PHILADELPHIA, Aug. 12 /PRNewswire/ -- Pennsylvania Real Estate Investment
Trust (NYSE: PEI) announced today the results of its operations for the second
quarter ended June 30, 1999.
Second Quarter Highlights
-- Increased FFO by 20.0% to $0.66 per share on 14.6 million shares/OP
units outstanding from $0.55 per share on 13.9 million shares/OP units
outstanding during the second quarter of 1998
-- Funds from operations for the quarter increased 25.0% to $9.6 million
from $7.7 million in 1998
-- Increased combined net operating income 45.5% to $18.9 million from
$13.0 million in 1998
-- Retail net operating income increased 76.7% from the 1998 second
quarter
-- Multifamily net operating income grew 18.7% from the 1998 second
quarter
-- Commenced construction of two power centers: Metroplex (Plymouth
Meeting, Pa.) and Paxton Towne Centre (Harrisburg, Pa.)
Second Quarter Results
Funds from operations (FFO) for the three months ended June 30, 1999
totaled $9,621,000, a 25.0% increase over FFO of $7,699,000 for the comparable
three-month period ended June 30, 1998. The growth was driven by acquisitions
and development projects completed in 1998 and improved operating results in
the Company's portfolio. Second quarter FFO was $0.66 per share on 14,636,000
weighted average share equivalents outstanding (including Operating
Partnership [OP] units), compared to $0.55 per share on 13,943,000 weighted
average share equivalents for the three months ended June 30, 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 before depreciation from wholly-owned properties and
the Company's proportionate share of partnerships and joint venture
properties, including PREIT-RUBIN, increased 45.5% to $18,852,000 for the
three months ended June 30, 1999, from $12,959,000 for the three months ended
June 30, 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 June 30, 1999 was $4,918,000, or
$0.37 per basic share, on total weighted average shares outstanding of
13,315,000 compared to $6,205,000, or $0.47 per basic share, on 13,297,000
total weighted average shares outstanding for the three months ended June 30,
1998. Net income for the 1998 period included a gain on sale of Charter
Pointe Apartments in Altamonte Springs, Fla. totaling $1,766,000 or $0.13 per
share.
Six Months Results
Funds from operations (FFO) for the six months ended June 30, 1999 totaled
$18,775,000, a 21.6% increase over FFO of $15,445,000 for the prior comparable
six-month period ended June 30, 1998. FFO for the six-month period totaled
$1.29 per share and OP unit on 14,609,000 weighted average shares outstanding
(including OP units), compared to $1.11 per share on 13,941,000 weighted
average shares for the six months ended June 30, 1998.
Net operating income before depreciation from wholly-owned properties and
the Company's proportionate share of partnerships and joint venture
properties, including PREIT-RUBIN, increased 43.3% to $37,168,000 for the six
months ended June 30, 1999, from $25,929,000 for the six months ended June 30,
1998.
On a fully diluted basis, net income for the six months ended June 30,
1999 was $0.81 per share on 13,312,000 total weighted average shares
outstanding. Net income for the 1999 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.
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, the strength of our portfolio, and the prudence of our
focus on strategic development projects and internal growth. During the 1999
second 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, "In the quarters ahead we will continue to focus on 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 4.4% over the second quarter of 1998, primarily driven by
a 2.7% increase in revenues and a 0.4% increase in operating expenses. Same
store net operating income for the second quarter of 1999 for the Company's
shopping center portfolio increased by 1.8% over the comparable quarter.
Portfolio Highlights
-- Metroplex Shopping Center (Plymouth Meeting, Pa.) -- PREIT announced
that a partnership in which it holds a 50% interest obtained financing
and closed on the 103-acre site for the development of Metroplex
Shopping Center in Plymouth Meeting, Pa. The 780,000 square foot power
center will be anchored by Target Stores, Lowe's and Giant Supermarket.
Initial occupancy is expected in the second quarter of 2000.
-- Paxton Towne Centre (Harrisburg, Pa.) -- The Company announced the
acquisition of a 100-acre site and the commencement of construction for
Paxton Towne Centre, a 560,000 square foot power center in Harrisburg,
Pa. Anchor tenants include Target Stores, Kohl's and Weis Markets, and
initial occupancy is expected in the second quarter of 2000.
-- Development Pipeline -- During the second quarter, PREIT announced that
it has entered into a joint venture to develop the Pavilion at Market
East in Philadelphia, Pa. The 375,000 square foot retail,
entertainment and parking complex will be anchored by a Disney Quest
indoor theme park. Also in the second quarter the Company entered into
an agreement to acquire a 50-acre site known as Frankford Arsenal in
Philadelphia, Pa. The Company expects to acquire the site and begin
construction on a 500,000 square foot power center in the fourth
quarter of 1999.
-- Home Depot at Northeast Tower Center (Philadelphia, Pa.) -- The
Company acquired an 89% interest in the Home Depot parcel at its
Northeast Tower Center in Philadelphia, Pa. as contemplated at the time
of the acquisition of the balance of the center. The purchase price
was $13.5 million, including $12.5 million of long term debt.
-- Dispositions -- After the close of the second quarter the Company sold
a non-core land parcel in Rancocas, N.J. in which it owned a 75%
interest. The Company's proportionate share of the gain on the sale is
approximately $175,000, or $0.01 per share.
Jonathan B. Weller, President and Chief Operating Officer of PREIT,
commented, "During the first six months of 1999, we have completed several
transactions that further diversify and enhance the Company's portfolio,
either through acquisitions or development projects. Each of these
transactions began with our identification of opportunities that met our
financial objectives, leveraged our expertise in property management, leasing
and project development, and offer the potential for FFO growth. Over the
remainder of this year, we fully expect to build upon this momentum as the
Company's current development and redevelopment pipeline includes 7 power
centers, 3 strip centers and 2 enclosed malls."
Capital Resources
The Company announced in April the completion of a $108 million financing
with a 10-year term and a weighted average interest rate of 6.77%, as well as
the use of proceeds to pay down its line of credit and a short-term secured
financing. During the second quarter, the Company utilized approximately
$20 million from its line of credit, primarily for the acquisition of the
Paxton Towne Centre land and other development activities. At the end of the
second quarter approximately $66 million was available under the Company's
$150 million line of credit. In addition the Company incurred new mortgage
and construction debt in the amount of approximately $24 million, primarily
for the acquisition of the Home Depot Parcel at Northeast Tower Centre and the
construction financing for the Metroplex Shopping Center.
Edward Glickman, Chief Financial Officer of PREIT, added, "Since the
beginning of the year one of our primary objectives was to provide the Company
with additional capital to fund its development projects and other high
value-added opportunities. By locking in the interest rate of 6.77% on our
$108 million financing, we have reduced our interest rate exposure and
increased the availability under the line of credit to facilitate our 1999 and
2000 developments. Furthermore, we continue to pursue opportunities to
enhance our financial flexibility to position PREIT to take advantage of
significant opportunities that exist in our industry."
Quarterly Dividend Declared
The Company declared a quarterly dividend of $0.47 per share payable on
September 15, 1999 to shareholders and unitholders of record as of August 31,
1999. The September 15, 1999 dividend payment will be PREIT's 90th
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 (8.1 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 6 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.
FUNDS FROM OPERATIONS
Three Months Ended Six Months Ended
June 30, June 30, June 30, June 30,
1999 1998 1999 1998
Income before minority
interest in operating
partnership $5,406,000 $6,509,000 $11,837,000 $11,325,000
Less: Gains on sales
of interests in
real estate -- (1,766,000) (1,346,000) (1,766,000)
Add: Wholly owned &
consolidated
partnership, net 3,266,000 2,089,000 6,422,000 4,178,000
Unconsolidated
partnerships &
joint ventures 1,137,000 1,008,000 2,196,000 2,007,000
Excess purchase price
over net asset
acquired 54,000 29,000 107,000 58,000
Refinancing prepayment
fee of partnership/
joint ventures 55,000 -- 55,000 --
Less: Depreciation of
non-real estate
assets (60,000) (57,000) (120,000) (114,000)
Amortization of
deferred financing
assets (237,000) (113,000) (376,000) (243,000)
FUNDS FROM
OPERATIONS $9,621,000(A)$7,699,000(A)$18,775,000(A)$15,445,000(A)
FUNDS FROM OPERATIONS
PER SHARE AND OP UNITS $0.66 $0.55 $1.29 $1.11
Weighted average number
of shares
outstanding 13,315,000 13,297,000 13,312,000 13,295,000
Weighted average effect
of full conversion
of OP units 1,321,000 646,000 1,297,000 646,000
Total weighted average
shares of outstanding
including OP units 14,636,000 13,943,000 14,609,000 13,941,000
(A) Includes the non-cash effect of straight-line rent of $323,000
and $206,000 for the 2nd quarter 1999 and 1998 and $614,000 and
$431,000 year to date for 1999 and 1998, respectively.
OPERATING RESULTS
Three Months Ended Six Months Ended
June 30, June 30, June 30, June 30,
1999 1998 1999 1998
REVENUES
Gross revenues
from real estate$21,659,000 $13,783,000 $42,759,000 $27,308,000
Interest and
other
income 402,000 133,000 564,000 255,000
22,061,000 13,916,000 43,323,000 27,563,000
EXPENSES
Property operating
expenses 7,512,000 5,050,000 14,889,000 10,142,000
Depreciation and
amortization 3,309,000 2,113,000 6,525,000 4,251,000
General &
administrative
expenses 993,000 868,000 1,846,000 1,607,000
Interest expense 5,362,000 1,855,000 10,467,000 3,834,000
17,176,000 9,886,000 33,727,000 19,834,000
Income before
equity in
unconsolidated
entities,
gains on
sales of
interests
in real
estate and
minority
interest
in
operating
partnership 4,885,000 4,030,000 9,596,000 7,729,000
Equity in loss of
PREIT-RUBIN, Inc. (856,000) (501,000) (1,948,000) (859,000)
Equity in income of
partnerships and
joint ventures 1,377,000 1,214,000 2,843,000 2,689,000
Gains on sales of
interests
in real estate -- 1,766,000(A) 1,346,000(B)1,766,000(A)
Income before
minority
interest
in operating
partnership 5,406,000 6,509,000 11,837,000 11,325,000
Minority interest in
operating
partnership (488,000) (304,000) (1,049,000) (529,000)
NET INCOME $4,918,000 $6,205,000 $10,788,000 $10,796,000
PER SHARE DATA
Net income before
gains on sales of
interests in real
estate $0.37 $0.34 $0.71 $0.68
Gains on sales of
interests in real
estate -- 0.13(A) 0.10(B) 0.13(A)
BASIC INCOME PER SHARE $0.37 $0.47 $0.81 $0.81
DILUTED INCOME PER SHARE $0.37 $0.47 $0.81 $0.81
Weighted average
number
of shares
outstanding 13,315,000 13,297,000 13,312,000 13,295,000
(A) In 1998, gains on sale of Charter Pointe Apartments in
Altemonte Springs, Fla.
(B) In 1999, 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 Six Months Ended
June 30, June 30, June 30, June 30,
1999 1998 1999 1998
Gross revenues
from real estate $14,363,000 $13,312,000 $28,521,000 $28,047,000
Expenses:
Property operating
expenses 4,830,000 4,702,000 9,682,000 10,104,000
Mortgage and bank
loan interest 4,331,000 4,093,000 8,519,000 8,326,000
Refinancing
prepayment fee (A) 110,000 -- 110,000 --
Depreciation and
amortization 2,311,000 2,083,000 4,465,000 4,154,000
11,582,000 10,878,000 22,776,000 22,584,000
2,781,000 2,434,000 5,745,000 5,463,000
Partner's Share (1,404,000) (1,220,000) (2,902,000) (2,774,000)
EQUITY IN INCOME
OF PARTNERSHIPS
AND JOINT VENTURES $1,377,000 $1,214,000 $2,843,000 $2,689,000
(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,
1999 1998 1999 1998
Gross Revenues $21,659,000 $13,783,000 $42,759,000 $27,308,000
Operating expenses (7,512,000) (5,050,000) (14,889,000) (10,142,000)
Net operating income:
Wholly-owned
properties 14,147,000 8,733,000 27,870,000 17,166,000
Company's
proportionate share
of partnerships and
joint ventures net
operating income 4,705,000 4,226,000 9,298,000 8,763,000
Combined net
operating income 18,852,000 12,959,000 37,168,000 25,929,000
Interest income 402,000 133,000 564,000 255,000
Company's proportionate
share of PREIT-RUBIN,
Inc.net
operating loss (403,000) (285,000) (1,173,000) (506,000)
General and
administrative
expenses (993,000) (868,000) (1,846,000) (1,607,000)
EBITDA $17,858,000 $11,939,000 $34,713,000 $24,071,000
MORTGAGE NOTES, BANK AND CONSTRUCTION LOANS PAYABLE
Wholly-Owned Properties
Mortgage notes payable $268,900,000 $64,766,000
Bank Loans payable 74,473,000 55,126,000
343,373,000 119,892,000
Company's Proportionate
Share of Partnerships
and Joint Ventures
Mortgage notes payable 111,385,000 99,999,000
Construction loans payable 7,553,000 --
Bank loans payable 2,475,000 4,189,000
Total mortgage notes and bank
loans payable $464,786,000 $224,080,000
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, Pamela King,
or Media, Judith Sylk-Siegel, all of The Financial Relations
Board, 212-661-8030
NOTE TO EDITORS: 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.
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