Brixmor Property Group Inc. — 2021 Form 10-K
Reporting period: Fiscal year ended December 31, 2021. The filing combines Brixmor Property Group Inc. and Brixmor Operating Partnership LP; operating and financial results are materially the same. Comparisons below are with full-year 2020 unless noted.
Business context
Brixmor is a REIT owning and operating open-air community and neighborhood shopping centers. At year-end, its portfolio comprised 382 centers and 67.5 million square feet of gross leasable area; approximately 70% of centers were grocery-anchored. The company reported one operating segment.
Key financial and operating metrics
| Metric | 2021 | 2020 |
|---|---|---|
| Total revenue | $1.152 billion | $1.053 billion |
| Net income | $270.2 million | $121.2 million |
| Diluted EPS | $0.90 | $0.41 |
| Nareit FFO | $522.3 million; $1.75 per diluted share | $437.8 million; $1.47 per diluted share |
| Same-property NOI | $779.6 million | $715.9 million |
| Net cash from operating activities | $552.2 million | $443.1 million |
- Revenue increased 9.4%; net income more than doubled, with gains in rental income and property-sale gains contributing to the comparison.
- Same-property NOI rose 8.9%. Year-end billed and leased occupancy were 88.7% and 92.0%, respectively, compared with 87.8% and 90.7% a year earlier.
- Comparable new-and-renewal lease spreads were 11.4% excluding options (10.1% including options); new-lease spreads were 27.6%.
- Investing cash outflow was $331.0 million and financing cash outflow was $293.6 million. Property improvements and investments totaled $308.6 million.
- Debt obligations, net, were $5.165 billion at year-end. Cash, cash equivalents and restricted cash totaled $297.7 million for Brixmor Property Group Inc.; the Operating Partnership reported $282.6 million. Available capacity under the $1.25 billion revolving facility was $1.2 billion.
- Debt maturities included $250 million in 2022 and none in 2023; $800 million was scheduled for 2024. The company said it had sufficient cash to meet the 2022 maturity as of the financial-statement issuance date.
Material changes and unusual items
- Rental income increased by $95.4 million. Management attributed much of the improvement to lower uncollectible-revenue charges and fewer COVID-related effects than in 2020, including a $67.6 million decrease in revenues deemed uncollectible.
- Net income included $73.1 million of gains on real estate sales, versus $34.5 million in 2020, and a $28.3 million loss on extinguishment of debt. The debt loss included $25.5 million of prepayment fees.
- The company issued $850 million of senior notes and used proceeds and cash to repay a $350 million term loan and redeem $500 million of notes due 2023. The new notes included 2.25% notes due 2028 and 2.50% notes due 2031.
- Acquisitions totaled $258.8 million; property dispositions generated $237.4 million in net proceeds. Brixmor stabilized 41 reinvestment projects at an 11% weighted average incremental NOI yield; 50 projects remained in process with $374.3 million of anticipated cost.
- The annual dividend declared was $0.885 per share, versus $0.500 in 2020. The quarterly dividend was $0.24 for both fourth-quarter 2021 and first-quarter 2022.
Outlook, commentary and risks
Management stated that expected cash flows and available capital should cover anticipated needs over the next 12 months and beyond, including debt service, property and leasing expenditures, and REIT distributions. It identified a pipeline of approximately $1.0 billion in potential reinvestment projects over several years, but provided no formal earnings or FFO guidance in the supplied filing text. Management cited leasing demand and occupancy gains, while noting further opportunity, particularly in smaller spaces.
Key risks include continuing effects of COVID-19 on tenant health, rent collection and consumer behavior; tenant distress and lease rollover; competition from other retail formats and e-commerce; inflation and unreimbursed operating-cost increases; redevelopment execution and cost risks; leverage, interest-rate exposure and refinancing; and potential impairment or uninsured property losses. $550 million of debt was variable-rate indexed to LIBOR at year-end, with $300 million hedged by swaps; management estimated a 100-basis-point rate increase would raise annual interest expense by $2.5 million after swaps. LIBOR transition, climate and natural-hazard exposure, environmental and regulatory compliance, and REIT qualification are also disclosed risks.
COVID-related deferrals and abatements continued, but collections improved: as of February 1, 2022, Brixmor had collected 97% of 2021 base rent. Unresolved rent matters and tenant receivables remain relevant; the company reported $1.5 million of COVID-related deferred rent receivable at year-end. Management reported no material ordinary-course litigation impact, and Deloitte issued unqualified opinions on the financial statements and internal controls.
Investor verification priorities
- Assess how much of the earnings and cash-flow rebound reflects sustainable leasing and property operations versus lower COVID reserves, real-estate sale gains and other nonrecurring items.
- Verify the 2022 debt repayment and subsequent liquidity, and review the debt maturity profile, covenants, variable-rate exposure and LIBOR transition terms.
- Track rent collections, tenant delinquencies, lease commencements, occupancy—especially for spaces under 10,000 square feet—and realized rent spreads.
- Evaluate funding needs and returns for the $374.3 million of projects in process and the larger potential reinvestment pipeline, alongside maintenance and leasing capital requirements.
- Review the sustainability of the dividend against operating cash flow, capital spending, debt service and REIT distribution requirements.