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• Portfolio Lease Rate: 97.1%.

• Leased Space: Over 1.2 million square feet year-to-date, including 450,000 square feet in Q3.

• Property Sales: Two properties sold for $69 million with a blended exit cap rate in the low 6% range.

• Property Acquisition: Acquired a shopping center for $70 million with a going-in cap rate in the high 6% range.

• GAAP Net Income: $32.1 million for Q3 2024, $0.25 per diluted share.

• Gain on Sales: $26.7 million from property sales in Q3.

• Same-Center NOI: Decreased by 2% in Q3; increased by 1.5% for the first nine months of 2024.

• Funds From Operations (FFO): $33.2 million for Q3, $0.25 per diluted share.

• Expected FFO for 2024: $1.03 to $1.05 per diluted share.

• Same-Center NOI Growth Expectation: 1% to 2% year-over-year.

• Re-Leasing Rent Growth: 14% cash increase on new leases, 7% increase on renewals in Q3.

• Incremental Rent from New Leases: $8.2 million as of September 30.

• Senior Notes Maturity: $250 million maturing in December, refinancing planned.

• Warning! GuruFocus has detected 10 Warning Signs with ROIC.

Release Date: October 23, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Retail Opportunity Investments Corp (NASDAQ:ROIC) maintained a high portfolio lease rate of 97.1%, showcasing strong demand for their grocery-anchored shopping centers.

• The company achieved significant leasing activity, with over 1.2 million square feet leased in the first nine months of 2024, including 450,000 square feet in the third quarter.

• ROIC is on track to achieve its 12th consecutive year of solid rent growth on both new and renewed leases.

• The company successfully sold two properties for $69 million, achieving a blended exit cap rate in the low 6% range, and acquired a dual grocery-anchored shopping center at a high 6% cap rate.

• ROIC's anchor re-leasing initiative is expected to add over $2 million of additional incremental long-term annual revenue, with a goal to bring the overall portfolio lease rate to around 98%.

Negative Points

• Same-center net operating income (NOI) for the third quarter was down by about 2% compared to the same period last year, due to higher lease recapture income in the previous year.

• Funds from operations (FFO) were impacted by higher interest expenses and property sales, with a full-year FFO per diluted share expected to be in the $1.03 to $1.05 range.

• The company faces challenges with refinancing $250 million of senior notes maturing in December, amidst fluctuating market conditions.

• ROIC's ongoing anchor re-leasing activity has muted same-center NOI growth for the year, with expectations for improvement in 2025.

• The company anticipates a considerable pickup in bad debt for the fourth quarter, despite a healthy tenant base, reflecting cautious financial guidance.