PHILADELPHIA, Oct. 31 /PRNewswire-FirstCall/ -- Pennsylvania Real Estate
Investment Trust (NYSE: PEI) ("PREIT") today announced the financial results
for the third quarter ended September 30, 2002 are in line with the Company's
guidance provided in August 2002.
Highlights for the 2002 Third quarter
-- Funds from operations (FFO) in the 2002 third quarter increased 14.6%
to $12.3 million from $10.7 million in the 2001 third quarter.
-- FFO per share for the 2002 third quarter increased 8.1% to $0.67 from
$0.62 for the 2001 third quarter.
-- Combined net operating income (NOI) increased 20.0% to $26.5 million
in the third quarter of 2002 from $22.1 million in the 2001 third
quarter.
-- Same store NOI, excluding lease termination fees, for the
Company's retail portfolio increased by 6.7% from the 2001 third
quarter.
Third Quarter Results
For the third quarter ended September 30, 2002, the Company's FFO
increased by 14.6% to $12,297,000 from $10,733,000 for the comparable
three-month period in 2001. FFO per share was $0.67 in the third quarter of
2002 as compared to $0.62 in the third quarter of 2001, an increase of 8.1%.
This increase is a result of completed development projects, the acquisition
of a 30% interest in Willow Grove Park and a 100% interest in Beaver Valley
Mall, internal growth in the Company's retail portfolio and an additional
$0.3 million payment from the Company's bankruptcy claim against Bradlees
Stores, Inc.
NAREIT defines FFO as net income, excluding extraordinary items, gain (or
loss) on the sale of property, plus real estate related depreciation and
amortization.
Weighted average shares of beneficial interest/Operating Partnership units
(collectively, shares) increased by 6.0% to 18,305,000 from 17,276,000 for the
quarters ending September 30, 2002 and September 30, 2001, respectively.
NOI from wholly-owned properties and the Company's proportionate share of
partnerships and joint venture properties increased by 20.0% to $26,479,000 in
the 2002 third quarter from $22,068,000 in the third quarter of 2001. This
increase is a result of completed development projects, the acquisition of a
30% interest in Willow Grove Park and a 100% interest in Beaver Valley Mall,
internal growth in the Company's retail portfolio and an additional
$0.3 million payment of the Company's bankruptcy claim against Bradlees
Stores, Inc. After eliminating lease termination fees from both periods, NOI
increased 18.6% to $26,052,000 in the third quarter 2002 from $21,958,000 in
the third quarter 2001.
Net income for the third quarter ended September 30, 2002 was $8,178,000,
or $0.49 per share, on 16,566,000 weighted average shares of beneficial
interest outstanding, compared to $4,149,000 or $0.27 per share, on
15,391,000 weighted average shares of beneficial interest outstanding for the
2001 third quarter. Net income for the third quarter 2002 included
$4,085,000, or $0.25 per share, gain from the sale of the Company's interest
in Mandarin Corners Shopping Center in Jacksonville, FL.
In the third quarter 2002, the Company's dividend payout ratio was
75.9% of FFO and 82.6% of FAD, compared to 82.1% of FFO and 93.5% of FAD,
respectively in the third quarter 2001.
Nine Month Results
FFO for the nine months ended September 30, 2002 totaled $35,615,000, an
increase of 14.6% over $31,069,000 for the comparable nine-month period ended
September 30, 2001. FFO for the nine-month period totaled $1.97 per share on
18,059,000 weighted average shares outstanding for the nine months ended
September 30, 2002, compared to $1.93 per share on 16,101,000 weighted average
shares outstanding for the nine months ended September 30, 2001.
NOI from wholly-owned properties and the Company's proportionate share of
partnerships and joint venture properties totaled $77,050,000 for the nine
months ended September 30, 2002, compared to $66,481,000 for the nine-month
period ended September 30, 2001. After eliminating lease termination fees
from both periods, NOI increased 16.1% to $75,917,000 in 2002 from $65,397,000
in 2001.
Net income for the nine months ended September 30, 2002 was $16,347,000,
or $1.01 per share, on 16,239,000 weighted average shares of beneficial
interest outstanding compared to $13,148,000, or $0.92 per share, on
14,257,000 weighted average shares of beneficial interest outstanding for the
nine months ended September 30, 2001. Year-to-date net income for 2002
included $4,085,000, or $0.25 per share, gain from the sale of the Company's
interest in Mandarin Corners in Jacksonville, FL. Year-to-date net income for
2001 included a net gain of $2,100,000, or $0.15 per share, which is comprised
of a $1,800,000 gain from the sale of the Company's interest in Ingleside
Shopping Center, Thorndale, PA, $1,300,000 gain from the sale of land at
Paxton Towne Centre, Harrisburg, PA and a loss of $1,000,000 on the sale of
land at The Commons at Magnolia, Florence, SC.
For the nine months ended September 30, 2002 the Company's dividend payout
ratio was 77.6% of FFO and 84.7% of FAD, compared to 79.3% of FFO and 87.5% of
FAD, respectively for the nine months ended September 30, 2001.
Portfolio Performance - Same Store NOI Growth & Occupancy Levels
In the third quarter 2002, same store NOI for the Company's retail
portfolio, excluding lease termination fees, increased 6.7% over the third
quarter 2001. Same store NOI growth over the comparable period was primarily
driven by higher revenues from the leasing of vacant space, lease renewal and
scheduled rent increases. Same store NOI for year-to-date 2002 for the
Company's retail portfolio, excluding lease termination fees, increased by
6.2% over the comparable year-to-date 2001.
Retail same store occupancy levels in the third quarter 2002 increased to
95.9%, 280 basis points higher than the 93.1% in the third quarter 2001. The
Company's power centers and enclosed malls were 97.7% and 93.6% occupied,
respectively, as of September 30, 2002. The Company's same store mall
properties reported that sales decreased 3.8% to $386 per square foot in the
trailing twelve months ended September 30, 2002, from $402 per square foot for
the comparable period ended September 30, 2001.
In the third quarter 2002, same store NOI for the Company's multifamily
properties decreased 1.4% over the 2001 third quarter. A 3.1% increase in
rents and a 28.3% increase in vacancies and concessions, resulted in a
1.4% increase in revenues. The revenue increase was offset by 5.4% higher
operating expenses due to increases in insurance costs and real estate taxes
for the Florida portfolio. As previously discussed, the Company expects to be
impacted by higher insurance costs throughout 2002. Same store NOI for the
Company's multifamily portfolio for year-to-date 2002 increased by 1.4% over
the comparable year-to-date 2001.
Occupancy in the Company's multifamily portfolio was 95.1% as of the end
of the third quarter of 2002, or 120 basis points lower than the
96.3% occupancy level reported in the 2001 third quarter. The Company also
notes that its 95.1% occupancy level for the 2002 third quarter was 10 basis
points lower than the 95.2% occupancy level at the end of the 2002 second
quarter.
Leasing Update
During the third quarter of 2002, the Company executed thirty-six leases
encompassing 233,173 square feet. Of this total, thirty-four leases were
in-line transactions representing 90,725 square feet of space at an average
rent per square foot of $27.16. The remaining two transactions, totaling
142,448 square feet, include leases with Wal-Mart (114,270 square feet), a new
anchor tenant at Northeast Tower Center, and Builder's Surplus (28,178 square
feet), a new Junior anchor for the strip center at Beaver Valley Mall. The
thirty-six leases executed consist of six new lease transactions for
previously leased space at an average rent of $28.06 per square foot,
$5.89 higher than the prior average rent. Twenty leases were renewed,
representing 47,656 square feet at an average rent of $28.86, an increase of
$4.58 per square foot over the base rent at expiration. The Company also
executed transactions for ten formerly vacant spaces, two of which were the
aforementioned anchor transactions. The following summarizes the major lease
transactions that took place during the third quarter:
Power and Strip Center Portfolio
-- Springfield Park (Springfield, PA) -- A ground lease for a newly
created outparcel location was executed with Krispy Kreme. A renewal
lease was also secured with Lenscrafters for a 6,500 square foot
store. Northeast Tower Center (Philadelphia, PA) -- A lease of
114,270 square feet was executed with Wal-Mart at a rental rate of
$6.25 per square foot for the parcel previously leased to Bradlees
Stores Inc. The parcel is currently under construction and scheduled
for occupancy in the second quarter of 2003.
Enclosed Regional Mall Portfolio
-- Willow Grove Park (Willow Grove, PA) -- Continuing with the
merchandising upgrades since the addition of Macy's and the grand re
-opening of the mall in November 2001, the Company executed four
leases for 10,762 square feet with Coach, Guess, Gertrurde Hawk and
Nextel. The Company also renewed four leases with Stride-Rite,
Footlocker, Regis and Sunglass Hut for 5,838 square feet.
-- Magnolia Mall (Florence, SC) -- The Company completed renewals with
Victoria's Secret and Lerner totaling 15,032 square feet. Aeropostale
committed to 3,002 square feet of formerly vacant space.
-- Dartmouth Mall (Dartmouth, MA) -- The Company leased two formerly
vacant spaces to Journeys and T Mobile totaling 3,208 square feet.
-- Lehigh Valley Mall (Allentown, PA) -- Five tenants were renewed: Time
Out, Lane Bryant, Radio Shack, The Coffee Grinder, and Creative Treats
and Gifts totaling 11,958 square feet.
Portfolio Composition
The Company ended the 2002 third quarter with investment in real estate of
$926,422,000, a decrease of $10,138,000 from the second quarter of 2002's
$936,560,000. The decrease is primarily a result of the sale of a
240,000 square foot strip shopping center, Mandarin Corners in Jacksonville,
FL. Investment in real estate at September 30, 2002 included $21,918,000 of
construction in progress. On a cost basis, the Company's portfolio is
66.3% retail, 31.0% multifamily, 2.4% retail construction in progress and
0.3% industrial.
Strategic Update
Ronald Rubin, Chairman and Chief Executive Officer of PREIT said, "The
2002 third quarter was strong in a number of areas, including 14.6% FFO
growth, an 8.1% increase in FFO per share and a 20% increase in combined net
operating income. Our retail portfolio performance was especially solid as a
result of aggressive leasing efforts, which drove the increase in occupancy
for the retail portfolio and the base rent for new leases. We are especially
pleased to announce that Wal-Mart has signed a leased to occupy the space
previously leased to Bradlees Stores at our Northeast Tower Center. Turning
to our multifamily portfolio, while we were able to maintain occupancy levels
in the 95% range and achieved a 3.1% increase in rents, higher than expected
real estate taxes in our Florida market and the continued impact of rising
insurance costs more than offset an otherwise solid performance. Looking to
the remainder of the year we continue to stay focused on core growth and we
are on track to meet our earnings target for 2002."
Jonathan B. Weller, PREIT's President and Chief Operating Officer
commented, "Redevelopment activities continue to play an important role in
2002 growth. During the quarter we completed the redevelopment of The Commons
at Magnolia, Florence, SC. The center is currently 95% occupied. With the
sale of the Mandarin Corners strip shopping center to the property's principal
tenant, Wal-Mart, for $16,300,000 the Company continues its strategy to
dispose of non-core and stabilized assets and opportunistically reinvest the
proceeds."
Development Pipeline
The Company had three retail properties under development, totaling
1.0 million square feet as of September 30, 2002. The expected investment in
the current development pipeline is $80,500,000, with $5,100,000 funded as of
September 30, 2002.
Redevelopment
The Commons at Magnolia
The property is currently 99% leased and 95% occupied. During the third
quarter, Target, Bed Bath and Beyond, Catherine's, Cingular Wireless, Game
Stop and S&K Menswear opened their stores totaling 159,000 square feet.
Disposition
Mandarin Corners
During the third quarter of 2002, the Company sold Mandarin Corners, a
240,000 square foot strip shopping center in Jacksonville, FL, to Wal-Mart,
the center's principal tenant, for a price of $16,300,000. The property was
sold subject to a first mortgage of $7,000,000 at an interest rate of 9.13%.
Total cash proceeds of approximately $9,000,000 were used to pay off
short-term debt. The Company recorded a gain of $4,100,000 in the 2002 third
quarter. The sale price reflects an 8.8% NOI cap rate, based on trailing
12 months.
Capital Resources
Edward Glickman, Chief Financial Officer of PREIT commented: "During the
third quarter the Company transferred $25,000,000 from its construction
facility to the Company's line of credit, increasing the line of credit to
$200,000,000 from $175,000,000. The Company also filed a shelf registration
for up to $300,000,000 in shares or other securities. The Company's leverage
in relation to total market capitalization has decreased from 57% on
September 30, 2001 to 56.1% on September 30, 2002. As a result we believe
that the Company has sufficient resources to fund its commitments and to react
to strategic opportunities that may arise."
Line of Credit
As of September 30, 2002, the Company had approximately
$121,700,000 outstanding under the $200,000,000 revolving portion of its line
of credit facility.
Subsequent Event
In October 2002, the Company acquired its joint venture partner's interest
in Regency Lakeside Apartments in Omaha, Nebraska for $14,200,000. The
Company assumed the partner's share of the first mortgage of $9,600,000 at an
interest rate of 7.56%. The balance was financed by $2,500,000 from the line
of credit and $2,100,000 in cash. The purchase price reflects a 10.0% NOI cap
rate, based on trailing 12 months. The Company assumed the management of the
property as of the date of closing.
Jon Weller added, "The Regency acquisition keeps with our stated goal of
diminishing our reliance on joint venture relationships. The transaction
provides PREIT with the opportunity to utilize our management's expertise to
reposition this property and maximize its value."
2002 Fiscal Year Forecast
The Company maintains its estimate for fiscal year 2002 at $2.77 - $2.81.
The Company will provide guidance for 2003 no later than its announcement of
fourth quarter and year-end 2002 results.
Conference Call Information
Management has scheduled a conference call for 11:00 am Eastern Standard
Time on October 31, 2002 to review the Company's third quarter results, market
trends and future outlook. To listen to the call, please dial (800) 219-6110
or (303) 262-2075 at least five minutes before the scheduled start time.
Investors can also access the call in a "listen only" mode via the Internet at
the Company website at http://www.preit.com or at http://www.vcall.com . Please allow extra
time prior to the call to visit the site and download the necessary software
to listen to the Internet broadcast. The online archive of the webcast will
be available for 14 days following the call.
For interested individuals unable to join the conference call, a replay of
the call will be available through November 7, 2002 at (303) 590-3000
(Passcode 504073). The online archive of the webcast will be available for
14 days following the call.
About Pennsylvania Real Estate Investment Trust
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 11.8 million square feet) and apartment communities
(approximately 7,242 units) located primarily in the eastern United States.
The Company's portfolio currently consists of 45 properties in 10 states. In
addition, there are 3 retail properties under development, which PREIT expects
will add approximately 1.0 million square feet to its portfolio. PREIT is
headquartered in Philadelphia, Pennsylvania.
The matters discussed in this report, as well as news releases issued from
time to time by PREIT include use of forward-looking terminology such as
"may," "will," "should," "expect," "anticipate," "estimate," "plan," or
"continue" or the negative thereof or other variations thereon, or comparable
terminology which constitute "forward-looking statements." Such
forward-looking statements (including without limitation, information
concerning PREIT's continuing dividend levels, planned acquisition,
development and divestiture activities, short- and long-term liquidity
position, ability to raise capital through public and private offerings of
debt and/or equity securities, availability of adequate funds at reasonable
cost, revenues and operating expenses for some or all of the properties,
leasing activities, occupancy rates, changes in local market conditions or
other competitive factors) involve known and unknown risks, uncertainties and
other factors that may cause the actual results, performance or achievements
of PREIT's results to be materially different from any future results,
performance or achievements expressed or implied by such forward-looking
statements. PREIT disclaims any obligation to update any such factors or to
publicly announce the result of any revisions to any of the forward-looking
statements contained herein to reflect future events or developments.
** A supplemental quarterly financial package ** is available on the Company's
web site at http://www.preit.com .
Pennsylvania Real Estate Investment Trust
Selected Financial Data
FUNDS FROM OPERATIONS Three Months Ended Nine Months Ended
(In thousands, Sept 30, Sept 30, Sept 30, Sept 30,
except per 2002 2001 2002 2001
share results)
Net income $8,178 $4,149 $16,347 $13,148
Minority interest in
operating partnership 467 499 1,404 1,696
Minority interest in
discontinued operations 419 2 428 4
Extraordinary loss (Early
extinguishment of debt) - - 77 -
Gains on sales of
interests in real estate (4,085)(B) - (4,085)(B) (2,107)(C)
Depreciation and
amortization:
Wholly owned &
consolidated
partnership, net 5,347(A) 4,387(A) 15,628(A) 12,887(A)
Unconsolidated
partnerships & joint
ventures 1,971(A) 1,590(A) 5,816(A) 4,869(A)
Excess purchase price over
net assets acquired - 106 - 317
Prepayment fee - - - 255(B)
FUNDS FROM OPERATIONS $12,297(C) $10,733(C) $35,615(C) $31,069(C)
FUNDS FROM OPERATIONS PER
SHARE AND OP UNITS $0.67 $0.62 $1.97 $1.93
Weighted average number of
shares outstanding 16,566 15,391 16,239 14,257
Weighted average effect of
full conversion of OP units 1,739 1,885 1,820 1,844
Total weighted average
shares outstanding,
including OP units 18,305 17,276 18,059 16,101
(A) Excludes depreciation of non-real estate assets, amortization of
deferred financing costs and discontinued operations. These amounts
were previously included in the depreciation amounts and deducted in
a separate line.
(B) Prepayment fee for the refinancing of the mortgage on Countrywood
Apartments in Tampa, FL.
(C) Includes the non-cash effect of straight-line rents of $264 and
$335 for the 3rd quarter 2002 and 2001 and $744 and $935 for year to
date 2002 and 2001, respectively.
OPERATING RESULTS Three Months Ended Nine Months Ended
(In thousands, except per Sept 30, Sept 30, Sept 30, Sept 30,
share results) 2002 2001(A) 2002 2001(A)
REAL ESTATE REVENUES
Base rent $23,931 $20,842 $68,797 $61,760
Percent rent 334 211 922 758
Expense reimbursement 3,380 2,368 9,230 7,328
Lease termination 426 110 1,072 1,084
Other real estate
revenue 1,019 964 2,655 2,644
Total real estate revenue 29,090 24,495 82,676 73,574
Management company revenue 2,443 2,545 6,769 7,010
Interest and other income 144 102 519 355
31,677 27,142 89,964 80,939
EXPENSES
Property payroll and
benefits 2,008 1,813 5,792 5,284
Real estate and other
taxes 2,352 1,933 6,503 5,639
Utilities 1,041 937 3,051 3,161
Other operating expenses 4,344 3,415 11,634 10,256
Total property operating
expenses 9,745 8,098 26,980 24,340
Depreciation and
amortization 5,376 4,353 15,539 12,796
Corporate payroll and
benefits 3,696 3,240 10,742 9,644
Other general and
administrative expenses 2,516 2,360 7,596 6,801
Total general &
administrative expenses 6,212 5,600 18,338 16,445
Interest expense 7,156 5,804 20,283 18,808
28,489 23,855 81,140 72,389
Income before equity in
partnerships and joint
ventures, minority
interest, gains
on sales of interests
in real estate
and extraordinary loss 3,188 3,287 8,824 8,550
Equity in income of
partnerships and joint
ventures 1,719 1,343 5,178 4,157
Gains on sales of interests
in real estate - - - 2,107(C)
Income before minority
interest, discontinued
operations and
extraordinary loss 4,907 4,630 14,002 14,814
Minority interest in
operating partnership (467) (499) (1,404) (1,696)
Income from continuing
operations 4,440 4,131 12,598 13,118
Income from discontinued
operations 72 20 169 34
Minority interest in
discontinued operations (419) (2) (428) (4)
Gains on sales of interests
in real estate 4,085(B) - 4,085(B) -
Income before
extraordinary loss 8,178 4,149 16,424 13,148
Extraordinary loss (Early
extinguishment of debt) - - (77) -
NET INCOME $8,178 $4,149 $16,347 $13,148
PER SHARE DATA
Net income before gains on
sales $0.25 $0.27 $0.76 $0.77
Gains on sales of interests
in real estate 0.25(B) - 0.25(B) 0.15(C)
BASIC INCOME PER SHARE $0.49 $0.27 $1.01 $0.92
DILUTED INCOME PER SHARE $0.49 $0.27 $1.00 $0.92
Weighted average number of
shares outstanding 16,566 15,391 16,239 14,257
(A) Prior periods' revenues and expenses were adjusted for discontinued
operations, which consist of disposed real estate assets.
(B) 3rd qtr 2002 includes gains on sale of Mandarin Corners, a shopping
center in Jacksonville, FL.
(C) Year to date 2001 includes net gains on sales of land at The Commons
at Magnolia in Florence, SC and at Paxton Towne Centre, Harrisburg,
PA, and sale of interest in Ingleside Shopping Center, Thorndale, PA.
Pennsylvania Real Estate Investment Trust
Selected Financial Data
(In thousands)
EQUITY IN INCOME OF PARTNERSHIPS Three Months Ended Nine Months Ended
AND JOINT VENTURES Sept 30, Sept 30, Sept 30, Sept 30,
2002 2001 2002 2001
Gross revenues from real estate $24,269 $22,651 $72,333 $67,796
Expenses:
Property operating expenses 8,496 8,190 24,933 24,226
Mortgage and bank loan interest 7,906 7,652 23,722 22,342
Prepayment fee - - - 510(A)
Depreciation and amortization 4,541 4,273 13,324 12,866
20,943 20,115 61,979 59,944
3,326 2,536 10,354 7,852
Partner's share (1,607) (1,193) (5,176) (3,695)
EQUITY IN INCOME OF PARTNERSHIPS
AND JOINT VENTURES $1,719 $1,343 $5,178 $4,157
(A) Prepayment fee for the refinancing of the mortgage on Countrywood
Apartments in Tampa, FL.
Supplemental Information for Wholly Owned Properties
and the Company's Proportionate Share of Partnerships and Joint Ventures
(In thousands)
EARNINGS BEFORE INTEREST,
TAXES, DEPRECIATION Three Months Ended Nine Months Ended
AND AMORTIZATIONS Sept 30, Sept 30, Sept 30, Sept 30,
("EBITDA") 2002 2001(A) 2002 2001(A)
Gross revenues $29,090 $24,495 $82,676 $73,574
Operating expenses (9,745) (8,098) (26,980) (24,340)
Net operating income:
wholly-owned properties 19,345 16,397 55,696 49,234
Company's proportionate
share of partnerships and
joint ventures net
operating income 7,134 5,671 21,354 17,247
Combined net operating
income 26,479(B) 22,068(B) 77,050(B) 66,481(B)
Interest income 144 102 519 355
Management company revenue 2,443 2,545 6,769 7,010
Total general &
administrative expenses (6,212) (5,600) (18,338) (16,445)
EBITDA $22,854(C) $19,115(C) $66,000(C) $57,401(C)
(A) Prior periods' revenues and expenses were adjusted for discontinued
operations, which consist of disposed real estate assets.
(B) NOI including the impact of disposed real estate assets for the
3 months ended 9/30/02 and 9/30/01 was $26,640 and $22,356,
respectively, and for the 9 months ended 9/30/02 and 9/30/01 was
$77,883 and $67,310, respectively.
(C) EBITDA including the impact of disposed real estate assets for the
3 months ended 9/30/02 and 9/30/01 was $23,015 and $19,404,
respectively, and for the 9 months ended 9/30/02 and 9/30/01 was
$66,833 and $58,230, respectively.
(In thousands)
MORTGAGE NOTES, BANK AND
CONSTRUCTION LOANS PAYABLE September 30, December 31,
Wholly-owned properties 2002 2001
Mortgage notes payable $301,994 $257,873
Bank loans payable 120,500 98,500
Construction loan payable - 4,000
422,494 360,373
Company's proportionate share of
partnerships and joint ventures
Mortgage notes payable 176,920 145,803
Total mortgage notes and bank loans
payable $599,414 $506,176
SOURCE Pennsylvania Real Estate Investment Trust
 back to top
Related links:
http://www.preit.com
CONTACT:
Edward A. Glickman, Executive Vice President
and CFO of Pennsylvania Real Estate Investment Trust,
+1-215-875-0700; or General Info, Joe Calabrese, +1-212-445-8434,
or Analyst Info, Georganne Palffy, +1-312-266-7800, both of FRB
Weber Shandwick
|
