PHILADELPHIA, Nov. 8 /PRNewswire/ -- Pennsylvania Real Estate Investment
Trust (NYSE: PEI) today announced results for the third quarter and nine
months ended September 30, 2001 in line with the Company's August 2001
guidance.
2001 Third Quarter Highlights
- FFO for the 2001 third quarter increased 7.6% to $10,733,000 from
$9,977,000 in the 2000 third quarter.
- Combined net operating income increased 10.9% to $22,356,000 in the
third quarter of 2001 from $20,160,000 for the third quarter of 2000.
- Same store net operating income for the Company's shopping center
portfolio increased 4.0% from the 2000 third quarter.
- Same store multifamily net operating income increased 5.4% from the
2000 third quarter.
- Mall sales increased 7.1% to $391 per square foot and shopping center
occupancy increased 180 basis points to 91.5%.
Third Quarter Results
For the third quarter ended September 30, 2001 the Company's funds from
operations (FFO) totaled $10,733,000 compared with FFO of $9,977,000 for the
comparable three-month period in 2000. Third quarter 2001 FFO per share
totaled $0.62 per share, on 17,276,111 weighted average shares of beneficial
interest/Operating Partnership units (collectively shares), compared with
$0.67 per share, on 14,922,706 weighted average shares outstanding, in the
2000 third quarter. FFO for the 2001 third quarter was 7.6% higher than FFO
for the same quarter one year ago, while weighted average shares outstanding
increased 15.8% percent due to the Company's public offering in July 2001,
leading to a 7.5% decrease in FFO on a per share basis.
As calculated by NAREIT, FFO is defined as net income, excluding
extraordinary items, gain (or loss) on the sale of property, plus real estate
related depreciation and amortization.
Net operating income from wholly-owned properties and the Company's
proportionate share of partnerships and joint venture properties increased by
10.9% to $22,356,000 for the 2001 third quarter from $20,160,000 for the third
quarter of 2000. This increase is due to improved performance in the Company's
shopping center and multifamily portfolios and the completion of development
projects.
Net income for the third quarter ended September 30, 2001 was $4,149,000,
or $0.27 per share, on 15,391,440 total weighted average shares outstanding
compared to $6,162,000 or $0.46 per share, on 13,387,471 total weighted
average shares outstanding for the comparable 2000 period. This decrease is
due, in part, to higher depreciation from development projects coming on line,
the absence of gains from sales of real estate during the 2001 third quarter
and the dilutive effect on earnings per share of the equity offering in July
2001. Net income in the third quarter of 2000 included a gain on the sale of
Valleyview, a strip shopping center in Wilmington, DE, totaling $1.4 million
or $0.10 per share.
Nine Month Results
FFO for the nine months ended September 30, 2001 totaled $31,069,000
compared with FFO of $34,381,000 for the prior nine-month period ended
September 30, 2000. FFO for the nine-month period totaled $1.93 per share on
16,100,792 weighted average shares outstanding, compared to $2.31 per share on
14,907,903 weighted average shares for the nine months ended September 30,
2000. The decrease was primarily the result of non-recurring lease termination
fees in the earlier period.
Net operating income from wholly-owned properties and the Company's
proportionate share of partnerships and joint venture properties totaled
$67,310,000 for the nine months ended September 30, 2001, compared with
$65,944,000 for the nine months ended September 30, 2000. After eliminating
lease termination revenues from both periods, NOI increased 10.5% to
$66,225,000 in 2001 from $59,939,000 in 2000.
Net income for the nine months ended September 30, 2001 was $13,148,000,
or $0.92 per share, on 14,256,967 total weighted average shares outstanding,
compared to $27,635,000, or $2.07 per share, on 13,370,767 total weighted
average shares outstanding for the nine months ended September 30, 2000. Year-
to-date net income for 2001 includes $2.1 million, or $0.15 per share, from
net gains on the sale of land at Florence Commons Shopping Center, Florence,
SC, and Paxton Towne Centre, Harrisburg, PA and the sale of the Company's
interest in Ingleside Shopping Center, Thorndale, PA. Net income for the 2000
nine-month period includes gains on the sale of Valley View shopping center in
Wilmington, DE, the CVS Building in Alexandria, VA and the Company's interest
in Park Plaza shopping center in Pinellas Park, FL totaling $10.3 million or
$0.77 per share.
Same Store NOI Growth -- Retail and Multifamily Portfolios
Same store net operating income for the Company's retail portfolio
increased 4.0% over the 2000 third quarter. The increase over the comparable
period was primarily driven by higher revenues from lease up of vacant space,
lease turnover and rent step-ups. Contributing to the Company's retail
portfolio net operating income growth was an increase in occupancy rates in
the 2001 third quarter, which rose to 91.5%, 180 basis points higher than
89.7% reported for the 2000 third quarter. The Company's power centers and
enclosed malls were 96.6% and 92.5% occupied, respectively, as of
September 30, 2001.
The Company also reported that sales at its mall properties increased 7.1%
to $391 per square foot for the trailing twelve months from $365 per square
foot for the comparable period in 1999 and 2000. During 2000 sales at the
Company's mall properties were $371 per square foot.
Same store net operating income for the Company's portfolio of multifamily
properties increased 5.4% over the comparable quarter in 2000, primarily
driven by a 4.2% increase in rents and a 5.6% increase in total revenues. The
growth in net operating income was limited by a 6.0% increase in operating
expenses due, in part, to a 76% increase in insurance costs. As previously
discussed, the Company expects to be impacted by higher insurance costs
throughout the balance of this year and is stringently managing its exposure
to utility expenses by implementing additional submetering to take effect in
the fourth quarter of this year.
Comments from Management
Ronald Rubin, Chairman and Chief Executive Officer of PREIT said, "It was
a productive quarter for the Company as we achieved year-over-year FFO growth
of 7.6% and a 10.9% increase in combined NOI. The Company achieved this
growth, despite a difficult market environment, through the positive
fundamentals of our core portfolio, strong relationships with leading national
and regional retailers and our conservative development activity. Looking
forward, we believe these fundamentals, along with our careful business plan,
position PREIT to take advantage of the numerous growth opportunities in
target markets and deliver consistent operating results and returns on
capital."
Mr. Rubin added, "Individuals are the heart of any organization, and we
owe a great deal to those who provided long-standing leadership for our
Company. We were saddened by the recent passing of Sylvan M. Cohen, our former
Chairman who founded Pennsylvania Real Estate Investment Trust in 1960, and
William R. Dimeling, a Trustee of PREIT since 1982. We shall deeply miss their
counsel, insight and friendship."
2001 Fourth Quarter and Fiscal Year Forecast
PREIT is reaffirming its financial guidance for the 2001 fourth quarter
and fiscal year. The Company noted that it is currently estimating FFO to be
approximately $0.75 to $0.79 for the fourth quarter ending December 31, 2001
and $2.68 to $2.72 per share for the calendar year ending December 31, 2001.
Strategic Update
PREIT is pursuing a broad range of internal and external growth strategies
in its primary markets and is focused on three strategic goals and
initiatives:
- Construction in Progress: To position the Company for future growth,
management intends, during 2001, to have $50 to $100 million of
development projects on-line. As of September 30, 2001 the Company's
construction in progress amounted to $45.8 million.
- Built-in Development Backlog: Leveraging the Company's in-depth market
knowledge, strong tenant relationships and economies of scale,
management is focused on maintaining an active pipeline of new
properties in desirable locations to advance into the construction phase
as existing development projects are completed. The Company's current
backlog consists of six development projects with approximately 1.8
million square feet of GLA and a potential investment of approximately
$116 million.
- Return on Investment: Focused on taking full advantage of the favorable
growth opportunities within its markets, the Company is committed to a
solid investment philosophy that emphasizes quality real estate and
transactions structured to protect return on investment. Accordingly,
management's goal is to achieve a minimum 11% return on investment in
its development portfolio.
Jonathan B. Weller, PREIT's President and Chief Operating Officer
commented, "While the near term general economic environment continues to be
challenging, we continue to benefit from our diversified portfolio of quality
real estate and high-end roster of national and regional retailers. We
continue to believe that our strategic direction is sound and will create
long-term value for our shareholders. The Company's development and
redevelopment pipeline currently consists of seven power centers, one
entertainment center and one enclosed mall."
The Company ended the 2001 third quarter with investment in real estate of
$824 million, a net increase of $20 million over 2000's year-end level of
$804 million. As a result, on a cost basis, the Company's portfolio is now
34% multifamily, 60% retail, 6% retail development and less than 1%
industrial.
Development Pipeline
- Creekview Shopping Center (Warrington, PA) - Construction of the 424,722
square foot shopping center is 70% complete as of September 30, 2001 and
the center is 100% leased. During the quarter several stores opened,
including Genuardi's Family Markets.
- Paxton Towne Centre (Harrisburg, PA) - Construction of the 712,621
square foot power center is 90% complete as of September 30, 2001 and
the center is 90% leased.
Leasing Update
A total of 412,587 square feet was leased in the third quarter of 2001,
including the renewal of JC Penney at Prince George's Plaza. Within this
total, 23 new leases for 230,092 square feet were responsible for the
portfolio's increase in occupancy. Noteworthy among these new leases were
replacements for two bankrupt tenants. At Creekview new leases were signed
with Bed Bath & Beyond and Cingular Wireless which along with Duron Paints
will occupy space previously leased to Lechter's Cost-for-Less. Linens' N
Things has leased the 54,096 square foot former Homeplace store at the Court
at Oxford Valley which will also include Thomasville Furniture Galleries. At
Paxton Towne Center Old Navy leased 22,000 square feet which will open in the
first quarter of 2002.
Financing
- Metroplex Shopping Center (Plymouth Meeting, PA) - The Company also
announced that, after the close of the quarter, it arranged a
$65.5 million financing with a 10-year term for the Metroplex Shopping
Center, a 778,000 square foot power center in which the Company owns a
50% interest. The newly placed financing carries an interest rate of
7.25% and was provided by CS First Boston. Proceeds were used to repay
the construction loan.
Capital Resources
Edward Glickman, Chief Financial Officer of PREIT, commented, "To position
PREIT for future growth, we continue to take steps to improve the Company's
capital structure. In July, we completed a two million share equity offering.
Net proceeds of $44.5 million were used to pay down debt and for working
capital. It is important to note that, while this offering resulted in modest
FFO per share dilution, we believe that the additional access to capital and
the reduction in leverage will be of significant long-term benefit to our
shareholders. The successful completion of this transaction along with the
$250 million combined credit and construction finance facility announced in
January 2001, will enable us to continue to make strategic investments in
areas that will drive growth. Looking forward, we will continue to conserve
our resources to meet new market realities and preserve financial strength."
As of September 30, 2001, the Company had approximately $89.1 million
outstanding under the $175 million revolving portion of its bank credit
facility. On July 11, 2001, the Company completed a public offering of
2.0 million shares of common stock at $23.00 per share, generating total net
proceeds of $44.5 million. The net proceeds were used to pay down debt and for
working capital. The offering was fully underwritten by Lehman Brothers.
99th Consecutive Dividend Distribution Declared
The Company previously announced on October 18, 2001 that its Board of
Trustees declared a quarterly cash dividend of $0.51 per share. The dividend
will be paid on December 17, 2001 to shareholders and unitholders of record on
November 30, 2001. The December 17, 2001 dividend will be PREIT's 99th
consecutive distribution since its initial dividend paid in August of 1962.
Throughout its history the Company has never omitted or reduced a shareholder
dividend. The December 17th dividend represents an annualized rate of $2.04
per share and a 9.1% yield based on the closing stock price of November 7,
2001.
Conference Call Information
The Company will conduct a conference call that will be broadcast
simultaneously over the Internet at 11:00 ET on Thursday November 8, 2001 to
review the Company's quarterly results, market trends and future outlook. The
webcast will be available to the public, on a listen-only basis, via the
Internet at http://www.vcall.com or the Company's website at http://www.preit.com . Please
allow extra time prior to the webcast to visit the site and download the
streaming media software required to listen to the Internet broadcast. The
online archive of the webcast will be available for 30 days.
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 10.9 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 6 retail properties under development, which PREIT expects
will add approximately 1.8 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 Data
Selected Financial Data
FUNDS FROM OPERATIONS
Three Months Ended Nine Months Ended
Sept 30, Sept 30, Sept 30, Sept 30,
2001 2000 2001 2000
Income before
minority interest
in operating
partnership $4,650,000 $6,871,000 $14,848,000 $30,815,000
Less: Gains on
sales of
interests in
real estate - (1,388,000) (2,107,000) (10,298,000)
Add: Depreciation
and amortization:
Wholly owned &
consolidated
partnership,
net 4,501,000(a) 3,551,000(a) 13,229,000(a) 10,733,000(a)
Unconsolidated
partnerships &
joint
ventures 1,639,000 977,000 4,988,000 3,234,000
Excess purchase
price over net
asset acquired 106,000 73,000 317,000 219,000
Prepayment fee - - 255,000(b) -
Less: Depreciation
of non-real
estate
assets (65,000) (65,000) (195,000) (195,000)
Amortization
of deferred
financing
costs (98,000)(c) (42,000)(c) (266,000)(c) (127,000)(c)
FUNDS FROM
OPERATIONS $10,733,000(d) $9,977,000(d) $31,069,000(d) $34,381,000(d)
FUNDS FROM
OPERATIONS PER
SHARE AND OP
UNITS $0.62 $0.67 $1.93 $2.31
Weighted average
number shares
outstanding 15,391,440 13,387,471 14,256,967 13,370,767
Weighted average
effect of full
conversion of
OP units 1,884,671 1,535,235 1,843,825 1,537,136
Total weighted
average shares
of outstanding
including OP
units 17,276,111 14,922,706 16,100,792 14,907,903
a) Amortization of deferred financing costs on the Company's Credit
Facility was reclassified to interest expense.
b) Prepayment fee for the refinancing of the mortgage on Countrywood
Apartments in Tampa, FL.
c) Amortization of deferred financing costs for property mortgages. Does
not include amortization of amounts relating to the Company's Credit
Facility.
d) Includes the non-cash effect of straight-line rents of $335,000 and
$555,000 for the 3rd quarter 2001 and 2000 and $934,000 and $1,034,000
for year to date 2001 and 2000, respectively.
OPERATING RESULTS
Three Months Ended Nine Months Ended
Sept 30, Sept 30, Sept 30, Sept 30,
2001 2000(d) 2001 2000(d)
REAL ESTATE
REVENUES
Base rent $21,148,000 $20,042,000 $62,630,000 $59,422,000
Percent rent 211,000 144,000 783,000 567,000
Expense
reimbursement 2,446,000 2,055,000 7,521,000 6,296,000
Lease
termination 110,000 83,000 1,084,000 5,720,000
Other real
estate
revenue 975,000 879,000 2,689,000 2,541,000
Total real
estate revenue 24,890,000 23,203,000 74,707,000 74,546,000
Management
company revenue 2,545,000 - 7,010,000 -
Interest and
other income 102,000 454,000 355,000 1,010,000
27,537,000 23,657,000 82,072,000 75,556,000
EXPENSES
Property
payroll and
benefits 1,817,000 1,647,000 5,298,000 4,980,000
Real estate
and other
taxes 1,980,000 1,773,000 5,779,000 5,349,000
Utilities 941,000 985,000 3,175,000 3,122,000
Other operating
expenses 3,467,000 3,643,000 10,392,000 10,201,000
Total property
operating
expenses 8,205,000 8,048,000 24,644,000 23,652,000
Depreciation
and
amortization 4,501,000 3,551,000 13,229,000 10,733,000
Corporate payroll
and benefits 3,240,000 542,000 9,644,000 1,708,000
Other general
and
administrative
expenses 2,360,000 397,000 6,801,000 1,672,000
Total general &
administrative
expenses 5,600,000 939,000 16,445,000 3,380,000
Interest expense 5,924,000 5,855,000 19,170,000 17,586,000
24,230,000 18,393,000 73,488,000 55,351,000
Income before
equity in
unconsolidated
entities, gains
on sales of
interests in
real estate
and minority
interest in
operating
partnership 3,307,000 5,264,000 8,584,000 20,205,000
Equity in loss
of PREIT-RUBIN,
Inc. - (1,634,000) - (5,021,000)
Equity in income
of partnerships
and joint
ventures 1,343,000 1,853,000 4,157,000 5,333,000
Gains on sales of
interests in real
estate - 1,388,000(a) 2,107,000(b) 10,298,000(c)
Income before
minority
interest in
operating
partnership 4,650,000 6,871,000 14,848,000 30,815,000
Minority interest
in operating
partnership (501,000) (709,000) (1,700,000) (3,180,000)
NET INCOME $4,149,000 $6,162,000 $13,148,000 $27,635,000
PER SHARE DATA
Net income before
gains on sales $0.27 $0.36 $0.77 $1.30
Gains on sales of
interests in real
estate $0.00 $0.10(a) $0.15(b) $0.77(c)
BASIC INCOME PER
SHARE $0.27 $0.46 $0.92 $2.07
DILUTED INCOME PER
SHARE $0.27 $0.46 $0.92 $2.07
Weighted average
number shares
outstanding 15,391,440 13,387,471 14,256,967 13,370,767
a) 3rd qtr 2000 includes gain on sale of Valley View, Wilmington, DE
b) Year to date 2001 includes net gains on sales of land at Florence
Commons Shopping Center in Florence, SC, land at Paxton Towne Centre,
Harrisburg, PA and sale of interest in Ingleside Shopping Center,
Thorndale, PA.
c) Year to date 2000 includes gain on sale of Valley View, Wilmington, DE,
of CVS Building, Alexandria, VA and gain on sale of interest in Park
Plaza shopping center in Pinellas Park, Florida.
d) Certain prior period amounts have been reclassified to conform with the
current period presentation.
Pennsylvania Real Estate Investment Trust
Selected Financial Data
EQUITY IN INCOME OF
PARTNERSHIPS AND JOINT
VENTURES Three Months Ended Nine Months Ended
Sept 30, Sept 30, Sept 30, Sept 30,
2001 2000 2001 2000
Gross revenues from
real estate $22,651,000 $16,381,000 $67,796,000 $55,942,000
Expenses:
Property operating
expenses 8,190,000 5,468,000 24,226,000 18,604,000
Mortgage and bank
loan interest 7,652,000 5,113,000 22,342,000 18,150,000
Prepayment fee - - 510,000(a) -
Depreciation and
amortization 4,273,000 2,531,000 12,866,000 8,592,000
20,115,000 13,112,000 59,944,000 45,346,000
2,536,000 3,269,000 7,852,000 10,596,000
Partner's share (1,193,000) (1,416,000) (3,695,000) (5,263,000)
EQUITY IN INCOME OF
PARTNERSHIPS AND
JOINT VENTURES $1,343,000 $1,853,000 $4,157,000 $5,333,000
a) Prepayment fee at 100% 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
EARNINGS BEFORE INTEREST,
TAXES, DEPRECIATION
AND AMORTIZATIONS
("EBITDA") Three Months Ended Nine Months Ended
Sept 30, Sept 30, Sept 30, Sept 30,
2001 2000 2001 2000
Gross revenues $24,890,000 $23,203,000 $74,707,000 $74,546,000
Operating
expenses (8,205,000) (8,048,000) (24,644,000) (23,652,000)
Net operating
income:
wholly-owned
properties 16,685,000 15,155,000 50,063,000 50,894,000
Company's
proportionate
share of
partnerships
and joint
ventures net
operating
income 5,671,000 5,005,000 17,247,000 15,050,000
Combined net
operating
income 22,356,000(b) 20,160,000(b) 67,310,000(b) 65,944,000(b)
Interest income 102,000 454,000 355,000 1,010,000
Company's
proportionate
share of
PREIT-RUBIN,
Inc. net
operating income
(loss) 1,165,000) (3,732,000)
Management company
revenue 2,545,000 - 7,010,000 -
Total general &
administrative
expenses (5,600,000)(a) (939,000) (16,445,000)(a) (3,380,000)
EBITDA $19,403,000 $18,510,000 $58,230,000 $59,842,000
a) Total General & Administrative Expenses for 2001 includes PREIT-RUBIN,
Inc. expenses.
b) Net operating income includes lease termination income of $110,000 and
$83,000 for the quarters ending September 30, 2001 and 2000
respectively, and $1,084,000 and $5,720,000 for the nine-month periods
ending September 30, 2001 and 2000, respectively.
NOI in the nine-month period ending September 30, 2000 also includes
recovery of receivables previously reserved of $285,000, received in
connection with a lease termination. Net operating income, net of
these amounts, is $22,245,000 and $20,077,000 for the quarters ended
September 30, 2001 and 2000, and $66,225,000 and $59,939,000 for the
nine-month periods ended September 30, 2001 and 2000, respectively.
MORTGAGE NOTES, BANK AND CONSTRUCTION LOANS PAYABLE
September 30, December 31,
Wholly-owned properties 2001 2000
Mortgage notes payable $259,111,000 $247,449,000
Bank loans payable 88,000,000 110,300,000
Construction loan payable 4,000,000 24,647,000
351,111,000 382,396,000
Company's proportionate share of
partnerships and joint ventures
Mortgage notes payable 113,973,000 111,457,000
Bank loans payable 31,200,000 30,929,000
Total mortgage notes and bank loans
payable $496,284,000 $524,782,000
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,
+1-215-875-0700; orGeneral Info, Joe Calabrese, +1-212-445-8434,
Analyst Info, Georganne Palffy, +1-312-266-7800, or Media Info,
Judith Sylk-Siegel, +1-212-445-8431, all of FRB Weber Shandwick
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