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ENVISIONING THE FUTURE OF RETAIL
2016 ANNUAL REPORT
ABOUT RAMCO-GERSHENSON
PROPERTIES TRUST
Ramco-Gershenson Properties Trust (NYSE:RPT) is a
premier, national publicly-traded shopping center real
estate investment trust (REIT) based in Farmington Hills,
Michigan. The Company’s primary business is the ownership
and management of regional dominant and urban-oriented
shopping centers in the 40 largest metropolitan markets
in the United States. At December 31, 2016, the Company
owned interests in and managed a portfolio of 65 shopping
centers and two joint venture properties. At December 31,
2016, the Company’s consolidated portfolio was 94.4% leased.
Ramco-Gershenson is a fully-integrated REIT that is self-
administered and self-managed. For additional information
about the Company, please visit www.rgpt.com or follow
Ramco-Gershenson at Twitter@RamcoGershenson and
facebook.com/ramcogershenson/.
BEST-IN-CLASS SMALL SHOP AND ANCHOR TENANTS
DEERFIELD TOWNE CENTER
PARKWAY SHOPS
SELECTED FINANCIAL HIGHLIGHTS
(Dollars in thousands, except per share amounts)
Total Revenues
Funds from Operations
Operating Funds from Operations
Per Share
Funds from Operations, Diluted Shares
Operating Funds from Operations, Diluted Shares
Cash Distributions Declared
Total Assets
Mortgages and Notes Payable
Total Liabilities
Total Shareholders’ Equity
YEARS ENDED DECEMBER 31,
2016
$ 260,930
$ 118,685
$ 119,433
2015
2014
2013
2012
$ 251,790
$ 119,556
$ 117,765
$ 218,363 $ 170,068 $ 125,225
$ 77,574 $ 79,861 $ 47,816
$ 102,668 $ 77,571 $ 49,270
$1.35
$1.36
$0.86
$1.36
$1.34
$0.95
$1.27
$1.16
$1.13
$1.02
$1.05
$0.82
$0.78
$0.71
$0.66
$2,061,498
$1,021,223
$1,169,807
$ 891,691
$2,136,082
$1,083,711
$1,231,616
$ 904,466
$1,951,743 $1,653,146 $1,166,629
$ 917,658 $ 746,661 $ 535,208
$1,055,335 $ 857,057 $ 608,668
$ 896,408 $ 796,089 $ 557,961
Consolidated Properties
JV Properties
Consolidated and JV Properties—Leased %
Consolidated and JV Properties—Occupied %
65
2
94.2%
93.2%
71
3
94.4%
93.8%
68
13
94.6%
94.0%
67
14
94.6%
93.3%
53
26
93.8%
93.2%
LAKELAND PARK CENTER
TROY MARKETPLACE
1
IN 2016, the significant changes that have buffeted the shopping center industry over the last several
years continued and accelerated. This evolution requires an understanding of these forces and the need to stay
ahead of the curve as we transform our portfolio to benefit from their impact. Factors including bankruptcies and
liquidations of a number of national retailers, macro-economic concerns heightened by the Presidential Election,
the increasing impact of e-commerce on bricks and mortar retailing and shifting consumer tastes all dictate a
constant re-evaluation of the centers we want to own, as well as acquire, and the tenants who will occupy them.
Thus, 2016 was a time when we worked to refine our long-term business strategy to ensure that our Company
would be well-positioned to benefit from these changes. As a result, our future capital allocation decisions
in the areas of market selection, shopping center type, merchandise mix, and customer experience will be
influenced by the ongoing flight of healthy, successful retailers to market dominant, fundamentally great real
estate as they insulate themselves from market risk by rationalizing their store count as well as store sizes
in an Omni-channel, e-commerce environment. Shopping centers will also be impacted by the convergence
of retailing that offers both value and a rewarding experience
for the consumer as tastes and demographics evolve.
We believe that focusing on these elements ensures
that our business model will be relevant in any future
retail environment.
Therefore, if the future success of our industry will be
predicated on one’s ability to understand and adapt to these
changes, then those shopping center owners who will thrive
tomorrow must not only have market dominant locations,
but must also merchandise their assets with those retailers
who understand the changing trends and rise to meet them.
All of these factors are driving both our short and long-term
management and investment strategies.
Our plans for 2017 include the following:
First, we are expanding our reach into key growth
markets beyond having a significant Mid-west focus.
This will involve selling approximately $250 million
PROVIDENCE MARKETPLACE
2
CENTENNIAL SHOPS
of non-strategic Michigan properties, specifically those
centers outside of Oakland County in metropolitan
Detroit, and acquiring approximately $250 million
of market dominant shopping centers, located in
several of the top 40 largest MSAs. These acquisitions
and dispositions will substantially complete the
transformation of our portfolio driving a healthy increase
in net asset value (NAV). Important characteristics of
those markets, which are the subject of our focus include
high population, employment and household income
growth. On the asset sales side, the sale of our Michigan
shopping centers outside of Oakland County will reduce
our rental exposure in Michigan to less than 20% by
the end of 2017. Further, by limiting our presence to
Oakland County we will have concentrated our Michigan
Dear Shareholders: DYNAMIC
LEADERSHIP
TEAM FOCUSED
ON LONG-TERM
VALUE
assets in the 24th wealthiest county in the nation and one of only approximately 30
counties, or 1% of all U.S. counties, with a AAA credit rating.
As of this date, we have made significant progress toward executing on this first
goal by acquiring two shopping centers in 2017 with a value of approximately
$170 million, and selling one center in Flint, Michigan as well as preparing to close
Woodbury Lakes,
on the sale of a second Michigan asset which together will generate approximately
St. Paul MN
$28.5 million. We have other Michigan shopping centers in the market and the
proceeds from these sales will be used to fund our acquisitions.
Below, from left to right:
John Hendrickson,
Executive Vice President
and Chief Operating
Officer; Dennis
Gershenson, President
and Chief Executive
Officer; and Geoffrey
Bedrosian, Executive Vice
President, Chief Financial
Officer and Secretary
Our second objective for this year involves the deployment of our capital raised from the sales
of our non-core assets into two types of shopping centers that will deliver the greatest long-term
growth and value creation for our shareholders. The two center types are:
• Regional-dominant centers, which combine the best of value, grocery, specialty small shops
and entertainment, and that possess the potential for additional value creation through large-
scale, strategic redevelopments.
• In-fill, urban-oriented centers with significant barriers to entry. These centers cater to large
daytime and evening populations with significant entertainment and restaurant components
that will generate ever increasing same-property NOI growth. There is also potential at these
centers to add value through creative redevelopments.
Our expansion into new markets as well as the pursuit of the two shopping center formats are
reflected in our recent acquisitions:
• Providence Marketplace, an 830,000 square foot regional dominant center in Mt. Juliet,
Tennessee, a burgeoning Nashville suburb.
• Centennial Shops, an 85,000 square foot in-fill, urban-oriented shopping center in Edina,
Minnesota, a prosperous sub-market of Minneapolis.
• Webster Place, a 135,000 square foot in-fill, urban-oriented center in Lincoln Park, an affluent
Chicago neighborhood.
All three of these acquisitions are located in 18 hour cities defined by above-average urban
population growth, a thriving economy and a lower cost of living.
Our third focus will involve our unrelenting effort to maximize the value of each of our core
shopping centers, including our recent acquisitions. Therefore, in 2017 we will continue
to grow our redevelopment program with an emphasis on densifying our properties and
creating a sense of place in an effort to meet the changing dynamic within our industry. These
commitments to bringing additional uses to our centers as well as place making coupled
with our one-of-a-kind Community First marketing programs will fortify our centers
as the retail destination of choice for both the most successful retailers and consumers
over the long term. All of our energies, for this year and in the future, are bent toward
ensuring a portfolio of high-quality shopping centers that satisfy the requirements of
our tenants and the needs of our trade area patrons.
As we look forward to the opportunities that await our Company in 2017 and beyond,
we are confident that we are envisioning the future of retail today to ensure long-term
value creation for our shareholders.
Thank you for your continued support.
DENNIS GERSHENSON
President and Chief Executive Officer
3
BEST-IN-CLASS VALUE AND GROCERY TENANTS
WINCHESTER CENTER
THE SHOPPES AT FOX RIVER
THE SHOPS AT OLD ORCHARD
HUNTER’S SQUARE
OUR CENTERS
CONTINUALLY
ATTRACT
BEST-IN-CLASS
RETAILERS
TOWN & COUNTRY CROSSING
4
WEST OAKS
BEST-IN-CLASS
RESTAURANT TENANTS
HARVEST JUNCTION
WOODBURY LAKES
OUR APPROACH TO
MANAGING FOR THE
FUTURE DIFFERENTIATES
AND POSITIONS US AS
THE BEST OF THE SMALL
CAP REITS
OUR STRONG MARKETS:
• Focused on the top 40 MSAs in the United States
that present the best opportunity to capitalize on
growth in population, industry, average household
incomes and education levels.
• Regionally dominant markets and/or in-fill urban
locations that provide superior risk adjusted returns.
OUR HIGH-QUALITY CENTERS:
• Large, diverse shopping centers typically with more
than one anchor including leading value and grocer
tenants as well as multiple small shop spaces that lend
themselves to continual revitalization and growth
in any retail environment.
• Urban-oriented, in-fill located centers that cater
to large daytime populations with significant
entertainment/restaurant components—that generate
ever-increasing cash flow through roll-over rental
increases, and continual upgrades to tenancies. Also,
potential for mixed-use partnerships.
OUR COMPELLING GROWTH AND
VALUE CREATION STRATEGY:
• Strong rental growth in existing (contractual rent
steps), new and renewal leases capitalizing on our
position as the best property in any given market.
• Commitment to tactical and strategic redevelopments
that generate strong returns on invested capital.
• A low-risk, flexible capital structure that provides a
solid foundation in all economic cycles.
OUR SOLID OPERATING PLATFORM
AND TEAM:
• Strengthened, cohesive management team that is
proactively positioning the Company to benefit from
the future of retail to deliver long-term value.
• A four-point management philosophy focused on:
• Market and location selection.
• Merchandise mix.
• Placemaking.
• Community First events and entertainment.
THE SHOPS ON LANE AVENUE
5
WE ARE FOCUSED
ON THE TOP 40 MSAs
IN THE UNITED STATES
MINNEAPOLIS-ST. PAUL
#16
MSA
CHICAGO
#3
MSA
MILWAUKEE
#39
MSA
S.E. MICHIGAN
#14
MSA
2
1
2
3
3
1
CINCINNATI
#28
MSA
JACKSONVILLE
#40
MSA
S.E. FLORIDA
#8
MSA
DENVER
#19
MSA
ATLANTA
#9
MSA
ST. LOUIS
#20
MSA
NASHVILLE #36
MSA
TAMPA #18
MSA
• Acquisitions: Focused on regional-dominant and urban-oriented, in-fill locations.
• Redevelopments: Creating one-of-a-kind destinations that feature the best value, grocer
and specialty tenants.
6
1
2
3
1
2
3
RECENT ACQUISITIONS
CENTENNIAL SHOPS
Edina, MN, 4th Quarter 2016 acquisition
Square feet: 85,000
Major tenants: The Container Store, West Elm, Pinstripes
WEBSTER PLACE
Lincoln Park, IL, 1st Quarter 2017 acquisition
Square feet: 135,000
Major tenants: Regal Cinemas, Webster Place Athletic Club,
Barnes and Noble
PROVIDENCE MARKETPLACE
Mt. Juliet, TN, 1st Quarter 2017 acquisition
Square feet: 830,000
Major tenants: TJ Maxx/Home Goods, Regal Cinemas, Dick’s
Sporting Goods, JoAnn Fabrics, Ross Dress for Less, Best Buy,
PetSmart, Staples, Book A Million, Old Navy, JC Penney, Belk
STRATEGIC REDEVELOPMENTS
FRONT RANGE VILLAGE
Fort Collins, CO
Square feet: 793,000
Major tenants: Toys “R” Us, Charming Charlie, Target, Ulta,
Staples, Sprouts Farmers Market, Microsoft Corporation,
Lowes, Fort Collins Library, Cost Plus World Market, DSW
Shoe Warehouse, Party City
WOODBURY LAKES
Woodbury, MN
Square feet: 319,000
Major tenants: Michaels Stores, buybuy BABY, Victoria’s
Secret, Trader Joe’s, Gap, Charming Charlie, H & M, DSW
Shoe Warehouse
DEERFIELD TOWNE CENTER
Mason, OH
Square feet: 463,000
Major tenants: Deerfield 16, Whole Foods, ULTA Beauty, Dick’s
Sporting Goods, Charming Charlie’s, buybuy BABY, Bed Bath &
Beyond, Ashley Furniture HomeStore, Crunch Fitness
SOCIAL
RESPONSIBILITY
Ramco-Gershenson Properties Trust is committed to promoting the interests of
society and the environment by thoughtfully considering and responding to the
impact of the Company’s business activities as they relate to its key stakeholders,
including tenants, employees, shareholders, and host communities.
EMPLOYEE
CHARITABLE
GIVING
THE POWER TO GIVE
The mission of Ramco-
Gershenson Properties Trust’s
Employee Charitable Giving
Program is to help meet the needs
of local, regional and national
charities that are committed to
improving overall quality of life.
2017 FEATURED CHARITIES
SOCIAL COMMUNITY
Ramco-Gershenson Properties Trust maintains a Social Community to
engage with our investors, retailers and shoppers about all topics related
to our business and our properties through different forms of social and
digital media. Our Social Community page on our corporate website
provides a “one stop shop” for our followers to discover what exciting news
we have to share, what is happening in the real estate investment world
and at our properties and how we’re continually working to distinguish
ourselves in our industry.
COMMUNITY FIRST
BUILDING CUSTOMER AND COMMUNITY LOYALTY
Ramco-Gershenson Properties Trust’s Community First program enhances
the dynamism of our shopping centers and celebrates our customers
and communities. Our Community First program is designed to increase
consumer and tenant demand, promote customer loyalty, strengthen
consumer perceptions and create long-term value for our properties.
In 2016:
• Total number of event participants: 37,080
• Total number of community partners: 51
• Total number of tenant participants: 352
• Total number of website visits: 767,800
About Us 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, 2016
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, 2016) was $1,525,818,861. As of February 16, 2017 there were outstanding 79,280,029 shares
of Common Stock.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the proxy statement for the annual meeting of shareholders to be held May 16, 2017 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
PART II
5. Market for Registrant’s Common Equity, Related Stockholder Matters and
Issuer Purchases of Equity Securities
Selected Financial Data
6.
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
5
13
14
22
22
23
25
26
39
39
40
40
40
41
41
41
41
41
42
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 twelve of the largest metropolitan markets in the United States. We aim to own multiple properties in each
of these metropolitan areas to leverage our management platform and to operate our centers efficiently in these markets. 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.
As of December 31, 2016, our property portfolio consisted of 65 wholly-owned shopping centers comprising approximately 14.5
million square feet. We also have ownership interests of 7%, 20% and 30%, in three joint ventures. Our joint ventures are reported
using the equity method of accounting. We earn fees from these 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” or “OP”), 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, 2016, we owned
approximately 97.6% 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, Dick's Sporting Goods, and Home Depot. 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. At December 31, 2016, the three largest development sites, Hartland
Towne Square, Lakeland Park Center and Parkway Shops, had phase one completed. We closed on the sale of 3.18 acres at
Lakeland Park Center in the fourth quarter of 2016 for the development of a health club. At Hartland Towne Square, we are under
contract to sell 7.5 acres for the development of a theater with certain due diligence contingencies unresolved at year-end. The
remaining future phases at these projects are in pre-development. We estimate that if we proceed with the development of the
projects, up to approximately 510,000 square feet of gross leasable area ("GLA") could be developed, excluding various out parcels
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.
Our development and construction activities are subject to risks and uncertainties such as our inability to obtain the necessary
governmental approvals for a project, our determination that the expected return on a project is not sufficient to warrant continuation
of the planned development or our change in plan or scope for the development. If any of these events occur, we may record an
impairment provision.
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, monitoring our tenants’ credit risk
and taking actions to mitigate our exposure to that tenant credit risk.
During 2016, our consolidated properties reported the following leasing activity:
Renewals
New Leases - Comparable
New Leases - Non-Comparable (2)
Total
Leasing
Transactions
224
28
74
326
Square
Footage
1,506,439 $
145,571
372,516
2,024,526 $
Base Rent/
SF (1)
15.15 $
17.65
17.07
15.67
Prior Rent/
SF
14.26 $
12.47
N/A
N/A $
Tenant
Improvements
/SF
0.16 $
49.05
48.92
12.65 $
Leasing
Commissions/
SF
0.02
4.06
3.98
1.04
(1) Base rent/sf (square foot) represents contractual minimum rent under the new lease for the first 12 months of the term.
(2) 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 comparable prior rent per square foot to compare to the base rent per square foot of the new lease.
2
Investing Strategies and Significant Transactions
Our investing objective is to generate an attractive risk-adjusted return on capital invested in acquisitions and developments. In
addition, we seek to sell land or shopping centers that we deem to be fully valued or that no longer meet our investment criteria. We
underwrite acquisitions based upon current cash flow, projections of future cash flow and scenario analyses that take into account
the risks and opportunities of ownership. We underwrite development of new shopping centers on the same basis, but also take
into account the unique risks of entitling land, constructing buildings and leasing newly built space.
In October 2016, we acquired Centennial Shops, a high-quality, multi-anchor 85,000 square foot upscale shopping center in the
affluent Minneapolis suburb of Edina, Minnesota, for $32.0 million. In addition, we sold six shopping centers and several land
outparcels for gross proceeds of $113.7 million. Refer to Note 4 for additional information related to acquisitions and dispositions.
At December 31, 2016, we had ten redevelopment, expansion or re-anchoring projects in process with an anticipated cost of $69.6
million, of which $40.8 million remained to be invested. Completion dates are anticipated during 2017 and early 2018.
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.
Specifically, we completed the following financing transactions:
Debt
During 2016, we issued $75.0 million in senior unsecured notes and repaid $146.5 million in mortgage notes. Refer to Note 8 for
additional information related to our debt.
Equity
In June 2016, we terminated our previous controlled equity offering arrangement and commenced a new distribution agreement
that registered up to 8.0 million common shares for issuance from time to time, in our sole discretion. For the year ended December
31, 2016, we did not issue any common shares through either arrangement. The shares issuable in the new distribution agreement
are registered with the Securities and Exchange Commission ("SEC") on our registration statement on Form S-3 (No. 333-211925).
As of December 31, 2016 we had net debt to total market capitalization of 41.0% as compared to 42.3%, at December 31, 2015. At
December 31, 2016 and 2015 we had $263.5 million and $286.5 million, respectively, available to draw under our unsecured
revolving line of credit.
Competition
See page 6 of Item 1A. “Risk Factors” for a description of competitive conditions in our business.
Environmental Matters
See page 12 of Item 1A. "Risk Factors" for a description of environmental risks for our business.
Employment
As of December 31, 2016, we had 117 full-time employees. None of our employees is represented by a collective bargaining unit.
We believe that our relations with our employees are good.
3
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
4
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 2016, our wholly-owned properties
located in Michigan and Florida accounted for approximately 28%, and 21%, respectively, of our annualized base rent. In 2015
Michigan and Florida accounted for approximately 29% and 21%, 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, 2016, we received 40.7% of our combined annualized base rents from our top 25 tenants, including our top
four tenants: TJ Maxx/Marshalls (4.0%), Bed Bath & Beyond (2.8%), Dicks Sporting Goods (2.6%) and LA Fitness (2.4%).
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 2016, two key tenants, The Sports Authority and Golfsmith, 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 would 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 would 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 would 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 $1.0 million in 2016 related to our real estate properties. Refer to Note
1 Organization and Summary of Significant Accounting Policies - Accounting for the Impairment of Long-Lived Assets of the
notes to the consolidated financial statements for a further information related to impairment provisions.
6
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.
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 were to 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.
As of December 31, 2016, we had interests in unconsolidated joint ventures that collectively own two 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.
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 related to our equity investments.
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 would
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 will 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.
Our ability to promptly sell one or more properties in our portfolio in response to changing economic, financial and investment
conditions is limited because real estate investments are relatively illiquid. 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
7
our control. We cannot be certain that we will be able to sell any property for the price and other terms we seek, or that any price
or other terms offered by a prospective purchaser would be acceptable to us. We also cannot estimate with certainty the length of
time needed to find a willing purchaser and to complete the sale of a property. We may be required to expend funds to correct
defects or to make improvements before a property can be sold. Factors that impede our ability to dispose of properties could
adversely affect our financial condition and operating results.
We are seeking to develop new properties, an activity that has inherent risks including cost overruns related to entitling land,
improving the site, 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
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, 2016, we had nine 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. In addition we have entered into one forward starting interest rate
swap agreements for an aggregate notional amount of $60.0 million. After accounting for these interest rate swap agreements,
we had $114.1 million of variable rate debt outstanding, net of deferred financing costs. Increases in interest rates on our existing
indebtedness would increase our interest expense, which would 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, 2016 increased
by 1.0%, the increase in interest expense on our existing variable rate debt would decrease future earnings and cash flows by
approximately $1.1 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.
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, 2016,
we had $1.0 billion of outstanding indebtedness, net of deferred financing costs, including $1.1 million of capital lease obligations.
8
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.
Our mortgage debt exposes us to the risk of loss of property, which could adversely affect our financial condition.
As of December 31, 2016, we had $160.7 million of mortgage debt, net of unamortized deferred financing costs, 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. 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 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.
9
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.
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.
There were 327,543 shares of unvested restricted common shares and options to purchase 57,140 common shares outstanding at
December 31, 2016.
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, would 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.
We rely upon information technology network and systems, some of which are managed by third parties, to process, transmit and
store electronic information, and to manage and support a variety of business processes and activities. 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. Risks that could result from a cyber incident include operational
interruption, damage to our relationships with tenants and private data disclosures including, personally identifiable, confidential
or proprietary information. Any compromise of our security could 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
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given that the Code imposes certain limitations on the ownership of the stock of a REIT. Not more than 50% in value of our
outstanding shares of beneficial interest may be owned, directly or indirectly by five or fewer individuals (as defined in the Code)
during the last half of any taxable year. If an individual or entity were found to own constructively more than 9.8% in value of
our outstanding shares, then any excess shares would be transferred by operation of our Declaration of Trust to a charitable trust,
which would sell such shares for the benefit of the shareholder in accordance with procedures specified in our Declaration of
Trust.
The ownership limit may discourage a change in control, may discourage tender offers for our common shares and may limit the
opportunities for our shareholders to receive a premium for their shares. Upon due consideration, our Board previously has granted
limited exceptions to this restriction for certain shareholders who requested an increase in their ownership limit. However, the
Board has no obligation to grant such limited exceptions in the future.
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.
Our success depends on key personnel whose continued service is not guaranteed.
We depend on the efforts and expertise of our senior management team to manage our day-to-day operations and strategic business
direction. While we have retention and severance agreements with certain members of our executive management team that provide
for certain payments in the event of a change of control or termination without cause, we do not have employment agreements
with all of the members of our executive management team. Therefore, we cannot guarantee their continued service. The loss of
their services, and our inability to find suitable replacements, could have an adverse effect on our operations.
12
Changes in accounting standards may adversely impact our financial results.
The Financial Accounting Standards Board, in conjunction with the SEC, has several projects on its agenda, as well as recently
issued updates that could impact how we currently account for material transactions, including lease accounting and revenue. At
this time, we are unable to predict with certainty which, if any, proposals may be passed or what level of impact the lease accounting
and revenue standards may have on the presentation of our consolidated financial statements, results of operations and financial
ratios required by our debt covenants.
Item 1B. Unresolved Staff Comments.
None.
13
Item 2. Properties
As of December 31, 2016, we owned and managed a portfolio of 67 shopping centers with approximately 15.0 million square feet
("SF") of GLA. Our wholly-owned properties consist of 65 shopping centers comprising approximately 14.5 million SF.
Location
City
State
Ownership
%
Year Built /
Acquired /
Redeveloped
Total GLA
%
Leased
Average
base
rent per
leased
SF (1) Anchor Tenants (2)
Property Name
Colorado [3]
Front Range Village
Fort Collins
CO
100% 2008/2014/NA
459,307
83.3% $
20.81 Charming Charlie, Cost Plus
Harvest Junction North
Longmont
CO
100% 2006/2012/NA
188,758
100.0%
World Markets, DSW,
Microsoft Corporation,
Party City, Sprouts Farmers
Market, Staples, Toys "R"
Us, Ulta Beauty, (Fort
Collins Library), (Lowes),
(Target)
16.91 Best Buy, Dick's Sporting
Goods, Dollar Tree, DSW
Shoe Warehouse, Staples
Harvest Junction South
Longmont
CO
100% 2006/2012/NA
177,030
98.1%
15.44 Bed Bath & Beyond,
Marshalls, Michaels, Petco,
Ross Dress for Less,
(Lowe's)
Florida [15]
Coral Creek Shops
Cypress Point
Coconut
Creek
Clearwater
Lakeland Park Center
Lakeland
Marketplace of Delray
Delray
Beach
FL
FL
FL
FL
100% 1992/2002/NA
109,312
96.0%
17.88
Publix
100% 1983/2007/NA
167,280
95.3%
12.56 Burlington Coat Factory,
The Fresh Market
100%
2014/NA/NA
210,422
99.5%
13.46 Dick's Sporting Goods,
Floor & Décor, Ross Dress
for Less
100% 1981/2005/2010
241,715
94.5%
15.17 Office Depot, Ross Dress for
Less, Winn-Dixie
Mission Bay Plaza
Boca Raton
FL
100% 1989/2004/NA
259,306
87.6%
25.81 Dick's Sporting Goods, The
Fresh Market, LA Fitness,
OfficeMax
Parkway Shops
Jacksonville
FL
100%
2013/2011/NA
144,114
100.0%
11.20 Dick's Sporting Goods,
Hobby Lobby, Marshalls
River City Marketplace
Jacksonville
FL
100% 2005/2005/NA
557,087
99.7%
17.71 Ashley Furniture
HomeStore, Bed Bath &
Beyond, Best Buy, Gander
Mountain, Hollywood
Theaters, Michaels,
PetSmart, Ross Dress for
Less, (Lowe's), (Wal-Mart
Supercenter)
Rivertowne Square
Shoppes of Lakeland
Deerfield
Beach
Lakeland
The Crossroads
Treasure Coast Commons
Royal Palm
Beach
Jensen
Beach
Village Lakes Shopping
Center
Village Plaza
Land O'
Lakes
Lakeland
FL
FL
FL
FL
FL
FL
100% 1980/1998/2010
146,666
90.5%
10.43 Bealls, Winn-Dixie
100% 1985/1996/NA
183,702
100.0%
12.78 Ashley Furniture
HomeStore, Michaels,
Staples, T.J. Maxx, (Target)
100% 1988/2002/NA
121,509
90.9%
16.60
Publix
100% 1996/2004/NA
91,656
100.0%
7.71 Barnes & Noble, Dick's
Sporting Goods, OfficeMax
100% 1987/1997/NA
166,485
96.8%
8.49 Bealls Outlet, Marshalls,
Ross Dress for Less
100% 1989/2004/NA
158,956
99.1%
12.04 Big Lots, Hobby Lobby
14
Location
City
Jensen
Beach
State
FL
Ownership
%
Year Built /
Acquired /
Redeveloped
Total GLA
%
Leased
100% 1998/2004/NA
109,761
100.0% $
Average
base
rent per
leased
SF (1) Anchor Tenants (2)
14.02 Bed Bath & Beyond,
Michaels, Total Wine &
More
Plantation
FL
100% 1965/2005/NA
152,973
99.1%
11.58 Badcock, DD's Discounts
Alpharetta
Duluth
Duluth
GA
GA
GA
100% 1997/2004/NA
100% 1986/2007/NA
100% 1993/2004/NA
106,003
154,700
261,808
72.3%
96.1%
95.5%
12.77
Studio Movie Grill
13.39 Kroger, LA Fitness
9.81 K1 Speed, LA Fitness,
Publix
Property Name
Vista Plaza
West Broward Shopping
Center
Georgia [3]
Holcomb Center
Peachtree Hill
Promenade at Pleasant
Hill
Illinois [5]
Deer Grove Centre
Palatine
Liberty Square
Market Plaza
Mount Prospect Plaza
Wauconda
Glen Ellyn
Mount
Prospect
Rolling Meadows
Shopping Center
Rolling
Meadows
Indiana [1]
IL
IL
IL
IL
IL
100% 1997/2013/2013
237,644
87.0%
10.13 Aldi(4), Hobby Lobby, Ross
100% 1987/2010/2008
100% 1965/2007/2009
107,427
166,634
82.4%
95.5%
100% 1962/2013/2013
300,682
92.8%
Dress for Less, T.J. Maxx,
(Target)
13.44
Jewel-Osco
15.69
Jewel-Osco, Ross Dress for
Less
12.21 Aldi, LA Fitness, Marshalls,
Ross Dress for Less,
Walgreens
100% 1956/2008/1995
134,012
91.9%
11.58
Jewel-Osco, Northwest
Community Hospital
Flix Brewhouse, Planet
Fitness
Field & Stream, Home
Depot, LA Fitness, Remke
Market
Merchants' Square
Carmel
IN
100% 1970/2010/2014
246,630
74.4%
13.45
Kentucky [1]
Buttermilk Towne Center
Crescent
Springs
KY
100% 2005/2014/NA
277,533
100.0%
9.57
Maryland [1]
Crofton Centre
Michigan [19]
Clinton Pointe
Clinton Valley
Gaines Marketplace
Hoover Eleven
Hunter's Square
Crofton
MD
100% 1974/1996/NA
252,230
97.2%
7.83 Gold's Gym, Kmart,
Shoppers Food Warehouse
Clinton
Township
Sterling
Heights
Gaines
Township
Warren
Farmington
Hills
MI
MI
MI
MI
MI
100% 1992/2003/NA
135,330
66.1%
10.40 OfficeMax, (Target)
100% 1977/1996/2009
205,435
91.2%
13.20 DSW Shoe Warehouse,
Hobby Lobby, Office Depot
100% 2004/2004/NA
60,576
100.0%
15.98
Staples, (Target), (Meijer)
100% 1989/2003/NA
280,719
83.5%
11.28 Dunham's, Kroger,
Marshalls
100% 1988/2005/NA
353,951
100.0%
16.74 Bed Bath & Beyond,
Jackson Crossing
Jackson
MI
100% 1967/1996/2002
419,770
92.3%
buybuy Baby, DSW Shoe
Warehouse (4), Marshalls,
Saks Fifth Avenue , T.J.
Maxx
12.01 Bed Bath & Beyond, Best
Buy, Jackson 10 Theater,
Kohl's, Shoe Carnival, T.J.
Maxx, Toys "R" Us,
(Sears), (Target)
Jackson West
Jackson
MI
100% 1996/1996/1999
209,800
100.0%
8.03
Lowe's, Michaels,
OfficeMax
Millennium Park
Livonia
MI
100% 2000/2005/NA
273,029
100.0%
15.31 Home Depot, Marshalls,
Michaels,(Costco), (Meijer)
15
Property Name
New Towne Plaza
Location
City
Canton
Township
Oak Brook Square
Flint
Roseville Towne Center
Roseville
Southfield Plaza
Southfield
State
MI
MI
MI
MI
Ownership
%
Year Built /
Acquired /
Redeveloped
Total GLA
%
Leased
Average
base
rent per
leased
SF (1) Anchor Tenants (2)
11.88 DSW Shoe Warehouse, Jo-
100% 1975/1996/2005
193,446
100.0% $
Ann, Kohl's
100% 1982/1996/2008
152,073
96.1%
9.57 Hobby Lobby, T.J. Maxx
100% 1963/1996/2004
100% 1969/1996/2003
76,998
190,099
98.3%
98.9%
13.57 Marshalls, (Wal-Mart)
8.90 Big Lots, Burlington Coat
Factory, Forman Mills
Tel-Twelve
Southfield
MI
100% 1968/1996/2005
523,411
99.2%
11.17 Best Buy, DSW Shoe
The Auburn Mile 1
Auburn Hills MI
100% 2000/1999/NA
90,553
100.0%
11.59
100% 1972/2007/2011
96,768
100.0%
18.46
The Shops at Old Orchard West
Bloomfield
Troy Marketplace
Troy
West Oaks I Shopping
Center
Novi
MI
MI
MI
100% 200/2005/2010
217,754
100.0%
17.24 Airtime, Golfsmith, LA
Fitness, Nordstrom Rack,
PetSmart, (REI)
100% 1979/1996/2004
284,973
100.0%
14.54 Gander Mountain,
West Oaks II Shopping
Center
Novi
MI
100% 1986/1996/2000
167,954
98.4%
17.97
Warehouse, Lowe's, Meijer,
Michaels, Office Depot,
PetSmart
Jo-Ann, Staples, (Best Buy),
(Costco), (Meijer), (Target)
Plum Market
Nordstrom Rack, Old Navy,
Petco, Rally House, The
Container Store, (Home
Goods), (Michaels)
Jo-Ann, Marshalls, (Art
Van), (ABC Warehouse),
(Bed Bath & Beyond),
(Kohl's), (Toys "R" Us),
(Value City Furniture)
Winchester Center
Rochester
Hills
MI
100% 1980/2005/NA
320,134
100.0%
11.61 Bed Bath & Beyond, Dick's
Sporting Goods, Marshalls,
Michaels, Party City,
PetSmart, Stein Mart
Minnesota [2]
Centennial Shops
Edina
MN
100% 2008/2016/NA
85,206
100.0%
31.28
Pinstripes, The Container
Store, West Elm
Woodbury Lakes
Woodbury
MN
100% 2005/2014/NA
306,336
87.2%
21.91 DSW, Michaels, (Trader
Missouri [4]
Central Plaza
Deer Creek Shopping
Center
Ballwin
MO
100% 1970/2012/2012
166,431
92.3%
12.26
Maplewood MO
100% 1975/2013/2013
208,122
94.6%
10.34
Joe's)
buybuy Baby, Jo-Ann,
OfficeMax, Ross Dress for
Less
buybuy Baby, State of
Missouri, Marshalls, Ross
Dress for Less
Heritage Place
Creve Coeur MO
100% 1989/2011/2005
269,105
97.9%
13.94 Dierbergs Markets,
Town & Country Crossing
Town &
Country
Ohio [7]
MO
100% 2008/2011/2011
176,830
95.0%
23.80 HomeGoods(5), Starbucks,
Stein Mart, Whole Foods
Market, (Target)
Marshalls, Office Depot,
T.J. Maxx
Bridgewater Falls
Hamilton
OH
100% 2005/2014/NA
503,293
94.2%
14.30 Bed Bath & Beyond, Best
Buy, Dick's Sporting Goods,
Five Below (5), J.C. Penney,
Michaels, PetSmart, T.J.
Maxx, (Target)
Crossroads Centre
Rossford
OH
100% 2001/2001/NA
344,045
93.7%
9.43 Giant Eagle (3), Home
Depot, Michaels, T.J. Maxx,
(Target)
16
Property Name
Location
City
Deerfield Towne Center
Mason
State
OH
Ownership
%
Year Built /
Acquired /
Redeveloped
Total GLA
%
Leased
100% 2004/2013/2013
463,246
88.4% $
Average
base
rent per
leased
SF (1) Anchor Tenants (2)
20.30 Ashley Furniture
Olentangy Plaza
Columbus
OH
100% 1981/2007/1997
253,204
94.9%
10.67 Eurolife Furniture,
Marshalls, Micro Center,
Tuesday Morning
Rossford Pointe
Rossford
OH
100% 2006/2005/NA
47,477
100.0%
10.83 MC Sporting Goods,
PetSmart
Spring Meadows Place
Holland
OH
100% 1987/1996/2005
314,514
94.7%
11.29 Ashley Furniture
HomeStore, Bed Bath &
Beyond, buybuy Baby,
Crunch Fitness Dick's
Sporting Goods, Five Below
(5), Regal Cinemas, Whole
Foods Market
HomeStore, Big Lots, DSW,
Guitar Center, HomeGoods
(5), Michaels, OfficeMax,
PetSmart, T.J. Maxx, (Best
Buy), (Dick's Sporting
Goods), (Sam's Club),
(Target), (Wal-Mart)
The Shops on Lane
Avenue
Upper
Arlington
OH
100% 1952/2007/2004
171,550
96.8%
22.65 Bed Bath & Beyond, Whole
Foods Market
Wisconsin [4]
East Town Plaza
Madison
WI
100% 1992/2000/2000
208,472
84.2%
10.11 Burlington Coat Factory, Jo-
Ann, Marshalls, (Shopko),
(Babies "R" Us)
Nagawaukee Center
Delafield
WI
100% 1994/2012-13/NA
220,083
99.0%
14.65 HomeGoods(5), Kohl's,
Marshalls, Sierra Trading
Post(5), (Sentry Foods)
The Shoppes at Fox River Waukesha
WI
100% 2009/2010/2011
276,642
100.0%
14.50 Hobby Lobby, Pick 'n Save,
Ross Dress for Less, T.J.
Maxx, (Target)
West Allis Towne Centre West Allis
WI
100% 1987/1996/2011
326,265
94.8%
9.09 Burlington Coat Factory,
Kmart, Ross Dress for Less,
Xperience Fitness
CONSOLIDATED SHOPPING CENTERS TOTAL/AVERAGE
14,484,936
94.4% $
13.93
JOINT VENTURE PORTFOLIO
Nora Plaza
Marion
Martin Square
Martin
IN
FL
7% 1958/2007/2002
139,753
94.3% $
14.11 Marshalls, Whole Foods
Market, (Target)
30% 1981/2005/NA
330,134
85.3%
6.73 Home Depot, Old Time
Pottery, Paradise Home &
Patio, Staples
Total/Average
469,887
88.0% $
9.09
CONSOLIDATED AND JV PORTFOLIO TOTAL / AVERAGE
14,954,823
94.2% $
13.78
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 tenant is defined as any tenant leasing 10,000 square feet or more. Tenants in parenthesis represent non-company owned GLA.
(3) Tenant closed - lease obligated.
(4) Space delivered to tenant.
(5) Space leased to tenant.
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
17
volume, reimbursement of the tenant’s allocable real estate taxes, insurance and common area maintenance (“CAM”) expenses and
reimbursement for utility costs if not directly metered.
Major Tenants
The following table sets forth as of December 31, 2016 the GLA, of our existing properties leased to tenants for our wholly owned
properties portfolio:
Type of Tenant
Anchor (1)
Retail (non-anchor)
Total
Annualized Base
Rent
$ 109,422,914
78,970,769
$ 188,393,683
% of Total
Annualized Base
Rent
58.1%
41.9%
100.0%
GLA (2) % of Total GLA (2)
70.8%
29.2%
100.0%
10,249,524
4,235,412
14,484,936
(1) Anchor tenant is defined as any tenant leasing 10,000 square feet or more.
(2) GLA owned directly by us or our unconsolidated joint ventures.
18
The following table depicts, as of December 31, 2016, information regarding leases with the 25 largest retail tenants (in terms of
annualized base rent) for our wholly owned properties portfolio:
% of
Total
GLA
5.4 % $
Total
Annualized
Base Rent
7,598,049
Annualized
Base Rent
PSF
9.74
$
% of
Annualized
Base Rent
4.0 %
11.35
11.02
18.34
9.53
12.60
16.85
11.68
19.65
15.00
22.68
9.03
23.96
9.94
14.93
12.21
19.71
7.04
8.24
16.50
14.01
7.18
7.26
16.31
12.89
12.01
15.64
13.93
N/A
N/A
2.8 %
2.6 %
2.4 %
1.8 %
1.8 %
1.7 %
1.7 %
1.7 %
1.7 %
1.6 %
1.6 %
1.5 %
1.3 %
1.3 %
1.3 %
1.2 %
1.2 %
1.2 %
1.1 %
1.1 %
1.1 %
1.0 %
1.0 %
1.0 %
40.7 %
59.3 %
100.0%
N/A
100.0%
Number
of Leases
25
16
9
6
3
11
10
12
29
10
13
13
2
24
5
6
3
6
4
9
2
5
2
8
GLA
779,770
466,700
443,277
245,521
354,295
262,801
193,829
273,800
162,384
208,863
134,684
332,052
119,080
253,243
165,309
198,947
118,879
330,096
277,315
128,427
142,354
276,497
270,394
116,575
Tenant Name
TJX Companies (2)
Bed Bath & Beyond (3)
Dick's Sporting Goods (4)
LA Fitness
Home Depot
Office Depot (5)
DSW Designer Shoe Warehouse
Michaels Stores
Ascena Retail (6)
PetSmart
ULTA Salon
Ross Stores (7)
Regal Cinemas
Dollar Tree
Best Buy
Credit Rating
S&P/Moody's (1)
A+/A2
BBB+/Baa1
--/--
B+/B2
A/A2
--/B1
--/--
B+/Ba2
BB-/Ba2
B+/--
--/--
A-/A3
B+/B1
BB+/Ba2
BBB-/Baa1
Jo-Ann Fabric and Craft Stores
B/Caa1
BBB-/Baa3
--/--
BB-/--
B/--
--/--
BBB-/Baa2
A-/A3
BB+/Baa2
BBB-/Baa2
Whole Foods
Hobby Lobby
Burlington Coat Factory
Petco (8)
Gander Mountain
Kohl's
Lowe's Home Centers
Gap, Inc. (9)
Staples
Sub-Total top 25 tenants
Remaining tenants
Sub-Total all tenants
Leased / Vacant
3.2 %
3.1 %
1.7 %
2.5 %
1.8 %
1.3 %
1.9 %
1.1 %
1.4 %
0.9 %
2.3 %
0.8 %
1.8 %
1.1 %
1.4 %
0.8 %
2.3 %
1.9 %
0.9 %
1.0 %
1.9 %
1.9 %
0.8 %
5,297,844
4,885,410
4,501,820
3,375,725
3,310,871
3,266,248
3,198,491
3,191,443
3,132,281
3,054,741
2,996,969
2,853,269
2,516,631
2,467,745
2,429,479
2,342,617
2,324,634
2,285,421
2,119,266
1,994,898
1,984,330
1,962,450
1,901,136
7
240
137,618
6,392,710
0.9 %
1,773,276
44.1 % $ 76,765,044
$
1,255
7,135,943
49.3 % 111,628,639
1,495
13,528,653
93.4% 188,393,683
$
225
956,283
6.6 %
N/A
Total including vacant
1,720
14,484,936
100.0% $ 188,393,683
(1) Source: Latest Company filings, as of December 31, 2016, per CreditRiskMonitor.
(2) Marshalls (15) / TJ Maxx (10)
(3) Bed Bath & Beyond (9) / Buy Buy Baby (5) / Cost Plus World Market (2)
(4) Dick's Sporting Goods (8) / Field & Stream (1)
(5) OfficeMax (7) / Office Depot (4)
(6) Ann Taylor (3) / Catherine's (3) / Dress Barn (6) / Justice (5) / Lane Bryant (6) / Maurice's (6)
(7) Ross Dress for Less (12) / DD's Discounts (1)
(8) Petco (8) / Unleashed (1)
(9) Old Navy (5) / Gap (2) / Banana Republic / (1)
19
Lease Expirations
The following tables set forth a schedule of lease expirations, for our wholly owned portfolio, for the next ten years and thereafter,
assuming that no renewal options are exercised:
ALL TENANTS
Expiring Leases As of December 31, 2016
Year
(3)
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027+
Sub-Total
Leased (4)
Vacant
Total
Number of
Leases
35
184
245
195
183
224
107
77
51
48
65
81
1,495
16
209
1,720
GLA (1)
90,998
852,296
1,201,121
1,322,814
1,493,847
2,020,262
1,315,621
1,268,968
612,441
776,462
957,323
1,616,500
13,528,653
147,298
808,985
14,484,936
Average
Annualized
Base Rent
Total
Annualized
Base Rent (2)
% of Total
Annualized
Base Rent
(per square foot)
18.01
15.49
16.69
14.63
13.09
13.57
13.10
13.01
13.08
13.81
14.79
12.71
13.93
N/A
N/A
13.93
$
$
$
$
$
$
1,639,114
13,205,813
20,052,631
19,352,220
19,553,610
27,407,701
17,235,133
16,506,262
8,013,018
10,721,333
14,159,183
20,547,665
188,393,683
N/A
N/A
188,393,683
0.9 %
7.0 %
10.6 %
10.3 %
10.4 %
14.5 %
9.1 %
8.8 %
4.3 %
5.7 %
7.5 %
10.9 %
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, 2016
Year
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027+
Sub-Total
Leased (4)
Vacant
Total
Number of
Leases
21
27
30
34
55
37
30
17
19
17
37
324
4
17
345
GLA (1)
434,435
623,171
786,893
1,038,452
1,538,517
1,069,525
1,028,300
482,655
632,791
783,791
1,440,466
9,858,996
78,113
312,415
10,249,524
Average
Annualized
Base Rent
Total
Annualized
Base Rent (2)
% of Total
Annualized
Base Rent
(per square foot)
11.15
11.78
10.24
9.67
10.94
11.23
11.15
11.00
11.86
12.37
11.33
11.10
N/A
N/A
11.10
$
$
$
$
$
$
4,844,194
7,343,891
8,059,546
10,046,510
16,824,171
12,015,594
11,460,472
5,310,537
7,504,344
9,698,856
16,314,799
109,422,914
N/A
N/A
109,422,914
4.4 %
6.7 %
7.4 %
9.2 %
15.4 %
11.0 %
10.5 %
4.9 %
6.9 %
8.9 %
14.7 %
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, 2016
Average
Annualized
Base Rent
(per square foot)
18.01
$
20.01
21.99
21.07
20.88
21.97
21.21
20.97
20.82
22.39
25.70
24.05
21.52
N/A
N/A
21.52
$
$
Total
Annualized
Base Rent (2)
% of Total
Annualized
Base Rent
$
$
$
1,639,114
8,361,619
12,708,740
11,292,674
9,507,101
10,583,530
5,219,538
5,045,790
2,702,480
3,216,989
4,460,327
4,232,867
78,970,769
N/A
N/A
78,970,769
2.1 %
10.6 %
16.1 %
14.3 %
12.0 %
13.4 %
6.6 %
6.4 %
3.4 %
4.1 %
5.6 %
5.4 %
100.0%
N/A
N/A
100.0%
Year
(3)
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027+
Sub-Total
Leased (4)
Vacant
Total
Number of
Leases
35
163
218
165
149
169
70
47
34
29
48
44
1,171
12
192
1,375
GLA (1)
90,998
417,861
577,950
535,921
455,395
481,745
246,096
240,668
129,786
143,671
173,532
176,034
3,669,657
69,185
496,570
4,235,412
(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, 2016, our three largest development sites, Hartland Towne Square, Lakeland Park Center and Parkway Shops,
had phase one completed. We closed on the sale of 3.18 acres at Lakeland Park Center in the fourth quarter of 2016 for the
development of a health club. At Hartland Towne Square, we are under contract to sell 7.5 acres for the development of a theater
with certain due diligence contingencies unresolved at year-end. . 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 510,000 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.
Our development and construction activities are subject to risks and uncertainties such as our inability to obtain the necessary
governmental approvals for a project, our determination that the expected return on a project is not sufficient to warrant continuation
of the planned development, or our change in plan or scope for the development. If any of these events occur, we may record an
impairment provision.
During 2016, we recorded an impairment provision of $1.0 million. We recorded impairment provisions of $2.5 million and $23.3
million in 2015 and 2014, respectively, related to developable land that we decided to market for sale. Refer to Note 1 Organization
and Summary of Significant Accounting Policies - Accounting for the Impairment of Long-Lived Assets of the notes to the
consolidated financial statements for a further information related to impairment provisions.
Insurance
Our tenants are generally responsible under their leases for providing adequate insurance on the spaces they lease. In addition we
believe 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 16, 2017, the closing price of our common shares on the NYSE was $16.13.
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, 2011 through
December 31, 2016. 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 2016 and 2015:
Quarter Ended
December 31, 2016
September 30, 2016
June 30, 2016
March 31, 2016
December 31, 2015
September 30, 2015
June 30, 2015
March 31, 2015
(1) Paid on January 3, 2017
(2) Paid on January 4, 2016
Stock Price
High
Low
Dividends
$
$
$
$
$
$
$
$
18.44
20.19
19.61
18.03
17.11
17.24
19.02
20.04
$
$
$
$
$
$
$
$
16.18
17.80
17.35
15.98
15.07
14.84
16.32
18.04
$
$
$
$
$
$
$
$
0.22000 (1)
0.22000
0.21000
0.21000
0.21000 (2)
0.21000
0.20000
0.20000
23
Holders
The number of holders of record of our common shares was 1,324 at February 16, 2017. 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 2016 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, 2016, refer to Item 12 of Part III of this report and Note
15 of the notes to the consolidated financial statements for further information regarding our share-based compensation and other
benefit plans.
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
Operating income
Income (loss) from continuing operations
Gain on sale of depreciable real estate
Gain on sale of land
Net income (loss)
Net (income) loss attributable to noncontrolling partner interest
Preferred share dividends
Net income (loss) available to common shareholders
Earnings (loss) per common share, basic
Continuing operations
Discontinued operations
Basic Earnings (loss)
Earnings (loss) per common share, diluted
Continuing operations
Discontinued operations
Diluted earnings (loss)
Weighted average shares outstanding:
Basic
Diluted
Cash dividends declared per RPT preferred share
Cash dividends declared per RPT common share
Cash distributions to RPT preferred shareholders
Cash distributions to RPT common shareholders
Balance Sheet Data (at December 31):
Investment in real estate (before accumulated depreciation)
Total assets
Total notes payable, net
Total liabilities
Total RPT shareholders' equity
Noncontrolling interest
Total shareholders' equity
Year Ended December 31,
2016
2015
2014
(In thousands, except per share)
2013
2012
260,930
70,908
61,112
34,108
1,673
61,112
(1,448)
(6,701)
52,963
0.66
—
0.66
0.66
—
0.66
79,236
79,435
3.625
0.8600
6,701
67,710
$
$
$
$
$
$
$
$
$
251,790
65,497
66,895
13,529
4,041
66,895
(1,786)
(6,838)
57,771
0.73
—
0.73
0.73
—
0.73
78,848
79,035
3.625
0.8200
6,977
63,972
$
$
$
$
$
$
$
$
$
218,363
23,330
(2,412)
10,022
835
(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
35,460
8,371
2,120
4,279
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
30,385
7,171
336
69
7,092
112
(7,250)
(46)
—
—
—
—
—
—
44,101
44,101
3.625
0.6600
7,250
28,333
2,132,670
$
2,184,481
$
1,934,032
$
1,625,217
$
1,119,171
$
$
$
$
$
$
$
$
$
$
1,653,146
1,166,629
2,061,498
1,021,223
1,169,807
870,723
20,968
891,691
2,136,082
1,083,711
1,231,616
882,413
22,053
904,466
1,951,743
917,658
1,055,335
870,547
25,861
896,408
746,661
857,057
768,287
27,802
796,089
535,208
608,668
527,973
29,988
557,961
47,816
62,194
(173,210)
103,094
Other Data:
Funds from operations ("FFO") available to common shareholders (1)
Net cash provided by operating activities
Net cash provided by (used in) investing activities
Net cash (used in) provided by financing activities
$
118,685
$
119,556
$
77,574
$
79,861
$
117,095
7,746
(127,903)
105,158
(154,333)
46,484
110,592
(315,723)
208,671
85,583
(355,752)
271,731
(1) Under the NAREIT definition, FFO represents net income available to common shareholders (computed in accordance with accounting principles generally accepted in the United
States of America (“GAAP”), excluding gains (losses) from sales of depreciable property and impairment provisions on depreciable property or on equity investments in depreciable
property plus real estate related depreciation and amortization (excluding amortization of financing costs), and adjustments for unconsolidated partnerships and joint ventures. See
“Funds From Operations” in Item 7 for a discussion of FFO and a reconciliation of FFO to net income.
25
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. 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, 2016, we owned and managed, either directly or through our interest in real estate joint ventures, a total of 67
shopping centers, with approximately 15.0 million square feet of gross leasable area owned by us and our joint ventures. We also
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 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 often 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 Dick's Sporting Goods.
Our shopping centers are primarily located in a number of the largest metropolitan markets in the central 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 is 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.
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.
26
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.
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 allocate
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 are computed using
the straight-line method over the estimated useful lives of 40 years for buildings, and over the remaining terms of any intangible
asset contracts and the respective tenant leases, which may include bargain renewal options. The impact of these estimates,
including 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 - 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, is regularly evaluated under applicable accounting requirements, including
requirements relating to abandonment of assets or changes in use. To the extent a project or an individual component of the project,
is 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 1 Organization and Summary of Significant Accounting Policies - Accounting
for the Impairment of Long-Lived Assets for further information regarding impairment provisions.
27
Results of Operations
Comparison of the Year Ended December 31, 2016 to the Year Ended December 31, 2015
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, 2016 as
compared to 2015:
Year Ended December 31,
$
Total revenue
Operating expenses
Real estate taxes
Depreciation and amortization
General and administrative expense
Provision for impairment
Gain on sale of real estate
Earnings from unconsolidated joint ventures
Interest expense and amortization of deferred financing fees
Other gain on unconsolidated joint ventures
(Loss) gain on extinguishment of debt
NM - Not meaningful
$
2016
260,930
33,156
41,739
91,793
22,041
977
35,781
454
44,514
215
(1,256)
2015
(In thousands)
251,790
$
34,875
38,737
89,439
20,077
2,521
17,570
17,696
42,211
7,892
1,414
Dollar
Change
Percent
Change
9,140
(1,719)
3,002
2,354
1,964
(1,544)
18,211
(17,242)
2,303
(7,677)
(2,670)
3.6 %
(4.9)%
7.7 %
2.6 %
9.8 %
(61.2)%
103.6 %
(97.4)%
5.5 %
(97.3)%
NM
Total revenue in 2016 increased $9.1 million, or 3.6% from 2015. The increase is primarily due to the following:
•
•
•
•
•
$16.0 million increase related to acquisitions completed in 2016 and 2015;
$3.9 million increase at existing centers; offset by
$9.2 million decrease related to properties sold in 2016 and 2015;
$1.2 million decrease in management and other fee income; and
$0.4 million decrease related to the disposal of our office building.
Operating expense in 2016 decreased $1.7 million, or 4.9%, from 2015 primarily due to certain operating costs direct billed to
tenants by the service provider which were previously part of the Company’s recovery cost, lower bad debt expense and our
dispositions which were partially offset by the impact of a full year from our 2015 acquisitions.
Real estate tax expense in 2016 increased $3.0 million, or 7.7%, from 2015, primarily due to our 2015 acquisitions and incremental
tax increases within existing properties, partially offset by dispositions.
Depreciation and amortization expense in 2016 increased $2.4 million, or 2.6%, from 2015. The increase was primarily related
to a $4.5 million increase from our nine acquisitions in 2015, one acquisition in 2016, new development completion and other
capital activities offset by a decrease of $2.2 million related to properties disposed of.
General and administrative expense in 2016 increased $2.0 million, or 9.8%, from 2015. The increase was primarily due to
increased costs associated with our long-term incentive plans, including increased stock compensation in 2016 related to a one-
time award to our current Chief Financial Officer in December 2015. By way of contrast, general and administration expense in
2015 included a reversal of expense attributable to the resignation of our former Chief Financial Officer.
Impairment provisions of $1.0 million recorded in 2016 related to developable land held for sale triggered by unforeseen increases
in development costs and changes in the associated sales price assumptions. In 2015 our impairment provisions totaled $2.5
million related to our plan to sell certain land parcels that we had previously intended to develop. Refer to Note 1 Organization
and Summary of Significant Accounting Policies - Accounting for the Impairment of Long-Lived Assets of the notes to the
consolidated financial statements for further information related to impairment provisions.
Gain on sale of real estate was $35.8 million in 2016. In the comparable period in 2015 we had a gain of $17.6 million. Refer to
Note 4 of the notes to the consolidated financial statements for further detail on dispositions.
28
Earnings from unconsolidated joint ventures in 2016 decreased $17.2 million from 2015. The decrease was primarily due to the
reduced level of properties in unconsolidated joint ventures following sales in 2015.
Interest expense and amortization of deferred financing fees increased in 2016 by $2.3 million, or 5.5% from 2015, primarily due
to changes in the composition between senior unsecured notes and mortgage debt, as well as higher average balances on our term
loan and revolving credit facility.
Gain on remeasurement of unconsolidated joint ventures in 2016 was $0.2 million, primarily due to the reduced level of activity
in our unconsolidated joint ventures. In 2015 we acquired our partners' interest in seven properties. The gain on remeasurement
represents the difference between the carrying value and the fair value of our previously held equity investment in the properties.
In 2016 only a single property was disposed of by a joint venture.
Loss on extinguishment of debt of approximately $1.3 million in 2016 resulted from a $0.9 million loss upon the conveyance of
our Aquia office property to the lender and a $0.4 million cash prepayment penalty on a mortgage payoff in 2016 with an original
maturity of April 2017 compared to a gain of $1.4 million in 2015 related to the write-off of debt premiums associated with the
early payoff of corresponding debt.
Comparison of the Year Ended December 31, 2015 to the Year Ended December 31, 2014
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, 2015 as
compared to 2014:
Total revenue
Operating expense
Real estate tax
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
Other gain on unconsolidated joint ventures
Gain (loss) on extinguishment of debt
NM - Not meaningful
Year Ended December 31,
2015
2014
(In thousands)
Dollar
Change
Percent
Change
$
251,790
$
218,363
$
33,427
34,875
38,737
89,439
20,077
2,521
17,570
17,696
42,211
7,892
1,414
30,952
31,474
81,182
21,670
27,865
10,857
75
35,188
117
(860)
3,923
7,263
8,257
(1,593)
(25,344)
6,713
17,621
7,023
7,775
2,274
15.3 %
12.7 %
23.1 %
10.2 %
(7.4)%
(91.0)%
61.8 %
NM
20.0 %
NM
NM
Total revenue in 2015 increased $33.4 million, or 15.3%, from 2014. The increase is primarily due to the following:
•
•
•
•
$32.3 million increase related to acquisitions completed in 2015 and 2014;
$2.9 million increase due to the completion of Phase I of Lakeland Park Center;
$4.0 million increase at existing centers primarily related to redevelopment or re-tenanting activities; offset by
$5.8 million decrease related to properties sold in 2014 and reduced management fee income and lower office tenant revenue
in 2015.
Operating expense in 2015 increased $3.9 million, or 12.7%, from 2014 primarily due to our 2015 and 2014 acquisitions.
Real estate tax expense in 2015 increased $7.3 million, or 23.1%, from 2014, primarily due to our 2015 and 2014 acquisitions.
Depreciation and amortization expense in 2015 increased $8.3 million, or 10.2%, from 2014. The increase was primarily related
to a $14.8 million increase from our acquisitions in 2015 and 2014, new development completion and other capital activities offset
by a decrease of $6.5 million related to sold properties and accelerated depreciation for demolition of certain centers undergoing
redevelopment in 2014.
29
General and administrative expense in 2015 decreased $1.6 million, or 7.4%, from 2014. The decrease was primarily due to lower
costs associated with our long-term incentive plans which are based on our stock price performance relative to a group of our peers
and the reversal of share based and long-term compensation expense related to the previous Chief Financial Officer offset in part
by a one-time award to our new Chief Financial Officer.
Impairment provisions of $2.5 million recorded in 2015 related to developable land that was subsequently sold in the second
quarter of 2015. In 2014 our impairment provisions totaled $27.9 million. Refer to Note 1 Organization and Summary of
Significant Accounting Policies - Accounting for the Impairment of Long-Lived Assets of the notes to the consolidated financial
statements for further information related to impairment provisions.
Gain on sale of real estate was $17.6 million in 2015. In the comparable period in 2014 we had a gain of $10.9 million. Refer to
Note 4 of the notes to the consolidated financial statements for further detail on dispositions.
Earnings from unconsolidated joint ventures in 2015 increased $17.6 million from 2014. The increase was primarily related to
our proportionate share of gains totaling $16.5 million generated by the sale of ten properties owned by two of our joint ventures.
In addition, in 2014 we recorded accelerated depreciation expense as a result of the demolition of a portion of centers for
redevelopment and additional proceeds related to the 2011 sale of a joint venture property. Refer to Note 7 of the notes to the
consolidated financial statements for additional information regarding our unconsolidated joint venture sales activity.
Interest expense and amortization of deferred financing fees increased in 2015 by $7.0 million, or 20% from 2014, primarily due
to the issuance of new senior unsecured notes and higher average loan balances on our credit facility.
Gain on remeasurement of unconsolidated joint ventures in 2015 was $7.9 million, triggered by our acquisition of our partner's
equity interest in seven properties. The gain on remeasurement represents the difference between the carrying value and the fair
value of our previously held equity investment in the properties. In 2014, we recognized a similar gain of $0.1 million.
Gain on extinguishment of debt of approximately $1.4 million in 2015 was related to the write-off of debt premiums associated
with two mortgages that were repaid compared to a loss of $0.9 million in 2014 related to write-off of deferred financing costs
associated with the early payoff of unsecured term loan debt.
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, 2016 and 2015, we had $14.7 million and $15.4 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, in addition to deposits on future acquisitions.
Short-Term Liquidity Requirements
Our short-term liquidity needs are met primarily from rental income and expense recoveries and consist primarily of funds necessary
to pay operating expenses associated with our 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, as well as general corporate expenses. We believe that our cash on hand, retained cash flow from operations along with,
availability under our revolving credit facility, issuance of equity, as well as other debt and equity alternatives is sufficient to meet
these obligations.
As of December 31, 2016 we had $263.5 million available to be drawn on our $350.0 million unsecured revolving credit facility
subject to our compliance with certain covenants.
We will continue to pursue the strategy of selling mature properties or non-core assets that no longer meet our investment criteria.
Our ability to obtain acceptable selling prices and satisfactory terms and financing will impact the timing of future sales. We
anticipate using net proceeds from the sale of properties to reduce outstanding debt and support current and future growth initiatives.
30
We continually search for investment opportunities that may require additional capital and/or liquidity. As of December 31, 2016,
we had one proposed property acquisition under contract and one property disposition under contract, subject to due diligence
contingencies.
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 provided by (used in) investing activities
Cash (used in) provided by financing activities
Operating Activities
$
2014
2016
Year Ended December 31,
2015
(In thousands)
105,158
$
(154,333)
46,484
117,095
7,746
(127,903)
$
110,592
(315,723)
208,671
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 $11.9 million in 2016 compared to 2015 primarily due to the following:
• Operating income, adjusted for non-cash activity, increased $3.0 million;
•
•
•
•
net accounts receivable decreased $8.6 million;
accounts payable, accrued expenses and other liabilities, and other assets decreased approximately $1.5 million;
long-term and share-based compensation expense increased $1.9 million; and
net interest expense increased approximately $2.3 million due to the composition between senior unsecured notes and
mortgage debt, as well as a higher average balances of our term loan and revolving credit facility.
Investing Activities
Net cash from investing activities increased $162.1 million compared to 2015 primarily due to:
• Acquisitions of real estate decreased $139.9 million;
• Development and capital improvements to real estate increased $11.1 million;
• Net proceeds from the sale of real estate increased $45.0 million; and
• Distributions from sales of joint venture properties decreased $12.8 million; and
• Restricted cash increased $1.0 million.
Financing Activities
Cash flows used in financing activities were $127.9 million as compared to cash flows provided by financing activities of $46.5
million in 2015. This difference of $174.4 million is primarily explained by:
•
•
•
•
net proceeds from common share issuances decreased $17.3 million;
an increase in cash dividends to common shareholders of $3.7 million due an increase in our per share quarterly dividend
payment; and
a decrease in cash paid for OP unit redemptions of $2.3 million; offset in part by
a decrease in net borrowings of $157.2 million including debt extinguishment costs and deferred financing costs.
As of December 31, 2016, $263.5 million was available to be drawn on our $350.0 million unsecured revolving credit facility
subject to our compliance with 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 8 of notes to 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 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 $0.85 per common share to shareholders in 2016. In the third quarter we increased our quarterly
dividend 4.8% to $0.22 per share, or an annualized amount of $0.88 per share. Cash dividends for 2015 and 2014 were $0.8100
and $0.7625 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 are insufficient to pay total distributions for any period, alternative
funding sources could 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
$
$
$
2016
Year Ended December 31,
2015
(In thousands)
105,158
$
$
117,095
2014
110,592
(6,701)
(67,710)
(1,667)
(76,078) $
(6,977)
(63,972)
(1,804)
(72,753) $
(7,250)
(54,149)
(1,716)
(63,115)
41,017
$
32,405
$
47,477
In June 2016, we terminated our previous controlled equity offering arrangement and commenced a new distribution agreement
that registered up to 8.0 million common shares for issuance from time to time, in our sole discretion. The shares issuable in the
new distribution agreement are registered with the Securities and Exchange Commission on our registration statement on Form
S-3 (No. 333-211925).
Off Balance Sheet Arrangements
Real Estate Joint Ventures
We consolidate entities in which we own less than 100% equity interest if we have a controlling interest or are the primary
beneficiary in a variable interest entity, as defined in the Consolidation Topic of FASB ASC 810. From time to time, we enter
into joint venture arrangements from which we believe we can benefit by owning a partial interest in one or more properties.
As of December 31, 2016, our investments in unconsolidated joint ventures were approximately $3.2 million representing our
ownership interest in three joint ventures. We accounted for these entities under the equity method. Refer to Note 6 of the notes
to the consolidated financial statements for further information regarding our equity investments in unconsolidated joint ventures.
We are engaged by our joint ventures to provide asset management, property management, leasing and investing services for such
ventures' respective properties. We receive fees for our services, including a property management fee calculated as a percentage
of gross revenues received.
32
Contractual Obligations
The following are our contractual cash obligations as of December 31, 2016:
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
$
18,545
1,001,298
1,019,843
321,600
1,914
1,600
102,115
5,859
$ 1,452,931
$
$
3,203
—
3,203
41,062
1,314
100
1,485
5,859
53,023
$
$
8,095
225,165
233,260
112,062
600
300
3,635
—
349,857
$
$
3,956
162,949
166,905
88,027
—
200
1,712
—
256,844
$
$
3,291
613,184
616,475
80,449
—
1,000
95,283
—
793,207
(1) Excludes $5.1 million of unamortized mortgage debt premium and $3.7 million in deferred financing costs.
(2) Variable rate debt interest is calculated using rates at December 31, 2016.
We anticipate that the combination of cash on hand, cash provided from operating activities, the availability under our credit
facility ($263.5 million at December 31, 2016 subject to our compliance with certain covenants), our access to the capital markets
and the potential sale of existing properties will satisfy our expected working capital requirements through at least the next 12
months.
At December 31, 2016, 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, 2016, we had employment contracts with our Chief Executive, Chief Financial and Chief Operating 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 that expires in August 2019.
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.
We also have a ground lease at Centennial Shops located in Edina, Minnesota. The lease includes rent escalations throughout the
lease period and expires in April 2105.
Construction Costs
In connection with the development and expansion of various shopping centers as of December 31, 2016, we have entered into
agreements for construction activities with an aggregate cost of approximately $5.9 million.
33
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 2017, we anticipate spending between $60.0 million and $70.0 million for capital expenditures, of which $5.9 million is
reflected in the construction commitments in the above contractual obligations table. The total anticipated spending relates to
redevelopment projects, tenant improvements and leasing costs. Estimates for future spending will change as new projects are
approved.
Capitalization
At December 31, 2016 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 $3.6 million in cash)
(In thousands)
$ 1,017,327
Common shares, OP units, and dilutive securities based on market price of $16.58 at December 31, 2016
1,349,314
Convertible perpetual preferred shares based on market price of $61.28 at December 31, 2016
Total market capitalization
113,307
$ 2,479,948
Net debt to total market capitalization
41.0%
At December 31, 2016, noncontrolling interests represented a 2.4% 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 81,188,919 of our common shares of beneficial interest outstanding
at December 31, 2016, with a market value of approximately $1.3 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 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.
In addition to FFO available to common shareholders, we include Operating FFO available to common shareholders as an additional
measure of our financial and operating performance. Operating FFO excludes acquisition costs and periodic items such as
impairment provisions on land available for development or sale, bargain purchase gains, accelerated amortization of debt premiums
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 available to common shareholders and Operating FFO available to common shareholders 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.
We recognize the limitations of FFO and Operating FFO when compared to GAAP net income available to common
shareholders. FFO and Operating FFO available to common shareholders 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:
35
Net income (loss)
Net (income) loss attributable to noncontrolling partner interest
Preferred share dividends
Preferred share conversion costs
Net income (loss) available to common shareholders
Adjustments:
Rental property depreciation and amortization expense
Pro-rata share of real estate depreciation from unconsolidated joint ventures
Gain on sale of depreciable real estate
Gain on sale of joint venture depreciable real estate (1)
Provision for impairment on income-producing properties
Other gain on unconsolidated joint ventures (2)
FFO available to common shareholders
Noncontrolling interest in Operating Partnership (3)
Preferred share dividends (assuming conversion) (4)
FFO available to common shareholders and dilutive securities
$
Gain on sale of land
Provision for impairment for land available for development or sale
Loss (gain) on extinguishment of debt
Accelerated amortization of debt premium
Gain on extinguishment of joint venture debt, net of RPT expenses (1)
Acquisition costs
Preferred share conversion costs
Operating FFO available to common shareholders and dilutive securities
$
Weighted average common shares
Shares issuable upon conversion of Operating Partnership Units (3)
Dilutive effect of restricted stock
Shares issuable upon conversion of preferred shares (4)
Weighted average equivalent shares outstanding, diluted
Diluted earnings (loss) per share (5)
Per share adjustments for FFO available to common shareholders and dilutive
securities
FFO available to common shareholders and dilutive securities per share, diluted
Years Ended December 31,
2014
2015
2016
(In thousands, except per share data)
$
$
61,112
(1,448)
(6,701)
—
52,963
$
66,895
(1,786)
(6,838)
(500)
57,771
91,610
310
(34,106)
(26)
—
(215)
110,536
1,448
6,701
118,685
(1,673)
977
1,256
(128)
—
316
—
119,433
79,236
1,943
199
6,630
88,008
$
$
89,289
1,782
(13,529)
(16,489)
—
(7,892)
110,932
1,786
6,838
119,556
(4,042)
2,521
(1,414)
—
—
644
500
117,765
78,848
2,187
187
6,692
87,914
$
$
$
0.66
$
0.73
$
(0.14)
0.69
1.35
0.63
1.36
(2,412)
48
(7,250)
—
(9,614)
80,826
4,719
(10,022)
—
4,580
(117)
70,372
(48)
7,250
77,574
(835)
23,285
860
—
(106)
1,890
—
102,668
72,118
2,250
217
7,019
81,604
1.09
0.95
0.32
1.27
Per share adjustments for Operating FFO available to common shareholders and
dilutive securities
0.01
(0.02)
Operating FFO available to common shareholders and dilutive securities per
share, diluted
$
1.36
$
1.34
$
(1) Amount included in earnings (loss) from unconsolidated joint ventures.
(2)
(3)
(4)
(5)
The gain represents the difference between the carrying value and the fair value of our previously held equity investment in the joint properties triggered
by disposals of joint venture properties.
The total noncontrolling interest reflects OP units convertible 1:1 into common shares.
Series D convertible preferred shares were dilutive for FFO for the years ended December 31, 2016 and 2015, were anti-dilutive for the comparable
period in 2014. In 2016, our Series D convertible preferred shares paid annual dividends of $6.7 million and are currently convertible into approximately
6.6 million shares of common stock. They are dilutive only when earnings or FFO exceed approximately $1.01 per diluted share per year The conversion
ratio is subject to adjustment based upon a number of factors, and such adjustment could affect the dilutive impact of the Series D convertible preferred
shares on FFO and earnings per share in future periods.
The denominator to calculate diluted earnings per share excludes shares issuable upon conversion of Operating Partnership Units and preferred shares
for all periods reported. In addition, the denominator to calculate diluted earnings per share also for the year ended December 31,2014 also excludes
restricted share awards under the treasury method.
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 excludes acquisitions,
dispositions and redevelopment properties. A property is designated as redevelopment when projected costs exceed $1.0 million,
and the construction impacts approximately 20% or more of the income producing property's gross leasable area ("GLA") or the
location and nature of the construction significantly impacts or disrupts the daily operations of the property. Redevelopment may
also include a portion of certain properties designated as same property for which we are adding additional GLA or retenanting
space. 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.
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. 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 for the periods noted with consistent classification in the prior period
for presentation of Same Property NOI:
Three Months Ended December 31,
Twelve Months Ended December 31,
Property Designation
Same-property
Acquisitions (1)
Redevelopment (2)
Total wholly owned properties
2016
61
1
3
65
2015
61
1
3
65
2016
52
8
5
65
2015
52
8
5
65
(1) Includes the following property for the three months ended December 31, 2016 and 2015: Centennial Shops. Includes the following properties for
the twelve months ended December 31, 2016 and 2015: Centennial Shops, Crofton Centre, Market Plaza, Olentangy Plaza, Peachtree Hill, Rolling
Meadows, Shops on Lane Avenue and Millennium Park.
(2) Includes the following properties for the three months ended December 31, 2016 and 2015: Hunter's Square, West Oaks, and Deerfield Towne
Center. Includes the following properties for the twelve months ended December 31, 2016 and 2015: Hunter's Square, West Oaks, Deerfield Towne
Center, Merchant's Square and Promenade at Pleasant Hill. The entire property indicated for each period is completely excluded from same property
NOI.
37
The following is a reconciliation of our Operating Income to Same Property NOI:
Operating income
Adjustments:
Three Months Ended
December 31,
Twelve Months Ended
December 31,
2016
2015
2016
2015
(in thousands)
$
17,905
$
16,102
$
70,908
$
65,497
Management and other fee income
Depreciation and amortization
Acquisition costs
General and administrative expenses
Provision for impairment
Properties excluded from pool - Acquisitions
Properties excluded from pool - Development/Redevelopment
Properties excluded from pool - Dispositions
Non-comparable income/expense adjustments (1)
Recovery income proforma adjustment (2)
Adjustments to NOI attributable to partial redevelopment
Same Property NOI without redevelopment
$
(98)
21,986
198
4,967
—
(457)
(4,289)
15
(2,065)
443
(707)
37,898
$
(331)
25,042
70
5,709
—
(22)
(3,612)
(2,854)
(1,234)
(40)
(431)
38,399
(529)
91,793
316
22,041
977
(18,164)
(20,121)
(5,788)
(1,416)
322
(1,719)
$ 138,620
(1,753)
89,439
644
20,077
2,521
(6,991)
(17,977)
(11,896)
(1,300)
(161)
(1,047)
$ 137,053
(1)
(2)
Includes adjustments for items that affect the comparability of the same center NOI results. Such items include straight-line rents, net of reserves, above/
below market rents, other non-comparable operating income/expense adjustments, and the effect of lease termination income/expense.
In Q416, the Company recorded a reserve adjustment to recovery income of $483 related to a three year utility billing dispute. Because the reserve adjustment
consists of activity for a three year period and not Q416 specifically, the Company has made proforma adjustments for the amounts presented such that each
of the periods are comparable. The proforma adjustments for the three months ended December 31, 2016 and 2015 result in a comparable reserve of $40
and the proforma adjustments for the twelve months ended December 31, 2016 and 2015 result in a comparable reserve of $161.
The following table summarizing GLA and NOI at properties for which we are adding additional GLA or retenanting space. The
property is included in same property NOI, however a portion of GLA and NOI is excluded.
Property
Harvest Junction North
Parkway Shops
Spring Meadows
Shoppes at Fox River
Town & Country Crossing
Mission Bay
Total adjustments
Stable
GLA
161
89
290
267
146
207
Portion of GLA & NOI Impacted by Redevelopment
Three Months Ended December 31,
Twelve Months Ended December 31,
2016
2015
2016
2015
GLA
NOI
GLA
NOI
(in thousands)
GLA
NOI
GLA
NOI
28 $
—
25
10
31
52
146 $
(185)
—
(97)
(33)
(65)
(327)
(707)
28 $
—
25
10
31
52
146 $
(83)
—
(42)
—
(30)
(276)
(431)
(704)
28 $
(309)
55
(97)
25
(33)
10
(72)
31
(504)
52
201 $ (1,719)
(207)
28 $
(19)
55
(42)
25
10
—
(60)
31
(719)
52
201 $ (1,047)
38
Inflation
Inflation has been relatively low in recent years and has not had a significant 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, 2016, a 100 basis point change in interest rates would
impact our future earnings and cash flows by approximately $1.1 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 $2.3 million at December 31, 2016.
We had interest rate swap agreements with an aggregate notional amount of $270.0 million as of December 31, 2016. The agreements
provided for fixed rates ranging from 1.46% to 2.15% and had expirations ranging from October 2018 to March 2023.
The following table sets forth information as of December 31, 2016 concerning our long-term debt obligations, including principal
cash flows by scheduled maturity, weighted average interest rates of maturing amounts and fair market value. Net debt premium
and unamortized deferred financing costs of approximately $1.4 million are excluded:
2017
2018
2019
2020
2021
Thereafter
Total
Fair Value
(dollars in thousands)
$ 3,203
$ 39,132
$ 5,860
$ 102,269
$114,508
$ 640,746
$ 905,718
$ 902,621
5.6%
4.7%
$ — $ 86,000
$
—%
2.1%
6.8%
— $
—%
3.9%
— $
—%
4.3%
3.4%
— $ 28,125
—%
4.2%
4.2%
4.2%
$ 114,125
$ 114,125
2.6%
2.6%
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, 2016 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.
39
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, 2016 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, 2016.
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.
40
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, 2016:
(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))
71,073
—
71,073
$34.69
—
$34.69
1,412,166
—
1,412,166
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 57,140 common shares and 13,933 deferred common shares (see
Note 15 of the notes to the consolidated financial statements for further information regarding options).
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.
41
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
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.
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.
42
10.3
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
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. **
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.
2016 Executive Incentive Plan, dated February 29, 2016, incorporated by reference to Exhibit 10.1
to the Company’s Current Report on Form 8-K dated March 4, 2016.
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.
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
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.
43
10.18
10.18
10.20
10.21
10.22
10.23
10.24
10.25
10.26
10.27
10.28
10.29
10.30
$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-Gershenson 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.
Fifth 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.
Sixth Amendment to Third Amended and Restated Unsecured Master Loan Agreement, dated March
4, 2016 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
March 31, 2016.
44
10.31
10.32
10.33
10.34
10.35
12.1*
21.1*
23.1*
31.1*
31.2*
32.2*
Employment Agreement dated April 20, 2015, between Ramco-Gershenson Properties Trust and John
Hendrickson incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K
dated April 23, 2015.
Agreement for Partial Liquidation of Joint Venture between Ramco HMW LLC, Ramco Gershenson
Properties, L.P., Ramco 450 Venture LLC and the State Board of Administration of Florida dated June
29, 2015 incorporated by reference to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q
ended June 30, 2015.
$100 Million Note Purchase Agreement, by Ramco-Gershenson Properties, L.P. dated September 30,
2015 incorporated by reference to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q ended
September 30, 2015.
Employment Agreement, dated December 16, 2015, between Ramco-Gershenson Properties Trust and
Geoffrey Bedrosian incorporated by reference to Exhibit 10.1 to the Company's Current Report on
Form 8-K dated December 18, 2015.
$75 Million Note Purchase Agreement, by Ramco-Gershenson Properties, L.P. dated August 19, 2016
incorporated by reference to Exhibit 10.1 to the Company's Quarterly Report on Form 8-K dated July
8, 2016.
Computation of Ratio of Earnings to Combined Fixed Charges and Preferred Share Dividends.
Subsidiaries
Consent of Grant Thornton LLP.
Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS(1)
101.SCH(1)
101.CAL(1)
101.DEF(1)
101.LAB(1)
101.PRE(1)
XBRL Instance Document
XBRL Taxonomy Extension Schema
XBRL Extension Calculation
XBRL Extension Definition
XBRL Taxonomy Extension Label
XBRL Taxonomy Extension Presentation
* Filed herewith
** Management contract or compensatory plan or arrangement
(1) Pursuant to Rule 406T of Regulations S-T, these interactive data files are deemed not filed or part of a registration statement or
prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, are deemed not filed for purposes of Sections 18 of the
Securities Exchange Act of 1924 and otherwise are not subject to liability thereunder.
15(b) The exhibits listed at item 15(a)(3) that are noted ‘filed herewith’ are hereby filed with this report.
15(c) The financial statement schedules listed at Item 15(a)(2) are hereby filed with this report.
45
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 23, 2017
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 23, 2017
By: /s/ Stephen R. Blank
Stephen R. Blank,
Chairman
Dated:
February 23, 2017
By: /s/ Dennis E. Gershenson
Dennis E. Gershenson,
Trustee, President and Chief Executive Officer
(Principal Executive Officer)
Dated:
February 23, 2017
Alice M. Connell
Trustee
Dated:
February 23, 2017
By: /s/ Arthur H. Goldberg
Arthur H. Goldberg,
Trustee
Dated:
February 23, 2017
By: /s/ David J. Nettina
David J. Nettina,
Trustee
Dated:
February 23, 2017
By: /s/ Joel M. Pashcow
Joel M. Pashcow,
Trustee
Dated:
February 23, 2017
By: /s/ Mark K. Rosenfeld
Mark K. Rosenfeld,
Trustee
Dated:
February 23, 2017
By: /s/ Laurie M. Shahon
Laurie M. Shahon,
Trustee
Dated:
February 23, 2017
By: /s/ Michael A. Ward
Michael A. Ward,
Trustee
Dated:
February 23, 2017
By: /s/ Geoffrey Bedrosian
Geoffrey Bedrosian,
Chief Financial Officer and Secretary
(Principal Financial Officer)
46
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, 2016 and 2015
Page
F-2
F-3
F-4
F-5
Consolidated Statements of Operations and Comprehensive Income (Loss) - Years Ended December 31, 2016, 2015, and 2014
F-6
Consolidated Statements of Shareholders’ Equity - Years Ended December 31, 2016, 2015, and 2014
Consolidated Statements of Cash Flows – Years Ended December 31, 2016, 2015, and 2014
Notes to Consolidated Financial Statements
Schedule to Consolidated Financial Statements
F-7
F-8
F-9
F-35
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, 2016 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, 2016.
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, 2016, 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, 2016, 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, 2016, and our report dated February 23,
2017 expressed an unqualified opinion on those financial statements.
/s/ GRANT THORNTON LLP
Southfield, Michigan
February 23, 2017
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, 2016 and 2015, 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,
2016. Our audits of the basic consolidated financial statements included the financial statement schedule listed in the index
appearing under Item 15(a)(2). 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, 2016 and 2015, and the results of their operations and
their cash flows for each of the three years in the period ended December 31, 2016 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, 2016, 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 23, 2017 expressed an unqualified opinion.
/s/GRANT THORNTON LLP
Southfield, Michigan
February 23, 2017
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
Real estate held for sale
Net real estate
Equity investments in unconsolidated joint ventures
Cash and cash equivalents
Restricted cash
Accounts receivable, net
Acquired lease intangibles, net
Other assets, net
TOTAL ASSETS
LIABILITIES AND SHAREHOLDERS' EQUITY
Notes payable, net
Capital lease obligation
Accounts payable and accrued expenses
Acquired lease intangibles, net
Other liabilities
Distributions payable
TOTAL LIABILITIES
Commitments and Contingencies
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), 1,849 shares
issued and outstanding as of December 31, 2016 and 2015, respectively
Common shares of beneficial interest, $0.01 par, 120,000 shares authorized, 79,272 and
79,162 shares issued and outstanding as of December 31, 2016 and 2015, respectively
Additional paid-in capital
Accumulated distributions in excess of net income
Accumulated other comprehensive income (loss)
TOTAL SHAREHOLDERS' EQUITY ATTRIBUTABLE TO RPT
Noncontrolling interest
TOTAL SHAREHOLDERS' EQUITY
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
The accompanying notes are an integral part of these consolidated financial statements.
F-5
December 31,
2016
2015
$
$
$
374,889
1,757,781
(345,204)
1,787,466
61,224
8,776
1,857,466
3,150
3,582
11,144
24,016
72,424
89,716
2,061,498
1,021,223
1,066
57,357
63,734
6,800
19,627
1,169,807
392,352
1,792,129
(331,520)
1,852,961
60,166
453
1,913,580
4,325
6,644
8,708
26,116
88,819
87,890
2,136,082
1,083,711
1,108
53,762
64,193
10,035
18,807
1,231,616
92,427
92,427
793
1,158,430
(381,912)
985
870,723
20,968
891,691
2,061,498
$
792
1,156,345
(365,747)
(1,404)
882,413
22,053
904,466
2,136,082
$
$
$
$
RAMCO-GERSHENSON PROPERTIES TRUST
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
(In thousands, except per share amounts)
Year Ended December 31,
2015
2014
2016
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 from unconsolidated joint ventures
Interest expense
Amortization of deferred financing fees
Other gain on unconsolidated joint ventures
(Loss) gain on extinguishment of debt
NET INCOME (LOSS) BEFORE TAX
Income tax provision
NET INCOME (LOSS)
Net (income) loss attributable to noncontrolling partner interest
NET INCOME (LOSS) ATTRIBUTABLE TO RPT
Preferred share dividends
Preferred share conversion costs
NET INCOME (LOSS) AVAILABLE TO COMMON SHAREHOLDERS
EARNINGS (LOSS) PER COMMON SHARE
Basic
Diluted
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
Basic
Diluted
OTHER COMPREHENSIVE INCOME (LOSS)
Net income (loss)
Other comprehensive income (loss):
Gain (loss) on interest rate swaps
Comprehensive income (loss)
Comprehensive (income) loss attributable to noncontrolling interest
COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO RPT
$
$
$
$
$
$
$
$
$
$
192,793
600
62,841
4,167
529
260,930
41,739
29,581
3,575
91,793
316
22,041
977
190,022
70,908
(177)
35,781
454
(43,071)
(1,443)
215
(1,256)
61,411
(299)
61,112
(1,448)
59,664
(6,701)
—
52,963
0.66
0.66
79,236
79,435
$
$
$
$
183,198
539
61,561
4,739
1,753
251,790
38,737
30,604
4,271
89,439
644
20,077
2,521
186,293
65,497
(624)
17,570
17,696
(40,778)
(1,433)
7,892
1,414
67,234
(339)
66,895
(1,786)
65,109
(6,838)
(500)
57,771
0.73
0.73
78,848
79,035
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)
48
(2,364)
(7,250)
—
(9,614)
(0.14)
(0.14)
72,118
72,118
61,112
$
66,895
$
(2,412)
2,442
63,554
(1,501)
62,053
$
570
67,465
(1,794)
65,671
$
(2,115)
(4,527)
113
(4,414)
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
Accumulated
Distributions
in Excess of
Net Income
Accumulated
Other
Comprehensive
(Loss) Income
Preferred
Shares
Common
Shares
Balance, December 31, 2013
100,000
Issuance of common shares, net of costs
Conversion and redemption of OP unit holders
Share-based compensation and other expense,
net of shares withheld for employee taxes
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 loss
—
—
—
—
—
—
—
—
—
667
107
—
2
—
—
—
—
—
—
Additional
Paid-in
Capital
959,183
170,265
—
814
—
—
—
—
—
—
(291,647)
—
—
—
(56,905)
(7,250)
—
(359)
—
(2,364)
Balance, December 31, 2014
100,000
776
1,130,262
(358,525)
Issuance of common shares, net of costs
Conversion and redemption of OP unit holders
Conversion of preferred shares
Share-based compensation and other expense,
net of shares withheld for employee taxes
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
—
—
(7,573)
—
—
—
—
—
—
—
9
—
5
2
—
—
—
—
—
—
17,101
—
7,568
1,414
—
—
—
—
—
—
—
—
(500)
—
(64,656)
(6,838)
—
(337)
—
65,109
Balance, December 31, 2015
92,427
792
1,156,345
(365,747)
(1,404)
Issuance of common shares, net of costs
Conversion and redemption of OP unit holders
Share-based compensation and other expense,
net of shares withheld for employee taxes
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
—
—
—
—
—
—
—
—
—
—
—
1
—
—
—
—
—
—
(202)
—
2,287
—
—
—
—
—
—
—
(598)
—
(68,160)
(6,701)
—
(370)
—
59,664
—
—
—
—
—
—
—
2,389
—
Balance, December 31, 2016
$ 92,427
$
793
$ 1,158,430
$
(381,912) $
985
$
20,968
$
891,691
The accompanying notes are an integral part of these consolidated financial statements.
F-7
84
—
—
—
—
—
—
—
(2,050)
—
(1,966)
—
—
—
—
—
—
—
—
562
—
Noncontrolling
Interest
27,802
—
(84)
—
—
—
(1,744)
—
(65)
(48)
25,861
—
(3,826)
—
—
—
—
(1,776)
—
8
1,786
22,053
—
(919)
—
—
—
(1,667)
—
53
1,448
Total
Shareholders’
Equity
796,089
170,372
(84)
816
(56,905)
(7,250)
(1,744)
(359)
(2,115)
(2,412)
896,408
17,110
(3,826)
(500)
1,416
(64,656)
(6,838)
(1,776)
(337)
570
66,895
904,466
(202)
(1,517)
2,288
(68,160)
(6,701)
(1,667)
(370)
2,442
61,112
RAMCO-GERSHENSON PROPERTIES TRUST
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Year Ended December 31,
2015
2014
2016
OPERATING ACTIVITIES
Net income (loss)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
$
61,112
$
66,895
$
(2,412)
Depreciation and amortization
Amortization of deferred financing fees
Income tax provision
Earnings from unconsolidated joint ventures
Distributions received from operations of unconsolidated joint ventures
Provision for impairment
Loss (gain) on extinguishment of debt
Other gain on unconsolidated joint ventures
Gain on sale of real estate
Amortization of premium on mortgages and notes payable, net
Share-based compensation expense
Long-term incentive cash compensation expense (benefit)
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
Net change in restricted cash
Investment in unconsolidated joint ventures
Net cash provided by (used in) investing activities
FINANCING ACTIVITIES
Proceeds on mortgages and notes payable
Repayment of mortgages and notes payable
Proceeds on revolving credit facility
Repayments 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
Redemption of operating partnership units for cash
Conversion of preferred shares
Dividends paid to preferred shareholders
Dividends paid to common shareholders
Distributions paid to operating partnership unit holders
Net cash (used in) 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
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid for interest (net of capitalized interest of $743, $1,613 and $1,862, respectively)
Escrowed proceeds used in acquisition of real estate
The accompanying notes are an integral part of these consolidated financial statements.
F-8
91,793
1,443
299
(454)
496
977
1,256
(215)
(35,781)
(1,815)
2,861
664
1,859
674
(8,074)
117,095
89,439
1,433
339
(17,696)
1,744
2,521
(1,414)
(7,892)
(17,570)
(1,687)
1,888
(271)
(6,708)
4,529
(10,392)
105,158
(12,990) $
(72,038)
90,975
1,303
496
—
7,746
(152,923) $
(60,923)
45,960
14,098
(545)
—
(154,333)
75,000
(149,956)
185,000
(159,000)
(410)
(698)
(202)
(42)
(1,517)
—
(6,701)
(67,710)
(1,667)
(127,903)
(3,062)
6,644
3,582
$
$
150,000
(92,305)
246,000
(196,000)
—
(522)
17,110
(720)
(3,826)
(500)
(6,977)
(63,972)
(1,804)
46,484
(2,691)
9,335
6,644
— $
60,048
$
$
$
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
(264,414)
(80,742)
34,156
—
(4,709)
(14)
(315,723)
275,000
(153,795)
250,000
(267,000)
—
(2,379)
170,372
(328)
(84)
—
(7,250)
(54,149)
(1,716)
208,671
3,540
5,795
9,335
58,634
46,937
18,990
$
$
42,898
$
— $
35,507
—
$
$
$
$
$
$
RAMCO-GERSHENSON PROPERTIES TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years Ended December 31, 2016, 2015 and 2014
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 65 wholly
owned shopping centers comprising approximately 14.5 million square feet. We also have ownership interests of 7%, 20% and
30%, respectively, in three joint ventures, two of which own a single 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 several land parcels that are available for development or sale. Most of our properties are anchored
by supermarkets and/or national chain stores. The Company's credit risk, therefore, is concentrated in the retail industry.
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
The consolidated financial statements include the accounts of us and our majority owned subsidiary, the Operating Partnership,
Ramco-Gershenson Properties, L.P. (97.6%, 97.6% and 97.2% owned by us at December 31, 2016, 2015 and 2014, 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.
Use of Estimates
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 consolidated financial statements and footnotes in order
to conform to the current presentation.
Correction of Immaterial Error
In the fourth quarter of 2016, management identified that certain accruals related to real estate taxes primarily associated with
shopping centers acquired prior to 2014 required correction. The cumulative adjustment to correct the accruals approximated
$9.3 million. The correction had no impact on earnings or cash flows for 2015 and 2014.
Pursuant to the guidance of Staff Accounting Bulletin ("SAB") No. 99, Materiality, the Company concluded that the adjustments
were not material to any of its prior period financial statements. Although the adjustments were immaterial to prior periods, the
prior period financial statements were revised, in accordance with SAB No. 108, Considering the Effects of Prior Year Misstatements
F-9
when Quantifying Misstatements in Current Year Financial Statements, due to the significance of the out-of-period correction in
the fourth quarter of 2016.
A reconciliation of the effects of the correction to the previously reported balance sheet at December 31, 2015 follows:
Accounts receivable, net
Total assets
Accounts payable and accrued expenses
Total liabilities
Accumulated distributions in excess of net income
Noncontrolling interest
Total shareholder's equity
As reported
18,705
2,128,671
44,480
December 31, 2015
Adjustment
(In thousands)
7,411
$
$
$
7,411
9,282
$
$
$
1,222,334
$
(363,937) $
$
22,114
906,337
$
9,282
$
(1,810) $
(61) $
(1,871) $
$
$
$
$
$
$
$
Adjusted
26,116
2,136,082
53,762
1,231,616
(365,747)
22,053
904,466
A reconciliation of the effects of the correction to the previously reported statement of stockholders' equity for the years ending
December 31, 2015, 2014 and 2013 follows:
Accumulated distributions in excess of net income, as reported
Correction
Accumulated distributions in excess of net income, adjusted
Noncontrolling interest, as reported
Correction
Noncontrolling interest, adjusted
Revenue Recognition and Accounts Receivable
Year Ended December 31,
2015
2014
2013
(In thousands)
(363,937) $
(1,810)
(365,747) $
(356,715) $
(1,810)
(358,525) $
(289,837)
(1,810)
(291,647)
22,114
(61)
22,053
$
$
25,922
(61)
25,861
$
$
27,863
(61)
27,802
$
$
$
$
Our shopping center space is generally leased to retail tenants under leases that are classified as operating leases. We recognize
minimum rents using the straight-line method over the terms of the leases commencing when the tenant takes possession of the
space or when construction of landlord funded improvements is substantially complete. Certain of the leases also provide for
contingent percentage rental income which is recorded on an accrual basis once the specified target that triggers this type of income
is achieved. The leases also provide for reimbursement from tenants for common area maintenance (“CAM”), insurance, real
estate taxes and other operating expenses ("Recovery Income"). The majority of our Recovery Income is estimated and recognized
as revenue in the period the recoverable costs are incurred or accrued. Revenues from management, leasing, and other fees are
recognized in the period in which the services have been provided and the earnings process is complete. Lease termination income
is recognized when a lease termination agreement is executed by the parties and the tenant vacates the space. When a lease is
terminated early but the tenant continues to control the space under a modified lease agreement, the lease termination fee is
generally recognized evenly over the remaining term of the modified lease agreement.
Current accounts receivable from tenants primarily relate to contractual minimum rent, percentage rent and recovery income.
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
F-10
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, 2016 and 2015, our accounts receivable were $24.0 million and $26.1 million, respectively, net of allowances for
doubtful accounts of $1.9 million and $2.8 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, 2016 and 2015, net of allowances of $3.2 million and $3.5 million was $18.8 million and $17.4 million,
respectively. To the extent any of the tenants under these leases become unable to pay its contractual cash rents, we may be required
to write down the straight-line rent receivable from that tenant, which would reduce our operating income.
Real Estate
Real estate assets that we own directly are stated at cost less accumulated depreciation. Depreciation is computed using the straight-
line method. The estimated useful lives for computing depreciation are generally 10 – 40 years for buildings and improvements
and 5 – 30 years for parking lot surfacing and equipment. We capitalize all capital improvement expenditures associated with
replacements and improvements to real property that extend the property's 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 lesser of the useful life of the improvements or the term of the related tenant lease. We also capitalize direct internal and
external costs of procuring leases and amortize them over the base term of the lease. If a tenant vacates before the expiration of
its lease, we charge unamortized leasing costs and undepreciated tenant leasehold 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 legally binding.
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 allocate
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 are computed using
the straight-line method over the estimated useful lives of 40 years for buildings, and over the remaining terms of any intangible
asset contracts and the respective tenant leases, which may include bargain renewal options. The impact of these estimates,
including 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.
Real estate also includes costs incurred in the development of new operating properties and the redevelopment of existing operating
properties. These properties are carried at cost and no depreciation is recorded on these assets until the commencement of rental
revenue or no later than one year from the completion of major construction. These costs include pre-development costs directly
identifiable with the specific project, development and construction costs, interest, real estate taxes and insurance. Interest is
capitalized on land under development and buildings under construction based on the weighted average rate applicable to our
borrowings outstanding during the period and the weighted average balance of qualified assets under development/redevelopment
during the period. Indirect project costs associated with development or construction of a real estate project are capitalized until
the earlier of one year following substantial completion of construction or when the property becomes available for occupancy.
The capitalized costs associated with development and redevelopment projects are depreciated over the useful life of the
improvements. If we determine a development or redevelopment project is no longer probable, we expense all capitalized costs
which are not recoverable.
F-11
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, is 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, is 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.
In the third quarter 2016, we recorded an impairment provision totaling $1.0 million related to developable land that was
subsequently sold in the fourth quarter of 2016. The adjustment was triggered by an unforeseen increase in development costs
and changes in the associated sales price assumptions.
Investments in Real Estate Joint Ventures
We have three 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 6 of the notes to the consolidated financial statements for further
information regarding our equity investments in unconsolidated joint ventures.
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 2016, 2015 or 2014.
Deferred Financing Costs
Debt issuance costs related to a recognized debt liability is presented in the balance sheet as a direct deduction from the carrying
amount of that debt liability, consistent with debt discounts. Unamortized debt issuance costs of $3.7 million and $3.8 million
are included in Notes payable, net as of December 31, 2016 and 2015, respectively.
Debt issuance costs associated with a line of credit arrangement is classified as an asset and subsequently amortized ratably over
the term of the line of credit arrangement, regardless of whether there are any outstanding borrowings on the line of credit
arrangement. Unamortized debt issuance costs related to our unsecured revolving credit facility of $1.2 million and $1.9 million
are included in Other assets, net as of December 31, 2016 and 2015, respectively.
F-12
Other Assets, net
Other assets consist primarily of acquired lease intangibles, straight-line rent receivable, deferred leasing costs, deferred financing
costs related to our unsecured revolving credit facility and prepaid expenses. Other assets also include 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 related to our unsecured revolving credit facility 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 deferred 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, 2016, we had $4.0 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 15 of the notes to the consolidated
financial statements for further information regarding our share based compensation.
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, 2016, 2015, and 2014, we sold various properties and land parcels at a gain, resulting in both a federal and state
tax liability. See Note 16 of the notes to the consolidated financial statements for further information regarding income taxes.
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 the Operating Partnership 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-13
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
is located outside the United States. Accordingly, we have a single reportable segment for disclosure purposes.
2. Recently Issued Accounting Pronouncements
In January 2017, the FASB issued ASU 2017-01, "Clarifying the Definition of a Business." ASU 2017-01 changes the definition
of a business to exclude acquisitions where substantially all of the fair value of the assets acquired are concentrated in a single
identifiable asset or a group of similar identifiable assets. Given this change in definition, we believe most of our shopping center
acquisitions will no longer be considered business combinations but rather asset acquisitions. While there are various differences
between the accounting for an asset acquisition and a business combination, we expect the largest impact will be that transaction
costs are capitalized for asset acquisitions rather than currently expensed when they are considered business combinations. The
new guidance will be applied prospectively to any transactions occurring in the period of adoption. ASU 2017-01 is effective
January 1, 2019, however, we expect to early adopt this standard in 2017.
In November 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update (“ASU”) 2016-18,
which requires that a statement of cash flows explain the change during the period in the total cash, cash equivalents and amounts
described as restricted cash or restricted cash equivalents. Restricted cash is to be included with cash and cash equivalents when
reconciling the beginning of the period and end of the period amounts shown on the statement of cash flows. This update is effective
for annual periods beginning after December 15, 2017, and interim periods within those fiscal years, with early adoption permitted,
including adoption in an interim period. We are currently evaluating the guidance and have not determined the impact this standard
may have on our consolidated financial statements.
In August 2016, the FASB issued ASU 2016-15, which clarifies the treatment of several cash flow categories. In addition, ASU
2016-15 clarifies that when cash receipts and cash payments have aspects of more than one class of cash flows and cannot be
separated, classification will depend on the predominant source or use. This update is effective for annual periods beginning after
December 15, 2017, and interim periods within those fiscal years, with early adoption permitted, including adoption in an interim
period. We are currently evaluating the guidance and have not determined the impact this standard may have on our consolidated
financial statements.
In June 2016, the FASB updated Accounting Standards Codification ("ASC") Topic 326 "Financial Instruments - Credit Losses"
with 2016-13 “Measurement of Credit Losses on Financial Instruments.” ASU 2016-13 enhances the methodology of measuring
expected credit losses to include the use of forward-looking information to better inform credit loss estimates. ASU 2016-13 is
effective for annual periods (including interim periods within those periods) beginning after December 15, 2019. We are currently
evaluating the guidance and have not determined the impact this standard may have on our consolidated financial statements.
In March 2016, the FASB updated ASC Topic 718 "Compensation - Stock Compensation" with ASU 2016-09 "Improvements to
Employee Share-Based Payment Accounting." ASU 2016-09 simplifies several aspects of share-based payment award transactions,
including tax consequences, classification of awards and the classification on the statement of cash flows. ASU 2016-09 is effective
for annual periods (including interim periods within those periods) beginning after December 15, 2016. The adoption of this
standard will not have a material impact on our consolidated financial statements.
In February 2016, the FASB updated ASC Topic 842 "Leases." In ASU 2016-02, which requires lessees to record operating and
financing leases as assets and liabilities on the balance sheet and lessors to expense costs that are not direct leasing costs. ASU
2016-02 is effective for periods beginning after December 15, 2018, with early adoption permitted upon issuance using a modified
retrospective approach. We are currently evaluating the effect that ASU 2016-02 will have on our consolidated financial statements
and related disclosures.
In May 2014, the FASB issued ASU 2014-09 "Revenue from Contract with Customers" as a new Topic, 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 it 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
F-14
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. Adoption shall be applied using either a full retrospective or modified retrospective approach and the standard
is effective for annual reporting periods (including interim periods within those periods) beginning after December 15, 2017.
While we are still completing the assessment of the impact of this standard to our consolidated financial statements, we believe
the majority of our revenue falls outside of the scope of this guidance.
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.
Following is the detail of the construction in progress and land available for development or sale as of December 31, 2016 and
2015:
Construction in progress
Land available for development
Land available for sale
Total
December 31,
2016
2015
(In thousands)
$
$
23,445
26,805
10,974
61,224
$
$
20,603
28,503
11,060
60,166
Construction in progress represents existing development, redevelopment and tenant build-out projects. When projects are
substantially complete and ready for their intended use, balances are transferred to land or building and improvements as appropriate.
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. At December 31, 2016, we had five projects under pre-development.
F-15
4. Property Acquisitions and Dispositions
Acquisitions
The following table provides a summary of our acquisitions during 2016 and 2015:
Property Name
Location
2016
Centennial Shops
Total acquisitions
2015
Millennium Park (1)
Edina, MN
Livonia, MI
Spring Meadows - Kroger Building
Holland, OH
Ramco 450 - 6 Income Producing
Properties (1)
Jackson Plaza
West Oaks II - Petco parcel
Total income producing acquisitions
GA, IL, OH, & MD
Jackson, MI
Novi, MI
Gaines Marketplace
Gaines Township, MI
Lakeland Park Center
Total land acquisitions
Total acquisitions
Lakeland, FL
GLA
Acreage
Date
Acquired
Purchase
Price
Debt
(In thousands)
(In thousands)
Gross
85
85
273
51
1,126
15
26
1,491
N/A
N/A
1,491
—
—
—
—
N/A
10/11/16
$
$
31,980
31,980
$
$
N/A
N/A
N/A
N/A
N/A
1.9
1.6
3.5
3.5
08/15/15
$
47,000
$
08/06/15
4,110
07/21/15
06/22/15
06/10/15
02/12/15
01/23/15
191,090
60,048
5,000
5,500
—
—
252,700
60,048
1,000
$
475
1,475
—
—
—
$
254,175
$
60,048
(1) Acquired from related parties. See note 1 to the fair value of the acquisitions table following.
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 3 fair value
measurements:
December 31,
2016
2015
2014
Land
Buildings and improvements
Above market leases
Ground leasehold
Lease origination costs
Other assets
Below market leases
Premium for above market interest rates on assumed debt
Capital lease obligation
Total purchase price allocated
Mortgages notes assumed
RPT's fair value of existing ownership (1)
Net assets acquired
$
$
— $
(In thousands)
50,367
183,651
1,014
—
32,683
4,256
(16,616)
(1,180)
—
254,175
(60,048)
(41,204)
152,923
$
$
$
55,618
235,322
4,775
—
23,343
30,883
(18,836)
(6,830)
(1,167)
323,108
(58,634)
—
264,474
29,639
—
2,203
4,717
813
(5,392)
—
—
31,980
—
—
31,980
(1) We acquired our partner's 80% interest in six properties owned by the Ramco 450 Venture LLC ("Ramco 450") and our
partner's 70% interest in Millennium Park owned by the Ramco/Lion Venture LP ("RLV").
F-16
Total revenue and net income for the 2016 acquisition included in our consolidated statement of operations for the year ended
December 31, 2016 were $0.9 million and $42.2 thousand, respectively.
Unaudited Proforma Information
If the 2016 and 2015 acquisitions had occurred on January 1, 2015, our consolidated revenues and net income for the years ended
December 31, 2016 and 2015 would have been as follows:
Consolidated revenue
Consolidated net income available to common shareholders
Years Ended December 31,
2016
2015
$
$
(in thousands)
263,819
53,105
$
$
269,271
59,282
F-17
Dispositions
Pursuant to the criteria established under ASC Topic 360 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 classification criteria. As of December 31, 2016, we had one property classified as
held for sale with a net book value of $8.8 million included in Net real estate. The purchase and sale agreement was executed in
December 2016 and we closed on the disposition in February 2017. In addition, subsequent to year-end, the Company executed
a purchase and sale agreement on another property with a net book value of $6.1 million with the disposition expected to close in
March 2017. As of December 31, 2015, the Company had one parcel of land classified as held for sale which was sold in January
2016.
The following table provides a summary of our disposition activity during 2016 and 2015.
Property Name
Location
GLA
Acreage
Date Sold
(In thousands)
Gross
Sales
Price
Gain (loss)
on Sale
(In thousands)
2016
Shoppes at Fairlane Meadows
Livonia Plaza
Lakeshore Marketplace
River Crossing Centre
Centre at Woodstock
Troy Towne Center
Total income producing dispositions
Lakeland Park Center - Outparcel
Harvest Junction LLC - Outparcel
Conyers Crossing - Chipotle Outparcel
Lakeshore Marketplace - Outparcel
The Towne Center at Aquia - Outparcel
Total outparcel dispositions
Total dispositions
2015
Horizon Village
Cocoa Commons
Conyers Crossing
Total income producing dispositions
The Towne Center at Aquia - Commercial /
Residential Outparcels
Taylors Square - Outparcel
Dearborn, MI
Livonia, MI
Norton Shores, MI
New Port Ritchey, FL
Woodstock, GA
Troy, OH
Lakeland, FL
Longmont, CO
Conyers, GA
Norton Shores, MI
Stafford, VA
Suwanee, GA
Cocoa, FL
Conyers, GA
Stafford, VA
Taylors, SC
Gaines Marketplace-Target and Shell Oil Parcels
Gaines Township, MI
Total outparcel dispositions
157
137
343
62
87
144
930
N/A
N/A
N/A
N/A
N/A
930
97
90
170
357
35
N/A
N/A
35
N/A
N/A
4.6
N/A
N/A
N/A
4.6
3.2
6.4
0.5
0.7
0.7
11.5
16.1
N/A
N/A
1.3
1.3
32.8
0.6
11.3
44.7
09/30/16
$
20,333
$
09/20/16
06/30/16
06/29/16
06/29/16
02/02/16
19,800
27,750
12,500
16,000
12,400
484
9,091
6,368
6,750
5,893
6,274
$
108,783
$
34,860
12/29/16
$
1,829
$
12/15/16
06/27/16
06/15/16
01/15/16
1,000
1,000
302
750
$
4,881
$
113,664
$
$
12/23/15
$
9,300
$
11/19/15
09/30/15
12,000
9,750
$
31,050
$
05/29/15
04/22/15
02/12/15
13,350
250
5,150
$
18,750
$
76
21
579
(6)
251
921
35,781
1,268
2,420
4,536
8,224
495
(16)
3,196
3,675
Gain recognized on sale of joint venture real estate (1)
—
—
—
5,671
Total dispositions
392
46.0
$
49,800
$
17,570
(1) Represents the net proceeds from a joint venture property sale to a third party in October 2015.
Approximately $19.0 million of the proceeds related to the Livonia Plaza disposition were placed into escrow at closing for the
acquisition of Centennial Shops under an Internal Revenue Code Section 1031 exchange.
F-18
In August 2016, we conveyed the title to and interest in The Towne Center at Aquia to the mortgage lender for the property. At
the time of conveyance, the outstanding balance of the mortgage loan was $11.8 million, resulting in a loss on extinguishment
of debt of $0.8 million.
5. Impairment Provisions
We established provisions for impairment for the following consolidated assets:
Land available for development or sale (1)
Income producing properties marketed for sale
Total
2016
$
$
977
—
977
$
$
Year Ended
December 31,
2015
(In thousands)
2,521
—
2,521
$
$
2014
23,285
4,580
27,865
During 2016, unforeseen increases in development costs and changes in associated sales price assumptions related to land held
for development or sale resulted in an impairment provision of $1.0 million.
During 2015, unforeseen increases in development costs and changes in associated sales price assumptions related to land held
for development or sale resulted in an impairment provision of $2.5 million
During 2014, changes to development plans and to estimated fair values triggered an impairment provision of $23.3 million
associated with land available for development or sale. As well, the Company's 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.
F-19
6. Equity Investments in Unconsolidated Joint Ventures
We have three joint venture agreements whereby we own 7%, 20% and 30%, respectively, of the equity in each 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
Other liabilities
Owners' equity
Total Liabilities and Owners' Equity
RPT's equity investments in unconsolidated joint ventures
December 31,
2016
2015
(In thousands)
$
$
$
$
$
43,995
3,712
47,707
219
47,488
47,707
3,150
$
$
$
$
$
63,623
4,230
67,853
750
67,103
67,853
4,325
Statements of Operations
2016
Total revenue
Total expenses
Gain on sale of real estate
Gain on extinguishment of debt
Net income from continuing operations
Discontinued operations (1)
Gain on sale of real estate (2)
Income (loss) from discontinued operations
Net income (loss) from discontinued operations
Net income (loss)
RPT's share of earnings from unconsolidated joint ventures
$
$
$
Years Ended December 31,
2015
(In thousands)
10,297
$
(7,113)
9,237
—
12,421
4,742
(3,030)
—
—
1,712
$
371
492
863
2,575
454
$
$
3,025
857
3,882
16,303
17,696
$
$
2014
14,038
(10,848)
740
529
4,459
—
(7,477)
(7,477)
(3,018)
75
(1) Discontinued operations reflects results of operations for those properties that meet the criteria for discontinued operations under ASU
2014-08.
(2) During 2015 Ramco 450 sold all of the properties from the joint venture. Ramco acquired its partners interest in six properties, our joint
venture partner acquired our interest in one property and the final property, Chester Springs, was sold to an unrelated third party. The
seven properties sold to partners in the venture generated a gain of $65.6 million, our share, $13.1 million, is recognized in the earnings
(loss) from unconsolidated joint ventures. Ramco 450 recognized the gain as a distribution to the partners.
F-20
Dispositions
The following table provides a summary of our unconsolidated joint venture property disposition activity during 2016 and 2015.
Property Name
Location
GLA
(In thousands)
Ownership % Date Sold
Gross Sales
Price
Debt
Repaid
(In thousands)
Gain on
Sale (at
100%)
2016
Kissimmee West Shopping
Center
Kissimmee, FL
116
116
7% 6/14/2016
$ 19,400
$ 19,400
RPT proportionate share of gross sales price and gain on sale of joint venture property
$
1,358
$
$
$
— $
371
— $
371
— $
26
2015
Ramco 450 Venture LLC
Chester Springs
Chester, NJ
223
20% 10/8/2015
$ 53,781
$ 22,000
$
3,025
Partners Portfolio - 7 Income
Producing Properties
FL, GA, IL, OH,
& MD
1,440
1,663
20% 7/21/2015
291,908
117,959
65,566
$ 345,689
$139,959
$ 68,591
RPT proportionate share of gross sales price and gain on sale of joint venture property
$ 69,138
$ 27,992
$ 13,718
Ramco/Lion Venture LP
Millennium Park
Livonia, MI
Village of Oriole Plaza
Delray Beach, FL
273
156
429
30% 8/11/2015 $ 47,000
$ 29,658
30% 3/24/2015
27,500
—
$ 74,500
$ 29,658
RPT proportionate share of gross sales price and gain on sale of joint venture property
$ 22,350
$ 8,897
$
$
$
1,776
7,463
9,239
2,772
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 ventures' 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:
Years Ended December 31,
2015
(In thousands)
1,149
$
311
108
185
1,753
318
118
45
48
529
$
$
$
2014
1,514
315
—
230
2,059
Management fees
Leasing fees
Acquisition/disposition fees
Construction fees
Total
2016
$
$
F-21
7. Other Assets, Net and Acquired Lease Intangible Assets, Net
Other assets, net consisted of the following:
Deferred leasing costs, net
Deferred financing costs on unsecured revolving credit facility, net
Acquired development agreements (1)
Ground leasehold intangible
Other, net
Total amortizable other assets
Straight-line rent receivable, net
Goodwill
Cash flow hedge mark-to-market asset
Prepaid and other deferred expenses, net
Other assets, net
December 31,
2016
2015
(In thousands)
35,071
1,190
21,149
2,198
2,835
62,443
18,794
2,089
2,143
4,247
89,716
$
$
35,282
1,871
22,194
—
2,655
62,002
17,366
2,089
642
5,791
87,890
$
$
(1) Represents in-place public improvement fee of approximately $15.9 million and real estate tax exemption agreement of approximately
$5.3 million associated with two properties acquired in 2014.
Straight-line rent receivables are recorded net of allowances of $3.2 million and $3.5 million at December 31, 2016 and 2015,
respectively.
Acquired lease intangible assets, net consisted of the following:
Lease originations costs
Above market leases
Accumulated amortization
Net acquired lease intangibles
Years Ended December 31,
2016
2015
(In thousands)
$
$
107,625
12,393
120,018
(47,594)
72,424
$
$
119,181
13,994
133,175
(44,356)
88,819
Acquired lease intangible assets have a remaining weighted-average amortization period of 3.3 years as of December 31,
2016. These intangible assets 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 $2.5 million, $3.1 million, and $2.7 million for the years ended December 31, 2016, 2015, and 2014, respectively.
F-22
Combined, amortizable other assets, net and acquired lease intangibles, net totaled $134.9 million. The following table
represents estimated aggregate amortization expense related to those assets as of December 31, 2016:
Year Ending December 31,
2017
2018
2019
2020
2021
Thereafter
Total
8. Debt
(In thousands)
21,986
$
18,127
14,777
12,167
9,822
57,988
134,867
$
The following table summarizes our mortgages and notes payable and capital lease obligation as of December 31, 2016 and 2015:
Senior unsecured notes
Unsecured term loan facilities
Fixed rate mortgages
Unsecured revolving credit facility
Junior subordinated notes
Unamortized premium
Unamortized deferred financing costs
Capital lease obligation
December 31,
2016
2015
(In thousands)
535,000
210,000
160,718
86,000
28,125
1,019,843
5,120
(3,740)
1,021,223
1,066
$
$
$
460,000
210,000
322,457
60,000
28,125
1,080,582
6,935
(3,806)
1,083,711
1,108
$
$
$
Senior unsecured notes and unsecured term loans
We completed the following financing transactions during 2016:
•
•
In July 2016, we entered into agreements to issue $75.0 million senior unsecured notes in a private placement offering.
The notes have a 12-year term and are priced at a fixed interest rate of 3.64%. The notes were issued to extend the
Company's maturity waterfall and reduce its average interest rate. The sale of the notes closed on November 30, 2016.
In March 2016, we executed an amendment extending the maturity of our $60.0 million unsecured term loan, originally
maturing in 2018 to 2023 and entered into a forward starting interest rate swap agreement for an aggregate notional
amount of $60.0 million.
Our $745.0 million of senior unsecured notes and unsecured term loans have interest rates ranging from 2.99% to 4.74% and are
due at various maturity dates from May 2020 through November 2028.
Mortgages
During 2016 we had the following mortgage transactions:
•
In December 2016, we repaid two mortgage notes secured by certain properties totaling $125.9 million, with an average
weighted interest rate of 5.49%. In conjunction with the mortgage repayments we recognized a cash loss on extinguishment
F-23
of debt of approximately $0.4 million related to a pre-payment penalty and a non-cash benefit of approximately $0.1
million related to the write off of a mortgage premium.
In August 2016, we conveyed the title to and interest in The Towne Center at Aquia to the mortgage lender for the property.
At the time of conveyance, the outstanding balance of the mortgage loan was $11.8 million, resulting in a loss on
extinguishment of debt of $0.8 million.
In March 2016, we repaid a mortgage note secured by Troy Marketplace in the amount of $20.6 million, that had an
interest rate of 5.90%.
•
•
Our $160.7 million of fixed rate mortgages have interest rates ranging from 2.86% to 7.38% and are due at various maturity dates
from January 2018 through June 2026. The fixed rate mortgage notes are secured by mortgages on properties that have an
approximate net book value of $360.9 million as of December 31, 2016.
We have no mortgage maturities until January 2018 and it is our intent to repay these mortgages using cash, borrowings under
our unsecured line of credit, or other sources of financing.
The mortgage loans encumbering our properties 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.
Revolving Credit Facility
During 2016 we had net borrowings of $26.0 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 $0.5 million. These
letters of credit reduce borrowing availability under our bank facility. As of December 31, 2016, $263.5 million was available to
be drawn on our $350.0 million unsecured revolving credit facility subject to our compliance with certain covenants. As of
December 31, 2016 the variable interest rate was 2.07%.
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, 2016, we were in compliance with these covenants.
Junior Subordinated Notes
Our junior subordinated notes have a variable rate of LIBOR plus 3.30%, for an effective rate of 4.19% at December 31, 2016. The
maturity date is January 2038.
Capital lease
At December 31, 2016 we had a capital ground lease at our Buttermilk Towne Center with the City of Crescent Springs, Kentucky
with a gross carrying value of $13.2 million classified as land. Total amounts expensed as interest relating to this lease were $0.1
million, $0.1 million and $0.1 million for each of the years ended December 31, 2016, 2015, and 2014 respectively.
The following table presents scheduled principal payments on mortgages and notes payable and capital lease payments as of
December 31, 2016:
F-24
Year Ending December 31,
2017
2018 (1)
2019
2020
2021
Thereafter
Subtotal debt
Unamortized mortgage premium
Deferred financing costs
Amounts representing interest
Total
$
$
Principal
Payments
Capital
Lease
Payments
$
(In thousands)
3,203
125,132
5,860
102,269
114,508
668,871
1,019,843
5,120
(3,740)
—
1,021,223
$
100
100
100
100
100
1,100
1,600
—
—
(534)
1,066
(1)
Scheduled maturities in 2018 include the $86.0 million balance on the unsecured revolving credit facility drawn as of December 31, 2016.
9. Acquired Lease Intangible Liabilities, Net
Acquired lease intangible liabilities, net were $63.7 million and $64.2 million as of December 31, 2016 and 2015, respectively.
We completed one acquisition in 2016 and the purchase price allocation included $5.4 million of acquired lease intangible liabilities.
The lease intangible liabilities relate to below-market leases and are being accreted over the applicable terms of the acquired leases,
which resulted in an increase in revenue of $5.9 million, $5.8 million, and $4.9 million for the years ended December 31, 2016,
2015 and 2014, respectively.
10. 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 11 of notes to the consolidated financial statements
for additional information on our derivative financial instruments.
F-25
The table below presents the recorded amount of assets and liabilities measured at fair value on a recurring basis as of December 31,
2016 and 2015.
2016
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
2015
Other liabilities
Derivative assets - interest rate swaps
Derivative liabilities - interest rate swaps
Other assets
Other liabilities
$
$
$
$
$
2,143
(1,300) $
— $
— $
$
2,143
(1,300) $
$
642
(2,241) $
— $
— $
$
642
(2,241) $
—
—
—
—
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 $905.7 million and $996.3 million as of December 31, 2016 and
2015, respectively, have fair values of approximately $900.3 million and $1.0 billion, respectively. Variable rate debt’s fair value
is estimated to be the carrying values of $114.1 million and $87.4 million as of December 31, 2016 and 2015, 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, 2016 and 2015 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, 2016 and 2015.
Assets
2016
Land available for sale
Total
2015
Land available for sale
Total
Total Fair
Value
Level 1
Level 2
(In thousands)
Level 3
Total
Impairment
$
$
$
$
6,815
6,815
453
453
$
$
$
— $
— $
—
— $
— $
— $
— $
— $
6,815
6,815
453
453
$
$
$
$
(977)
(977)
(2,521)
(2,521)
Equity Investments in Unconsolidated Entities
Our equity investments in unconsolidated joint venture entities are subject to impairment testing on a nonrecurring basis if a decline
in the fair value of the investment below the carrying amount is determined to be a decline that is other-than-temporary. To estimate
the fair value of properties held by unconsolidated entities, we use cash flow models, discount rates, and capitalization rates based
upon assumptions of the rates that market participants would use in pricing the asset. To the extent other-than-temporary impairment
F-26
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.
11. 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. We may also enter into forward starting swaps to set the effective interest rate on planned fixed rate financing. 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, 2016, all of our hedges were highly effective.
As of December 31, 2016, we had nine 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. In addition we have entered into one forward starting interest rate
swap agreements for an aggregate notional amount of $60.0 million. All of our interest rate swap agreements are designated as
cash flow hedges The agreements provide for swapping one-month LIBOR interest rates ranging from 1.460% to 2.150% and
have expirations ranging from October 2018 to March 2023.
The following table summarizes the notional values and fair values of our derivative financial instruments as of December 31,
2016:
Underlying Debt
Derivative Assets
Unsecured term loan facility
Unsecured term loan facility
Unsecured term loan facility
Unsecured term loan facility
Derivative Assets - Forward Swaps
Unsecured term loan facility
Total Derivative Assets
Derivative Liabilities
Unsecured term loan facility
Unsecured term loan facility
Unsecured term loan facility
Unsecured term loan facility
Unsecured term loan facility
Total Derivative Liabilities
Hedge
Type
Notional
Value
(In thousands)
Fixed
Rate
Fair
Value
Expiration
Date
(In thousands)
Cash Flow
Cash Flow
Cash Flow
Cash Flow
Cash Flow
Cash Flow
Cash Flow
Cash Flow
Cash Flow
Cash Flow
$
$
$
$
$
50,000
20,000
15,000
40,000
125,000
60,000
185,000
30,000
25,000
5,000
15,000
10,000
85,000
1.460% $
1.498%
1.490%
1.480%
$
$
1.770%
2.048% $
1.850%
1.840%
2.150%
2.150%
$
185
177
138
429
929
1,214
2,143
(457)
(291)
(58)
(296)
(198)
(1,300)
05/2020
05/2021
05/2021
05/2021
03/2023
10/2018
10/2018
10/2018
05/2020
05/2020
F-27
The effect of derivative financial instruments on our consolidated statements of operations for the year ended December 31, 2016
and 2015 is summarized as follows:
Amount of Gain (Loss)
Recognized in OCI on
Derivative
(Effective Portion)
Year Ended December 31,
2016
2015
(In thousands)
Location of Loss
Reclassified from
Accumulated OCI
into Income
(Effective Portion)
$
$
3,718
1,230
4,948
$
$
1,008
Interest Expense
2,589
Interest Expense
3,597 Total
Amount of Loss Reclassified
from
Accumulated OCI into
Income (Effective Portion)
Year Ended December 31,
2016
2015
(In thousands)
(2,217) $
(289)
(2,506) $
(902)
(2,125)
(3,027)
$
$
Derivatives in Cash Flow Hedging
Relationship
Interest rate contracts - assets
Interest rate contracts - liabilities
Total
12. Leases
Revenues
Approximate future minimum revenues from rentals under non-cancelable operating leases in effect at December 31, 2016,
assuming no new or renegotiated leases or option extensions on lease agreements and no early lease terminations were as follows:
Year Ending December 31,
2017
2018
2019
2020
2021
Thereafter
Total
Expenses
(In thousands)
181,697
$
167,846
147,880
130,637
107,892
347,640
1,083,592
$
We have an operating lease for our corporate headquarters in Michigan for a term expiring in 2019. We recognized rent expense
of $0.6 million, $0.6 million, and $0.6 million for the years ended December 31, 2016, 2015, and 2014, respectively.
We also have a ground lease at Centennial Shops located in Edina, Minnesota. The lease includes rent escalations throughout the
lease period and expires in April 2105. We recognized rent expense of $0.2 million for the year ended December 31, 2016.
Approximate future rental payments under our non-cancelable leases, assuming no option extensions are as follows:
Year Ending December 31,
2017
2018
2019
2020
2021
Thereafter
Total
F-28
(In thousands)
1,485
$
1,494
1,285
856
856
96,139
102,115
$
13. Earnings per Common Share
The following table sets forth the computation of basic earnings per share (“EPS”):
Income (loss) from continuing operations
Net (income) loss from continuing operations attributable to noncontrolling interest
Preferred share dividends and conversion costs
Allocation of continuing income to restricted share awards
Net income (loss) available to common shareholders
Weighted average shares outstanding, Basic
Earnings (loss) per common share, Basic
The following table sets forth the computation of diluted EPS:
Income (loss) from continuing operations
Net (income) loss from continuing operations attributable to noncontrolling interest
Preferred share dividends and conversion costs
Allocation of continuing income to restricted share awards
Net income (loss) available to common shareholders
Weighted average shares outstanding, Basic
Stock options and restricted share awards using the treasury method (1)
Weighted average shares outstanding, Diluted (2)(3)
$
$
$
$
$
Year Ended December 31,
2016
2014
2015
(In thousands, except per share data)
61,112
(1,448)
(6,701)
(354)
52,609
$
$
66,895
(1,786)
(7,338)
(336)
57,435
$
$
(2,412)
48
(7,250)
(180)
(9,794)
79,236
78,848
72,118
0.66
$
0.73
$
(0.14)
Year Ended December 31,
2016
2014
2015
(In thousands, except per share data)
61,112
(1,448)
(6,701)
(354)
52,609
$
$
66,895
(1,786)
(7,338)
(336)
57,435
$
$
79,236
199
79,435
78,848
187
79,035
(2,412)
48
(7,250)
(180)
(9,794)
72,118
—
72,118
Earnings (loss) per common share, Diluted
$
0.66
$
0.73
$
(0.14)
(1)
(2)
(3)
For the year ended December 31, 2014 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.
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.
The effect of the conversion of Common OP Units is not reflected in the computation of basic and diluted earnings per share, as they are exchangeable
for Common Shares on a one-for-one basis. The income allocable to such units is allocated on this same basis and reflected as noncontrolling interests
in the accompanying consolidated financial statements. As such, the assumed conversion of these units would have no net impact on the determination
of diluted earnings per share.
14. Shareholders’ Equity
Underwritten public offerings
In 2016 and 2015 we did not complete any underwritten public offerings.
Controlled equity offerings
In June 2016, we terminated our previous controlled equity offering arrangement and commenced a new distribution agreement
that registered up to 8.0 million common shares for issuance from time to time, in our sole discretion. The shares issuable in the
new distribution agreement are registered with the Securities and Exchange Commission on our registration statement on Form
S-3 (No. 333-211925).
In 2015, through our previous controlled equity offering we issued 0.9 million common shares at an average price of $19.28 and
received approximately $17.1 million in net proceeds, after sales commissions and fees of $0.3 million.
Non-Controlling Interests
F-29
As of December 31 2016 we had 1,917,329 OP Units outstanding. OP Unit holders are entitled to exchange their units for our
common shares on a 1:1 basis or for cash. The form of payment is at our election. During 2016, 84,132 units were converted for
cash in the amount of $1.5 million.
Preferred Shares
As of December 31, 2016 we had 1,848,539 shares of 7.25% Series D Cumulative Convertible Preferred Shares (“Preferred
Shares”) outstanding that have a liquidation preference of $50 per share and par value $0.01 per share. The Preferred Shares are
convertible at any time by the holders to our common shares at a conversion rate of $13.94 per share. The conversion rate is
adjusted quarterly. The Preferred Shares are also convertible under certain circumstances at our election. The holders of the
Preferred Shares have no voting rights. At December 31, 2016, the Preferred Shares were convertible into approximately 6.6
million shares of common stock.
In April 2015, holders of preferred shares converted Preferred Shares with a liquidation preference of $7.6 million into 532,628
common shares pursuant to the terms of the securities and in that connection we incurred conversion costs of approximately $0.5
million.
The following table provides a summary of dividends declared and paid per share:
Year Ended December 31,
2016
2015
2014
Declared
Paid
Declared
Paid
Declared
Paid
Common shares
Preferred shares
$
$
0.860
3.625
$
$
0.850
3.625
$
$
0.820
3.625
$
$
0.810
3.625
$
$
0.775
3.625
$
$
0.763
3.625
A summary of the income tax status of dividends per share paid is as follows:
Common shares
Ordinary dividend
Capital gain distribution
Non-dividend distribution
7.25% Series D Cumulative Convertible Preferred Shares
Ordinary dividend
Capital gain distribution
Year Ended December 31,
2016
2015
2014
$
$
$
$
0.640
0.160
—
0.800
2.881
0.744
3.625
$
$
$
$
0.658
$
—
0.162
0.820
3.625
—
3.625
$
$
$
0.715
0.060
0.775
3.342
0.283
3.625
The fourth quarter 2016 distribution is treated as paid in two tax years for income tax purposes, $0.160 is treated as paid on
December 31, 2016 and $0.060 is treated as paid on January 3, 2017, which accounts for the variance between the dividend declared
of $0.860 for the year ended December 31, 2016 and the tax status of $0.800.
Dividend reinvestment plan
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.
F-30
15. Share-Based Compensation and Other Benefit Plans
Incentive and Stock Option Plans
As of December 31, 2016 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 performance conditions as specified by the
compensation committee, restricted shares, restricted share units, options and other awards for up to 2.0 million of our common
shares, units or stock options, of which 1.4 million is available for issuance as of December 31, 2016.
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 which allowed for the grant of stock options to our executive officers and employees. As of December 31,
2016, there were 47,140 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, 2016, there were 10,000 options exercisable.
We recognized total share-based compensation expense of $3.4 million, $1.6 million, and $4.6 million for 2016, 2015, and 2014,
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
the compensation expense is recognized on a graded vesting basis. We recognized expense related to restricted share grants of
$2.9 million for the year ended December 31, 2016, $1.9 million for year ended December 31, 2015 and $2.1 million for the year
ended December 31, 2014.
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. We recognized a
compensation expense of $0.5 million, compensation benefit of $0.4 million and compensation expense of $2.5 million related
to the cash awards recorded during the years ended December 31, 2016, 2015 and 2014, respectively.
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 is reversed.
A summary of the activity of service based restricted shares under the LTIP for the years ended December 31, 2016, 2015 and
2014 is presented below:
2016
2015
2014
Outstanding, beginning of the year
Granted
Vested
Forfeited or expired
Outstanding, end of the year
Number of
Shares
365,524
$
180,914
(176,816)
(41,890)
327,732
Weighted-
Average
Grant Date
Fair Value
14.92
17.77
14.29
16.17
16.39
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
327,732
$
130,890
(124,187)
(6,892)
327,543
Weighted-
Average
Grant Date
Fair Value
16.39
17.80
15.88
16.76
17.02
F-31
As of December 31, 2016 there was approximately $4.2 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
When we grant options, the fair value 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, 2016, 2015 and 2014.
The following table reflects the stock option activity for all plans described above:
Outstanding, beginning of the year
Exercised
Forfeited or expired
Outstanding, end of the year
Exercisable, end of the year
2016
2015
2014
Shares
Under
Option
107,165
Weighted-
Average
Exercise Price
32.13
$
Shares
Under
Option
155,248
Weighted-
Average
Exercise Price
30.94
$
Shares
Under
Option
190,993
Weighted-
Average
Exercise Price
30.34
$
— $
(50,025) $
57,140
57,140
$
$
—
29.21
34.69
34.69
— $
(48,083) $
$
107,165
107,165
$
—
28.29
32.13
32.13
— $
(35,745) $
$
155,248
155,248
$
—
27.73
30.94
30.94
The following table summarizes information about options outstanding at December 31, 2016:
Range of Exercise Price
Outstanding
Options Outstanding
Weighted-
Average
Remaining
Contractual Life
Options Exercisable
Weighted-
Average
Exercise Price
Exercisable
Weighted-
Average
Exercise Price
$34.30 - $36.50
57,140
0.2
$
34.69
57,140
$
34.69
Other Benefit Plan
The Company has a defined contribution profit sharing plan and trust (the "Plan") with a qualified cash or deferred 401(k)
arrangement covering all employees. Participation in the Plan is discretionary for all full-time employees who have attained the
age of 21. The entry date eligibility is the first pay date of a quarter following the date of hire. Our expense for the years ended
December 31, 2016, 2015 and 2014 was approximately $0.2 million, $0.2 million and $0.2 million, respectively.
F-32
16. 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, impairment charges and net operating loss carryforwards.
As of December 31, 2016, we had a federal and state deferred tax asset of $11.1 million and a valuation allowance of $11.1 million,
which represents an increase of $0.4 million from December 31, 2015. Our deferred tax assets, such as net operating losses and
land basis differences, are reduced by an offsetting valuation allowance where there is uncertainty regarding their realizability.
We believe that it is more likely than not that the results of future operations will not generate sufficient taxable income to recognize
the 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.
If in the future we are able to conclude it is more likely than not that we will realize a future benefit from a deferred tax asset, we
will reduce the related valuation allowance by the appropriate amount. The first time this occurs, it will result in a net deferred
tax asset on our balance sheet and an income tax benefit of equal magnitude in our statement of operations in the period we made
the determination.
During the years ended December 31, 2016, 2015 and 2014, we recorded an income tax provision of approximately $299,000,
$339,000, and $54,000, respectively.
We had no unrecognized tax benefits as of or during the three year period ended December 31, 2016. We expect no significant
increases or decreases in unrecognized tax benefits due to changes in tax positions within one year of December 31, 2016. No
material interest or penalties relating to income taxes were recognized in the statement of operations for the years ended
December 31, 2016, 2015, and 2014 or in the consolidated balance sheets as of December 31, 2016, 2015, and 2014. It is our
accounting policy to classify interest and penalties relating to unrecognized tax benefits as tax expense. As of December 31, 2016,
returns for the calendar years 2013 through 2016 remain subject to examination by the Internal Revenue Service (“IRS”) and
various state and local tax jurisdictions. As of December 31, 2016, certain returns for calendar year 2012 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.
17. Commitments and Contingencies
Construction Costs
In connection with the development and expansion of various shopping centers as of December 31, 2016, we had entered into
agreements for construction costs of approximately $5.9 million.
Litigation
We are currently involved in certain litigation arising in the ordinary course of business.
F-33
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.
18. Subsequent Events
We have evaluated subsequent events through the date that the consolidated financial statements were issued.
Subsequent to year-end, the Company sold one Michigan shopping center and agreed to sell another for a combined total of
$28.5 million.
In addition, the Company also acquired two high-quality shopping centers for $167.4 million.
19. Selected Quarterly Financial Data (Unaudited)
The following table sets forth summarized quarterly financial data for the year ended December 31, 2016:
Total revenue
Operating income
Net income attributable to RPT
Net income available to common shareholders
Earnings per common share, basic: (1)
Earnings per common share, diluted:(1)
Quarters Ended 2016
March 31
June 30
September 30
December 31
(In thousands, except per share amounts)
$
$
$
$
$
$
66,512
17,219
11,845
10,170
0.13
0.13
$
$
$
$
$
$
65,884
19,115
27,363
25,688
0.32
0.32
$
$
$
$
$
$
64,080
16,669
13,545
11,870
0.15
0.15
$
$
$
$
$
$
64,454
17,905
6,911
5,235
0.07
0.07
(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, 2016.
The following table sets forth summarized quarterly financial data for the year ended December 31, 2015:
Total revenue
Operating income
Net income attributable to RPT
Net income (loss) available to common shareholders
Earnings per common share, basic: (1)
Earnings per common share, diluted:(1)
Quarters Ended 2015
March 31 (1)
June 30 (1)
September 30 (1)
(In thousands, except per share amounts)
December 31 (1)
$
$
$
$
$
$
59,417
14,631
9,667
7,885
0.10
0.10
$
$
$
$
$
$
59,735
15,910
7,090
4,915
0.06
0.06
$
$
$
$
$
$
64,060
18,854
33,666
31,991
0.39
0.38
$
$
$
$
$
$
68,578
16,102
14,686
13,010
0.16
0.16
(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, 2015.
F-34
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F-3(cid:26)
SUMMARY OF COMPENSATION FOR
THE BOARD OF TRUSTEES OF
RAMCO-GERSHENSON PROPERTIES TRUST
The following table sets forth the compensation program for non-employee Trustees:
Annual cash retainer (1)
Additional cash retainer:
Chairman
Audit Committee chair
Compensation Committee chair
Nominating and Governance Committee chair
Executive Committee chair
Executive Committee members
Annual equity retainer (value of restricted shares) (2)
Exhibit 10.8
$ 30,000
100,000
15,000
10,000
10,000
5,000
—
75,000
(1) The annual cash retainer is equal to $105,000 less the grant date fair value, which approximates $75,000, of the restricted
shares granted in the applicable year.
(2) Grants are made under the Trust's 2012 LTIP. The restricted shares vest over one year. The grant is made on July 1st or,
if not a business day, the business day prior to July 1st. During 2016, 3,811 shares were granted to each Trustee that was
in service as of the July 1st date.
The Trust also reimburses all Trustees for all expenses incurred in connection with attending any meetings or performing their
duties as Trustees.
Exhibit 12.1
Computation of Ratio of Earnings to Combined Fixed Charges and Preferred Dividends
2016
Year Ended December 31,
2013
2014
2015
2012
(In thousands, except ratio computation)
Income (loss) from continuing operations before adjustment
for noncontrolling interest
$ 61,112
$ 66,895
$ (2,412) $
8,371
$
7,171
Add back:
Fixed charges
Distributed income of equity investees
Deduct:
Equity in (earnings) loss of equity investees
Capitalized interest
Earnings as Defined
Fixed Charges
Interest expense including amortization of deferred
financing fees
Capitalized interest
Interest portion of rent expense
Fixed Charges
Preferred share dividends
45,416
1,799
44,039
15,842
37,274
1,881
31,918
4,919
28,618
3,793
(454)
(743)
$ 107,130
(17,696)
(1,613)
$ 107,467
(75)
(1,862)
$ 34,806
4,759
(1,161)
$ 48,806
(3,248)
(996)
$ 35,338
$ 44,514
$ 42,211
$ 35,188
$ 30,522
$ 27,344
743
159
1,613
215
1,862
224
1,161
235
996
278
$ 45,416
$ 44,039
$ 37,274
$ 31,918
$ 28,618
6,701
6,838
7,250
7,250
7,250
Combined Fixed Charges and Preferred Dividends
$ 52,117
$ 50,877
$ 44,524
$ 39,168
$ 35,868
Ratio of Earnings to Combined Fixed Charges and
Preferred Dividends
2.06
2.11
(a)
1.25
(b)
(a) Due to the loss from continuing operations, as restated for discontinued operations, for year ended December 31, 2014, the
ratio coverage was less than 1:1. We would have needed to generate additional earnings from continuing operations of
$9.7 million to achieve a coverage of 1:1 for 2014.
(b) Due to the reduced income from continuing operations, as restated for discontinued operations, for year ended December
31, 2012, the ratio coverage was less than 1:1. We would have needed to generate additional earnings from continuing
operations of $0.5 million to achieve a coverage of 1:1 for 2012.
Subsidiaries
Exhibit 21.1
Name
Ramco-Gershenson, Inc.
Ramco-Gershenson, Properties L.P.
Ramco Lion LLC
Ramco/Lion Venture L.P.
Ramco Properties GP, L.L.C.
Jurisdiction
Michigan
Delaware
Delaware
Delaware
Michigan
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We have issued our reports dated February 23, 2017, with respect to the consolidated financial statements, schedule, and internal
control over financial reporting included in the Annual Report of Ramco-Gershenson Properties Trust on Form 10-K for the year
ended December 31, 2016. We hereby consent to the incorporation by reference of said reports in the Registration Statements of
Ramco-Gershenson Properties Trust on Form S-3 (File No. 333-211925) and on Forms S-8 (File No. 333-66409, File No.
333-121008, File No. 333-160168 and File No. 333-182514).
Exhibit 23.1
/s/ GRANT THORNTON LLP
Southfield, Michigan
February 23, 2017
Exhibit 31.1
I, Dennis E. Gershenson, certify that:
CERTIFICATIONS
1.
2.
3.
4.
I have reviewed this annual report on Form 10-K of Ramco-Gershenson Properties Trust;
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this report;
Based on my knowledge, the financial statements, and other financial information included in this report, fairly
present in all material respects the financial condition, results of operations and cash flows of the registrant as of,
and for, the periods presented in this report;
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls
and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial
reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a)
b)
c)
d)
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be
designed under our supervision, to ensure that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those entities, particularly during the period
in which this report is being prepared;
designed such internal control over financial reporting, or caused such internal control over financial
reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external purposes in accordance with
generally accepted accounting principles;
evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report
our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period
covered by this report based upon such evaluation; and
disclosed in this report any change in the registrant’s internal control over financial reporting that occurred
during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual
report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control
over financial reporting; and
5.
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal
control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of
directors (or persons performing the equivalent functions):
a)
all significant deficiencies and material weaknesses in the design or operation of internal control over
financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process,
summarize and report financial information; and
b)
any fraud, whether or not material, that involves management or other employees who have a significant role
in the registrant’s internal control over financial reporting.
Date: February 23, 2017
/s/ Dennis E. Gershenson
Dennis E. Gershenson
President and Chief Executive Officer
Exhibit 31.2
I, Geoffrey Bedrosian, certify that:
CERTIFICATIONS
1.
2.
3.
4.
I have reviewed this annual report on Form 10-K of Ramco-Gershenson Properties Trust;
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this report;
Based on my knowledge, the financial statements, and other financial information included in this report, fairly
present in all material respects the financial condition, results of operations and cash flows of the registrant as of,
and for, the periods presented in this report;
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls
and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial
reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a)
b)
c)
d)
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be
designed under our supervision, to ensure that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those entities, particularly during the period
in which this report is being prepared;
designed such internal control over financial reporting, or caused such internal control over financial
reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external purposes in accordance with
generally accepted accounting principles;
evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report
our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period
covered by this report based upon such evaluation; and
disclosed in this report any change in the registrant’s internal control over financial reporting that occurred
during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual
report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control
over financial reporting; and
5.
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal
control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of
directors (or persons performing the equivalent functions):
a)
all significant deficiencies and material weaknesses in the design or operation of internal control over
financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process,
summarize and report financial information; and
b)
any fraud, whether or not material, that involves management or other employees who have a significant role
in the registrant’s internal control over financial reporting.
Date: February 23, 2017
/s/ Geoffrey Bedrosian
Geoffrey Bedrosian
Chief Financial Officer
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
Exhibit 32.1
In connection with the Annual Report of Ramco-Gershenson Properties Trust (the “Company”) on Form 10-K for the period ended
December 31, 2016, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Dennis E.
Gershenson, President and Chief Executive Officer of the Company, certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant
to Section 906 of the Sarbanes-Oxley Act, that:
1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2. The information contained in the Report fairly presents, in all material respects, the financial condition and results
of operations of the Company.
/s/ Dennis E. Gershenson
Dennis E. Gershenson
President and Chief Executive Officer
February 23, 2017
Exhibit 32.2
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report of Ramco-Gershenson Properties Trust (the “Company”) on Form 10-K for the period ended
December 31, 2016, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Geoffrey Bedrosian,
Chief Financial Officer of the Company, certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act, that:
1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2. The information contained in the Report fairly presents, in all material respects, the financial condition and results
of operations of the Company.
/s/ Geoffrey Bedrosian
Geoffrey Bedrosian
Chief Financial Officer
February 23, 2017
Property Summary
Property Summary (as of December 31, 2016)
PROPERTY NAME
LOCATION
TOTAL
CENTER
GLA
TOTAL
OWNED
GLA
COLORADO (3)
Front Range Village
Harvest Junction North
Harvest Junction South
Total
FLORIDA (15)
Coral Creek Shops
Cypress Point
Lakeland Park Center
Marketplace of Delray
Mission Bay Plaza
Parkway Shops
River City Marketplace
Rivertowne Square
Shoppes of Lakeland
The Crossroads
Treasure Coast Commons
Village Lakes
Shopping Center
Village Plaza
Vista Plaza
West Broward
Shopping Center
Total
GEORGIA (3)
Holcomb Center
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 (1)
Merchants’ Square
Total
KENTUCKY (1)
Fort Collins
Longmont
Longmont
792,945
188,758
312,030
1,293,733
459,307
188,758
177,030
825,095
Coconut Creek
Clearwater
Lakeland
Delray Beach
Boca Raton
Jacksonville
Jacksonville
Deerfield Beach
Lakeland
Royal Palm Beach
Jensen Beach
Land O’ Lakes
Lakeland
Jensen Beach
Plantation
Alpharetta
Duluth
Duluth
Palatine
Wauconda
Glen Ellyn
Mount Prospect
Rolling Meadows
109,312
167,280
210,422
241,715
259,306
144,114
899,588
146,666
307,102
121,509
91,656
166,485
158,956
109,761
109,312
167,280
210,422
241,715
259,306
144,114
557,087
146,666
183,702
121,509
91,656
166,485
158,956
109,761
152,973
3,286,845
152,973
2,820,944
106,003
154,700
261,808
522,511
357,644
107,427
166,634
300,682
134,012
1,066,399
106,003
154,700
261,808
522,511
237,644
107,427
166,634
300,682
134,012
946,399
Carmel
326,630
326,630
246,630
246,630
Buttermilk Towne Center
Total
Crescent Springs
277,533
277,533
277,533
277,533
MARYLAND (1)
Crofton Centre
Total
Crofton
252,230
252,230
252,230
252,230
PROPERTY NAME
LOCATION
MICHIGAN (19)
Clinton Township
Sterling Heights
Gaines Township
Warren
Farmington Hills
Jackson
Jackson
Livonia
Canton Township
Flint
Roseville
Southfield
Southfield
Auburn Hills
Clinton Pointe
Clinton Valley
Gaines Marketplace
Hoover Eleven
Hunter’s Square
Jackson Crossing
Jackson West
Millennium Park
New Towne Plaza
Oak Brook Square
Roseville Towne Center
Southfield Plaza
Tel-Twelve
The Auburn Mile 1
The Shops at Old Orchard West Bloomfield
Troy Marketplace
West Oaks I
Shopping Center
West Oaks II
Shopping Center
Winchester Center
Total
Novi
Rochester Hills
Novi
Troy
TOTAL
CENTER
GLA
TOTAL
OWNED
GLA
248,206
205,435
392,169
280,719
353,951
674,012
209,800
625,670
193,446
152,073
212,857
190,099
523,411
624,212
96,768
238,354
135,330
205,435
60,576
280,719
353,951
419,770
209,800
273,029
193,446
152,073
76,998
190,099
523,411
90,553
96,768
217,754
344,973
284,973
500,923
320,134
6,387,212
167,954
320,134
4,252,773
MINNESOTA (2)
Centennial Shops
Woodbury Lakes
Total
MISSOURI (4)
Central Plaza
Deer Creek
Shopping Center
Heritage Place
Town & Country Crossing
Total
OHIO (7)
Bridgewater Falls
Crossroads Centre
Deerfield Towne Center
Olentangy Plaza
Rossford Pointe
Spring Meadows Place
The Shops on Lane Avenue
Total
WISCONSIN (4)
Edina
Woodbury
85,206
318,853
404,059
85,206
306,336
391,542
Ballwin
166,431
166,431
Maplewood
Creve Coeur
Town & Country
208,122
269,105
313,667
957,325
208,122
269,105
176,830
820,488
Hamilton
Rossford
Mason
Columbus
Rossford
Holland
Upper Arlington
626,993
470,245
463,246
253,204
47,477
818,466
171,550
2,851,181
503,293
344,045
463,246
253,204
47,477
314,514
171,550
2,097,329
East Town Plaza
Nagawaukee Center
The Shoppes at Fox River Waukesha
West Allis Towne Centre
West Allis
Total
Madison
Delafield
341,467
280,083
409,024
326,265
1,356,839
208,472
220,083
276,642
326,265
1,031,462
WHOLLY OWNED SHOPPING CENTERS
18,982,497
14,484,936
JOINT VENTURE
PORTFOLIO
OWNERSHIP %
Nora Plaza, Indianapolis, IN
Martin Square, Stuart, FL
Total
7%
30%
TOTAL COMPANY
OWNED
GLA
CENTER
GLA
263,553
330,134
593,687
139,753
330,134
469,887
CONSOLIDATED AND JV PORTFOLIO TOTAL 19,576,184
14,954,823
COMPANY INFORMATION (AS OF FEBRUARY 28, 2017)
PRINCIPAL EXECUTIVE
OFFICERS:
DENNIS GERSHENSON
President and CEO
GEOFFREY BEDROSIAN
Executive Vice President,
Chief Financial Officer and
Secretary
JOHN HENDRICKSON
Executive Vice President and
Chief Operating Officer
CATHERINE CLARK
Executive Vice President
Transactions
EDWARD EICKHOFF
Senior Vice President
Development
BOARD OF TRUSTEES:
STEPHEN R. BLANK,
CHAIRMAN
Senior Fellow, Finance
Urban Land Institute
Audit Committee—
Financial Expert and Member
Compensation Committee—Member
Nominating and Corporate 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 Corporate 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
LAURIE M. SHAHON
President of Wilton Capital Group
Compensation Committee—Member
MICHAEL A. WARD
Private Investor
Executive Committee—Member
Nominating and Corporate Governance
Committee—Member
Compensation Committee—Member
CORPORATE INFORMATION
CORPORATE
HEADQUARTERS
31500 Northwestern Highway
Suite 300
Farmington Hills, MI 48334
Tel: (248) 350-9900
Fax: (248) 350-9925
www.rgpt.com
STOCK EXCHANGE LISTING
New York Stock Exchange
NYSE:RPT
INDEPENDENT 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
SHAREHOLDER
INFORMATION
Current and prospective
Ramco-Gershenson investors can
receive a copy of the Company’s
proxy statement, earnings
announcements as well as quarterly
and annual reports (and exhibits) through
the corporate web site, www.rgpt.com
or by contacting:
Dawn L. Hendershot
Vice President Investor Relations
and Corporate Communications
31500 Northwestern Highway
Suite 300
Farmington Hills, MI 48334
(248) 592-6202
dhendershot@rgpt.com
MEMBER
National Association of Real Estate
Investment Trusts, Inc.
International Council of
Shopping Centers
CERTIFICATIONS
On June 6, 2016, the Company
submitted the Annual CEO Certification
to the NYSE, pursuant to Section 303A.12
of the NYSE’s listing standards, whereby
our CEO certified that he is not aware of
any violation by the Trust of the NYSE’s
corporate governance listing standards
as of the date of the certification. In
addition, we have filed with the Securities
and Exchange Commission, as exhibits
to our Quarterly Reports on Form 10-Q
for the quarters ended March 31, June 30
and September 30, 2016, and our Annual
Report on Form 10-K for the year ended
December 31, 2016, certifications by
our CEO and CFO in accordance with
Sections 302 and 906 of the Sarbanes-Oxley
Act of 2002.
BEST-IN-CLASS SMALL SHOP AND ANCHOR TENANTS
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31500 Northwestern Highway
Suite 300
Farmington Hills, MI 48334
telephone (248) 350-9900
fax (248) 350-9925
www.rgpt.com