PHILADELPHIA, May 13 /PRNewswire/ -- Pennsylvania Real Estate Investment
Trust (NYSE: PEI) announced today the results of its operations for the first
quarter ended March 31, 1999.
First Quarter Highlights
-- Increased FFO by 12.5% to $0.63 per share on 14.6 million shares/OP
units outstanding from $0.56 per share on 13.9 million shares/OP units
outstanding during the first quarter of 1998
-- Funds from operations for the quarter increased 18.2% to $9.2 million
from $7.7 million in 1998
-- Increased combined net operating income 41.2% to $18.3 million from
$13.0 million in 1998
-- Retail net operating income increased 68.7% from the 1998 first
quarter
-- Multifamily net operating income grew 17.8% from the 1998 first
quarter
-- Acquired an interest in Creekview shopping center, a 64-acre power
center site in Warrington, Pa.
First Quarter Results
Funds from operations (FFO) for the three months ended March 31, 1999
totaled $9,155,000, an 18.2% increase over FFO of $7,744,000 for the
comparable three-month period ended March 31, 1998. The growth was driven by
acquisitions and development projects completed in 1998 and improved operating
results in the Company's portfolio. First quarter FFO was $0.63 per share on
14,582,000 weighted average share equivalents outstanding (including Operating
Partnership [OP] units), compared to $0.56 per share on 13,938,000 weighted
average share equivalents for the three months ended March 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 from wholly-owned properties and the Company's
proportionate share of partnerships and joint venture properties increased
41.2% to $18,316,000 for the three months ended March 31, 1999, from
$12,971,000 for the three months ended March 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 March 31, 1999 was $5,870,000, or
$0.44 per basic share, on total weighted average shares outstanding of
13,309,000 compared to $4,593,000, or $0.35 per basic share, on 13,292,000
total weighted average shares outstanding for the three months ended March 31,
1998. Net income for the 1999 period included gains on sales of 135 Commerce
Drive, Fort Washington, Pa. and a land parcel at Crest Plaza, Allentown, Pa.,
totaling $1,346,000 or $0.10 per share.
Comments from Management
Ronald Rubin, Chief Executive Officer of PREIT, said, "We continue to be
pleased with our operating results, demonstrating the integration of several
accretive acquisitions over the past year, the recent completion of two
development projects and strong internal growth. During the 1999 first
quarter we achieved double digit increases in FFO, combined net operating
income as well as solid performance from our multifamily portfolio, reflecting
the effectiveness of our long-term growth strategies."
Mr. Rubin continued, "Our primary focus in early 1999 is maintaining the
growth of our development pipeline, and obtaining adequate funding for such
purpose."
Same Store NOI Growth Continues -- Multifamily & Shopping Center
Portfolios
Same store net operating income for the Company's portfolio of multifamily
properties increased 4.7% over the first quarter of 1998, primarily driven by
an increase in revenues and improved occupancy. Same store net operating
income for the first quarter of 1999 for the Company's shopping center
portfolio increased by 0.5% over the comparable quarter. The Company's same
store analysis of the retail portfolio is negatively impacted by the Company's
revised policy of not accruing percentage rental income until all
contingencies have been removed (consistent with the Emerging Issues Task
Force (EITF) 98-9). This policy causes some percentage rental income to be
recognized later in the calendar year when compared with the policy in effect
in the first quarter of 1998.
Portfolio Highlights
-- Creekview (Warrington, Pa.) -- PREIT announced that it acquired a
64-acre power center site in conjunction with the center's two major
tenants, Target and Lowe's. Ownership of the 387,000 square foot shopping
center is in the form of a retail condominium in which PREIT, Target and
Lowe's own 100% of the condominium. PREIT, whose share of the purchase
price was $1.3 million, plans to develop 100,000 square feet of stores
complementary to Target and Lowe's at a total cost of approximately $10
million.
-- Development Pipeline -- During the second quarter, the Company
expects construction will commence on two retail development projects,
Paxton Towne Center (582,000 square feet) in Harrisburg, Pa. and Blue
Route Metroplex (760,000 square feet) in Plymouth Meeting, Pa. Funding
for these projects is expected to come from the Company's line of credit
and construction financing.
-- Dispositions -- The Company sold a non-core asset from its
industrial portfolio (135 Commerce Drive in Fort Washington, Pa.) to the
property's tenant and a surplus land parcel at Crest Plaza in Allentown,
Pa. for total capital gains of $1,346,000, or $0.10 per share.
Jonathan B. Weller, President and Chief Operating Officer of PREIT,
commented, "We remain highly committed to our development efforts, providing
PREIT with opportunities to leverage its development expertise while offering
the potential for FFO growth. Currently, PREIT's development and
redevelopment pipeline includes five power centers, three strip centers and
one enclosed mall," Mr. Weller added. "Consistent with the Company's strategy
of selling non-core assets, PREIT sold one of its industrial properties as
well as a surplus land parcel at Crest Plaza during the quarter. Looking
forward, we will continue to prune our portfolio by selling properties that do
not meet PREIT's long-term ownership criteria."
Benefits of New Long-Term Financing
As previously announced in April, PREIT closed on the financing of eight
multifamily communities with $108 million of permanent, fixed-rate, long-term
debt. With the financing, PREIT replaced short-term floating rate debt with
mortgage debt with a 10 year maturity and a weighted average interest cost of
6.77%. A portion of the proceeds from the transaction were used to pay off a
short-term, floating rate loan of $17 million, which was secured by the
recently acquired Northeast Tower Center in Philadelphia, Pa. The balance of
the proceeds, approximately $88 million, was used to pay down the Company's
line of credit. After the paydown, approximately $60 million was outstanding
under the Company's line of credit.
Edward Glickman, Chief Financial Officer of PREIT, added, "To position
PREIT for future growth, we recently took steps to strengthen our financial
resources and our capability to continue building our portfolio. Importantly,
the proceeds from the $108 million long-term financing provide the Company
with additional financial flexibility to facilitate its 1999 development
projects and other high value-added opportunities. We are confident of the
Company's prospects for continued profitable growth."
Quarterly Dividend Declared
The Company declared a quarterly dividend of $0.47 per share payable on
June 15, 1999 to shareholders and unitholders of record as of May 28, 1999.
The June 15, 1999 dividend payment will be PREIT's 89th 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 (8.0 million square feet) and apartment communities (7,241 units)
located primarily in the eastern United States. The Company's portfolio
currently consists of interests in 47 properties in 10 states. In addition,
there are 5 retail properties under development. Pennsylvania Real Estate
Investment Trust is headquartered in Philadelphia, Pa.
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 and 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.
Pennsylvania Real Estate Investment Trust
Selected Financial Data
Three Months Ended
March 31, 1999 March 31, 1998
Income before minority interest
in operating partnership $6,432,000 $4,817,000
Less: Gains on sales of interests
in real estate (1,346,000) -
Add: Wholly owned & consolidated
partnership, net 3,156,000 2,088,000
Unconsolidated partnerships
& joint ventures 1,059,000 998,000
Excess purchase price over
net asset acquired 53,000 29,000
Less: Depreciation of non-real
estate assets (60,000) (58,000)
Amortization of deferred
financing assets (139,000) (130,000)
FUNDS FROM OPERATIONS $9,155,000(A) $7,744,000(A)
FUNDS FROM OPERATIONS PER
SHARE AND OP UNITS $0.63 $0.56
Weighted average number
of shares outstanding 13,309,000 13,292,000
Weighted average effect of
full conversion of OP units 1,273,000 646,000
Total weighted average shares
of outstanding including OP units 14,582,000 13,938,000
(A) Includes the non-cash effect of straight-line rent of $295,000 and
$225,000 for the 1st quarter of 1999 and 1998, respectively.
OPERATING RESULTS
Three Months Ended
March 31, 1999 March 31, 1998
REVENUES
Gross revenues from real estate $21,100,000 $13,526,000
Interest and other income 163,000 121,000
21,263,000 13,647,000
EXPENSES
Property operating expenses 7,377,000 5,093,000
Depreciation and amortization 3,216,000 2,138,000
General & administrative expenses 853,000 738,000
Interest expense 5,105,000 1,978,000
16,551,000 9,947,000
Income before equity in
unconsolidated entities,
gains on sales of interests
in real estate and minority
interest in operating partnership 4,712,000 3,700,000
Equity in loss of PREIT-RUBIN, Inc. (1,092,000) (358,000)
Equity in income of partnerships
and joint ventures 1,466,000 1,475,000
Gains on sales of interests
in real estate (B) 1,346,000 -
Income before minority interest
in operating partnership 6,432,000 4,817,000
Minority interest in
operating partnership (562,000) (224,000)
NET INCOME $5,870,000 $4,593,000
PER SHARE DATA
Net income before gains on
sales of interests in real estate $0.34 $0.35
Gains on sales of interests
in real estate 0.10 -
BASIC INCOME PER SHARE $0.44 $0.35
DILUTED INCOME PER SHARE $0.44 $0.34
Weighted average number of
shares outstanding 13,309,000 13,292,000
(B) Gains on sales of 135 Commerce Drive, Fort Washington, Pa. and land
parcel at Crest Plaza, Allentown, Pa.
EQUITY IN INCOME OF PARTNERSHIPS
AND JOINT VENTURES
Three Months Ended
March 31, 1999 March 31, 1998
Gross revenues from real estate $14,158,000 $14,737,000
Expenses:
Property operating expenses 4,852,000 5,403,000
Mortgage and bank loan interest 4,188,000 4,233,000
Depreciation and amortization 2,154,000 2,071,000
11,194,000 11,707,000
2,964,000 3,030,000
Partner's Share (1,498,000) (1,555,000)
EQUITY IN INCOME OF PARTNERSHIPS
AND JOINT VENTURES $1,466,000 $ 1,475,000
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, 1999 March 31, 1998
Gross Revenues $21,100,000 $13,526,000
Operating expenses (7,377,000) (5,093,000)
Net operating income: Wholly-owned
properties 13,723,000 8,433,000
Company's proportionate share
of partnerships and joint ventures
net operating income 4,593,000 4,538,000
Combined net operating income 18,316,000 12,971,000
Interest income 163,000 121,000
Company's proportionate share
of PREIT-RUBIN, Inc. net operating loss (800,000) (221,000)
General and administrative expenses (853,000) (738,000)
EBITDA $16,826,000 $12,133,000
MORTGAGE NOTES AND BANK LOANS PAYABLE
Wholly-Owned Properties
Mortgage notes payable $166,274,000 $65,121,000
Bank Loans payable 142,973,000 49,526,000
309,247,000 114,647,000
Company's Proportionate Share of
Partnerships and Joint Ventures
Mortgage notes payable 108,861,000 102,704,000
Bank loans payable 2,482,000 4,154,000
Total mortgage notes and bank
loans payable $420,590,000 $221,505,000
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; or General, Joe Calabrese, Analyst, Pamela King, or
Media, Judith Sylk-Siegel, 212-661-8030, all of The Financial
Relations Board
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