Initiates Report of Management's Estimate
of Net Asset Value
Declares Third Quarter 2012
Dividend
Winthrop Realty Trust (NYSE:FUR), a leading real estate value
investor, today announced financial and operating results for the
second quarter ended June 30, 2012. All per share amounts are on a
diluted basis.
Financial Results
Three Months Ended June 30, 2012
Net income applicable to common shares for the quarter ended
June 30, 2012 was $571,000, or $0.02 per common share as compared
with net income per common share of $3.7 million or $0.11 per
common share for the quarter ended June 30, 2011. The decrease in
per common share amounts is directly attributable to the effect of
the full second quarter dividend payable on the Series D preferred
shares issued in March 2012. The $77.7 million in proceeds from the
offering along with capital recycled from certain liquidated
investments have been invested or committed to investments but the
expected positive impact to earnings from such investments will not
begin to be recognized until the third quarter. In addition, as a
value investor some of our more recent investments, such as the
Southern California portfolio loan, have returns that are less
weighted to a current coupon, but have a return that will be
recognized through a liquidation event at the end of the investment
life.
For the quarter ended June 30, 2012, the Company reported FFO
applicable to common shares of $8.1 million, or $0.24 per common
share as compared with FFO of $12.3 million, or $0.38 per common
share for the second quarter of 2011.
Six Months Ended June 30, 2012
Net income applicable to common shares for the six months ended
June 30, 2012 was $7.9 million or $0.24 per common share as
compared with net income of $10.8 million or $0.36 per common share
for the same period ended June 30, 2011. The reasons for the
decrease in per common share amounts are the same as reported above
for the decline in the three month operating results.
FFO for the six months ended June 30, 2012 was $22.1 million or
$0.67 per common share as compared with FFO of $24.3 million, or
$0.81 per common share for the six months ended June 30, 2011.
Net Asset Value as of June 30, 2012
The Company has added net asset value disclosure to assist the
financial community in its evaluation of the Company's value and
performance. The Company's estimated range of net asset value
per common share is $12.76 to $15.10. Details regarding the
methodology used to calculate this range of value as well as
financial results, properties and tenants can be accessed in the
quarterly supplemental report at www.winthropreit.com in the
Investor Relations section.
Michael L. Ashner, Winthrop's Chairman and Chief Executive
Officer commented, "As we continue to look for ways to improve
financial transparency, we have provided shareholders with
management's estimate of net asset value determined on a somewhat
granular asset by asset basis. This information will be
updated quarterly as we believe it to be among the more important
metrics in understanding both the Company's strategy and
performance."
2012 Second Quarter Activity
Acquisitions and Loan Originations
- Acquired a $44.5 million first mortgage loan secured by a
326,000 square foot commercial building located in Ft. Lauderdale,
Florida, known as the Broward Financial Center, for $42.8
million. The Company subsequently received a payment of
approximately $12.8 million, reducing the outstanding principal
balance to $30.0 million. The Company modified the loan to
waive the late charge, extend the term of the loan to October 15,
2012, increase the interest rate to 9.836% and provide for an exit
fee. The property contains 47,000 square feet of retail and
279,000 square feet of office space and is 74.4% leased.
- Acquired from its joint venture partner, Marc Realty, its 20%
non-controlling interest in the entity which owns the property
located at One East Erie in Chicago, Illinois for $5.85
million. The property contains 126,000 square feet of retail
and office space consisting of the first six floors in a mixed use
building together with 208 parking spaces. The Company now
owns 100% of the property.
- Originated a $9.0 million mezzanine loan collateralized by 100%
of the member interests in the owner of the 104,000 square
foot, 12-story building located at 127 West 25th Street in
Manhattan, New York. The loan bears interest at a rate equal
to the greater of 14% per annum or LIBOR plus 10%, requires payment
of principal and interest and matures April 30, 2015. In
connection with the loan origination, the Company received a 1%
origination fee of $90,000 and commitment fees totaling
$591,500.
- Originated a $2.25 million first mortgage loan which bears
interest at 12% per annum and matures on April 5, 2014, with one,
one-year extension right. Payments are interest only payable
monthly with a balloon payment due at maturity. The loan is
collateralized by a 45,655 square foot, two-story multi-tenant
office building located at 4545 East Shea Boulevard in Phoenix,
Arizona.
- Entered into an agreement to acquire a 284 unit multi-family
property for $17.5 million. The property, Lake Brandt
Apartments, is located in Greensboro, North Carolina and is
presently 94% occupied. In connection with this acquisition,
it is expected that the Company will assume the existing $13.6
million non-recourse mortgage loan which bears interest at 6.22%
per annum, matures on August 1, 2016 and requires payments of
interest only. The closing is expected to occur in September
or October 2012.
- Contributed an additional $5.5 million to the Company's Vintage
Housing Holdings LLC ("VHH") equity investment platform. In
connection with the transaction, VHH acquired a general partner
interest and development fees relating to a residential development
project referred to as Vintage at Urban Center, a tax credit
apartment community in Lynwood, Washington with a proposed village
development of 395 multi-family rental units and 4,000 square feet
of retail space.
Dispositions and Loan Asset Repayments
- Sold the Company's non-Westinghouse portion of the Churchill,
Pennsylvania operating property for $914,000. The Company
provided a financing commitment to the buyer of $675,000. At
closing, the Company provided $324,000 of financing to cover buyers
expenses and taxes due. An additional $175,000 will be
advanced on each of August 20, 2012 and November 20, 2012 directly
to the taxing authority to cover taxes due on the sold parcel.
The loan is interest only, at LIBOR +3.75% and matures June
1, 2015.
- Sold to Marc Realty, the Company's equity interest in 30 North
Michigan for $10.3 million, of which $6.55 million was financed by
the Company with a secured promissory note which bears interest at
10% per annum and requires payments of interest only and matures
May 31, 2015.
- Sold to Marc Realty, all of the Company's equity interest in
2720 River Road, 2000-2060 Algonquin Road and Ridgebrook equity
investments for an aggregate of $2.1 million.
- Received payment of approximately $19.6 million resulting in an
annualized return of 47.8% that satisfied the Company's 160 Spear
mortgage and mezzanine loans.
- Received repayment of approximately $20.0 million resulting in
an annualized return of 15.8% that satisfied the Company's Magazine
multi-family mezzanine loan.
Subsequent to Quarter End
- Obtained a $13.5 million first mortgage loan secured by the
recently acquired 320 Unit Class A multi-family property in
Memphis, Tennessee, known as Waterford Place. The loan bears
interest at 3% annually, and requires monthly payments of principal
and interest and matures on August 1, 2014, subject to two,
one-year extensions.
- The Company and Marc Realty each contributed approximately $3.5
million to pay off the existing first mortgage loan collateralized
by our joint venture investment in the property located at 223 West
Jackson in Chicago, Illinois.
Third Quarter 2012 Dividend Declaration
The Company's Board of Trustees declared a dividend for the
third quarter of 2012 of $0.1625 per common share payable on
October 15, 2012 to common shareholders of record on September 28,
2012.
The Company's Board of Trustees also declared a regular
quarterly cash dividend of $0.578125 per Series D preferred share
which is payable on October 1, 2012 to the holders of Series D
preferred shares of record on September 14, 2012.
Conference Call Information
The Company will host a conference call to discuss its second
quarter 2012 results today, Thursday, August 2, 2012 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. An
online replay will be available for one year. A replay of the
call will be available through September 2, 2012 by dialing (877)
660-6853; account #286, confirmation #394234.
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,
2012 and 2011 are as follows (in thousands except per share
amounts):
| |
For the Three Months
Ended June 30, |
For the Six Months
Ended June 30, |
| |
2012 |
2011 |
2012 |
2011 |
| |
(Unaudited) |
(Unaudited) |
| Revenue |
|
|
|
|
| Rents and reimbursements |
$ 13,257 |
$ 11,234 |
$ 25,797 |
$ 22,220 |
| Interest, dividends and
discount accretion |
5,778 |
5,094 |
11,296 |
14,766 |
| |
19,035 |
16,328 |
37,093 |
36,986 |
| Expenses |
|
|
|
|
| Property operating |
3,779 |
3,987 |
8,331 |
8,032 |
| Real estate taxes |
1,017 |
1,087 |
2,271 |
2,342 |
| Depreciation and
amortization |
4,479 |
3,312 |
8,198 |
6,793 |
| Interest |
3,512 |
3,963 |
7,301 |
8,576 |
| General and administrative |
3,264 |
2,758 |
6,295 |
5,282 |
| State and local taxes |
143 |
48 |
149 |
77 |
| |
16,194 |
15,155 |
32,545 |
31,102 |
| Other income (loss) |
|
|
|
|
| Earnings from preferred equity
investments |
-- |
158 |
-- |
241 |
| Equity in income of equity
investments |
586 |
2,875 |
1,010 |
1,520 |
| Realized gain on sale of
securities carried at fair value |
15 |
7 |
41 |
131 |
| Unrealized (loss) gain on
securities carried at fair value |
(791) |
(723) |
4,141 |
163 |
| Unrealized (loss) gain on loan
securities carried at fair value |
(88) |
34 |
76 |
2,847 |
| Gain on sale of equity
investment |
232 |
-- |
232 |
-- |
| Interest income |
90 |
443 |
192 |
536 |
| |
44 |
2,794 |
5,692 |
5,438 |
| |
|
|
|
|
| Income from continuing
operations |
2,885 |
3,967 |
10,240 |
11,322 |
| |
|
|
|
|
| Discontinued
operations |
|
|
|
|
| Income (loss) from discontinued
operations |
-- |
90 |
(3) |
137 |
| Consolidated net
income |
2,885 |
4,057 |
10,237 |
11,459 |
| (Income) loss attributable to
non-controlling interests |
473 |
(329) |
1,374 |
(533) |
| Net income attributable to Winthrop
Realty Trust |
3,358 |
3,728 |
11,611 |
10,926 |
| Income attributable to non-controlling
redeemable preferred interest |
-- |
(58) |
-- |
(117) |
| Income attributable to Series D Preferred
Shares |
(2,787) |
-- |
(3,712) |
-- |
| Net income attributable
to Common Shares |
$ 571 |
$ 3,670 |
$ 7,899 |
$ 10,809 |
| |
|
|
|
|
| Per Common Share Data –
Basic |
|
|
|
|
| Income from continuing operations |
$ 0.02 |
$ 0.11 |
$ 0.24 |
$ 0.36 |
| Income from discontinued operations |
-- |
-- |
-- |
-- |
| Net income attributable to Winthrop Realty
Trust |
$ 0.02 |
$ 0.11 |
$ 0.24 |
$ 0.36 |
| |
|
|
|
|
| Per Common Share Data –
Diluted |
|
|
|
|
| Income from continuing operations |
$ 0.02 |
$ 0.11 |
$ 0.24 |
$ 0.36 |
| Income from discontinued operations |
-- |
-- |
-- |
-- |
| Net income attributable to Winthrop Realty
Trust |
$ 0.02 |
$ 0.11 |
$ 0.24 |
$ 0.36 |
| |
|
|
|
|
| Basic Weighted-Average Common
Shares |
33,064 |
32,573 |
33,058 |
29,841 |
| Diluted Weighted-Average Common
Shares |
33,064 |
32,574 |
33,058 |
29,842 |
| |
|
|
|
|
| Comprehensive
income |
|
|
|
|
| Consolidated net
income |
$ 2,885 |
$ 4,057 |
$ 10,237 |
$ 11,459 |
| Change in unrealized gain
(loss) on interest rate derivative |
(25) |
-- |
(57) |
63 |
| Comprehensive
income |
$ 2,860 |
$ 4,057 |
$ 10,180 |
$ 11,522 |
Funds From Operations:
The following presents a reconciliation of net income to funds
from operations for the three and six months ended June 30, 2012
and 2011 (in thousands, except per share amounts):
| |
For the Three Months
Ended June 30, |
For the Six Months
Ended June 30, |
| |
2012 |
2011 |
2012 |
2011 |
| |
(Unaudited) |
(Unaudited) |
| Net income attributable to Winthrop Realty
Trust |
$ 3,358 |
$ 3,728 |
$ 11,611 |
$ 10,926 |
| Real estate depreciation |
2,747 |
2,086 |
5,261 |
4,204 |
| Amortization of capitalized leasing
costs |
1,732 |
1,226 |
2,937 |
2,591 |
| Real estate depreciation and amortization of
unconsolidated interests |
3,992 |
2,376 |
7,654 |
4,639 |
| Gain on sale of equity investments |
(232) |
-- |
(232) |
-- |
| Impairment loss on equity investments |
-- |
3,800 |
-- |
3,800 |
| Less: Non-controlling interest share of real
estate depreciation and amortization |
(713) |
(789) |
(1,445) |
(1,581) |
| |
|
|
|
|
| Funds from operations |
10,884 |
12,427 |
25,786 |
24,579 |
| Series C Preferred Share dividends |
-- |
(58) |
-- |
(117) |
| Series D Preferred Share dividends |
(2,787) |
-- |
(3,712) |
-- |
| Allocations of earnings to Series B-1
Preferred Shares |
-- |
(11) |
-- |
(78) |
| Allocations of earnings to Series C Preferred
Shares |
-- |
(39) |
-- |
(92) |
| FFO applicable to Common
Shares-Basic |
$ 8,097 |
$ 12,319 |
$ 22,074 |
$ 24,292 |
| |
|
|
|
|
| Weighted-average Common
Shares |
33,064 |
32,573 |
33,058 |
29,841 |
| |
|
|
|
|
| FFO Per Common
Share-Basic |
$ 0.24 |
$ 0.38 |
$ 0.67 |
$ 0.81 |
| |
|
|
|
|
| Diluted |
|
|
|
|
| Funds from operations (per above) |
$ 10,884 |
$ 12,427 |
$ 25,786 |
$ 24,579 |
| Series C Preferred Share dividends |
-- |
(58) |
-- |
(117) |
| Series D Preferred Share dividends |
(2,787) |
-- |
(3,712) |
-- |
| Allocation of earnings to Series B-1
Preferred Shares |
-- |
(11) |
-- |
(78) |
| Allocation of earning to Series C Preferred
Shares |
-- |
(39) |
-- |
(92) |
| FFO applicable to Common
Shares |
$ 8,097 |
$ 12,319 |
$ 22,074 |
$ 24,292 |
| |
|
|
|
|
| Weighted-average Common Shares |
33,064 |
32,573 |
33,058 |
29,841 |
| Stock options |
-- |
1 |
-- |
1 |
| Series B-1 Preferred Shares |
-- |
-- |
-- |
-- |
| Series C Preferred Shares |
-- |
-- |
-- |
-- |
| Diluted weighted-average Common
Shares |
33,064 |
32,574 |
33,058 |
29,842 |
| FFO Per Common Share -
Diluted |
$ 0.24 |
$ 0.38 |
$ 0.67 |
$ 0.81 |
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.
| Consolidated Balance
Sheets: |
|
|
| (in thousands, except share
data) |
|
|
| |
|
|
| |
June 30, 2012 |
December 31,
2011 |
| |
(Unaudited) |
(Unaudited) |
| ASSETS |
|
|
| Investments in real estate, at
cost |
|
|
| Land |
$ 39,575 |
$ 36,495 |
| Buildings and improvements |
350,243 |
327,337 |
| |
389,818 |
363,832 |
| Less: accumulated
depreciation |
(49,818) |
(44,556) |
| Investments in real estate,
net |
340,000 |
319,276 |
| |
|
|
| Cash and cash equivalents |
43,959 |
40,952 |
| Restricted cash held in
escrows |
10,678 |
3,914 |
| Loans receivable,
net |
123,872 |
114,333 |
| Accounts receivable, net of
allowances of $397 and $639, respectively |
19,261 |
16,140 |
| Securities carried at fair
value |
34,079 |
28,856 |
| Loan securities carried at fair
value |
5,385 |
5,309 |
| Preferred equity
investments |
5,500 |
5,520 |
| Equity investments |
146,221 |
162,142 |
| Lease intangibles, net |
34,678 |
36,305 |
| Deferred financing costs,
net |
1,081 |
1,180 |
| Assets held for sale |
6 |
6 |
| TOTAL
ASSETS |
$ 764,720 |
$ 733,933 |
| |
|
|
|
LIABILITIES |
|
|
| Mortgage loans payable |
$ 229,891 |
$ 230,940 |
| Non-recourse secured
financings |
29,150 |
29,150 |
| Revolving line of credit |
-- |
40,000 |
| Accounts payable and accrued
liabilities |
16,696 |
16,174 |
| Dividends payable |
5,373 |
5,369 |
| Deferred income |
1,010 |
502 |
| Below market lease intangibles,
net |
2,602 |
2,962 |
| TOTAL
LIABILITIES |
284,722 |
325,097 |
| |
|
|
| COMMITMENTS AND
CONTINGENCIES |
|
|
| |
|
|
| EQUITY |
|
|
| Winthrop Realty Trust Shareholders'
Equity: |
|
|
| Series D Cumulative Redeemable Preferred
Shares, $25 per share liquidation preference; 5,060,000 shares
authorized and 4,820,000 shares outstanding at June 30, 2012 and
1,840,000 shares authorized and 1,600,000 shares outstanding at
December 31, 2011 |
120,500 |
40,000 |
| Common Shares, $1 par, unlimited shares
authorized; 33,066,280 and 33,041,034 issued and outstanding at
June 30, 2012 and December 31, 2011, respectively |
33,066 |
33,041 |
| Additional paid-in capital |
617,862 |
626,099 |
| Accumulated distributions in
excess of net income |
(314,091) |
(311,246) |
| Accumulated other comprehensive
loss |
(149) |
(92) |
| Total Winthrop Realty Trust
Shareholders' Equity |
457,188 |
387,802 |
| Non-controlling interests |
22,810 |
21,034 |
| Total Equity |
479,998 |
408,836 |
| TOTAL LIABILITIES AND
EQUITY |
$ 764,720 |
$ 733,933 |
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, 2012 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: AT THE COMPANY
John Garilli
Chief Financial Officer
(617) 570-4614
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