PHILADELPHIA, March 11 /PRNewswire-FirstCall/ -- Pennsylvania Real Estate
Investment Trust (NYSE: PEI) today announced results for the fourth quarter
and year ended December 31, 2001 in line with the Company's November 2001
guidance.
2001 Fourth Quarter Highlights
* FFO for the 2001 fourth quarter increased 18.9% to $13.6 million from
$11.5 million in the 2000 fourth quarter.
* FFO per share for the 2001 fourth quarter increased to $0.77 from $0.75
in the 2000 fourth quarter.
* Combined net operating income, excluding lease termination fees for
both periods, increased 10.5% to $25.0 million in the fourth quarter of
2001 from $22.6 million for the fourth quarter of 2000.
* Same store multifamily NOI increased 7.2% from the 2000 fourth
quarter.
* Same store NOI, excluding lease termination fees, for the Company's
shopping center portfolio increased 0.8% from the 2000 fourth
quarter.
Fourth Quarter Results
For the fourth quarter ended December 31, 2001 the Company's funds from
operations (FFO) totaled $13,631,000, an increase of 18.9% over FFO of
$11,462,000 for the comparable three-month period in 2000. Fourth quarter 2001
FFO totaled $0.77 per share, on 17,788,132 weighted average shares of
beneficial interest/Operating Partnership units (collectively shares)
outstanding, compared with $0.75 per share, on 15,179,848 weighted average
shares outstanding, in the 2000 fourth quarter. Weighted average shares
outstanding increased 17.2% due to the Company's public offering in July 2001.
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.
Net operating income (NOI) from wholly-owned properties and the Company's
proportionate share of partnerships and joint venture properties increased by
9.3% to $25,087,000 for the 2001 fourth quarter from $22,954,000 for the
fourth quarter of 2000. After eliminating lease termination revenues from both
periods, NOI increased by 10.5% to $25,010,000 in 2001 from $22,634,000 in
2000. This increase is due to improved performance in the Company's shopping
center and multifamily portfolios and the completion of development projects.
Net income for the fourth quarter ended December 31, 2001 was $6,641,000,
or $0.42 per share, on 15,842,909 total weighted average shares outstanding,
compared to $4,619,000 or $0.34 per share, on 13,499,924 total weighted
average shares outstanding for the comparable 2000 period. The increase is
primarily due to development properties placed in service.
Year End Results
FFO for the year ended December 31, 2001 totaled $44,699,000 compared with
FFO of $45,844,000 for the year ended December 31, 2000. FFO for 2001 totaled
$2.70 per share on 16,526,094 weighted average shares outstanding, compared to
$3.06 per share on 14,976,261 weighted average shares outstanding for the
twelve months ended December 31, 2000. The decrease was primarily the result
of lease termination fees in the prior year and the utilization of the
proceeds of the share offering to repay floating rate debt.
NOI from wholly-owned properties and the Company's proportionate share of
partnerships and joint venture properties increased 3.9% to $92,396,000 for
the twelve months ended December 31, 2001, from $88,897,000 for the twelve
months ended December 31, 2000. After eliminating lease termination revenues
from both periods, NOI increased 10.5% to $91,234,000 in 2001 from $82,572,000
in 2000.
Net income for the year ended December 31, 2001 was $19,789,000, or $1.35
per share, on 14,656,711 total weighted average shares outstanding, compared
to $32,254,000, or $2.41 per share, on 13,403,233 total weighted average
shares outstanding for the year ended December 31, 2000. Net income for 2001
includes $2.1 million, or $0.14 per share, from net gains on the sale of land
at Florence Commons Shopping Center, Florence, SC, and Paxton Towne Centre,
Harrisburg, PA and the sale of the Company's interest in Ingleside Shopping
Center, Thorndale, PA. Net income for 2000 includes $10.3 million, or $0.77
per share, from gains on sale of the Company's interests in Valley View
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.
Same Store NOI Growth -- Retail and Multifamily Portfolios
Same store NOI for the Company's retail portfolio, excluding lease
termination fees for both periods, increased 4.9% from fiscal 2000 and 0.8%
over the 2000 fourth quarter. The increase over the comparable periods was
primarily driven by higher revenues from leasing of vacant space, lease
turnover and scheduled rent increases.
Of note, occupancy rates in the 2001 fourth quarter increased to 92.0%, 80
basis points higher than 91.2% reported in the 2000 fourth quarter. The
Company's power centers and enclosed malls were 96.6% and 94.3% occupied,
respectively, as of December 31, 2001. The Company's mall properties also
reported that sales increased 5.5% to $391 per square foot in 2001 from $371
per square foot in 2000.
Same store NOI for the Company's portfolio of multifamily properties
increased 3.7% over 2000 and 7.2% over the 2000 fourth quarter. The 2001
fourth quarter same store NOI growth was primarily driven by a 4.2% increase
in rents and a 2.8% increase in total revenues. The growth in NOI was also
due to a 2.8% decrease in operating expenses, primarily the result of a
reduction in utility costs from the prior period. As discussed in previous
releases, the Company expects to be impacted by higher insurance costs
throughout 2002 and is stringently managing its exposure to utility expenses
by implementing additional submetering that began to take effect in the 2001
fourth quarter. Occupancy in the multifamily portfolio was 94.7% as of year-
end 2001, a decline of 140 basis points from year-end 2000.
Portfolio Composition
The Company ended 2001 with investment in real estate of $834.4 million,
an increase of $30.8 million, or 3.8%, over 2000's year-end level of
$803.6 million. Investment in real estate at December 31, 2001 included
$52.5 million of construction in progress. As a result, on a cost basis, the
Company's portfolio is now 33.9% multifamily, 59.5% retail, 6.3% retail
development and 0.3% industrial.
Comments from Management
Ronald Rubin, Chairman and Chief Executive Officer of PREIT said,
"Despite a more difficult retail operating environment our financial
performance during 2001 was solid. During the 2001 fourth quarter we achieved
18.9% FFO growth and a 10.5% increase in NOI, excluding lease termination
revenues. Also, during 2001 we continued the Company's historically successful
approach of internal growth and external expansion. Development highlights
include the completion of the Willow Grove Park redevelopment and expansion,
which involved a new 225,000 square foot, three-level, full-line Macy's
department store. In addition, in July 2001 we successfully completed a public
offering of 2.0 million shares of beneficial interest at a price of $23.00 per
share, generating total net proceeds of $44.3 million."
Finally, Mr. Rubin added it was with great pride that the Company
announced on February 8, 2002 that its Board of Trustees declared a quarterly
cash dividend of $0.51 per share. The dividend will be paid on March 15, 2002
to shareholders and unitholders of record on February 28, 2002. This
declaration marks the 40th anniversary of the Company's first dividend payment
and represents PREIT's 100th consecutive distribution since its initial
dividend paid in. Throughout its history the Company has never omitted or
reduced a shareholder dividend.
To commemorate the Company's 100th dividend payment, Company officials
will participate in the closing bell-ringing ceremony at the New York Stock
Exchange on Thursday, March 14, 2002 at 4:00 p.m. ET.
Outlook for 2002
Jonathan B. Weller, PREIT's President and Chief Operating Officer
commented, "As we move into 2002, PREIT will continue to pursue a broad range
of internal and external growth strategies in our primary markets. Central to
the Company's focus is an emphasis on maximizing profitability, prudently
investing capital and maintaining the flexibility in our capital structure
necessary to grow our business. We will continue to conservatively maintain
the growth of our development and redevelopment pipeline and look to acquire
properties in key markets that are accretive to shareholders and which add to
the long-term value of the portfolio."
"Towards this end, PREIT's 2002 investment philosophy is focused on
selectively developing and acquiring quality real estate with transactions
structured to enhance our return on investment. Notably, the Company's
development strategy is location and tenant driven with an emphasis towards
high-quality, financially sound retailers. Regarding acquisitions, PREIT is
focused on acquiring middle-market malls -- those malls in secondary markets
that dominate their trade area -- and repositioning the property to maximize
NOI and enhance the tenant roster. Additionally, in line with our non-core
disposition program, we continue to seek opportunities to sell non-core and
stabilized assets for a high return on our original investment and reinvesting
the proceeds."
2002 Forecast
The Company noted that it is currently estimating FFO to be approximately
$0.57 to $0.59 for the first quarter ending March 31, 2002 and $2.73 to $2.77
per share for the calendar year ending December 31, 2002. This estimate is
expressly subject to the cautionary statement at the end of this release.
Development Pipeline
* Willow Grove Park (Willow Grove, PA) - The renovation and expansion of
the 1.2 million square foot regional shopping center was completed in
November 2001. Redevelopment efforts included mall renovations and the
addition of a new 225,000 square foot, three-level, full-line Macy's
department store. Additionally, as part of the renovation, new leases
were executed during 2001 with J. Crew, Banana Republic, Casual Corner,
Rockport Shoes and Spencer Gifts and an expansion with Gap,
Build-a-bear, Reference, Ruby Tuesday and Gertrude Hawk.
* Creekview Shopping Center (Warrington, PA) - Construction of the
424,722 square foot shopping center was completed during the 2001
fourth quarter. During the first quarter of 2002, a 25,000 square foot
Bed Bath & Beyond was opened as well as Cingular Wireless, Duron
Paints, and a 38,888 square foot L.A. Fitness, which allowed us to
achieve 100% occupancy at this asset.
* Paxton Towne Centre (Harrisburg, PA) - Construction of the 717,000
square foot power center is on schedule, and as of December 31, 2001,
99% complete and 90% leased. During the 2001 fourth quarter a 31,000
square foot Babies "R" Us was opened at the property.
* As of December 31, 2001 the Company determined not to proceed with
development projects in Delran, NJ and Toms River, NJ, resulting in a
charge of approximately $300,000
Leasing Update
Significant leasing accomplishments during the quarter included:
During the fourth quarter 2001 the Company executed thirty-four leases
encompassing 137,153 square feet at a total average rent per square foot of
$17.58. Of this total, new leases for previously leased space accounted for
two transactions at an average rent of $23.14, an increase of 19.9% over the
previous minimum rent. In addition, we renewed seventeen leases representing
80,195 square feet at an average rent of $19.63, an increase of 19.0% over the
previous average minimum rent. The Company also executed transactions for
fifteen formerly vacant spaces at an average rental rent of $13.72 per square
foot. The following summarizes the major lease transactions that took place
during the fourth quarter:
Enclosed Regional Mall Portfolio
* Prince George's Plaza - New leases were signed with Kingston
Restaurant, Dollar Plus, Day Spa & Salon, and Smart Attire totaling
17,430 square feet of formerly vacant space and six renewal leases for
9,424 square feet were executed.
* Palmer Park Mall - Champs Sports, Children's Place and Amateur Athlete
executed leases to occupy 11,057 square feet of formerly vacant space.
Strip and Power Center Portfolio
* Christiana Phase I - Pearle Vision executed a lease to occupy the
former T.S.I. Soccer premises. With this transaction the asset is 100%
leased.
* Northeast Tower Center - Dollar Tree signed a lease to occupy 8,694
square feet of formerly vacant space.
* Florence Commons - The Company secured a renewal and expansion of Rack
Room Shoes and renewed Goody's Family Clothing and American General
Finance.
Capital Resources
Edward Glickman, Chief Financial Officer of PREIT, commented, "A critical
objective for 2001 was reducing the Company's leverage so as to provide
greater financial flexibility for future acquisitions and development.
Because proceeds from the Company's July equity offering were used to reduce
debt, our ratio of total liabilities to gross asset value fell to 52.0% at
year-end 2001 from 56.7% at year end 2000. Also, due to the equity offering
and an increase in PREIT's share price, debt as a percentage of total
capitalization fell to 55.3% at the end of 2001 compared with 64.6% at the end
of 2000."
Mr. Glickman added, "During the 2002 first quarter we further augmented
our financing flexibility with the placement of Creekview Shopping Center in
our line of credit collateral pool. Similarly, we expect to add Paxton Towne
Centre to our line of credit during the second quarter of 2002. These
transactions are designed to provide the Company with enhanced borrowing
capacity."
As of December 31, 2001, the Company had approximately $100.2 million
outstanding under the $175 million revolving portion of its bank credit
facility.
Conference Call Information
The Company will conduct a conference call that will be broadcast
simultaneously over the Internet at 11:00 ET on Monday, March 11, 2002 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, http://www.ccbn.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 10.9 million square feet) and apartment communities
(approximately 7,242 units) located primarily in the eastern United States.
The Company's portfolio currently consists of 45 properties in 10 states. In
addition, there are 4 retail properties under development, which PREIT expects
will add approximately 1.3 million square feet to its portfolio. PREIT 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.
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,
2001 2000 2001 2000
Income before
minority interest
in operating
partner-
ship $7,465,000 $5,223,000 $22,313,000 $36,038,000
Less: - - (2,107,000)(1) (10,298,000)(2)
Add: Depreciation
and amortization:
Wholly owned &
consolidated
partnership,
net 4,745,000 (a) 4,928,000 (a) 17,974,000 (a) 15,661,000 (a)
Unconsolidated
partnerships &
joint
ven-
tures 1,484,000 1,448,000 6,472,000 4,683,000
Excess purchase
price over net
asset
acquired 106,000 73,000 423,000 291,000
Prepayment fee - - 255,000 (b) -
Less: Depreciation of
non-real estate
assets (65,000) (65,000) (260,000) (260,000)
Amortization of
deferred
financing
costs (104,000)(c) (145,000)(c) (371,000)(c) (271,000)(c)
FUNDS FROM
OPE-
RATIONS $13,631,000 (d) $11,462,000 (d)$44,699,000 (d) $45,844,000 (d)
FUNDS FROM
OPERATIONS PER
SHARE AND OP
UNITS $0.77 $0.75 $2.70 $3.06
Weighted
average number
shares
out-
standing 15,842,909 13,499,924 14,656,711 13,403,233
Weighted
average effect
of full
conversion of
OP units 1,945,223 1,679,924 1,869,383 1,573,028
Total weighted
average shares
of outstanding
including OP
units 17,788,132 15,179,848 16,526,094 14,976,261
(a) Amortization of deferred financing costs on the Company's Credit
facility was reclassified to interest expense.
(b) Prepayment fee for the refinancing of the mortgage on Countrywood
Apartments in Tampa, FL.
(c) Amortization of deferred financing costs for property mortgages. Does
not include amortization of amounts relating to the Company's Credit
Facility.
(d) Includes the non-cash effect of straight-line rents of $214,000 and
$598,000 for the 4th quarter 2001 and 2000
and $1,148,000 and $1,632,000 for year to date 2001 and 2000,
respectively.
Pennsylvania Real Estate Investment Trust
Selected Financial Data
OPERATING RESULTS Three Months Ended Twelve Months Ended
Dec 31, Dec 31, Dec 31, Dec 31,
2001 2000 2001 2000(3)
REAL ESTATE
REVENUES
Base rent $22,059,000 $20,739,000 $84,689,000 $80,161,000
Percent rent 1,005,000 910,000 1,787,000 1,477,000
Expense
reimbursement 2,694,000 2,448,000 10,215,000 8,743,000
Lease
termination 78,000 320,000 1,162,000 6,040,000
Other real
estate revenue 1,343,000 1,509,000 4,032,000 4,050,000
Total real estate
revenue 27,179,000 25,926,000 101,885,000 100,471,000
Management
company revenue 4,326,000 - 11,336,000 -
Interest and
other income 6,000 375,000 361,000 1,385,000
31,511,000 26,301,000 113,582,000 101,856,000
EXPENSES
Property payroll
and benefits 1,779,000 1,646,000 7,077,000 6,626,000
Real estate and
other taxes 1,971,000 1,861,000 7,750,000 7,210,000
Utilities 1,026,000 1,186,000 4,201,000 4,308,000
Other operating
expenses 3,982,000 4,330,000 14,374,000 14,531,000
Total property
operating
expenses 8,758,000 9,023,000 33,402,000 32,675,000
Depreciation and
amortization 4,745,000 4,928,000 17,974,000 15,661,000
Corporate payroll
and benefits 3,642,000 995,000 13,286,000 2,703,000
Other general and
administrative
expenses 3,490,000 578,000 10,291,000 2,250,000
Total general &
administrative
expenses 7,132,000 1,573,000 23,577,000 4,953,000
Interest expense 5,794,000 6,300,000 24,963,000 23,886,000
26,429,000 21,824,000 99,916,000 77,175,000
Income before equity
in unconsolidated
entities, gains on
sales of interests
in real estate and
minority interest in
operating
partnership 5,082,000 4,477,000 13,666,000 24,681,000
Equity in loss of
PREIT-RUBIN, Inc. - (1,286,000) - (6,307,000)
Equity in income
of partnerships
and joint
ventures 2,383,000 2,032,000 6,540,000 7,366,000
Gains on sales of
interests in real
estate - - 2,107,000(1) 10,298,000(2)
Income before minority
interest in operating
partnership 7,465,000 5,223,000 22,313,000 36,038,000
Minority interest
in operating
partnership (824,000) (604,000) (2,524,000) (3,784,000)
NET INCOME $6,641,000 $4,619,000 $19,789,000 $32,254,000
PER SHARE DATA
Net income before
gains on sales $0.42 $0.34 $1.21 $1.64
Gains on sales
interests in estate $0.00 $0.00 $0.14(1) $0.77(2)
BASIC INCOME PER
SHARE $0.42 $0.34 $1.35 $2.41
DILUTED INCOME PER
SHARE $0.42 $0.34 $1.35 $2.41
Weighted average
number shares
outstanding 15,842,909 13,499,924 14,656,711 13,403,233
(1) Year to date 2001 includes net gains on sales of land at Florence
Commons Shopping Center in Florence, SC, land at Paxton Towne
Centre, Harrisburg, PA and sale of interest in Ingleside Shopping
Center, Thorndale, PA.
(2) 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.
(3) Certain prior period amounts have been reclassified to conform with
the current period presentation.
Pennysylvania Real Estate Investment Trust
Selected Financial Data
EQUITY IN INCOME OF
PARTNERSHIPS AND Three Months Ended Twelve Months Ended
JOINT VENTURES Dec 31, Dec 31, Dec 31, Dec 31,
2001 2000 2001 2000(3)
Gross revenues from
real estate $26,477,000 $23,925,000 $94,272,000 $80,303,000
Expenses:
Property
operating
expenses 9,755,000 8,228,000 33,981,000 27,267,000
Mortgage and bank
loan
interest 7,888,000 7,327,000 30,229,000 25,477,000
Prepayment fee - - 510,000(a) -
Depreciation and
amortization 3,533,000 3,879,000 16,363,000 12,436,000
21,176,000 19,434,000 81,083,000 65,180,000
5,301,000 4,491,000 13,189,000 15,123,000
Partner's share (2,918,000) (2,459,000) (6,649,000) (7,757,000)
EQUITY IN INCOME OF
PARTNERSHIPS AND
JOINT VENTURES $2,383,000 $2,032,000 $6,540,000 $7,366,000
(a) Prepayment fee at 100% for the refinancing of the mortgage on
Countrywood Apartments in Tampa, FL.
Supplemental Information for Wholly Owned Properties
and the Company's Proportionate Share of Partnerships and Joint Ventures
EARNINGS BEFORE
INTEREST, TAXES,
DEPRECIATION AND
AMORTIZATIONS Three Months Ended Twelve Months Ended
("EBITDA") Dec 31, Dec 31, Dec 31, Dec 31,
2001 2000 2001 2000(3)
Gross
revenues $27,179,000 $25,926,000 $101,885,000 $100,471,000
Operating
expenses (8,758,000) (9,023,000) (33,402,000) (32,675,000)
Net operating
income: wholly-owned
properties 18,421,000 16,903,000 68,483,000 67,796,000
Company's
proportionate share
of partnerships and
joint ventures net
operating
income 6,666,000 6,051,000 23,913,000 21,101,000
Combined net
operating
income 25,087,000(2) 22,954,000(2) 92,396,000(2) 88,897,000(2)
Interest income 6,000 375,000 361,000 1,385,000
Company's proportionate
share of
PREIT-RUBIN, Inc.
net operating
income(loss) - (765,000) - (4,498,000)
Management company
revenue 4,326,000 - 11,336,000 -
Total general &
administrative
expenses (7,132,000)(1) (1,573,000) (23,577,000)(1) (4,953,000)
EBITDA $22,287,000 $20,991,000 $80,516,000 $80,831,000
(1) Total General & Administrative Expenses for 2001 includes PREIT-RUBIN,
Inc. expenses.
(2) Net operating income includes lease termination income of $77,000 and
$320,000 for the quarters ending December 31, 2001 and 2000
respectively, and $1,162,000 and $6,040,000 for the twelve-month
periods ending December 31, 2001 and 2000, respectively.
NOI in the twelve-month period ending December 31, 2000 also includes
recovery of receivables previously reserved of $285,000, received in
connection with a lease termination. Net operating income, net of
these amounts, is $25,010,000 and $22,634,000 for the quarters ended
December 31, 2001 and 2000, and $91,234,000 and $82,572,000 for the
twelve-month periods ended December 31, 2001 and 2000, respectively.
MORTGAGE NOTES, BANK AND CONSTRUCTION LOANS PAYABLE
Wholly-owned properties December 31, December 31,
2001 2000
Mortgage notes payable $257,873,000 $247,449,000
Bank loans payable 98,500,000 110,300,000
Construction loan payable 4,000,000 24,647,000
360,373,000 382,396,000
Company's proportionate share of
partnerships and joint ventures
Mortgage notes payable 145,803,000 111,457,000
Bank loans payable - 30,929,000
Total mortgage notes and bank loans
payable $506,176,000 $524,782,000
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,
+1-215-875-0700, or Joe Calabrese, General Info, +1-212-445-8434,
or Georganne Palffy, Analyst Info, +1-312-266-7800, or Judith
Sylk-Siegel, Media Info, +1-212-445-8431, all of FRB-Weber
Shandwick
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