Retail Opportunity Investments Ends the Year Strong

MarketsMotley Fool

Retail Opportunity Investments Corp. (NASDAQ: ROIC) announced fourth-quarter 2017 results on Wednesday after the market closed, capping another impressive year in which it added more than 1 million square feet of grocery-anchored shopping centers to its portfolio.

With shares up slightly as investors peruse the news, let's take a closer look at what the specialty real estate investment trust (REIT) accomplished over the past few months.

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Retail Opportunity Investments results: The raw numbers

What happened with Retail Opportunity Investments this quarter?

  • Revenue growth included a 15.1% increase in base rents to $55.7 million and 13.8% growth in recoveries from tenants to $15.7 million.
  • Full-year FFO arrived at $1.14 per diluted share, at the high end of guidance provided last quarter for a range of $1.12 to $1.14.
  • Ended the year with a portfolio lease rate of 97.5%, up from 97.3% last quarter and marking its fourth straight year above 97%.
  • Same-center net operating income grew 2.9% to $43.2 million.
  • Same-space comparative base rents increased 14.1% year over year on 38 new leases totaling 95,806 square feet, and grew 9% on 64 renewed leases totaling 297,400 square feet.
  • Retail Opportunity Investments acquired $155.8 million of grocery-anchored shopping centers during the fourth quarter, including: A two-property portfolio for $96.5 million, encompassing Riverstone Marketplace, a 98.5%-leased, 96,000-square-foot property in Vancouver, Washington, and Fullerton Crossroads, a 99.4%-leased, 220,000-square-foot property in Fullerton, California. North Lynnwood Shopping Center, a 91.3%-leased, 64,000-square-foot property in North Lynnwood, Washington, for $13.3 million. The Village at Nellie Gail Ranch, a 98.5%-leased, 88,000-square-foot property in Laguna Hills, California, for $46.0 million.
  • A two-property portfolio for $96.5 million, encompassing Riverstone Marketplace, a 98.5%-leased, 96,000-square-foot property in Vancouver, Washington, and Fullerton Crossroads, a 99.4%-leased, 220,000-square-foot property in Fullerton, California.
  • North Lynnwood Shopping Center, a 91.3%-leased, 64,000-square-foot property in North Lynnwood, Washington, for $13.3 million.
  • The Village at Nellie Gail Ranch, a 98.5%-leased, 88,000-square-foot property in Laguna Hills, California, for $46.0 million.
  • So far in 2018, the company has acquired two properties including: King City Plaza, a 100%-leased, 63,000-square-foot property in King City, Oregon, for $15.6 million. Stadium Center, a 100%-leased, 49,000-square-foot property in Tacoma, Washington, for $19.0 million.
  • King City Plaza, a 100%-leased, 63,000-square-foot property in King City, Oregon, for $15.6 million.
  • Stadium Center, a 100%-leased, 49,000-square-foot property in Tacoma, Washington, for $19.0 million.

What management had to say

Retail Opportunity Investments CEO Stuart Tanz said:

Looking forward

For the full year of 2018, Retail Opportunity Investments expects FFO per diluted share in the range of $1.16 to $1.20, up from $1.14 in 2017, with earnings per share in the range of $0.39 to $0.41.

All things considered -- and as per usual -- there were no significant surprises in this report from Retail Opportunity Investments. Instead, the company continued to maintain its enviable portfolio lease rates, growing base rents, and executing on its strategy of acquiring and revitalizing necessity-based shopping centers in the western regions of the U.S. For that steady performance and consistent growth, I think investors should be more than pleased.

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Steve Symington owns shares of Retail Opportunity Investments. The Motley Fool owns shares of and recommends Retail Opportunity Investments. The Motley Fool has a disclosure policy.