SAN DIEGO, Nov. 12 /PRNewswire/ -- Burnham Pacific Properties, Inc.
(NYSE: BPP) today announced operating results for the third quarter ended
September 30, 1999. The Company also announced that its Board of Directors
has instructed management and Goldman Sachs & Co. to expand the scope of their
activities to include actively pursuing a full range of strategic
alternatives.
Said J. David Martin, Chief Executive Officer, "Like most publicly-traded
REITs, our stock price and public market financial flexibility have been
negatively impacted by the current market environment. That said, we believe
we have an excellent portfolio of properties that have the potential for
higher valuation. Therefore, we are pursuing all of our opportunities to
maximize shareholder value. Separately, we have already commenced the active
marketing of certain properties to provide the company with additional
liquidity and financial flexibility."
For the third quarter, Funds From Operations ("FFO") on a fully-diluted
basis was $8.9 million or $0.28 per share (based on 32,080,000 shares), as
compared to $14.1 million or $0.34 per share (based on 41,839,000 shares) for
the quarter ended September 30, 1998. Diluted FFO for the third quarter of
1999 does not assume the conversion of the Company's convertible preferred
stock and other common stock equivalents because such conversion would be
accretive to the Company. If conversions were assumed, fully-diluted FFO for
the third quarter of 1999 would be $11.9 million or $0.28 per share (based on
41,691,000 shares). For the nine months ended September 30, 1999, FFO on a
fully-diluted basis (assuming conversion of the Company's convertible
preferred stock and other common stock equivalents) was $39.7 million or
$0.95 per share (based on 41,639,000 shares), as compared to $38.7 million or
$1.01 per share (based on 38,396,000 shares) for the first nine months of
1998. FFO is calculated in accordance with the current definition adopted by
the Board of Governors of the National Association of Real Estate Investment
Trusts (NAREIT) and is considered the primary earnings measure for equity
REITs.
Review of Results
For the quarter ended September 30, 1999, revenues decreased $3.0 million
to $31.5 million from $34.5 million in the third quarter of 1998. This is
primarily the result of asset dispositions in 1999 and decreases in lease
termination fees. Including the one-time revenue and expense items referenced
below, net income available to common stockholders was $9.1 million or
$0.28 per share as compared to $4.3 million or $0.13 per share for the prior
year's comparable three-month period.
For the nine months ended September 30, 1999, revenues grew $4.5 million
to $101 million, from $96.5 million for the first nine months of 1998. Again,
including the one-time revenue and expense items referenced below, net income
available to common stockholders was $11.8 million or $0.37 per share as
compared to $11.5 million or $0.40 per share for the prior year's comparable
nine-month period.
Revenues in the 1999 and 1998 three-month periods included one-time lease
termination fees of $106,000 and $2.0 million, respectively. The 1999
three-month period was also unfavorably impacted by an impairment write-off in
the amount of $1.0 million related to the prospective sale of the Marcoa
Office Building in San Diego, California and by costs of $1.8 million
associated with the unsolicited proposal from Schottenstein Stores. If these
one-time items were excluded, net income available to common stockholders
before gain on sales of real estate for the current quarter would have been
$2.2 million or $0.07 per share, as compared to $2.3 million or $0.07 per
share for the prior year's comparable three-month period.
If the above-mentioned, one-time lease termination fees were excluded,
fully-diluted FFO for the quarter-ended September 30, 1999 would have been
$8.8 million or $0.27 per share (based on 32,080,000 shares), as compared to
$12.1 million or $0.29 per share (based on 41,839,000 shares) for the quarter
ended September 30, 1998.
Revenues in the 1999 and 1998 nine-month periods included one-time lease
termination fees of $1.5 million and $3.7 million, respectively. The 1999
nine-month period was also impacted by one-time charges taken in the first six
months of 1999, in addition to the $1.0 million impairment charge and the
$1.8 million in costs related to the unsolicited proposal. Charges taken in
the first six months included an impairment write-off in the amount of
$1.2 million related to the prospective sale of the Bergen Brunswig office
building, $1.4 million related to the Company's decision to outsource its
property management function to third-party providers, $875,000 in costs
related to the unsolicited proposal, $750,000 in costs associated with the
abandonment of prospective acquisition transactions in process prior to the
AMB portfolio acquisition, and $1.9 million recognized as the cumulative
effect of a change in accounting principle. If these one-time revenue and
expense items were excluded, net income available to common stockholders
before gain on sales of real estate for the 1999 nine-month period would have
been $9.7 million or $0.30 per share as compared to $7.8 million or $0.27 per
share for the prior nine-month period.
If the above mentioned, one-time lease termination fees were excluded,
fully diluted FFO for the nine months ended September 30, 1999 would have been
$38.2 million or $0.92 per share, as compared to $35.0 million or $0.91 per
share for the first nine months of 1998.
Said Burnham's Chief Financial Officer Daniel B. Platt, "Our results for
the quarter were negatively impacted by asset sales, decreases in lease
termination fees, and continued delays in new store openings which were
described last quarter. Additionally, same-store performance for the quarter
was flat."
Acquisitions
On August 4, 1999, BPP Retail LLC, a co-investment entity with CalPERS,
closed on the acquisition of 12 retail centers from AMB Property Corporation
for a purchase price of approximately $246 million. The centers add an
additional two million square feet to BPP Retail's existing portfolio. The
final AMB transaction is scheduled to close on December 1st of this year.
On August 26, 1999, BPP Retail acquired Lake Forest Village in Lake
Forest, California for $17.6 million. Located in South Orange County, the
119,700 square-foot center is anchored by a 38,400 square-foot Lucky's
Supermarket, and an 8,000 square-foot Sav-On Drug Express.
Dispositions
On July 2, 1999, the Company closed on the sale of four retail centers
located in San Diego, California to GE Capital Realty Group for approximately
$44.4 million. On August 18, 1999, the Company closed on the sale of a fifth
retail center located in San Diego to GE Capital for approximately
$3.5 million. The combined gain on sale for the five properties was
$9.5 million.
On October 28, 1999, Bergen Brunswig closed on the acquisition of its
headquarters office building from the Company for a purchase price of
$19.3 million. The Company recorded an impairment charge of $1.2 million in
the second quarter to account for the loss on sale. As a part of the
transaction, Bergen Brunswig prepaid the remainder of its rental obligation
through the March 31, 2000 maturity of its lease to the Company in the amount
of $1.5 million.
The Company has executed a letter of intent to sell its Marcoa Office
Building for approximately $2.8 million, which would result in a loss on sale
of approximately $1.0 million. The sale is expected to close in
December, 1999.
New Line of Credit
The Company is negotiating a replacement for its Line of Credit with
Nomura Asset Capital Corporation, which expires November 18, with a new credit
facility secured through an institutional lender. The new facility is
expected to close shortly, but this may not occur prior to the maturity date
of the existing line of credit. No assurance can be given regarding the
company's ability to successfully complete this refinancing or to avoid a
default for its existing indebtedness.
Employee Retention Program
The Company's Board of Directors and its executive officers have agreed to
modify the recently approved phantom stock agreement to retroactively
discontinue the annual vesting and dividend payment. These changes will
reverse the previously reported dilutive impact on earnings. The agreements
will remain in effect in the event of a change of control transaction as
defined in the agreement, or the death or disability of the executives.
About Burnham Pacific
Burnham Pacific is a real estate investment trust (REIT) that focuses on
value-added retail real estate opportunities throughout the United States.
The Company 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 obtained by calling 800.462.5181,
or visiting the Company's web site at http://www.burnhampacific.com.
This news release contains "forward-looking statements" that predict or
indicate future events or trends or that do not relate to historical matters.
We cannot assure the future results or outcome of the matters described in
these statements; rather, these statements merely reflect our current
expectations of the approximate outcome of the matter discussed. In
particular, information concerning the following are forward-looking
statements: (i) the completion, and the timing and cost of completion, of
properties under development or redevelopment; (ii) the timing of lease-up and
occupancy of properties; (iii) the timing and the terms of proposed
acquisitions and dispositions; and (iv) the availability and, if available,
the terms and timing of a replacement for the Nomura line of credit.
Investors should not rely on forward-looking statements since they involve
known and unknown risks, uncertainties and other factors, some of which are
beyond our control. Investors should read the documents the Company files
from time to time with the SEC, specifically the risk factors that were
disclosed in our Registration Statement on Form S-3 that was filed with the
SEC on August 13, 1999. You should be aware that the risk factors contained
in that Form S-3 may not be exhaustive. Therefore, we recommend that you read
the information in that Form S-3 together with other reports and documents
that we file with the SEC from time to time, including our Forms 10-K, which
may supplement, modify, supersede or update those risk factors.
CONSOLIDATED STATEMENTS OF INCOME
Quarter Ended Year to Date
09/30/1999 09/30/1998 09/30/1999 09/30/1998
Revenues
Rents $ 29,104 $ 34,112 $ 95,995 $ 95,650
Fee Income 2,092 248 4,058 248
Interest 355 179 1,002 633
Total Revenues 31,551 34,539 101,055 96,531
Costs and Expenses
Interest 8,706 8,980 27,869 26,195
Rental Operating 8,897 9,374 27,812 26,222
General & Administrative 2,242 1,455 5,901 3,958
Restructuring Charge (147) - 1,353 -
Abandoned Acquisition Costs - - 748 -
Costs Associated with
Unsolicited Proposal and
Litigation 1,797 - 2,672 -
Impairment Write-Offs 1,000 - 2,200 -
Depreciation & Amortization 6,670 7,741 20,795 20,922
Total Costs and Expenses 29,165 27,550 89,350 77,297
Income from Operations before
Income from Unconsolidated
Subsidiaries, Minority
Interest, Gain on Sales of
Real Estate and Cumulative
Effect of Change in
Accounting Principle 2,386 6,989 11,705 19,234
Income from Unconsolidated
Subsidiaries 204 32 646 160
Minority Interest (1,567) (1,327) (3,950) (3,652)
Gain on Sales of Real Estate 9,499 - 9,499 -
Income before Cumulative
Effect of Change in
Accounting Principle 10,522 5,694 17,900 15,742
Cumulative Effect of Change
in Accounting Principle - - (1,866) -
Net Income $ 10,522 $ 5,694 $ 16,034 $ 15,742
Dividends Paid to Preferred
Stockholders (1,400) (1,400) (4,200) (4,200)
Income Available to Common
Stockholders $ 9,122 $ 4,294 $ 11,834 $ 11,542
Basic Earnings Per Share:
Income before Cumulative
Effect of Change in
Accounting Principle $ 0.28 $ 0.13 $ 0.43 $ 0.40
Cumulative Effect of
Change in Accounting
Principle - - (0.06) -
Net Income $ 0.28 $ 0.13 $ 0.37 $ 0.40
Diluted Earnings Per Share:
Income before Cumulative
Effect of Change in
Accounting Principle $ 0.28 $ 0.13 $ 0.43 $ 0.39
Cumulative Effect of
Change in Accounting
Principle - - (0.06) -
Net Income $ 0.28 $ 0.13 $ 0.37 $ 0.39
Funds from Operations-Diluted:
Income Available to Common
Stockholders $ 9,122 $ 4,294 $ 11,834 $ 11,542
Adjustments:
Depreciation and
Amortization of Real
Estate and Tenant
Improvements 6,631 7,071 20,339 19,271
Cumulative Effect of
Change in Accounting
Principle - - 1,866 -
Restructuring Charge (147) - 1,353 -
Abandoned Acquisition
Costs - - 748 -
Costs Associated with
Unsolicited Proposal
and Litigation 1,797 - 2,672 -
Impairment Write-Offs 1,000 - 2,200 -
Gain on Sales of Real
Estate (9,499) - (9,499) -
Preferred Stock (A) - 1,400 4,200 4,200
Minority Interest (A) - 1,327 3,950 3,652
Funds from Operations
- Diluted $ 8,904 $ 14,092 $ 39,663 $ 38,665
Funds from Operations
Per Share
Basic $ 0.28 $ 0.36 $ 0.99 $ 1.06
Diluted $ 0.28 $ 0.34 $ 0.95 $ 1.01
Weighted Average Shares
Outstanding - FFO
Basic 32,063,441 31,933,378 31,992,929 29,161,116
Diluted 32,080,417 41,839,015 41,639,226 38,396,395
Note (A) -- During the third quarter of 1999, dividends and shares from
the conversion of Preferred Stock and minority interest and shares from
the conversion of operating units are excluded from the diluted FFO and
FFO per share calculations because they were anti-dilutive.
CONSOLIDATED BALANCE SHEETS
09/30/1999 12/31/1998
ASSETS
Real Estate $1,027,840 $1,137,779
Less Accumulated Depreciation (63,586) (79,837)
Real Estate-Net 964,254 1,057,942
Real Estate Held for Sale 21,671 -
Cash and Cash Equivalents 1,089 20,873
Restricted Cash 10,182 7,737
Receivables-Net 8,945 7,697
Investment and Advances in
Unconsolidated Subsidiaries 62,028 3,438
Other Assets 17,965 16,489
Total $1,086,134 $1,114,176
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Accounts Payable and Other Liabilities $ 35,302 $ 50,572
Tenant Security Deposits 2,565 2,982
Notes Payable 405,770 394,029
Line of Credit Advances 170,082 180,999
Total Liabilities 613,719 628,582
Commitments and Contingencies
Minority Interest 66,571 70,217
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, 1999 and December 31, 1998 28 28
Common Stock, Par Value $.01/Share,
95,000,000 Shares Authorized,
32,261,046 and 31,954,008 Shares
Outstanding at September 30, 1999
and December 31, 1998, Respectively 323 319
Paid in Capital in Excess of Par 528,834 524,957
Dividends Paid in Excess of Net Income (123,341) (109,927)
Total Stockholders' Equity 405,844 415,377
Total $1,086,134 $1,114,176
SOURCE Burnham Pacific Properties, Inc.
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Related links:
http://www.burnhampacific.com
CONTACT:
Investors: Daniel B. Platt, Chief Financial
Officer of Burnham Pacific Properties, Inc., 619-652-4700, fax
619-652-4711, dbplatt@bpac.com; or Media: Judy Brennan or Andrew
Cole, both of Sard Verbinnen & Co., 212-687-8080, for Burnham
Pacific Properties, Inc.
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