Company to Host Investor Conference Call at 11:00 AM ET Tomorrow
The Necessity Retail REIT, Inc. (Nasdaq: RTL) (“RTL” or the “Company”), a real estate investment trust focused on acquiring and managing a diversified portfolio of primarily service-oriented and traditional retail and distribution related commercial real estate properties in the U.S., announced today its financial and operating results for the first quarter ended March 31, 2022.
First Quarter 2022 and Subsequent Events Highlights
- Revenue grew 19.9% to $94.9 million from $79.2 million for the first quarter 2021
- Net income attributable to common stockholders was $39.9 million as compared to net loss of $9.4 million for the first quarter 2021
- Cash net operating income (“NOI”) rose 16.7% to $73.6 million from $63.1 million for the first quarter 2021
- Funds from Operations (“FFO”) of $30.0 million, or $0.23 per diluted share increased from $22.6 million, or $0.21 per diluted share, for the first quarter 2021
- Adjusted Funds from Operations (“AFFO”) increased 24.3% to $31.8 million from $25.5 million in the prior year first quarter
- AFFO per share increased by 9.1% to $0.24 per share from $0.22 per share in the fourth quarter of 2021 and flat compared to $0.24 per diluted share in the prior year first quarter
- Paid dividends of $26.7 million or $0.21 per share
- Acquired 59 properties for $842.0 million at a cash capitalization rate1 of 7.3% and a weighted average capitalization rate2 8.6%
- Disposed of six properties for $265.2 million, including an office property leased to Sanofi in New Jersey for $260.7 million
- High quality portfolio with 54% of the single tenant portfolio, and 64% of top 20 tenants, investment grade rated or implied investment grade rated3
- Occupancy at open-air assets grew to 87.6% from 86.8% at first quarter 2021 and Executed Occupancy and Leasing Pipeline4 at open-air shopping centers was 88.8% compared to 88.5% in first quarter 2021
- Subsequent to quarter-end, closed on acquisition of 23 properties for $277.8 million, substantially completing the previously announced $1.3 billion shopping center acquisition
- Multi-tenant acquisitions contributed $8.3 million of NOI in first quarter, expected to add over $113 million of annualized straight-line rent once all acquisitions are complete
“The momentum we carried into this year has continued to build as we completed the acquisition of the majority of a $1.3 billion open-air shopping center portfolio and the sale of the Sanofi office buildings that we had previously announced,” said Michael Weil, CEO of RTL. “We have already started to experience year-over-year growth thus far in 2022 in our AFFO, net income and NOI, and quarter-over-quarter in our AFFO per share, despite these acquisitions not starting to close until mid-quarter. With over 90% of our straight-line rent coming from retail tenants, we are a well-positioned pure-play retail REIT poised to continue to benefit from strong trends in this sector as we work to add value for shareholders.”
Financial Results
|
Three Months Ended March 31, |
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(In thousands, except per share data) |
2022 |
2021 |
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|
Revenue from tenants |
$ 94,943 |
$ 79,187 |
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|
Net income (loss) attributable to common stockholders |
$ 39,934 |
$ (9,411) |
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|
Net income (loss) per common share (a) |
$ 0.31 |
$ (0.09) |
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|
FFO attributable to common stockholders |
$ 30,008 |
$ 22,571 |
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|
FFO per common share (a) |
$ 0.23 |
$ 0.21 |
||
|
AFFO attributable to common stockholders |
$ 31,751 |
$ 25,540 |
||
|
AFFO per common share (a) |
$ 0.24 |
$ 0.24 |
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|
(a) |
All per share data based on 130,048,111 and 108,436,571 diluted weighted-average shares outstanding for the three months ended March 31, 2022 and 2021, respectively. |
Real Estate Portfolio
The Company’s portfolio consisted of 1,029 net lease properties located in 47 states and the District of Columbia and comprised 26.2 million rentable square feet as of March 31, 2022. Portfolio metrics include:
- 91.4% leased, with 7.4 years remaining weighted-average lease term5
- 64.4% of leases have weighted-average contractual rent increases of 1.0% based on annualized straight-line rent
- 54% of single-tenant portfolio and 38% of multi-tenant anchor tenants annualized straight-line rent derived from investment grade or implied investment grade tenants
- 90% retail properties, 9% distribution properties and 1% office properties (based on an annualized straight-line rent)
- 63% of the retail portfolio focused on either service6 or experiential retail7 giving the Company strong alignment with “e-commerce resistant” real estate
Property Acquisitions
During the three months ended March 31, 2022, the Company acquired 59 properties for an aggregate contract purchase price of $842.0 million at a cash capitalization rate of 7.3% and a weighted average capitalization rate 8.6%.
Property Dispositions
During the three months ended March 31, 2022, the Company disposed of six properties, for an aggregate contract price of $265.2 million.
Capital Structure and Liquidity Resources
As of March 31, 2022 the Company had a total borrowing capacity under the credit facility of $550.8 million based on the value of the borrowing base under the credit facility, and, of this amount, $378.0 million was outstanding under the credit facility as of March 31, 2022 and $172.8 million remained available for future borrowings. Subsequent to quarter end, the Company borrowed additional funds under the credit facility to partially fund acquisitions. As of March 31, 2022, the Company had $82.1 million of cash and cash equivalents. The Company’s net debt8 to gross asset value9 was 46.0%, with net debt of $2.3 billion.
The Company’s percentage of fixed rate debt was 84.2% as of March 31, 2022. The Company’s total combined debt had a weighted-average interest rate cost of 3.7%10, resulting in an interest coverage ratio of 2.9 times11.
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