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 MONTHS ENDED MARCH 31, 2005
FOR IMMEDIATE RELEASE - Boston, Massachusetts- May 13, 2005 First Union Real
Estate Equity and Mortgage Investments (NYSE:FUR), a real estate investment
trust, announced the operating results for the three months ended March 31,
2005.
Financial results for the three months ended March 31, 2005 and 2004 are as
follows:
Three Months Ended
--------------------------
(in thousands, except per share data) March 31, March 31,
2005 2004
--------- ---------
Revenues $ 4,899 $ 624
========= =========
Income (loss) from continuing operations 1,438 (990)
Income from discontinued operations 34 785
--------- ---------
Net income (loss) $ 1,472 $ (205)
========= =========
Net income (loss) applicable to Common
Shares of Beneficial Interest $ 446 $ (721)
========= =========
Per Share - Basic
Income (loss) from continuing operations,
net of preferred dividends 0.01 (0.05)
Income from discontinued operations 0.00 0.03
--------- ---------
Basic - net income (loss) applicable to
Common Shares of Beneficial Interest $ 0.01 $ (0.02)
========= =========
Per Share - Diluted
Income (loss) from continuing operations,
net of preferred dividends 0.01 (0.05)
Income from discontinued operations 0.00 0.03
--------- ---------
Diluted - net income (loss) applicable to
Common Shares of Beneficial Interest $ 0.01 $ (0.02)
========= =========
Three Months Ended March 31, 2005 vs. March 31, 2004
Net Income (Loss)
Net income for the three months ended March 31, 2005 was $446,000 as compared to
a net loss of $721,000 for the three months ended March 31, 2004. The primary
reason for the increase in net income was an increase in revenues of $4,275,000
and other income of $287,000, partially offset by increased expenses of
$2,134,000 and a decrease in income from discontinued operations of $751,000.
Rents
Rental income increased by $3,492,000 to $3,862,000 for the three months ended
March 31, 2005 from $370,000 for the three months ended March 31, 2004. The
increase was primarily due to the acquisition of additional properties in
November 2004 which generated $3,501,000 of rental income. This increase in
rental income was partially offset by a decrease in revenues of $9,000 at the
office building located in Indianapolis, Indiana commonly referred to as Circle
Tower.
Interest and Dividends
Interest income increased by $783,000 to $1,037,000 for the three months ended
March 31, 2005 from $254,000 for the three months ended March 31, 2004. The
increase was the result of dividends on real estate securities of $130,000,
interest income of $652,000 on higher amounts invested in government securities
and higher interest rates on the invested cash balances.
Property Operating
Property operating expenses decreased by $11,000 to $185,000 for the three
months ended March 31, 2005 from $196,000 for the three months ended March 31,
2004. The decrease was due to a reduction in utilities expense at our Circle
Tower property.
Real Estate Taxes
Real estate taxes increased by $5,000 to $21,000 for the three months ended
March 31, 2005 from $16,000 for the three months ended March 31, 2004 due to
higher taxes at the Circle Tower property. The 2004 expense reflects an
abatement.
Depreciation and Amortization
Depreciation and amortization expense increased by $781,000 to $842,000 for the
three months ended March 31, 2005 compared to $61,000 for the three months ended
March 31, 2004. The increase was due primarily to depreciation and amortization
of $736,000 on the properties acquired in November 2004 and $45,000 on Circle
Tower.
Interest Expense
Interest expense increased by $1,669,000 to $1,700,000 for the three months
ended March 31, 2005 compared to $31,000 for the three months ended March 31,
2004. The increase was due to the debt related to the properties acquired in
November 2004.
General and Administrative Expenses
General and administrative expenses decreased by $310,000 to $1,000,000 for the
three months ended March 31, 2005 from $1,310,000 for the three months ended
March 31, 2004. The primary cause of this decrease was a reduction in the annual
premiums for directors' and officers' insurance.
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 shares in Presidential Realty Corp. ("Presidential Realty") .
Discontinued Operations
Income from discontinued operations decreased by $751,000 to $34,000 for the
three months ended March 31, 2004 compared to $785,000 for the three months
ended March 31, 2004. The decrease is attributed to the sale of the Park Plaza
Mall property located in Little Rock, Arkansas and VenTek International, Inc.,
which comprise the 2004 discontinued operations in 2004. The 2005 discontinued
operations represent the Sherman, Texas property, which is net leased to the
Kroger Co. and is scheduled to be sold pursuant to their right to purchase the
property as provided in its lease.
The operations of these assets have been recorded as discontinued operations in
accordance with the provisions of 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 month periods ended March 31, 2005 and 2004 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
FORM 10-Q - MARCH 31, 2005
CONSOLIDATED AND COMBINED STATEMENTS OF OPERATIONS AND
COMPREHENSIVE INCOME
(Unaudited)
(In thousands, except per-share data)
For the Three Months Ended
March 31,
---------------------------
2005 2004
---------- ----------
Revenues
Rents $ 3,862 $ 370
Interest and dividends 1,037 254
---------- ----------
4,899 624
---------- ----------
Expenses
Property operating 185 196
Real estate taxes 21 16
Depreciation and amortization 842 61
Interest 1,700 31
General and administrative 1,000 1,310
---------- ----------
3,748 1,614
---------- ----------
Other income
Gain on sale of real estate securities available for sale 142 --
Gain on sale of real estate held for syndication 169 --
Equity in loss from investment in limited partnership (24) --
---------- ----------
287 --
---------- ----------
Income (loss) from continuing operations 1,438 (990)
Discontinued operations:
Income from discontinued operations 34 785
---------- ----------
Income from discontinued operations 34 785
---------- ----------
Net income (loss) 1,472 (205)
Preferred dividends (1,026) (516)
---------- ----------
Net income (loss) applicable to Common Shares of Beneficial Interest $ 446 $ (721)
========== ==========
Other comprehensive income
Net income (loss) $ 1,472 $ (205)
Unrealized (loss) gain on available for sale securities (25) 396
Unrealized gain on interest rate derivative 1,006 --
---------- ----------
Comprehensive income (loss) $ 2,453 $ 191
========== ==========
Per share data - Basic:
Loss from continuing operations, net of preferred dividend $ 0.01 $ (0.05)
Income from discontinued operations 0.00 0.03
---------- ----------
Net income (loss) applicable to Common Shares of Beneficial Interest $ 0.01 $ (0.02)
========== ==========
Diluted:
Income (loss) from continuing operations, net of preferred dividend $ 0.01 $ (0.05)
Income from discontinued operations 0.00 0.03
---------- ----------
Net income (loss) applicable to Common Shares of Beneficial Interest $ 0.01 $ (0.02)
========== ==========
Basic Weighted-Average Common Shares 31,537 31,059
========== ==========
Diluted Weighted Average Common Shares 31,583 31,059
========== ==========