First Union Real Estate Investments Announces First Quarter Results; Closes On Sale of Apartment Portfolio; Closes Rights Offering.CLEVELAND--(BUSINESS WIRE)--May 13, 1999-- 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 first quarter ended March 31, 1999. Financial results for the three months ended March 31, 1999 are as follows: -0-
Three Months Ended Three Months Ended
(in thousands except per share) March 31, 1999 March 31, 1998
(Restated)
Revenues $79,413 $80,354
Loss from operations (5,186) (3,579)
Capital gains 523 --
Net loss (5,371) (4,454)
Funds from operations
before preferred dividend 2,470 3,548
Funds from operations
after preferred dividend 1,762 2,673
Funds from operations per share
before preferred dividend $.07 $.10
Funds from operations per share
after preferred dividend $.06 $.09
The Trust's net loss increased by $.9 million when comparing the first quarter of 1999 to 1998. The net loss increased primarily due to higher interest expense, severance The act of dividing, or the state of being divided. The term severance has unique meanings in different branches of the law. Courts use the term in both civil and criminal litigation in two ways: first, when dividing a lawsuit into two or more parts, and second, when expense, legal fees and amortization of financing costs related to the Trust's notes payable. However, the Trust's core property portfolio on a "same-store basis" produced an 8% increase in operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. when comparing the first quarter of 1999 to the first quarter of 1998. This increase was due primarily to the leasing of additional space at the North Valley Tech Center in Denver Denver, city (1990 pop. 467,610), alt. 5,280 ft (1,609 m), state capital, coextensive with Denver co., N central Colo., on a plateau at the foot of the Front Range of the Rocky Mts., along the South Platte River where Cherry Creek meets it; inc. 1861. , CO, the opening of the first phase of a power strip center in Abilene Abilene (ăb`ĭlēn). 1 City (1990 pop. 6,242), seat of Dickinson co., central Kans., on the Smoky Hill River; inc. 1869. It was (1867–71) a railhead for a large cattle-raising region extending SW into Texas. , TX, and strong occupancy Gaining or having physical possession of real property subject to, or in the absence of, legal right or title. In a fire insurance policy, for example, the term occupancy of the Trust's apartment portfolio. Additionally, Impark's results improved primarily due to the reduction of losses at its manufacturing subsidiary. The increase in the Trust's operating income was tempered by the adoption of Emerging Issues Task Force 98-9, "accounting for contingent Fortuitous; dependent upon the possible occurrence of a future event, the existence of which is not assured. The word contingent denotes that there is no present interest or right but only a conditional one which will become effective upon the happening of the rent in interim financial periods" which resulted in $.7 million less participation rent being recorded in 1999 as compared to 1998. As a result of the accounting change, the Trust will now record the majority of its participation rent in the fourth quarter. The positive increases in property operations were offset by $.5 million in severance expenses as the downsizing (1) Converting mainframe and mini-based systems to client/server LANs. (2) To reduce equipment and associated costs by switching to a less-expensive system. (jargon) downsizing of the Trust's operations continued and $.3 million in legal fees incurred in renegotiating the senior credit facility and bridge loan. The Trust's interest expense increased over the same period in 1998 because the Trust repaid $87.5 million in senior notes bearing interest at 8.875% per annum Per annum Yearly. in August 1998 with a $90 million bridge loan that currently bears interest at 12% per annum. The senior notes were repurchased to prevent the possibility that the Trust would be required to 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. the senior notes at 101% as a result of a credit downgrade Downgrade A negative change in the rating of a security. Notes: For example, an analyst may downgrade a stock from strong buy to buy, or a bond rating agency may downgrade a bond from AAA to AA. and to provide the Trust with financial and operating flexibility. Rights Offering First Union successfully completed its rights offering yesterday, May 12th, raising $50 million in new equity from its existing holders of common shares. Based upon preliminary figures provided by the subscription agent, holders of 9.8 million rights exercised their basic subscription and then oversubscribed Refers to connecting more users to a system than can be fully supported if all of them were using it at the same time. Networks and servers are almost always designed with some amount of oversubscription, counting on the fact that everybody does not need the service simultaneously. for 13.3 million additional common shares. The offering was limited to 12.5 million Shares. Oversubscribed shares will be prorated among those holders who exercised their basic subscriptions. Apartment Portfolio Sale The Trust has completed the sale of of its apartment portfolio to Apartment Investment and Management Company, a NYSE-listed company ("AIMCO AIMCO Apartment Investment Management Company (Columbus, OH) "), for approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $86 million. As previously announced, AIMCO assumed approximately $37.5 million of first mortgage debt (allowing the Trust to avoid more than $5 million in prepayment penalties Prepayment penalty A fee a borrower pays a lender when the borrower repays a loan before its scheduled time of maturity. ), delivered 530,000 shares of common stock, and paid $24.9 in cash after prorations and fees. As anticipated, AIMCO has extended offers of employment to all First Union employees that are currently located at each of the properties. Supplemental Financial Information To receive the Trust's 14-page supplemental financial information for the First Quarter 1999, please call our toll-free NewsOnDemand Service. Simply dial 800/683-8431 and press no. 3 to place your order. The order number for this information is no. 5200. The information will be faxed to you within minutes of placing your order. 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 on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. and the registration statement for the proposed rights offering filed by the Company with the SEC. 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. . -0-
First Union Real Estate Investments
Combined Statements of Operations
Unaudited (In thousands, except per share data)
Three Months Ended
March 31,
--------------------------
Restated
1999 1998
--------- ---------
Revenues
Rents $ 78,879 $ 79,104
Interest - Mortgage loans 115 619
- Short-term investments 234 229
- Investments -- 190
Joint venture income and fees 104 122
Other 81 90
--------- ---------
79,413 80,354
--------- ---------
Expenses
Property operating 55,386 57,286
Real estate taxes 3,160 2,998
Interest 13,174 11,902
Depreciation and amortization 9,489 7,556
General and administrative 3,723 3,437
Foreign currency gain (333) (177)
Litigation and proxy expenses -- 931
--------- ---------
84,599 83,933
--------- ---------
Loss before capital gains (5,186) (3,579)
Capital gains 523 --
--------- ---------
Loss before preferred dividend (4,663) (3,579)
--------- ---------
Preferred dividend (708) (875)
--------- ---------
Net loss applicable to shares of
beneficial interest $ (5,371) $ (4,454)
--------- ---------
--------- ---------
Funds from operations before
preferred dividend $ 2,470 $ 3,548
--------- ---------
--------- ---------
Funds from operations after
preferred dividend $ 1,762 $ 2,673
--------- ---------
--------- ---------
Dividends declared $ -- $ 3,478
--------- ---------
--------- ---------
Per share data
Loss applicable to shares
of beneficial interest
before capital gains $ (.19) $ (.15)
--------- ---------
--------- ---------
Net loss applicable to shares of
beneficial interest -
basic and diluted $ (.17) $ (.15)
--------- ---------
--------- ---------
Funds from operations before
preferred dividend -
fully converted $ .07 $ .10
--------- ---------
--------- ---------
Funds from operations after
preferred dividend - diluted $ .06 $ .09
--------- ---------
--------- ---------
Dividends declared $ -- $ .11
--------- ---------
--------- ---------
Shares of beneficial interest - basic 31,376 29,230
--------- ---------
--------- ---------
Shares of beneficial interest - diluted 31,376 29,755
--------- ---------
--------- ---------
Shares of beneficial interest -
fully converted 35,845 35,691
--------- ---------
--------- ---------
NOTES TO THE COMBINED STATEMENTS OF OPERATIONS
1. First Union adopted Emerging Issues Task Force 98-9 "Accounting
for Contingent Rent in Interim Financial Periods" prospectively
in the fourth quarter of 1998. 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, percent
rent recorded in the first quarter of 1999 decreased by
$.7 million when comparing the first quarter of 1999 to 1998.
2. First Union sold a shopping center in February 1999 for
$21.6 million resulting in net proceeds of $9.3 million after
closing costs and repayment of $11.5 million of mortgage debt.
The capital gain recognized from the sale of the shopping center
was $.5 million. First Union in March 1999 also sold an office
building for $2.2 million resulting in net proceeds of
$1.8 million.
3. First Union has restated its 1998 combined financial statements as
a result of changing the estimated useful lives used to calculate
depreciation expense.
4. 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.
|
|
||||||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion