Brixmor Property Group Reports First Quarter 2017 Results

NEW YORK, May 1, 2017 /PRNewswire/ -- Brixmor Property Group Inc. (NYSE: BRX) ("Brixmor" or the "Company") announced today its operating results for the three months ended March 31, 2017. For the three months ended March 31, 2017, net income attributable to common stockholders was $0.23 per diluted share compared with $0.20 per diluted share in the comparable 2016 period.

Key highlights for the three months ended March 31, 2017 include:

• Grew FFO per diluted share 4.4% year-over-year, excluding non-cash GAAP adjustments and lease termination fees
• Generated same property NOI growth of 3.2%
• Executed 1.9 million square feet of new and renewal leases at comparable rent spreads of 16.4%
• Increased leased occupancy by 10 basis points year-over-year to 92.5%
• Increased small shop leased occupancy by 90 basis points year-over-year to 84.8%
• Added $42.5 million of value enhancing reinvestment projects to the in process pipeline at an expected average incremental NOI yield of 10%
• Completed four anchor space repositioning projects and three outparcel developments for a total investment of $14.5 million at an average incremental NOI yield of 14%
• Completed $104.5 million of acquisitions and $35.5 million of dispositions
• Issued $400.0 million of 3.90% Senior Notes due 2027 and utilized proceeds to prepay a portion of the Company's Tranche A Term Loan maturing July 31, 2018

"While the overall retail environment brought an increase in announced retail bankruptcies and store closings, our portfolio continued to benefit from healthy tenant demand, resulting in 1.9 million square feet of new and renewal leases executed in the first quarter at blended comparable rent spreads of 16.4%," commented James Taylor, Chief Executive Officer and President. "Importantly, our leasing and redevelopment activity continues to demonstrate the upside embedded in our portfolio given our locations, below market rent basis and accretive redevelopment potential, all of which represent distinct competitive advantages in today's environment."

FINANCIAL HIGHLIGHTS

Net Income

• For the three months ended March 31, 2017 and 2016, net income attributable to common stockholders was $71.6 million, or $0.23 per diluted share, and $60.5 million, or $0.20 per diluted share, respectively.

NAREIT FFO

• For the three months ended March 31, 2017 and 2016, NAREIT FFO was $161.6 million, or $0.53 per diluted share, and $161.3 million, or $0.53 per diluted share, respectively.

Same Property NOI Growth

• Same property NOI for the three months ended March 31, 2017 increased 3.2% from the comparable 2016 period.
• Same property base rent for the three months ended March 31, 2017 contributed 250 basis points to same property NOI growth.

Dividend

• The Company's Board of Directors declared a quarterly cash dividend of $0.26 per common share (equivalent to $1.04 per annum) for the second quarter of 2017.
• The dividend is payable on July 17, 2017 to stockholders of record on July 6, 2017, representing an ex-dividend date of July 3, 2017.

PORTFOLIO AND INVESTMENT ACTIVITY

Value Enhancing Reinvestment Opportunities

• During the three months ended March 31, 2017, the Company completed four anchor space repositioning projects and added five new projects to its in process pipeline. At March 31, 2017, the anchor space repositioning in process pipeline was comprised of 17 projects with an aggregate net estimated cost of approximately $33.1 million at expected average incremental NOI yields of 13 to 15%.
• During the three months ended March 31, 2017, the Company completed three outparcel developments and added three new projects to its in process pipeline. At March 31, 2017, the outparcel development in process pipeline was comprised of seven projects with an aggregate net estimated cost of approximately $9.6 million at an expected average incremental NOI yield of 13%. In addition, the new development in process pipeline was comprised of one project, with a net estimated cost of approximately $32.6 million at an expected NOI yield of 10%.
• During the three months ended March 31, 2017, the Company added two new redevelopment projects to its in process pipeline. At March 31, 2017, the redevelopment in process pipeline was comprised of 11 projects with an aggregate net estimated cost of approximately $142.1 million at an expected average incremental NOI yield of 9%.

Acquisitions

• As previously announced, during the three months ended March 31, 2017, the Company acquired Arborland Center, a 404,000 square foot grocery-anchored regional shopping destination located in Ann Arbor, Michigan, for $102.0 million. Arborland Center is located in a high barrier-to-entry trade area situated between the University of Michigan and Eastern Michigan University and is anchored by a range of best-in-class retailers including Kroger, Nordstrom Rack, Marshalls, Ulta, DSW and Starbucks.
• In addition, during the three months ended March 31, 2017, the Company acquired two outparcels for a combined purchase price of $2.5 million.

Dispositions

• During the three months ended March 31, 2017, the Company generated approximately $35.5 million of gross proceeds on the sale of Killingly Plaza located in Killingly, Connecticut, North Park shopping center located in Macon, Georgia and Perry Marketplace located in Perry, Georgia.

Mark Horgan, Executive Vice President, Chief Investment Officer, added, "The transaction market continues to reflect strong demand for grocery-anchored community and neighborhood shopping centers across both coastal and non-coastal markets.  Consistent with our capital recycling strategy of clustering ownership in successful retail nodes, we added critical mass in the Ann Arbor MSA with the acquisition of Arborland Center, growing our ownership in that market to four assets with over 1.0 million square feet of GLA. Additionally, we are increasing the rate of our disposition activity, exiting three single market assets during the first quarter and we expect to close on more in the coming quarters."

CAPITAL STRUCTURE

• During the three months ended March 31, 2017, the Company's Operating Partnership, Brixmor Operating Partnership LP, issued $400.0 million aggregate principal amount of 3.90% Senior Notes due 2027 at 99.009% of par value. Proceeds from the offering were utilized to prepay $390.0 million of the Company's $1.0 billion Tranche A Term Loan maturing July 31, 2018.
• As a result, the Company extended its weighted average maturity to 5.0 years, while reducing maturing debt in 2018 to $629.5 million from $1,019.5 million at December 31, 2016.

GUIDANCE

• The Company is affirming its previously provided NAREIT FFO per diluted share expectations for 2017. Key underlying assumptions are updated as indicated below:

⁽¹⁾ Does not include any expectations of additional one-time items, including, but not limited to, litigation, investigative and other non-routine legal expenses.

• The following table provides a reconciliation of the range of the Company's 2017 estimated net income attributable to common stockholders to NAREIT FFO:

CONNECT WITH BRIXMOR

• For additional information, please visit www.brixmor.com;
• Follow Brixmor on Twitter at www.twitter.com/Brixmor;
• Find Brixmor on LinkedIn at www.linkedin.com/company/brixmor.

CONFERENCE CALL AND SUPPLEMENTAL INFORMATION

The Company will host a teleconference on Tuesday, May 2, 2017 at 10:00 AM ET.  To participate, please dial 888.317.6003 (domestic) or 412.317.6061 (international) at least ten minutes prior to the scheduled start of the call (Passcode: 0206262).  The teleconference can also be accessed via a live webcast at www.brixmor.com in the Investors section. A replay of the teleconference will be available through midnight ET on May 16, 2017 by dialing 877.344.7529 (domestic) or 412.317.0088 (international) (Passcode: 10102384) or via the web through May 2, 2018 at www.brixmor.com in the Investors section.

The Company's Supplemental Disclosure will be posted at www.brixmor.com in the Investors section.  These materials are also available to all interested parties upon request to the Company at investorrelations@brixmor.com or 800.468.7526.

NON-GAAP DISCLOSURES

NAREIT FFO

NAREIT FFO is a supplemental non-GAAP performance measure utilized to evaluate the operating performance of real estate companies. The National Association of Real Estate Investment Trusts ("NAREIT") defines FFO as net income (loss) in accordance with GAAP excluding (i) gain (loss) on disposition of operating properties, and (ii) extraordinary items, plus (iii) depreciation and amortization of operating properties, (iv) impairment of operating properties and real estate equity investments, and (v) after adjustments for joint ventures calculated to reflect FFO on the same basis.

The Company presents NAREIT FFO as it considers it an important supplemental measure of its operating and financial performance.  The Company believes NAREIT FFO assists investors  in analyzing Brixmor's comparative operating and financial performance because, by excluding gains and losses related to dispositions of previously depreciated operating properties, real estate-related depreciation and amortization of continuing operations, impairment of operating properties and real estate equity investments, and after adjustments for joint ventures calculated to reflect FFO on the same basis, investors can compare the operating performance of a company's real estate between periods. 

NAREIT FFO should not be considered as an alternative to, or more meaningful than, net income (determined in accordance with GAAP) or other GAAP financial measures, as an indicator of financial performance and is not an alternative to, or more meaningful than, cash flow from operating activities (determined in accordance with GAAP) as a measure of liquidity.

Non-GAAP performance measures have limitations as they do not include all items of income and expense that affect operations and, accordingly, should always be considered as supplemental financial results to those presented in accordance with GAAP. Computation of NAREIT FFO may differ in certain respects from the methodology utilized by other REITs and, therefore, may not be comparable to similarly titled measures presented by such other REITs. Investors are cautioned that items excluded from NAREIT FFO are relevant to understanding and addressing financial performance.  A reconciliation of NAREIT FFO to Net income is presented in the attached table.

Same Property NOI

Same property NOI is a supplemental, non-GAAP performance measure utilized to evaluate the operating performance of real estate companies.  Same property NOI is calculated (using properties owned for the entirety of both periods excluding properties under development), as total property revenues (base rent, ancillary and other, expense reimbursements and percentage rents) less direct property operating expenses (operating costs, real estate taxes and provision for doubtful accounts). Same Property NOI includes the Company's unconsolidated joint venture at pro rata share.  Same property NOI excludes corporate level income (including management, transaction and other fees), lease termination fees, straight-line rental income, amortization of above- and below-market rent and tenant inducements, straight-line ground rent expense and income / expense associated with the captive insurance entity.

Same property NOI eliminates disparities in NOI due to the acquisition, disposition or stabilization of development properties during the period presented, and therefore, provides a more consistent metric for comparing operational performance. Management uses same property NOI to review operating results for comparative purposes with respect to previous periods or forecasts, and also to evaluate future prospects.

Same property NOI should not be considered an alternative to, or more meaningful than, net income (determined in accordance with GAAP) or other GAAP financial measures as an indicator of financial performance and is not an alternative to, or more meaningful than, cash flow from operating activities (determined in accordance with GAAP) as a measure of liquidity.

Non-GAAP performance measures have limitations as they do not include all items of income and expense that affect operations, and accordingly, should always be considered as supplemental financial results to those presented in accordance with GAAP.  Computation of same property NOI may differ in certain respects from the methodology utilized by other REITs and, therefore, may not be comparable to similarly titled measures presented by such other REITs.  Investors are cautioned that items excluded from same property NOI are relevant to understanding and addressing financial performance.  A reconciliation of same property NOI to Net income is presented in the attached table.

ABOUT BRIXMOR PROPERTY GROUP

Brixmor Property Group, a real estate investment trust (REIT), is a leading owner and operator of high-quality, open-air shopping centers. The Company's more than 500 retail centers comprise 86 million square feet in established trade areas across the nation and are supported by a diverse mix of highly productive non-discretionary and value-oriented retailers, as well as consumer-oriented service providers. Brixmor is committed to maximizing the value of its portfolio by prioritizing investments, cultivating relationships and capitalizing on embedded growth opportunities through driving rents, increasing occupancy and pursuing value-enhancing reinvestment opportunities. Headquartered in New York City, Brixmor is a partner to more than 5,500 best-in-class national, regional and local tenants and is the largest landlord to The TJX Companies and The Kroger Company. 

SAFE HARBOR LANGUAGE

This press release may contain 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.  These statements include, but are not limited to, statements related to the Company's expectations regarding the performance of its business, its financial results, its liquidity and capital resources and other non-historical statements.  You can identify these forward-looking statements by the use of words such as "outlook," "believes," "expects," "potential," "continues," "may," "will," "should," "seeks," "approximately," "projects," "predicts," "intends," "plans," "estimates," "anticipates" or the negative version of these words or other comparable words. Such forward-looking statements are subject to various risks and uncertainties, including those described under the section entitled "Risk Factors" in the Company's Annual Report on Form 10-K for the year ended December 31, 2016, as such factors may be updated from time to time in our periodic filings with the SEC, which are accessible on the SEC's website at www.sec.gov.  Accordingly, there are or will be important factors that could cause actual outcomes or results to differ materially from those indicated in these statements. These factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included in this release and in the Company's filings with the SEC. The Company undertakes no obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise, except as required by law.

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SOURCE Brixmor Property Group Inc.