SAN DIEGO, Aug. 11 /PRNewswire/ -- Burnham Pacific Properties, Inc.
(NYSE: BPP) today announced operating results for the quarter ended
June 30, 1999.
Financial Results
For the second quarter, Funds From Operations ("FFO") on a fully diluted
basis (assuming conversion of the Company's convertible preferred stock and
other common stock equivalents) was $14.1 million or $.34 per share, as
compared to $13.9 million or $.34 per share for the quarter ended June 30,
1998. Diluted FFO for the six months ended June 30, 1999 was $27.8 million or
$.67 per share, as compared to $24.6 million or $.67 per share for the first
half of 1998. FFO is calculated based upon the revised definition adopted by
the Board of Governors of the National Association of Real Estate Investment
Trusts (NAREIT) and is considered the primary earnings measure for equity
REITs.
Commenting on the second quarter's results, David Martin, Burnham
Pacific's Chief Executive Officer, stated, "We are pleased to report results
for the first half that are in line with our expectations. Our leasing team
had another outstanding quarter, once again exceeding previous quarters'
results for newly executed leases. Our acquisition team has recently acquired
over $450 million in new assets in our CalPERS joint venture, and our
development/ redevelopment team is making good progress on several fronts.
Our redevelopment program has been delayed by several factors including the
recent consolidation in the grocery store industry. This delay has affected
the pace of our new tenant move-ins."
Review of Results
For the quarter ended June 30, 1999, revenues grew $2.2 million to
$34.3 million, from $32.1 million in the second quarter of 1998. Including
the one-time revenue and expense items referenced below, net income available
to common stockholders was $2,401,000 or $.08 per share (diluted), as compared
to $5.1 million or $.16 per share (diluted) for the prior three-month period.
For the six months ended June 30, 1999, revenues grew $7.5 million to
$69.5 million, from $62.0 million in the first half of 1998. Again, including
the one-time revenue and expense items referenced below, net income available
to common stockholders was $2,712,000 or $.08 per share (diluted), as compared
to $7.2 million or $.26 per share (diluted) for the prior six-month period.
Revenues in the 1999 and 1998 three-month periods included one-time lease
termination fees of $800,000 and $1.8 million, respectively. The 1999
three-month period was also impacted by an impairment write-off in the amount
of $1.2 million related to the prospective sale of the Bergen Brunswig office
building and costs of $875,000 associated with the unsolicited proposal from
Schottenstein Stores. If these one-time revenue and expense items were
excluded, net income available to common stockholders for the current quarter
would have been $3.7 million or $.12 per share (diluted), as compared to $3.3
million or $.10 per share (diluted) for the prior three-month period.
Revenues in the 1999 and 1998 six-month periods included one-time lease
termination fees of $1.5 million and $1.8 million, respectively. The 1999
six-month period was also impacted by one-time charges taken in the first
quarter of 1999, in addition to the $1.2 million impairment charge and
$875,000 in costs related to the unsolicited proposal. The first-quarter
charges included $1.5 million related to the Company's decision to outsource
its property management function to third-party providers, $750,000 of costs
associated with the abandonment of transactions in process prior to the AMB
portfolio acquisition, and $1.9 million recognized as the cumulative effect of
a change in accounting principle. If these one-time revenue and expense items
were excluded, net income available to common stockholders for the 1999
six-month period would have been $7.4 million or $.23 per share (diluted), as
compared to $5.4 million or $.20 per share (diluted).
Leasing Results
The Company executed leases for over 436,000 square feet during the second
quarter. Of the total, over 204,000 square feet were for space not previously
occupied. Of the 204,000 square feet, the Company received revenue from some
23,000 square feet during the second quarter and expects to receive revenue
from some 77,000 square feet sometime during this quarter, at an average rate
of $11.42 per square foot; from some 62,000 square feet sometime during the
fourth quarter, at an average rate of $14.50 per square foot; and from some
42,000 square feet during the year 2000, at an average rate of $13.02
per square foot.
The Company has now signed leases covering 94% of its operating
properties, with 91.8% of those tenants in place and another 2.2% scheduled to
move in throughout the next 11 months. However, the pace of tenant move-ins
has been slightly less than the Company's expectations.
Acquisitions
During the second quarter, the Company's co-investment entity with
CalPERS, BPP Retail LLC, closed on nine retail centers for $207.4 million from
AMB Property Corporation. The centers add 1.4 million square feet to the
Company's portfolio.
On August 4, 1999, BPP Retail LLC closed on an additional 12 retail
centers from AMB for approximately $246 million. The centers add an
additional two million square feet to the Company's existing portfolio of over
11 million square feet. The final AMB transaction ($105 million) is scheduled
to close between October 1 and December 1 of this year.
The Company expects to close additional acquisitions this year.
Contributions
During the second quarter, the Company contributed four shopping centers
to BPP Retail LLC at a value of approximately $38.7 million, which brought the
Company's ownership in the co-investment entity with CalPERS to approximately
20%.
Dispositions
On July 2, 1999, the Company disposed of four retail centers in San Diego
for a total of $44.4 million before repayment of mortgage obligations of
$16.2 million. The Company was receiving approximately $4.9 million per year
in net operating income from the properties at the time of disposition.
Bergen Brunswig has exercised its option to acquire its headquarters
office building from the Company, under the terms of its lease. The Company
expects to receive $19.3 million in gross proceeds before repayment of a
mortgage obligation of $9.34 million. The purchase price represents a loss to
book value of approximately $1.2 million. The transaction is expected to
close on or before March 31, 2000. The company is currently receiving
approximately $3.3 million a year in net operating income from the property.
Assuming the net proceeds from these dispositions are used to pay down
debt (which is the Company's current intention), the Company expects these
transactions to be dilutive to future earnings.
The Company may close additional dispositions this year.
Developments/Redevelopments
The Company continues to make progress on its development and
redevelopment program. The Downtown Pleasant Hill development ($79 million
and 355,000 square feet) begins store openings this fall with a scheduled
grand opening in May of 2000. The Cameron Park redevelopment is progressing
well with Safeway scheduled to open by year end 1999.
The Company has reached agreement with Ralphs supermarket for expansions
at two locations, Ladera Center and La Mancha, both in Los Angeles County.
The Company is behind schedule on its redevelopment plans at the Fremont
Hub due to a continuing change in the scope of the project. Safeway has
recently agreed to a store expansion, General Cinema has recently agreed to a
buy-out and facility closure, and Bed, Bath & Beyond has recently executed a
lease for a new 36,000 square-foot store. Additional leasing activity and
construction continue. However, final completion is estimated to occur after
mid-2000.
Costs Associated with Unsolicited Proposal and Litigation
In response to the unsolicited proposal from Schottenstein Stores, the
Company has retained Goldman Sachs and Goodwin, Procter & Hoar LLP to
represent and advise the Company. The Company has also been served with a
complaint in a class action lawsuit in connection with the Company's adoption
of a shareholder rights plan, and has retained Morrison & Foerster LLP to
represent its interests. The Company has also retained other professionals to
advise the Company on related matters. As of the end of the second quarter,
the Company has incurred $875,000 and expects to incur an additional $2.0
million to cover estimated future costs. Total future costs could exceed
these estimates.
Employee Retention Program
The Company's Board has adopted an Employee Retention Program, which
includes a cash component and phantom stock awards made to its executive
officers. The phantom stock awards will reduce future earnings by
approximately $.03 per share per annum commencing August 1, 1999. Details of
the program are contained in the Company's recently filed Form 8-K .
Property Management Outsourcing
During the second quarter, the Company successfully completed the
outsourcing of the vast majority of its property management operations to
third party providers. The Company believes its original reserve of
$1.5 million is adequate to cover the costs associated with the outsourcing.
Burnham Pacific is a real estate investment trust that focuses on
value-added retail real estate opportunities throughout the United States.
More information may be found by calling 800-462-5181 or visiting the
Company's web site at http://www.burnhampacific.com.
This news release contains forward-looking statements regarding future
events or financial performance of the Company. These statements are only
predictions and actual events or results may differ materially. Investors
should refer to the documents the Company files from time to time with the
Securities and Exchange Commission, specifically the cautionary statement
identifying certain factors that could affect future results included in the
"Risk Factors" section of the Company's most recently filed Registration
Statement and in the "Forward Looking Statements & Certain Risk Factors"
section of the Company's most recently filed Form 10K.
Consolidated Statements of Income
Quarter Ended Year to Date
6/30/99 6/30/98 6/30/99 6/30/98
Revenues
Rents $32,456 $31,899 $66,891 $61,538
Fee Income 1,582 0 1,966 0
Interest 331 226 647 454
Total Revenues 34,369 32,125 69,504 61,992
Expenses
Interest 9,275 7,749 19,163 17,215
Rental Operating 9,541 8,596 18,915 16,848
General & Administrative 1,905 1,392 3,659 2,503
Restructuring Charge 0 0 1,500 0
Abandoned Acquisition Costs 0 0 748 0
Costs Associated with
Unsolicited Proposal
and Litigation 875 0 875 0
Impairment Write-Off 1,200 0 1,200 0
Depreciation & Amortization 6,964 6,750 14,125 13,181
Total Costs and Expenses 29,760 24,487 60,185 49,747
Income from Operations before
Income from Unconsolidated
Subsidiaries, Minority
Interest and Cumulative
Effect of Change in
Accounting Principle 4,609 7,638 9,319 12,245
Income from Unconsolidated
Subsidiaries 473 33 442 128
Minority Interest (1,281) (1,159) (2,383) (2,325)
Net Income before Cumulative
Effect of Change in
Accounting Principle 3,801 6,512 7,378 10,048
Cumulative Effect of Change
in Accounting Principle 0 0 (1,866) 0
Net Income $3,801 $6,512 $5,512 $10,048
Dividends Paid to
Preferred Stockholders (1,400) (1,400) (2,800) (2,800)
Income Available to
Common Stockholders $2,401 $5,112 $2,712 $7,248
Basic Earnings Per Share:
Net Income before Cumulative
Effect of Change in
Accounting Principle $0.08 $0.16 $0.14 $0.26
Cumulative Effect of Change
in Accounting Principle 0 0 (0.06) 0
Net Income $0.08 $0.16 $0.08 $0.26
Diluted Earnings Per Share:
Net Income before Cumulative
Effect of Change in
Accounting Principle $0.08 $0.16 $0.14 $0.26
Cumulative Effect of Change
in Accounting Principle 0 0 (0.06) 0
Net Income $0.08 $0.16 $0.08 $0.26
Funds from Operations-Diluted:
Income before Cumulative
Effect of Change in
Accounting Principle $3,801 $6,512 $7,378 $10,048
Adjustments:
Depreciation & Amortization
of Real Estate and
Tenant Improvements 6,928 6,250 13,708 12,200
Restructuring Charge 0 0 1,500 0
Abandoned Acquisition Costs 0 0 748 0
Costs Associated with
Unsolicited Proposal
and Litigation 875 0 875 0
Impairment Write-Off 1,200 0 1,200 0
Minority Interest 1,281 1,159 2,383 2,325
Funds from
Operations-Diluted $14,085 $13,921 $27,792 $24,573
Funds from Operations Per Share
Basic $0.36 $0.36 $0.71 $0.70
Diluted $0.34 $0.34 $0.67 $0.67
Weighted Average Shares
Outstanding-FFO
Basic 31,960,069 31,911,239 31,957,055 27,798,879
Diluted 41,710,211 41,035,295 41,707,197 36,711,739
Consolidated Balance Sheets
6/30/99 12/31/98
ASSETS
Real Estate $1,045,711 $1,137,779
Less Accumulated Depreciation (77,257) (79,837)
Real Estate-Net 968,454 1,057,942
Real Estate Held for Sale 19,006 0
Cash and Cash Equivalents 3,058 20,873
Restricted Cash 8,664 7,737
Receivables-Net 11,189 7,697
Investment in Unconsolidated Subsidiaries 61,693 3,438
Other Assets 16,797 16,489
Total $1,088,861 $1,114,176
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Accounts Payable and Other Liabilities $18,765 $50,572
Tenant Security Deposits 2,785 2,982
Notes Payable 412,456 394,029
Line of Credit Advances 183,375 180,999
Total Liabilities 617,381 628,582
Commitments and Contingencies
Minority Interest 69,383 70,217
Stockholders' Equity:
Preferred Stock, Par Value $.01/Share,
5,000,000 Shares Authorized, 4,800,000
Shares Designated as Series 1997-A
Convertible Preferred, 2,800,000
Shares Outstanding at June 30, 1999
and December 31, 1998 28 28
Common Stock, Par Value $.01/Share,
95,000,000 Shares Authorized, 31,965,600
and 31,954,008 Shares Outstanding at
June 30, 1999 and December 31, 1998,
Respectively 320 319
Paid in Capital in Excess of Par 525,743 524,957
Dividends Paid in Excess of Net Income (123,994) (109,927)
Total Stockholders' Equity 402,097 415,377
Total $1,088,861 $1,114,176
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., 619-652-4700, fax 619-652-4711,
dbplatt@bpac.com
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