PREIT Reports Fourth Quarter and Full Year 2020 Results
PREIT (NYSE: PEI) reported significant financial losses for the quarter and year ending December 31, 2020. The net loss for Q4 was $202.1 million, or $2.62 per share, compared to a loss of $21.7 million, or $0.29 per share, in 2019. Funds From Operations (FFO) also decreased to $(0.22) per diluted share from $0.28 in the prior year. Same Store Net Operating Income (NOI) dropped 33.3% for the quarter and 28.2% for the year, primarily due to bankruptcies and the impacts of COVID-19. Despite these challenges, PREIT is restructuring its debt and signed 358,000 square feet of leases, predicting an annual gross rent increase of $8.4 million.
- Successful restructuring of debt and emergence from Chapter 11.
- Leasing momentum with over 600,000 square feet of new stores opened in 2020.
- 358,000 square feet of leases signed for future openings expected to generate annual gross rent of $8.4 million.
- Net loss of $202.1 million in Q4 2020, significantly higher than the loss of $21.7 million in Q4 2019.
- Same Store NOI decreased 33.3% for Q4 2020 and 28.2% for the year, largely due to bankruptcies and COVID-19-related store closures.
- FFO decreased to $(0.22) per diluted share from $0.28 in Q4 2019.
PHILADELPHIA, March 11, 2021 /PRNewswire/ -- PREIT (NYSE: PEI) today reported results for the three months and year ended December 31, 2020. A description of each non-GAAP financial measure and the related reconciliation to the comparable GAAP financial measure is located in the tables accompanying this release.
Three Months Ended | Year Ended December 31, | ||||||||||||||
(per share amounts) | 2020 | 2019 | 2020 | 2019 | |||||||||||
Net loss - basic and diluted | $ | (2.62) | $ | (0.29) | $ | (3.72) | $ | (0.52) | |||||||
FFO | (0.22) | 0.28 | (0.02) | 1.33 | |||||||||||
FFO, as adjusted | (0.13) | 0.34 | (0.01) | 1.05 | |||||||||||
FFO from assets transferred in 2019 and 2020 | - | (0.01) | - | (0.02) | |||||||||||
FFO, as adjusted for assets transferred | $ | (0.13) | $ | 0.33 | $ | (0.01) | $ | 1.03 | |||||||
"The PREIT team, and portfolio, proved to be resilient as we navigated uncertain terrain. Our targeted strategy of dispositions and anchor replacements over the past several years created a real estate portfolio of bullseye locations in high barrier-to-entry markets that stands the test of time," said Joseph F. Coradino, Chairman and CEO of PREIT. "Our portfolio is comprised of a differentiated mix of uses that attracts robust demand from a variety of non-retail uses, strengthening the Company and fortifying our revenue stream. At the same time, we are well-positioned for a strong return to brick and mortar shopping and leisure as restrictions ease and vaccinations continue."
- Same Store NOI, excluding lease termination revenue, decreased
33.3% for the three months ended December 31, 2020 compared to the three months ended December 31, 2019. - The quarter was impacted by a decrease in revenue of
$22.1 million primarily resulting from bankruptcies and related store closings, an increase in credit losses for challenged tenants as well as decreased percentage sales revenue resulting from restrictions limiting consumer traffic related to the COVID-19 pandemic. - Same Store NOI, excluding lease termination revenue, decreased
28.2% for the year ended December 31, 2020 compared to December 31, 2019. - The year was impacted by a decrease in revenue of
$75.0 million primarily resulting from bankruptcies and related store closings, an increase in credit losses for challenged tenants, the accounting for rental abatements as well as decreased percentage sales revenue resulting from mall closures related to the COVID-19 pandemic. - In support of challenged tenants, PREIT granted just under
$12 million in rent abatements. - Cash collections continued to improve, increasing to
112% of billings for Q4 2020. - Core Mall total occupancy was
90.3% . Core Mall non-anchor occupancy was89.4% . - Core Mall non-anchor leased space, at
90.1% , exceeds occupied space by 70 basis points when factoring in executed new leases slated for future occupancy. - Average renewal spreads for the quarter ended December 31, 2020 were
1.4% in the wholly-owned portfolio for spaces less than 10,000 square feet. - The Company supported local economies, paying over
$66 million in real estate taxes during 2020. - The Company completed its financial restructuring, extending its debt maturity schedule and improving its liquidity position.
Leasing and Redevelopment
- 358,000 square feet of leases are signed for future openings, which is expected to contribute annual gross rent of
$8.4 million . - Leasing momentum continued with over 600,000 square feet of new stores opening in the portfolio during the year.
- Construction is underway for Aldi to open its first store in the portfolio at Dartmouth Mall during Q3 2021.
- A lease has been executed for a new self-storage facility in previously unused below grade space at Mall at Prince George's with an anticipated opening in Q1 2022.
- A lease with Tilt Studios was signed to replace JC Penney at Magnolia Mall in Florence, SC.
- A transaction has been executed with Cooper Hospital for an outpatient location in the former Sears space at Moorestown Mall in Moorestown, NJ.
COVID-19 Impact and Response
- During 2020, the Company experienced varying levels of property closures and continued restrictions on certain businesses.
- Core mall traffic at comparable properties was approximately
74% of 2019 traffic during the holiday season. - Cash collections for April through December totaled
80% of billings for those months. - In continuous support of its tenants, PREIT has developed and implemented its own contactless pick up solution, Mall2Go, and developed a branded parking lot activation series, Park and Play, that has resulted in two dozen events being held between late July and mid-September at its properties.
- Across its portfolio, the Company has hosted blood drives and food donation drives, provided meals to area essential workers, and donated much needed protective supplies. Read more about our efforts here.
- The Company launched sMALL surprises, an innovative e-commerce platform delivering curated surprise packs from our mall retailers based on the recipient's interests.
- The Company launched an initiative to support black-owned businesses and brands throughout its portfolio to empower its customers to make more informed purchasing decisions, noting that black-owned businesses were disproportionately challenged by the pandemic.
Primary Factors Affecting Financial Results for the Three Months Ended December 31, 2020 and 2019
- Net loss attributable to PREIT common shareholders was
$202.1 million (which takes into consideration the accrual of preferred dividends that accumulated during the quarter but have not been paid), or$2.62 per basic and diluted share for the three months ended December 31, 2020, compared to net loss attributable to PREIT common shareholders of$21.7 million , or$0.29 per basic and diluted share for the three months ended December 31, 2019. - As a result of the revaluation of assets at our Fashion District Philadelphia partnership, the Company recognized a loss on remeasurement of
$148.5 million in the quarter. - Same Store NOI, including lease terminations, decreased by
$20.7 million , or34.4% . The decrease is primarily due to lost revenues from bankrupt tenants, an increase in credit losses and a decrease in percentage of sales revenue due to COVID-19 related store closures, partially offset by new store openings, including contributions from replacement anchors. - Non-Same Store NOI decreased by
$1.6 million , primarily due to lost revenues from bankrupt tenants, an increase in credit losses and a decrease in percentage of sales revenue due to COVID-19 related mall closures. Other decreases in NOI from Non-Same Store properties is due to the derecognition of property at Valley View Mall during the third quarter of 2020. - FFO for the three months ended December 31, 2020 was
$(0.22) per diluted share and OP Unit compared to$0.28 per diluted share and OP Unit for the three months ended December 31, 2019. Adjustments to FFO in the fourth quarter of 2020 were related to$0.05 per share from reorganization expenses and$0.04 per share from loss on hedge ineffectiveness. Adjustments to FFO in the 2019 quarter included$0.04 per share of provision for employee separation expenses and$0.03 per share of impairment of development land parcels.
All NOI and FFO amounts referenced as primary factors affecting financial results above include our share of unconsolidated properties' revenues and expenses. Additional information regarding changes in operating results for the three months ended December 31, 2020 and 2019 is included on page 16.
Debt Restructuring and Chapter 11 Process
On December 11, 2020, the Company announced that it had successfully completed its financial restructuring and emerged from Chapter 11.
The Company's new credit facility provides the Company access to up to
Asset Dispositions
Multifamily Land Parcels: The Company has executed agreements of sale for land parcels for anticipated multifamily development in the amount of
Hotel Parcels: The Company has an executed agreement of sale to convey a land parcel for anticipated hotel development in the amount of
Retail Operations
Due to COVID-related mall closures impacting a significant portion of the year, the Company is not reporting tenant sales at this time.
2021 Outlook
The Company is not issuing detailed guidance at this time.
Conference Call Information
Management has scheduled a conference call for 11:00 a.m. Eastern Time on Friday March 12, 2021, to review the Company's results and future outlook. To listen to the call, please dial 1-844-885-9139 (domestic toll free), or 1-647-689-4441 (international), and request to join the PREIT call, Conference ID 4671799, at least fifteen minutes before the scheduled start time as callers could experience delays. Investors can also access the call in a "listen only" mode via the internet at the Company's website, preit.com. Please allow extra time prior to the call to visit the site and download the necessary software to listen to the Internet broadcast. Financial and statistical information expected to be discussed on the call will also be available on the Company's website.
For interested individuals unable to join the conference call, the online archive of the webcast will also be available for one year following the call.
About PREIT
PREIT (NYSE:PEI) is a publicly traded real estate investment trust that owns and manages quality properties in compelling markets. PREIT's robust portfolio of carefully curated retail and lifestyle offerings mixed with destination dining and entertainment experiences are located primarily in the densely-populated eastern U.S. with concentrations in the mid-Atlantic's top MSAs. Since 2012, the Company has driven a transformation guided by an emphasis on portfolio quality and balance sheet strength driven by disciplined capital expenditures. Additional information is available at www.preit.com or on Twitter or LinkedIn.
Rounding
Certain summarized information in the tables above may not total due to rounding.
Definitions
Funds From Operations ("FFO")
The National Association of Real Estate Investment Trusts ("NAREIT") defines Funds From Operations ("FFO"), which is a non-GAAP measure commonly used by REITs, as net income (computed in accordance with GAAP) excluding (i) depreciation and amortization of real estate, (ii) gains and losses on sales of certain real estate assets, (iii) gains and losses from change in control and (iv) impairment write-downs of certain real estate assets and investments in entities when the impairment is directly attributable to decreases in the value of depreciable real estate held by the entity. We compute FFO in accordance with standards established by NAREIT, which may not be comparable to FFO reported by other REITs that do not define the term in accordance with the current NAREIT definition, or that interpret the current NAREIT definition differently than we do. NAREIT's established guidance provides that excluding impairment write downs of depreciable real estate is consistent with the NAREIT definition.
FFO is a commonly used measure of operating performance and profitability among REITs. We use FFO and FFO per diluted share and unit of limited partnership interest in our operating partnership ("OP Unit") in measuring our performance against our peers and as one of the performance measures for determining incentive compensation amounts earned under certain of our performance-based executive compensation programs.
FFO does not include gains and losses on sales of operating real estate assets or impairment write downs of depreciable real estate (including development land parcels), which are included in the determination of net loss in accordance with GAAP. Accordingly, FFO is not a comprehensive measure of our operating cash flows. In addition, since FFO does not include depreciation on real estate assets, FFO may not be a useful performance measure when comparing our operating performance to that of other non-real estate commercial enterprises. We compensate for these limitations by using FFO in conjunction with other GAAP financial performance measures, such as net loss and net cash used in operating activities, and other non-GAAP financial performance measures, such as NOI. FFO does not represent cash generated from operating activities in accordance with GAAP and should not be considered to be an alternative to net loss (determined in accordance with GAAP) as an indication of our financial performance or to be an alternative to cash flow from operating activities (determined in accordance with GAAP) as a measure of our liquidity, nor is it indicative of funds available for our cash needs, including our ability to make cash distributions. We believe that net loss is the most directly comparable GAAP measurement to FFO.
When applicable, we also present FFO, as adjusted, and FFO per diluted share and OP Unit, as adjusted, which are non-GAAP measures, for the years ended December 31, 2020 and 2019, respectively, to show the effect of such items as gain or loss on debt extinguishment (including accelerated amortization of financing costs), impairment of assets, provision for employee separation expense, insurance recoveries or losses, net, gain on derecognition of property, loss on hedge ineffectiveness and reorganization expenses which had an effect on our results of operations, but are not, in our opinion, indicative of our ongoing operating performance.
We believe that FFO is helpful to management and investors as a measure of operating performance because it excludes various items included in net loss that do not relate to or are not indicative of operating performance, such as gains on sales of operating real estate and depreciation and amortization of real estate, among others. We believe that Funds From Operations, as adjusted, is helpful to management and investors as a measure of operating performance because it adjusts FFO to exclude items that management does not believe are indicative of our operating performance, such as gain or loss on debt extinguishment (including accelerated amortization of financing costs), impairment of assets, provision for employee separation expense, insurance recoveries or losses, net, gain on derecognition of property, loss on hedge ineffectiveness and reorganization expenses.
When applicable, we also present FFO, as adjusted, and FFO per diluted share and OP Unit, as adjusted, which are non-GAAP measures, for the years ended December 31, 2020 and 2019, respectively, to show the effect of such items as gain or loss on debt extinguishment (including accelerated amortization of financing costs), impairment of assets, provision for employee separation expense, insurance recoveries or losses, net, gain on derecognition of property, loss on hedge ineffectiveness and reorganization expenses which had an effect on our results of operations, but are not, in our opinion, indicative of our ongoing operating performance.
We believe that FFO is helpful to management and investors as a measure of operating performance because it excludes various items included in net loss that do not relate to or are not indicative of operating performance, such as gains on sales of operating real estate and depreciation and amortization of real estate, among others. We believe that Funds From Operations, as adjusted, is helpful to management and investors as a measure of operating performance because it adjusts FFO to exclude items that management does not believe are indicative of our operating performance, such as gain or loss on debt extinguishment (including accelerated amortization of financing costs), impairment of assets, provision for employee separation expense, insurance recoveries or losses, net, gain on derecognition of property, loss on hedge ineffectiveness and reorganization expenses.
Net Operating Income ("NOI")
NOI (a non-GAAP measure) is derived from real estate revenue (determined in accordance with GAAP, including lease termination revenue), minus property operating expenses (determined in accordance with GAAP), plus our pro rata share of revenue and property operating expenses of our unconsolidated partnership investments. NOI does not represent cash generated from operating activities in accordance with GAAP and should not be considered to be an alternative to net loss (determined in accordance with GAAP) as an indication of our financial performance or to be an alternative to cash flow from operating activities (determined in accordance with GAAP) as a measure of our liquidity. It is not indicative of funds available for our cash needs, including our ability to make cash distributions. We believe NOI is helpful to management and investors as a measure of operating performance because it is an indicator of the return on property investment, and provides a method of comparing property performance over time. We believe that net loss is the most directly comparable GAAP measure to NOI. NOI excludes other income, general and administrative expenses, provision for employee separation expenses, interest expense, depreciation and amortization, insurance recoveries, gain/loss on debt extinguishment, gain on derecognition of property, impairment of assets, gains on sales of real estate by equity method investees, equity in loss/income of partnerships, loss on remeasurement of assets by equity method investee, gain on sale of non operating real estate, gain/loss on sale of real estate, impairment of development land parcel, project costs and other expenses and reorganization expenses.
Same Store NOI is calculated using retail properties owned for the full periods presented and excludes properties acquired or disposed of, under redevelopment, or designated as non-core during the periods presented. In 2018, Wyoming Valley Mall was designated as non-core and subsequently conveyed to the lender of the mortgage loan secured by that property in 2019. In 2019, Exton Square Mall and Valley View Mall were designated as non-core and are excluded from Same Store NOI. Non Same Store NOI is calculated using the retail properties excluded from the calculation of Same Store NOI.
Financial Information of our Unconsolidated Properties
The non-GAAP financial measures of FFO and NOI presented in this press release incorporate financial information attributable to our share of unconsolidated properties. This proportionate financial information is also non-GAAP financial information, but we believe that it is helpful information because it reflects the proportionate contribution from our unconsolidated properties that are owned through investments accounted for under GAAP using the equity method of accounting. Under such method, earnings from these unconsolidated partnerships are recorded in our statements of operations prepared in accordance with GAAP under the caption entitled "Equity in (loss) income of partnerships."
To derive the proportionate financial information from our unconsolidated properties, we multiplied the percentage of our economic interest in each partnership on a property-by-property basis by each line item. Under the partnership agreements relating to our current unconsolidated partnerships with third parties, we own a
Core Properties
Core Properties include all operating retail properties except for Exton Square Mall and Fashion District Philadelphia. Valley View Mall was previously designated as a non-core property. In August 2020, a court order assigned a special servicer to operate the property on behalf of the lender of the mortgage loan secured by the property and a court order was issued in September 2020 to conduct a foreclosure sale of the property. Although we have not yet conveyed the property because foreclosure proceedings are ongoing, we no longer operate the property as a result of the court order assigning the special servicer. Core Malls excludes these properties, power centers and Gloucester Premium Outlets.
Forward Looking Statements
This press release contains certain forward-looking statements that can be identified by the use of words such as "anticipate," "believe," "estimate," "expect," "intend," "may," "project," and similar expressions. Forward-looking statements relate to expectations, beliefs, projections, future plans, strategies, anticipated events, trends and other matters that are not historical facts. These forward-looking statements reflect our current views about future events, achievements or results and are subject to risks, uncertainties and changes in circumstances that might cause future events, achievements or results to differ materially from those expressed or implied by the forward-looking statements. In particular, our business might be materially and adversely affected by the following:
- the effectiveness of our financial restructuring and any additional strategies that we may employ to address our liquidity and capital resources in the future;
- our ability to achieve forecasted revenue and pro forma leverage ratio and generate free cash flow to further reduce indebtedness;
- the COVID-19 global pandemic and the public health and governmental response, which have and may continue to exacerbate many of the risks listed below;
- changes in the retail and real estate industries, including bankruptcies, consolidation and store closings, particularly among anchor tenants;
- current economic conditions, including current high rates of unemployment and its effects on consumer confidence and spending, and the corresponding effects on tenant business performance, prospects, solvency and leasing decisions;
- our inability to collect rent due to the bankruptcy or insolvency of tenants or otherwise;
- our ability to maintain and increase property occupancy, sales and rental rates;
- increases in operating costs that cannot be passed on to tenants;
- the effects of online shopping and other uses of technology on our retail tenants;
- risks related to our development and redevelopment activities, including delays, cost overruns and our inability to reach projected occupancy or rental rates;
- social unrest and acts of vandalism or violence at malls, including our properties, or at other similar spaces, and the potential effect on traffic and sales;
- our ability to sell properties that we seek to dispose of or our ability to obtain prices we seek;
- potential losses on impairment of certain long-lived assets, such as real estate, including losses that we might be required to record in connection with any disposition of assets;
- our substantial debt and our ability to remain in compliance with our financial covenants under our debt facilities;
- our ability to raise capital, including through sales of properties or interests in properties, subject to the terms of our Credit Agreements; and
- potential dilution from any capital raising transactions or other equity issuances.
Additional factors that might cause future events, achievements or results to differ materially from those expressed or implied by our forward-looking statements include those discussed herein and in the sections entitled "Item 1A. Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2019 and in our Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2020 and any subsequent reports we may file with the SEC. We do not intend to update or revise any forward-looking statements to reflect new information, future events or otherwise.
CONTACT: AT THE COMPANY
Mario Ventresca
EVP & CFO
(215) 875-0703
Heather Crowell
EVP, Strategy and Communications
(215) 454-1241
heather.crowell@preit.com
** Quarterly supplemental financial and operating **
** information will be available on www.preit.com **
Pennsylvania Real Estate Investment Trust
Selected Financial Data
Three Months Ended December 31, | Year Ended December 31, | ||||||||||||||
(in thousands of dollars) | 2020 | 2019 | 2020 | 2019 | |||||||||||
REVENUE: | |||||||||||||||
Real estate revenue: | |||||||||||||||
Lease revenue | $ | 58,828 | $ | 78,643 | $ | 237,141 | $ | 302,311 | |||||||
Expense reimbursements | 4,142 | 4,637 | 15,462 | 19,979 | |||||||||||
Other real estate revenue | 3,529 | 5,049 | 8,333 | 12,668 | |||||||||||
Total real estate revenue | 66,499 | 88,329 | 260,936 | 334,958 | |||||||||||
Other income | 123 | 393 | 887 | 1,834 | |||||||||||
Total revenue | 66,622 | 88,722 | 261,823 | 336,792 | |||||||||||
EXPENSES: | |||||||||||||||
Operating expenses: | |||||||||||||||
Property operating expenses: | |||||||||||||||
CAM and real estate taxes | (26,104) | (27,369) | (106,522) | (113,260) | |||||||||||
Utilities | (2,858) | (3,383) | (11,829) | (14,733) | |||||||||||
Other property operating expenses | (2,848) | (2,750) | (8,547) | (8,565) | |||||||||||
Total property operating expenses | (31,810) | (33,502) | (126,898) | (136,558) | |||||||||||
Depreciation and amortization | (30,765) | (39,699) | (126,362) | (137,784) | |||||||||||
General and administrative expenses | (19,480) | (12,591) | (50,272) | (46,010) | |||||||||||
Provision for employee separation expenses | (55) | (2,611) | (1,227) | (3,689) | |||||||||||
Insurance recoveries, net | - | (132) | 586 | 4,362 | |||||||||||
Project costs and other expenses | (7) | (17) | (294) | (284) | |||||||||||
Total operating expenses | (82,117) | (88,552) | (304,467) | (319,963) | |||||||||||
Interest expense, net | (30,042) | (17,001) | (84,341) | (63,987) | |||||||||||
(Loss) gain on debt extinguishment, net | (1,487) | 27 | (1,487) | 24,859 | |||||||||||
Gain on derecognition of property | 1,121 | - | 8,127 | - | |||||||||||
Impairment of assets | - | (1,455) | - | (1,455) | |||||||||||
Impairment of development land parcel | - | (2,098) | - | (3,562) | |||||||||||
Reorganization expenses | (3,769) | - | (3,769) | - | |||||||||||
Total expenses | (116,294) | (109,079) | (385,938) | (364,108) | |||||||||||
Loss before equity in (loss) income of partnerships, loss on remeasurement of assets by equity method investee, gain on sales of real estate by equity method investee, gain on sales of real estate, net, and gain on sales of interests in non operating real estate, net of adjustment | (49,672) | (20,357) | (124,115) | (27,316) | |||||||||||
Equity in (loss) income of partnerships | (2,746) | 2,153 | (5,544) | 8,289 | |||||||||||
Loss on remeasurement of assets by equity method investee | (148,545) | - | (148,545) | - | |||||||||||
Gain on sales of real estate by equity method investee | - | — | — | 553 | |||||||||||
Gain on sales of real estate, net | 274 | 72 | 11,444 | 2,744 | |||||||||||
Gain on sales of interests in non operating real estate | 228 | 2,718 | 54 | 2,730 | |||||||||||
Net loss | (200,461) | (15,414) | (266,706) | (13,000) | |||||||||||
Less: net loss attributable to noncontrolling interest | 5,192 | 565 | 7,189 | 2,128 | |||||||||||
Net loss attributable to PREIT | (195,269) | (14,849) | (259,517) | (10,872) | |||||||||||
Less: preferred share dividends | (6,844) | (6,844) | (27,375) | (27,375) | |||||||||||
Net loss attributable to PREIT common shareholders | $ | (202,113) | $ | (21,693) | $ | (286,892) | $ | (38,247) | |||||||
Three Months Ended December 31, | Year Ended December 31, | ||||||||||||||
(in thousands, except per share amounts) | 2020 | 2019 | 2020 | 2019 | |||||||||||
Net loss | $ | (200,462) | $ | (15,414) | $ | (266,706) | $ | (13,000) | |||||||
Noncontrolling interest | 5,193 | 565 | 7,189 | 2,128 | |||||||||||
Cumulative preferred share dividends | (6,844) | (6,844) | (27,375) | (27,375) | |||||||||||
Dividends on unvested restricted shares | - | (219) | (363) | (883) | |||||||||||
Net loss used to calculate loss per share—basic and diluted | $ | (202,112) | $ | (21,912) | $ | (287,255) | $ | (39,130) | |||||||
Basic and diluted loss per share: | $ | (2.62) | $ | (0.29) | $ | (3.72) | $ | (0.52) | |||||||
(in thousands of shares) | |||||||||||||||
Weighted average shares outstanding—basic | 77,457 | 76,557 | 77,227 | 75,221 | |||||||||||
Effect of common share equivalents(1) | - | - | - | - | |||||||||||
Weighted average shares outstanding—diluted | 77,457 | 76,557 | 77,227 | 75,221 | |||||||||||
(1) | The Company had net losses in all periods presented. Therefore, the effects of common share equivalents of 285 and 485 for the three months ended December 31, 2020 and 2019, respectively, and, 380 and 452 for the year ended December 30, 2020 and 2019, respectively, are excluded from the calculation of diluted loss per share for these periods because they would be antidilutive. |
Three Months Ended | Year Ended | ||||||||||||||
(in thousands of dollars) | 2020 | 2019 | 2020 | 2019 | |||||||||||
Comprehensive loss: | |||||||||||||||
Net loss | $ | (200,461) | $ | (15,414) | $ | (266,706) | $ | (13,000) | |||||||
Unrealized gain (loss) on derivatives | 4,498 | 2,903 | (11,252) | (18,937) | |||||||||||
Reclassification adjustment of loss from de-designated interest rate swaps | 2,818 | - | 2,818 | - | |||||||||||
Amortization of settled swaps | 2 | 3 | 75 | 85 | |||||||||||
Total comprehensive loss | (193,143) | (12,508) | (275,065) | (31,852) | |||||||||||
Less: comprehensive loss attributable to noncontrolling interest | 5,083 | 491 | 7,484 | 3,016 | |||||||||||
Comprehensive loss attributable to PREIT | $ | (188,060) | $ | (12,017) | $ | (267,581) | $ | (28,836) | |||||||
The following table presents a reconciliation of net loss determined in accordance with GAAP to (i) FFO attributable to common shareholders and OP Unit holders, (ii) FFO, as adjusted, attributable to common shareholders and OP Unit holders, (iii) FFO, as adjusted for assets sold, (iv) FFO attributable to common shareholders and OP Unit holders per diluted share and OP Unit, (v) FFO, as adjusted, attributable to common shareholders and OP Unit holders per diluted share and OP Unit, and (vi) FFO, as adjusted for assets sold per diluted share and OP Unit for the three months and year ended December 31, 2020 and 2019, respectively:
Three Months Ended December 31, | Year Ended December 31, | ||||||||||||||
(in thousands, except per share amounts) | 2020 | 2019 | 2020 | 2019 | |||||||||||
Net loss | $ | (200,461) | $ | (15,414) | $ | (266,706) | $ | (13,000) | |||||||
Depreciation and amortization on real estate: | |||||||||||||||
Consolidated properties | 30,402 | 39,296 | 124,940 | 136,422 | |||||||||||
PREIT's share of equity method investments | 4,244 | 3,421 | 16,641 | 9,874 | |||||||||||
Gain on sales of real estate, net | (274) | (72) | (11,444) | (2,756) | |||||||||||
Loss on remeasurement of assets by equity method investee | 148,545 | - | 148,545 | - | |||||||||||
Impairment of assets | - | 1,455 | - | 1,455 | |||||||||||
Dividend on preferred shares | - | (6,843) | (13,687) | (27,375) | |||||||||||
Funds from operations attributable to common shareholders and OP Unit holders | $ | (17,544) | $ | 21,843 | $ | (1,711) | $ | 104,620 | |||||||
Insurance recoveries, net | - | 132 | (586) | (4,362) | |||||||||||
Reorganization expenses | 3,769 | - | 3,769 | - | |||||||||||
Loss (gain) on debt extinguishment, net | 1,487 | (27) | 1,487 | (24,859) | |||||||||||
Gain on derecognition of property | (1,121) | - | (8,127) | - | |||||||||||
Loss on hedge ineffectiveness | 2,912 | - | 2,912 | - | |||||||||||
Impairment of development land parcel | - | 2,098 | - | 3,562 | |||||||||||
Provision for employee separation expenses | 55 | 2,611 | 1,227 | 3,689 | |||||||||||
Funds from operations, as adjusted, attributable to common shareholders and OP Unit holders | $ | (10,442) | $ | 26,657 | $ | (1,029) | $ | 82,650 | |||||||
Funds from operations attributable to common shareholders and OP Unit holders per diluted share and OP Unit | $ | (0.22) | $ | 0.28 | $ | (0.02) | $ | 1.33 | |||||||
Funds from operations, as adjusted, attributable to common shareholders and OP Unit holders per diluted share and OP Unit | $ | (0.13) | $ | 0.34 | $ | (0.01) | $ | 1.05 | |||||||
Funds from operations, as adjusted for assets sold per diluted share and OP Unit | $ | (0.13) | $ | 0.34 | $ | (0.01) | $ | 1.05 | |||||||
(in thousands of shares) | |||||||||||||||
Weighted average number of shares outstanding | 77,457 | 76,557 | 77,227 | 75,221 | |||||||||||
Weighted average effect of full conversion of OP Units | 1,979 | 2,023 | 2,012 | 3,221 | |||||||||||
Effect of common share equivalents | 285 | 485 | 380 | 453 | |||||||||||
Total weighted average shares outstanding, including OP Units | 79,721 | 79,065 | 79,619 | 78,895 | |||||||||||
NOI for the three months ended December 31, 2020 and 2019:
Same Store | Change | Non Same Store | Total | ||||||||||||||||||||||||||||||||||||
(in thousands of dollars) | 2020 | 2019 | $ | % | 2020 | 2019 | 2020 | 2019 | |||||||||||||||||||||||||||||||
NOI from consolidated properties | $ | 34,095 | $ | 52,666 | $ | (18,571) | (35.3) | % | $ | 594 | $ | 2,162 | $ | 34,689 | $ | 54,828 | |||||||||||||||||||||||
NOI attributable to equity method investments, at ownership share | 5,359 | 7,451 | (2,092) | (28.1) | % | 903 | 923 | 6,262 | 8,374 | ||||||||||||||||||||||||||||||
Total NOI | 39,454 | 60,117 | (20,663) | (34.4) | % | 1,497 | 3,085 | 40,951 | 63,202 | ||||||||||||||||||||||||||||||
Less: lease termination revenue | 32 | 1,018 | (986) | (96.9) | % | - | 1 | 32 | 1,019 | ||||||||||||||||||||||||||||||
Total NOI excluding lease termination revenue | $ | 39,422 | $ | 59,099 | $ | (19,677) | (33.3) | % | $ | 1,497 | $ | 3,084 | $ | 40,919 | $ | 62,183 | |||||||||||||||||||||||
NOI for the year ended December 31, 2020 and 2019:
Same Store | Change | Non Same Store | Total | ||||||||||||||||||||||||||||
(in thousands of dollars) | 2020 | 2019 | $ | % | 2020 | 2019 | 2020 | 2019 | |||||||||||||||||||||||
NOI from consolidated properties | $ | 132,264 | $ | 185,874 | $ | (53,610) | (28.8) | % | $ | 1,774 | $ | 12,526 | $ | 134,038 | $ | 198,400 | |||||||||||||||
NOI attributable to equity method investments, at ownership share | 22,869 | 28,597 | (5,728) | (20.0) | % | 1,687 | 732 | 24,556 | 29,329 | ||||||||||||||||||||||
Total NOI | 155,133 | 214,471 | (59,338) | (27.7) | % | 3,461 | 13,258 | 158,594 | 227,729 | ||||||||||||||||||||||
Less: lease termination revenue | 2,268 | 1,531 | 737 | 48.1 | % | - | 18 | 2,268 | 1,549 | ||||||||||||||||||||||
Total NOI excluding lease termination revenue | $ | 152,865 | $ | 212,940 | $ | (60,075) | (28.2) | % | $ | 3,461 | $ | 13,240 | $ | 156,326 | $ | 226,180 | |||||||||||||||
The table below reconciles net loss to NOI of our consolidated properties for the three months and year ended December 31, 2020 and 2019.
Three Months Ended | Year Ended December 31, | ||||||||||||||
(in thousands of dollars) | 2020 | 2019 | 2020 | 2019 | |||||||||||
Net (loss) income | $ | (200,461) | $ | (15,414) | $ | (266,706) | $ | (13,000) | |||||||
Other income | (123) | (393) | (887) | (1,834) | |||||||||||
Depreciation and amortization | 30,765 | 39,699 | 126,362 | 137,784 | |||||||||||
General and administrative expenses | 19,480 | 12,591 | 50,271 | 46,010 | |||||||||||
Insurance recoveries, net | - | 132 | (586) | (4,362) | |||||||||||
Provision for employee separation expense | 55 | 2,611 | 1,228 | 3,689 | |||||||||||
Project costs and other expenses | 7 | 17 | 294 | 283 | |||||||||||
Interest expense, net | 30,042 | 17,001 | 84,341 | 63,987 | |||||||||||
Impairment of assets | - | 1,455 | - | 1,455 | |||||||||||
Impairment of development land parcel | - | 2,098 | - | 3,562 | |||||||||||
Gain on debt extinguishment, net | 1,487 | (27) | 1,487 | (24,859) | |||||||||||
Gain on derecognition of property | (1,121) | - | (8,127) | - | |||||||||||
Reorganization expenses | 3,769 | - | 3,769 | - | |||||||||||
Equity in (income) loss of partnerships | 2,746 | (2,153) | 5,544 | (8,289) | |||||||||||
Loss on remeasurement of assets by equity method investee | 148,545 | - | 148,545 | - | |||||||||||
Gain on sales of real estate by equity method investee | - | - | - | (553) | |||||||||||
(Loss) Gain on sales of interests in real estate, net | (274) | (72) | (11,444) | (2,756) | |||||||||||
(Loss) Gain on sales of interest in non operating real estate | (228) | (2,718) | (54) | (2,717) | |||||||||||
NOI from consolidated properties | 34,689 | 54,828 | 134,038 | 198,400 | |||||||||||
Less: Non Same Store NOI of consolidated properties | 594 | 2,163 | 1,774 | 12,526 | |||||||||||
Same Store NOI from consolidated properties | 34,095 | 52,665 | 132,264 | 185,874 | |||||||||||
Less: Same Store lease termination revenue | 14 | 963 | 2,268 | 1,426 | |||||||||||
Same Store NOI excluding lease termination revenue | $ | 34,081 | $ | 51,702 | $ | 129,996 | $ | 184,448 | |||||||
The table below reconciles equity in (loss) income of partnerships to NOI of equity method investments at ownership share for the three months and year ended December 31, 2020 and 2019:
Three Months Ended | Year Ended December 31, | ||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||
Equity in (loss) income of partnerships | $ | (2,746) | $ | 2,153 | $ | (5,544) | $ | 8,289 | |||||||
Other income | (10) | (29) | (48) | (76) | |||||||||||
Depreciation and amortization | 4,244 | 3,422 | 16,640 | 9,874 | |||||||||||
Interest and other expenses | 4,774 | 2,828 | 13,508 | 11,243 | |||||||||||
Net operating income from equity method investments at ownership share | 6,262 | 8,374 | 24,556 | 29,330 | |||||||||||
Less: Non Same Store NOI from equity method investments at ownership share | 903 | 923 | 1,687 | 732 | |||||||||||
Same Store NOI of equity method investments at ownership share | 5,359 | 7,451 | 22,869 | 28,598 | |||||||||||
Less: Same Store lease termination revenue | 18 | 55 | 18 | 105 | |||||||||||
Same Store NOI from equity method investments excluding lease termination revenue at ownership share | $ | 5,341 | $ | 7,396 | $ | 22,851 | $ | 28,493 | |||||||
December 31, | ||||||||
2020 | 2019 | |||||||
(in thousands of dollars) | ||||||||
ASSETS: | ||||||||
INVESTMENTS IN REAL ESTATE, at cost: | ||||||||
Operating properties | $ | 3,168,536 | $ | 3,099,034 | ||||
Construction in progress | 46,285 | 106,011 | ||||||
Land held for development | 5,516 | 5,881 | ||||||
Total investments in real estate | 3,220,337 | 3,210,926 | ||||||
Accumulated depreciation | (1,308,427) | (1,202,722) | ||||||
Net investments in real estate | 1,911,910 | 2,008,204 | ||||||
INVESTMENTS IN PARTNERSHIPS, at equity: | 27,066 | 159,993 | ||||||
OTHER ASSETS: | ||||||||
Cash and cash equivalents | 43,309 | 12,211 | ||||||
Tenant and other receivables, net | 54,532 | 41,261 | ||||||
Intangible assets | 11,392 | 13,404 | ||||||
Deferred costs and other assets, net | 127,593 | 103,688 | ||||||
Assets held for sale | 1,384 | 12,506 | ||||||
Total assets | $ | 2,177,186 | $ | 2,351,267 | ||||
LIABILITIES: | ||||||||
Mortgage loans payable, net | $ | 884,503 | $ | 899,753 | ||||
Term Loans, net | 908,473 | 548,025 | ||||||
Revolving Facility | 54,830 | 255,000 | ||||||
Tenants' deposits and deferred rent | 8,899 | 13,006 | ||||||
Distributions in excess of partnership investments | 76,586 | 87,916 | ||||||
Fair value of derivative liabilities | 23,292 | 13,126 | ||||||
Accrued expenses and other liabilities | 93,663 | 107,016 | ||||||
Total liabilities | 2,050,246 | 1,923,842 | ||||||
EQUITY: | ||||||||
Total equity | 126,940 | 427,425 | ||||||
Total liabilities and equity | $ | 2,177,186 | $ | 2,351,267 | ||||
Changes in Funds from Operations for the three months and year ended December 31, 2020 as compared to the three months and year ended December 31, 2019 (all per share amounts on a diluted basis unless otherwise noted; per share amounts rounded to the nearest half penny; amounts may not total due to rounding)
(in thousands, except per share amounts) | Three Months | Per Diluted | Year Ended | Per Diluted | |||||||||||
Funds from Operations, as adjusted December 31, 2019 | $ | 26,657 | $ | 0.34 | $ | 82,650 | $ | 1.05 | |||||||
Changes - Q4 2019 to Q4 2020 | |||||||||||||||
Contribution from anchor replacements and new box tenants | 1,422 | 0.02 | 4,650 | 0.06 | |||||||||||
Impact from bankruptcies | (1,694) | (0.02) | (3,356) | (0.05) | |||||||||||
Other leasing activity, including base rent and net CAM and real estate tax recoveries | (7,590) | (0.10) | (32,931) | (0.42) | |||||||||||
Lease termination revenue | (949) | (0.01) | 824 | 0.01 | |||||||||||
Credit losses | (8,271) | (0.11) | (19,739) | (0.25) | |||||||||||
Other | (1,488) | (0.02) | (3,057) | (0.04) | |||||||||||
Same Store NOI from unconsolidated properties | (2,092) | (0.03) | (5,729) | (0.08) | |||||||||||
Same Store NOI | (20,662) | (0.26) | (59,339) | (0.75) | |||||||||||
Non Same Store NOI | (1,588) | (0.02) | (9,797) | (0.13) | |||||||||||
Dilutive effect of asset sales | (718) | (0.01) | (1,851) | (0.03) | |||||||||||
General and administrative expenses | (6,890) | (0.09) | (4,262) | (0.06) | |||||||||||
Capitalization of leasing costs | (238) | (0.01) | (756) | (0.01) | |||||||||||
Gain on debt extinguishment | (1,514) | (0.02) | (26,346) | (0.34) | |||||||||||
Gain on sales of non-operating real estate | 228 | 0.01 | 54 | - | |||||||||||
Other | 9,327 | 0.12 | 41,539 | 0.53 | |||||||||||
Interest expense, net | (15,044) | (0.19) | (22,921) | (0.29) | |||||||||||
Increase in weighted average shares | - | (0.01) | - | - | |||||||||||
Funds from Operations, as adjusted December 31, 2020 | $ | (10,442) | $ | (0.13) | $ | (1,029) | $ | (0.01) | |||||||
Insurance recoveries, net | - | - | 586 | 0.01 | |||||||||||
Reorganization expenses | (3,769) | (0.05) | (3,769) | (0.05) | |||||||||||
Gain on derecognition of property | 1,121 | 0.02 | 8,127 | 0.11 | |||||||||||
Loss gain on debt extinguishment | (1,487) | (0.02) | (1,487) | (0.02) | |||||||||||
Provision for employee separation expense | (55) | - | (1,227) | (0.02) | |||||||||||
Loss on hedge ineffectiveness | (2,912) | (0.04) | (2,912) | (0.04) | |||||||||||
Funds from Operations December 31, 2020 | $ | (17,544) | $ | (0.22) | $ | (1,711) | $ | (0.02) | |||||||
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SOURCE PREIT
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