a6814882.htm
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549

FORM 10-Q

x   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES ACT OF 1934

For the quarterly period ended June 30, 2011

Commission file number 1-10093

RAMCO-GERSHENSON PROPERTIES TRUST
(Exact name of registrant as specified in its charter)

   
MARYLAND
13-6908486
(State or other jurisdiction of incorporation or organization)
 (I.R.S. Employer Identification Number)
   
31500 Northwestern Highway
  
Farmington Hills, Michigan
48334
 (Address of principal executive offices)
(Zip Code)
 

Indicate by check mark whether the registrant:  (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes x No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a “smaller reporting company”. See definition of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
 
Large accelerated filer o Accelerated filer x Non-accelerated filer o Smaller reporting company o
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yeso No x

Number of common shares of beneficial interest ($0.01 par value) of the registrant outstanding as of August 3, 2011: 38,552,673
 
 
Page 1 of 43
 
 
INDEX

  Page No.  
   
         
     
      3  
 
          
      4  
           
      5  
           
      6  
           
      7  
           
    23  
           
    36  
           
    36  
           
 
           
    37  
           
     37  
           
    37  
 
 
Page 2 of 43
 
 
 
Item 1.   Unaudited Condensed Financial Statements
 
Condensed Consolidated Balance Sheets
June 30, 2011 (Unaudited) and December 31, 2010
(In thousands, except per share data)
 
   
June 30,
    
December 31,
  
   
2011
    
2010
  
ASSETS
            
Income producing properties, at cost:
            
Land
   $ 124,316     $ 114,814  
Buildings and improvements
     861,637       863,229  
Less accumulated depreciation and amortization
     (215,958 )     (213,919 )
Income producing properties, net
     769,995       764,124  
Construction in progress and land held for development or sale
                
(including $0 and $25,812 of consolidated variable interest entities,
          
 respectively)
     96,974       95,906  
Property held for sale
     13,630       -  
Net real estate
   $ 880,599     $ 860,030  
Equity investments in unconsolidated joint ventures
     112,111       105,189  
Cash and cash equivalents
     6,314       10,175  
Restricted cash
     6,836       5,726  
Accounts receivable, net
     10,302       10,451  
Notes receivable
     3,000       3,000  
Other assets, net
     59,417       58,258  
TOTAL ASSETS
   $ 1,078,579     $ 1,052,829  
                 
LIABILITIES AND SHAREHOLDERS' EQUITY
                
Mortgages and notes payable:
                
    Mortgages payable (including $0 and $4,605 of consolidated variable
      interest entities, respectively)
   $ 361,932     $ 363,819  
    Unsecured revolving credit facility
     33,000       -  
    Unsecured term loan facility
     75,000       -  
    Secured revolving credit facility
     -       119,750  
    Secured term loan facility, including secured bridge loan
     -       60,000  
    Junior subordinated notes
     28,125       28,125  
    Total mortgages and notes payable
   $ 498,057     $ 571,694  
Capital lease obligation
     6,493       6,641  
Accounts payable and accrued expenses
     28,525       24,986  
Other liabilities
     2,712       3,462  
Distributions payable
     8,506       6,680  
TOTAL LIABILITIES
   $ 544,293     $ 613,463  
                 
Ramco-Gershenson Properties Trust shareholders' equity:
                
Preferred shares, $0.01 par, 2,000 shares authorized: 7.25% Series D
          
Cumulative Convertible Perpetual Preferred Shares, (stated at liquidation
          
preference $50 per share), 2,000 and 0 shares issued and outstanding at
          
       June 30, 2011 and December 31, 2010, respectively
   $ 100,000     $ -  
Common shares of beneficial interest, $0.01 par, 60,000 shares authorized,
          
38,543 and 37,947 shares issued and outstanding as of June 30, 2011
          
   and December 31, 2010, respectively
     385       379  
Additional paid-in capital
     569,211       563,370  
Accumulated distributions in excess of net income
     (170,824 )     (161,476 )
TOTAL SHAREHOLDERS' EQUITY ATTRIBUTABLE TO RPT
     498,772       402,273  
Noncontrolling interest
     35,514       37,093  
TOTAL SHAREHOLDERS' EQUITY
     534,286       439,366  
                 
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
   $ 1,078,579     $ 1,052,829  
                 
The accompanying notes are an integral part of these condensed consolidated financial statements.
  
 
 
Page 3 of 43
 
 
Condensed Consolidated Statements of Operations and Comprehensive Income
For the three and six months ended June 30, 2011 and 2010
(In thousands, except per share amounts)
(Unaudited)
 
   
Three Months Ended June 30,
    
Six Months Ended June 30,
  
   
2011
    
2010
    
2011
    
2010
  
REVENUE
                        
Minimum rent
   $ 21,150     $ 19,536     $ 41,354     $ 39,446  
Percentage rent
     45       120       122       193  
Recovery income from tenants
     7,364       7,171       14,925       14,636  
Other property income
     609       1,035       2,134       2,251  
Management and other fee income
     795       1,040       1,787       2,070  
TOTAL REVENUE
     29,963       28,902       60,322       58,596  
                                 
EXPENSES
                                
Real estate taxes
     4,714       4,434       9,145       8,894  
Recoverable operating expense
     3,319       3,100       7,406       6,704  
Other non-recoverable operating expense
     623       940       1,368       2,091  
Depreciation and amortization
     9,677       7,319       18,390       14,846  
General and administrative
     4,866       4,824       9,922       8,950  
TOTAL EXPENSES
     23,199       20,617       46,231       41,485  
                                 
INCOME BEFORE OTHER INCOME AND EXPENSE, TAX AND DISCONTINUED OPERATIONS
     6,764       8,285       14,091       17,111  
                                 
OTHER INCOME AND EXPENSES
                                
Other income (expense)
     (201 )     (303 )     (411 )     (633 )
Gain on sale of real estate
     2,240       499       2,396       499  
Earnings from unconsolidated joint ventures
     672       (73 )     1,633       885  
Interest expense
     (6,967 )     (7,925 )     (15,098 )     (15,747 )
Amortization of deferred financing fees
     (476 )     (639 )     (1,104 )     (1,222 )
Impairment charge on unconsolidated joint ventures
     -       -       -       (2,653 )
Loss on early extinguishment of debt
     (1,968 )     -       (1,968 )     -  
INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE TAX
     64       (156 )     (461 )     (1,760 )
Income tax (provision) benefit
     (831 )     209       (890 )     352  
INCOME (LOSS) FROM CONTINUING OPERATIONS
     (767 )     53       (1,351 )     (1,408 )
                                 
DISCONTINUED OPERATIONS
                                
Gain (loss) on sale of real estate
     6,210       (2,050 )     6,210       (2,050 )
Income from discontinued operations
     86       195       417       303  
INCOME (LOSS) FROM DISCONTINUED OPERATIONS
     6,296       (1,855 )     6,627       (1,747 )
                                 
NET INCOME (LOSS)
     5,529       (1,802 )     5,276       (3,155 )
Net (income) loss attributable to noncontrolling interest
     (371 )     760       (350 )     1,431  
NET INCOME (LOSS) ATTRIBUTABLE TO RAMCO-GERSHENSON PROPERTIES TRUST
     5,158       (1,042 )     4,926       (1,724 )
Preferred share dividends
     (1,619 )     -       (1,619 )     -  
NET INCOME (LOSS) AVAILABLE TO COMMON SHAREHOLDERS
   $ 3,539     $ (1,042 )   $ 3,307     $ (1,724 )
                                 
EARNINGS (LOSS) PER COMMON SHARE, BASIC
                                
Continuing operations
   $ (0.06 )   $ 0.02     $ (0.07 )   $ -  
Discontinued operations
     0.15       (0.05 )     0.16       (0.05 )
 
   $ 0.09     $ (0.03 )   $ 0.09     $ (0.05 )
EARNINGS (LOSS) PER COMMON SHARE, DILUTED
                                
Continuing operations
   $ (0.06 )   $ 0.02     $ (0.07 )   $ -  
Discontinued operations
     0.15       (0.05 )     0.16       (0.05 )
    $ 0.09     $ (0.03 )   $ 0.09     $ (0.05 )
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
                                
Basic
     38,523       34,371       38,227       32,706  
Diluted
     38,523       34,371       38,227       32,706  
                                 
OTHER COMPREHENSIVE INCOME (LOSS)
                                
Net income (loss)
   $ 5,529     $ (1,802 )   $ 5,276     $ (3,155 )
Other comprehensive income:
                                
Gain on interest rate swaps
     -       846       -       1,336  
Comprehensive income (loss)
     5,529       (956 )     5,276       (1,819 )
Comprehensive (income) loss attributable to noncontrolling interest
     (371 )     700       (350 )     1,328  
Comprehensive income (loss) attributable to Ramco-Gershenson Properties Trust
   $ 5,158     $ (256 )   $ 4,926     $ (491 )
                                 
The accompanying notes are an integral part of these condensed consolidated financial statements.
                  
 
 
Page 4 of 43
 
 
Condensed Consolidated Statement of Shareholders' Equity
For the six months ended June 30, 2011
(In thousands)
(Unaudited)
 
   
Shareholders' Equity of Ramco-Gershenson Properties Trust
        
   
Preferred
Shares
    
Common
Shares
    
Additional 
Paid-in 
Capital
    
Accumulated Distributions in Excess of Net Income
    
Noncontrolling Interest
    
Total Shareholders' Equity
  
                                     
BALANCE, DECEMBER 31, 2010
   $ -     $ 379     $ 563,370     $ (161,476 )   $ 37,093     $ 439,366  
                                                 
Issuance of common stock
     -       6       8,271       -       -       8,277  
Issuance of preferred shares
     100,000       -       (3,342 )     -       -       96,658  
Share-based compensation expense, net
     -       -       912       -       -       912  
Dividends declared to common shareholders
     -       -       -       (12,556 )     -       (12,556 )
Dividends declared to preferred shareholders
     -       -       -       (1,619 )     -       (1,619 )
Distributions declared to noncontrolling interests
     -       -       -       -       (935 )     (935 )
Dividends paid on restricted shares
     -       -       -       (99 )     -       (99 )
Purchase of partner's interest in consolidated
  variable interest entity
     -       -       -       -       (993 )     (993 )
Conversion of OP units
     -       -       -       -       (1 )     (1 )
Net income
     -       -       -       4,926       350       5,276  
BALANCE, JUNE 30, 2011
   $ 100,000     $ 385     $ 569,211     $ (170,824 )   $ 35,514     $ 534,286  
                                                 
The accompanying notes are an integral part of these condensed consolidated financial statements.
                  
 
 
Page 5 of 43
 
 
 Condensed Consolidated Statements of Cash Flows
 For the six months ended June 30, 2011 and 2010
 (In thousands)
 (Unaudited)
 
   
Six months ended June 30,
  
   
2011
    
2010
  
OPERATING ACTIVITIES
            
Net income (loss)
   $ 5,276     $ (3,155 )
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
                
Depreciation and amortization
     18,390       14,846  
Amortization of deferred financing fees
     1,104       1,222  
Earnings from unconsolidated joint ventures
     (1,633 )     (885 )
Distributions received from operations of unconsolidated joint ventures
     2,192       1,396  
Impairment charge on unconsolidated joint ventures
     -       2,653  
Loss on early extinguishment of debt
     1,968       -  
Discontinued operations
     (417 )     (303 )
Gain on sale of real estate
     (2,396 )     (499 )
Amoritization of premium on mortgages and notes payable, net
     (18 )     (21 )
Share-based compensation expense
     883       375  
Changes in assets and liabilities:
                
Accounts and other receivables
     76       2,431  
Other assets
     1,765       1,380  
Accounts payable and accrued expenses
     8       (656 )
Other liabilities
     (750 )     -  
Net cash provided by continuing operating activities
     26,448       18,784  
Operating cash from discontinued operations
     807       812  
(Gain) loss on sale of discontinued operations
     (6,210 )     2,050  
Net cash provided by operating activities
     21,045       21,646  
                 
INVESTING ACTIVITIES
                
Additions to real estate, net
   $ (50,685 )   $ (14,854 )
Proceeds from sale of real estate
     3,775       1,041  
Increase in restricted cash
     (1,110 )     (1,743 )
Investment in unconsolidated joint ventures
     (8,039 )     (4,797 )
Purchase of partner's equity in consolidated joint ventures
     (1,000 )     -  
Net cash used in continuing investing activities
     (57,059 )     (20,353 )
Net investing cash provided by discontinued operations
     6,917       797  
Net cash used in investing activities
     (50,142 )     (19,556 )
                 
FINANCING ACTIVITIES
                
Proceeds of mortgages and notes payable
   $ 152,650     $ 59,700  
Repayments of mortgages and notes payable
     (216,733 )     (120,879 )
Payment of deferred financing costs
     (2,474 )     (1,077 )
Proceeds from issuance of preferred shares
     96,658       -  
Proceeds from issuance of common stock
     8,754       75,611  
Repayment of capital lease obligation
     (148 )     (140 )
Dividends paid to common shareholders
     (12,488 )     (10,109 )
Distributions or conversions paid to operating partnership unit holders
     (983 )     (950 )
Net cash provided by financing activities
     25,236       2,156  
                 
Net (decrease) increase in cash and cash equivalents
     (3,861 )     4,246  
Cash from consolidated variable interest entity
     -       44  
Cash and cash equivalents at beginning of the period
     10,175       8,432  
Cash and cash equivalents at end of the period
   $ 6,314     $ 12,722  
                 
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
                
Cash paid for interest (net of capitalized interest of $203 and $864 in 2011 and 2010, respectively)
   $ 15,365     $ 14,967  
Cash paid for federal income taxes
     61       3  
Increase in fair value of interest rate swaps
     -       1,336  
                 
The Company acquired income producing property as follows:
                
Fair value of income producing property
   $ 39,410     $ -  
Cash paid for income producing property
   $ 39,410     $ -  
                 
The accompanying notes are an integral part of these condensed consolidated financial statements.
          
 
 
Page 6 of 43
 
 
RAMCO-GERSHENSON PROPERTIES TRUST
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

1. Organization and Basis of Presentation

Organization

Ramco-Gershenson Properties Trust, together with its subsidiaries (the “Company”), is a real estate investment trust (“REIT”) engaged in the business of owning, developing, acquiring, managing and leasing community shopping centers located in the Eastern and Midwestern regions of the United States.  At June 30, 2011, we owned and managed, either directly or through our interest in real estate joint ventures, a portfolio of 89 shopping centers and one office building, with approximately 20.6 million square feet of gross leaseable area (“GLA”), of which 15.7 million is owned directly by us and our real estate joint ventures.  We also owned interests in four parcels of land held for development or sale and four parcels of land adjacent to certain of our existing developed properties. Our land is located in Florida, Georgia, Michigan, Tennessee and Virginia.  Most of our properties are anchored by supermarkets and/or national chain stores. The Company’s credit risk, therefore, is concentrated in the retail industry.

Basis of Presentation

The accompanying condensed consolidated financial statements include the accounts of the Company and our majority owned subsidiary, the Operating Partnership, Ramco-Gershenson Properties, L.P. (93.2% and 92.9% owned by the Company at June 30, 2011 and December 31, 2010, respectively), and all wholly-owned subsidiaries, including entities in which we have a controlling financial interest or have been determined to be a primary beneficiary of a variable interest entity (“VIE”).  We have elected to be a REIT for federal income tax purposes.  All intercompany balances and transactions have been eliminated in consolidation. The information furnished is unaudited and reflects all adjustments which are, in the opinion of management, necessary to reflect a fair statement of the results for the interim periods presented, and all such adjustments are of a normal recurring nature. These Condensed Consolidated Financial Statements should be read in conjunction with our 2010 Annual Report on Form 10−K.
 
The preparation of our unaudited financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management of the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the unaudited financial statements and the reported amounts of revenues and expenses during the reporting period. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and reported amounts that are not readily apparent from other sources.  Actual results could differ from those estimates. 
 
Reclassifications

Certain reclassifications of prior period amounts have been made in the condensed consolidated financial statements in order to conform to the current presentation.

Recent Accounting Pronouncements

In July 2010, the FASB updated ASC 310 “Receivables” with ASU 2010-20 “Disclosures about the Credit Quality of Financing Receivables and the Allowance for Credit Losses”, which requires enhanced disclosures about financing receivables, including the allowance for credit losses, credit quality, and impaired loans.  This standard is effective for fiscal years ending after December 15, 2010.  We adopted the standard in the fourth quarter of 2010 and it did not have a material impact to our consolidated financial statements.

In May 2011, the FASB updated ASC 820 “Fair Value Measurements and Disclosures” with ASU 2011-04 “Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRS”.  The amendments change the wording used to describe many of the requirements in U.S. GAAP for measuring fair value and for disclosing information about fair value measurements. This standard is to be applied prospectively and is effective for fiscal years, and interim periods within those years, beginning after December 15, 2011.  We do not expect this update to have a material impact on our consolidated financial statements.

In June 2011, the FASB updated ASC 220 “Comprehensive Income” with ASU 2011-05 “Presentation of Comprehensive Income”, which requires an entity to present the total of comprehensive income, the components of net income, and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements.  This standard is to be applied retrospectively and is effective for fiscal years, and interim periods within those years, beginning after December 15, 2011.  We do not expect this update to have a material impact on our consolidated financial statements.

 
Page 7 of 43
 
 
2.   Accounts Receivable, Net

We provide for bad debt expense based upon the allowance method of accounting. We continuously monitor the collectability of our accounts receivable from specific tenants, analyze historical bad debts, customer credit worthiness, current economic trends and changes in tenant payment terms when evaluating the adequacy of the allowance for bad debts.  Allowances are taken for those balances that we have reason to believe will be uncollectible.  When tenants are in bankruptcy, we make estimates of the expected recovery of pre-petition and post-petition claims.  The period to resolve these claims can exceed one year.  Management believes the allowance for doubtful accounts is adequate to absorb currently estimated bad debts.  However, if we experience bad debts in excess of the allowance we have established, our operating income would be reduced.  At June 30, 2011 and December 31, 2010, our allowance for doubtful accounts was approximately $3.0 million and $3.8 million, respectively.

3.   Real Estate

Included in our net real estate is income producing shopping center properties that are recorded at cost less accumulated depreciation and amortization.

We review our investment in real estate, including any related intangible assets, for impairment on a property-by-property basis whenever events or changes in circumstances indicate that the remaining estimated useful lives of those assets may warrant revision or the applicable holding period changes and that the carrying value of the property may not be recoverable.  There was no impairment loss for the three and six months ended June 30, 2011 and 2010.

Land held for development or sale represents projects where vertical construction has yet to commence, but which have been identified by us as available for future development if and when market conditions dictate the demand for a new shopping center.  Land held for development or sale was $94.3 million and $93.3 million at June 30, 2011 and December 31, 2010, respectively.

Construction in progress represents existing development and redevelopment projects. When projects are substantially complete and ready for their intended use, balances are transferred to land or buildings and improvements as appropriate.  Construction in progress was $2.7 and $2.6 million at June 30, 2011 and December 31, 2010, respectively.

4.   Property Acquisitions and Dispositions

Acquisitions

The following table provides a summary of our acquisition activity for the six months ended June 30, 2011.
                       
             
Purchase
    
Mortgage
  
 Date Purchased
Property Name
Property Location
  
Square Feet
    
Price
    
Assumed
  
             
(In thousands)
      
                       
05/19/11
Heritage Place
Creve Coeur (St. Louis), Missouri
     269,254     $ 39,410     $ -  
        Total 2011 acquistions     $ 39,410     $ -  
                       
 
There was no acquisition activity in the six months ended June 30, 2010.  The total aggregate fair value of our 2011 acquisitions through June 30, 2011, was allocated and is reflected in the following table in accordance with accounting guidance for business combinations.   At the time of acquisition, these assets and liabilities were considered Level 2 fair value measurements:

 
Page 8 of 43
 
 
             
             
   
Allocated
Fair Value
    
Weighted Average Remaining Useful Life of Intangibles
  
   
(In thousands)
    
(In years)
  
             
Land
   $ 13,899        
Buildings and improvements
     22,506        
Above market leases
     660     6.1    
Lease origination costs
     4,269     16.1    
Other assets
     1,015          
Below market leases
     (2,939 )   37.2    
Total purchase price allocated
   $ 39,410          
                 
 
Dispositions

The following table provides a summary of our disposition activity for the six months ended June 30, 2011 and 2010:
                     
                     
Date Sold
Property Name
Property Location
  
GLA /
Acreage
  
Gross Sales Price
    
Gain (loss) on Sale
  
           
(In thousands)
  
                     
04/29/11
Lantana Shopping Center
Lantana, Florida
   123,014   $ 16,942     $ 6,210  
       Total 2011 income producing dispositions   $ 16,942     $ 6,210  
                         
06/29/11
Southbay Shopping Center - outparcel
Osprey, Florida
   1.31   $ 2,625     $ 2,240  
03/02/11
River City Shopping Center - outparcel
Jacksonville, Florida
   0.95     678       50  
01/21/11
River City Shopping Center- outparcel
Jacksonville, Florida
   1.02     663       106  
       Total 2011 land / outparcel dispositions   $ 3,966     $ 2,396  
                         
       Total 2011 dispositions   $ 20,908     $ 8,606  
                         
                         
05/12/10
Ridgeview Crossing Shopping Center
Elkin, North Carolina
   211,524   $ 900     $ (2,050 )
       Total 2010 income producing dispositions   $ 900     $ (2,050 )
                         
06/30/10
River City Shopping Center- outparcel
Jacksonville, Florida
   1.29   $ 1,069     $ 499  
       Total 2010 land / outparcel dispositions   $ 1,069     $ 499  
                         
       Total 2010 dispositions   $ 1,969     $ (1,551 )
                         
 
As of June 30, 2011, we had one income producing property held for sale located in Tamarac, Florida.  The following table provides a summary of selected operating results for those properties sold or held for sale during the three and six months ended June 30, 2011 and 2010:
 
 
Page 9 of 43
 
 
                         
                         
   
Three Months Ended
    
Six Months Ended
  
   
June 30,
    
June 30,
  
   
2011
    
2010
    
2011
    
2010
  
   
(In thousands)
  
Revenue
   $ 674     $ 1,218     $ 1,792     $ 2,431  
Expenses:
                                
    Recoverable operating expenses
     183       413       596       856  
    Other non-recoverable property operating expenses
     197       33       240       106  
    Depreciation and amortization
     172       249       385       509  
    Interest expense
     36       328       154       657  
Operating income of properties sold or held for sale
     86       195       417       303  
Gain (loss) on sale of properties
     6,210       (2,050 )     6,210       (2,050 )
Income (loss) from discontinued operations
   $ 6,296     $ (1,855 )   $ 6,627     $ (1,747 )
                                 
                                 
 
5.    Equity Investments in Unconsolidated Joint Ventures

The combined condensed financial information for our unconsolidated joint ventures is summarized as follows (unaudited):
             
             
   
June 30,
    
December 31,
  
Balance Sheets
  
2011
    
2010
  
   
(In thousands)
  
ASSETS
            
Investment in real estate, net
   $ 895,824     $ 902,289  
Other assets
     68,808       62,596  
   Total Assets
   $ 964,632     $ 964,885  
LIABILITIES AND OWNERS' EQUITY
                
Mortgage notes payable
   $ 411,376     $ 437,757  
Other liabilities
     17,244       15,329  
Owners' equity
     536,012       511,799  
   Total Liabilities and Owners' Equity
   $ 964,632     $ 964,885  
                 
   RPT's equity investments in unconsolidated joint ventures
   $ 112,111     $ 105,189  
                 
 
 
Page 10 of 43
 
 
                         
                         
   
Three Months Ended
    
Six Months Ended
  
Statements of Operations
  
June 30,
    
June 30,
  
   
2011
    
2010
    
2011
    
2010
  
   
(In thousands)
  
Total Revenue
   $ 22,088     $ 23,753     $ 45,191     $ 50,167  
Total Expenses
     19,794       24,062       40,043       47,225  
      2,294       (309 )     5,148       2,942  
Impairment of long-lived assets (1)
     -       -       125       -  
Net income
   $ 2,294     $ (309 )   $ 5,023     $ 2,942  
Company's share of earnings from
                                
    unconsolidated joint ventures
   $ 672     $ (73 )   $ 1,633     $ 885  
                                 
                                 
                                 
(1) The Ramco/West Acres LLC joint venture recorded a $0.1 million impairment of long-lived assets in the first quarter of 2011.
  
 
In the first quarter 2010, we recorded an impairment charge of $2.7 million resulting from other-than-temporary declines in the fair market value of various equity investments in unconsolidated joint ventures.  There was no impairment loss for the same period in 2011.

As of June 30, 2011, we had investments in the following unconsolidated joint ventures:
 
                   
         
Total Assets
    
Total Assets
  
   
Ownership as of
    
as of
    
as of
  
Entity Name
  
June 30, 2011
    
June 30, 2011
    
December 31, 2010
  
         
(In thousands)
  
S-12 Associates
   50%     $ 630     $ 628  
Ramco/West Acres LLC
   40%       9,571       9,504  
Ramco/Shenandoah LLC (1)
   40%       15,021       14,990  
Ramco/Lion Venture LP
   30%       528,237       524,160  
Ramco 450 Venture LLC
   20%       310,186       313,596  
Ramco 191 LLC
   20%       24,050       24,243  
Ramco HHF KL LLC
   7%       50,618       51,224  
Ramco HHF NP LLC
   7%       26,319       26,540  
          $ 964,632     $ 964,885  
                       
(1) The joint venture owns one shopping center, Shenandoah Square, which was classified as held-for-sale at June 30, 2011.
  
 
There were no acquisitions of shopping centers in the six months ended June 30, 2011 and 2010 by any of our unconsolidated joint ventures.
 
 
Page 11 of 43
 
 
Debt

Our unconsolidated joint ventures had the following debt outstanding at June 30, 2011 (unaudited):
               
               
   
Balance
    
Interest
    
Entity Name
  
Outstanding
    
Rate
  
Maturity Date
   
(In thousands)
          
Ramco/West Acres LLC (1)
   $ 8,401     13.1%    
Ramco/Shenandoah LLC (2)
     11,571     7.3%  
February 2012
Ramco 191 LLC (3)
     8,400     1.7%  
June 2012
Ramco/Lion Venture LP (4)
     210,015     5.0% - 8.2%  
Various
Ramco 450 Venture LLC (5)
     171,625     5.3% - 6.0%  
Various
S-12 Associates (6)
     653     5.6%  
May 2016
    $ 410,665          
   Unamortized premium
     711          
Total mortgage debt
   $ 411,376          
                 
 
(1)
Default interest rate (reflected above), effective July 1, 2010.  Original maturity was April 2030.  Lender accelerated payment of the note in February 2011.  See below for addition information.
(2)
The joint venture owns one shopping center, Shenandoah Square, which was classified as held-for-sale at June 30, 2011.
(3) Interest rate is variable based on LIBOR plus 1.45%.
(4)
Interest rates range from 5.0% to 8.2% with maturities ranging from October 2012 to June 2020.
(5)
Interest rates range from 5.3% to 6.0% with maturities ranging from January 2013 to January 2017.
(6)
Interest rate resets annually each June 1.
 
At June 30, 2011, the Ramco/West Acres LLC joint venture, in which we own a 40% interest, was in default on its $8.4 million non-recourse loan.  On February 10, 2011, the lender accelerated payment of the loan.  Accordingly, the joint venture has been in discussions with the lender to transfer the property ownership to the lender in consideration for the repayment of the loan.  The joint venture recorded an impairment loss of $0.1 million which was the extent of the joint venture’s equity balance as of March 31, 2011.  The joint venture is currently accruing interest at a default rate of 13.1%.  Based upon our 40% ownership interest in the joint venture, our share of the debt was $3.4 million at June 30, 2011.
 
In May 2011, the Ramco/Lion Venture LP joint venture, in which we own a 30% interest, repaid one property mortgage in the amount of $12.2 million.  Our proportionate share of the debt repayment was approximately $3.7 million.

In February 2011, the Ramco 450 Venture LLC joint venture, in which we own a 20% interest, repaid one property mortgage in the amount of $11.0 million.  Our proportionate share of the debt repayment was approximately $2.2 million.

Joint Venture Management and Other Fee Income

We are engaged by certain of our joint ventures to provide asset management, property management, leasing and investing services for such venture’s respective properties.  We receive fees for our services, including a property management fee calculated as a percentage of gross revenues received and recognize these fees as the services are rendered.

The following table provides information for our fees earned which are reported in our consolidated statements of operations:

 
Page 12 of 43
 
 
                         
                         
   
Three Months Ended
    
Six Months Ended
  
   
June 30,
    
June 30,
  
   
2011
    
2010
    
2011
    
2010
  
   
(In thousands)
  
Management fees
   $ 577     $ 701     $ 1,323     $ 1,424  
Leasing fees
     139       243       284       420  
Construction fees
     23       61       98       161  
Total
   $ 739     $ 1,005     $ 1,705     $ 2,005  
                                 
 
6.   Consolidated Variable Interest Entity

At December 31, 2010, the Ramco Hartland SC, LLC joint venture was reported as a consolidated VIE. In January 2011, we purchased our partner’s interest in the Ramco Hartland SC, LLC joint venture for $1.0 million, which approximated the partner’s equity interest in the joint venture at October 1, 2010. As a result, we now own and control 100% of this project.

The total project, including the portion we purchased, is comprised of land held for development or sale and construction in progress of approximately $31.6 million.

 7.   Other Assets, Net

Other assets consisted of the following:
             
             
   
June 30,
    
December 31,
  
   
2011
    
2010
  
   
(In thousands)
  
Deferred leasing costs, net
   $ 15,288     $ 15,136  
Deferred financing costs, net
     5,870       6,703  
Lease intangible assets, net
     11,468       7,969  
Other, net
     2,414       2,111  
Straight-line rent receivable, net
     17,617       17,864  
Prepaid expenses and other deferred expenses, net
     6,760       8,475  
Other assets, net
   $ 59,417     $ 58,258  
                 

Total accumulated amortization of other assets was $40.2 million and $42.0 million at June 30, 2011 and December 31, 2010, respectively.

Deferred financing costs, net of accumulated amortization, were $5.9 million at June 30, 2011, compared to $6.7 million at December 31, 2010.  We recorded amortization of deferred financing costs of $1.1 million and $1.2 million, respectively, during the six months ended June 30, 2011 and 2010.  This amortization is included in amortization of deferred financing fees in our condensed consolidated statements of operations.

Other assets included $17.6 million and $17.9 million of unbilled straight-line rent receivables, net of an allowance of $0.8 million and $0.7 million at June 30, 2011 and December 31, 2010, respectively.
 
Include in accounts payable and accrued expenses at June 30, 2011 and December 31, 2010 were intangible liabilities related to below market leases of $6.5 million and $3.5 million, respectively.
 
 
Page 13 of 43
 
 
8.  Mortgages and Notes Payable

The following table summarizes our mortgages and notes payable as of June 30, 2011 and December 31, 2010:
             
             
   
June 30,
    
December 31,
  
Mortgages and Notes Payable
  
2011
    
2010
  
   
(In thousands)
  
Fixed rate mortgages
   $ 339,659     $ 341,341  
Variable rate mortgages
     22,273       22,478  
Unsecured revolving credit facility
     33,000       -  
Unsecured term loan facility
     75,000       -  
Secured revolving credit facility
     -       119,750  
Secured term loan facility
     -       30,000  
Secured bridge loan
     -       30,000  
Junior subordinated notes, 7.9%, unsecured (1)
     28,125       28,125  
    $ 498,057     $ 571,694  
                 
(1) Fixed interest rate until January 2013, and then at LIBOR plus 3.30%.                
 
Our fixed rate mortgages have interest rates ranging from 5.1% to 7.6%, and are due at various maturity dates from November 2011 through April 2020.  Included in fixed rate mortgages at June 30, 2011 and December 31, 2010 were unamortized premium balances related to the fair market value of debt of $0.1 million.  Our variable rate mortgages have interest rates ranging from 3.7% to 6.0%, and are due at various dates from December 2011 through June 2012.  The mortgage notes, both fixed rate and variable rate, are secured by mortgages on properties that have an approximate net book value of $393.8 million as of June 30, 2011.
 
On April 29, 2011, we closed on a new $250.0 million unsecured bank facility (the “Credit Facility”) comprised of a $175.0 million revolving line of credit and a $75.0 million term loan.  The Credit Facility replaces our prior secured line and secured term loan.  The new revolving line of credit and term loan are due in April 2014 and April 2015, respectively.  Subject to customary conditions, both the revolving line and the term loan can be extended for one year at our option.   Borrowings under the facility are priced at LIBOR plus 200 to 275 basis points depending on our leverage ratio.  It is anticipated that funds borrowed under the aforementioned Credit Facility will be used for general corporate purposes, including working capital, capital expenditures, repayment of indebtedness or other corporate activities.
 
In the three and six months ended June 30, 2011, we recorded a one-time write-off of unamortized deferred financing costs related to the prior secured revolving line of credit and term loan of approximately $2.0 million.  This amount is included in loss on early extinguishment of debt on our condensed consolidated statements of operations.  The remaining $1.5 million in unamortized deferred financing costs related to the prior credit facility will be amortized over the term of the new facility.
 
At June 30, 2011, outstanding letters of credit issued under the Credit Facility, not reflected in the accompanying condensed consolidated balance sheets, were $0.3 million. These letters of credit reduce the availability under the Credit Facility.

The Credit Facility contains financial covenants relating to total leverage, fixed charge coverage ratio, tangible net worth and various other calculations. As of June 30, 2011, we were in compliance with the covenant terms.

In May 2011, we repaid one wholly-owned property mortgage in the amount of $14.3 million.  The mortgage bore interest at a fixed rate of 7.6%.

A $9.2 million non-recourse mortgage note that is secured by our wholly-owned Madison Center property located in Madison Heights, Michigan, was due May 1, 2011.  The note entered default status in May when we did not repay the note at maturity.  The lender is working with us to transfer the property title to the lender and release our obligation.  Until we are legally released from our obligation, we will continue to accrue interest at the default rate of 12.5%.  Accrued interest on this note, including the default interest, was approximately $0.2 million for the three months ended June 30, 2011.
 
 
Page 14 of 43
 
 
In April 2011, we used net proceeds from our cumulative convertible perpetual preferred share offering to repay our $30.0 million secured bridge loan and reduce borrowings on our Credit Facility.  Additionally, in March 2011, the $30.0 million secured term loan facility was repaid in full.

On March 31, 2011, we closed on a new $24.7 million mortgage secured by the Jackson Crossing shopping center in Jackson, Michigan that has an approximate net book value of $27.6 million.  The mortgage bears interest at a fixed rate of 5.8% and matures in April 2018.

The mortgage loans encumbering our properties, including properties held by our unconsolidated joint ventures, are generally non-recourse, subject to certain exceptions for which we would be liable for any resulting losses incurred by the lender.  These exceptions vary from loan to loan but generally include fraud or a material misrepresentation, misstatement or omission by the borrower, intentional or grossly negligent conduct by the borrower that harms the property or results in a loss to the lender, filing of a bankruptcy petition by the borrower, either directly or indirectly, and certain environmental liabilities.  In addition, upon the occurrence of certain events, such as fraud or filing of a bankruptcy petition by the borrower, we or our joint ventures would be liable for the entire outstanding balance of the loan, all interest accrued thereon and certain other costs, including penalties and expenses.

We have entered into mortgage loans which are secured by multiple properties and contain cross-collateralization and cross-default provisions. Cross-collateralization provisions allow a lender to foreclose on multiple properties in the event that we default under the loan. Cross-default provisions allow a lender to foreclose on the related property in the event a default is declared under another loan.

The following table presents scheduled principal payments on mortgages and notes payable as of June 30, 2011:
       
       
Year Ending December 31,
  
       
     2011 (July 1 - December 31)
   $ 22,441  
     2012
     29,232  
     2013
     25,907  
     2014
     66,670  
     2015
     151,967  
     Thereafter
     201,840  
       Total
   $ 498,057  
         

With respect to the various mortgages due in 2011 and 2012, it is our intent to refinance or repay these mortgages and notes payable.  However, there can be no assurance that we will be able to refinance our debt on commercially reasonable or any other terms.

9.   Other Liabilities

Other liabilities were $2.7 million and $3.5 million at June 30, 2011 and December 31, 2010, respectively.  In December 2010, we acquired The Shoppes at Fox River in Waukesha, Wisconsin.  As part of the transaction, we recorded a $1.8 million deferred liability related to the fair value of an earn-out provision if certain spaces that were vacant at acquisition were to become leased in the future.  In January 2011, we paid the seller for the leasing of one of the vacant spaces included in the earn-out provision, thereby reducing the deferred liability by approximately $0.6 million.  In June 2011, an additional vacant space was leased further reducing the deferred liability by approximately $0.2 million.

Also in the fourth quarter of 2010, we recorded a deferred liability of $1.5 million related to a tax increment financing agreement with the City of West Allis, Wisconsin (“City”) for the redevelopment of the West Allis Towne Centre.  The City reimbursed us for certain costs incurred to improve the shopping center which will be repaid to the City over ten years in the form of increased property tax assessments, not to exceed $0.2 million per year until 2020.
 
 
Page 15 of 43
 
 
10.  Fair Value

We utilize fair value measurements to record fair value adjustments to certain assets and liabilities and to determine fair value disclosures.  Derivative instruments (interest rate swaps) are recorded at fair value on a recurring basis. Additionally, we, from time to time, may be required to record other assets at fair value on a nonrecurring basis.  As a basis for considering market participant assumptions in fair value measurements, GAAP establishes three fair value levels, based on the markets in which the assets and liabilities are traded and the reliability of the assumptions used to determine fair value.  The assessed inputs used in determining any fair value measurement could result in incorrect valuations that could be material to our consolidated financial statements. These levels are:
 
Level 1
Valuation is based upon quoted prices for identical instruments traded in active markets.
   
Level 2
Valuation is based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market.
   
Level 3
Valuation is generated from model-based techniques that use at least one significant assumption not observable in the market. These unobservable assumptions reflect estimates of assumptions that market participants would use in pricing the asset or liability.
 
The following is a description of valuation methodologies used for our assets and liabilities recorded at fair value.

Derivative Assets and Liabilities

In the past, we had interest rate swaps for which quoted market prices are not readily available.  For those derivatives, we measure fair value on a recurring basis using valuation models that use primarily market observable inputs, such as yield curves.  We classify derivative instruments as Level 2.  As of June 30, 2011, we did not have any interest rate swaps in effect.  Refer to Note 11 for additional information on our derivative financial instruments.

We did not have any material assets or liabilities that were required to be measured at fair value on a recurring basis at June 30, 2011.

The carrying values of cash and cash equivalents, restricted cash, receivables and accounts payable and accrued liabilities are reasonable estimates of their fair values because of the short maturity of these financial instruments. As of June 30, 2011 and December 31, 2010, the carrying amounts of our borrowings under variable rate debt approximated fair value.

We estimated the fair value of fixed rate mortgages using a discounted cash flow analysis, based on our incremental borrowing rates for similar types of borrowing arrangements with the same remaining maturity.  The following table summarizes the fair value and net book value of properties with fixed rate debt:
             
   
June 30,
    
December 31,
  
   
2011
    
2010
  
   
(In thousands)
  
Fair value of debt
   $ 383,004     $ 389,279  
                 
Net book value
   $ 367,720     $ 369,384  
                 

The following is a description of valuation methodologies used for our assets and liabilities recorded at fair value on a nonrecurring basis:

Net Real Estate

Our net real estate, including any identifiable intangible assets, is subject to impairment testing on a nonrecurring basis.  To estimate fair value, we use discounted cash flow models that include assumptions of the discount rates that market participants would use in pricing the asset. To the extent impairment has occurred, we charge to expense the excess of the carrying value of the property over its estimated fair value.  We classify impaired real estate assets as nonrecurring Level 3.  As of June 30, 2011, we did not have any material real estate required to be measured at fair value on a recurring basis.
 
 
Page 16 of 43
 

Equity Investments in Unconsolidated Joint Ventures
 
Our equity investments in unconsolidated joint ventures are subject to impairment testing on a nonrecurring basis if a decline in the fair value of the investment below the carrying amount is determined to be a decline that is other-than-temporary.  To estimate the fair value of properties held by unconsolidated entities, we use cash flow models, discount rates, and capitalization rates based upon assumptions of the rates that market participants would use in pricing the asset.  To the extent other-than-temporary impairment has occurred, we charge to expense the excess of the carrying value of the equity investment over its estimated fair value.  We classify other-than-temporarily impaired equity investments in unconsolidated entities as nonrecurring Level 3.  We did not have any material equity investments in unconsolidated joint ventures that were required to be measured at fair value on a recurring basis at June 30, 2011.

11.  Derivative Financial Instruments

We utilize interest rate swap agreements for risk management purposes to reduce the impact of changes in interest rates on our variable rate debt.  On the date we enter into an interest rate swap, the derivative is designated as a hedge against the variability of cash flows that are to be paid in connection with a recognized liability.  Subsequent changes in the fair value of a derivative designated as a cash flow hedge that is determined to be highly effective are recorded in other comprehensive income (“OCI”) until earnings are affected by the variability of cash flows of the hedged transaction. The differential between fixed and variable rates to be paid or received is accrued, as interest rates change, and recognized currently as interest expense in the consolidated statement of income.

As of June 30, 2011 and December 31, 2010, we had no interest rate swap agreements in effect.  As of June 30, 2010, we had interest rate swap agreements with an aggregate notional of $90.0 million.  Based on rates in effect at June 30, 2010, the agreements provided for fixed rates ranging from 6.4% to 6.7% on a portion of our prior secured credit facility.  All outstanding interest rate swaps expired in December of 2010.

The effect of derivative financial instruments on our condensed consolidated statements of income for the six months ended June 30, 2011 and 2010 is summarized as follows:
 
                             
                             
               
Location of
  
Amount of Gain (Loss)
  
   
Amount of Gain (Loss)
    
Gain (Loss)
  
Reclassified from
  
   
Recognized in OCI on Derivative
    
Reclassified from
  
Accumulated OCI into
  
Derivatives in
  
(Effective Portion)
    
Accumulated OCI
  
Income (Effective Portion)
  
Cash Flow Hedging
  
Six Months Ended June 30,
    
into Income
  
Six Months Ended June 30,
  
Relationship
  
2011
    
2010
    
(Effective Portion)
  
2011
    
2010
  
                             
Interest rate contracts
   $ -     $ 1,336    
Interest Expense
   $ -     $ (1,541 )
                                     
    Total
   $ -     $ 1,336         $ -     $ (1,541 )
                                     
                                     
 
 
Page 17 of 43
 
 
12.   Earnings Per Common Share

The following table sets forth the computation of basic earnings per share (“EPS”):
                         
                         
   
Three Months Ended June 30,
    
Six Months Ended June 30,
  
   
2011
    
2010
    
2011
    
2010
  
   
(In thousands, except per share data)
  
                         
Income (loss) from continuing operations
   $ (767 )   $ 53       (1,351 )     (1,408 )
Net loss from continuing operations attributable to noncontrolling interest
     55       628       99       1,307  
Preferred share dividends
     (1,619 )     -       (1,619 )     -  
Allocation of continuing (income) loss to restricted share awards
     22       14       36       78  
Income (loss) from continuing operations attributable to common shareholders
   $ (2,309 )   $ 695       (2,835 )     (23 )
Income (loss) from discontinued operations
     6,296       (1,855 )     6,627       (1,747 )
Net (income) loss from discontinued operations attributable to noncontrolling interest
     (427 )     132       (449 )     124  
Allocation of discontinued (income) loss to restricted share awards
     (52 )     17       (55 )     15  
Income (loss) from discontinued operations attributable to common shareholders
     5,817       (1,706 )     6,123       (1,608 )
Net income (loss) available to common shareholders
   $ 3,508     $ (1,011 )     3,288       (1,631 )
                                 
Weighted average shares outstanding — basic
     38,523       34,371       38,227       32,706  
Basic earnings per share attributable to the common shareholders
                                
Income (loss) from continuing operations
   $ (0.06 )   $ 0.02     $ (0.07 )   $ -  
Income (loss) from discontinued operations
     0.15       (0.05 )     0.16       (0.05 )
Net income (loss)
   $ 0.09     $ (0.03 )   $ 0.09     $ (0.05 )
                                 
 
 
Page 18 of 43
 
 
The following table sets forth the computation of diluted EPS:
                         
                         
   
Three Months Ended June 30,
    
Six Months Ended June 30,
  
   
2011
    
2010
    
2011
    
2010
  
   
(In thousands, except per share data)
  
                         
Income (loss) from continuing operations
   $ (767 )   $ 53       (1,351 )     (1,408 )
Net loss from continuing operations attributable to noncontrolling interest
     55       628       99       1,307  
Income (loss) from continuing operations attributable to RPT
     (712 )     681       (1,252 )     (101 )
Preferred share dividends
     (1,619 )     -       (1,619 )     -  
Allocation of loss to restricted share awards
     22       14       36       78  
Allocation of continuing loss to restricted share awards
     (1 )     (1 )     (3 )     (4 )
Income (loss) from continuing operations attributable to common shareholders
   $ (2,310 )   $ 694     $ (2,838 )   $ (27 )
Income (loss) from discontinued operations
     6,296       (1,855 )     6,627       (1,747 )
Net (income) loss from discontinued operations attributable to noncontrolling interest
     (427 )     132       (449 )     124  
Allocation of discontinued income (loss) to restricted share awards
     (1 )     -       (1 )     -  
Income (loss) from discontinued operations attributable to common shareholders
     5,868       (1,723 )     6,177       (1,623 )
Net income (loss) available to common shareholders
   $ 3,558     $ (1,029 )     3,339       (1,650 )
                                 
Weighted average shares outstanding - basic
     38,523       34,371       38,227       32,706  
Stock options using the treasury method
     -       -       -       -  
Dilutive effect of securities (1)
     -       -       -       -  
Weighted average shares - diluted
     38,523       34,371       38,227       32,706  
                                 
Diluted earnings per share attributable to common shareholders:
                          
Income (loss) from continuing operations
   $ (0.06 )   $ 0.02     $ (0.07 )   $ -  
Income (loss) from discontinued operations
     0.15