Prime Group Realty Trust (NYSE: PGEPRB) (the "Company") announced its results today for the third quarter ended September 30, 2009. Net loss attributable to common shareholders was $0.4 million or $1.57 per share for the third quarter of 2009, as compared to net loss attributable to common shareholders of $8.5 million or $35.77 per share for the third quarter of 2008.
Revenue for the third quarter of 2009 was $19.7 million, a decrease of $1.4 million from third quarter 2008 revenue of $21.1 million. This decrease was primarily due to an early lease termination fee received in 2008 and lower occupancy at some of our properties.
The results of the Company''s operations compared to the third quarter of 2008 were positively affected by:
- an $8.3 million non-cash gain on extinguishment of debt on our 800-810 Jorie Boulevard property when it was conveyed to the lender,
- a $5.9 million non-cash charge for distributions and losses to noncontrolling interest in excess of basis was incurred in 2008 and did not occur in 2009, and
- a $1.8 million decrease in interest expense primarily due to the assignment of our membership interest in BHAC Capital IV, L.L.C. and a related loan in the third quarter of 2009.
Partially offset by the negative impact of:
- a $1.6 million cumulative real estate tax expense true-up in 2008 of estimates which did not occur in 2009, and
- a $1.8 million loss on tax indemnification in the third quarter of 2009 related to the termination of a tax indemnification agreement associated with our Continental Towers property.
In April, July and October 2009, we announced that our Board decided not to declare a quarterly dividend on our Series B Preferred Shares for the first, second and third quarters of 2009, and that the Board is unable to determine when the Company will recommence dividends on the Series B Preferred Shares. We also announced that the Board is in the process of considering various financing and other capitalization alternatives for the Company.
The Board''s decision was based on the Company''s current capital resources and liquidity needs and the overall negative state of the economy and capital markets. The Board intends to review the suspension of the Series B Preferred Shares dividends periodically based on the Board''s ongoing review of the Company''s financial results, capital resources and liquidity needs, and the condition of the economy and capital markets. The Company can give no assurances that dividends on the Company''s Series B Preferred Shares will be resumed, or that any financing or other capitalization alternatives will be satisfactorily concluded.
About Prime Group Realty Trust
Prime Group Realty Trust is a fully-integrated, self-administered, and self-managed real estate investment trust (REIT) which owns, manages, leases, develops, and redevelops office and industrial real estate, primarily in metropolitan Chicago. The Company currently owns 8 office properties containing an aggregate of 3.3 million net rentable square feet and a joint venture interest in one office property comprised of approximately 101,000 net rentable square feet. The Company leases and manages approximately 3.3 million square feet comprising all of its wholly-owned properties. In addition, the Company is the asset and development manager for an approximately 1.1 million square foot office building located at 1407 Broadway Avenue in New York, New York. For more information about Prime Group Realty Trust, contact the company''s Chicago headquarters at (312) 917-1300 or visit its website at www.pgrt.com.
Certain statements contained in this press release may constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 that reflect management''s current views with respect to future events and financial performance. The words, “believes,” “expects,” “anticipates,” “estimates,” and similar words or expressions are generally intended to identify forward-looking statements. Actual results may differ materially from those expected because of various risks and uncertainties, including, but not limited to, changes in general economic conditions as well as adverse changes in real estate markets.Other risks and uncertainties are described under “Risk Factors” in our Annual Report on Form 10-K and subsequent Company filings with the Securities and Exchange Commission.
| Prime Group Realty Trust | ||||||||
| Consolidated Statements of Operations | ||||||||
| (dollars in thousands, except per share amounts) | ||||||||
| (Unaudited) | ||||||||
| Three months ended | ||||||||
| September 30, | ||||||||
| 2009 | 2008 | |||||||
| Revenue: | ||||||||
| Rental | $ | 10,200 | $ | 11,684 | ||||
| Tenant reimbursements | 8,109 | 7,645 | ||||||
| Other property revenues | 1,173 | 1,535 | ||||||
| Services Company revenue | 258 | 256 | ||||||
| Total revenue | 19,740 | 21,120 | ||||||
| Expenses: | ||||||||
| Property operations | 6,358 | 6,249 | ||||||
| Real estate taxes | 4,434 | 2,502 | ||||||
| Depreciation and amortization | 6,230 | 5,581 | ||||||
| General and administrative | 1,451 | 1,585 | ||||||
| Services Company operations | 288 | 344 | ||||||
| Loss on tax indemnification | 1,799 | - | ||||||
| Total expenses | 20,560 | 16,261 | ||||||
| Operating (loss) income | (820 | ) | 4,859 | |||||
| Interest and other expense | (17 | ) | (494 | ) | ||||
| Income from investments in unconsolidated joint ventures | - | 1 | ||||||
| Interest: | ||||||||
| Expense | (5,690 | ) | (7,475 | ) | ||||
| Amortization of deferred financing costs | (287 | ) | (829 | ) | ||||
Distributions and losses to noncontrolling interest in excess of basis | - | (5,852 | ) | |||||
| Loss from continuing operations | (6,814 | ) | (9,790 | ) | ||||
| Discontinued operations | 8,129 | (2,271 | ) | |||||
| Net income (loss) | 1,315 | (12,061 | ) | |||||
| Net (income) loss attributable to noncontrolling interest | (1,667 | ) | 3,621 | |||||
| Net loss attributable to Prime Group Realty Trust | (352 | ) | (8,440 | ) | ||||
Net income allocated to preferred shareholders, net of noncontrolling interest of $2,230 in 2009 and 2008 | (20 | ) | (20 | ) | ||||
| Net loss available to common shareholders | $ | (372 | ) | $ | (8,460 | ) | ||
| Basic and diluted earnings (loss) attributable to common shareholders per common share: | ||||||||
| Loss from continuing operations | $ | (1.87 | ) | $ | (35.69 | ) | ||
| Discontinued operations | 0.30 | (0.08 | ) | |||||
Net loss attributable to common shareholders per common share- basic and diluted | $ | (1.57 | ) | $ | (35.77 | ) | ||
| Prime Group Realty Trust | |||||||||
| Consolidated Statements of Operations | |||||||||
| (dollars in thousands, except per share amounts) | |||||||||
| (Unaudited) | |||||||||
| Nine months ended | |||||||||
| September 30, | |||||||||
| 2009 | 2008 | ||||||||
| Revenue: | |||||||||
| Rental | $ | 31,266 | $ | 33,348 | |||||
| Tenant reimbursements | 23,071 | 24,235 | |||||||
| Other property revenues | 3,757 | 4,634 | |||||||
| Services Company revenue | 764 | 861 | |||||||
| Total revenue | 58,858 | 63,078 | |||||||
| Expenses: | |||||||||
| Property operations | 18,985 | 20,168 | |||||||
| Real estate taxes | 11,798 | 12,063 | |||||||
| Depreciation and amortization | 21,395 | 18,141 | |||||||
| General and administrative | 5,501 | 4,937 | |||||||
| Services Company operations | 923 | 1,087 | |||||||
| Loss on tax indemnification | 1,799 | - | |||||||
| Total expenses | 60,401 | 56,396 | |||||||
| Operating (loss) income | (1,543 | ) | 6,682 | ||||||
| Interest and other income | 4,965 | 708 | |||||||
| Income (loss) from investments in unconsolidated joint ventures | 31 | (60,344 | ) | ||||||
Provision for asset impairment from unconsolidated joint ventures | - | (5,633 | ) | ||||||
| Interest: | |||||||||
| Expense | (20,459 | ) | (23,886 | ) | |||||
| Amortization of deferred financing costs | (3,957 | ) | (1,409 | ) | |||||
Recovery of distributions and losses to noncontrolling interest in excess of basis | - | 14,222 | |||||||
Distributions and losses to noncontrolling interest in excess of basis | - | (13,315 | ) | ||||||
| Gain on sales of real estate and joint venture interests | - | 39,194 | |||||||
| Loss from continuing operations | (20,963 | ) | (43,781 | ) | |||||
| Discontinued operations | 38 | (2,695 | ) | ||||||
| Net loss | (20,925 | ) | (46,476 | ) | |||||
| Net loss (income) attributable to noncontrolling interest | 13,121 | (25,439 | ) | ||||||
| Net loss attributable to Prime Group Realty Trust | (7,804 | ) | (71,915 | ) | |||||
Net income allocated to preferred shareholders, net of noncontrolling interest of $6,690 in 2009 and 2008 | (60 | ) | (60 | ) | |||||
| Net loss available to common shareholders | $ | (7,864 | ) | $ | (71,975 | ) | |||
| Basic and diluted earnings (loss) attributable to common shareholders per common share: | |||||||||
| Loss from continuing operations | $ | (33.25 | ) | $ | (304.25 | ) | |||
| Discontinued operations | - | (0.10 | ) | ||||||
Net loss attributable to common shareholders per common share - basic and diluted | $ | (33.25 | ) | $ | (304.35 | ) | |||
| Prime Group Realty Trust | ||||||||
| Consolidated Balance Sheets | ||||||||
| (dollars in thousands, except share and per share amounts) | ||||||||
| (Unaudited) | ||||||||
| September 30, | December 31, | |||||||
| Assets | 2009 | 2008 | ||||||
| Real estate: | ||||||||
| Land | $ | 76,044 | $ | 81,865 | ||||
| Building and improvements | 317,324 | 334,280 | ||||||
| Tenant improvements | 54,889 | 57,799 | ||||||
| Furniture, fixtures and equipment | 1,267 | 1,159 | ||||||
| 449,524 | 475,103 | |||||||
| Accumulated depreciation | (72,277 | ) | (61,651 | ) | ||||
| 377,247 | 413,452 | |||||||
| In-place lease value, net | 6,553 | 10,445 | ||||||
| Above-market lease value, net | 8,021 | 11,901 | ||||||
| 391,821 | 435,798 | |||||||
| Cash and cash equivalents | 9,874 | 15,419 | ||||||
| Investments in unconsolidated joint ventures | - | 6 | ||||||
Receivables, net of allowance for doubtful accounts of $1,415 and $846 at September 30, 2009 and December 31, 2008, respectively: | ||||||||
| Tenant | 668 | 1,388 | ||||||
| Deferred rent | 13,648 | 13,072 | ||||||
| Other | 534 | 1,043 | ||||||
| Restricted cash escrows | 36,570 | 37,254 | ||||||
| Deferred costs, net | 14,241 | 16,859 | ||||||
| Other | 1,332 | 819 | ||||||
| Total assets | $ | 468,688 | $ | 521,658 | ||||
| Liabilities and Equity | ||||||||
| Mortgage and notes payable | $ | 342,302 | $ | 447,871 | ||||
| Accrued interest payable | 1,764 | 2,945 | ||||||
| Accrued real estate taxes | 24,491 | 18,244 | ||||||
| Accrued tenant improvement allowances | 1,019 | 6,884 | ||||||
| Accrued environmental remediation liabilities | 8,347 | 7,839 | ||||||
| Accounts payable and accrued expenses | 7,411 | 9,409 | ||||||
| Liabilities for leases assumed | 2,806 | 3,279 | ||||||
| Below-market lease value, net | 3,998 | 5,450 | ||||||
| Other | 5,465 | 13,769 | ||||||
| Total liabilities | 397,603 | 515,690 | ||||||
| Commitments and contingencies | ||||||||
| Shareholders'' equity: | ||||||||
| Preferred Shares, $0.01 par value; 30,000,000 shares authorized: | ||||||||
| Series B - Cumulative Redeemable Preferred Shares, 4,000,000 shares designated, issued and outstanding | 40 | 40 | ||||||
| Common Shares, $0.01 par value; 100,000,000 shares authorized; 236,483 shares issued and outstanding | 2 | 2 | ||||||
| Additional paid-in capital | 243,688 | 155,396 | ||||||
| Retained deficit | (157,294 | ) | (149,470 | ) | ||||
| Total equity - Prime Group Realty Trust | 86,436 | 5,968 | ||||||
| Noncontrolling interest | (15,351 | ) | - | |||||
| Total equity | 71,085 | 5,968 | ||||||
| Total liabilities and equity | $ | 468,688 | $ | 521,658 | ||||
Contacts:
Prime Group Realty Trust
Jeffrey A. Patterson
President and
Chief Executive Officer
312/917-1300
or
Paul G. Del
Vecchio
Executive Vice President-Capital Markets
312/917-1300