PHILADELPHIA, Nov. 12 /PRNewswire/ -- Pennsylvania Real Estate Investment
Trust (NYSE: PEI) announced today the results of its operations for the third
quarter and nine months ended September 30, 1999.
Third Quarter Highlights
-- Increased FFO to $0.66 per share on 14.7 million shares/OP units
outstanding from $0.65 per share on 14.1 million shares/OP units
outstanding during the third quarter of 1998
-- Increased FFO 5.7% to $9.7 million from $9.2 million in 1998
-- Increased combined net operating income 40.6% to $18.9 million from
$13.4 million in 1998
-- Same store multifamily net operating income grew 7.0% from the 1998
third quarter due to 3.3% increase in revenues and 1.2% decrease in
operating expenses
Third Quarter Results
Funds from operations (FFO) for the three months ended September 30, 1999
totaled $9,683,000, a 5.7% increase over FFO of $9,162,000 for the comparable
three-month period ended September 30, 1998. The growth was driven by
acquisitions and development projects completed in 1998 and improved operating
results in the Company's portfolio. Third quarter FFO was $0.66 per share on
14,657,596 weighted average share equivalents outstanding (including Operating
Partnership [OP] units), compared to $0.65 per share on 14,111,188 weighted
average share equivalents for the three months ended September 30, 1998. As
calculated by NAREIT, FFO is defined as net income, excluding extraordinary
and unusual items, gain (or loss) on the sale of property, plus depreciation
and amortization.
Net operating income before depreciation from wholly-owned properties and
the Company's proportionate share of partnerships and joint venture properties
increased 40.6% to $18,851,000 for the three months ended September 30, 1999,
from $13,410,000 for the three months ended September 30, 1998. The increase
is mainly due to acquisitions completed in the second half of 1998 and the
completion of two development properties in the fourth quarter of 1998.
Net income for the three months ended September 30, 1999 was $5,064,000,
or $0.38 per basic share, on total weighted average shares outstanding of
13,321,934 compared to $7,016,000, or $0.53 per basic share, on 13,299,723
total weighted average shares outstanding for the three months ended September
30, 1998. Net income for the 1999 third quarter includes gain on the sale of
the Company's interest in land located in Rancocas, N.J. totaling $162,000 or
$0.01 per share. Net income for the 1998 third quarter included gains on the
sale of interests in Punta Gorda Mall, Punta Gorda, Fla. and Ormond Beach
Mall, Daytona Beach, Fla. totaling $1,277,000 or $0.10 per share.
Nine Months Results
Funds from operations (FFO) for the nine months ended September 30, 1999
totaled $28,459,000, a 15.7% increase over FFO of $24,606,000 for the prior
comparable nine-month period ended September 30, 1998. FFO for the nine-month
period totaled $1.95 per share on 14,625,386 weighted average shares
outstanding (including OP units), compared to $1.76 per share on 13,998,356
weighted average shares for the nine months ended September 30, 1998.
Net operating income before depreciation from wholly-owned properties and
the Company's proportionate share of partnerships and joint venture properties
increased 42.4% to $56,020,000 for the nine months ended September 30, 1999,
from $39,339,000 for the nine months ended September 30, 1998.
Net income for the nine months ended September 30, 1999 totaled
$15,852,000, or $1.19 per basic share, on total weighted average shares
outstanding of 13,315,203 compared to $17,812,000, or $1.34 per basic share,
on 13,296,405 total weighted average shares outstanding for the comparable
1998 nine month period. Net income for the 1999 period includes gains on the
sale of the Company's interests in 135 Commerce Drive in Fort Washington, Pa.,
a land parcel at Crest Plaza in Allentown, Pa. and land located in Rancocas,
N.J. totaling $1,508,000, or $0.11 per share. Net income for the 1998 nine
month period included gains on the sale of interests in Charter Pointe
Apartments, Altemonte Springs, Fla., Punta Gorda Mall, Punta Gorda, Fla. and
Ormond Beach Mall, Daytona Beach, Fla. totaling $3,043,000 or $0.23 per share.
Comments from Management
Ronald Rubin, Chief Executive Officer of PREIT, said, "Our solid operating
performance for both the quarter and nine-month period demonstrates the
effectiveness of our focused strategy on both strategic development projects
and accretive acquisitions. During the third quarter we achieved a 41%
increase in combined net operating income and a 35% increase in real estate
operating revenues. PREIT's year-to-date statistics are equally compelling
with strong increases in both FFO per share and combined net operating income.
In the quarters ahead we will continue to view opportunities for external
growth, particularly through our active development pipeline, while focusing
on internal growth from our existing portfolio."
Same Store NOI Growth -- Multifamily and Shopping Center Portfolios
Same store net operating income for the Company's portfolio of multifamily
properties increased 7.0% over the third quarter of 1998, primarily driven by
a 3.3% increase in revenues and a 1.2% decrease in operating expenses. Same
store net operating income for the third quarter of 1999 for the Company's
shopping center portfolio decreased by 4.1% over the comparable quarter
primarily due to differences in the timing of income recognition and tenant
bankruptcies which caused a negative $500,000 variance from the comparable
period last year.
Portfolio Highlights
-- Metroplex Shopping Center (Plymouth Meeting, Pa.) -- Construction of
the 780,000 square foot power center is on schedule and is currently
44% complete. Lowe's (163,000 square feet) and Target Stores (138,000
square feet), two of the power center's anchor tenants, began
construction of their stores in October and November 1999,
respectively. Initial occupancy is expected in the second quarter of
2000.
-- Paxton Towne Centre (Harrisburg, Pa.) -- Construction of the 582,000
square foot power center is on schedule and is currently 48% complete.
Target Stores (124,000 square feet) and Kohl's (87,000 square feet),
two of the power center's anchor tenants, have begun construction of
their stores. Initial occupancy is expected in the second quarter of
2000. PREIT also announced that it is negotiating with an additional
anchor tenant for a second phase of the development involving a 184,000
square foot store.
-- Pavilion at Market East (Philadelphia) -- Construction of the Pavilion
at Market East, a 377,000 square foot retail, entertainment and parking
complex, is expected to commence in the first quarter of 2000, assuming
the completion of leasing activities.
-- Frankford Arsenal (Philadelphia) -- The Company is actively engaged in
predevelopment work for the Frankford Arsenal, a 500,000 square foot
power center, and construction of the site is now slated for the third
quarter of 2000, subject to satisfactory due diligence and leasing.
-- Dispositions -- The Company has previously announced its intention to
sell certain of its non-core properties which no longer meet its
ownership criteria. With a sharpened focus on higher-yielding power
centers and shopping malls, PREIT has retained Eastdil Realty to assist
management in selling six non-core strip shopping center properties.
The Company expects to bring these properties to market in the first
quarter of 2000.
Consistent with management's disposition strategy, during the third
quarter the Company completed the sale of two undeveloped land parcels
in Rancocas, N.J. and Coral Springs, Fla., realizing total proceeds of
approximately $5.0 million.
Jonathan B. Weller, President and Chief Operating Officer of PREIT,
commented, "Pennsylvania Real Estate Investment Trust continues to refine its
portfolio, expanding and strengthening its presence in retail power center and
enclosed shopping mall properties, while selling those properties that no
longer fit into our target property plan. Over the past nine months, we have
completed several transactions that further diversify and enhance the
Company's portfolio in mid-Atlantic markets, either through acquisitions or
development projects. Management's sharp focus on proven markets like
Philadelphia and its surrounding regions, has positioned the Company to
attract top national retailers as anchor tenants while continuing to
experience steady, fundamental growth. In the coming year, we fully expect to
build upon this momentum as our existing development and redevelopment
pipeline includes 7 power centers, 2 strip centers and 3 enclosed malls."
Capital Resources
Edward Glickman, Chief Financial Officer of PREIT, added, "Throughout the
year, PREIT has closely examined financing options and has taken advantage of
the favorable opportunities it identified. Most recently, the Company
arranged a $30.0 million construction financing with a 2-year term for Paxton
Towne Centre. The newly placed financing, which carries an interest rate of
175 basis points over LIBOR, was provided by Mellon Bank and First Trust.
Furthermore, with the decision to sell six of our non-core strip center
properties, PREIT will have the opportunity to use the net proceeds from these
sales for the reduction of debt and the reinvestment of assets more consistent
with our business plan. Going forward, the Company will continue to take
steps to improve its capital structure and look for ways to provide PREIT with
additional capital to fund its development projects."
The Company noted that at end of the 1999 third quarter approximately
$89 million was outstanding under the Company's $150 million line of credit.
1999 Fourth Quarter One-Time Charge
The Company announced that it would take a charge of approximately
$150,000, or $0.01 per share, during the 1999 fourth quarter relating to the
abandonment of a previously unannounced shopping center development project in
Newburgh, N.Y.
Quarterly Dividend Declared
The Company declared a quarterly dividend of $0.47 per share payable on
December 15, 1999 to shareholders and unitholders of record as of November 30,
1999. The December 15, 1999 dividend payment will be PREIT's 91st consecutive
distribution since its initial dividend paid in August of 1962. Throughout
its history, the Company has never omitted or reduced a shareholder dividend.
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 8.1 million square feet) and apartment communities
(7,242 units) located primarily in the eastern United States. The Company's
portfolio currently consists of 46 properties in 10 states. In addition,
there are 6 retail properties under development, which will add approximately
2.9 million square feet to the portfolio. Pennsylvania Real Estate Investment
Trust is headquartered in Philadelphia.
With the exception of the historical information contained in the release,
the matters described herein contain forward-looking statements that are made
pursuant to the Safe Harbor provisions of the Private Securities Litigation
Reform Act of 1995. Such statements involve various risks which may cause
actual results to differ materially. These risks include, but are not limited
to, the ability of the Company to grow internally or by acquisition and to
integrate acquired businesses, the availability of adequate funds at
reasonable cost, changing industry and competitive conditions, and other risks
outside the control of the company referred to in the Company's registration
statement and periodic reports filed with the Securities and Exchange
Commission.
A supplemental quarterly financial package is available on the Company's
web site at http://www.preit.com .
To receive additional information on Pennsylvania Real Estate Investment
Trust via fax at no charge, please dial 1-800-PRO-INFO and enter the ticker
symbol PEI.
FUNDS FROM OPERATIONS
Three Months Ended Nine Months Ended
Sept. 30, Sept. 30, Sept. 30, Sept. 30,
1999 1998 1999 1998
Income before minority
interest in
operating
partnership $5,571,000 $7,448,000 $17,409,000 $18,773,000
Less: Gains on
sales of interests
in real estate (162,000) (1,277,000) (1,508,000) (3,043,000)
Add: Wholly owned
& consolidated
partnership, net 3,326,000 2,151,000 9,748,000 6,328,000
Unconsolidated
partnerships &
joint ventures 1,127,000 985,000 3,323,000 2,992,000
Excess purchase
price over net
asset acquired 54,000 29,000 161,000 87,000
Refinancing
prepayment fee of
partnership/joint
ventures -- -- 55,000 --
Less: Depreciation of
non-real estate
assets (60,000) (57,000) (180,000) (171,000)
Amortization of
deferred financing
assets (173,000) (117,000) (549,000) (360,000)
FUNDS FROM
OPERATIONS $9,683,000(a) $9,162,000(a) $28,459,000(a) $24,606,000(a)
FUNDS FROM
OPERATIONS PER
SHARE AND OP UNITS $0.66 $0.65 $1.95 $1.76
Weighted average
number of shares
outstanding 13,321,934 13,299,723 13,315,203 13,296,405
Weighted average
effect of full
conversion of
OP units 1,335,662 811,465 1,310,183 701,951
Total weighted
average shares of
outstanding
including
OP units 14,657,596 14,111,188 14,625,386 13,998,356
(a) Includes the non-cash effect of straight-line rent of $189,000 and
$280,000 for the 3rd quarter 1999 and 1998 and $807,000 and $711,000
year to date for 1999 and 1998, respectively.
OPERATING RESULTS
Three Months Ended Nine Months Ended
Sept. 30, Sept. 30, Sept. 30, Sept. 30,
REVENUES 1999 1998 1999 1998
Gross revenues
from real estate $21,949,000 $14,768,000 $65,184,000 $42,076,000
Interest and
other income 293,000 145,000 857,000 400,000
22,242,000 14,913,000 66,041,000 42,476,000
EXPENSES
Property operating
expenses 7,925,000 5,678,000 23,289,000 15,820,000
Depreciation and
amortization 3,384,000 2,231,000 9,909,000 6,482,000
General &
administrative
expenses 771,000 852,000 2,617,000 2,458,000
Interest expense 5,676,000 2,457,000 16,143,000 6,292,000
17,756,000 11,218,000 51,958,000 31,052,000
Income before
equity in
unconsolidated
entities, gains on
sales of interests
in real estate and
minority interest
in operating
partnership 4,486,000 3,695,000 14,083,000 11,424,000
Equity in loss of
PREIT-RUBIN, Inc. (618,000) 1,133,000 (2,566,000) 274,000
Equity in income of
partnerships and
joint ventures 1,541,000 1,343,000 4,384,000 4,032,000
Gains on sales of
interests in
real estate 162,000(b) 1,277,000(c) 1,508,000(b) 3,043,000(c)
Income before
minority interest
in operating
partnership 5,571,000 7,448,000 17,409,000 18,773,000
Minority interest
in operating
partnership (507,000) (432,000) (1,557,000) (961,000)
NET INCOME $5,064,000 $7,016,000 $15,852,000 $17,812,000
PER SHARE DATA
Net income before
gains on sales of
interests in
real estate $0.37 $0.43 $1.08 $1.11
Gains on sales of
interests in
real estate 0.01(b) 0.10(c) 0.11(b) 0.23(c)
BASIC INCOME
PER SHARE $0.38 $0.53 $1.19 $1.34
DILUTED INCOME
PER SHARE $0.38 $0.53 $1.19 $1.34
Weighted average
number of shares
outstanding 13,321,934 13,299,723 13,315,203 13,296,405
(b)In the third quarter 1999, includes gains on sale of interest in land
located in Rancocas, N.J. Year to date also includes gains on sales
of 135 Commerce Drive, Fort Washington, Pa. and land parcel at Crest
Plaza, Allentown, Pa.
(c)In the third quarter 1998, includes gains on sale of interests in
Punta Gorda Mall, Punta Gorda, Fla. and Ormond Beach Mall,
Daytona Beach, Fla.Year to date also includes gains on the sale of
interests in Charter Pointe Apartments in Altemonte Springs, Fla.
EQUITY IN INCOME OF PARTNERSHIPS
AND JOINT VENTURES
Three Months Ended Nine Months Ended
Sept. 30, Sept. 30, Sept. 30, Sept. 30,
1999 1998 1999 1998
Gross revenues
from real estate $14,388,000 $13,703,000 $42,909,000 $41,750,000
Expenses:
Property operating
expenses 4,603,000 4,917,000 14,285,000 15,021,000
Mortgage and
bank loan interest 4,398,000 4,043,000 12,917,000 12,369,000
Refinancing
prepayment fee (a) -- -- 110,000 --
Depreciation and
amortization 2,291,000 2,021,000 6,756,000 6,175,000
11,292,000 10,981,000 34,068,000 33,565,000
3,096,000 2,722,000 8,841,000 8,185,000
Partner's Share (1,555,000) (1,379,000) (4,457,000) (4,153,000)
EQUITY IN INCOME
OF PARTNERSHIPS
AND JOINT VENTURES $1,541,000 $1,343,000 $4,384,000 $4,032,000
(a) The Company's share is $55,000.
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,
1999 1998 1999 1998
Gross Revenues $21,949,000 $14,768,000 $65,184,000 $42,076,000
Operating
expenses (7,925,000) (5,678,000) (23,289,000) (15,820,000)
Net operating
income: Wholly-
owned properties 14,024,000 9,090,000 41,895,000 26,256,000
Company's
proportionate
share of
partnerships and
joint ventures net
operating income 4,827,000 4,320,000 14,125,000 13,083,000
Combined net
operating income 18,851,000 13,410,000 56,020,000 39,339,000
Interest income 293,000 145,000 857,000 400,000
Company's
proportionate share
of PREIT-RUBIN, Inc.
net operating
income (loss) (149,000) 2,196,000 (1,352,000) 1,690,000
General and
administrative
expenses (771,000) (852,000) (2,617,000) (2,458,000)
EBITDA $18,224,000 $14,899,000 $52,908,000 $38,971,000
MORTGAGE NOTES, BANK AND CONSTRUCTION LOANS PAYABLE
Wholly-Owned Properties
Mortgage notes
payable $267,920,000 $115,423,000
Bank Loans payable 83,200,000 116,261,000
$351,120,000 $231,684,000
Company's Proportionate
Share of Partnerships
and Joint Ventures
Mortgage
notes payable 111,635,000 99,045,000
Construction
loans payable 9,426,000 --
Bank loans payable -- 4,212,000
Total mortgage notes
and bank
loans payable $472,181,000 $334,941,000
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,
215-875-0700, or General Info, Joe Calabrese, Analyst Info,
Pamela King, Media Info, Judith Sylk-Siegel, of The Financial
Relations Board, 212-661-8030
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