TPGI Thomas Properties Grp., Inc. (MM)

Thomas Properties Group, Inc. (Nasdaq: TPGI) reported today the results of operations for the quarter ended September 30, 2012.

The results of operations presented in this release include TPGI’s results of operations for the three and nine months ended September 30, 2012 and 2011. The consolidated net loss for the three months ended September 30, 2012 was $4.1 million or $0.09 per share compared to consolidated net income of $2.1 million or $0.06 per share for the three months ended September 30, 2011. The consolidated net loss for the nine months ended September 30, 2012 was $12.0 million or $0.30 per share compared to consolidated net loss of $4.2 million or $0.11 per share for nine months ended September 30, 2011. The increase in the consolidated net loss is primarily due to lower tenant reimbursement revenues and a decrease in investment advisory fees. Also contributing to the increase in net loss is a decrease in condominium unit sales at Murano, as we closed on the sale of nine condominium units during the nine months ended September 30, 2012 compared to twelve units during the nine months ended September 30, 2011.

After tax cash flow (“ATCF”) for the three months ended September 30, 2012 was $1.3 million or $0.03 per share compared to ATCF of $5.6 million or $0.15 per share for the three months ended September 30, 2011. After tax cash flow for the nine months ended September 30, 2012 was $3.4 million or $0.08 per share compared to after tax cash flow of $9.3 million or $0.25 per share for the nine months ended September 30, 2011. The decrease in ATCF per share for the nine months ended September 30, 2012 compared to the nine months ended September 30, 2011 was primarily the result of the decreased revenues resulting from fewer Murano condominium sales 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 taxes, non-cash charges for depreciation and amortization and asset impairment, amortization of loan costs, non-cash compensation expense, straight-line rent adjustments, adjustments to reflect the fair market value of rent, and gain from extinguishment of debt. ATCF is further described in note (a) and reconciled to net income (loss) in the financial statements below.

“Our purchase of the Austin portfolio along with CalSTRS and Madison International Realty was the focus and highlight of the third quarter,” said James Thomas, Chairman, President and CEO of Thomas Properties Group, Inc. “In keeping with our strategic plan, we, through our investment with Madison, control 50% of the portfolio. By repaying short term floating rate debt, we deleveraged the portfolio and positioned it to take advantage of improving market conditions in Austin. We continue to focus on converting a substantial part of our land holdings into cash-flowing properties as we move the Company toward REIT status.”

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 Thursday, November 1, 2012 at 10:00 a.m. Pacific Time. To participate in the call, dial (877) 299-4454 and (617) 597-5447 internationally, and provide confirmation code 90417889.

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 November 22, 2012, by calling (888) 286-8010 and (617) 801-6888 internationally, and providing confirmation code 49670632. The replay will also be available on Thomas Properties Group, Inc.’s website 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, 2011 and our subsequent Form 10-Q quarterly reports, each of 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 Nine months ended September 30, September 30, 2012       2011 2012       2011 Revenues: Rental $ 7,813 $ 7,446 $ 23,343 $ 22,233 Tenant reimbursements 5,344 5,666 15,746 17,051 Parking and other 786 708 2,271 2,225 Investment advisory, management, leasing and development services 1,005 5,565 2,669 7,689

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

3,588 4,324 11,909 13,690 Reimbursement of property personnel costs 1,273 1,365 4,140 4,389 Condominium sales 2,302   3,084   4,266   6,122   Total revenues 22,111   28,158   64,344   73,399   Expenses: Property operating and maintenance 6,183 6,211 18,198 18,384 Real estate and other taxes 1,742 1,854 5,627 5,616 Investment advisory, management, leasing and development services 2,634 3,273 8,628 9,912 Reimbursable property personnel costs 1,273 1,365 4,140 4,389 Cost of condominium sales 1,858 2,055 3,251 4,042 Interest 4,205 4,331 12,659 13,629 Depreciation and amortization 4,120 3,447 11,782 10,188 General and administrative 3,893   3,925   13,024   11,802   Total expenses 25,908   26,461   77,309   77,962   Interest income 39 5 52 25 Equity in net income (loss) of unconsolidated real estate entities (1,797 ) (353 ) (2,613 ) (1,938 ) Income (loss) before income taxes and noncontrolling interests (5,555 ) 1,349 (15,526 ) (6,476 ) Benefit (provision) for income taxes 442   1,206   368   1,001   Net income (loss) (5,113 ) 2,555   (15,158 ) (5,475 ) Noncontrolling interests' share of net (income) loss: Unitholders in the Operating Partnership 1,226 (295 ) 3,817 1,763 Partners in consolidated real estate entities (198 ) (177 ) (668 ) (496 ) 1,028   (472 ) 3,149   1,267   TPGI share of net income (loss) $ (4,085 ) $ 2,083   $ (12,009 ) $ (4,208 ) Income (loss) per share - basic and diluted $ (0.09 ) $ 0.06 $ (0.30 ) $ (0.11 ) Weighted average common shares outstanding—basic 45,517,207 36,647,394 40,301,224 36,610,178 Weighted average common shares outstanding—diluted 45,517,207 36,873,339 40,301,224 36,610,178   Reconciliation of net income (loss) to ATCF(a): Net income (loss) $ (4,085 ) $ 2,083 $ (12,009 ) $ (4,208 ) Adjustments: Income tax (benefit) provision (442 ) (1,206 ) (368 ) (1,001 ) Noncontrolling interests - unitholders in the Operating Partnership (1,226 ) 295 (3,817 ) (1,763 ) Depreciation and amortization 4,120 3,447 11,782 10,188

Depreciation and amortization - noncontrolling interest share

(224 ) — (224 ) — Amortization of loan costs 120 153 440 580 Non-cash compensation expense 324 127 1,235 660 Straight-line rent adjustments 59 (22 ) (296 ) (170 )

Straight-line rent adjustments - noncontrolling interest share

34 — 34 — Adjustments to reflect the fair market value of rent 12 7 31 16 Unconsolidated real estate entities: Depreciation and amortization 3,017 2,854 7,840 7,842 Depreciation and amortization from discontinued operations — 427 153 1,789 Amortization of loan costs 41 136 196 229 Amortization of loan costs from discontinued operations 21 26 33 83 Straight-line rent adjustments (111 ) (57 ) (118 ) (107 ) Straight-line rent adjustments from discontinued operations — (46 ) (20 ) (301 ) Adjustments to reflect the fair market value of rent (177 ) (358 ) (609 ) (806 )

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

— (10 ) (11 ) 1 Gain on extinguishment of debt from discontinued operations —   (333 ) —   (333 ) ATCF before income taxes $ 1,483   $ 7,523   $ 4,272   $ 12,699   TPGI share of ATCF before income taxes (b) $ 1,164 $ 5,620 $ 3,265 $ 9,488 TPGI income tax refund (expense) - current 144   (48 ) 108   (157 ) TPGI share of ATCF $ 1,308 $ 5,572 $ 3,373 $ 9,331 ATCF per share - basic & diluted $ 0.03 $ 0.15 $ 0.08 $ 0.25 Dividends paid per share $ 0.015 $ — $ 0.045 $ —

Weighted average common shares outstanding - basic

45,517,207 36,647,394 40,301,224 36,610,178

Weighted average common shares outstanding - diluted

45,902,063 36,873,339 40,668.418 36,863,237   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 on extinguishment of debt. 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 supplement to or substitute for cash flow from operating activities (computed in accordance with GAAP).

  b. Based on an interest in our operating partnership of 78.56% and 76.43% for the three and nine months ended September 30, 2012, respectively, and 74.70% and 74.72% for the three and nine months ended September 30, 2011, respectively.                            

THOMAS PROPERTIES GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands)

 

September 30,

2012

December 31,

2011

(unaudited) (audited) ASSETS Investments in real estate: Operating properties, net $ 268,921 $ 265,202 Land improvements—development properties 80,439   80,254  

 

349,360   345,456   Condominium units held for sale 42,332 45,217 Investments in unconsolidated real estate entities 110,396 11,372 Cash and cash equivalents, unrestricted 58,395 79,320 Restricted cash 14,085 10,616 Rents and other receivables, net 2,244 1,903 Receivables from unconsolidated real estate entities 1,952 2,918 Deferred rents 19,014 17,866 Deferred leasing and loan costs, net 10,607 12,283 Other assets, net 16,319 17,465 Assets associated with land held for sale —   1,107   Total assets $ 624,704   $ 545,523     LIABILITIES AND EQUITY Liabilities: Mortgage loans $ 284,965 $ 289,523 Accounts payable and other liabilities, net 41,481 34,981 Prepaid rent and deferred revenue 3,205 3,019 Obligations associated with land held for sale —   27   Total liabilities 329,651   327,550     Equity: Stockholders’ equity:

Preferred stock, $.01 par value, 25,000,000 shares authorized, none issued or outstanding as of September 30, 2012 and December 31, 2011

— —

Common stock, $.01 par value, 225,000,000 shares authorized, 46,100,229 and 37,094,995 shares issued and outstanding as of September 30, 2012 and December 31, 2011, respectively

461 371

Limited voting stock, $.01 par value, 20,000,000 shares authorized, 12,313,331 shares issued and outstanding as of September 30, 2012 and December 31, 2011, respectively

123 123 Additional paid-in capital 258,625 208,473 Retained deficit and dividends (69,297 ) (55,472 ) Total stockholders’ equity 189,912   153,495   Noncontrolling interests: Unitholders in the Operating Partnership 48,324 52,983 Partners in consolidated real estate entities 56,817   11,495   Total noncontrolling interests 105,141   64,478   Total equity 295,053   217,973   Total liabilities and equity $ 624,704   $ 545,523