EX-99.1 2 e500374_ex99-1.txt PRESS RELEASE, DATED MARCH 31, 2005. 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 ======== ======== ======== ========