Thomas Properties Group, Inc. Announces First Quarter 2013 Results

Thomas Properties Group, Inc. Announces First Quarter 2013 Results

LOS ANGELES--(BUSINESS WIRE)-- Thomas Properties Group, Inc. (NAS: TPGI) reported today the results of operations for the quarter ended March 31, 2013.

The results of operations presented in this release include TPGI's results of operations for three months ended March 31, 2013 and 2012. The consolidated net loss for the three months ended March 31, 2013 was $9.0 million or $0.20 per share compared to consolidated net loss of $3.1 million or $0.09 per share for the three months ended March 31, 2012. The increase in the consolidated net loss during the three months ended March 31, 2013 compared to the three months ended March 31, 2012 was primarily due to an increase in general and administrative expenses of $3.25 million to settle a professional fee claim. Additionally, there was a $0.8 million impairment charge to reduce the book value of Campus El Segundo, a development currently held for sale, to estimated net sales proceeds, with no comparable impairment charge in 2012. There was also an overall decrease of $2.7 million from equity in net income (loss) of unconsolidated real estate entities due to our increased ownership interest in the Austin properties from 6.25% to an effective interest of 33.3%.


TPGI's share of after tax cash flow ("ATCF") for the three months ended March 31, 2013 was $0.1 million or $0.00 per share compared to ATCF of $1.7 million or $0.05 per share for the three months ended March 31, 2012. The decrease in ATCF per share for the three months ended March 31, 2013 compared to the three months ended March 31, 2012 was primarily the result of the overall reduction in consolidated net income described above for the three months ended March 31, 2013 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 the first quarter of 2013, we closed the sales of two land parcels at Four Points Centre in Austin, Texas, as well as three suburban properties owned by our TPG/CalSTRS Austin partnership," remarked Jim Thomas, Chairman and CEO. "These sales represent further progress in achieving our goal of disposing of non-strategic assets. We successfully refinanced our Two Commerce Square property in Philadelphia, and have continued to sell condominium units at Murano. We are concentrating on increasing the cash flow of our portfolio through acquisitions, improved occupancies and higher rental rates."

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 Tuesday, May 7, 2013 at 10:00 a.m. Pacific Time. To participate in the call, dial (800) 706-7745 and (617) 614-3472 internationally, and provide confirmation code 50767665.

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 May 28, 2013, by calling (888) 286-8010 and (617) 801-6888 internationally, and providing confirmation code 43698194. 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, 2012 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

March 31,

2013

2012

Revenues:

Rental

$

7,389

$

7,846

Tenant reimbursements

5,576

5,421

Parking and other

1,380

740

Investment advisory, management, leasing and development services

892

931

Investment advisory, management, leasing and development services - unconsolidated real estate entities

3,104

4,102

Reimbursement of property personnel costs

1,130

1,511

Condominium sales

4,398

919

Total revenues

23,869

21,470

Expenses:

Property operating and maintenance

6,618

6,264

Real estate and other taxes

1,995

1,920

Investment advisory, management, leasing and development services

1,920

2,994

Reimbursable property personnel costs

1,130

1,511

Cost of condominium sales

3,638

672

Interest

3,941

4,238

Depreciation and amortization

4,192

3,510

General and administrative

7,927

4,239

Impairment loss

753

Total expenses

32,114

25,348

Interest income

23

5

Equity in net income (loss) of unconsolidated real estate entities

(2,756

)

(22

)

Gain (loss) on sale of real estate

(700

)

Income (loss) before income taxes and noncontrolling interests

(11,678

)

(3,895

)

Benefit (provision) for income taxes

(22

)

(43

)

Net income (loss)

(11,700

)

(3,938

)

Noncontrolling interests' share of net (income) loss:

Unitholders in the Operating Partnership

2,422

1,041

Partners in consolidated real estate entities

309

(223

)

2,731

818

TPGI's share of net income (loss)

$

(8,969

)

$

(3,120

)

Income (loss) per share - basic and diluted

$

(0.20

)

$

(0.09

)

Weighted average common shares - basic and diluted

45,826,728

36,737,276

Reconciliation of net income (loss) to ATCF (a):

Net income (loss)

$

(8,969

)

$

(3,120

)

Adjustments:

Income tax (benefit) provision

22

43

Noncontrolling interests - unitholders in the Operating Partnership

(2,422

)

(1,041

)

Depreciation and amortization

4,192

3,510

Amortization of loan costs

162

160

Non-cash compensation expense

953

648

Straight-line rent adjustments

327

(267

)

Adjustments to reflect the fair market value of rent

41

8

Impairment loss

753

(Gain) loss on sale of real estate

700

Unconsolidated real estate entities at TPGI's share:

Depreciation and amortization

7,414

2,367

Depreciation and amortization from discontinued operations

233

173

Amortization of loan costs

(55

)

76

Amortization of loan costs from discontinued operations

5

Straight-line rent adjustments

(692

)

(13

)

Straight-line rent adjustments from discontinued operations

(31

)

(5

)

Adjustments to reflect the fair market value of rent

(924

)

(232

)

Adjustments to reflect the fair market value of rent from discontinued operations

12

(16

)

(Gain) loss on sale of real estate

(1

)

Noncontrolling interests' share:

Depreciation and amortization

(1,967

)

Depreciation and amortization from discontinued operations

(86

)

Amortization of loan costs

28

Straight-line rent adjustments

221

Straight-line rent adjustments from discontinued operations

10

Adjustments to reflect the fair market value of rent

286

Adjustments to reflect the fair market value of rent from discontinued operations

(4

)

ATCF before income taxes

$

203

$

2,296

TPGI's share of ATCF before income taxes (b)

$

160

$

1,716

TPGI's income tax refund (expense) - current

(22

)

(17

)

TPGI's share of ATCF

$

138

$

1,699

ATCF per share - basic

$

$

0.05

ATCF per share - diluted

$

$

0.05

Dividends paid per share

$

0.02

$

0.015

Weighted average common shares - basic

45,826,728

36,737,276

Weighted average common shares - diluted

46,091,417

37,076,840

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 78.69% and 74.72% for the three months ended March 31, 2013 and 2012, respectively.

THOMAS PROPERTIES GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands)

March 31,

December 31,

2013

2012

(unaudited)

(audited)

ASSETS

Investments in real estate:

Operating properties, net

$

270,353

$

268,324

Land improvements—development properties, net

6,298

6,403

Investments in real estate, net

276,651

274,727

Condominium units held for sale

34,620

37,891

Investments in unconsolidated real estate entities

107,374

106,210

Cash and cash equivalents, unrestricted

86,873

76,689

Restricted cash

4,696

11,611

Rents and other receivables, net

2,024

1,825

Receivables from unconsolidated real estate entities

2,393

2,347

Deferred rents

19,394

18,994

Deferred leasing and loan costs, net

10,900

10,716

Other assets, net

15,386

10,222

Assets associated with land held for sale

47,651

59,760

Total assets

$

607,962

$

610,992

LIABILITIES AND EQUITY

Liabilities:

Mortgage loans

$

263,304

$

259,995

Accounts payable and other liabilities, net

31,433

28,346

Losses and distributions in excess of investments in unconsolidated real estate entities

10,878

10,084

Prepaid rent

2,651

1,784

Deferred revenue

11,194

10,566

Obligations associated with land held for sale

14,500

21,380

Total liabilities

333,960

332,155

Equity:

Stockholders' equity:

Preferred stock, $.01 par value, 25,000,000 shares authorized, none issued or outstanding as of March 31, 2013 and December 31, 2012

Common stock, $.01 par value, 225,000,000 shares authorized, 46,303,321 and 46,126,481 shares issued and outstanding as March 31, 2013 of and December 31, 2012, respectively

463

461

Limited voting stock, $.01 par value, 20,000,000 shares authorized, 12,313,331 shares issued and outstanding as of March 31, 2013 and December 31, 2012

123