SAN DIEGO, Nov. 11 /PRNewswire/ -- Burnham Pacific Properties, Inc.
(NYSE: BPP) today announced operating results for the quarter ended September
30, 1998. For the third quarter, diluted Funds From Operations ("FFO") was
$14,092,000 or $0.34 per share, up 3.4 percent on a per-share basis, as
compared to $7,678,000 or $0.33 per share for the quarter ended September 30,
1997. Basic FFO per share increased 8.8 percent to $0.36 per share as
compared to $0.33 per share for the third quarter of 1997. Diluted FFO for
the nine months ended September 30, 1998 was $38,665,000 or $1.01 per share,
up 8.5 percent on a per-share basis, as compared to $19,244,000 or $0.93 per
share for the prior nine-month period. Basic FFO per share increased
13.31 percent to $1.06 per share as compared to $0.93 per share for the first
nine months of 1997. FFO is calculated based on the revised definition
adopted by the Board of Governors of the National Association of Real Estate
Investment Trusts (NAREIT) and is considered a primary earnings measure for
equity REITs.
Review of Results
For the quarter ended September 30, 1998, compared to the prior year
period, revenues grew $16,422,000 from $18,117,000 to $34,539,000. Net income
available to common shareholders was $4,294,000 or $0.13 per share (both basic
and diluted) as compared to $4,111,000 or $0.18 per share (both basic and
diluted) for the prior three-month period.
For the nine months ended September 30, 1998, compared to the prior year
period, revenues grew $48,450,000 from $48,081,000 to $96,531,000. Net income
available to common shareholders was $11,542,000 or $0.40 per share basic and
$0.39 per share diluted as compared to $9,139,000 or $0.44 per share (both
basic and diluted) for the prior nine-month period.
Revenues for both the quarter and nine-month period were positively
impacted by a lease termination fee of $1,895,000. Without the benefit of
this fee, results were less than management's expectations. Revenues were
less than anticipated due to the slower-than-expected lease-up of the core
portfolio, the integration of the new management team to accommodate the 40
assets acquired during the past 12 months, and the slowing of the pace of new
acquisitions in anticipation of the Company's new co-investment venture with
the California Public Employees' Retirement System ("CalPERS").
Expenses were higher than expected due to the staffing required to both
manage the new assets, as well as prepare for the CalPERS relationship. For
these reasons, coupled with the Company's redevelopment strategy discussed
later on, management anticipates that operating results for the fourth quarter
will be less than the operating results being currently announced for the
third quarter, resulting in full-year results also being less than
management's previous expectations.
Total assets more than doubled to $1,094,266,000 at September 30, 1998,
from $545,974,000 a year earlier. Total outstanding debt increased to
$576,808,000, of which $373,653,000 was fixed at a weighted average interest
rate of 7.68 percent; $173,899,000 was variable rate debt incurred under the
Company's line of credit, which bears interest at a weighted average rate of
LIBOR plus 1.44 percent; and $29,256,000 was a construction loan secured by
one of the Company's development properties, which bears interest at LIBOR
plus 1.90 percent.
Weighted average common shares outstanding increased to 31,933,378 from
23,433,982 in the prior year period. This increase occurred primarily as a
result of a 7,475,000 share offering which was completed on March 30, 1998.
In addition, on March 30, 1998, the Company sold 965,518 shares of stock to a
Unit Investment Trust managed by Everen Securities.
Leasing
During the past several months, the Company has appointed a new Chief
Operating Officer, a new Director of Leasing and additional leasing staff,
resulting in improved leasing activity. During the third quarter, the Company
entered into new leases for 139,400 square feet of previously vacant space at
a weighted-average rent of $1.25 per square foot per month. The Company also
executed leases relating to renewals, replacements, and expansions for 39,200
square feet, also at a weighted-average rent of $1.25 per square foot per
month.
In the fourth quarter, the Company has thus far executed leases for
34,900 square feet and has leases out for execution totaling an additional
174,900 square feet. The majority of this new leasing income will not
commence until 1999.
Acquisitions
During the third quarter the Company acquired four properties containing
approximately 298,292 square feet of Company-owned space for an aggregate
purchase price of approximately $25.1 million. These properties were acquired
in anticipation of the CalPERS venture and the Company anticipates
transferring them to the venture prior to year-end.
Greentree Plaza: In July, the Company acquired 78,676 square feet of this
178,932 square-foot center located in Everett, Washington, for $9,600,000.
The property is anchored by a 100,256 square-foot Target (not owned).
Zimel Portfolio: In August, the Company acquired three properties in
Oregon containing approximately 219,616 square feet of Company-owned space for
$15.5 million.
Farmington Village: Located in Aloha, the Company owns 32,740 square feet
of this 105,247 square-foot center anchored by an Albertson's and Bi-Mart,
both of which own their own parcels.
Young's Bay Plaza: Located in Warrenton, this 93,776 square-foot property
is anchored by a 33,400 square-foot Rite Aid and a 25,684 square-foot Lamont's
Apparel.
Greenway Town Center: Located in Tigard, this 93,100 square-foot center
is anchored by a 37,500 square-foot Howard's Thriftway Supermarket and a
17,000 square-foot Rite Aid.
CalPERS
On August 31, 1998, the Company finalized its joint venture agreement with
the State of California Public Employees' Retirement System ("CalPERS") whose
purpose is to serve as the vehicle through which the parties will invest in
neighborhood, community, promotional and specialty retail centers in the
western United States. The Company will serve as the managing partner and
have a 20 percent interest in the joint venture, while CalPERS will have an 80
percent interest.
On October 1, 1998, CalPERS made an initial contribution to the joint
venture of five retail properties valued at approximately $80 million. The
Company intends to contribute, on or about November 30, 1998, an asset valued
at approximately $20 million for purposes of its initial contribution. On
October 2, 1998, the joint venture acquired a retail shopping center in
Redmond, Washington, for $13,300,000. The agreement contemplates a $400
million investment by CalPERS, a $100 million investment by the Company, and
up to $165 million of borrowings for an initial total investment of $665
million. As the managing partner, Burnham is entitled to acquisition, asset
management, property management, leasing and disposition fees. In addition,
after a preferred return to CalPERS, the Company will be entitled to receive
an incentive distribution equal to 25 percent of profits provided the joint
venture meets or exceeds certain performance benchmarks.
Redevelopment Strategy
The Company has always targeted mature centers for acquisition. These
centers are in supply-restricted areas with well-defined demand. Properties
can be acquired at prices below their replacement costs with rents below
market. Many of the anchor tenants are in store configurations which are not
their current preference. These situations present the Company with many
value-added opportunities including the opportunity to renegotiate the
anchor's lease to accommodate their new store preference in exchange for
higher rent.
Under the agreement with CalPERS, it is in the parties' mutual best
interest to realize this value added as soon as possible so that maximum
holding period yields can be achieved. It is also in the Company's best
interest to realize this value added on its own assets as soon as possible so
that the Company's return on capital can be maximized and the proceeds
reinvested in the co-investment venture where the marginal return on invested
capital is higher.
Therefore, the Company has identified 14 assets on which it plans to
commence redevelopment activities beginning the fourth quarter of 1998 and
lasting throughout 1999. On a short-term basis, current income to the Company
will be reduced while the assets are going through the redevelopment process,
resulting in slower earnings growth than previously anticipated in 1999. In
the near term, 2000 and beyond, these assets and the Company should benefit
from these efforts.
The redevelopment plans include the reconfiguration of the Cameron Park
Center outside Sacramento which replaces an existing 23,000 square-foot
Safeway store with a new 53,000 square-foot Safeway Marketplace, and a new
20,000 square-foot Long's Drugstore. At the Ladera Center in Los Angeles, we
will be replacing a Service Merchandise with The Gap and Old Navy stores, and
expanding the existing Ralphs Grocery. Additional expansions are planned for
supermarkets in Fullerton and Placerville, California, as well as a potential
redevelopment of a portion of the recently acquired Lake Arrowhead Village.
"We are very pleased with our new management team, and we believe we now
have the most experienced bench in our sector," commented J. David Martin,
Burnham Pacific's Chief Executive Officer. "We have substantial new capital
available to invest, leasing activity is high, and our redevelopment plans are
now ready to roll out. We will have plenty of growth opportunities in the
next several years as we mine our existing portfolio for value-added
activities and look for strategic new investments with our new capital
partner."
Burnham Pacific Properties is a fully integrated real estate operating
company which acquires, rehabilitates, develops and manages retail properties.
With 81 properties in its portfolio to date, the Company is the largest owner
of retail centers on the West Coast. Burnham Pacific maintains offices in
California, Oregon and Washington and makes available on a quarterly basis
supplemental information that includes property and corporate level detail
which is available upon request. More information on Burnham Pacific may be
found on the Company's web site at http://www.burnhampacific.com or by calling
800-462-5181.
This news release contains forward-looking statements regarding future
events or financial performance of the Company. These statements are only
predictions and actual events or results may differ materially. Investors
should refer to the documents the Company files from time to time with the
Securities and Exchange Commission, specifically the cautionary statement
identifying certain factors that could affect future results included in the
MD&A section of the Company's most recent 10-K report.
CONSOLIDATED STATEMENTS OF INCOME
(In Thousands, Except Per Share Amounts)
Three Months Ended Nine Months Ended
9/30/98 9/30/97 9/30/98 9/30/97
Revenues
Rents $34,360 $17,958 $95,898 $47,559
Interest 179 159 633 522
Total Revenues 34,539 18,117 96,531 48,081
Costs and Expenses
Interest 8,980 4,771 26,195 12,827
Rental Operating 9,374 4,777 26,222 13,163
General & Administrative 1,455 724 3,958 2,279
Depreciation &
Amortization 7,741 3,802 20,922 10,731
Total Costs and Expenses 27,550 14,074 77,297 39,000
Income from Operations before
Income from Unconsolidated
Subsidiaries, Minority
Interest and Extraord. Item 6,989 4,043 19,234 9,081
Income from Unconsolidated
Subsidiaries 32 79 160 143
Minority Interest (1,327) (11) (3,652) (33)
Income before
Extraordinary Item $5,694 $4,111 $15,742 $9,191
Loss from Early
Extinguishment of Debt 0 0 0 (52)
Net Income $5,694 $4,111 $15,742 $9,139
Dividends Paid to
Preferred Stockholders (1,400) 0 (4,200) 0
Income Available to
Common Stockholders $4,294 $4,111 $11,542 $9,139
Basic Earnings Per Share:
Income before
Extraordinary Item $0.13 $0.18 $0.40 $0.45
Extraordinary Item 0 0 0 (0.01)
Net Income $0.13 $0.18 $0.40 $0.44
Diluted Earnings Per Share:
Income before
Extraordinary Item $0.13 $0.18 $0.39 $0.45
Extraordinary Item 0 0 0 (0.01)
Net Income $0.13 $0.18 $0.39 $0.44
Funds from Operations-Diluted:
Income before
Extraordinary Item $5,694 $4,111 $15,742 $9,191
Adjustments:
Depreciation and Amort.
of Real Estate and
Tenant Improvements 7,071 3,556 19,271 10,020
Minority Interest 1,327 11 3,652 33
Funds from
Operations-Diluted: $14,092 $7,678 $38,665 $19,244
Funds from Operations
Per Share
Basic $0.36 $0.33 $1.06 $0.93
Diluted $0.34 $0.33 $1.01 $0.93
Weighted Average
Shares Outstanding
Basic 31,933,378 23,433,982 29,161,116 20,601,118
Diluted 41,839,015 23,569,586 38,396,395 20,736,722
CONSOLIDATED BALANCE SHEETS
(In Thousands, Except Per Share Amounts)
9/30/98 12/31/97
ASSETS
Real Estate $1,132,408 $964,755
Less Accumulated Depreciation (74,564) (55,823)
Real Estate-Net 1,057,844 908,932
Cash and Cash Equivalents 4,563 6,841
Restricted Cash 8,908 5,242
Receivables-Net 5,554 7,456
Investment in Unconsolidated Subsidiaries 3,683 3,683
Other Assets 13,714 11,641
Total $1,094,266 $943,795
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Accounts Payable and Other Liabilities $21,902 $19,296
Tenant Security Deposits 2,937 2,396
Notes Payable 402,909 369,511
Line of Credit Advances 173,899 180,869
Total Liabilities 601,647 572,072
Commitments and Contingencies
Minority Interest 70,554 58,759
Preferred Stock 0 28,160
Stockholders' Equity:
Preferred Stock, Par Value $.01/Share,
5,000,000 Shares Authorized, 4,800,000 Shares
Designated as Series 1997-A Convertible Preferred,
2,800,000 Shares Outstanding at September 30, 1998
and December 31, 1997 28 17
Common Stock, Par Value $.01/Share,
95,000,000 Shares Authorized, 31,948,008 and
23,448,852 Shares Outstdg. at September 30, 1998
and December 31, 1997 Respectively 319 234
Paid in Capital in Excess of Par 524,872 376,326
Dividends Paid in Excess of Net Income (103,154) (91,773)
Total Stockholders' Equity 422,065 284,804
Total $1,094,266 $943,795
SOURCE Burnham Pacific Properties, Inc.
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Related links:
http://www.burnhampacific.com
CONTACT:
Daniel B. Platt, Chief Financial Officer of
Burnham Pacific Properties, Inc., 619-652-4700, Fax:
619-652-4711, dbplatt@bpac.com
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