Core Mall total leased space reached 96.6%
NOI-weighted sales per square foot reach $525; Sales up 5.1% at Top 5 Assets
Average renewal spreads of 6.3% for the quarter and 6.9% for the year
Opened Belk in former Bon-Ton and signed DICK’s Sporting Goods in former Sears at Valley Mall
Completed first multifamily land sale
Philadelphia, PA, February 13, 2019 – PREIT (NYSE: PEI) today reported results for the quarter and year ended December 31, 2018. A description of each non-GAAP financial measure used in this release and the related reconciliation to the comparable GAAP financial measure are located in the tables accompanying this release.
Quarter EndedDecember 31, | Year EndedDecember 31, | ||||
(per share amounts) | 2018 | 2017 | 2018 | 2017 | |
Net loss – basic and diluted | $(1.23) | $(0.03) | $(1.98) | $(0.84) | |
FFO | $0.42 | $0.44 | $1.43 | $1.58 | |
FFO, as adjusted | $0.52 | $0.51 | $1.54 | $1.67 | |
FFO from assets sold in 2018 | — | $(0.01) | — | $(0.09) | |
FFO, as adjusted for assets sold | $0.52 | $0.50 | $1.54 | $1.58 |
Highlights from the quarter include:
“Our disciplined approach to low-productivity asset sales and proactive department store repositioning along with tenant diversification has resulted in a quality portfolio with densification opportunities,” said Joseph F. Coradino, CEO of PREIT. “The work we’re doing in this milestone-marked year as we complete many of the anchor and redevelopment projects underway sets the stage for a stronger Company in 2020 and beyond. The early results from this effort are evident with core portfolio sales reaching $510 per square foot and traffic up 5% during the holidays at properties that have undergone remerchandising, paving the way for a solid NOI growth forecast despite a rapidly changing environment.”
Primary Factors Affecting Financial Results for the Quarters Ended December 31, 2018 compared to December 31, 2017:
Leasing and Redevelopment
Retail Operations
The following tables set forth information regarding sales per square foot and occupancy in the Company’s mall portfolio, including unconsolidated properties:
A reconciliation of portfolio sales per square foot (1) can be found below:
Comp store sales for the rolling twelve months ended December 31, 2017 | $ | 475 |
Organic sales growth | 16 | |
Impact of non-core malls | 19 | |
Core mall comp store sales for the rolling twelve months ended December 31, 2018 | $ | 510 |
(1) Based on reported sales by all comparable non-anchor tenants that lease individual spaces of less than 10,000 square feet and have occupied the space for at least 24 months.
2019 Outlook
The Company is introducing its earnings guidance for the year ending December 31, 2019 of GAAP Net loss between ($0.55) and ($0.40) per diluted share and estimates FFO for the year will be between $1.14 and $1.29 per diluted share. FFO, as adjusted per share is expected to be between $1.20 and $1.34. Same Store NOI, excluding termination revenue is expected to grow between 1.0% and 1.9% with wholly-owned properties in the range of 1.5% to 2.6% and joint venture properties declining between (2.7%) and (2.4%).
A reconciliation between GAAP net loss and FFO is as follows:
2019 Guidance Range | ||
(Estimates per diluted share) | Low | High |
Net loss attributable to common shareholders | $(0.55) | (0.40) |
Depreciation and amortization, non controlling interest | ||
and other | 1.72 | 1.68 |
FFO per share | $1.14 | $1.29 |
Mortgage loan defeasance | 0.06 | 0.06 |
FFO per share, as adjusted | $1.20 | $1.34 |
Our guidance assumes the defeasance of the mortgage loan secured by Capital City Mall during the first quarter of 2019.
Detailed guidance assumptions are included herein in our Financial tables.
Our 2019 guidance is based on our current assumptions and expectations about market conditions, our projections regarding occupancy, retail sales and rental rates, and planned capital spending. Our guidance is forward-looking, and is subject to risks, uncertainties and changes in circumstances that might cause future events, achievements or results to differ materially from those expressed or implied by the forward-looking statements.
Conference Call Information
Management has scheduled a conference call for 11:00 a.m. Eastern Time on Thursday,
February 14, 2019, to review the Company’s results and future outlook. To listen to the call, please dial 1-844-885-9139 (domestic toll free), or 1-647-689-4441 (international), and request to join the PREIT call, Conference ID 3088886, at least five minutes before the scheduled start time. Investors can also access the call in a “listen only” mode via the internet at the Company’s website, preit.com. Please allow extra time prior to the call to visit the site and download the necessary software to listen to the Internet broadcast. Financial and statistical information expected to be discussed on the call will also be available on the Company’s website. For best results when listening to the webcast, the Company recommends using Flash Player.
For interested individuals unable to join the conference call, the online archive of the webcast will also be available for one year following the call.
About PREIT
PREIT (NYSE:PEI) is a publicly traded real estate investment trust that owns and manages quality properties in compelling markets. PREIT’s robust portfolio of carefully curated retail and lifestyle offerings mixed with destination dining and entertainment experiences are located primarily in the densely-populated eastern U.S. with concentrations in the mid-Atlantic’s top MSAs. Since 2012, the Company has driven a transformation guided by an emphasis on portfolio quality and balance sheet strength driven by disciplined capital expenditures. Additional information is available at www.preit.comor on Twitter or LinkedIn.
Rounding
Certain summarized information in the tables above may not total due to rounding.
CONTACT: AT THE COMPANY
Robert McCadden
EVP & CFO
(215) 875-0735
Heather Crowell
SVP, Strategy and Communications
(215) 454-1241
heather.crowell@preit.com
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