SAN DIEGO, Nov. 15 /PRNewswire/ -- Burnham Pacific Properties, Inc.
(NYSE: BPP) today announced operating results for the third quarter ended
September 30, 2000.
Basic Funds From Operations (FFO) for the third quarter of 2000 were a
negative $1.1 million or a negative $0.04 per share, as compared to
$7.3 million or $0.23 per share for the quarter ended September 30, 1999. For
the nine months ended September 30, 2000, basic FFO was $7.9 million or
$0.25 per share, as compared to $26.7 million or $0.84 per share for the first
nine months of 1999. Basic and fully-diluted FFO and FFO per share were
identical for each period, except for the first nine months of 1999, for which
fully-diluted FFO was $30.7 million or $0.83 per share. FFO for both the 1999
and 2000 periods is calculated in accordance with the revised definition
adopted by the Board of Governors of the National Association of Real Estate
Investment Trusts (NAREIT) effective January 1, 2000. FFO is considered the
primary earnings measure for equity REITs.
The year-over-year decline in FFO for both periods was primarily
attributable to lower revenues resulting from asset sales occurring subsequent
to March 31, 1999, a decrease in lease termination fees and management fee
income, an increase in borrowing costs which is partially due to the
refinancing of the Company's line of credit during the fourth quarter of 1999,
and costs associated with the Company's pursuit of its strategic alternatives.
We anticipate that the foregoing dilutive effects will continue to impact the
Company's operating results.
Results for the first nine months of 2000 were also negatively impacted by
an impairment write-off taken in connection with the Company's recently
announced plan to liquidate, legal fees and a litigation reserve related to a
recent verdict against the Company in favor of a tenant, severance expenses
related to the resignation of former executive officers of the Company, and a
restructuring charge related to the termination of the CalPERS joint venture
agreement.
Review of Results
For the third quarter ended September 30, 2000, revenues decreased
$96,000 to $31.5 million from $31.6 million in the third quarter of 1999.
Including the one-time revenue and expense items referenced below,
particularly, the impairment write-off, net income (loss) available to common
stockholders was a net loss of $39.1 million or $1.21 per share, as compared
to net income of $9.1 million or $0.28 per share for the prior-year period.
Revenues in the 2000 and 1999 three-month periods included one-time lease
termination fees of $12,000 and $106,000, respectively. Net income (loss) for
the third quarter of 2000 included a net gain on sales of real estate of
$832,000, while net income for the third quarter of 1999 included a net gain
on sales of real estate of $9.5 million. The 2000 and 1999 three-month
periods were unfavorably impacted by costs of $3.3 million and $1.8 million,
respectively, associated with the Company's pursuit of its strategic
alternatives. The 2000 three-month period was also unfavorably impacted by an
impairment write-off of $32.3 million taken in connection with the Company's
recently announced plan to liquidate, a restructuring charge of $2.1 million
for severance and related costs for employees affected by the Company's
recently announced decision to terminate its joint venture with CalPERS,
severance expense of $1.6 million relating to the resignation of the Company's
former Chief Executive Officer, and litigation expenses of $977,000 related to
a recent verdict against the Company in favor of a tenant. The 1999 three-
month period was also unfavorably impacted by an impairment write-off in the
amount of $1.0 million related to the sale of an office building. If these
one-time items were excluded, net income (loss) available to common
stockholders before gain on sales of real estate for the current quarter would
have been net income of $419,000 or $0.01 per share, as compared to net income
of $2.2 million or $0.07 per share for the prior year's comparable three-month
period.
For the nine months ended September 30, 2000, revenues decreased
$7.4 million to $93.6 million from $101.0 million in the first nine months of
1999. This decrease is primarily the result of asset dispositions and a
decrease in management fees and lease termination fees. Including the one-
time revenue and expense items referenced below, net income (loss) available
to common stockholders was a net loss of $42.9 million or a loss of $1.33 per
share, as compared to net income of $11.8 million or $0.37 per share for the
prior nine-month period.
Revenues in the 2000 and 1999 nine-month periods included one-time lease
termination fees of $129,000 and $1.5 million, respectively. The net loss for
the 2000 nine-month period included a net gain on sales of real estate of
$1.2 million, while net income for the 1999 nine-month period included a net
gain on sales of real estate of $9.5 million. The 2000 and 1999 nine-month
periods were unfavorably impacted by costs of $4.6 million and $2.7 million,
respectively, associated with the Company's pursuit of its strategic
alternatives. The 2000 nine-month period was also unfavorably impacted by the
impairment charge of $32.3 million taken in connection with the Company's
recently announced plan of liquidation, the $2.1 million restructuring charge
related to the termination of the CalPERS joint venture, legal fees and
litigation expenses totaling $3.6 million related to a recent verdict against
the Company in favor of a tenant, and severance expense totaling $1.9 million
relating to the resignations of the Company's former Chief Operating Officer
and former Chief Executive Officer. The 1999 nine-month period was also
unfavorably impacted by charges of $1.4 million related to the Company's
decision to outsource its property management function to third-party
providers, $748,000 associated with the abandonment of prospective acquisition
transactions, $1.9 million recognized as the cumulative effect of a change in
accounting principle, and impairment write-offs of $2.2 million related to the
sales of two office buildings. If these one-time items were excluded, net
income (loss) available to common stockholders before gain on sales of real
estate for the 2000 period would have been net income of $313,000 or $0.01 per
share, as compared to net income of $9.7 million or $0.30 per share for the
prior nine-month period.
Plan of Liquidation and Related Asset Sales
On August 31, 2000, the Company's Board of Directors adopted a plan of
liquidation. The plan of liquidation, which is subject to approval by the
Company's stockholders, contemplates the orderly sale of the Company's assets
for cash or such other form of consideration as may be conveniently
distributed to the stockholders and the payment of (or provision for) the
Company's liabilities and expenses, including the establishment of a reserve
to fund the Company's contingent liabilities. The principal purpose of the
plan of liquidation is to maximize stockholder value by liquidating the
Company's assets and distributing the net proceeds of the liquidation to the
holders of the Company's preferred stock and the Company's common stock.
Impairment Charge
During the third quarter of 2000, the Company recorded a non-cash charge
of $32.3 million for impairment of certain real estate properties. The
impairment charge was based upon a comprehensive review of all 57 of the
Company's properties, taking into account the Company's intention to have
stockholders vote to approve the plan of liquidation, the Company's
implementation of several steps in contemplation of a liquidation, a
significantly shortened holding period for the properties, and current market
conditions. As such, the carrying values of 11 properties were written down
to the Company's estimates of fair value. Fair value was based on recent
offers, or other estimates of fair value, such as estimated discounted future
cash flow. Accordingly, the actual results could vary significantly from such
estimates.
Dispositions
On July 31, 2000, the Company sold its interest in the Scripps Ranch
Office Building located in San Diego, California, for approximately
$5.6 million.
On August 16, 2000, the Company sold its leasehold interest in the Bear
Creek Shopping Center located in Redmond, Washington, for approximately
$3.5 million.
On August 28, 2000, the Company sold its interest in the Santee Village
Square Shopping Center located in Santee, California, for approximately
$6.5 million.
Net proceeds from these sales were used to reduce outstanding indebtedness
and for general working capital purposes.
Costs Associated with Pursuit of Strategic Alternatives
During the third quarter of 2000, the Company expensed $3.3 million in
costs associated with the pursuit of its strategic alternatives. These costs
include $1.0 million paid to the Schottenstein/Ashner group as a reimbursement
for expenses incurred in the settlement of certain litigation, $1.7 million in
legal fees, and $600,000 for consultant and other expenses.
Recent Event
On October 27, 2000, the Company sold its interest in the Anacomp Building
located in Poway, California, for approximately $21.3 million. Net proceeds
were used to reduce outstanding indebtedness and for general working capital
purposes.
Burnham Pacific Properties, Inc. is a real estate investment trust (REIT)
that focuses on value-added retail real estate opportunities. On a quarterly
basis, Burnham makes available supplemental information that includes property
and corporate level detail which is available upon request. More information
on Burnham 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.
There are a number of important factors that could cause actual events to
differ materially from those indicated by such forward-looking statements.
These factors include, but are not limited to, the following: we may be
unsuccessful in implementing our liquidation strategy; we may not be able to
complete the liquidation in a timely manner or realize proceeds from the sales
of assets in amounts that will enable us to provide currently anticipated
liquidating distributions to our stockholders; we have approximately
$177 million of outstanding indebtedness which has matured or is scheduled to
mature before the end of 2000, we may be unable to refinance, replace or
extend any or all of this indebtedness on terms that are as favorable to the
Company as those currently in effect, or at all; and occupancy rates and
market rents may be adversely affected by economic and market conditions which
are beyond our control, including imbalances in supply and demand for retail
shopping center space and the financial condition of our tenants.
You should also read the risk factors that are discussed in the Company's
periodic reports filed with the Securities and Exchange Commission, including
the risk factors that were disclosed in our Form 10-K which was filed with the
SEC on March 30, 2000. You should be aware that the risk factors contained in
that Form 10-K may not be exhaustive. Therefore, we recommend that you read
the information in that Form 10-K together with other reports and documents
that we file with the SEC from time to time, including our Forms 10-K, 10-Q
and 8-K and Proxy Statements, which may supplement, modify, supersede or
update those risk factors.
Consolidated Statements of Income
Quarter Ended Year-to-Date
09/30/00 09/30/99 09/30/00 09/30/99
Revenues
Rents $30,232 $29,104 $89,277 $95,995
Fee Income 893 2,092 3,046 4,058
Interest & Other 330 355 1,301 1,002
Total Revenues 31,455 31,551 93,624 101,055
Expenses
Interest 11,310 9,188 32,019 28,996
Rental Operating 9,663 8,897 28,530 27,812
General & Administrative 4,090 2,242 8,794 5,901
Litigation 977 -- 3,613 --
Costs Associated
w/Unsolicited Proposal &
Pursuit of Strategic
Alternatives 3,320 1,797 4,642 2,672
Restructuring Charge 2,144 (147) 2,144 1,353
Abandoned Acquisition
Costs -- -- -- 748
Impairment Write-Off 32,330 1,000 32,330 2,200
Depreciation &
Amortization 6,567 6,188 19,960 19,668
Total Expenses 70,401 29,165 132,032 89,350
Income (Loss) from Operations
before Income from
Unconsolidated Subsidiaries,
Minority Interest, Gain on
Sales of Real Estate and
Cumulative Effect of Change
in Accounting Principle (38,946) 2,386 (38,408) 11,705
Income from Unconsolidated
Subsidiaries 41 204 117 646
Minority Interest 607 (1,567) (1,404) (3,950)
Gain on Sales of Real Estate 832 9,499 1,226 9,499
Net Income (Loss) before
Cumulative Effect of
Change in Accounting
Principle (37,466) 10,522 (38,469) 17,900
Cumulative Effect of
Change in Accounting
Principle -- -- -- (1,866)
Net Income (Loss) $(37,466) $10,522 $(38,469) $16,034
Dividends Paid to
Preferred Stockholders (1,667) (1,400) (4,467) (4,200)
Income (Loss) Available to
Common Stockholders $(39,133) $9,122 $(42,936) $11,834
Basic Earnings Per Share:
Income (Loss) before
Cumulative Effect of
Change in Accounting
Principle $(1.21) $0.28 $(1.33) $0.43
Cumulative Effect of
Change in Accounting
Principle 0.00 0.00 0.00 (0.06)
Net Income (Loss) $(1.21) $0.28 $(1.33) $0.37
Diluted Earnings Per Share:
Income (Loss) before
Cumulative Effect of Change
in Accounting Principle $(1.21) $0.28 $(1.33) $0.37
Cumulative Effect of Change
in Accounting Principle 0.00 0.00 0.00 0.00
Net Income (Loss) $(1.21) $0.28 $(1.33) $0.37
Funds from Operations-Basic:
(New Definition)
Income (Loss) Available to
Common Stockholders $(39,133) $9,122 $(42,936) $11,834
Adjustments:
Depreciation &
Amortization of Real
Estate and Tenant
Improvements 6,487 6,631 19,753 20,339
Cumulative Effect of
Change in Accounting
Principle -- -- -- 1,866
Gain on Sales of
Real Estate (832) (9,499) (1,226) (9,499)
Impairment Write-Off 32,330 1,000 32,330 2,200
Funds from Operations-
Basic: (New Definition) $(1,148) $7,254 $7,921 $26,740
Adjustments:
Operating Partnership Units -- -- -- 3,950
Funds from Operations -
Diluted: (New Definition) $(1,148) $7,254 $7,921 $30,690
Funds from Operations
Per Share: (New Definition)
Basic $(0.04) $0.23 $0.25 $0.84
Diluted $(0.04) $0.23 $0.25 $0.83
Weighted Average Shares
Outstanding-FFO
Basic 32,324,107 32,063,441 32,308,655 31,992,929
Diluted 32,324,107 32,063,441 32,308,655 37,086,381
CONSOLIDATED BALANCE SHEETS
09/30/2000 12/31/1999
ASSETS
Real Estate $982,293 $1,036,294
Less Accumulated Depreciation (74,940) (65,494)
Real Estate-Net 907,253 970,800
Real Estate Held for Sale 29,661 8,737
Cash and Cash Equivalents 4,236 11,119
Restricted Cash 11,126 9,827
Receivables-Net 10,582 8,413
Investment in Unconsolidated Subsidiaries 3,617 3,650
Other Assets 23,979 22,469
Total $990,454 $1,035,015
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Accounts Payable and Other Liabilities $25,100 $29,224
Tenant Security Deposits 2,569 2,606
Notes Payable 406,530 400,410
Line of Credit Advances 157,392 138,420
Total Liabilities 591,591 570,660
Commitments and Contingencies
Minority Interest 24,536 66,350
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 December 31, 1999 0 28
Preferred Stock, Par Value $.01/Share,
10,000,000 Shares Authorized, 4,800,000
Shares Designated as Series 2000-C Convertible
Preferred, 4,400,000 Shares Outstanding at
September 30, 2000 44 0
Common Stock, Par Value $.01/Share,
90,000,000 Shares Authorized, 32,329,622
and 32,273,546 Shares Outstanding
at September 30, 2000 and December 31, 1999,
Respectively 323 323
Paid in Capital in Excess of Par 568,250 528,811
Dividends Paid in Excess of Net Income (194,290) (131,157)
Total Stockholders' Equity 374,327 398,005
Total $990,454 $1,035,015
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, or fax,
619-652-4711, dbplatt@bpac.com
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