SAN DIEGO, March 2 /PRNewswire/ -- Burnham Pacific Properties, Inc.
(NYSE: BPP) today announced operating results for the fourth quarter and
year-ended December 31, 1999. The Company also announced that as part of its
pursuit of its strategic alternatives, it is exchanging additional information
with certain interested parties.
J. David Martin, the Company's Chief Executive Officer and President,
stated "We are continuing to explore all of our strategic alternatives in the
pursuit of maximizing shareholder value. We previously announced that we
might sell certain properties to provide the Company with additional liquidity
and financial flexibility. To that end, we sold two non-core office buildings
and liquidated substantially all of our interest in our joint venture with
CalPERS during the fourth quarter."
Funds From Operations ("FFO") for the fourth quarter on a fully-diluted
basis was $9.9 million or $0.27 per share (based on 37,130,000 shares), as
compared to $13.4 million or $0.32 per share (based on 41,797,000 shares) for
the quarter ended December 31, 1998. Diluted FFO for the fourth quarter of
1999 does not assume the conversion of the Company's convertible preferred
stock because such conversion would be accretive to the Company. If
conversion was assumed, fully-diluted FFO for the fourth quarter of 1999 would
be $11.3 million or $0.27 per share (based on 41,683,000 shares). For the
year-ended December 31, 1999, FFO on a fully-diluted basis (assuming
conversion of the Company's convertible preferred stock and other common stock
equivalents) was $51.0 million or $1.22 per share (based on 41,673,000
shares), as compared to $52.0 million or $1.33 per share (based on 39,215,000
shares) for the year ended December 31, 1998. FFO is calculated in accordance
with the definition adopted by the Board of Governors of the National
Association of Real Estate Investment Trusts (NAREIT) and is considered the
primary earnings measure for equity REITs.
Review of Results
For the fourth quarter ended December 31, 1999, revenues decreased
$3.4 million to $31.8 million from $35.2 million in the fourth quarter of
1998. This resulted primarily from asset dispositions in 1999, offset
partially by an increase in fee income. Including the one-time revenue and
expense items referenced below, net income available to common stockholders
was $653,000 or $0.02 per share as compared to $1.6 million or $0.05 per share
for the prior year period.
Revenues in the 1999 and 1998 three-month periods included one-time lease
termination fees of $1.0 million and $806,000, respectively. The 1999
three-month period was unfavorably impacted by costs of $1.9 million
associated with the unsolicited proposal from Schottenstein Stores. If these
one-time items were excluded, net income available to common stockholders
before gain (loss) on sales of real estate for the quarter ended December 31,
1999, would have been $657,000 or $0.02 per share, as compared to $2.6 million
or $0.08 per share for the prior year period.
If the above-mentioned one-time lease termination fees were excluded,
fully-diluted FFO for the quarter ended December 31, 1999 would have been
$8.9 million or $0.24 per share (based on 37,130,000 shares), as compared to
$12.6 million or $0.30 per share (based on 41,797,000 shares) for the prior
year period.
For the year ended December 31, 1999, revenues grew $1.1 million to
$132.8 million from $131.7 million in 1998. Again including the one-time
revenue and expense items referenced below, net income available to common
stockholders was $12.5 million or $0.39 per share, as compared to
$13.2 million or $0.44 per share for the prior year.
Revenues for the 1999 and 1998 full year periods included lease
termination fees of $2.5 million and $4.7 million, respectively. The 1999
full year period was also impacted by one-time charges taken in the first nine
months of 1999, in addition to the $1.9 million in costs related to the
unsolicited proposal taken in the current quarter. Charges taken in the first
nine months included impairment write-offs totaling $2.2 million related to
the sales of two office buildings, $1.4 million related to the Company's
decision to outsource its property management function to third-party
providers, $2.7 million in costs related to the unsolicited proposal, $748,000
in costs associated with the abandonment of prospective acquisition
transactions in process prior to the AMB portfolio acquisition, and
$1.9 million recognized as the cumulative effect of a change in accounting
principle. If these one-time revenue and expense items were excluded, net
income available to common stockholders before gain (loss) on sales of real
estate for 1999 would have been $10.4 million or $0.32 per share as compared
to $10.3 million or $0.34 per share for 1998.
If the above-mentioned one-time lease termination fees were excluded,
fully-diluted FFO for 1999 would have been $48.5 million or $1.16 per share,
as compared to $47.4 million or $1.21 per share for 1998.
Results for both the quarter and full year were negatively impacted by
asset sales, decreases in lease termination fees, delays in new store
openings, and delays in the completion of development and redevelopment
projects. In addition, same center performance for the quarter was
essentially flat, and for the full year was down approximately 1%.
Leasing Results
The Company executed leases for approximately 291,000 square feet during
the fourth quarter at a weighted average rent of $15.52 per square foot per
year, with approximately 156,000 square feet representing space not previously
occupied. Of the total, approximately 129,000 square feet was leased to
anchor tenants (tenants greater than 14,000 square feet) at a weighted average
rent of $12.39 per square foot per year, as compared to a weighted average
rent for anchor tenants in the Company's overall portfolio of $9.30 per square
foot per year; and approximately 162,000 square feet was leased to non-anchor
tenants at a weighted average rent of $18.01 per square foot per year, as
compared to a weighted average rent for non-anchor tenants in the Company's
overall portfolio of $16.30 per square foot per year.
CalPERS Joint Venture
In December 1999, BPP Retail LLC, the Company's joint venture with
CalPERS, closed on the acquisition of four retail centers from AMB Property
Corporation for a purchase price of approximately $107 million. The centers
added an additional 932,000 square feet to the portfolio of assets managed by
the Company. This closing represented the third and final phase of the AMB
transaction.
Also in December 1999, the Company and CalPERS made certain modifications
to the BPP Retail arrangement. As part of the modifications, the Company
exchanged substantially all of its equity interest in BPP Retail LLC for a
consideration having a total value of approximately $39.4 million. In
addition, as part of the modification, the Company contributed two properties
to the joint venture at a value of approximately $18.9 million. The Company
was receiving an aggregate of approximately $1.7 million per year in net
operating income from the two properties.
Concurrently with these contributions, the Company withdrew approximately
$12.8 million in cash from the joint venture, and the joint venture assumed
approximately $6.1 million in existing mortgage debt associated with one of
the two contributed properties. The Company recognized a net gain of $609,000
as a result of the modifications, and cash proceeds were used to reduce
outstanding indebtedness and for general working capital purposes. The
Company will continue to serve as the manager of BPP Retail's assets and is
entitled to receive fees for asset management, leasing, acquisition and
disposition activities, but will no longer be eligible for the incentive fee
attributable to increases in asset values. The Company estimates that these
modifications will reduce FFO per share going forward by approximately
$0.02 per year.
Dispositions
On October 28, 1999, Bergen Brunswig closed on the acquisition of its
headquarters office building from the Company for a purchase price of
$19.3 million. Proceeds were applied to the repayment of a related mortgage
obligation of approximately $9.3 million, to reduce outstanding indebtedness
on the Company's line of credit and for general working capital purposes. The
Company recorded an impairment charge of $1.2 million in the second quarter to
account for the anticipated loss on the sale. As a part of the transaction,
Bergen Brunswig prepaid the remainder of its rental obligation through the
March 31, 2000 maturity of its lease to the Company in the amount of
$1.5 million. The Company was receiving approximately $3.3 million per year
in net operating income from the property.
On December 30, 1999, the Company closed on the sale of its Marcoa Office
Building for a sales price of approximately $2.8 million. The Company
recorded an impairment charge of $1.0 million in the third quarter to account
for the anticipated loss on sale. Proceeds were used to reduce outstanding
indebtedness and for general working capital purposes. The Company was
receiving approximately $678,000 per year in net operating income from the
property. The Company estimates that the net effect of these two sales will
reduce FFO per share going forward by approximately $0.07 per year.
Development/Redevelopment
The Company continues to make progress on its development/redevelopment
program. At the Downtown Pleasant Hill development, Bed Bath & Beyond, Ross
Stores and Borders Books opened for business in the fourth quarter, and
Albertson's supermarket is scheduled to open next month. The Company is in
the process of identifying a new movie theatre anchor to replace Mann
Theatres, which filed for bankruptcy late last year. Once identified, it is
anticipated that the new theatre will open approximately one year later than
Mann's originally scheduled opening. With the exception of the theatre space,
the remainder of the center is approximately 89% leased, with most tenants
scheduled to be open by the third quarter of this year.
The Cameron Park redevelopment is progressing well. Safeway's new
55,000 square-foot store opened in mid-December of last year. With the
anticipated execution of a lease with a new tenant for 7,000 square feet, with
a projected opening in the third quarter of this year, the overall leasing in
the center will be approximately 91%.
The redevelopment of the Fremont Hub continues to progress. Bed, Bath &
Beyond opened in the fourth quarter, and the Company was able to re-lease the
theatre space vacated by General Cinema at mid-year to a new operator who is
now open for business. Leases have been executed with Borders Books, Zany
Brainy, and Pier 1. Additional leasing activity and construction continue
with final completion estimated to occur after mid-year.
Credit Facility
In November 1999, the Company obtained a $202.8 million credit facility
from General Electric Capital Corporation, the proceeds of which were used to
repay an existing $205.0 million credit facility. The facility is secured by
mortgages on certain of the Company's properties and bears interest at a rate
of LIBOR plus 2.5%, as compared to a weighted average rate of LIBOR plus 1.45%
on the prior facility. In December 1999, the Company repaid $35.2 million of
the outstanding indebtedness, and reduced the commitment amount to
$176.3 million. Given the increase in spread on the credit facility and the
recent increase in 30-day LIBOR, the Company's interest cost will increase in
2000, reducing FFO per share by an estimated $0.04 to $0.06 per year,
depending on future outstanding balances under the facility, and future
fluctuations in short-term interest rates.
Costs Associated with Pursuit of Strategic Alternatives
The Company estimates that the costs associated with its pursuit of its
strategic alternatives will reduce FFO during 2000 by $0.02 to $0.04 per
share, depending on the length of the process.
Burnham Pacific is a real estate investment trust (REIT) that focuses on
value-added retail real estate opportunities throughout the United States. On
a quarterly basis, Burnham Pacific makes available supplemental information
that includes property and corporate level detail which is available upon
request. More information on Burnham Pacific may be obtained by calling
800.462.5181, or visiting the Company's web site at http://www.burnhampacific.com.
This news release contains "forward-looking statements" that predict or
indicate future events or trends or that do not relate to historical matters.
We cannot assure the future events or outcomes of the matters described in
these statements; rather, these statements merely reflect our current
expectations of the approximate outcome of the matter discussed. Investors
should read the documents the Company files from time to time with the SEC,
including the risk factors that were disclosed in our Registration Statement
on Form S-3 that was filed with the SEC on August 13, 1999. You should be
aware that the risk factors contained in that Form S-3 may not be exhaustive.
Therefore, we recommend that you read the information in that Form S-3
together with other reports and documents that we file with the SEC from time
to time, including our Forms 10-K, 10-Q, and 8-K which may supplement, modify,
supersede or update those risk factors.
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except share and per-share amounts)
Quarter Ended Year to Date
12/31/1999 12/31/1998 12/31/1999 12/31/1998
Revenues
Rents $30,096 $34,338 $126,091 $130,236
Fee Income 1,020 669 5,078 669
Interest 639 185 1,641 818
Total Revenues 31,755 35,192 132,810 131,723
Costs and Expenses
Interest 8,522 9,435 36,391 35,630
Rental Operating 10,026 10,321 37,838 36,543
General & Administrative 2,120 1,765 8,021 5,723
Restructuring Charge 0 0 1,353 0
Abandoned Acquisition Costs 0 0 748 0
Costs Associated with
Unsolicited Proposal
and Litigation 1,876 0 4,548 0
Impairment Write-Off 0 0 2,200 0
Depreciation & Amortization 7,387 7,685 28,182 28,607
Total Costs and Expenses 29,931 29,206 119,281 106,503
Income from Operations before
Income from Unconsolidated
Subsidiaries, Minority
Interest, Gain (Loss) on
Sales of Real Estate and
Cumulative Effect of Change
in Accounting Principle 1,824 5,986 13,529 25,220
Income from Unconsolidated
Subsidiaries 431 54 1,077 214
Minority Interest (1,074) (1,212) (5,024) (4,864)
Gain (Loss) on Sales
of Real Estate 872 (1,814) 10,371 (1,814)
Income before Cumulative
Effect of Change in
Accounting Principle 2,053 3,014 19,953 18,756
Cumulative Effect of Change
in Accounting Principle 0 0 (1,866) 0
Net Income 2,053 3,014 18,087 18,756
Dividends Paid to Preferred
Stockholders (1,400) (1,400) (5,600) (5,600)
Income Available to
Common Stockholders $653 $1,614 $12,487 $13,156
Basic Earnings Per Share:
Income before Cumulative
Effect of Change in
Accounting Principle $0.02 $0.05 $0.45 $0.44
Cumulative Effect of Change
in Accounting Principle 0.00 0.00 (0.06) 0.00
Net Income $0.02 $0.05 $0.39 $0.44
Diluted Earnings Per Share:
Income before Cumulative
Effect of Change in
Accounting Principle $0.02 $0.05 $0.45 $0.44
Cumulative Effect of Change
in Accounting Principle 0.00 0.00 (0.06) 0.00
Net Income $0.02 $0.05 $0.39 $0.44
Funds from Operations-Diluted:
Income Available to
Common Stockholders $653 $1,614 $12,487 $13,156
Adjustments:
Depreciation & Amortization
of Real Estate and
Tenant Improvements 7,213 7,317 27,552 26,588
Dividends Paid to
Preferred Stockholders 0 1,400 5,600 5,600
Restructuring Charge 0 0 1,353 0
Cumulative Effect of Change
in Accounting Principle 0 0 1,866 0
Abandoned Acquisition Costs 0 0 748 0
Costs Associated with
Unsolicited Proposal
and Litigation 1,876 0 4,548 0
Impairment Write-Off 0 0 2,200 0
(Gain) Loss on Sales
of Real Estate (872) 1,814 (10,371) 1,814
Minority Interest 1,074 1,212 5,024 4,864
Funds from
Operations-Diluted $9,944 $13,357 $51,007 $52,022
Funds from Operations
Per Share
Basic $0.2700 $0.3400 $1.2600 $1.3900
Diluted $0.2700 $0.3200 $1.2200 $1.3300
Weighted Average Shares
Outstanding-FFO
Basic 32,268,274 31,948,073 32,062,331 29,863,565
Diluted 37,130,337 41,796,955 41,673,196 39,214,956
CONSOLIDATED BALANCE SHEETS
(in thousands, except share amounts)
12/31/1999 12/31/1998
ASSETS
Real Estate $1,036,294 $1,137,779
Less Accumulated Depreciation (65,494) (79,837)
Real Estate-Net 970,800 1,057,942
Real Estate Held for Sale 8,737 0
Cash and Cash Equivalents 11,119 20,873
Restricted Cash 9,827 7,737
Receivables-Net 8,413 7,697
Investment in Unconsolidated Subsidiaries 3,650 3,438
Other Assets 22,469 16,489
Total $1,035,015 $1,114,176
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Accounts Payable and Other Liabilities $29,224 $50,572
Tenant Security Deposits 2,606 2,982
Notes Payable 400,410 394,029
Line of Credit Advances 138,420 180,999
Total Liabilities 570,660 628,582
Commitments and Contingencies
Minority Interest 66,350 70,217
Stockholders' Equity:
Preferred Stock, Par Value $.01/Share,
5,000,000 Shares Authorized, 4,800,000 Shares
Designated as Series 1997-A Convertible
Preferred, 2,800,000 Shares Outstanding at
December 31, 1999 and 1998, Respectively 28 28
Common Stock, Par Value $.01/Share, 95,000,000
Shares Authorized, 32,273,546 and 31,954,008
Shares Outstanding at December 31, 1999 and
1998, Respectively 323 319
Paid in Capital in Excess of Par 528,811 524,957
Dividends Paid in Excess of Net Income (131,157) (109,927)
Total Stockholders' Equity 398,005 415,377
Total $1,035,015 $1,114,176
SOURCE Burnham Pacific Properties, Inc.
 back to top
Related links:
http://www.burnhampacific.com
CONTACT:
Daniel B. Platt, Chief Financial Officer of
Burnham Pacific Properties, Inc., 619-652-4700, Fax:
619-652-4711, dbplatt@bpac.com
|
