Pan Pacific Retail Properties Reports Strong 1st Quarter Results; 7.6% Increase in Funds From Operations Per Share to $0.71.Business Editors/Real Estate Writers SAN DIEGO--(BUSINESS WIRE)--May 2, 2002 Pan Pacific Retail Properties, Inc. (NYSE NYSE See: New York Stock Exchange :PNP), the largest neighborhood shopping center 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 real estate investment trust (REIT REIT See: Real Estate Investment Trust REIT See real estate investment trust (REIT). ) on the West Coast, today announced results for the first quarter ended March 31, 2002. All per share amounts are 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. -- 10.2% increase in total Funds from Operations (FFO) to $24.2 million vs. 1Q '01 -- 7.6% increase in FFO per share to $0.71 vs. 1Q '01 -- 8.9% increase in earnings per share to $0.49 vs. 1Q '01 -- 96.7% portfolio occupancy rate as of March 31st -- 147 leases executed, totaling 387,804 square feet -- 12.9% increase in base rent on same store new and renewed leases -- $60.5 million in grocery-anchored shopping center acquisitions year-to-date -- 39.8% debt to total market capitalization ratio as of March 31st -- 3.2 to 1.0 interest coverage ratio -- $0.475 per share quarterly dividend paid "During the first quarter we continued on track with executing our business plan and growth objectives," stated Stuart A. Tanz, President and Chief Executive Officer of Pan Pacific. "Our ability to consistently generate solid FFO FFO See: Funds from operations per share growth, high occupancy rates Noun 1. occupancy rate - the percentage of all rental units (as in hotels) are occupied or rented at a given time pct, per centum, percent, percentage - a proportion in relation to a whole (which is usually the amount per hundred) , and double-digit rent increases is driven by our proven strategy of owning dominant grocery-anchored shopping centers in mature, supply-constrained markets. The long-term demographic and economic fundamentals in our core West Coast markets remain sound." Tanz commented further, "We continue to expand and enhance our strong franchise through selective acquisitions. Thus far this year we have already acquired over $60 million of grocery-anchored shopping centers. With these acquisitions, along with the strong performance of our existing portfolio, we are in excellent shape to achieve our previously stated outlook of growing FFO per share by approximately 8% in 2002." FINANCIAL RESULTS For the quarter ended March 31, 2002 total 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) increased 10.2% to $24.2 million, compared with FFO of $22.0 million for the quarter ended March 31, 2001. On a per share basis, FFO increased 7.6% to $0.71 for the quarter ended March 31, 2002 compared to $0.66 for the quarter ended March 31, 2001. Net income increased 12.8% to $16.4 million, or $0.49 per share, for the quarter ended March 31, 2002 compared with net income for the quarter ended March 31, 2001 of $14.5 million, or $0.45 per share, representing an 8.9% increase on a per share basis. Total revenue increased 5.0% to $47.6 million for the quarter ended March 31, 2002 compared with total revenue of $45.3 million for the quarter ended March 31, 2001. For the quarter ended March 31, 2002 total Funds Available for Distributions (FAD FAD - ["FAD, A Simple and Powerful Database Language", F. Bancilon et al, Proc 13th Intl Conf on VLDB, Brighton, England, Sep 1987]. ) was $20.1 million, or $0.59 per share. For the quarter, the Company distributed a dividend of $0.475 per share representing an FFO payout ratio Payout Ratio The percentage of earnings paid out in dividends. It is calculated by dividing dividends per share by earnings per share. Notes: The payout ratio indicates how well earnings support the dividend payments: the lower the ratio, the more secure the dividend. of 67.0% and an FAD payout ratio of 80.8%. At March 31, 2002 total market capitalization Total Market Capitalization The total market value of all of a firm's outstanding securities. was approximately $1.7 billion. The Company had $689.3 million in debt outstanding, equating e·quate v. e·quat·ed, e·quat·ing, e·quates v.tr. 1. To make equal or equivalent. 2. To reduce to a standard or an average; equalize. 3. to a 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. ratio of 39.8%. The Company's debt was comprised of: $227.3 million in fixed-rate, long-term mortgage debt with a weighted average interest rate of 7.7%, and a weighted average maturity of 5.7 years; $273.8 million in senior unsecured notes with a fixed, weighted average interest rate of 7.7%, and a weighted average maturity of 7.2 years; and $188.1 million of floating-rate debt outstanding, which had a weighted average interest rate of 3.1% at March 31, 2002. For the quarter ended March 31, 2002 the Company's interest coverage ratio was 3.2 to 1. OPERATING RESULTS Leasing Activity At March 31, 2002, the Company's portfolio was 96.7% leased to 2,407 tenants. During the quarter the Company executed 147 leases (new and renewed), for 387,804 square feet, and achieved a 12.9% straight-line increase over prior rents, on a same-store basis. Same Property Operating Results With respect to the properties owned and operated by the Company for both the three months ended March 31, 2002 and 2001, same property net 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. increased 2.7%.
Same Property Operating Data
(In thousands)
Three Months Ended
March 31,
---------------------------
2002 2001
------- -------
Total revenue $44,663 $43,411
Operating expenses 10,797 10,445
------- -------
Operating income $33,866 $32,966 2.7%
======= ======= ===
ACQUISITION ACTIVITY Since January 1, 2002 the Company has acquired three grocery-anchored neighborhood shopping centers in Hacienda Heights, California Hacienda Heights is an unincorporated census-designated place in Los Angeles County, California, United States. As of the 2000 census, the community had a total population of 53,122. ; Hillsboro, Oregon Hillsboro is a city in and county seat of Washington County, Oregon, United States.GR6 The community began in 1842 and was named Hillsborough in 1850, before incorporation in 1876 as Hillsboro. ; and 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. , Nevada. The properties, which together encompass approximately 600,000 square feet, were acquired through separate transactions for a total of $60.5 million. The acquisitions were financed by a combination of draws under the Company's unsecured line of credit and cash flow from operations Cash flow from operations A firm's net cash inflow resulting directly from its regular operations (disregarding extraordinary items such as the sale of fixed assets or transaction costs associated with issuing securities), calculated as the sum of net income plus noncash expenses . Hacienda hacienda also called estancia (Argentina and Uruguay) or fazenda (Brazil) In Latin America, a large landed estate. The hacienda originated in the colonial period and survived into the 20th century. Plaza Hacienda Plaza is a 135,000 square foot neighborhood center located in Hacienda Heights, California, a suburb of Los Angeles Los Angeles (lôs ăn`jələs, lŏs, ăn`jəlēz'), city (1990 pop. 3,485,398), seat of Los Angeles co., S Calif.; inc. 1850. . Hacienda Plaza is situated off the 60 Freeway, at the intersection of Azusa Avenue and Colima Road, across from Puente Hills Mall Puente Hills Mall, located in Industry, California, United States, is a major regional shopping center in the San Gabriel Valley region of Los Angeles County. The mall was built in 1974 after the completion of the Pomona Freeway a few years earlier. , the primary regional mall in the area. The center is currently 94% leased and is anchored by Albertson's Supermarket. Sunset Esplanade Sunset Esplanade is a 358,000 square foot community center located in Hillsboro, Oregon, a suburb of Portland. The center is situated on SE Tualatin Valley Highway The Tualatin Valley Highway (or T.V. Highway as it is commonly abbreviated) is an Oregon highway which passes through the Tualatin Valley, between the cities of McMinnville and Beaverton. in close proximity to the Company's Tanasbourne Village and Shute Park Plaza shopping centers. Sunset Esplanade is currently 98% leased and is anchored by Safeway Supermarket, Rite Aid Rite Aid (NYSE: RAD) is a United States retailer and pharmacy chain, operating over 5,000 stores in 31 states and the District of Columbia. Rite Aid Corporation is one of the nation's leading drugstore chains. Drugstore, Jo-Ann Fabrics & Crafts, and Target. Decatur Meadows Decatur Meadows is a 111,000 square foot neighborhood center located in Las Vegas, Nevada, in close proximity to the Company's Sahara Pavilion shopping centers. The center is situated off the 95 Freeway, at the intersection of Decatur Boulevard and Meadows Lane, across from Meadows Mall Meadows Mall is located at 4300 Meadows Lane in Las Vegas, Nevada. Meadows Mall is owned by the General Growth Properties Inc. It is a two story enclosed mall with approx. 960,000 ft² of space. The mall has 140 stores and 4 anchors. , the primary regional mall in the area. Decatur Meadows is currently 95% leased and is anchored by Vons Supermarket (a division of Safeway, Inc.) DEVELOPMENT ACTIVITY The Company currently has one shopping center under development, Olympic Place, located in Northern California Northern California, sometimes referred to as NorCal, is the northern portion of the U.S. state of California. The region contains the San Francisco Bay Area, the state capital, Sacramento; as well as the substantial natural beauty of the redwood forests, the northern . The Company commenced construction in April 2001 with a targeted completion date by the end of 2002. The expected gross investment is approximately $40.0 million, of which $19.1 million had been funded as of March 31, 2002 including all of the equity. The project is well situated in downtown Walnut Creek Walnut Creek, residential city (1990 pop. 60,569), Contra Costa co., W Calif., in the San Francisco Bay area; inc. 1914. It is the trade and shipping center of an extensive agricultural area where walnuts are among the major product. , an affluent suburb of the San Francisco Bay Area “Bay Area” redirects here. For other uses, see Bay Area (disambiguation). The San Francisco Bay Area, colloquially known as the Bay Area or The Bay , with a population of 96,000 within a 3-mile radius, an average household income of $96,400, and a retail vacancy rate of less than 1%. FIRST QUARTER CONFERENCE CALL & FFO GUIDANCE On Thursday, May 2, 2002 at 11:30 AM Eastern Time, the Company will be hosting a conference call to discuss its first quarter results. The Company will also discuss and reaffirm re·af·firm tr.v. re·af·firmed, re·af·firm·ing, re·af·firms To affirm or assert again. re its previous guidance regarding EPS (Encapsulated PostScript) A PostScript file format used to transfer a graphic image between applications and platforms. EPS files contain PostScript code as well as an optional preview image in TIFF, WMF, PICT or EPSI, the latter being an ASCII-only format. and FFO per share growth in 2002 of approximately 8%. The Company's remarks will be followed by a question and answer period, which will be limited to questions from analysts. Stockholders and interested parties may participate in this conference call by dialing (888) 747-3510. A taped replay of the call will be available through June 1, 2002 at (888) 266-2081, pass code 5936651. A live web cast (listen-only mode) of the conference call will be available at www.pprp.com via a link to www.vcall.com. An online replay will also be available through August 1, 2002. You must have RealPlayer installed on your computer to listen to the web cast. RealPlayer may be downloaded for free at the websites listed above. ABOUT PAN PACIFIC RETAIL PROPERTIES Pan Pacific Retail Properties, Inc. is an equity real estate investment trust (REIT) traded on the New York Stock Exchange New York Stock Exchange (NYSE) World's largest marketplace for securities. The exchange began as an informal meeting of 24 men in 1792 on what is now Wall Street in New York City. under the symbol PNP. The Company is the largest neighborhood shopping center REIT on the West Coast. Pan Pacific's portfolio currently totals 111 shopping centers, encompassing 15.9 million square feet of retail space. As of March 31, 2002 the Company's portfolio totaled 110 shopping centers and was 96.7% leased to 2,407 retailers. The portfolio is diversified diversified (di·verˑ·s across five Western U.S. markets: Northern California, 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, , Washington, Oregon and Nevada. Pan Pacific focuses on creating long-term stockholder value by specializing in the acquisition, ownership and management of community and neighborhood shopping centers for everyday essentials. The Company's strategy is aimed at providing stockholders with long-term stable cash flow through maintaining a diverse portfolio and tenant base, balanced with consistent growth through implementing its acquisition and property management programs. Pan Pacific is headquartered in Vista (San Diego San Diego (săn dēā`gō), city (1990 pop. 1,110,549), seat of San Diego co., S Calif., on San Diego Bay; inc. 1850. San Diego includes the unincorporated communities of La Jolla and Spring Valley. Coronado is across the bay. ), California, and has regional offices located in Sacramento, California “Sacramento” redirects here. For other uses, see Sacramento (disambiguation). Sacramento is the capital of the State of California and the county seat of Sacramento County. ; Kent, Washington Kent is a city located in King County, Washington, United States. The second largest city in south King County and the eighth largest in the state, Kent has the third-largest industrial area in the United States. ; Portland, Oregon; and Las Vegas, Nevada. Additional information on Pan Pacific is available on the Company's web site at www.pprp.com. (Note: Certain matters discussed within this press release are 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. 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 which reflect management's current views with respect to future events and financial performance. Forward-looking statements are subject to risks and uncertainties. Factors that could cause actual results to differ materially from expectations include market valuations of our stock, financial performance and operations of our shopping centers, real estate conditions, execution of shopping center development programs, successful completion of renovations, completion of pending acquisitions, changes in the availability of additional acquisitions, changes in local or national economic conditions, acts of terrorism or war and other risks detailed from time to time in reports filed with the Securities and Exchange Commission including the Company's 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. for the year ended December 31, 2001.)
Consolidated Balance Sheets
(In thousands)
March 31, December 31,
2002 2001
------------ ------------
(unaudited)
ASSETS:
Properties, at cost:
Land $ 361,209 $ 349,694
Buildings and improvements 977,400 946,188
Tenant improvements 37,841 36,069
------------ ------------
1,376,450 1,331,951
Less accumulated depreciation
and amortization (105,078) (98,762)
------------ ------------
1,271,372 1,233,189
Investments in unconsolidated
partnerships 1,785 1,580
Cash and cash equivalents 297 3,765
Accounts receivable 7,109 8,006
Accrued rent receivable 18,067 17,351
Notes receivable 47,895 47,892
Deferred lease commissions 6,575 6,352
Prepaid expenses 9,695 10,305
Other assets 2,535 11,178
------------ ------------
$ 1,365,330 $ 1,339,618
============ ============
LIABILITIES AND EQUITY:
Notes payable $ 228,689 $ 229,135
Line of credit payable 186,750 165,300
Senior notes 273,836 273,800
Accounts payable, accrued expenses
and other liabilities 29,880 28,177
------------ ------------
719,155 696,412
Minority interests 15,872 20,748
------------ ------------
Stockholders' equity:
Common stock 333 328
Paid in capital in excess of par
value 721,834 714,615
Accumulated deficit (91,864) (92,485)
------------ ------------
630,303 622,458
------------ ------------
$ 1,365,330 $ 1,339,618
============ ============
Consolidated Statements of Income
(Unaudited)
(In thousands, except share data)
Three Months Ended
March 31,
---------------------------------
2002 2001
------------ ------------
REVENUE:
Base rent $ 36,680 $ 34,524
Percentage rent 440 808
Recoveries from tenants 8,881 7,872
Income from unconsolidated
partnerships 71 217
Other 1,498 1,875
------------ ------------
47,570 45,296
------------ ------------
EXPENSES:
Property operating 5,583 5,386
Property taxes 3,829 3,443
Depreciation and amortization 7,617 6,868
Interest 10,965 11,696
General and administrative 2,654 2,389
Other 167 307
------------ ------------
30,815 30,089
------------ ------------
INCOME BEFORE MINORITY INTERESTS AND
LOSS ON SALE OF REAL ESTATE: 16,755 15,207
Minority interests (358) (500)
Loss on sale of real estate -- (173)
------------ ------------
NET INCOME $ 16,397 $ 14,534
============ ============
Basic earnings per share $ 0.50 $ 0.46
Diluted earnings per share $ 0.49 $ 0.45
Calculation of Funds from Operations
and Funds Available for Distribution
(Unaudited)
(In thousands, except share data)
Three Months Ended
March 31,
---------------------------------
2002 2001
------------ ------------
FUNDS FROM OPERATIONS:
Net Income $ 16,397 $ 14,534
Plus depreciation and
amortization expense 7,617 6,868
Plus depreciation on
unconsolidated partnerships 2 26
Less corporate FF&E depreciation
(included above) (139) (114)
Plus OP unitholder minority
interests 358 500
Plus loss on sale of real estate -- 173
------------ ------------
Funds From Operations $ 24,235 $ 21,987
============ ============
Funds From Operations Per Share $ 0.71 $ 0.66
FUNDS AVAILABLE FOR DISTRIBUTION:
Funds From Operations $ 24,235 $ 21,987
Plus corporate FF&E depreciation
(included above) 139 114
Plus amortization of prepaid
financing costs 312 266
Less amortization of debt
premiums/discounts (16) (43)
Less capital expenditures:
Tenant improvements (1,795) (599)
Leasing commissions (499) (247)
Capital improvements (449) (30)
Less scheduled debt principal
payments (1,113) (958)
Less straight line rent (716) (429)
------------ ------------
Funds Available for Distribution $ 20,098 $ 20,061
============ ============
Funds Available for Distribution
Per Share $ 0.59 $ 0.60
Diluted Weighted Average Number of
Shares Outstanding 34,194,508 33,495,388
The White Paper on Funds from Operations approved by the Board of Governors of the National Association of Real Estate Investment Trusts ("NAREIT NAREIT National Association of Real Estate Investment Trusts ") in March 1995 (the "White Paper") defines Funds from Operations as net income (loss) (computed in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). ), excluding gains (or losses) from debt restructuring Debt Restructuring A method used by companies with outstanding debt obligations to alter the terms of the debt agreements in order to achieve some advantage. Notes: and sales of property, plus real estate related depreciation and amortization and after adjustments for unconsolidated partnerships and joint ventures. Management considers Funds from Operations an appropriate measure of performance of an equity REIT Equity REIT A Real Estate Investment Trust that assumes ownership status in the property it invests in enabling investors of the REIT to earn dividends on rental income from the property and appreciation in property resale. Antithesis of a Mortgage REIT. because it is predicated on cash flow analyses. The Company computes Funds from Operations in accordance with standards established by the White Paper, except that one-time merger related expenses are excluded for comparability from period to period. The Company's computation Computation is a general term for any type of information processing that can be represented mathematically. This includes phenomena ranging from simple calculations to human thinking. of Funds from Operations may, however, differ from the methodology for calculating Funds from Operations utilized by other equity REITs and, therefore, may not be comparable to such other REITs. Funds from Operations should not be considered as an alternative to net income (determined in accordance with GAAP) as a measure of the Company's liquidity, nor is it indicative of funds available to fund the Company's cash needs, including its ability to make distributions. The Company also cautions that the calculation of Funds Available for Distribution (FAD) may vary from entity to entity and, as such, the presentation of FAD by the Company may not be comparable to other similarly titled measures of other equity REITs. FAD does not represent cash generated from operating activities in accordance with generally accepted accounting principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting ; is not necessarily indicative of cash available to fund the Company's cash needs; and should not be considered as an alternative to cash flow as a measure of liquidity. |
|
||||||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion