PHILADELPHIA, May 21, 2020 /PRNewswire/ -- PREIT (NYSE: PEI)
today reported results for the three months ended March 31, 2020. 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.
|
|
Three Months
Ended
March
31,
|
|
|
(per share
amounts)
|
|
2020
|
|
|
2019
|
|
|
Net loss - basic and
diluted
|
|
$
|
(0.26)
|
|
|
$
|
(0.30)
|
|
|
FFO
|
|
$
|
0.14
|
|
|
$
|
0.17
|
|
|
FFO, as
adjusted
|
|
$
|
0.14
|
|
|
$
|
0.26
|
|
|
FFO from assets sold
in 2019
|
|
$
|
-
|
|
|
$
|
(0.01)
|
|
|
FFO, as adjusted
for assets sold
|
|
$
|
0.14
|
|
|
$
|
0.25
|
|
|
"As we slowly emerge from an unprecedented environment, we are
focused on ensuring the safety and well-being of our associates and
communities while enhancing near-term liquidity with a laser-focus
on improving our balance sheet to position PREIT for long-term
success," said Joseph F. Coradino,
Chairman and CEO of PREIT. "The PREIT team has been resilient and
courageous as we navigate this challenging environment. We
have pivoted quickly, making difficult decisions and focusing our
efforts on supporting our communities of tenants, shoppers, retail
employees and our staff."
Coradino added, "PREIT was among the first companies in our
sector to embark on a proactive effort to improve our portfolio
through asset sales and anchor repositioning and redevelopment,
completing the program ahead of industry peers and in advance of
the COVID-19 pandemic. We believe our properties are
well-positioned with mass-market offerings appealing to a
value-focused shopper. These properties, with prime locations
in their respective markets, are dominant retail hubs and we
believe they will ultimately gain market share as they
re-open."
- Same Store NOI, excluding lease termination revenue, decreased
9.6% for the three months ended March 31,
2020 compared to March 31,
2019.
-
- The quarter was impacted by a decrease in revenue of
$5.6 million primarily resulting from
bankruptcies and related store closings, an increase in credit
losses for challenged tenants prior to the COVID-19 pandemic as
well as decreased percentage sales revenue resulting from mall
closures related to the COVID-19 pandemic. This was partially
offset by incremental revenues from anchor replacements and other
leasing activity of $0.7 million in
the quarter.
- Same Store NOI, excluding lease termination revenue, decreased
5% through February, in line with prior expectations.
- NOI-weighted sales at our Core Malls increased to $551 per square foot. Core Mall sales per
square foot reached $542, a 4.8%
increase over the prior year. Average comparable sales per
square foot at our top six properties rose 4.8% over the prior year
to $651 with two properties
generating sales over $700 per square
foot. Sales data is for the trailing twelve
months ended February 29, 2020, the
last full month of operations, for comparability purposes in light
of the widespread COVID-19 related mall closures in March 2020.
- Core Mall total occupancy was 92.9%, a decrease of 180 basis
points compared to March 31, 2019.
Core Mall non-anchor occupancy declined by only 120 basis points
from last year despite the impact from bankruptcies and chain
liquidations that resulted in 71 store closures for an aggregate
274,000 square feet during the year ended December 31, 2019.
- Non-anchor Leased space, at 92.0%, exceeds occupied space by
170 basis points when factoring in executed new leases slated for
future occupancy, excluding Fashion District Philadelphia.
- Average renewal spreads for the quarter in our wholly-owned
portfolio reflected a 5.2% increase for spaces less than 10,000
square feet and 4.5% overall. Average renewal spreads
for the entire portfolio were negative 1.6% for the quarter when
joint venture properties are included.
- As part of the Company's plan to improve liquidity during the
COVID-19 crisis, we have initiated certain corporate actions
including, but not limited to: staff furloughs, reducing the common
dividend from $0.21 per share to
$0.02 per share, a reduction in
forecast capital expenditures of approximately $25.0 million, a reduction in forecast corporate
G&A of $3.1 million, reduced
property operating expenses during the closure period,
achieved deferral on approximately $11.6
million in real estate tax payments and received forbearance
on several mortgage payments.
- The Company continues to make progress on liquidity-generating
capital transactions including its multifamily and hotel land
sales, its outparcel sales and the multi-property sale-leaseback
transaction. Timing of closing on many of these transactions
is now expected to be later than previously forecast with details
noted later in this release.
- As part of PREIT's plan, during the quarter, the Company
executed amendments to its Senior Credit Facilities. The
Company continues its discussions with lenders to put in place a
longer-term financing solution before September 30, 2020.
Leasing and Redevelopment
- Excluding Fashion District Philadelphia, 267,000 square feet of
leases are signed for 2020 openings, which is expected to
contribute annual gross rent of $11.3
million.
- During the first quarter, the following anchor replacement
tenants opened: Dick's Sporting Goods at Valley Mall, Burlington at Dartmouth Mall, Michael's at
Plymouth Meeting and Moorestown
Malls.
Mall Re-openings and Community Support
Initiatives
- Currently, the Company has re-opened three enclosed malls and
plans to re-open a fourth on Friday, May
22, 2020.
- Details on the re-opening schedule and the new safety and
social distancing protocols the Company is employing at its managed
properties can be found here.
- Across its portfolio, the Company has hosted blood drives and
food donation drives, provided meals to area essential workers, and
donated much needed protective supplies. Read more about our
efforts here.
- PREIT has continued to support the businesses that were able to
remain open during the pandemic through several avenues including
social media support highlighting dining establishments and other
contactless pickup options at our properties as well as ecommerce
platforms for certain retailers.
- Shop Local webpages were developed by PREIT, aggregating
ecommerce sites for all the small businesses throughout our
portfolio. The offerings highlighted not only to the local
audience, but to customers of the entire PREIT portfolio,
leveraging the Company's marketing power for local business
partners.
- Through PREIT's SBA resources page and contact with
tenants, the Company has continued to provide resources for smaller
business to access the liquidity needed to make it through this
challenging time.
- PREIT's mall websites now include job portals to
collect information to pass along to our retail partners.
Primary Factors Affecting Financial Results for the Three
Months Ended March 31, 2020 and
2019:
- Net loss attributable to PREIT common shareholders was
$13.5 million, or $0.26 per basic and diluted share for the three
months ended March 31, 2020, compared
to net loss attributable to PREIT common shareholders of
$16.2 million, or $0.30 per basic and diluted share for the three
months ended March 31,
2019.
- Same Store NOI decreased by $5.3
million, or 10.1%. The decrease is primarily due to
lost revenues from bankrupt tenants, an increase in credit losses
and a decrease in percentage of sales revenue due to COVID-19
related mall closures, partially offset by new store openings,
including contributions from replacement anchors. Lease
termination revenue was $0.3 million
less than the prior year's quarter.
- Non Same Store NOI decreased by $2.4
million, primarily due to the conveyance of Wyoming Valley
Mall to the lender of the mortgage loan secured by that property in
2019 and; anchor closings as well as associated co-tenancy rents,
decrease in other non-recurring revenue compared to the first
quarter of 2019 and the sale of the Whole Foods parcel at Exton
Square in 2019.
- FFO for the three months ended March 31,
2020 was $0.14 per share and
OP Unit compared to $0.17 per diluted
share and OP Unit for the three months ended March 31, 2019. Adjustments to FFO in the
first quarter of 2020 were less than $0.01 per share of provision for employee
separation expenses. Adjustments to FFO in the 2019 quarter
included $0.06 per share of loss on
debt extinguishment, $0.01 per share
of provision for employee separation expenses and $0.02 per share of impairment of development land
parcels.
- General and administrative expenses decreased by $0.5 million compared to the first quarter of
2019 due to lower payroll and incentive compensation expenses.
All NOI and FFO amounts referenced as primary factors affecting
financial results above include our share of unconsolidated
properties' revenues and expenses. Additional information
regarding changes in operating results for the three months ended
March 31, 2020 and 2019 is included
on page 16.
Asset Dispositions
The Company executed
agreements of sale for remaining expected gross proceeds of
$281.0 million as detailed below.
Sale/Leaseback: In February
2020, the Company entered into an agreement of sale for the
sale and leaseback of five properties for $153.6 million. Structured as a 99-year
lease with an option to repurchase, the agreement
provides for release of parcels related to multifamily development
and is subject to ongoing lease payments at 7% ($10.75 million) with annual 1.25%
escalations. Closing on the transaction is subject to
customary closing conditions, including due diligence provisions
and is forecast for late in the year.
Multifamily Land Parcels: The Company has three
executed agreements of sale for land parcels for anticipated
multifamily development in the amount of $107.3 million. The agreements are with
three different buyers across five properties for 2,650 units as
part of Phase I of the Company's previously announced multifamily
land sale plan. Closing on the transactions is subject to
customary due diligence provisions and securing entitlements.
One buyer for two other land parcels had terminated its agreement
and PREIT has now executed letters of intent with another
buyer.
Outparcels: The Company has executed an agreement of
sale with Four Corners Property Trust for 14 outparcels, which we
expect to generate $29.9 million in
total proceeds. To date, the Company has closed on the sale
of six of the parcels, totaling $13.4
million in proceeds. The remaining 8 outparcels are
expected to close late in the second quarter or early in the third
quarter of 2020 and are subject to customary due diligence
provisions.
Hotel Parcels: The Company has executed two
agreements of sale to convey land parcels for anticipated hotel
development in the amount of $3.75
million. The agreements are with two separate buyers
for approximately 250 rooms. Closings on the transactions are
subject to customary due diligence provisions and securing
entitlements.
Retail Operations
The following table sets
forth information regarding sales per square foot in the Company's
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, 2019
|
$
|
499
|
|
Organic sales
growth
|
|
30
|
|
Impact of non-core
malls
|
|
13
|
|
Comp store sales
for the rolling twelve months ended February 29, 2020
(2)
|
$
|
542
|
|
(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.
|
|
(2) Reported through February 29,
2020 due to COVID-19 pandemic related property closures for partial
month of March 2020.
|
|
2020 Outlook
On March
31, 2020, the Company withdrew its financial outlook for
2020 provided in its February 25,
2020 earnings press release.
Conference Call Information
Management has
scheduled a conference call for 1:00 p.m.
Eastern Time on Thursday, May 21, 2020, 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 6664627, 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 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 gain or loss on debt extinguishment (including
accelerated amortization of financing costs), impairment of assets,
provision for employee separation expense, and insurance recoveries
or losses, net, 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 (including accelerated amortization of financing
costs) 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/adjustments to 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, gain or loss on debt
extinguishment, insurance losses or recoveries, net 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 2019, Wyoming Valley, Exton Square and
Valley View Malls were designated as non-core and are excluded from
Same Store NOI. In 2020, Exton Square and Valley View Malls
are designated as non-core and are 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 rata 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 and Fashion District
Philadelphia. 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, including our expectations regarding the impact
of COVID-19 on our business, that are not historical facts. These
forward-looking statements reflect our current views about future
events, achievements, results, cost reductions, dividend payments
and the impact of COVID-19 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:
- the COVID-19 global pandemic and the public health and
governmental actions in response, which have and may continue to
exacerbate many of the risks listed below;
- our ability to implement plans and initiatives to adequately
address the "going concern" considerations described in Note 1 to
our consolidated financial statements in our Form 10-K for the year
ended December 31, 2019;
- 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 and our ability to
remain in compliance with our financial covenants under our debt
facilities;
- our ability to refinance our existing indebtedness when it
matures, on favorable terms or at all;
- our ability to satisfy our indebtedness if such indebtedness
were to be accelerated due to breach of covenants or payment
default, as well as our ability to satisfy any other debt that was
accelerated as a consequence;
- 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;
- our ability to continue to pay dividends at current levels or
at all; 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, in
our Annual Report on Form 10-K for the year ended December 31, 2019 in the section entitled "Item
1A. Risk Factors" in the section entitled "Item 1A. Risk Factors,"
in our Current Report on Form 8-K filed on May 11, 2020, and any subsequent reports we may
file with the SEC. 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 **
|
|
Three Months
Ended
March
31,
|
|
(in thousands of
dollars)
|
|
2020
|
|
|
2019
|
|
REVENUE:
|
|
|
|
|
|
|
|
|
Real estate
revenue:
|
|
|
|
|
|
|
|
|
Lease
revenue
|
|
$
|
67,721
|
|
|
$
|
76,615
|
|
Expense
reimbursements
|
|
|
4,305
|
|
|
|
5,062
|
|
Other real estate
revenue
|
|
|
1,924
|
|
|
|
3,001
|
|
Total real estate
revenue
|
|
|
73,950
|
|
|
|
84,678
|
|
Other
income
|
|
|
293
|
|
|
|
627
|
|
Total
revenue
|
|
|
74,243
|
|
|
|
85,305
|
|
EXPENSES:
|
|
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
Property operating
expenses:
|
|
|
|
|
|
|
|
|
CAM and real estate
taxes
|
|
|
(27,517)
|
|
|
|
(29,403)
|
|
Utilities
|
|
|
(2,922)
|
|
|
|
(3,660)
|
|
Other property
operating expenses
|
|
|
(2,098)
|
|
|
|
(2,065)
|
|
Total property
operating expenses
|
|
|
(32,537)
|
|
|
|
(35,128)
|
|
Depreciation and
amortization
|
|
|
(30,269)
|
|
|
|
(34,904)
|
|
General and
administrative expenses
|
|
|
(10,695)
|
|
|
|
(11,205)
|
|
Provision for
employee separation expenses
|
|
|
(73)
|
|
|
|
(719)
|
|
Insurance recoveries,
net
|
|
|
-
|
|
|
|
(236)
|
|
Project costs and
other expenses
|
|
|
(95)
|
|
|
|
(58)
|
|
Total operating
expenses
|
|
|
(73,669)
|
|
|
|
(82,250)
|
|
Interest expense,
net
|
|
|
(16,858)
|
|
|
|
(15,898)
|
|
Loss on debt
extinguishment, net
|
|
|
-
|
|
|
|
(4,768)
|
|
Impairment of
development land parcel
|
|
|
-
|
|
|
|
(1,464)
|
|
Total
expenses
|
|
|
(90,527)
|
|
|
|
(104,380)
|
|
Loss before equity in
income of partnerships, gain on sales of real estate by equity
method investee, gain on sales of real estate, net, and adjustment
to loss on sales
of interests in non operating real estate
|
|
|
(16,284)
|
|
|
|
(19,075)
|
|
Equity in income of
partnerships
|
|
|
819
|
|
|
|
2,289
|
|
Gain on sales of real
estate by equity method investee
|
|
|
-
|
|
|
|
563
|
|
Gain on sales of real
estate, net
|
|
|
1,962
|
|
|
|
-
|
|
Loss on sales of
interests in non operating real estate
|
|
|
(46)
|
|
|
|
-
|
|
Net
loss
|
|
|
(13,549)
|
|
|
|
(16,223)
|
|
Less: net loss
attributable to noncontrolling interest
|
|
|
516
|
|
|
|
1,688
|
|
Net loss
attributable to PREIT
|
|
|
(13,033)
|
|
|
|
(14,535)
|
|
Less: preferred share
dividends
|
|
|
(6,844)
|
|
|
|
(6,844)
|
|
Net loss
attributable to PREIT common shareholders
|
|
$
|
(19,877)
|
|
|
$
|
(21,379)
|
|
|
|
Three Months
Ended
March
31,
|
|
(in thousands,
except per share amounts)
|
|
2020
|
|
|
2019
|
|
Net loss
|
|
$
|
(13,549)
|
|
|
$
|
(16,223)
|
|
Noncontrolling
interest
|
|
|
516
|
|
|
|
1,688
|
|
Preferred share
dividends
|
|
|
(6,844)
|
|
|
|
(6,844)
|
|
Dividends on unvested
restricted shares
|
|
|
(350)
|
|
|
|
(218)
|
|
Net loss used to
calculate loss per share—basic and diluted
|
|
$
|
(20,227)
|
|
|
$
|
(21,597)
|
|
Basic and diluted
income (loss) per share:
|
|
$
|
(0.26)
|
|
|
$
|
(0.30)
|
|
|
|
|
|
|
|
|
|
|
(in thousands of
shares)
|
|
|
|
|
|
|
|
|
Weighted average
shares outstanding—basic
|
|
|
76,774
|
|
|
|
71,358
|
|
Effect of common
share equivalents(1)
|
|
|
—
|
|
|
|
—
|
|
Weighted average
shares outstanding—diluted
|
|
|
76,774
|
|
|
|
71,358
|
|
(1)The
Company had net losses for the three months ended March 31, 2020
and 2019, 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.
|
|
|
Three Months
Ended
March
31,
|
|
|
(in thousands of
dollars)
|
|
2020
|
|
|
2019
|
|
|
Comprehensive
loss:
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(13,549)
|
|
|
$
|
(16,223)
|
|
|
Unrealized loss on
derivatives
|
|
|
(19,751)
|
|
|
|
(6,508)
|
|
|
Amortization of
settled swaps
|
|
|
5
|
|
|
|
2
|
|
|
Total comprehensive
loss
|
|
|
(33,295)
|
|
|
|
(22,729)
|
|
|
Less: comprehensive
loss attributable to noncontrolling interest
|
|
|
1,021
|
|
|
|
2,253
|
|
|
Comprehensive loss
attributable to PREIT
|
|
$
|
(32,274)
|
|
|
$
|
(20,476)
|
|
|
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 three months ended March 31, 2020 and
2019, respectively:
|
|
|
Three Months
Ended
March
31,
|
|
(in thousands,
except per share amounts)
|
|
2020
|
|
|
2019
|
|
Net
loss
|
|
$
|
(13,549)
|
|
|
$
|
(16,223)
|
|
Depreciation and
amortization on real estate:
|
|
|
|
|
|
|
|
|
Consolidated
properties
|
|
|
29,944
|
|
|
|
34,565
|
|
PREIT's share of
equity method investments
|
|
|
3,610
|
|
|
|
1,970
|
|
Gain on sales of
interests in real estate, net
|
|
|
(1,962)
|
|
|
|
-
|
|
Dividend on preferred
shares
|
|
|
(6,844)
|
|
|
|
(6,844)
|
|
Funds from
operations attributable to common shareholders and
OP Unit holders
|
|
$
|
11,199
|
|
|
$
|
13,468
|
|
Insurance recoveries,
net
|
|
|
-
|
|
|
|
236
|
|
(Gain) Loss on debt
extinguishment, net
|
|
|
-
|
|
|
|
4,768
|
|
Impairment of
development land parcel
|
|
|
-
|
|
|
|
1,464
|
|
Provision for employee
separation expenses
|
|
|
73
|
|
|
|
719
|
|
Funds from
operations, as adjusted, attributable to common shareholders
and OP Unit holders
|
|
$
|
11,272
|
|
|
$
|
20,655
|
|
Less: Funds from
operations from assets sold in 2019 and 2018
|
|
|
-
|
|
|
|
-
|
|
Funds from
operations, as adjusted for assets sold
|
|
$
|
11,272
|
|
|
$
|
20,655
|
|
|
|
|
|
|
|
|
|
|
Funds from
operations attributable to common shareholders and OP Unit
holders per diluted share and OP Unit
|
|
$
|
0.14
|
|
|
$
|
0.17
|
|
Funds from
operations, as adjusted, attributable to common shareholders
and
OP Unit holders per diluted share and OP Unit
|
|
$
|
0.14
|
|
|
$
|
0.26
|
|
Funds from
operations, as adjusted for assets sold per diluted share and OP
Unit
|
|
$
|
0.14
|
|
|
$
|
0.26
|
|
|
|
|
|
|
|
|
|
|
(in thousands of
shares)
|
|
|
|
|
|
|
|
|
Weighted average
number of shares outstanding
|
|
|
76,774
|
|
|
|
71,358
|
|
Weighted average
effect of full conversion of OP Units
|
|
|
2,023
|
|
|
|
6,884
|
|
Effect of common
share equivalents
|
|
|
520
|
|
|
|
309
|
|
Total weighted
average shares outstanding, including OP Units
|
|
|
79,317
|
|
|
|
78,551
|
|
NOI for the three
months ended March 31, 2020 and 2019:
|
|
|
|
Same
Store
|
|
|
Change
|
|
|
Non Same
Store
|
|
|
Total
|
|
|
|
2020
|
|
|
2019
|
|
|
$
|
|
|
%
|
|
|
2020
|
|
|
2019
|
|
|
2020
|
|
|
2019
|
|
NOI from consolidated
properties
|
|
$
|
40,430
|
|
|
$
|
45,271
|
|
|
$
|
(4,841)
|
|
|
|
-10.7
|
%
|
|
$
|
983
|
|
|
$
|
4,278
|
|
|
$
|
41,413
|
|
|
$
|
49,549
|
|
NOI attributable to
equity method
investments, at ownership share
|
|
|
6,612
|
|
|
|
7,052
|
|
|
|
(440)
|
|
|
|
-6.2
|
%
|
|
|
832
|
|
|
|
(29)
|
|
|
|
7,444
|
|
|
|
7,023
|
|
Total
NOI
|
|
|
47,042
|
|
|
|
52,323
|
|
|
|
(5,281)
|
|
|
|
-10.1
|
%
|
|
|
1,815
|
|
|
|
4,249
|
|
|
|
48,857
|
|
|
|
56,572
|
|
Less: lease
termination revenue
|
|
|
9
|
|
|
|
300
|
|
|
|
(291)
|
|
|
|
-97.0
|
%
|
|
|
-
|
|
|
|
16
|
|
|
|
9
|
|
|
|
316
|
|
Total NOI excluding
lease termination
revenue
|
|
$
|
47,033
|
|
|
$
|
52,023
|
|
|
$
|
(4,990)
|
|
|
|
-9.6
|
%
|
|
$
|
1,815
|
|
|
$
|
4,233
|
|
|
$
|
48,848
|
|
|
$
|
56,256
|
|
The table below
reconciles net loss to NOI of our consolidated properties for the
three months ended March 31, 2020 and 2019.
|
|
|
|
Three Months
Ended
March
31,
|
|
|
(in thousands of
dollars)
|
|
2020
|
|
|
2019
|
|
|
Net
loss
|
|
$
|
(13,549)
|
|
|
$
|
(16,223)
|
|
|
Other
income
|
|
|
(293)
|
|
|
|
(628)
|
|
|
Depreciation and
amortization
|
|
|
30,269
|
|
|
|
34,904
|
|
|
General and
administrative expenses
|
|
|
10,695
|
|
|
|
11,205
|
|
|
Insurance recoveries,
net
|
|
|
-
|
|
|
|
236
|
|
|
Provision for
employee separation expense
|
|
|
73
|
|
|
|
719
|
|
|
Project costs and
other expenses
|
|
|
95
|
|
|
|
58
|
|
|
Interest expense,
net
|
|
|
16,858
|
|
|
|
15,898
|
|
|
Impairment of
development land parcel
|
|
|
-
|
|
|
|
1,464
|
|
|
Loss on debt
extinguishment, net
|
|
|
-
|
|
|
|
4,768
|
|
|
Equity in income of
partnerships
|
|
|
(819)
|
|
|
|
(2,289)
|
|
|
Gain on sales of real
estate by equity method investee
|
|
|
-
|
|
|
|
(563)
|
|
|
Gain on sales of
interests in real estate, net
|
|
|
(1,962)
|
|
|
|
-
|
|
|
Loss on sales of
interest in non operating real estate
|
|
|
46
|
|
|
|
-
|
|
|
NOI from
consolidated properties
|
|
$
|
41,413
|
|
|
$
|
49,549
|
|
|
Less: Non Same Store
NOI of consolidated properties
|
|
|
983
|
|
|
|
4,278
|
|
|
Same Store NOI
from consolidated properties
|
|
$
|
40,430
|
|
|
$
|
45,271
|
|
|
Less: Same Store
lease termination revenue
|
|
|
9
|
|
|
|
297
|
|
|
Same Store NOI
excluding lease termination revenue
|
|
$
|
40,421
|
|
|
$
|
44,974
|
|
|
The table below
reconciles equity in income of partnerships to NOI of equity method
investments at ownership share for the three months
ended March 31, 2020 and 2019:
|
|
|
|
Three Months
Ended
March
31,
|
|
|
|
|
2020
|
|
|
2019
|
|
|
Equity in income of
partnerships
|
|
$
|
819
|
|
|
$
|
2,289
|
|
|
Other
income
|
|
|
(14)
|
|
|
|
(12)
|
|
|
Depreciation and
amortization
|
|
|
3,610
|
|
|
|
1,970
|
|
|
Interest and other
expenses
|
|
|
3,029
|
|
|
|
2,776
|
|
|
Net operating
income from equity method investments at
ownership share
|
|
$
|
7,444
|
|
|
$
|
7,023
|
|
|
Less: Non Same Store
NOI from equity method investments at
ownership share
|
|
|
832
|
|
|
|
(29)
|
|
|
Same Store NOI of
equity method investments at ownership share
|
|
$
|
6,612
|
|
|
$
|
7,052
|
|
|
Less: Same Store
lease termination revenue
|
|
|
-
|
|
|
|
3
|
|
|
Same Store NOI
from equity method investments excluding lease
termination revenue at ownership share
|
|
$
|
6,612
|
|
|
$
|
7,049
|
|
|
|
|
March 31,
2020
|
|
|
December 31,
2019
|
|
(in thousands,
except per share amounts)
|
|
(Unaudited)
|
|
|
|
|
|
ASSETS:
|
|
|
|
|
|
|
|
|
INVESTMENTS IN REAL
ESTATE, at cost:
|
|
|
|
|
|
|
|
|
Operating
properties
|
|
$
|
3,140,293
|
|
|
$
|
3,099,034
|
|
Construction in
progress
|
|
|
81,485
|
|
|
|
106,011
|
|
Land held for
development
|
|
|
5,881
|
|
|
|
5,881
|
|
Total investments in
real estate
|
|
|
3,227,659
|
|
|
|
3,210,926
|
|
Accumulated
depreciation
|
|
|
(1,230,657)
|
|
|
|
(1,202,722)
|
|
Net investments in
real estate
|
|
|
1,997,002
|
|
|
|
2,008,204
|
|
INVESTMENTS IN
PARTNERSHIPS, at equity:
|
|
|
167,167
|
|
|
|
159,993
|
|
OTHER
ASSETS:
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
|
5,351
|
|
|
|
12,211
|
|
Tenant and other
receivables
|
|
|
36,929
|
|
|
|
41,261
|
|
Intangible assets (net
of accumulated amortization of $17,733 and $18,248 at
March 31, 2020 and December
31, 2019, respectively)
|
|
|
12,846
|
|
|
|
13,404
|
|
Deferred costs and
other assets, net
|
|
|
98,110
|
|
|
|
103,688
|
|
Assets held for
sale
|
|
|
6,536
|
|
|
|
12,506
|
|
Total
assets
|
|
$
|
2,323,941
|
|
|
$
|
2,351,267
|
|
LIABILITIES:
|
|
|
|
|
|
|
|
|
Mortgage loans
payable, net
|
|
$
|
896,495
|
|
|
$
|
899,753
|
|
Term Loans,
net
|
|
|
548,216
|
|
|
|
548,025
|
|
Revolving
Facilities
|
|
|
289,000
|
|
|
|
255,000
|
|
Tenants' deposits
and deferred rent
|
|
|
5,918
|
|
|
|
13,006
|
|
Distributions in
excess of partnership investments
|
|
|
85,770
|
|
|
|
87,916
|
|
Fair value of
derivative liabilities
|
|
|
31,695
|
|
|
|
13,126
|
|
Accrued expenses and
other liabilities
|
|
|
94,882
|
|
|
|
107,016
|
|
Total
liabilities
|
|
|
1,951,976
|
|
|
|
1,923,842
|
|
COMMITMENTS AND
CONTINGENCIES:
|
|
|
|
|
|
|
|
|
EQUITY:
|
|
|
|
|
|
|
|
|
Total
equity
|
|
|
371,965
|
|
|
|
427,425
|
|
Total liabilities and
equity
|
|
$
|
2,323,941
|
|
|
$
|
2,351,267
|
|
Changes in Funds from
Operations for the three months ended March 31, 2020 as compared to
the three months ended March 31, 2019
(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)
|
|
Three
Months
Ended
March
31,
2020
|
|
|
Per
Diluted
Share and
OP
Unit
|
|
|
Funds from
Operations, as adjusted March 31, 2019
|
|
$
|
20,655
|
|
|
$
|
0.26
|
|
|
|
|
|
|
|
|
|
|
|
|
Changes - Q1 2019
to Q1 2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other leasing
activity, including base rent and net CAM and real estate
tax recoveries
|
|
|
(3,166)
|
|
|
|
(0.040)
|
|
|
Lease termination
revenue
|
|
|
(288)
|
|
|
|
(0.005)
|
|
|
Credit
losses
|
|
|
(1,345)
|
|
|
|
(0.015)
|
|
|
Other
|
|
|
(42)
|
|
|
|
-
|
|
|
Same Store NOI from
unconsolidated properties
|
|
|
(440)
|
|
|
|
(0.005)
|
|
|
Same Store
NOI
|
|
|
(5,281)
|
|
|
|
(0.065)
|
|
|
Non Same Store
NOI
|
|
|
(2,434)
|
|
|
|
(0.030)
|
|
|
Dilutive effect of
asset sales
|
|
|
(473)
|
|
|
|
(0.005)
|
|
|
General and
administrative expenses
|
|
|
666
|
|
|
|
0.010
|
|
|
Capitalization of
leasing costs
|
|
|
(156)
|
|
|
|
-
|
|
|
Gain on sales of
non-operating real estate
|
|
|
(609)
|
|
|
|
(0.010)
|
|
|
Other
|
|
|
170
|
|
|
|
-
|
|
|
Interest expense,
net
|
|
|
(1,266)
|
|
|
|
(0.015)
|
|
|
Increase in weighted
average shares
|
|
|
-
|
|
|
|
(0.005)
|
|
|
Funds from
Operations, as adjusted March 31, 2020
|
|
$
|
11,272
|
|
|
$
|
0.14
|
|
|
Provision for
employee separation expense
|
|
|
(73)
|
|
|
|
-
|
|
|
Funds from
Operations March 31, 2020
|
|
$
|
11,199
|
|
|
$
|
0.14
|
|
|
CONTACT: AT THE COMPANY
Mario Ventresca
EVP & CFO
(215) 875-0703
Heather Crowell
EVP, Strategy and Communications
(215) 454-1241
heather.crowell@preit.com
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