FORT WASHINGTON, Pa., Feb. 19 /PRNewswire/ -- Pennsylvania Real Estate
Investment Trust (NYSE: PEI) released the following statement today:
Highlights of Three-Month Period ended December 31, 1997
-- 1997 FFO increased 15.5 % on a per share basis versus 1996
-- Acquisition of The Rubin Organization and interests in four shopping
centers completed
-- Trading on NYSE commenced November 14, 1997
-- Follow-on offering of 4.6 million shares completed December 17, 1997
-- Net Proceeds from offering of $96 million used to pay down debt
Pennsylvania Real Estate Investment Trust announced today the results of
its operations for the three months and four months ended December 31, 1997.
The Company is reporting for two operating periods as a result of the
previously announced change in its fiscal year from August 31 to December 31.
Three-Month Results
Funds from operations (FFO) for the three months ended December 31, 1997
totaled $6,592,000, or $0.67 per share and operating partnership (OP) unit, a
15.5% increase (on a per share basis) over the previous year's FFO of
$5,050,000, or $0.58 per share. The growth in FFO was driven by the September
30 acquisition of The Rubin Organization and interests in four shopping
centers. 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 income for the three months ended December 31, 1997 was $5,436,000, or
$0.59 per share compared to $2,639,000, or $0.30 per share for the comparable
period. Net income for the 1997 period included a gain on the sale of Gateway
Mall in St. Petersburg, Florida of $2,090,000, or $0.23 per share. Net income
for the three months ended November 30, 1996 was reduced by a prepayment fee
in connection with a refinancing, the Company's share of which was $214,000,
or $0.02 per share. The property sale in 1997 and the prepayment fee in 1996
do not affect the calculation of FFO.
Four-Month Results
FFO for the four months ended December 31, 1997 totaled $8,146,000, or
$0.86 per share and OP unit, a 14.7% increase (on a per share basis) over FFO
for the comparable period in 1996 of $6,505,000, or $0.75 per share. As noted
above, results were driven by the acquisition of The Rubin Organization and
interests in four shopping centers.
Net income for the four months ended December 31, 1997 was $5,962,000 or
$0.66 per share, compared to $4,842,000, or $0.56 per share for the comparable
period in 1996. Net income for the 1997 period included the aforementioned
gain of $0.23 per share on the sale of Gateway Mall and was reduced by an
extraordinary loss of $300,000, or $0.03 per share, due to the prepayment of
the term loan portion of the Company's line of credit. Net income in the 1996
period included gains on the sale of the Company's interests in three shopping
centers of $1,461,000, or $0.17 per share, and was reduced by a prepayment fee
of $214,000, or $0.02 per share. The calculation of FFO in the 1996 and 1997
periods is not affected by the gains on the sale of properties or
extraordinary prepayment expenses.
Analysis
The impact of the acquisition of The Rubin Organization and interests in
four shopping centers may be analyzed by comparing the FFO results for the
three months ended December 31, 1997 with the Company's fiscal quarter ended
November 30, 1996 and by considering the effect of the follow-on offering of
4.6 million shares completed on December 17, 1997. FFO on the Company's
existing portfolio increased by approximately $114,000 in the 1997 period,
while the acquisition of the operating company and properties generated
incremental FFO of approximately $1,428,000, accounting for 93% of the
Company's FFO growth for the period. The net proceeds of the offering of $96
million were used to prepay a mortgage and substantially pay down the
Company's line of credit. Operating results will not reflect the total
interest savings from the repayment of debt until the first quarter of 1998,
at which time the weighted average number of shares outstanding will also
fully reflect the recent offering.
As of December 31, 1997, the Company had $10.3 million outstanding under
its $150 million unsecured line of credit.
Comments from Management
On December 17, 1997 the Company completed a follow-on offering of
4.6 million shares raising total net proceeds of $96 million. Referring to
the net proceeds, Ronald Rubin, Chief Executive Officer, stated, "We were able
to immediately apply those funds to pay down debt and restore our line of
credit. As a result, we have additional capital for acquisitions, development
projects, and selective investments in assets to increase their marketability
to tenants."
Commenting on the Company's performance, Jonathan Weller, President and
Chief Operating Officer, said, "We are extremely pleased with our financial
results for the three-month period ended December 31, 1997. Specifically, our
record performance reflects the excellent results of the new properties
acquired from The Rubin Organization and our continued ability to generate
solid returns from our existing portfolio."
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 (6.4 million square feet) and apartment communities (7,236 units)
located primarily in the eastern United States. The Company's portfolio
currently consists of 46 properties in 10 states. Pennsylvania Real Estate
Investment Trust is headquartered in Fort Washington, Pennsylvania, a suburb
of Philadelphia.
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, 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.
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 Four Months Ended
Dec. 31, Nov. 30, Dec. 31, Dec. 31,
1997 1996 1997 1996
Net income before
minority interest
and extraordinary
item $5,885,000 $2,729,000 $6,736,000 $4,959,000
Less: Gains on sales
of interests in
real estate (2,090,000) -- (2,090,000)(1,461,000)
Minority interest
in consolidated
partnerships (55,000) (90,000) (80,000) (117,000)
Plus: Depreciation
and amortization -- --
Wholly owned &
consolidated
partnership(A) 2,017,000 1,474,000 2,629,000 1,961,000
Unconsolidated
partnerships &
joint ventures 996,000 852,000 1,252,000 1,119,000
Excess purchase
price over net
asset required 29,000 -- 29,000 --
Refinancing
prepayment fees -- 214,000 -- 214,000
Less: Depreciation of
non-real estate
assets (57,000) (51,000) (76,000) (73,000)
Amortization of
deferred financing
assets (133,000) (78,000) (254,000) (97,000)
FUNDS FROM OPERATIONS $6,592,000(B)$5,050,000 $8,146,000(C)$6,505,000
FUNDS FROM OPERATIONS
PER SHARE AND OP UNITS $0.67 $0.58 $0.86 $0.75
Weighted average number
of shares outstanding 9,135,000 8,676,000 9,025,000 8,676,000
Weighted average effect
of full conversion
of OP units 646,286 -- 484,715 --
Total weighted average
shares outstanding
including OP units 9,781,286 8,676,000 9,509,715 8,676,000
(A) Net of minority interest
(B) Includes the non-cash effect of straight-line rents of $208,000
(C) Includes the non-cash effect of straight-line rents of $212,000
OPERATING RESULTS
Three Months Ended Four Months Ended
Dec. 31, Nov. 30, Dec. 31, Dec. 31,
1997 1996 1997 1996
REVENUES
Gross revenues from
real estate $13,753,000 $9,968,000 $17,170,000 $13,289,000
Interest and
other income 78,000 95,000 82,000 108,000
13,831,000 10,063,000 17,252,000 13,397,000
EXPENSES
Property operating
expenses 5,551,000 4,013,000 8,835,000 5,465,000
Depreciation and
amortization 2,067,000 1,540,000 2,695,000 2,049,000
General &
administrative
expenses 678,000 748,000 1,088,000 1,061,000
Interest expense 3,604,000 2,359,000 4,349,000 3,120,000
11,900,000 8,660,000 14,967,000 11,665,000
Income before equity
in unconsolidated
entities, gains on
sales of interests
in real estate,
minority interest
and extraordinary
item 1,931,000 1,403,000 2,285,000 1,732,000
Equity in income
of PREIT-RUBIN 260,000 -- 260,000 --
Equity in income of
partnerships and
joint ventures 1,604,000 1,326,000 2,101,000 1,766,000
Gains on sales of
interests in real
estate(B)(C) 2,090,000(B) -- 2,090,000(B)1,461,000(C)
Income before
minority interest
and extraordinary
item 5,885,000 2,729,000 6,736,000 4,959,000
Minority interest (449,000) (90,000) (474,000) (117,000)
Income before
extraordinary item 5,436,000 2,639,000 6,262,000 4,842,000
Extraordinary loss on
early extinguishment
of debt -- -- (300,000) --
NET INCOME $5,436,000 $2,639,000 $5,962,000 $4,842,000
PER SHARE DATA
Net income before gains
on sales of interests
in real estate $0.37 $0.30 $0.43 $0.39
Gains on sales of
interests in
real estate(B)(C) 0.23 -- 0.23 0.17
BASIC INCOME PER SHARE $0.60 $0.30 $0.66 $0.56
DILUTED INCOME PER SHARE $0.59 $0.30 $0.66 $0.56
Weighted average number
of shares outstanding 9,135,000 8,676,000 9,025,000 8,676,000
(B) Gain on sale of interest in Gateway Mall, St. Petersburg, FL
(C) Gains on sales of three joint venture shopping centers in Lancaster,
Beaver Falls, and Waynesburg, PA
Pennsylvania Real Estate Investment Trust
Selected Financial Data
EQUITY IN INCOME OF PARTNERSHIPS
AND JOINT REVENUES
Three Months Ended Four Months Ended
Dec. 31, Nov. 30, Dec. 31, Dec. 31,
1997 1996 1997 1996
Gross revenues from
real estate $14,989,000 $13,545,000 $19,258,000 $17,997,000
Expenses:
Property operating
expenses 5,476,000 5,202,000 7,122,000 7,060,000
Mortgage and bank
loan interest
expense 4,148,000 3,858,000 5,205,000 4,999,000
Depreciation and
amortization 2,077,000 1,756,000 2,609,000 2,307,000
11,701,000 10,816,000 14,936,000 14,366,000
3,288,000 2,729,000 4,322,000 3,631,000
Partner's Share (1,684,000) (1,403,000) (2,221,000) (1,865,000)
EQUITY IN INCOME OF
PARTNERSHIPS AND
JOINT VENTURES $1,604,000 $1,326,000 $2,101,000 $1,766,000
NOTE: One partnership in which the Company is a general partner and has
control, as provided in the partnership agreement, has been
consolidated for financial presentation. All of those assets and
liabilities are included in the consolidated financial statements
at 100%. The minority partner's interest is 35%.
Supplemental Information for Wholly Owned Properties
and the Company's Proportionate Share of Partnerships and Joint Ventures
EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION
AND AMORTIZATION ("EBITDA")
Three Months Ended Four Months Ended
Dec. 31, Nov. 30, Dec. 31, Dec. 31,
1997 1996 1997 1996
Gross Revenues $13,753,000 $9,968,000 $17,170,000 $13,289,000
Operating expenses (5,551,000) (4,013,000) (6,835,000) (5,435,000)
Minority Interest (449,000) (90,000) (474,000) (117,000)
Net operating income:
Wholly-owned
properties 7,753,000 5,865,000 9,861,000 7,737,000
Company's
proportionate share
of partnerships and
joint ventures net
operating income 4,622,000 3,995,000 5,886,000 5,326,000
Company's
proportionate share
of PREIT-Rubin net
operating income 922,000 922,000
Combined net
operating income 13,297,000 9,860,000 16,669,000 13,063,000
Interest income 78,000 95,000 82,000 108,000
General and
administrative
expenses (678,000) (748,000) (1,088,000) (1,061,000)
EBITDA $12,697,000 $9,207,000 $15,663,000 $12,110,000
MORTGAGE NOTES AND BANK LOANS PAYABLE
Wholly-Owned Properties
Mortgage notes payable $99,364,000 $84,385,000
Bank Loans payable 4,575,000 26,912,000
103,939,000 111,297,000
Company's Proportionate Share of
Partnerships and Joint Ventures
Mortgage notes payable 103,237,000 78,144,000
Bank loans payable 4,112,000 5,440,000
Total mortgage notes and bank loans payable $211,288,000 $194,881,000
SOURCE Pennsylvania Real Estate Investment Trust
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CONTACT:
Edward A. Glickman, Executive Vice President
and CFO of Pennsylvania Real Estate Investment Trust,
215-875-0700; or Julie Gottlieb, General Info, or Pamela King,
Analyst Info, or Judith Sylk-Siegel, Media Info, all of The
Financial Relations Board, for Pennsylvania Real Estate
Investment Trust, 212-661-8030
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