Winthrop Realty Trust (NYSE:FUR), a leading real estate value
investor, today announced financial and operating results for the
second quarter ended June 30, 2011. All per share amounts are on a
diluted basis.
Financial Results
Three Months Ended June 30, 2011
Net income applicable to Common Shares for the quarter ended
June 30, 2011 was $3.7 million, or $0.11 per Common Share as
compared with net income per Common Share of $4.5 million or $0.21
per Common Share for the quarter ended June 30, 2010.
For the quarter ended June 30, 2011, the Company reported FFO
applicable to Common Shares of $8.6 million, or $0.26 FFO per
Common Share as compared with FFO of $8.4 million, or $0.39 per
Common Share for the second quarter of 2010.
Six Months Ended June 30, 2011
Net income applicable to Common Shares for the six months ended
June 30, 2011 was $10.8 million or $0.36 per Common Share as
compared with net income of $8.6 million or $0.41 per Common Share
for the same period ended June 30, 2010.
FFO for the six months ended June 30, 2011 was $20.6 million or
$0.69 per Common Share as compared with FFO of $16.3 million, or
$0.76 per Common Share for June 30, 2010.
The per share decline in net income applicable to Common Shares
and FFO for the three and six months ended June 30, 2011 is
primarily attributable to an increase of 5.75 million shares issued
in April 2011.
Michael L. Ashner, Winthrop's Chairman and Chief Executive
Officer commented, "We had another very productive quarter, as we
continued to source acquisitions, grow assets under management and
unlock value from existing assets. We should begin to realize the
financial benefits of this effort in the Company's future quarters'
earnings."
2011 Second Quarter Investment Activity
Acquisitions
- Purchased a $20.0 million senior mezzanine loan secured by six
apartment complexes with 2,106 units located in Orlando, Sarasota,
Bradenton and Palm Beach Gardens, Florida, for $17.5 million. The
loan is scheduled to mature in July 2012 and is expected to
generate a yield to maturity of 15.8%.
- Acquired a $15.0 million preferred equity interest in an entity
that holds the leasehold interest in a newly constructed 73%
pre-leased 102,000 square foot retail and office property in
Manhattan, New York. The investment is subject to a $54.0 million
first mortgage loan.
- Invested $5.76 million to acquire through a 50/50 joint
venture, a $71.5 million mezzanine loan secured by an interest in
the Sofitel hotel in New York City. The loan is encumbered by a
$56.1 million repurchase obligation. The investment is expected to
generate a yield to maturity of 58.7%.
- Closed on the second phase of the Vintage Housing transaction
by acquiring for $18.2 million, plus a contribution of the
receivables purchased in the first phase for $7.0 million, an
effective 75% interest in the general partnership interests in, and
certain developer fees and advances receivable from, partnerships
owning 25 multifamily and senior housing properties comprising
approximately 4,200 units located primarily in the Pacific
Northwest and California.
- Acquired through a new 50/50 joint venture with an affiliate of
Atrium Holding Company, certain collateral management agreements
and subordinated interests related to two collateralized debt
obligation entities that hold loans and loan securities that were
approximately $1.3 billion. The aggregate purchase price paid
for these agreements was $2.5 million, half of which was
contributed by Winthrop.
Dispositions and Loan Asset Repayments
- Received payment of approximately $23.75 million resulting in
an annualized return of 112.7% that satisfied at par, the Company's
Metropolitan Tower B Note and rake bond receivable. Both were
acquired for an aggregate purchase price of $11.75 million.
- Received repayment of $18.7 million on an $18.1 million
investment for an annualized return of 30.0% on two recently
acquired non-performing first mortgage loans secured by two retail
centers located in Riverside County, California.
- Received repayment of $8.6 million on an $8.0 million
investment for an annualized return of 34.0% on a recently acquired
first mortgage secured by a 26-story, 66-room boutique hotel
located on 46th Street between 5th and Madison Avenues in New York,
New York.
- Received $2.5 million in repayment in full on a
Sub-Participation B Interest secured by an office complex in
Phoenix, Arizona which is referred to as Siete Square for an
annualized return of 19.1%.
- Concord satisfied its KeyBank loan which is expected to result
in future annual distributions to Winthrop of approximately
$680,000, exclusive of any distributions on account of the Concord
CDO.
- Sold for $18.5 million to its partner Marc Realty, its interest
in three properties located in Chicago, Illinois (8 S. Michigan, 11
E. Adams and 29 E. Madison), the sales price for which was paid
$6.0 million in cash and $12.5 million in aggregate secured
promissory notes which bear interest at 8% per annum.
The sale resulted in a deferred gain of $385,000. Subsequent to the
end of the quarter, Winthrop received principal repayment of $4.1
million on account of the notes.
Financing Activity
- Negotiated a $20.5 million discounted payoff on an existing
$28.75 million first mortgage on the Sealy Northwest Atlanta joint
venture investment, which was funded with a bridge first mortgage
loan from Winthrop that bears interest at 8% per annum and matures
on November 1, 2011. The joint venture expects to acquire
replacement financing prior to the November 1st maturity.
- Closed a public offering of 5.75 million Common Shares at a
price of $11.25 per Common Share, before underwriter's discounts,
resulting in net proceeds of approximately $61.4 million.
- Subsequent to the end of the quarter, negotiated a $14.5
million discounted payoff of an existing $23.8 million first
mortgage loan encumbering the Company's Lisle, Illinois
properties.
Leasing Activity
- Recently entered into a new lease for approximately 13,750
square feet of space at its Deer Valley Professional Building,
located in Phoenix, Arizona resulting in the property being 78%
leased at August 4, 2011 compared to 61% leased at our acquisition
on August 6, 2010.
- Recently executed a new lease with an initial term that expires
December 2020, for approximately 74,500 square feet of space at the
Meridian Corporate Center II (Crossroads II) office building
located in Englewood, Colorado with TIC-The Industrial Company, a
direct-hire, heavy industrial contractor. The space will
serve as TIC's corporate headquarters and is expected to be
occupied in February 2012. As a result of this lease,
Crossroads I and II are collectively 74% leased compared to 56% at
Winthrop's acquisition on December 22, 2010 and November 17,
2010.
Third Quarter 2011 Dividend Declaration
The Company's Board of Trustees declared a dividend for the
third quarter of 2011 of $0.1625 per Common Share payable on
October 14, 2011 to common shareholders of record on September 30,
2011.
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 October 31, 2011 to the
holders of Series B-1 Preferred Shares or Series C Preferred
Shares, as applicable, of record on September 30, 2011.
Supplemental Financial Information
Further details regarding financial results, properties and
tenants can be accessed at www.winthropreit.com in the Investor
Relations section.
Conference Call Information
The Company will host a conference call to discuss its second
quarter 2011 results today, Thursday, August 4, 2011 at 12:00 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 September 5, 2011 by
dialing (877) 660-6853; account #286, confirmation #373689. An
online replay will also be available through September 5, 2011.
About Winthrop Realty Trust
Winthrop Realty Trust, headquartered in Boston, Massachusetts,
is a NYSE-listed real estate investment trust (REIT) focused on
acquiring, owning, operating and investing in real property as well
as real estate financial instruments including CMBS, Bonds, REIT
Preferred and common stock. For more information, please visit
our web-site at 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.
Financial Results
Financial results for the three and six months ended June 30,
2011 and 2010 are as follows (in thousands except per share
amounts):
|
For the Three
Months |
For the Six
Months |
|
Ended June
30, |
Ended June
30, |
|
2011 |
2010 |
2011 |
2010 |
|
(Unaudited) |
(Unaudited) |
Revenue |
|
|
|
|
Rents and reimbursements |
$11,234 |
$9,435 |
$22,220 |
$18,755 |
Interest, dividends and discount
accretion |
5,094 |
3,590 |
14,766 |
6,799 |
|
16,328 |
13,025 |
36,986 |
25,554 |
Expenses |
|
|
|
|
Property operating |
3,987 |
1,818 |
8,032 |
3,767 |
Real estate taxes |
1,087 |
340 |
2,342 |
1,060 |
Depreciation and amortization |
3,312 |
2,371 |
6,793 |
4,671 |
Interest |
3,963 |
3,666 |
8,576 |
7,317 |
General and administrative |
2,758 |
1,916 |
5,282 |
3,823 |
State and local taxes |
48 |
85 |
77 |
99 |
|
15,155 |
10,196 |
31,102 |
20,737 |
Other income (loss) |
|
|
|
|
Earnings from preferred equity
investments |
158 |
85 |
241 |
168 |
Equity in income (loss) of equity
investments |
2,875 |
(392) |
1,520 |
(919) |
Realized gain on sale of securities
carried at fair value |
7 |
78 |
131 |
773 |
Unrealized gain (loss) on securities
carried at fair value |
(723) |
(750) |
163 |
1,790 |
Unrealized gain on loan securities
carried at fair value |
34 |
3,625 |
2,847 |
3,012 |
Interest income |
443 |
40 |
536 |
77 |
|
2,794 |
2,686 |
5,438 |
4,901 |
|
|
|
|
|
Income from continuing
operations |
3,967 |
5,515 |
11,322 |
9,718 |
|
|
|
|
|
Discontinued
operations |
|
|
|
|
Income (loss) from discontinued
operations |
90 |
(764) |
137 |
(517) |
Consolidated net
income |
4,057 |
4,751 |
11,459 |
9,201 |
Income attributable to non-controlling
interests |
(329) |
(175) |
(533) |
(420) |
Net income attributable to Winthrop
Realty Trust |
3,728 |
4,576 |
10,926 |
8,781 |
Income attributable to non-controlling
redeemable preferred interest |
(58) |
(58) |
(117) |
(171) |
Net income attributable to Common
Shares |
$3,670 |
$4,518 |
$10,809 |
$8,610 |
|
|
|
|
|
Comprehensive
income |
|
|
|
|
Consolidated net income |
$4,057 |
$4,751 |
$11,459 |
$9,201 |
Change in unrealized gain on available
for sale securities |
-- |
(5) |
-- |
2 |
Change in unrealized gain on interest
rate derivative |
-- |
(28) |
63 |
12 |
Comprehensive
income |
$4,057 |
$4,718 |
$11,522 |
$9,215 |
|
|
|
|
|
Per Common Share Data –
Basic |
|
|
|
|
Income from continuing operations |
$0.11 |
$0.25 |
$0.36 |
$0.44 |
Loss from discontinued operations |
-- |
(0.04) |
-- |
(0.03) |
Net income attributable to Winthrop Realty
Trust |
$0.11 |
$0.21 |
$0.36 |
$0.41 |
|
|
|
|
|
Per Common Share Data –
Diluted |
|
|
|
|
Income from continuing operations |
$0.11 |
$0.25 |
$0.36 |
$0.44 |
Loss from discontinued operations |
-- |
(0.04) |
-- |
(0.03) |
Net income attributable to Winthrop Realty
Trust |
$0.11 |
$0.21 |
$0.36 |
$0.41 |
|
|
|
|
|
Basic Weighted-Average Common
Shares |
32,573 |
21,175 |
29,841 |
20,888 |
Diluted Weighted-Average Common
Shares |
32,574 |
21,177 |
29,842 |
21,412 |
Funds From Operations:
The following presents a reconciliation of net income to funds
from operations for the three and six months ended June 30, 2011
and 2010 (in thousands, except per share amounts):
|
For the Three Months
Ended |
For the Six Months
Ended |
|
June 30, |
June 30, |
|
2011 |
2010 |
2011 |
2010 |
|
(Unaudited) |
(Unaudited) |
Net income (loss) attributable to Winthrop
Realty Trust |
$3,728 |
$4,576 |
$10,926 |
$8,781 |
Real estate depreciation |
2,086 |
1,508 |
4,204 |
3,014 |
Amortization of capitalized leasing
costs |
1,226 |
894 |
2,591 |
1,719 |
Real estate depreciation and amortization
of unconsolidated interests |
2,376 |
2,266 |
4,639 |
4,400 |
|
|
|
|
|
Less: Non-controlling interest share of real
estate depreciation and amortization |
(789) |
(799) |
(1,581) |
(1,584) |
|
|
|
|
|
Funds from operations |
8,627 |
8,445 |
20,779 |
16,330 |
Series C Preferred Share dividends |
(58) |
(58) |
(117) |
(171) |
Allocations of earnings to |
|
|
|
|
Series B-1 Preferred Shares |
-- |
(26) |
-- |
(31) |
Allocations of earnings to Series C Preferred
Shares |
(9) |
(43) |
(60) |
(162) |
|
|
|
|
|
FFO applicable to Common
Shares-Basic |
$8,560 |
$8,318 |
$20,602 |
$15,966 |
|
|
|
|
|
Weighted-average Common
Shares |
32,573 |
21,175 |
29,841 |
20,808 |
|
|
|
|
|
FFO Per Common
Share-Basic |
$0.26 |
$0.39 |
$0.69 |
$0.76 |
|
|
|
|
|
|
|
|
|
|
Diluted |
|
|
|
|
Funds from operations (per above) |
8,627 |
8,445 |
20,779 |
16,330 |
Series C Preferred Share dividends |
(58) |
-- |
(117) |
-- |
Allocation of earnings to Series B-1
Preferred Shares |
-- |
(26) |
-- |
(31) |
|
|
|
|
|
Allocation of earning to Series C
Preferred Shares |
(9) |
-- |
(60) |
-- |
FFO applicable to Common
Shares |
$8,560 |
$8,419 |
$20,602 |
$16,299 |
|
|
|
|
|
|
|
|
|
|
Weighted-average Common Shares |
32,573 |
21,175 |
29,841 |
20,888 |
Stock options (1) |
1 |
2 |
1 |
2 |
Series B-1 Preferred Shares
(2) |
-- |
-- |
-- |
-- |
Series C Preferred Shares (3) |
-- |
257 |
-- |
522 |
Diluted weighted-average Common
Shares |
32,574 |
21,434 |
29,842 |
21,412 |
FFO Per Common Share-Fully
Diluted |
$0.26 |
$0.39 |
$0.69 |
$0.76 |
|
|
|
|
|
|
|
|
|
|
(1) The Trust's stock
options were dilutive for the three and six months ended June 30,
2011 and 2010. |
(2) The Trust's Series B-1
Preferred Shares were anti-dilutive for the three and six months
ended June 30, 2011 and 2010. |
(3) The Trust's Series C
Preferred Shares were anti-dilutive for the three and six months
ended June 30, 2011 and dilutive for the three and six months ended
June 30, 2010. |
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) |
|
|
|
|
|
|
June 30, |
December 31, |
|
2011 |
2010 |
|
(Unaudited) |
(Unaudited) |
ASSETS |
|
|
Investments in real estate, at cost |
|
|
Land |
$36,495 |
$37,142 |
Buildings
and improvements |
273,964 |
271,357 |
|
310,459 |
308,499 |
Less: accumulated depreciation |
(40,168) |
(36,232) |
Investments in real estate,
net |
270,291 |
272,267 |
|
|
|
Cash and cash equivalents |
51,344 |
45,257 |
Restricted cash held in
escrows |
9,152 |
8,593 |
Loans receivable, net |
153,437 |
110,395 |
Accounts receivable, net of
allowances of $453 and $262, respectively |
14,110 |
12,402 |
Securities carried at fair
value |
7,613 |
33,032 |
Loan securities carried at fair
value |
5,418 |
11,981 |
Preferred equity investments |
10,155 |
4,010 |
Equity investments |
95,169 |
81,937 |
Lease intangibles, net |
24,681 |
26,821 |
Deferred financing costs, net |
1,346 |
1,158 |
Assets held for sale |
3,702 |
2,275 |
TOTAL ASSETS |
$646,418 |
$610,128 |
|
|
|
LIABILITIES |
|
|
Mortgage loans
payable |
$210,751 |
$230,443 |
Series B-1 Cumulative Convertible
Redeemable Preferred Shares, $25 per share liquidation
preference; 852,000 shares authorized and outstanding
at June 30, 2011 and December 31, 2010 |
21,300 |
21,300 |
Secured financing |
15,150 |
-- |
Revolving line of credit |
-- |
25,450 |
Accounts payable and accrued
liabilities |
12,322 |
12,557 |
Dividends payable |
5,385 |
4,431 |
Deferred income |
1,016 |
150 |
Below market lease intangibles,
net |
2,312 |
2,696 |
Liabilities of held for sale
assets |
620 |
33 |
TOTAL
LIABILITIES |
268,856 |
297,060 |
|
|
|
COMMITMENTS AND
CONTINGENCIES |
|
|
|
|
|
NON-CONTROLLING REDEEMABLE PREFERRED
INTEREST |
|
|
Series C Cumulative Convertible Redeemable
Preferred Shares, $25 per share liquidation preference, 144,000
shares authorized and outstanding at June 30, 2011 and
December 31, 2010 |
3,221 |
3,221 |
Total non-controlling redeemable preferred
interest |
3,221 |
3,221 |
|
|
|
EQUITY |
|
|
Winthrop Realty Trust Shareholders'
Equity: |
|
|
Common Shares, $1 par, unlimited shares
authorized; 32,897,554 and 27,030,186 issued and outstanding at
June 30, 2011 and December 31, 2010, respectively |
32,898 |
27,030 |
Additional paid-in capital |
626,472 |
569,586 |
Accumulated distributions in excess
of net income |
(299,721) |
(300,782) |
Accumulated other comprehensive
loss |
-- |
(63) |
Total Winthrop Realty Trust
Shareholders' Equity |
359,649 |
295,771 |
Non-controlling interests |
14,692 |
14,076 |
Total Equity |
374,341 |
309,847 |
TOTAL LIABILITIES AND
EQUITY |
$646,418 |
$610,128 |
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 June 30, 2011 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: Thomas Staples
Chief Financial Officer
(617) 570-4614
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