Griffin Announces Fiscal 2019 First Quarter Results
April 08 2019 - 8:59AM
Griffin Industrial Realty, Inc. (Nasdaq: GRIF)
(“Griffin”) reported total revenue of $9,303,000 for the
three months ended February 28, 2019 (the “2019 first quarter”) as
compared to $8,305,000 for the three months ended February 28, 2018
(the “2018 first quarter”). Rental revenue was $8,437,000 and
revenue from property sales was $866,000 in the 2019 first quarter,
as compared to rental revenue of $8,180,000 and revenue from
property sales of $125,000 in the 2018 first quarter.
Operating income increased to $792,000 in the 2019 first quarter
from $584,000 in the 2018 first quarter. The increase in operating
income in the 2019 first quarter, as compared to the 2018 first
quarter, principally reflected an increase in net operating income
from leasing, which Griffin defines as rental revenue less
operating expenses of rental properties (“Leasing NOI”)1, partially
offset by an increase in depreciation and amortization expense.
Although revenue from property sales was higher in the 2019 first
quarter than the 2018 first quarter, the gain from property sales
was not significant, as the cost basis of the development rights
sold in the 2019 first quarter was relatively higher than the cost
basis of the property sold in the 2018 first quarter.
Leasing NOI was $5,772,000 in the 2019 first quarter, as
compared to $5,503,000 in the 2018 first quarter, reflecting the
increase in rental revenue principally due to more space under
lease in the 2019 first quarter than the 2018 first quarter. The
increase in leased space included the long-term lease of 220
Tradeport Drive (“220 Tradeport”), an approximately 234,000 square
foot build-to-suit industrial/warehouse building in New England
Tradeport, Griffin’s industrial park located in Windsor and East
Granby, Connecticut, that was completed and placed in service in
the fiscal 2018 fourth quarter. The increase in rental revenue from
220 Tradeport and other new leases was partially offset by a
reduction of rental revenue from leases that expired or were
terminated subsequent to the 2018 first quarter.
The increase in depreciation and amortization expense in the
2019 first quarter, as compared to the 2018 first quarter,
principally reflected the inclusion of 220 Tradeport and 6975
Ambassador Drive (“6975 Ambassador”), an approximately 134,000
square foot industrial/warehouse building, built on speculation, in
the Lehigh Valley of Pennsylvania that was also completed in the
2018 fourth quarter. 6975 Ambassador is not yet leased.
Griffin’s total real estate portfolio as of February 28, 2019
was approximately 4,078,000 square feet and 93% leased (or 96%
leased excluding 6975 Ambassador), as compared to approximately
3,710,000 square feet and 95% leased as of February 28, 2018.
Industrial/warehouse space comprised 89% of Griffin’s real estate
portfolio as of February 28, 2019 and was 95% leased (or 99% leased
excluding 6975 Ambassador) as of that date. Griffin’s office/flex
space of approximately 433,000 square feet was 74% leased at
February 28, 2019.
Griffin reported a net loss of ($586,000) and a basic and
diluted net loss per share of ($0.12) in the 2019 first quarter, as
compared to a net loss of ($1,723,000) and a basic and diluted net
loss per share of ($0.34) in the 2018 first quarter. The lower net
loss in the 2019 first quarter, as compared to the 2018 first
quarter, principally reflected an income tax benefit of $180,000 in
the 2019 first quarter as compared to an income tax provision of
$790,000 in the 2018 first quarter and the increase in operating
income in the 2019 first quarter, as compared to the 2018 first
quarter, partially offset by an increase in interest expense to
$1,650,000 in the 2019 first quarter from $1,532,000 in the 2018
first quarter. The increase in interest expense in the 2019 first
quarter, as compared to the 2018 first quarter, principally
reflected the higher amount of mortgage loans outstanding in the
2019 first quarter as compared to the 2018 first quarter.
The 2019 first quarter income tax benefit was entirely related
to the 2019 first quarter pretax loss. The income tax provision in
the 2018 first quarter included a charge of $1,001,000 for the
re-measurement of Griffin’s deferred tax assets and liabilities as
a result of the reduction in the U.S. federal corporate statutory
income tax rate from 35% to 21% under the Tax Cuts and Jobs Act
that was enacted on December 22, 2017 and became effective for
Griffin in the 2018 first quarter. Partially offsetting the charge
for the re-measurement of deferred tax assets and liabilities in
the 2018 first quarter was an income tax benefit of $211,000
related to the pretax loss in the 2018 first quarter.
1 Leasing NOI is not a financial measure in conformity with
generally accepted accounting principles in the United States of
America (“U.S. GAAP”). It is presented because Griffin
believes it is a useful financial indicator for measuring results
of its real estate leasing activities. However, it should not
be considered as an alternative to operating income as a measure of
operating results in accordance with U.S. GAAP. In prior periods,
Griffin referred to this metric as “profit from leasing
activities.” Griffin changed from profit from leasing activities to
Leasing NOI to be more in line with terminology used by other real
estate companies.
CONTACT:
Anthony GaliciChief Financial
Officer(860) 286-1307
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Griffin Industrial Realty, Inc. |
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Consolidated Statements of Operations |
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(amounts in thousands, except per share data) |
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(unaudited) |
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For the Three Months Ended |
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Feb. 28, 2019 |
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Feb. 28, 2018 |
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Rental revenue (1) |
$ |
8,437 |
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$ |
8,180 |
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Revenue from property
sales (2) |
|
866 |
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|
125 |
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Total revenue |
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9,303 |
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8,305 |
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Operating expenses of
rental properties (1) |
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2,665 |
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|
2,677 |
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Depreciation and
amortization expense |
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2,942 |
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2,818 |
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General and
administrative expenses |
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2,090 |
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|
2,137 |
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Costs related to
property sales |
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814 |
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89 |
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Total expenses |
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8,511 |
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7,721 |
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Operating income |
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792 |
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584 |
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Interest expense
(3) |
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(1,650 |
) |
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(1,532 |
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Investment income |
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92 |
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|
15 |
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Loss before income tax
benefit (provision) |
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(766 |
) |
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(933 |
) |
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Income tax benefit
(provision) |
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180 |
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(790 |
) |
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Net loss |
$ |
(586 |
) |
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$ |
(1,723 |
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Basic net loss per
common share |
$ |
(0.12 |
) |
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$ |
(0.34 |
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Diluted net loss per
common share |
$ |
(0.12 |
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$ |
(0.34 |
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Weighted average common
shares outstanding for computation of basic per share results |
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5,065 |
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5,001 |
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Weighted average common
shares outstanding for computation of diluted per share
results |
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5,065 |
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5,001 |
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(1) Net operating
income from leasing ("Leasing NOI"): |
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For the Three Months Ended |
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Feb. 28, 2019 |
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Feb. 28, 2018 |
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Rental revenue |
$ |
8,437 |
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$ |
8,180 |
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Operating expenses of
rental properties |
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2,665 |
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2,677 |
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Net operating income
from leasing |
$ |
5,772 |
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$ |
5,503 |
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(2) Revenue from property sales in the three months ended
February 28, 2019 reflected the sale of development rights for a
116 acre parcel of land in East Windsor, Connecticut. Subsequent to
February 28, 2019, the land was sold for $700. |
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Revenue from property sales in the three months ended February
28, 2018 reflected the sale of a residential lot. |
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(3) Interest expense is primarily for mortgages on Griffin's
rental properties. |
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