in whole or in part, with
consideration other than cash.
35
Mortgages and notes payable
See the analysis of our debt included in “Liquidity and Capital Resources” above.
Employment Contracts
At December 31, 2013, we had employment contracts with our Chief Executive and Chief Financial Officers 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 under an operating lease. 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 $5.0 million.
Construction Costs
In connection with the development and expansion of various shopping centers as of December 31, 2013, we have entered into
agreements for construction activities with an aggregate cost of approximately $13.1 million.
Planned Capital Spending
We are focused on our core strength 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.
For 2014, we anticipate spending approximately $56.0 million for capital expenditures, of which $11.7 million is reflected in the
construction commitments in the above contractual obligations table. Of the total anticipated spending, approximately $26.8
million is for development costs and approximately $29.2 million is for redevelopment projects, tenant improvements, and leasing
costs.
Capitalization
At December 31, 2013 our total market capitalization was $2.0 billion and is detailed below:
Net debt (including property-specific mortgages, unsecured revolving credit facility, term loans and capital
lease obligation net of $5.8 million in cash)
(in thousands)
$
749,891
Common shares, OP units, and dilutive securities based on market price of $15.74 at December 31, 2013
1,090,987
Convertible perpetual preferred shares based on market price of $58.57 at December 31, 2013
Total market capitalization
117,140
$ 1,958,018
Net debt to total market capitalization
38.3%
At December 31, 2013, the noncontrolling interest in the Operating Partnership represented a 3.2% 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 68,920,927 of our common shares of beneficial interest outstanding at
December 31, 2013, with a market value of approximately $1.1 billion.
Funds From Operations
We consider funds from operations, also known as “FFO”, to be an appropriate supplemental measure of the financial performance
of an equity REIT. Under the NAREIT definition, FFO represents net income available to common shareholders, excluding
extraordinary items, as defined under accounting principles generally accepted in the United States of America (“GAAP”), gains
36
(losses) on sales of depreciable property, plus real estate related depreciation and amortization (excluding amortization of financing
costs), and adjustments for unconsolidated partnerships and joint ventures. In addition, in October 2011, NAREIT clarified its
definition of FFO to exclude impairment provisions on depreciable property and equity investments in depreciable
property. Management has restated FFO for prior periods accordingly.
Also, we consider “Operating FFO” a meaningful, additional measure of financial performance because it excludes periodic items
such as impairment provisions on land available for sale, bargain purchase gains, and gains or losses on extinguishment of debt
that are not adjusted under the current NAREIT definition of FFO. We provide a reconciliation of FFO to Operating FFO. FFO
and Operating FFO should not be considered alternatives to GAAP net income available to common shareholders or as alternatives
to cash flow as measures of liquidity.
While we consider FFO and Operating FFO useful measures for reviewing our comparative operating and financial performance
between periods or to compare our performance to different REITs, our computations of FFO and Operating FFO may differ from
the computations utilized by other real estate companies, and therefore, may not be comparable to these other real estate companies.
We recognize the limitations of FFO and Operating FFO when compared to GAAP net income available to common
shareholders. FFO and Operating FFO do not represent amounts available for needed capital replacement or expansion, debt
service obligations, or other commitments and uncertainties. In addition, FFO and Operating FFO do not represent cash generated
from operating activities in accordance with GAAP and are not necessarily indicative of cash available to fund cash needs, including
the payment of dividends. FFO and Operating FFO are simply used as additional indicators of our operating performance. The
following table illustrates the calculations of FFO and Operating FFO:
Net income (loss) available to common shareholders
Adjustments:
Rental property depreciation and amortization expense
Pro-rata share of real estate depreciation from unconsolidated joint ventures
Gain on sale of depreciable real estate
Loss (gain) on sale of joint venture depreciable real estate (1)
Provision for impairment on income-producing properties
Provision for impairment on joint venture income-producing properties (1)
Provision for impairment on equity investments in unconsolidated joint ventures
Deferred gain recognized upon acquisition of real estate
Noncontrolling interest in Operating Partnership (2)
Subtotal
Add preferred share dividends (assumes if converted) (3)
FFO
Provision for impairment for land available for sale
Loss on extinguishment of debt
Gain on extinguishment of joint venture debt, net of RPT expenses (1)
Operating FFO
Weighted average common shares
Shares issuable upon conversion of Operating Partnership Units (2)
Dilutive effect of securities
Shares issuable upon conversion of preferred shares (3)
Weighted average equivalent shares outstanding, diluted
Funds from operations per diluted share
Operating FFO, per diluted share
Years Ended December 31,
2011
2012
2013
(In thousands, except per share data)
$
3,747
$
(46) $
(32,002)
56,316
3,689
(2,120)
6,454
9,342
—
—
(5,282)
465
72,611
7,250
79,861
327
340
—
80,528
59,336
2,257
392
6,940
68,925
$
$
39,240
6,584
(336)
75
2,355
50
386
(845)
353
47,816
—
47,816
1,387
—
(178)
49,025
44,101
2,509
384
—
46,994
$
$
1.16
1.17
$
$
1.02
1.04
$
$
36,271
9,310
(7,197)
(2,718)
16,332
1,644
9,611
—
(1,742)
29,509
—
29,509
11,468
750
—
41,727
38,466
2,785
145
—
41,396
0.71
1.01
$
$
$
$
(1) Amount included in earnings (loss) from unconsolidated joint ventures.
(2) The total noncontrolling interest reflects OP units convertible 1:1 into common shares.
(3) Series D convertible preferred shares were dilutive for year ended December 31, 2013 and anti-dilutive for the comparable
periods in 2012 and 2011.
37
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 July 2013, the FASB updated ASC 740 "Income Taxes" with ASU 2013-11 "Presentation of an Unrecognized Tax Benefit When
a Net Operating Loss Carry forward, a Similar Tax Loss, or a Tax Credit Carry forward Exists." The objective of this update is
to reduce the diversity in practice related to the presentation of certain unrecognized tax benefits. The amendments in this update
require an entity to present an unrecognized tax benefit in the financial statements as a reduction to a deferred tax asset for those
instances described above, except in certain situations described in the update. For public entities, ASU 2013-11 is effective for
fiscal years beginning after December 15, 2013 and interim periods within those years. The guidance should be applied
prospectively to all unrecognized tax benefits that exist at the effective date. Early adoption and retrospective application are
permitted. The adoption of this guidance will not have an impact on our consolidated financial statements.
In July 2013, the FASB updated ASC 815 "Derivatives and Hedging" with ASU 2013-10 "Inclusion of the Fed Funds Effective
Swap Rate (of Overnight Index Swap Rate) as a Benchmark Interest Rate for Hedge Accounting Purposes." ASU 2013-10 permits
the Overnight Index Swap ("OIS") Rate, also referred to as the Fed Funds effective Swap Rate, to be used as a U.S. benchmark
for hedge accounting purposes, in addition to London Interbank Offered Rate ("LIBOR") and the interest rate on direct U.S.
Treasury obligations. The guidance also removes the restriction on using different benchmarks for similar hedges. ASU 2013-10
is effective prospectively for qualifying new or re-designated hedges entered into on or after July 17, 2013. The adoption of this
guidance did not have an impact on our consolidated financial statements.
In February 2013, the FASB updated ASC 220 “Comprehensive Income” with ASU 2013-2 "Reporting of Amounts Reclassified
Out of Accumulated Other Comprehensive Income." This update requires an entity to provide information about the amounts
reclassified out of accumulated other comprehensive income by component. In addition, ASU 2013-2 requires an entity to present,
either on the face of the income statement or in the notes to financial statements, significant amounts reclassified out of accumulated
other comprehensive income by the respective line items of net income but only if the amount reclassified is required under GAAP
to be reclassified to net income in its entirety in the same reporting period. For other amounts, an entity is required to cross-
reference to other disclosures required under GAAP that provide additional detail about those amounts. The amendments in ASU
2013-2 do not change the current requirements for reporting net income or other comprehensive income in financial statements.
For public entities, the amendments in ASU 2013-2 are effective prospectively for reporting periods beginning after December
15, 2012. The adoption of this guidance concerns disclosure only and did not have an impact on our consolidated financial
statements.
In July 2012 the FASB updated ASC 350 “Intangibles – Goodwill and Other – Testing Indefinite-Lived Intangible Assets for
Impairment” with ASU 2012-02. This update amends the procedures for testing the impairment of indefinite-lived intangible
assets by permitting an entity to first assess qualitative factors to determine whether the existence of events and circumstances
indicates that it is more likely than not that the indefinite-lived intangible assets are impaired. An entity’s assessment of the totality
of events and circumstances and their impact on the entity’s indefinite-lived intangible assets will then be used as a basis for
determining whether it is necessary to perform the quantitative impairment test as described in ASC 350-30. ASU 2012-02 is
effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012, with early adoption
permitted. The adoption of this guidance did not have an 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. The disclosures
38
in this standard did not have an impact on our results of operations or financial position, other than the presentation of comprehensive
income.
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. The adoption of this guidance did not have an 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. This
standard is effective for fiscal years beginning after December 15, 2011. The adoption of this guidance did not have an 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. This standard is to be applied retrospectively and is effective for fiscal years, and interim periods within
those years, beginning after December 15, 2011. In December 2011, the FASB deferred portions of this update in its issuance of
ASU 2011-12, “Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items Out of Accumulated
Other Comprehensive Income.” ASU 2011-12 supersedes certain pending paragraphs in Update 2011-05. The amendments are
being made to allow the FASB time to re-deliberate whether or not to present on the face of the financial statements the effects of
reclassifications out of accumulated other comprehensive income on the components of net income and other comprehensive
income for all periods presented. The new disclosures in this standard did not have an impact on our results of operations or
financial position, other than the presentation of comprehensive income.
In May 2011, the FASB updated ASC 820 “Fair Value Measurements and Disclosures” with ASU 2011-04 “Amendments to
Achieve Common Fair Value Measurements 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. This standard is to be applied prospectively and is effective for fiscal years, and interim periods
within those years, beginning after December 15, 2011. The adoption of this guidance did not have an 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, 2013, a 100 basis point change in interest rates would
impact our future earnings and cash flows by approximately $1.0 million annually. We believe that a 100 basis point increase in
interest rates would decrease the fair value of our total outstanding debt by approximately $7.2 million at December 31, 2013.
We had interest rate swap agreements with an aggregate notional amount of $210.0 million as of December 31, 2013. The agreements
provided for fixed rates ranging from 1.2% to 2.2% and had expirations ranging from April 2016 to May 2020.
39
The following table sets forth information as of December 31, 2013 concerning our long-term debt obligations, including principal
cash flows by scheduled maturity, weighted average interest rates of maturing amounts and fair market:
2014
2015
2016
2017
2018
Thereafter
Total
Fair Value
(In thousands)
Fixed-rate debt
Average interest rate
Variable-rate debt
Average interest rate
$ 33,456
$ 85,250
$ 22,710
$187,222
$ 84,244
$ 236,993
$ 649,875
$ 650,910
$
5.4%
— $
—%
5.9%
5.3%
— $ 27,000
—%
1.8%
4.4%
$ 45,000
$
1.8%
4.3%
4.1%
— $ 28,125
—%
3.5%
4.5%
4.9%
$ 100,125
$ 100,125
2.3%
2.3%
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, 2013 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, 2013 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, 2013.
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.
40
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, 2013 using the
framework established in 1992 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, 2013.
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.
41
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Board of Trustees and Shareholders
Ramco-Gershenson Properties Trust
We have audited the internal control over financial reporting of Ramco-Gershenson Properties Trust (a Maryland corporation)
and subsidiaries (the “Company”) as of December 31, 2013, based on criteria established in the 1992 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, the Company maintained, in all material respects, effective internal control over financial reporting as of
December 31, 2013, based on criteria established in the 1992 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 financial statements of the Company as of and for the year ended December 31, 2013, and our report dated February 27,
2014 expressed an unqualified opinion on those financial statements.
/s/ GRANT THORNTON LLP
Southfield, Michigan
February 27, 2014
42
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, 2013:
(A)
(B)
Number of securities to be
issued upon exercise of
outstanding options,
warrants and rights
Weighted-average
exercise price of
outstanding options,
warrants and rights
(C)
Number of securities
remaining available for
future issuances under
equity compensation plans
(excluding securities
reflected in column (A))
284,638
—
284,638
$30.34
—
$30.34
1,855,202
—
1,855,202
Plan Category
Equity compensation plans
approved by security holders
Equity compensation plans not
approved by security holders
Total
The total in Column (A) above consisted of options to purchase 190,993 common shares, 13,933 deferred common shares (see
Note 16 of the notes to the consolidated financial statements for further information) and 79,712 restricted common shares issuable
on the satisfaction of applicable performance measures. The number of restricted shares 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.
43
Item 15. Exhibits and Financial Statement Schedules
PART IV
(a)(1)
Consolidated financial statements. See “Item 8 – Financial Statements and Supplementary Data.”
(2)
(3)
3.1
3.2*
3.3
3.4
3.5
4.1
4.2
4.3
4.4
4.5
10.1
10.2
10.3
Financial statement schedule. See “Item 8 – Financial Statements and Supplementary Data.”
Exhibits
Articles of Restatement of Declaration of Trust of the Company, effective June 8, 2010, incorporated
by reference to the Company's 2010 Proxy dated April 30, 2010.
Amended and Restated Bylaws of the Company, effective February 23, 2012.
Articles of Amendment, as filed with the State Department of Assessments and Taxation of
Maryland on April 5, 2012, incorporated by reference to Exhibit 3.1 to the Company’s Form 8-K
dated April 6, 2012.
Articles Supplementary, as filed with the State Department of Assessments and Taxation of
Maryland on April 5, 2012, incorporated by reference to Exhibit 3.2 to the Company’s Form 8-K
dated April 6, 2012.
Articles Supplementary, as filed with the State Department of Assessments and Taxation of
Maryland on April 28, 2012, incorporated by reference to Exhibit 3.1 to the Company’s Form 8-K
dated April 28, 2012.
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.
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.
44
10.4
10.5
10.6
10.7
10.8
10.9*
10.10
10.11
10.12
10.13
10.14
10.15
10.16
10.17
10.18
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.
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.**
Summary of Trustee Compensation Program.**
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. **
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.
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**
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.
2012 Executive Incentive Plan, dated January 12, 2012, incorporated by reference to Exhibit 10.1 to
the Company’s Current Report on Form 8-K dated January 13, 2012.
Third Amended and Restated Unsecured Master Loan Agreement dated as of July 19, 2012 among
Ramco-Gershenson Properties, L.P., as Borrower, Ramco-Gershenson Properties Trust, as a
Guarantor, KeyBank National Association, as a Bank, the Other Banks which are a Party to this
Agreement, the Other Banks which may become Parties to this Agreement, 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, and Deutsche Bank
Securities Inc. and PNC Bank, National Association, as Co Documentation Agents incorporated by
reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q ended June 30, 2012.
10.19
Third Amended and Restated Unconditional Guaranty of Payment and Performance, dated as of July
19, 2012 by Ramco-Gershenson Properties Trust, as Guarantor, in favor of KeyBank National
45
Association and certain other lenders incorporated by reference to Exhibit 10.2 to the Company’s
Quarterly Report on Form 10-Q ended June 30, 2012.
$110 Million Note Purchase Agreement, by Ramco-Gershenson Properties, L.P. incorporated by
reference to Exhibit 10.1 to the Company's Current Report on Form 8-K dated July 2, 2013.
Unsecured Term Loan Agreement, dated May 16, 2013 among Ramco-Gershenson Properties, L.P., as
borrower, Ramco-Gershenson Properties Trust, as Guarantor, Capital One, National Association, as
bank, The Other Banks Which Are A Party To this Agreement, The Other Banks Which May Become
Parties To This Agreement, Capital One, National Association, as Agent and Capital One, National
Association, as Sole Lead Manager and Arranger incorporated by reference to Exhibit 10.2 to the
Company's Quarterly Report on Form 10-Q ended June 30, 2013.
First Amendment To Third Amended And Restated Unsecured Master Loan Agreement, dated March
29, 2013 by and among Ramco-Gershenson Properties, L.P. and KeyBank National Association
incorporated by reference to Exhibit 10.3 to the Company's Quarterly Report on Form 10-Q ended June
30, 2013.
Third Amendment To Unsecured Term Loan Agreement by and among Ramco-Gershenson Properties,
L.P. and KeyBank National Association incorporated by reference to Exhibit 10.4 to the Company's
Quarterly Report on Form 10-Q ended June 30, 2013.
Second Amendment To Third Amended And Restated Unsecured Master Loan Agreement, dated June
26, 2013 by and among Ramco-Gershenson Properties, L.P. and KeyBank National Association
incorporated by reference to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q ended
September 30, 2013.
Third Amendment To Third Amended And Restated Unsecured Master Loan Agreement, dated August
27, 2013 by and among Ramco-Gershenson Properties, L.P. and KeyBank National Association
incorporated by reference to Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q ended
September 30, 2013.
Computation of Ratio of Earnings to Combined Fixed Charges and Preferred Share Dividends.
Subsidiaries
Consent of Grant Thornton LLP.
Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
10.20
10.21
10.22
10.23
10.24
10.25
12.1*
21.1*
23.1*
31.1*
31.2*
32.2*
46
101.INS(1)
101.SCH(1)
101.CAL(1)
101.DEF(1)
101.LAB(1)
101.PRE(1)
XBRL Instance Document
XBRL Taxonomy Extension Schema
XBRL Extension Calculation
XBRL Extension Definition
XBRL Taxonomy Extension Label
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.
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.
47
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.
SIGNATURES
Dated: February 27, 2014
By: /s/ Dennis E. Gershenson
Ramco-Gershenson Properties Trust
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:
February 27, 2014
By: /s/ Stephen R. Blank
Stephen R. Blank,
Chairman
Dated:
February 27, 2014
By: /s/ Dennis E. Gershenson
Dennis E. Gershenson,
Trustee, President and Chief Executive Officer
(Principal Executive Officer)
Dated:
February 27, 2014
By: /s/ Arthur H. Goldberg
Arthur H. Goldberg,
Trustee
Dated:
February 27, 2014
By:
Robert A. Meister,
Trustee
Dated:
February 27, 2014
By: /s/ David J. Nettina
David J. Nettina,
Trustee
Dated:
February 27, 2014
By: /s/ Matthew L. Ostrower
Dated:
February 27, 2014
Matthew L. Ostrower,
Trustee
By: /s/ Joel M. Pashcow
Joel M. Pashcow,
Trustee
Dated:
February 27, 2014
By: /s/ Mark K. Rosenfeld
Mark K. Rosenfeld,
Trustee
Dated:
February 27, 2014
By: /s/ Michael A. Ward
Michael A. Ward,
Trustee
Dated:
February 27, 2014
By: /s/ Gregory R. Andrews
Gregory R. Andrews,
Chief Financial Officer and Secretary
(Principal Financial and Accounting Officer)
48
RAMCO-GERSHENSON PROPERTIES TRUST
Index to Consolidated Financial Statements
Report of Independent Registered Public Accounting Firm
Consolidated Financial Statements:
Consolidated Balance Sheets - December 31, 2013 and 2012
Consolidated Statements of Operations and Comprehensive Income (Loss) - Years Ended December 31, 2013, 2012, and
2011
Consolidated Statements of Shareholders’ Equity - Years Ended December 31, 2013, 2012, and 2011
Consolidated Statements of Cash Flows – Years Ended December 31, 2013, 2012, and 2011
Notes to Consolidated Financial Statements
Schedule to Consolidated Financial Statements
Page
F-2
F-3
F-4
F-5
F-6
F-7
F-36
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, 2013 and 2012, and the related consolidated statements of operations and
comprehensive income (loss), shareholders’ equity, and cash flows for each of the three years in the period ended December 31,
2013. Our audits of the basic financial statements included the financial statement schedule listed in the index appearing under
Item 15. These financial statements and financial statement schedule are the responsibility of the Company’s management. Our
responsibility is to express an opinion on these financial statements and financial statement schedule 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, 2013 and 2012, and the results of their operations and
their cash flows for each of the three years in the period ended December 31, 2013 in conformity with accounting principles
generally accepted in the United States of America. Also, in our opinion, the related financial statement schedule, when considered
in relation to the basic financial statements taken as a whole, presents fairly, in all material respects, the information set forth
therein.
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, 2013, based on criteria established in the 1992 Internal
Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO)
and our report dated February 27, 2014 expressed an unqualified opinion.
/s/GRANT THORNTON LLP
Southfield, Michigan
February 27, 2014
F-2
RAMCO-GERSHENSON PROPERTIES TRUST
CONSOLIDATED BALANCE SHEETS
(In thousands, except per share amounts)
ASSETS
Income producing properties, at cost:
Land
Buildings and improvements
Less accumulated depreciation and amortization
Income producing properties, net
Construction in progress and land held for development or sale
Net real estate
Equity investments in unconsolidated joint ventures
Cash and cash equivalents
Restricted cash
Accounts receivable, net
Other assets, net
TOTAL ASSETS
LIABILITIES AND SHAREHOLDERS' EQUITY
Notes payable:
Senior unsecured notes payable
Mortgages payable
Unsecured revolving credit facility
Junior subordinated notes
Total notes payable
Capital lease obligation
Accounts payable and accrued expenses
Other liabilities
Distributions payable
TOTAL LIABILITIES
Commitments and Contingencies
$
$
$
December 31,
2013
2012
$
$
$
284,686
1,340,531
(253,292)
1,371,925
101,974
1,473,899
30,931
5,795
3,454
9,648
128,521
1,652,248
365,000
333,049
27,000
28,125
753,174
5,686
32,026
48,593
14,809
854,288
166,500
952,671
(237,462)
881,709
98,541
980,250
95,987
4,233
3,892
7,976
72,953
1,165,291
180,000
293,156
40,000
28,125
541,281
6,023
21,589
26,187
10,379
605,459
Ramco-Gershenson Properties Trust ("RPT") Shareholders' Equity:
Preferred shares, $0.01 par, 2,000 shares authorized: 7.25% Series D Cumulative Convertible
Perpetual Preferred Shares, (stated at liquidation preference $50 per share), 2,000 shares
issued and outstanding as of December 31, 2013 and December 31, 2012
Common shares of beneficial interest, $0.01 par, 120,000 shares authorized, 66,669 and
48,489 shares issued and outstanding as of December 31, 2013 and 2012, respectively
Additional paid-in capital
Accumulated distributions in excess of net income
Accumulated other comprehensive income (loss)
TOTAL SHAREHOLDERS' EQUITY ATTRIBUTABLE TO RPT
Noncontrolling interest
TOTAL SHAREHOLDERS' EQUITY
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
The accompanying notes are an integral part of these consolidated financial statements.
$
100,000
$
100,000
667
959,183
(289,837)
84
770,097
27,863
797,960
1,652,248
$
485
683,609
(249,070)
(5,241)
529,783
30,049
559,832
1,165,291
$
F-3
RAMCO-GERSHENSON PROPERTIES TRUST
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
(In thousands, except per share amounts)
Year Ended December 31,
2012
2011
2013
REVENUE
Minimum rent
Percentage rent
Recovery income from tenants
Other property income
Management and other fee income
TOTAL REVENUE
EXPENSES
Real estate taxes
Recoverable operating expense
Other non-recoverable operating expense
Depreciation and amortization
General and administrative expense
$
TOTAL EXPENSES
INCOME BEFORE OTHER INCOME AND EXPENSES, TAX AND
DISCONTINUED OPERATIONS
OTHER INCOME AND EXPENSES
Other expense, net
Gain on sale of real estate
(Loss) earnings from unconsolidated joint ventures
Interest expense
Amortization of deferred financing fees
Provision for impairment
Provision for impairment on equity investments in unconsolidated joint ventures
Deferred gain recognized upon acquisition of real estate
Loss on extinguishment of debt
INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE TAX
Income tax (provision) benefit
INCOME (LOSS) FROM CONTINUING OPERATIONS
DISCONTINUED OPERATIONS
Gain on sale of real estate
Gain on extinguishment of debt
Provision for impairment
Income from discontinued operations
INCOME (LOSS) FROM DISCONTINUED OPERATIONS
NET INCOME (LOSS)
Net (income) loss attributable to noncontrolling partner interest
NET INCOME (LOSS) ATTRIBUTABLE TO RPT
Preferred share dividends
NET INCOME (LOSS) AVAILABLE TO COMMON SHAREHOLDERS
EARNINGS (LOSS) PER COMMON SHARE, BASIC
$
Continuing operations
Discontinued operations
EARNINGS (LOSS) PER COMMON SHARE, DILUTED
Continuing operations
Discontinued operations
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
Basic
Diluted
OTHER COMPREHENSIVE INCOME (LOSS)
Net income (loss)
Other comprehensive income (loss):
Gain (loss) on interest rate swaps
Comprehensive income (loss)
Comprehensive (income) loss attributable to noncontrolling interest
COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO RPT
124,169
209
40,018
3,337
2,335
170,068
23,161
20,194
3,006
56,305
22,273
124,939
45,129
(965)
4,279
(4,759)
(29,075)
(1,447)
(9,669)
—
5,282
(340)
8,435
(64)
8,371
2,120
—
—
971
3,091
11,462
(465)
10,997
(7,250)
3,747
0.01
0.05
0.06
0.01
0.05
0.06
$
$
87,921
592
30,721
1,927
4,064
125,225
16,699
15,447
2,802
38,673
19,446
93,067
32,158
(66)
69
3,248
(25,895)
(1,449)
(1,387)
(386)
845
—
7,137
34
7,171
336
307
(2,915)
2,193
(79)
7,092
112
7,204
(7,250)
$
(46) $
—
—
—
—
—
—
77,145
244
28,815
4,057
4,125
114,386
15,982
13,992
3,454
33,842
19,646
86,916
27,470
(257)
231
1,669
(27,413)
(1,827)
(16,917)
(9,611)
—
(1,968)
(28,623)
(795)
(29,418)
9,406
1,218
(10,883)
1,177
918
(28,500)
1,742
(26,758)
(5,244)
(32,002)
(0.85)
0.01
(0.84)
(0.85)
0.01
(0.84)
59,336
59,728
44,101
44,101
38,466
38,466
$
$
11,462
$
7,092
$
(28,500)
5,520
16,982
(195)
16,787
$
(2,745)
4,347
153
4,500
$
(2,828)
(31,328)
179
(31,149)
The accompanying notes are an integral part of these consolidated financial statements.
F-4
RAMCO-GERSHENSON PROPERTIES TRUST
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(In thousands, except share amounts)
Shareholders' Equity of Ramco-Gershenson Properties
Trust
Preferred
Shares
Common
Shares
Additional
Paid-in
Capital
Accumulated
Distributions
in Excess of
Net Income
Accumulated
Other
Comprehensive
(Loss) Income
Noncontrolling
Interest
Total
Shareholders’
Equity
Balance, December 31, 2010
$
— $
379
$ 563,370
$
(161,476) $
— $
37,093
$
439,366
Issuance of common shares
Issuance of preferred shares
—
100,000
—
—
—
—
—
—
—
—
—
(2,649)
—
(2,649)
—
—
—
—
—
—
—
(2,592)
—
(5,241)
—
—
—
—
—
—
—
5,325
—
84
—
—
(3)
—
—
—
(2,077)
—
(993)
(179)
(1,742)
32,099
—
(3)
—
—
—
(1,782)
—
(153)
(112)
30,049
—
(1,243)
—
—
—
(1,603)
—
195
465
8,337
96,642
(3)
1,884
(25,203)
(5,244)
(2,077)
(207)
(993)
(2,828)
(28,500)
481,174
111,468
(3)
2,014
(29,863)
(7,250)
(1,782)
(273)
(2,745)
7,092
559,832
273,749
(1,243)
2,007
(44,172)
(7,250)
(1,603)
(342)
5,520
11,462
$
27,863
$
797,960
Conversion and redemption of OP unit holders
Share-based compensation and other expense
Dividends declared to common shareholders
Dividends declared to preferred shareholders
Distributions declared to noncontrolling interests
Dividends paid on restricted shares
Purchase of partner's interest in consolidated
variable interest entity
Other comprehensive loss adjustment
Net loss
Balance, December 31, 2011
Issuance of common shares
Conversion and redemption of OP unit holders
Share-based compensation and other expense
Dividends declared to common shareholders
Dividends declared to preferred shareholders
Distributions declared to noncontrolling interests
Dividends declared to deferred shares
Other comprehensive loss adjustment
Net income (loss)
Balance, December 31, 2012
Issuance of common shares
Conversion and redemption of OP unit holders
Share-based compensation and other expense
Dividends declared to common shareholders
Dividends declared to preferred shareholders
Distributions declared to noncontrolling interests
Dividends declared to deferred shares
Other comprehensive income adjustment
Net income
8
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
100,000
387
—
—
—
—
—
—
—
—
—
100,000
—
—
—
—
—
—
—
—
—
98
—
—
—
—
—
—
—
—
485
181
—
1
—
—
—
—
—
—
8,329
(3,358)
—
1,884
—
—
—
—
—
—
—
570,225
111,370
—
2,014
—
—
—
—
—
—
683,609
273,568
—
2,006
—
—
—
—
—
—
—
—
—
—
(25,203)
(5,244)
—
(207)
—
—
(26,758)
(218,888)
—
—
—
(29,863)
(7,250)
—
(273)
—
7,204
(249,070)
—
—
—
(44,172)
(7,250)
—
(342)
—
10,997
Balance, December 31, 2013
$ 100,000
$
667
$ 959,183
$
(289,837) $
The accompanying notes are an integral part of these consolidated financial statements.
F-5
RAMCO-GERSHENSON PROPERTIES TRUST
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
OPERATING ACTIVITIES
Net income (loss)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
$
11,462
$
7,092
$
(28,500)
Year Ended December 31,
2012
2011
2013
Depreciation and amortization, including discontinued operations
Amortization of deferred financing fees, including discontinued operations
Income tax provision (benefit)
Loss (earnings) from unconsolidated joint ventures
Distributions received from operations of unconsolidated joint ventures
Provision for impairment, including discontinued operations
Provision for impairment on equity investments in unconsolidated joint ventures
Loss (gain) on extinguishment of debt, including discontinued operations
Deferred gain recognized upon acquisition of real estate
Gain on sale of real estate, including discontinued operations
Amortization of premium on mortgages and notes payable, net
Share-based compensation expense
Long-term incentive cash compensation expense
Changes in assets and liabilities:
Accounts receivable, net
Other assets, net
Accounts payable, accrued expenses and other liabilities
Net cash provided by operating activities
INVESTING ACTIVITIES
Acquisitions of real estate, net of assumed debt
Development and capital improvements
Net proceeds from sales of real estate
Distributions from sale of joint venture property
Decrease (increase) in restricted cash
Investment in unconsolidated joint ventures
Note repayment from third party
Purchase of partner's equity in consolidated joint ventures
Net cash used in investing activities
FINANCING ACTIVITIES
Proceeds on mortgages and notes payable
Repayment of mortgages and notes payable
Net proceeds (repayments) on revolving credit facility
Payment of debt extinguishment costs
Payment of deferred financing costs
Proceeds from issuance of common shares
Proceeds from issuance of preferred shares
Repayment of capitalized lease obligation
Conversion of operating partnership units for cash
Dividends paid to preferred shareholders
Dividends paid to common shareholders
Distributions paid to operating partnership unit holders
Net cash provided by financing activities
Net change in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period
SUPPLEMENTAL DISCLOSURE OF NON-CASH ACTIVITY
Assumption of debt related to acquisitions
Conveyance of ownership interest to lender, release from mortgage obligation
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid for interest (net of capitalized interest of $1,161, $996 and $325 in 2013, 2012 and
2011, respectively)
Cash paid for federal income taxes
The accompanying notes are an integral part of these consolidated financial statements.
F-6
37,026
1,879
795
(1,669)
4,413
27,800
9,611
750
—
(9,638)
(35)
1,849
—
(252)
4,577
(3,903)
44,703
(77,260)
(24,430)
28,803
3,756
(337)
(9,279)
—
(1,000)
(79,747)
135,586
(79,840)
(90,250)
—
(2,839)
8,819
96,642
(300)
—
(3,432)
(25,203)
(2,159)
37,024
1,980
10,175
12,155
56,841
1,447
64
4,759
3,232
9,669
—
—
(5,282)
(6,399)
(541)
2,151
1,498
(1,672)
(689)
9,043
85,583
39,822
1,454
(34)
(3,248)
3,793
4,302
386
(307)
(845)
(405)
(30)
2,120
445
1,128
6,349
172
62,194
$ (342,189) $ (149,960) $
(38,431)
10,292
3,587
2,171
(3,869)
3,000
—
(173,210)
45,000
(24,200)
10,500
—
(1,959)
111,468
—
(318)
—
(7,250)
(28,333)
(1,814)
103,094
(7,922)
12,155
4,233
$
$
(44,625)
33,916
1,687
438
(4,979)
—
—
(355,752)
185,000
(121,817)
(13,000)
(340)
(1,889)
274,295
—
(337)
(1,243)
(7,250)
(40,108)
(1,580)
271,731
1,562
4,233
5,795
158,767
—
30,631
—
$
$
$
$
$
$
$
$
— $
8,501
—
9,107
$
25,686
16
28,747
63
RAMCO-GERSHENSON PROPERTIES TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years Ended December 31, 2013, 2012 and 2011
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 in
strategic metropolitan markets throughout the Eastern, Midwestern and Central United States. Our property portfolio consists of
66 wholly owned shopping centers and one office building comprising approximately 13.1 million square feet. In addition, we
are co-investor in and manager of two institutional joint ventures that own portfolios of shopping centers. We own 20% of Ramco
450 Venture LLC, an entity that owns eight shopping centers comprising approximately 1.7 million square feet and 30% of Ramco/
Lion Venture L.P., an entity that owns three shopping centers comprising approximately 0.8 million square feet. We also have
ownership interests in three smaller joint ventures that each own a shopping center. Our joint ventures 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 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. (96.8%, 95.4% and 93.7% owned by us at December 31, 2013, 2012 and 2011, 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.
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 2013
presentation, principally to reflect the sale of certain operating properties and the classification of those properties as "discontinued
operations."
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 or 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 reimbursement from tenants for common area maintenance (“CAM”), insurance, real
F-7
estate taxes and other operating expenses ("Recovery Income"). The majority of our Recovery Income is 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 and Recovery Income.
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 creditworthiness, 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, 2013 and 2012,
our accounts receivable were $9.6 million and $8.0 million, respectively, net of allowances for doubtful accounts of $2.4 million
and $2.6 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, net” 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, 2013 and 2012, net of allowances was $15.1 million and $14.8 million, respectively. 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
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 10 – 40 years for buildings and improvements
and 5 – 30 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 15 – 25 years. In addition, we capitalize qualifying tenant leasehold improvements and depreciate them over 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 improvements 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 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.
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 identifiable
intangibles such as in-place leases, above/below market leases, out-of-market assumed mortgages, 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-development costs directly
identifiable with the specific project, development and construction costs, interest, real estate taxes and insurance. Interest is
F-8
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.
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 carrying value of the property may not be recoverable. These
changes in circumstances include, but are not limited to, changes in occupancy, rental rates, tenant sales, net operating income,
geographic location, real estate values and expected holding period. 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.
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. Refer to Note 6 of the notes to the consolidated financial statements for further information.
In 2013, we recorded impairment provisions totaling $9.7 million and consisted of:
•
•
$0.3 million related to changes to estimated sales price assumptions for certain parcels of land held for development;
and
$9.4 million of impairment provisions related to income producing properties that we have identified to be marketed
for sale and the estimated sales price being lower than the net book value.
Investments in Real Estate Joint Ventures
We have five equity investments in unconsolidated joint venture entities in which we own 30% or less of the total ownership
interest. Because we can influence but not make significant decisions without our partners' 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. Refer to Note 7 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.
There were no impairment provisions on our equity investments in joint ventures recorded in 2013.
F-9
Other Assets, net
Other assets consist primarily of acquired lease intangibles, straight-line rent receivable, deferred leasing costs, deferred financing
costs, and prepaid expenses. 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”). As of
December 31, 2013, we had $7.5 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 16 of the notes to the consolidated financial statements for further information.
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, 2013, 2012, and 2011, we sold various properties and land parcels at a gain, resulting in both a federal and state tax
liability. See Note 17 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. 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.
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 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. The
calculation of earnings per share is based on income available to common shareholders.
F-10
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.
2. Recent Accounting Pronouncements
In July 2013, the FASB updated ASC 740 "Income Taxes" with ASU 2013-11 "Presentation of an Unrecognized Tax Benefit When
a Net Operating Loss Carry forward, a Similar Tax Loss, or a Tax Credit Carry forward Exists." The objective of this update is
to reduce the diversity in practice related to the presentation of certain unrecognized tax benefits. The amendments in this update
require an entity to present an unrecognized tax benefit in the financial statements as a reduction to a deferred tax asset for those
instances described above, except in certain situations described in the update. For public entities, ASU 2013-11 is effective for
fiscal years beginning after December 15, 2013 and interim periods within those years. The guidance should be applied
prospectively to all unrecognized tax benefits that exist at the effective date. Early adoption and retrospective application are
permitted. The adoption of this guidance will not have an impact on our consolidated financial statements.
In July 2013, the FASB updated ASC 815 "Derivatives and Hedging" with ASU 2013-10 "Inclusion of the Fed Funds Effective
Swap Rate (of Overnight Index Swap Rate) as a Benchmark Interest Rate for Hedge Accounting Purposes." ASU 2013-10 permits
the Overnight Index Swap ("OIS") Rate, also referred to as the Fed Funds effective Swap Rate, to be used as a U.S. benchmark
for hedge accounting purposes, in addition to London Interbank Offered Rate ("LIBOR") and the interest rate on direct U.S.
Treasury obligations. The guidance also removes the restriction on using different benchmarks for similar hedges. ASU 2013-10
is effective prospectively for qualifying new or re-designated hedges entered into on or after July 17, 2013. The adoption of this
guidance did not have an impact on our consolidated financial statements.
In February 2013, the FASB updated ASC 220 “Comprehensive Income” with ASU 2013-2 "Reporting of Amounts Reclassified
Out of Accumulated Other Comprehensive Income." This update requires an entity to provide information about the amounts
reclassified out of accumulated other comprehensive income by component. In addition, ASU 2013-2 requires an entity to present,
either on the face of the income statement or in the notes to financial statements, significant amounts reclassified out of accumulated
other comprehensive income by the respective line items of net income but only if the amount reclassified is required under GAAP
to be reclassified to net income in its entirety in the same reporting period. For other amounts, an entity is required to cross-
reference to other disclosures required under GAAP that provide additional detail about those amounts. The amendments in ASU
2013-2 do not change the current requirements for reporting net income or other comprehensive income in financial statements.
For public entities, the amendments in ASU 2013-2 are effective prospectively for reporting periods beginning after December
15, 2012. The adoption of this guidance concerns disclosure only and did not have an impact on our consolidated financial
statements.
In July 2012 the FASB updated ASC 350 “Intangibles – Goodwill and Other – Testing Indefinite-Lived Intangible Assets for
Impairment” with ASU 2012-02. This update amends the procedures for testing the impairment of indefinite-lived intangible
assets by permitting an entity to first assess qualitative factors to determine whether the existence of events and circumstances
indicates that it is more likely than not that the indefinite-lived intangible assets are impaired. An entity’s assessment of the totality
of events and circumstances and their impact on the entity’s indefinite-lived intangible assets will then be used as a basis for
determining whether it is necessary to perform the quantitative impairment test as described in ASC 350-30. ASU 2012-02 is
effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012, with early adoption
permitted. The adoption of this guidance did not have an 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. The disclosures
in this standard did not have an impact on our results of operations or financial position, other than the presentation of comprehensive
income.
F-11
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. The adoption of this guidance did not have an 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. This
standard is effective for fiscal years beginning after December 15, 2011. The adoption of this guidance did not have an 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. This standard is to be applied retrospectively and is effective for fiscal years, and interim periods within
those years, beginning after December 15, 2011. In December 2011, the FASB deferred portions of this update in its issuance of
ASU 2011-12, “Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items Out of Accumulated
Other Comprehensive Income.” ASU 2011-12 supersedes certain pending paragraphs in Update 2011-05. The amendments are
being made to allow the FASB time to re-deliberate whether or not to present on the face of the financial statements the effects of
reclassifications out of accumulated other comprehensive income on the components of net income and other comprehensive
income for all periods presented. The new disclosures in this standard did not have an impact on our results of operations or
financial position, other than the presentation of comprehensive income.
In May 2011, the FASB updated ASC 820 “Fair Value Measurements and Disclosures” with ASU 2011-04 “Amendments to
Achieve Common Fair Value Measurements 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. This standard is to be applied prospectively and is effective for fiscal years, and interim periods
within those years, beginning after December 15, 2011. The adoption of this guidance did not have an impact on our consolidated
financial statements.
3. 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 available for 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 available for sale was $19.9 million and $20.2 million at December 31, 2013 and 2012, respectively.
F-12
At December 31, 2013, we had three projects under pre-development. Our land held for development consisted of:
Development Project/Location
Hartland Towne Square - Hartland Twp., MI
Lakeland Park Center - Lakeland, FL (1)
Parkway Shops - Phase II - Jacksonville, FL
Carrying Value As of December 31,
2013
2012
(In thousands)
$
Total $
25,193
11,774
11,673
48,640
$
$
25,210
21,909
14,193
61,312
(1) During 2013, we began construction on Phase I of Lakeland Park Center, located adjacent to our existing Shoppes of Lakeland
shopping center. Land costs related to Phase I of the project were transferred to construction in progress. The costs shown
in the table relate to land held for Phase II.
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 $33.5 million and $17.0 million at December 31, 2013 and December 31, 2012, respectively. The increase was
primarily due to the commencement of Phase I of Lakeland Park Center and ongoing redevelopment projects at existing centers.
This increase was partially offset by the completion of Phase I of our Parkway shops development. The net cost of Phase I of
Parkway was approximately $17.5 million.
F-13
4. Property Acquisitions and Dispositions
Acquisitions
The following table provides a summary of our acquisitions during 2013, 2012 and 2011:
Property Name
Location
2013
Deerfield Towne Center
Mason (Cincinnati), OH
Deer Creek Shopping Center
Maplewood (St. Louis), MO
Deer Grove Centre
Mount Prospect Plaza
Palatine (Chicago), IL
Mt. Prospect (Chicago), IL
The Shoppes at Nagawaukee
Delafield, WI
Clarion Partners Portfolio -
12 Income Producing Properties
FL & MI
Total consolidated income producing acquisitions - 2013
2012
Spring Meadows Place II
Holland, OH
The Shoppes at Fox River - Phase II
Waukesha (Milwaukee), WI
Southfield Expansion
The Shoppes of Lakeland
Central Plaza
Harvest Junction North
Harvest Junction South
Southfield, MI
Lakeland, FL
Ballwin (St. Louis), MO
Longmont (Boulder), CO
Longmont (Boulder), CO
Nagawaukee Shopping Center
Delafield (Milwaukee), WI
Total consolidated income producing acquisitions - 2012
2011
Town & Country Crossing
Town and Country (St. Louis), MO
Heritage Place
Creve Coeur (St. Louis), MO
Total consolidated income producing acquisitions - 2011
Gross
GLA
Date
Acquired
Purchase
Price
Debt
(In thousands)
(In thousands)
461
208
236
301
106
2,246
3,558
50
47
19
184
166
159
177
114
916
142
269
411
12/19/2013
$
96,500
$
11/15/2013
8/26/2013
6/20/2013
4/18/2013
23,878
20,000
36,100
22,650
—
—
—
—
9,253
3/25/2013
367,415
149,514
$ 566,543
$ 158,767
12/19/2012
$
2,367
$
12/13/2012
9/18/2012
9/6/2012
6/7/2012
6/1/2012
6/1/2012
6/1/2012
10,394
868
28,000
21,600
38,181
33,550
15,000
$ 149,960
$
11/30/2011
$
37,850
5/19/2011
39,410
$
77,260
$
$
—
—
—
—
—
—
—
—
—
—
—
—
(1) Purchase price includes vacant land adjacent to the shopping center available for future development.
For the years ended December 31, 2013, 2012 and 2011, we recorded in general and administrative expenses approximately $1.3
million, $0.2 million, and $0.1 million, respectively, in costs associated with our acquisitions.
F-14
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:
Land
Buildings and improvements
Above market leases
Lease origination costs
Other assets
Below market leases
Premium for above market interest rates on assumed debt
Total purchase price allocated
December 31,
2013
2012
2011
122,963
406,743
6,977
50,577
10,196
(27,216)
(3,697)
566,543
(In thousands)
38,756
$
100,216
1,874
2,522
16,566
(9,974)
—
149,960
$
$
$
$
$
22,294
48,971
996
7,733
2,099
(4,833)
—
77,260
Total revenue and net income for the 2013 acquisitions included in our consolidated statement of operations for the year ended
December 31, 2013 were $36.5 million and $8.7 million, respectively.
Unaudited Proforma Information
If the 2013 Acquisitions had occurred on January 1, 2012, our consolidated revenues and net income for the years ended
December 31, 2013 and 2012 would have been as follows:
Consolidated revenue
Consolidated net income available to common shareholders
$
$
181,022
4,938
$
$
168,390
2,599
December 31,
2013
2012
F-15
Dispositions
The following table provides a summary of our disposition activity during 2013, 2012, and 2011. All of the properties disposed
of were unencumbered:
Property Name
Location
GLA Acreage
Date Sold
(In thousands)
Gross
Sales
Price
Gain
(loss) on
Sale
(In thousands)
2013
Beacon Square
Grand Haven, MI
Edgewood Towne Center
Lansing, MI
Mays Crossing
Stockbridge, GA
Total consolidated income producing dispositions
Hunter's Square - Land Parcel
Farmington Hills, MI
Parkway Phase I - Moe's Southwest
Grill Outparcel
Jacksonville North Industrial - The
Learning Experience Outparcel
Parkway Phase I - Mellow
Mushroom Outparcel
Jacksonville, FL
Jacksonville, FL
Jacksonville, FL
Roseville Towne Center - Wal-Mart
parcel
Roseville, MI
Parkway Phase I - BJ's Restaurant
Outparcel
Jacksonville, FL
Total consolidated land / outparcel dispositions
Total 2013 consolidated dispositions
2012
Southbay SC and Pelican Plaza
Eastridge Commons
OfficeMax Center
Osprey and Sarasota, FL
Flint, MI
Toledo, OH
Total consolidated income producing dispositions
Outparcel
Roswell, GA
Total consolidated land / outparcel dispositions
Total 2012 consolidated dispositions
2011
Taylors Square
Sunshine Plaza
Lantana Shopping Center
Greenville, SC
Tamarac, FL
Lantana, FL
Total consolidated income producing dispositions
Southbay Shopping Center -
outparcel
River City Shopping Center -
outparcel
River City Shopping Center -
outparcel
Osprey, FL
Jacksonville, FL
Jacksonville, FL
Total consolidated land / outparcel dispositions
Total 2011 consolidated dispositions
F-16
51
86
137
274
N/A
N/A
N/A
N/A
N/A
N/A
274
190
170
22
382
N/A
382
34
237
123
394
N/A
N/A
N/A
394
N/A
12/6/2013
$
8,600
$
N/A
N/A
9/27/2013
4/9/2013
5,480
8,400
$ 22,480
0.1
12/11/2013 $
104
$
$
1.0
11/21/2013
1,000
1.0
9/26/2013
510
1.2
5/22/2013
1,200
(74)
657
1,537
2,120
72
306
(13)
332
11.6
2/15/2013
7,500
3,030
2.9
17.8
17.8
1/24/2013
2,600
$ 12,914
$ 35,394
$
$
N/A
5/15/2012
$
5,600
$
N/A
N/A
2/27/2012
3/27/2012
2/14/2012
2.26
2.26
2.26
1,750
1,725
9,075
2,030
2,030
$
$
$
$ 11,105
$
$
$
$
N/A 12/20/2011 $
4,300
$
N/A
N/A
7/11/2011
4/29/2011
15,000
16,942
$ 36,242
1.31
6/29/2011 $
2,625
0.95
3/2/2011
1.02
1/21/2011
678
663
3.28
3.28
$
3,966
$ 40,208
$
$
$
$
552
4,279
6,399
72
137
127
336
69
69
405
1,020
(32)
6,209
7,197
2,240
74
127
2,441
9,638
5. 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. Refer to Note 1 under real estate for additional information regarding
the sale of properties. As of December 31, 2013, 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,
2013, 2012 and 2011:
Total revenue
Expenses:
Recoverable operating expenses and real estate taxes
Other non-recoverable property operating expenses
Depreciation and amortization
Interest expense
Operating income of properties sold
Other expense
Gain on sale of properties
Provision for impairment
Gain on extinguishment of debt
2013
$
2,175
December 31,
2012
(In thousands)
5,502
$
2011
$
10,617
570
2
537
—
1,066
(95)
2,120
—
—
3,091
$
1,367
299
1,149
249
2,438
(245)
336
(2,915)
307
(79) $
3,957
557
3,184
1,742
1,177
—
9,406
(10,883)
1,218
918
Income (loss) from discontinued operations
$
6. Impairment Provisions
We established provisions for impairment during the years ended December 31 for the following consolidated assets and
unconsolidated joint venture investments:
Land held for development or available for sale (1)
Income producing properties marketed for sale (2)
Investments in unconsolidated joint ventures
Total
2013
$
$
327
9,342
—
9,669
Year Ended
December 31,
2012
(In thousands)
1,387
$
2,915
386
4,688
$
$
$
2011
11,468
16,332
9,611
37,411
(1)
(2)
In 2013, changes to estimated sales price assumptions triggered an impairment provision of $0.3 million. 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.
In 2013, our decision to market for potential sale certain wholly-owned income producing properties resulted in an
impairment provision of $9.4 million. 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.
Our impairment provisions for our land available for sale and our income producing properties marketed for potential 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 estimating value for
each land parcel or property. Our estimated fair value in these investments are classified as Level 3 of the fair value hierarchy
under GAAP. Refer to Note 11 of the notes to the consolidated financial statements for a discussion of fair value measurements.
F-17
7. Equity Investments in Unconsolidated Entities
We have five joint venture agreements whereby we own between 7% and 30% 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:
Balance Sheets
ASSETS
Investment in real estate, net
Other assets
Total Assets
LIABILITIES AND OWNERS' EQUITY
Mortgage notes payable
Other liabilities
Owners' equity
Total Liabilities and Owners' Equity
RPT's equity investments in unconsolidated joint ventures
Statements of Operations
Total Revenue
Total Expenses
Income before other income and expenses and discontinued operations
Gain on sale of land
Interest expense
Amortization of deferred financing fees
Provision for impairment of long-lived assets
Gain on extinguishment of debt
Income (loss) from continuing operations
Discontinued operations
Provision for impairment of long-lived assets
Gain on extinguishment of debt
Gain on sale of land
(Loss) gain on sale of real estate (1)
Income (loss) from discontinued operations
(Loss) income from discontinued operations
Net Income (Loss)
RPT's share of (loss) earnings from unconsolidated joint ventures (2)
2013
December 31,
2012
(In thousands)
2011
$
$
$
$
$
$
$
$
$
$
410,218
27,462
437,680
178,708
7,885
251,087
437,680
30,931
$
$
$
$
$
796,584
56,631
853,215
360,302
13,866
479,047
853,215
95,987
2013
42,778
29,599
13,179
—
(9,200)
(269)
—
—
3,710
December 31,
2012
(In thousands)
44,348
$
29,036
15,312
169
(11,725)
(304)
(7,622)
275
(3,895)
—
—
—
(21,512)
1,015
$
(20,497) $
(16,787) $
(4,759) $
—
736
624
(61)
4,055
5,354
1,459
3,646
$
$
$
$
$
$
$
$
$
$
866,184
61,377
927,561
396,792
16,547
514,222
927,561
97,020
2011
46,567
45,019
1,548
—
(14,076)
(378)
(125)
—
(13,031)
(5,482)
—
—
6,796
4,517
5,831
(7,200)
1,669
(1)
In March, 2013 Ramco/Lion Venture LP sold 12 shopping centers to us. The aggregate purchase price for 100% of the
shopping centers was $367.4 million resulting in a loss on the sale of $21.5 million to the joint venture. The properties are
located in Florida and Michigan. Three properties remain in this joint venture.
(2) For the year ended December 31, 2012, our pro-rata share excludes $0.4 million in costs associated with the liquidation of
two joint ventures concurrent with the extinguishment of their debt. The costs are reflected in earnings (loss) from
unconsolidated joint ventures on our consolidated statement of operations.
F-18
As of December 31, we had investments in the following unconsolidated entities:
Unconsolidated Entities
Ramco/Lion Venture LP
Ramco 450 Venture LLC
Other Joint Ventures
Ownership as of
December 31,
Total Assets as
of December 31,
Total Assets as
of December 31,
2013
30%
20%
(1)
2013
(In thousands)
$
91,053
$
293,410
53,217
$
437,680
$
2012
495,585
303,107
54,523
853,215
(1) Other JV's include joint ventures in which we own 7%-20% of the sole property in the joint venture.
Acquisitions
There were no acquisitions of shopping centers in 2013 and 2012 by any of our unconsolidated joint ventures.
Dispositions
The following table provides a summary of our unconsolidated joint venture property disposition activity during 2013, 2012 and
2011:
Property Name
Location
GLA
Acreage
Date Sold
Gross
Ownership
%
Sales Price
(at 100%)
Debt
Repaid
(Loss) gain
on Sale
(at 100%)
(In thousands)
2013
Clarion Partners Portfolio
FL & MI
2,246
N/A
3/25/2013
20% $ 367,415
$ 149,514
$ (21,512)
Total 2013 unconsolidated joint venture's
dispositions
2,246
$ 367,415
$ 149,514
$ (21,512)
2012
CVS Outparcel
Cartersville, GA
Wendy's Outparcel
Plantation, FL
Southfield Expansion
Southfield, MI
Shoppes of Lakeland
Lakeland, FL
Autozone Outparcel
Cartersville, GA
N/A
N/A
19
184
N/A
1.21
1.00
N/A
N/A
0.85
10/22/2012
20% $
2,616
$
— $
9/28/2012
9/18/2012
9/6/2012
9/10/2012
30%
50%
7%
20%
1,063
396
28,000
939
77
627
(138)
166
89
(89)
—
—
—
—
—
Collins Pointe Shopping
Center
Cartersville, GA
81
N/A
6/1/2012
20%
4,650
Total 2012 unconsolidated joint venture's
dispositions
284
3.06
$ 37,664
$
— $
732
2011
Shenandoah Square
Total 2011 unconsolidated joint venture's
dispositions
Davie, FL
124
124
N/A
8/24/2011
40% $ 21,950
$ 11,519
—
$ 21,950
$ 11,519
$
$
6,796
6,796
F-19
Debt
Our unconsolidated entities had the following debt outstanding at December 31, 2013:
Entity Name
Ramco 450 Venture LLC (1)
Ramco/Lion Venture LP (2)
Ramco 191 LLC (3)
Unamortized discount
Total mortgage debt
Balance
Outstanding
(In thousands)
$
$
140,883
30,506
7,525
178,914
(206)
178,708
(1) Maturities range from December 2015 to September 2023 with interest rates ranging from 1.9% to 5.8%.
(2) Balance relates to Millennium Park's mortgage loan which has a maturity date of October 2015 with a 5% interest rate.
(3) Balance relates to Paulding Pavilion's mortgage loan which has a maturity date of January 2014. The interest rate is variable
based on LIBOR plus 3.50%. The joint venture, in which we own a 7% interest, is in discussion with the lender to transfer
the property ownership to the lender in consideration for repayment of the loan.
During 2013, the Ramco 450 Venture LLC, in which our ownership interest is 20%, refinanced the mortgage on:
• The Chester Springs shopping center with a new 3-year loan in the amount of $22.0 million with a variable interest
based on LIBOR plus 1.7%;
• The Plaza at Delray with a new 10-year loan in the amount of $46.0 million with an interest rate fixed at 4.4%;
• Market Plaza. The new 5-year loan required the joint venture to pay down the outstanding principal balance from
$24.5 million to $16.0 million. Our share of the pay down was $1.7 million. The interest rate is fixed at 2.9%; and
• Repaid the mortgage on Olentangy Plaza in the amount of $21.6 million of which our share was $4.3 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:
Management fees
Leasing fees
Acquisition/disposition fees
Construction fees
Total
December 31,
2013
2012
2011
(In thousands)
1,875
$
2,564
$
2,633
390
—
61
1,026
16
318
918
66
364
2,326
$
3,924
$
3,981
$
$
F-20
8. Other Assets, Net
Other assets consisted of the following:
Deferred leasing costs, net
Deferred financing costs, net
Lease intangible assets, net
Straight-line rent receivable, net
Cash flow hedge marked-to-market asset
Prepaid and other deferred expenses, net
Other, net
Other assets, net
December 31,
2013
2012
(In thousands)
$
$
26,617
6,513
69,635
15,115
2,244
4,629
3,768
128,521
$
$
18,067
6,073
25,611
14,799
—
4,636
3,767
72,953
Gross intangible assets of $89.1 million, attributable to lease origination costs and above market leases, have a remaining weighted-
average amortization period of 4.7 years as of December 31, 2013. 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 above market lease asset resulted in a reduction of revenue of approximately $2.1 million, $0.8 million,
and $0.6 million for the years ended December 31, 2013, 2012, and 2011, respectively.
The following table represents estimated aggregate amortization expense related to other assets as of December 31, 2013:
Year Ending December 31,
2014
2015
2016
2017
2018
Thereafter
Total (1)
(In thousands)
23,355
18,772
14,207
9,085
7,318
29,000
101,737
$
$
(1) Excludes straight-line rent receivable, prepaid and other deferred expenses, cash flow hedge, goodwill, and deferred leasing
costs for assets not yet placed into service of $15.1 million, $4.6 million, $2.3 million, $2.1 million, and $2.7 million, respectively.
F-21
9. Debt
The following table summarizes our mortgages and notes payable and capital lease obligation as of December 31, 2013 and 2012:
Senior unsecured notes
Unsecured term loan facilities
Fixed rate mortgages
Unsecured revolving credit facility
Junior subordinated notes
Unamortized premium
Capital lease obligation (1)
December 31,
2013
2012
(In thousands)
$
110,000
$
255,000
329,875
27,000
28,125
750,000
3,174
753,174
5,686
$
$
$
$
—
180,000
293,139
40,000
28,125
541,264
17
541,281
6,023
(1) 99 year ground lease expires September 2103. However, an anchor tenant’s exercise of its option to purchase its parcel in
October 2014 would require us to purchase the real estate that is subject to the ground lease.
Mortgages and unsecured notes payable
We completed the following debt transactions during 2013:
•
•
•
•
In conjunction with our acquisitions, we assumed eight mortgages totaling $158.8 million. In addition to the contractual
debt assumed, a premium of approximately $3.7 million was recorded based upon the fair value of the loans on the date
they were assumed. This additional mortgage premium is being amortized over the remaining life of the loans and is
decreasing the monthly interest expense recorded on the loans. Of the eight mortgages assumed, three mortgages totaling
$100.5 million were repaid during the second quarter of 2013;
In June 2013, we closed on a $110.0 million private placement of senior unsecured notes. The notes were issued in three
tranches maturing in 2021, 2023 and 2025. The weighted average interest rate on the notes is 4.0%;
In May 2013, we entered into a $50.0 million, seven year unsecured term loan that includes an accordion feature providing
the opportunity to borrow up to an additional $25.0 million under the same loan agreement. In conjunction with the
closing of the loan, we entered into a seven year swap agreement with an interest rate at December 31, 2013 of 3.2%;
and
In December 2013, we exercised the accordion feature associated with the $50.0 million loan, increasing the loan to $75.0
million. In conjunction with the closing, we entered into two additional swap agreements totaling $25.0 million, with
an interest rate at December 31, 2013 of 3.9%.
The gross proceeds from these debt financings repaid maturing mortgage debt. Specifically, we repaid:
• Mission Bay Plaza in the amount of $42.2 million with an interest rate of 6.6%;
• Hunter's Square in the amount of $33.0 million with an interest rate of 8.2%;
• Winchester Center in the amount of $25.3 million with an interest rate of 8.1%;
• East Town Plaza in the amount of $10.1 million with an interest rate of 5.5%;
• Centre at Woodstock in the amount of $3.0 million with an interest rate of 6.9%;
• Hoover Eleven I in the amount of $1.3 million with an interest rate of 7.2%; and
• Hoover Eleven II in the amount of $2.2 million with an interest rate of 7.6%.
Our fixed rate mortgages have interest rates ranging from 5.0% to 7.4% and are due at various maturity dates from May 2014
through June 2026. Included in fixed rate mortgages at December 31, 2013 and 2012 were unamortized premium balances related
to the fair market value of debt of approximately $3.2 million and $17 thousand, respectively. The fixed rate mortgage notes are
secured by mortgages on properties that have an approximate net book value of $313.2 million as of December 31, 2013.
F-22
The mortgage loans encumbering our properties, including properties held by our unconsolidated joint ventures, are generally
nonrecourse, 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.
The following table presents scheduled principal payments on mortgages and notes payable as of December 31, 2013:
Year Ending December 31,
2014
2015
2016 (1)
2017
2018
Thereafter
Subtotal debt
Unamortized premium
Total debt (including unamortized premium)
(In thousands)
33,456
$
85,250
49,710
232,222
84,244
265,118
750,000
3,174
753,174
$
(1) Scheduled maturities in 2016 include $27.0 million which represents the balance of the unsecured revolving credit facility
drawn as of December 31, 2013.
We have no mortgage maturities until the second quarter of 2014 and it is our intent to repay these mortgages using cash, borrowings
under our unsecured line of credit, or other sources of financing.
Revolving Credit Facility
During 2013 we had net repayments of $13.0 million on our revolving credit facility and had outstanding letters of credit issued
under our revolving credit facility, not reflected in the accompanying consolidated balance sheets, totaling $8.2 million. These
letters of credit reduce borrowing availability under our bank facility. As of December 31, 2013, $204.8 million was available to
be drawn on our $240 million unsecured revolving credit facility subject to certain covenants.
The revolving credit and term loan facilities contain financial covenants relating to total leverage, fixed charge coverage ratio,
tangible net worth and various other calculations. As of December 31, 2013, we were in compliance with these covenants.
Junior Subordinated Notes
In January 2013, in accordance with the agreement, our junior subordinated notes converted from a fixed interest rate to a variable
rate of LIBOR plus 3.30%. The maturity date is January 2038.
Capital lease
We have a capital ground lease at our Gaines Marketplace shopping center. Total amounts expensed as interest relating to this
lease were $0.3 million for the year ended December 31, 2013 and $0.4 million for each of the years ended December 31, 2012
and 2011.
F-23
Approximate future rental payments under our capital ground lease are as follows:
Year Ending December 31,
2014
Total lease payments
Less: amounts representing interest
Total
Capital
Lease(1)
$
$
5,955
5,955
(269)
5,686
(1) Amounts represent a ground lease at one of our shopping centers that provides the option for us to purchase the land in October
2014 for approximately $5.0 million.
10. Other Liabilities, net
Other liabilities consist of the following:
Lease intangible liabilities, net
Cash flow hedge marked-to-market liability
Deferred liabilities
Tenant security deposits
Other, net
Other liabilities, net
December 31,
2013
2012
(In thousands)
$
$
40,386
2,297
2,637
2,940
333
48,593
$
$
16,297
5,574
1,970
1,948
398
26,187
The increase in other liabilities was primarily due to the acquisitions that were completed in 2013 and the allocation of a portion
of the purchase price to lease intangible liabilities. The lease intangible liability relates to below-market leases that are being
accreted over the applicable terms of the acquired leases, which resulted in an increase of revenue of $3.1 million, $1.0 million,
and $0.6 million for the years ended December 31, 2013, 2012 and 2011, respectively.
11. 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:
Level 1
Valuation is based upon quoted prices for identical instruments traded in active markets.
Level 2
Level 3
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.
The following is a description of valuation methodologies used for our assets and liabilities recorded at fair value.
F-24
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 12 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, 2013
and 2012.
2013
Derivative assets - interest rate swaps
Derivative liabilities - interest rate swaps
2012
Derivative liabilities - interest rate swaps
Total Fair
Value
Level 1
Level 2
Level 3
(In thousands)
$
$
$
2,244
$
(2,297) $
— $
— $
2,244
$
(2,297) $
(5,574) $
— $
(5,574) $
—
—
—
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.
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 $649.9 million and $456.3 million as of December 31, 2013 and
2012, respectively, have fair values of approximately $650.9 million and $455.4 million, respectively. Variable rate debt’s fair
value is estimated to be the carrying values of $100.1 million and $85.0 million as of December 31, 2013 and 2012, 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.
F-25
The table below presents the recorded amount of assets at the time they were marked to fair value during the years ended
December 31, 2013 and 2012 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 years ended December 31, 2013 and 2012.
Assets
2013
Total Fair
Value
Level 1
Level 2
Level 3
(In thousands)
Total
Losses
Income producing properties
Land available for sale
Total
2012
Income producing properties
Land available for sale
Investments in unconsolidated entities
Total
$
$
$
$
$
$
$
26,520
5,568
32,088
16,862
17,745
1,164
— $
—
— $
— $
—
— $
— $
— $
—
—
—
—
$
$
$
26,520
5,568
32,088
16,862
17,745
1,164
35,771
$
— $
— $
35,771
$
(9,342)
(327)
(9,669)
(2,915)
(1,387)
(386)
(4,688)
12. 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, 2013, we had seven interest rate swap agreements in effect for an aggregate notional amount of $210.0 million
that were designated as cash flow hedges. The agreements provide for swapping one-month LIBOR interest rates ranging from
1.2% to 2.2% on $210.0 million of unsecured term loans, and have expirations ranging from April 2016 to May 2020.
The following table summarizes the notional values and fair values of our derivative financial instruments as of December 31,
2013:
Underlying Debt
Derivative Assets
Unsecured term loan facility
Unsecured term loan facility
Unsecured term loan facility
Derivative Liabilities
Unsecured term loan facility
Unsecured term loan facility
Unsecured term loan facility
Unsecured term loan facility
Hedge
Type
Notional
Value
(In thousands)
Fixed
Rate
Fair
Value
Expiration
Date
(In thousands)
$
$
$
Cash Flow
Cash Flow
Cash Flow
Cash Flow
Cash Flow
Cash Flow
Cash Flow
50,000
15,000
10,000
75,000
75,000
30,000
25,000
5,000
1.4600% $
2,211
2.1500%
2.1500%
20
13
$
2,244
1.2175% $
2.0480%
1.8500%
1.8400%
(1,249)
(668)
(317)
(63)
(2,297)
05/2020
05/2020
05/2020
04/2016
10/2018
10/2018
10/2018
$
135,000
$
F-26
The following table presents the fair values of derivative financial instruments in our consolidated balance sheets as of December 31,
2013 and December 31, 2012, respectively:
Liability Derivatives
December 31, 2013
December 31, 2012
Derivatives designated as
hedging instruments
Balance Sheet
Location
Fair
Value
(In thousands)
Balance Sheet
Location
Other assets
Other liabilities
$
$
2,244 Other assets
(2,297) Other liabilities
Fair
Value
(In thousands)
$
$
—
(5,574)
The effect of derivative financial instruments on our consolidated statements of operations for the year ended December 31, 2013
and 2012 is summarized as follows:
Amount of Gain (Loss)
Recognized in OCI on
Derivative
(Effective Portion)
Year Ended December 31,
2013
2012
(In thousands)
Location of Loss
Reclassified from
Accumulated OCI
into Income
(Effective Portion)
$
$
2,244
3,277
5,521
$
$
— Interest Expense
Interest Expense
(2,745)
(2,745) Total
Amount of Loss Reclassified
from
Accumulated OCI into
Income (Effective Portion)
Year Ended December 31,
2013
2012
(In thousands)
$
$
(424) $
(1,847)
(2,271) $
—
(1,782)
(1,782)
Derivatives in Cash Flow Hedging
Relationship
Interest rate contracts - assets
Interest rate contracts - liabilities
Total
13. Leases
Revenues
Approximate future minimum revenues from rentals under non-cancelable operating leases in effect at December 31, 2013,
assuming no new or renegotiated leases or option extensions on lease agreements were as follows:
Year Ending December 31,
2014
2015
2016
2017
2018
Thereafter
Total
(In thousands)
143,115
$
131,560
113,735
90,828
74,957
304,730
858,925
$
F-27
Expenses
We have an operating lease for our corporate headquarters in Michigan for a term expiring in 2019. We also have an operating
lease adjacent to our former Taylors Square shopping center. We recognized rent expense of $0.7 million for each of the years
ended December 31, 2013 and 2012 and $0.8 million for the year ended December 31, 2011. Approximate future rental payments
under our non-cancelable leases, assuming no option extensions are as follows:
Year Ending December 31,
2014
2015
2016
2017
2018
Thereafter
Total
(In thousands)
579
$
462
468
475
481
942
3,407
$
14. Earnings per Common Share
The following table sets forth the computation of basic earnings per share (“EPS”):
Year Ended December 31,
2013
2012
2011
(In thousands, except per share data)
Income (loss) from continuing operations
$
8,371
$
7,171
$
(29,418)
Net (income) loss from continuing operations attributable to noncontrolling
interest
Preferred share dividends
Allocation of continuing (income) loss to restricted share awards
Income (loss) from continuing operations attributable to RPT
Income (loss) from discontinued operations
Net (income) loss from discontinued operations attributable to noncontrolling
interest
Allocation of discontinued (income) loss to restricted share awards
Income (loss) from discontinued operations attributable to RPT
Net income (loss) available to common shareholders
Weighted average shares outstanding, Basic
Earnings (loss) per common share, Basic
Continuing operations
Discontinued operations
(355)
(7,250)
(102)
664
3,091
(110)
(20)
2,961
3,625
59,336
0.01
0.05
0.06
$
$
$
$
87
(7,250)
29
37
(79)
$
25
1
(53)
(16) $
1,800
(5,244)
267
(32,595)
918
(58)
(7)
853
(31,742)
44,101
38,466
— $
—
— $
(0.85)
0.01
(0.84)
$
$
$
$
F-28
The following table sets forth the computation of diluted EPS:
Income (loss) from continuing operations
$
8,371
$
7,171
$
(29,418)
Year Ended December 31,
2013
2012
2011
(In thousands, except per share data)
Net (income) loss from continuing operations attributable to noncontrolling
interest
Preferred share dividends
Allocation of continuing (income) loss to restricted share awards
Allocation of over distributed continuing (income) loss to restricted share
awards
Income (loss) from continuing operations attributable to RPT
Income (loss) from discontinued operations
Net (income) loss from discontinued operations attributable to noncontrolling
interest
Allocation of discontinued (income) loss to restricted share awards
Income (loss) from discontinued operations attributable to RPT
Net income (loss) available to common shareholders
Weighted average shares outstanding, Basic
Stock options and restricted share awards using the treasury method (1)
Dilutive effect of securities (2)
Weighted average shares outstanding, Diluted
Earnings (loss) per common share, Diluted
Continuing operations
Discontinued operations
(355)
(7,250)
(102)
—
$
664
$
3,091
(110)
—
2,981
3,645
$
87
(7,250)
29
$
(23)
14
(79)
25
—
(54)
(40) $
1,800
(5,244)
267
(38)
(32,633)
918
(58)
(1)
859
(31,774)
59,336
44,101
38,466
392
—
—
—
—
—
59,728
44,101
38,466
0.01
0.05
0.06
$
$
— $
—
— $
(0.85)
0.01
(0.84)
$
$
$
(1) For the year ended December 31, 2012 stock options and restricted stock awards are anti-dilutive and accordingly, have
been excluded from the weighted average common shares used to compute diluted EPS.
(2) The assumed conversion of 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.
15. Shareholders’ Equity
Underwritten public offerings
During 2013, we completed two separate underwritten public offerings of newly issued common shares of beneficial interest,
specifically:
• On November 13, 2013, we issued 4.5 million shares at $15.90 per share. Our total net proceeds, after deducting expenses,
were approximately $70.4 million; and
• On March 18, 2013, we issued 8.05 million shares at $15.55 per share. Our total net proceeds, after deducting expenses,
were approximately $122.2 million.
In May 2012 we completed an underwritten public offering of 5.5 million newly issued common shares of beneficial interest at
$12.10 per share. The underwriters were granted an option to purchase an additional 0.825 million common shares and they fully
exercised that option on June 1, 2012. Our total net proceeds, after deducting expenses, were approximately $73.2 million.
F-29
Controlled equity offerings
In 2013, through our controlled equity offerings we issued 5.4 million common shares, at an average share price of $15.10, and
received approximately $81.7 million in net proceeds, after sales commissions and fees of $1.2 million.
In 2012, we issued 3.1 million common shares through our controlled equity offerings generating $38.1 million in net proceeds,
after sales commissions and fees of $0.8 million. The average share price of shares issued under the controlled equity offering in
2012 was $12.79 per share.
Our controlled equity offerings were issued under offerings registered in 2012 and 2013. In the third quarter 2012 we registered
a new controlled equity offering whereby we may sell up to 6.0 million common shares of beneficial interest. As of December 31,
2013 all shares under this offering had been issued. In the third quarter 2013, we entered into agreements related to a new controlled
equity offering whereby we may sell up to 8.0 million common shares of beneficial interest once the remaining shares of the
previous offering have been issued. As of December 31, 2013 we had 7.8 million shares available for issuance.
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.
16. Share-Based Compensation and Other Benefit Plans
Incentive and Stock Option Plans
Share-based compensation is awarded under the 2012 Omnibus Long-Term Incentive Plan (“2012 LTIP”). Under the plan our
compensation committee may grant, subject to the Company’s 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 2012 LTIP
allows us to issue up to 2,000,000 of our common shares, units or stock options, of which 1.9 million is available for issuance as
of December 31, 2013.
The following share-based compensation plans have been terminated, except with respect to awards outstanding under each plan:
• The 2009 Omnibus Long-Term Incentive Plan ("2009 LTIP") which allowed for the grant of restricted shares, restricted
share units, options and other awards to trustees, officers and other key employees;
• The 2008 Restricted Share Plan for Non-Employee Trustees (the "Trustees' Plan") which allowed for the grant of
•
•
restricted shares to non-employee trustees of the Company;
2003 LTIP - allowed for the grant of stock options to our executive officers and employees. As of December 31, 2013,
there were 146,993 options exercisable; and
2003 Non-Employee Trustee Stock Option Plan – this plan provided for the annual grant of options to purchase our
shares to our non-employee trustees. As of December 31, 2013, there were 44,000 options exercisable.
We recognized total share-based compensation expense of $3.6 million, $2.6 million, and $1.8 million for 2013, 2012, and 2011,
respectively.
Restricted Stock Share-Based Compensation
In 2013 and 2012 the compensation committee determined that the LTIP award would consist of 50% service based restricted
shares and 50% performance-based cash awards that are earned subject to a future performance measurement based on a three-
year shareholder return peer comparison (the “TSR Grants”). If the performance criterion is met the actual value of the grant
earned will be determined and 50% of the award will be paid in cash immediately while the balance will be paid in cash the
following year.
Pursuant to ASC 718 – Stock Compensation, we determine the grant date fair value of TSR Grants, and any subsequent re-
measurements, based upon a Monte Carlo simulation model. We will recognize the compensation expense ratably over the
requisite service period. We are required to re-value the performance cash awards at the end of each quarter using the same
methodology as was used at the initial grant date and adjust the compensation expense accordingly. If it is determined that the
performance criteria will not be met, compensation expense previously recognized would be reversed. We recognized
compensation expense of $1.5 million and $0.4 million related to the cash awards during the year ended December 31, 2013 and
2012, respectively. No such cash awards existed in 2011.
F-30
In 2011, the compensation committee determined that the LTIP award for those years would consist of 50% service-based restricted
shares and 50% performance-based grants to our senior management. The service-based restricted share awards include a five
year vesting period and the compensation expense is recognized on a graded vesting basis. The performance-based share awards
are also 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.
We recognized expense related to restricted share grants of $2.1 million, $2.2 million and $1.8 million during the years ended
December 31, 2013 , 2012, and 2011, respectively.
A summary of the activity of service based restricted shares under the LTIP for the years ended December 31, 2013, 2012 and
2011 is presented below:
Outstanding at the beginning of the
year
Granted
Vested
Forfeited or expired
Outstanding at the end of the year
2013
2012
2011
Number of
Shares
Weighted-
Average
Grant Date
Fair Value
Number of
Shares
Weighted-
Average
Grant Date
Fair Value
Number of
Shares
Weighted-
Average Gran
t Date Fair
Value
286,306
$
293,732
(197,014)
(7,211)
375,813
11.83
15.68
10.07
13.38
13.71
229,722
$
135,223
(68,683)
(9,956)
286,306
12.40
11.30
11.47
11.95
11.83
264,657
$
119,964
(109,638)
(45,261)
229,722
10.78
13.34
11.04
13.12
12.40
As of December 31, 2013 there was approximately $4.5 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 4.2 years.
Stock Option Share-Based Compensation
We recognized approximately $0.1 million of expense related to options during each of the years ended December 31, 2012 and
2011. 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.
No options were granted under the LTIP in the years ended December 31, 2013, 2012 and 2011.
The following table reflects the stock option activity for all plans described above:
Outstanding at the beginning of the year
Granted
Exercised
Forfeited or expired
Outstanding at the end of the year
Exercisable at the end of year
2013
2012
2011
Shares
Under
Option
227,743
Weighted-
Average
Exercise Price
27.81
$
Shares
Under
Option
272,201
Weighted-
Average
Exercise Price
25.98
$
Shares
Under
Option
323,948
Weighted-
Average
Exercise Price
25.06
$
—
(25,000)
(11,750)
190,993
190,993
$
$
9.61
25.34
30.34
—
(25,000)
(19,458)
227,743
30.34
202,743
$
$
—
9.61
25.65
27.81
—
(25,000)
(26,747)
272,201
30.05
222,201
$
$
—
9.61
30.18
25.98
29.67
F-31
The following tables summarize information about options outstanding at December 31, 2013:
Range of Exercise Price
Outstanding
Options Outstanding
Weighted-
Average
Remaining
Contractual Life
Options Exercisable
Weighted-
Average
Exercise Price
Exercisable
Weighted-
Average
Exercise Price
23.77 - $27.96
28.80 - $29.06
34.30 - $36.50
69,917
49,806
71,270
190,993
1.1
2.0
3.2
2.1
$
$
26.88
29.01
34.67
30.34
69,917
$
49,806
71,270
190,993
$
26.88
29.01
34.67
30.34
We received cash of approximately $0.2 million from options exercised during each of the years ended December 31, 2013, 2012
and 2011. The impact of the cash receipt is included in financing activities in the accompanying consolidated statements of cash
flows.
17. Taxes
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.
As of December 31, 2013, we had a federal and state deferred tax asset of $0.2 million, net of a valuation allowance of $9.8
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, 2013 and 2012, we recorded an income tax provision of approximately $64,000 and an
income tax benefit of $34,000, respectively.
We had no unrecognized tax benefits as of or during the three year period ended December 31, 2013. We expect no significant
increases or decreases in unrecognized tax benefits due to changes in tax positions within one year of December 31, 2013. No
material interest or penalties relating to income taxes were recognized in the statement of operations for the years ended
December 31, 2013, 2012, and 2011 or in the consolidated balance sheets as of December 31, 2013, 2012, and 2011. It is our
accounting policy to classify interest and penalties relating to unrecognized tax benefits as tax expense. As of December 31, 2013,
returns for the calendar years 2010 through 2013 remain subject to examination by the Internal Revenue Service (“IRS”) and
various state and local tax jurisdictions. As of December 31, 2013, certain returns for calendar year 2009 also remain subject to
examination by various state and local tax jurisdictions.
Sales Tax
We collect various taxes from tenants and remit these amounts, on a net basis, to the applicable taxing authorities.
F-32
18. Transactions with Related Parties
During 2011 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 year ended December 31, 2011 from
these related parties:
Management fees
Leasing fees
Other
Total
Year Ended December 31, 2011
(In thousands)
$
$
72
12
110
194
These agreements were terminated with the sale of the joint venture’s sole property, Shenandoah Shopping Center, in August
2011. We had no receivables from related parties at December 31, 2013 and 2012, respectively.
For additional related party information Refer to Note 7 Equity investments in unconsolidated entities.
19. Commitments and Contingencies
Construction Costs
In connection with the development and expansion of various shopping centers as of December 31, 2013, we had entered into
agreements for construction costs of approximately $13.1 million.
Litigation
We are currently involved in certain litigation arising in the ordinary course of business.
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.
F-33
20. Subsequent Events
We have evaluated subsequent events through the date that the consolidated financial statements were issued.
Subsequent to December 31, 2013, we executed a sale agreement for a Florida property in the amount of $7.3 million. The
agreement is subject to contingencies for due diligence.
F-34
21. Quarterly Financial Data (Unaudited)
The following table sets forth the quarterly results of operations for the year ended December 31, 2013:
Total revenue
Income before other income and expenses, tax and discontinued
operations
Income (loss) from continuing operations
Income from discontinued operations
Net income (loss)
Net (income) loss attributable to noncontrolling partner interest
Preferred share dividends
Net income (loss) available to common shareholders
Earnings (loss) per common share, basic: (2)
Continuing operations
Discontinued operations
Earnings (loss) per common share, diluted:(2)
Continuing operations
Discontinued operations
Quarters Ended 2013
March 31 (1)
June 30 (1)
September 30 (1)
(In thousands, except per share amounts)
December 31 (1)
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
33,938
8,230
4,827
447
5,274
(225)
(1,812)
$
$
$
$
$
42,703
11,310
4,093
1,689
5,782
(208)
(1,813)
$
$
$
$
$
45,411
13,110
4,816
899
5,715
(201)
(1,813)
3,237
$
3,761
$
3,701
$
0.05
0.01
0.06
0.05
0.01
0.06
$
$
$
$
0.03
0.03
0.06
0.03
0.03
0.06
$
$
$
$
0.05
0.01
0.06
0.05
0.01
0.06
$
$
$
$
48,016
12,479
(5,365)
56
(5,309)
169
(1,812)
(6,952)
(0.11)
—
(0.11)
(0.11)
—
(0.11)
(1)
(2)
Amounts are reclassified to reflect the reporting of discontinued operations.
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, 2013.
The following table sets forth the quarterly results of operations for the years ended December 31, 2012:
Total revenue
Income before other income and expenses, tax and discontinued
operations
Income from continuing operations
(Loss) income from discontinued operations
Net (loss) income
Net loss (income) attributable to noncontrolling partner interest
Preferred share dividends
Net (loss) income available to common shareholders
(Loss) earnings per common share, basic: (2)
Continuing operations
Discontinued operations
(Loss) earnings per common share, diluted:(2)
Continuing operations
Discontinued operations
Quarters Ended 2012
March 31 (1)
June 30 (1)
September 30 (1)
(In thousands, except per share amounts)
December 31 (1)
$
$
$
$
$
$
$
$
$
$
30,040
8,219
1,644
$
$
$
(1,696) $
(52) $
534
(1,812)
$
$
$
$
$
30,117
7,319
1,323
841
2,164
(185)
(1,813)
$
$
$
$
$
31,764
7,837
2,685
636
3,321
(158)
(1,813)
(1,330) $
166
$
1,350
$
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33,304
8,783
1,519
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1,659
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(232)
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(1)
(2)
Amounts are reclassified to reflect the reporting of discontinued operations.
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, 2012.
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F-38
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ProPerty Summary
ProPerty Name
LoCatIoN
oWNer-
SHIP %
totaL
oWNeD
GLa
ProPerty Name
LoCatIoN
Lakeshore Marketplace
Livonia Plaza
Millennium Park
New Towne Plaza
Oak Brook Square
Roseville Towne Center
Shoppes at
Fairlane Meadows
Southfield Plaza
Tel-Twelve
The Auburn Mile
The Shops at
Old Orchard
Troy Marketplace
West Oaks I
Shopping Center
West Oaks II
Shopping Center
Winchester Center
total
mISSourI (4)
Central Plaza
Deer Creek
Shopping Center
Heritage Place
Town & Country Crossing
total
NeW JerSey (1)
Chester Springs
Shopping Center
total
oHIo (7)
Crossroads Centre
Deerfield Towne Center
Olentangy Plaza
Rossford Pointe
Spring Meadows Place
The Shops on
Lane Avenue
Troy Towne Center
total
teNNeSSee (1)
Northwest Crossing
total
VIrGINIa (2)
oWNer-
SHIP %
100%
100%
30%
100%
100%
100%
100%
100%
100%
100%
100%
100%
totaL
oWNeD
GLa
342,959
137,391
272,568
192,587
152,073
76,998
157,246
185,409
523,411
90,553
96,768
217,754
Norton Shores
Livonia
Livonia
Canton Township
Flint
Roseville
Dearborn
Southfield
Southfield
Auburn Hills
West Bloomfield
Troy
Novi
100%
243,987
Novi
Rochester Hills
100%
100%
167,954
314,575
5,357,414
Ballwin
100%
166,431
Maplewood
Creve Coeur
(St Louis)
Town & Country
100%
100%
100%
208,144
Chester
20%
Rossford
Mason
Columbus
Rossford
Holland
Upper Arlington
Troy
100%
100%
20%
100%
100%
20%
100%
Knoxville
100%
269,105
148,630
792,310
223,068
223,068
344,045
460,675
253,474
47,477
259,362
170,719
144,485
1,680,237
124,453
124,453
40,518
98,147
138,665
208,472
219,538
182,392
326,271
936,673
The Town Center at Aquia
The Town Center at
Aquia Office
total
WISCoNSIN (4)
Stafford
Stafford
East Town Plaza
Nagawaukee Center
The Shoppes at Fox River Waukesha
West Allis Towne Centre
West Allis
total
Madison
Delafield
100%
100%
100%
100%
100%
100%
PortFoLIo totaL
15,910,243
CoLoraDo (2)
Harvest Junction North
Harvest Junction South
total
FLorIDa (21)
Cocoa Commons
Coral Creek Shops
Cypress Point
Kissimmee West
Marketplace of Delray
Martin Square
Mission Bay Plaza
Naples Towne Centre
Parkway Shops
River City Marketplace
River Crossing Centre
Rivertowne Square
Shoppes of Lakeland
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
total
GeorGIa (7)
Centre at Woodstock
Conyers Crossing
Holcomb Center
Horizon Village
Paulding Pavilion
Peachtree Hill
Promenade at
Pleasant Hill
total
ILLINoIS (5)
Deer Grove Centre
Liberty Square
Market Plaza
Mount Prospect Plaza
Rolling Meadows
Shopping Center
total
INDIaNa (2)
Merchants’ Square
Nora Plaza
total
maryLaND (1)
Crofton Centre
total
mICHIGaN (24)
Longmont
Longmont
Cocoa
Coconut Creek
Clearwater
Kissimmee
Delray Beach
Stuart
Boca Raton
Naples
Jacksonville
Jacksonville
New Port Richey
Deerfield Beach
Lakeland
Royal Palm Beach
Delray Beach
Jensen Beach
Land O’ Lakes
Delray Beach
Lakeland
Jensen Beach
Plantation
Woodstock
Conyers
Roswell
Suwanee
Hiram
Duluth
Duluth
Palatine
Wauconda
Glen Ellyn
Mount Prospect
Rolling Meadows
Carmel
Indianapolis
100%
100%
100%
100%
100%
7%
100%
30%
100%
100%
100%
100%
100%
100%
100%
100%
20%
100%
100%
30%
100%
100%
100%
100%
100%
100%
100%
20%
20%
100%
100%
100%
20%
100%
20%
100%
7%
Crofton
20%
Clinton Pointe
Clinton Valley
Fraser Shopping Center
Gaines Marketplace
Hoover Eleven
Hunter’s Square
Jackson Crossing
Jackson West
Lake Orion Plaza
Clinton Township
Sterling Heights
Fraser
Gaines Township
Warren
Farmington Hills
Jackson
Jackson
Lake Orion
100%
100%
100%
100%
100%
100%
100%
100%
100%
159,397
176,960
336,357
90,116
109,312
167,280
115,586
238,196
331,105
263,714
134,707
89,114
557,087
62,038
144,907
183,842
120,092
313,913
92,979
168,751
155,770
146,755
109,761
152,973
3,747,998
86,748
170,475
106,003
97,001
84,846
154,700
261,982
961,755
235,936
107,427
163,054
301,138
134,012
941,567
277,728
139,788
417,516
252,230
252,230
135,330
201,115
68,326
392,169
280,719
354,323
402,326
209,800
141,073
c om P a n y in f o r m a Ti o n
Board of TrusTees:
stephen r. Blank, chairman
Senior Fellow, Finance
Urban Land Institute
Audit Committee–
Financial Expert and Member
Compensation Committee–Member
Nominating and Governance
Committee–Chairman
dennis gershenson
President and CEO
Ramco–Gershenson Properties Trust
Executive Committee–Member
arthur 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
david J. nettina
President and co-Chief Executive Officer
Career Management, LLC
Audit Committee–Financial Expert
and 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 auditors
Grant Thornton LLP
Southfield, MI
corporate counsel
Honigman Miller Schwartz and
Cohn LLP
Detroit, MI
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
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execuTive officers:
dennis gershenson
President and CEO
gregory r. andrews
Chief Financial Officer,
Secretary
frederick a. Zantello
Executive Vice President,
Assistant Secretary
catherine clark
Senior Vice President
Acquisitions
michael J. sullivan
Senior Vice President
Asset Management
matthew l. ostrower
Managing Director
Morgan Stanley
Audit Committee–
Financial Expert and 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
shareholder information
Current and prospective
Ramco–Gershenson 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
Vice President of Investor Relations and
Corporate Communications
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
certifications
On June 26, 2013, 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 addi-
tion, 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, 2013, and our Annual
Report on Form 10-K for the year ended
December 31, 2013, certifications by
our CEO and CFO in accordance with
Sections 302 and 906 of the Sarbanes-
Oxley Act of 2002.
31500 Northwestern Highway, Suite 300
Farmington Hills, MI 48334
Tel: (248) 350-9900 Fax: (248) 350-9925
www.rgpt.com