2014

Phillips Edison-ARC Shopping Center REIT Inc. Reports Third Quarter 2013 Results

CINCINNATI, Nov. 8, 2013 /PRNewswire/ -- Phillips Edison–ARC Shopping Center REIT Inc. (the "Company"), a publicly registered, non-traded REIT focused on the acquisition and management of well-occupied grocery-anchored neighborhood and community shopping centers, today announced its operating results for the three and nine month periods ending September 30, 2013.

(Logo:  http://photos.prnewswire.com/prnh/20130204/PH54119LOGO )

"We are pleased to report the continued strong growth the Company experienced in the third quarter of 2013. Our Modified Funds from Operations ("MFFO") increased to $17.94 million for the nine months ended September 30, 2013 compared to $2.44 million for the same period in 2012. Additionally, we increased the size of our portfolio in the third quarter with the addition of 12 grocery-anchored shopping centers totaling over 1.2 million square feet," said Jeff Edison, Chief Executive Officer of the Company.

Edison further noted that, "Our seasoned acquisition team continues to find great buying opportunities that support our diversification strategy in infill growth markets across the United States. We further diversified the strength of our national credit tenant mix this quarter with five new grocery store anchors, and we also expanded our geographic reach into two additional states. These acquisitions bring the total purchase price of our portfolio to $853.4 million, including those properties owned by the joint venture in which we have a 54% ownership interest. Additionally, we believe that our prospective acquisition pipeline will provide us with the ability to continue to acquire shopping centers that will benefit our entire portfolio."

Highlights from the three and nine months ended September 30, 2013:

  • During the three months ended September 30, 2013, the Company acquired 12 grocery-anchored shopping centers totaling approximately 1.2 million square feet for an aggregate purchase price of approximately $203 million.
  • The Company generated MFFO of $17.94 million for the nine months ended September 30, 2013.
  • The Company paid distributions totaling $17.92 million for the nine months ended September 30, 2013.
  • As of September 30, 2013, the Company reported leased portfolio occupancy of 94.1%.
  • As of September 30, 2013:
    • 63.0% of the Company's debt was fixed-rate debt; 
    •  The weighted average interest rate of all debt was 4.6%.
  • The Company issued 52.7 million and 94.0 million shares of common stock during the three and nine months ended September 30, 2013, respectively, including shares issued through the dividend reinvestment plan, generating gross proceeds of $522.6 million and $932.1 million respectively. The Company had issued 107.8 million shares of common stock including 1.0 million shares issued through the dividend reinvestment plan, generating cash proceeds of $1.1 billion since inception.

Subsequent Events:

  • Subsequent to the end of the quarter, the Company acquired eleven grocery-anchored shopping centers totaling 1,000,410 square feet for an aggregate purchase price of $148.5 million. The addition of these shopping centers increases the Company's portfolio to interests in 69 shopping centers totaling 7.1 million square feet for an aggregate purchase price of $1.0 billion (inclusive of contributions made by the Company's joint venture partners).
  • Subsequent to the end of the quarter, from October 1, 2013 through October 31, 2013 or later, the Company raised approximately $210.1 million through the issuance of 21.1 million shares of common stock.
  • Subsequent to the end of the quarter, the Company made net payments of $74.4 million to the lenders under various revolving lines of credit.

PORTFOLIO UPDATE:

As of September 30, 2013, the Company owned fee simple interests in 58 real estate properties, 20 of which were owned through a joint venture in which the Company has a 54% ownership interest, acquired from third parties unaffiliated with the Company (dollars in thousands):

















Average














Contract


Rentable


Remaining








Ownership




Date


Purchase


Square


Lease Term


%

Property Name


Location


Interest


Anchor


Acquired


Price(1)


Footage


in Years


Leased

Lakeside Plaza


Salem, VA


54%


Kroger


12/10/2010


$

8,750


82,798


4.4

 years


100.0%

Snow View Plaza


Parma, OH


54%


Giant Eagle


12/15/2010



12,300


100,460


5.8

 years


97.0%

St. Charles Plaza


Haines City, FL


54%


Publix


6/10/2011



10,100


65,000


9.6

 years


96.3%

Centerpoint


Easley, SC


54%


Publix


10/14/2011



6,850


72,287


9.5

 years


96.7%

Southampton Village


Tyrone, GA


54%


Publix


10/14/2011



8,350


77,956


7.8

 years


96.2%

Burwood Village Center


Glen Burnie, MD


54%


Food Lion


11/9/2011



16,600


105,834


5.7

 years


100.0%

Cureton Town Center


Waxhaw, NC


54%


Harris Teeter


12/29/2011



13,950


84,357


9.1

 years


98.8%

Tramway Crossing


Sanford, NC


54%


Food Lion


2/23/2012



5,500


62,382


2.8

 years


95.9%

Westin Centre


Fayetteville, NC


54%


Food Lion


2/23/2012



6,050


66,890


2.4

 years


97.0%

The Village at Glynn Place


Brunswick, GA


54%


Publix


4/27/2012



11,350


111,924


6.7

 years


96.3%

Meadowthorpe Shopping Center


Lexington, KY


54%


Kroger


5/9/2012



8,550


87,384


3.2

 years


97.4%

New Windsor Marketplace


Windsor, CO


54%


King Soopers(2)


5/9/2012



5,550


95,877


6.4

 years


93.2%

Vine Street Square


Kissimmee, FL


54%


Walmart(3)


6/4/2012



13,650


120,699


5.7

 years


98.0%

Northtowne Square


Gibsonia, PA


54%


Giant Eagle


6/19/2012



10,575


113,372


7.6

 years


100.0%

Brentwood Commons


Bensenville, IL


54%


Dominick's(4)


7/5/2012



14,850


125,550


5.8

 years


99.1%

Sidney Towne Center


Sidney, OH


54%


Kroger


8/2/2012



4,300


118,360


5.5

 years


100.0%

Broadway Plaza


Tucson, AZ


54%


Sprouts


8/13/2012



12,675


83,612


4.7

 years


96.8%

Richmond Plaza


Augusta, GA


54%


Kroger


8/30/2012



19,500


178,167


4.6

 years


87.3%

Publix at Northridge


Sarasota, FL


54%


Publix


8/30/2012



11,500


65,320


8.5

 years


92.0%

Baker Hill Center


Glen Ellyn, IL


100%


Dominick's(4)


9/6/2012



21,600


135,355


4.4

 years


95.8%

New Prague Commons


New Prague, MN


54%


Coborn's


10/12/2012



10,150


59,948


7.6

 years


100.0%

Brook Park Plaza


Brook Park, OH


100%


Giant Eagle


10/23/2012



10,140


157,459


5.4

 years


94.2%

Heron Creek Towne Center


North Port, FL


100%


Publix


12/17/2012



8,650


64,664


5.9

 years


90.4%

Quartz Hill Towne Centre


Lancaster, CA


100%


Vons(4)


12/26/2012



20,970


110,306


3.6

 years


94.6%

Hilfiker Square


Salem, OR


100%


Trader Joe's


12/28/2012



8,000


38,558


7.5

 years


100.0%

Village One Plaza


Modesto, CA


100%


Raley's


12/28/2012



26,500


105,658


13.4

 years


90.3%

Butler Creek


Acworth, GA


100%


Kroger


1/15/2013



10,650


95,597


3.7

 years


92.6%

Fairview Oaks


Ellenwood, GA


100%


Kroger


1/15/2013



9,300


77,052


3.0

 years


97.2%

Grassland Crossing


Alpharetta, GA


100%


Kroger


1/15/2013



9,700


90,906


6.3

 years


89.9%

Hamilton Ridge


Buford, GA


100%


Kroger


1/15/2013



11,800


90,996


6.3

 years


85.9%

Mableton Crossing


Mableton, GA


100%


Kroger


1/15/2013



11,500


86,819


3.4

 years


100.0%

The Shops at Westridge


McDonough, GA


100%


Publix


1/15/2013



7,550


66,297


9.6

 years


74.7%

Fairlawn Town Centre


Fairlawn, OH


100%


Giant Eagle


1/30/2013



42,200


347,255


6.1

 years


97.1%

Macland Pointe


Marietta, GA


100%


Publix


2/13/2013



9,150


79,699


3.1

 years


92.9%

Kleinwood Center


Spring, TX


100%


H-E-B


3/21/2013



32,535


148,963


7.3

 years


95.5%

Murray Landing


Irmo, SC


100%


Publix


3/21/2013



9,920


64,359


6.8

 years


100.0%

Vineyard Center


Tallahassee, FL


100%


Publix


3/21/2013



6,760


62,821


8.4

 years


84.7%

Lutz Lake Station


Lutz, FL


100%


Publix


4/4/2013



9,800


64,986


6.5

 years


98.3%

Publix at Seven Hills


Spring Hill, FL


100%


Publix


4/4/2013



8,500


72,590


2.8

 years


90.6%

Hartville Centre


Hartville, OH


100%


Giant Eagle


4/23/2013



7,300


108,412


6.0

 years


76.7%

Sunset Center


Corvallis, OR


100%


Safeway


5/31/2013



24,900


164,797


5.5

 years


95.4%

Savage Town Square


Savage, MN


100%


Cub Foods(5)


6/19/2013



14,903


87,181


7.9

 years


100.0%

Northcross


Austin, TX


100%


Walmart(3)


6/24/2013



61,500


280,243


14.7

 years


94.5%

Glenwood Crossing


Kenosha, WI


100%


Pick 'n Save


6/27/2013



12,822


87,504


13.5

 years


97.5%

Pavilions at San Mateo


Albuquerque, NM


100%


Walmart(3)


6/27/2013



28,350


149,287


4.7

 years


96.6%

Shiloh Square


Kennesaw, GA


100%


Kroger


6/27/2013



14,500


139,720


4.1

 years


80.4%

Boronda Plaza


Salinas, CA


100%


Food 4 Less(2)


7/3/2013



22,700


93,071


6.4

 years


97.9%

Rivergate


Macon, GA


100%


Publix


7/18/2013



32,354


207,567


6.0

 years


83.4%

Westwoods Shopping Center


Arvada, CO


100%


King Soopers(2)


8/8/2013



14,918


90,855


5.5

 years


95.4%

Paradise Crossing


Lithia Springs, GA


100%


Publix


8/13/2013



9,000


67,470


5.0

 years


93.8%

Contra Loma Plaza


Antioch, CA


100%


Save Mart


8/19/2013



7,250


74,616


4.1

 years


81.9%

South Oaks Plaza


St. Louis, MO


100%


Shop 'n Save(5)


8/21/2013



9,500


112,300


10.9

 years


100.0%

Yorktown Centre


Erie, PA


100%


Giant Eagle


8/30/2013



21,400


196,728


4.9

 years


100.0%

Stockbridge Commons


Fort Mill, SC


100%


Harris Teeter


9/3/2013



15,250


99,473


5.7

 years


95.9%

Dyer Crossing


Dyer, IN


100%


Jewel-Osco


9/4/2013



18,500


95,083


7.3

 years


94.0%

East Burnside Plaza


Portland, OR


100%


QFC(2)


9/12/2013



8,643


38,363


6.0

 years


100.0%

Red Maple Village


Tracy, CA


100%


Raley's


9/18/2013



31,140


97,591


11.0

 years


98.7%

Crystal Beach Plaza


Palm Harbor, FL


100%


Publix


9/25/2013



12,100


59,015


12.8

 years


82.9%





















 (1)

The contract purchase price excludes closing costs and acquisition costs.

 (2)

King Soopers, Food 4 Less, and QFC are affiliates of Kroger.

 (3)

The anchor tenants of Vine Street Square and Pavilions at San Mateo are Walmart Neighborhood Markets.  The anchor tenant of Northcross is a


Walmart Supercenter.

 (4)

Dominick's and Vons are affiliates of Safeway, Inc.

 (5)

Cub Foods and Shop 'n Save are affiliates of SUPERVALU.

The terms and expirations of the Company's operating leases vary. The leases frequently contain provisions for the extension of the lease agreement and other terms and conditions as negotiated. The Company retains substantially all the risks and benefits of ownership of the real estate assets leased to tenants. The weighted-average remaining lease term of grocery anchor tenants at the properties listed above was approximately 10 years as of September 30, 2013.

FINANCIAL UPDATE: 
Funds from operations, or FFO, is a non-GAAP performance financial measure that is widely recognized as a measure of REIT operating performance. The Company uses FFO as defined by the National Association of Real Estate Investment Trusts ("NAREIT") to be net income (loss), computed in accordance with GAAP excluding extraordinary items, as defined by GAAP, and gains (or losses) from sales of property (including deemed sales and settlements of pre-existing relationships), plus depreciation and amortization on real estate assets and impairment charges, and after related adjustments for unconsolidated partnerships, joint ventures and subsidiaries and noncontrolling interests. The Company believes that FFO is helpful to its investors and its management as a measure of operating performance because it excludes real estate-related depreciation and amortization, gains and losses from property dispositions, impairment charges, and extraordinary items, and as a result, when compared year to year, reflects the impact on operations from trends in occupancy rates, rental rates, operating costs, development activities, general and administrative expenses, and interest costs, which are not immediately apparent from net income. Historical cost accounting for real estate assets in accordance with GAAP implicitly assumes that the value of real estate and intangibles diminishes predictably over time, especially if such assets are not adequately maintained or repaired and renovated as required by relevant circumstances and/or are requested or required by lessees for operational purposes in order to maintain the value disclosed. Since real estate values have historically risen or fallen with market conditions, including inflation, changes in interest rates, the business cycle, unemployment and consumer spending, many industry investors and analysts have considered the presentation of operating results for real estate companies that use historical cost accounting alone to be insufficient. As a result, the Company's management believes that the use of FFO, together with the required GAAP presentations, is helpful for its investors in understanding the Company's performance. In particular, because GAAP impairment charges are not allowed to be reversed if the underlying fair values improve or because the timing of impairment charges may lag the onset of certain operating consequences, the Company believes FFO provides useful supplemental information related to current consequences, benefits and sustainability related to rental rate, occupancy and other core operating fundamentals. Additionally, the Company believes it is appropriate to exclude impairment charges from FFO, as these are fair value adjustments that are largely based on market fluctuations and assessments regarding general market conditions which can change over time.  Factors that impact FFO include start-up costs, fixed costs, delay in buying assets, lower yields on cash held in accounts, income from portfolio properties and other portfolio assets, interest rates on acquisition financing and operating expenses. In addition, FFO will be affected by the types of investments in the Company's targeted portfolio which will consist primarily of, but is not limited to, necessity-based neighborhood and community shopping centers.

An asset will only be evaluated for impairment if certain impairment indicators exist and if the carrying or book value exceeds the total estimated undiscounted future cash flows (including net rental and lease revenues, net proceeds on the sale of the property, and any other ancillary cash flows at a property or group level under GAAP) from such asset.  Investors should note, however, that determinations of whether impairment charges have been incurred are based partly on anticipated operating performance, because estimated undiscounted cash flows from a property, including estimated future net rental and lease revenues, net proceeds on the sale of the property, and certain other ancillary cash flows, are taken into account in determining whether an impairment charge has been incurred. While impairment charges are excluded from the calculation of FFO as described above, as impairments are based on estimated future undiscounted cash flows, investors are cautioned that the Company may not recover any impairment charges. FFO is not a useful measure in evaluating net asset value because impairments are taken into account in determining net asset value but not in determining FFO.  

Since FFO was promulgated, GAAP has expanded to include several new accounting pronouncements, such that management and many investors and analysts have considered the presentation of FFO alone to be insufficient. Accordingly, in addition to FFO, the Company uses both FFO adjusted for acquisition expenses and modified funds from operations, or MFFO, as defined by the Investment Program Association ("IPA"). FFO adjusted for acquisition expenses excludes acquisition fees and expenses from FFO.  In addition to excluding acquisition fees and expenses, MFFO also excludes from FFO the following items:

  1. straight-line rent amounts, both income and expense;
  2. amortization of above- or below-market intangible lease assets and liabilities;
  3. amortization of discounts and premiums on debt investments;
  4. gains or losses from the early extinguishment of debt;
  5. gains or losses on the extinguishment or sales of hedges, foreign exchange, securities and other derivatives holdings except where the trading of such instruments is a fundamental attribute of the Company's operations;
  6. gains or losses related to fair-value adjustments for derivatives not qualifying for hedge accounting, including interest rate and foreign exchange derivatives;
  7. gains or losses related to consolidation from, or deconsolidation to, equity accounting;
  8. gains or losses related to contingent purchase price adjustments; and
  9. adjustments related to the above items for unconsolidated entities in the application of equity accounting.

The Company believes that both FFO adjusted for acquisition expenses and MFFO are helpful in assisting management and investors with the assessment of the sustainability of operating performance in future periods and, in particular, after the Company's offering and acquisition stages are complete, because both FFO adjusted for acquisition expenses and MFFO exclude acquisition expenses that affect property operations only in the period in which the property is acquired. Thus, FFO adjusted for acquisition expenses and MFFO provide helpful information relevant to evaluating the Company's operating performance in periods in which there is no acquisition activity.

In evaluating investments in real estate, including both business combinations and investments accounted for under the equity method of accounting, management's investment models and analyses differentiate costs to acquire the investment from the operations derived from the investment. Prior to 2009, acquisition costs for both of these types of investments were capitalized under GAAP; however, beginning in 2009, acquisition costs related to business combinations are expensed. The Company has funded, and intends to continue to fund, both of these acquisition-related costs from offering proceeds and generally not from operations. However, if offering proceeds are not available to fund these acquisition-related costs, operational cash flows may be used to fund future acquisition-related costs.  The Company believes by excluding expensed acquisition costs, FFO adjusted for acquisition expenses and MFFO provide useful supplemental information that is comparable for each type of real estate investment and is consistent with management's analysis of the investing and operating performance of the Company's properties. Acquisition fees and expenses include those paid to the advisor, the sub-advisor or third parties.

As explained below, management's evaluation of the Company's operating performance excludes the additional items considered in the calculation of MFFO based on the following economic considerations. Many of the adjustments in arriving at MFFO are not applicable to the Company. Nevertheless, the Company explains below the reasons for each of the adjustments made in arriving at its MFFO definition.

  • Adjustments for straight-line rents and amortization of discounts and premiums on debt investments.  In the proper application of GAAP, rental receipts and discounts and premiums on debt investments are allocated to periods using various systematic methodologies. This application may result in income recognition that could be significantly different than underlying contract terms. By adjusting for these items, MFFO provides useful supplemental information on the realized economic impact of lease terms and debt investments and aligns results with management's analysis of operating performance. The adjustment to MFFO for straight-line rents, in particular, is made to reflect rent and lease payments from a GAAP accrual basis to a cash basis.
  • Adjustments for amortization of above- or below-market intangible lease assets. Similar to depreciation and amortization of other real estate related assets that are excluded from FFO, GAAP implicitly assumes that the value of intangibles diminishes ratably over time and that these charges be recognized currently in revenue. Since real estate values and market lease rates in the aggregate have historically risen or fallen with market conditions,management believes that by excluding these charges, MFFO provides useful supplemental information on the performance of the real estate.
  • Gains or losses related to fair-value adjustments for derivatives not qualifying for hedge accounting and gains or losses related to contingent purchase price adjustments.  Each of these items relates to a fair value adjustment, which is based on the impact of current market fluctuations and underlying assessments of general market conditions and specific performance of the holding, which may not be directly attributable to current operating performance. As these gains or losses relate to underlying long-term assets and liabilities, management believes MFFO provides useful supplemental information by focusing on the changes in core operating fundamentals rather than changes that may reflect anticipated gains or losses.
  • Adjustment for gains or losses related to early extinguishment of hedges, debt, consolidation or deconsolidation and contingent purchase price.  Similar to extraordinary items excluded from FFO, these adjustments are not related to continuing operations. By excluding these items, management believes that MFFO provides supplemental information related to sustainable operations that will be more comparable between other reporting periods and to other real estate operators.

By providing FFO adjusted for acquisition expenses and MFFO, the Company believes it is presenting useful information that also assists investors and analysts to better assess the sustainability (that is, the capacity to continue to be maintained) of its operating performance after its offering and acquisition stages are completed. The Company also believes that MFFO is a recognized measure of sustainable operating performance by the non-listed REIT industry. However, under GAAP, acquisition costs are characterized as operating expenses in determining operating net income (loss). These expenses are paid in cash by us, and therefore such funds will not be available to distribute to investors. FFO adjusted for acquisition expenses and MFFO are useful in comparing the sustainability of the Company's operating performance after its offering and acquisition stages are completed with the sustainability of the operating performance of other real estate companies that are not as involved in acquisition activities. However, investors are cautioned that FFO adjusted for acquisition expenses and MFFO should only be used to assess the sustainability of the Company's operating performance after its offering and acquisition stages are completed, as both measures exclude acquisition costs that have a negative effect on operating performance during the periods in which properties are acquired.  All paid and accrued acquisition costs negatively impact operating performance during the period in which properties are acquired and will have negative effects on returns to investors, the potential for future distributions, and cash flows generated, unless earnings from operations or net sales proceeds from the disposition of other properties are generated to cover the purchase prices of the properties the Company acquires. Therefore, MFFO may not be an accurate indicator of the Company's operating performance, especially during periods in which properties are being acquired. MFFO that excludes such costs and expenses would only be comparable to that of non-listed REITs that have completed their acquisition activities and have similar operating characteristics as the Company. The purchase of properties, and the corresponding expenses associated with that process, is a key operational feature of the Company's business plan to generate operational income and cash flows in order to make distributions to investors. In the event that the Company is unable to raise any additional proceeds from the sale of shares in its offerings, the Company may still be obligated to pay acquisition fees and reimburse acquisition expenses to its advisor and sub-advisor and the advisor and sub-advisor will be under no obligation to reimburse these payments back to the Company.  As a result, such fees and expenses may need to be paid from other sources, including additional debt, operational earnings or cash flows, net proceeds from the sale of properties or from ancillary cash flows. Acquisition costs also adversely affect the Company's book value and equity.  

The additional items that may be excluded from FFO to determine MFFO are cash flow adjustments made to net income in calculating the cash flows provided by operating activities.  Each of these items is considered an important overall operational factor that affects the Company's long-term operational profitability.  These items and any other mark-to-market or fair value adjustments may be based on many factors, including current operational or individual property issues or general market or overall industry conditions.  While the Company is responsible for managing interest rate, hedge and foreign exchange risk, it does retain an outside consultant to review its hedging agreements. Inasmuch as interest rate hedges are not a fundamental part of the Company's operations, management believes it is appropriate to exclude such gains and losses in calculating MFFO, as such gains and losses are not reflective of ongoing operations.

Each of FFO, FFO adjusted for acquisition expenses, and MFFO should not be considered as an alternative to net income (loss), or income (loss) from continuing operations under GAAP, or as an indication of the Company's liquidity, nor is any of these measures indicative of funds available to fund the Company's cash needs, including its ability to fund distributions. In particular, as the Company is currently in the acquisition phase of its life cycle, acquisition-related costs and other adjustments that are increases to FFO adjusted for acquisition expenses and MFFO are, and may continue to be, a significant use of cash. MFFO has limitations as a performance measure in an offering such as the Company's where the price of a share of common stock is a stated value and there is no net asset value determination during the offering stage and for a period thereafter. Additionally, FFO adjusted for acquisition expenses, and MFFO may not be a useful measure of the impact of long-term operating performance on value if the Company does not continue to operate its business plan in the manner currently contemplated. Accordingly, FFO, FFO adjusted for acquisition expenses, and MFFO should be reviewed in connection with other GAAP measurements. FFO, FFO adjusted for acquisition expenses, and MFFO should not be viewed as more prominent measures of performance than the Company's net income or cash flows from operations prepared in accordance with GAAP.  The Company's FFO, FFO adjusted for acquisition expenses, and MFFO as presented may not be comparable to amounts calculated by other REITs.

Neither the SEC, NAREIT nor any other regulatory body has passed judgment on the acceptability of the adjustments that the Company uses to calculate FFO adjusted for acquisition expenses or MFFO. In the future, the SEC, NAREIT or another regulatory body may decide to standardize the allowable adjustments across the non-listed REIT industry, and the Company may have to adjust its calculation and characterization of FFO, FFO adjusted for acquisition expenses or MFFO.

The following section presents the Company's calculation of FFO, FFO adjusted for acquisition expenses, and MFFO and provides additional information related to its operations (in thousands, except per share amounts). As a result of the timing of the commencement of the Company's initial public offering and its active real estate operations, FFO, FFO adjusted for acquisition expenses, and MFFO are not relevant to a discussion comparing operations for the periods presented. The Company expects revenues and expenses to increase in future periods as it raises additional offering proceeds and uses them to acquire additional investments.

 

FUNDS FROM OPERATIONS, FUNDS FROM OPERATIONS ADJUSTED FOR ACQUISITION EXPENSES, AND

MODIFIED FUNDS FROM OPERATIONS

FOR THE PERIODS ENDED SEPTEMBER 30, 2013 AND 2012

(Unaudited)

(In thousands, except share and per share amounts)

 



Three Months Ended September 30,


Nine Months Ended September 30,



2013


2012


2013


2012

Calculation of Funds from Operations












Net loss attributable to Company stockholders

$

(1,408)


$

(1,036)


$

(6,249)


$

(2,099)

Add:













Depreciation and amortization of real estate assets


8,324



2,507



19,879



5,079


Amortization of tenant improvement allowances


(1)



-



-



-

Less:













Noncontrolling interest


(1,331)



(1,114)



(3,965)



(2,297)

Funds from operations (FFO)

$

5,584


$

357


$

9,665


$

683














Calculation of FFO Adjusted for Acquisition Expenses












Funds from operations

$

5,584


$

357


$

9,665


$

683

Add:













Acquisition expenses


3,967



1,097



9,633



2,416

Less:













Noncontrolling interest


-



(188)



-



(632)

FFO adjusted for acquisition expenses

$

9,551


$

1,266


$

19,298


$

2,467














Calculation of Modified Funds from Operations












FFO adjusted for acquisition expenses

$

9,551


$

1,266


$

19,298


$

2,467

Add:













Net amortization of above- and below-market leases


127



62



465



337

Less:













Straight-line rental income


(587)



(164)



(1,135)



(286)


Amortization of market debt adjustment


(371)



(69)



(830)



(82)


Change in fair value of derivative


(45)



-



(55)



-


Noncontrolling interest


79



59



194



(1)

Modified funds from operations (MFFO)

$

8,754


$

1,154


$

17,937


$

2,435














Weighted-average common shares outstanding - basic and diluted


79,796,551



6,928,167



45,207,554



4,935,127

Net loss per share - basic and diluted

$

(0.02)


$

(0.15)


$

(0.14)


$

(0.43)

FFO per share - basic and diluted

$

0.07


$

0.05


$

0.21


$

0.14

FFO adjusted for acquisition expenses per share - basic and diluted

$

0.12


$

0.18


$

0.43


$

0.50

MFFO per share - basic and diluted

$

0.11


$

0.17


$

0.40


$

0.49

 

About Phillips Edison – ARC Shopping Center REIT Inc.
Phillips Edison-ARC Shopping Center REIT Inc. is a public non-traded REIT that seeks to acquire and manage well-occupied grocery-anchored neighborhood shopping centers having a mix of national and regional retailers selling necessity-based goods and services, in strong demographic markets throughout the United States.  The Company is co-sponsored by two industry leaders: Phillips Edison & Company, who has acquired over $2.3 billion in shopping centers throughout the United States, and AR Capital, LLC, a real estate investment program sponsor dedicated to governance best practices.  As of October 30, 2013, the Company owned, directly or indirectly through a joint venture in which it has a controlling interest, and managed an institutional quality retail portfolio consisting of 64 grocery-anchored shopping centers totaling approximately 6.6 million square feet.  For more information on the Company, please visit the website at www.phillipsedison-arc.com.

 

 

 

 

SOURCE Phillips Edison - ARC Shopping Center REIT Inc.



RELATED LINKS
http://www.phillipsedison-arc.com

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