FACTORY STORES OF AMERICA, INC. REPORTS YEAR-END RESULTS; INCREASES FIRST QUARTER DIVIDEND.

SMITHFIELD, N.C.--(BUSINESS WIRE)--April 3, 1995--Factory Stores of America, Inc. (NYSE:FAC), the nation's largest owner and operator of factory outlet centers, today announced results for the year and fourth quarter ended December 31, 1994. The Company also announced an increase in the quarterly dividend for the first quarter of 1995 to $0.51 per share from $0.48 per share. The dividend will be payable on May 5, 1995, to stockholders of record on April 19, 1995.

For the year ended December 31, 1994, funds from operations (FFO), as adjusted, increased to $27.9 million, or $2.36 per share, from FFO of $7.2 million, or $1.20 per share, for the period from March 31, 1993 (inception) to December 31, 1993. Revenue for the year increased to $47.9 million from $14.9 million for the period from March 31, 1993 (inception) to December 31, 1993. Net income for the year before extraordinary charges was $13.1 million, or $1.11 per share, compared with net income of $5.1 million, or $0.86 per share, for the period from March 31, 1993 (inception) to December 31, 1993. In the fourth quarter of 1994, the Company incurred an extraordinary charge of approximately $0.9 million (or $0.07 per share) for prepayment charges associated with the early extinguishment of debt in December 1994.

For the fourth quarter, FFO as adjusted was $5.6 million, or $0.47 per share. Net income before extraordinary charges for the period was $1.3 million, or $.11 per common share.

FFO for the year ended December 31, 1994, has been adjusted for certain nonoperational items which include approximately $4.7 million in cash payments received by the Company during the year from the managing partner of the Willey Creek properties which were acquired by Factory Stores in two separate transactions in December 1993 and June 1994. The cash payments related to certain tenant lease revenue, common area maintenance charges and marketing expenses for tenant leases that were terminated after the acquisition ($1.7 million), marketing commitments related to the properties ($1.0 million), and an interest rate reimbursement agreement ($2.0 million) related to debt extinguished in December 1994. The tenant space affected by the terminations was re-leased to other tenants during the year. For accounting purposes, the cash payments have been treated as an adjustment to the purchase price of the Willey Creek properties and have not been included in the Company's revenue. However, the cash payments are available for dividend distributions and certain portions of these payments have been included in revenue for tax purposes. The decision to account for the $4.7 million in cash payments as a purchase price adjustment instead of revenue was made as part of the year-end audit of the Company's financial statements. This treatment was not utilized in the Company's previously reported results for the first three quarters of 1994. The Company expects to restate its results for the second and third quarters of 1994 which will reflect the retroactive application of this accounting treatment.

Commenting on the results, J. Dixon Fleming, Jr., chairman and chief executive officer, said, "1994 was an exciting year at Factory Stores of America as we completed a significant acquisition, expanded our existing portfolio at six of our factory outlet centers, and established new partnerships with manufacturers which will be important to our future growth. We begin 1995 as the largest owner and operator of outlet centers in the U.S., in a healthy and growing industry, and with major developments under construction which will further expand our portfolio and solidify our position as a leader in the outlet industry.

"Our strong performance for 1994 reflects the high occupancy rates at our centers and the addition to our portfolio of the Willey Creek properties. We have experienced a very solid 86% renewal rate in our existing properties for tenants renewing during the year. Coupled with existing demand for new space, the portfolio is now 95% leased, up from 93% at year-end 1993. Total center sales increased 8% for the year compared with 1993.

"The increase in the dividend for the first quarter reflects the Board's very positive outlook for the rest of the year. Expansion projects at our Crossville, Tennessee, and Arcadia, Louisiana, centers were completed during the fourth quarter of 1994 and in the first quarter we completed projects at our centers in Mesa, Arizona, and Draper, Utah. Leasing has been strong for the expansion space and we've brought on a number of new tenants. First quarter results will reflect the additional square footage and continued high occupancy levels. We expect to release first quarter results at the end of April."

Factory Stores of America, Inc., which completed its initial public offering on June 3, 1993, is a self-administered real estate investment trust and is the nation's largest owner and operator of factory outlet centers. Headquartered in Smithfield, North Carolina, the Company owns 35 centers in 21 states, with more than 4 million square feet of gross leasable area.

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                     FACTORY STORES OF AMERICA, INC.
                   Condensed Statements of Operations
                (in thousands, except per share amounts)

                              Three Months Ended Three Months Ended
                                 Dec. 31, 1994   Dec. 31, 1993
Total revenue                      $  14,179       $   7,309
Income before extraordinary item       1,258           2,890
Net income                               374           2,890

Per share:
  Income before extraordinary item      0.11            0.35
  Net income                            0.03            0.35
  Dividend                               .48            0.45

Funds from operations (as adjusted
 for 1994)                             5,596           3,845
Funds from operations per share,
   (as adjusted for 1994)          $     .47       $     .47

Weighted average shares outstanding   11,813           8,194

                                                   Period from
                                                  March 31, 1993
                              Twelve Months Ended (inception) to
                                 Dec. 31, 1994    Dec. 31, 1993
Total revenue                      $  47,913       $  14,856
Income before extraordinary item      13,109           5,139
Net income                            12,226           5,139

Per share:
  Income before extraordinary item      1.11            0.86
  Net income                            1.04            0.86
  Dividends                             1.89            0.55

Funds from operations (as adjusted
 for 1994)                            27,913           7,225
Funds from operations per share,
   (as adjusted for 1994)          $    2.36       $    1.21

Weighted average shares outstanding   11,811           5,989

CONTACT: Factory Stores of America, Inc., Smithfield

David A. Hodson, 919/934-9446