SAN DIEGO, April 1 /PRNewswire-FirstCall/ --
Burnham Pacific Properties, Inc. (NYSE: BPP) today announced financial results
for the fourth quarter and year ended December 31, 2001. Net income available
to common stockholders for the fourth quarter of 2001 was $2,723,000, or
$0.08 per share, as compared to net income of $1,691,000, or $0.05 per share,
for the quarter ended December 31, 2000. For the year ended December 31,
2001, net income available to common stockholders was $13,173,000, or
$0.41 per share, as compared to a net loss of $41,245,000, or a loss of
$1.45 per share, for 2000.
The Company historically reported Funds From Operations ("FFO") because it
is generally accepted in the REIT industry as a meaningful supplemental
measure of performance. However, because the Company is liquidating, it no
longer believes that FFO is meaningful in understanding its performance and
therefore no longer reports FFO.
Review of Results
For the fourth quarter ended December 31, 2001, total revenues decreased
$17,990,000 to $11,910,000 from $29,900,000 in the fourth quarter of 2000.
This decrease was primarily attributable to asset sales completed since
September of 2000 under the Company's Plan of Complete Liquidation and
Dissolution. Net income available to common stockholders for the fourth
quarter of 2001 was $2,723,000, or $0.08 per share, as compared to net income
of $1,691,000, or $0.05 per share, for the fourth quarter of 2000.
The 2000 three-month period was favorably impacted by a net gain on sales
of real estate of $5,660,000. The 2000 three-month period was unfavorably
impacted by costs of $3,052,000 associated with the Company's pursuit of its
strategic alternatives and litigation and legal expenses of $1,852,000. In
addition, because of its adoption of the liquidation basis of accounting on
December 15, 2000, the Company did not record depreciation expense in 2001.
From October 1, 2000 through December 15, 2000, the Company recorded
depreciation and amortization expense of $4,914,000.
For the fiscal year ended December 31, 2001, revenues decreased
$56,973,000 to $64,237,000 from $121,210,000 in 2000. Rental revenues
decreased $57,006,000 primarily as a result of asset sales completed in
2000 and 2001. Management fee income decreased $768,000 as a result of the
termination of the Company's former joint venture with CalPERS. Interest and
other income increased $801,000 primarily as a result of the sale of historic
tax credits on the Company's 1000 Van Ness property. Net income available to
common stockholders for 2001 was $13,173,000, or $0.41 per share, compared to
a net loss of $41,245,000, or a loss of $1.45 per share, in 2000. The 2001
and 2000 periods were unfavorably impacted by litigation and legal expenses of
$885,000 and $5,465,000, respectively. Net income for 2000 was unfavorably
impacted by costs of $7,694,000 associated with the Company's pursuit of its
strategic alternatives, legal and litigation settlement expenses of
$3,902,000 related to a verdict against the Company in favor of a tenant, a
restructuring charge of $1,921,000 for severance and related costs for
employees affected by the termination of the Company's joint venture with
CalPERS, and an impairment write-off of $32,330,000 taken in connection with
the Company's plan to liquidate. The 2000 period was favorably impacted by a
net gain on sales of real estate of $6,886,000. In addition, because of its
adoption of the liquidation basis of accounting on December 15, 2000, the
Company did not record depreciation expense in 2001. In 2000, the Company
recorded depreciation and amortization expense of $24,874,000.
Liquidation Basis of Accounting
As a result of the adoption of the Plan of Liquidation and its approval by
the Company's stockholders, the Company adopted the liquidation basis of
accounting for all periods subsequent to December 15, 2000. Accordingly, on
December 16, 2000, assets were adjusted to estimated net realizable value and
liabilities were adjusted to estimated settlement amounts, including estimated
costs associated with carrying out the liquidation. The valuation of real
estate held for sale as of December 31, 2001 is based on current contracts,
estimates as determined by independent appraisals and other indications of
sales value, net of (i) estimated selling costs and (ii) anticipated capital
expenditures during the remaining liquidation period of approximately
$6,337,000. Actual values realized for assets and settlement of liabilities
may differ materially from the amounts estimated. Factors that may cause such
a variation include, among other factors, tenant financial difficulties, the
possibility that assets currently under contract may not be sold on the terms
currently provided in those contracts or at all, and the other risk factors
that were disclosed in the Company's Form 10-K filed with the Securities and
Exchange Commission on April 1, 2002.
Adjustments to Net Assets in Liquidation
The net adjustment at December 16, 2000, required to convert from the
going concern (historical cost) basis to the liquidation basis of accounting,
amounted to a negative adjustment to Net Assets in Liquidation of
$85,228,000, which is included in the Consolidated Statements of Changes in
Net Assets (liquidation basis) for the period December 16, 2000 to December
31, 2000. In 2001, the Company recorded an additional negative adjustment of
$10,458,000 to Net Assets in Liquidation. Significant increases (decreases)
in the carrying value of net assets are summarized (in thousands) as follows:
January 1, December 16,
2001 2000
through through
December 31 December 31
2001 2000
Increase to reflect estimated net realizable
values of certain real estate properties $60 $28,388
Deferral of appreciated gain on
real estate properties -- (15,584)
Recognition of deferred gain on sale
of certain properties 6,466 --
Decrease to reflect estimated net realizable
value of certain real estate properties (19,009) (56,004)
Write-off of other assets -- (21,802)
Increase (decrease) to reflect net
realizable value of investments in
Unconsolidated subsidiaries (916) 1,763
Deferral of appreciated gain on
investments in unconsolidated Subsidiaries -- (1,763)
Reserve for estimated costs during
the period of liquidation 2,321 (19,116)
Liquidation Preference on Series 2000-C
Preferred Stock and Preferred Units -- (6,000)
Write-off of deferred debt costs -- (364)
Effect on minority interest of adjustment
to liquidation basis 620 5,254
Adjustments to reflect the change in
Net Assets in Liquidation $(10,458) $(85,228)
The adjustments to reflect the change in Net Assets in Liquidation are
included in the Consolidated Statements of Changes in Net Assets in the
accompanying financial statements.
Adjustment to Deferred Gain on Real Estate Assets
Adjusting assets to estimated net realizable value resulted in the
write-up of certain real estate properties. The anticipated gains associated
with the write-up of these real estate properties have been deferred until
their sales. The amount of Deferred Gain on Real Estate Assets at December
31, 2000 was $17,347,000. During 2001, the Deferred Gain on Real Estate
Assets was adjusted as follows:
Deferred Gain at December 31, 2000 $17,347,000
Deferred Gain recognized upon sale (6,466,000)
Reduction in property valuations (5,062,000)
Decrease in Deferred Gain (11,528,000)
Deferred Gain at December 31, 2001 $5,819,000
Net Assets in Liquidation
Net Assets in Liquidation at December 31, 2001 of $135,860,000, or
$4.14 per share, does not include the Deferred Gain on Real Estate Assets of
$5,819,000, or $0.18 per share, as the recognition of these amounts has been
deferred until their sales. Additionally, Net Assets in Liquidation at
December 31, 2001 does not include future net operating income or loss during
the period of liquidation. The aggregate amount of liquidation distributions
made since the adoption of the Plan of Liquidation by the Company's Board of
Directors in August 2000 through December 31, 2001 is $1.45 per share and per
common unit. The valuation of Net Assets in Liquidation is based on estimates
as of December 31, 2001, and the actual values realized for assets and
settlement of liabilities may differ materially from the amounts estimated.
Dispositions
Since the adoption of the Plan of Liquidation by the Company's Board of
Directors in August 2000 through March 26, 2002, the Company has disposed of
52 properties and two parcels of undeveloped land for aggregate proceeds of
approximately $843,416,000, consisting of approximately $508,557,000 in cash,
2,512,778 shares of common stock of Developers Diversified Realty Corporation
("DDR") valued at $20.21 per share (the value of a share of DDR common stock
as of the close of business on the closing date of the sale by the Company of
two properties to DDR), and the assumption of approximately $284,076,000 of
liabilities. The Company applied approximately $126,000,000 of the cash
proceeds to redeem all of the Company's outstanding preferred equity,
approximately $2,578,000 to redeem units of limited partnership interests in
conjunction with the sale of certain assets, and approximately $243,255,000 to
further reduce the Company's outstanding indebtedness. To date, the Company
has also made liquidating distributions to its common stockholders and the
holders of common units of limited partnership interests in its subsidiaries
of approximately $73,591,000 in cash ($2.20 per share and common unit) and has
distributed all of the shares of DDR common stock at a ratio of 0.07525 of a
share of DDR common stock for each share of the Company's common stock and
each common unit. The remainder of the net proceeds (excluding current cash
reserves) was used for capital improvements in development projects, tenant
improvements and leasing commissions, litigation costs, severance and other
liquidation costs, and the repayment of other obligations. The aggregate
amount of liquidating distributions made to date, using the value of the DDR
common stock of $20.21 per share, is $3.72 per share and common unit.
As of April 1, 2002, the Company owned seven properties, all of which are
located in California. The Company currently expects that not later than the
end of the second quarter of 2002 any then remaining assets (which may include
direct or indirect interests in real property) and liabilities will be
transferred to a liquidating trust, although there can be no assurance in this
regard. At that time, certificates representing outstanding shares of our
common stock will be automatically deemed to evidence ownership of beneficial
interests in the liquidating trust. Beneficial interests in the liquidating
trust will be non-certificated and non-transferable, except by will, intestate
succession or operation of law. As a result, the beneficial interests in the
liquidating trust will not be listed on any securities exchange.
Prior to transferring the Company's remaining assets and liabilities to a
liquidating trust, the Company will make a public announcement indicating,
among other things, the date on which the transfer is expected to occur, the
identity (if known at that time) of one or more trustees that will oversee the
sale of any remaining real property and the distribution of the remaining cash
and net proceeds, and a summary of the rights of holders of beneficial
interests in the liquidating trust. The Company expects that such notice will
precede any transfer to a liquidating trust by approximately sixty (60) days.
This press release contains forward-looking statements that predict or
indicate future events or trends or that do not relate to historical matters.
There are a number of important factors that could cause actual events to
differ materially from those indicated by such forward-looking statements.
These factors include, but are not limited to, the following: we may be
unsuccessful in implementing our liquidation strategy or forming a liquidating
trust as currently anticipated; we may not be able to complete the liquidation
in a timely manner or realize proceeds from the sales of assets in amounts
that will enable us to provide currently anticipated liquidating distributions
to our stockholders; our reserves and insurance may not be sufficient to
satisfy all liabilities and indemnification obligations that may arise after
the sale of our assets; we may encounter increased difficulty in collecting
accounts receivable associated with the properties that we sell; and occupancy
rates and market rents may be adversely affected by economic and market
conditions which are beyond our control, including imbalances in supply and
demand for retail shopping center space and the financial condition of our
tenants.
You should also read the risk factors that are discussed in the Company's
periodic reports filed with the Securities and Exchange Commission, including
the risk factors that were disclosed in our Form 10-K which was filed with the
SEC on April 1, 2002. You should be aware that the risk factors contained in
that Form 10-K may not be exhaustive. Therefore, we recommend that you read
the information in that Form 10-K 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 and Proxy Statements, which may supplement, modify, supersede or
update those risk factors.
BURNHAM PACIFIC PROPERTIES, INC.
CONSOLIDATED STATEMENT OF NET ASSETS AS OF DECEMBER 31, 2001 AND 2000
(LIQUIDATION BASIS)
(in thousands)
2001 2000
ASSETS
Real Estate Held for Sale $212,274 $743,527
Cash and Cash Equivalents 75,122 5,110
Restricted Cash 8,816 9,004
Receivables-Net 7,796 8,467
Investment in Unconsolidated Subsidiaries 1,886 5,131
Other Assets 1,270 1,993
Total 307,164 773,232
LIABILITIES
Accounts Payable and Other Liabilities 6,108 21,235
Liquidating Distributions Payable 41,731 --
Deposits for Property Sales 6,593 --
Tenant Security Deposits 715 2,246
Notes Payable 102,204 349,237
Line of Credit Advances -- 51,267
Reserve for Estimated Costs During
the Period of Liquidation 5,709 19,116
Deferred Gain on Real Estate Assets 5,819 17,347
Total Liabilities 168,879 460,448
Minority Interest 2,425 19,837
Mandatorily Redeemable Series 2000-C
Convertible Preferred Stock -- 115,500
NET ASSETS IN LIQUIDATION $135,860 $177,447
CONSOLIDATED STATEMENTS OF INCOME (LOSS)
(In thousands, except per-share amounts)
Quarter Ended Year to Date
12/31/2001 12/31/2000 12/31/2001 12/31/2000
Revenues
Rents $11,692 $30,171 $62,442 $119,448
Fee Income -- (35) -- 768
Interest and
Other Income 218 (236) 1,795 994
Total Revenues 11,910 29,900 64,237 121,210
Costs and Expenses
Interest 2,085 10,804 15,707 42,823
Rental Operating 4,713 9,129 22,244 35,345
Provision for Bad Debt 738 1,044 2,835 1,829
General &
Administrative 1,448 897 6,324 8,906
Restructuring Charge -- (223) -- 1,921
Litigation and Legal 151 1,852 885 5,465
Costs Associated
with Unsolicited
Proposal and Pursuit
of Strategic
Alternatives -- 3,052 -- 7,694
Impairment Write-Off -- -- -- 32,330
Depreciation &
Amortization -- 4,914 -- 24,874
Total Costs and
Expenses 9,135 31,469 47,995 161,187
Income from Operations
before Income from
Unconsolidated
Subsidiaries,
Minority Interest,
and Gain on Sales
of Real Estate 2,775 (1,569) 16,242 (39,977)
Income from
Unconsolidated
Subsidiaries -- 1 -- 100
Minority Interest (52) (201) (820) (1,587)
Gain on Sales of
Real Estate -- 5,660 -- 6,886
Net Income (Loss) 2,723 3,891 15,422 (34,578)
Dividends Paid to
Preferred Stockholders -- (2,200) (2,249) (6,667)
Income (Loss)
Available to
Common Stockholders $2,723 $1,691 $13,173 $(41,245)
Basic and Diluted
Earnings Per Share $0.08 $0.05 $0.41 $(1.45)
Weighted Average
Shares
Outstanding 32,450,000 32,336,000 32,450,000 32,336,000
SOURCE Burnham Pacific Properties, Inc.
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Related links:
http://www.burnhampacific.com
CONTACT:
Daniel B. Platt, Chief Financial Officer of
Burnham Pacific Properties, Inc., +1-619-652-4700, or fax,
+1-619-652-4711, dbplatt@bpac.com
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