PREIT Reports Second Quarter 2021 Results
PREIT (NYSE: PEI) reported its financial results for Q2 2021, indicating a net loss of $31.4 million, or $0.40 per share, compared to a loss of $29.2 million or $0.38 per share in Q2 2020. Funds From Operations (FFO) rose to $0.10 per diluted share, from $(0.06) in the prior year. Same Store Net Operating Income (NOI) surged by 53.9%, driven by increased consumer demand and successful leasing efforts. Cash collections improved significantly, reaching 127% of billings, with plans for significant future openings, including multifamily units and entertainment venues.
- Same Store NOI increased by 53.9% YoY for Q2 2021.
- Cash collections reached 127% of billings in Q2 2021.
- FFO improved to $0.10 per diluted share for Q2 2021, from $(0.06) in Q2 2020.
- Core Mall occupancy increased to 90.2%, with leasing momentum continuing.
- 500,000 square feet of leases signed expected to generate $10.8 million in annual rent.
- Net loss attributable to common shareholders widened to $31.4 million for Q2 2021.
- Average renewal spreads declined by 1.0% for the six months ended June 30, 2021.
PHILADELPHIA, Aug. 5, 2021 /PRNewswire/ -- PREIT (NYSE: PEI) today reported results for the three and six months ended June 30, 2021. A description of each non-GAAP financial measure and the related reconciliation to the comparable GAAP financial measure is provided in the tables accompanying this release.
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||
(per share amounts) | 2021 | 2020 | 2021 | 2020 | |||||||||||||
Net loss - basic and diluted | $ | (0.40) | $ | (0.38) | $ | (1.04) | $ | (0.64) | |||||||||
FFO | $ | 0.10 | $ | (0.06) | $ | (0.04) | $ | 0.08 | |||||||||
FFO, as adjusted | $ | 0.03 | $ | (0.06) | $ | (0.12) | $ | 0.09 | |||||||||
"We believe this quarter marks the inflection point in the turnaround of our business and the evolution of PREIT. It is now clear that the work we have done in creating a stronger portfolio by selling off 19 lower-productivity properties, repositioning 19 anchor boxes with over 3 dozen new tenants and securing a differentiated tenant base is driving results. Our portfolio is generating tremendous momentum with strong same store NOI growth, that is expected to continue through the balance of the year, tenant sales ahead of pre-pandemic levels and a leasing pipeline that exceeds any of the past five years' activity," said Joseph F. Coradino, Chairman and CEO of PREIT. "Consumers are demonstrating their desire to return to in-person shopping and are attracted to the mix of tenants at our properties that meet the changing needs of today's consumer."
- Same Store NOI, excluding lease termination revenue, increased
53.9% for the three months ended June 30, 2021 compared to the three months ended June 30, 2020. - For the quarter, results were driven by an increase in real estate revenue of
$17.7 million primarily due to prior year pandemic-related store closings and rent abatements and the increase in credit losses for challenged tenants for the three months ended June 30, 2020, partially offset by reduced expense recoveries resulting from temporary rent restructuring. - Second quarter 2020 Same Store NOI would have been
$43.4 million when adjusted for the$10.5 million in rental abatements granted. Quarterly Same Store NOI grew by16.6% over this adjusted amount. - For the fourth straight quarter, collections improved with cash collections increasing to
127% of billings for the second quarter of 2021. We collected88% of billed second quarter 2021 rents, an increase from receipts of81% ,73% and61% of billed rents as of the end of each of the past three quarters, respectively. Momentum continued in July with91.4% of billed rents collected, or126% on a cash collections basis. - The Company's accounts receivable balance decreased again in the second quarter of 2021, down to
$37.8 million as of June 30, 2021 from$54.5 million as of December 31, 2020. - As a result of strong collections, net cash generated from operating activities totaled
$34.7 million for the six months ended June 30, 2021 compared to$3.7 million used in the six months ended June 30, 2020. - Robust leasing activity is driving increased occupancy with Core Mall total occupancy increasing 100 basis points, sequentially, to
90.2% . Core Mall non-anchor occupancy increased 80 basis points, sequentially, to87.8% . - Total Core Mall leased space, at
92.6% , exceeds occupied space by 240 basis points, and total non-anchor leased space, at90.4% , exceeds occupied space by 260 basis points when factoring in executed new leases slated for future occupancy, demonstrating the rapid pace of leasing activity. - Sales grew at over
80% of properties, with comparable tenants, meaning that reported sales in both periods, reporting sales growth of16% over in June 2021 when compared to June of 2019. - Average renewal spreads for the six months ended June 30, 2021 declined by
1.0% . COVID-related rent concessions impacted quarterly renewal spread results for tenants under 10K square feet by 370 basis points.
Leasing and Redevelopment
- 500,000 square feet of leases are signed for future openings, which is expected to contribute annual gross rent of
$10.8 million . - Leasing momentum continues to build with transactions executed or in the process of being negotiated for 1.2 million square feet of occupancy thus far in 2021.
- Construction is underway for Aldi to open its first store in the portfolio at Dartmouth Mall in Dartmouth, MA in 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 in Hyattsville, MD with an anticipated opening in Q1 2022.
- Tilt Studios is under construction to replace JC Penney at Magnolia Mall in Florence, SC. The family-focused destination is expected to open in Q3 2021.
- A transaction has been executed with Cooper University Health Care for an outpatient location in the former Sears space at Moorestown Mall in Moorestown, NJ.
- The Company executed a rezoning agreement to allow for the addition of up to 1,065 multifamily units and a hotel at Moorestown Mall.
- A lease has been executed with Turn 7 to occupy the former Lord & Taylor space at Moorestown Mall. Turn 7 will open this Fall selling ever-changing overstocked merchandise from online channels at a discount, in a fast-paced, fun atmosphere.
- A lease is nearly finalized with an entertainment destination to replace the former JC Penney at Willow Grove Park, adding family entertainment to this locally-loved destination shopping experience.
Primary Factors Affecting Financial Results for the Three Months Ended June 30, 2021 and 2020
- Net loss attributable to PREIT common shareholders was
$31.4 million (which takes into consideration the accrual of preferred dividends that accumulated during the quarter but have not been paid), or$0.40 per basic and diluted share for the three months ended June 30, 2021, compared to net loss attributable to PREIT common shareholders of$29.2 million , or$0.38 per basic and diluted share for the three months ended June 30, 2020. - Same Store NOI, including lease terminations, increased by
$20.7 million , or62.3% . The increase is primarily due to tenant store closings and rent abatements and increased credit losses that occurred in the prior year, partially offset by a reduction in expense recoveries resulting from tenant restructuring transactions. - Non-Same Store NOI increased by
$0.5 million , primarily due to high credit losses in the prior year, partially offset by the transfer of property at Valley View Mall during the third quarter of 2020. - FFO for the three months ended June 30, 2021 was
$0.10 per diluted share and OP Unit compared to$(0.06) per diluted share and OP Unit for the three months ended June 30, 2020. Adjustments to FFO in the second quarter of 2021 were primarily related to$(0.06) per share from gain on debt extinguishment and$(0.01) per share from gain on hedge ineffectiveness.
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 and six months ended June 30, 2021 and 2020 is included on page 15.
Liquidity and Financing Activities
As of June 30, 2021, the Company had
During the quarter, the Company entered into over
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
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 Thursday August 5, 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 4436069, 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 (REIT) that owns and manages distinctive real estate in high barrier-to-entry markets at the forefront of enabling communities through the built environment. PREIT's robust portfolio of carefully curated retail and lifestyle offerings mixed with destination dining and entertainment experiences are located primarily in densely-populated, high barrier-to-entry markets with tremendous opportunity to create vibrant multi-use destinations. Additional information is available at 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 three and six months ended June 30, 2021 and 2020, 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, gain or 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 provision for employee separation expense, gain 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, depreciation and amortization, general and administrative expenses, insurance recoveries and losses, net, provision for employee separation expenses, project costs and other expenses, interest expense, reorganization expenses, equity in loss/income of partnerships, gain on extinguishment of debt, gain/loss on sale of real estate and gain/loss on sales of non-operating real estate.
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. Non Same Store NOI is calculated using the retail properties excluded from the calculation of Same Store NOI.
Unconsolidated Properties and Proportionate Financial Information
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 non-GAAP financial information, but we believe that it is helpful information because it reflects the pro rata 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 a non-core property, as we no longer operate this property. 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 herein;
- 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;
- the frequency, severity and potential impact of extreme weather events at or near our properties, including potential property damage, some or all of which may not be covered by insurance, the potential effect on traffic and sales, and the potential increased costs of insurance coverage;
- 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, 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.
** Quarterly supplemental financial and operating **
** information will be available on www.preit.com **
Pennsylvania Real Estate Investment Trust
Selected Financial Data
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
(in thousands of dollars) | 2021 | 2020 | 2021 | 2020 | ||||||||||||
REVENUE: | ||||||||||||||||
Real estate revenue: | ||||||||||||||||
Lease revenue | $ | 68,112 | $ | 52,119 | $ | 128,020 | $ | 119,840 | ||||||||
Expense reimbursements | 3,887 | 2,976 | 7,786 | 7,280 | ||||||||||||
Other real estate revenue | 1,957 | 1,543 | 3,428 | 3,467 | ||||||||||||
Total real estate revenue | 73,956 | 56,638 | 139,234 | 130,587 | ||||||||||||
Other income | 162 | 131 | 288 | 424 | ||||||||||||
Total revenue | 74,118 | 56,769 | 139,522 | 131,011 | ||||||||||||
EXPENSES: | ||||||||||||||||
Operating expenses: | ||||||||||||||||
Property operating expenses: | ||||||||||||||||
CAM and real estate taxes | (25,661) | (25,213) | (53,492) | (52,730) | ||||||||||||
Utilities | (2,860) | (2,519) | (5,824) | (5,442) | ||||||||||||
Other property operating expenses | (2,244) | (1,775) | (4,608) | (3,872) | ||||||||||||
Total property operating expenses | (30,765) | (29,507) | (63,924) | (62,044) | ||||||||||||
Depreciation and amortization | (29,686) | (30,908) | (59,525) | (61,177) | ||||||||||||
General and administrative expenses | (13,535) | (10,569) | (25,366) | (21,264) | ||||||||||||
Provision for employee separation expenses | (149) | (1,040) | (240) | (1,113) | ||||||||||||
Insurance recoveries, net | 670 | 586 | 670 | 586 | ||||||||||||
Project costs and other expenses | (77) | (66) | (179) | (161) | ||||||||||||
Total operating expenses | (73,542) | (71,504) | (148,564) | (145,173) | ||||||||||||
Interest expense, net | (31,978) | (17,182) | (62,709) | (34,040) | ||||||||||||
Gain on debt extinguishment, net | 4,587 | — | 4,587 | — | ||||||||||||
Impairment of assets | (1,302) | — | (1,302) | — | ||||||||||||
Reorganization expenses | (69) | — | (267) | — | ||||||||||||
Total expenses | (102,304) | (88,686) | (208,255) | (179,213) | ||||||||||||
Loss before equity in income (loss) of partnerships, (loss) gain | (28,186) | (31,917) | (68,733) | (48,202) | ||||||||||||
Equity in income (loss) of partnerships | 2,433 | (358) | (1,000) | 461 | ||||||||||||
Gain on sales of real estate by equity method investee | 1,347 | — | 1,347 | — | ||||||||||||
(Loss) gain on sales of real estate, net | (974) | 9,300 | (974) | 11,263 | ||||||||||||
Loss on sales of interests in non operating real estate | — | (144) | — | (190) | ||||||||||||
Net loss | (25,380) | (23,119) | (69,360) | (36,668) | ||||||||||||
Less: net loss attributable to noncontrolling interest | 783 | 746 | 2,017 | 1,262 | ||||||||||||
Net loss attributable to PREIT | (24,597) | (22,373) | (67,343) | (35,406) | ||||||||||||
Less: cumulative preferred share dividends | (6,844) | (6,844) | (13,688) | (13,688) | ||||||||||||
Net loss attributable to PREIT common shareholders | $ | (31,441) | $ | (29,217) | $ | (81,031) | $ | (49,094) | ||||||||
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
(in thousands, except per share amounts) | 2021 | 2020 | 2021 | 2020 | ||||||||||||
Net loss | $ | (25,380) | $ | (23,119) | $ | (69,360) | $ | (36,668) | ||||||||
Noncontrolling interest | 783 | 746 | 2,017 | 1,262 | ||||||||||||
Cumulative preferred share dividends | (6,844) | (6,844) | (13,688) | (13,688) | ||||||||||||
Dividends on unvested restricted shares | — | (13) | — | (363) | ||||||||||||
Net loss used to calculate loss per share—basic and diluted | $ | (31,441) | $ | (29,230) | $ | (81,031) | $ | (49,457) | ||||||||
Basic and diluted loss per share: | $ | (0.40) | $ | (0.38) | $ | (1.04) | $ | (0.64) | ||||||||
(in thousands of shares) | ||||||||||||||||
Weighted average shares outstanding—basic | 78,144 | 77,269 | 77,896 | 77,021 | ||||||||||||
Effect of common share equivalents(1) | — | — | — | — | ||||||||||||
Weighted average shares outstanding—diluted | 78,144 | 77,269 | 77,896 | 77,021 | ||||||||||||
(1) | The Company had net losses in all periods presented. Therefore, the effects of common share equivalents are excluded from the calculation of diluted loss per share for these periods because they would be antidilutive. |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
(in thousands of dollars) | 2021 | 2020 | 2021 | 2020 | ||||||||||||
Comprehensive loss: | ||||||||||||||||
Net loss | $ | (25,380) | $ | (23,119) | $ | (69,360) | $ | (36,668) | ||||||||
Unrealized gain (loss) on derivatives | 2,668 | (52) | 5,269 | (19,803) | ||||||||||||
Amortization of settled swaps | 2 | 65 | 5 | 70 | ||||||||||||
Total comprehensive loss | (22,710) | (23,106) | (64,086) | (56,401) | ||||||||||||
Less: comprehensive loss attributable to noncontrolling | 718 | 1,241 | 1,888 | 2,263 | ||||||||||||
Comprehensive loss attributable to PREIT | $ | (21,992) | $ | (21,865) | $ | (62,198) | $ | (54,138) | ||||||||
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 attributable to common shareholders and OP Unit holders per diluted share and OP Unit, (iv) and FFO, as adjusted, attributable to common shareholders and OP Unit holders per diluted share and OP Unit for the three and six months ended June 30, 2021 and 2020:
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
(in thousands, except per share amounts) | 2021 | 2020 | 2021 | 2020 | ||||||||||||
Net loss | $ | (25,380) | $ | (23,119) | $ | (69,360) | $ | (36,668) | ||||||||
Depreciation and amortization on real estate: | ||||||||||||||||
Consolidated properties | 29,349 | 30,541 | 58,840 | 60,485 | ||||||||||||
PREIT's share of equity method investments | 2,974 | 3,796 | 6,162 | 7,407 | ||||||||||||
Gain on sales of real estate by equity method investee | (1,347) | (1,347) | ||||||||||||||
Loss (gain) on sales of real estate, net | 974 | (9,301) | 974 | (11,263) | ||||||||||||
Impairment of assets: | ||||||||||||||||
Consolidated properties | 1,302 | - | 1,302 | - | ||||||||||||
PREIT's share of equity method investments | 265 | - | 265 | - | ||||||||||||
Dividend on preferred shares | - | (6,844) | - | (13,688) | ||||||||||||
Funds from operations attributable to common shareholders and OP | 8,137 | (4,927) | (3,164) | 6,273 | ||||||||||||
Insurance recoveries, net | (670) | (586) | (670) | (586) | ||||||||||||
Provision for employee separation expenses | 149 | 1,040 | 240 | 1,113 | ||||||||||||
Gain on hedge ineffectiveness | (494) | - | (1,797) | - | ||||||||||||
Gain on debt extinguishment, net | (4,587) | - | (4,587) | - | ||||||||||||
Reorganization expenses | 69 | - | 267 | - | ||||||||||||
Funds from operations, as adjusted, attributable to common | $ | 2,604 | $ | (4,473) | $ | (9,711) | $ | 6,800 | ||||||||
Funds from operations attributable to common shareholders and OP | $ | 0.10 | $ | (0.06) | $ | (0.04) | $ | 0.08 | ||||||||
Funds from operations, as adjusted, attributable to common | $ | 0.03 | $ | (0.06) | $ | (0.12) | $ | 0.09 | ||||||||
(in thousands of shares) | ||||||||||||||||
Weighted average number of shares outstanding | 78,144 | 77,269 | 77,896 | 77,021 | ||||||||||||
Weighted average effect of full conversion of OP Units | 1,976 | 2,023 | 1,976 | 2,023 | ||||||||||||
Effect of common share equivalents | 919 | 357 | 805 | 439 | ||||||||||||
Total weighted average shares outstanding, including OP Units | 81,039 | 79,649 | 80,677 | 79,483 | ||||||||||||
NOI for the three months ended June 30, 2021 and 2020:
Same Store | Change | Non Same Store | Total | |||||||||||||||||||||||||||||
(in thousands of dollars) | 2021 | 2020 | $ | % | 2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||||||
NOI from consolidated properties | $ | 42,617 | $ | 27,077 | $ | 15,540 | 57.4 | % | $ | 574 | $ | 54 | $ | 43,191 | $ | 27,131 | ||||||||||||||||
NOI attributable to equity method | 11,196 | 6,078 | 5,118 | 84.2 | % | 7 | 6 | 11,203 | 6,085 | |||||||||||||||||||||||
Total NOI | 53,813 | 33,155 | 20,658 | 62.3 | % | 581 | 60 | 54,394 | 33,216 | |||||||||||||||||||||||
Less: lease termination revenue | 3,135 | 217 | 2,918 | 1,344.7 | % | - | - | 3,135 | 217 | |||||||||||||||||||||||
Total NOI excluding lease termination | $ | 50,678 | $ | 32,938 | $ | 17,740 | 53.9 | % | $ | 581 | $ | 60 | $ | 51,259 | $ | 32,999 | ||||||||||||||||
NOI for the six months ended June 30, 2021 and 2020:
Same Store | Change | Non Same Store | Total | |||||||||||||||||||||||||||||
(in thousands of dollars) | 2021 | 2020 | $ | % | 2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||||||
NOI from consolidated properties | $ | 75,323 | $ | 67,507 | $ | 7,816 | 11.6 | % | $ | (13) | $ | 1,036 | $ | 75,310 | $ | 68,543 | ||||||||||||||||
NOI attributable to equity method | 16,255 | 13,513 | 2,742 | 20.3 | % | (10) | 15 | 16,245 | 13,529 | |||||||||||||||||||||||
Total NOI | 91,578 | 81,020 | 10,558 | 13.0 | % | (23) | 1,051 | 91,555 | 82,072 | |||||||||||||||||||||||
Less: lease termination revenue | 3,170 | 226 | 2,944 | 1302.7 | % | - | - | 3,170 | 226 | |||||||||||||||||||||||
Total NOI excluding lease termination | $ | 88,408 | $ | 80,794 | $ | 7,614 | 9.4 | % | $ | (23) | $ | 1,051 | $ | 88,385 | $ | 81,846 | ||||||||||||||||
The table below reconciles net loss to NOI of our consolidated properties for the three and six months ended June 30, 2021 and 2020.
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
(in thousands of dollars) | 2021 | 2020 | 2021 | 2020 | |||||||||||
Net loss | $ | (25,380) | $ | (23,119) | $ | (69,360) | $ | (36,668) | |||||||
Other income | (162) | (131) | (288) | (424) | |||||||||||
Depreciation and amortization | 29,686 | 30,908 | 59,525 | 61,177 | |||||||||||
General and administrative expenses | 13,535 | 10,569 | 25,366 | 21,264 | |||||||||||
Insurance recoveries, net | (670) | (586) | (670) | (586) | |||||||||||
Provision for employee separation expense | 149 | 1,040 | 240 | 1,113 | |||||||||||
Project costs and other expenses | 77 | 66 | 179 | 161 | |||||||||||
Interest expense, net | 31,978 | 17,182 | 62,709 | 34,040 | |||||||||||
Impairment of assets | 1,302 | - | 1,302 | - | |||||||||||
Gain on debt extinguishment, net | (4,587) | - | (4,587) | - | |||||||||||
Reorganization expenses | 69 | - | 267 | - | |||||||||||
Equity in (income) loss of partnerships | (2,433) | 358 | 1,000 | (461) | |||||||||||
Gain on sales of real estate by equity method investee | (1,347) | - | (1,347) | - | |||||||||||
Loss (gain) on sales of real estate, net | 974 | (9,300) | 974 | (11,263) | |||||||||||
Loss on sales of interest in non operating real estate | - | 144 | - | 190 | |||||||||||
NOI from consolidated properties | 43,191 | 27,131 | 75,310 | 68,543 | |||||||||||
Less: Non Same Store NOI of consolidated properties | 574 | 54 | (13) | 1,036 | |||||||||||
Same Store NOI from consolidated properties | 42,617 | 27,077 | 75,323 | 67,507 | |||||||||||
Less: Same Store lease termination revenue | 623 | 217 | 3,170 | - | |||||||||||
Same Store NOI excluding lease termination revenue | $ | 41,994 | $ | 26,860 | $ | 72,153 | $ | 67,507 | |||||||
The table below reconciles equity in income (loss) of partnerships to NOI of equity method investments at ownership share for the three and six months ended June 30, 2021 and 2020:
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2021 | 2020 | 2021 | 2020 | ||||||||||||
Equity in income (loss) of partnerships | $ | 2,433 | $ | (358) | $ | (1,000) | $ | 461 | |||||||
Other income | - | (12) | - | (26) | |||||||||||
Depreciation and amortization | 2,975 | 3,691 | 6,162 | 7,302 | |||||||||||
Impairment of assets | 265 | - | 265 | - | |||||||||||
Interest and other expenses | 5,530 | 2,764 | 10,818 | 5,792 | |||||||||||
Net operating income from equity method investments | 11,203 | 6,085 | 16,245 | 13,529 | |||||||||||
Less: Non Same Store NOI from equity method | 7 | 6 | (10) | 15 | |||||||||||
Same Store NOI of equity method investments at | 11,196 | 6,079 | 16,255 | 13,514 | |||||||||||
Less: Same Store lease termination revenue | 2,512 | - | 2,512 | - | |||||||||||
Same Store NOI from equity method investments | $ | 8,684 | $ | 5,477 | $ | 13,743 | $ | 12,090 | |||||||
(Unaudited) | ||||||||
June 30, 2021 | December 31, 2020 | |||||||
(in thousands, except per share amounts) | ||||||||
ASSETS: | ||||||||
INVESTMENTS IN REAL ESTATE, at cost: | ||||||||
Operating properties | $ | 3,171,551 | $ | 3,168,536 | ||||
Construction in progress | 43,571 | 46,285 | ||||||
Land held for development | 5,516 | 5,516 | ||||||
Total investments in real estate | 3,220,638 | 3,220,337 | ||||||
Accumulated depreciation | (1,361,137) | (1,308,427) | ||||||
Net investments in real estate | 1,859,501 | 1,911,910 | ||||||
INVESTMENTS IN PARTNERSHIPS, at equity: | 23,576 | 27,066 | ||||||
OTHER ASSETS: | ||||||||
Cash and cash equivalents | 38,794 | 43,309 | ||||||
Tenant and other receivables, net | 37,846 | 54,532 | ||||||
Intangible assets (net of accumulated amortization of | 10,683 | 11,392 | ||||||
Deferred costs and other assets, net | 124,732 | 127,593 | ||||||
Assets held for sale | 4,925 | 1,384 | ||||||
Total assets | $ | 2,100,057 | $ | 2,177,186 | ||||
LIABILITIES: | ||||||||
Mortgage loans payable, net | $ | 861,899 | $ | 884,503 | ||||
Term Loans, net | 934,588 | 908,473 | ||||||
Revolving Facility | 54,830 | 54,830 | ||||||
Tenants' deposits and deferred rent | 9,776 | 8,899 | ||||||
Distributions in excess of partnership investments | 72,390 | 76,586 | ||||||
Fair value of derivative liabilities | 16,227 | 23,292 | ||||||
Accrued expenses and other liabilities | 85,632 | 93,663 | ||||||
Total liabilities | 2,035,342 | 2,050,246 | ||||||
COMMITMENTS AND CONTINGENCIES | ||||||||
EQUITY: | ||||||||
Series B Preferred Shares, $.01 par value per share; 25,000 shares | 35 | 35 | ||||||
Series C Preferred Shares, $.01 par value per share; 25,000 shares | 69 | 69 | ||||||
Series D Preferred Shares, $.01 par value per share; 25,000 shares | 50 | 50 | ||||||
Shares of beneficial interest, | 79,260 | 79,537 | ||||||
Capital contributed in excess of par | 1,773,877 | 1,771,777 | ||||||
Accumulated other comprehensive loss | (15,475) | (20,620) | ||||||
Distributions in excess of net income | (1,766,981) | (1,699,638) | ||||||
Total equity—Pennsylvania Real Estate Investment Trust | 70,835 | 131,210 | ||||||
Noncontrolling interest | (6,120) | (4,270) | ||||||
Total equity | 64,715 | 126,940 | ||||||
Total liabilities and equity | $ | 2,100,057 | $ | 2,177,186 | ||||
Changes in Funds from Operations for the three and six months ended June 30, 2021 as compared to the three and six months ended June 30, 2020 (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 Share and OP Unit | Six Months | Per Diluted Share and OP Unit | |||||||||||
Funds from Operations, as adjusted June 30, 2020 | $ | (4,473) | $ | (0.06) | $ | 6,800 | $ | 0.08 | |||||||
Changes - Q2 2020 to Q2 2021 | |||||||||||||||
Contribution from anchor replacements and new box | 662 | 0.01 | 1,316 | 0.02 | |||||||||||
Impact from bankruptcies | 386 | 0.01 | 622 | 0.01 | |||||||||||
Other leasing activity, including base rent and net | 7,942 | 0.10 | (759) | (0.01) | |||||||||||
Lease termination revenue | 406 | 0.01 | 432 | 0.01 | |||||||||||
Credit losses | 6,311 | 0.08 | 7,006 | 0.09 | |||||||||||
Other | (167) | - | (801) | (0.01) | |||||||||||
Same Store NOI from unconsolidated properties | 5,117 | 0.07 | 2,741 | 0.04 | |||||||||||
Same Store NOI | 20,657 | 0.26 | 10,557 | 0.14 | |||||||||||
Non Same Store NOI | 521 | 0.01 | (1,073) | (0.02) | |||||||||||
Dilutive effect of asset sales | - | - | - | - | |||||||||||
General and administrative expenses | (2,966) | (0.04) | (4,102) | (0.05) | |||||||||||
Capitalization of leasing costs | (140) | - | (881) | (0.01) | |||||||||||
Other | 6,551 | 0.08 | 12,683 | 0.16 | |||||||||||
Interest expense, net | (17,546) | (0.22) | (33,695) | (0.43) | |||||||||||
Increase in weighted average shares | - | 0.01 | - | 0.01 | |||||||||||
Funds from Operations, as adjusted June 30, 2021 | 2,604 | 0.03 | (9,711) | (0.12) | |||||||||||
Provision for employee separation expense | (149) | - | (240) | (0.01) | |||||||||||
Gain on hedge ineffectiveness | 494 | 0.01 | 1,797 | 0.03 | |||||||||||
Gain on debt extinguishment, net | 4,587 | 0.06 | 4,587 | 0.06 | |||||||||||
Insurance recoveries, net | 670 | 0.01 | 670 | 0.01 | |||||||||||
Reorganization expenses | (69) | - | (267) | (0.01) | |||||||||||
Funds from Operations June 30, 2021 | $ | 8,137 | $ | 0.10 | $ | (3,164) | $ | (0.04) | |||||||
CONTACT: AT THE COMPANY
Mario Ventresca
EVP & CFO
(215) 875-0703
Heather Crowell
EVP, Strategy and Communications
(215) 454-1241
heather.crowell@preit.com
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SOURCE PREIT
FAQ
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