PHILADELPHIA, May 9 /PRNewswire/ -- Pennsylvania Real Estate Investment
Trust (NYSE: PEI) today announced results for the first quarter ended
March 31, 2001 in line with the Company's recent guidance. The Company also
reaffirmed three strategic goals and initiatives that will drive its growth in
2001.
2001 First Quarter Highlights
- FFO for the first quarter of 2001 increased 3.7% to $9.9 million from
$9.5 million in the 2000 first quarter.
- FFO per share for the first quarter of 2001 remained unchanged from the
first quarter of 2000 at $0.64 per share on a 3.7% increase in total
weighted average shares of beneficial interest/Operating Partnership
units (collectively, shares). Shares increased to 15.4 million during
the first quarter 2001 from 14.9 million shares during the first
quarter of 2000.
- Combined net operating income increased 9.7% to $21.9 million from
$20.0 million in the 2000 first quarter.
- Same store net operating income for the Company's shopping center
portfolio increased 7.1% from the 2000 first quarter.
First Quarter Results
For the first quarter ended March 31, 2001 the Company's funds from
operations (FFO) totaled $9,881,000, a 3.7% increase over FFO of $9,524,000
for the comparable three-month period in 2000. This increase is due to the
completion of development projects and improved performance in the Company's
retail portfolio. First quarter 2001 FFO was $0.64 per share on 15,429,713
weighted average shares compared to $0.64 per share on 14,880,708 weighted
average shares for the three months ended March 31, 2000. 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 from wholly-owned properties and the Company's
proportionate share of partnerships and joint venture properties totaled
$21,911,000 for the 2001 first quarter, an increase of 9.7% from $19,980,000
in the 2000 first quarter. This increase is due to the completion of
development projects and improved performance in the Company's retail
portfolio.
Net income for the first quarter ended March 31, 2001 was $5,092,000, or
$0.37 per share, on 13,668,943 total weighted average shares outstanding
compared to $6,389,000 or $0.48 per share, on 13,339,873 total weighted
average shares outstanding for the three months ended March 31, 2000, due to
increased interest expense and increases in non-cash depreciation and
amortization. Net income in the first quarter of 2001 included a gain on the
sale of Ingleside Shopping Center in Thorndale, PA totaling $1.8 million or
$0.13 per share. Net income in the first quarter of 2000 included the gain on
the sale of the Company's interest in Park Plaza shopping center in Pinellas
Park, Florida totaling $2.3 million or $0.17 per share.
Effective January 1, 2001, the Company, in response to new tax law
provisions, converted its management company, PREIT-RUBIN, Inc. to a wholly-
owned taxable REIT subsidiary. For financial reporting purposes PREIT-RUBIN is
no longer accounted for as an unconsolidated entity and the Company's
financial results, beginning with the first quarter of 2001, reflects the
consolidation of PREIT-RUBIN into the Company.
Same Store NOI Growth -- Retail and Multifamily Portfolios
Same store net operating income for the Company's retail portfolio
increased 7.1% over the 2000 first quarter. Contributing in part to the
Company's strong retail portfolio net operating income growth was the
successful completion of 44 new and renewal leases representing 275,000 square
feet. The renewal leases were renewed at an average rent of $23.68, which was
22.1% higher than the previous rent. Additionally, occupancy rates in the 2001
first quarter averaged 91.5%, 160 basis points higher than 89.9% reported in
the 2000 first quarter. The Company also reported that sales at its mall
properties increased 6.7% to $382 per square foot for the trailing twelve
months from $358 per square foot for the comparable period.
Same store net operating income for the Company's portfolio of multifamily
properties increased 0.8% over the comparable quarter in 2000. During the 2001
first quarter the Company's multifamily revenues increased 3.6%. This growth
was negatively impacted by a 9.7% increase, excluding real estate taxes, in
operating expenses due primarily to a 17.8% increase in utility expenses,
including higher costs for gas and oil, and a 44% increase in insurance costs
over 2000. While the Company expects that it will continue to be impacted by
higher energy and insurance costs through the balance of the year, management
is stringently managing expenses and is examining, based on market conditions,
passing additional energy costs along to the tenant. The Company also noted
that occupancy rates decreased slightly in the 2001 first quarter to 95.6%
from 96.0% as of the 2000 first quarter.
Portfolio Composition
The Company ended the 2001 first quarter with investment in real estate of
$807.3 million, a net increase of $3.7 million over 2000's year-end level of
$803.6 million. As a result, on a cost basis, the Company's portfolio is now
34.6% multifamily, 59.0% retail, 6.1% retail development and 0.3% industrial.
Comments from Management
Ronald Rubin, Chief Executive Officer of PREIT said, "Our results this
quarter continue to be solid, reflecting the effectiveness of our retail
development, asset management programs and conservative investment philosophy
emphasizing transactions structured to protect return on investment. We remain
confident that our current development pipeline and the growing number of
quality properties in our portfolio underscore the enhanced value we are
committed to building for PREIT and its shareholders. Throughout the
remainder of the year we plan to maintain our focus on enhancing this value
and will pursue other strategic opportunities that may arise."
Strategic Update
Jonathan B. Weller, PREIT's President and Chief Operating Officer
commented, "Our retail development and redevelopment activities continue to
be the key drivers of the Company's growth. We expect to maintain this
momentum throughout 2001 and beyond, where our focus will be to expedite
construction and leasing activities at retail properties currently under
development while attaining strong performance in the Company's core portfolio
through strategic redevelopment, renovation and retenanting efforts.
Additionally, we continue to stringently manage our business to achieve
economies of scale and capitalize on operating efficiencies throughout our
entire portfolio."
PREIT is pursuing a broad range of internal and external growth strategies
in its primary markets and is focused on three strategic goals and initiatives
during 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 March 31, 2001 the
Company's construction in progress amounted to $49.2 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
$110 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 Second Quarter and Fiscal Year Forecast
The Company noted that it is currently estimating FFO to be approximately
$0.66 to $0.68 for the second quarter ending June 30, 2001 and $2.85 to
$2.90 per share for the calendar year ending December 31, 2001.
Development Pipeline
- Creekview Shopping Center (Warrington, PA) -- Construction of the
422,102 square foot shopping center is 61% complete as of
March 31, 2001 and the center is 93% leased.
- Metroplex Shopping Center (Plymouth Meeting, PA) -- Construction of
the 788,187 square foot power center is 89% complete as of
March 31, 2001 and the center is 95% leased. During the first quarter
several stores opened, including Giant Supermarkets, Designer Shoe
Warehouse, Gap/Gap Kids and David's Bridal.
- Paxton Towne Centre (Harrisburg, PA) -- Construction of the
711,471 square foot power center is 83% complete as of March 31, 2001
and the center is 90% leased. During the first quarter several stores
opened, including Dress Barn and David's Bridal.
Disposition
The Company also announced that after the close of the first quarter it
sold to Costco Wholesale a parcel of land at its Paxton Towne Centre property
for $6.3 million. Costco is expected to build a 140,000 square foot store on
the site. Net proceeds will be used to reduce debt.
During the 2001 first quarter, the Company sold a non-core property,
Ingleside Shopping Center in Thorndale, PA, for total proceeds of $3.6 million
and recorded a gain of $1.8 million, a portion of which was structured to
facilitate a 1031 exchange.
Capital Resources
As of March 31, 2001, the Company had approximately $100.5 million and
$5.6 million in letters of credit outstanding under the $175 million revolving
portion of its bank credit facility.
Edward Glickman, Chief Financial Officer of PREIT, added, "Our investment
strategy continues to be focused on opportunistically developing and acquiring
quality retail properties at attractive yields and prices, while selectively
selling non-core and stabilized assets for a high return on our original
investment and reinvesting the proceeds. With the $250 million combined
revolving credit and construction facility in place, the Company has ample
capital to fund its development pipeline in 2001."
Conference Call Information
The Company will conduct a conference call that will be broadcast
simultaneously over the Internet at 11:00 ET on Wednesday, May 9, 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.streetevents.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
March 31, 2001 March 31, 2000
Income before minority interest in
operating partnership $5,748,000 $7,129,000
Less: Gains on sales of interests in
real estate (1,806,000) (2,263,000)
Add: Depreciation and amortization:
Wholly owned & consolidated
partnership, net 4,570,000 3,710,000
Unconsolidated partnerships &
joint ventures 1,603,000 1,122,000
Excess purchase price over net
asset acquired 106,000 54,000
Less: Depreciation of non-real estate
assets (65,000) (65,000)
Amortization of deferred
financing assets (275,000) (163,000)
FUNDS FROM OPERATIONS $9,881,000 (A) $9,524,000 (A)
FUNDS FROM OPERATIONS PER SHARE AND
OP UNITS $0.64 $0.64
Weighted average number shares
outstanding 13,668,943 13,339,873
Weighted average effect of full
conversion of OP units 1,760,770 1,540,835
Total weighted average shares of
outstanding including OP units 15,429,713 14,880,708
(A) Includes the non-cash effect of straight-line rents of $247,000 and
$296,000 for the 1st quarter 2001 and 2000, respectively.
OPERATING RESULTS
Three Months Ended
March 31, 2001 March 31, 2000
REAL ESTATE REVENUES
Base Rent $20,563,000 $19,886,000
Percent Rent 333,000 277,000
Expense Reimbursement 2,796,000 2,205,000
Lease Termination and Other Income 129,000 80,000
Other Real Estate Revenue 862,000 774,000
Total Real Estate Revenue 24,683,000 23,222,000
Management company revenue 2,152,000 -
Interest and other income 161,000 230,000
26,996,000 23,452,000
EXPENSES
Property Payroll and benefits 1,779,000 1,765,000
Real Estate and Other Taxes 1,915,000 1,753,000
Utilities 1,243,000 1,158,000
Other Operating Expenses 3,431,000 3,504,000
Total Property Operating Expenses 8,368,000 8,180,000
Depreciation and amortization 4,570,000 3,710,000
Corporate payroll and benefits 3,218,000 459,000
Other general and administrative
expenses 1,982,000 576,000
Total General & Administrative
Expenses 5,200,000 1,035,000
Interest expense 6,360,000 5,844,000
24,498,000 18,769,000
Income before equity in
unconsolidated entities,
gains on sales of interests in
real estate and
minority interest in operating
partnership 2,498,000 4,683,000
Equity in loss of PREIT-RUBIN, Inc. - (1,489,000)
Equity in income of partnerships and
joint ventures 1,444,000 1,672,000
Gains on sales of interests in real
estate 1,806,000 (A) 2,263,000 (B)
Income before minority interest in
operating partnership 5,748,000 7,129,000
Minority interest in operating
partnership (656,000) (740,000)
NET INCOME $5,092,000 $6,389,000
PER SHARE DATA
Net income before gains on sales of
interests in real estate $0.24 $0.31
Gains on sales of interests in real
estate $0.13 (A) 0.17 (B)
BASIC INCOME PER SHARE $0.37 $0.48
DILUTED INCOME PER SHARE $0.37 $0.48
Weighted average number shares
outstanding 13,668,943 13,339,873
(A) 2001 includes a gain on sale of Ingleside Shopping Center, Thorndale,
PA.
(B) 2000 includes a gain on sale of 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
March 31, 2001 March 31, 2000
Gross revenues from real estate $22,422,000 $16,423,000
Expenses:
Property operating expenses 7,985,000 5,468,000
Mortgage and bank loan interest 6,953,000 5,113,000
Depreciation and amortization 4,183,000 2,531,000
19,121,000 13,112,000
3,301,000 3,311,000
Partner's Share (1,677,000) (1,639,000)
EQUITY IN INCOME OF PARTNERSHIPS
AND JOINT VENTURES $1,624,000 $1,672,000
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
March 31, 2001 March 31, 2000
Gross Revenues $24,683,000 $23,222,000
Operating expenses (8,368,000) (8,180,000)
Net operating income: Wholly-owned
properties 16,315,000 15,042,000
Company's proportionate share of
partnerships and
joint ventures net operating income 5,596,000 4,938,000
Combined net operating income 21,911,000 19,980,000
Interest income 161,000 230,000
Company's proportionate share of
PREIT-RUBIN, Inc.
net operating income (loss) (1,129,000)
Management company revenue 2,152,000
Total General & Administrative
Expenses (5,200,000)(A) (1,035,000)
EBITDA $16,872,000 $18,046,000
MORTGAGE NOTES, BANK AND CONSTRUCTION
LOANS PAYABLE March 31, 2001 December 31, 2000
Wholly-Owned Properties
Mortgage notes payable $261,368,000 $247,449,000
Bank Loans payable 100,500,000 110,300,000
Construction Loan Payable 28,119,000 24,647,000
389,987,000 382,396,000
Company's Proportionate Share of
Partnerships and Joint Ventures
Mortgage notes payable 110,395,000 111,457,000
Bank loans payable 30,611,000 30,929,000
Total mortgage notes and bank loans
payable $530,993,000 $524,782,000
(A) Total General & Administrative Expenses for 2001 includes PREIT-RUBIN,
Inc. expenses.
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, or General, Joe Calabrese, 212-661-8030, Analysts,
Georganne Palffy, 312-266-7800, or Media, Judith Sylk-Siegel, of
The Financial Relations Board BSMG Worldwide, 212-661-8030
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