investor presentation · 5 1msa per us census bureau. 2per costar group. total number of properties...
TRANSCRIPT
November 2010
Investor
Presentation
Deliver superior total shareholder returns
Generate consistent, predictable earnings growth
Maintain a strong balance sheet and financial flexibility
Position the Company to grow annual dividend
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Ramco’s Strategic Goals
“Our business plan is simple, to produce sustainable FFO growth and deliver long-term value for our shareholders.”
Capitalize on high-quality shopping center portfolio
Allocate capital conservatively for external growth
Dominant locations in major metropolitan markets
Existing diverse, stable and credit-quality tenant base
Significant embedded leasing and redevelopment opportunities in the core portfolio
Continue to strengthen the balance sheet
Acquire shopping centers to diversify markets and upgrade portfolio
Maximize development returns and minimize risk through land sales and partner participation
Improve debt metrics
Extend debt maturities, enhance liquidity and promote financial flexibility
2
Strategies to Grow Shareholder Value
Strengthen the Balance
Sheet and Improve Liquidity
3
Executed 11 mid-box leases with national and regional tenants
Delivered 6 of 8 value-added existing redevelopment projects involving the addition or expansion of at least one anchor tenant promoting stability and value
Nearing completion on 2 remaining redevelopment projects anticipated for the fourth quarter of 2010
Improving Same-center NOI and Occupancy through first nine months of 2010
Raised approximately $75.7 million in equity, which was used to pay down debt
Closed on a new, 10-year $31.3 million CMBS loan for properties in Michigan and Ohio
Closed on a new 5-year $14.7 million CMBS loan for Aquia Office Building
Reduced term loan by half and paid-off two mortgages early
Extended average term of consolidated debt to 5.2 years
Execution of a Focused Strategy
Improve Core Operations and
Demonstrate Conservative
Growth
Communicated Goals Achievements in 2010
INTERNAL:
EXTERNAL:
Acquired Liberty Square shopping center in Chicago MSA
Acquired $32.7 million note securing Merchants’ Square in Carmel, IN for $16.8 million
Strong Markets and High-Quality Centers
51MSA per US Census Bureau. 2Per CoStar Group.
Total Number of
Properties88
Total GLA 20.0M
Company owned GLA 15.4M
3 Mile Population2 67,483
5 Mile Population2 170,650
3 Mile Avg. HH Income2 $82,324
5 Mile Avg. HH Income2 $82,397
Approximately 90% of the total portfolio is located in 15 of the top 100 MSAs1 in the Country
Focus on strong trade area demographics that far exceed state wide averages
Located in Leading Metropolitan Markets
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Largest owner and manager of shopping centers in the Metro Detroit area
Current leased occupancy of 94.3%, versus national average leased occupancy of 92.6%
Large, high-quality centers with average total center GLA of 272,000 square feet
High-income, densely populated sub-markets
Total # of Properties 22
Gross Leasable Area1 5.9M
Population2 81,897
Avg. HH Income2 $87,940
1Includes both anchor owned and landlord owned space.2Source: CoStar Group: Numbers represent averages for 3-mile trade area.
Dominant portfolio in SE Michigan
SE Michigan
SE Florida
Large concentration of properties create economies of scale
Infill market locations with superior demographics
Seven Publix anchored centers generating sales of $553 psf
Total # of Properties 14
Gross Leasable Area1 2.5M
Population2 83,454
Avg. HH Income2 $74,748
Significant Ownership in SE Florida
Competitive Advantage in Michigan and Florida
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Diverse line-up of high-quality national and regional tenants that account for 81% of total base rent
Average center has 2.3 anchors, promoting stability
Over 52% of our centers are grocery anchored
Average grocer sales of $464 PSF, 25% higher than industry average
2.2%
2.7%
3.9%
4.3%
4.6%
11.4%
WRI
FRT
RPT
DDR
REG
EQY
TenantCredit Rating S&P/Moody’s
No. of Stores
% of Annualized Base Rent
T.J. Maxx/Marshalls A/A3 20 3.9%
Publix NR/NR 12 3.0%
Home Depot BBB+/Baa1 3 1.9%
Kmart/Sears BB-/Ba2 6 1.8%
OfficeMax B/B1 11 1.8%
Dollar Tree NR/NR 28 1.7%
Jo-Ann Fabrics BB-/NR 6 1.6%
Burlington Coat NR/NR 5 1.6%
Staples BBB/Baa2 10 1.5%
Best Buy BBB-/Baa2 5 1.5%
Top tenant concentration vs. peers1
Top tenants2
Strong Line-up of Anchor Tenants
1Source: Company filings as of September 30, 2010.2Source: RPT Financial and Operating Supplement for the quarter ended September 30, 2010.
Top Names in Convenience Draws
Emphasis on leasing to national and regional chains to provide stability, improved credit-quality and secondary tenant draw to our centers.1
1List not comprehensive for any category.
BANKS Bank of America (5)Washington Mutual (5)
Wells Fargo (5)
DRUGS/NUTRITION Walgreens (5) CVS (8) GNC (20)
HAIRCUTS Supercuts (7) Great Clips (7) Fantastic Sam’s (6)
TELECOM AT&T (7) T-Mobile (5) Sprint (5)
CASUAL FARE Panera (8) Starbucks (5) Subway (20)
MAIL/SHIP UPS (13)U.S. Postal Service (8)
FAST FOOD McDonald’s (2) Burger King (2) Wendy’s (4)
BEAUTY Sally Beauty (15) Bath & Body (6) Ulta Salon (1)
ELECTRONICS GameStop (23) Radio Shack (15) Micro Center (1)
SHOES Payless (10) DSW (3) Footlocker (4)
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1Q2010 2Q2010 3Q2010
Physical Occupancy Leased Occupancy
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Improving Operating Metrics
Total Portfolio Occupancy YTD Same-center Cash NOI Cash Leasing Spreads
89.7%
1Q2010 2Q2010 3Q2010
89.5%
90.8%
90.5%
-1.8%-1.5%
1Q2010 2Q2010 3Q2010
-12.9 %
-1.6%
89.8%
91.1%
-1.5%
-0.2%
Source: RPT Financial and Operating Supplements for the quarters ended March 31, June 30 and September 30, 2010.
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Positive Leasing Momentum
Since January of 2010, the Company has signed 11 mid-box leases totaling 300,000 square feet with national and regional chains including TJ Maxx, Best Buy, Ross Dress for Less, Old Navy, Staples, Golfsmith and Total Wine
For the remainder of 2010, the Company anticipates signing at least 4additional mid-box leases totaling 100,000 square feet to replace vacant spaces or underperforming tenants
Anticipate achieving a full-year effect of new mid-box lease signings in 2012
2007
Actual
2008
Actual
2009
Actual
2010
Estimate
Executed Leases 67 98 116 129
Renewal Retention 69.4% 71.1% 74.0% 75.0%
2010 Leasing Velocity
Mid-Box Leasing Activity“Leasing velocity is continuing to show positive momentum, which is reflected in the record number of new leases projected to be signed in 2010 .”
The Company is on pace to achieve its highest level of new lease signings and renewals during 2010
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The Company’s value-add redevelopment program is designed to improve the NAV and NOI of existing shopping centers through:
1. Leasing vacant anchor space or replacing underperforming anchor tenants
2. Accommodating new anchor retailers desirous of entering the market and being at the ideal location
3. Expanding existing successful anchor tenants
BEFORE AFTER
Upgrading the Portfolio through Redevelopment
Former Farmer Jack anchored center acquired in 2008
Replaced Farmer Jack with upscale specialty grocer Plum Market
Added national and regional in-line tenants including Running Fit and Five Guys Burgers & Fries as well as popular local retailers such as Churchill’s Cigars and 7 Bar and Grill
Completed façade renovation, parking lot improvements and pylon signage upgrades
Cost $10.4M, ROI 11.9%, stabilizing end of 20101
The Shops at Old Orchard, West Bloomfield, Michigan
1Source: RPT Financial and Operating Supplement for the quarter ended September 30, 2010.
Opportunities for External Growth
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Metro markets in identified growth areas with value-added potential
Focus on market dominant community shopping centers with a grocery and/or discount anchor component
Geographic diversification
Disposition of non-strategic assets to upgrade portfolio and markets
External Growth Opportunities
Acquisition
Philosophy
Development
Philosophy
Pursue a conservative approach to existing pipeline of potential future projects including land sales and partner participation
Developments will only be considered upon achieving certain, specific criteria:
Critical mass of signed anchor leases
Demonstrated demand for small shop retail
Firm construction costs
Construction financing in place
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Growing the Portfolio-Acquisition of Liberty Square
107,000 grocery-anchored community center in Chicago MSA market
Jewel-Osco currently generating sales of over $650 PSF
3 mile trade area average household income of $112,000
89% occupancy at time of purchase with existing lease-up opportunities
8.0% capitalization rate on 2011 budgeted NOI
Liberty Square, Wauconda (Chicago), Illinois
“The acquisition of Liberty Square underscores our strategy of acquiring shopping centers with value-added potential in high growth markets emphasizing geographic diversification.”
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Strategic Investment-Merchants’ Square
Purchased $32.7 million note for $16.8 million
Partner’s ownership interest transferred in October 2010
360,000 square foot power center with strong national and regional tenants
3 mile trade area average population of 61,740 and household income of $114,636
Opportunity to add value through lease-up of vacant Hobby Lobby, lease obligated through December 31, 2013
Approximately 10.0% unleveraged ROI
Merchants’ Square in Carmel, Indiana
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Conservative Development Program
The Town Center at Aquia, Stafford County, VA:
Anchor commitments for Regal Theater, Gold’s Gym, The Learning Experience
Sale of office and residential components
Joint venture for retail phases
Gateway Commons, Lakeland, FL: 340,000 SF power center adjacent to our Target
anchored, Shoppes of Lakeland shopping center Very strong anchor retail interest from Kohl’s,
Ross Dress For Less, Toys R Us, LA Fitness, Dick’s Sporting Goods, Wine Time, Old Navy and PetSmart
Potential anchor and out parcel sales
Hartland Towne Square, Hartland Twp., MI: Sale of land parcels to Meijer (opened), Menard’s
(Jan. 2011), Belle Tire (opened) and Tim Horton’s Continue to market remaining land for retail,
entertainment & other uses including medical, school and office
Parkway Shops, Jacksonville, FL: 330,000 SF power center directly across from
River City Marketplace Very strong anchor retail interest from Kohl’s,
Target, HH Gregg, Dick’s Sporting Goods, TJ Maxx as well as numerous other destination users
Potential anchor and out parcel sales
Critical mass of anchor tenants in place
Demonstrated demand for small shop retail
Firm construction costs
Construction financing secured
Development projects:
Criteria to commence vertical construction:
Strengthened Balance Sheet
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Current Financial Position
0
20
40
60
80
100
120
4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12
Mill
ions
Land Loan Mortgage Bank Loan
Debt Maturities 2010-2012Capitalization
Weighted average term to maturity 5.2 years.
Debt information as of September 30, 2010.
Mortgage Loans (due
various dates)36%
Line of Credit (due Dec-12)
9%Bank Term Loan (due June-11)
3%
Junior Subordinated
Note (due June-38)
3%
Land Loans (due various
dates)1%
Equity (Market
Capitalization as of
11/5/2010)48%
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Delivering on Balance Sheet Strategy
Funded two acquisitions expected to generate first year returns of 9.3%
Paid off RPT’s share of two mortgages on joint venture properties
Completion of Merchants’ Square consolidation will reduce JV debt by another $32.7 million
Growing pool of consolidated unencumbered assets valued at approximately $100 million
Debt Measures September 30, 2010 September 30, 2009
Total Consolidated Debt $538.2M $543.5M
Debt to Market Capitalization 55.2% 64.3%
Average Term 5.2 yrs 4.8 yrs
Term Loan Balance $30M $100M
Total Joint Venture Debt $470.7 $537.3
3Q2010 Activity
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Selling Assets to Meet Strategic Objectives
“We continuously review and evaluate the portfolio to identify potential sales with an eye towards (1) upgrading the portfolio, (2) generating capital to pay down debt, and (3) redeploying capital into new markets and assets.”
Potential asset sales:
Core properties that are fully-valued
Non-core
Market has moved
Possible future risk
Out parcels
Three assets currently being marketed for sale, which are expected to generate between $40-$45 million in proceeds to Ramco:
Fully-valued/potential future risk
Diversify out of the market
Use proceeds to pay down debt
Focused business plan with demonstrated results
High-quality, multi-anchor shopping centers in strong
metropolitan markets
Improving operating metrics
Strengthened balance sheet
Experienced and knowledgeable management team
Competitive, secure dividend yield of 5.3%, versus 4.0% for
shopping center peers1
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Attractive Investment
1Source: SNL.
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Ramco-Gershenson Properties Trust considers portions of this information to be
forward-looking statements within the meaning of Section 27A of the Securities Act
of 1933 and Section 21E of the Securities Exchange Act of 1934, both as amended,
with respect to the Company’s expectation for future periods. Although the
Company believes that the expectations reflected in such forward-looking
statements are based upon reasonable assumptions, it can give no assurance that
its expectations will be achieved. For this purpose, any statements contained herein
that are not historical fact may be deemed to be forward-looking
statements. Certain factors could occur that might cause actual results to vary.
These include our success or failure in implementing our business strategy,
economic conditions generally and in the commercial real estate and finance
markets specifically, our cost of capital, which depends in part on our asset quality,
our relationships with lenders and other capital providers, our business prospects
and outlook, changes in governmental regulations, tax rates and similar matters,
and our continuing to qualify as a REIT, and other factors discussed in the
Company’s reports filed with the Securities and Exchange Commission.
Safe Harbor Statement
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Quality Shopping Center Portfolio