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EX-99.1 - EXHIBIT 99.1 - THOMAS PROPERTIES GROUP INCexhibit991-suppq32013.htm
8-K - 8-K - THOMAS PROPERTIES GROUP INCa2013q3earningsreleasecove.htm


Exhibit 99.2
THOMAS PROPERTIES GROUP, INC. ANNOUNCES
THIRD QUARTER 2013 RESULTS
Thomas Properties Group, Inc. (NYSE: TPGI) reported today the results of operations for the quarter ended September 30, 2013.
The results of operations presented in this release include TPGI’s results of operations for three and nine months ended September 30, 2013 and 2012. Consolidated net income for the three months ended September 30, 2013 was $80.3 million or $1.71 per share compared to consolidated net loss of $4.1 million or $0.09 per share for the three months ended September 30, 2012. Consolidated net income for the nine months ended September 30, 2013 was $65.8 million or $1.40 per share compared to consolidated net loss of $12.0 million or $0.30 per share for the nine months ended September 30, 2012. The increase in the consolidated net income during the three and nine months ended September 30, 2013 compared to the same periods ending September 30, 2012, was primarily due to a $118.2 million gain associated with the liquidation of our TPG/CalSTRS, LLC joint venture in which we transferred our interest in City National Plaza to our venture partner, and acquired our venture partner’s 75% interest in San Felipe Plaza and CityWestPlace resulting in our sole ownership of these two projects in Houston, Texas.
TPGI's share of after tax cash flow (“ATCF”) for the three months ended September 30, 2013 was a loss of $1.4 million or $0.03 per share compared to ATCF of $1.3 million or $0.03 per share for the three months ended September 30, 2012. The $0.06 decrease in ATCF per share for the three months ended September 30, 2013 compared to the three months ended September 30, 2012 was primarily due to our decreased share of ATCF from the Austin properties. TPGI's share of ATCF for the nine months ended September 30, 2013 was $0.2 million or $0.00 per share compared to ATCF of $3.4 million or $0.08 per share for the nine months ended September 30, 2012. The decrease in ATCF per share for the nine months ended September 30, 2013 compared to the nine months ended September 30, 2012 was primarily the result of our decreased share of ATCF from the Austin properties and the increased number of shares of our common stock outstanding resulting from the issuance of common stock in 2012. The Company defines ATCF (a non-GAAP financial measure) as net income (loss) excluding the following items: noncontrolling interests, deferred income tax expense (benefit), non-cash charges for depreciation and amortization and asset impairment, amortization of loan costs, non-cash compensation expense, adjustments to recognize rental revenues using the straight-line method, adjustments to rental revenue to reflect the fair market value of rents, impairment loss, gain on liquidation of joint venture, and gain (loss) on sale of real estate. ATCF is further described in note (a) and reconciled to net income (loss) in the financial statements below.
Parkway Properties, Inc. Merger
On September 4, 2013, TPGI entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Parkway Properties, Inc., (“Parkway”). Under the terms of the Merger Agreement, TPGI will merge with and into Parkway, with Parkway surviving the merger, and our Operating Partnership will merge with a wholly owned subsidiary of Parkway. Each outstanding share of common stock of TPGI will be canceled and converted into the right to receive 0.3822 shares (the “Exchange Ratio”) of common stock of Parkway, and each outstanding share of limited voting stock of TPGI will be canceled and converted into the right to receive limited voting stock of Parkway at the Exchange Ratio. Pursuant to the Merger Agreement, each outstanding limited partnership unit of TPGI's Operating Partnership will be converted into the right to receive common limited partnership units of Parkway Properties LP at the Exchange Ratio.
Special Meeting
TPGI will hold a Special Meeting of its Stockholders (the “Special Meeting”) on December 17, 2013. The record date for determination of stockholders entitled to vote at the Special Meeting has been set as the close of business on November 11, 2013. At the Special Meeting, TPGI’s stockholders will vote on the a proposal to approve the merger with Parkway and other proposals as described in the preliminary joint proxy statement/prospectus of TPGI and Parkway filed by Parkway with the Securities and Exchange Commission. Completion of the transaction is subject to the approval of shareholders of both companies and satisfaction of customary closing conditions.
Supplemental Materials
The Company publishes a Supplemental Financial Information package which is available at www.tpgre.com in the Investor Relations tab, Supplemental Financial Information section.
About Thomas Properties Group, Inc.
Thomas Properties Group, Inc., with headquarters in Los Angeles, is a full-service real estate company that owns, acquires, develops and manages primarily office, as well as mixed-use properties on a nationwide basis. The Company’s primary areas of focus are the acquisition and ownership of interests in premier office properties, property development and redevelopment, and property and investment management activities. For more information on Thomas Properties Group, Inc., visit www.tpgre.com.






Additional Information about the Proposed Transaction and Where to Find It
This communication does not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote or approval. In connection with the proposed transaction, TPG and Parkway have filed a preliminary joint proxy statement/prospectus with the SEC as part of Parkway’s registration statement on Form S-4. These materials are not yet final and may be amended. INVESTORS ARE URGED TO READ THE PRELIMINARY JOINT PROXY STATEMENT/PROSPECTUS (INCLUDING ALL AMENDMENTS AND SUPPLEMENTS THERETO) AND OTHER RELEVANT DOCUMENTS FILED WITH THE SEC IF AND WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION.
Investors may obtain free copies of the registration statement, the preliminary joint proxy statement/prospectus, the definitive joint proxy statement/prospectus and other relevant documents filed by TPG and Parkway with the SEC (if and when they become available) through the website maintained by the SEC at www.sec.gov. Copies of the documents filed by TPG with the SEC are available free of charge on TPG’s website at www.tpgre.com, and copies of the documents filed by Parkway with the SEC are also available free of charge on Parkway’s website at www.PKY.com.
TPG, Parkway and their respective directors and executive officers may be deemed to be participants in the solicitation of proxies from TPG’s and Parkway’s stockholders in respect of the proposed transaction. Information regarding TPG’s directors and executive officers can be found in TPG’s definitive proxy statement filed with the SEC on April 30, 2013. Information regarding Parkway’s directors and executive officers can be found in Parkway’s definitive proxy statement filed with the SEC on April 4, 2013. Additional information regarding the interests of such potential participants is included in the preliminary joint proxy statement/prospectus and will be included in the definitive joint proxy statement/prospectus and other relevant documents filed with the SEC in connection with the proposed transaction if and when they become available. These documents are available free of charge on the SEC’s website and from TPG or Parkway, as applicable, using the sources indicated above.
Forward Looking Statements
Statements made in this press release that are not historical may contain forward-looking statements. Although TPGI believes the expectations reflected in any forward-looking statements are based on reasonable assumptions, these statements are subject to numerous risks and uncertainties. Factors that could cause actual results to differ materially from TPGI’s expectations include actual and perceived trends in various national and economic conditions that affect global and regional markets for commercial real estate services (including interest rates), the availability of debt and equity investors to finance commercial real estate transactions, our ability to enter into or renew leases at favorable rates, which can be impacted by the financial condition of our tenants, risks associated with the success of our development and property redevelopment projects, general volatility in the securities and credit markets, and the impact of tax laws affecting real estate. For a discussion of some of the factors that may cause our results to differ from management’s expectations, see the information under the captions “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Form 10-K for the year ended December 31, 2012 and our subsequent Form 10-Q quarterly reports, each of which is filed with the Securities and Exchange Commission. TPGI disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.





THOMAS PROPERTIES GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share and per share data)
(unaudited)
 
Three months ended
 
Nine months ended
 
September 30,
 
September 30,
 
2013
 
2012
 
2013
 
2012
Revenues:
 
 
 
 
 
 
 
Rental
$
8,165

 
$
7,813

 
$
23,464

 
$
23,343

Tenant reimbursements
5,423

 
5,344

 
16,392

 
15,746

Parking and other
769

 
786

 
2,977

 
2,271

Investment advisory, management, leasing and development services
998

 
1,005

 
2,526

 
2,669

Investment advisory, management, leasing and development services -
    unconsolidated real estate entities
4,114

 
3,588

 
10,396

 
11,909

Reimbursement of property personnel costs
846

 
1,273

 
2,879

 
4,140

Condominium sales
3,630

 
2,302

 
11,423

 
4,266

Total revenues
23,945

 
22,111

 
70,057

 
64,344

Expenses:
 
 
 
 
 
 
 
Property operating and maintenance
6,421

 
6,183

 
19,544

 
18,198

Real estate and other taxes
2,003

 
1,742

 
5,940

 
5,627

Investment advisory, management, leasing and development services
2,968

 
2,634

 
7,176

 
8,628

Reimbursable property personnel costs
846

 
1,273

 
2,879

 
4,140

Cost of condominium sales
2,985

 
1,858

 
9,396

 
3,251

Interest
3,350

 
4,205

 
10,594

 
12,659

Depreciation and amortization
3,738

 
4,120

 
11,850

 
11,782

General and administrative
7,603

 
3,893

 
20,083

 
13,024

Impairment loss

 

 
753

 

Total expenses
29,914

 
25,908

 
88,215

 
77,309

Interest income
66

 
39

 
180

 
52

Equity in net income (loss) of unconsolidated real estate entities
(1,846
)
 
(1,797
)
 
(8,167
)
 
(2,613
)
Gain (loss) on sale of real estate
(7
)
 

 
(566
)
 

Gain on liquidation of joint venture
118,201

 

 
118,201

 

Income (loss) before income taxes and noncontrolling interests
110,445

 
(5,555
)
 
91,490

 
(15,526
)
Benefit (provision) for income taxes
(7,987
)
 
442

 
(8,027
)
 
368

Net income (loss)
102,458

 
(5,113
)
 
83,463

 
(15,158
)
Noncontrolling interests' share of net (income) loss:
 
 
 
 
 
 
 
Unitholders in the Operating Partnership
(22,532
)
 
1,226

 
(18,821
)
 
3,817

Partners in consolidated real estate entities
355

 
(198
)
 
1,119

 
(668
)
 
(22,177
)
 
1,028

 
(17,702
)
 
3,149

TPGI's share of net income (loss)
$
80,281

 
$
(4,085
)
 
$
65,761

 
$
(12,009
)
Income (loss) per share - basic and diluted
$
1.71

 
$
(0.09
)
 
$
1.40

 
$
(0.30
)
Weighted average common shares - basic
46,610,859

 
45,517,207

 
46,484,165

 
40,301,224

Weighted average common shares - diluted
46,884,429

 
45,517,207

 
46,752,071

 
40,301,224

 
 
 
 
 
 
 
 
Reconciliation of net income (loss) to ATCF (a):
 
 
 
 
 
 
 
Net income (loss)
$
80,281

 
$
(4,085
)
 
$
65,761

 
$
(12,009
)
Adjustments:
 
 
 
 
 
 
 
Income tax (benefit) provision
7,987

 
(442
)
 
8,027

 
(368
)
Noncontrolling interests - unitholders in the Operating Partnership
22,532

 
(1,226
)
 
18,821

 
(3,817
)
Depreciation and amortization
3,738

 
4,120

 
11,850

 
11,782






 
Three months ended
 
Nine months ended
 
September 30,
 
September 30,
 
2013
 
2012
 
2013
 
2012
Amortization of loan costs
143

 
120

 
416

 
440

Non-cash compensation expense
558

 
324

 
1,815

 
1,235

Straight-line rent adjustments
(1,078
)
 
59

 
(1,110
)
 
(296
)
Adjustments to reflect the fair market value of rent
33

 
12

 
115

 
31

Impairment loss

 

 
753

 

(Gain) loss on sale of real estate
8

 

 
566

 

Gain on liquidation of joint venture
(118,201
)
 

 
(118,201
)
 

Unconsolidated real estate entities at TPGI's share:
 
 
 
 
 
 
 
Depreciation and amortization
5,223

 
1,103

 
16,442

 
2,306

Depreciation and amortization from discontinued operations
1,822

 
1,914

 
5,560

 
5,687

Amortization of loan costs
(84
)
 
8

 
(251
)
 
34

Amortization of loan costs from discontinued operations
28

 
54

 
85

 
195

Straight-line rent adjustments
(531
)
 
(141
)
 
(2,012
)
 
(197
)
Straight-line rent adjustments from discontinued operations
133

 
30

 
221

 
59

Adjustments to reflect the fair market value of rent
(819
)
 
(100
)
 
(2,548
)
 
(379
)
Adjustments to reflect the fair market value of rent from
  discontinued operations
(65
)
 
(77
)
 
(188
)
 
(241
)
(Gain) loss on sale of real estate discontinued operations
(2,192
)
 

 
(2,192
)
 

Noncontrolling interests' share:
 
 
 
 
 
 
 
Depreciation and amortization
(1,754
)
 
(201
)
 
(5,582
)
 
(201
)
Depreciation and amortization from discontinued operations

 
(23
)
 
(86
)
 
(23
)
Amortization of loan costs
28

 

 
84

 

Straight-line rent adjustments
177

 
31

 
671

 
31

Straight-line rent adjustments from discontinued operations

 
3

 
10

 
3

Adjustments to reflect the fair market value of rent
273

 

 
849

 

Adjustments to reflect the fair market value of rent from
  discontinued operations

 

 
(4
)
 

ATCF before income taxes
$
(1,760
)
 
$
1,483

 
$
(128
)
 
$
4,272

TPGI's share of ATCF before income taxes (b)
$
(1,405
)
 
$
1,164

 
$
(102
)
 
$
3,265

TPGI's income tax benefit (expense) - current
(23
)
 
144

 
(63
)
 
108

TPGI's share of ATCF
$
(1,428
)
 
$
1,308

 
$
(165
)
 
$
3,373

ATCF per share - basic
$
(0.03
)
 
$
0.03

 
$

 
$
0.08

ATCF per share - diluted
$
(0.03
)
 
$
0.03

 
$

 
$
0.08

Dividends paid per share
$
0.02

 
$
0.015

 
$
0.06

 
$
0.045

Weighted average common shares - basic
46,610,859

 
45,517,207

 
46,484,165

 
40,301,224

Weighted average common shares - diluted
46,884,429

 
45,902,063

 
46,752,071

 
40,668,418


a.
ATCF is a non-GAAP financial measure and may not be directly comparable to similarly-titled measures reported by other companies. We define ATCF as net income (loss) excluding the following items: i) deferred income tax expense (benefit); ii) noncontrolling interests; iii) non-cash charges for depreciation and amortization and asset impairment; iv) amortization of loan costs; v) non-cash compensation expense; vi) the adjustment to recognize rental revenues using the straight-line method; vii) the adjustment to rental revenue to reflect the fair market value of rents; viii) impairment loss; ix) gain on liquidation of joint venture; and x) gain (loss) on sale of real estate. Our management utilizes ATCF data in assessing performance of our business operations in period to period comparisons and for financial planning purposes. ATCF should be considered only as a supplement to net income as a measure of our performance. ATCF should not be used as a measure of our liquidity, nor is it indicative of funds available to fund our cash needs. ATCF also should not be used as a substitute for cash flow from operating activities (computed in accordance with GAAP).





b.
Based on an interest in our operating partnership of 79.83% and 79.68% for the three and nine months ended September 30, 2013, respectively, and 78.56% and 76.43% for the three and nine months ended September 30, 2012, respectively.






THOMAS PROPERTIES GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)

 
September 30,
 
December 31,
 
2013
 
2012
 
(unaudited)
 
(audited)
ASSETS
 
 
 
Investments in real estate:
 
 
 
Operating properties, net
$
826,688

 
$
267,798

Land improvements—development properties, net
15,431

 
6,403

Investments in real estate, net
842,119

 
274,201

Condominium units held for sale
29,388

 
37,891

Investments in unconsolidated real estate entities
66,308

 
106,210

Cash and cash equivalents, unrestricted
62,274

 
76,837

Restricted cash
8,794

 
11,463

Marketable securities
9,160

 

Rents and other receivables, net
1,858

 
1,825

Receivables from unconsolidated real estate entities
1,373

 
2,347

Deferred rents
22,013

 
18,994

Deferred leasing and loan costs, net
60,211

 
10,716

Other assets, net
25,768

 
10,222

Assets associated with land held for sale

 
60,286

Total assets
$
1,129,266

 
$
610,992

LIABILITIES AND EQUITY
 
 
 
Liabilities:
 
 
 
Mortgage loans
$
595,538

 
$
259,995

Unsecured loan
80,000

 

Accounts payable and other liabilities, net
79,455

 
28,346

Losses and distributions in excess of investments in unconsolidated real estate entities
276

 
10,084

Prepaid rent
7,118

 
1,784

Deferred revenue
10,950

 
10,566

Obligations associated with land held for sale

 
21,380

Total liabilities
773,337

 
332,155

 
 
 
 
Equity:
 
 
 
Stockholders’ equity:
 
 
 
Preferred stock, $.01 par value, 25,000,000 shares authorized, none issued or outstanding as
    of September 30, 2013 and December 31, 2012

 

Common stock, $.01 par value, 225,000,000 shares authorized, 46,969,703 and 46,126,481
    shares issued and outstanding as September 30, 2013 of and December 31, 2012,
    respectively
470

 
461

Limited voting stock, $.01 par value, 20,000,000 shares authorized, 11,646,949 and
    12,313,331 shares issued and outstanding as of September 30, 2013 and
    December 31, 2012, respectively
116

 
123

Additional paid-in capital
261,893

 
258,780

Retained deficit and dividends
(20,798
)
 
(83,635
)
Total stockholders’ equity
241,681

 
175,729

Noncontrolling interests:
 
 
 
Unitholders in the Operating Partnership
60,096

 
44,154

Partners in consolidated real estate entities
54,152

 
58,954

Total noncontrolling interests
114,248

 
103,108

Total equity
355,929

 
278,837

Total liabilities and equity
$
1,129,266

 
$
610,992










Contact: Thomas Properties Group, Inc.
Website: www.tpgre.com
Diana M. Laing, Chief Financial Officer
(213) 613-1900