Winthrop Realty Trust (NYSE:FUR) announced today financial and
operating results for the third quarter ended September 30, 2010.
All per share amounts are on a fully diluted basis.
Third Quarter 2010 Financial Highlights
- Reported net income for the quarter from continuing operations
attributable to Common Shares of $5.3 million or $0.25 per Common
Share.
- Retained liquid assets consisting of cash, cash equivalents,
restricted cash and marketable securities of $141.7 million at
September 30, 2010, inclusive of net proceeds from the public
offering.
- Closed a public offering of 5.75 million Common Shares at a
price of $12.25 per Common Share (before underwriter's discounts)
resulting in net proceeds of approximately $66.9 million.
- Declared a regular quarterly cash dividend for the third
quarter of 2010 of $0.1625 per Common Share which was paid on
October 15, 2010.
Third Quarter 2010 Investment Highlights and Subsequent
Events
In addition to the third quarter transactions highlighted in our
second quarter 2010 earnings release, the following transactions
have occurred:
- Executed on our strategy by foreclosing on: (i) an 86,000
square foot, class A medical office building known as the Deer
Valley Professional Center located in Phoenix, Arizona, in which we
held a first mortgage with a carrying amount of $10.3 million; (ii)
a 118,000 square foot office building referred to as Crossroads II
at Meridian, located in Englewood, Colorado, in which we held a
first mortgage with a carrying amount of $8.4 million; and (iii) a
180 unit apartment building located in Meriden, Connecticut, in
which we held a mezzanine loan with a carrying amount of $550,000
and which is subject to a first mortgage of approximately $23.9
million.
- Formed a venture, in which we own 22.5%, that acquired for $45
million the $300 million face amount of Peter Cooper
Village/Stuyvesant Town Mezzanine Loans 1, 2, and 3. As an
alternative to pursuing further legal remedies with uncertain
outcomes and incurring additional costs, the venture sold the
Mezzanine Loans to the senior mortgage lenders for $45
million.
- Received full repayment on a $6.5 million first mortgage loan
secured by the Robert F. Driver Building located in San Diego,
California for an annualized return of 12.9%.
- Purchased for $235,000 a $1.5 million performing 12% mezzanine
loan indirectly secured by a 130,000 square foot warehouse building
net leased to Rockwell Automation located in Shirley, New
York.
- Acquired for $9.75 million an existing $39.0 million performing
loan made to a private real estate equity fund and then modified
the loan to provide for: (i) an interest rate of 15% on the $9.75
million investment amount; (ii) collateral in the form of a $3
million letter of credit, a first mortgage on entitled land and
other assets; and, (iii) a discounted payoff option after one year
of $9.75 million.
- Acquired at par a $3.5 million, 11% first mortgage loan secured
by an interest in four class B office buildings, containing 91,100
square feet of office space in Phoenix, Arizona.
- Acquired at par a $21.4 million 7.98% senior participation in a
B Note secured by a first mortgage lien on a 951,000 square foot,
recently constructed class A office complex located in Sunnyvale,
California.
- Acquired for $4.2 million the land parcels underlying six of
our retail properties previously subject to ground leases.
Third Quarter 2010 Financial Results
Net income applicable to Common Shares for the quarter ended
September 30, 2010 was $3.7 million, or $0.18 per Common Share,
compared with net income of $14.3 million, or $0.90 per Common
Share, for the quarter ended September 30, 2009. The change in net
income is primarily the result of a $9.5 million decrease in
unrealized gain on securities carried at fair value.
For the quarter ended September 30, 2010, the Company reported
Funds from Operations applicable to Common Shares (FFO) of $7.7
million, or $0.36 FFO per Common Share, compared with FFO of $18.0
million, or $1.14 FFO per Common Share, for the quarter ended
September 30, 2009. Adjusting FFO for certain items that
affect comparability which are listed in the table below, FFO for
the quarter ended September 30, 2010 was $9.4 million or $0.43 per
Common Share, compared with FFO of $17.6 million, or $1.11 FFO per
Common Share for the quarter ended September 30, 2009.
The following presents funds from operations as adjusted for
comparability for the three and the nine months ended September 30,
2010 and 2009 (in thousands, except per share amounts). Please
note that certain prior year amounts have been adjusted to conform
to current year presentation.
|
(Unaudited) |
(Unaudited) |
|
For the Three Months
Ended |
For the Nine Months
Ended |
|
September
30, |
September
30, |
|
2010 |
2009 |
2010 |
2009 |
|
|
|
|
|
Funds from Operations |
$ 7,707 |
$ 19,213 |
$ 24,038 |
$ (68,393) |
|
|
|
|
|
Items that affect comparability (income)
expense: |
|
|
|
|
Non-cash asset
write-downs: |
|
|
|
|
Provision for loss on loans
receivable |
-- |
-- |
-- |
2,152 |
Loan available for sale
impairment |
-- |
-- |
-- |
203 |
Loan loss and impairments from
partially owned entity – Concord |
-- |
-- |
-- |
71,390 |
Impairment of equity investment
in Concord |
-- |
-- |
-- |
31,670 |
Preferred equity
impairment |
-- |
-- |
-- |
4,850 |
Impairment of real estate |
1,720 |
-- |
2,720 |
-- |
Net gain on sale of preferred
equity |
-- |
-- |
-- |
(735) |
Net gain on repurchase of
Series B-1 Preferred Shares |
-- |
(445) |
-- |
(5,682) |
Total items that affect
comparability |
1,720 |
(445) |
2,720 |
103,848 |
|
|
|
|
|
Funds from Operations adjusted for
comparability |
9,427 |
18,768 |
26,758 |
35,455 |
|
|
|
|
|
Series C Preferred Share dividends |
(59) |
-- |
(230) |
-- |
Allocation of earnings to Series B-1
Preferred Shares |
(63) |
(1,162) |
(137) |
(1,757) |
Allocation of earning to Series C Preferred
Shares |
(53) |
-- |
(242) |
-- |
FFO applicable to Common
Shares-Basic |
$
9,252 |
$ 17,606 |
$ 26,149 |
$ 33,698 |
Weighted-average Common Shares -
Basic |
21,412 |
15,855 |
21,064 |
15,828 |
FFO Per Common
Share-Basic |
$ 0.43 |
$ 1.11 |
$ 1.24 |
$ 2.13 |
|
|
|
|
|
Diluted |
|
|
|
|
Funds from Operations adjusted for
comparability |
$ 9,427 |
$ 18,768 |
$ 26,758 |
$ 35,455 |
Series C Preferred Share dividends |
-- |
-- |
-- |
-- |
Allocation of earnings to Series B-1
Preferred Shares |
(63) |
(1,162) |
(137) |
(1,757) |
Adjustment for dilution of Series B-1
Preferred Shares |
-- |
-- |
-- |
-- |
Allocation of earning to Series C Preferred
Shares |
-- |
-- |
-- |
-- |
Series B Interest Expense |
-- |
-- |
-- |
-- |
FFO applicable to Common Shares -
Diluted |
$ 9,364 |
$ 17,606 |
$ 26,621 |
$ 33,698 |
|
|
|
|
|
Weighted-average Common
Shares |
21,412 |
15,855 |
21,064 |
15,828 |
Stock options |
2 |
-- |
2 |
-- |
Convertible Series B-1
Preferred Shares |
-- |
-- |
-- |
-- |
Convertible Series C Preferred
Shares |
257 |
-- |
433 |
-- |
Diluted weighted-average Common
Shares |
21,671 |
15,855 |
21,499 |
15,828 |
FFO Per Common Share
Diluted |
$ 0.43 |
$ 1.11 |
$ 1.24 |
$ 2.13 |
(1) See the Funds From Operations table below for a
reconciliation of net income to FFO for the three and nine months
ended September 30, 2010 and 2009.
Supplemental Financial Information
Further details regarding financial results, properties and
tenants can be accessed at www.winthropreit.com in the Investor
Relations section.
Fourth Quarter 2010 Dividend Declaration
The Company's Board of Trustees is announcing that it has
declared a dividend for the fourth quarter of 2010 of $0.1625 per
Common Share payable on January 18, 2011 to common shareholders of
record on December 31, 2010.
The Company also has declared the regular quarterly cash
dividend of $0.40625 per Series B-1 Preferred Share and per Series
C Preferred Share which is payable on January 31, 2011 to the
holders of Series B-1 Preferred Shares or Series C Preferred
Shares, as applicable, of record on December 31, 2010.
Conference Call Information
The Company will host a conference call to discuss its third
quarter 2010 results today, Thursday, November 4, 2010 at 2:00 pm
Eastern Time. Interested parties may access the live call by
dialing (877) 407-9205 or (201) 689-8054, or via the Internet at
www.winthropreit.com within the News and Events section. A
replay of the call will be available through December 6, 2010 by
dialing (877) 660-6853; account #286, confirmation #356547. An
online replay will also be available through December 6, 2010.
About Winthrop Realty Trust
Winthrop Realty Trust is a real estate investment trust (REIT)
that owns, manages and lends to real estate and related
investments, both directly and through joint
ventures. Winthrop Realty Trust is listed on the New York
Stock Exchange and trades under the symbol "FUR." The Company
has executive offices in Boston, Massachusetts and Jericho, New
York. For more information please visit www.winthropreit.com.
Forward-Looking Statements
"Safe Harbor" Statement under the Private Securities Litigation
Reform Act of 1995. The statements in this release state the
Company's and management's hopes, intentions, beliefs, expectations
or projections of the future and are forward-looking statements for
which the Company claims the protections of the safe harbor for
forward-looking statements under the Private Securities Litigation
Reform Act of 1995. It is important to note that future events
and the Company's actual results could differ materially from those
described in or contemplated by such forward-looking
statements. Factors that could cause actual results to differ
materially from current expectations include, but are not limited
to, (i) general economic conditions, (ii) the inability of major
tenants to continue paying their rent obligations due to
bankruptcy, insolvency or general downturn in their business, (iii)
local real estate conditions, (iv) increases in interest rates, (v)
increases in operating costs and real estate taxes, (vi) changes in
accessibility of debt and equity capital markets and (vii) defaults
by borrowers on loans. Additional information concerning
factors that could cause actual results to differ materially from
those forward-looking statements is contained from time to time in
the Company's filings with the Securities and Exchange Commission,
copies of which may be obtained from the Company or the Securities
and Exchange Commission. The Company refers you to the
documents filed by the Company from time to time with the
Securities and Exchange Commission, specifically the section titled
"Risk Factors" in the Company's most recent Annual Report on Form
10-K, as may be updated or supplemented in the Company's Form 10-Q
filings, which discuss these and other factors that could adversely
affect the Company's results.
Consolidated Financial Results
Financial results for the three and nine months ended September
30, 2010 and 2009 are as follows (in thousands except per share
amounts):
|
(Unaudited) |
(Unaudited) |
|
For the Three Months
Ended September 30, |
For the Nine Months
Ended September 30, |
|
2010 |
2009 |
2010 |
2009 |
|
|
|
|
|
Revenue |
|
|
|
|
Rents and reimbursements |
$ 9,298 |
$ 10,140 |
$ 28,162 |
$ 30,609 |
Interest and dividends |
4,948 |
2,496 |
11,747 |
6,462 |
|
14,246 |
12,636 |
39,909 |
37,071 |
Expenses |
|
|
|
|
Property operating |
1,812 |
1,990 |
5,585 |
5,492 |
Real estate taxes |
952 |
674 |
2,012 |
1,968 |
Depreciation and
amortization |
2,393 |
2,598 |
7,092 |
7,987 |
Interest |
3,809 |
4,169 |
11,126 |
12,745 |
Provision for loss on loans
receivable |
-- |
-- |
-- |
2,152 |
General and administrative |
2,300 |
1,820 |
6,123 |
5,137 |
State and local taxes |
7 |
14 |
107 |
211 |
|
11,273 |
11,265 |
32,045 |
35,692 |
Other income (loss) |
|
|
|
|
Earnings (loss) from preferred
equity investments |
85 |
86 |
253 |
(2,108) |
Equity in (loss) earnings of
equity investments |
(409) |
211 |
(1,328) |
(100,201) |
Gain (loss) on sale of
securities carried at fair value |
(185) |
676 |
588 |
3,274 |
Unrealized gain on securities
carried at fair value |
2,490 |
12,578 |
4,280 |
14,010 |
Impairment loss on real estate
loan available for sale |
-- |
-- |
-- |
(203) |
Gain on extinguishment of
debt |
-- |
445 |
-- |
5,682 |
Unrealized gain on loan
securities carried at fair value |
581 |
-- |
3,593 |
-- |
Interest income |
17 |
31 |
94 |
145 |
|
2,579 |
14,027 |
7,480 |
(79,401) |
|
|
|
|
|
Income (loss) from continuing
operations |
5,552 |
15,398 |
15,344 |
(78,022) |
|
|
|
|
|
Discontinued operations |
|
|
|
|
Income (loss) from discontinued
operations |
(1,569) |
74 |
(2,160) |
201 |
|
|
|
|
|
Consolidated net income
(loss) |
3,983 |
15,472 |
13,184 |
(77,821) |
Income attributable to non-controlling
interest |
(175) |
(315) |
(595) |
(651) |
Net income(loss) attributable to
Winthrop Realty Trust |
3,808 |
15,157 |
12,589 |
(78,472) |
Income attributable to
non-controlling redeemable preferred interest |
(59) |
-- |
(230) |
-- |
Net income (loss)
attributable to Common Shares |
$ 3,749 |
$ 15,157 |
$ 12,359 |
$ (78,472) |
|
|
|
|
|
Comprehensive income
(loss) |
|
|
|
|
Consolidated net income
(loss) |
$ 3,983 |
$ 15,472 |
$ 13,184 |
$ (77,821) |
Change in unrealized gain on
available for sale securities |
-- |
10 |
2 |
21 |
Change in unrealized gain
(loss) on interest rate derivative |
(20) |
141 |
(8) |
406 |
Change in unrealized loss from
equity investments |
-- |
-- |
-- |
26,174 |
Comprehensive income
(loss) |
$ 3,963 |
$ 15,623 |
$ 13,178 |
$ (51,220) |
|
|
|
|
|
Per Common Share Data –
Basic |
|
|
|
|
Income (loss) from continuing operations |
$ 0.25 |
$ 0.90 |
$ 0.69 |
$ (4.97) |
Income (loss) from discontinued
operations |
(0.07) |
-- |
(0.10) |
0.01 |
Net income (loss) attributable to Winthrop
Realty Trust |
$ 0.18 |
$ 0.90 |
$ 0.59 |
$ (4.96) |
|
|
|
|
|
Per Common Share Data –
Diluted |
|
|
|
|
Income (loss) from continuing operations |
$ 0.25 |
$ 0.90 |
$ 0.69 |
$ (4.97) |
Income (loss) from discontinued
operations |
(0.07) |
-- |
(0.10) |
0.01 |
Net income (loss) attributable to Winthrop
Realty Trust |
$ 0.18 |
$ 0.90 |
$ 0.59 |
$ (4.96) |
|
|
|
|
|
Basic Weighted-Average Common
Shares |
21,412 |
15,855 |
21,064 |
15,828 |
Diluted Weighted-Average Common
Shares |
21,414 |
15,855 |
21,499 |
15,828 |
Funds From Operations:
The following presents a reconciliation of net income to funds
from operations for the three and the nine months ended September
30, 2010 and 2009 (in thousands, except per share
amounts). Please note that certain prior year amounts have
been adjusted to conform to current year presentation.
|
(Unaudited) |
(Unaudited) |
|
For the Three Months
Ended September 30, |
For the Nine Months
Ended September 30, |
|
2010 |
2009 |
2010 |
2009 |
|
|
|
|
|
Net income (loss) attributable to Winthrop
Realty Trust |
$ 3,808 |
$ 15,157 |
$ 12,589 |
$ (78,472) |
Real estate depreciation |
1,569 |
1,637 |
4,583 |
4,984 |
Amortization of capitalized leasing
costs |
872 |
1,050 |
2,591 |
3,267 |
Real estate depreciation and amortization of
unconsolidated interests |
2,245 |
2,155 |
6,646 |
4,210 |
Less: Non-controlling interest share of
real estate depreciation and amortization |
(787) |
(786) |
(2,371) |
(2,382) |
|
|
|
|
|
Funds from operations |
7,707 |
19,213 |
24,038 |
(68,393) |
Series C Preferred Share dividends |
(59) |
-- |
(230) |
-- |
Allocations of earnings to Series B-1
Preferred Shares |
-- |
(1,202) |
(22) |
-- |
Allocations of earnings to Series C Preferred
Shares |
(33) |
-- |
(189) |
-- |
FFO applicable to Common
Shares-Basic |
$ 7,615 |
$ 18,011 |
$ 23,597 |
$ (68,393) |
|
|
|
|
|
Weighted-average Common
Shares |
21,412 |
15,855 |
21,064 |
15,828 |
|
|
|
|
|
FFO Per Common
Share-Basic |
$ 0.36 |
$ 1.14 |
$ 1.12 |
$ (4.32) |
|
|
|
|
|
|
|
|
|
|
Diluted |
|
|
|
|
Funds from operations (per above) |
$ 7,707 |
$ 19,213 |
$ 24,038 |
$ (68,393) |
Series C Preferred Share Dividends |
-- |
-- |
-- |
-- |
Allocation of earnings to Series B-1
Preferred Shares |
-- |
(1,202) |
(22) |
-- |
Allocation of Earnings to Series C Preferred
Shares |
-- |
-- |
-- |
-- |
Series B-1 Interest Expense |
-- |
-- |
-- |
-- |
FFO applicable to Common
Shares |
$ 7,707 |
$ 18,011 |
$ 24,016 |
$ (68,393) |
|
|
|
|
|
Weighted-average Common
Shares |
21,412 |
15,855 |
21,064 |
15,828 |
Stock options |
2 |
-- |
2 |
-- |
Convertible Series C Preferred
Shares |
257 |
-- |
433 |
-- |
Convertible Series B-1
Preferred Shares |
-- |
-- |
-- |
-- |
Diluted weighted-average
Common Shares |
21,671 |
15,855 |
21,499 |
15,828 |
FFO Per Common
Share-Diluted |
$ 0.36 |
$ 1.14 |
$ 1.12 |
$ (4.32) |
FFO is computed in accordance with the definition adopted by the
Board of Governors of the National Association of Real Estate
Investment Trusts ("NAREIT"). NAREIT defines FFO as net
income or loss determined in accordance with Generally Accepted
Accounting Principles ("GAAP"), excluding extraordinary items as
defined under GAAP and gains or losses from sales of previously
depreciated operating real estate assets, plus specified non-cash
items, such as real estate asset depreciation and amortization, and
after adjustments for unconsolidated partnerships and joint
ventures. FFO and FFO per diluted share are used by
management, investors and industry analysts as supplemental
measures of operating performance of equity REITs. FFO and FFO per
diluted share should be evaluated along with GAAP net income and
income per diluted share (the most directly comparable GAAP
measures), as well as cash flow from operating activities,
investing activities and financing activities, in evaluating the
operating performance of equity REITs. FFO and FFO per
diluted share exclude the effect of depreciation, amortization and
gains or losses from sales of real estate, all of which are based
on historical costs which implicitly assumes that the value of real
estate diminishes predictably over time. Since real estate
values instead have historically risen or fallen with market
conditions, these non-GAAP measures can facilitate comparisons of
operating performance between periods and among other equity REITs.
FFO does not represent cash generated from operating activities in
accordance with GAAP and is not necessarily indicative of cash
available to fund cash needs as disclosed in the Company's
Consolidated Statements of Cash Flows. FFO should not be
considered as an alternative to net income as an indicator of the
Company's operating performance or as an alternative to cash flows
as a measure of liquidity. In addition to FFO, the Company
also discloses FFO before certain items that affect comparability.
Although this non-GAAP measure clearly differs from NAREIT's
definition of FFO, the Company believes it provides a meaningful
presentation of operating performance. A reconciliation of
net income to FFO is provided above. In addition, a
reconciliation of FFO to FFO before certain items that affect
comparability is provided above in this press release.
Consolidated Balance
Sheets: |
|
|
(in thousands, except share
data) |
|
|
|
|
|
|
(Unaudited) |
(Unaudited) |
|
September 30,
2010 |
December 31,
2009 |
ASSETS |
|
|
Investments in real estate, at
cost |
|
|
Land |
$ 21,460 |
$ 20,659 |
Buildings and improvements |
236,500 |
228,419 |
|
257,960 |
249,078 |
Less: accumulated
depreciation |
(34,416) |
(31,269) |
Investments in real estate,
net |
223,544 |
217,809 |
|
|
|
Cash and cash equivalents |
102,919 |
66,493 |
Restricted cash held in
escrows |
8,889 |
9,505 |
Loans receivable, net |
77,964 |
26,101 |
Accounts receivable, net of
allowances of $293 and $565, respectively |
12,560 |
14,559 |
Securities carried at fair
value |
29,893 |
52,394 |
Loan securities carried at fair
value |
6,454 |
1,661 |
Available for sale securities,
net |
-- |
203 |
Preferred equity
investment |
3,972 |
4,012 |
Equity investments |
92,691 |
73,207 |
Lease intangibles, net |
24,496 |
22,666 |
Deferred financing costs,
net |
1,217 |
1,495 |
Assets held for sale |
3,096 |
3,087 |
TOTAL
ASSETS |
$ 587,695 |
$ 493,192 |
|
|
|
LIABILITIES |
|
|
|
|
|
Mortgage loans payable |
$ 211,773 |
$ 216,767 |
Series B-1 Cumulative
Convertible Redeemable Preferred Shares, $25 per share liquidation
preference; 852,000 shares authorized and outstanding
at September 30, 2010 and December 31, 2009 |
21,300 |
21,300 |
Revolving line of credit |
25,450 |
-- |
Accounts payable and accrued
liabilities |
9,852 |
7,401 |
Dividends payable |
4,424 |
3,458 |
Deferred income |
33 |
48 |
Below market lease intangibles,
net |
2,348 |
2,849 |
TOTAL
LIABILITIES |
275,180 |
251,823 |
|
|
|
COMMITMENTS AND
CONTINGENCIES |
|
|
|
|
|
NON-CONTROLLING REDEEMABLE PREFERRED
INTEREST |
|
|
Series C Cumulative Convertible Redeemable
Preferred Shares, $25 per share liquidation preference,
144,000 and 544,000 shares authorized and outstanding
at September 30, 2010 and December 31,
2009, respectively |
3,221 |
12,169 |
Total non-controlling redeemable preferred
interest |
3,221 |
12,169 |
|
|
|
EQUITY |
|
|
Winthrop Realty Trust Shareholders'
Equity: |
|
|
Common Shares, $1 par, unlimited shares
authorized; 26,981,888 and 20,375,483 outstanding at September
30, 2010 and December 31, 2009, respectively |
26,982 |
20,375 |
Additional paid-in capital |
569,121 |
498,118 |
Accumulated distributions in
excess of net income |
(300,219) |
(301,317) |
Accumulated other comprehensive
loss |
(93) |
(87) |
Total Winthrop Realty Trust
Shareholders' Equity |
295,791 |
217,089 |
Non-controlling interests |
13,503 |
12,111 |
Total Equity |
309,294 |
229,200 |
TOTAL LIABILITIES AND
EQUITY |
$ 587,695 |
$ 493,192 |
Further details regarding the Company's results of operations,
properties, joint ventures and tenants are available in the
Company's Form 10-Q for the quarter ended September 30, 2010 which
will be filed with the Securities and Exchange Commission and will
be available for download at the Company's website
www.winthropreit.com or at the Securities and Exchange Commission
website www.sec.gov.
CONTACT: Winthrop Realty Trust
Thomas Staples, Chief Financial Officer
(617) 570-4614
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