Inland Real Estate Posts FFO Decline

FFO totaled $20.7 million or $0.31 per share. This is less than a $2 million decline from the previous year, which posted $22.5 million, or $0.34 per share in FFO. EBITDA was $37.6 million. This total is a slight increase over the previous year's numbers of $36.6 million.

"Our results for the quarter reflected the challenges inherent in the current operating environment as national chain failures and retailer distress impacted portfolio performance," says CEO Mark Zalatoris. "Utilizing both time-tested and resourceful leasing strategies, we have made progress toward mitigating the economic impact of certain tenant bankruptcies and expect to see the benefit of our efforts in the second half of the year."

Despite the lower numbers, the leasing activity was strong during Q1. Inland Real Estate completed 65 leases for a total of 276,239 square feet of leased space. This is a 34.7% increase over the leasing velocity in Q4 2008. The majority of the leases were renewals, although 1 new transactions were completed, according to Scott Carr, president of property management. These new leases saw a gross leasing average of $11.56 per square foot, an 8.9% increase over the expiring lease rate. Renewals saw a 2.7% increase in rates.

Carr says the company remains optimistic about the state of the retail sector, citing the fact that none of the large retailers filed bankruptcy during the first quarter, which is historically the most active bankruptcy season. Still, he says, they do expect to see more retailers go under before the sector begins to rebound.

Occupancy fell marginally for the company, dropping from 94.1% at the end of 2008 to 93.6% in Q1.

After receiving board approval, Inland Real Estate has decided reduce the amount of the annual dividend it will pay out. Now the company will pay annual dividends equal to its annual taxable income for the year. Zalatoris, says the dividend will continue to be paid all in cash. "This action was not taken lightly," he says.