Center Trust Reports Third-Quarter Results; Announces Common Stock Repurchase Program.MANHATTAN BEACH Manhattan Beach, city (1990 pop. 32,063), Los Angeles co., S Calif., on Santa Monica Bay; inc. 1912. It is a residential and beach community with an oil refinery and nearby factories that produce transportation and electrical equipment, computers, and pottery. , Calif.--(BUSINESS WIRE)--Nov. 3, 1998--Center Trust (CenterTrust Retail Properties Inc.) (AMEX AMEX See: American Stock Exchange :ACH (Automated Clearing House) A system of the U.S. Federal Reserve Bank that provides electronic funds transfer (EFT) between banks. It is used for all kinds of fund transfer transactions, including direct deposit of paychecks and monthly debits for routine payments to ), a real estate investment trust, Tuesday Tuesday: see week. announced operating results for the third quarter and nine months ended Sept. 30, 1998. Highlights for the Third Quarter Ended Sept. 30, 1998
-- Funds from operations (FFO) of $13.1 million, or 35 cents per
share on a diluted basis
-- Funded $40.5 million investment capital from an affiliate of
Lazard Freres Real Estate Investors, LLC
-- Acquired three community retail centers with aggregate purchase
price of $85 million
-- 59 percent growth in total assets over third quarter last year
-- Portfolio occupancy at 92.9 percent
Financial Highlights (Unaudited)
(Dollars in thousands, except per share data)
Three Months Ended %
Sept. 30
1998 1997 Change
Revenues $34,188 $21,838 57%
EBITDA $22,153 $14,487 53%
FFO (Diluted) $13,142 $ 8,704 51%
FFO Per Share (Diluted) $ 0.35 $ 0.32 9%
Total Square Feet 12.4 million 8.3 million 49%
No. of Properties 63 41 54%
Nine Months Ended %
Sept. 30
1998 1997 Change
Revenues $92,721 $65,359 42%
EBITDA $60,235 $43,424 39%
FFO (Diluted) $35,803 $26,341 36%
FFO Per Share (Diluted) $ 1.04 $ 1.00 4%
Total Square Feet 12.4 million 8.3 million 49%
No. of Properties 63 41 54%
Financial Results Funds from operations Funds From Operations (FFO) Used by real estate and other investment trusts to define the cash flow from trust operations; earnings with depreciation and amortization added back. on a diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. basis for the third quarter ended Sept. 30, 1998 (assuming conversion of the company's convertible debentures Convertible Debenture Any type of debenture that can be converted into some other security. Notes: For example, a convertible bond can be converted into stock. and other common stock equivalents) were $13.1 million, or 35 cents per share Cents per share The amount of a mutual fund's dividend or capital gains distributions that a shareholder will receive for each share owned. , an increase of 9.4 percent on a per share basis, compared with $8.7 million, or 32 cents per share, for the same quarter last year. FFO FFO See: Funds from operations on a basic basis was $9.7 million for the quarter, or 34 cents per share, compared with $5.2 million, or 29 cents per share, for the same period in the prior year, an increase of 17.2 percent on a per share basis. Revenue for the quarter was $34.2 million, compared with $21.8 million for the same period a year ago, an increase of 56.9 percent. Net income for the quarter was $3.4 million, compared with $0.6 million for the third quarter last year. For the nine months ended Sept. 30, 1998, FFO on a diluted basis was $35.8 million, or $1.04 per share, compared with $26.3 million, or $1.00 per share, for the same period in the previous year. FFO for the period on a basic basis was $25.4 million, or $1.01 per share, compared with $15.9 million, or 94 cents per share, for the nine months last year. Revenue for the nine months ended Sept. 30, 1998, rose 41.7 percent to $92.7 million from $65.4 million for the same period a year ago. For the nine months, Center Trust reported net income of $6.7 million this year, compared with $2.1 million last year. Commenting on the quarterly results, Ned Fox, president and chief executive officer, said, "The year-over-year growth in FFO for the quarter primarily reflects the successful implementation of our strategic growth plan as we have completed the acquisition of over $350 million of quality community shopping centers shopping center, a concentration of retail, service, and entertainment enterprises designed to serve the surrounding region. The modern shopping center differs from its antecedents—bazaars and marketplaces—in that the shops are usually amalgamated into in the western United States Noun 1. western United States - the region of the United States lying to the west of the Mississippi River West Santa Fe Trail - a trail that extends from Missouri to New Mexico; an important route for settlers moving west in the 19th century since the third quarter last year. "Community retail properties now account for 77 percent of our portfolio, up from 62 percent in the third quarter last year. To fund our acquisition of community retail properties during the quarter, we funded $40.5 million pursuant to the previously announced stock purchase agreement with an affiliate of Lazard Lazard Ltd. (NYSE: LAZ) is the parent company of Lazard LLC, a New York-based, independent investment bank with approximately 2,200 employees in Europe, North America, Asia and Australia. Freres Real Estate Investors A real estate investor is someone who actively or passively invests in real estate. An active investor may buy a property, make repairs and/or improvements to the property, and sell it later for a profit. , LLC (Logical Link Control) See "LANs" under data link protocol. LLC - Logical Link Control and sold one of our single tenant facilities, a Sears store in Hollywood, California California (kăl'ĭfôr`nyə), most populous state in the United States, located in the Far West; bordered by Oregon (N), Nevada and, across the Colorado River, Arizona (E), Mexico (S), and the Pacific Ocean (W). . "We now have net assets Net assets The difference between total assets on the one hand and current liabilities and noncapitalized long-term liabilities on the other hand. net assets See owners' equity. of rental properties totaling $956.8 million, compared to $591.2 million as of the end of the third quarter last year. "As we look to the future, we remain steadfast in our strategic commitment to expand our portfolio through accretive acquisitions Accretive Acquisition An acquisition that will increase the acquiring company's EPS. Notes: As they are expected to increase the acquiring company's future earnings, these acquisitions tend to be favorable for the company's market price. , disposition of non-core assets and aggressive leasing, management and development programs." Acquisitions of $85 Million Center Trust acquired three community shopping centers, two in Southern California Southern California, also colloquially known as SoCal, is the southern portion of the U.S. state of California. Centered on the cities of Los Angeles and San Diego, Southern California is home to nearly 24 million people and is the nation's second most populated region, and one in Phoenix. The aggregate purchase price was $85 million, adding 630,887 square feet of company-owned GLA, increasing the total portfolio of community retail centers to 7.9 million feet of company-owned GLA. Disposition of Assets The company completed a sale of its 134,644-square-foot Sears store in Hollywood for $5.4 million, representing a 7.5 percent capitalization rate Capitalization Rate According to the Appraisal Institute, it is a method used to convert an estimate of a single year's income expectancy into an indication of value in one direct step, by dividing the income estimate by an appropriate rate. . The company anticipates further sales of single tenant facilities in the near future. The company is also actively marketing certain other non-core assets such as City Center in San Francisco San Francisco (săn frănsĭs`kō), city (1990 pop. 723,959), coextensive with San Francisco co., W Calif., on the tip of a peninsula between the Pacific Ocean and San Francisco Bay, which are connected by the strait known as the Golden and Media City Center in Burbank, Calif. Equity Investment On Sept. 24, 1998, the company sold an additional 2.7 million shares to an affiliate of Lazard Freres Real Estate Investors at a price of $15 per share. Proceeds of $40.5 million were used to fund the acquisition of the Mountain Square Shopping Center and reduce the outstanding balance on the company's secured credit facility. Balance Sheet At Sept. 30, 1998, total assets increased to $1.0 billion from $634.2 million in the year-earlier period. The company's debt-to-total market capitalization Market Capitalization A measure of a public company's size. Market capitalization is the total dollar value of all outstanding shares. It's calculated by multiplying the number of shares times the current market price. This term is often referred to as market cap. was 62 percent and its debt-service coverage ratio Debt-service coverage ratio Earnings before interest and income taxes, divided by interest expense plus the quantity of principal repayments divided by one minus the tax rate. at quarter-end was 1.8 times. Total debt outstanding was $647.6 million at a weighted average interest rate of 7.9 percent. Common Stock Repurchase Stock repurchase A firm's repurchase of outstanding shares of its common stock. Program The company's board of directors has authorized au·thor·ize tr.v. au·thor·ized, au·thor·iz·ing, au·thor·iz·es 1. To grant authority or power to. 2. To give permission for; sanction: the repurchase re·pur·chase tr.v. re·pur·chased, re·pur·chas·ing, re·pur·chas·es To buy (something) again. n. The act of buying something that one previously sold or owned. Noun 1. of up to $25 million of its outstanding common shares over a period of one year. The company will repurchase the shares in the open market or in privately negotiated transactions, from time to time in compliance with the Securities and Exchange Commission's Rule 10b-18, subject to market conditions, applicable legal requirements and other factors. The number of shares of common stock actually acquired by Center Trust will depend on subsequent developments and corporate needs, and the repurchase program may be interrupted in·ter·rupt v. in·ter·rupt·ed, in·ter·rupt·ing, in·ter·rupts v.tr. 1. To break the continuity or uniformity of: Rain interrupted our baseball game. 2. or discontinued dis·con·tin·ue v. dis·con·tin·ued, dis·con·tin·u·ing, dis·con·tin·ues v.tr. 1. To stop doing or providing (something); end or abandon: at any time. The company currently has approximately 25.8 million shares outstanding. "The board of directors believes that the company's common stock is undervalued Undervalued A stock or other security that is trading below its true value. Notes: The difficulty is knowing what the "true" value actually is. Analysts will usually recommend an undervalued stock with a strong buy rating. in the marketplace and represents an excellent investment at its recent trading price Trading price The price at which a security is currently selling. ," said Fox. "This share repurchase Share Repurchase A program by which a company buys back its own shares from the marketplace, reducing the number of outstanding shares. This is usually an indication that the company's management thinks the shares are undervalued. program clearly demonstrates the board of directors and management's confidence in Center Trust's long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. prospects, and is consistent with the company's continuing efforts to enhance shareholder value." Center Trust, a fully integrated, self-managed real estate investment trust, is a leading owner, manager and developer of retail shopping centers in the western United States. The company owns or controls a portfolio of 63 shopping centers, consisting of 49 community shopping centers, two regional malls and 12 single tenant facilities, comprising 12.4 million square feet of gross leasable area Gross leasable area (GLA) in the retail development industry is a term applied to shopping malls, lifestyle centers, outlet malls and other retail centers to indicate the amount of floor space available to be rented. . For investor information on Center Trust, call the company's automated au·to·mate v. au·to·mat·ed, au·to·mat·ing, au·to·mates v.tr. 1. To convert to automatic operation: automate a factory. 2. shareholder information line at 800/679-2606. Safe Harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. Certain statements contained in this release are forward-looking within the meaning of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. Forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. involve known and unknown risks, uncertainties and other factors that could cause actual results to differ materially from what is currently anticipated. Those risks include, among others, national and local economic, business and real estate conditions that will, among other things, affect demand for retail properties; availability and creditworthiness Creditworthiness The condition in which the risk of default on a debt obligation by that entity is deemed low. Creditworthiness Eligibility of an individual or firm to borrow money. of prospective tenants; the level of lease rents and the availability of financing for both tenants and the company; adverse changes in the real estate markets including, among other things, competition with other companies, risks of real estate acquisitions and development (including the failure of pending acquisitions to close and successful completion of renovations); governmental actions and initiatives, and environmental/safety requirements; and other risks detailed from time to time in the SEC filings of CenterTrust Retail Properties Inc. (dba Center Trust).
CENTER TRUST
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
Sept. 30, Dec. 31,
1998 1997
(unaudited)
ASSETS
Rental Properties $ 1,092,545 $ 783,279
Accumulated depreciation
and amortization (135,709) (121,202)
Rental properties, net 956,836 662,077
Cash and cash equivalents 6,758 3,613
Tenant receivables, net 10,641 6,017
Other Receivables 6,752 7,575
Restricted cash 5,417 9,435
Deferred charges, net 19,458 19,759
Other assets 2,305 2,237
Total $ 1,008,167 $ 710,713
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Secured debt $ 479,020 $ 313,660
7 1/2% Convertible
subordinated debentures 138,599 138,599
7 1/4% Exchangeable
subordinated debentures 30,000 30,000
Accrued distributions 11,139 7,371
Accrued interest 3,778 5,604
Accounts payable and
other accrued expenses 11,038 8,482
Accrued construction costs 2,183 10,996
Tenant security and other deposits 6,128 4,729
Total liabilities 681,885 519,441
MINORITY INTERESTS
Operating Partnership (5,187,712 and
4,280,789 units issued as of
Sept. 30, 1998, and Dec. 31, 1997,
respectively) 54,512 39,685
Other minorities 1,954 1,748
Total minority interest 56,466 41,433
REDEEMABLE COMMON STOCK
(510,034 shares outstanding as of
June 30, 1998, and Dec. 31, 1997,
redeemable on May 25, 1999) 8,543 8,385
STOCKHOLDERS' EQUITY
Common stock ($.01 par value,
100,000,000 shares authorized;
25,276,665 and 15,664,814 shares issued
and outstanding as of Sept. 30, 1998,
and Dec. 31, 1997, respectively) 252 157
Additional paid-in capital 361,102 223,972
Accumulated distributions and deficit (100,081) (82,675)
Total stockholders' equity 261,273 141,454
Total $ 1,008,167 $ 710,713
CENTER TRUST
CONSOLIDATED INCOME STATEMENTS
(in thousands, except per share data)
Three Months Ended Nine Months Ended
Sept. 30, Sept. 30,
1998 1997 1998 1997
(unaudited) (unaudited)
Rental revenues $ 25,336 $ 16,083 $ 68,024 $ 47,717
Expense reimbursements 7,493 4,525 20,283 14,022
Percentage rents 241 187 803 625
Other income 1,118 1,043 3,611 2,995
Total revenues 34,188 21,838 92,721 65,359
Interest 12,741 9,088 35,167 27,010
Depreciation and
amortization 6,213 4,567 17,518 13,357
Property operating costs:
Common area 5,564 3,288 14,379 9,855
Property taxes 3,020 1,797 8,724 5,678
Leasehold rentals 412 408 1,237 1,228
Marketing 149 94 307 246
Other operating 387 540 1,413 1,214
General and administrative 2,503 1,224 6,426 3,714
Total expenses 30,989 21,006 85,171 62,302
Income From Operations
Before Gain on Sale of
Asset and Minority
Interest 3,199 832 7,550 3,057
Gain on Sale of Asset 1,055 -- 1,055 --
Equity in Unconsolidated
Subsidiary -- 19 -- 19
Minority interests -
Operating Partnership (793) (182) (1,657) (726)
Minority interests -
Other (69) (69) (206) (216)
Net Income $ 3,392 $ 600 $ 6,742 $ 2,134
Income Per Share:
Basic and Diluted
Income Per Share $ 0.15 $ 0.04 $ 0.33 $ 0.17
Basic and Diluted
Weighted Average
Number Of Shares 23,139 13,777 20,144 12,653
CENTER TRUST
COMPUTATION OF FUNDS FROM OPERATIONS
(in thousands, except per share data)
Three Months Ended Nine Months Ended
Sept. 30, Sept. 30,
1998 1997 1998 1997
(unaudited) (unaudited)
Funds From Operations
(FFO):
Net Income $ 3,392 $ 600 $ 6,742 $ 2,134
Adjustments to
reconcile net
income to FFO:
Depreciation of
real property 6,202 4,539 17,426 13,311
Minority Interests 712 97 1,426 494
Gain on Sale
of Asset (1,055) -- (1,055) --
Other 423 -- 862 --
Funds From Operations
- Basic 9,674 5,236 25,401 15,939
Adjustments to reconcile
Basic to Diluted FFO:
Debenture interest 3,143 3,143 9,427 9,427
Amortization of
deferred costs
- Debentures 325 325 975 975
Funds From Operations
- Diluted (b) $ 13,142 $ 8,704 $ 35,803 $ 26,341
Funds Available for
Distribution (FAD):
Funds from
Operations - Basic $ 9,674 $ 5,236 $ 25,401 $ 15,939
Adjustments to
reconcile Basic
FFO to FAD:
Amortization of
deferred costs
- debt 412 230 1,165 690
Amortization of
deferred costs
- debentures 325 325 975 975
Net effect of
Straight-line Rent (442) -- (1,258) --
Recurring capital
expenditures (288) (66) (493) (506)
Funds Available for
Distribution - Basic $ 9,681 $ 5,725 $ 25,790 $ 17,098
PER SHARE:
Funds From Operations
- Basic (a) $ 0.34 $ 0.29 $ 1.01 $ 0.94
Funds From Operations
- Diluted (a), (b) $ 0.35 $ 0.32 $ 1.04 $ 1.00
Funds Available
for Distribution
- Basic (a) $ 0.34 $ 0.32 $ 1.03 $ 1.01
Dividend $ 0.36 $ 0.36 $ 1.08 $ 1.08
Weighted Average
Number Of Shares
Basic (a) 28,338 18,063 25,082 16,940
Diluted (a), (b) 37,704 27,430 34,449 26,306
Notes:
(a) Includes Operating Partnership Units.
(b) For purposes of computing FFO, diluted information assumes the
conversion of the company's Debentures at $18 per share as well
and other common stock equivalents.
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