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2009 Second Quarter Highlights and Recent Events
-- Incurred a net non-cash charge of $81.6 million related to the
Company's investment in Concord, bringing the carrying amount of
this investment to $0 at June 30, 2009.
-- Recorded non-cash charges totaling $5.8 million in connection with a
restructuring of the Company's investment in the Marc Realty joint
venture. Through the restructuring, the Company effectively exchanged
interests in three Chicago suburban properties and one downtown property
for an increased overall interest in five downtown Chicago properties
which management believes to have a better return potential and are
better aligned with the Company's overall investment strategy.
GAAP does not allow for gain recognition related to the Company's
increased interest in the downtown properties accomplished through the
restructuring.
-- Recorded an unrealized gain on securities held at June 30, 2009 of $12.6
million.
-- Sold securities with a cost basis of $7.5 million for sales proceeds of
$9.8 million.
-- Extended and modified the lease agreement on the Plantation, Florida
office property net leased to BellSouth Telecommunications Inc. for ten
years through March 31, 2020.
-- Exercised a one-year extension option of the $24.4 million mortgage loan
payable to KeyBank which is secured by 14 properties and now matures on
June 30, 2010, with one remaining one-year extension option.
-- Acquired for $38.5 million, a $73.8 million first mortgage loan bearing
interest at 6.48% with a discounted payoff option of $50 million which
loan is secured by an office building located in San Francisco,
California. Subsequent to June 30, 2009, the Company sold a $35.0
million A Note at par with respect to this first mortgage loan.
-- Acquired for $5.5 million a $7.2 million first mortgage loan bearing
interest at 9.84% with a discounted payoff option of $5.5 million which
loan is secured by an office complex located in Phoenix, Arizona.
-- Retained liquid assets consisting of cash, cash equivalents, restricted
cash and marketable securities of $83.2 million at June 30, 2009.
-- Subsequent to June 30, 2009, repurchased an additional 100,000 of its
Series B-1 Preferred Shares at a 20% discount for $2.0 million. Through
July 2009, repurchased a total of 2,041,105 of its Series B-1 Preferred
Shares having a redemption value of $51.0 million for a gross price of
approximately $37.7 million, a 26.1% blended discount. Currently,
1,396,000 of the Company's Series B-1 Preferred Shares remain
outstanding.
-- Declared a regular quarterly cash dividend of $0.25 per common share,
which was paid on July 15, 2009 to common shareholders of record on June
30, 2009. Additionally declared a quarterly cash dividend of $0.40625
per Series B-1 Preferred Share, which was paid on July 31, 2009, to
preferred shareholders of record on July 20, 2009.
-- Elected Lee Seidler to the Company's Board of Trustees and a member
of the Audit Committee, effective May 21, 2009.
Second Quarter 2009 Financial Results
-- Net loss applicable to common shares was $71.2 million, or $4.50 per
common share loss, compared with a net loss of $24.1 million, or $1.65
per common share loss for the quarter ended June 30, 2008. The loss was
primarily the result of net non-cash charges of $81.6 million related to
the Company's investment in Concord, which was written down to $0
as of June 30, 2009. This carrying value is reflective of
management's view that the continued deterioration in the credit
markets, the non-controlling nature of the Company's investment in
Concord and the near-term obligations of Concord under its repurchase
agreements which may necessitate asset sales by Concord have caused an
other-than-temporary decline in the fair value of the Company's
investment. The Company's net loss was increased as a result of
the net non-cash charges of $5.8 million related to the Company's
restructuring of its investment in Marc Realty as discussed above.
-- The Company reported negative Funds from Operations (FFO) of $68.3
million, or $4.32 negative FFO per common share, compared with negative
FFO of $21.1 million, or $1.45 negative FFO per common share, for the
quarter ended June 30, 2008. Adjusting FFO for certain items that
affect comparability which are listed in the table below, FFO for the
quarter ended June 30, 2009 was $6.1 million or $0.35 per common share,
compared with FFO of $7.8 million, or $0.42 per common share for the
quarter ended June 30, 2008.
(Amounts in thousands) For the Three Months For the Six Months
Ended June 30, Ended June 30,
2009 2008 2009 2008
---- ---- ---- ----
(Unaudited) (Unaudited)
FFO applicable to
Common Shares (1) $(68,307) $(21,078) $(87,606) $(11,764)
======== ======== ======== ========
Per Common Share $(4.32) $(1.45) $(5.54) $(0.84)
====== ====== ====== ======
Items that affect
comparability (income) expense:
Non-cash asset write-downs:
Loan loss reserves $1,724 $- $2,152 $-
Loan available for sale
impairment 203 - 203 -
Unrealized gain on
securities (12,580) - (1,432) -
Loan loss and impairments
from partially owned
entity - Concord 51,246 26,319 71,390 29,008
Available for sale
securities - 107 - 207
Impairment of equity
investment in Concord 31,670 - 31,670 -
Preferred equity
impairment 4,850 2,000 4,850 2,000
Net gain on sale of
mortgage-backed securities - - - (454)
Net gain on sale of
securities (2,685) - (2,598) (2,029)
Net gain on sale of
preferred equity (735) - (735) (959)
Net gain on repurchase of
Series B-1 Preferred Shares - - (5,237) -
Net gain on extinguishment of
debt of partially owned
entity - Concord - (1,173) - (3,748)
Adjustment for dilution by
Series B-1 Preferred
Shares (2) 686 1,619 1,346 3,350
--- ----- ----- -----
Total items that
affect comparability $74,379 $28,872 $101,609 $27,375
======= ======= ======== =======
Per Common Share $4.25 $1.56 $5.78 $1.51
===== ===== ===== =====
FFO as adjusted for
comparability $6,072 $7,794 $14,003 $15,611
====== ====== ======= =======
Per Common Share $0.35 $0.42 $0.80 $0.86
===== ===== ===== =====
(1) See Funds From Operations table below for a reconciliation of net
income to FFO for the quarters ended June 30, 2009 and 2008.
(2) The Series B-1 Preferred Shares are anti-dilutive for basic FFO
for the period ended June 30, 2009. However, after giving effect
to the adjustments for comparability, the Series B-1 Preferred
Shares are dilutive for the period. Accordingly, for the
presentation we have adjusted for this dilution and increased
dilutive weighted-average common shares outstanding.
Third Quarter 2009 Dividend Declaration
The Company's Board of Trustees has declared a cash dividend for the third quarter of 2009 of $0.25 per common share payable on October 15, 2009 to common shareholders of record on September 30, 2009. The Company also has declared the regular quarterly cash dividend of $0.40625 per Series B-1 Preferred Share which is payable on October 31, 2009 to the holders of Series B-1 Preferred Shares of record on October 20, 2009.
Conference Call Information
The Company will host a conference call to discuss its second quarter 2009 results today, Thursday, August 6, 2009 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 6, 2009 by dialing (877) 660-6853; account #286, confirmation #325945. An online replay will also be available through September 6, 2009.
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.
Condensed Financial Results
Financial results for the three and six months ended June 30, 2009 and
2008 are as follows (in thousands except per common share amounts):
For the Three Months For the Six Months
Ended June 30, Ended June 30,
2009 2008 2009 2008
---- ---- ---- ----
(Unaudited)
Revenue
Rents and reimbursements $10,447 $10,993 $21,432 $21,660
Interest and dividends 2,214 350 3,966 883
----- --- ----- ---
12,661 11,343 25,398 22,543
------ ------ ------ ------
Expenses
Property operating 1,822 1,802 3,823 3,669
Real estate taxes 652 675 1,355 1,414
Depreciation and amortization 2,682 2,910 5,581 5,968
Interest 4,433 5,468 8,831 11,299
Impairment loss on available
for sale securities - 107 - 207
Provision for loss on loan
receivable 1,724 - 2,152 -
General and administrative 1,878 1,482 3,324 3,553
State and local taxes 147 98 197 222
--- -- --- ---
13,338 12,542 25,263 26,332
------ ------ ------ ------
Other income
Earnings (loss) from
preferred equity investments (3,209) (912) (2,194) 1,418
Loss of equity investments (82,249) (22,333) (100,412) (18,521)
Gain on sale of available
for sale securities - - - 2,029
Gain on sale of securities
carried at fair value 2,685 - 2,598 -
Gain on sale of mortgage-backed
securities available for sale - - - 454
Unrealized gain on
securities carried at
fair value 12,580 - 1,432 -
Impairment loss on real estate
loan available for sale (203) - (203) -
Gain on early extinguishment
of debt - - 5,237 -
Interest income 42 436 114 664
-- --- --- ---
(70,354) (22,809) (93,428) (13,956)
-------- -------- -------- --------
Consolidated loss from
continuing operations (71,031) (24,008) (93,293) (17,745)
-------- -------- -------- --------
Income from discontinued
operations - 37 - 86
- -- - --
Consolidated net (loss)
income (71,031) (23,971) (93,293) (17,659)
-------- -------- -------- --------
Income attributable to
non-controlling interests (165) (86) (336) (86)
----- ---- ----- ---
Net loss attributable to
Winthrop Realty Trust $(71,196) $(24,057) $(93,629) $(17,745)
======== ======== ======== ========
Comprehensive income (loss)
Net loss $(71,031) $(23,971) $(93,293) $(17,659)
Change in unrealized loss
on available for sale
securities arising during
the period 9 89 11 2,112
Change in unrealized gain
on mortgage-backed securities
available for sale arising
during the period - - - 190
Change in unrealized gain
(loss) on interest rate
derivatives arising during
the period 127 401 265 (250)
Change in unrealized loss
from equity investments 26,371 13,920 26,174 4,285
Less reclassification
adjustment from gains
included in net income - - - (2,483)
- - - -------
Comprehensive income (loss) $(44,524) $(9,561) $(66,843) $(13,805)
======== ======= ======== ========
Per Common Share Data -
Basic
Loss from continuing
operations attributable
to Winthrop Realty Trust $(4.50) $(1.65) $(5.92) $(1.27)
Income from discontinued
operations attributable
to Winthrop Realty Trust - - - 0.01
- - - ----
Net loss attributable to
Winthrop Realty Trust $(4.50) $(1.65) $(5.92) $(1.26)
====== ====== ====== ======
Per Common Share Data -
Diluted
Loss from continuing
operations attributable
to Winthrop Realty Trust $(4.50) $(1.65) $(5.92) $(1.27)
Income from discontinued
operations attributable
to Winthrop Realty Trust - - - 0.01
- - - ----
Net loss attributable to
Winthrop Realty Trust $(4.50) $(1.65) $(5.92) $(1.26)
====== ====== ====== ======
Basic Weighted-Average
Common Shares 15,822 14,564 15,814 13,990
====== ====== ====== ======
Diluted Weighted-Average
Common Shares 15,822 14,564 15,814 13,990
====== ====== ====== ======
Amounts attributable to
Winthrop Realty Trust
Common Shareholders
Loss from continuing
operations $(71,196) $(24,094) $(93,629) $(17,831)
Income from discontinued
operations - 37 - 86
- -- - --
Net loss $(71,196) $(24,057) $(93,629) $(17,745)
======== ======== ======== ========
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, 2009 and 2008
(in thousands, except per common share amounts):
For the Three Months For the Six Months
Ended June 30, Ended June 30,
2009 2008 2009 2008
---- ---- ---- ----
Net loss attributable to
Winthrop Realty Trust $(71,197) $(24,057) $(93,630) $(17,745)
Real estate depreciation 1,657 1,654 3,347 3,301
Amortization of capitalized
leasing costs 1,017 1,274 2,217 2,631
Real estate depreciation and
amortization of unconsolidated
interests 1,008 858 2,055 1,677
Less: Non-controlling interest
share of real estate
depreciation and amortization
(792) (807) (1,595) (1,628)
---- ---- ------ ------
Funds from operations (68,307) (21,078) (87,606) (11,764)
Interest expense on Series B-1
Preferred Shares (1) - - - -
- - - -
Funds from operations
applicable to Common Shares
plus assumed conversions $(68,307) $(21,078) $(87,606) $(11,764)
======== ======== ========= =========
Basic weighted-average Common
Shares 15,822 14,564 15,814 13,990
Convertible Preferred Shares (1) - - - -
Stock options (1) - - - -
- - - -
Diluted weighted-average Common
Shares 15,822 14,564 15,814 13,990
====== ====== ====== ======
Funds from operations per
common share - diluted
$(4.32) $(1.45) $(5.54) $(0.84)
====== ====== ====== ======
(1) The Trust's convertible preferred shares and stock options were
considered anti-dilutive for the three and six months ended
June 30, 2009 and 2008.
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. Management believes that FFO and FFO per diluted share are helpful to investors as supplemental performance measures because these measures 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 earlier in this press release.
Consolidated Balance Sheets:
(in thousands, except share data)
June 30, December 31,
2009 2008
---- ----
(as adjusted)
ASSETS
Investments in real estate, at cost
Land $21,344 $21,344
Buildings and improvements 246,579 246,362
------- -------
267,923 267,706
Less - accumulated depreciation (28,884) (25,901)
-------- --------
Investments in real estate, net 239,039 241,805
Cash and cash equivalents 20,469 59,238
Restricted cash held in escrows 8,821 14,353
Loans receivable, net of reserve of
$1,538 and $2,445, respectively 25,591 22,876
Accounts receivable, net of reserve
of $130 and $225, respectively 11,995 14,028
Securities carried at fair value 53,676 36,516
Available for sale securities, net 195 184
Preferred equity investment 45,780 50,624
Real estate loan available for sale 34,797 -
Equity investments 17,299 92,202
Lease intangibles, net 24,798 25,929
Deferred financing costs, net 2,272 3,218
Deposit for purchase of Series B-1
Preferred Shares - 17,081
Other assets - 40
- --
TOTAL ASSETS $484,732 $578,094
======== ========
LIABILITIES
Mortgage loans payable $226,655 $229,737
Series B-1 Cumulative Convertible
Redeemable
Preferred Shares, $25 per share
liquidation preference;
1,496,000 and 2,413,105 shares
authorized and outstanding at
June 30, 2009 and December 31, 2008,
respectively 37,400 60,328
Loan payable 19,818 -
Note payable - 9,800
Accounts payable and accrued liabilities 8,463 8,596
Dividends payable 3,956 5,934
Deferred income 58 795
Below market lease intangibles, net 3,220 3,696
----- -----
TOTAL LIABILITIES 299,570 318,886
------- -------
COMMITMENTS AND CONTINGENCIES
EQUITY
Winthrop Realty Trust Shareholders' Equity:
Common Shares, $1 par, unlimited
shares authorized; 15,823,249 and
15,754,495 outstanding at June 30,
2009 and December 31, 2008, respectively 15,823 15,754
Additional paid-in capital 461,614 460,956
Accumulated distributions in excess
of net income (303,176) (213,284)
Accumulated other comprehensive loss (373) (15,176)
----- --------
Total Winthrop Realty Trust
Shareholders' Equity 173,888 248,250
Non-controlling interests 11,274 10,958
------ ------
Total Equity 185,162 259,208
------- -------
TOTAL LIABILITIES AND EQUITY $484,732 $578,094
======== ========
Other Financial Information:
(in thousands)
For the Three Months For the Six Months
Ended June 30, Ended June 30,
Sources (Uses) of Cash 2009 2008 2009 2008
---------------------- ---- ---- ---- ----
(Unaudited)
Capital expenditures $(1,576) $(699) $(2,525) $(1,764)
======= ===== ======= =======
Straight line rent
adjustment $253 $148 $577 $372
==== ==== ==== ====
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, 2009 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
http://www.winthropreit.com
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