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August 6, 2009 at 8:00 AM EDT

Winthrop Realty Trust Announces Second Quarter 2009 Results and Declares Third Quarter Cash Dividend

BOSTON, Aug 06, 2009 /PRNewswire-FirstCall via COMTEX News Network/ -- Winthrop Realty Trust (NYSE: FUR) announced today financial and operating results for the second quarter ended June 30, 2009. All per common share amounts are on a diluted basis, and the presentation for the period ended June 30, 2008 has been restated to reflect the effect of the reverse stock split in November 2008.

2009 Second Quarter Highlights and Recent Events

    --  Incurred a net non-cash charge of $81.6 million related to the
        Company's investment in Concord, bringing the carrying amount of
        this investment to $0 at June 30, 2009.

    --  Recorded non-cash charges totaling $5.8 million in connection with a
        restructuring of the Company's investment in the Marc Realty joint
        venture.  Through the restructuring, the Company effectively exchanged
        interests in three Chicago suburban properties and one downtown property
        for an increased overall interest in five downtown Chicago properties
        which management believes to have a better return potential and are
        better aligned with the Company's overall investment strategy.
        GAAP does not allow for gain recognition related to the Company's
        increased interest in the downtown properties accomplished through the
        restructuring.

    --  Recorded an unrealized gain on securities held at June 30, 2009 of $12.6
        million.

    --  Sold securities with a cost basis of $7.5 million for sales proceeds of
        $9.8 million.

    --  Extended and modified the lease agreement on the Plantation, Florida
        office property net leased to BellSouth Telecommunications Inc. for ten
        years through March 31, 2020.

    --  Exercised a one-year extension option of the $24.4 million mortgage loan
        payable to KeyBank which is secured by 14 properties and now matures on
        June 30, 2010, with one remaining one-year extension option.

    --  Acquired for $38.5 million, a $73.8 million first mortgage loan bearing
        interest at 6.48% with a discounted payoff option of $50 million which
        loan is secured by an office building located in San Francisco,
        California.  Subsequent to June 30, 2009, the Company sold a $35.0
        million A Note at par with respect to this first mortgage loan.

    --  Acquired for $5.5 million a $7.2 million first mortgage loan bearing
        interest at 9.84% with a discounted payoff option of $5.5 million which
        loan is secured by an office complex located in Phoenix, Arizona.

    --  Retained liquid assets consisting of cash, cash equivalents, restricted
        cash and marketable securities of $83.2 million at June 30, 2009.

    --  Subsequent to June 30, 2009, repurchased an additional 100,000 of its
        Series B-1 Preferred Shares at a 20% discount for $2.0 million.  Through
        July 2009, repurchased a total of 2,041,105 of its Series B-1 Preferred
        Shares having a redemption value of $51.0 million for a gross price of
        approximately $37.7 million, a 26.1% blended discount. Currently,
        1,396,000 of the Company's Series B-1 Preferred Shares remain
        outstanding.

    --  Declared a regular quarterly cash dividend of $0.25 per common share,
        which was paid on July 15, 2009 to common shareholders of record on June
        30, 2009.  Additionally declared a quarterly cash dividend of $0.40625
        per Series B-1 Preferred Share, which was paid on July 31, 2009, to
        preferred shareholders of record on July 20, 2009.

    --  Elected Lee Seidler to the Company's Board of Trustees and a member
        of the Audit Committee, effective May 21, 2009.

Second Quarter 2009 Financial Results

    --  Net loss applicable to common shares was $71.2 million, or $4.50 per
        common share loss, compared with a net loss of $24.1 million, or $1.65
        per common share loss for the quarter ended June 30, 2008.  The loss was
        primarily the result of net non-cash charges of $81.6 million related to
        the Company's investment in Concord, which was written down to $0
        as of June 30, 2009. This carrying value is reflective of
        management's view that the continued deterioration in the credit
        markets, the non-controlling nature of the Company's investment in
        Concord and the near-term obligations of Concord under its repurchase
        agreements which may necessitate asset sales by Concord have caused an
        other-than-temporary decline in the fair value of the Company's
        investment.  The Company's net loss was increased as a result of
        the net non-cash charges of $5.8 million related to the Company's
        restructuring of its investment in Marc Realty as discussed above.

    --  The Company reported negative Funds from Operations (FFO) of $68.3
        million, or $4.32 negative FFO per common share, compared with negative
        FFO of $21.1 million, or $1.45 negative FFO per common share, for the
        quarter ended June 30, 2008.  Adjusting FFO for certain items that
        affect comparability which are listed in the table below, FFO for the
        quarter ended June 30, 2009 was $6.1 million or $0.35 per common share,
        compared with FFO of $7.8 million, or $0.42 per common share for the
        quarter ended June 30, 2008.



    (Amounts in thousands)        For the Three Months  For the Six Months
                                      Ended June 30,       Ended June 30,
                                     2009       2008      2009       2008
                                     ----       ----      ----       ----
                                       (Unaudited)          (Unaudited)
    FFO applicable to
     Common Shares (1)             $(68,307) $(21,078) $(87,606) $(11,764)
                                   ========  ========  ========  ========
    Per Common Share                 $(4.32)   $(1.45)   $(5.54)   $(0.84)
                                     ======    ======    ======    ======

     Items that affect
      comparability (income) expense:
       Non-cash asset write-downs:
          Loan loss reserves         $1,724        $-    $2,152        $-
           Loan available for sale
            impairment                  203         -       203         -
          Unrealized gain on
           securities               (12,580)        -    (1,432)        -
          Loan loss and impairments
           from partially owned
           entity - Concord          51,246    26,319    71,390    29,008
          Available for sale
           securities                     -       107         -       207
          Impairment of equity
           investment in Concord     31,670         -    31,670         -
          Preferred equity
           impairment                 4,850     2,000     4,850     2,000
       Net gain on sale of
        mortgage-backed securities        -         -         -      (454)
       Net gain on sale of
        securities                   (2,685)        -    (2,598)   (2,029)
       Net gain on sale of
        preferred equity               (735)        -      (735)     (959)
       Net gain on repurchase of
        Series B-1 Preferred Shares       -         -    (5,237)        -
       Net gain on extinguishment of
        debt of partially owned
        entity - Concord                  -    (1,173)        -    (3,748)
       Adjustment for dilution by
        Series B-1 Preferred
        Shares (2)                      686     1,619     1,346     3,350
                                        ---     -----     -----     -----

       Total items that
        affect comparability        $74,379   $28,872  $101,609   $27,375
                                    =======   =======  ========   =======
       Per Common Share               $4.25     $1.56     $5.78     $1.51
                                      =====     =====     =====     =====

    FFO as adjusted for
     comparability                   $6,072    $7,794   $14,003   $15,611
                                     ======    ======   =======   =======

    Per Common Share                  $0.35     $0.42     $0.80     $0.86
                                      =====     =====     =====     =====

    (1) See Funds From Operations table below for a reconciliation of net
        income to FFO for the quarters ended June 30, 2009 and 2008.
    (2) The Series B-1 Preferred Shares are anti-dilutive for basic FFO
        for the period ended June 30, 2009.  However, after giving effect
        to the adjustments for comparability, the Series B-1 Preferred
        Shares are dilutive for the period.  Accordingly, for the
        presentation we have adjusted for this dilution and increased
        dilutive weighted-average common shares outstanding.

Third Quarter 2009 Dividend Declaration

The Company's Board of Trustees has declared a cash dividend for the third quarter of 2009 of $0.25 per common share payable on October 15, 2009 to common shareholders of record on September 30, 2009. The Company also has declared the regular quarterly cash dividend of $0.40625 per Series B-1 Preferred Share which is payable on October 31, 2009 to the holders of Series B-1 Preferred Shares of record on October 20, 2009.

Conference Call Information

The Company will host a conference call to discuss its second quarter 2009 results today, Thursday, August 6, 2009 at 2:00 pm Eastern Time. Interested parties may access the live call by dialing (877) 407-9205 or (201) 689-8054, or via the Internet at www.winthropreit.com within the News and Events section.

A replay of the call will be available through September 6, 2009 by dialing (877) 660-6853; account #286, confirmation #325945. An online replay will also be available through September 6, 2009.

About Winthrop Realty Trust

Winthrop Realty Trust is a real estate investment trust (REIT) that owns, manages and lends to real estate and related investments, both directly and through joint ventures. Winthrop Realty Trust is listed on the New York Stock Exchange and trades under the symbol "FUR." The Company has executive offices in Boston, Massachusetts and Jericho, New York. For more information please visit www.winthropreit.com.

Forward-Looking Statements

"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995. The statements in this release state the Company's and management's hopes, intentions, beliefs, expectations or projections of the future and are forward-looking statements for which the Company claims the protections of the safe harbor for forward-looking statements under the Private Securities Litigation Reform Act of 1995. It is important to note that future events and the Company's actual results could differ materially from those described in or contemplated by such forward-looking statements. Factors that could cause actual results to differ materially from current expectations include, but are not limited to, (i) general economic conditions, (ii) the inability of major tenants to continue paying their rent obligations due to bankruptcy, insolvency or general downturn in their business, (iii) local real estate conditions, (iv) increases in interest rates, (v) increases in operating costs and real estate taxes, (vi) changes in accessibility of debt and equity capital markets and (vii) defaults by borrowers on loans. Additional information concerning factors that could cause actual results to differ materially from those forward-looking statements is contained from time to time in the Company's filings with the Securities and Exchange Commission, copies of which may be obtained from the Company or the Securities and Exchange Commission. The Company refers you to the documents filed by the Company from time to time with the Securities and Exchange Commission, specifically the section titled "Risk Factors" in the Company's most recent Annual Report on Form 10-K, as may be updated or supplemented in the Company's Form 10-Q filings, which discuss these and other factors that could adversely affect the Company's results.



    Condensed Financial Results

    Financial results for the three and six months ended June 30, 2009 and
    2008 are as follows (in thousands except per common share amounts):

                                    For the Three Months  For the Six Months
                                        Ended June 30,      Ended June 30,
                                        2009      2008      2009      2008
                                        ----      ----      ----      ----
                                          (Unaudited)

    Revenue
       Rents and reimbursements       $10,447   $10,993   $21,432   $21,660
       Interest and dividends           2,214       350     3,966       883
                                        -----       ---     -----       ---
                                       12,661    11,343    25,398    22,543
                                       ------    ------    ------    ------
    Expenses
       Property operating               1,822     1,802     3,823     3,669
       Real estate taxes                  652       675     1,355     1,414
       Depreciation and amortization    2,682     2,910     5,581     5,968
       Interest                         4,433     5,468     8,831    11,299
       Impairment loss on available
        for sale securities                 -       107         -       207
       Provision for loss on loan
        receivable                      1,724         -     2,152         -
       General and administrative       1,878     1,482     3,324     3,553
       State and local taxes              147        98       197       222
                                          ---        --       ---       ---
                                       13,338    12,542    25,263    26,332
                                       ------    ------    ------    ------
    Other income
       Earnings (loss) from
        preferred equity investments   (3,209)     (912)   (2,194)    1,418
       Loss of equity investments     (82,249)  (22,333) (100,412)  (18,521)
       Gain on sale of available
        for sale securities                 -         -         -     2,029
       Gain on sale of securities
        carried at fair value           2,685         -     2,598         -
       Gain on sale of mortgage-backed
        securities available for sale       -         -         -       454
       Unrealized gain on
        securities carried at
        fair value                     12,580         -     1,432         -
       Impairment loss on real estate
        loan available for sale          (203)        -      (203)        -
       Gain on early extinguishment
        of debt                             -         -     5,237         -
       Interest income                     42       436       114       664
                                           --       ---       ---       ---
                                      (70,354)  (22,809)  (93,428)  (13,956)
                                     --------  --------  --------  --------
    Consolidated loss from
     continuing operations            (71,031)  (24,008)  (93,293)  (17,745)
                                     --------  --------  --------  --------

          Income from discontinued
           operations                       -        37         -        86
                                            -        --         -        --
    Consolidated net (loss)
     income                           (71,031)  (23,971)  (93,293)  (17,659)
                                     --------  --------  --------  --------

          Income attributable to
           non-controlling interests     (165)      (86)     (336)      (86)
                                        -----      ----     -----       ---
    Net loss attributable to
     Winthrop Realty Trust           $(71,196) $(24,057) $(93,629) $(17,745)
                                     ========  ========  ========  ========

    Comprehensive income (loss)
    Net loss                         $(71,031) $(23,971) $(93,293) $(17,659)
    Change in unrealized loss
     on available for sale
     securities arising during
     the period                             9        89        11     2,112
    Change in unrealized gain
     on mortgage-backed securities
     available for sale arising
     during the period                      -         -         -       190
    Change in unrealized gain
     (loss) on interest rate
     derivatives arising during
     the period                           127       401       265      (250)
    Change in unrealized loss
     from equity investments           26,371    13,920    26,174     4,285
    Less reclassification
     adjustment from gains
     included in net income                 -         -         -    (2,483)
                                            -         -         -   -------

    Comprehensive income (loss)      $(44,524)  $(9,561) $(66,843) $(13,805)
                                     ========   =======  ========  ========

    Per Common Share Data -
     Basic
    Loss from continuing
     operations attributable
     to Winthrop Realty Trust          $(4.50)   $(1.65)   $(5.92)   $(1.27)
    Income from discontinued
     operations attributable
     to Winthrop Realty Trust               -         -         -      0.01
                                            -         -         -      ----
    Net loss attributable to
     Winthrop Realty Trust             $(4.50)   $(1.65)   $(5.92)   $(1.26)
                                       ======    ======    ======    ======

    Per Common Share Data -
     Diluted
    Loss from continuing
     operations attributable
     to Winthrop Realty Trust          $(4.50)   $(1.65)   $(5.92)   $(1.27)
    Income from discontinued
     operations attributable
     to Winthrop Realty Trust               -         -         -      0.01
                                            -         -         -      ----
     Net loss attributable to
      Winthrop Realty Trust            $(4.50)   $(1.65)   $(5.92)   $(1.26)
                                       ======    ======    ======    ======

    Basic Weighted-Average
     Common Shares                     15,822    14,564    15,814    13,990
                                       ======    ======    ======    ======
    Diluted Weighted-Average
     Common Shares                     15,822    14,564    15,814    13,990
                                       ======    ======    ======    ======

    Amounts attributable to
     Winthrop Realty Trust
           Common Shareholders
           Loss from continuing
            operations               $(71,196) $(24,094) $(93,629) $(17,831)
           Income from discontinued
            operations                      -        37         -        86
                                            -        --         -        --
           Net loss                  $(71,196) $(24,057) $(93,629) $(17,745)
                                     ========  ========  ========  ========



    Funds From Operations:

    The following presents a reconciliation of our net income to our funds
    from operations for the three and six months ended June 30, 2009 and 2008
    (in thousands, except per common share amounts):

                                    For the Three Months  For the Six Months
                                       Ended June 30,        Ended June 30,
                                       2009      2008       2009       2008
                                       ----      ----       ----       ----

    Net loss attributable to
     Winthrop Realty Trust          $(71,197) $(24,057)  $(93,630)  $(17,745)
    Real estate depreciation           1,657     1,654      3,347      3,301
    Amortization of capitalized
     leasing costs                     1,017     1,274      2,217      2,631
    Real estate depreciation and
     amortization of unconsolidated
     interests                         1,008       858      2,055      1,677

     Less: Non-controlling interest
      share of real estate
      depreciation and amortization
                                        (792)     (807)    (1,595)    (1,628)
                                        ----      ----     ------     ------

    Funds from operations            (68,307)  (21,078)   (87,606)   (11,764)
    Interest expense on Series B-1
     Preferred Shares (1)                  -         -          -          -
                                           -         -          -          -
    Funds from operations
     applicable to Common Shares
     plus assumed conversions       $(68,307) $(21,078)  $(87,606)  $(11,764)
                                    ========  ========  =========  =========

    Basic weighted-average Common
     Shares                           15,822    14,564     15,814     13,990
    Convertible Preferred Shares (1)       -         -          -          -
    Stock options (1)                      -         -          -          -
                                           -         -          -          -
    Diluted weighted-average Common
     Shares                           15,822    14,564     15,814     13,990
                                      ======    ======     ======     ======

    Funds from operations per
     common share - diluted
                                      $(4.32)   $(1.45)    $(5.54)    $(0.84)
                                      ======    ======     ======     ======

    (1) The Trust's convertible preferred shares and stock options were
        considered anti-dilutive for the three and six months ended
        June 30, 2009 and 2008.

FFO is computed in accordance with the definition adopted by the Board of Governors of the National Association of Real Estate Investment Trusts ("NAREIT"). NAREIT defines FFO as net income or loss determined in accordance with Generally Accepted Accounting Principles ("GAAP"), excluding extraordinary items as defined under GAAP and gains or losses from sales of previously depreciated operating real estate assets, plus specified non-cash items, such as real estate asset depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures. FFO and FFO per diluted share are used by management, investors and industry analysts as supplemental measures of operating performance of equity REITs. FFO and FFO per diluted share should be evaluated along with GAAP net income and income per diluted share (the most directly comparable GAAP measures), as well as cash flow from operating activities, investing activities and financing activities, in evaluating the operating performance of equity REITs. Management believes that FFO and FFO per diluted share are helpful to investors as supplemental performance measures because these measures exclude the effect of depreciation, amortization and gains or losses from sales of real estate, all of which are based on historical costs which implicitly assumes that the value of real estate diminishes predictably over time. Since real estate values instead have historically risen or fallen with market conditions, these non-GAAP measures can facilitate comparisons of operating performance between periods and among other equity REITs. FFO does not represent cash generated from operating activities in accordance with GAAP and is not necessarily indicative of cash available to fund cash needs as disclosed in the Company's Consolidated Statements of Cash Flows. FFO should not be considered as an alternative to net income as an indicator of the Company's operating performance or as an alternative to cash flows as a measure of liquidity. In addition to FFO, the Company also discloses FFO before certain items that affect comparability. Although this non-GAAP measure clearly differs from NAREIT's definition of FFO, the Company believes it provides a meaningful presentation of operating performance. A reconciliation of net income to FFO is provided above. In addition, a reconciliation of FFO to FFO before certain items that affect comparability is provided earlier in this press release.



    Consolidated Balance Sheets:
    (in thousands, except share data)

                                                     June 30,  December 31,
                                                       2009        2008
                                                       ----        ----
                                                               (as adjusted)
    ASSETS
       Investments in real estate, at cost
           Land                                       $21,344     $21,344
           Buildings and improvements                 246,579     246,362
                                                      -------     -------
                                                      267,923     267,706
           Less - accumulated depreciation            (28,884)    (25,901)
                                                     --------    --------
       Investments in real estate, net                239,039     241,805

       Cash and cash equivalents                       20,469      59,238
       Restricted cash held in escrows                  8,821      14,353
        Loans receivable, net of reserve of
         $1,538 and $2,445, respectively               25,591      22,876
        Accounts receivable, net of reserve
         of $130 and $225, respectively                11,995      14,028
       Securities carried at fair value                53,676      36,516
       Available for sale securities, net                 195         184
       Preferred equity investment                     45,780      50,624
       Real estate loan available for sale             34,797           -
       Equity investments                              17,299      92,202
       Lease intangibles, net                          24,798      25,929
       Deferred financing costs, net                    2,272       3,218
       Deposit for purchase of Series B-1
        Preferred Shares                                    -      17,081
       Other assets                                         -          40
                                                            -          --
           TOTAL ASSETS                              $484,732    $578,094
                                                     ========    ========

    LIABILITIES

       Mortgage loans payable                        $226,655    $229,737
       Series B-1 Cumulative Convertible
        Redeemable
             Preferred Shares, $25 per share
              liquidation preference;
              1,496,000 and 2,413,105 shares
              authorized and outstanding at
              June 30, 2009 and December 31, 2008,
              respectively                             37,400      60,328
       Loan payable                                    19,818           -
       Note payable                                         -       9,800
       Accounts payable and accrued liabilities         8,463       8,596
       Dividends payable                                3,956       5,934
       Deferred income                                     58         795
       Below market lease intangibles, net              3,220       3,696
                                                        -----       -----
           TOTAL LIABILITIES                          299,570     318,886
                                                      -------     -------

    COMMITMENTS AND CONTINGENCIES

    EQUITY

    Winthrop Realty Trust Shareholders' Equity:

        Common Shares, $1 par, unlimited
         shares authorized; 15,823,249 and
         15,754,495 outstanding at June 30,
         2009 and December 31, 2008, respectively      15,823      15,754

       Additional paid-in capital                     461,614     460,956

       Accumulated distributions in excess
        of net income                                (303,176)   (213,284)

       Accumulated other comprehensive loss              (373)    (15,176)
                                                        -----    --------

              Total Winthrop Realty Trust
               Shareholders' Equity                   173,888     248,250

       Non-controlling interests                       11,274      10,958
                                                       ------      ------

              Total  Equity                           185,162     259,208
                                                      -------     -------
            TOTAL LIABILITIES AND EQUITY             $484,732    $578,094
                                                     ========    ========



    Other Financial Information:
    (in thousands)

                             For the Three Months     For the Six Months
                                Ended June 30,           Ended June 30,
    Sources (Uses) of Cash    2009        2008        2009          2008
    ----------------------    ----        ----        ----          ----
                                  (Unaudited)

    Capital expenditures    $(1,576)      $(699)    $(2,525)      $(1,764)
                            =======       =====     =======       =======
    Straight line rent
     adjustment                $253        $148        $577          $372
                               ====        ====        ====          ====

Further details regarding the Company's results of operations, properties, joint ventures and tenants are available in the Company's Form 10-Q for the quarter ended June 30, 2009 which will be filed with the Securities and Exchange Commission and will be available for download at the Company's website www.winthropreit.com or at the Securities and Exchange Commission website www.sec.gov.

SOURCE Winthrop Realty Trust

http://www.winthropreit.com

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