BOSTON, Feb. 15 /PRNewswire-FirstCall/ -- Heritage Property
Investment Trust, Inc. (NYSE:HTG) ("Heritage" or the "Company"),
today reported results of operations for the quarter and year ended
December 31, 2005. Highlights included: * Diluted FFO per share of
$0.68 for the quarter and $2.70 for the year * Diluted FFO per
share of $0.69 for the quarter and $2.80 for the year, excluding
impact of tax-offset provision and restatement costs * Same
property net operating income growth (excluding lease termination
fee income) of 2.1% for the quarter and 3.5% for the year *
Dividend payment of $2.10 per share in 2005 * Finalized agreement
to sell eight shopping centers, including entire Nebraska and South
Dakota shopping center portfolio * Reached tentative agreement for
capital raising joint venture platform * Achieved increase over
prior rents within our shopping center portfolio of 6.6% for the
quarter and year * Board of Directors authorized $50 million common
stock repurchase program "We are extremely pleased with the
progress we made in 2005 in executing our business plan," stated
Thomas C. Prendergast, Chairman, President and Chief Executive
Officer. "Our core portfolio continued its strong performance and
momentum from 2004 and produced solid same store results once
again. We are also pleased with our investment activity, as we
added seven high quality shopping centers in excellent markets.
Lastly, we made great strides in advancing our joint venture and
capital recycling initiatives, which will position us for growth in
2006 and beyond." FINANCIAL RESULTS The results set forth in this
release reflect the impact of the Company's previously announced
restatement of its financial statements for the quarter and year
ended December 31, 2004. All per share amounts are stated on a
diluted basis. In the opinion of management, all adjustments
considered necessary for a fair presentation of these reported
results have been made. For the three months ended December 31,
2005, Funds From Operations (FFO), a widely accepted measure of
REIT performance, was $33.1 million, or $0.68 per share, as
compared to $28.8 million, or $0.61 per share, for the same period
in 2004. Net income attributable to common shareholders was $6.6
million for the three months ended December 31, 2005, or $0.14 per
share, as compared to $6.8 million, or $0.14 per share for the same
period in 2004. For the year ended December 31, 2005, FFO was
$129.8 million, or $2.70 per share, as compared to $123.5 million,
or $2.62 per share, for the year ended December 31, 2004. Net
income attributable to common shareholders was $29.6 million, or
$0.62 per share, for the year ended December 31, 2005 as compared
to $39.3 million, or $0.84 per share, for the year ended December
31, 2004. For the three and twelve months ended December 31, 2005,
both FFO and net income attributable to common shareholders include
a reduction of approximately $0.1 million, or less than $0.01 per
share, and $4.9 million, or $0.10 per share, respectively,
reflecting the impact of the tax-offset provision that gave rise to
the restatement and the costs of the restatement itself. For the
three and twelve months ended December 31, 2004, both FFO and net
income attributable to common shareholders include a reduction of
approximately $4.2 million, or $0.09 per share, and $5.5 million,
or $0.12 per share, respectively, reflecting the impact of the
tax-offset provision. BALANCE SHEET POSITION As of December 31,
2005, Heritage's market capitalization was $3.1 billion, including
an aggregate of $1.5 billion of indebtedness, resulting in a
debt-to-total market capitalization ratio of approximately 47.6%.
Heritage's indebtedness had a weighted average interest rate of
6.18% with an average maturity of 4.2 years. Approximately 57% of
the Company's total debt is unsecured debt. As of December 31,
2005, $328 million was outstanding under the Company's $400 million
line of credit. PORTFOLIO OVERVIEW General As of December 31, 2005,
Heritage had a shopping center portfolio of 171 properties, located
in 30 states and totaling approximately 35.0 million square feet of
total gross leasable area, of which 28.7 million square feet is
company-owned gross leasable area. Leasing Activity During the
fourth quarter of 2005, the Company executed 179 leases (new and
renewed), for 934,000 square feet in the Company's shopping center
portfolio. In doing so, the Company achieved a 6.6% increase over
prior rents on a cash basis from $8.83 per square foot to $9.42 per
square foot. For the full year 2005, the Company signed 663 leases
(new and renewed), for 2.7 million square feet in the Company's
shopping center portfolio. In doing so, the Company achieved a 6.6%
increase over prior rents on a cash basis from $10.82 per square
foot to $11.54 per square foot. At December 31, 2005, the
percentage of the Company's portfolio leased was 92.4%. At
September 30, 2005, the Company's portfolio was 92.5% leased. Same
Property Operating Results With respect to the properties owned and
operated by the Company for the three and twelve months ended
December 31, 2005 and 2004, same property net operating income
increased as follows: Same Property Operating Data (in thousands)
Three Months Ended Year Ended December 31, December 31, 2005 2004
2005 2004 Real estate revenue $85,341 $83,871 $328,776 $320,496
Operating expenses (25,737) (24,147) (95,804) (93,611) Net
Operating Income 59,604 59,724 -0.2% 232,972 226,885 2.7% Less:
Lease termination income (53) (1,408) (424) (2,124) Net Operating
Income, as adjusted $59,551 $58,316 2.1% $232,548 $224,761 3.5%
INVESTMENT ACTIVITY 2005 Investment Activity During 2005, the
Company acquired seven shopping centers, totaling approximately 1.3
million square feet, of which approximately 709,000 square feet is
Company-owned gross leasable area. These shopping centers are
located in Manchester, Connecticut, Parlin/Old Bridge Township, New
Jersey and Simpsonville, South Carolina. The total purchase price
paid for these properties was approximately $143 million, including
approximately $29 million of assumed mortgage indebtedness and
operating partnership units valued at approximately $6 million in
one of the Company's operating subsidiaries. The centers are an
aggregate 97% leased and the anchors and major tenants include
Super Target, Best Buy, TJ Maxx, Marshalls, Bed Bath & Beyond,
Sports Authority, Borders Books, Office Max, A.C. Moore, Petco,
Modell's Sporting Goods, Ross Dress for Less, CVS and Pier 1
Imports. In 2005, the Company's joint venture with Intercontinental
Real Estate Corporation acquired Skillman Abrams, a 133,000 square
foot shopping center in Dallas, Texas for a total purchase price of
approximately $20 million. Recent Investment Activity Capital
Raising Joint Venture Platform As previously announced, Heritage
has been exploring capital raising joint venture opportunities
involving an initial contribution of certain existing assets and
the funding of future shopping center acquisitions. Heritage is
pleased to report that it has reached a tentative agreement with a
partner regarding the principal terms of a joint venture. Assuming
a final agreement is reached, the Company anticipates completing
the joint venture in the second quarter of 2006. In connection with
the formation of the joint venture, Heritage will contribute no
more than four of its existing shopping centers. The identity of,
and aggregate purchase price for, these contributed properties are
not being disclosed pending the completion of the transaction. In
addition to the properties to be contributed at closing by
Heritage, the joint venture will acquire stable, well-located
grocer-anchored retail community or neighborhood shopping centers
primarily located in Top 50 Metropolitan Statistical Areas of the
United States. Heritage anticipates that the joint venture will be
the primary vehicle through which Heritage will acquire stabilized
retail properties. Heritage will contribute 20% of the equity
capital required by the joint venture and will manage the joint
venture and its properties and will receive fees for acquisitions,
financing, property management, leasing, construction management
and disposition of the assets as well as have the opportunity to
receive current performance-based incentives. "We are very excited
about the opportunity to establish a joint venture of this
magnitude," said Mr. Prendergast. "It will enable us to acquire
strong retail properties in an accretive manner while allowing us
to leverage our operational capabilities to the benefit of both
joint venture partners. We are also pleased to seed the joint
venture with some of our own existing assets, giving the joint
venture a platform from which to grow while allowing us to take
advantage of favorable market-pricing conditions." River East
Center, Chicago, Illinois In January 2006, Intercontinental Real
Estate Corporation acquired River East Center, a mixed-use property
located in Chicago, Illinois, and engaged Heritage to provide
property management services at the property. River East includes
250,000 square feet of retail space and a parking garage. Sale of
Nebraska Portfolio In late January 2006, Heritage finalized an
agreement to sell eight shopping centers. The shopping centers are
being sold as a portfolio to a single buyer and constitute all of
the Company's centers in Nebraska and South Dakota. The transaction
is expected to be completed by the end of the first quarter. As of
the date of this press release, the buyer has completed its due
diligence of the properties. The purchase price for the sale is not
being disclosed pending completion of the transaction. "I am very
pleased to announce our agreement to sell eight shopping centers.
These centers do not meet the Company's long-term ownership
criteria and are located within markets that are not part of the
Company's future strategic direction," said Mr. Prendergast. "This
transaction represents an excellent opportunity to execute our
capital recycling strategy and take advantage of favorable
pricing." CAPITAL MARKETS ACTIVITY Stock Buyback Program Heritage
also announced that its Board of Directors has authorized a common
stock repurchase program under which the Company may purchase up to
$50 million of its common stock over the next twelve months as
market conditions warrant. The shares may be repurchased in the
open market or in privately negotiated transactions. The Company
anticipates that it may use a portion of the proceeds of its
Nebraska portfolio sale to repurchase its stock. Bridge Loan On
November 28, 2005, the Company entered into a $100 million term
loan or "bridge loan" with Wachovia Investment Holdings, LLC, as
agent, and certain other financial institutions, expiring August
28, 2006, subject to a two year extension. As of December 31, 2005,
$50 million was left to be drawn upon under the bridge loan.
Amounts borrowed under the bridge loan bear interest at either the
lender's base rate or a floating rate based on a spread over LIBOR
ranging from 55 basis points to 115 basis points, depending upon
the Company's debt rating. The variable rate in effect at December
31, 2005 was 5.09%. This bridge loan also has a facility fee based
on the amount committed ranging from 12.5 to 25 basis points,
depending upon the Company's debt rating, and requires quarterly
payments. The bridge loan will provide the Company with additional
flexibility in funding short-term growth opportunities and working
capital needs. Interest Rate Hedge During the fourth quarter 2005,
the Company entered into $150 million of forward-starting interest
rate swaps with a fixed rate of 5.019%. The Company entered into
the interest rate swap contracts designated and qualifying as cash
flow hedges. The purpose of these forward swaps is to mitigate the
risk of changes in forecasted interest payments on $150 million of
ten-year fixed- rate financing anticipated to be obtained in the
second or third quarter of 2006. DIVIDEND PAYMENT On January 17,
2006, the Company paid its regular quarterly dividend of $0.525 per
common share to shareholders of record on December 30, 2005. For
2005, the Company paid regular dividends of $2.10 per share. 2006
EARNINGS GUIDANCE Given the current economic outlook and
management's expectations with respect to its portfolio performance
and level of investment and capital recycling activity, the Company
anticipates 2006 FFO per share on a diluted basis to be in the
range of $2.80 to $2.88. The foregoing estimates do not include
possible future gains or losses from property dispositions, the
effect of any prepayment of indebtedness in connection with
property dispositions or the impact of any impairments of real
estate. These events may negatively and materially impact both net
income and FFO. A reconciliation of management's projections from
earnings per diluted common share to FFO per diluted common share
is included in this release. CONFERENCE CALL Members of Heritage's
senior management will host a conference call on Thursday, February
16, 2006, at 10:00 a.m., ET, to discuss the Company's fourth
quarter and full year results. Stockholders, analysts and other
interested parties may participate in this conference call by
dialing 800-218- 0530 or 303-262-2140 at least five minutes before
the scheduled start time. Investors can also access the call via
the Internet at the Company's website,
http://www.heritagerealty.com/. To listen to a live broadcast,
access this site at least 15 minutes prior to the scheduled start
time in order to register, download, and install any necessary
audio software. A replay of the conference call will be available
after the call through February 23, 2006 by accessing the Company's
website at http://www.heritagerealty.com/ or by dialing
800-405-2236 or 303-590-3000, pass-code 11050207. ABOUT HERITAGE
PROPERTY INVESTMENT TRUST, INC. Heritage is a fully integrated,
self-administered and self-managed REIT traded on the New York
Stock Exchange under the symbol "HTG". Heritage is one of the
largest owners and operators of neighborhood and community shopping
centers in the United States. Heritage focuses on grocer-anchored
shopping centers with multiple anchors. Heritage is headquartered
in Boston, Massachusetts and has an additional 16 regional offices
located in the Eastern, Midwestern and Southwestern United States.
For more information about Heritage, please refer to Heritage's
website, http://www.heritagerealty.com/. A copy of Heritage's
fourth quarter 2005 "Supplemental Operating and Financial Data" is
available on the Investor Relations section of the Company's
website at http://www.heritagerealty.com/. These materials are also
available by written request to: Investor Relations Heritage
Property Investment Trust, Inc. 131 Dartmouth St. Boston, MA 02116
SAFE HARBOR LANGUAGE Some of the statements contained in this press
release constitute forward- looking statements. Forward-looking
statements relate to expectations, beliefs, projections, future
plans and strategies, anticipated events or trends and similar
expressions concerning matters that are not historical facts. The
forward-looking statements reflect the Company's current views
about future events and are subject to risks, uncertainties,
assumptions and changes in circumstances that may cause the
Company's actual results to differ significantly from those
expressed in any forward-looking statement. You should not rely on
forward-looking statements since they involve known and unknown
risks, uncertainties and other factors that are, in some cases,
beyond the Company's control and that could materially affect
actual results. The factors that could cause actual results to
differ materially from current expectations include risks detailed
from time to time in filings with the Securities and Exchange
Commission. The forward-looking statements contained herein
represent the Company's judgment as of the date of this release,
and the Company cautions readers not to place undue reliance on
such statements. HERITAGE PROPERTY INVESTMENT TRUST, INC.
Consolidated Balance Sheets December 31, 2005 and 2004 (Unaudited
and in thousands of dollars) December 31, December 31, Assets 2005
2004 Real estate investments, net $2,305,402 $2,222,638 Cash and
cash equivalents - 6,720 Accounts receivable, net of allowance for
doubtful accounts of $10,585 in 2005 and $9,583 in 2004 54,077
41,148 Prepaids and other assets 30,219 24,488 Investments in
unconsolidated joint ventures 5,211 3,406 Deferred financing and
leasing costs 63,320 54,150 Total assets $2,458,229 $2,352,550
Liabilities and Shareholders' Equity Liabilities: Mortgage loans
payable $630,819 $649,040 Unsecured notes payable 449,964 449,763
Line of credit facility 328,000 196,000 Bridge loan payable 50,000
- Accrued expenses and other liabilities 96,286 99,955 Accrued
distributions 25,224 24,915 Total liabilities 1,580,293 1,419,673
Minority Interests: Exchangeable limited partnership units 17,125
13,008 Other minority interest - 2,425 Total minority interests
17,125 15,433 Shareholders' equity: Common stock, $.001 par value;
200,000,000 shares authorized; 47,385,995 and 46,934,285 shares
issued and outstanding at December 31, 2005 and 2004, respectively
47 47 Additional paid-in capital 1,174,855 1,160,081 Cumulative
distributions in excess of net income (309,219) (239,403) Unearned
compensation (3,672) (2,775) Other comprehensive loss (1,200) (506)
Total shareholders' equity 860,811 917,444 Total liabilities and
shareholders' equity $2,458,229 $2,352,550 HERITAGE PROPERTY
INVESTMENT TRUST, INC. Consolidated Statements of Operations Year
ended December 31, 2005 and 2004 (Unaudited and in thousands,
except per-share data) 2005 2004 Revenue: Rentals and recoveries
$350,345 $325,947 Interest, other, and joint venture fee income
1,071 993 Total revenue 351,416 326,940 Expenses: Property
operating expenses 49,910 45,954 Real estate taxes 51,934 48,973
Depreciation and amortization 100,411 88,678 Interest 86,435 77,269
General and administrative 32,828 29,668 Total expenses 321,518
290,542 Income before gain on sale of marketable securities and
real estate investment 29,898 36,398 Gain on sale of marketable
securities 8 529 Gain on sale of real estate investment - 28 Income
before equity in (loss) income from unconsolidated joint ventures
and allocation to minority interests 29,906 36,955 Equity in (loss)
income from unconsolidated joint ventures (77) 86 Income allocated
to exchangeable limited partnership units (241) (206) Income
allocated to Series B & C Preferred Units - (2,176) Income
before discontinued operations 29,588 34,659 Discontinued
Operations: Income from discontinued operations - 696 Gains on
sales of discontinued operations - 3,958 Income from discontinued
operations - 4,654 Net income attributable to common shareholders
$29,588 $39,313 Basic per-share data: Income before discontinued
operations $0.63 $0.75 Income from discontinued operations - 0.10
Income attributable to common shareholders $0.63 $0.85 Weighted
average common shares outstanding 46,888 46,385 Diluted per-share
data: Income before discontinued operations $0.62 $0.74 Income from
discontinued operations - 0.10 Income attributable to common
shareholders $0.62 $0.84 Weighted average common and common
equivalent shares outstanding 48,176 47,288 HERITAGE PROPERTY
INVESTMENT TRUST, INC. Consolidated Statements of Operations Three
Months ended December 31, 2005 and 2004 (Unaudited and in
thousands, except per-share data) 2005 2004 Revenue: Rentals and
recoveries $90,835 $84,173 Interest, other, and joint venture fee
income 287 442 Total revenue 91,122 84,615 Expenses: Property
operating expenses 13,226 12,158 Real estate taxes 13,969 12,043
Depreciation and amortization 26,387 23,137 Interest 23,042 20,114
General and administrative 7,530 11,446 Total expenses 84,154
78,898 Income before gain on sale of real estate investment 6,968
5,717 Gain on sale of real estate investment - 3 Income before
equity in (loss) income from unconsolidated joint ventures and
allocation to exchangeable limited partnership units 6,968 5,720
Equity in (loss) income from unconsolidated joint ventures (296) 72
Income allocated to exchangeable limited partnership units (59)
(28) Income before discontinued operations 6,613 5,764 Discontinued
Operations: Income from discontinued operations - 61 Gains on sales
of discontinued operations - 970 Income from discontinued
operations - 1,031 Net income attributable to common shareholders
$6,613 $6,795 Basic per-share data: Income before discontinued
operations $0.14 $0.13 Income from discontinued operations - 0.02
Income attributable to common shareholders $0.14 $0.15 Weighted
average common shares outstanding 47,013 46,581 Diluted per-share
data: Income before discontinued operations $0.14 $0.12 Income from
discontinued operations - 0.02 Income attributable to common
shareholders $0.14 $0.14 Weighted average common and common
equivalent shares outstanding 48,503 47,695 Heritage Property
Investment Trust, Inc. Calculation of Funds from Operations
(Unaudited and in thousands of dollars) Year Ended December 31,
2005 2004 Net income $29,588 $39,313 Add (deduct): Depreciation and
amortization (real-estate related) Continuing operations 99,738
87,869 Discontinued operations - 314 Pro-rata share of
unconsolidated joint venture depreciation 440 13 Net gains on sales
of real estate investments and equipment - (3,986) Funds from
Operations $129,766 $123,523 Three Months Ended December 31, 2005
2004 Net income $6,613 $6,795 Add (deduct): Depreciation and
amortization (real-estate related) Continuing operations 26,233
22,959 Discontinued operations - 36 Pro-rata share of
unconsolidated joint venture depreciation 300 11 Net gains on sales
of real estate investments and equipment - (973) Funds from
Operations $33,146 $28,828 We calculate Funds from Operations in
accordance with the best practices described in the April 2001
National Policy Bulletin of the National Association of Real Estate
Investment Trusts, referred to as NAREIT, and NAREIT's 1995 White
Paper on Funds from Operations. The White Paper defines Funds From
Operations as net income (loss) (computed in accordance with U.S.
generally accepted accounting principles ("GAAP")), excluding gains
(or losses) from extraordinary items and sales of property, plus
real estate related depreciation and amortization and after
adjustments for unconsolidated partnerships and joint ventures.
Given the nature of our business as a real estate owner and
operator, we believe that FFO is helpful to investors as a starting
point in measuring our operational performance because it excludes
various items included in net income that do not relate to, or are
not indicative of, our operating performance, such as gains (or
losses) from sales of real estate investments and depreciation and
amortization, which can make periodic and peer analyses of
operating performance more difficult. However, FFO (i) should not
be considered as an alternative to net income (determined in
accordance with GAAP) as an indicator of our financial performance,
(ii) is not an alternative to cash flow from operating activities
(determined in accordance with GAAP) as a measure of our liquidity,
and (iii) is not indicative of funds available to fund our cash
needs, including our ability to make distributions. Our computation
of FFO may differ from the methodology utilized by other equity
REITs to calculate FFO and, therefore, may not be comparable to
other REITs. Heritage Property Investment Trust, Inc.
Reconciliation of Net Operating Income (Unaudited and in thousands
of dollars) Years ended December 31, 2005 2004 Net operating income
$248,501 $231,020 Add: Interest, other, and joint venture fee
income 1,071 993 Gain on sale of marketable securities 8 529 Gains
on sales of real estate investments - 28 Equity in (loss) income
from unconsolidated joint ventures (77) 86 Income from discontinued
operations - 696 Gains on sales of discontinued operations - 3,958
Deduct: Depreciation and amortization 100,411 88,678 Interest
86,435 77,269 General and administrative 32,828 29,668 Income
allocated to exchangeable limited partnership units 241 206 Income
allocated to Series B and C Preferred Units - 2,176 Net income
attributable to common shareholders $29,588 $39,313 Three months
ended December 31, 2005 2004 Net operating income $63,640 $59,972
Add: Interest, other, and joint venture fee income 287 442 Gains on
sales of real estate investments - 3 Equity in (loss) income from
unconsolidated joint ventures (296) 72 Income from discontinued
operations - 61 Gains on sales of discontinued operations - 970
Deduct: Depreciation and amortization 26,387 23,137 Interest 23,042
20,114 General and administrative 7,530 11,446 Income allocated to
exchangeable limited partnership units 59 28 Net income
attributable to common shareholders $6,613 $6,795 Net operating
income, or "NOI," is a non-GAAP financial measure equal to net
income available to common shareholders (the most directly
comparable GAAP financial measure), plus accretion of redeemable
equity, preferred stock distributions, minority interest in Bradley
Operating Limited Partnership, net derivative losses (gains),
losses (gains) on investments in securities, losses from prepayment
of debt, general and administrative expense, depreciation and
amortization, and interest expense, less income from discontinued
operations, gains (losses) on sales of real estate investments and
equipment and interest and other income. We use NOI internally, and
believe NOI provides useful information to investors, as a
performance measure in evaluating the operating performance of our
real estate assets. This is because NOI reflects only those income
and expense items that are incurred at the property level and
excludes certain components from net income in order to provide
results that are more closely related to a property's results of
operations. Our presentation of NOI may not be comparable to NOI
reported by other REITs that define NOI differently. We believe
that in order to obtain a clear understanding of our operating
results, NOI should be examined in conjunction with net income as
presented in our consolidated financial statements. NOI should not
be considered as an alternative to net income as an indication of
our performance or to cash flows as a measure of liquidity or
ability to make distributions. Heritage Property Investment Trust,
Inc. Reconciliation of Projected Diluted Net Income Per Common
Share to Projected Funds From Operations Per Common Share Projected
Range Full Year 2006 Low High Projected diluted net income per
share $0.61 $0.66 Projected depreciation and amortization (real
estate related) 2.18 2.20 Pro-rata share of unconsolidated joint
venture depreciation 0.01 0.02 Projected FFO per diluted share
$2.80 $2.88 The foregoing estimates reflect management's view of
current and future market conditions, including assumptions with
respect to rental rates, occupancy levels and earnings impact of
the events referenced in this release. These estimates may be
subject to fluctuations as the result of several factors, including
changes in the recognition of depreciation and amortization
expense, gains or losses associated with disposition activity, the
effect of any prepayment of indebtedness in connection with
property dispositions and the impact of any impairments of real
estate. The Company is not able to assess at this time the
potential impact of these factors, which may negatively and
materially impact both net income and FFO. By definition, FFO does
not include real estate-related depreciation and amortization or
gains or losses associated with disposition activities. There can
be no assurance that the Company's actual results will not differ
materially from the estimates set forth above. DATASOURCE: Heritage
Property Investment Trust, Inc. CONTACT: Patrick O'Sullivan, Vice
President, Finance and Accounting, +1-617-247-2200, ; Analyst
Information: Claire Koeneman, +1-312-640-6745, General Information:
Joe Calabrese, +1-212-827-3772, both of Financial Relations Board
Web site: http://www.heritagerealty.com/
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