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Glimcher Reports Third Quarter 2010 Results

^{Published on 2010-10-28 13:26:02 - Market Wire}
 

COLUMBUS, Ohio--([ BUSINESS WIRE ])--Glimcher Realty Trust (NYSE: GRT) today announced financial results for the third quarter ended September 30, 2010. 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.

"Additionally, our existing portfolio has posted another strong quarter of performance with positive net operating income growth, increased retail sales and higher occupancy levels"

aWe are excited about the significant steps accomplished toward our goal of enhancing the quality of our mall portfolio. Both the pending acquisition of Pearlridge Center in Honolulu, Hawaii along with gaining full control of our signature Scottsdale Quarter^® development will meaningfully improve our portfolio quality,a stated MichaelP.Glimcher, Chairman of the Board and CEO. aAdditionally, our existing portfolio has posted another strong quarter of performance with positive net operating income growth, increased retail sales and higher occupancy levels,a added Mr. Glimcher.

Net loss to common shareholders during the third quarter of 2010 was $4.6 million, or $0.06 per share, as compared to a net loss of $2.4 million, or $0.06 per share, in the third quarter of 2009. Funds From Operations (aFFOa) during the third quarter of 2010 was $13.0 million compared to $17.5 million in the third quarter of 2009. On a per share basis, FFO during the third quarter of 2010 was $0.16 per share compared to $0.40 per share for the third quarter of 2009.

For the first nine months of 2010, net loss to common shareholders was $15.2 million, or $0.21 per share, compared to a net loss of $7.3 million, or $0.19 per share, for the first nine months of 2009. FFO was $40.1 million, or $0.53 per share, in the first nine months of 2010, compared to $54.3 million, or $1.29 per share, in the first nine months of 2009.

Third Quarter Earnings Highlights

• Total revenues were $64.8 million in the third quarter of 2010 compared to total revenues of $74.7 million in the third quarter of 2009. The $9.9 million decrease in total revenues primarily resulted from reduced revenue of $11.7 million from the sale of a 60% interest in Lloyd Center in Portland, Oregon (aLloyda) and WestShore Plaza in Tampa, Florida (aWestShorea) to The Blackstone Group^® late in the first quarter of 2010. This decrease was partially offset by revenue growth of $1.4 million from our comparable properties and from Scottsdale Quarter^®, a development in Scottsdale, Arizona (aScottsdalea), in 2010.
• Net loss to common shareholders was $4.6 million in the third quarter of 2010 compared to a net loss of $2.4 million in the third quarter of 2009. Unfavorable variances included increased preferred dividends of $1.8 million associated with the 3.5 million shares of preferred stock issued in April of 2010, the dilution of $0.8 million from the sale of a 60% interest in Lloyd and WestShore to The Blackstone Group^®, an increase in the companya™s share of losses on Scottsdale Quarter^® of $1.4 million primarily driven by increased interest expense and depreciation. These unfavorable variances were partially offset by improved operating income of $1.3 million for our wholly-owned properties, and a $0.5 million improvement from discontinued operations.
• Net operating income (aNOIa) for comparable mall properties, including the pro-rata share of the malls held through joint ventures, increased approximately 1% for the three months ended September 30, 2010 from the three months ended September30, 2009.
• Average store rents for the Core Malls were $26.73 per square foot (apsfa) at September 30, 2010, a 0.6% decrease from $26.89psf at September 30, 2009. Core Malls include both wholly-owned and joint venture mall properties. Re-leasing spreads for the leases signed during the quarter ending September30, 2010 were up 6% with base rents averaging $38.57 psf. Re-leasing spreads represent the percentage change in base rent for leases signed, both new leases 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, including anchor stores (stores in excess of 20,000 square feet), for Core Malls improved to 93.2% at September 30, 2010, compared to 92.9% at September30, 2009. Store occupancy, excluding anchor stores, in the Core Malls at September 30, 2010 decreased to 90.9% compared to 91.5% at September30, 2009, but increased sequentially from June 30, 2010 by 40 basis points.
• Average store sales in the Core Malls increased 4.1% to $354 psf for the twelve months ended September30, 2010 compared to $340 psf for the twelve months ended September 30, 2009. Average store sales represent retail sales for mall stores of 10,000 square feet or less that reported sales in the most recent twelve month period.
• Comparable store sales for the Companya™s Core Malls during the three months ended September 30, 2010, compared to the three months ended September30, 2009, increased by 4.1% and increased 0.7% for the twelve months ending September 30, 2010 compared to the same period in 2009. Comparable sales compare only those stores with sales in each respective period ended September 30, 2010 and September 30, 2009.

Update on Liquidity and Capital Resources

• Debt-to-total-market capitalization at September 30, 2010 (including the Companya™s pro-rata share of joint venture debt) was 62.9% based on the common share closing price of $6.15, as compared to 80.6% at December31, 2009 based on the common share closing price of $2.70. Debt with fixed interest rates represented approximately 93% of the Companya™s consolidated total outstanding borrowings at September30, 2010, as compared to 82.1% as of December31, 2009.
• The Company issued 16,100,000 common shares in July 2010, raising net proceeds of approximately $96 million. The proceeds were used to reduce the outstanding borrowings on the Companya™s credit facility.
• In October 2010, the Company exercised a one-year extension option on the credit facility, extending the maturity date to December 2011. A second one-year extension option remains available.
• The Company gained full control of the Scottsdale project by purchasing the land for all three project phases and acquiring its joint venture partnera™s 50% interest in the project improvements. The total investment of $120 million was funded by three loans totaling $86.0 million with the balance from the Companya™s credit facility. The loans included a $70 million loan with a 4.9% interest rate secured by the Phase I and II ground, assumption of a $12.5 million loan with an adjustable interest rate with a floor of 5.5% secured by the Phase III ground and seller financing of $3.5 million at a 6% interest rate secured by a subordinate lien on the Phase III ground. The Phase I and II land purchase occurred in September 2010. The Phase III land and the joint venture partner purchase occurred in October 2010.
• The Company, along with an affiliate of Blackstone Real Estate Advisors (aBlackstonea), is in contract to purchase Pearlridge Center (aPearlridgea) in Honolulu, Hawaii for $245 million and plans to close on November 1, 2010. Pearlridge will be acquired by a joint venture that is owned 80% by Blackstone and 20% by Glimcher. The purchase price of $245 million will be funded with proceeds from a new mortgage loan of approximately $175 million and equity contributions by the joint venture partners. The $175 million loan has an interest rate of 4.6% per annum and a five year term.

2010 Outlook

The Company estimates diluted net loss per share to be in the range of $(0.21) to $(0.16) for the year ending December 31, 2010 and maintains previously issued diluted FFO per share guidance in the range of $0.72 to $0.77 for the year ending December31, 2010.

A reconciliation of the range of estimated diluted net loss per share to estimated diluted FFO per share for 2010 follows:

For the fourth quarter of 2010, the Company estimates diluted net (loss) income per share to be in the range of $(0.02) to $0.01 and FFO per share to be in the range of$0.19 to $0.22. A reconciliation of the range of estimated diluted net income per share to estimated FFO per share for the fourth quarter of 2010 follows:

The Company continues to look to opportunistically raise additional capital as market conditions may warrant, consistent with the Company's long-term objectives, as well as make strategic acquisitions or dispositions of properties subject to market conditions and availability of capital. Such potential activity is not factored into the guidance provided above.

Funds From Operations and Net Operating Income

This press release contains certain non-Generally Accepted Accounting Principles (GAAP) financial measures and other terms. The Companya™s definition and calculation of these non-GAAP financial measures and other terms may differ from the definitions and methodologies used by other REITs and, accordingly, may not be comparable. The non-GAAP financial measures referred to above should not be considered as alternatives to net income or other GAAP measures as indicators of the Companya™s performance.

Funds From Operations is used by industry analysts and investors as a supplemental operating performance measure of an equity real estate investment trust (aREITa). The Company uses FFO in addition to net income to report operating results. FFO is an industry standard for evaluating operating performance defined as net income (computed in accordance with GAAP) excluding gains or losses from sales of depreciable property, plus real estate depreciation and amortization after adjustments for unconsolidated partnerships and joint ventures. FFO does include impairment losses for properties held for use and held for sale. The Company may also discuss FFO as adjusted. Reconciliations of non-GAAP financial measures to earnings used in this press release are included in the above Outlook sections of the press release.

NOI is used by industry analysts, investors and Company management to measure operating performance of the companya™s properties. NOI represents total property revenues less property operating and maintenance expenses. Accordingly, NOI excludes certain expenses included in the determination of net income such as property management and other indirect operating expenses, interest expense and depreciation and amortization expense. These items are excluded from NOI in order to provide results that are more closely related to a propertya™s results of operations. In addition the Companya™s computation of same mall NOI excludes property bad debt expense, straight-line adjustments of minimum rents, amortization of above-below market intangibles, termination income, and income from outparcel sales. We also adjust for other miscellaneous items in order to enhance the comparability of results from one period to another. Certain items, such as interest expense, while included in FFO and net income, do not affect the operating performance of a real estate asset and are often incurred at the corporate level as opposed to the property level. As a result, management uses only those income and expense items that are incurred at the property level to evaluate a propertya™s performance. Real estate asset related depreciation and amortization is excluded from NOI for the same reasons that it is excluded from FFO pursuant to the National Association of Real Estate Investment Trusta™s definition.

Third Quarter Conference Call

Glimchera™s third quarter investor conference call is scheduled for 10 a.m. ET on Friday, October 29, 2010. Those wishing to listen to this call may do so by calling 800.638.4930, Passcode 86554808. This call also will be simulcast and available over the Internet via the web site [ www.glimcher.com ]. A replay will be available approximately one hour after the Earnings Call through midnight November 12, 2010 by dialing 888.286.8010, Passcode70448952, or you can access the webcast replay on the Investor Relations page of the website. Supplemental information about the second quarter operating results is available on the Companya™s website or at [ www.sec.gov ] or by calling 614.887.5632.

About Glimcher Realty Trust

Glimcher Realty Trust, a real estate investment trust, is a recognized leader in the ownership, management, acquisition and development of malls, which includes enclosed regional malls and open-air lifestyle centers, as well as community centers. At September 30, 2010, GRT owned interests in and managed 26 Properties with total gross leasable area totaling approximately 20.0 million square feet, consisting of 22 Malls (17 wholly owned and 5 partially owned through joint ventures) and 4 Community Centers (three wholly owned and one partially owned through a joint venture).

Glimcher Realty Trusta™s common shares are listed on the New York Stock Exchange under the symbol aGRT.a Glimcher Realty Trusta™s Series F and Series G preferred shares are listed on the New York Stock Exchange under the symbols aGRT-Fa and aGRT-G,a respectively. Glimcher Realty Trust is a component of both the Russell 2000^® Index, representing small cap stocks, and the Russell 3000^® Index, representing the broader market. Glimcher^® and Scottsdale Quarter^® are registered trademarks of Glimcher Realty Trust.

Forward Looking Statements

This news release contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such statements are based on assumptions and expectations that may not be realized and are inherently subject to risks and uncertainties, many of which cannot be predicted with accuracy. Future events and actual results, financial and otherwise, may differ from the results discussed in the forward-looking statements. Risks and other factors that might cause differences, some of which could be material, include, but are not limited to, economic and market conditions, tenant bankruptcies, bankruptcies of joint venture (JV) partners, rejection of leases by tenants in bankruptcy, financing and development risks, construction and lease-up delays, cost overruns, the level and volatility of interest rates, the rate of revenue increases versus expense increases, the financial stability of tenants within the retail industry, the failure of Glimcher to make additional investments in regional mall properties and redevelopment of properties, the failure to acquire properties as and when anticipated, the failure to fully recover tenant obligations for CAM, taxes and other property expenses, failure to comply or remain in compliance with covenants in our debt instruments, inability to exercise available extension options on debt instruments, failure of Glimcher to qualify as real estate investment trust, termination of existing JV arrangements, conflicts of interest with our existing JV partners, the failure to sell mall and community centers and the failure to sell such properties when anticipated, the failure to achieve estimated sales prices and proceeds from the sale of malls, increases in impairment charges, additional impairment charges, as well as other risks listed in this news release and from time to time in Glimchera™s reports filed with the Securities and Exchange Commission or otherwise publicly disseminated by Glimcher.

Visit Glimcher at: [ www.glimcher.com ]