TPGI Thomas Properties Grp., Inc. (MM)

Thomas Properties Group, Inc. (Nasdaq: TPGI) reported today the results of operations for the quarter and year ended December 31, 2012.

The results of operations presented in this release include TPGI’s results of operations for the three and twelve months ended December 31, 2012 and 2011. The consolidated net loss for the three months ended December 31, 2012 was $13.4 million or $0.29 per share compared to consolidated net income of $10.1 million or $0.27 per share for the three months ended December 31, 2011. The consolidated net loss for the twelve months ended December 31, 2012 was $25.4 million or $0.61 per share compared to consolidated net income of $5.9 million or $0.16 per share for twelve months ended December 31, 2011. The increase in the consolidated net loss during the twelve months ended December 31, 2012 compared to the twelve months ended December 31, 2011 is due to a $6.1 million decrease in investment advisory fees primarily related to one-time incentive fees earned in 2011, $4.6 million of increased impairment charges at our development properties, $23.7 million decrease in income from unconsolidated real estate entities primarily due to our share of gain on disposition of certain joint venture assets in 2011, and a $1.3 million gain from sale of a land parcel for the year ended December 31, 2011 with no comparable gain from sale in 2012.

TPGI's share of after tax cash flow (“ATCF”) for the three months ended December 31, 2012 was $4.1 million or $0.09 per share compared to ATCF of $17.9 million or $0.49 per share for the three months ended December 31, 2011. TPGI's share of after tax cash flow for the twelve months ended December 31, 2012 was $7.4 million or $0.18 per share compared to after tax cash flow of $27.2 million or $0.74 per share for the twelve months ended December 31, 2011. The decrease in ATCF per share for the twelve months ended December 31, 2012 compared to the twelve months ended December 31, 2011 was primarily the result of the overall reduction in consolidated net income described above for the twelve months ended December 31, 2012 compared to the same period in the prior year, and the increased number of shares of our common stock outstanding resulting from the issuance of common stock in 2012. The Company defines ATCF (a non-GAAP financial measure) as net income (loss) excluding the following items: noncontrolling interests, deferred income tax expense (benefit), non-cash charges for depreciation and amortization and asset impairment, amortization of loan costs, non-cash compensation expense, adjustments to recognize rental revenues using the straight-line method, adjustments to rental revenue to reflect the fair market value of rents, and gain from extinguishment of debt. ATCF is further described in note (a) and reconciled to net income (loss) in the financial statements below.

“During 2012, we made real progress toward the achievement of our strategic plan,” said Jim Thomas, Chairman and CEO. “We have continued to dispose of non-core operating assets and non income-producing investments and to pay down debt where practicable. We have recapitalized and increased our ownership interest in our Austin properties, and we have increased the occupancy of our present portfolio to 88%. We are continuing our focused strategy of maximizing our recurring cash flow and expanding our asset base.”

Supplemental Materials

The Company publishes a Supplemental Financial Information package which is available at www.tpgre.com in the Investor Relations tab, Supplemental Financial Information section. The Company also provides an estimated net asset value workbook, available for download at www.tpgre.com in the Investor Relations tab, NAV Workbook section.

Teleconference and Webcast

TPGI will hold a quarterly earnings conference call on Thursday, February 14, 2013 at 10:00 a.m. Pacific Time. To participate in the call, dial (866) 713-8564 and (617) 597-5312 internationally, and provide confirmation code 43009130.

A live webcast (listen only mode) of the conference call will also be available at that time. A hyperlink to the live webcast will be available from the Investor Relations section of our website at www.tpgre.com. A replay of the call will be available through March 7, 2013, by calling (888) 286-8010 and (617) 801-6888 internationally, and providing confirmation code 72959301. The replay will also be available on Thomas Properties Group, Inc.’s web site at www.tpgre.com. The webcast is also being distributed through the Thomson StreetEvents Network. Individual investors can listen to the call at www.earnings.com, Thomson’s individual investor portal, powered by StreetEvents. Institutional investors can access the call via Thomson StreetEvents (www.streetevents.com), a password-protected event management site.

About Thomas Properties Group, Inc.

Thomas Properties Group, Inc., with headquarters in Los Angeles, is a full-service real estate company that owns, acquires, develops and manages primarily office, as well as mixed-use properties on a nationwide basis. The Company’s primary areas of focus are the acquisition and ownership of interests in premier office properties, property development and redevelopment, and property and investment management activities. For more information on Thomas Properties Group, Inc., visit www.tpgre.com.

Forward Looking Statements

Statements made in this press release or during the quarterly earnings conference call that are not historical may contain forward-looking statements. Although TPGI believes the expectations reflected in any forward-looking statements are based on reasonable assumptions, these statements are subject to numerous risks and uncertainties. Factors that could cause actual results to differ materially from TPGI’s expectations include actual and perceived trends in various national and economic conditions that affect global and regional markets for commercial real estate services (including interest rates), the availability of debt and equity investors to finance commercial real estate transactions, our ability to enter into or renew leases at favorable rates, which can be impacted by the financial condition of our tenants, risks associated with the success of our development and property redevelopment projects, general volatility in the securities and credit markets, and the impact of tax laws affecting real estate. For a discussion of some of the factors that may cause our results to differ from management’s expectations, see the information under the captions “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Form 10-K for the year ended December 31, 2011 and our subsequent Form 10-Q quarterly reports, each of which is filed with the Securities and Exchange Commission. TPGI disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

THOMAS PROPERTIES GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except share and per share data)

(unaudited)

       

Three months ended December 31,

Twelve months ended December 31,

2012     2011 2012     2011 Revenues: Rental $ 7,626 $ 7,460 $ 30,969 $ 29,693 Tenant reimbursements 5,195 5,386 20,941 22,437 Parking and other 741 734 3,012 2,959 Investment advisory, management, leasing and development services 1,914 831 4,583 8,520 Investment advisory, management, leasing and development services -

unconsolidated real estate entities

3,779 4,172 15,688 17,862 Reimbursement of property personnel costs 1,043 1,421 5,183 5,810 Condominium sales 5,974   1,578   10,240   7,700   Total revenues 26,272   21,582   90,616   94,981   Expenses: Property operating and maintenance 6,126 6,205 24,324 24,589 Real estate and other taxes 1,909 1,853 7,536 7,469 Investment advisory, management, leasing and development services 3,833 2,842 12,461 12,754 Reimbursable property personnel costs 1,043 1,421 5,183 5,810 Cost of condominium sales 4,878 1,049 8,129 5,091 Interest 4,188 4,309 16,847 17,938 Depreciation and amortization 3,919 3,434 15,701 13,622 General and administrative 4,725 3,632 17,749 15,434 Impairment loss 12,745   8,095   12,745   8,095   Total expenses 43,366   32,840   120,675   110,802   Interest income 22 10 74 35 Equity in net income (loss) of unconsolidated real estate entities (1,059 ) 21,889 (3,672 ) 19,951 Gain (loss) on sale of real estate —   1,258   —   1,258   Income (loss) before income taxes and noncontrolling interests (18,131 ) 11,899 (33,657 ) 5,423 Benefit (provision) for income taxes 17   428   385   1,429   Net income (loss) (18,114 ) 12,327 (33,272 ) 6,852 Noncontrolling interests' share of net (income) loss: Unitholders in the Operating Partnership 3,864 (3,263 ) 7,681 (1,500 ) Partners in consolidated real estate entities 863   1,004   195   508   4,727   (2,259 ) 7,876   (992 ) TPGI's share of net income (loss) $ (13,387 ) $ 10,068   $ (25,396 ) $ 5,860   Income (loss) per share - basic and diluted $ (0.29 ) $ 0.27 $ (0.61 ) $ 0.16 Weighted average common shares - basic 45,594,590 36,647,394 41,631,796 36,619,558 Weighted average common shares - diluted 45,594,590 36,865,327 41,631,796 36,865,286   Reconciliation of net income (loss) to ATCF (a): Net income (loss) $ (13,387 ) $ 10,068 $ (25,396 ) $ 5,860 Adjustments: Income tax (benefit) provision (17 ) (428 ) (385 ) (1,429 ) Noncontrolling interests - unitholders in the Operating Partnership (3,864 ) 3,263 (7,681 ) 1,500 Depreciation and amortization 3,919 3,434 15,701 13,622 Depreciation and amortization - non-controlling interest share (2,130 ) — (2,355 ) — Amortization of loan costs 142 170 582 750 Amortization of loan costs - non-controlling interest share 33 — 33 — Non-cash compensation expense 169 238 1,404 898 Straight-line rent adjustments 66 20 (230 ) (150 ) Straight-line rent adjustments - non-controlling interest share 192 — 226 — Adjustments to reflect the fair market value of rent 41 7 72 23 Adjustments to reflect the fair market value of rent - non-controlling

interest share

293 — 293 — Impairment loss 12,745 8,095 12,745 8,095 Unconsolidated real estate entities at TPGI's share: Depreciation and amortization 8,065 2,487 15,568 10,011 Depreciation and amortization from discontinued operations — 548 490 2,655 Amortization of loan costs (69 ) 76 118 292 Amortization of loan costs from discontinued operations — 40 42 135 Straight-line rent adjustments (590 ) 27 (707 ) (145 ) Straight-line rent adjustments from discontinued operations — (51 ) (20 ) (352 ) Adjustments to reflect the fair market value of rent (943 ) (221 ) (1,532 ) (1,017 ) Adjustments to reflect the fair market value of rent from

discontinued operations

— (29 ) (31 ) (28 ) Impairment loss 600 3,150 600 3,150 Impairment loss from discontinued operations — 1,943 — 1,943 Gain on extinguishment of debt from discontinued operations — (1,297 ) — (1,630 ) Gain of foreclosure of real estate from discontinued operations —   (7,506 ) —   (7,506 ) ATCF before income taxes $ 5,265   $ 24,034   $ 9,537   $ 36,677   TPGI's share of ATCF before income taxes (b) $ 4,143 $ 17,946 $ 7,346 $ 27,401 TPGI's income tax refund (expense) - current (20 ) (64 ) 88   (221 ) TPGI's share of ATCF $ 4,123   $ 17,882   $ 7,434   $ 27,180   ATCF per share - basic $ 0.09   $ 0.49   $ 0.18   $ 0.74   ATCF per share - diluted $ 0.09   $ 0.49   $ 0.18   $ 0.74   Dividends paid per share $ 0.02   $ 0.015   $ 0.065   $ 0.015   Weighted average common shares - basic 45,594,590   36,647,394   41,631,796   36,619,558   Weighted average common shares - diluted 45,983,130   36,865,327   42,004,936   36,865,286       a.     ATCF is a non-GAAP financial measure and may not be directly comparable to similarly-titled measures reported by other companies. We define ATCF as net income (loss) excluding the following items: i) deferred income tax expense (benefit); ii) noncontrolling interests; iii) non-cash charges for depreciation and amortization and asset impairment; iv) amortization of loan costs; v) non-cash compensation expense; vi) the adjustment to recognize rental revenues using the straight-line method; vii) the adjustment to rental revenue to reflect the fair market value of rents; and viii) gain from extinguishment of debt. Our management utilizes ATCF data in assessing performance of our business operations in period to period comparisons and for financial planning purposes. ATCF should be considered only as a supplement to net income as a measure of our performance. ATCF should not be used as a measure of our liquidity, nor is it indicative of funds available to fund our cash needs. ATCF also should not be used as a substitute for cash flow from operating activities (computed in accordance with GAAP).   b. Based on an interest in our operating partnership of 78.68% and 77.03% for the three and twelve months ended December 31, 2012, respectively, and 74.67% and 74.71% for the three and twelve months ended December 31, 2011, respectively.  

THOMAS PROPERTIES GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands)

       

December 31, 2012

December 31, 2011

(unaudited) (audited) ASSETS Investments in real estate: Operating properties, net $ 270,487 $ 265,270 Land improvements—development properties, net 57,944   76,876   328,431   342,146   Condominium units held for sale 37,891 45,217 Investments in unconsolidated real estate entities 106,210 11,372 Cash and cash equivalents, unrestricted 76,689 79,320 Restricted cash 11,611 10,616 Rents and other receivables, net 1,825 1,903 Receivables from unconsolidated real estate entities 2,347 2,918 Deferred rents 18,994 17,866 Deferred leasing and loan costs, net 10,716 12,283 Other assets, net 11,441 17,465 Assets associated with land held for sale 4,837   4,417   Total assets $ 610,992   $ 545,523   LIABILITIES AND EQUITY Liabilities: Mortgage loans $ 281,375 $ 289,523 Accounts payable and other liabilities, net 28,346 32,443 Losses and distributions in excess of investments in unconsolidated real estate

entities

10,084 2,538 Prepaid rent 1,784 2,116 Deferred revenue 10,566 903 Obligations associated with land held for sale —   27   Total liabilities 332,155   327,550     Equity: Stockholders’ equity: Preferred stock, $.01 par value, 25,000,000 shares authorized, none issued or

outstanding as of December 31, 2012 and 2011

— — Common stock, $.01 par value, 225,000,000 shares authorized, 46,126,481 and

37,094,995 shares issued and outstanding as of December 31, 2012 and

2011, respectively

461 371 Limited voting stock, $.01 par value, 20,000,000 shares authorized, 12,313,331

shares issued and outstanding as of December 31, 2012 and 2011,

respectively

123 123 Additional paid-in capital 258,780 208,473 Retained deficit and dividends (83,635 ) (55,472 ) Total stockholders’ equity 175,729   153,495   Noncontrolling interests: Unitholders in the Operating Partnership 44,154 52,983 Partners in consolidated real estate entities 58,954   11,495   Total noncontrolling interests 103,108   64,478   Total equity 278,837   217,973   Total liabilities and equity $ 610,992   $ 545,523