TA K I N G
R E TA I L
TO NEW
HEIGHTS
A N N U A L R E P O R T
■ 2 0 1 4
A BOUT R A M C O - G E RS H E NS O N
PRO PE RTIE S TRUS T
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 large, multi-anchor shopping centers primarily
in a dozen of the largest metropolitan markets
in the United States. At December 31, 2014,
the Company owned interests in and managed a
portfolio of 80 shopping centers and one office
building with approximately 16.9 million square
feet of gross leasable area. At December 31,
2014, the Company’s core operating portfolio
was 95.5% leased.
Front Range Village
OVER THE LAST FIVE
YEARS WE HAVE BEEN
FOCUSED ON INCREASING
QUALITY IN ALL ASPECTS
OF OUR BUSINESS.
A N N U A L R E P O R T 2 0 1 4 ■
1
DEAR FELLOW SHAREHOLDER:
Over the last five years we have worked tirelessly to transform
our Company into an organization with a high-quality shop-
ping center portfolio tenanted by best-in-class retailers while
simultaneously building a fortress balance sheet. In the
process we delivered a total shareholder return of approxi-
mately 167% for that period besting all but one of our peers.
Our strategy over these last five years has focused on three key
objectives: constantly increasing the quality of our portfolio,
growing the quality of our earnings, and maintaining a quality
balance sheet. By every measure we have delivered on this
strategy. From the end of 2010 to 2014 we have produced:
• Per Square Foot Rental Growth of over 18%.
• An increase in Funds from Operations Per Share of over 20%.
• An increase in Net Asset Value of approximately 35%.
At the heart of this track record of success is a management
team dedicated to making our Company even more produc-
tive year-in and year-out. In 2014, we continued to position
Ramco-Gershenson as a leader in the shopping center industry
by remaining consistent in our commitment to quality.
AN EVER IMPROVING SHOPPING CENTER PORTFOLIO:
I can confidently say that at the end of 2014 our Company
owned a portfolio of high-quality, market dominant shopping
centers tenanted with best-in-class retailers. Our centers have
an average size of 260,000 square feet one of the largest foot-
prints among our peers. The size of our centers provides a
broad selection of shopping options for the consumer in our
trade areas. The quality of our portfolio is partly the result of an
acquisition program that emphasized geographic diversification,
demographic quality and an ever higher average base rent.
Last year, we acquired four shopping centers for $322 million
located in the targeted major metropolitan markets of
Minneapolis-St. Paul, Cincinnati, and Fort Collins. As a result
of these acquisitions, while we began 2014 with the state of
Michigan representing approximately 35% of base rents, we
ended the year with no one market exceeding 29% of rentals.
Dennis Gershenson
President and CEO
OUR COMMITMENT TO
QUALITY HAS POSITIONED
OUR COMPANY TO
CONSISTENTLY DELIVER
STRONG RESULTS.
Lakeland Park Center
Also in 2014, our high-quality acquisitions generated an
increase in our portfolio’s average household income from
$72,000 at the beginning of the year to $78,000 by year-end,
and the retailers at these properties are paying average base
rentals of $15.96 per square foot. Together these shopping
centers are expected to add approximately $22 million of
annualized property level net operating income to our port-
folio and feature an impressive line-up of the nation’s top
anchor and specialty retailers, including Whole Foods, DSW
Shoe Warehouse, White House/Black Market, Sephora, Soma
Intimates, LOFT, and H&M. Each property has the added
benefit of additional value creation potential through a
number of redevelopment initiatives. A portion of the capital
required for these purchases was generated from our capital
recycling program where we sold assets that fell into the
lowest quartile of our portfolio relative to financial and
operating performance.
The success of our portfolio improvement strategy is reflected
in our solid operating metrics that compares favorably to our
peers. Of particular note is our 2014 increase in same-center
net operating income of 3.3%, the 18th quarter in a row of
same-center growth, the leasing of approximately 2.3 million
square feet of space with comparable rental spreads of 6.3%,
and the signing of multiple leases with high-quality national
credit retailers including TJ Maxx, Ross Dress for Less, ULTA
Beauty, Kirkland’s, Rue 21 and Charming Charlie. Further, we
ended the year with core shopping center occupancy of 95.5%,
a rate at the high end of our historical average.
S TRON G OPE R ATIN G ME TRICS
3.3%
SAME-CENTER
NOI GROWTH
95.5%
CORE
OCCUPANCY
6.3%
LEASING
SPREADS
With this record of strong success, we have built a solid foun-
dation for even greater quality improvement in all aspects of
our business. We expect to continue to expand our shopping
center presence in a number of quality markets including
Denver, Minneapolis, and Metro Chicago. We are also in the
process of redeveloping and expanding a significant number
of our properties to include the best and newest retail con-
cepts and we continue to realign our top 25 tenant line up by
replacing under performers with credit retailers who are in high
demand within our trade areas. Even with our emphasis on
national, credit tenants as the users of choice to occupy the
majority of our retail space, we seek out unique regional and
local tenants with a winning platform to add a fresh, local com-
ponent to our mix.
Additionally, as the retailing marketplace continues to evolve
and the competition to attract the consumer intensifies, we are
focused on creating an appealing shopping environment
where our retailers can thrive, cross shopping is promoted and
our customers desire to extend their stay at our shopping
A N N U A L R E P O R T 2 0 1 4 ■
3
S TRO N G D E BT ME TRICS
5.9X
DEBT TO
EBITDA
3.9X
INTEREST
COVERAGE
3.0X
FIXED CHARGE
COVERAGE
centers because of the relaxed and exciting atmosphere we’ve
built into our properties. We believe that developing “a sense
of place” at our shopping centers is a winning formula and will
set us apart from our competition for years to come.
MAINTAINING A STRONG BALANCE SHEET:
The greatest insulator against both short and long term capital
risk is the ability to maintain a conservative and flexible bal-
ance sheet. This financial approach also allows our Company
to be opportunistic in any economic environment. In 2014, we
further improved an already strong capital structure by issuing
$170 million of new equity, expanding our credit facility to $350
million, and closing $200 million in private placement debt.
These significant financing transactions were used to fund
acquisitions, decrease leverage, and extend our average debt
maturity to 6.5 years. At year-end, 96% of our debt was fixed
rate, 76% of our net operating income was unsecured, and our
net debt to EBITDA ratio was 5.9x.
THE NEXT FIVE YEARS:
Our actions to improve the quality of the portfolio, intelligently
grow the Company, and strengthen the balance sheet have
positioned our company to outperform over the next five
years. We believe that the pursuit of quality in all aspects of our
business will be the greatest generator of value for our share-
holders. Therefore, our plans for 2015 and beyond will be
focused on ensuring that our acquisitions and dispositions
reflect this philosophy. Additionally, we will not be satisfied
merely with well-leased properties, but will seek to secure the
most exciting retail concepts and national credit tenants to
expand our shopping centers, undertake value-add redevel-
opments, and/or replace underperforming uses.
All of these activities are designed to reinforce our Company’s
dominance in our chosen markets, continue to promote a
tenant mix that will maintain our shopping centers as the shop-
ping destinations of choice for the consumer, and produce
consistent sustainable increases in net operating income.
We foresee a bright future for our Company as we take our
retail to new heights. I am grateful to our shareholders for their
continued support and I look forward to rewarding their com-
mitment with strong results in 2015 and beyond.
Dennis Gershenson
President and CEO
4 ■(cid:3) (cid:3)
Buttermilk Towne Center
W E A R E C O M M I T T E D
T O C R E A T I N G A N
E X C I T I N G S H O P P I N G
ENVIRONMENT WHERE
OUR BEST-IN - QUALIT Y
RETAILERS CAN THRIVE.
A N N U A L R E P O R T 2 0 1 4 ■
5
WE SELECTIVELY ACQUIRE
HIGH-QUALITY, MARKET
DOMINANT SHOPPING
CENTERS WHERE WE CAN
ADD VALUE OVER THE
LONG TERM.
Top: Woodbury Lakes
Bridgewater Falls
6 ■(cid:3) (cid:3)
R A M C O - G E RS H E N S O N ’ S PRO P E R TIE S
MN
1
WI
4
MI
22
IL
5
IN
2
OH
8
KY
1
MO
4
NJ
1
MD
1
VA
2
CO
3
N E W P RO P E R TI E S
A D D E D I N 2 014
+1
+1
+2
Fort Collins, CO
Minneapolis, MN
Cincinnati, OH
GA
6
FL
21
Front Range Village
A N N U A L R E P O R T 2 0 1 4 ■
7
S E LECTE D FIN A N CIA L HIG H LIG HT S
Years Ended December 31
(Dollars in thousands, except per share amounts)
2014
2013
2012
2011
2010
Total Revenues
$ 218,363
$ 170,068
$ 125,225
$ 114,386
$ 104,333
Net (Loss) Income Available to Common Shareholders
$
(9,614)
$
3,747
$
(46)
$
(32,002)
$
(20,148)
Operating Funds from Operations Available to
Common Shareholders
$ 103,503
$
81,850
$
49,339
$
41,813
$
40,388
Per Share
Operating Funds from Operations Available
Cash Distributions Declared
$
$
1.27
0.78
$
$
1.19
0.71
$
$
1.05
0.66
$
$
1.01
0.65
$
$
1.06
0.65
Total Assets
$ 1,948,379
$ 1,652,248
$ 1,165,291
$ 1,048,823
$ 1,052,829
Mortgages and Notes Payable
$ 921,705
$ 753,174
$ 541,281
$ 518,512
$ 571,694
Total Liabilities
300
$ 1,050,100
$ 854,288
$ 605,459
$ 567,649
$ 613,463
Shareholders’ Equity Attributable to RPT
$ 872,357
$ 770,097
$ 529,783
$ 449,075
$ 402,273
Number of Properties
250
200
81
81
79
84
90
5 -YE AR CUMUL ATIVE TOTA L RE TURN
150
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
100
12/31/09
12/31/10
12/31/11
12/31/12
12/31/13
12/31/14
commencing December 31, 2009 and ending December 31, 2014, assuming an investment of $100 and the reinvest-
ment of all dividends into additional common shares during the holding period.
l
e
u
a
V
x
e
d
n
I
300
250
200
150
100
8 ■(cid:3) (cid:3)
2_RG_30819_PR.indd 8
12/31/09
12/31/10
12/31/11
12/31/12
12/31/13
12/31/14
Ramco-Gershenson Properties Trust
NAREIT Equity
S&P 500
3/19/15 8:27 AM
F O R M 1 0 - K
■ 2 0 1 4
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, 2014
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, Suite 300
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, 2014) was $1,136,555,426. As of February 13, 2015 there were outstanding 77,930,959 shares
of Common Stock.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the proxy statement for the annual meeting of shareholders to be held May 5, 2015 are in incorporated by reference into Part III.
TABLE OF CONTENTS
PART I
Page
Item
1.
Business
1A. Risk Factors
1B. Unresolved Staff Comments
2.
3.
Properties
Legal Proceedings
4. Mine Safety Disclosures
5. Market for Registrant’s Common Equity, Related Stockholder Matters and
PART II
Issuer Purchases of Equity Securities
6.
Selected Financial Data
7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
7A. Quantitative and Qualitative Disclosures About Market Risk
8.
9.
Financial Statements and Supplementary Data
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
9A. Controls and Procedures
9B. Other Information
10. Directors, Executive Officers and Corporate Governance
PART III
11.
12.
Executive Compensation
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
13. Certain Relationships and Related Transactions, and Director Independence
14.
Principal Accountant Fees and Services
15.
Exhibits and Financial Statement Schedule
Consolidated Financial Statements and Notes
PART IV
1
6
13
14
22
22
23
25
26
38
38
39
39
39
40
40
40
40
40
41
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 large multi-anchored shopping
centers primarily in a dozen of the largest metropolitan markets in the United States. We aim to own multiple properties in each
of these metropolitan areas to leverage our expertise in these markets and to operate our centers efficiently. Our target submarkets
are affluent communities where our centers can offer value, convenience and a sense of place to the residents of the trade area.
Our property portfolio consists of 67 wholly owned shopping centers and one office building comprising approximately 14.2
million square feet. In addition, we are a 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 two smaller joint ventures that each own one 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. In addition, we own various parcels of land available 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, 2014, we owned
approximately 97.2% 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 primarily in large, multi-anchored shopping centers that include national chain store tenants and market dominant
supermarket tenants. National chain anchor tenants in our centers include, among others, TJ Maxx/Marshalls, Bed Bath and
Beyond, Home Depot and Dick's Sporting Goods. Supermarket anchor tenants in our centers include, among others, Publix Super
Market, Whole Foods, Kroger and Sprouts. Our shopping centers are primarily located in metropolitan markets such as Metro
Detroit, Southeast Florida, Greater Denver, Cincinnati, St. Louis, Jacksonville, Tampa/Lakeland, Milwaukee, Chicago and Atlanta.
We also own land which is available for development or sale. Approximately 44% of our land is available for sale primarily to
retailers or restaurants that prefer to own and develop their sites. The remaining land is available for development. At December 31,
2014, we had one project in pre-development and two projects where Phase I of the development was completed. The remaining
future Phases at those projects are in pre-development. We estimate that if we proceed with the development of the projects, up
to approximately 600,000 square feet of GLA could be developed, excluding various outparcels of land. It is our policy to start
vertical construction on new development projects only after the project has received entitlements, significant anchor commitments
and construction financing, if appropriate.
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 2014, for the combined portfolio including wholly-owned and joint venture properties, we reported the following leasing
activity:
Renewals
New Leases - Comparable
New Leases - Non-Comparable (1)
Total
Leasing
Transactions
233
27
85
345
Square
Footage
1,525,719 $
84,893
643,783
2,254,395 $
Base Rent/
SF
13.24 $
15.83
13.24
13.34
Prior Rent/
SF
12.53 $
13.51
N/A
N/A $
Tenant
Improvements
/SF
— $
Leasing
Commissions/
SF
—
3.68
3.26
1.07
10.32
17.66
5.45 $
(1) Non-comparable lease transactions include leases for space vacant for greater than 12 months, leases for space which has been
combined from smaller spaces or demised from larger spaces, and leases structured differently from the prior lease. As a result,
there is no prior rent per square foot to compare to the base rent per square foot of the new lease.
At December 31, 2014, we had seven redevelopment or expansion projects in process with an anticipated cost of $51.1 million,
of which $33.9 million remains to be invested. Completion dates are anticipated from early 2015 to mid 2016.
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.
In 2014, we completed construction of Phase I of Lakeland Park Center, a ground up development located in Lakeland, Florida,
at a cost of approximately $33.4 million, excluding land cost. Phase I consists of approximately 210,000 square feet of retail
space. The center was 98% leased and occupied as of December 31, 2014.
2
During 2014, we completed $323.1 million in wholly-owned acquisitions as follows:
Property Name
Location
Front Range Village
Bridgewater Falls Shopping Center
Woodbury Lakes
Buttermilk Towne Center
The Shoppes at Fox River
Total 2014 acquisitions
Fort Collins, CO
Hamilton (Cincinnati), OH
Woodbury (Minneapolis), MN
Crescent Springs (Cincinnati), KY
Waukesha (Milwaukee), WI
Purchase
Price
GLA
Excess
Acreage
(In thousands, except acreage)
459
504
305
278
—
1,546
— $
—
2.4
—
9.9
12.3
$
128,250
85,542
66,200
41,900
1,216
323,108
In addition, we sold five wholly-owned income-producing properties and four outparcels for net proceeds to us of $34.2
million. Specifically, we sold:
Property Name
Location
Sales Price
Northwest Crossing
Naples Town Center
Lake Orion Plaza
Fraser Shopping Center
The Town Center at Aquia - El Gran Charro
Total consolidated income producing dispositions
Knoxville, TN
Naples, FL
Lake Orion, MI
Fraser, MI
Stafford, VA
Harvest Junction Land - BioLife Outparcel
Parkway Land - Wendy's Outparcel
Parkway Land - Express Oil Change Outparcel
Hartland Land - Taco Bell Outparcel
Total consolidated outparcel dispositions
Total 2014 consolidated dispositions
Longmont, CO
Jacksonville, FL
Jacksonville, FL
Hartland Township, MI
$
$
$
$
$
15,550
7,150
4,300
3,250
1,730
31,980
1,568
900
680
650
3,798
35,778
Gain (loss)
on Sale
(In thousands)
7,082
$
2,343
288
186
123
10,022
$
$
$
$
371
258
215
(9)
835
10,857
$
$
$
$
$
Net
Proceeds
15,200
6,962
4,008
2,881
1,618
30,669
1,314
870
653
650
3,487
34,156
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 2014, we continued to strengthen our capital structure by completing one underwritten public offering of newly issued
common shares and various debt transactions.
Specifically, we completed the following financing transactions:
Debt
•
•
•
$100.0 million private placement of senior unsecured notes consisting of $50.0 million of notes with a ten-year term with
a fixed interest rate of 4.65% and $50.0 million of notes with a twelve-year term at a fixed interest rate of 4.74%. A
"shelf" facility allows for an additional $50.0 million in notes to the same purchaser within the next three years, subject
to approval, pricing and documentation;
$75.0 million senior unsecured term loan with an additional $75.0 million accordion feature. The loan has a seven-year
term and bears interest at an annual rate of LIBOR plus 1.25% to 2.25% (initially 1.70%) depending upon our leverage
or credit rating. The interest expense is hedged with an existing interest rate swap expiring in April 2016, resulting in
an effective fixed initial annual rate of 2.9%; and
$100.0 million private placement of senior unsecured notes consisting of $50.0 million of notes with a ten-year term
priced at a fixed interest rate of 4.16% and $50.0 million of notes with a twelve-year term priced at a fixed interest rate
of 4.30%.
Gross proceeds from these financings was used in part to repay the following:
$45.0 million of variable-rate bank term debt due 2017;
$75.0 million of bank term debt also due in 2017;
$45.0 million balance on our unsecured revolving line of credit;
•
•
•
• Mortgages securing two properties in the total amount of $29.8 million both with an interest rate of 5.4%.
In addition, in conjunction with our acquisition of Bridgewater Falls, we assumed a mortgage loan with a $58.6 million principal
balance outstanding and an interest rate of 5.7%. We recorded a premium of approximately $6.8 million based upon the fair value
of the loan on the date it was assumed.
Equity
• Completed one underwritten public offering issuing a total of 6.9 million common shares of beneficial interest. Our total
•
net proceeds, after deducting expenses, were approximately $108.7 million; and
Issued 3.8 million common shares through controlled equity offerings, at an average share price of $16.50, and received
approximately $61.7 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, 2014 we had net debt to total market capitalization of 35.7% as compared to 38.3%, at December 31, 2013. At
December 31, 2014 and 2013 we had $335.9 million and $204.8 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.
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Employment
As of December 31, 2014, we had 116 full-time employees. None of our employees is represented by a collective bargaining unit.
We believe that our relations with our employees are good.
Available Information
All reports we electronically file with, or furnish to, the SEC, including our Annual Report on Form 10-K, Quarterly Reports on
Form 10-Q, Current Reports on Form 8-K and amendments to such reports, are available, 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
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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 2014, our wholly-owned and pro
rata share of joint venture properties located in Michigan and Florida accounted for approximately 29%, and 23%, respectively,
of our annualized base rent. In 2013 Michigan and Florida accounted for approximately 35% and 25%, respectively. 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, 2014, we received 38.7% of our combined annualized base rents from our top 25 tenants, including our top
three tenants: TJ Maxx/Marshalls (4.5%), LA Fitness (2.6%) and Bed Bath & Beyond (2.5%). 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 for bankruptcy protection, 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 2014, no key tenant of ours filed for bankruptcy protection.
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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 is 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 $27.9 million in 2014 related to our real estate properties. Refer to Note
6 of the notes to the consolidated financial statements for further information regarding impairment provisions.
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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, 2014, we had interests in four unconsolidated joint ventures that collectively own 13 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 as 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 occur or what the impact of adverse market and economic conditions might be 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
8
control. We cannot be certain that we will be able to sell any property for the price and other terms we seek, or that any price or
other terms offered by a prospective purchaser would be acceptable to us. We also cannot estimate with certainty the length of
time needed to find a willing purchaser and to complete the sale of a property. We may be required to expend funds to correct
defects or to make improvements before a property can be sold. Factors that impede our ability to dispose of properties could
adversely affect our financial condition and operating results.
We are seeking to develop new properties, an activity that has inherent risks including cost overruns related to entitling land,
improving the site, 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, 2014,
we had $923.5 million of outstanding indebtedness, including $1.8 million of capital lease obligations. Of this, $86.9 million
matures in 2015. In addition, our joint ventures had $170.2 million of outstanding indebtedness, of which our share is $37.0
million. $41.9 million of joint venture debt matures in 2015, of which our share is $11.4 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, 2014, 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
$38.1 million of variable rate debt outstanding. Increases in interest rates on our existing indebtedness would increase our interest
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expense, which could adversely affect our cash flow and our ability to distribute cash to our shareholders. For example, if market
rates of interest on our variable rate debt outstanding as of December 31, 2014 increased by 1.0%, the increase in interest expense
on our existing variable rate debt would decrease future earnings and cash flows by approximately $0.4 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, 2014, we had $354.7 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.
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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 2014 we completed one underwritten public offering of 6.9 million common shares and issued 3.8 million common shares
through controlled equity offerings. In addition, there were 365,524 shares of unvested restricted common shares and options to
purchase 155,248 common shares outstanding at December 31, 2014.
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 as a REIT, we may be subject to various federal income and excise taxes, as well as state and local taxes.
Even 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.
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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.
Our business and operations would suffer in the event of system failures or cyber security attacks.
Despite the implementation of security measures and the existence of a Disaster Recovery Plan for our internal information
technology systems, our systems are vulnerable to damages from any number of sources, including energy blackouts, natural
disasters, terrorism, war, telecommunication failures and cyber security attacks, such as computer viruses or unauthorized access.
Any system failure or accident that causes interruptions in our operations could result in a material disruption to our business. We
may also incur additional costs to remedy damages caused by such disruptions. Any compromise of our security could also result
in a violation of applicable privacy and other laws, significant legal and financial exposure, damage to our reputation, loss or
misuse of the information and a loss of confidence in our security measures, which could harm our business.
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,
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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.
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, 2014, we owned and managed a portfolio of 80 shopping centers and one office building with approximately
16.9 million square feet of gross leasable area ("GLA"). Our wholly-owned properties consist of 67 shopping centers and one office
building comprising approximately 14.2 million square feet ("SF").
Location
City
State
Ownership
%
Year Built /
Acquired /
Redeveloped
Total GLA
%
Leased
Average
base
rent per
leased
SF (1) Anchor Tenants (2)
Property Name
CORE PORTFOLIO (3)
Front Range Village
Fort Collins
CO
100%
2008/2014/NA
459,307
95.7% $
19.38 CA, Inc., Charming Charlie,
Harvest Junction North
Longmont
CO
100% 2006/2012/NA
159,413
99.4% $
Cost Plus World Markets,
DSW, Microsoft
Corporation, Party City,
Sports Authority, Sprouts
Farmers Market, Staples,
Toys "R" Us, Ulta Beauty,
(Fort Collins Library),
(Lowes), (Target)
15.85 Best Buy, Dick's Sporting
Goods, Dollar Tree, DSW
Shoe Warehouse, Staples
Harvest Junction South
Longmont
CO
100% 2006/2012/NA
176,960
97.3%
14.73 Bed Bath & Beyond,
Cocoa Commons
Coral Creek Shops
Cypress Point
Cocoa
Coconut
Creek
Clearwater
Kissimmee West
Kissimmee
Lakeland Park Center
Lakeland
FL
FL
FL
FL
FL
Marshalls, Michaels, Petco,
Ross Dress for Less,
(Lowe's)
100% 2001/2007/2008
90,116
89.7%
11.91
Publix
100% 1992/2002/NA
109,312
92.7%
17.53
Publix
100% 1983/2007/NA
167,280
95.7%
12.15 Burlington Coat Factory,
7% 2005/2005/NA
115,586
95.1%
12.42
Chuck E. Cheese's, The
Fresh Market
Jo-Ann, Marshalls, (Super
Target)
100%
2014
210,965
98.1%
13.59 Dick's Sporting Goods,
Floor & Décor, Old Navy,
PetSmart, Ross Dress for
Less, Shoe Carnival
Marketplace of Delray
Delray
Beach
FL
100% 1981/2005/2010
240,789
91.6%
12.86 Beall's Outlet, Dollar Tree,
Office Depot, Ross Dress for
Less, Winn-Dixie
Mission Bay Plaza
Boca Raton
FL
100% 1989/2004/NA
264,748
97.6%
21.59 The Fresh Market,
Parkway Shops
Jacksonville
River City Marketplace
Jacksonville
River Crossing Centre
Rivertowne Square
Shoppes of Lakeland
New Port
Richey
Deerfield
Beach
Lakeland
FL
FL
FL
FL
FL
100%
2013/2011/NA
89,114
100.0%
13.37 Dick's Sporting Goods,
Marshalls
100% 2005/2005/NA
557,087
99.4%
17.09 Ashley Furniture
Golfsmith, LA Fitness,
OfficeMax, Toys "R" Us
HomeStore, Bed Bath &
Beyond, Best Buy,
Cracker Barrel, Gander
Mountain, Michaels,
OfficeMax, Old Navy,
PetSmart, Ross Dress for
Less, Hollywood Theaters,
(Lowe's), (Wal-Mart
Supercenter)
100% 1998/2003/NA
62,038
95.2%
12.50
Publix
100% 1980/1998/2010
141,943
96.2%
7.91 Beall's, CVS, Winn-Dixie
100% 1985/1996/NA
183,842
99.0%
12.96 Ashley Furniture
HomeStore, Dollar Tree,
Michaels, Petco, Staples,
T.J. Maxx, (Target)
14
Property Name
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
Centre at Woodstock
Conyers Crossing
Holcomb Center
Horizon Village
Location
City
Royal Palm
Beach
Delray
Beach
Jensen
Beach
Land O'
Lakes
Delray
Beach
Lakeland
Jensen
Beach
Woodstock
Conyers
Roswell
Suwanee
Peachtree Hill
Promenade at Pleasant Hill
Duluth
Duluth
Deer Grove Centre
Palatine
Liberty Square
Market Plaza
Mount Prospect Plaza
Rolling Meadows
Shopping Center
Wauconda
Glen Ellyn
Mount
Prospect
Rolling
Meadows
State
Ownership
%
Year Built /
Acquired /
Redeveloped
Total GLA
%
Leased
100% 1988/2002/NA
120,092
95.0%
Average
base
rent per
leased
SF (1) Anchor Tenants (2)
16.08 Dollar Tree, Publix,
Walgreens
20% 1979/2004/NA
313,913
97.4%
17.09 Anna's Linens, CVS, Duffy's
Sports Grill, LA Fitness,
Marshalls, Michaels, Publix,
Ross Dress for Less, T.J.
Maxx, Ulta Beauty
100% 1996/2004/NA
92,979
100.0%
12.26 Barnes & Noble, OfficeMax,
100% 1987/1997/NA
168,751
80.7%
30% 1986/2005/NA
155,770
94.6%
Sports Authority
8.87 Beall's Outlet, Dollar Tree,
Marshalls, Ross Dress for
Less, You Fit Health Club
13.42 Glick's Kosher Market,
Oriole Cinemas, Publix,
Walgreens
100% 1989/2004/NA
103,956
93.9%
14.16 Big Lots, Party City
100% 1998/2004/NA
109,761
100.0%
13.58 Bed Bath & Beyond,
Michaels, Total Wine &
More
FL
FL
FL
FL
FL
FL
FL
Plantation
FL
100% 1965/2005/NA
152,973
98.7%
10.89 Badcock, DD's Discounts,
Dollar Tree, Save-A-Lot, US
Postal Service, Walgreens
GA
GA
GA
GA
GA
GA
IL
IL
IL
IL
IL
100% 1997/2004/NA
86,748
100.0%
12.09
Publix
100% 1978/1998/NA
170,475
99.4%
5.07 Burlington Coat Factory,
100% 1986/1996/2010
106,003
85.6%
11.75
Hobby Lobby
Just Fitness, Studio Movie
Grill
100% 1996/2002/NA
97,001
91.5%
11.05 Crossroads Treatment
20% 1986/2007/NA
100% 1993/2004/2014
154,700
261,808
94.5%
93.5%
Center, Movie Tavern, You
Fit Health Club
13.10 Kroger, LA Fitness
9.45
Farmers Home Furniture,
K1 Speed, LA Fitness (5),
Publix
100% 1997/2013/2013
235,840
90.6%
11.74 Dominick's Supermarkets (3),
Dress Barn, Petco, Staples,
T J Maxx, (Target)
100% 1987/2010/2008
20% 1965/2007/2009
100% 1962/2013/2013
107,427
163,054
300,682
85.0%
96.3%
89.5%
13.99
Jewel-Osco
16.15
Jewel-Osco, Staples
11.97 Aldi, Dollar Tree, LA
Fitness, Marshalls, Petco,
Ross Dress for Less,
Walgreens
20% 1956/2008/1995
134,012
88.4%
10.51 Dollar Tree, Jewel-Osco,
Northwest Community
Hospital
12.57 Bang Fitness (5), Cost Plus,
Flix Brewhouse (5),Hancock
Fabrics, Petco, Tuesday
Morning, (Marsh
Supermarket)
Merchants' Square
Carmel
IN
100% 1970/2010/2014
248,369
82.3%
Nora Plaza
Indianapolis
IN
7% 1958/2007/2002
139,753
97.2%
13.74
Buttermilk Towne Center
Crescent
Springs
KY
100% 2005/2014/NA
277,533
100.0%
9.15
Firestone, Marshalls, Whole
Foods Market, (Target)
Field & Stream, Home
Depot, LA Fitness, Remke
Market
Crofton Centre
Crofton
MD
20% 1974/1996/NA
252,230
97.2%
8.20 Gold's Gym, Goodwill,
Hibachi Grill & Supreme
Buffet, Kmart, Shoppers
Food Warehouse, United
Tile and Granite
15
Property Name
Clinton Pointe
Clinton Valley
Location
City
Clinton
Township
Sterling
Heights
Ownership
%
Year Built /
Acquired /
Redeveloped
Total GLA
%
Leased
100% 1992/2003/NA
135,330
100.0%
State
MI
Average
base
rent per
leased
SF (1) Anchor Tenants (2)
Famous Footwear,
9.64
OfficeMax, Planet Fitness,
Sports Authority, (Target)
MI
100% 1977/1996/2009
200,935
98.2%
12.20 DSW Shoe Warehouse,
Famous Furniture, Hobby
Lobby, Office Depot,
OptimEyes
Gaines Marketplace
Hoover Eleven
Gaines
Township
Warren
MI
MI
100% 2004/2004/NA
184,376
100.0%
7.47
Staples, Target, (Meijer)
100% 1989/2003/NA
280,719
93.5%
11.63 CVS, Dollar Tree, Dress
Barn/Dress Barn Woman,
Dunham's, Kroger,
Marshalls, OfficeMax
Hunter's Square
Farmington
Hills
MI
100% 1988/2005/NA
354,323
89.4%
17.15 Bed Bath & Beyond, Buy
Buy Baby, Marshalls,
Michaels, Old Navy, T.J.
Maxx
Jackson Crossing
Jackson
MI
100% 1967/1996/2002
402,326
97.5%
10.38 Bed Bath & Beyond, Best
Buy, Citi Trends, Deb,
Dollar Tree, Jackson 10
Theater, Kohl's, MC
Sporting Goods, T.J. Maxx,
Toys "R" Us, Ulta Beauty,
(Sears), (Target)
Jackson West
Jackson
MI
100% 1996/1996/1999
209,800
97.7%
7.41 GFS Marketplace, Lowe's,
Lakeshore Marketplace
Livonia Plaza
Millennium Park
Norton
Shores
Livonia
Livonia
New Towne Plaza
Oak Brook Square
Canton
Township
Flint
Roseville Towne Center
Roseville
MI
100% 1996/2003/NA
342,991
96.0%
Michaels, OfficeMax,
PetSmart
8.72 Barnes & Noble, Dollar
Tree, DSW Shoe
Warehouse, Dunham's,
Gordmans, Hobby Lobby,
Old Navy, Petco, T.J. Maxx,
Toys "R" Us, (Target)
MI
MI
MI
MI
MI
100% 1988/2003/NA
137,391
100.0%
11.28 Kroger, T.J. Maxx
30% 2000/2005/NA
272,568
100.0%
14.36
Five Below, Home Depot,
Marshalls, Michaels,
PetSmart, Ulta Beauty,
(Costco), (Meijer)
100% 1975/1996/2005
192,587
100.0%
10.82 DSW Shoe Warehouse, Jo-
Ann, Kohl's
100% 1982/1996/2008
152,073
93.2%
9.38 Dollar Tree, Hobby Lobby,
T.J. Maxx
100% 1963/1996/2004
76,998
100.0%
12.05 CVS, Dollar Tree, Five
Below, Marshalls, (Wal-
Mart)
Dearborn
MI
100% 1987/2003/2007
157,225
100.0% $
13.42 Best Buy, Citi Trends,
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
MI
MI
MI
MI
MI
100% 1969/1996/2003
190,099
98.9%
8.80 Big Lots, Burlington Coat
Factory, Forman Mills
100% 1968/1996/2005
523,411
100.0%
10.99 Best Buy, DSW Shoe
David's Bridal, Dollar Tree,
(Burlington Coat Factory),
(Target)
100% 2000/1999/NA
90,553
100.0%
10.95
100% 1972/2007/2011
96,768
100.0%
17.80
Warehouse, Lowe's, Meijer,
Michaels, Office Depot,
PetSmart, Pier1 Imports
Jo-Ann, Staples, (Best Buy),
(Costco), (Meijer), (Target)
Plum Market, Witbeck
Home Appliance
100% 2000/2005/2010
217,754
100.0%
16.86 Airtime, Golfsmith, LA
Fitness, Nordstrom Rack,
PetSmart, Total Hockey,
(REI)
West Oaks I
Novi
MI
100% 1979/1996/2004
243,987
100.0%
9.88 Best Buy, David's Bridal,
DSW Shoe Warehouse,
Gander Mountain, Home
Goods & Michaels-Sublease
of JLPK-Novi LLC, Old
Navy, Party City
16
Property Name
West Oaks II
Location
City
State
Ownership
%
Year Built /
Acquired /
Redeveloped
Total GLA
%
Leased
Novi
MI
100% 1986/1996/2000
167,954
98.7%
Average
base
rent per
leased
SF (1) Anchor Tenants (2)
17.87
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%
10.45 Bed Bath & Beyond, Dick's
Sporting Goods, Legacy
Volleyball Club, Marshalls,
Michaels, Old Navy, Party
City, PetSmart, Pier 1
Imports
buybuy Baby, Charming
Charlie, DSW, Gap, H & M,
Michaels, Victoria's Secret
(Trader Joe's)
buybuy Baby, Five Below,
Jo-Ann, OfficeMax, Ross
Dress for Less, Tuesday
Morning
Woodbury Lakes
Woodbury
MN
100% 2005/2014/NA
305,086
87.2%
21.38
Central Plaza
Ballwin
MO
100% 1970/2012/2012
166,431
100.0%
11.38
Deer Creek Shopping
Center
Maplewood
MO
100% 1975/2013/2013
208,144
100.0%
10.16 Buy Buy Baby, GFS
Marketplace, Jo-Ann,
Marshalls, Ross Dress for
Less, Shoe Carnival, State of
Missouri
Heritage Place
Creve Coeur
(St Louis)
MO
100% 1989/2011/2005
269,105
96.4%
13.60 Dierbergs Markets,
Marshalls, Office Depot,
Petco, T.J. Maxx
Town & Country Crossing
Chester Springs Shopping
Center
Town &
Country
Chester
MO
NJ
100% 2008/2011/2011
148,630
88.5%
26.08 Whole Foods Market,
20%
1970/1996/1999
222,930
93.8%
(Target)
14.67 CVS, Marshalls, Nitroflex
Gym, Shop-Rite
Supermarket, Staples
Bridgewater Falls
Hamilton
OH
100% 2005/2014/NA
503,502
94.7%
13.93 Bed Bath & Beyond, Best
Crossroads Centre 1
Rossford
OH
100% 2001/2001/NA
344,045
97.6%
Buy, Dick's Sporting Goods,
J.C. Penney, Michaels, Old
Navy, Party City, PetSmart,
Staples, T.J. Maxx, Ulta
Beauty, (Target)
8.90 Giant Eagle(4), Home Depot,
Michaels, T.J. Maxx,
Tuesday Morning, (Target)
Deerfield Towne Center
Mason
OH
100% 2004/2013/2013
460,675
87.9%
19.44 Ashley Furniture
HomeStore, Bed Bath &
Beyond, Buy Buy Baby,
Charming Charlie's, Dick's
Sporting Goods, Regal
Cinemas, Ulta Beauty,
Whole Foods Market
Olentangy Plaza
Columbus
OH
20% 1981/2007/1997
253,204
94.5%
10.96 Eurolife Furniture,
Marshalls, Metro Fitness,
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
96.6%
9.98 MC Sporting Goods,
PetSmart
100% 1987/1996/2005
259,362
92.4%
10.61 Ashley Furniture
HomeStore, Big Lots, Dollar
Tree, Guitar Center,
OfficeMax, Party City,
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
93.9%
21.44 Bed Bath & Beyond, Pier 1
Imports, Whole Foods
Market
17
Property Name
Troy Towne Center
Location
City
State
Ownership
%
Year Built /
Acquired /
Redeveloped
Total GLA
%
Leased
Troy
OH
100% 1990/1996/2003
144,485
98.3 % $
Average
base
rent per
leased
SF (1) Anchor Tenants (2)
7.14 Kohl's, Petco, Shoe Carnival
(5), (Wal-Mart Supercenter)
East Town Plaza
Madison
WI
100% 1992/2000/2000
208,472
84.6 %
9.83 Burlington Coat Factory,
Nagawaukee Center
Delafield
The Shoppes at Fox River
Waukesha
WI
WI
100% 1994/2012-13/NA
219,538
99.0 %
100% 2009/2010/2011
237,392
100.0 %
West Allis Towne Centre
West Allis
WI
100% 1987/1996/2011
326,271
97.1 %
FUTURE REDEVELOPMENTS/AVAILABLE FOR SALE (6):
Martin Square
Stuart
FL
30% 1981/2005/NA
331,105
66.0 % $
DSW Shoe Warehouse, Jo-
Ann, Kirkland's Home,
Marshalls, Party City, Ulta
Beauty, (Shopko), (Babies
"R" Us)
13.81 Kohl's, Marshalls, Sports
Authority, (Sentry Foods)
14.25 Hobby Lobby, Petco, Pick 'n
Save, T.J. Maxx, Ulta
Beauty, (Target)
8.77 Burlington Coat Factory,
Citi Trends, Dollar Tree,
Harbor Freight Tools,
Kmart, Lumber Liquidators,
Office Depot (4), Party City,
Xperience Fitness
6.69 Home Depot, Paradise
Home & Patio, Staples,
Walgreens
The Town Center at Aquia
Stafford
The Town Center at Aquia
Office
Stafford
VA
VA
100% 1989/1998/NA
34,720
100.0 % $
9.27 Regal Cinemas, Rite Aid
100% 1989/1998/2009
98,147
48.2 % $
Pharmacy
28.02 Cask Technologies(5)
PORTFOLIO TOTAL / AVERAGE
16,886,513
94.6% $
12.95
Footnotes
(1) Average base rent per leased SF is calculated based on annual minimum contractual base rent pursuant to the tenant lease,
excluding percentage rent, recovery income from tenants, and is net of tenant concessions. Percentage rent and recovery
income from tenants is presented separately in our consolidated statements of operations and comprehensive income (loss) statement.
(2) Anchor tenants is defined as any tenant leasing 10,000 square feet or more. Tenants in parenthesis represent non-company owned GLA.
(3) We define Core Portfolio as stabilized assets that are not currently under development/redevelopment.
(4) Tenant closed - lease obligated.
(5) Space delivered to tenant.
(6) Represents 1.5% of combined portfolio annual base rent.
Our leases for tenant space under 10,000 square feet generally have terms ranging from three to five years. Tenant leases greater
than or equal to 10,000 square feet generally have lease terms of five years or longer, 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.
18
Major Tenants
The following table sets forth as of December 31, 2014 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
$ 117,614,266
88,055,930
$ 205,670,196
100.0%
16,886,513
57.2%
42.8%
11,913,200
4,973,313
70.5%
29.5%
100.0%
(1) We define anchor tenants as tenants occupying a space consisting of 10,000 square feet or more.
(2) GLA owned directly by us or our unconsolidated joint ventures.
The following table depicts, as of December 31, 2014, information regarding leases with the 25 largest retail tenants (in terms of
annualized base rent) in our combined properties portfolio:
Tenant Name
TJX Companies
LA Fitness
Bed Bath & Beyond
Dick's Sporting Goods
Office Depot
The Home Depot
Michaels Stores
PetSmart
Best Buy
Dollar Tree
Publix Super Markets
Ascena Retail
DSW Designer Shoe Warehouse
Whole Foods Market
Jo-Ann Fabric and Craft Stores
ULTA Beauty
Regal Cinemas
Burlington Coat Factory
Staples
Ross Stores
Kohl's
Gap, Inc.
Gander Mountain
Sports Authority
Lowe's Home Centers
Credit Rating
S&P/Moody's (1)
A+/A3
B/B2
Number
of Leases
32
7
A-/Baa1
--/--
B-/B2
A/A2
B/B3
BB+/--
BB/Baa2
--/--
--/--
--/--
--/--
BBB-/--
B/Caa1
--/--
--/--
B/--
BBB-/Baa2
A-/A3
BBB/Baa1
BBB-/Baa3
--/--
--/B3
A-/A3
16
7
13
4
13
10
7
29
8
26
9
4
7
12
3
5
10
10
6
10
2
4
2
GLA
974,725
297,300
466,700
353,737
308,933
487,203
287,298
208,873
236,677
300,143
372,141
147,935
169,773
152,657
233,947
123,842
143,080
360,867
202,710
262,734
363,081
145,941
159,791
172,705
270,394
% of
Total
GLA (2)
5.8 % $
1.8 %
Total
Annualized
Base Rent
9,323,498
5,339,870
Annualized
Base Rent
PSF
9.57
17.96
$
% of
Annualized
Base Rent
4.5 %
2.6 %
2.8 %
2.1 %
1.8 %
2.9 %
1.7 %
1.2 %
1.4 %
1.8 %
2.2 %
0.9 %
1.0 %
0.9 %
1.4 %
0.7 %
0.8 %
2.1 %
1.2 %
1.6 %
2.2 %
0.9 %
0.9 %
1.0 %
1.6 %
5,094,117
3,756,143
3,660,738
3,465,250
3,206,853
3,040,114
3,019,499
2,911,753
2,790,512
2,787,604
2,770,983
2,747,953
2,741,288
2,737,536
2,672,623
2,461,341
2,376,498
2,268,726
2,239,857
2,187,530
2,023,539
1,989,264
1,919,646
10.92
10.62
11.85
7.11
11.16
14.55
12.76
9.70
7.50
18.84
16.32
18.00
11.72
22.11
18.68
6.82
11.72
8.64
6.17
14.99
12.66
11.52
7.10
2.5 %
1.8 %
1.8 %
1.7 %
1.6 %
1.5 %
1.5 %
1.4 %
1.4 %
1.4 %
1.3 %
1.3 %
1.3 %
1.3 %
1.3 %
1.2 %
1.2 %
1.1 %
1.1 %
1.1 %
1.0 %
0.9 %
0.9 %
Sub-Total top 25 tenants
256
7,203,187
42.7 % $ 79,532,735
$
11.04
38.7 %
Remaining tenants
1,565
8,674,455
51.3 % 126,137,461
14.54
61.3 %
Sub-Total all tenants
1,821
15,877,642
94.0% $ 205,670,196
$
12.95
100.0%
Leased / Vacant
249
1,008,871
6.0 %
N/A
Total including vacant
2,070
16,886,513
100.0% $ 205,670,196
N/A
N/A
N/A
100.0%
(1) Source: Latest Company filings per CreditRiskMonitor.
19
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
Expiring Leases As of December 31, 2014
Year
(3)
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026+
Sub-Total
Leased (4)
Vacant
Total
Number of
Leases
39
226
326
298
242
196
133
69
63
81
60
37
51
1,821
9
240
2,070
GLA (1)
139,001
974,612
2,118,337
1,871,799
1,404,530
1,566,979
1,488,567
1,035,809
877,430
1,289,098
829,318
676,934
1,605,228
15,877,642
102,956
905,915
16,886,513
Average
Annualized
Base Rent
Total
Annualized
Base Rent (2)
% of Total
Annualized
Base Rent
(per square foot)
10.27
14.08
14.13
14.20
15.14
12.70
10.88
11.53
13.56
12.38
11.43
12.19
11.91
12.95
N/A
N/A
12.95
$
$
$
$
$
$
1,428,004
13,719,878
29,936,996
26,574,937
21,265,039
19,894,264
16,199,956
11,942,004
11,894,155
15,961,341
9,479,376
8,253,393
19,120,853
205,670,196
N/A
N/A
205,670,196
0.7 %
6.7 %
14.6 %
12.9 %
10.3 %
9.7 %
7.9 %
5.8 %
5.8 %
7.8 %
4.6 %
4.0 %
9.2 %
100.0%
N/A
N/A
100.0%
ANCHOR TENANTS (greater than or equal to 10,000 square feet)
Expiring Anchor Leases As of December 31, 2014
Year
(3)
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026+
Sub-Total
Leased (4)
Vacant
Total
Number of
Leases
3
18
51
47
37
33
34
27
24
34
21
16
28
373
3
13
389
GLA (1)
61,010
436,346
1,374,872
1,196,112
836,331
1,026,787
1,153,262
888,992
729,114
1,047,716
671,503
575,193
1,512,885
11,510,123
70,957
332,120
11,913,200
Average
Annualized
Base Rent
Total
Annualized
Base Rent (2)
% of Total
Annualized
Base Rent
(per square foot)
5.51
9.06
10.36
10.82
11.31
9.01
8.43
10.11
11.84
10.53
9.41
10.67
10.97
10.22
N/A
N/A
10.22
$
$
$
$
336,000
3,953,077
14,247,446
12,939,329
9,460,984
9,253,618
9,722,885
8,988,080
8,631,807
11,036,014
6,318,791
6,134,751
16,591,484
117,614,266
N/A
N/A
117,614,266
0.3 %
3.4 %
12.1 %
11.0 %
8.0 %
7.9 %
8.3 %
7.6 %
7.3 %
9.4 %
5.4 %
5.2 %
14.1 %
100.0%
N/A
N/A
100.0%
(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.
20
NON-ANCHOR TENANTS (less than 10,000 square feet)
Expiring Non-Anchor Leases As of December 31, 2014
Average
Annualized
Base Rent
(per square foot)
14.00
$
18.14
21.10
20.18
20.77
19.70
19.32
20.12
22.00
20.40
20.03
20.82
27.39
20.16
N/A
N/A
20.16
$
$
Total
Annualized
Base Rent (1)
% of Total
Annualized
Base Rent
$
$
$
1,092,004
9,766,801
15,689,550
13,635,608
11,804,055
10,640,646
6,477,071
2,953,924
3,262,348
4,925,327
3,160,585
2,118,642
2,529,369
88,055,930
N/A
N/A
88,055,930
1.2 %
11.1 %
17.8 %
15.5 %
13.4 %
12.1 %
7.4 %
3.4 %
3.7 %
5.6 %
3.6 %
2.4 %
2.8 %
100.0%
N/A
N/A
100.0%
Year
(3)
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026+
Sub-Total
Leased (4)
Vacant
Total
Number of
Leases
36
208
275
251
205
163
99
42
39
47
39
21
23
1,448
6
227
1,681
GLA (2)
77,991
538,266
743,465
675,687
568,199
540,192
335,305
146,817
148,316
241,382
157,815
101,741
92,343
4,367,519
31,999
573,795
4,973,313
(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 Available for Development and/or Sale
At December 31, 2014, we had one project in pre-development and two projects where Phase I of the development was completed.
The remaining future Phases at those projects are in pre-development. We also have various additional parcels of land available
for development or sale. 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 2014 we completed construction of Phase I of Lakeland Park Center, a ground up development located in Lakeland, Florida,
at a cost of approximately $33.4 million, excluding land cost. Phase I consists of approximately 210,000 square feet of retail space.
The center was 98% leased and occupied as of December 31, 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 2014, we recorded an impairment provision of $23.3 million primarily due to changes in our plans for
certain parcels. We recorded impairment provisions of $0.3 million and $1.4 million in 2013 and 2012, 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.
21
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
22
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 13, 2015, the closing price of our common shares on the NYSE was $19.37.
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, 2009 through
December 31, 2014. The stock price performance shown is not necessarily indicative of future price performance.
The following table depicts high/low closing prices and dividends declared per share for each quarter in 2014 and 2013:
Quarter Ended
December 31, 2014
September 30, 2014
June 30, 2014
March 31, 2014
December 31, 2013
September 30, 2013
June 30, 2013
March 31, 2013
(1) Paid on January 2, 2015
(2) Paid on January 2, 2014
Stock Price
High
Low
Dividends
$
$
$
$
$
$
$
$
18.99
17.35
17.03
16.76
16.57
16.11
17.68
16.82
$
$
$
$
$
$
$
$
15.86
16.25
15.94
15.35
14.77
14.24
14.48
13.72
$
$
$
$
$
$
$
$
0.20000
0.20000
0.18750
0.18750
0.18750
0.18750
0.16825
0.16825
(1)
(2)
23
Holders
The number of holders of record of our common shares was 1,341 at February 13, 2015. 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 2014 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, 2014, refer to Item 12 of Part III of this report and Note
16 of the notes to the consolidated financial statements.
24
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.
Operating Data:
Total revenue
Property net operating income (1)
(Loss) income from continuing operations
Gain (loss) on sale of real estate assets
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
Continuing operations
Discontinued operations
Basic (loss) earnings
(Loss) earnings per common share, diluted
Continuing operations
Discontinued operations
Diluted (loss) earnings
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
Year Ended December 31,
2014
2013
2012
(In thousands, except per share)
2011
2010
$
$
$
$
$
$
$
$
$
$
218,363
153,878
(2,412)
—
(2,412)
48
(7,250)
(9,614)
(0.14)
—
(0.14)
(0.14)
—
(0.14)
72,118
72,118
3.625
0.7750
7,250
54,149
$
$
$
$
$
$
$
$
$
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
3.625
0.7115
7,250
40,108
$
$
$
$
$
$
$
$
$
$
125,225
86,213
7,171
336
7,092
112
(7,250)
(46)
— $
—
— $
— $
—
— $
44,101
44,101
3.630
0.6600
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
0.6530
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
—
0.6530
—
22,501
9,335
$
5,795
$
4,233
$
12,155
$
10,175
1,934,032
1,948,379
921,705
1,050,100
872,357
25,922
898,279
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
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 financing activities
$
70,324
$
79,861
$
47,816
$
29,509
$
110,592
(315,723)
208,671
85,583
(355,752)
271,731
62,194
(173,210)
103,094
44,703
(79,747)
37,024
Reconciliation Property Net Operating Income from Continuing Operations to Net (Loss) Income
Property net operating income from continuing operations
$
153,878
$
121,372
$
86,213
$
76,833
$
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 (loss) income
2,059
(81,182)
(21,670)
(55,443)
(54)
—
2,335
(56,305)
(20,951)
(38,016)
(64)
3,091
4,064
(38,673)
(19,132)
(25,335)
34
(79)
4,125
(33,842)
(19,646)
(56,093)
(795)
918
$
(2,412)
$
11,462
$
7,092
$
(28,500)
$
(23,724)
(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.
(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.
25
1,074,095
1,052,829
571,694
613,463
402,273
37,093
439,366
20,945
43,249
(101,935)
60,385
70,010
4,191
(28,592)
(18,986)
(51,356)
670
339
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, 2014, 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 16.9 million square feet of gross leasable area owned by us and our
joint ventures. We also owned interests in three parcels of land available for development and five parcels of land available for
sale.
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 half 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, Kroger and Sprouts. 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 a dozen of the largest metropolitan markets in the United States. Our focus on these
markets has enabled us to develop a thorough understanding of their unique characteristics. 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 are based on our consolidated financial
statements, which have been prepared in accordance with GAAP. The preparation of these financial statements requires us to
make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosure
of contingent assets and liabilities. Our estimates are based on historical experience and on various other assumptions that are
believed to be reasonable under the circumstances. Actual results could differ from these estimates under different assumptions
or conditions.
We believe the following critical accounting policies require our most subjective judgment and use of estimates in the preparation
of our consolidated financial statements.
26
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), other intangible assets such as
assumed tax increment revenue bonds and out-of-market assumed mortgages. Depreciation and amortization is computed using
the straight-line method over the estimated useful lives of 40 years for buildings, over the remaining terms of any intangible asset
contracts and the respective tenant leases, which may include bargain review options. 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 subsequent depreciation or amortization expense. For more information, refer to Note 1,
Organization and Summary of Significant Accounting Policies subtopic Real Estate of the notes to the consolidated financial
statements.
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.
Impairment provisions resulting from any event or change in circumstances, including changes in our intentions or our 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.
Revenue Recognition and Accounts Receivable
Most 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. An allowance to
write down the straight-line receivable balance is taken in the period that future collectability is uncertain.
Additionally, 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.
For more information refer to Note 1 Organization and Summary of Significant Accounting Policies, Revenue Recognition and
Accounts Receivable subtopics of the notes to the consolidated financial statements.
27
Results of Operations
Comparison of the Year Ended December 31, 2014 to the Year Ended December 31, 2013
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, 2014 as
compared to 2013:
Year Ended December 31,
2014
(In thousands)
2013
Dollar
Change
Percent
Change
$
Total revenue
Operating expenses
Real estate taxes
Depreciation and amortization
General and administrative expense
Provision for impairment
Gain on sale of real estate
Earnings (loss) from unconsolidated joint ventures
Interest expense and amortization of deferred financing fees
Deferred gain recognized upon acquisition of real estate
Loss on extinguishment of debt
$
218,363
30,952
31,474
81,182
21,670
27,865
10,857
75
35,188
117
860
$
170,068
23,200
23,161
56,305
20,951
9,669
4,279
(4,759)
30,522
5,282
340
48,295
7,752
8,313
24,877
719
18,196
6,578
4,834
4,666
(5,165)
520
28.4%
33.4%
35.9%
44.2%
3.4%
188.2%
153.7%
101.6%
15.3%
97.8%
152.9%
Total revenue in 2014 increased $48.3 million, or 28.4% from 2013. The increase is primarily due to the following:
•
•
•
•
$43.7 million increase related to acquisitions completed in 2014 and 2013;
$4.6 million increase at existing centers; and
$1.8 million increase in lease termination income primarily due to the early departure of an office tenant at our office
building; offset by
$1.8 million decrease related to properties sold in 2014, reduced management fee income and properties in redevelopment.
Operating expense in 2014 increased $7.8 million, or 33.4% from 2013. The increase is primarily due to the following:
$5.7 million related to increases in recoverable operating expenses due to our 2014 and 2013 acquisitions; and
$1.5 million related to increase in recoverable operating expenses at existing centers.
•
•
Real estate tax expense in 2014 increased $8.3 million, or 35.9% from 2013, primarily due to our 2014 and 2013 acquisitions.
Depreciation and amortization expense in 2014 increased $24.9 million, or 44.2%, from 2013. The increase was primarily due
to our acquisitions in 2014 and 2013, new development completion and other capital activities.
General and administrative expense in 2014 increased $0.7 million or 3.4% from 2013. The increase was primarily due to:
•
•
$0.9 million 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 2014. Salaries capitalized in 2014 and 2013
represented approximately 19% and 18%, respectively, of total salaries.
Impairment provisions of $27.9 million recorded in 2014 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 2013 our impairment provisions totaled $9.7 million. Refer to Note 6 of the notes to the consolidated
financial statements for a detailed discussion of these charges.
Gain on sale of real estate was $10.9 million in 2014 primarily due to the sale of five income-producing properties and four
individual outparcel sales. In the comparable period in 2013 we had a gain of $4.3 million. Refer to Note 4 of the notes to the
consolidated financial statements for further detail on the sales.
28
Earnings from unconsolidated joint ventures in 2014 increased $4.8 million from 2013. In 2013 we acquired 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 and amortization of deferred financing fees increased in 2014 by $4.7 million, or 15.3% from 2013, primarily
due to the following:
•
•
•
$6.1 million increase in loan interest due to the issuance of $200.0 million in senior unsecured notes in the second half of
2014; offset in part by
$0.6 million increase in the amortization of mortgage premiums; and
$0.7 million increase in capitalized interest due to our development/redevelopment projects.
In 2014 we recorded a deferred gain of $0.1 million which related to a property sold in 2007 to a joint venture in which we had a
20% non-controlling interest. Due to our continuing involvement we deferred the portion of the gain related to our 20% interest.
The property was conveyed to the lender in 2014 and we recognized the previously deferred gain. In 2013, we recorded a deferred
gain of $5.3 million.
Loss on extinguishment of debt of approximately $0.9 million in 2014 related to the write-off of unamortized deferred financing
costs associated with the early payoff of $120.0 million in unsecured term loan debt. In 2013 we recorded a loss of $0.3 million
related to a prepayment penalty incurred to repay two mortgages.
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 which have significantly changed during the year ended December 31, 2013 as
compared to 2012:
Total revenue
Operating expense
Real Estate Tax
Depreciation and amortization
General and administrative expense
Provision for impairment
Gain on sale of real estate
(Loss) earnings from unconsolidated joint ventures
Interest expense and amortization of deferred financing fees
Deferred gain recognized upon acquisition of real estate
Loss on extinguishment of debt
NM - Not meaningful
Year Ended December 31,
2013
2012
(In thousands)
Dollar
Change
Percent
Change
$
170,068
$
125,225
$
44,843
23,200
23,161
56,305
20,951
9,669
4,279
(4,759)
30,522
5,282
340
18,249
16,699
38,673
19,132
1,773
69
3,248
27,344
845
—
4,951
6,462
17,632
1,819
7,896
4,210
(8,007)
3,178
4,437
340
35.8%
27.1%
38.7%
45.6%
9.5%
445.3%
6,101.4%
246.5%
11.6%
525.1%
NM
Total revenue in 2013 increased $44.8 million, or 35.8% from 2012. The increase is primarily due to the following:
•
•
•
•
$43.6 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; offset in part by
a decrease in revenue at properties under redevelopment and lower fee income due to our acquisition of a portfolio of
properties from a joint venture in which we hold a 30% interest.
In 2013 operating expenses increased by $5.0 million, or 27.1%, real estate tax expense increased $6.5 million, or 38.7%, and
depreciation and amortization expense increased by $17.6 million, or 45.6% from 2012 primarily due to our acquisitions completed
in 2013 and 2012.
29
General and administrative expense in 2013 increased $1.8 million or 9.5% from 2012. The increase was primarily due to:
•
$1.8 million 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.
Impairment provisions of $9.7 million were recorded in 2013 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 2012 our impairment provisions totaled $1.8
million. Refer to Note 6 of the notes to the consolidated financial statements for a detailed discussion of these charges.
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 indvidual sales.
(Loss) earnings from unconsolidated joint ventures decreased in 2013 by $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 11.6% 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.
In 2013, we recorded a deferred gain of $5.3 million which related to a property sold in 2007 to the Ramco/Lion Venture, LP, a
joint venture in which we have a 30% non-controlling interest. Due to our continuing involvement we deferred the portion of the
gain related to our 30% interest. In 2013 we acquired our partners' 70% interest in the property and recognized the previously
deferred gain. In 2012 we recognized a previously deferred gain of $0.8 million.
Loss on extinguishment of debt of approximately $0.3 million in 2013 related to a prepayment penalty incurred to repay two
mortgages. There was no similar charge in 2012.
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, 2014 and 2013, we had $17.5 million and $9.2 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 OP unit holders) and capital expenditures related to tenant improvements and
redevelopment activities.
We have five mortgages maturing from June through December 2015 totaling $86.1 million, which includes scheduled amortization
payments.
We continually search for investment opportunities that may require additional capital and/or liquidity. As of December 31, 2014,
we had no proposed property acquisitions under contract.
30
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
$
2012
2014
Year Ended December 31,
2013
(In thousands)
85,583
$
(355,752)
271,731
110,592
(315,723)
208,671
$
62,194
(173,210)
103,094
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 $25.0 million in 2014 compared to 2013 primarily due to:
• Net operating income increased $27.7 million as a result of our acquisitions (net of dispositions) and leasing activity at
our shopping centers; offset by
• Net accounts receivable increase of $0.7 million; and
• An increase in net interest expense of approximately $4.7 million primarily due to the issuance of senior notes.
Investing Activities
Net cash used for investing activities decreased $40.0 million compared to 2013 primarily due to:
• Acquisitions of real estate decreased $77.8 million;
•
Investment in unconsolidated joint ventures decreased $5.0 million. In the previous year we had made contributions to
fund debt repayment. In addition in 2013 we received a distribution of $1.7 million for the sale of joint venture property;
offset by
• Restricted cash decreased $5.1 million; and
• Additions to real estate increased $36.1 million, as a result of an increase in development funding by $25.1 million, capital
expenditures of $9.3 million, and $1.7 million in deferred leasing costs.
Financing Activities
Cash flows provided by financing activities were $208.7 million as compared to $271.7 million in 2013. This difference of $63.1
million is primarily explained by:
•
•
•
•
an increase in our net borrowing of $53.9 million for debt and deferred financing costs; offset by
a decrease in net proceeds of $103.9 million from common share issuances;
an increase in cash dividends to common shareholders of $14.0 million due to additional shares issued as well as an
increase in our per share quarterly dividend payment; and
a decrease in cash paid out for OP unit conversions of $1.2 million.
As of December 31, 2014, $335.9 million was available to be drawn on our $350 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.
31
Dividends and Equity
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 $0.7625 per common share to shareholders in 2014. In the third quarter we increased our quarterly
dividend 6.7% to $0.20 per share, or an annualized amount of $0.80 per share. Cash dividends for 2013 and 2012 were $0.6923
and $0.653 per common share, respectively. 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
$
$
$
2014
Year Ended December 31,
2013
(In thousands)
85,583
$
$
110,592
2012
62,194
(7,250)
(54,149)
(1,716)
(63,115) $
(7,250)
(40,108)
(1,580)
(48,938) $
(7,250)
(28,333)
(1,814)
(37,397)
47,477
$
36,645
$
24,797
In August 2014, we issued 6.9 million common shares of beneficial interest. Our total net proceeds, after deducting expenses,
were approximately $108.7 million and were used to fund a portion of the consideration for our acquisitions in the third quarter
2014.
In addition, during 2014, we issued 3.8 million common shares through our controlled equity offerings generating $61.7 million
in net proceeds, after sales commissions and fees of $0.9 million. We used the net proceeds for general corporate purposes including
the repayment of debt. We have registered up to 8.0 million common shares for issuance from time to time, at our sole discretion,
through our controlled equity offering sales agreement, of which 4.0 million shares remained unsold as of December 31, 2014.
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
As of December 31, 2014, we had four equity investments in unconsolidated joint venture entities in which we owned 30% or
less of the total ownership interest. We account for these entities under the equity method.
We have a 20% ownership interest in Ramco 450 which owns a portfolio of eight properties totaling 1.7 million square feet of
GLA. As of December 31, 2014, the properties had consolidated equity of $137.3 million. Our total investment in the venture at
December 31, 2014 was $17.2 million. The Ramco 450 venture has total debt obligations of approximately $140.3 million with
maturity dates ranging from December 2015 through September 2023. Our proportionate share of the total debt is $28.1 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 Ramco/Lion which owns a portfolio of three properties totaling 0.8 million square feet of
GLA. As of December 31, 2014, the properties in the portfolio had consolidated equity of $57.6 million. Our total investment
in the venture at December 31, 2014 was $8.8 million. Ramco/Lion has one property with a mortgage payable obligation of
32
approximately $30.0 million with maturity date of October 2015. Our proportionate share of the total debt is $9.0 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 of 7% in two smaller joint ventures that each own one property. As of December 31, 2014, these
properties have combined equity of $45.1 million. Our total investment in these ventures was $2.8 million.
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, 2014:
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
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
$
25,408
887,431
912,839
287,935
763
2,513
3,719
10,149
$ 1,217,918
$
$
4,337
81,780
86,117
38,768
763
813
648
10,149
137,258
$
$
9,553
212,537
222,090
93,697
—
300
1,998
—
318,085
$
$
5,381
129,040
134,421
48,768
—
200
505
—
183,894
$
$
6,137
464,074
470,211
106,702
—
1,200
568
—
578,681
(1) Excludes $8.9 million of unamortized mortgage debt premium.
(2) Variable rate debt interest is calculated using rates at December 31, 2014.
We anticipate that the combination of cash on hand, cash provided from operating activities, the availability under our credit
facility ($335.9 million at December 31, 2014 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.
At December 31, 2014, we did not have any contractual obligations that required or allowed settlement, in whole or in part, with
consideration other than cash.
Mortgages and notes payable
See the analysis of our debt included in “Liquidity and Capital Resources” above.
Employment Contracts
At December 31, 2014, 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 have an operating lease for land at one of our
shopping centers.
At December 31, 2014 we had a capital lease at our Gaines Marketplace shopping center that provides the option to purchase the
land parcel for approximately $0.7 million. Refer to Note 19 - Subsequent Events of the notes to the consolidated financial
33
statements for more information. In addition we have a capital lease at our Buttermilk Towne Center with the City of Crescent
Springs, Kentucky. The lease provides for fixed annual payments of $0.1 million through maturity in December 2032, at which
time we can acquire the center for one dollar.
Construction Costs
In connection with the development and expansion of various shopping centers as of December 31, 2014, we have entered into
agreements for construction activities with an aggregate cost of approximately $10.1 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 2015, we anticipate spending approximately $57.5 million for capital expenditures, of which $10.1 million is reflected in the
construction commitments in the above contractual obligations table. Of the total anticipated spending, approximately $3.3 million
is for development costs and approximately $54.2 million is for redevelopment projects, tenant improvements, and leasing costs.
Estimates for future spending will change as new projects are approved.
Capitalization
At December 31, 2014 our total market capitalization was $2.5 billion and is detailed below:
Net debt (including property-specific mortgages, unsecured revolving credit facility, term loans and capital
lease obligation net of $9.3 million in cash)
Common shares, OP units, and dilutive securities based on market price of $18.74 at December 31, 2014
Convertible perpetual preferred shares based on market price of $66.93 at December 31, 2014
Total market capitalization
Net debt to total market capitalization
(in thousands)
$
905,332
1,499,893
133,860
$ 2,539,085
35.7%
At December 31, 2014, noncontrolling interests represented a 2.8% 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.
Assuming the exchange of all OP Units, there would have been 79,820,122 of our common shares of beneficial interest outstanding
at December 31, 2014, with a market value of approximately $1.5 billion.
34
Non-GAAP Financial Measures
Certain of our key performance indicators are considered non-GAAP financial measures. Management uses these measures along
with our GAAP financial statements in order to evaluate our operations results. We believe these additional measures provide
users of our financial information additional comparable indicators of our industry, as well as, our performance.
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 (computed in accordance with generally accepted
accounting principles), excluding gains (or losses) from sales of depreciable property and excluding impairment provisions on
depreciable real estate or on investments in non-consolidated investees that are driven by measurable decreases in the fair value
of depreciable real estate held by the investee, plus depreciation and amortization, (excluding amortization of financing costs).
Adjustments for unconsolidated partnerships and joint ventures are calculated to reflect funds from operations on the same basis.
Also, we consider “Operating FFO” a meaningful, additional measure of financial performance because it excludes acquisition
costs and periodic items such as impairment provisions on land available for development or 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.
35
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:
Years Ended December 31,
2012
2013
2014
(In thousands, except per share data)
$
(9,614) $
3,747
$
(46)
Net (loss) income 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 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 on real estate
Noncontrolling interest in Operating Partnership (2)
Subtotal
Add preferred share dividends (if converted) (3)
FFO
Provision for impairment for land available for development or sale
Loss on extinguishment of debt
Gain on extinguishment of joint venture debt, net of RPT expenses (1)
Acquisition costs (4)
Add preferred share dividends (if converted) (5)
Operating FFO
Weighted average common shares
Shares issuable upon conversion of Operating Partnership Units (2)
Dilutive effect of securities
Subtotal
Shares issuable upon conversion of preferred shares (3) (5)
Weighted average equivalent shares outstanding, diluted
80,826
4,719
(10,022)
—
4,580
—
—
(117)
(48)
70,324
—
70,324
23,285
860
(106)
1,890
$
$
7,250
103,503
$
$
72,118
2,250
217
74,585
7,019
81,604
56,316
3,689
(2,120)
6,454
9,342
—
—
(5,282)
465
72,611
7,250
79,861
327
340
—
1,322
—
81,850
59,336
2,257
392
61,985
6,940
68,925
$
$
Funds from operations per diluted share
Operating FFO, per diluted share
$
$
0.94
1.27
$
$
1.16
1.19
$
$
39,240
6,584
(336)
75
2,355
50
386
(845)
353
47,816
—
47,816
1,387
—
(178)
314
—
49,339
44,101
2,509
384
46,994
—
46,994
1.02
1.05
(1) Amount included in earnings (loss) from unconsolidated joint ventures.
(2)
(3)
(4)
(5)
The total noncontrolling interest reflects OP units convertible 1:1 into common shares.
Series D convertible preferred shares were dilutive for FFO for the year ended December 31, 2013 and anti-dilutive for the comparable periods in 2014
and 2012.
Prior periods have been restated to reflect the add back of acquisition costs beginning in 1Q14.
Series D convertible preferred shares were dilutive for Operating FFO for years ended December 31, 2014 and 2013 and anti-dilutive for the comparable
period in 2012.
36
Same Property Operating Income
Same Property Operating Income ("Same Property NOI") is a supplemental non-GAAP financial measure of real estate companies'
operating performance. Same Property NOI is considered by management to be a relevant performance measure of our operations
because it includes only the NOI of comparable properties for the reporting period. Same Property NOI is calculated using
consolidated operating income and adjusted to exclude management and other fee income, depreciation and amortization, general
and administrative expense, provision for impairment and non-comparable income/expense adjustments such as straight-line rents,
lease termination fees, above/below market rents, and other non-comparable operating income and expense adjustments.
Same Property NOI should not be considered an alternative to net income in accordance with GAAP or as a measure of liquidity. Our
method of calculating Same Property NOI may differ from methods used by other REITs and, accordingly, may not be comparable
to such other REITs.
The following is a summary of our wholly owned properties by classification:
Three Months Ended
December 31, 2014
Twelve Months Ended
December 31, 2014
Property Designation
Same property
Acquisitions (1)
Completed developments (1)
Non-retail properties (2)
Redevelopment (3)
Total wholly owned properties
56
6
1
1
4
68
56
6
1
1
4
68
(1) Properties were not owned in both comparable periods.
(2) Office building.
(3) Properties under construction primarily related to re-tenanting resulting in reduced rental income.
Acquisition and redevelopment properties removed from the pool will not be added until owned and operated or construction is
complete for the entirety of both periods being compared.
The following is a reconciliation of our Operating Income to Same Property NOI:
Three Months Ended
December 31,
2014
2013
Twelve Months Ended
December 31,
2014
2013
(in thousands)
Operating (loss) income
$
(10,587)
$
2,810
$
23,330
$
35,460
Adjustments:
Management and other fee income
Depreciation and amortization
Acquisition costs
General and administrative expenses
Provision for impairment
Properties excluded from pool
Non-comparable income/expense adjustments (1)
Same Property NOI
$
Period-end Leased Occupancy percent
(1)
Includes $2.1 million in lease termination income received from an office tenant.
(531)
20,605
168
5,575
27,865
(8,876)
(3,300)
30,919
$
(493)
15,883
538
5,238
9,669
(2,877)
(699)
30,069
$
(2,059)
81,182
1,890
21,670
27,865
(29,351)
(5,636)
118,891
$
(2,335)
56,305
1,322
20,951
9,669
(5,149)
(1,084)
115,139
95.5%
95.6%
95.5%
95.6%
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
Refer to Note 2 of the notes to the consolidated financial statements for a discussion of Recent Accounting Pronouncements.
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, 2014, a 100 basis point change in interest rates would
impact our future earnings and cash flows by approximately $0.4 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 $7.3 million at December 31, 2014.
We had interest rate swap agreements with an aggregate notional amount of $210.0 million as of December 31, 2014. The agreements
provided for fixed rates ranging from 1.2% to 2.2% and had expirations ranging from April 2016 to May 2020.
The following table sets forth information as of December 31, 2014 concerning our long-term debt obligations, including principal
cash flows by scheduled maturity, weighted average interest rates of maturing amounts and fair market. Debt premium of
approximately $8.9 million is excluded:
2015
2016
2017
2018
(In thousands)
2019
Thereafter
Total
Fair Value
$ 86,117
$ 23,619
$113,196
$ 85,275
$ 6,278
$ 560,229
$ 874,714
$ 900,911
$
5.3%
— $
—%
5.9%
— $
—%
4.1%
5.4%
— $ 10,000
—%
1.5%
$
4.3%
6.7%
— $ 28,125
—%
3.5%
4.6%
4.2%
$ 38,125
$ 38,125
3.0%
3.0%
Fixed-rate debt
Average interest rate
Variable-rate debt
Average interest rate
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, 2014 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.
38
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, 2014 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, 2014.
Statement of Our Management
Our management has issued a report on its assessment of the Trust’s internal control over financial reporting, which appears on
page F-2 of this Annual Report on Form 10-K.
Statement of Our Independent Registered Public Accounting Firm
Grant Thornton LLP, our independent registered public accounting firm that audited the financial statements included in this
Annual Report on Form 10-K, has issued an attestation report on the Trust’s internal control over financial reporting, which
appears on page F-3 of this Annual Report on Form 10-K.
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.
39
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, 2014:
(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))
169,181
—
169,181
$30.94
—
$30.94
1,716,017
—
1,716,017
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 155,248 common shares and 13,933 deferred common shares (see
Note 16 of the notes to the consolidated financial statements for further information).
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.
40
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
3.6
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 Appendix A to the Company's 2010 Proxy dated April 30, 2010.
Amended and Restated Bylaws of the Company, effective February 23, 2012, incorporated by
reference to Exhibit 3.1 to the Company's Form 8-K dated February 29, 2012
Articles of Amendment, as filed with the State Department of Assessments and Taxation of
Maryland on April 5, 2011, incorporated by reference to Exhibit 3.1 to the Company’s Form 8-K
dated April 6, 2011.
Articles Supplementary, as filed with the State Department of Assessments and Taxation of
Maryland on April 5, 2011, incorporated by reference to Exhibit 3.2 to the Company’s Form 8-K
dated April 6, 2011.
Articles Supplementary, as filed with the State Department of Assessments and Taxation of
Maryland on April 28, 2011, incorporated by reference to Exhibit 3.1 to the Company’s Form 8-K
dated April 28, 2011.
Articles of Amendment, as filed with the State Department of Assessments and Taxation of
Maryland on July 31, 2013, incorporated by reference to Exhibit 3.1 to the Company’s Form 8-K
dated July 31, 2013.
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.
41
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 2012 Omnibus Long-Term Incentive Plan, incorporated by
reference to Exhibit 10.1 to Registrant’s Form 8-K, dated June 12, 2012. **
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 May 14, 2013, incorporated by reference to Exhibit 10.1 to
Registrant’s Form 8-K dated May 16, 2013.
Form of Non-Qualified Option Agreement Under 2012 Omnibus Long-Term Incentive Plan,
incorporated by reference to Exhibit 10.1 to Registrant’s Form 8-K dated June 12, 2012**
Form of Restricted Stock Award Agreement Under 2012 Omnibus Long-Term Incentive Plan,
incorporated by reference to Exhibit 10.1 to Registrant’s Form 8-K dated June 6, 2012**
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.
2014 Executive Incentive Plan, dated February 24, 2014, incorporated by reference to Exhibit 10.1
to the Company’s Current Report on Form 8-K dated February 28, 2014.
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
42
10.20
10.21
10.22
10.23
10.24
10.25
10.26
10.27
10.28
10.29
10.30
10.31*
12.1*
21.1*
23.1*
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.
Agreement for the Acquisition of Partnership and Limited Liability Company Interests, dated March
5, 2013, between CLPF-Ramco, LLC, CLPF-Ramco L.P., Ramco Lion, LLC, Ramco-Gershenson
Properties, L.P. and Ramco GP incorporated by reference to Exhibit 10.1 to the Company's Quarterly
Report on Form 10-Q ended March 31, 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.
$100 Million Note Purchase Agreement, by Ramco-Gershenon Properties, L.P. dated May 28, 2014
incorporated by reference to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q ended June
30, 2014.
Unsecured Term Loan Agreement, dated May 29, 2014 among Ramco-Gershenson Properties, L.P., as
borrower, Ramco-Gershenson Properties Trust, as a Guarantor, Capital One, 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, Capital One, National Association, as Administrative Agent, and Capital
One, National Association, as Sole Lead Arranger and Sole Bookrunner incorporated by reference to
Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q ended June 30, 2014.
$100 Million Note Purchase Agreement, by Ramco-Gershenson Properties, L.P. dated September 8,
2014 incorporated by reference to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q ended
September 30, 2014.
Fourth Amendment to Third Amended and Restated Unsecured Master Loan Agreement, dated October
10, 2014 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, 2014.
Separation Agreement and Release, dated December 10, 2014 between Ramco-Gershenson Trust and
Michael Sullivan.**
Computation of Ratio of Earnings to Combined Fixed Charges and Preferred Share Dividends.
Subsidiaries
Consent of Grant Thornton LLP.
43
31.1*
31.2*
32.2*
101.INS(1)
101.SCH(1)
101.CAL(1)
101.DEF(1)
101.LAB(1)
101.PRE(1)
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.
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.
44
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, 2015
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, 2015
By: /s/ Stephen R. Blank
Stephen R. Blank,
Chairman
Dated:
February 27, 2015
By: /s/ Dennis E. Gershenson
Dennis E. Gershenson,
Trustee, President and Chief Executive Officer
(Principal Executive Officer)
Dated:
February 27, 2015
By: /s/ Arthur H. Goldberg
Arthur H. Goldberg,
Trustee
Dated:
February 27, 2015
By: /s/ David J. Nettina
David J. Nettina,
Trustee
Dated:
February 27, 2015
By: /s/ Joel M. Pashcow
Joel M. Pashcow,
Trustee
Dated:
February 27, 2015
By: /s/ Mark K. Rosenfeld
Mark K. Rosenfeld,
Trustee
Dated:
February 27, 2015
By: /s/ Michael A. Ward
Michael A. Ward,
Trustee
Dated:
February 27, 2015
By: /s/ Gregory R. Andrews
Gregory R. Andrews,
Chief Financial Officer and Secretary
(Principal Financial and Accounting Officer)
45
RAMCO-GERSHENSON PROPERTIES TRUST
Index to Consolidated Financial Statements
Consolidated Financial Statements:
Management Assessment Report on Internal Control over Financial Reporting
Report of Independent Registered Public Accounting Firm
Report of Independent Registered Public Accounting Firm
Consolidated Balance Sheets - December 31, 2014 and 2013
Consolidated Statements of Operations and Comprehensive Income (Loss) - Years Ended December 31, 2014, 2013, and
2012
Consolidated Statements of Shareholders’ Equity - Years Ended December 31, 2014, 2013, and 2012
Consolidated Statements of Cash Flows – Years Ended December 31, 2014, 2013, and 2012
Notes to Consolidated Financial Statements
Schedule to Consolidated Financial Statements
Page
F-2
F-3
F-4
F-5
F-6
F-7
F-8
F-9
F-34
F-1
Management’s Report on Internal Control Over Financial Reporting
Management is responsible for establishing and maintaining effective internal control over financial reporting as such term is
defined under Rule 13a-15(f) promulgated under the Securities Exchange Act of 1934, as amended.
Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial
reporting and preparation of our consolidated financial statements for external purposes in accordance with generally accepted
accounting principles.
Internal control over financial reporting includes those policies and procedures that pertain to our ability to record, process,
summarize and report reliable financial data. Management recognizes that there are inherent limitations in the effectiveness of
any internal control and effective internal control over financial reporting can provide only reasonable assurance with respect to
financial statement preparation. Additionally, because of changes in conditions, the effectiveness of internal control over financial
reporting may vary over time.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because
of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Our management conducted an assessment of our internal controls over financial reporting as of December 31, 2014 using the
framework established in 2013 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, 2014.
Our independent registered public accounting firm, Grant Thornton LLP, has issued an attestation report on our internal control
over financial reporting. Their report appears on page F-3 of this Annual Report on Form 10-K.
F-2
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, 2014, based on criteria established in the 2013 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, 2014, based on criteria established in the 2013 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, 2014, and our report dated February 27,
2015 expressed an unqualified opinion on those financial statements.
/s/ GRANT THORNTON LLP
Southfield, Michigan
February 27, 2015
F-3
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, 2014 and 2013, 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,
2014. Our audits of the basic consolidated 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, 2014 and 2013, and the results of their operations and
their cash flows for each of the three years in the period ended December 31, 2014 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 consolidated 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, 2014, based on criteria established in the 2013 Internal
Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), and
our report dated February 27, 2015 expressed an unqualified opinion.
/s/GRANT THORNTON LLP
Southfield, Michigan
February 27, 2015
F-4
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 available 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,
2014
2013
$
$
$
341,388
1,592,644
(287,177)
1,646,855
74,655
1,721,510
28,733
9,335
8,163
11,997
168,641
1,948,379
520,000
363,580
10,000
28,125
921,705
1,828
44,232
64,384
17,951
1,050,100
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
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, 2014 and December 31, 2013
Common shares of beneficial interest, $0.01 par, 120,000 shares authorized, 77,573 and
66,669 shares issued and outstanding as of December 31, 2014 and 2013, respectively
Additional paid-in capital
Accumulated distributions in excess of net income
Accumulated other comprehensive (loss) income
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
776
1,130,262
(356,715)
(1,966)
872,357
25,922
898,279
1,948,379
$
667
959,183
(289,837)
84
770,097
27,863
797,960
1,652,248
$
F-5
RAMCO-GERSHENSON PROPERTIES TRUST
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
(In thousands, except per share amounts)
Year Ended December 31,
2013
2012
2014
$
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
Acquisitions costs
General and administrative expense
Provision for impairment
TOTAL EXPENSES
OPERATING INCOME
OTHER INCOME AND EXPENSES
Other expense, net
Gain on sale of real estate
Earnings (loss) from unconsolidated joint ventures
Interest expense
Amortization of deferred financing fees
Deferred gain recognized on real estate
Loss on extinguishment of debt
(LOSS) INCOME FROM CONTINUING OPERATIONS BEFORE TAX
Income tax (provision) benefit
(LOSS) INCOME 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 (LOSS) INCOME
Net loss (income) attributable to noncontrolling partner interest
NET (LOSS) INCOME ATTRIBUTABLE TO RPT
Preferred share dividends
NET (LOSS) INCOME AVAILABLE TO COMMON SHAREHOLDERS
$
(LOSS) EARNINGS PER COMMON SHARE, BASIC
Continuing operations
Discontinued operations
(LOSS) EARNINGS PER COMMON SHARE, DILUTED
Continuing operations
Discontinued operations
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
Basic
Diluted
OTHER COMPREHENSIVE (LOSS) INCOME
Net (loss) income
Other comprehensive (loss) income:
(Loss) gain on interest rate swaps
Comprehensive (loss) income
Comprehensive loss (income) attributable to noncontrolling interest
COMPREHENSIVE (LOSS) INCOME ATTRIBUTABLE TO RPT
$
157,691
264
52,828
5,521
2,059
218,363
31,474
27,319
3,633
81,182
1,890
21,670
27,865
195,033
23,330
(689)
10,857
75
(33,742)
(1,446)
117
(860)
(2,358)
(54)
(2,412)
—
—
—
—
—
(2,412)
48
(2,364)
(7,250)
(9,614) $
(0.14)
—
(0.14)
(0.14)
—
(0.14)
$
$
124,169
209
40,018
3,337
2,335
170,068
23,161
20,194
3,006
56,305
1,322
20,951
9,669
134,608
35,460
(965)
4,279
(4,759)
(29,075)
(1,447)
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
314
19,132
1,773
94,840
30,385
(66)
69
3,248
(25,895)
(1,449)
845
—
7,137
34
7,171
336
307
(2,915)
2,193
(79)
7,092
112
7,204
(7,250)
(46)
—
—
—
—
—
—
72,118
72,118
59,336
59,728
44,101
44,101
$
$
(2,412) $
11,462
$
7,092
(2,115)
(4,527)
65
(4,462) $
5,520
16,982
(195)
16,787
$
(2,745)
4,347
153
4,500
The accompanying notes are an integral part of these consolidated financial statements.
F-6
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, 2011
$ 100,000
$
387
$
570,225
$
(218,888) $
(2,649) $
32,099
$
481,174
Issuance of common shares
Issuance of preferred 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 paid on restricted 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
Balance, December 31, 2013
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 loss
—
—
—
—
—
—
—
—
—
—
100,000
—
—
—
—
—
—
—
—
—
100,000
—
—
—
—
—
—
—
—
—
98
—
—
—
—
—
—
—
—
—
485
181
—
1
—
—
—
—
—
—
667
107
—
2
—
—
—
—
—
—
111,370
—
—
2,014
—
—
—
—
—
—
683,609
273,568
—
2,006
—
—
—
—
—
—
959,183
170,265
—
814
—
—
—
—
—
—
—
—
—
—
(29,863)
(7,250)
—
(273)
—
7,204
(249,070)
—
—
—
(44,172)
(7,250)
—
(342)
—
10,997
(289,837)
—
—
—
(56,905)
(7,250)
—
(359)
—
(2,364)
—
—
—
—
—
—
—
—
(2,592)
—
(5,241)
—
—
—
—
—
—
—
5,325
—
84
—
—
—
—
—
—
—
(2,050)
—
—
—
(3)
—
—
—
(1,782)
—
(153)
(112)
30,049
—
(1,243)
—
—
—
(1,603)
—
195
465
27,863
—
(84)
—
—
—
(1,744)
—
(65)
(48)
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
797,960
170,372
(84)
816
(56,905)
(7,250)
(1,744)
(359)
(2,115)
(2,412)
Balance, December 31, 2014
$ 100,000
$
776
$ 1,130,262
$
(356,715) $
(1,966) $
25,922
$
898,279
The accompanying notes are an integral part of these consolidated financial statements.
F-7
RAMCO-GERSHENSON PROPERTIES TRUST
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Year Ended December 31,
2013
2012
2014
OPERATING ACTIVITIES
Net (loss) income
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
$
(2,412) $
11,462
$
7,092
Depreciation and amortization, including discontinued operations
Amortization of deferred financing fees, including discontinued operations
Income tax provision (benefit)
(Earnings) loss from unconsolidated joint ventures
Distributions received from operations of unconsolidated joint ventures
Provision for impairment, including discontinued operations
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
(Increase) decrease in restricted cash
Investment in unconsolidated joint ventures
Note repayment from third party
Net cash used in investing activities
FINANCING ACTIVITIES
Proceeds on mortgages and notes payable
Repayment of mortgages and notes payable
Net (repayments) proceeds on revolving credit facility
Payment of debt extinguishment costs
Payment of deferred financing costs
Proceeds from issuance of common 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 $1,862, $1,161 and $996 in 2014, 2013 and
2012, respectively)
Cash paid for federal income taxes
The accompanying notes are an integral part of these consolidated financial statements.
F-8
81,182
1,446
54
(75)
1,881
27,865
860
(117)
(10,857)
(1,138)
2,093
2,527
(2,349)
5,420
4,212
110,592
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
4,688
(307)
(845)
(405)
(30)
2,120
445
1,128
6,349
172
62,194
$ (264,414) $ (342,189) $ (149,960)
(38,431)
10,292
3,587
2,171
(3,869)
3,000
(173,210)
(44,625)
33,916
1,687
438
(4,979)
—
(355,752)
(80,742)
34,156
—
(4,709)
(14)
—
(315,723)
$
$
$
$
275,000
(153,795)
(17,000)
—
(2,379)
170,372
(328)
(84)
(7,250)
(54,149)
(1,716)
208,671
3,540
5,795
9,335
58,634
—
35,507
—
$
$
$
$
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
—
$
$
$
$
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
—
8,501
25,686
16
RAMCO-GERSHENSON PROPERTIES TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years Ended December 31, 2014, 2013 and 2012
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 large multi-anchored shopping
centers primarily in a dozen of the largest metropolitan markets in the United States. Our property portfolio consists of 67 wholly
owned shopping centers and one office building comprising approximately 14.2 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 two 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 available for development and five parcels of land available for sale.
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. (97.2%, 96.8% and 95.4% owned by us at December 31, 2014, 2013 and 2012, 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 2014
presentation.
Revenue Recognition and Accounts Receivable
Our shopping center space is generally leased to retail tenants under leases that are classified as operating leases. We recognize
minimum rents using the straight-line method over the terms of the leases commencing when the tenant takes possession of the
space 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
F-9
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 monitor the collectability of our accounts
receivable from specific tenants on an ongoing basis, 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 may 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, 2014 and 2013, our accounts receivable were $12.0 million and $9.6 million, respectively, net of allowances for
doubtful accounts of $2.3 million and $2.4 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, 2014 and 2013, net of allowances was $15.8 million and $15.1 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 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 asset. 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
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
F-10
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 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,
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 2014, we recorded impairment provisions totaling $27.9 million consisting of:
•
•
$23.3 million related to certain parcels of land available for development or sale due to changes in plans or in fair
value estimates; and
$4.6 million of related to income producing properties that we have identified to be marketed for sale.
Investments in Real Estate Joint Ventures
We have four 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 2014.
F-11
Other Assets, net
Other assets consist primarily of acquired lease intangibles, straight-line rent receivable, deferred leasing costs, deferred financing
costs and prepaid expenses. Other assets also include the the fair value of in-place public improvement fee income and real estate
tax exemption agreements associated with two properties acquired in 2014. 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, 2014, we had $12.7 million in excess of the FDIC insured limit.
Recognition of Share-based Compensation Expense
We grant share-based compensation awards to employees and trustees in the form of restricted common shares and in the past we
have granted stock options to employees and trustees. Our share-based award costs are equal to each grant date fair value and are
recognized over the service periods of the awards using the graded vesting method. 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 permit us to 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, 2014, 2013, and 2012, 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
There are third parties who have certain noncontrolling interests 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-12
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 June 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update No. 2014-12, “Accounting
for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite
Service Period” (“ASU 2014-12”). The amendments in ASU 2014-12 require that a performance target that affects vesting and
that could be achieved after the requisite service period be treated as a performance condition. A reporting entity should apply
existing guidance in Accounting Standards Codification Topic No. 718, “Compensation — Stock Compensation” (“ASC 718”),
as it relates to awards with performance conditions that affect vesting to account for such awards. The amendments in ASU 2014-12
are effective for annual periods and interim periods within those annual periods beginning after December 15, 2015. Early adoption
is permitted. Entities may apply the amendments in ASU 2014-12 either: (a) prospectively to all awards granted or modified after
the effective date; or (b) retrospectively to all awards with performance targets that are outstanding as of the beginning of the
earliest annual period presented in the financial statements and to all new or modified awards thereafter. We believe the adoption
of this guidance will not have a material effect on our consolidated financial statements.
In May 2014, the FASB issued ASU 2014-09 "Revenue from Contract with Customers" as a new Topic, Accounting Standards
Codification ("ASC") Topic 606. The objective of ASU 2014-09 is to establish a single comprehensive model for entities to use
in accounting for revenue arising from contracts with customers and will supersede most of the existing revenue recognition
guidance, including industry-specific guidance. The core principle is that a company should recognize revenue to depict the
transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be
entitled in exchange for those goods or services. In applying the new standard, companies will perform a five-step analysis of
transactions to determine when and how revenue is recognized. ASU 2014-09 applies to all contracts with customers except those
that are within the scope of other topics in the FASB ASC. This ASU is effective for annual reporting periods (including interim
periods within those periods) beginning after December 15, 2016 and shall be applied using either a full retrospective or modified
retrospective approach. Early adoption is not permitted. We are currently evaluating the guidance and have not determined the
impact this standard may have on our consolidated financial statements nor decided upon the method of adoption.
In April 2014, the FASB issued ASU 2014-08 "Presentation of Financial Statements (Topic 205) and Property, Plant, and Equipment
(Topic 360), Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity" which amends the
requirements for reporting discontinued operations. Under ASU 2014-08, a disposal of a component of an entity or a group of
components of an entity is required to be reported in discontinued operations if the disposal represents a strategic shift that has
(or will have) a major effect on an entity's operations and financial results. For public entities, ASU 2014-08 is effective
prospectively for fiscal years beginning after December 15, 2014; however, early adoption is permitted, but only for disposals or
classifications as held for sale that have not been reported in financial statements previously issued or available for issuance. We
adopted the provisions of ASU 2014-08 beginning with the period ended March 31, 2014, and have applied the provisions
prospectively.
Prior to the adoption of ASU 2014-08, the results of operations for operating properties sold or held for sale during the reported
periods were shown under Discontinued Operations on the Consolidated Statements of Operations. Beginning with the period
ended March 31, 2014, in general, our activity related to individual sales of properties wholly-owned or co-owned with joint
ventures will no longer be classified as Discontinued Operations.
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, construction in process and land available for development or sale.
F-13
Land available for development or sale includes real estate projects where vertical construction has yet to commence, but which
have been identified by us and are available for future development when market conditions dictate the demand for a new shopping
center. Land available for sale was $21.8 million and $19.9 million at December 31, 2014 and 2013, respectively.
At December 31, 2014, we had three projects under pre-development. Our land available for development consisted of:
Development Project/Location
Hartland Towne Square - Hartland Twp., MI
Lakeland Park Center - Phase II, III - Lakeland, FL
Parkway Shops - Phase II - Jacksonville, FL
Carrying Value As of December 31,
2014
2013
(In thousands)
$
Total $
4,699
14,506
7,962
27,167
$
$
25,193
11,774
11,673
48,640
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 $25.7 million and $33.5 million at December 31, 2014 and December 31, 2013, respectively. The decrease was
primarily due to the completion of Phase I of Lakeland Park Center, located in Lakeland, Florida. The cost for Lakeland Park
Center Phase I was approximately $33.4 million, excluding initial land costs. This decrease is offset in part by costs associated
with the commencement of Phase II of Parkway Shops located in Jacksonville, Florida which commenced in the third quarter of
2014, as well as by costs associated with redevelopment and expansion projects at various centers.
4. Property Acquisitions and Dispositions
Acquisitions
The following table provides a summary of our acquisitions during 2014 and 2013:
Property Name
Location
2014
Front Range Village
Fort Collins, CO
Buttermilk Towne Center
Crescent Springs (Cincinnati), KY
Woodbury Lakes
Woodbury (Minneapolis), MN
Bridgewater Falls Shopping Center
Hamilton (Cincinnati), OH
Total consolidated income producing acquisitions
The Shoppes at Fox River
Waukesha (Milwaukee), WI
Total consolidated land acquisitions
Total consolidated acquisitions
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
Total consolidated acquisitions
FL & MI
GLA
Acreage
Date
Acquired
Purchase
Price
Debt
(In thousands)
(In thousands)
Gross
459
278
305
504
1,546
N/A
1,546
461
208
236
301
106
2,246
3,558
N/A
N/A
2.4
N/A
2.4
9.9
9.9
12.3
N/A
N/A
N/A
N/A
N/A
09/04/14
$
128,250
$
08/22/14
07/22/14
07/10/14
09/08/14
41,900
66,200
85,542
321,892
1,216
1,216
323,108
$
$
$
$
$
$
$
$
12/19/13
$
96,500
$
11/15/13
08/26/13
06/20/13
04/18/13
23,878
20,000
36,100
22,650
—
—
—
58,634
58,634
—
—
58,634
—
—
—
—
9,253
N/A
03/25/13
367,415
149,514
$
566,543
$ 158,767
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
Capital lease obligation
Total purchase price allocated
December 31,
2014
2013
2012
55,618
235,322
4,775
23,343
30,883
(18,836)
(6,830)
(1,167)
323,108
(In thousands)
122,963
$
406,743
6,977
50,577
10,196
(27,216)
(3,697)
—
566,543
$
$
$
$
$
38,756
100,216
1,874
2,522
16,566
(9,974)
—
—
149,960
Total revenue and net income for the 2014 acquisitions included in our consolidated statement of operations for the year ended
ended December 31, 2014 were $14.0 million and $0.9 million, respectively.
Unaudited Proforma Information
If the 2014 Acquisitions had occurred on January 1, 2013, our consolidated revenues and net income for the years ended
December 31, 2014 and 2013 would have been as follows:
Consolidated revenue
Consolidated net (loss) income available to common shareholders
$
$
238,868
$
(9,060) $
204,577
629
December 31,
2014
2013
F-15
Dispositions
We will classify properties as held for sale when executed purchase and sales agreement contingencies have been satisfied thereby
signifying that the sale is legally binding. Refer to Note 1 under Real Estate for additional information regarding the sale of
properties. As of December 31, 2014, we did not have any properties held for sale.
The following table provides a summary of our disposition activity during 2014 and 2013. 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)
N/A
N/A
N/A
N/A
N/A
3.0
1.0
0.7
0.8
5.5
5.5
N/A
N/A
N/A
11/5/2014
$
4,300
$
10/21/2014
10/17/2014
5/28/2014
4/17/2014
12/5/2014
8/27/2014
6/13/2014
5/1/2014
15,550
3,250
1,730
7,150
288
7,082
186
123
2,343
$
31,980
$
10,022
1,568
900
680
650
371
258
215
(9)
$
$
3,798
35,778
$
$
835
10,857
12/6/2013
$
8,600
$
9/27/2013
4/9/2013
5,480
8,400
0.1
12/11/2013
$
$
22,480
104
$
$
1.0
11/21/2013
1,000
1.0
1.2
11.6
2.9
17.8
17.8
9/26/2013
5/22/2013
2/15/2013
1/24/2013
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
2014
Lake Orion Plaza
Northwest Crossing
Fraser Shopping Center
The Town Center at Aquia - El Gran Charro
Outparcel
Naples Town Center
Total consolidated income producing dispositions
Lake Orion, MI
Knoxville, TN
Fraser, MI
Stafford, VA
Naples, FL
Harvest Junction Land - BioLife Outparcel
Longmont, CO
Parkway Land - Wendy's Outparcel
Jacksonville, FL
Parkway Land - Express Oil Change Outparcel
Jacksonville, FL
Hartland Land - Taco Bell Outparcel
Hartland Township, MI
Total consolidated outparcel dispositions
Total consolidated dispositions
2013
Beacon Square
Edgewood Towne Center
Mays Crossing
Grand Haven, MI
Lansing, MI
Stockbridge, GA
Total consolidated income producing dispositions
Hunter's Square - Land Parcel
Farmington Hills, MI
Parkway Phase I - Moe's Southwest Grill
Outparcel
Jacksonville, FL
Jacksonville North Industrial - The Learning
Experience Outparcel
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
Jacksonville, FL
Total consolidated land / outparcel dispositions
Total consolidated dispositions
141
124
68
6
135
474
N/A
N/A
N/A
N/A
474
51
86
137
274
N/A
N/A
N/A
N/A
N/A
N/A
274
F-16
5. Discontinued Operations
Prior to our adoption of ASU 2014-08, as discussed in Note 2, certain disposition transactions were classified as discontinued
operations. A summary of the financial information for those properties classified as Discontinued Operations follows:
Total revenue
Operating income
Income (loss) from discontinued operations
6. Impairment Provisions
December 31,
2013
2012
(In thousands)
2,175
1,066
3,091
$
$
$
5,502
2,438
(79)
$
$
$
We established provisions for impairment for the following consolidated assets and unconsolidated joint venture investments:
Land available for development or sale (1)
Income producing properties marketed for sale (2)
Investments in unconsolidated joint ventures
Total
2014
$
$
23,285
4,580
—
27,865
Year Ended
December 31,
2013
(In thousands)
327
$
9,342
—
9,669
$
$
$
2012
1,387
2,915
386
4,688
(1)
(2)
In 2014, changes to development plans and to estimated fair values triggered an impairment provision of $23.3 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 2014, our decision to market for potential sale certain wholly-owned income producing properties resulted in an
impairment provision of $4.6 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 fair value of parcels or properties and our allocated or net book basis of those parcels and
properties. 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 Joint Ventures
We have four 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.
Combined financial information of our unconsolidated joint ventures 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
December 31,
2014
2013
(In thousands)
$
$
$
$
$
394,740
23,102
417,842
170,194
7,625
240,023
417,842
28,733
$
$
$
$
$
410,218
27,462
437,680
178,708
7,885
251,087
437,680
30,931
As of December 31, 2014 we had investments in the following unconsolidated entities:
Unconsolidated Entities
Ramco 450 Venture LLC
Ramco/Lion Venture LP
Other Joint Ventures
Ownership as of
December 31,
Total Assets as
of December 31,
Total Assets as
of December 31,
2014
20%
30%
(1)
2014
2013
(In thousands)
$
283,100
$
293,410
89,091
45,651
91,053
53,217
$
417,842
$
437,680
(1)
Includes two joint ventures in which we have a 7% ownership interest. Each joint venture owns one property.
F-18
Statements of Operations
Total revenue
Total expenses (1)
Income before other income and expenses and discontinued operations
Gain on sale of land (2)
Interest expense
Amortization of deferred financing fees
Provision for impairment of long-lived assets
Gain on extinguishment of debt
(Loss) income from continuing operations
Discontinued operations (3)
Gain on extinguishment of debt
Gain on sale of land
Loss on sale of real estate (4)
Income from discontinued operations
(Loss) income from discontinued operations
Net (loss) income
RPT's share of earnings (loss) from unconsolidated joint ventures (5)
$
$
$
December 31,
2013
(In thousands)
42,778
$
2012
$
44,348
2014
42,442
39,096
3,346
740
(7,326)
(307)
—
529
(3,018)
29,599
13,179
—
(9,200)
(269)
—
—
3,710
—
—
—
—
—
(3,018) $
—
—
(21,512)
1,015
(20,497)
(16,787) $
75
$
(4,759) $
29,036
15,312
169
(11,725)
(304)
(7,622)
275
(3,895)
736
624
(61)
4,055
5,354
1,459
3,646
(1) The increase in 2014 from prior years is due to the demolition of a portion of a center for redevelopment and the acceleration of
depreciation.
(2) The 2014 gain on sale relates to a joint venture property that was sold in 2011 and additional proceeds were received in June 2014. Our
share of the gain was approximately $0.4 million.
(3) Beginning in the first quarter of 2014 discontinued operations reflects results of operations for those properties classified as discontinued
operations as of December 31, 2013.
(4)
In March, 2013 Ramco/Lion Venture LP sold 12 shopping centers to us resulting in a loss on the sale of $21.5 million to the joint venture.
(5) 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.
Acquisitions
There were no acquisitions of shopping centers in 2014 and 2013 by any of our unconsolidated joint ventures.
Dispositions
There were no dispositions of shopping centers in 2014. The following table provides a summary of our unconsolidated joint
venture property disposition activity during 2013:
Property Name
Location
GLA
Acreage
Date Sold
Gross
Ownership
%
Sales Price
(at 100%)
Debt
Repaid
Loss on
Sale
(at 100%)
(In thousands)
2013
Clarion Partners Portfolio
Total 2013 unconsolidated joint venture's
dispositions
FL & MI
2,246
2,246
N/A
3/25/2013
20% $ 367,415
$ 149,514
$ (21,512)
$ 367,415
$ 149,514
$ (21,512)
F-19
Debt
Our unconsolidated entities had the following debt outstanding at December 31, 2014:
Entity Name
Ramco 450 Venture LLC (1)
Ramco/Lion Venture LP (2)
Unamortized discount
Total mortgage debt
Balance
Outstanding
(In thousands)
$
$
140,308
29,981
170,289
(95)
170,194
(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.
On March 31, 2014, Ramco 191, LLC, in which our ownership interest was 20%, completed the conveyance of its ownership
interest in its sole remaining shopping center to the noteholder in lieu of repayment of a non-recourse loan in the amount of $7.5
million of which our share was $1.5 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
2014
1,514
315
—
230
2,059
$
$
December 31,
2013
(In thousands)
1,875
$
390
—
61
2,326
$
$
$
2012
2,564
1,026
16
318
3,924
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 (1)
Other assets, net
December 31,
2014
2013
(In thousands)
$
$
33,557
6,598
77,045
15,805
537
7,054
28,045
168,641
$
$
26,617
6,513
69,635
15,115
2,244
4,629
3,768
128,521
(1) Includes the fair value of in-place public improvement fee of approximately $17.3 million and real estate tax exemption agreement of
approximately $6.0 million associated with two properties acquired in 2014.
Gross intangible assets of $110.3 million, attributable to lease origination costs and above market leases, have a remaining
weighted-average amortization period of 4.6 years as of December 31, 2014.
Intangible assets attributable to lease origination costs and for above-market leases are being amortized over the lives of the
applicable lease. Amortization of lease origination costs is an increase to amortization expense and amortization of above-market
leases is a reduction to minimum rent revenue over the applicable terms of the respective leases. Amortization of the above market
lease asset resulted in a reduction of revenue of approximately $2.7 million, $2.1 million, and $0.8 million for the years ended
December 31, 2014, 2013, and 2012, respectively.
Straight-line rent receivables are recorded net of allowances of $4.3 and $3.8 million at December 31, 2014 and 2013, respectively.
The following table represents estimated aggregate amortization expense related to other assets as of December 31, 2014:
Year Ending December 31,
2014
2015
2016
2017
2018
Thereafter
Total (1)
(In thousands)
27,217
21,452
15,304
12,136
9,725
54,417
140,251
$
$
(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 $15.8 million, $7.1 million, $0.5 million, $2.1 million, and $2.9 million, respectively.
F-21
9. Debt
The following table summarizes our mortgages and notes payable and capital lease obligation as of December 31, 2014 and 2013:
Senior unsecured notes
Unsecured term loan facilities
Fixed rate mortgages
Unsecured revolving credit facility
Junior subordinated notes
Unamortized premium
Capital lease obligation
December 31,
2014
2013
(In thousands)
310,000
210,000
354,714
10,000
28,125
912,839
8,866
921,705
1,828
$
$
$
110,000
255,000
329,875
27,000
28,125
750,000
3,174
753,174
5,686
$
$
$
Mortgages and unsecured notes payable
We completed the following financing transactions during 2014:
•
In May 2014, we completed a $100.0 million private placement of senior unsecured notes consisting of $50.0 million of
notes with a ten-year term with a fixed interest rate of 4.65% and $50.0 million of notes with a twelve-year term at a
fixed interest rate of 4.74%. A "shelf" facility allows for an additional $50.0 million in notes to the same purchaser within
the next three years, subject to approval, pricing and documentation;
• Also in May 2014, we closed a $75.0 million senior unsecured term loan with an additional $75.0 million accordion
feature. The loan has a seven-year term and bears interest at an annual rate of LIBOR plus 1.25% to 2.25% (initially
1.7%) depending upon our leverage or credit rating. The interest expense is hedged with an existing interest rate swap
expiring in April 2016, resulting in an effective fixed initial annual rate of 2.9%. The combined proceeds from the May
2014 financings were used to repay $45.0 million of variable-rate bank term debt due 2017, $75.0 million of bank term
debt also due in 2017, the $45.0 million balance on our unsecured revolving line of credit, as well as for general corporate
purposes; and
•
In November 2014, we completed a $100.0 million private placement of senior unsecured notes consisting of $50.0
million of notes with a ten-year term priced at a fixed interest rate of 4.16% and $50.0 million of notes with a twelve-
year term priced at a fixed interest rate of 4.3%.
During 2014 we had the following mortgage transactions:
•
In conjunction with our acquisition of Bridgewater Falls, we assumed a mortgage loan with a $58.6 million principal
balance outstanding and an interest rate of 5.7%. We recorded a premium of approximately $6.8 million based upon the
fair value of the loan on the date it was assumed. This mortgage premium is being amortized to interest expense over
the remaining life of the loan; and
• We repaid mortgages securing the following properties:
The Auburn Mile mortgage in the amount of $6.6 million with an interest rate of 5.4%; and
Crossroads Centre mortgage in the amount of $23.2 million with an interest rate of 5.4%.
Our $354.7 million of 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. The fixed rate mortgage notes are secured by mortgages on properties that have an approximate
net book value of $368.7 million as of December 31, 2014.
We have no mortgage maturities until the second half of 2015 and it is our intent to repay these mortgages using cash, borrowings
under our unsecured line of credit, or other sources of financing.
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.
Capital lease
At December 31, 2014 we had a capital ground lease at our Gaines Marketplace shopping center. In addition we have a capital
lease at our Buttermilk Towne Center with the City of Crescent Springs, Kentucky. Total amounts expensed as interest relating to
these leases was $0.2 million, $0.3 million and $0.4 million for each of the years ended December 31, 2014, 2013, and 2012
respectively.
The following table presents scheduled principal payments on mortgages and notes payable and capital lease payments as of
December 31, 2014:
Year Ending December 31,
2015 (1)
2016
2017
2018 (2)
2019
Thereafter
Subtotal debt
Unamortized mortgage premium
Amounts representing interest
Total
Mortgage
Principal
Payments
Capital
Lease
Payments
(In thousands)
$
$
$
86,117
23,619
113,196
95,275
6,278
588,354
912,839
8,866
—
921,705
$
$
813
100
100
100
100
1,300
2,513
—
(685)
1,828
(1) Amount includes payment of approximately $0.7 million to exercise an option for us to purchase the land at Gaines Marketplace.
(2)
Scheduled maturities in 2018 include the $10.0 million balance on the unsecured revolving credit facility drawn as of December 31, 2014.
Revolving Credit Facility
In October 2014 we closed an amendment to our Master Loan Agreement which increased our revolving credit facility to $350.0
million (from $240.0 million), extended the maturity to October 2018 and modified interest rates. During 2014 we had net
repayments of $17.0 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 $4.1 million. These letters of credit reduce
borrowing availability under our bank facility. As of December 31, 2014, $335.9 million was available to be drawn on our $350
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, 2014, we were in compliance with these covenants.
Junior Subordinated Notes
Our junior subordinated notes have a variable rate of LIBOR plus 3.30%. The maturity date is January 2038.
F-23
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,
2014
2013
(In thousands)
$
$
54,278
2,705
3,882
3,239
280
64,384
$
$
40,386
2,297
2,637
2,940
333
48,593
The increase in other liabilities was primarily due to the acquisitions that were completed in 2014 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 $4.9 million, $3.1 million,
and $1.0 million for the years ended December 31, 2014, 2013 and 2012, 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.
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.
F-24
The table below presents the recorded amount of assets and liabilities measured at fair value on a recurring basis as of December 31,
2014 and 2013.
2014
Balance Sheet location
Total Fair
Value
Level 1
Level 2
Level 3
(In thousands)
Derivative assets - interest rate swaps
Other assets
Derivative liabilities - interest rate swaps
2013
Other liabilities
Derivative assets - interest rate swaps
Derivative liabilities - interest rate swaps
Other assets
Other liabilities
$
$
$
$
$
537
(2,705) $
— $
— $
$
537
(2,705) $
$
2,244
(2,297) $
— $
— $
$
2,244
(2,297) $
—
—
—
—
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 $874.7 million and $649.9 million as of December 31, 2014 and
2013, respectively, have fair values of approximately $900.9 million and $650.9 million, respectively. Variable rate debt’s fair
value is estimated to be the carrying values of $38.1 million and $100.1 million as of December 31, 2014 and 2013, respectively.
We classify our debt as Level 2.
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.
The table below presents the recorded amount of assets at the time they were marked to fair value during the years ended
December 31, 2014 and 2013 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, 2014 and 2013.
Assets
2014
Income producing properties
Land available for sale
Total
2013
Income producing properties
Land available for sale
Total
Total Fair
Value
Level 1
Level 2
(In thousands)
Level 3
Total
Impairment
$
$
$
$
28,754
13,972
42,726
26,520
5,568
32,088
$
$
$
$
— $
—
— $
— $
—
— $
— $
—
— $
— $
—
— $
28,754
13,972
42,726
26,520
5,568
32,088
$
$
$
$
(4,580)
(23,285)
(27,865)
(9,342)
(327)
(9,669)
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
F-25
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.
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, 2014, 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,
2014:
Underlying Debt
Hedge
Type
Notional
Value
(In thousands)
Fixed
Rate
Fair
Value
Expiration
Date
(In thousands)
Derivative Assets
Unsecured term loan facility
Cash Flow
Derivative Liabilities
Unsecured term loan facility
Unsecured term loan facility
Unsecured term loan facility
Unsecured term loan facility
Unsecured term loan facility
Unsecured term loan facility
Cash Flow
Cash Flow
Cash Flow
Cash Flow
Cash Flow
Cash Flow
$
$
$
$
50,000
50,000
1.4600% $
$
537
537
05/2020
75,000
30,000
25,000
5,000
15,000
10,000
160,000
1.2175% $
2.0480%
1.8500%
1.8400%
2.1500%
2.1500%
$
(749)
(772)
(469)
(250)
(90)
(375)
(2,705)
04/2016
10/2018
10/2018
10/2018
05/2020
05/2020
The effect of derivative financial instruments on our consolidated statements of operations for the year ended December 31, 2014
and 2013 is summarized as follows:
Amount of Gain (Loss)
Recognized in OCI on
Derivative
(Effective Portion)
Year Ended December 31,
2014
2013
(In thousands)
Location of Loss
Reclassified from
Accumulated OCI
into Income
(Effective Portion)
$
$
(1,707) $
2,244
Interest Expense
(408)
3,276
Interest Expense
(2,115) $
5,520 Total
Amount of Loss Reclassified
from
Accumulated OCI into
Income (Effective Portion)
Year Ended December 31,
2014
2013
(In thousands)
(661) $
(2,404)
(3,065) $
(424)
(1,847)
(2,271)
$
$
Derivatives in Cash Flow Hedging
Relationship
Interest rate contracts - assets
Interest rate contracts - liabilities
Total
F-26
13. Leases
Revenues
Approximate future minimum revenues from rentals under non-cancelable operating leases in effect at December 31, 2014,
assuming no new or renegotiated leases or option extensions on lease agreements and no early lease terminations were as follows:
Year Ending December 31,
2015
2016
2017
2018
2019
Thereafter
Total
Expenses
(In thousands)
168,855
$
154,060
129,156
111,991
95,029
378,131
1,037,222
$
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 $0.6 million for the year ended
December 31, 2014 and $0.7 million for each of the years ended December 31, 2013 and 2012. Approximate future rental payments
under our non-cancelable leases, assuming no option extensions are as follows:
Year Ending December 31,
2015
2016
2017
2018
2019
Thereafter
Total
(In thousands)
648
$
657
666
675
466
607
3,719
$
F-27
14. Earnings per Common Share
The following table sets forth the computation of basic earnings per share (“EPS”):
(Loss) income from continuing operations
Net loss (income) from continuing operations attributable to noncontrolling interest
Preferred share dividends
Allocation of continuing (income) loss to restricted share awards
(Loss) income 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 (loss) income available to common shareholders
Weighted average shares outstanding, Basic
(Loss) earnings per common share, Basic
Continuing operations
Discontinued operations
The following table sets forth the computation of diluted EPS:
(Loss) income from continuing operations
Net loss (income) 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 to restricted share awards
(Loss) income from continuing operations attributable to RPT
Income (loss) from discontinued operations
Net (income) loss from discontinued operations attributable to noncontrolling interest
Income (loss) from discontinued operations attributable to RPT
Net (loss) income 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
(Loss) earnings per common share, Diluted
Continuing operations
Discontinued operations
Year Ended December 31,
2014
2012
2013
(In thousands, except per share data)
(2,412) $
48
(7,250)
(180)
(9,794) $
—
—
—
—
(9,794) $
8,371
(355)
(7,250)
(102)
664
3,091
(110)
(20)
2,961
3,625
72,118
59,336
(0.14) $
—
(0.14) $
0.01
0.05
0.06
$
$
$
$
$
7,171
87
(7,250)
29
37
(79)
25
1
(53)
(16)
44,101
—
—
—
Year Ended December 31,
2014
2012
2013
(In thousands, except per share data)
(2,412) $
48
(7,250)
(180)
—
(9,794) $
—
—
—
(9,794) $
72,118
—
—
72,118
$
$
$
8,371
(355)
(7,250)
(102)
—
664
3,091
(110)
2,981
3,645
59,336
392
—
59,728
7,171
87
(7,250)
29
(23)
14
(79)
25
(54)
(40)
44,101
—
—
44,101
(0.14) $
—
(0.14) $
0.01
0.05
0.06
$
$
—
—
—
$
$
$
$
$
$
$
$
$
$
(1) For the year ended December 31, 2013 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.
F-28
15. Shareholders’ Equity
Underwritten public offerings
In August 2014 we completed an underwritten public offering of 6.9 million newly issued common shares of beneficial interest
at $16.44 per share which included 0.9 million common shares sold in connection with the full exercise of the underwriters' option
to purchase additional shares. Our total net proceeds, after deducting expenses, were approximately $108.7 million.
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.
Controlled equity offerings
In 2014, through our controlled equity offering we issued 3.8 million common shares, at an average share price of $16.50, and
received approximately $61.7 million in net proceeds, after sales commissions and fees of $0.9 million.
In 2013, we issued 5.4 million common shares through our controlled equity offerings generating approximately $81.7 million in
net proceeds, after sales commissions and fees of $1.2 million. The average share price in 2013 was $15.10 per share.
Our controlled equity offerings were issued under offerings registered in 2013 whereby we may sell up to 8.0 million common
shares of beneficial interest. As of December 31, 2014 we had 4.0 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
As of December 31, 2014 we have one share-based compensation plan in effect, 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 for up to 2 million of
our common shares, units or stock options, of which 1.7 million is available for issuance as of December 31, 2014.
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, 2014,
there were 127,248 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, 2014, there were 28,000 options exercisable.
We recognized total share-based compensation expense of $4.6 million, $3.6 million, and $2.6 million for 2014, 2013, and 2012,
respectively.
Restricted Stock Share-Based Compensation
Beginning in 2012 the compensation committee determined that the LTIP award would consist of 50% service based restricted
shares and 50% performance-based cash awards. The service-based restricted share awards include a five year vesting period and
F-29
the compensation expense is recognized on a graded vesting basis We recognized expense related to restricted share grants of
$2.1 million, $2.1 million and $2.2 million during the years ended December 31, 2014 , 2013, and 2012, respectively.
The performance shares 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 recognize the compensation expense ratably over the requisite
service period and we are required to re-value the performance cash awards at the end of each quarter. We use 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 $2.5 million, $1.5 million and $0.4 million related to the cash awards during the year ended December 31, 2014, 2013 and
2012, respectively.
A summary of the activity of service based restricted shares under the LTIP for the years ended December 31, 2014, 2013 and
2012 is presented below:
Outstanding, beginning of the year
Granted
Vested
Forfeited or expired
Outstanding, end of the year
2014
2013
2012
Number of
Shares
375,813
$
286,954
(281,851)
(15,392)
365,524
Weighted-
Average
Grant Date
Fair Value
13.71
16.70
12.69
14.69
14.92
Number of
Shares
286,306
$
293,732
(197,014)
(7,211)
375,813
Weighted-
Average
Grant Date
Fair Value
11.83
15.68
10.07
13.38
13.71
Number of
Shares
229,722
$
135,223
(68,683)
(9,956)
286,306
Weighted-
Average
Grant Date
Fair Value
12.40
11.30
11.47
11.95
11.83
As of December 31, 2014 there was approximately $4.6 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 the year ended December 31, 2012. 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, 2014, 2013 and 2012.
F-30
The following table reflects the stock option activity for all plans described above:
Outstanding, beginning of the year
Granted
Exercised
Forfeited or expired
Outstanding, end of the year
Exercisable, end of the year
2014
2013
2012
Shares
Under
Option
190,993
Weighted-
Average
Exercise Price
30.34
$
Shares
Under
Option
227,743
Weighted-
Average
Exercise Price
27.81
$
Shares
Under
Option
272,201
Weighted-
Average
Exercise Price
25.98
$
—
—
(35,745)
155,248
155,248
$
$
—
—
27.73
30.94
—
(25,000)
(11,750)
190,993
30.94
190,993
$
$
9.61
25.34
30.34
—
(25,000)
(19,458)
227,743
30.34
202,743
$
$
—
9.61
25.65
27.81
30.05
The following tables summarize information about options outstanding at December 31, 2014:
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
40,878
46,430
67,940
155,248
1.5
2.0
3.2
2.4
$
$
27.00
29.02
34.62
30.94
40,878
$
46,430
67,940
155,248
$
27.00
29.02
34.62
30.94
We received cash of approximately $0.2 million from options exercised during each of the years ended December 31, 2013 and
2012. 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, 2014, we had a federal and state deferred tax asset of $0.2 million, net of a valuation allowance of $10.9
million. We believe that it is more likely than not that the results of future operations will generate sufficient taxable income to
recognize the net deferred tax assets. These future operations are primarily dependent upon the profitability of our TRSs, the timing
and amounts of gains on land sales, and other factors affecting the results of operations of the TRSs. The valuation allowances
relate to net operating loss carryforwards and tax basis differences where there is uncertainty regarding their realizability.
F-31
During the years ended December 31, 2014 and 2013, we recorded an income tax provision of approximately $54,000 and $64,000,
respectively.
We had no unrecognized tax benefits as of or during the three year period ended December 31, 2014. We expect no significant
increases or decreases in unrecognized tax benefits due to changes in tax positions within one year of December 31, 2014. No
material interest or penalties relating to income taxes were recognized in the statement of operations for the years ended
December 31, 2014, 2013, and 2012 or in the consolidated balance sheets as of December 31, 2014, 2013, and 2012. It is our
accounting policy to classify interest and penalties relating to unrecognized tax benefits as tax expense. As of December 31, 2014,
returns for the calendar years 2011 through 2014 remain subject to examination by the Internal Revenue Service (“IRS”) and
various state and local tax jurisdictions. As of December 31, 2014, certain returns for calendar year 2010 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.
18. Commitments and Contingencies
Construction Costs
In connection with the development and expansion of various shopping centers as of December 31, 2014, we had entered into
agreements for construction costs of approximately $10.1 million.
Litigation
We are currently involved in certain litigation arising in the ordinary course of business.
Environmental Matters
We are subject to numerous federal, state and local environmental laws, ordinances and regulations in the areas where we
own or operate properties. We are not aware of any contamination which may have been caused by us or any of our tenants that
would have a material effect on our consolidated financial statements.
As part of our risk management activities, we have applied and been accepted into state sponsored environmental programs which
will expedite and assure satisfactory compliance with environmental laws and regulations should contaminants need to be
remediated. We also have an environmental insurance policy that covers us against third party liabilities and remediation costs.
While we believe that we do not have any material exposure to environmental remediation costs, we cannot give absolute assurance
that changes in the law or new discoveries of contamination will not result in additional liabilities to us.
19. Subsequent Events
We have evaluated subsequent events through the date that the consolidated financial statements were issued.
In February 2015 we finalized the purchase of land subject to the ground lease at Gaines Marketplace and sold a portion to the
shadow anchor tenant. Net proceeds to us were approximately $3.4 million.
F-32
20. Selected Quarterly Financial Data (Unaudited)
The following table sets forth summarized quarterly financial data for the year ended December 31, 2014:
Total revenue
Operating income (loss)
Net income (loss) attributable to RPT
Net income (loss) available to common shareholders
Earnings (loss) per common share, basic: (1)
Earnings (loss) per common share, diluted:(1)
Quarters Ended 2014
March 31
June 30
September 30
December 31
(In thousands, except per share amounts)
$
$
$
$
$
$
50,133
12,403
2,761
860
0.01
0.01
$
$
$
$
$
$
49,930
6,732
1,120
$
$
$
(727) $
(0.01) $
(0.01) $
55,143
14,782
6,263
4,270
0.06
0.06
$
$
$
$
$
$
63,157
(10,587)
(12,556)
(14,017)
(0.18)
(0.18)
(1)
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, 2014.
The following table sets forth summarized quarterly financial data for the year ended December 31, 2013:
Total revenue
Operating income (loss)
Income (loss) from continuing operations
Income from discontinued operations
Net income (loss) attributable to RPT
Net income (loss) available to common shareholders
Earnings (loss) per common share, basic: (2)
Earnings (loss) per common share, diluted:(2)
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
3,237
0.06
0.06
$
$
$
$
$
$
$
$
42,703
11,310
4,093
1,689
5,782
3,761
0.06
0.06
$
$
$
$
$
$
$
$
45,411
13,110
4,816
899
5,715
3,701
0.06
0.06
$
$
$
$
$
$
$
$
48,016
12,479
(5,365)
56
(5,309)
(6,952)
(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.
F-33
Property
Auburn Mile
Bridgewater Falls
Buttermilk Towne Center
Central Plaza
Centre at Woodstock
Clinton Pointe
Clinton Valley
Cocoa Commons
Conyers Crossing
Coral Creek Shops
Crossroads Centre
Cypress Point
Deer Creek Shopping Center
Deer Grove Centre
Deerfield Towne Center
East Town Plaza
Fairlane Meadows
Front Range Village
Gaines Marketplace
Harvest Junction North
Harvest Junction South
Heritage Place
Holcomb Center
Hoover Eleven
Horizon Village
Hunters Square
Jackson Crossing
Jackson West
Lakeland Park Center
Lakeshore Marketplace
Liberty Square
Livonia Plaza
Marketplace of Delray
Merchants' Square
RAMCO-GERSHENSON PROPERTIES TRUST
SCHEDULE III
SUMMARY OF REAL ESTATE AND ACCUMULATED DEPRECIATION
December 31, 2014
(in thousands of dollars)
INITIAL COST
TO COMPANY
Location
Encumbrances
Land
Building &
Improvements
Capitalized
Subsequent to
Acquisition or
Improvements,
Net of
Impairments
GROSS AMOUNTS AT WHICH
CARRIED AT CLOSE OF PERIOD
Land
Building &
Improvements
Total
Accumulated
Depreciation
Date Constructed
MI
OH
KY
MO
GA
MI
MI
MI
GA
FL
OH
FL
MO
IL
OH
WI
MI
CO
MI
CO
CO
MO
GA
MI
GA
MI
MI
MI
FL
MI
IL
MI
FL
IN
$
— $
15,704
$
— $
(7,110)
$
5,917
$
2,677
$
8,594
$
58,295
—
—
—
—
—
—
—
—
3,618
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
23,481
16,153
—
—
—
—
—
—
9,831
13,249
10,250
1,880
1,175
1,500
2,188
729
1,565
5,800
2,968
6,070
8,408
6,868
1,768
3,255
20,910
226
8,254
6,241
13,899
658
3,308
1,133
7,673
2,249
2,806
15,365
2,018
2,670
1,317
7,922
4,997
76,446
21,103
10,909
10,801
10,499
13,498
7,613
6,562
14,085
20,709
17,637
18,105
8,197
78,551
16,216
17,620
80,600
6,782
25,232
22,856
22,506
5,953
29,778
10,200
52,774
20,237
6,270
—
18,114
11,862
11,786
18,910
18,346
5
—
(57)
(53)
541
10,585
(9)
609
826
3,507
269
82
1,117
(235)
3,121
5,127
—
4,225
1,602
257
1,071
10,079
4,576
161
689
17,718
6,261
33,371
5,415
38
421
1,037
(199)
F-34
9,831
13,249
10,250
1,987
1,175
1,625
2,188
729
1,572
4,904
2,968
6,070
8,408
6,868
1,768
3,260
20,910
3,646
7,344
6,241
13,899
658
3,304
1,143
7,652
2,249
2,691
15,365
3,402
2,670
1,317
7,922
4,997
76,451
21,103
10,852
10,641
11,040
23,958
7,604
7,171
14,904
25,112
17,906
18,187
9,314
78,316
19,337
22,742
80,600
7,587
27,744
23,113
23,577
16,032
34,358
10,351
53,484
37,955
12,646
33,371
22,145
11,900
12,207
19,947
18,147
86,282
34,352
21,102
12,628
12,215
25,583
9,792
7,900
16,476
30,016
20,874
24,257
17,722
85,184
21,105
26,002
101,510
11,233
35,088
29,354
37,476
16,690
37,662
11,494
61,136
40,204
15,337
48,736
25,547
14,570
13,524
27,869
23,144
INITIAL COST
TO COMPANY
Location
Encumbrances
Land
Building &
Improvements
Capitalized
Subsequent to
Acquisition or
Improvements,
Net of
Impairments
GROSS AMOUNTS AT WHICH
CARRIED AT CLOSE OF PERIOD
Land
Building &
Improvements
Total
Accumulated
Depreciation
Date Constructed
Property
Mission Bay
Mount Prospect Plaza
Nagawaukee Shopping Center
New Towne Plaza
Oak Brook Square
Parkway Shops
Promenade at Pleasant Hill
River City Marketplace
River Crossing Centre
Rivertowne Square
Roseville Towne Center
Rossford Pointe
Shoppes of Lakeland
Shops at Old Orchard
Southfield Plaza
Spring Meadows Place (1)
Tel-Twelve
The Crossroads
The Shoppes at Fox River
The Town Center at Aquia Office Building
Town & Country Crossing
Treasure Coast Commons
Troy Marketplace
Troy Marketplace II
Troy Towne Center
Village Lakes Shopping Center
Village Plaza
Vista Plaza
West Broward
West Allis Towne Centre
West Oaks I
West Oaks II (2)
Winchester Center
FL
IL
WI
MI
MI
FL
GA
FL
FL
FL
MI
OH
FL
MI
MI
OH
MI
FL
WI
VA
MO
FL
MI
MI
OH
FL
FL
FL
FL
WI
MI
MI
MI
Woodbury Lakes
Land Available for Future Development (3)
Land Available for Sale (4)
MN
Various
Various
—
—
8,448
18,621
—
—
—
110,000
—
—
—
—
—
—
—
28,731
—
—
—
13,827
—
7,856
20,941
—
—
—
8,698
10,376
—
—
25,669
—
—
—
33,975
11,633
7,549
817
955
3,145
3,891
19,768
728
954
1,403
796
5,503
2,864
1,121
2,646
3,819
1,850
8,534
—
8,395
2,924
4,581
3,790
930
862
2,531
3,667
5,339
1,866
—
1,391
5,667
10,411
28,266
10,931
48,159
21,767
30,898
7,354
8,591
—
22,520
73,859
6,459
8,587
13,195
3,087
20,236
16,698
10,777
16,758
43,181
16,650
26,227
—
26,465
10,644
19,041
10,292
8,372
7,768
12,688
16,769
11,521
16,789
6,304
12,519
18,559
55,635
14,026
27,252
2,658
1,022
156
5,919
5,930
17,877
4,007
8,605
53
1,804
3,445
1,762
929
149
782
5,611
32,197
708
5,928
14,366
2,224
(2,024)
110
468
(488)
5,883
409
231
75
13,850
13,584
7,350
518
96
(14,843)
(16,471)
33,975
11,633
7,549
817
955
3,145
3,440
11,140
728
954
582
797
5,503
2,864
1,121
2,637
3,819
1,857
9,750
4,615
8,395
2,924
4,581
3,790
813
862
2,531
3,667
5,339
1,866
1,768
1,391
5,667
10,411
27,167
17,449
50,817
22,789
31,054
13,273
14,521
17,877
26,978
91,092
6,512
10,391
17,461
4,848
21,165
16,847
11,559
22,378
75,378
17,351
30,939
9,751
28,689
8,620
19,151
10,760
8,001
13,651
13,097
17,000
11,596
30,639
18,120
19,869
19,077
55,731
282
4,263
84,792
34,422
38,603
14,090
15,476
21,022
30,418
102,232
7,240
11,345
18,043
5,645
26,668
19,711
12,680
25,015
79,197
19,208
40,689
14,366
37,084
11,544
23,732
14,550
8,814
14,513
15,628
20,667
16,935
32,505
19,888
21,260
24,744
66,142
27,449
21,712
TOTALS
(1) The property's mortgage loan is cross-collateralized with West Oaks II.
(2) The property's mortgage loan is cross-collateralized with a portion of Spring Meadows Place.
(3) Primarily in Hartland, MI, Lakeland, FL and Jacksonville, FL.
(4) Primarily in Stafford County, VA and Hartland, MI. Includes portion of retail and office outparcels with depreciable assets.
1,380,404
354,714
398,356
$
$
$
$
229,927
$
394,681
$
1,614,006
$ 2,008,687
$
287,177
F-35
SCHEDULE III
REAL ESTATE INVESTMENT AND ACCUMULATED DEPRECIATION
December 31, 2014
Reconciliation of total real estate carrying value:
Balance at beginning of year
Additions during period:
Acquisition
Improvements
Deductions during period:
Cost of real estate sold/written off
Impairment
Balance at end of year
Reconciliation of accumulated depreciation:
Balance at beginning of year
Depreciation Expense
Cost of real estate sold/written off
Balance at end of year
Aggregate cost for federal income tax purposes
2014
Year ended December 31,
2013
(In thousands)
1,727,191
$
1,217,712
$
289,340
70,982
(50,961)
(27,865)
2,008,687
253,292
50,081
(16,196)
287,177
2,115,287
$
$
$
$
530,697
38,613
(50,162)
(9,669)
1,727,191
237,462
39,469
(23,639)
253,292
1,781,084
$
$
$
$
$
$
$
$
$
F-36
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PRO PE RT Y SUM M A RY
PROPERTY NAME
LOCATION
OWNER-
SHIP %
TOTAL
OWNED
GLA
PROPERTY NAME
LOCATION
OWNER-
SHIP %
459,307
159,413
176,960
795,680
90,116
109,312
167,280
115,586
210,965
240,789
331,105
264,748
89,114
557,087
62,038
141,943
183,842
120,092
313,913
92,979
168,751
155,770
103,956
109,761
Jackson Crossing
Jackson West
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 1
The Shops at
Old Orchard
Troy Marketplace
West Oaks I
Shopping Center
West Oaks II
Shopping Center
Winchester Center
Total
MINNESOTA (1)
Woodbury Lakes
Total
MISSOURI (4)
Central Plaza
Deer Creek
Jackson
Jackson
Norton Shores
Livonia
Livonia
Canton Township
Flint
Roseville
Dearborn
Southfield
Southfield
Auburn Hills
West Bloomfield
Troy
100%
100%
100%
100%
30%
100%
100%
100%
100%
100%
100%
100%
100%
100%
Novi
100%
243,987
Novi
Rochester Hills
100%
100%
Woodbury
100%
167,954
314,575
4,944,743
305,086
305,086
Ballwin
100%
166,431
152,973
3,782,120
Shopping Center
Heritage Place
Town & Country Crossing
Total
Maplewood
Creve Coeur
Town & Country
100%
100%
100%
Chester
20%
86,748
170,475
106,003
97,001
154,700
261,808
876,735
235,840
107,427
163,054
300,682
134,012
941,015
248,369
139,753
388,122
277,533
277,533
NEW JERSEY (1)
Chester Springs
Shopping Center
Total
OHIO (8)
Bridgewater Falls
Crossroads Centre
Deerfield Towne Center
Olentangy Plaza
Rossford Pointe
Spring Meadows Place
The Shops on
Lane Avenue
Troy Towne Center
Total
VIRGINIA (2)
The Town Center at Aquia
The Town Center at
Aquia Office
Total
WISCONSIN (4)
Hamilton
Rossford
Mason
Columbus
Rossford
Holland
Upper Arlington
Troy
Stafford County
Stafford County
East Town Plaza
Nagawaukee Center
The Shoppes at Fox River Waukesha
West Allis Towne Centre
West Allis
Total
Madison
Delafield
100%
100%
100%
20%
100%
100%
20%
100%
100%
100%
100%
100%
100%
100%
TOTAL
OWNED
GLA
402,326
209,800
342,991
137,391
272,568
192,587
152,073
76,998
157,225
190,099
523,411
90,553
96,768
217,754
208,144
269,105
148,630
792,310
222,930
222,930
503,502
344,045
460,675
253,204
47,477
259,362
170,719
144,485
2,183,469
34,720
98,147
132,867
208,472
219,538
237,392
326,271
991,673
PORTFOLIO TOTAL
16,886,513
COLORADO (3)
Front Range Village
Harvest Junction North
Harvest Junction South
Total
FLORIDA (21)
Cocoa Commons
Coral Creek Shops
Cypress Point
Kissimmee West
Lakeland Park Center
Marketplace of Delray
Martin Square
Mission Bay Plaza
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 (6)
Centre at Woodstock
Conyers Crossing
Holcomb Center
Horizon Village
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
KENTUCKY (1)
Fort Collins
Longmont
Longmont
Cocoa
Coconut Creek
Clearwater
Kissimmee
Lakeland
Delray Beach
Stuart
Boca Raton
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
Duluth
Duluth
Palatine
Wauconda
Glen Ellyn
Mount Prospect
Rolling Meadows
Carmel
Indianapolis
100%
100%
100%
100%
100%
100%
7%
100%
100%
30%
100%
100%
100%
100%
100%
100%
100%
20%
100%
100%
30%
100%
100%
100%
100%
100%
100%
100%
20%
100%
100%
100%
20%
100%
20%
100%
7%
Buttermilk Towne Center
Total
Crescent Springs
100%
MARYLAND (1)
Crofton Centre
Total
MICHIGAN (22)
Clinton Pointe
Clinton Valley
Gaines Marketplace
Hoover Eleven
Hunter’s Square
Crofton
20%
252,230
252,230
Clinton Township
Sterling Heights
Gaines Township
Warren
Farmington Hills
100%
100%
100%
100%
100%
135,330
200,935
184,376
280,719
354,323
A BOUT R A M C O - G E RS H E NS O N
PRO PE RTIE S TRUS T
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 large, multi-anchor shopping centers primarily
in a dozen of the largest metropolitan markets
in the United States. At December 31, 2014,
the Company owned interests in and managed a
portfolio of 80 shopping centers and one office
building with approximately 16.9 million square
feet of gross leasable area. At December 31,
2014, the Company’s core operating portfolio
was 95.5% leased.
C O M PA NY IN FO RM ATIO N
A s o f M a r c h 2 015
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—Member
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
David J. Nettina
President and co-Chief Executive Officer
Career Management, LLC
Audit Committee—
Financial Expert and Chairman
Nominating and Corporate Governance
Committee—Member
Joel M. Pashcow
Managing Member
Nassau Capital LLC
Compensation Committee—Member
Executive Committee—Chairman
Nominating and Governance
Committee—Member
Mark K. Rosenfeld
Chairman and CEO
Wilherst Developers, Inc.
Audit Committee—
Financial Expert and Member
Compensation Committee—Member
Nominating and Corporate Governance
Committee—Chairman
Michael A. Ward
Private Investor
Executive Committee—Member
Nominating and Governance
Committee—Member
Compensation Committee—Member
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
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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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 May 24, 2014, the Company submitted
the Annual CEO Certification to the NYSE,
pursuant to Section 303A.12 of the NYSE’s
listing standards, whereby our CEO certi-
fied that he is not aware of any violation
by the Trust of the NYSE’s corporate
governance listing standards as of the
date of the certification. In addition,
we have filed with the Securities and
Exchange Commission, as exhibits to
our Quarterly Reports on Form 10-Q for
the quarters ended March 31, June 30
and September 30, 2014, and our Annual
Report on Form 10-K for the year ended
December 31, 2014, certifications by
our CEO and CFO in accordance with
Sections 302 and 906 of the Sarbanes-
Oxley Act of 2002.
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Front Range Village
31500 Northwestern Highway, Suite 300
Farmington Hills, MI 48334
Tel: (248) 350-9900 Fax: (248) 350-9925
www.rgpt.com
www.rgpt.com