PHILADELPHIA, Aug. 9 /PRNewswire/ -- Pennsylvania Real Estate Investment
Trust (NYSE: PEI) announced today the results of its operations for the second
quarter and six months ended June 30, 2000.
2000 Second Quarter Highlights
-- 2000 second quarter FFO per share, including non-recurring lease
termination fees, increased 52% to $1.00 per share on 14.9 million
shares of beneficial interest/ Operating Partnership units
(collectively shares) outstanding from $0.66 per share on 14.6 million
shares during the second quarter of 1999.
-- Excluding non-recurring items, FFO for 2000 second quarter was $0.67
per share compared with $0.66 per share for the second quarter of 1999.
-- Increased combined net operating income, including non-recurring lease
termination fees, by 37% to $25.8 million from $18.9 million in the
1999 second quarter.
-- Same store multifamily net operating income increased 4.0% from the
1999 second quarter.
-- Same store retail net operating income, excluding non-recurring
lease termination fees, increased 6.0% from the 1999 second quarter.
Second Quarter Results
For the quarter ended June 30, 2000 the Company's funds from operations
(FFO) were $14,880,000, or $1.00 per share. FFO was positively impacted by
non-recurring lease termination fees of approximately $5.6 million, or $0.38
per share. These fees were received for the termination of the CVS building
lease in Alexandria, VA, the Northeast Tower General Cinema lease in
Philadelphia, PA and the Mandarin Corners Upton's lease in Jacksonville, FL.
These fees were recorded as income in accordance with Generally Accepted
Accounting Principles.
Excluding the impact of non-recurring items (lease termination fees and
two unusual items described below), FFO for the 2000 second quarter totaled
$9,965,000, or $0.67 per share, on 14,920,132 weighted average shares
outstanding, a 3.6% increase over FFO of $9,621,000, or $0.66 per share, on
14,635,633 weighted average shares for the three months ended June 30, 1999.
As a result of the termination of plans to develop a power center in
Philadelphia, PA, the Company recorded a charge of $370,000, or $0.03 per
share, in its management and development affiliate, PREIT-RUBIN, Inc.
Additionally during the 2000 second quarter the Company recorded an additional
charge of approximately $330,000, or $0.02 per share, for prior services
rendered under the terms of an employment agreement. Combined, these charges
reduced FFO for the second quarter ended June 30, 2000 by $700,000, or $0.05
per share.
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, including non-recurring lease termination fees, from
wholly-owned properties and the Company's proportionate share of partnerships
and joint venture properties totaled $25,803,000 before depreciation for the
three months ended June 30, 2000. Excluding the non-recurring lease
termination fees, net operating income for the 2000 second quarter increased
6% to $20,038,000 from $18,852,000 for the three months ended June 30, 1999.
The increase is mainly due to acquisitions and development projects completed
in 1999 and improved operating results in the Company's portfolio.
Net income for the three months ended June 30, 2000 was $15,083,000, or
$1.13 per share, on total weighted average shares outstanding of 13,384,774
compared to $4,918,000 or $0.37 per share, on 13,314,945 total weighted
average shares outstanding for the three months ended June 30, 1999. Net
income for the second quarter ended June 30, 2000 includes a gain on the sale
of the CVS Building in Alexandria, VA totaling $6.6 million, or $0.50 per
share, and the lease termination fees noted above.
Six Months Results
FFO for the six months ended June 30, 2000 totaled $24,404,000, a 30%
increase over FFO of $18,775,000 for the prior comparable six-month period
ended June 30, 1999. FFO for the six-month period totaled $1.64 per share on
14,900,420 weighted average shares outstanding, compared to $1.29 per share on
14,609,014 weighted average shares for the six months ended June 30, 1999.
Net operating income before depreciation from wholly-owned properties and
the Company's proportionate share of partnerships and joint venture properties
increased 23% to $45,783,000 for the six months ended June 30, 2000, from
$37,168,000 for the six months ended June 30, 1999.
On a diluted basis, net income for the six months ended June 30, 2000 was
$1.61 per share on 13,362,324 total weighted average shares outstanding
compared to $0.81 per share on 13,311,782 total weighted average shares
outstanding for the six months ended June 30, 1999. Net income for the six
months ended June 30, 2000 includes a gain on the sale of the CVS Building in
Alexandria, VA totaling $6.6 million, or $0.50 per share, and a 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. Net income for the 1999
six-month period includes gains on the sales of 135 Commerce Drive in Fort
Washington, PA and a land parcel at Crest Plaza in Allentown, PA totaling
$1,346,000 or $0.10 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 4.0% over the second quarter of 1999, primarily driven
by a 2.8% increase in rents and reduced rental concessions. Same store net
operating income, excluding non-recurring lease termination fees, for the
second quarter of 2000 for the Company's shopping center portfolio increased
6.0% over the comparable quarter in 1999 primarily driven by new leases at
North Dartmouth Mall, Palmer Park Mall and Christiana Power Center.
Comments from Management
Commenting on the Company's second quarter and six months results, Ronald
Rubin, Chief Executive Officer of PREIT, said, "We are pleased with our
performance at all levels, with solid growth in FFO, net income and retail and
multifamily NOI. These results were driven by our focus on development
activity, the positive fundamentals of our core portfolio and expanding
relationships with leading national and regional retailers. At the same time,
acquisitions completed during 1999 and early 2000 generated strong returns."
Mr. Rubin continued, "In the quarters ahead, the Company is committed to
prudently investing its capital in developing high quality retail properties
in the Mid-Atlantic region. Our development and redevelopment schedule is
well on target, with approximately $200 million in projects currently underway
at a number of prime locations."
Portfolio Highlights
Development Pipeline / 8 Projects
-- Paxton Towne Centre (Harrisburg, PA) -- Construction of the 695,000
square foot power center is on schedule and, as of June 30, 2000, 73%
complete and 80% leased. In July, the power center celebrated its
grand opening with the introduction of several stores including Target,
Men's Warehouse and Borders Books and Music. Additional stores are
slated to open during the 2000 third and fourth quarters.
-- Metroplex Shopping Center (Plymouth Meeting, PA) -- Construction of the
780,000 square foot power center is on schedule and, as of June 30,
2000, 71% complete and 90% leased. The first stores are scheduled to
open in August 2000.
-- Willow Grove Park (Willow Grove, PA) -- Construction has commenced on
the infrastructure for a new Macy's department store, which will be
added to this 980,000 square foot regional shopping center. Macy's is
expected to open in the third quarter of 2001.
Dispositions
-- CVS Building (Alexandria, VA) -- As previously announced, in April, the
Company sold a 294,000 square foot industrial property for total
proceeds of approximately $11.7 million. In connection with the sale,
the Company terminated the lease with the building's sole tenant, CVS
Drug Co., which otherwise would have expired on April 30, 2002.
-- Valley View (Wilmington, DE) -- In July, the Company sold Valley View,
a 55,700 square foot strip shopping center, generating proceeds of
approximately $9,600,000. The Company expects to record a gain of
approximately $1,500,000 ($0.11 per share) in the 2000 third quarter.
Additional Second Quarter 2000 Activity
-- Frankford Arsenal (Philadelphia, PA) -- During the second quarter the
Company terminated its proposed plans to develop a 500,000 square foot
power center at Frankford Arsenal in Philadelphia, PA. As a result,
the Company recorded a charge of $370,000 ($0.03 per share) in its
management and development affiliate, PREIT-RUBIN, Inc. during the 2000
second quarter.
Jonathan B. Weller, PREIT's President and Chief Operating Officer,
commented. "As we look forward to the remainder of 2000, the Company will
continue to focus on prudently growing the business and maintaining the growth
of our development pipeline which currently consists of six power centers, one
entertainment center and one enclosed mall."
Capital Resources
As of June 30, 2000, the Company had approximately $99 million
outstanding, including letters of credit, under its $150 million line of
credit.
Edward Glickman, Chief Financial Officer of PREIT, added, "The Company
continues to closely examine financing options and is actively engaged in
discussions to expand its line of credit. In the coming months we will
continue to take steps to solidify our capital structure and seek out new
sources to fund our development projects and redevelopment activities. We
believe that a disciplined allocation of our capital among these assets can
offer the potential for the generation of strong FFO growth and solid
returns."
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 9.5 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 7 retail properties under development, which will add approximately
3.0 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
(Unaudited)
FUNDS FROM OPERATIONS
Three Months Ended Six Months Ended
June 30, June 30, June 30, June 30,
2000 1999 2000 1999
Income before
minority interest
in operating
partnership $16,815,000 $5,406,000 $23,944,000 $11,837,000
Less: Gains on
sales of
interests in
real estate (6,648,000) -- (8,911,000) (1,346,000)
Add: Depreciation
and amortization:
Wholly owned &
consolidated
partnership,
net 3,716,000 3,266,000 7,427,000 6,422,000
Unconsolidated
partnerships
& joint
ventures 1,137,000 1,137,000 2,258,000 2,196,000
Excess purchase
price over net
asset acquired 92,000 54,000 146,000 107,000
Refinancing
prepayment fee
of partnership/
joint ventures - 55,000 - 55,000
Less: Depreciation
of non-real estate
assets (65,000) (60,000) (130,000) (120,000)
Amortization of
deferred
financing
assets (167,000) (237,000) (330,000) (376,000)
FUNDS FROM
OPERATIONS $14,880,000(A) $9,621,000(A) $24,404,000(A)
$18,775,000(A)
FUNDS FROM
OPERATIONS PER
SHARE AND OP UNITS $1.00 $0.66 $1.64 $1.29
Weighted average
number of shares
outstanding 13,384,774 13,314,945 13,362,324 13,311,782
Weighted average
effect of full
conversion of
OP units 1,535,358 1,320,688 1,538,096 1,297,232
Total weighted
average shares
of outstanding
including OP
units 14,920,132 14,635,633 14,900,420 14,609,014
(A) Includes the non-cash effect of straight-line rents of $183,000 and
$323,000 for the 2nd quarter 2000 and 1999 and $478,000 and $618,000
for year to date 2000 and 1999, respectively.
OPERATING RESULTS
Three Months Ended Six Months Ended
June 30, June 30, June 30, June 30,
2000 1999 2000 1999
REVENUES
Gross revenues
from real
estate $28,121,000 $21,659,000 $51,342,000 $42,759,000
Interest and
other income 325,000 402,000 556,000 564,000
28,446,000 22,061,000 51,898,000 43,323,000
EXPENSES
Property
operating
expenses 7,425,000 7,512,000 15,604,000 14,889,000
Depreciation and
amortization 3,716,000 3,309,000 7,427,000 6,525,000
General &
administrative
expenses 1,406,000 993,000 2,441,000 1,846,000
Interest
expense 5,642,000 5,362,000 11,486,000 10,467,000
18,189,000 17,176,000 36,958,000 33,727,000
Income before
equity in
unconsolidated
entities, gains
on sales of
interests in real
estate and minority
interest in
operating
partnership 10,257,000 4,885,000 14,940,000 9,596,000
Equity in loss
of PREIT-RUBIN,
Inc. (1,898,000) (856,000) (3,387,000) (1,948,000)
Equity in income
of partnerships
and joint
ventures 1,808,000 1,377,000 3,480,000 2,843,000
Gains on sales of
interests in
real estate 6,648,000 -- 8,911,000 1,346,000(C)
Income before
minority interest
in operating
partnership 16,815,000 5,406,000 23,944,000 11,837,000
Minority interest
in operating
partnership (1,732,000) (488,000) (2,471,000) (1,049,000)
NET INCOME $15,083,000 $4,918,000 $21,473,000 $10,788,000
PER SHARE DATA
Net income before
gains on sales
of interests in
real estate $0.63 $0.37 $0.94 $0.71
Gains on sales of
interests in real
estate 0.50(A) - 0.67(B) 0.10(C)
BASIC INCOME PER
SHARE $1.13 $0.37 $1.61 $0.81
DILUTED INCOME
PER SHARE $1.13 $0.37 $1.61 $0.81
Weighted average
number of shares
outstanding 13,384,774 13,314,945 13,362,324 13,311,782
(A) 2nd qtr 2000 includes gain on sale of CVS Building, Alexandria, VA.
(B) Year to date 2000 includes gain on sale of CVS Building, Alexandria,
VA and gain on sale of interest in Park Plaza shopping center in
Pinellas Park, Florida.
(C) 1999 includes gains on sales of interest in 135 Commerce Drive, Fort
Washington, PA, and land parcel at Crest Plaza, Allentown, PA.
Pennsylvania Real Estate Investment Trust
Selected Financial Data
(Unaudited)
EQUITY IN INCOME OF PARTNERSHIPS
AND JOINT VENTURES
Three Months Ended Six Months Ended
June 30, June 30, June 30, June 30,
2000 1999 2000 1999
Gross revenues from
real estate $19,343,000 $14,363,000 $35,767,000 $28,521,000
Expenses:
Property operating
expenses 6,255,000 4,830,000 11,723,000 9,682,000
Mortgage and bank
loan interest 6,503,000 4,331,000 11,617,000 8,519,000
Refinancing
prepayment fee (A) - 110,000 - 110,000
Depreciation and
amortization 3,217,000 2,311,000 5,713,000 4,465,000
15,975,000 11,582,000 29,053,000 22,776,000
3,368,000 2,781,000 6,714,000 5,745,000
Partner's Share (1,560,000) (1,404,000) (3,234,000) (2,902,000)
EQUITY IN INCOME OF
PARTNERSHIPS AND
JOINT VENTURES $1,808,000 $1,377,000 $3,480,000 $2,843,000
(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 Six Months Ended
June 30, June 30, June 30, June 30,
2000 1999 2000 1999
Gross Revenues $28,121,000 $21,659,000 $51,342,000 $42,759,000
Operating
expenses (7,425,000) (7,512,000) (15,604,000) (14,889,000)
Net operating
income: Wholly-owned
properties 20,696,000 14,147,000 35,738,000 27,870,000
Company's
proportionate share
of partnerships and
joint ventures net
operating income 5,107,000 4,705,000 10,045,000 9,298,000
Combined net
operating income 25,803,000 18,852,000 45,783,000 37,168,000
Interest income 325,000 402,000 556,000 564,000
Company's
proportionate share
of PREIT-RUBIN, Inc.
net operating income
(loss) (1,437,000) (403,000) (2,567,000) (1,173,000)
General and
administrative
expenses (1,406,000) (993,000) (2,441,000) (1,846,000)
EBITDA $23,285,000 $17,858,000 $41,331,000 $34,713,000
MORTGAGE NOTES, BANK AND
CONSTRUCTION LOANS PAYABLE
Wholly-Owned Properties
Mortgage notes payable $264,600,000 $268,900,000
Bank Loans payable 92,200,000 74,473,000
Construction Loan Payable 14,822,000 --
371,622,000 343,373,000
Company's Proportionate Share of
Partnerships and Joint Ventures
Mortgage notes payable 113,019,000 111,385,000
Bank loans payable -- 2,475,000
Construction loans payable 19,759,000 7,553,000
Total mortgage notes and bank loans payable $504,400,000 $464,786,000
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, Analysts, Steve Martini,
or Media, Judith Sylk-Siegel, all of The Financial Relations
Board, 212-661-8030
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