Retail Opportunity Investments (NASDAQ: ROIC) announced second-quarter 2019 results on Wednesday after the markets closed, highlighting its continued planned strategic divestments of non-core properties and setting a fresh high mark for portfolio lease rates.
We can expect more color during Thursday morning's call regarding the shopping-center REIT's results and whether current market conditions support its eventual return to finding growth through acquisitions. But in the meantime, let's have a closer look at how Retail Opportunity Investments ended the first half, as well as what we should expect for the rest of the year.
Image source: Retail Opportunity Investments.
Retail Opportunity Investments results: The raw numbers
| Metric | Q2 2019 | Q2 2018 | Year-Over-Year Growth (Decline) |
|---|---|---|---|
| Revenue | $72.93 million | $72.34 million | 0.8% |
| GAAP net income attributable to retail opportunity investments | $7.59 million | $7.34 million | 3.4% |
| GAAP net income per diluted share | $0.07 | $0.06 | 16.7% |
| Diluted funds from operations (FFO) | $32.61 million | $33.43 million | (2.5%) |
| Diluted FFO per share | $0.26 | $0.27 | (3.7%) |
Data source: Retail Opportunity Investments.
What happened with Retail Opportunity Investments this quarter?
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Base rents increased 4.3% year over year to $51 million, while recoveries from tenants climbed 2.9% to $16.5 million.
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Same-space comparative base rent grew 27.3% on 27 new leases totaling 88,037 square feet, and increased 10.7% on 57 renewed leases totaling 231,444 square feet.
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Ended the second quarter with a portfolio lease rate of 97.9% -- up 10 basis points from last quarter and good for a new company record -- marking the metric's 20th straight quarter at or above 97%.
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Same-center net operating income rose 4.6% year over year to $49.3 million.
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ROIC sold Norwood Shopping Center in Sacramento California for $13.5 million, and -- as previously announced -- has agreements to sell two more properties in separate transactions totaling $43 million.
What management had to say
CEO Stuart Tanz stated:
During the second quarter we continued to build on the solid momentum we established during the first quarter. We again posted strong releasing spreads and same-center NOI growth. Additionally, we achieved a new record high lease rate for the company, finishing the second quarter at a very strong 97.9%. We also continued to make steady progress in terms of disposing of non-core properties and with the entitlement process on our densification initiatives. Thus far we are squarely on track to achieve our stated objectives for the year and look forward to continuing to advance our business during the second half of 2019.