Brixmor Property Group Inc. — Q1 2021 Form 10-Q
Reporting period: Three months ended March 31, 2021. Brixmor is a REIT operating 389 open-air shopping centers totaling approximately 68 million square feet, primarily grocery- and value-oriented centers. Figures below are in millions unless stated otherwise.
Financial performance and position
| Metric | Q1 2021 | Q1 2020 / prior date |
|---|---|---|
| Total revenue | $279.7 | $282.3 |
| Net income | $52.4 | $59.8 |
| Diluted EPS | $0.18 | $0.20 |
| NAREIT FFO | $130.5; $0.44 per diluted share | $137.5; $0.46 per diluted share |
| Same-property NOI | $196.8 | $199.8 |
| Operating cash flow | $110.5 | $95.1 |
| Cash, cash equivalents and restricted cash | $372.7 | $370.1 at Dec. 31, 2020 |
| Debt obligations, net | $5,165.9 | $5,167.3 at Dec. 31, 2020 |
Net cash used in investing was $34.1 million; net cash used in financing was $73.8 million. Interest expense was $49.0 million, up $1.6 million year over year. The filing does not provide a consolidated operating-margin measure.
Material changes versus the comparable period
- Revenue decreased $2.6 million, with rental income down $3.9 million, partly offset by $1.4 million higher other revenue.
- Net income fell $7.4 million and diluted EPS declined from $0.20 to $0.18. FFO decreased $7.0 million; same-property NOI declined $2.9 million.
- Same-property billed and leased occupancy were 87.9% and 90.9%, respectively, versus 89.4% and 92.6% in Q1 2020. The separate portfolio leasing disclosure reports 87.8% billed and 90.8% leased at March 31, 2021, versus 89.1% and 92.2% a year earlier.
- Operating cash flow rose $15.4 million, primarily from working-capital changes. Investing cash use decreased $12.5 million, mainly due to lower real estate improvement spending.
- Financing cash flow shifted from $517.1 million provided in Q1 2020 to $73.8 million used in Q1 2021, largely because the prior-year period included substantial revolving-credit borrowings during the pandemic.
Debt, liquidity and capital allocation
In March, Brixmor issued $350 million of 2.250% senior notes due 2028 and used the proceeds to repay its $350 million term loan; it recorded a $1.2 million extinguishment loss. Debt maturities total $250 million in 2022, and management said cash on hand was sufficient to meet that scheduled maturity. The company reported $1.2 billion of available revolving-facility liquidity and was in compliance with debt covenants at quarter-end. Weighted-average debt maturity was 5.7 years.
Quarterly common dividends were $0.215 per share, versus $0.285 in Q1 2020; $65.0 million of dividends were paid during the quarter. The board declared a further $0.215 dividend for Q2 2021 and said it will reassess dividends quarterly. The company did not repurchase shares in Q1 2021.
Outlook, risks and unusual items
- Management expects COVID-19 to continue adversely affecting results during 2021, but cannot estimate the pandemic’s ultimate duration or financial impact. As of April 27, 2021, it reported collection of 94% of Q1 billed base rent; 2% of portfolio ABR was associated with currently closed tenants. Collection varied by tenant category.
- COVID-19 rent relief included $6.9 million of deferrals and $2.8 million of abatements granted for Q1 2021 lease payments. The quarter-end COVID-related deferred receivable was $9.4 million, after receipts and amounts deemed uncollectible.
- Leasing spreads remained positive: 6.7% for comparable new, renewal and option leases. Management said leasing execution velocity had recovered to levels similar to prior periods after slowing in Q2 2020.
- The company had 57 active anchor repositioning, redevelopment and outparcel projects with anticipated costs of $409.2 million; $225.1 million had been incurred. It identified a further approximately $1.0 billion pipeline of potential projects over several years.
- Q1 included $5.8 million of property-sale gains, $1.5 million of real estate impairment charges and the $1.2 million debt-extinguishment loss. G&A rose $2.0 million, primarily due to litigation and other non-routine legal costs and compensation.
- The company remains obligated to advance legal fees for certain former executives in pending SEC civil actions. Advances exceed insurance coverage, and recovery may be uncertain. Management reported no material change to previously disclosed risk factors.
Management stated it expects available cash, operating cash flow, revolving capacity and other capital sources to meet anticipated needs for the next 12 months and beyond. No numerical earnings or FFO guidance was provided in the supplied filing text.
Investor verification priorities
- Track rent collections, deferred receivables, tenant closures and any subsequent rent relief or tenant credit deterioration.
- Verify occupancy, leasing spreads and same-property NOI trends, including the differing occupancy figures disclosed for the portfolio and same-property pool.
- Assess the capacity to fund the redevelopment pipeline while maintaining liquidity, debt covenants and dividends; monitor the 2022 debt maturity and refinancing conditions.
- Review future G&A and legal costs, including advances related to former executives and potential recoverability.
- Monitor impairment exposure, dispositions and the execution and returns of planned capital projects.