Retail Opportunity Investments Corp (ROIC, Financial) released its 8-K filing on February 14, 2024, disclosing its financial and operational results for the year and three months ended December 31, 2023. ROIC, a self-managed real estate investment trust, specializes in the acquisition, ownership, and management of necessity-based community and neighborhood shopping centers, primarily anchored by supermarkets and drugstores on the west coast of the United States.
The company reported a net income of $34.5 million ($0.27 per diluted share) for the year, a decrease from the previous year's $51.9 million ($0.42 per diluted share). This decline was partly due to the absence of a $7.7 million gain on the sale of real estate recorded in 2022. Funds From Operations (FFO), a key metric for REITs, amounted to $140.9 million ($1.06 per diluted share) for the year, compared to $145.3 million ($1.10 per diluted share) in 2022. The fourth quarter FFO remained stable at $35.5 million ($0.27 per diluted share).
ROIC's operational performance showcased resilience with a 3.7% increase in same-center cash net operating income (NOI) for the year and a 3.3% increase for the fourth quarter. The portfolio lease rate was robust at 97.7% at year-end, and the company achieved record leasing activity with 1.7 million square feet leased. The same-space cash rents on new leases surged by 22.2%, and renewals saw a 6.7% increase.
On the financial front, ROIC made significant strides in debt management. The company issued $350.0 million in unsecured senior notes, retired $250.0 million in December 2023 unsecured senior notes, repaid $100.0 million of floating-rate debt, and fixed $150.0 million of floating-rate debt through interest rate swap agreements. By the end of the year, 91.0% of the principal debt outstanding was effectively fixed-rate, up from 72.3% at the end of 2022.
ROIC's acquisition of Foothill Plaza for $21.8 million expanded its portfolio, which is now 97.7% leased. The company executed 414 leases throughout the year, achieving significant growth in same-space comparative base rent for both new leases and renewals.
President and CEO Stuart A. Tanz commented on the results, highlighting the company's new leasing records and milestones, as well as its enhanced financial strength and profile. Tanz expressed confidence in ROIC's ability to continue driving solid operating results and building long-term value.
"Capitalizing on the strong fundamentals and demand for space across our portfolio, during 2023 we achieved a number of new leasing records and milestones for the company. We leased a record amount of space and, for the eleventh consecutive year, we achieved solid releasing rent growth, including a 22.2% increase in cash base rents on same-space new leases signed during 2023. In addition to enhancing ROIC’s portfolio through our leasing initiatives, we also worked to enhance our financial strength and profile. During 2023, we reduced our floating-rate debt by $250.0 million, balanced our debt maturity schedule and reduced ROIC’s quarterly net-debt ratio to a new, nine-year low, as of the fourth quarter," Tanz stated.
Looking ahead, ROIC provided guidance for 2024, estimating GAAP net income to be in the range of $0.24 to $0.34 per diluted share and FFO to be between $1.03 and $1.09 per diluted share. The company will discuss this guidance and underlying assumptions in its conference call on February 15, 2024.
ROIC's financial stability is further underscored by its investment-grade corporate debt ratings, reaffirmed by Moody's Investor Services, S&P Global Ratings, and Fitch Ratings, Inc. The company's strategic focus on grocery-anchored shopping centers in densely-populated, metropolitan markets on the West Coast positions it well for future growth and resilience in the dynamic retail real estate sector.
Explore the complete 8-K earnings release (here) from Retail Opportunity Investments Corp for further details.
