Chelsea Property Group Reports 19% Increase in Third Quarter Funds from Operations; Split-Adjusted FFO Per Share Up 6% to $0.71.Business Editors ROSELAND, N.J.--(BUSINESS WIRE)--Nov. 12, 2002 Chelsea Property Group, Inc. (NYSE NYSE See: New York Stock Exchange : CPG CPG central pattern generators. ) today reported its operating results for the third quarter ended September 30, 2002. Third quarter 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. (FFO FFO See: Funds from operations ) before minority interest rose 19% to $32.7 million from $27.4 million in the third quarter of 2001. Adjusted for a 2-for-1 stock split in May 2002, 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. FFO per share rose 6% to $0.71 from $0.67. FFO attributable to real estate operations rose 26% to $36.5 million from $28.9 million, or 11% on a per-share basis, to $0.79 from $0.71. Rental revenues from wholly-owned properties rose 51% to $52.4 million from $34.6 million, and total revenues from wholly-owned properties rose 46% to $71.5 million from $49.1 million. FFO from unconsolidated investments declined to $2.9 million from $5.6 million due to the purchase and consolidation by Chelsea of Simon Property Group's 50% interest in Orlando Premium Outlets on April 1, 2002, and of Fortress Investment Group's 51% interest in four joint-venture properties on August 20, 2002, partially offset by higher income from Chelsea Japan. The loss attributable to the Company's investment in Chelsea Interactive was $3.8 million, compared to $1.5 million in the year-earlier quarter. Third quarter earnings before interest, depreciation and amortization (EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become ) rose 27% to $51.4 million from $40.6 million. Third quarter revenue, income and FFO comparisons were positively impacted by internal rent growth; the completion since June 30, 2001 of expansions totaling approximately 200,000 square feet at three operating Premium Outlet(R) centers (Napa, Allen and Rinku); the acquisition in September 2001 of 31 retail properties from Konover Property Trust; the acquisitions in April 2002 of an outlet center in Edinburgh, Indiana
Edinburgh is a town in Johnson County, Indiana, United States. The population was 4,505 at the 2000 census. It is part of the Columbus, Indiana metropolitan statistical area. , and Simon's 50% interest in Orlando Premium Outlets; and the acquisition in August 2002 of Fortress Investment Group's 51% interest in Premium Outlet centers in Gilroy (California), Michigan City Michigan City, city (1990 pop. 33,822), La Porte co., NW Ind., on Lake Michigan; inc. 1836. Michigan City produces machinery, consumer articles, kitchen and transportation equipment, concrete and wire products, chemicals, apparel, and cast iron boilers. (Indiana), Waterloo Waterloo, town, Belgium Waterloo (vä`tərlō), commune (1991 pop. 27,860), Walloon Brabant prov., central Belgium, near Brussels. The battle of Waterloo (see Waterloo campaign) was fought just south of there on June 18, 1815. (New York New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of ) and Kittery (Maine). Also during the quarter, the Company realized a gain of $10.9 million (not included in FFO or EBITDA) in connection with the sale of a portion of its interests in Value Retail PLC and affiliates. For the year to date, FFO rose to $91.0 million from $74.5 million, up 22%; split-adjusted diluted FFO per share rose to $2.00 from $1.87, up 7%; FFO attributable to real estate operations rose to $101.3 million from $77.9 million, up 30%, or to $2.22 per share from $1.95 per share, up 14%; rental revenues from wholly-owned properties rose to $141.7 million from $97.8 million, up 45%; total revenues from wholly-owned properties rose to $193.2 million from $140.2 million, up 38%; FFO from unconsolidated investments decreased to $12.5 million from $15.2 million; the loss from Chelsea Interactive increased to $10.3 million from $3.5 million; and EBITDA rose to $140.6 million from $112.8 million, up 25%. Same-space sales (weighted average sales per square foot reported in space open for the full duration of both comparison periods) at Chelsea's U.S. Premium Outlet centers were up 2% for the third quarter of 2002 and 1% for the year to date compared to the corresponding periods in 2001. Year to date, the Company has completed acquisitions covering approximately 2.3 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. (GLA), including the purchases in April of the Edinburgh, Indiana center and Simon's 50% interest in Orlando Premium Outlets; and the purchase in August of Fortress' 51% interest in the four centers mentioned earlier. Four non-core outlet centers acquired from Konover in 2001, totaling approximately 430,000 square feet of GLA, were sold in June and July, 2002. GLA in service at September 30, 2002, including joint venture projects, totaled 12.5 million square feet, unchanged from a year earlier. The U.S. Premium Outlet center portfolio remained 98% leased at September 30, 2002. The Company currently has a record amount of simultaneous construction underway, including Chicago Premium Outlets, a 435,000 square-foot single-phase center located on Interstate in·ter·state adj. Involving, existing between, or connecting two or more states. n. One of a system of highways extending between the major cities of the 48 contiguous United States. Noun 1. 88 approximately 30 miles west of Chicago; Las Vegas Las Vegas (läs vā`gəs), city (1990 pop. 258,295), seat of Clark co., S Nev.; inc. 1911. It is the largest city in Nevada and the center of one of the fastest-growing urban areas in the United States. Premium Outlets, a 430,000 square-foot single-phase center near downtown Las Vegas Downtown Las Vegas can have several meanings depending on how it is used. It can mean:
On September 30, the Company announced that it agreed to acquire two outlet centers (Albertville, Minnesota Albertville is a city in Wright County, Minnesota, United States. The population was 3,621 at the 2000 census. Geography According to the United States Census Bureau, the city has a total area of 12.2 km² (4.7 mi²). 11.3 km² (4.4 mi²) of it is land and 0.8 km² (0. , and Johnson Creek, Wisconsin Johnson Creek is a village in Jefferson County, Wisconsin, United States. The population was 1,581 at the 2000 census. Geography Johnson Creek is located at (43.079147, -88.771030)GR1. ) from JMJ JMJ Jam Master Jay (rap artist) JMJ Jornada Mundial de la Juventud JMJ Jean Michel Jarre (musician) JMJ Jesus-Mary-Joseph Properties, Inc. for $89.5 million. Earlier today, the Company announced that it signed a definitive agreement to acquire four outlet properties from New Plan Excel A full-featured spreadsheet for Windows and the Macintosh from Microsoft. It can link many spreadsheets for consolidation and provides a wide variety of business graphics and charts for creating presentation materials. Realty realty n. a short form of "real estate." (See: real estate) REALTY. An abstract of real, as distinguished from personalty. Realty relates to lands and tenements, rents or other hereditaments. Vide Real Property. , Inc. (NYSE: NXL NXL National XBall League NXL Network Exchange Limited ) for $193 million. Both transactions will be discussed further during the Company's third-quarter conference call (see below). David Bloom David Bloom (May 22, 1963 – April 6, 2003) was an NBC journalist (co-anchor of Weekend Today and reporter) until his sudden death in 2003 at the age of 39. Early life , Chairman and Chief Executive Officer, said, "Our operating results again reflect strong growth, driven both by acquisitions completed in the past year and internal growth. We continue to see good opportunities to acquire individual properties as well as larger portfolios, while projects currently under construction domestically and in Japan, totaling more than 1.2 million square feet of leasable space, will add significantly to our operating assets Operating Assets Another term for working capital. and income in 2003 and 2004. At the same time, our existing portfolio continues to perform very well in spite of in opposition to all efforts of; in defiance or contempt of; notwithstanding. See also: Spite a very challenging retail environment." Chelsea Property Group, Inc. is a fully integrated, self-administered and self-managed real estate investment trust (REIT REIT See: Real Estate Investment Trust REIT See real estate investment trust (REIT). ) that wholly or partially owns 54 Premium Outlet(R) and other retail 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 - containing 12.5 million square feet of GLA - in 28 states and Japan. The company's leading properties include Woodbury Common Premium Outlets Woodbury Common Premium Outlets, is an outlet center located in Central Valley, New York. The center is part of the Chelsea Premium Outlets group and takes its name from the town in which it is located. , near New York City New York City: see New York, city. New York City City (pop., 2000: 8,008,278), southeastern New York, at the mouth of the Hudson River. The largest city in the U.S. ; Wrentham Village Premium Outlets, near Boston; Orlando Premium Outlets, in Orlando, Florida The city of Orlando is a major city in central Florida and is the county seat of Orange County, Florida. According to the 2000 census, the city population was 185,951. A 2006 U.S. ; Desert Hills Premium Outlets, near Palm Springs, California Palm Springs is a famed Riverside County, California desert resort city, approximately 110 miles (177 km) east of Los Angeles and 140 miles (225 km) northeast of San Diego. As of the 2000 census, the city population was 42,807. ; and Gotemba Premium Outlets, near Tokyo, Japan. Please see www.cpgi.com for more information. Chelsea's third-quarter conference call with investors and analysts will be held on Wednesday, November 13, 2002 at 2:00 p.m. eastern time. The call may be accessed by dialing 800-633-8410 (U.S. callers) or 212-748-2727 (international callers) and referencing reservation No. 20996232. A replay of the call will be available through November 20, 2002 by dialing 800-633-8284 (U.S. callers) or 402-977-9140 (international callers) with the same reservation number. Statements in this news release that are not strictly historical are "forward-looking" statements under the 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. provisions 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. Although Chelsea Property Group believes that the expectations reflected in such statements are based on reasonable assumptions, it can give no assurance that its expectations will be attained. 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 that may cause actual results to differ materially from expected results. Risk factors include, without limitation, the receipt of regulatory entitlements for and completion of development projects, in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. or abroad; the availability and cost of capital and foreign currency; credit risk; the Company's ability to lease its properties; retail, real estate and economic conditions; risks inherent to being a partner in joint ventures; risks inherent to developing and marketing a technology based business; competition; and other risks detailed from time to time in Chelsea Property Group's reports to the Securities and Exchange Commission. The Company accepts no responsibility for updating forward-looking statements.
CHELSEA PROPERTY GROUP, INC.
STATEMENTS OF OPERATIONS - Unaudited
(In thousands, except per share data)
Three Months Ended Nine Months Ended
September 30, September 30,
2002 2001 2002 2001
----------- ----------- ----------- -----------
Revenues:
Base rent (a) $46,968 $30,528 $128,776 $87,930
Percentage rent 5,402 4,051 12,952 9,851
Expense reimbursements 16,128 11,581 43,265 34,002
Other income 2,991 2,905 8,207 8,403
----------- ----------- ----------- -----------
Total revenues 71,489 49,065 193,200 140,186
Expenses:
Operating and
maintenance 19,389 12,779 53,779 37,505
Depreciation and
amortization 15,045 12,174 42,229 35,479
General and
administrative 1,558 622 4,996 3,053
Other 1,027 473 3,221 1,713
----------- ----------- ----------- -----------
Total expenses 37,019 26,048 104,225 77,750
Income before
unconsolidated
investments, interest
expense and minority
interest 34,470 23,017 88,975 62,436
Income from
unconsolidated
investments 2,032 3,953 8,784 10,509
Loss from Chelsea
Interactive (3,790) (1,477) (10,266) (3,447)
Gain on sale of
unconsolidated
investment 10,911 - 10,911 -
Interest expense (13,098) (8,891) (33,691) (26,326)
----------- ----------- ----------- -----------
Income before minority
interest 30,525 16,602 64,713 43,172
Less minority interest (5,467) (3,717) (12,607) (10,213)
----------- ----------- ----------- -----------
Net income 25,058 12,885 52,106 32,959
Preferred dividends (835) (1,047) (2,588) (3,141)
----------- ----------- ----------- -----------
Net income - common
shareholders $24,223 $11,838 $49,518 $29,818
Net income per common
share (diluted) (b) $0.61 $0.34 $1.26 $0.89
Funds from operations
(FFO) (c) $32,660 $27,415 $90,989 $74,498
FFO per common share -
real estate $0.79 $0.71 $2.22 $1.96
Internet loss per
common share (0.08) (0.04) (0.22) (0.09)
----------- ----------- ----------- -----------
FFO per common share
(diluted) $0.71 $0.67 $2.00 $1.87
Dividends per common
share $0.485 $0.39 $1.375 $1.17
----------------------------------------------------------------------
(a) Base rent includes straight-line rent of $993 and $534 in the
third quarters of 2002 and 2001, respectively, and $2,441 and
$1,181 for the nine months ended September 30, 2002 and 2001,
respectively.
(b) Basic earnings per share were $0.64 and $0.36 in the third
quarters of 2002 and 2001, respectively, and $1.31 and $0.92 for
the nine months ended September 30, 2002 and 2001, respectively.
(c) FFO per common share is defined as income before minority
interest, gain or loss on a sale or writedown of asset and
depreciation and amortization, reduced by amortization of deferred
financing costs, depreciation of non-real estate assets, and
preferred dividends.
----------------------------------------------------------------------
CALCULATION OF FFO
(Amounts in thousands)
Three Months Ended Nine Months Ended
September 30, September 30,
2002 2001 2002 2001
----------- ----------- ----------- -----------
Net income - common
shareholders $24,223 $11,838 $49,518 $29,818
Add:
Depreciation and
amortization - wholly-
owned 15,045 12,174 42,229 35,479
Depreciation and
amortization - joint
ventures 871 1,628 3,673 4,700
Amortization of
deferred financing
costs and depreciation
of non-real estate
assets (573) (480) (1,741) (1,326)
Gain on sale of
unconsolidated
investment (10,911) - (10,911) -
Preferred unit
distributions (1,462) (1,462) (4,386) (4,386)
Minority interest 5,467 3,717 12,607 10,213
----------- ----------- ----------- -----------
FFO $32,660 $27,415 $90,989 $74,498
Ownership interests:
REIT common shares 39,610 34,320 39,253 33,534
Partnership units held
by minority interest 6,273 6,310 6,285 6,378
----------- ----------- ----------- -----------
Weighted average
shares/units
outstanding 45,883 40,630 45,538 39,912
CHELSEA PROPERTY GROUP, INC.
SELECTED BALANCE SHEET DATA - Unaudited
(In thousands, except center data)
Sept. 30, Dec. 31,
2002 2001
------------ ------------
Real estate assets, before depreciation $1,541,298 $1,127,906
Cash and cash equivalents 13,693 24,604
Total assets 1,430,684 1,099,308
Total liabilities 966,806 624,246
Minority interest 114,472 115,639
Stockholders' equity 349,406 359,423
Shares and units outstanding at period-end 44,230 43,840
DEBT DATA:
Unsecured bank debt 97,035 5,035
Mortgage debt 307,677 170,209
8.375% Notes due 2005 49,915 49,892
7.25% Notes due 2007 124,833 124,809
8.625% Notes due 2009 49,930 49,923
8.25% Notes due 2011 148,780 148,670
6.875% Notes due 2012 99,189 -
Interest coverage ratio - trailing 12 months 4.2x 4.3x
OPERATING DATA: (sq ft in thousands)
Gross leasable area at period-end 12,517 12,574
Weighted average GLA during period 12,683 9,349
Lease-up at period-end Domestic Premium
Outlets 98% 98%
Number of centers (including two
international) 54 57
Number of states and foreign countries 29 29
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