First Union Announces Third Quarter Earnings.CLEVELAND--(BUSINESS WIRE)--Oct. 30, 1998-- A conference call will take place today at 4:00 p.m. EST P.M. also p.m. or p.m. abbr. post meridiem Usage Note: By definition, 12 a.m. . Please refer to the invitation to participate at the end of this release. First Union Real Estate Investments (NYSE NYSE See: New York Stock Exchange :FUR fur, hairy covering of an animal, especially the skins of animals that have thick, soft, close-growing hair next to the skin itself and coarser protective hair above it. ) announced the operating results for the third quarter ended September September: see month. 30, 1998. As in the second quarter, the Trust recognized a number of extraordinary and non-operational charges that created a loss for the quarter. Exclusive of these items, the most significant of which are listed below, the Trust generated 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. per share of $.18 for the third quarter and $.45 for the nine months ended September 30, 1998. These compare to $.20 and $.58 for the comparable periods in 1997. As further detailed in the following supplemental information, the Trust estimates a current FFO FFO See: Funds from operations run rate of $.84 per share on a fully converted basis. The Trust recorded a GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). loss for the quarter of $11.7 million, or $.37 per share, due primarily to the following items: -0-
-- The accrual of severance expense of $3.6 million for anticipated
employee terminations.
-- Legal fees of $1.6 million related primarily to the tender for
the Trust's Senior Note issue, the potential rights offering, the
$90 million bridge loan borrowing, various employment related
issues and due diligence required to complete a financial and
corporate restructuring of the Trust.
-- A $1.6 million charge for the write-off of deferred issue costs
and other fees resulting from the repayment of $87.5 million of
Senior Notes.
-- The adoption of the Financial Accounting Board's Emerging Issues
Task Force Bulletin 98-9 (EITF 98-9), "Accounting for Contingent
Rents in Interim Financial Reports" which resulted in no
percentage rent from tenants being recorded in the third quarter
of 1998, resulting in a decrease of $1.5 million in revenues.
-- A non-cash $1.1 million foreign currency mark-to-market loss on
the Trust's loans to Imperial Parking (issued in conjunction with
the acquisition of Impark) due to the decline in the value of the
Canadian dollar as of the end of the quarter.
Without Impact of 1998 Extraordinary Expenses
_____________________________________________
Three Months Ended Nine Months Ended
September 30, September 30,
1998 1997 1998 1997
____ ____ ____ ____
FFO per share before
preferred dividend $.18 $.20 $.45 $.58
FFO per share after
preferred dividend $.18 $.21 $.45 $.62
As Reported
___________
Three Months Ended Nine Months Ended
September 30, September 30,
1998 1997 1998 1997
____ ____ ____ ____
Revenue $78,670 $73,135 $240,871 $154,203
Income from operations
(loss) (9,316) 1,945 (30,255) 6,057
Net income (loss) (11,657) 738 (25,531) 2,435
FFO before preferred
dividends (2,868) 6,987 (11,875) 18,587
FFO after preferred
dividends (3,576) 5,780 (14,166) 14,965
FFO per share before
preferred dividends (.08) .20 (.33) .58
FFO per share
after preferred dividends (.11) .21 (.46) .62
For further information on First Union's financial condition and performance for the third quarter, see the supplemental information schedules which follow. Recent Announcements In August, the Trust repurchased approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $87 million in aggregate principal amount of its $100 million outstanding 8-7/8% Senior Notes due 2003. In connection with 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 the Notes, the Trust borrowed $90 million from a banking syndicate Syndicate organized crime unit throughout major cities of the United States. [Am. Hist.: NCE, 2018] See : Gangsterism . The Trust intends to repay the loan from (1) the proceeds of asset sales, (2) additional borrowings under available credit facilities credit facilities npl → facilidades fpl de crédito credit facilities npl → facilités fpl de paiement credit facilities , and/or and/or conj. Used to indicate that either or both of the items connected by it are involved. Usage Note: And/or is widely used in legal and business writing. (3) a potential rights offering. The Trust is presently reviewing bids it has received for its apartment and office portfolios, and it expects to select successful bidders shortly. Bids on the Trust's retail portfolio are due in early November November: see month. . Proceeds from asset sales will be used to repay indebtedness INDEBTEDNESS. The state, of being in debt, without regard to the ability or inability of the party to pay the same. See 1 Story, Eq. 343; 2 Hill. Ab. 421. 2. . Certain statements contained in this news release that are forward-looking for·ward-look·ing adj. Concerned with or making provision for the future: forward-looking educators; a forward-looking corporate plan. Adj. 1. are based on current expectations that are subject to a number of uncertainties and risks, and actual results may differ materially. The uncertainties and risks include, but are not limited to, changes in market activity, changes in local real estate conditions and markets, actions by competitors COMPETITORS, French law. Persons who compete or aspire to the same office, rank or employment. As an English word in common use, it has a much wider application. Ferriere, Dict. de Dr. h.t. , interest rate movements and general economic conditions. Further information about these matters can be found in the information included in the Annual Report filed by the company with the SEC on Form 10K. First Union Real Estate Equity and Mortgage Investments is a NYSE listed stapled-stock real estate investment trust (REIT REIT See: Real Estate Investment Trust REIT See real estate investment trust (REIT). ) headquartered in Cleveland, Ohio "Cleveland" redirects here. For the Cleveland metropolitan area, see . For other uses, see Cleveland (disambiguation). Cleveland is a city in the U.S. state of Ohio and the county seat of Cuyahoga County, the most populous county in the state. . A conference call will be held today, October October: see month. 30, 1998 at 4:00 p.m. EST. All interested parties are welcome to participate by dialing 212-748-2220. Please refer to the password A secret word or code used to serve as a security measure against unauthorized access to data. It is normally managed by the operating system or DBMS. However, the computer can only verify the legitimacy of the password, not the legitimacy of the user. See NCSC. "First Union Earnings". There will be a taped replay of this conference call beginning Saturday Saturday: see week; Sabbath. , October 31 through Friday Friday: see Sabbath; week. Friday young Indian rescued by Crusoe and kept as servant and companion. [Br. Lit.: Robinson Crusoe] See : Servant , November 6 at 5:00 p.m. EST. You may listen to this taped replay by dialing 913-385-6780, refer to PIN number no. 2134.
First Union Real Estate Investments
Combined Statements of Income
Unaudited (In thousands, except per share data)
Three Months Ended Nine Months Ended
September 30, September 30,
__________________ __________________
1998 1997 1998 1997
________ ________ ________ ________
Revenues
Rents $ 78,057 $ 70,440 $237,839 $145,643
Interest
- Mortgage loans 118 648 1,093 2,221
- Short-term investments 227 635 911 1,319
- Investments 2 177 302 301
Joint venture income and
fees 72 927 285 3,118
Other 194 308 441 1,601
________ ________ ________ ________
78,670 73,135 240,871 154,203
________ ________ ________ ________
Expenses
Property operating 55,323 52,989 168,615 101,695
Real estate taxes 3,269 2,490 9,335 7,106
Interest 12,318 7,325 37,567 18,483
Depreciation and
amortization 7,508 5,276 20,365 12,724
General and administrative 8,443 3,110 29,271 8,138
Litigation and proxy
expenses 4,848
Foreign currency loss 1,125 1,125
________ ________ ________ ________
87,986 71,190 271,126 148,146
________ ________ ________ ________
Income (loss) before
capital gains and
extraordinary loss (9,316) 1,945 (30,255) 6,057
from early
extinguishment of debt
Capital gains 8,648
Extraordinary loss on
extinguishment of debt (1,633) (1,633)
________ ________ ________ ________
Net income (loss) before
preferred dividend (10,949) 1,945 (23,240) 6,057
Preferred dividend (708) (1,207) (2,291) (3,622)
________ ________ ________ ________
Net income (loss)
applicable to shares of
beneficial interest $(11,657) $ 738 $(25,531) $ 2,435
________ ________ ________ ________
Funds from (used in)
operations before
preferred dividend $ (2,868) $ 6,987 $(11,875) $ 18,587
________ ________ ________ ________
Funds from (used in)
operations after
preferred dividend $ (3,576) $ 5,780 $(14,166) $ 14,965
________ ________ ________ ________
Dividends declared $ -- $ 3,095 $ 3,478 $ 8,550
________ ________ ________ ________
Per share data
Income (loss)
applicable to
shares of
beneficial interest
before capital gain
and extraordinary
loss from early
extinguishment of
debt
- basic and diluted $ (.32) $ .03 $ (1.06) $ .10
________ ________ ________ ________
Net income (loss)
applicable to shares of
beneficial interest
- basic and diluted $ (.37) $ .03 $ (.84) $ .10
________ ________ ________ ________
Funds from (used in)
operations before
preferred dividend
- fully converted $ (.08) $ .20 $ (.33) $ .58
________ ________ ________ ________
Funds from (used in)
operations after
preferred dividend
- diluted $ (.11) $ .21 $ (.46) $ .62
________ ________ ________ ________
Dividends declared $ -- $ .11 $ .11 $ .33
________ ________ ________ ________
Shares of beneficial
interest - basic 31,431 27,337 30,561 23,522
________ ________ ________ ________
Shares of beneficial
interest - diluted 31,431 28,006 30,563 24,191
________ ________ ________ ________
Shares of beneficial
interest - fully
converted 35,901 35,620 35,516 31,805
________ ________ ________ ________
NOTES TO THE COMBINED STATEMENTS OF INCOME
1. Income per share of beneficial interest has been computed in
accordance with SFAS 128 (Earnings Per Share). SFAS 128 requires
that common share equivalents be excluded from the weighted
average shares outstanding for the calculation of basic earnings
per share. Shares and per share amounts for 1997 have been
restated accordingly.
2. The amount of funds from operations (FFO) is calculated as net
income (loss) both before and after the preferred dividend, plus
noncash charges for depreciation and amortization for both First
Union and the joint venture. However, amortization of intangible
assets from the acquisition of Impark has been included in FFO.
First Union adopted the definition of FFO as recommended by the
National Association of Real Estate Investment Trusts in 1997.
3. In May 1998, First Union sold its investment in the land beneath
the Huntington Building in Cleveland, Ohio for $6.0 million
resulting in a capital capital gain of $1.7 million.
Additionally, an $18.9 million mortgage investment secured by the
Huntington Building was repaid in 1998 resulting in the
recognition of a $7.7 million capital gain which was deferred
when the building was sold in 1982 since First Union received the
mortgage note as consideration. In June 1998, First Union sold a
forward exchange agreement resulting in a loss of $.8 million.
The forward exchange contract was purchased to protect First
Union from foreign currency fluctuations resulting from notes
issued in conjunction with the acquisition of Impark.
4. The registrant, in July 1998, adopted the Financial Accounting
Standards Board's Emerging Issues Task Force Bulletin 98-9 (EITF
98-9), "Accounting for Contingent Rent in Interim Financial
Periods," on a prospective basis. EITF 98-9 requires that
contingent rental income, such as percentage rent which is
dependent on sales of retail tenants, be recognized in the period
that a tenant exceeds its specified sales breakpoint.
Consequently , the registrant will accrue the majority of
percentage rental income in the fourth quarter of each year after
adoption of EITF 98-9. As a result, no percentage rental income
was recorded by the registrant in the third quarter of 1998. In
the third quarter of 1997, $1.0 million of percentage rental
income was recorded.
FIRST UNION REAL ESTATE EQUITY and MORTGAGE INVESTMENTS
_______________________________________________________
Combined Balance Sheets
Unaudited (In thousands, except shares)
September 30, December 31,
1998 1997
____________ ____________
ASSETS
Investments in real estate
Land $139,488 $109,308
Buildings and improvements 702,277 648,571
____________ ____________
841,765 757,879
Less - Accumulated depreciation (127,409) (113,858)
____________ ____________
Total investments in real estate 714,356 644,021
Investment in joint venture 1,598 1,575
Mortgage loans and notes receivable 5,521 30,686
Other assets
Cash and cash equivalents
- unrestricted 5,327 2,582
- restricted 17,873 14,282
Accounts receivable and prepayments 18,513 20,070
Investments 13,103
Inventory 3,214 3,374
Goodwill, net 61,183 66,560
Management and lease agreements, net 2,200 4,113
Deferred charges and other, net 6,182 6,300
Unamortized debt issue costs 7,199 7,445
Other 6,415 5,910
____________ ____________
Total assets $849,581 $820,021
____________ ____________
____________ ____________
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Bank loans $101,995 $ 69,922
Mortgage loans 346,065 313,391
Notes payable 94,998 146
Senior notes 12,538 100,000
Accounts payable and accrued
liabilities 38,249 38,000
Deferred obligations 10,608 10,807
Deferred capital gains and other
deferred income 2,370 10,646
Other 10,957
____________ ____________
Total liabilities 606,823 553,869
____________ ____________
Minority interest 1,047 1,047
Shareholders' equity
Preferred shares of beneficial
interest, $25 liquidation
preference, 2,300,000 shares
authorized and 1,349,000
outstanding 31,737 54,109
Shares of beneficial interest,
$1 par, unlimited
authorization, outstanding 31,416 28,179
Paid-in capital 180,007 189,272
Deferred compensation (5,643)
Foreign currency translation
adjustment (1,449) (812)
____________ ____________
Total shareholders' equity 241,711 265,105
____________ ____________
$849,581 $820,021
____________ ____________
____________ ____________
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