BOSTON, Aug. 7 MA-WinthropRealty-ERN
BOSTON, Aug. 7 /PRNewswire-FirstCall/ -- Winthrop Realty Trust (NYSE: FUR)
announced today performance and operations results for the second quarter
ended June 30, 2008. All per share amounts are on a diluted basis.
2008 Second Quarter Highlights and Recent Events
-- The Company increased cash and cash equivalents, including restricted
cash, from $42.6 million at the end of 2007 to $141.3 million at
June 30, 2008 and $225.0 million at August 6, 2008, inclusive of a
$70 million draw in July 2008 on its previously unused line of credit,
and net proceeds of approximately $37.0 million from the Company's
over-subscribed rights offering which was consummated in May 2008.
-- With respect to the Marc Realty portfolio:
- The Company made a $3.9 million convertible participating mezzanine
loan which bears interest at 8.5% with respect to the property
located at 180 N. Michigan, Chicago, Illinois.
- The property located at 600 West Jackson Street, Chicago, Illinois
was sold to an unaffiliated third party resulting in proceeds of
$2.5 million, exclusive of the 7.65% current interest received, on
the Company's original investment of $1.7 million. As part of this
transaction, the Company contributed $900,000 to the selling entity
which, in turn, made a $1.5 million second mortgage loan to the buyer
which loan bears interest at 6.50%, matures on June 30, 2009 and
requires monthly payments of interest only.
- The Company took a $2.0 impairment loss with respect to the Company's
loans relating to the Lansing, Michigan property as the Company
expects that it will not likely receive full payment of this loan
because of the property's prospective operating performance in a
particularly soft regional market.
-- With respect to its Concord Debt Holdings LLC ("Concord") joint venture
debt platform:
- The Company received distributions from retained earnings of
$4.6 million in April 2008 and $10 million in July 2008.
- On August 2, 2008, a subsidiary of Inland American Real Estate Trust
Inc. agreed to contribute up to $100 million in capital over the next
18 months to Concord to be used primarily for new investments by
Concord. Inland American made an initial $20 million contribution on
August 4, 2008.
- Concord acquired an additional class of securities issued by its CDO
with a face value of $4.2 million for $1.6 million resulting in the
aggregate purchases during 2008 by Concord of securities issued by
Concord's CDO with a face value of $14.2 million for $6.5 million.
- Concord borrowed an aggregate of $22.0 million under its KeyBank
credit facility which is secured by certain of its loan assets.
- Concord made $66.5 million in principal payments on its credit
facilities.
- Concord acquired two mezzanine loans with an aggregate stated
principal balance of $2.96 million for $2.69 million and a weighted
yield to maturity of 14.2%.
- As detailed in Concord's press release on August 1, 2008, Concord
recognized a $50.4 million impairment charge and $2.2 million loan
reserve.
-- On August 6, 2008, Lex-Win Acquisition LLC, an entity in which Winthrop
holds a 28% interest, sold all of its shares in Piedmont Office Realty
Trust, Inc. (formerly known as Wells Office Realty Trust Inc.) for an
aggregate sales price of $32.3 million ($8.31 per share) resulting in a
distribution to the Company of approximately $9.0 million. The Company
recognized a loss during the second quarter of 2008 of $1.1 million
with respect to its interest in Lex-Win Acquisition.
Second Quarter 2008 Financial Results
-- Net loss for the quarter ended June 30, 2008 was ($24.1) million, or
($0.33) per share, compared with net income of $12.8 million, or $0.16
per share, for the quarter ended June 30, 2007. This decrease in
earnings for the comparable periods was due primarily to the:
- $50.4 million impairment charge and $2.2 million loan reserve
recognized by the Concord joint venture, as detailed in Concord's
press release on August 1, 2008, which resulted in recognition of a
$20.9 million loss on the Company's equity investment for quarter
ended June 30, 2008;
- $9.7 million gain on sale of REIT securities during the three months
ended June 30, 2007 from the sale of the Company's interest in
America First Apartment Investors;
- $2.0 million impairment loss recognized during the quarter ended
June 30, 2008 with respect to the Company's loans in the Marc Realty
portfolio relating to the Lansing, Michigan property, which is
reflected in Earnings (loss) from preferred equity investments on the
Condensed Financial Results on page 4 of this release; and
- $1.1 million loss recognized for the quarter ended June 30, 2008 with
respect to the Piedmont Office Realty Trust shares.
-- Funds from Operations (FFO) available to common stockholders for the
quarter ended June 30, 2008 was ($21.1) million, or ($0.29) per diluted
share, compared with $17.7 million, or $0.20 per diluted share, for the
quarter ended June 30, 2007.
-- At June 30, 2008, the Company's assets consisted of:
- Operating properties comprising approximately 9.25 million square
feet of space, including assets in the Marc Realty and Sealy
portfolios, and 230 rental units at a multi-family property;
- $72.5 million of loan assets directly held and a 50% ownership
interest in Concord which held assets with a face value of $1.17
billion and a carrying value of $1.09 billion;
- REIT equity interests with a market value of $10.4 million;
- Cash and cash equivalents, including restricted cash, of
$141.3 million.
-- Declared a regular quarterly cash dividend of $0.065 per common share,
which was paid on July 15, 2008. Winthrop currently pays an annualized
dividend of $0.26 per common share (excluding any special dividends).
Michael L. Ashner, Winthrop Realty Trust's Chairman and Chief Executive
Officer, commented, "During the quarter we continued our focus on increasing
the Company's liquidity to protect against and prepare for the rigors and
opportunities of this changed environment. These efforts included
consummation of our rights offering, which generated approximately $37.0
million in net proceeds as well as the subsequent draw down on our credit
facility. In light of the challenging market environment, we evaluated all of
our assets for valuation purposes in a manner which reflected our concerned
view with respect to the current state of real estate markets. This
evaluation resulted in the previously announced impairments and loan reserves
taken by Concord, as well as significantly smaller impairments taken relating
to the Marc Realty Lansing, Michigan loan and our interest in Lex-Win
Acquisition LLC. With our increased cash position and the other transactions
we have undertaken thus far this year, we continue to believe we are well
positioned in this very challenging environment to capitalize on future
investment opportunities as they become available."
Conference Call Information
The Company will host a conference call to discuss its second quarter 2008
financial results today, Thursday, August 7 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 September 7, 2008 by
dialing (877) 660-6853; confirmation #287844. An online replay will also be
available through September 7, 2008.
About Winthrop Realty Trust
Winthrop Realty Trust is 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
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. It is important to note that the Company's actual
results could differ materially from those projected in 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 SEC filings,
including but not limited to the annual report on Form 10-K/A for the year
ended December 31, 2007 as well as its subsequent filings with the SEC.
Further information relating to the Company's financial position, results of
operations, and investor information is contained in our annual and quarterly
reports filed with the SEC and available for download at our website
www.winthropreit.com or at the SEC website www.sec.gov .
Condensed Financial Results
Financial results for the three and six months ended June 30, 2008 and
2007 are as follows (in thousands except per share amounts):
For the Three Months For the Six Months
Ended Ended
June 30, June 30,
(Unaudited)(Unaudited)
2008 2007 2008 2007
Revenues $ 11,337$ 14,844 $ 22,534$ 28,754
Expenses 12,546 15,785 26,343 29,680
Other income
Earnings (loss) from
preferred equity
investments(912) 1,247 1,4187,397
Equity in earnings
(loss) of equity
investments (22,333) 2,171(18,521) 3,763
Gain on sale of
available for sale
securities-9,739 2,0299,982
Gain on sale of
mortgage-backed
Securities available
for sale --454-
Loss on early
extinguishment of debt - (320) - (320)
Interest income 436 7636642,026
Income (loss) from
continuing operations
before minority interest (24,018) 12,659(17,765) 21,922
Minority interest86 (71)86 542
Income (loss) from
continuing operations (24,104) 12,730(17,851) 21,380
Income from discontinued
operations 47 46106 97
Net income (loss) $ (24,057) $ 12,776 $ (17,745) $ 21,477
Per Common Share data -
Basic
Income (loss) from
continuing operations$ (0.33) $0.16 $ (0.25) $ 0.28
Income from discontinued
operations -- --
Net income (loss) (0.33)0.16 (0.25)0.28
Per Common Share data -
Diluted
Income (loss) from
continuing operations$ (0.33) $0.16 $ (0.25) $ 0.28
Income from discontinued
operations -- --
Net income (loss) $ (0.33) $0.16 $ (0.25) $0.28
Basic Weighted-Average
Common Shares 72,819 65,661 69,950 65,590
Diluted Weighted-Average
Common Shares 72,819 65,727 69,950 65,656
Funds From Operations:
The following presents a reconciliation of our net income to our funds
from operations for the three and six months ended June 30, 2008 and 2007 (in
thousands, except per share amounts):
For the Three Months For the Six Months
EndedEnded
June 30, June 30,
2008 2007 2008 2007
Net income (loss) $ (24,057) $12,776 $ (17,745) $ 21,477
Real estate depreciation1,654 1,565 3,301 3,070
Amortization of
capitalized leasing
costs 1,274 1,628 2,631 2,683
Real estate depreciation
and amortization of
unconsolidated interests 858 662 1,677 1,028
Less: Minority interest
share of depreciation and
amortization(807) (798)(1,628) (1,504)
Funds from operations (21,078) 15,833(11,764) 26,754
Interest expense on
Series B-1 Preferred
Shares (1) - 1,831 - 3,662
Funds from operations
applicable to Common
Shares plus assumed
conversions$ (21,078) $17,664 $ (11,764) $ 30,416
Basic weighted-average
Common Shares 72,81965,661 69,95065,590
Convertible Preferred
Shares (1) -22,167 -22,167
Stock options (1) -66 -66
Diluted weighted-average
Common Shares 72,81987,894 69,95087,823
Funds from operations
per share - diluted$ (0.29) $ 0.20 $ (0.17) $ 0.35
(1) The Trust's convertible preferred shares and stock options were
considered anti-dilutive for the three months and the six months ended June
30, 2008.
Most industry analysts and equity REITs generally consider funds from
operations ("FFO") to be an appropriate supplemental measure of the
performance of an equity REIT. FFO is defined as net income applicable to
common shares before depreciation and amortization, extraordinary items,
cumulative effect of accounting changes, gains on sales of operating real
estate, plus the pro-rata amount of depreciation and amortization of
unconsolidated joint ventures, net of minority interests, determined on a
consistent basis. Given that part of the nature of the Company's business is
as a real estate owner and operator, the Company believes that FFO may be
helpful to investors as a measure of its operational performance. FFO does not
represent cash generated from operating activities in accordance with
generally accepted accounting principles and therefore should not be
considered an alternative for net income as a measure of liquidity. In
addition, the comparability of the Company's FFO with the FFO reported by
other REITs may be affected by the differences that exist regarding certain
accounting policies relating to expenditures for repairs and other recurring
items.
The Company computes FFO in accordance with standards established by the
National Association of Real Estate Investment Trusts, Inc. ("NAREIT"). FFO is
defined by NAREIT as "net income (or loss) computed in accordance with GAAP,
excluding gains (or losses) from sales of property, plus real estate
depreciation and amortization and after adjustments for unconsolidated
partnerships and joint ventures." FFO does not represent cash generated from
operating activities in accordance with GAAP and is not indicative of cash
available to fund cash needs. FFO should not be considered as an alternative
to net income as an indicator of our operating performance or as an
alternative to cash flow as a measure of liquidity.
Other Selected Financial Data:
(in thousands)
June 30, December 31,
2008 2007
(unaudited)
Investments in real estate, net $ 45,382 $ 7,076
Cash and cash equivalents 35,320 6,654
Mortgage backed securities - 8,141
Preferred equity investment 56,218 4,573
Equity investments 64,350 9,475
Lease intangibles, net 28,954 1,964
Other assets39,334 7,564
Total assets $ 69,558 $ 5,447
Mortgage loans payable $ 35,128 $ 6,925
Series B-1 Cumulative Convertible
Preferred Shares86,266 8,266
Repurchase agreements- 5,175
Accounts payable, accrued and other
liabilities18,623 3,309
Minority interest 10,064 9,978
Shareholders' equity19,477 1,794
Total liabilities and shareholders' equity $ 69,558 $ 5,447
Further details regarding the Company's financial results are available in
the Company's Quarterly Report filed on Form 10-Q for the quarter ended June
30, 2008 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 .
SOURCE Winthrop Realty Trust
