Attached files
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| 8-K - 8-K - PENNSYLVANIA REAL ESTATE INVESTMENT TRUST | a8kcoverpageearningsrelease.htm |
Exhibit 99.1
CONTACT: AT THE COMPANY
Robert McCadden
EVP & CFO
(215) 875-0735
Heather Crowell
VP, Corporate Communications and Investor Relations
(215) 875-0735
PREIT Reports Second Quarter 2013 Results and Increases 2013 Guidance
Philadelphia, PA, July 23, 2013 - Pennsylvania Real Estate Investment Trust (NYSE: PEI) today reported results for the quarter and six months ended June 30, 2013.
• | Same Store NOI improved by 3.8% for the quarter and 3.2% year to date |
◦ | Same store NOI excluding lease termination revenue improved by 4.9% for the quarter and 4.2% year to date |
• | Total Portfolio Occupancy increased to 93.4%, an increase of 150 basis points over the prior year |
◦ | Non-Anchor Occupancy was 89.6%, an increase of 200 basis points |
◦ | Same store mall occupancy increased to 93.2%, an increase of 150 basis points |
• | Renewal spreads were 5.2% for the quarter and 5.1% year to date |
• | Raised $220.3 million in a common equity offering |
• | Asset disposition program progressed with three properties under contract |
• | Leverage ratio (Debt to Gross Asset Value) fell below 50% |
• | Closing on new unsecured credit facility increased flexibility and lowered interest rates |
• | Path to growth began with acquisition of building contiguous to The Gallery in Philadelphia and finalization of the venture with Simon Property Group for Gloucester Premium Outlets in Greater Philadelphia market |
“Our priorities of operational excellence, balance sheet improvement and elevating portfolio quality remain paramount," said Joseph F. Coradino, Chief Executive Officer. “Today, we are a healthier company with strong growth in same store NOI, occupancy and rents. We have an improved balance sheet with more flexibility resulting from asset sales, refinancing efforts and our recent equity offering. We also have a higher quality portfolio through successful and ongoing dispositions and remerchandising efforts.”
The following tables set forth information regarding Funds From Operations (“FFO”) and the adjustments to FFO for the quarter and six months ended June 30, 2013:
Quarter Ended June 30, | Six Months Ended June 30, | |||||||||||||
(In millions, except per share amounts) | 2013 | 2012 | 2013 | 2012 | ||||||||||
FFO | $ | 24.0 | $ | 20.8 | $ | 48.1 | $ | 45.8 | ||||||
Provision for employee separation expense | 1.0 | 0.8 | 2.3 | 0.8 | ||||||||||
Accelerated amortization of deferred financing costs | 0.1 | — | 1.0 | — | ||||||||||
Loss on hedge ineffectiveness | 3.1 | — | 2.7 | — | ||||||||||
FFO, as adjusted | $ | 28.3 | $ | 21.6 | $ | 54.2 | $ | 46.6 | ||||||
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Quarter Ended June 30, | Six Months Ended June 30, | |||||||||||||
Per Diluted Share and OP Unit | 2013 | 2012 | 2013 | 2012 | ||||||||||
FFO | $ | 0.36 | $ | 0.36 | $ | 0.77 | $ | 0.79 | ||||||
FFO, as adjusted | $ | 0.42 | $ | 0.37 | $ | 0.86 | $ | 0.80 | ||||||
Information regarding Net Operating Income (“NOI”) and same store NOI for the quarter and six months ended June 30, 2013 is set forth in the table below:
Quarter Ended June 30, | Six Months Ended June 30, | ||||||||||||
(In millions, except per share amounts) | 2013 | 2012 | 2013 | 2012 | |||||||||
NOI | $ | 68.7 | $ | 67.6 | $ | 137.3 | $ | 136.8 | |||||
NOI from discontinued operations | (1.3 | ) | (3.4 | ) | (2.6 | ) | (7.0 | ) | |||||
NOI from acquisitions and other | (0.7 | ) | — | (0.8 | ) | (0.1 | ) | ||||||
Same store NOI | $ | 66.7 | $ | 64.2 | $ | 133.9 | $ | 129.7 | |||||
Lease termination revenue | (0.1 | ) | (0.8 | ) | (0.3 | ) | (1.5 | ) | |||||
Same store NOI excluding lease termination revenue | $ | 66.5 | $ | 63.4 | $ | 133.6 | $ | 128.2 | |||||
Information regarding net income (loss) and net income (loss) per diluted share for the quarter and six months ended June 30, 2013 is set forth in the table below:
Quarter Ended June 30, | Six Months Ended June 30, | ||||||||||||
(In millions, except per share amounts) | 2013 | 2012 | 2013 | 2012 | |||||||||
Net income (loss) | ($12.7 | ) | ($13.7 | ) | $ | 8.2 | ($23.70 | ) | |||||
Net income (loss) per diluted share | ($0.20 | ) | ($0.25 | ) | $ | 0.13 | ($0.43 | ) | |||||
A description of each non-GAAP financial measure and the related reconciliation to the comparable GAAP measure are located at the end of this press release.
Primary Factors Affecting Financial Results for the Quarter Ended June 30, 2013:
• | Same Store NOI increased $2.5 million |
• | NOI increased $1.0 million as a result of the acquisition of the 907 Market Street property in April 2013 |
• | NOI decreased $2.2 million as a result of the sale of three properties and one power center classified as held for sale, all as reflected in discontinued operations |
• | Interest expense decreased $6.7 million from lower overall debt balances and lower average interest rates |
• | General and administrative expenses decreased $0.6 million from lower executive headcount and incentive compensation |
• | Net loss on hedge ineffectiveness of $3.1 million primarily from the early repayment of a mortgage loan |
• | Increased dividends on preferred shares of $2.1 million |
Primary Factors Affecting Financial Results for the Six Months Ended June 30, 2013:
• | Same Store NOI increased $4.1 million |
• | NOI increased $1.0 million from the 907 Market Street acquisition |
• | NOI decreased $4.5 million as a result of discontinued operations |
• | Interest expense decreased $10.2 million from lower overall debt balances and lower average interest rates |
• | General and administrative expenses decreased $1.7 million from lower executive headcount and incentive compensation |
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• | Increased dividends on preferred shares of $6.1 million |
• | Net loss on hedge ineffectiveness of $2.7 million |
• | Accelerated deferred financing costs of $1.0 million |
Financing Activities
During the quarter, we closed on our 2013 Revolving Facility, which replaced the Company's 2010 Term Loan and Revolving Credit Facility. The initial borrowing of $192.5 million at an interest rate of LIBOR plus 205 basis points was used for repayment of the amounts outstanding under the 2010 Credit Facility.
Key terms of the 2013 Revolving Facility are as follows:
• | The available amount is $400.0 million and includes an accordion feature up to an additional $200.0 million; |
• | The initial term is three years and the Company has two one-year extension options; |
• | The amounts borrowed will bear interest at a rate of LIBOR plus a range of 150 to 205 basis points depending upon the Company's leverage; and |
• | The capitalization rates used to calculate Gross Asset Value are as follows: |
◦ | 6.5% for properties with sales per square foot of more than $500 |
◦ | 7.5% for all other properties |
In May 2013, the Company closed on an 11,500,000 share common equity offering at $20.00 per share, which generated net proceeds of $220.3 million.
Also in May 2013, the Company repaid a $56.3 million mortgage loan on Jacksonville Mall in Jacksonville, North Carolina.
Asset Dispositions
Christiana Center remains under agreement of sale. The sale price is approximately $75.0 million.
South Mall in Allentown, Pennsylvania and Commons at Magnolia, the Company's sole remaining wholly-owned power center, and are under contract for sale subject to due diligence and customary closing conditions.
Asset Acquisitions
In April 2013, the Company closed on the acquisition of 907 Market Street, a six story property located contiguous to the Company's The Gallery at Market East property in downtown Philadelphia. The purchase price was approximately $59.6 million.
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Retail Operations
The following tables set forth information regarding sales per square foot and occupancy in the Company's portfolio, including properties owned by partnerships in which the Company owns a 50% interest:
Rolling Twelve Months Ended: | ||
June 30, 2013 | June 30, 2012 | |
Portfolio Sales per square foot (1) | $384 | $378 |
(1) Based on sales reported by tenants leasing 10,000 square feet or less of non-anchor space for at least 24 months. | ||
Occupancy as of: | ||
June 30, 2013 | June 30, 2012 | |
Same Store Malls: | ||
Total including anchors | 93.2% | 91.7% |
Total excluding anchors | 89.6% | 87.6% |
Portfolio Total Occupancy: | ||
Total including anchors | 93.4% | 91.9% |
Total excluding anchors | 90.0% | 87.7% |
2013 Outlook
The Company is revising its 2013 guidance as follows:
Estimates Per Diluted Share | Lower End | Upper End | ||||
FFO as adjusted | $ | 1.87 | $ | 1.91 | ||
Provision for employee separation expense | (0.03 | ) | (0.03 | ) | ||
Deferred financing costs and hedge ineffectiveness, net | (0.06 | ) | (0.06 | ) | ||
FFO | $ | 1.78 | $ | 1.82 | ||
Gains on sales | 1.17 | 1.17 | ||||
Depreciation and amortization (includes the Company's proportionate share of unconsolidated properties), net of other adjustments | (2.25 | ) | (2.23 | ) | ||
Net income attributable to PREIT common shareholders | $ | 0.70 | $ | 0.76 | ||
The Company's guidance includes the effect of the pending sale of Christiana Center, but does not include the impact of any other property dispositions or acquisitions.
Conference Call Information
Management has scheduled a conference call for 11:00 a.m. Eastern Daylight Time on Wednesday, July 24, 2013, to review the Company's second quarter results and future outlook. To listen to the call, please dial (877) 941-1427 (domestic) or (480) 629-9664 (international), at least five minutes before the scheduled start time, and provide conference ID number 4626103. Investors can also access the call in a "listen only" mode via the Internet at the Company website, www.preit.com. Please allow extra time prior to the call to visit the site and download the necessary software to listen to the Internet broadcast. Financial and statistical information expected to be discussed on the call will also be available on the Company's website.
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For interested individuals unable to join the conference call, a replay of the call will be available through August 7, 2013 at (877) 870-5176 (domestic) or (858) 384-5517 (international), (Replay reservation code: 4626103). The online archive of the webcast will be available for 14 days following the call.
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 retail shopping malls. Currently, the Company's portfolio of 46 properties comprises 36 shopping malls, seven community and power centers, and three development properties. The Company's properties are located in 13 states in the eastern half of the United States, primarily in the Mid-Atlantic region. The operating retail properties have approximately 31.0 million total square feet of space. PREIT, headquartered in Philadelphia, Pennsylvania, is publicly traded on the NYSE under the symbol PEI. The Company's website can be found at www.preit.com.
Rounding
Certain summarized information in the tables above may not total due to rounding.
Definitions
Funds From Operations
The National Association of Real Estate Investment Trusts (“NAREIT”) defines Funds From Operations (“FFO”), which is a non-GAAP measure commonly used by REITs, as net income (computed in accordance with GAAP), excluding gains (or losses) from sales of property, plus real estate depreciation and amortization; and after adjustments for unconsolidated partnerships and joint ventures to reflect funds from operations on the same basis. We compute FFO in accordance with standards established by NAREIT, which may not be comparable to FFO reported by other REITs that do not define the term in accordance with the current NAREIT definition, or that interpret the current NAREIT definition differently than we do. NAREIT's established guidance provides that excluding impairment write downs of depreciable real estate is consistent with the NAREIT definition.
FFO is a commonly used measure of operating performance and profitability among REITs. We use FFO and FFO per diluted share and unit of limited partnership interest in our operating partnership (“OP Unit”) in measuring our performance against our peers and as one of the performance measures for determining incentive compensation amounts earned under certain of our performance based executive compensation programs. FFO does not include gains and losses on sales of operating real estate assets or impairment write downs of depreciable real estate, which are included in the determination of net income in accordance with GAAP. Accordingly, FFO is not a comprehensive measure of our operating cash flows. In addition, since FFO does not include depreciation on real estate assets, FFO may not be a useful performance measure when comparing our operating performance to that of other non-real estate commercial enterprises. We compensate for these limitations by using FFO in conjunction with other GAAP financial performance measures, such as net income and net cash provided by operating activities, and other non-GAAP financial performance measures, such as NOI. FFO does not represent cash generated from operating activities in accordance with GAAP and should not be considered to be an alternative to net income (determined in accordance with GAAP) as an indication of our financial performance or to be an alternative to cash flow from operating activities (determined in accordance with GAAP) as a measure of our liquidity, nor is it indicative of funds
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available for our cash needs, including our ability to make cash distributions. We believe that net income is the most directly comparable GAAP measurement to FFO.
We also present Funds From Operations, as adjusted, and Funds From Operations per diluted share and OP Unit, as adjusted, which are non-GAAP measures, for the three months June 30, 2013 and 2012 to show the effect of the provision for employee separation expense, accelerated amortization of deferred financing costs and gain and loss on hedge ineffectiveness, which had a significant effect on our results of operations, but are not, in our opinion, indicative of our operating performance.
We believe that FFO is helpful to management and investors as a measure of operating performance because it excludes various items included in net income that do not relate to or are not indicative of operating performance, such as gains on sales of operating real estate and depreciation and amortization of real estate, among others. We believe that Funds From Operations, as adjusted, is helpful to management and investors as a measure of operating performance because it adjusts FFO to exclude items that management does not believe are indicative of its operating performance, such as provision for employee separation expense, accelerated amortization of deferred financing costs and gain on hedge ineffectiveness.
Net Operating Income (“NOI”)
NOI (a non-GAAP measure) is derived from real estate revenue (determined in accordance with generally accepted accounting principles, or GAAP, including lease termination revenue) minus operating expenses (determined in accordance with GAAP), plus our share of revenue and operating expenses of our partnership investments, and includes real estate revenue and operating expenses from properties included in discontinued operations, if any. It does not represent cash generated from operating activities in accordance with GAAP and should not be considered to be an alternative to net income (determined inaccordance with GAAP) as an indication of our financial performance or to be an alternative to cash flow from operating activities (determined in accordance with GAAP) as a measure of our liquidity. It is not indicative of funds available for our cash needs, including our ability to make cash distributions. We believe that NOI is helpful to management and investors as a measure of operating performance because it is an indicator of the return on property investment, and provides a method of comparing property performance over time. We believe that net income is the most directly comparable GAAP measurement to NOI.
NOI excludes interest and other income, general and administrative expenses, provision for employee separation expense, interest expense, depreciation and amortization, gains on sales of interests in real estate, gains on sales of non-operating real estate, gains on sales of discontinued operations, gain on extinguishment of debt, impairment losses, project costs and other expenses.
Forward Looking Statements
This press release contains certain “forward-looking statements” within the meaning of the U.S. Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements relate to expectations, beliefs, projections, future plans, strategies, anticipated events, trends and other matters that are not historical facts. These forward-looking statements reflect our current views about future events, achievements or results and are subject to risks, uncertainties and changes in
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circumstances that might cause future events, achievements or results to differ materially from those expressed or implied by the forward-looking statements. In particular, our business might be materially and adversely affected by uncertainties affecting real estate businesses generally as well as the following, among other factors: our substantial debt, stated value of preferred shares and our high leverage ratio; constraining leverage, interest and tangible net worth covenants under our 2013 Revolving Facility; potential losses on impairment of certain long-lived assets, such as real estate, or of intangible assets, such as goodwill; potential losses on impairment of assets that we might be required to record in connection with any dispositions of assets; recent changes to our corporate management team and any resulting modifications to our business strategies; our ability to refinance our existing indebtedness when it matures, on favorable terms or at all; our ability to raise capital, including through the issuance of equity or equity-related securities if market conditions are favorable, through joint ventures or other partnerships, through sales of properties or interests in properties, or through other actions; our short- and long-term liquidity position; current economic conditions and their effect on employment, consumer confidence and spending and the corresponding effects on tenant business performance, prospects, solvency and leasing decisions and on our cash flows, and the value and potential impairment of our properties; general economic, financial and political conditions, including credit market conditions, changes in interest rates or unemployment; changes in the retail industry, including consolidation and store closings, particularly among anchor tenants; the effects of online shopping and other uses of technology on our retail tenants; our ability to maintain and increase property occupancy, sales and rental rates, in light of the relatively high number of leases that have expired or are expiring in the next two years; increases in operating costs that cannot be passed on to tenants; risks relating to development and redevelopment activities; concentration of our properties in the Mid-Atlantic region; changes in local market conditions, such as the supply of or demand for retail space, or other competitive factors; potential dilution from any capital raising transactions; possible environmental liabilities; our ability to obtain insurance at a reasonable cost; and existence of complex regulations, including those relating to our status as a REIT, and the adverse consequences if we were to fail to qualify as a REIT. Additional factors that might cause future events, achievements or results to differ materially from those expressed or implied by our forward-looking statements include those discussed in our Annual Report on Form 10-K and in our Quarterly Report on Form 10-Q for the three months ended March 31, 2013 in the section entitled “Item 1A. Risk Factors.” We do not intend to update or revise any forward-looking statements to reflect new information, future events or otherwise.
** Quarterly supplemental financial and operating **
** information will be available on www.preit.com **
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Selected Financial Data
STATEMENTS OF OPERATIONS | Quarter Ended | Six Months Ended | ||||||||||||||
June 30, 2013 | June 30, 2012 | June 30, 2013 | June 30, 2012 | |||||||||||||
(In thousands, except per share amounts) | ||||||||||||||||
REVENUE: | ||||||||||||||||
Real estate revenue: | ||||||||||||||||
Base rent | $ | 70,274 | $ | 67,141 | $ | 139,884 | $ | 133,892 | ||||||||
Expense reimbursements | 31,163 | 29,691 | 62,269 | 60,393 | ||||||||||||
Percentage rent | 584 | 509 | 1,576 | 1,405 | ||||||||||||
Lease termination revenue | 91 | 769 | 244 | 1,420 | ||||||||||||
Other real estate revenue | 2,901 | 3,088 | 5,766 | 5,763 | ||||||||||||
Real estate revenue | 105,013 | 101,198 | 209,739 | 202,873 | ||||||||||||
Other income | 1,395 | 884 | 2,283 | 1,645 | ||||||||||||
Total revenue | 106,408 | 102,082 | 212,022 | 204,518 | ||||||||||||
EXPENSES: | ||||||||||||||||
Property operating expenses: | ||||||||||||||||
CAM and real estate tax | (35,155 | ) | (33,332 | ) | (70,599 | ) | (66,908 | ) | ||||||||
Utilities | (5,140 | ) | (5,651 | ) | (10,259 | ) | (10,887 | ) | ||||||||
Other | (4,095 | ) | (4,616 | ) | (8,020 | ) | (8,596 | ) | ||||||||
Total operating expenses | (44,390 | ) | (43,599 | ) | (88,878 | ) | (86,391 | ) | ||||||||
Depreciation and amortization | (35,451 | ) | (31,573 | ) | (69,432 | ) | (63,545 | ) | ||||||||
Other expenses: | ||||||||||||||||
General and administrative expenses | (9,606 | ) | (10,240 | ) | (18,462 | ) | (20,124 | ) | ||||||||
Provision for employee separation expenses | (1,035 | ) | (796 | ) | (2,314 | ) | (796 | ) | ||||||||
Project costs and other expenses | (198 | ) | (39 | ) | (400 | ) | (397 | ) | ||||||||
Total other expenses | (10,839 | ) | (11,075 | ) | (21,176 | ) | (21,317 | ) | ||||||||
Interest expense, net | (27,689 | ) | (30,815 | ) | (55,027 | ) | (61,533 | ) | ||||||||
Total expenses | (118,369 | ) | (117,062 | ) | (234,513 | ) | (232,786 | ) | ||||||||
Loss before equity in income of partnerships and discontinued operations | (11,961 | ) | (14,980 | ) | (22,491 | ) | (28,268 | ) | ||||||||
Equity in income of partnerships | 2,283 | 1,952 | 4,736 | 3,945 | ||||||||||||
Net loss from continuing operations | (9,678 | ) | (13,028 | ) | (17,755 | ) | (24,323 | ) | ||||||||
Discontinued operations: | ||||||||||||||||
Operating results from discontinued operations | 669 | 627 | 1,299 | 1,506 | ||||||||||||
Gains on sales of discontinued operations | — | — | 33,254 | — | ||||||||||||
Income from discontinued operations | 669 | 627 | 34,553 | 1,506 | ||||||||||||
Net (loss) income | (9,009 | ) | (12,401 | ) | 16,798 | (22,817 | ) | |||||||||
Less: net (income) loss attributed to noncontrolling interest | 314 | 513 | (691 | ) | 932 | |||||||||||
Net (loss) income attributable to Pennsylvania Real Estate Investment Trust | (8,695 | ) | (11,888 | ) | 16,107 | (21,885 | ) | |||||||||
Less: preferred share dividends | (3,962 | ) | (1,845 | ) | (7,924 | ) | (1,845 | ) | ||||||||
Net (loss) income attributable to Pennsylvania Real Estate Investment Trust common shareholders | $ | (12,657 | ) | $ | (13,733 | ) | $ | 8,183 | $ | (23,730 | ) | |||||
Basic and diluted net (loss) income per share - Pennsylvania Real Estate Investment Trust (1) | $ | (0.20 | ) | $ | (0.25 | ) | $ | 0.13 | $ | (0.43 | ) | |||||
Weighted average number of shares outstanding for diluted EPS | 63,540 | 55,143 | 59,661 | 55,026 | ||||||||||||
(1)For the three and six month periods ended June 30, 2013 and 2012, respectively, there are net losses from continuing operations, so the effect of common share equivalents is excluded from the calculation of diluted loss per share for these periods.
PREIT / 9 Pennsylvania Real Estate Investment Trust
Selected Financial Data
OTHER COMPREHENSIVE INCOME (LOSS) | Quarter Ended | Six Months Ended | ||||||||||||||
June 30, 2013 | June 30, 2012 | June 30, 2013 | June 30, 2012 | |||||||||||||
(In thousands) | ||||||||||||||||
Net (loss) income | $ | (9,009 | ) | $ | (12,401 | ) | $ | 16,798 | $ | (22,817 | ) | |||||
Unrealized gain on derivatives | 5,917 | 2,825 | 8,096 | 4,276 | ||||||||||||
Amortization of (gains) losses of settled swaps | 3,577 | 207 | 3,782 | 509 | ||||||||||||
Total comprehensive income (loss) | 485 | (9,369 | ) | 28,676 | (18,032 | ) | ||||||||||
Less: Comprehensive (income) loss attributable to noncontrolling interest | (23 | ) | 389 | (1,121 | ) | 738 | ||||||||||
Comprehensive income (loss) attributable to Pennsylvania Real Estate Investment Trust | $ | 462 | $ | (8,980 | ) | $ | 27,555 | $ | (17,294 | ) | ||||||
PREIT / 10 Pennsylvania Real Estate Investment Trust
Selected Financial Data
Quarter Ended June 30, 2013 | Quarter Ended June 30, 2012 | |||||||||||||||||||||||||||||||
RECONCILIATION OF NOI AND FFO TO NET LOSS | Consolidated | PREIT's Share unconsolidated partnerships | Discontinued operations | Total | Consolidated | PREIT's Share unconsolidated partnerships | Discontinued operations | Total | ||||||||||||||||||||||||
(In thousands, except per share amounts) | ||||||||||||||||||||||||||||||||
Real estate revenue(1) | $ | 105,013 | $ | 9,685 | $ | 1,429 | $ | 116,127 | $ | 101,198 | $ | 9,247 | $ | 6,643 | $ | 117,088 | ||||||||||||||||
Operating expenses | (44,390 | ) | (2,827 | ) | (173 | ) | (47,390 | ) | (43,599 | ) | (2,638 | ) | (3,209 | ) | (49,446 | ) | ||||||||||||||||
NET OPERATING INCOME | 60,623 | 6,858 | 1,256 | 68,737 | 57,599 | 6,609 | 3,434 | 67,642 | ||||||||||||||||||||||||
General and administrative expenses | (9,606 | ) | — | — | (9,606 | ) | (10,240 | ) | — | — | (10,240 | ) | ||||||||||||||||||||
Provision for employee separation expenses | (1,035 | ) | — | — | (1,035 | ) | (796 | ) | — | — | (796 | ) | ||||||||||||||||||||
Other income | 1,395 | — | — | 1,395 | 884 | — | — | 884 | ||||||||||||||||||||||||
Project costs and other expenses | (198 | ) | — | — | (198 | ) | (39 | ) | — | — | (39 | ) | ||||||||||||||||||||
Interest expense, net | (27,689 | ) | (2,765 | ) | (587 | ) | (31,041 | ) | (30,815 | ) | (2,817 | ) | (980 | ) | (34,612 | ) | ||||||||||||||||
Depreciation on non real estate assets | (323 | ) | — | — | (323 | ) | (156 | ) | — | — | (156 | ) | ||||||||||||||||||||
Preferred share dividends | (3,962 | ) | — | — | (3,962 | ) | (1,845 | ) | — | — | (1,845 | ) | ||||||||||||||||||||
FUNDS FROM OPERATIONS | 19,205 | 4,093 | 669 | 23,967 | 14,592 | 3,792 | 2,454 | 20,838 | ||||||||||||||||||||||||
Depreciation on real estate assets | (35,128 | ) | (1,810 | ) | — | (36,938 | ) | (31,417 | ) | (1,840 | ) | (1,827 | ) | (35,084 | ) | |||||||||||||||||
Equity in income of partnerships | 2,283 | (2,283 | ) | — | — | 1,952 | (1,952 | ) | — | — | ||||||||||||||||||||||
Operating results from discontinued operations | 669 | — | (669 | ) | — | 627 | — | (627 | ) | — | ||||||||||||||||||||||
Gain on sales of discontinued operations | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||
Preferred share dividends | 3,962 | — | — | 3,962 | 1,845 | — | — | 1,845 | ||||||||||||||||||||||||
Net loss | $ | (9,009 | ) | $ | — | $ | — | $ | (9,009 | ) | $ | (12,401 | ) | $ | — | $ | — | $ | (12,401 | ) | ||||||||||||
(1)Total includes the non-cash effect of straight-line rent of $419 and $138 for the quarters ended June 30, 2013 and 2012, respectively. | ||||||||||||||||||||||||||||||||
Weighted average number of shares outstanding | 63,540 | 55,143 | ||||||||||||||||||||||||||||||
Weighted average effect of full conversion of OP Units | 2,228 | 2,309 | ||||||||||||||||||||||||||||||
Effect of common share equivalents | 727 | 1,007 | ||||||||||||||||||||||||||||||
Total weighted average shares outstanding, including OP Units | 66,495 | 58,459 | ||||||||||||||||||||||||||||||
FUNDS FROM OPERATIONS | $ | 23,967 | $ | 20,838 | ||||||||||||||||||||||||||||
Provision for employee separation expenses | 1,035 | 796 | ||||||||||||||||||||||||||||||
Accelerated amortization of deferred financing costs | 112 | — | ||||||||||||||||||||||||||||||
Loss on hedge ineffectiveness | 3,146 | — | ||||||||||||||||||||||||||||||
FUNDS FROM OPERATIONS AS ADJUSTED | $ | 28,260 | $ | 21,634 | ||||||||||||||||||||||||||||
FUNDS FROM OPERATIONS PER DILUTED SHARE AND OP UNIT | $ | 0.36 | $ | 0.36 | ||||||||||||||||||||||||||||
FUNDS FROM OPERATIONS PER DILUTED SHARE AND OP UNIT AS ADJUSTED | $ | 0.42 | $ | 0.37 | ||||||||||||||||||||||||||||
SAME STORE RECONCILIATION | Three Months Ended June 30, | |||||||||||||||||||||||
Same Store | Non-Same Store | Total | ||||||||||||||||||||||
2013 | 2012 | 2013 | 2012 | 2013 | 2012 | |||||||||||||||||||
Real estate revenue | $ | 112,952 | $ | 109,964 | $ | 3,175 | $ | 7,124 | $ | 116,127 | $ | 117,088 | ||||||||||||
Operating expenses | (46,297 | ) | (45,761 | ) | (1,093 | ) | (3,685 | ) | (47,390 | ) | (49,446 | ) | ||||||||||||
NET OPERATING INCOME (NOI) | $ | 66,655 | $ | 64,203 | $ | 2,082 | $ | 3,439 | $ | 68,737 | $ | 67,642 | ||||||||||||
Less: Lease termination revenue | 107 | 766 | 35 | — | 142 | 766 | ||||||||||||||||||
NOI - EXCLUDING LEASE TERMINATION REVENUE | $ | 66,548 | $ | 63,437 | $ | 2,047 | $ | 3,439 | $ | 68,595 | $ | 66,876 | ||||||||||||
PREIT / 11 Pennsylvania Real Estate Investment Trust
Selected Financial Data
Six Months Ended June 30, 2013 | Six Months Ended June 30, 2012 | |||||||||||||||||||||||||||||||
RECONCILIATION OF NOI AND FFO TO NET INCOME (LOSS) | Consolidated | PREIT's Share unconsolidated partnerships | Discontinued operations | Total | Consolidated | PREIT's Share unconsolidated partnerships | Discontinued operations | Total | ||||||||||||||||||||||||
(In thousands, except per share amounts) | ||||||||||||||||||||||||||||||||
Real estate revenue(1) | $ | 209,739 | $ | 19,704 | $ | 4,172 | $ | 233,615 | $ | 202,873 | $ | 18,838 | $ | 13,432 | $ | 235,143 | ||||||||||||||||
Operating expenses | (88,878 | ) | (5,798 | ) | (1,614 | ) | (96,290 | ) | (86,391 | ) | (5,565 | ) | (6,422 | ) | (98,378 | ) | ||||||||||||||||
NET OPERATING INCOME | 120,861 | 13,906 | 2,558 | 137,325 | 116,482 | 13,273 | 7,010 | 136,765 | ||||||||||||||||||||||||
General and administrative expenses | (18,462 | ) | — | — | (18,462 | ) | (20,124 | ) | — | — | (20,124 | ) | ||||||||||||||||||||
Provision for employee separation expenses | (2,314 | ) | — | — | (2,314 | ) | (796 | ) | — | — | (796 | ) | ||||||||||||||||||||
Other income | 2,283 | — | — | 2,283 | 1,645 | — | — | 1,645 | ||||||||||||||||||||||||
Project costs and other expenses | (400 | ) | — | — | (400 | ) | (397 | ) | — | — | (397 | ) | ||||||||||||||||||||
Interest expense, net | (55,027 | ) | (5,531 | ) | (1,259 | ) | (61,817 | ) | (61,533 | ) | (5,637 | ) | (1,930 | ) | (69,100 | ) | ||||||||||||||||
Depreciation on non real estate assets | (548 | ) | — | — | (548 | ) | (348 | ) | — | — | (348 | ) | ||||||||||||||||||||
Preferred share dividends | (7,924 | ) | — | — | (7,924 | ) | (1,845 | ) | — | — | (1,845 | ) | ||||||||||||||||||||
FUNDS FROM OPERATIONS | 38,469 | 8,375 | 1,299 | 48,143 | 33,084 | 7,636 | 5,080 | 45,800 | ||||||||||||||||||||||||
Depreciation on real estate assets | (68,884 | ) | (3,639 | ) | — | (72,523 | ) | (63,197 | ) | (3,691 | ) | (3,574 | ) | (70,462 | ) | |||||||||||||||||
Equity in income of partnerships | 4,736 | (4,736 | ) | — | — | 3,945 | (3,945 | ) | — | — | ||||||||||||||||||||||
Operating results from discontinued operations | 1,299 | — | (1,299 | ) | — | 1,506 | — | (1,506 | ) | — | ||||||||||||||||||||||
Gain on sales of discontinued operations | 33,254 | — | — | 33,254 | — | — | — | — | ||||||||||||||||||||||||
Preferred share dividends | 7,924 | — | — | 7,924 | 1,845 | — | — | 1,845 | ||||||||||||||||||||||||
Net income (loss) | $ | 16,798 | $ | — | $ | — | $ | 16,798 | $ | (22,817 | ) | $ | — | $ | — | $ | (22,817 | ) | ||||||||||||||
(1) Total includes the non-cash effect of straight-line rent of $829 and $253 for the six months ended June 30, 2013 and 2012, respectively. | ||||||||||||||||||||||||||||||||
Weighted average number of shares outstanding | 59,661 | 55,026 | ||||||||||||||||||||||||||||||
Weighted average effect of full conversion of OP Units | 2,256 | 2,318 | ||||||||||||||||||||||||||||||
Effect of common share equivalents | 780 | 947 | ||||||||||||||||||||||||||||||
Total weighted average shares outstanding, including OP Units | 62,697 | 58,291 | ||||||||||||||||||||||||||||||
FUNDS FROM OPERATIONS | $ | 48,143 | $ | 45,800 | ||||||||||||||||||||||||||||
Provision for employee separation expenses | 2,314 | 796 | ||||||||||||||||||||||||||||||
Accelerated amortization of deferred financing costs | 1,026 | — | ||||||||||||||||||||||||||||||
Loss on hedge ineffectiveness | 2,682 | — | ||||||||||||||||||||||||||||||
FUNDS FROM OPERATIONS AS ADJUSTED | $ | 54,165 | $ | 46,596 | ||||||||||||||||||||||||||||
FUNDS FROM OPERATIONS PER DILUTED SHARE AND OP UNIT | $ | 0.77 | $ | 0.79 | ||||||||||||||||||||||||||||
FUNDS FROM OPERATIONS PER DILUTED SHARE AND OP UNIT AS ADJUSTED | $ | 0.86 | $ | 0.80 | ||||||||||||||||||||||||||||
SAME STORE RECONCILIATION | Six Months Ended June 30, | |||||||||||||||||||||||
Same Store | Non-Same Store | Total | ||||||||||||||||||||||
2013 | 2012 | 2013 | 2012 | 2013 | 2012 | |||||||||||||||||||
Real estate revenue | $ | 227,213 | $ | 220,745 | $ | 6,402 | $ | 14,398 | $ | 233,615 | $ | 235,143 | ||||||||||||
Operating expenses | (93,359 | ) | (91,030 | ) | (2,931 | ) | (7,348 | ) | (96,290 | ) | (98,378 | ) | ||||||||||||
NET OPERATING INCOME (NOI) | $ | 133,854 | $ | 129,715 | $ | 3,471 | $ | 7,050 | $ | 137,325 | $ | 136,765 | ||||||||||||
Less: Lease termination revenue | 260 | 1,477 | 35 | 7 | 295 | 1,484 | ||||||||||||||||||
NOI - EXCLUDING LEASE TERMINATION REVENUE | $ | 133,594 | $ | 128,238 | $ | 3,436 | $ | 7,043 | $ | 137,030 | $ | 135,281 | ||||||||||||
PREIT / 12 Pennsylvania Real Estate Investment Trust
Selected Financial Data
CONSOLIDATED BALANCE SHEETS | June 30, 2013 | December 31, 2012 | ||||||
(Unaudited) | ||||||||
(In thousands) | ||||||||
ASSETS: | ||||||||
INVESTMENTS IN REAL ESTATE, at cost: | ||||||||
Operating properties | $ | 3,465,804 | $ | 3,395,681 | ||||
Construction in progress | 74,673 | 68,619 | ||||||
Land held for development | 12,649 | 13,240 | ||||||
Total investments in real estate | 3,553,126 | 3,477,540 | ||||||
Accumulated depreciation | (971,715 | ) | (907,928 | ) | ||||
Net investments in real estate | 2,581,411 | 2,569,612 | ||||||
INVESTMENTS IN PARTNERSHIPS, at equity: | 15,193 | 14,855 | ||||||
OTHER ASSETS: | ||||||||
Cash and cash equivalents | 17,525 | 33,990 | ||||||
Tenant and other receivables (net of allowance for doubtful accounts of $13,955 and $14,042 at June 30, 2013 and December 31, 2012, respectively) | 32,482 | 38,473 | ||||||
Intangible assets (net of accumulated amortization of $14,403 and $14,940 at June 30, 2013 and December 31, 2012 , respectively) | 10,789 | 8,673 | ||||||
Deferred costs and other assets, net | 92,643 | 97,399 | ||||||
Assets held for sale | 29,956 | 114,622 | ||||||
Total assets | 2,779,999 | 2,877,624 | ||||||
LIABILITIES: | ||||||||
Mortgage loans | $ | 1,619,155 | $ | 1,718,052 | ||||
Term loans | — | 182,000 | ||||||
Revolving facility | 35,000 | — | ||||||
Tenants deposits and deferred rent | 9,997 | 14,862 | ||||||
Distributions in excess of partnership investments | 64,000 | 64,874 | ||||||
Fair value of derivative liabilities | 3,056 | 9,742 | ||||||
Liabilities on assets held for sale | 50,275 | 102,417 | ||||||
Accrued expenses and other liabilities | 64,884 | 72,448 | ||||||
Total liabilities | 1,846,367 | 2,164,395 | ||||||
EQUITY: | 933,632 | 713,229 | ||||||
Total liabilities and equity | $ | 2,779,999 | $ | 2,877,624 | ||||
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