PHILADELPHIA, Feb. 28 /PRNewswire/ -- Pennsylvania Real Estate Investment
Trust (NYSE: PEI) announced today its operating and business results for the
fourth quarter and twelve months ended December 31, 2000. The Company also
reaffirmed three strategic goals and initiatives that will drive its growth in
2001.
Highlights
* For the fourth quarter 2000, FFO per share increased 7.1% to $0.75
per share on 15.2 million shares of beneficial interest/Operating
Partnership units (collectively, shares) outstanding from $0.70 per
share on 14.9 million shares during the fourth quarter of 1999.
* For the twelve months ended December 31, 2000, the Company's FFO totaled
$3.06 per share on 15.0 million weighted average shares outstanding
during 2000, compared to $2.65 per share on 14.7 million weighted
average shares for the twelve months ended December 31, 1999.
* Same store net operating income, excluding non-recurring lease
termination fees, for the Company's shopping center portfolio increased
6.6% from fiscal 1999 and 7.1% over the 1999 fourth quarter.
Fourth Quarter Results
For the quarter ended December 31, 2000 the Company's funds from
operations (FFO) totaled $11,462,000, or $0.75 per share versus FFO of
$10,452,000, or $0.70 per share, on 14.9 million weighted average shares for
the three months ended December 31, 1999.
Net operating income from wholly owned properties and the Company's
proportionate share of partnerships and joint venture properties totaled
$22,954,000 for the 2000 fourth quarter, an increase of 10.5 % from
$20,771,000 in the 1999 fourth quarter. This increase is due to the completion
of development projects and improved performance in the Company's retail and
multifamily portfolios.
Net income for the three months ended December 31, 2000 was $4,619,000, or
$0.34 per share, on 13.5 million total weighted average shares outstanding
compared to $4,887,000 or $0.37 per share, on 13.3 million total weighted
average shares outstanding for the three months ended December 31, 1999. Net
income in the 1999 period included the gain on the sale of land in
Elizabethtown, PA of $255,000, or $0.02 per share.
Net operating income, net income and FFO were positively impacted by non-
recurring lease termination fees of approximately $250,000. These fees were
received as a result of the termination of a ground lease with a restaurant
operator and were recorded as income in accordance with Generally Accepted
Accounting Principles.
As calculated by NAREIT, FFO is defined as net income, excluding
extraordinary items, gain (or loss) on the sale of property, plus real estate
related depreciation and amortization.
Year End Results
For the twelve months ended December 31, 2000 the Company's FFO totaled
$45,844,000, a 17.8 % increase over FFO of $38,911,000 for fiscal 1999. FFO
for the twelve-month period totaled $3.06 per share on 15.0 million weighted
average shares outstanding during 2000, compared to $2.65 per share on 14.7
million weighted average shares for the twelve months ended December 31, 1999.
Net operating income from wholly-owned properties and the Company's
proportionate share of partnerships and joint venture properties increased
15.8% to $88,897,000 for the twelve months ended December 31, 2000, from
$76,790,000 for the twelve months ended December 31, 1999. The increase is
mainly due to the completion of development projects, improved performance in
the Company's retail and multifamily portfolios and lease termination fees.
Net income for the twelve months ended December 31, 2000 was $32,254,000,
or $2.41 per share, on 13.4 million total weighted average shares outstanding
compared to $ 20,741,000, or $1.56 per share on 13.3 million total weighted
average shares outstanding for the twelve months ended December 31, 1999. Net
income for 2000 includes $10,298,000 from gains on sales of the Company's
interests in Valleyview Shopping Center in Wilmington, DE, the CVS Building in
Alexandria, VA, Forestville Shopping Center in Forestville, MD and Park Plaza
Shopping Center in Pinellas Park, FL. Net income for 1999 included aggregate
gains of $1,763,000 on the sale of 135 Commerce Drive in Fort Washington, PA,
land parcels in Elizabethtown, PA, Rancocas, NJ and at Crest Plaza in
Allentown, PA.
Results for the year-ended December 31, 2000 include the impact of non-
recurring lease termination fees which positively impacted net operating
income, net income and FFO by approximately $6.0 million. These fees were
received for the termination of the CVS building lease in Alexandria, VA, the
Northeast Tower General Cinema and Fuddruckers restaurant leases in
Philadelphia, PA and the Mandarin Corners Upton's lease in Jacksonville, FL.
Same Store NOI Growth -- Retail and Multifamily Portfolios
Same store net operating income, excluding non-recurring lease termination
fees, for the Company's retail portfolio increased 6.6% from fiscal 1999 and
7.1% over the 1999 fourth quarter. The increases over the comparable periods
were primarily driven by increases in occupancy and rental rates at Dartmouth
Mall (Dartmouth, MA), Magnolia Mall (Florence, SC), Palmer Park Mall (Easton,
PA) and Christiana Power Center (Newark, DE).
Same store net operating income for the Company's portfolio of multifamily
properties increased 3.6% over 1999 and 2.3% over the 1999 fourth quarter. For
the year multifamily portfolio revenues increased by 4.4%, while expenses
increased by 5.6%. Results in the fourth quarter were negatively impacted by
increased utility and snow removal expenses.
Portfolio Composition
The Company ended 2000 with investment in real estate of $800.3 million,
an increase of $57.2 million, or 7.7%, over 1999's year end level of $743.1
million. As a result, on a cost basis, the Company's portfolio is now 34.8%
multifamily, 58.0% retail, 6.9% retail development and .3% industrial.
Comments from Management
Ronald Rubin, Chief Executive Officer of PREIT said, "Our strong
operating results for the fourth quarter and fiscal year signify the high
quality of our tenant mix, strength of our major markets and our ability to
realize the embedded growth in our retail and multifamily portfolios. As a
result of consistent growth in operating results and gains in 2000 from
implementing our strategy of selling non-core assets, quarterly dividends were
raised in November to $0.51 per share, an increase of 8.5%. Additionally, we
significantly enhanced our financial flexibility in December 2000 with the
closing on a $250 million combined credit and construction facility led by
Wells Fargo Bank. This new agreement provides PREIT with additional investment
capital to complete various development and re-development projects as well as
pursue other strategic opportunities that may arise. "
Recapping the Company's 2000 operational highlights, Jonathan B. Weller,
PREIT's President and Chief Operating Officer commented, "On the development
front we completed several new well-leased properties, including Paxton Towne
Centre and Metroplex Shopping Center, while identifying new locations for
additional high-yielding development projects. With the acquisition of the
1,000,000 square foot regional mall, Willow Grove Park, the Company completed
its first joint venture with a major institutional partner, Pennsylvania State
Employee Retirement System. This transaction provided PREIT with a long-term
opportunity to add a desirable center to its portfolio, while utilizing its
capital in an efficient manner."
Outlook for 2001
Mr. Rubin added, "We enter 2001 a much stronger organization and prospects
are good for continued success in the coming year. Our strategies remain in
place and we will continue to focus on the development and re-development of
quality real estate and the addition of new projects in desirable locations
that we expect will generate solid returns upon stabilization."
Looking forward to 2001, PREIT is pursuing a broad range of internal and
external growth strategies in its primary markets. Accordingly, the Company
will continue its focus on three strategic goals and initiatives in 2001:
* Construction in Progress: To position the Company for future growth,
management intends during 2001 to continuously have $50 to $100 million
of development projects on-line. As of December 31, 2000 the Company's
construction in progress amounted to $55 million.
* Built-in Development/Re-Development Backlog: Leveraging the Company's
in-depth market knowledge, strong tenant relationships and economies of
scale, management is focused on maintaining an active pipeline of new
properties in desirable locations to advance into the construction phase
as existing development projects are completed. The Company's current
backlog level consists of 6 projects with approximately 1.6 million
square feet of GLA and a potential investment of $95 million.
* Return on Investment: Focused on taking full advantage of the favorable
growth opportunities within its markets, the Company is committed to a
solid investment philosophy that emphasizes quality real estate and
transactions structured to protect return on investment. Accordingly,
management's goal is to achieve a minimum 11% return on investment on
its development portfolio.
2001 Forecast
The Company noted that it is currently estimating FFO to be approximately
$.64 to $.66 for the first quarter ending March 31, 2001 and $ 2.85 to $ 2.90
per share for the calendar year ending December 31, 2001.
The Company's estimates for 2001 reflect current market conditions in the
retail and multifamily sectors. In the multifamily portfolio, higher energy
costs and additional expenses due to harsh winter conditions are negatively
impacting net operating income, particularly in the first quarter. When
combined with retail portfolio store closings and lease modifications due to
bankruptcy or restructuring, the Company is adjusting downward its forecast
for FFO for the first quarter and calendar year 2001. The Company has not
included in this forecast any recovery of lost income from releasing or
available legal remedies, although there is tenant demand for much of the
affected space. In addition several retailers have slowed store openings in
the Company's development projects, delaying the receipt of revenues. The
Company anticipates providing updates to this forecast on a quarterly basis.
Notwithstanding the above, the Company strongly believes in its focus on
new retail development, given significant demand from several key tenants,
such as Home Depot Expo and Target. New development is not activated without
significant tenant commitment historically amounting on average to 75% of the
total GLA.
Development Pipeline
* Paxton Towne Centre (Harrisburg, PA) - Construction of the
717,000 square foot power center is on schedule and, as of
December 31, 2000, 81% complete and 84% leased. During the fourth
quarter several stores opened including Weis Market and Circuit City.
* Metroplex Shopping Center (Plymouth Meeting, PA) -- Construction
of the 780,000 square foot power center is on schedule and, as of
December 31, 2000, 87% complete and 100% leased. During the fourth
quarter several stores opened including Target, Best Buy and Ross Dress
for Less.
2001 Development Projects
* New Garden Township (Chester County, PA) - Construction of this new
330,000 square foot power center is scheduled to commence during the
2001 second quarter and is expected to be completed by the
second quarter of 2002.
* Delran (Delran, NJ) - The Company is actively engaged in predevelopment
work for the 222,000 square foot Delran power center. Construction
commenced during the 2001 first quarter and is expected to be completed
by the second quarter of 2002.
* Christiana Power Center - Phase II (Newark, DE) - The 346,000
square foot second phase of the redevelopment of Christiana Power Center
is expected to begin in the second quarter of 2001 and is expected to be
completed by the first quarter of 2003.
* South Brunswick, NJ Project - Predevelopment has commenced for a power
center of 200,000 square feet. Construction is expected to commence in
the first quarter of 2002 and is expected to be completed in the first
quarter of 2003.
Capital Resources
Edward Glickman, Chief Financial Officer of PREIT, added, "With the
recent completion of the $250 million combined revolving credit and
construction facility, we now have ample flexibility and borrowing capacity to
complete our development program for 2001. We have also been successful in
selectively selling a number of properties providing us with a high return on
our original investment and capital to recycle into higher-yielding
properties. Throughout 2001 we will continue to opportunistically offer non-
core assets for sale."
As of December 31, 2000, the Company had approximately $116 million,
including $6 million in letters of credit, outstanding under its $175 million
line of credit.
In conjunction with the placement of the line of credit and construction
facility, the Company entered into a $75 million three-year interest rate swap
which fixed LIBOR at approximately 6%. After accounting for the new and
existing swap agreements, at year end 86.5% of the Company's debt was fixed at
a weighted average rate of 7.51%. The Company's fixed rate debt has a
weighted average maturity of 8.17 years. The balance of the Company's debt is
currently floating.
Dividend Announcement
The Company's Board of Trustees approved on February 20, 2001 a quarterly
cash dividend of $0.51 per share. The dividend will be paid on March 15, 2001
to shareholders of record on February 28, 2001. The March 15, 2001 dividend
payment will be PREIT's 96th consecutive distribution since its initial
dividend paid in August of 1962. Throughout its history, the Company has never
omitted or reduced a shareholder dividend.
Subsequent Event
In January 2001 the Company refinanced its Eagle's Nest apartment
community in Coral Springs, FL for $15,000,000 for a term of 10 years at an
interest rate of 7.52%. Net proceeds were used to pay down the Company's line
of credit.
Quarterly Conference Call
The Company will conduct a conference call that will be broadcast
simultaneously over the Internet at 11:00 EST on Wednesday, February 28, 2001
to review the Company's quarterly results, market trends and future outlook.
The webcast will be available to the public, on a listen-only basis, via the
Internet at http://www.vcall.com or the Company's website at http://www.preit.com. Please
allow extra time prior to the webcast to visit the site and download the
streaming media software required to listen to the Internet broadcast. The
online archive of the webcast will be available for 30 days.
About Pennsylvania Real Estate Investment Trust
Pennsylvania Real Estate Investment Trust, founded in 1960 and one of the
first equity REITs in the U.S., has a primary investment focus on shopping
centers (approximately 10.6 million square feet) and apartment communities
(7,242 units) located primarily in the eastern United States. The Company's
portfolio currently consists of 46 properties in 10 states. In addition, there
are 6 retail properties under development, which will add approximately 1.6
million square feet to the portfolio. Pennsylvania Real Estate Investment
Trust is headquartered in Philadelphia, Pennsylvania.
The matters discussed in this report, as well as news releases issued from
time to time by PREIT include use of forward-looking terminology such as
"may," "will," "should," "expect," "anticipate," "estimate," "plan," or
"continue" or the negative thereof or other variations thereon, or comparable
terminology which constitute "forward-looking statements." Such forward-
looking statements (including without limitation, information concerning
PREIT's continuing dividend levels, planned acquisition, development and
divestiture activities, short- and long-term liquidity position, ability to
raise capital through public and private offerings of debt and/or equity
securities, availability of adequate funds at reasonable cost, revenues and
operating expenses for some or all of the properties, leasing activities,
occupancy rates, changes in local market conditions or other competitive
factors) involve known and unknown risks, uncertainties and other factors that
may cause the actual results, performance or achievements of PREIT's results
to be materially different from any future results, performance or
achievements expressed or implied by such forward-looking statements. PREIT
disclaims any obligation to update any such factors or to publicly announce
the result of any revisions to any of the forward-looking statements contained
herein to reflect future events or developments.
A supplemental quarterly financial package is available on the Company's
web site at http://www.preit.com .
To receive additional information on Pennsylvania Real Estate Investment
Trust via fax at no charge, please dial 1-800-PRO-INFO and enter the ticker
symbol PEI.
Pennsylvania Real Estate Investment Trust
Selected Financial Data
FUNDS FROM OPERATIONS
Three Months Ended Twelve Months Ended
Dec. 31, 2000 Dec. 31, 1999 Dec. 31, 2000 Dec. 31, 1999
Income
before
minority
interest in
operating
partnership $5,223,000 $5,452,000 $36,038,000 $22,862,000
Less: Gains on
sales of
interests
in real
estate - (255,000) (10,298,000) (1,763,000)
Depreciation
and amortization:
Wholly
owned
&
consolidated
partnership,
net 5,052,000 4,257,000 16,156,000 14,004,000
Unconsolidated
partnerships &
joint
ventures 1,448,000 1,250,000 4,683,000 4,573,000
Excess purchase
price over net
asset
acquired 73,000 34,000 291,000 195,000
Refinancing
prepayment fee of
partnership/joint
ventures - - - 55,000
Less: Depreciation
of non-real estate
assets (65,000) (60,000) (260,000) (240,000)
Amortization
of deferred
financing
assets (269,000) (226,000) (766,000) (775,000)
FUNDS FROM
OPERATIONS $11,462,000(A) $10,452,000(A) $45,844,000(A) $38,911,000(A)
FUNDS FROM
OPERATIONS
PER SHARE
AND OP
UNITS $0.75 $0.70 $3.06 $2.65
Weighted
average
number of
shares
outstanding 13,499,924 13,329,551 13,403,233 13,318,820
Weighted
average
effect of
full
conversion
of OP units 1,679,924 1,540,835 1,573,028 1,368,320
Total
weighted
average
shares of
outstanding
including
OP units 15,179,848 14,870,386 14,976,261 14,687,140
(A) Includes the non-cash effect of straight-line rents of $ 598,000
and $302,000 for the 4th quarter 2000 and 1999 and $1,632,000 and
$1,109,000 for year to date 2000 and 1999, respectively.
OPERATING RESULTS
Three Months Ended Twelve Months Ended
Dec. 31, Dec. 31 Dec. 31, Dec. 31,
2000 1999 2000 1999
REVENUES
Gross
revenues
from real
estate $25,926,000 $24,036,000 $100,471,000 $89,220,000
Interest and
other
income 375,000 286,000 1,385,000 1,144,000
26,301,000 24,322,000 101,856,000 90,364,000
EXPENSES
Property
operating
expenses 9,023,000 8,494,000 32,675,000 31,783,000
Depreciation
and
amortization 5,052,000 4,314,000 16,155,000 14,223,000
General &
administrative
expenses 1,573,000 943,000 4,953,000 3,560,000
Interest
expense 6,176,000 5,698,000 23,392,000 21,841,000
21,824,000 19,449,000 77,175,000 71,407,000
Income
before
equity in
unconsolidated
entities,
gains on
sales of
interests
in real
estate and
minority
interest
in
operating
partnership 4,477,000 4,873,000 24,681,000 18,957,000
Equity in
loss of
PREIT-RUBIN,
Inc. (1,286,000) (1,470,000) (6,307,000) (4,036,000)
Equity in
income of
partnerships
and joint
ventures 2,032,000 1,794,000 7,366,000 6,178,000
Gains on
sales of
interests in
real estate - 255,000(A) 10,298,000(B)) 1,763,000(A)
Income
before
minority
interest
in
operating
partnership 5,223,000 5,452,000 36,038,000 22,862,000
Minority
interest in
operating
partnership (604,000) (565,000) (3,784,000) (2,121,000)
NET INCOME $4,619,000 $4,887,000 $32,254,000 $20,741,000
PER SHARE
DATA
Net income
before gains
on sales of
interests in
real estate $0.34 $0.35 $1.64 $1.43
Gains on
sales of
interests in
real estate - 0.02(A) $0.77(B) 0.13(A)
BASIC INCOME
PER SHARE $0.34 $0.37 $2.41 $1.56
DILUTED
INCOME PER
SHARE $0.34 $0.37 $2.41 $1.56
Weighted
average
number of
shares
outstanding 13,499,924 13,329,551 13,403,233 13,318,820
(A) 14th qtr 1999 includes gain on sale of land in Elizabethtown,
Pennsylvania. Year to date 1999 includes gains on sales of
interest in 135 Commerce Drive, Fort Washington, PA, land parcel
at Crest Plaza, Allentown, PA, land in Elizabethtown, PA and
land located in Rancocas, NJ.
(B) Year to date 2000 includes gains on sales of Valleyview Shopping
Center, Wilmington, DE, Forestville Shopping Center, Forestville, MD
and CVS Building, Alexandria, VA and interest in Park Plaza Shopping
Center in Pinellas Park, Florida.
Pennsylvania Real Estate Investment Trust
Selected Financial Data
EQUITY IN INCOME OF PARTNERSHIPS
AND JOINT VENTURES
Three Months Ended Twelve Months Ended
Dec. 31, Dec. 31, Dec. 31, Dec. 31,
2000 1999 2000 1999
Gross revenues from
real estate $23,925,000 $15,908,000 $80,303,000 $58,817,000
Expenses:
Property operating
expenses 8,228,000 5,500,000 27,267,000 19,785,000
Mortgage and bank
loan interest 7,327,000 4,449,000 25,477,000 17,365,000
Refinancing
prepayment fee (A) - - - 110,000
Depreciation and
amortization 3,879,000 2,375,000 12,436,000 9,131,000
19,434,000 12,324,000 65,180,000 46,391,000
4,491,000 3,584,000 15,123,000 12,426,000
Partner's Share (2,459,000) (1,790,000) (7,757,000) (6,248,000)
EQUITY IN INCOME OF
PARTNERSHIPS
AND JOINT
VENTURES $2,032,000 $1,794,000 $7,366,000 $6,178,000
(A) The Company's share is $55,000.
Supplemental Information for Wholly Owned Properties
and the Company's Proportionate Share of Partnerships and Joint Ventures
EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION
AND AMORTIZATIONS ("EBITDA")
Three Months Ended Twelve Months Ended
Dec. 31, Dec. 31, Dec. 31, Dec. 31,
2000 1999 2000 1999
Gross Revenues $25,926,000 $24,036,000 $100,471,000 $89,220,000
Operating expenses (9,023,000) (8,494,000) (32,675,000) (31,783,000)
Net operating
income: Wholly-
owned properties 16,903,000 15,542,000 67,796,000 57,437,000
Company's
proportionate share
of partnerships and
joint ventures net
operating income 6,051,000 5,228,000 21,101,000 19,353,000
Combined net
operating income 22,954,000 20,770,000 88,897,000 76,790,000
Interest income 375,000 286,000 1,385,000 1,144,000
Company's
proportionate share
of PREIT-RUBIN,
Inc.
net operating
income (loss) (765,000) (1,152,000) (4,498,000) (2,504,000)
General and
administrative
expenses (1,573,000) (943,000) (4,953,000) (3,560,000)
EBITDA $20,991,000 $18,961,000 $80,831,000 $71,870,000
MORTGAGE NOTES, BANK
AND CONSTRUCTION
LOANS PAYABLE
Wholly-Owned
Properties Dec. 31, 2000 Dec. 31, 1999
Mortgage notes
payable $247,449,000 $266,830,000
Bank Loans payable 110,300,000 91,000,000
Construction Loan
Payable 24,647,000 6,804,000
382,396,000 364,634,000
Company's
Proportionate Share
of
Partnerships and
Joint Ventures
Mortgage notes
payable 111,457,000 113,670,000
Construction loans
payable 30,929,000 11,149,000
Total mortgage notes
and bank loans
payable $524,782,000 $489,453,000
SOURCE Pennsylvania Real Estate Investment Trust
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Related links:
http://www.preit.com
CONTACT:
Edward A. Glickman, Executive Vice President
and CFO, Pennsylvania Real Estate Investment Trust, 215-875-0700;
General Info, Joe Calabrese, Analyst Info, Georganne Palffy,
Media Info, Judith Sylk-Siegel, 212-661-8030, of The Financial
Relations Board BSMG Worldwide
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