PHILADELPHIA, March 9 /PRNewswire/ -- Pennsylvania Real Estate Investment
Trust (NYSE: PEI) announced today the audited results of its operations for
the fourth quarter and year ended December 31, 1999.
1999 Year End and Fourth Quarter Highlights
-- FFO for 1999 increased 8.2% to $2.65 per share on 14.7 million
shares/OP units outstanding from $2.45 per share on 14.1 million
shares/OP units outstanding at year end 1998.
-- FFO for the 1999 fourth quarter increased to $0.70 per share on
14.9 million shares/OP units outstanding from $0.69 per share on
14.4 million shares/OP units outstanding during the fourth quarter of
1998.
-- FFO for the year increased 12.5% to $38.9 million from $34.6 million in
1998.
-- Increased combined net operating income 33.8% to $76.8 million in 1999
from $57.4 million in 1998.
-- Same store retail net operating income increased 2.4% from calendar
year 1998 and increased 8.6% from the 1998 fourth quarter.
-- Same store multifamily net operating income grew 4.2% from calendar
year 1998 and decreased 2.3% from the 1998 fourth quarter due to
accounting adjustments.
Fourth Quarter Results
Funds from operations (FFO) for the three months ended December 31, 1999
totaled $10,452,000, a 4.8% increase over FFO of $9,970,000 for the comparable
period in 1998. The growth was driven by acquisitions and development
projects completed in the second half of 1998 and improved operating results
in the Company's portfolio. Fourth quarter FFO was $0.70 per share on
14,870,386 weighted average share equivalents outstanding (including Operating
Partnership [OP] units), compared to $0.69 per share on 14,444,163 weighted
average share equivalents for the three months ended December 31, 1998. As
calculated by NAREIT, FFO is defined as net income, excluding extraordinary
and unusual items, gain (or loss) on the sale of property, plus depreciation
and amortization.
Net operating income before depreciation from wholly-owned properties and
the Company's proportionate share of partnerships and joint venture properties
increased 14.7% to $20,771,000 for the three months ended December 31, 1999,
from $18,108,000 for the three months ended December 31, 1998. The increase
is mainly due to acquisitions completed in the second half of 1998 and the
completion of two development properties in the fourth quarter of 1998.
Net income for the three months ended December 31, 1999 was $4,887,000, or
$0.37 per basic share, on total weighted average shares outstanding of
13,329,551 compared to $5,374,000, or $0.40 per basic share, on 13,299,723
total weighted average shares outstanding for the three months ended
December 31, 1998. The reduction in net income is due to greater depreciation
as a result of acquisitions and completed development properties and greater
interest expense. Net income for the 1999 fourth quarter includes gain on the
sale of the Company's interest in land located in Elizabethtown, Pennsylvania
totaling $255,000 or $0.02 per share.
Year End Results
Funds from operations (FFO) for the twelve months ended December 31, 1999
totaled $38,911,000, a 12.5% increase over FFO of $34,576,000 for the twelve-
month period ended December 31, 1998. FFO for the twelve-month period totaled
$2.65 per share on 14,687,140 weighted average shares outstanding (including
OP units), compared to $2.45 per share on 14,135,032 weighted average shares
outstanding (including OP units) for the twelve months ended December 31,
1998.
Net operating income before depreciation from wholly-owned properties and
the Company's proportionate share of partnerships and joint venture properties
increased 33.7% to $76,790,000 for the twelve months ended December 31, 1999,
from $57,448,000 for the twelve months ended December 31, 1998.
Net income for the twelve months ended December 31, 1999 totaled
$20,741,000, or $1.56 per basic share, on total weighted average shares
outstanding of 13,318,820 compared to $23,185,000, or $1.74 per basic share,
on 13,297,241 total weighted average shares outstanding for 1998. The
reduction in net income is due to greater depreciation, higher interest
expense, an operating loss in PREIT-RUBIN Inc. and reduced gains on the sale
of real estate. Net income for 1999 includes gains on the sale of the
Company's interests in 135 Commerce Drive in Fort Washington, Pa., a land
parcel at Crest Plaza in Allentown, Pa. and interests in land located in
Rancocas, New Jersey and Elizabethtown, Pennsylvania totaling $1,763,000, or
$0.13 per share. Net income for the 1998 twelve month period included gains
on the sale of interests in real estate totaling $3,043,000 or $0.23 per
share.
Same Store NOI Growth -- Multifamily and Shopping Center Portfolios
Same store net operating income for the Company's portfolio of multifamily
properties increased 4.2% from 1998, driven by a 2.9% increase in revenues and
a 1.0% increase in operating expenses. For the 1999 fourth quarter, same
store net operating income for the Company's portfolio of multifamily
properties decreased 2.3% from the comparable three-month period in 1998,
primarily due to accounting adjustments for revenue and expense recognition.
Same store net operating income for the Company's shopping center portfolio
increased 2.4% over 1998. Same store net operating income for the fourth
quarter of 1999 for the Company's shopping center portfolio increased by 8.6%
over the comparable quarter in 1998 primarily driven by a 12.1% increase in
revenues.
Comments from Management
Commenting on the year, Ronald Rubin, Chief Executive Officer of PREIT,
said, "We continue to be pleased with our operating results, reflecting the
strong performance of our core portfolio and a productive year of development
projects and strategic acquisitions. During the 1999 fourth quarter we
achieved a 14.7% increase in combined net operating income as well as an 8.6%
increase in same store net operating income from our retail portfolio. The
strong increase in retail same store comparisons was primarily due to solid
performances across our retail portfolio, particularly North Dartmouth Mall,
Prince Georges Plaza and Lehigh Valley Mall."
Mr. Rubin continued, "While 1999 was a challenging time in the stock
market across the entire REIT industry, we remain convinced that business and
market fundamentals remain sound. During the year we maintained our strategy
to develop our underlying business while continuing to leverage our four
decades of experience and solid relationships in the industry. The Company
continues to actively implement new financial and competitive strategies to
address the changing market conditions while seeking to successfully maximize
our operating performance and expand our portfolio. Importantly, PREIT enters
2000 a stronger and more diverse Company and we will continue to focus on
enhancing our areas of strategic advantage."
Acquisition Update
-- Willow Grove Park (Willow Grove, Pa.) During the 2000 first quarter, a
partnership of PREIT and Pennsylvania State Employee Retirement System
(PaSERS) purchased Willow Grove Park, a 981,000 square foot regional
shopping center for $140 million. In conjunction with the acquisition,
it was announced that a 230,000 square foot Macy's department store
would be added to the complex in the Fall of 2001.
-- Florence Commons (Florence, S.C.) During the 1999 fourth quarter, PREIT
completed a $6.6 million acquisition of Florence Commons, a 197,000
square foot strip center adjacent to Company-owned Magnolia Mall. The
Company noted that ownership of Florence Commons allows PREIT to offer
a broad range of merchandising opportunities, including the possible
relocation of tenants from Magnolia Mall to Florence Commons.
-- Emerald Point (Virginia Beach, Va.) In early January 2000, PREIT
completed the purchase for $11 million, including assumption of debt,
of its partner's 35% interest in 862 apartment units at the Emerald
Point multifamily community. The property is now 100% owned and
operated by PREIT.
Development Update
-- Metroplex Shopping Center (Plymouth Meeting, Pa.) - Construction of the
780,000 square foot power center is on schedule and as of December 31,
1999, 40% complete and 90% leased. Lowe's (163,000 square feet) and
Target Stores (138,000 square feet), two of the power centers anchor
tenants, began construction of their stores in October and November
1999, respectively. Initial occupancy is expected in the third quarter
of 2000.
-- Paxton Towne Centre (Harrisburg, Pa.) - Construction of the 695,000
square foot power center is on schedule and as of December 31, 1999,
56% complete and 75% leased. Target Stores (124,000 square feet) and
Kohl's (87,000 square feet), two of the power center's anchor tenants,
have begun construction of their stores. Initial occupancy is expected
in the third quarter of 2000.
-- Pavilion at Market East (Philadelphia, Pa.) - Plans for the site are
currently undergoing a reconfiguration and redesign, and the
recommencement of construction is dependant upon the completion of
leasing and financing arrangements.
-- Frankford Arsenal (Philadelphia, Pa.) - The Company is actively engaged
in predevelopment work for the Frankford Arsenal, a 500,000 square foot
power center, and construction of the site is now slated for the fourth
quarter of 2000, subject to satisfactory due diligence and leasing.
Initial occupancy is expected in the third quarter of 2001 with
completion expected in the fourth quarter of 2001.
-- Creekview (Warrington, Pa.) - Construction of the 418,000 square foot
shopping center is on schedule and as of December 31, 1999, 52%
complete. Target and Lowe's have opened at Creekview and occupancy of
additional tenants is expected in the third quarter of 2001 with
completion in the fourth quarter of 2001.
-- Phase II - Christiana Power Center (Newark, Del.) The second phase of
the redevelopment of Christiana Power Center is expected to begin in
the fourth quarter of 2000 and is expected to be completed by the
fourth quarter of 2001.
Jonathan Weller, PREIT's President and Chief Operating Officer, commented,
"PREIT was extremely active this year as we accelerated our successful
development and acquisition program and implemented a tighter focus on our
real estate portfolio. Committed to building on our progress over the next
twelve months, we will advance on developmental activities in our existing
portfolio and look to add new projects that we expect will generate solid
returns upon stabilization."
Mr. Weller continued, "Consistent with this strategy, we acquired an
interest in Willow Grove Park in early 2000 through a partnership with one of
the nation's oldest and largest statewide retirement plans, PaSERS. This
transaction not only provides enhanced fees to PREIT for its management of the
property and construction services in connection with a new Macy's store, but
provides the opportunity for significant incremental cash flow beginning in
2002. Importantly, we are excited to be venturing with a major institutional
investor and will continue to pursue opportunities to expand our portfolio
through these types of joint ventures."
Disposition Update
As previously announced, the Company intends to sell certain of its non-
core properties that no longer meet its ownership criteria. With a sharpened
focus on higher-yielding power centers and shopping malls, PREIT retained
Eastdil Realty in late 1999 to assist management in selling six non-core strip
shopping center properties. These properties are currently on the market and
PREIT expects to complete the sale by the end of the 2000 third quarter. The
Company expects proceeds from this transaction to be approximately $60.0 to
$65.0 million
Consistent with management's disposition strategy, during the fourth
quarter of 1999 the Company completed the sale of an undeveloped land parcel
in Elizabethtown, Pennsylvania, realizing proceeds of approximately $400,000.
Subsequent to the end of the year, PREIT sold its 50% interest in the Park
Plaza shopping center in Pinellas Park, Florida for $3.0 million.
Capital Resources
As of December 31, 1999, the Company had approximately $98 million
outstanding, including letters of credit, under its line of credit.
Edward Glickman, Chief Financial Officer of PREIT, added, "We will
continue to pursue opportunities to obtain equity capital to fund our
development projects and redevelopment activities with high-value-added
potential. As always, we remain committed to maintaining a strong financial
position and, in this regard, we expect to fund our pipeline with a
combination of retained cash, non-core asset dispositions, debt financing and
potential strategic partnerships."
1999 Fourth Quarter One-Time Charge
The Company previously announced that it would take a charge of
approximately $150,000, or $0.01 per share, during the 1999 fourth quarter
relating to the abandonment of a previously unannounced shopping center
development project in Newburgh, New York.
Quarterly Dividend Declared
The Company declared a quarterly dividend of $0.47 per share payable on
March 15, 2000 to shareholders and unitholders of record as of February 29,
2000. The March 15, 2000 dividend payment will be PREIT's 92nd consecutive
distribution since its initial dividend paid in August of 1962. Throughout
its history, the Company has never omitted or reduced a shareholder dividend.
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 8.3 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
3.1 million square feet to the portfolio. Pennsylvania Real Estate Investment
Trust is headquartered in Philadelphia, Pennsylvania.
With the exception of the historical information contained in the release,
the matters described herein contain forward-looking statements that are made
pursuant to the Safe Harbor provisions of the Private Securities Litigation
Reform Act of 1995. Such statements involve various risks which may cause
actual results to differ materially. These risks include, but are not limited
to, the ability of the Company to grow internally or by acquisition and to
integrate acquired businesses, the availability of adequate funds at
reasonable cost, changing industry and competitive conditions, and other risks
outside the control of the company referred to in the Company's registration
statement and periodic reports filed with the Securities and Exchange
Commission.
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, Dec. 31, Dec. 31, Dec. 31,
1999 1998 1999 1998
Income before
minority interest
in operating
partnership $5,452,000 $6,106,000 $22,862,000 $24,878,000
Less: Gains on sales
of interests
in real
estate (255,000) -- (1,763,000) (3,043,000)
Add: Wholly owned
& consolidated
partnership,
net 4,257,000 2,955,000 14,004,000 9,285,000
Unconsolidated
partnerships
& joint
ventures 1,250,000 1,075,000 4,573,000 4,067,000
Excess purchase
price over net
asset acquired 34,000 29,000 195,000 115,000
Refinancing
prepayment
fee of
partnership
/joint
ventures -- -- 55,000 --
Less: Depreciation
of non-real
estate assets (60,000) (57,000) (240,000) (228,000)
Amortization
of deferred
financing
assets (226,000) (138,000) (775,000) (498,000)
FUNDS FROM
OPERATIONS $10,452,000(A) $9,970,000(A) $38,911,000(A) $34,576,000(A)
FUNDS FROM
OPERATIONS
PER SHARE
AND OP UNITS $0.70 $0.69 $2.65 $2.45
Weighted average
number shares
outstanding 13,329,551 13,299,723 13,318,820 13,297,241
Weighted average
effect of full
conversion
of OP units 1,540,835 1,144,440 1,368,320 837,791
Total weighted
average shares
of outstanding
including
OP units 14,870,386 14,444,163 14,687,140 14,135,032
(A)Includes the non-cash effect of straight-line rents of $302,000 and
$200,000 for the 4th quarter 1999 and 1998, respectively. and $1,109,000
and $912,000 year to date for 1999 and 1998, respectively.
OPERATING RESULTS
Three Months Ended Twelve Months Ended
Dec. 31, Dec. 31, Dec. 31, Dec. 31,
1999 1998 1999 1998
REVENUES
Gross revenues
from real estate $24,036,000 $19,669,000 $89,220,000 $61,745,000
Interest and
other income 286,000 250,000 1,144,000 650,000
24,322,000 19,919,000 90,364,000 62,395,000
EXPENSES
Property operating
expenses 8,494,000 6,700,000 31,783,000 22,519,000
Depreciation
and amortization 4,314,000 2,923,000 14,223,000 9,406,000
General &
administrative
expenses 943,000 893,000 3,560,000 3,351,000
Interest expense 5,698,000 4,299,000 21,841,000 10,591,000
19,449,000 14,815,000 71,407,000 45,867,000
Income before
equity in
unconsolidated
entities, gains on
sales of interests
in real estate and
minority interest
in operating
partnership 4,873,000 5,104,000 18,957,000 16,528,000
Equity in loss of
PREIT-RUBIN, Inc. (1,470,000) (952,000) (4,036,000) (678,000)
Equity in income of
partnerships and
joint ventures 1,794,000 1,954,000 6,178,000 5,985,000
Gains on sales of
interests in
real estate 255,000(B) -- 1,763,000(B) 3,043,000(C)
Income before
minority interest
in operating
partnership 5,452,000 6,106,000 22,862,000 24,878,000
Minority interest
in operating
partnership (565,000) (462,000) (2,121,000) (1,423,000)
Income before
extraordinary item 4,887,000 5,644,000 20,741,000 23,455,000
Loss on early
extinguishment of debt -- (270,000) -- (270,000)
NET INCOME $4,887,000 $5,374,000 $20,741,000 $23,185,000
PER SHARE DATA
Net income before gains on
sales of interests
in real estate $0.35 $0.40 $1.42 $1.51
Gains on sales
of interests
in real estate 0.02(B) -- 0.13(B) 0.23(B)
BASIC INCOME PER SHARE $0.37 $0.40 $1.56 $1.74
DILUTED INCOME PER SHARE $0.37 $0.40 $1.56 $1.74
Weighted average
number shares
outstanding 13,329,551 13,299,723 13,318,820 13,297,241
(B)The fourth quarter 1999, includes gains on sale of interest in land
located in Elizabethtown, Pennsylvania.Year to date also includes gains on
sales of 135 Commerce Drive, Fort Washington, Pa., land parcel at Crest
Plaza, Allentown, Pa. and interest in land located in Rancocas, New
Jersey.
(C)Year to date 1998, includes gains on sales of interests in Punta Gorda
Mall, Punta Gorda, Fla., Ormond Beach Mall, Daytona Beach, Fla. and
Charter Pointe Apartments in Altemonte Springs, Fla.
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,
1999 1998 1999 1998
Gross revenues
from real estate $15,908,000 $16,042,000 $58,817,000 $57,792,000
Expenses:
Property operating
expenses 5,500,000 5,641,000 19,785,000 20,662,000
Mortgage and bank
loan interest 4,449,000 4,278,000 17,365,000 16,647,000
Refinancing prepayment
fee (A) -- -- 110,000 --
Depreciation and
amortization 2,375,000 2,174,000 9,131,000 8,348,000
12,324,000 12,093,000 46,391,000 45,657,000
3,584,000 3,949,000 12,426,000 12,135,000
Partner's Share (1,790,000) (1,995,000) (6,248,000) (6,150,000)
EQUITY IN INCOME OF
PARTNERSHIPS
AND JOINT VENTURES $1,794,000 $1,954,000 $6,178,000 $5,985,000
(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,
1999 1998 1999 1998
Gross Revenues $24,036,000 $19,669,000 $89,220,000 $61,745,000
Operating expenses (8,494,000) (6,700,000) (31,783,000) (22,519,000)
Net operating income:
Wholly-owned
properties 15,542,000 12,969,000 57,437,000 39,226,000
Company's proportionate
share of
partnerships and
joint ventures
net operating income 5,229,000 5,139,000 19,353,000 18,222,000
Combined net operating
income 20,771,000 18,108,000 76,790,000 57,448,000
Interest income 286,000 250,000 1,144,000 650,000
Company's proportionate
share of PREIT-RUBIN, Inc.
net operating
income (loss) (1,152,000) (928,000) (2,504,000) 762,000
General and
administrative
expenses (943,000) (893,000) (3,560,000) (3,351,000)
EBITDA $18,962,000 $16,537,000 $71,870,000 $55,509,000
MORTGAGE NOTES, BANK
AND CONSTRUCTION LOANS PAYABLE
Wholly-Owned Properties
Mortgage notes payable $266,830,000 $167,003,000
Bank Loans payable 91,000,000 135,273,000
Construction Loan Payable 6,804,000 --
$364,634,000 $302,276,000
Company's Proportionate Share of
Partnerships and Joint Ventures
Mortgage notes payable 113,670,000 106,973,000
Bank loans payable 11,149,000 2,441,000
Total mortgage notes and bank loans payable $489,454,000 $411,690,000
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 of Pennsylvania Real Estate Investment Trust,
215-875-0700; General Info, Joe Calabrese, Analyst Info, Pamela
Belfor, or Media Info, Judith Sylk-Siegel, all of The Financial
Relations Board, 212-661-8030, for Pennsylvania Real Estate
Investment Trust
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