Announces Major Shopping Center Redevelopments, Gives 2001 and 2002 Guidance
Third Quarter Highlights:
Financial Information
- Diluted FFO per share of $0.65
- 6.6% increase on a FFO per share basis
- 4.7% increase in revenues
- 3.5% increase in same center Net Operating Income
- $0.42 per share regular quarterly dividend declared September 14, 2001
Operating Results
- New Lowe's Home Improvement Store and Super Kmart expansion announced at
Tel-Twelve shopping center in Southfield, MI
- Super Wal-Mart expansion approved for Troy Towne Center in Troy, Ohio
- West Acres Commons shopping center acquired in Flint Township, MI
- 17 new non-anchor leases signed at rental rates 30.9% above portfolio
average
SOUTHFIELD, Mich., Oct. 18 /PRNewswire/ -- Ramco-Gershenson Properties
Trust (NYSE: RPT) announced today results for the third quarter and nine
months ended September 30, 2001 and also provided guidance on expected diluted
FFO per share for 2001 and 2002.
For the three months ended September 30, 2001, diluted Funds from
Operations (FFO) increased 6.2 percent, or approximately $460,000, to
$7,869,000, compared with $7,409,000 for the three months ended September 30,
2000. On a per share basis, the increase was 6.6 percent, or $0.04, to $0.65
compared with $0.61 in 2000. Total revenues increased 4.7 percent or
$1,019,000, to a total of $22,653,000, compared with $21,634,000 in 2000.
For the nine months ended September 30, 2001, diluted Funds from
Operations (FFO) increased 3.4 percent, or approximately $763,000, to
$23,473,000, compared with $22,710,000 for the nine months ended September 30,
2000. On a per share basis, the increase was 3.7 percent, or $0.07, to $1.94
compared with $1.87 in 2000. Total revenues increased 4.7 percent or
$3,043,000, to a total of $67,663,000, compared with $64,620,000 in 2000.
"We are pleased to report solid financial results for the quarter," said
Dennis Gershenson, president and chief executive officer. "This is the
product of continued strong performance in our core portfolio supplemented by
fees generated from our acquisition and development joint ventures. Demand
for space at our centers remained high during the quarter. In addition, we
are announcing two major redevelopments, which have moved from the planning
stages to implementation. In the near future, we expect to announce three
additional major redevelopment projects."
Asset Management
During the quarter, the Company signed leases with two anchor tenants and
obtained the necessary governmental approvals to proceed with the conversion
of its Tel-Twelve shopping center from an enclosed regional mall to an open-
air center. The redevelopment consists of the demolition of a major portion
of the building to allow for the construction of a 140,000 square foot Lowe's
Home Improvement store. Also included in the project is the expansion of the
existing 129,000 square foot Kmart to a 156,000 square foot super store format
and the relocation and expansion of DSW Shoe Warehouse. In addition, the
project includes the development of 47,000 square feet of outlots, which will
be tenanted by destination-oriented users and nationally recognized
restaurants. The Company has also negotiated a termination of the Montgomery
Ward lease. By gaining control of this space, the redevelopment process has
been simplified and the Company will be able to pursue additional credit-
worthy tenants to anchor the center at improved economics.
The Tel-Twelve shopping center fronts Telegraph Road in Southfield,
Michigan, one of the highest traveled thoroughfares in Metropolitan Detroit.
It is located immediately off the Lodge Expressway and less than one mile
north of I-696. The center serves a major trade area in Northwestern Oakland
County, the third wealthiest county per capita in the United States.
The Company is also announcing the redevelopment of its Troy Towne Center,
in Troy, Ohio with the expansion of the 121,000 square foot Wal-Mart into a
197,000 square foot Superstore. In order to accommodate the expansion a
portion of the center, which includes space vacated by Stage department store,
which filed for bankruptcy in 1999, will be demolished. Further expansion of
this asset is also contemplated by the inclusion of an additional major
national retailer. An announcement concerning this enhancement to the center
will be forthcoming.
In addition, the Company has secured the rights to the Montgomery Ward
space at its Shoppes of Lakeland shopping center in Lakeland, Florida and is
in the process of negotiating with several nationally recognized anchor
tenants as additions to the center. Redevelopment of this asset was
contemplated at the time of purchase to take advantage of the shopping
center's superior location adjacent to the I-4 expressway and across from the
890,000 square foot Lakeland Square mall. These improvements to the tenant
mix should be announced next year.
As announced previously, RPT has commenced the expansion of the Publix
Supermarket at its Sunshine Plaza and Lantana shopping centers. Both
developments are proceeding on schedule.
"We are very excited about our newly announced redevelopment projects, as
well as several others that are currently in the lease negotiation phase,"
said Dennis Gershenson. "Each of the redevelopments we are pursuing
represents our response to opportunities to improve and strengthen the
individual shopping center and our portfolio through a positive change in the
tenant mix. Our objective in undertaking the redevelopments announced today
and those that will be announced in the next few months is to look beyond
short term economic swings so that after construction is complete these
centers will benefit from both the improvement in net operating income and the
increase in the asset's value due to the enhanced quality of our tenants. "
Leasing
In the third quarter, the Company opened 17 non-anchor stores at rental
rates 30.9% above portfolio average. The Company also signed 3 new anchor
leases at an average base rent of $10.34, which is significantly higher than
average rates for existing anchor leases. For the year, the Company renewed
61 leases and opened 49 new stores. As of September 30, 2001 the portfolio
was 95% leased, excluding centers under redevelopment.
Acquisitions
In September, the Company acquired West Acres Commons in Flint Township,
Michigan as part of a joint venture transaction. The 95,000 square foot
shopping center was purchased for $10.8 million and is anchored by a Farmer
Jack Supermarket, a subsidiary of A&P. Under the terms of the joint venture
agreement, RPT received an acquisition fee and will be responsible for the
property management and leasing of the shopping center. The Company expects to
announce an additional joint venture acquisition during the fourth quarter.
Share Repurchase Program
Since the inception of the Company's common stock repurchase program
initiated in March of 2000, 132,000 common shares at an average price of
$14.23 per share have been purchased. At quarter end 7,092,826 common shares
were outstanding.
Dividend
The Company paid a cash dividend on its common stock of $0.42 per share on
October 16, 2001 to shareholders of record on September 30, 2001. The
distribution is equivalent to an annualized dividend of $1.68 per share and is
anticipated to be 65% of FFO and 71% of FAD (funds available for
distribution).
FFO Guidance
"Our performance in the third quarter and our comfort with fourth quarter
estimates should reinforce the fact that in these somewhat difficult times
that Ramco-Gershenson has a balanced portfolio with a stable income stream.
As we plan for the long range, our asset management team continues to
capitalize on opportunities as they present themselves within our shopping
center portfolio as well as to pursue our well-thought out business plan to
maximize the earnings potential and value of each asset," said Dennis
Gershenson. "The de-malling of Tel-Twelve and repositioning of Troy Towne
Center have been initiated with these objectives in mind and are taking place
during a lull in the economy so that our new and expanded retailers are open
and on-line when the retail marketplace recovers. These positive changes at
our centers, however, do not come without a short-term cost. As we take
income off line to commence our redevelopments, we expect our estimated
diluted FFO per share to be reduced from the $2.60-$2.62 range in 2001 to
between $2.30 and $2.40 in 2002. The loss of revenue will be replaced as the
new retailers come on line in 2003. It is important to note that the expected
reduction in FFO should not impact our ability to pay dividends at our current
rate. If the Company's FFO per share were to come in at the low end of the
range of $2.30 for 2002, the payment of dividends at the current rate would
only represent a payout ratio of approximately 73% of FFO and 84% of FAD. We
expect to fund our redevelopment program through the refinancing of existing
assets that have increased in value through prior repositionings and through
the sale of selected assets."
Conference Call
RPT will host a live broadcast of its 2nd Quarter conference call on
October 19, 2001 at 10:30 a.m. eastern time. The live broadcast will be
available online at http://www.ramcogershenson.com and http://www.streetevents.com and also
by telephone at (877) 817-7175 (no passcode needed). A replay will be
available shortly after the call on the aforementioned Websites (for ninety
days) or by telephone at 888-266-2086, passcode 5548872 (for one week).
Supplemental financial information is available via e-mail by sending
requests to dgarcia@ramco-gershenson.com and is also available at the investor
section of the Company's Web page.
Ramco-Gershenson Properties Trust has a portfolio of 56 shopping centers,
with approximately 11.7 million square feet of gross leasable area, located in
Michigan, Ohio, Wisconsin, New Jersey, Maryland, Virginia, North Carolina,
South Carolina, Tennessee, Georgia, Alabama and Florida. Headquartered in
Southfield, Michigan, the Trust is a fully integrated, self-administered,
publicly-traded real estate investment trust (REIT) which owns, develops,
acquires, manages and leases community shopping centers, regional malls and
single tenant retail properties, nationally.
This press release contains forward-looking statements with respect to the
operation of certain of the Trust's properties. Management of Ramco-
Gershenson believes the expectations reflected in the forward-looking
statements made in this document are based on reasonable assumptions. Certain
factors could occur that might cause actual results to vary. These include
general economic conditions, the strength of key industries in the cities in
which the Trust's properties are located, the performance of the Trust's
tenants at the Trust's properties and elsewhere, and other factors discussed
in the Trust's reports filed with the Securities and Exchange Commission.
Ramco-Gershenson Properties Trust
Consolidated Statements of Income
(In thousands, except per share amounts)
(Unaudited)
Three Three Nine Nine
Months Months Months Months
Ended Ended Ended Ended
9/30/01 9/30/00 9/30/01 9/30/00
REVENUES
Minimum rents $14,819 $15,218 $45,239 $44,965
Percentage rents 132 197 1,226 1,585
Recoveries from tenants 5,921 5,496 17,035 16,141
Fees and management income 838 - 1,934 -
Interest and other income 943 723 2,229 1,929
Total Revenues 22,653 21,634 67,663 64,620
EXPENSES
Real estate taxes 2,511 1,929 6,841 5,712
Recoverable operating expenses 3,733 3,858 10,972 11,035
Depreciation and amortization 4,049 3,774 12,123 11,004
Other operating 355 426 1,113 1,095
General and administrative 2,022 1,129 6,268 4,033
Interest expense 6,503 6,998 19,896 20,125
Total Expenses 19,173 18,114 57,213 53,004
Operating income 3,480 3,520 10,450 11,616
Earnings from unconsolidated
entities 203 31 617 115
Income before gain on sale of
real estate and minority
interest 3,683 3,551 11,067 11,731
Gain on sale of real estate 117 - 5,466 3,420
Minority interest 1,126 866 4,889 4,270
Net income before cumulative
effect of change in accounting
principle 2,674 2,685 11,644 10,881
Cumulative effect of change in
accounting principle(A) - - - (1,264)
Net income $2,674 $2,685 $11,644 $9,617
Net income available to common
shareholders $1,827 $1,840 $9,131 $7,102
Basic and diluted earnings per
share before cumulative effect
of change in accounting
principle:
Basic $0.26 $0.26 $1.28 $1.16
Diluted $0.26 $0.26 $1.28 $1.16
Basic and diluted earnings per
share after cumulative effect
of change in accounting
principle:
Basic $0.26 $0.26 $1.28 $0.99
Diluted $0.26 $0.26 $1.28 $0.99
Weighted average shares
outstanding:
Basic 7,105 7,179 7,109 7,197
Diluted 7,158 7,188 9,127 7,200
Ramco-Gershenson Properties Trust
Calculation of Funds from Operations(B)
(In thousands, except per share data)
(Unaudited)
Three Three Nine Nine
Months Months Months Months
Ended Ended Ended Ended
9/30/01 9/30/00 9/30/01 9/30/00
Net Income $2,674 $2,685 $11,644 $9,617
Add:
Depreciation and amortization
expense 4,066 3,858 12,149 11,228
Cumulative effect of change
in accounting principle - - - 1,264
Minority Interest 1,126 866 4,889 4,270
Loss (Gain) on sale of real
estate 3 - (5,209) (3,669)
Funds from Operations-diluted 7,869 7,409 23,473 22,710
Less:
Preferred share dividends 847 845 2,513 2,515
Funds from Operations-basic $7,022 $6,564 $20,960 $20,195
Funds from Operations per share:
Diluted $0.65 $0.61 $1.94 $1.87
Basic $0.70 $0.65 $2.08 $1.99
Basic weighted average shares
outstanding(C) 10,050 10,124 10,054 10,142
Convertible Preferred shares
and options 2,053 2,009 2,018 2,003
Diluted weighted average shares
outstanding(D) 12,103 12,133 12,072 12,145
Ramco-Gershenson Properties Trust
Consolidated Balance Sheets
(In thousands)
September 30, December 31,
2001 2000
ASSETS (unaudited)
Investment in real estate, net $491,973 $509,629
Cash and cash equivalents 4,224 2,939
Accounts receivable, net 16,410 15,954
Equity investments in and advances
to unconsolidated entities 6,103 9,337
Other assets, net 25,268 22,425
Total Assets $543,978 $560,284
LIABILITIES AND SHAREHOLDERS' EQUITY
Mortgages and notes payable $339,289 $354,008
Distributions payable 5,063 5,076
Accounts payable and accrued expenses 16,349 15,355
Total Liabilities 360,701 374,439
Minority Interest 48,480 47,301
Commitments and Contingencies - -
Shareholders' Equity 134,797 138,544
Total Liabilities and Shareholders' Equity $543,978 $560,284
(A) In December 1999, the Securities and Exchange Commission issued Staff
Accounting Bulletin No. 101, "Revenue Recognition in Financial
Statements" (SAB 101), which among other topics, requires that real
estate companies should not recognize contingent percentage rents
until the specified target that triggers this type of income is
achieved. The Company had previously recorded percentage rents
throughout the year based on rent estimated to be due from the
tenant. The Company has adopted the provisions of SAB 101 as of
April 1, 2000. The cumulative effect of such adoption is a reduction
in percentage rents retroactive to January 1, 2000, of approximately
$1,264,000.
(B) Management generally considers Funds from Operations ("FFO") to be
one measure of financial performance of an Equity REIT. The Trust
has adopted the most recent National Association of Real Estate
Investment Trusts ("NAREIT") definition of FFO, which was amended
effective January 1, 2000. Under the NAREIT definition, FFO
represents income before minority interest, excluding "extraordinary"
items, as defined under generally accepted accounting principles,
gains on sale of depreciated operating property, plus real estate
related depreciation and amortization (excluding amortization of
financing costs), and after adjustment for unconsolidated
partnerships and joint ventures.
The Company's FFO calculations include $120 and $256 of gain on sale
of undepreciated land for the three months and nine months ended
September 30, 2001, respectively.
FFO does not represent cash generated from operating activities in
accordance with generally accepted accounting principles and should
not be considered an alternative to net income as an indication of
the Trust's performance or to cash flows from operating activities as
a measure of liquidity or the ability to pay distributions.
Furthermore, while net income and cash generated from operating,
investing and financing activities, determined in accordance with
generally accepted accounting principles, consider capital
expenditures which have been and will be incurred in the future, the
calculation of FFO does not.
(C) Represents the weighted average total shares outstanding, assuming
the redemption of all operating partnership units for common shares.
(D) Represents the weighted average total shares outstanding, assuming
the redemption of all operating partnership units for common shares,
the conversion of convertible preferred shares to common shares, and
dilutive stock options.
For more information on Ramco-Gershenson Properties Trust, visit the
website: http://www.ramcogershenson.com .
SOURCE Ramco-Gershenson Properties Trust
 back to top
Related links:
http://www.ramcogershenson.com
CONTACT:
Dennis Gershenson, President & CEO, or
Richard Smith, CFO, both of Ramco-Gershenson Properties Trust,
+1-248-350-9900, fax, +1-248-350-9925
|
