By a News Reporter-Staff News Editor at Marketing Weekly News -- Glimcher Realty Trust (NYSE: GRT) announced financial results for the second quarter ended June 30, 2014. A description and reconciliation of non-GAAP financial measures to GAAP financial measures are contained in a later section of this press release. References to per share amounts are based on diluted common shares.
"During the second quarter, we continued to deliver solid operating metrics from our core mall portfolio, including net operating income growth above 4%, 95% total occupancy, and 17% re-leasing spreads. Additionally, we were pleased with the leasing momentum at our signature redevelopment projects during the second quarter, which included new deals with American Girl, Intermix, Athleta, Kendra Scott, West Elm and Sephora," said Michael P. Glimcher, Chairman of the Board and CEO. "As we look to the second half of the year, we are focused on the execution of our asset dispositions to further accelerate improvements to the quality of our portfolio and balance sheet."
Net loss to common shareholders during the second quarter of 2014 was $5.6 million, or $0.04 per share, as compared to a net income of $29.9 million, or $0.21 per share, in the second quarter of 2013. Funds From Operations ("FFO") during the second quarter of 2014 was $26.7 million, or $0.18 per share, compared to $33.4 million, or $0.23 per share, in the second quarter of 2013. Adjusted FFO for the second quarter of 2013 was $26.6 million, or $0.18 per share. Adjusted FFO for the second quarter of 2013 primarily excludes the $6.9 million gain associated with the Company's pro-rata share of the loan extinguishment on Tulsa Promenade ("Tulsa"), a property sold during the second quarter of 2013. Second Quarter Earnings Highlights Total revenues were $97.9 million in the second quarter of 2014, compared to total revenues of $95.0 million in the second quarter of 2013. A primary driver of the $2.9 million increase was property revenue growth, excluding termination income, of $6.6 million from acquired properties as well as comparable property revenue growth of $2.7 million. The acquired properties were Arbor Hills in Ann Arbor, Michigan in December of 2013, the retail properties in Oklahoma City, Oklahoma in February of 2014, and the remaining 60% indirect ownership interest in WestShore Plaza ("WestShore") located in Tampa, Florida in June of 2013. These increases were partially offset by a $4.0 million decrease in revenue from termination fee income and sales of outparcels and a $1.7 million decrease in fee and service income.
Net loss to common shareholders was $5.6 million in the second quarter of 2014, compared to net income of $29.9 million in the second quarter of 2013. The decrease in net income was primarily due to non-cash items in the second quarter of 2013 totaling $31.7 million. The non-cash items for the second quarter of 2013 related to the Company's recognition of a $19.2 million gain on the re-measurement of its 40% equity investment in WestShore, the Company's pro-rata share of the gain associated with the debt extinguishment on Tulsa of $6.9 million, as well as the Company's share of the net gain on the sale of Tulsa and Lloyd Center in Portland, Oregon of $5.6 million.
Net operating income ("NOI") for comparable mall properties, including the pro-rata share of NOI for malls held through joint ventures, increased 4.3% for the three months ended June 30, 2014 from the three months ended June 30, 2013.
Average in-line store rents for the Core Malls were $34.80 per square foot ("psf") at June 30, 2014, compared to $34.77 psf at June 30, 2013. Average in-line store rents include in-line permanent retail stores that are less than 10,000 square feet. Core Malls include all of the Company's mall properties, both wholly-owned and joint venture properties.
Re-leasing spreads for the Core Malls increased by 17% for the non-anchor leases signed during the second quarter of 2014, with base rents averaging $43.89 psf. Re-leasing spreads represent the percentage change in base rent for permanent leases signed, including both new leases and renewals, compared to the base rent for comparative tenants for those leases where the space was occupied in the previous twenty-four months.
Total occupancy for Core Malls increased to 95.3% at June 30, 2014, compared to 94.7% at June 30, 2013.
Average store sales in the Core Malls increased 0.4% to $473 psf for the twelve months ended June 30, 2014, compared to $471 psf for the twelve months ended June 30, 2013. Average store sales represent retail sales for mall stores of 10,000 square feet of gross leasable area or less that reported sales in the most recent twelve month period.
Occupancy costs for the twelve months ended June 30, 2014 were 10.0% of tenant sales for Core Mall stores. Occupancy costs include the tenants' minimum rent and costs the tenants pay toward property operating costs and real estate taxes. Update on Liquidity and Capital Resources Debt-to-total-market capitalization at June 30, 2014 (including the Company's pro-rata share of unconsolidated entities debt) was 50.0%, based on a common share closing price of $10.83, as compared to 52.8% at December 31, 2013, based on a common share closing price of $9.36. Debt with fixed interest rates represented approximately 90.8% of the Company's consolidated total outstanding borrowings at June 30, 2014, compared to 92.1% at December 31, 2013.
The Company did not sell any common shares under its at-the-market ("ATM") equity offering program during the six months ended June 30, 2014. The Company has approximately $209.2 million available for issuance under the ATM program.
The Company sold two non-core assets for $6.8 million in 2014. The Company sold the remaining parcels of Town Square at Surprise for $3.7 million and a multi-tenant building at River Valley Mall in Lancaster, Ohio for $3.1 million. The proceeds from these sales were used to repay property level debt as well as to paydown amounts outstanding on the Company's credit facility. Update on Asset Disposition Program In January 2014, the Company executed an agreement with the securitization trustee for the securitized mortgage loan currently encumbering Eastland Mall in Columbus, Ohio ("Eastland"), and commenced marketing this property for sale. As Eastland will not sell within the six month marketing period established by the aforementioned agreement, the trustee will acquire title to the property by a deed in lieu of foreclosure and issue a full release of the associated $39.8 million mortgage lien at the end of July 2014.
In May 2014, the Company together with their joint venture partner, commenced formal marketing of Puente Hills Mall, located in the City of Industry, California ("Puente"). The Company expects to complete the sale of Puente in the later part of 2014. The Company owns a 52% interest in Puente.
Incremental to the Eastland and Puente disposition activity, the Company has targeted to raise approximately $200 - $300 million of capital through the sale of three to four additional malls (the "Targeted Dispositions"). To accomplish this, the Company listed thirteen of its malls with a broker with the objective of only selling a subset of such properties. The Company expects to complete the Targeted Dispositions in the second half of 2014. Based upon prevailing market conditions during the offering process, the overall scope of the Company's Targeted Dispositions is subject to change. 2014 Outlook As of the date of this release, the Company maintains previously issued guidance of net income per share to be in the range of $0.03 to $0.07 for the year ending December 31, 2014, and adjusted FFO per share to be in the range of $0.74 to $0.78 for the year ending December 31, 2014. References to estimated per share amounts are based on diluted common shares. Key assumptions as detailed in our initial guidance remain the same other than the adjustment for the Eastland impairment. Due to the uncertainty of the scope, mix of assets involved, pricing and ultimate timing, the dilutive impact of the potential divestures discussed above are not included in the Company's current 2014 outlook, other than the disposition of Eastland.
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