Griffin's 2013 first quarter operating loss was lower than the operating loss incurred in the 2012 first quarter due to higher operating profit at Griffin Land, Griffin's real estate business, principally due to the aforementioned gain on a land sale transaction reported in the 2013 first quarter. There were no property sales reflected in continuing operations in the 2012 first quarter. All of the revenue and gain on property sales in the 2013 first quarter reflect the recognition of previously deferred revenue and gain of approximately $900,000 and approximately $700,000, respectively, from the sale of 93 acres of undeveloped land to Dollar Tree Distribution, Inc. (the "Dollar Tree Sale"), which closed in the 2012 third quarter. As Griffin Land is required to construct a sewer line to service the property sold, the Dollar Tree Sale is being accounted for under the percentage of completion method, whereby the revenue and gain on sale are recorded as costs are incurred. Griffin Land received all the cash proceeds of $7,000,000, before transaction costs, at the time the Dollar Tree Sale closed. From the closing of the Dollar Tree Sale through the end of the 2013 first quarter, Griffin Land has recognized revenue of approximately $5,600,000 and gain of approximately $4,700,000. At the end of the 2013 first quarter, the balance of the revenue that is deferred (approximately $1,400,000) and gain on sale that has not yet been recognized (approximately $1,200,000 based on the current estimate of remaining costs to be incurred to complete the construction of the sewer line) is expected to be reflected in the 2013 second quarter when the construction of the sewer line is expected to be completed.The increase in Griffin Land's operating profit as a result of a portion of the gain on the Dollar Tree Sale being recognized in the 2013 first quarter was partially offset by slightly lower profit from Griffin Land's leasing operations in the 2013 first quarter as compared to the 2012 first quarter, due to higher building operating expenses and higher depreciation and amortization expense in the 2013 first quarter as compared to the 2012 first quarter. The increase in building operating expenses was the result of higher snow removal costs in the 2013 first quarter than the 2012 first quarter because of the very mild winter weather in the 2012 first quarter. The increase in depreciation and amortization expense includes depreciation expense on Griffin Land's new 228,000 square foot warehouse in the Lehigh Valley of Pennsylvania which was constructed in fiscal 2012 and placed in service at the end of the 2012 third quarter. Although there have been expressions of interest in that new building by prospective tenants, there are no leases in place. The higher building operating expenses and higher depreciation and amortization expense more than offset an increase in rental revenue in the 2013 first quarter as compared to the 2012 first quarter.
Griffin Announces 2013 First Quarter Results
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