Investor Presentation January 2012 Committed to Quality - - PowerPoint PPT Presentation

Investor Presentation

January 2012

~COMMITTED TO QUALITY

Committed to Quality

• Ramco-Gershenson is a leading shopping center REIT focused on the ownership
• f high-quality shopping centers in top metropolitan markets.
• The Company’s assets primarily consist of large, multiple-anchor shopping

centers and market dominant supermarket centers.

• The Company’s business plan is centered on three key areas:
• Increasing the quality of its income stream through the lease-up of existing

vacancies and the replacement of underperforming tenancies with leading national retailers as well as pursuing opportunities to add value through redevelopment.

• Acquiring high-quality properties in metropolitan markets with capital

recycled from the disposition of non-core assets.

• Maintaining a strong balance sheet that promotes financial flexibility.

2

2011 Accomplishments

3

All of the Company’s 2011 achievements support the Company’s commitment to quality:  Improved the core portfolio leased occupancy rate to 93.5% at year-end.  Signed fourteen mid-box leases with national retailers including Bed, Bath & Beyond, buy buy Baby, Marshalls, Ross Dress for Less, Michaels, PetSmart, DSW Shoe Warehouse, and LA Fitness.  Sold four non-core shopping centers for a total of $58 million, including the fourth quarter sale of Taylors Square, the Company’s only center in South Carolina, at an average cap rate of 7.0%  Entered the St. Louis, Missouri market acquiring two market-dominant shopping centers with an aggregate purchase price of $77 million, at an average cap rate of 7.4%.  Closed over $400 million in financing, including $100 million of convertible preferred stock at 7.25%, $130 million in unsecured term loans, and a new $175 million unsecured line of credit.  Increased the pool of unencumbered assets to $550 million, compared to less than $100 in 2010.

Our Properties

Focus on Metropolitan Markets

5

1MSA per US Census Bureau. Annualized base rents reported at 100%. 2Based on a three-mile trade area. 3Includes anchor-owned space.

• 80% of the Company’s total annualized

base rents come from 10 of the top MSA’s in the U.S .[1]

• The Company’s top MSA shopping

centers have an average trade area population of 66,217 and an average household income of $83,191. [2]

• Centers in our top MSAs are primarily:
• Large, multiple-anchor shopping

centers with approximately 225,000 square feet and average 3 anchors per center.[3]

• Market-dominant supermarket

anchored centers producing above average sales of $445 per square foot.

Top 10 Market

Metro Detroit Indianapolis Columbus

• Ft. Lauderdale/P. Beach

Milwaukee Jacksonville Atlanta Chicago

• St. Louis

Tampa/Sarasota

Focus on High-Quality Properties: Large, Multiple-Anchor Shopping Centers

6 The Company’s shopping center portfolio includes multiple-anchor properties:

• 87% of shopping centers in our top markets are anchored by two or more national retailers.[1]
• Characteristics of our multiple-anchor shopping centers:
• Located in metropolitan markets with high barriers to entry.
• Dominant locations at major intersections.
• Diversified tenant mix of value oriented retailers.
• Proven strong NOI growth potential.

1Based on Annualized Base Rents as of September 30, 2011, for those properties in the

Company’s top ten markets.

Focus on High-Quality Properties: Market Dominant Supermarket Centers

7 The Company’s shopping center portfolio also includes market dominant grocery-anchored properties:

• 50% of shopping centers in our top markets are anchored by the leading supermarket in their

respective trade areas.[1][2]

• Characteristics of our market dominant supermarket shopping centers:
• High average annual sales of $445 per square foot.
• Top supermarket tenants such as Publix, Kroger, Jewel-Osco, Meijer and Whole Foods.
• Typically part of a multiple-anchor center.

1Based on Annualized Base Rents as of September 30, 2011, for those centers in the

Company’s top ten markets.

2 Includes centers with one or more anchor and anchor-owned space.

Focus on Diverse, Creditworthy Tenants

8

1Source: Latest tenant filings per CreditRiskMonitor for the quarter ended September 30, 2011.

Includes the combined wholly -owned and joint venture portfolio.

• The Company continually

evaluates its roster of top tenants and proactively manages its retail exposure.

• Recently Kmart dropped off the

Company’s top ten tenant list.

• The Company is able to

capitalize on strong retailer relationships to replace underperforming tenants with those that have long-term growth potential.

• The Company’s portfolio is well-

balanced between national and regional tenancies. Local tenants represent less than 20%

• f the overall tenant profile.

Top Ten Tenants Credit Rating S&P/Moody's (1) Number of Leases % of Annualized Base Rental Revenue

T.J. Maxx/Marshalls A/A3 23 4.4% Home Depot BBB+/A3 3 2.0% Dollar Tree NR/NR 31 1.9% Publix Super Market NR/NR 8 1.8% OfficeMax B-/B1 11 1.8% Jo-Ann Fabrics B2/B 6 1.7% Burlington Coat Factory NR/NR 5 1.5% PETsMART BB/NR 7 1.5% Bed Bath & Beyond/buybuy Baby BBB+/NR 6 1.5% Best Buy BBB-/Baa2 5 1.4%

Leasing and Asset Management Initiatives

Adding High-Quality National Retailers

10

In 2011, the Company continued to improve the quality of its shopping center portfolio by filling mid- box vacancies and replacing at risk tenancies with high-quality national retailers.

• Signed 14 new mid-box leases with national, credit-quality tenants including; Bed, Bath & Beyond, buy buy Baby,

Marshalls, Michaels, PetSmart, DSW Shoe Warehouse, and LA Fitness.

• Proactively responded to Border’s pending bankruptcy by releasing two of three stores to national credit anchors.
• Leased 9 of 11 vacancies created by the bankruptcy of Linens ‘N Things and Circuit City.
• Generating creative solutions to accommodate mid-box anchors desire for smaller format stores.
• All mid-box retailers signed in 2010 and 2011 will be in occupancy by the end of 2012 achieving full year income in

2013. 2011 2010 Number of new mid-box leases signed 14 23 Unleased mid-boxes[1] 8 15 Dark and Paying Anchors[1] 4 9

1Based on the Company’s forecasted information through December 31, 2011.

Aggressive Leasing Efforts Producing Results

11 Asset Management has implemented changes to drive occupancy and NOI:

• Implemented new short-form lease reducing cost and time spent on lease documentation.
• Compressed the timeline from securing tenant interest through execution to store opening.
• Initiated program of fixed CAM charges with annual increases.

Improving Operating Metrics 3Q2011 Statistics 2010 Statistics Renewal Retention Rate 81% 75.7% Renewal Leasing Spreads 2.0%

• 6.0%

Leased Occupancy 92.8% 91.0% Same Center NOI 0.7%

• 1.6%

Capital Recycling

Pursuing Quality through Capital Recycling

13

Dispositions:

• Identified $25-50 million of non-core properties to be sold in 2012.
• Sales will generate capital for investment in high-quality centers in target markets.
• Recycling program goals include improving portfolio quality and diversifying into

strong markets. Acquisition Criteria:

• Multiple-anchor or market dominant supermarket anchored centers.
• In-fill locations with high average household incomes.
• Opportunities to drive additional income and value.

High-Quality Acquisition

14

Town & Country

Town and County (St. Louis), Missouri

Acquisition Highlights:

• Market dominant shopping center constructed in 2008.
• Anchored by Whole Foods, one of only two Whole Foods in the

metropolitan area. Shadow-anchored by Target.

• Affluent trade area with 3 mile population of 65,772 and average

household incomes of $115,790.

• Lease-up and mid-box pad opportunity.
• Second acquisition of market-dominant, grocery-anchored center in
• St. Louis market.

Pad Opportunity

Value-Added Redevelopment and Development

Redevelopment and Development Opportunities

16

Redevelopment

• Two redevelopments are currently under construction:
• A new Whole Foods (35,000 sf) at Shops on Lane in Arlington, OH, which is also

anchored by Bed, Bath & Beyond.

• A new LA Fitness (45,000 sf) at Peachtree Hill in Duluth, GA, which is also anchored

by Kroger.

• Additional redevelopments that are in the planning stages will add value by using excess

land, reconfiguring vacant space, and bringing best-in-class retailers to our centers. Development

• Development projects in Jacksonville and Lakeland are currently being pre-leased.

Construction will take place in phases tied to substantially pre-leasing anchor stores.

• Efforts are underway to sell various parcels of land marked-to-market at approximately

$23 million.

In Process Redevelopment

17

• Dominant, upscale shopping center in

close proximity to The Ohio State University is being expanded to meet the needs of a growing trade area.

• Approximately doubling the size of

Whole Foods to new prototype store while eliminating 10,000 square feet of unproductive small shop space.

• Upon completion, the Whole Foods/Bed,

Bath & Beyond anchored shopping center will be 100% occupied.

Demographics (3 mile): Population 116,585 HH Income $64,239 Scheduled Completion Date: September 2012

Shops on Lane Avenue

Upper Arlington (Columbus), Ohio

Parkway Shops Development

18 The Company is finalizing lease agreements with anchor tenants for Phase I of its Parkway Shops development in Jacksonville, Florida.

Project Specifications:

• Phase 1: 100,000 square feet, including 2 anchors and 6 out parcels.
• Anchors will represent approximately 80% of GLA.
• Adjacent to the Company’s 1.0 million square foot River City Market Place.
• 11%-12% return on incremental costs.

Building and Maintaining a Strong Balance Sheet

Fortifying a Sound Capital Structure

20

.

The Company has been focused on reducing leverage, extending debt maturities, increasing liquidity, and enhancing financial flexibility. In 2011, the following activities supported these goals:

• Raised $100 million of convertible preferred stock at 7.25%.
• Closed a new three-year $175 million unsecured line of credit.
• Closed a new five-year $75 million unsecured term loan at a fixed rate of 3.47%.
• Closed a new seven-year $60 million unsecured term loan at a fixed rate of 4.20%.
• Generated $58 million in non-core asset sales.
• Increased pool of unencumbered assets to approximately $550 million, with the

fourth quarter acquisition of Town & Country.

Improved Capital Structure

21

1Total Net Consolidated Debt includes capital lease obligations, net of cash. 2Excludes pro rata share of unconsolidated joint venture debt. 3Based upon year-to-date EBITDA annualized.

Improving Debt Metrics September 30, 2011 September 30, 2010 Total Net Consolidated Debt[1][2] $483.8 million $539.4 million Average Term[2] 6.3 years 5.2 years Debt to EBITDA[3] 6.2x 7.9x Interest Coverage Ratio[3] 2.7x 2.1x Fixed Charge Coverage Ratio[3] 2.0x 1.8x Unencumbered Assets $525 million $90 million

At September 30, 2011, the Company had $22 million in cash and full availability under its $175 million unsecured line of credit.

Eliminating Near-Term Debt Maturities

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• Extended average consolidated debt maturities from 5.4 years in 2010 to 6.3 years in 2011.
• Only $3.4 million of debt (at pro-rata share) maturing in 2011 and $15.2 million in 2012.

[1]Data as of September 30, 2011, with the exception of Madison Center, which was conveyed by a deed in lieu in October. [2]$75 million term loan shown assuming company exercises option to extend maturity one year from 2015 to 2016.

$0.0 $50.0 $100.0 $150.0 $200.0 $250.0 2011 2012 2013 2014 2015 2016 2017 2018 2019+

($ in millions)

Mortgage Unsecured JV Mortgage (at pro rata share)

$15.2 $82.6 $31.4 $93.4 $77.2

Debt Maturity Schedule as of September 30, 2011[1]

$90.1[2] $3.4 $113.4 $86.2

2012 FFO Guidance

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The Company’s 2012 business plan is focused on three key areas; driving NOI in its core shopping centers, executing on a capital recycling program designed to increase overall portfolio quality and maintaining a sound capital structure. The Company’s FFO guidance for the full-year 2012 of $0.94 to $1.02 per diluted share. The 2012 guidance is based on the following key assumptions:  Core portfolio leased occupancy of between 93.0% - 94.0%.  An increase in same-center net operating income of 1.0% - 2.0%.  Management and leasing fees of approximately $3.0 million.  General and administrative expenses of approximately $19.0 million.  Gains on land sales of $1.0 million to $2.0 million.  Acquisitions of $25 million to $50 million, funded with a like amount of dispositions.

Long-Term Strategic Objectives

• Generate sustainable same-center NOI growth of between 2.0% to 3.0% each year,

through aggressive leasing and asset management initiatives.

• Execute on a capital recycling program designed to grow the Company, enhance the

quality of the portfolio and increase market concentration in desirable trade areas through the acquisition of high-quality shopping centers and the disposition of non- core properties.

• Continue to maintain a strong, flexible balance sheet to support the achievement of

the Company’s long-term goals.

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Safe Harbor Statement

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Information included herein contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, or the “Securities Act”, and Section 21E of the Securities Exchange Act of 1934, as amended, or the “Exchange Act.” You can identify these forward-looking statements by our use of the words “believe,” “anticipate,” “plan,” “expect,” “may,” “might,” “should,” “will,” “intend,” “estimate,” “predict” and similar expressions, whether in the negative or

• affirmative. These forward-looking statements represent our expectations or beliefs concerning future events, including:

statements regarding future developments and joint ventures, rents, returns, and earnings; statements regarding the continuation of trends; and any statements regarding the sufficiency of our cash balances and cash generated from

• perating, investing, and financing activities for our future liquidity and capital resource needs. We caution that although

forward-looking statements reflect our good faith beliefs and reasonable judgment based upon current information, these statements are not guarantees of future performance and are qualified by important factors that could cause actual results to differ materially from those in the forward-looking statements, because of risks, uncertainties, and factors including, but not limited to: the final size of the offering; 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. Further, we have included important factors under the heading “Risk Factors” and elsewhere in our Annual Report on Form 10-K for the year ended December 31, 2010, and other periodic reports, that we believe could cause our actual results to differ materially from the forward-looking statements that we make. All forward-looking statements are made as of the date hereof or the date specified herein, based on information available to us as of such date. Except as required by law, we do not undertake any obligation to update our forward-looking statements or the risk factors contained herein to reflect new information or future events or otherwise. You are cautioned not to place undue reliance on forward-looking statements.

Investor Presentation

January 2012