Glimcher Realty Trust (NYSE: GRT)
today announced financial results for the fourth quarter and fiscal year ended December 31, 2012. A description and reconciliation of non-GAAP financial measures to GAAP financial measures is contained in a later section of this press release. References to per share amounts are based on diluted common shares.
“We are pleased with another quarter of strong fundamentals turned in from our core mall portfolio,” stated Michael P. Glimcher, Chairman of the Board and CEO. “With portfolio occupancy over 95%, mall store sales per square foot at a record level, and tenant occupancy cost ratios remaining at historic lows, we believe the Company is well positioned to deliver meaningful growth in 2013 and beyond.”
Net loss to common shareholders during the fourth quarter of 2012 was $24.3 million, or $0.17 per share, as compared to net income to common shareholders of $28.0 million, or $0.26 per share, in the fourth quarter of 2011. Funds From Operations (“FFO”) during the fourth quarter of 2012 was $28.5 million, or $0.20 per share, compared to $22.0 million, or $0.20 per share, in the fourth quarter of 2011.
For fiscal year 2012, net loss to common shareholders was $30.5 million, or $0.23 per share, compared to a net loss of $5.0 million, or $0.05 per share, for fiscal year 2011. FFO was $80.1 million, or $0.58 per share, for fiscal year 2012, compared to $56.4 million, or $0.52 per share, for fiscal year 2011.
Fourth Quarter and Fiscal Year Earnings Highlights
Update on Liquidity and Capital Resources
- Total revenues were $91.8 million in the fourth quarter of 2012, compared to total revenues of $71.9 million in the fourth quarter of 2011. The $19.9 million increase in total revenues resulted primarily from $18.9 million of revenue from properties acquired since December 2011, as well as revenue growth of $1.9 million from Scottsdale Quarter ®, an open-air center in Scottsdale, Arizona. The acquired properties were Town Center Plaza and Town Center Crossing, each located in Leawood, Kansas, and Malibu Lumber Yard located in Malibu, California. The Company also acquired the remaining 80% indirect ownership interest in Pearlridge Center in Honolulu, Hawaii (“Pearlridge”) during the second quarter of 2012.
- Total revenues were $326.0 million for fiscal year 2012 compared to total revenues of $267.4 million for the fiscal year 2011. The $58.6 million increase in total revenues resulted primarily from $53.1 million of revenue from properties acquired since December 2011 as well as revenue growth of $6.7 million from Scottsdale Quarter ®.
- Net loss to common shareholders was $24.3 million in the fourth quarter of 2012, compared to net income to common shareholders of $28.0 million in the fourth quarter of 2011. The $52.3 million decrease in net income was primarily due to increased non-cash impairment charges in the fourth quarter of 2012 and the $27.8 million gain on the sale of Polaris Towne Center in Columbus, Ohio recognized during the fourth quarter of 2011. The Company’s share of impairment charges related to Eastland Mall located in Columbus, Ohio and Tulsa Promenade Mall located in Tulsa, Oklahoma (“Tulsa”) during the fourth quarter of 2012 impacted earnings by a total of $24.9 million. The 2012 impairment charges related to Eastland Mall were $18.5 million and the Company’s share of the 2012 impairment charge on Tulsa was $6.4 million.
- Net loss to common shareholders for fiscal year 2012 was $30.5 million, compared to a net loss of $5.0 million for fiscal year 2011. The $25.5 million decrease was primarily due to the $27.8 million gain from the sale of Polaris Towne Center during fiscal year 2011, $9.9 million of non-cash write-offs in fiscal year 2012, and an increase of $12.7 million in non-cash impairment charges recognized in the fiscal year 2012. The $9.9 million of non-cash write-offs in 2012 include the $3.4 million write-off of issuance costs related to the redemption of preferred shares, the $3.2 million write-off of pre-development costs related to a project in Panama City Beach, Florida, and a charge of $3.3 million related to the write down of a note receivable from the Tulsa joint venture, which owns Tulsa. The 2012 impairment charges related to Eastland Mall for $18.5 million, $10.6 million for the Company’s share of Tulsa’s impairment, and $1.6 million for the Company’s share of Town Square at Surprise in Surprise, Arizona. The 2011 impairments related to land held-for-sale ($9.0 million) and the Company’s pro-rata share of the impairment ($9.0 million) related to Tulsa. Partially offsetting these decreases to net income was the Company’s recognition of a $25.1 million gain on the re-measurement of its 20% equity investment in Pearlridge during fiscal year 2012.
- Net operating income (“NOI”) for comparable mall properties, including the pro-rata share of the malls held through joint ventures, increased 1.8% when comparing the three months ended December 31, 2012 to the three months ended December 31, 2011. NOI for these same properties for the fiscal year ended December 31, 2012 increased approximately 0.8% compared to the fiscal year ended December 31, 2011.
- Average store rents for the Core Malls were $34.74 per square foot (“psf”) as of December 31, 2012, a 4.1% improvement from $33.37 psf as of December 31, 2011. Average in-line store rents include in-line permanent retail stores that are less than 10,000 square feet. Core Malls include all of the Company’s open-air centers, mall properties and outlet properties, including both wholly-owned and material joint venture properties.
- Re-leasing spreads for the Core Malls increased by 12% for the non-anchor leases signed during the fourth quarter of 2012, with base rents averaging $34.19 psf. Re-leasing spreads represent the percentage change in base rent for permanent leases signed, both new and renewals, to the base rent for comparative tenants for those leases where the space was occupied in the previous twenty-four months.
- Total occupancy for Core Malls increased 50 basis points to 95.3% at December 31, 2012 compared to 94.8% at December 31, 2011.
- Average store sales in the Core Malls increased 7.7% to $435 psf for the twelve months ended December 31, 2012, compared to $404 psf for the twelve months ended December 31, 2011. Average store sales represent retail sales for mall stores of 10,000 square feet of gross leasable area or less that reported sales in the most recent twelve month period.
- Comparable store sales for the Company’s Core Malls during the twelve months ended December 31, 2012, compared to the twelve months ended December 31, 2011 increased 3.9%. Comparable sales compare only those stores with sales in each twelve month period ended December 31, 2012 and December 31, 2011.
- Occupancy costs for the twelve months ended December 31, 2012 were 10.8% of tenant sales for Core Mall stores. Occupancy costs include the tenants’ minimum rent and amounts the tenants pay toward operating costs and real estate taxes.
- Scottsdale Quarter ® finished the year ended December 31, 2012 with a total occupancy of 88.5% for the first two phases of the project, comprised of retail at 84.1% and office at 97.8%. When including signed leases for tenants not yet open, leases out for signature, and outstanding letters of intent, approximately 96% of the gross leasable area for the first two phases has been addressed.
- Debt-to-total-market capitalization at December 31, 2012 (including the Company’s pro-rata share of joint venture debt) was 46.1%, based on a common share closing price of $11.09, as compared to 50.6% at December 31, 2011, based on a common share closing price of $9.20. Debt with fixed interest rates represented approximately 89.2% of the Company’s consolidated total outstanding borrowings at December 31, 2012, compared to 85.0% at December 31, 2011.
- The Company sold 1.1 million common shares, at a weighted average price of $10.80 per share, under its at-the-market (“ATM”) equity offering program during the three months ended December 31, 2012, generating net proceeds of $11.4 million. The proceeds generated from the ATM program were used to repay a portion of the outstanding balance under the Company’s corporate credit facility. The Company has approximately $29.2 million available for issuance under the ATM program based upon the shares sold through December 31, 2012.
- The mortgage loan for Tulsa matured on December 31, 2012 and is currently in default. The lender has not initiated any adverse actions. The Tulsa joint venture, in which the Company has a 52% interest, is engaged in active discussions with the lender regarding an extension of the loan’s term and the continued marketing of Tulsa for sale . In January 2013, the Tulsa joint venture received an offer and expects to enter into an agreement to sell Tulsa during the first quarter of 2013. Accordingly, the joint venture reduced the carrying value of Tulsa in the fourth quarter of 2012 to the purchase price in the offer.
- In January 2013, the Company acquired University Park Village, a premier open-air center located in Fort Worth, Texas, for $105.0 million. University Park Village has approximately 173,220 square feet of leasable retail space, tenant sales averaging approximately $800 per square foot and occupancy at 97%. The Company funded the acquisition through a $60 million term loan with the remaining funds coming from the Company’s credit facility. The term loan has an interest rate of LIBOR plus 300 basis points and matures on April 8, 2013. The Company expects to obtain long-term mortgage financing on the property prior to the term loan’s maturity date, provided market conditions are favorable.
- In February 2013, the Company closed on a $225 million loan on Polaris Fashion Place in Columbus, Ohio (“Polaris”). The interest rate is 3.9% per annum and the loan has a term of 12 years. Proceeds from the loan were used to repay the previously outstanding $125.2 million loan on Polaris. The balance of the loan’s excess proceeds was used to reduce the amount outstanding under the Company’s credit facility.
- The Company has currently received in excess of $250 million of non-binding commitments in support of the modification and extension of the corporate credit facility. The modification will extend the facility’s maturity date to February 2017 with an additional one-year extension option available that would extend the final maturity date to February 2018. The new unsecured revolving credit facility (“Revolver”) will provide for improved pricing through lower interest rate spreads which are based on the Company’s total debt outstanding as a percentage of total assets. Based upon the Company’s current debt levels, pricing will be set initially at LIBOR plus 195 basis points versus the current rate of LIBOR plus 237.5 basis points. The commitment amount of $250 million will remain the same under the Revolver as modified with the ability to increase the commitment amount to $400 million under an accordion feature. Initially, the Company will have approximately $195 million of availability under the Revolver and is expecting to have over $160 million of unused capacity at closing. Simultaneously, the Company will close and fully draw on a new $45 million secured credit facility. The interest rate will be LIBOR plus 250 basis points and the term of the loan will be no longer than 15 months. The secured credit facility will be secured by 49% of the partnership interests in four of the Company’s properties and will be subject to borrowing availability limits and financial covenants that are consistent with market terms.
As of the date of this release, the Company expects diluted net (loss) income per share to be in the range of $(0.02) to $0.02 for the year ending December 31, 2013, and expects diluted FFO per share to be in the range of $0.69 to $0.73 for the year ending December 31, 2013.