SOURCE: Excel Trust

Excel Trust

February 12, 2014 17:24 ET

Excel Trust Announces Fourth Quarter and Year Ended 2013 Results

SAN DIEGO, CA--(Marketwired - Feb 12, 2014) - Excel Trust, Inc. (NYSE: EXL) announced today financial and operating results for the quarter and year ended December 31, 2013. A supplemental financial package with additional information can be found on Excel Trust's website under the Investor Relations tab.

Highlights for the Year Ended 2013

  • Reported Adjusted Funds from Operations (AFFO) for the quarter of $11.4 million, or $0.23 per diluted share and for the year of $43.8 million, or $0.90 per diluted share (15% annual increase over 2013)
  • Reported Funds from Operations (FFO) for the quarter of $11.3 million or $0.23 per diluted share and for the year of $44.6 million, or $0.92 per diluted share (24% annual increase over 2013)
  • Acquired approximately $178.6 million in properties
  • Improved terms and increased unsecured credit facility to $300 million, expandable to $500 million
  • Subsequent to year-end, published Moody's investment grade credit rating of (P)Baa3
  • Subsequent to year-end, increased share buy-back program to $50 million

"We set some clear objectives at the beginning of the year outlining a path for growth and for strengthening the underlying fundamentals of our company," commented Gary Sabin, Chairman and CEO of Excel Trust. "Looking back at the year, we are gratified at the progress we have made. We achieved an investment grade credit rating and successfully issued long-term, unsecured debt. We grew our annual same store NOI 3.3% and our releasing spread on comparable leases averaged 3.7%. We increased our annual same-store portfolio leased rate by 40 basis points to 95% at year-end. In addition to our operational success, we harvested gains from our existing portfolio and acquired several attractive properties. We expect another successful year in 2014 as we continue to execute our strategy of growing and enhancing our portfolio."

Financial Results

Excel Trust reported Adjusted Funds From Operations (AFFO) for the fourth quarter of $11.4 million, or $0.23 per diluted share, and $43.8 million, or $0.90 per diluted share for the year. Excel Trust reported Funds From Operations (FFO) for the fourth quarter of $11.3 million or $0.23 per diluted share, and $44.6 million, or $0.92 per diluted share for the year. Net loss attributable to the common stockholders for the fourth quarter was $0.4 million or $0.01 per diluted share, with net income attributable to the common stockholders of $8.6 million, or $0.17 per diluted share for the year.

Included in FFO for the quarter ended December 31, 2013 were transaction costs of $0.1 million related to acquisitions and $1.2 million, or $0.02 per diluted share in the year ended December 31, 2013. Also, included in FFO was non-cash compensation expense of approximately $0.6 million, or $0.01 per diluted share in the quarter ended December 31, 2013 and $2.3 million or $0.05 per diluted share in the year ended December 31, 2013, resulting from the Company's incentive stock award plan. Further included in FFO for the year ended December 31, 2013 was a non-cash gain due to a change in the fair value of contingent consideration relating to the West Broad Village acquisition of $1.6 million, or $0.03 per diluted share.

Excel Trust considers AFFO and FFO important supplemental measures of its operating performance and believes that they are frequently used by securities analysts, investors and other interested parties in the evaluation of real estate investment trusts (REITs), many of which present AFFO and FFO when reporting their results. A complete reconciliation containing adjustments from GAAP net income available to common shareholders to AFFO and FFO and a definition of both are included at the end of this release.

Operating Results

At the end of the fourth quarter 2013, the retail portfolio was 94.1% leased compared to 94.0% in the third quarter 2013. Anchor space was 99.1% leased compared to 99.1% in the third quarter 2013 and inline space was 84.9% leased compared to 84.3% during the third quarter 2013.

During the fourth quarter 2013, the Company signed 38 leases and renewals, totaling 202,513 square feet. The average releasing spread on comparable new leases was 5.0%.

Same Store Net Operating Income ("SSNOI") for the fourth quarter 2013 increased 6.2%. Year-to-date, SSNOI increased 3.3%. 

Summary of Significant Activities During Fourth Quarter 2013

On October 4, 2013, the Company acquired a 38,000 square foot building leased to LA Fitness in San Diego, California for approximately $14.3 million. The property is situated in a fast growing, master planned community less than three miles from Excel Trust's headquarters. The area features average household income of $116,140 and $122,033 and population of 62,458 and 159,929 in a three and five mile radius respectively (source: AGS 2013).

On October 8, 2013, the Company amended its credit facility. The facility now bears interest at a rate per annum equal to LIBOR plus 1.45% to 2.05% (down from 1.65% to 2.25%), depending on the Company's leverage ratio. The facility has been increased to $300.0 million and includes an accordion feature that allows for an increase up to $500.0 million under specified circumstances. The maturity date of the credit facility is April 2018 and can be extended for six months at the Company's option.

On November 4, 2013, the Company acquired Cedar Square, a retail shopping center located in Dallas - Ft. Worth, Texas for approximately $4.3 million. The center is currently being redeveloped to include a Walgreens (signed lease) resulting in a total of 75,550 square feet.

On November 12, 2013, the Company issued $100.0 million in senior unsecured notes to Prudential Capital Group. Of the $100.0 million in notes, $75.0 million will mature in 2020 and $25.0 million will mature in 2023, for a weighted average maturity of 7.8 years, and a weighted average fixed interest rate of 4.6%.

On November 18, 2013 the Company acquired Southlake Park Village, a development project comprised of 22.4 acres of land in Dallas - Ft. Worth (Southlake), Texas, for $16.3 million. The project is approximately 50% leased (signed leases with Fresh Market, REI and other national tenants) and will encompass approximately 186,000 square feet. The project is well-located in the retail corridor of an affluent community, with average household income in a three mile radius of $164,506 (source: AGS 2014).

On November 22, 2013, the Company acquired Centennial Crossroads, a retail shopping center with 259,415 square feet of GLA located in Las Vegas, Nevada for approximately $16.4 million. The Company acquired 105,415 square feet as Target (154,000 square feet), which anchors the property, is tenant owned. Other major tenants include Safeway (Vons) and Chase Bank. In a three mile radius, the population is estimated to be 104,666 and the average household income is estimated to be $88,052 (source: AGS 2014).

Events Subsequent to Fourth Quarter 2013

On January 6, 2014, the Company published an investment grade credit rating from Moody's. The agency assigned a (P)Baa3 rating citing Excel Trust's high quality property portfolio, sound liquidity, and moderate leverage. Additionally, Moody's stated that Excel Trust's management team has a long, successful operating history, in both the private and public markets. The Company obtained an investment grade rating to facilitate access to the investment grade unsecured debt market as part of its overall strategy to maximize its financial flexibility and manage its overall cost of capital.

First Quarter 2014 Dividend Declared

The Board of Directors declared a first quarter 2014 cash dividend of $0.175 per common share payable on April 15, 2014 to shareholders of record as of March 31, 2014.

The Board of Directors has also declared a dividend of $0.4375 per share on the Company's Series A Cumulative Convertible Perpetual Preferred Shares, and a dividend of $0.5078 on its Series B Cumulative Redeemable Preferred Shares. The dividend on Excel Trust's outstanding Series A and Series B Preferred Shares will be payable on April 15, 2014 to the Series A and Series B Preferred shareholders of record as of March 31, 2014

Guidance for 2014

Excel Trust expects its AFFO per share for fiscal year 2014 to be between $0.91 and $0.98 and its FFO per share to be between $0.90 and $0.97. The Company will further discuss assumptions surrounding guidance tomorrow on the conference call.

The foregoing estimates are forward-looking and reflect management's view of current and future market conditions, including certain assumptions with respect to leasing activity, rental rates, occupancy levels, interest rates, and the amount and timing of acquisitions and development activities. Excel Trust's actual results may differ materially from these estimates.

Conference Call

In conjunction with Excel Trust's results, you are invited to listen to its conference call on
Thursday, February 13, 2014 at 1:00 p.m. Eastern Time.
Phone: Conference call access information is as follows:
Dial in number: (800) 299-8538
International Dial in number: (617) 786-2902
Pass code: 34697712

Internet: A live webcast of the conference call will be available through Excel Trust's web site at www.exceltrust.com. The conference call will be recorded and available for replay for seven days beginning at 4:00 p.m. ET on February 13, 2014. Replay access information is as follows:
Dial in number: (888) 286-8010
International Dial in number: (617) 801-6888
Pass code: 30082346

About Excel Trust

Excel Trust, Inc. is a retail focused REIT that primarily targets community and power centers, grocery anchored neighborhood centers and freestanding retail properties. The Company has elected to be treated as a REIT, for U.S. federal income tax purposes. Excel Trust trades publicly on the NYSE under the symbol "EXL". For more information on Excel Trust, Inc., please visit www.exceltrust.com.

Forward Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 based on current expectations, forecasts and assumptions that involve risks and uncertainties that could cause actual outcomes and results to differ materially. These risks and uncertainties include, without limitation: general risks affecting the real estate industry (including, without limitation, the inability to enter into or renew leases, dependence on tenants' financial condition, and competition from other developers, owners and operators of real estate); adverse economic or real estate developments in the retail industry or the markets in which the Company operates; increased interest rates and operating costs; decreased rental rates or increased vacancy rates; the Company's failure to obtain necessary outside financing on favorable terms or at all; changes in the availability of additional acquisition opportunities; the Company's inability to successfully complete real estate acquisitions or successfully operate acquired properties; the Company's failure to qualify or maintain its status as a REIT; risks associated with the Company's dependence on key personnel whose continued service is not guaranteed; and risks associated with downturns in domestic and local economies, and volatility in the securities markets. For a further list and description of such risks and uncertainties, see the reports filed by the Company with the Securities and Exchange Commission, including the Company's most recent annual report on Form 10-K and quarterly reports on Form 10-Q. The Company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Funds From Operations (FFO) and Adjusted Funds From Operations (AFFO)

Excel Trust considers FFO and AFFO to be important supplemental measures of its operating performance and believes they are frequently used by securities analysts, investors and other interested parties in the evaluation of REITs, many of which present FFO and AFFO when reporting their results. FFO and AFFO are intended to exclude GAAP historical cost depreciation and amortization of real estate and related assets, which assumes that the value of real estate assets diminishes ratably over time. Historically, however, real estate values have risen or fallen with market conditions. Because FFO and AFFO exclude depreciation and amortization unique to real estate, gains and losses from property dispositions and extraordinary items, they provide a performance measure that, when compared year-over-year, reflects the impact to operations from trends in occupancy rates, rental rates, operating costs, development activities and interest costs, providing perspective not immediately apparent from net income.

Excel Trust computes FFO in accordance with standards established by the National Association of Real Estate Investment Trusts, or NAREIT. As defined by NAREIT, FFO represents net income (loss) (computed in accordance with generally accepted accounting principles, or GAAP), excluding real estate-related depreciation and amortization, impairment charges and net gains (losses) on the disposition of assets.

Excel Trust computes AFFO by adding to FFO the non-cash compensation expense, amortization of prepaid financing costs and non-recurring transaction costs, and other one-time items, then subtracting or adding straight-line rents, amortization of above and below market leases and non-incremental capital expenditures. Excel Trust's computation of FFO and AFFO may differ from the methodology for calculating FFO and AFFO utilized by other equity REITs and, accordingly, may not be comparable to such other REITs. Further, FFO and AFFO do not represent amounts available for management's discretionary use because of needed capital replacement or expansion, debt service obligations, or other commitments and uncertainties.

FFO and AFFO should not be considered alternatives to net income (loss) (computed in accordance with GAAP) as an indicator of Excel Trust's financial performance or to cash flow from operating activities (computed in accordance with GAAP) as an indicator of Excel Trust's liquidity, nor are they indicative of funds available to fund Excel Trust's cash needs, including Excel Trust's ability to pay dividends or make distributions.

Summarized Financial Statements

Reported results are preliminary and not final until the filing of Excel Trust's Form 10-K for the period ended December 31, 2013 with the Securities and Exchange Commission and, therefore, remain subject to adjustment. The accompanying notes to follow in the Form 10-K are an integral part of these consolidated and combined financial statements.

Balance Sheets        
         
CONSOLIDATED BALANCE SHEETS        
(Dollars in thousands)        
         
    December 31, 2013     December 31, 2012  
ASSETS:                
                 
Property:                
  Land   $ 380,366     $ 320,289  
  Buildings     642,356       564,352  
  Site improvements     63,242       51,875  
  Tenant improvements     54,025       42,903  
  Construction in progress     7,576       1,709  
  Less accumulated depreciation     (61,479 )     (36,765 )
    Property, net     1,086,086       944,363  
Cash and cash equivalents     3,245       5,596  
Restricted cash     8,147       5,657  
Tenant receivables, net     5,117       5,376  
Lease intangibles, net     78,345       85,646  
Mortgage loan receivable     -       -  
Deferred rent receivable     9,226       5,983  
Other assets     20,135       17,618  
Real estate held for sale, net of accumulated amortization     -       -  
Investment in unconsolidated entities     8,520       9,015  
  Total assets   $ 1,218,821     $ 1,079,254  
                 
LIABILITIES AND EQUITY:                
                 
Liabilities:                
  Mortgages payable, net   $ 251,191     $ 333,935  
  Notes payable     279,500       75,000  
  Accounts payable and other liabilities     21,700       25,319  
  Lease intangibles, net     28,114       26,455  
  Dividends/distributions payable     10,932       9,773  
  Total liabilities     591,437       470,482  
                 
Equity:                
  Stockholders' equity                
    Preferred stock     136,423       136,423  
    Common stock     482       448  
    Additional paid-in capital     460,431       459,151  
    Cumulative deficit     18,110       (1,414 )
      615,446       594,608  
    Accumulated other comprehensive loss     -       (572 )
  Total stockholders' equity     615,446       594,036  
  Non-controlling interests     11,938       14,736  
  Total equity     627,384       608,772  
    Total liabilities and equity   $ 1,218,821     $ 1,079,254  
                 
   
Statements of Operations  
   
CONSOLIDATED STATEMENTS OF OPERATIONS  
(In thousands, except per share data and dividends per share)  
   
                         
    Three Months Ended December 31, 2013     Three Months Ended December 31, 2012     Twelve Months Ended December 31, 2013     Twelve Months Ended December 31, 2012  
                                 
Revenues:                                
  Rental revenue   $ 24,609     $ 20,354     $ 92,294     $ 69,155  
  Tenant recoveries     4,777       3,538       18,875       13,835  
  Other income     419       459       1,373       1,431  
    Total revenues     29,805       24,351       112,542       84,421  
                                 
Expenses:                                
  Maintenance and repairs     2,089       1,537       7,328       5,557  
  Real estate taxes     3,444       2,764       12,756       9,693  
  Management fees     440       313       1,772       851  
  Other operating expenses     1,487       1,293       6,194       4,028  
  Changes in fair value of contingent consideration     -       (160 )     (1,568 )     (281 )
  General and administrative     3,335       3,641       13,871       13,796  
  Depreciation and amortization     11,534       10,311       46,146       34,800  
    Total expenses     22,329       19,699       86,499       68,444  
                                 
Net operating income     7,476       4,652       26,043       15,977  
                                 
  Interest expense     (5,193 )     (4,501 )     (18,944 )     (15,650 )
  Interest income     58       48       204       173  
  Income (loss) from equity in unconsolidated entities     53       -       40       -  
  Changes in fair value of financial instruments and gain on OP unit redemption     -       418       230       1,530  
                                 
Net income (loss) from continuing operations     2,394       617       7,573       2,030  
                                 
Income from discontinued operations before gain on sale of real estate assets     (18 )     97       464       135  
  Gain on sale of real estate assets     81       -       12,055       -  
                                 
Income from discontinued operations     63       97       12,519       135  
                                 
Net income (loss)     2,457       714       20,092       2,165  
  Net (income) loss attributable to non-controlling interests     (79 )     4       (568 )     18  
                                 
Net income (loss) attributable to Excel Trust, Inc.     2,378       718       19,524       2,183  
  Preferred stock dividends     (2,744 )     (2,744 )     (10,976 )     (10,353 )
                                 
Net income (loss) attributable to the common stockholders   $ (366 )   $ (2,026 )   $ 8,548     $ (8,170 )
                                 
Basic and diluted net income (loss) per share   $ (0.01 )   $ -     $ 0.17     $ -  
Weighted-average common shares outstanding - basic and diluted     47,672       -       46,926       -  
 
        The notes in the Form 10-Q or 10-K are an integral part of these condensed consolidated financial statements.
   
   
   
Reconciliation of Net Income to FFO and AFFO  
                         
For the Periods Ended December 31, 2013  
(In thousands, except per share data)  
                         
Excel Trust, Inc.'s FFO and AFFO available to common stockholders and operating partnership unitholders and a reconciliation to net income(loss) for the three and twelve months ended December 31, 2013 and 2012 is as follows:              
                         
    Three Months Ended December 31, 2013     Three Months Ended December 31, 2012     Twelve Months Ended December 31, 2013     Twelve Months Ended December 31, 2012  
                                 
Net income (loss) attributable to the common stockholders   $ (366 )   $ (2,188 )   $ 8,548     $ (8,490 )
                                 
Add:                                
  Non-controlling interests in operating partnership     (7 )     (67 )     233       (297 )
  Depreciation and amortization     11,534       10,588       46,839       36,021  
Deduct:                                
  Depreciation and amortization related to joint venture     175       237       1,054       72  
  Gain on sale of real estate assets     (81 )     -       (12,055 )     -  
Funds from operations   $ 11,255     $ 8,570     $ 44,619     $ 27,306  
                                 
Adjustments:                                
  Transaction costs     112       387       1,159       1,572  
  Deferred financing costs     448       457       1,748       1,867  
  Stock-based and other non-cash compensation expense     583       817       2,291       3,223  
  Changes in fair value of contingent consideration     -       (160 )     (1,568 )     (281 )
  Changes in fair value of financial instruments     -       (418 )     (230 )     (1,530 )
  Straight-line effects of lease revenue     (764 )     (1,130 )     (3,352 )     (3,139 )
  Amortization of above- and below-market leases     213       77       417       65  
  Non-incremental capital expenditures     (396 )     (97 )     (973 )     (469 )
  Non-cash expenses (income) related to joint venture     (5 )     -       (280 )     -  
                                 
Adjusted funds from operations   $ 11,446     $ 8,503     $ 43,831     $ 28,614  
                                 
Weighted average common shares outstanding     47,672       40,830       46,926       34,681  
Add:                                
  OP units     1,100       1,272       1,198       1,231  
  Restricted stock     141       254       190       306  
  Contingent consideration related to business combinations     -       20               73  
  LTIP restricted stock     -       -       -       -  
  Common stock issuable upon conversion of preferred stock     -       -       -       -  
    Weighted average common shares outstanding - diluted (FFO and AFFO)     48,913       42,376       48,314       36,291  
                                 
Funds from operations per share (diluted)   $ 0.23     $ 0.20     $ 0.92     $ 0.74  
Adjusted funds from operations per share (diluted)   $ 0.23     $ 0.20     $ 0.90     $ 0.78  
                                 
                                 
Other Information:                                
    Leasing commissions paid   $ 382     $ 333     $ 1,748     $ 755  
    Tenant improvements paid   $ 1,065     $ 1,830     $ 7,548     $ 3,270  
                                 

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