Thomas Properties Group, Inc. Announces First Quarter 2013 Results

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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 reimbursements5,5765,421
Parking and other1,380740
Investment advisory, management, leasing and development services892931

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

3,1044,102
Reimbursement of property personnel costs1,1301,511
Condominium sales4,398 919 
Total revenues23,869 21,470 
Expenses:
Property operating and maintenance6,6186,264
Real estate and other taxes1,9951,920
Investment advisory, management, leasing and development services1,9202,994
Reimbursable property personnel costs1,1301,511
Cost of condominium sales3,638672
Interest3,9414,238
Depreciation and amortization4,1923,510
General and administrative7,9274,239
Impairment loss753  
Total expenses32,114 25,348 
Interest income235
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 Partnership2,4221,041
Partners in consolidated real estate entities309 (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 diluted45,826,72836,737,276
 
Reconciliation of net income (loss) to ATCF (a):
Net income (loss)$(8,969)$(3,120)
Adjustments:
Income tax (benefit) provision2243
Noncontrolling interests - unitholders in the Operating Partnership(2,422)(1,041)
Depreciation and amortization4,1923,510
Amortization of loan costs162160
Non-cash compensation expense953648
Straight-line rent adjustments327(267)

Adjustments to reflect the fair market value of rent

418
Impairment loss753
(Gain) loss on sale of real estate700

Unconsolidated real estate entities at TPGI's share:

Depreciation and amortization7,4142,367

Depreciation and amortization from discontinued operations

233173
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 costs28
Straight-line rent adjustments221
Straight-line rent adjustments from discontinued operations10
Adjustments to reflect the fair market value of rent286

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 - basic45,826,728 36,737,276 
Weighted average common shares - diluted46,091,417 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.

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THOMAS PROPERTIES GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands)

 
   March 31,  

December 31,

20132012
(unaudited)(audited)
ASSETS
Investments in real estate:
Operating properties, net$270,353$268,324
Land improvements—development properties, net6,298

 

6,403 
Investments in real estate, net276,651 274,727 
Condominium units held for sale34,62037,891
Investments in unconsolidated real estate entities107,374106,210
Cash and cash equivalents, unrestricted86,87376,689
Restricted cash4,69611,611
Rents and other receivables, net2,0241,825
Receivables from unconsolidated real estate entities2,3932,347
Deferred rents19,39418,994
Deferred leasing and loan costs, net10,90010,716
Other assets, net15,38610,222
Assets associated with land held for sale47,651 59,760 
Total assets$607,962 $610,992 
LIABILITIES AND EQUITY
Liabilities:
Mortgage loans$263,304$259,995
Accounts payable and other liabilities, net31,43328,346
Losses and distributions in excess of investments in unconsolidated real estate entities10,87810,084
Prepaid rent2,6511,784
Deferred revenue11,19410,566
Obligations associated with land held for sale14,500 21,380 
Total liabilities333,960 332,155 
 
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

463461

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