PHILADELPHIA, May 2, 2019 /PRNewswire/ -- PREIT (NYSE:
PEI) today reported results for the quarter ended March 31, 2019. A description of each
non-GAAP financial measure and the related reconciliation to the
comparable GAAP financial measure is located in the tables
accompanying this release.
|
Quarter
Ended
March
31,
|
(per share
amounts)
|
2019
|
|
2018
|
Net loss - basic and
diluted
|
$(0.30)
|
|
$(0.14)
|
FFO
|
$0.17
|
|
$0.29
|
FFO, as
adjusted
|
$0.26
|
|
$0.29
|
FFO from assets sold
in 2018
|
--
|
|
$(0.01)
|
FFO, as adjusted for
assets sold
|
$0.26
|
|
$0.28
|
- Same Store NOI, both including and excluding lease termination
revenue, was up 2.2% for the quarter compared to March 31, 2018.
-
- Same Store NOI, excluding lease termination revenue, in PREIT's
wholly-owned portfolio was up 3.2% compared to March 31, 2018.
- Lower revenues from tenants that filed for bankruptcy
protection in 2018 and 2019 reduced first quarter 2019 Same Store
NOI by $0.5 million compared to last
year's first quarter. The impact of co-tenancy adjustments on same
store NOI was not material.
- NOI-weighted sales at our core malls increased to $531 per square foot. Core Mall sales per square
foot reached $517, a 2.8% increase
over the prior year and a sequential increase of 1.4%. Average
comparable sales per square foot increased 4.2% in PREIT's top 6
properties to $621.
- Core Mall total occupancy was 94.7%, a 100 bps increase over
March 31, 2018. Leased space
continues to exceed 95%, when factoring in 613,000 square feet of
executed new leases slated for future occupancy.
-
- Executed leases are comprised of 494,000 square feet of space
expected to open in 2019 contributing annual gross rent of
$10.4 million and 119,000 square feet
opening in 2020 contributing annual gross rent of $2.3 million.
- Average renewal spreads were 2.2% for the quarter, impacted by
two lease renewals at contracting rents. Excluding these
transactions, spreads would have been 7.5%. We expect this metric
to normalize in the high single digits for the year.
- Percentage in lieu renewal leases for the quarter resulted from
portfolio transactions with several underperforming tenants. On
average, the term of these leases is 1.9 years as we seek
replacements throughout our portfolio. 66% of these transactions
include fixed rent floors, mitigating downside risk.
- Year-to-date, the Company has completed asset sales generating
cash proceeds of $43 million and
improved its liquidity position by over $70
million. The Company has no material debt maturities until
2021.
"As catalyst projects are set to come online this Fall and we
progress on our densification initiatives, PREIT continues to lead
the way in redefining the mall experience with results that
validate our strategy," said Joseph F.
Coradino, Chairman and Chief Executive Officer of
PREIT. "With sales per square foot approaching the next
milestone of $550, no unleased anchor
space in our core mall portfolio and progress on delivering over
5,000 apartment units, our portfolio is attractive to tenants and
reflective of the future of our industry. We continue to
place a strong emphasis on delivering new and differentiated
customer experiences to our malls and have a strategy to generate
proceeds to recapitalize the Company for sustainable growth in the
future."
Primary Factors Affecting Financial Results for the
Quarters Ended March 31, 2019 and
March 31, 2018:
- Net loss attributable to PREIT common shareholders was
$21.4 million, or $0.30 per basic and diluted share for the quarter
ended March 31, 2019, compared to net
loss attributable to PREIT common shareholders of $9.4 million, or $0.14 per basic and diluted share for the quarter
ended March 31, 2018.
- Same Store NOI increased by $1.1
million, or 2.2%, from $51.2
million for the quarter ended March
31, 2018 to $52.3 million for
the quarter ended March 31, 2019.
Revenue from new store openings, including contributions from
replacement anchors, mitigated the impact of revenue lost to
bankruptcies and associated store closings. Non Same Store NOI
decreased by $1.3 million primarily
due to lower rents and associated co-tenancy revenue adjustments
from multiple anchor closings at Wyoming Valley and Valley View malls and the sale of an office
property at Fashion District in the first quarter of 2018.
- Same Store NOI, excluding lease termination revenue, at
unconsolidated properties declined 3.7%.
- FFO, as adjusted, for the quarter was $0.26 per share and OP Unit, compared to
$0.29 per share and OP Unit in the
prior year.
- FFO for the quarter was $0.17 per
share and OP Unit compared to $0.29
per share and OP Unit in the prior year. Adjustments to FFO in the
2019 quarter included $0.06 per share
loss on debt extinguishment, $0.02
per share impairment of a development land parcel, and $0.01 per share provision for employee separation
expense. There were no such adjustments in the 2018 period.
However, net dilution from assets sold in 2018 was approximately
$0.01 per share.
- General and administrative expenses were impacted by the new
lease accounting standard that now limits the capitalization of
certain leasing costs. We expensed $1.5
million ($0.02 per share) of
costs in the first quarter of 2019 that would have been capitalized
under the prior standard.
All NOI and FFO amounts referenced as primary factors affecting
financial results above include our share of unconsolidated
properties' revenues and expenses.
Asset Dispositions
In March 2019, we sold a portion
of our undeveloped land located in Gainesville, Florida for consideration of
$5.0 million. The remaining portion
of the land is expected to close in the second half of 2019 for
approximately $10.0
million.
In April 2019, we closed on the
sale of the Whole Foods parcel located at Exton Square Mall for
$22.1 million.
In April 2019, we sold an
undeveloped land parcel located in New
Garden Township, Pennsylvania, for total consideration of
$11.0 million consisting of
$8.25 million in cash and
$2.75 million of preferred stock.
Financing Activity
In March 2018, we repaid a
$58.5 million mortgage loan including
accrued interest, secured by Capital City Mall in Camp Hill, Pennsylvania using funds from our
2013 Revolving Facility and the balance from available working
capital. We recorded a loss on debt extinguishment of $4.8 million in March
2019 in connection with this repayment. The addition
of Capital City Mall to our unencumbered pool is expected to
generate approximately $40 million in
incremental capacity under our Revolving Facility.
Capital Transaction Summary
|
Closed
|
Under
Contract
|
Total
|
|
Gainesville
Development Parcel
|
$5,000
|
$10,000
|
$15,000
|
(1)
|
New Garden Township
Parcel
|
8,250
|
|
8,250
|
(2)
|
Wiregrass mortgage
loan sale
|
8,000
|
|
8,000
|
|
Whole Foods
Parcel
|
10,500
|
|
10,500
|
(3)
|
Capital City
transaction - incremental capacity
|
40,000
|
|
40,000
|
(4)
|
Total
|
$71,750
|
$10,000
|
$81,750
|
|
|
|
|
|
|
(1) Under contract
and expected to close in the second half of 2019
|
|
|
|
|
(2) Represents cash
proceeds; does not include $2.8 million of preferred stock received
by the Company
|
|
(3) Represents the
net liquidity to the Company after adjusting for line
capacity. Sale price was $22.1 million
|
(4) Represents the
Company's approximate incremental borrowing capacity by the end of
2019, net of the Capital City mortgage loan defeasance
|
|
|
|
|
|
|
|
Leasing and Redevelopment
- Excluding Fashion District Philadelphia, 613,000 square feet of
leases are signed for future openings. This is comprised of 494,000
square feet of space expected to open in 2019 contributing annual
gross rent of $10.4 million and
119,000 square feet opening in 2020 contributing annual gross rent
of $2.3 million.
- At Moorestown Mall, Sierra opened in the former Macy's space,
joining Five Below and the region's first HomeSense.
- At Willow Grove Park,
construction continues on the 51,000 square foot Studio Movie
Grill, which is projected to open in first quarter of 2020. During
the quarter, a lease was executed with Yard House which will
complement the movie theater along with an additional entertainment
operator, for which a lease is being negotiated.
- At Valley Mall, both Macy's and The Bon Ton were replaced in
2018. In December 2018, the Company
signed a lease with DICK's Sporting Goods to replace a former Sears
that was acquired in 2018. DICK's Sporting Goods is expected to
open in 2020.
- At Fashion District Philadelphia, leases for over 85% of the
leasable area are signed or are in active negotiation. Noteworthy
commitments joining Century 21 and Burlington include H&M, Nike, Forever 21,
AMC Theaters, Round One, City Winery, Ulta, Columbia Sportswear and
Guess Factory. The first wave of tenants is expected to open in
September 2019.
- At Plymouth Meeting Mall, work continues to replace a former
Macy's with five new tenants – Burlington, DICK's Sporting Goods, Miller's
Ale House, Michael's and Edge Fitness. All five tenants are
expected to open in October
2019.
- The redevelopment at Woodland Mall is in its final stages, with
opening of the new wing planned for October
2019. The first REI in our portfolio will open here this
month and, during the quarter, we executed a lease with The
Cheesecake Factory which will open this Fall.
Retail Operations
The following table sets forth information regarding sales per
square foot in the Company's core mall portfolio, including
unconsolidated properties:
A reconciliation of portfolio sales per square foot
(1) for the core mall portfolio can be found below:
|
Comp store sales for
the rolling twelve months ended March 31, 2018
|
$485
|
|
Organic sales
growth
|
14
|
|
Impact of non-core
malls
|
18
|
|
Comp store sales
for the rolling twelve months ended March 31, 2019
|
$517
|
|
|
|
(1)
|
Based on reported
sales by all comparable non-anchor tenants that lease individual
spaces of less than 10,000 square feet and have occupied the space
for at least 24 months.
|
2019 Outlook
The Company expects a GAAP net loss of between $0.63 and $0.46 per
diluted share for the year ending December
31, 2019.
The Company is reaffirming its February
13, 2019 guidance for FFO as adjusted of $1.20 to $1.34 per
share. FFO is expected to be between $1.17 and $1.31 per
share. Same Store NOI, excluding termination revenue, is expected
to grow between 1.0% and 1.9% with wholly-owned properties in the
range of 1.6% to 2.6% and joint venture properties declining
between 3.0% and 2.4%.
A reconciliation between GAAP net loss and FFO is as
follows:
|
2019 Guidance
Range
|
(Estimates per
diluted share)
|
Low
|
High
|
Net loss attributable
to common shareholders
|
$
(0.63)
|
$
(0.46)
|
Depreciation and
amortization, non-controlling interest and other
|
1.80
|
1.77
|
FFO per
share
|
$
1.17
|
$
1.31
|
Loss on debt
extinguishment
|
0.06
|
0.06
|
Impairment of
development land parcel
|
0.02
|
0.02
|
Provision for
employee separation expense
|
0.01
|
0.01
|
Insurance
recoveries
|
(0.06)
|
(0.06)
|
FFO per share, as
adjusted
|
$
1.20
|
$
1.34
|
Detailed guidance assumptions are included herein in our
financial tables.
Our 2019 guidance is based on our current assumptions and
expectations about market conditions, our projections regarding
occupancy, retail sales and rental rates, and planned capital
spending. Our guidance is forward-looking, and is subject to risks,
uncertainties and changes in circumstances that might cause future
events, achievements or results to differ materially from those
expressed or implied by the forward-looking statements.
Conference Call Information
Management has scheduled a conference call for 11:00 a.m. Eastern Time on Friday, May 3, 2019,
to review the Company's results and future outlook. To listen
to the call, please dial 1-844-885-9139 (domestic toll free), or
1-647-689-4441 (international), and request to join the PREIT call,
Conference ID 4279998, at least five minutes before the
scheduled start time. Investors can also access the call in a
"listen only" mode via the internet at the Company's website,
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. For best results when listening to the webcast,
the Company recommends using Flash Player.
For interested individuals unable to join the conference call,
the online archive of the webcast will also be available for one
year following the call.
About PREIT
PREIT (NYSE: PEI) is a publicly traded real estate investment
trust that owns and manages quality properties in compelling
markets. PREIT's robust portfolio of carefully curated retail and
lifestyle offerings mixed with destination dining and entertainment
experiences are located primarily in the densely-populated eastern
U.S. with concentrations in the mid-Atlantic's top MSAs. Since
2012, the Company has driven a transformation guided by an emphasis
on portfolio quality and balance sheet strength driven by
disciplined capital expenditures. Additional information is
available at www.preit.com or on Twitter or LinkedIn.
Rounding
Certain summarized information in the tables above may not total
due to rounding.
Definitions
Funds From Operations (FFO)
The National Association of Real Estate Investment Trusts
("NAREIT") defines FFO, which is a non-GAAP measure commonly used
by REITs, as net income (computed in accordance with GAAP)
excluding (i) depreciation and amortization related to real estate,
(ii) gains and losses from the sale of certain real estate assets,
(iii) gains and losses from change in control, and (iv) impairment
write-downs of certain real estate assets and investments in
entities when the impairment is directly attributable to decreases
in the value of depreciable real estate held by the entity. 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.
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") and, when applicable, related measures such
as Funds From Operations, as adjusted, 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 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.
When applicable, 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, to show the effect of
such items as provision for employee separation expense and
accelerated amortization of financing costs, which can have a
significant effect on our results of operations, but are not, in
our opinion, indicative of our operating performance. We also
present FFO on a further adjusted basis to isolate the impact on
FFO caused by property dispositions.
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 our operating performance, such
as provision for employee separation expense, loss on debt
extinguishment and insurance losses and recoveries.
Net Operating Income ("NOI")
NOI (a non-GAAP measure) is derived from real estate revenue
(determined in accordance with GAAP, including lease termination
revenue), minus property operating expenses (determined in
accordance with GAAP), plus our pro rata share of revenue and
property operating expenses of our unconsolidated partnership
investments. NOI 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. 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 other income, general and administrative expenses,
provision for employee separation expenses, interest expense,
depreciation and amortization, impairment of assets, gains on sale
of interest in non operating real estate, gain/adjustments to gain
on sale of interest in real estate by equity method investee,
gains/losses on sales of interests in real estate, net, project
costs, loss on debt extinguishment, insurance losses recoveries and
other expenses.
Same Store NOI is calculated using retail properties owned for
the full periods presented and excludes properties acquired,
disposed, under redevelopment or designated as non-core during the
periods presented. In 2018, Wyoming Valley Mall was
designated as non-core. In 2019, Exton Square and Valley View
Malls were designated as non-core and will be excluded from Same
Store NOI. Non Same Store NOI is calculated using the retail
properties excluded from the calculation of Same Store NOI.
Financial Information of our Unconsolidated Properties
The non-GAAP financial measures of FFO and NOI presented in this
press release incorporate financial information attributable to our
share of unconsolidated properties. This proportionate financial
information is also non-GAAP financial information, but we believe
that it is helpful information because it reflects the
proportionate contribution from our unconsolidated properties that
are owned through investments accounted for under GAAP using the
equity method of accounting. Under such method, earnings from
these unconsolidated partnerships are recorded in our statements of
operations prepared in accordance with GAAP under the caption
entitled "Equity in income of partnerships."
To derive the proportionate financial information from our
unconsolidated properties, we multiplied the percentage of our
economic interest in each partnership on a property-by-property
basis by each line item. Under the partnership agreements
relating to our current unconsolidated partnerships with third
parties, we own a 25% to 50% economic interest in such
partnerships, and there are generally no provisions in such
partnership agreements relating to special non-proportionate
allocations of income or loss, and there are no preferred or
priority returns of capital or other similar provisions.
While this method approximates our indirect economic interest in
our pro rate share of the revenue and expenses of our
unconsolidated partnerships, we do not have a direct legal claim to
the assets, liabilities, revenues or expenses of the unconsolidated
partnerships beyond our rights as an equity owner in the event of
any liquidation of such entity. Our percentage ownership is
not necessarily indicative of the legal and economic implications
of our ownership interest. Accordingly, NOI and FFO results
based on our share of the results of unconsolidated partnerships do
not represent cash generated from our investments in these
partnerships.
Core Properties
Core Properties include all operating retail properties except
for Exton Square Mall, Valley View Mall, Wyoming Valley Mall and
Fashion District Philadelphia, which is currently under
redevelopment. Core Malls excludes these properties, power
centers and Gloucester Premium Outlets.
Forward Looking Statements
This press release contains certain forward-looking statements
that can be identified by the use of words such as "anticipate,"
"believe," "estimate," "expect," "intend," "may," "project"
or similar expressions. 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 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 the following:
- changes in the retail and real estate industries, including
consolidation and store closings, particularly among anchor
tenants;
- current economic conditions and the corresponding effects on
tenant business performance, prospects, solvency and leasing
decisions;
- our inability to collect rent due to the bankruptcy or
insolvency of tenants or otherwise;
- our ability to maintain and increase property occupancy, sales
and rental rates;
- increases in operating costs that cannot be passed on to
tenants;
- the effects of online shopping and other uses of technology on
our retail tenants;
- risks related to our development and redevelopment activities,
including delays, cost overruns and our inability to reach
projected occupancy or rental rates;
- acts of violence at malls, including our properties, or at
other similar spaces, and the potential effect on traffic and
sales;
- our ability to sell properties that we seek to dispose of or
our ability to obtain prices we seek;
- potential losses on impairment of certain long-lived assets,
such as real estate, including losses that we might be required to
record in connection with any disposition of assets;
- our substantial debt and the liquidation preference of our
preferred shares and our high leverage ratio;
- our ability to refinance our existing indebtedness when it
matures, on favorable terms or at all;
- our ability to raise capital, including through sales of
properties or interests in properties and through the issuance of
equity or equity-related securities if market conditions are
favorable; and
- potential dilution from any capital raising transactions or
other equity issuances.
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 herein and
in our Annual Report on Form 10-K for the year ended December 31, 2018 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 **
CONTACT: AT THE COMPANY
Robert McCadden
EVP & CFO
(215) 875-0735
Heather Crowell
EVP, Strategy and Communications
(215) 454-1241
heather.crowell@preit.com
|
2018
Actual
|
|
2019
Guidance
|
|
Same Store NOI
Growth
|
|
Low
|
|
High
|
|
Low
|
|
High
|
Same Store NOI,
excluding termination revenue
|
|
|
|
|
|
|
|
|
|
Wholly-owned
properties
|
$
|
188.7
|
|
|
$
|
191.7
|
|
|
$
|
193.6
|
|
|
1.6
|
%
|
|
2.6
|
%
|
Unconsolidated
properties
|
29.7
|
|
|
28.8
|
|
|
29.0
|
|
|
(3.0)
|
%
|
|
(2.4)
|
%
|
|
218.4
|
|
|
220.5
|
|
|
222.6
|
|
|
1.0
|
%
|
|
1.9
|
%
|
Non-Same Store
NOI
|
20.1
|
|
|
13.7
|
|
|
14.0
|
|
|
|
|
|
NOI, excluding lease
termination revenue
|
238.5
|
|
|
234.2
|
|
|
236.6
|
|
|
|
|
|
Lease termination
revenue of consolidated and unconsolidated properties
|
9.2
|
|
|
2.0
|
|
|
4.0
|
|
|
|
|
|
Total
NOI
|
$
|
247.7
|
|
|
$
|
236.2
|
|
|
$
|
240.6
|
|
|
|
|
|
General and
administrative and leasing expenses
|
|
|
|
|
|
|
|
|
|
General and
administrative expenses
|
(38.3)
|
|
|
(38.0)
|
|
|
(37.5)
|
|
|
|
|
|
Leasing costs
expensed under ASC 842
|
—
|
|
|
(5.7)
|
|
|
(6.0)
|
|
|
|
|
|
Other income
(expenses)
|
|
|
|
|
|
|
|
|
|
Corporate
revenues
|
4.3
|
|
|
1.1
|
|
|
1.3
|
|
|
|
|
|
Land sale
gains
|
8.1
|
|
|
5.5
|
|
|
10.0
|
|
|
|
|
|
Provision for
employee separation expense
|
(1.1)
|
|
|
(0.7)
|
|
|
(0.7)
|
|
|
|
|
|
Impairment of
mortgage loan receivable/land parcel
|
(8.1)
|
|
|
(1.5)
|
|
|
(1.5)
|
|
|
|
|
|
Other, including
non-real estate depreciation
|
(1.5)
|
|
|
(2.2)
|
|
|
(2.0)
|
|
|
|
|
|
Insurance losses
(recoveries)
|
—
|
|
|
4.0
|
|
|
5.0
|
|
|
|
|
|
Capital
costs
|
|
|
|
|
|
|
|
|
|
Interest expense,
gross
|
(83.3)
|
|
|
(88.9)
|
|
|
(88.5)
|
|
|
|
|
|
Capitalized
interest
|
11.1
|
|
|
14.2
|
|
|
14.6
|
|
|
|
|
|
Preferred share
dividends
|
(27.4)
|
|
|
(27.4)
|
|
|
(27.4)
|
|
|
|
|
|
Loss on debt
extinguishment
|
—
|
|
|
(4.8)
|
|
|
(4.8)
|
|
|
|
|
|
Funds from
Operations (FFO)
|
$
|
111.5
|
|
|
$
|
91.8
|
|
|
$
|
103.1
|
|
|
|
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
Impairment of
mortgage loan receivable/land parcel
|
8.1
|
|
|
1.5
|
|
|
1.5
|
|
|
|
|
|
Provision for
employee separation expense
|
1.1
|
|
|
0.7
|
|
|
0.7
|
|
|
|
|
|
Insurance recoveries
and other
|
(0.3)
|
|
|
(4.0)
|
|
|
(5.0)
|
|
|
|
|
|
Loss on debt
extinguishment
|
—
|
|
|
4.8
|
|
|
4.8
|
|
|
|
|
|
FFO as
adjusted
|
$
|
120.4
|
|
|
$
|
94.8
|
|
|
$
|
105.1
|
|
|
|
|
|
FFO per
share
|
$
|
1.42
|
|
|
$
|
1.17
|
|
|
$
|
1.31
|
|
|
|
|
|
FFO, as adjusted
per share
|
$
|
1.54
|
|
|
$
|
1.20
|
|
|
$
|
1.34
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2018
Actual
|
|
2019
Guidance
|
|
|
Low
|
|
High
|
|
|
|
|
|
|
Net
loss
|
$
|
(126.5)
|
|
|
$
|
(20.7)
|
|
|
$
|
(7.4)
|
|
Depreciation and
amortization
|
140.3
|
|
|
138.0
|
|
|
136.0
|
|
Gains on sales of
operating assets
|
(4.3)
|
|
|
1.9
|
|
|
1.9
|
|
Impairment of real
estate assets
|
129.4
|
|
|
—
|
|
|
—
|
|
Preferred share
dividends
|
(27.4)
|
|
|
(27.4)
|
|
|
(27.4)
|
|
Funds From
Operations
|
$
|
111.5
|
|
|
$
|
91.8
|
|
|
$
|
103.1
|
|
Adjustments:
|
|
|
|
|
|
Impairment of
mortgage loan receivable/land parcel
|
8.1
|
|
|
1.5
|
|
|
1.5
|
|
Provision for
employee separation expense
|
1.1
|
|
|
0.7
|
|
|
0.7
|
|
Insurance recoveries
and other
|
(0.3)
|
|
|
(4.0)
|
|
|
(5.0)
|
|
Loss on debt
extinguishment
|
—
|
|
|
4.8
|
|
|
4.8
|
|
FFO as
adjusted
|
$
|
120.4
|
|
|
$
|
94.8
|
|
|
$
|
105.1
|
|
|
|
|
|
|
|
Net
loss
|
$
|
(126.5)
|
|
|
$
|
(20.7)
|
|
|
$
|
(7.4)
|
|
Preferred share
dividends
|
(27.4)
|
|
|
(27.4)
|
|
|
(27.4)
|
|
Noncontrolling
interest
|
16.2
|
|
|
2.0
|
|
|
1.4
|
|
Dividends on unvested
restricted shares
|
(0.5)
|
|
|
(0.9)
|
|
|
(0.9)
|
|
Net loss used to
calculate earnings per share
|
$
|
(138.2)
|
|
|
$
|
(47.0)
|
|
|
$
|
(34.3)
|
|
|
|
|
|
|
|
Weighted average
shares
|
69.7
|
|
|
75.1
|
|
|
75.1
|
|
Weighted average
shares, including OP units
|
78.3
|
|
|
78.3
|
|
|
78.3
|
|
|
|
|
|
|
|
Net loss per
share
|
$
|
(1.98)
|
|
|
$
|
(0.63)
|
|
|
$
|
(0.46)
|
|
STATEMENTS OF
OPERATIONS (Unaudited)
|
|
Quarter Ended
March 31,
|
|
(in
thousands)
|
|
2019
|
|
2018
|
|
|
|
|
|
|
|
REVENUE:
|
|
|
|
|
|
Real
estate revenue:
|
|
|
|
|
|
Lease
revenue
|
|
$
|
76,615
|
|
|
$
|
77,998
|
|
|
Expense
reimbursements
|
|
5,062
|
|
|
5,234
|
|
|
Other real
estate revenue
|
|
3,001
|
|
|
2,161
|
|
|
Total real estate
revenue
|
|
84,678
|
|
|
85,393
|
|
|
Other
income
|
|
627
|
|
|
889
|
|
|
Total
revenue
|
|
85,305
|
|
|
86,282
|
|
|
EXPENSES:
|
|
|
|
|
|
Operating
expenses
|
|
|
|
|
|
Property
operating expenses:
|
|
|
|
|
|
CAM and real estate
taxes
|
|
(29,403)
|
|
|
(29,396)
|
|
|
Utilities
|
|
(3,660)
|
|
|
(3,909)
|
|
|
Credit
losses
|
|
—
|
|
|
(1,062)
|
|
|
Other property
operating expenses
|
|
(2,065)
|
|
|
(2,338)
|
|
|
Total property
operating expenses
|
|
(35,128)
|
|
|
(36,705)
|
|
|
Depreciation
and amortization
|
|
(34,904)
|
|
|
(34,030)
|
|
|
General and
administrative expenses
|
|
(11,205)
|
|
|
(10,132)
|
|
|
Provision for
employee separation expense
|
|
(719)
|
|
|
—
|
|
|
Project costs
and other expenses
|
|
(294)
|
|
|
(112)
|
|
|
Total operating
expenses
|
|
(82,250)
|
|
|
(80,979)
|
|
|
Interest
expense, net
|
|
(15,898)
|
|
|
(14,901)
|
|
|
Loss on debt
extinguishment
|
|
(4,768)
|
|
|
—
|
|
|
Impairment of
development land parcel
|
|
(1,464)
|
|
|
—
|
|
|
Total
expenses
|
|
(104,380)
|
|
|
(95,880)
|
|
|
Loss before equity in
income of partnerships, gain on sale of real estate by equity
method investee, and adjustment to gains on sales of interests in
non operating real estate
|
|
(19,075)
|
|
|
(9,598)
|
|
|
Equity in income of
partnerships
|
|
2,289
|
|
|
3,138
|
|
|
Gain on sale of real
estate by equity method investee
|
|
563
|
|
|
2,773
|
|
|
Adjustment to gains
on sales of interests in non operating real estate
|
|
—
|
|
|
(25)
|
|
|
Net loss
|
|
(16,223)
|
|
|
(3,712)
|
|
|
Less: net loss
attributable to noncontrolling interest
|
|
1,688
|
|
|
1,111
|
|
|
Net loss attributable
to PREIT
|
|
(14,535)
|
|
|
(2,601)
|
|
|
Less: preferred share
dividends
|
|
(6,844)
|
|
|
(6,844)
|
|
|
Net loss attributable
to PREIT common shareholders
|
|
$
|
(21,379)
|
|
|
$
|
(9,445)
|
|
|
EARNINGS PER
SHARE (Unaudited)
|
Quarter Ended
March 31,
|
|
(in thousands of
dollars, except per share amounts)
|
2019
|
|
2018
|
|
Net loss
|
$
|
(16,223)
|
|
|
$
|
(3,712)
|
|
|
Noncontrolling
interest
|
1,688
|
|
|
1,111
|
|
|
Preferred share
dividends
|
(6,844)
|
|
|
(6,844)
|
|
|
Dividends on unvested
restricted shares
|
(218)
|
|
|
(138)
|
|
|
Net loss used to
calculate loss per share—basic and diluted
|
$
|
(21,597)
|
|
|
$
|
(9,583)
|
|
|
|
|
|
|
|
Basic and diluted
loss per share:
|
$
|
(0.30)
|
|
|
$
|
(0.14)
|
|
|
|
|
|
|
|
(in thousands of
shares)
|
|
|
|
|
Weighted average
shares outstanding—basic
|
71,358
|
|
|
69,601
|
|
|
Effect of common
share equivalents (1)
|
—
|
|
|
—
|
|
|
Weighted average
shares outstanding—diluted
|
71,358
|
|
|
69,601
|
|
|
|
(1)The company had net losses for
the quarters ended March 31, 2019 and 2018, respectively,
therefore, the effects of common share equivalents are excluded
from the calculation of diluted loss per share for these periods
because they would be antidilutive.
|
OTHER
COMPREHENSIVE INCOME (LOSS) (Unaudited)
|
|
Quarter Ended
March 31,
|
|
|
|
2019
|
|
2018
|
|
(in
thousands)
|
|
|
|
|
|
Comprehensive (loss)
income:
|
|
|
|
|
|
Net loss
|
|
$
|
(16,223)
|
|
|
$
|
(3,712)
|
|
|
Unrealized (loss)
gain on derivatives
|
|
(6,508)
|
|
|
4,828
|
|
|
Amortization of
settled swaps
|
|
2
|
|
|
275
|
|
|
Total comprehensive
(loss) income
|
|
(22,729)
|
|
|
1,391
|
|
|
Less: comprehensive
loss attributable to noncontrolling interest
|
|
2,253
|
|
|
570
|
|
|
Comprehensive (loss)
income attributable to PREIT
|
|
$
|
(20,476)
|
|
|
$
|
1,961
|
|
|
The following table presents a reconciliation of net income
(loss) determined in accordance with GAAP to (i) Funds from
operations attributable to common shareholders and OP Unit holders,
(ii) Funds from operations, as adjusted, attributable to common
shareholders and OP Unit holders , (iii) Funds from operations, as
adjusted for assets sold, (iv) Funds from operations attributable
to common shareholders and OP Unit holders per diluted share and OP
Unit (v) Funds from operations, as adjusted, attributable to common
shareholders and OP Unit holders per diluted share and OP Unit, and
(vi) Funds from operations, as adjusted for assets sold per diluted
share and OP Unit for the quarters ended March 31, 2019 and
2018, respectively:
|
Quarter Ended
March 31,
|
|
(in thousands,
except per share amounts)
|
2019
|
|
2018
|
|
Net loss
|
$
|
(16,223)
|
|
|
$
|
(3,712)
|
|
|
Depreciation and amortization on real estate:
|
|
|
|
|
Consolidated properties
|
34,565
|
|
|
33,663
|
|
|
PREIT's share of equity method investments
|
1,970
|
|
|
2,241
|
|
|
Gain on sale of real estate
by equity method investee
|
—
|
|
|
(2,773)
|
|
|
Preferred share
dividends
|
(6,844)
|
|
|
(6,844)
|
|
|
Funds from operations
attributable to common shareholders and OP Unit holders
|
13,468
|
|
|
22,575
|
|
|
Loss on debt
extinguishment
|
4,768
|
|
|
—
|
|
|
Impairment of
development land parcel
|
1,464
|
|
|
—
|
|
|
Provision for
employee separation expense
|
719
|
|
|
—
|
|
|
Insurance
losses, net
|
236
|
|
|
—
|
|
|
Funds from
operations, as adjusted, attributable to common shareholders and OP
Unit holders
|
20,655
|
|
|
22,575
|
|
|
Less: Funds from
operations from assets sold in 2019 and 2018
|
—
|
|
|
(412)
|
|
|
Funds from
operations, as adjusted for assets sold
|
$
|
20,655
|
|
|
$
|
22,163
|
|
|
|
|
|
|
|
Funds from operations
attributable to common shareholders and OP Unit holders per diluted
share and OP Unit
|
$
|
0.17
|
|
|
$
|
0.29
|
|
|
Funds from
operations, as adjusted, attributable to common shareholders and OP
Unit holders per diluted share and OP Unit
|
$
|
0.26
|
|
|
$
|
0.29
|
|
|
Funds from
operations, as adjusted for assets sold per diluted share and OP
Unit
|
$
|
0.26
|
|
|
$
|
0.28
|
|
|
|
|
|
|
|
Weighted average
number of shares outstanding
|
71,358
|
|
|
69,601
|
|
|
Weighted average
effect of full conversion of OP Units
|
6,884
|
|
|
8,274
|
|
|
Effect of common
share equivalents
|
309
|
|
|
209
|
|
|
Total weighted
average shares outstanding, including OP Units
|
78,551
|
|
|
78,084
|
|
|
NOI for the quarters ended March 31, 2019 and 2018:
|
|
Same
Store
|
|
Non-Same
Store
|
|
Total
|
(in
thousands)
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
NOI from consolidated
properties
|
|
$
|
45,271
|
|
|
$
|
43,607
|
|
|
$
|
4,278
|
|
|
$
|
5,081
|
|
|
$
|
49,549
|
|
|
$
|
48,688
|
|
NOI from equity
method investments at ownership share
|
|
7,052
|
|
|
7,575
|
|
|
(29)
|
|
|
463
|
|
|
7,023
|
|
|
8,038
|
|
Total NOI
|
|
52,323
|
|
|
51,182
|
|
|
4,249
|
|
|
5,544
|
|
|
56,572
|
|
|
56,726
|
|
Less: lease
termination revenue
|
|
300
|
|
|
261
|
|
|
16
|
|
|
21
|
|
|
316
|
|
|
282
|
|
Total NOI excluding
lease termination revenue
|
|
$
|
52,023
|
|
|
$
|
50,921
|
|
|
$
|
4,233
|
|
|
$
|
5,523
|
|
|
$
|
56,256
|
|
|
$
|
56,444
|
|
The table below reconciles net loss to NOI of our consolidated
properties for the quarters ended March 31, 2019 and 2018.
|
Quarter Ended
March 31,
|
|
(in
thousands)
|
2019
|
|
2018
|
|
Net loss
|
$
|
(16,223)
|
|
|
$
|
(3,712)
|
|
|
Other
income
|
(628)
|
|
|
(889)
|
|
|
Depreciation and
amortization
|
34,904
|
|
|
34,030
|
|
|
General and
administrative expenses
|
11,205
|
|
|
10,132
|
|
|
Provision for
employee separation expense
|
719
|
|
|
—
|
|
|
Project costs and
other expenses
|
294
|
|
|
112
|
|
|
Interest expense,
net
|
15,898
|
|
|
14,901
|
|
|
Impairment of
development land parcel
|
1,464
|
|
|
—
|
|
|
Loss on debt
extinguishment
|
4,768
|
|
|
—
|
|
|
Equity in income of
partnerships
|
(2,289)
|
|
|
(3,138)
|
|
|
Gain on sale of real
estate by equity method investee
|
(563)
|
|
|
(2,773)
|
|
|
(Adjustment to gains)
gains on sales of interest in non operating real estate
|
—
|
|
|
25
|
|
|
NOI from consolidated
properties
|
49,549
|
|
|
48,688
|
|
|
Less: Non Same Store
NOI of consolidated properties
|
4,278
|
|
|
5,081
|
|
|
Same Store NOI from
consolidated properties
|
45,271
|
|
|
43,607
|
|
|
Less: Same Store
lease termination revenue
|
297
|
|
|
10
|
|
|
Same Store NOI
excluding lease termination revenue
|
$
|
44,974
|
|
|
$
|
43,597
|
|
|
The table below reconciles equity in income of partnerships to
NOI of equity method investments at ownership share for the
quarters ended March 31, 2019 and 2018:
|
Quarter Ended
March 31,
|
|
(in
thousands)
|
2019
|
|
2018
|
|
Equity in income of
partnerships
|
$
|
2,289
|
|
|
$
|
3,138
|
|
|
Other
income
|
(12)
|
|
|
(12)
|
|
|
Depreciation and
amortization
|
1,970
|
|
|
2,241
|
|
|
Interest and other
expenses
|
2,776
|
|
|
2,671
|
|
|
Net operating income
from equity method investments at ownership share
|
7,023
|
|
|
8,038
|
|
|
Less: Non Same Store
NOI from equity method investments at ownership share
|
(29)
|
|
|
463
|
|
|
Same Store NOI of
equity method investments at ownership share
|
7,052
|
|
|
7,575
|
|
|
Less: Same Store
lease termination revenue
|
3
|
|
|
251
|
|
|
Same Store NOI from
equity method investments excluding lease termination revenue at
ownership share
|
$
|
7,049
|
|
|
$
|
7,324
|
|
|
CONSOLIDATED
BALANCE SHEETS
|
|
March 31,
2019
|
|
December 31,
2018
|
|
|
(Unaudited)
|
|
|
(in
thousands)
|
|
|
|
|
ASSETS:
|
|
|
|
|
INVESTMENTS IN REAL
ESTATE, at cost:
|
|
|
|
|
Operating
properties
|
|
$
|
3,058,422
|
|
|
$
|
3,063,531
|
|
Construction in
progress
|
|
119,873
|
|
|
115,182
|
|
Land held for
development
|
|
5,881
|
|
|
5,881
|
|
Total investments in
real estate
|
|
3,184,176
|
|
|
3,184,594
|
|
Accumulated
depreciation
|
|
(1,148,794)
|
|
|
(1,118,582)
|
|
Net investments in
real estate
|
|
2,035,382
|
|
|
2,066,012
|
|
INVESTMENTS IN
PARTNERSHIPS, at equity:
|
|
149,795
|
|
|
131,124
|
|
OTHER
ASSETS:
|
|
|
|
|
Cash and cash
equivalents
|
|
10,416
|
|
|
18,084
|
|
Tenant and other
receivables, net
|
|
35,344
|
|
|
38,914
|
|
Intangible assets
(net of accumulated amortization of $16,391 and $15,543 at March
31, 2019 and December 31, 2018, respectively)
|
|
17,020
|
|
|
17,868
|
|
Deferred costs and
other assets, net
|
|
107,239
|
|
|
110,805
|
|
Assets held for
sale
|
|
35,275
|
|
|
22,307
|
|
Total
assets
|
|
$
|
2,390,471
|
|
|
$
|
2,405,114
|
|
LIABILITIES:
|
|
|
|
|
Mortgage loans
payable, net
|
|
$
|
985,763
|
|
|
$
|
1,047,906
|
|
Term Loans,
net
|
|
547,478
|
|
|
547,289
|
|
Revolving
Facilities
|
|
162,000
|
|
|
65,000
|
|
Tenants' deposits and
deferred rent
|
|
10,261
|
|
|
15,400
|
|
Distributions in
excess of partnership investments
|
|
91,227
|
|
|
92,057
|
|
Fair value of
derivative liabilities
|
|
6,364
|
|
|
3,010
|
|
Accrued expenses and
other liabilities
|
|
85,431
|
|
|
87,901
|
|
Total
liabilities
|
|
1,888,524
|
|
|
1,858,563
|
|
EQUITY:
|
|
501,947
|
|
|
546,551
|
|
Total liabilities and
equity
|
|
$
|
2,390,471
|
|
|
$
|
2,405,114
|
|
Changes in Funds from Operations for the Quarter Ended
March 31, 2019 as compared to the Quarter Ended March 31, 2018 (all per share amounts on a
diluted basis unless otherwise noted; rounded to the nearest half
penny; amounts may not total due to rounding)
(in thousands,
except per share amounts)
|
|
Quarter Ended
March 31, 2019
|
|
Per Diluted
Share
and OP Unit
|
|
Funds from
Operations, as adjusted March 31, 2018
|
|
$
|
22,575
|
|
|
$
|
0.29
|
|
|
|
|
|
|
|
|
Changes - Q1 2018
to Q1 2019
|
|
|
|
|
|
|
|
|
|
|
|
Contribution from
anchor replacements, increase in base rents and net CAM and real
estate tax recoveries
|
|
1,290
|
|
|
0.015
|
|
|
Impact from
bankruptcies
|
|
(462)
|
|
|
(0.005)
|
|
|
Lease termination
revenue
|
|
287
|
|
|
0.005
|
|
|
Bad debt
expense
|
|
455
|
|
|
0.005
|
|
|
Other
|
|
93
|
|
|
—
|
|
|
Same Store NOI from
unconsolidated properties
|
|
(522)
|
|
|
(0.005)
|
|
|
Same Store
NOI
|
|
1,141
|
|
|
0.015
|
|
|
Non Same Store
NOI
|
|
(803)
|
|
|
(0.010)
|
|
|
Dilutive effect of
asset sales
|
|
(412)
|
|
|
(0.005)
|
|
|
General and
administrative expenses
|
|
110
|
|
|
—
|
|
|
Capitalization of
leasing costs
|
|
(1,184)
|
|
|
(0.015)
|
|
|
Gain on sale of
non-operating real estate
|
|
589
|
|
|
0.010
|
|
|
Other
|
|
(294)
|
|
|
(0.005)
|
|
|
Interest
expense
|
|
(1,067)
|
|
|
(0.015)
|
|
|
Funds from
Operations, as adjusted March 31, 2019
|
|
$
|
20,655
|
|
|
$
|
0.26
|
|
|
Loss on debt
extinguishment
|
|
(4,768)
|
|
|
(0.060)
|
|
|
Impairment of
development land parcel
|
|
(1,464)
|
|
|
(0.020)
|
|
|
Provision for employee
separation expense
|
|
(719)
|
|
|
(0.010)
|
|
|
Insurance losses,
net
|
|
(236)
|
|
|
—
|
|
|
Funds from
Operations March 31, 2019
|
|
$
|
13,468
|
|
|
$
|
0.17
|
|
|
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SOURCE PREIT