FIRST UNION REAL ESTATE EQUITY AND MORTGAGE INVESTMENTS
AT THE COMPANY
Carolyn Tiffany
Chief Operating Officer
(617) 570-4614
FIRST UNION REAL ESTATE EQUITY AND MORTGAGE INVESTMENTS
ANNOUNCES FINANCIAL RESULTS FOR THE THREE AND TWELVE MONTHS
ENDED DECEMBER 31, 2004
FOR IMMEDIATE RELEASE - Boston, Massachusetts- March 31, 2005 First Union Real
Estate Equity and Mortgage Investments (NYSE:FUR), a real estate investment
trust, announced the operating results for the three and twelve months ended
December 31, 2004.
Financial results for the three and twelve months ended December 31, 2004 and
2003 are as follows:
Three Months Ended Twelve Months Ended
---------------------------- ----------------------------
(in thousands, except per share data) December 31, December 31, December 31, December 31,
2004 2003 2004 2003
---------- ---------- ---------- ----------
Revenues $ 2,886 $ 563 $ 5,918 $ 2,427
========== ========== ========== ==========
Income (loss) from continuing operations 429 (1,272) 1,936 (6,575)
Income from discontinued operations 64 253 20,516 673
---------- ---------- ---------- ----------
Net income (loss) $ 493 $ (1,019) $ 22,452 $ (5,902)
========== ========== ========== ==========
Net (loss) income applicable to
shares of beneficial interest $ (23) $ (1,535) $ 20,388 $ (7,966)
========== ========== ========== ==========
Per Share - Basic
Income (loss) from continuing operations 0.00 (0.07) 0.00 (0.28)
Income from discontinued operations 0.00 0.01 0.66 0.02
---------- ---------- ---------- ----------
Basic - net income (loss) applicable to
shares of beneficial interest (per $ 0.00 $ (0.06) $ 0.66 $ (0.26)
share) ========== ========== ========== ==========
Per Share - Diluted
Income (loss) from continuing operations 0.00 (0.07) 0.00 (0.28)
Income from discontinued operations 0.00 0.01 0.66 0.02
---------- ---------- ---------- ----------
Diluted - net income (loss) applicable to
shares of beneficial interest (per $ 0.00 $ (0.06) $ 0.66 $ (0.26)
share) ========== ========== ========== ==========
Three Months Ended December 31, 2004 vs. December 31, 2003
Income (loss) from Continuing Operations The income from continuing operations
increased by $1,701,000 to $429,000 for the three months ended December 31, 2004
from a loss of $1,272,000 for the three months ended December 31, 2003. As more
fully described below, this increase in income from continuing operations is
attributable to an increase in total revenues of $2,323,000, an increase in
other income of $119,000 partially offset by an increase in total expenses of
$741,000.
Rents
Rental income increased by $1,887,000 to $2,294,000 for the three months ended
December 31, 2004 from $407,000 for the three months ended December 31, 2003.
The increase was primarily due to the acquisition of sixteen net lease
properties in November 2004 which contributed $1,720,000 of revenue and an
increase in revenues of $167,000 at our Circle Tower office property located in
Indianapolis.
Interest and Dividends
Interest income increased by $436,000 to $592,000 for the three months ended
December 31, 2004 from $156,000 for the three months ended December 31, 2003.
The increase was due to $300,000 of income earned on loans acquired during 2004,
higher amounts invested in government securities and higher interest rates on
the invested cash balances.
Property Operating
Property operating expenses remained the same at $222,000 for the three months
ended December 31, 2004 and December 31, 2003.
Real Estate Taxes
The $126,000 increase in real estate tax expense was due to a refund received in
2003 for taxes previously paid with respect to the previously sold Mountaineer
Mall property. Exclusive of this refund, real estate tax expense remained
constant.
Depreciation and Amortization
Depreciation and amortization expense increased by $433,000 to $539,000 for the
three months ended December 31, 2004 compared to $106,000 for the three months
ended December 31, 2003. The increase was due to the net lease properties
acquired in November 2004.
Interest Expense
Interest expense increased by $666,000 to $686,000 for the three months ended
December 31, 2004 compared to $20,000 for the three months ended December 31,
2003. The increase was due to interest expense of $686,000 on new borrowings in
November and December 2004.
General and Administrative Expenses
General and administrative expenses decreased by $484,000 to $1,108,000 for the
three months ended December 31, 2004 from $1,592,000 for the three months ended
December 31, 2003. The primary cause of this decrease was a $700,000 expense in
2003 related to contingency reserves. Additional savings in insurance, legal,
accounting and other professional fees of $290,000 were offset by an increase in
management fees of $393,000 and expenses of $22,000 incurred in connection with
the publication of material events.
Twelve Months Ended December 31, 2004 vs. December 31, 2003
Income (loss) from Continuing Operations
The income from continuing operations increased by $8,511,000 to $1,936,000 for
the year ended December 31, 2004 from a loss of $6,575,000 for the year ended
December 31, 2003. As more fully described below, this increase is attributable
to an increase in total revenues of $3,491,000, an increase in other income of
$2,407,000 and a decrease in total expenses of $2,613,000.
Rents
Rental income increased by $1,801,000 or approximately 113% to $3,390,000 for
the year ended December 31, 2004 from $1,589,000 for the year ended December 31,
2003. The increase was primarily due to the November 2004 acquisition of the net
lease properties which contributed $1,720,000 of revenue and an increase in
revenues at Circle Tower of $81,000.
Interest and Dividends
Interest income increased by $1,690,000 or approximately 201% to $2,528,000 for
the year ended December 31, 2004 from $838,000 for the year ended December 31,
2003. The increase was the result of income from loans acquired during 2004 of
$1,373,000, dividends on real estate securities of $139,000, higher amounts
invested in government securities and higher interest rates on the invested cash
balances.
Insurance Recoveries
Insurance recoveries amounted to $1,254,000 for the year ended December 31,
2004. The insurance proceeds were recovered under the director's and officer's
policy for reimbursement of legal fees expended in connection with the preferred
shareholder litigation in 2003. We received $696,000 during 2004 and have
included an additional $558,000 in accounts receivable and prepaids at December
31, 2004.
Gain on Sale of Securities Available for Sale
The gain on sale of securities available for sale consists primarily of the gain
on sale of Atlantic Realty Trust stock.
Property Operating
Property operating expenses decreased by $63,000 or approximately 7% to $786,000
for the year ended December 31, 2004 from $849,000 for the year ended December
31, 2003. The decrease was due to a decrease in professional fees of $55,000
associated with real estate tax appeals in 2003.
Real Estate Taxes
The $102,000 increase in real estate tax expense resulted from a refund received
in 2003 for taxes previously paid with respect to the previously sold
Mountaineer Mall property. Exclusive of this refund, real estate tax expense
remained constant.
Depreciation and Amortization
Depreciation and amortization expense increased by $281,000 or approximately 62%
to $735,000 for the year ended December 31, 2004 compared to $454,000 for the
year ended December 31, 2003. The increase was due to the net lease properties
acquired in November 2004.
Interest Expense
Interest expense decreased by $164,000 or 19% to $698,000 for the year ended
December 31, 2004 compared to $862,000 for the year ended December 31, 2003. The
decrease was due primarily to the savings of $835,000 in interest expense as a
result of the repayment in full of the senior notes on October 1, 2003,
partially offset by interest expense of $686,000 on new borrowings in November
and December 2004.
General and Administrative Expenses
General and administrative expenses decreased by $2,769,000 or approximately 40%
to $4,104,000 for the year ended December 31, 2004 from $6,873,000 for the year
ended December 31, 2003. The primary cause of this decrease was the 2003
expenses related to the Gotham transaction of $2,856,000 and a $700,000 expense
in 2003 related to contingency reserves. Additional savings in legal, accounting
and other professional fees of $868,000 were offset by an increase in management
fees of $1,431,000.
Discontinued Operations
During 2004, we sold the Park Plaza Mall and VenTek for a combined sales price
of $77,515,000. We recognized a net gain on disposal of these properties of
$19,267,000. The sale and operations of these assets have been recorded as
discontinued operations in accordance with the provisions of the Statement of
Financial Accounting Standards (SFAS No. 144, "Accounting for the Impairment or
Disposal of Long Lived Assets).
The Combined Statements of Operations and Comprehensive Income for First Union
for the three and twelve month periods ended December 31, 2004 and 2003
accompany this release.
-----------------------
Certain statements contained in this press release that are forward-looking are
based on current expectations that are subject to a number of uncertainties and
risks, and actual results may differ materially. Further information about these
matters and the risks generally with respect to First Union can be found in
First Union's Annual Report on Form 10-K and Quarterly Reports on Form 10-Q
filed with the Securities and Exchange Commission.
First Union Real Estate Equity and Mortgage Investments is a NYSE-listed real
estate investment trust (REIT) headquartered in Boston, Massachusetts.
FIRST UNION REAL ESTATE EQUITY AND MORTGAGE INVESTMENTS
COMBINED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(In thousands, except per share data)
Three Months Ended
December 31, Years Ended December 31,
------------------------- -------------------------
2004 2003 2004 2003
-------- -------- -------- --------
Revenues
Rents $ 2,294 $ 407 $ 3,390 $ 1,589
Interest and dividends 592 156 2,528 838
-------- -------- -------- --------
2,886 563 5,918 2,427
-------- -------- -------- --------
Expenses
Property operating 222 222 786 849
Real estate taxes 21 (105) 66 (36)
Depreciation and amortization 539 106 735 454
Interest 686 20 698 862
General and administrative 1,108 1,592 4,104 6,873
-------- -------- -------- --------
2,576 1,835 6,389 9,002
-------- -------- -------- --------
Other income
Insurance recoveries -- -- 1,254 --
Gain on sale of securities available for sale 119 -- 1,153 --
-------- -------- -------- --------
119 -- 2,407 --
-------- -------- -------- --------
Income (loss) from continuing operations 429 (1,272) 1,936 (6,575)
Discontinued operations:
Income from discontinued operations 64 253 1,249 619
Gain on sale of discontinued operations -- -- 19,267 54
-------- -------- -------- --------
Income from discontinued operations 64 253 20,516 673
-------- -------- -------- --------
Net income (loss) 493 (1,019) 22,452 (5,902)
Preferred dividend (516) (516) (2,064) (2,064)
-------- -------- -------- --------
Net income (loss) applicable to Common Shares of $ (23) $ (1,535) $ 20,388 $ (7,966)
Beneficial Interest ======== ======== ======== ========
Other comprehensive income
Net income (loss) $ 493 $ (1,019) $ 22,452 $ (5,902)
Unrealized gain on available for sale securities 2,749 -- 3,359 --
Unrealized loss on interest rate derivative (325) -- (325) --
-------- -------- -------- --------
Comprehensive income (loss) $ 2,917 $ (1,019) $ 25,486 $ (5,902)
======== ======== ======== ========
Per share data - Basic:
Loss from continuing operations, net of preferred dividend $ (0.00) $ (0.07) $ 0.00 $ (0.28)
Income from discontinued operations 0.00 0.01 0.66 0.02
-------- -------- -------- --------
Net income (loss) applicable to Common Shares of $ (0.00) $ (0.06) $ 0.66 $ (0.26)
Beneficial Interest ======== ======== ======== ========
Diluted:
Income (loss) from continuing operations, net of
preferred dividend $ (0.00) $ (0.07) $ 0.00 $ (0.28)
Income from discontinued operations 0.00 0.01 0.66 0.02
-------- -------- -------- --------
Net income (loss) applicable to Common Shares of $ (0.00) $ (0.06) $ 0.66 $ (0.26)
Beneficial Interest ======== ======== ======== ========
Basic weighted average Common Shares 31,059 26,168 31,059 30,885
======== ======== ======== ========
Diluted weighted average Common Shares 31,059 26,168 31,059 30,885
======== ======== ======== ========