EX-99.1 2 e600863_ex99-1.txt PRESS RELEASE DATED AUGUST 1, 2006 WINTHROP REALTY TRUST AT THE COMPANY Carolyn Tiffany Chief Operating Officer (617) 570-4614 WINTHROP REALTY TRUST ANNOUNCES RESULTS FOR THE QUARTER ENDED JUNE 30, 2006 FOR IMMEDIATE RELEASE - Boston, Massachusetts - August 1, 2006 Winthrop Realty Trust (NYSE:FUR), a real estate investment trust, announced today the financial results for the second quarter ended June 30, 2006. Second Quarter Financial Highlights o Reported net income for the quarter ended June 30, 2006 of $5,271,000 or $0.08 per common share (basic) and $0.08 per common share (diluted, which assumes full conversion of the Series B-1 Preferred Shares) compared to a net income of $2,071,000 or $0.00 per common share (both basic and diluted assuming conversion of the Series A and Series B-1 Preferred Shares) for the same period in 2005. o Reported net income for the six months ended June 30, 2006 of $17,282,000 or $0.34 per common share (basic) and $0.27 per common share (diluted, which assumes full conversion of the Series A and Series B-1 Preferred Shares) compared to a net income of $3,544,000 or $0.02 per common share (both basic and diluted assuming conversion of the Series A and Series B-1 Preferred Shares) for the six months ended June 30, 2005. In addition to reporting the Company's earnings, management has elected to also begin reporting Adjusted Funds from Operations ("AFFO"). Management believes that while the nature of the Company's investments may not always be conducive to an AFFO measurement, this can help to facilitate a comparison among other REITs. o AFFO for the six months ended June 30, 2006 was $21,356,000 or $0.33 per common share on a fully diluted basis compared to $5,430,000 or $0.11 per common share on a fully diluted basis for the six months ended June 30, 2005. Second Quarter Milestones and Recent Events As announced on July 12, 2006, the Company established a quarterly dividend of $.06 per common share of beneficial interest retroactive to January 1, 2006 and declared the payment of the dividend for the first two quarters of 2006 ($.12 per share) on August 7, 2006 to holders of record on July 24, 2006. Corporate Level Financing and Equity Events o In May 2006, the Company issued 5,220,022 common shares at $5.25 per share in connection with its rights offering to existing shareholders, raising $27,100,000 in equity available for acquisitions. o In July 2006, the Company increased its revolving line of credit from $50,000,000 to $70,000,000. Property Financings o On May 5, 2006, the Company obtained a $24,600,000 loan from an unaffiliated third party lender, which is secured by the Company's properties located at 550-650 Warrenville Road and 701 Warrenville Road Lisle, Illinois. The loan bears interest at 6.26%, requires monthly payments of interest only during the first two years of the loan term and thereafter principal (based on a 30-year amortization schedule) and interest for the balance of the term. The loan is scheduled to mature on June 1, 2016, at which time the outstanding principal balance is expected to be approximately $22,188,000. Property Financings (continued) o On June 30, 2006, the Company modified its existing mortgage loan secured by certain of the Company's net lease properties, commonly referred to as the FINOVA portfolio. As a result of the modification the interest rate has been reduced, the maturity has been extended and the Company has the ability to draw an additional $22,000,000 to refinance certain other existing first mortgage debt. The loan which had a principal balance outstanding of $51,022,000 at June 30, 2006, was modified to (a) reduce the interest rate from LIBOR plus 4.50% to LIBOR plus 1.75%, (b) extend the maturity to June 30, 2009, subject to two one-year extensions and (c) eliminate the requirement for principal payments equal to 50% of cash flow (as defined) and replaced this requirement with quarterly principal payments of approximately $306,000, beginning April 1, 2007. In addition, the lender has agreed to advance an additional amount up to $22,000,000 to be used to refinance the Company's existing first mortgage debt secured by its properties leased to The Kroger Co. and Bell South Communications, Inc. Debt Placements and Acquisitions As previously reported, the Company entered into a joint venture with a subsidiary of Newkirk Realty Trust, Inc. to originate and acquire loans secured directly or indirectly by real estate. The joint venture made the following investments during the quarter ended June 30, 2006: B-Notes: o a $13,000,000 junior participation in a B Note secured by a 638,363 square foot Class A office building in downtown Atlanta for a purchase price of $10,473,000. The B Note has an interest rate of 6.09% and an expected yield of 12.43%. o a $4,500,000 participation in a B Note secured by an office portfolio know as Boston Wharf Properties containing a total of 438,522 square feet located in Boston, MA. The two-year loan bears an interest rate of LIBOR plus 2.25% and is subject to three, one-year extensions. Mezzanine Loans: o a $1,500,000 mezzanine loan secured by the ownership interests in entities owning fee title to a 130,000 square foot industrial facility that is net leased to Rockwell Automation. The loan bears an interest rate of 12% and matures in 10 years. o a $10,000,000 participation in a mezzanine loan secured by the ownership interests in entities owning fee title to One Madison Avenue, a 1,100,000 square foot office building located in New York City and 95% leased to Credit Suisse. The loan was purchased for $8,469,000 and has an expected unleveraged yield to maturity of 7.58%. o a $20,000,000 mezzanine loan secured by the ownership interests in entities owning fee title to One Pepsi Way, a 539,692 square foot Class A office building situated on 206 acres in Westchester County, NY. The two-year loan bears an interest rate of LIBOR plus 4.25% and is subject to three, one-year extensions. Remics/Bonds: o a $3,000,000 BB rated bond, BALL 2003-BBA2 Class L for a price of $2,984,000. o a $13,000,000 BB rated bond, BSCMS 2004-BA5A Class K for a price of $12,870,000. o three BBB-rated CMBS bonds: (i) BALL 2004-BBA4 $7,000,000 Class K for a price of $7,061,000; (ii) COMM 20005 FL11 $15,700,000 Class L for a price of $15,432,000; and (iii) BSCMS 2006-BBA7 $4,785,000 Class K for a price of $4,784,000. CEO Commentary Michael L. Ashner, the Company's chief executive officer commented, "We believe that the quarterly financial results begin to reflect the successful execution of our business strategy." Additional Information and Supplemental Data Winthrop Realty Trust is real estate investment trust engaged in the ownership and management of, and lending to, real estate and related investments. Winthrop Realty Trust is listed on the New York Stock Exchange and trades under the symbol "FUR." It has executive offices in Boston, Massachusetts and Jericho, New York. WINTHROP REALTY TRUST CONSOLIDATED BALANCE SHEETS (In thousands, except share and per share data)
June 30, 2006 (Unaudited) December 31, 2005 ----------------- ----------------- ASSETS Investments in real estate, at cost Land $ 19,546 $ 12,595 Buildings and improvements 229,279 203,323 ----------------- ----------------- 248,825 215,918 Less - Accumulated depreciation (12,135) (9,267) ----------------- ----------------- Investments in real estate, net 236,690 206,651 Cash and cash equivalents 27,443 19,018 Restricted cash 7,834 626 Mortgage-backed securities available for sale pledged under repurchase agreements 108,996 126,163 Loans receivable 79,331 67,504 Accounts receivable and prepayments, net of allowance of $6 and $23, respectively 2,965 9,094 Real estate securities available for sale 15,061 34,300 Preferred equity investment 79,355 78,427 Equity investment 70,676 70,304 Equity investment in joint venture 33,601 -- Lease intangibles, net 38,401 36,735 Equity investment in limited liability company 13,357 -- Deferred financing costs, net 2,102 1,516 Assets of discontinued operations 1,382 1,382 Other assets 3,081 1,946 ----------------- ----------------- TOTAL ASSETS $ 720,275 $ 653,666 ================= ================= LIABILITIES Repurchase agreements $ 109,471 $ 121,716 Mortgage loans payable 234,513 175,118 Loan payable 30,014 30,025 Revolving line of credit -- 16,000 Accounts payable and accrued liabilities 8,054 7,598 Dividends payable 1,098 5,530 Below market lease intangibles, net 4,925 4,569 Deferred income 7,833 9,500 Liabilities of discontinued operations 1,588 1,659 ----------------- ----------------- TOTAL LIABILITIES 397,496 371,715 ----------------- ----------------- COMMITMENTS AND CONTINGENCIES MINORITY INTEREST 30,172 27,527 ----------------- ----------------- SHAREHOLDERS' EQUITY Series A Cumulative Convertible Redeemable Preferred Shares of Beneficial Interest, $25 per share liquidating preference, 2,300,000 shares authorized, 0 and 983,082 outstanding at June 30, 2006 and December 31, 2005, respectively -- 23,131 Series B-1 Cumulative Convertible Redeemable Preferred Shares of Beneficial Interest, $25 per share liquidating preference, 4,000,000 shares authorized, 3,990,000 and 4,000,000 outstanding at June 30, 2006 and December 31, 2005, respectively 93,928 94,164 Common Shares of Beneficial Interest, $1 par, unlimited authorized, 45,693,809 and 35,581,479 outstanding at June 30, 2006 and December 31, 2005, respectively 45,694 35,581 Additional paid-in capital 261,762 221,386 Accumulated other comprehensive income 3,938 6,915 Accumulated distributions in excess of net income (112,715) (126,753) ----------------- ----------------- Total Shareholders' Equity 292,607 254,424 ----------------- ----------------- TOTAL LIABILITIES, MINORITY INTEREST AND SHAREHOLDERS' EQUITY $ 720,275 $ 653,666 ================= =================
WINTHROP REALTY TRUST CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (Unaudited) (In thousands, except per share data)
For the Three Months Ended For the Six Months Ended June 30, June 30, --------------------------- --------------------------- 2006 2005 2006 2005 ------------ ------------ ------------ ------------ Revenues Rents $ 9,572 $ 4,045 $ 18,149 $ 7,907 Interest, dividends and other 3,929 1,118 7,383 2,155 ------------ ------------ ------------ ------------ 13,501 5,163 25,532 10,062 ------------ ------------ ------------ ------------ Expenses Property operating 988 181 1,822 366 Real estate taxes 301 20 579 41 Depreciation and amortization 2,879 983 5,430 1,825 Interest 6,155 1,838 11,791 3,538 General and administrative 1,701 1,686 3,220 2,686 State and local taxes 216 -- 220 -- ------------ ------------ ------------ ------------ 12,240 4,708 23,062 8,456 ------------ ------------ ------------ ------------ Other income Assignment of exclusivity agreement 834 -- 1,667 -- Equity in earnings of preferred equity investment 1,490 1,131 2,969 1,131 Equity in earnings (loss) of equity investment 1,700 (2) 3,302 (26) Equity in earnings of equity investment in joint venture 749 -- 749 -- Gain on sale of real estate securities available for sale 187 -- 7,506 142 Gain on sale of real estate held for syndication -- -- -- 169 Loss on early extinguishment of debt (276) -- (111) -- ------------ ------------ ------------ ------------ 4,684 1,129 16,082 1,416 ------------ ------------ ------------ ------------ Income from continuing operations before minority interest 5,945 1,584 18,552 3,022 Minority interest 719 -- 1,351 -- ------------ ------------ ------------ ------------ Income from continuing operations 5,226 1,584 17,201 3,022 Discontinued operations Income from discontinued operations 45 487 81 522 ------------ ------------ ------------ ------------ Net income 5,271 2,071 17,282 3,544 Preferred dividend (1,620) (2,011) (3,244) (3,037) ------------ ------------ ------------ ------------ Net income applicable to Common Shares of Beneficial Interest $ 3,651 $ 60 $ 14,038 $ 507 ============ ============ ============ ============ Comprehensive income Net income $ 5,271 $ 2,071 $ 17,282 $ 3,544 Change in unrealized gain on real estate securities available for sale 392 2,222 (3,747) 2,197 Change in unrealized loss on mortgage-backed securities held for sale (373) -- (372) -- Change in unrealized gain on interest rate derivative 436 (756) 1,142 250 ------------ ------------ ------------ ------------ Comprehensive income $ 5,726 $ 3,537 $ 14,305 $ 5,991 ============ ============ ============ ============ Per Common Share data - Basic Income (loss) from continuing operations $ 0.08 $ (0.01) $ 0.34 $ 0.00 Income from discontinued operations 0.00 0.01 0.00 0.02 ------------ ------------ ------------ ------------ Net income $ 0.08 $ 0.00 $ 0.34 $ 0.02 ============ ============ ============ ============ Per Common Share data - Diluted Income (loss) from continuing operations $ 0.08 $ (0.01) $ 0.27 $ 0.00 Income from discontinued operations 0.00 0.01 0.00 0.02 ------------ ------------ ------------ ------------ Net income $ 0.08 $ 0.00 $ 0.27 $ 0.02 ============ ============ ============ ============ Basic Weighted-Average Common Shares 43,858 32,059 41,173 31,799 ============ ============ ============ ============ Diluted Weighted-Average Common Shares 66,086 32,102 64,402 31,843 ============ ============ ============ ============
Net income increased by $13,738,000 to $17,282,000 for the six months ended June 30, 2006 from $3,544,000 for the six months ended June 30, 2005. The increase was due primarily to an increase in other income of $14,666,000, which included $7,506,000 in gain from the sale of real estate securities, and an increase in revenues of $15,470,000 as a result of our acquisition activity. These increases were partially offset by an increase in expenses of $14,606,000 and an increase in minority interest expense of $1,351,000. Assets increased from December 31, 2005 to June 30, 2006 by $66,609,000 to $720,275,000 principally as a result of the acquisition of the three office properties located in Lisle, Illinois, contributions to our joint venture with Newkirk Realty Trust, and other investing activities. The funds for these acquisitions were derived primarily from financing proceeds, proceeds from the sale of securities and the issuance of common shares in connection with our rights offering. Shareholders equity increased by $38,183,000 to $292,607,000 as the result of the issuance of the common shares and the net income recognized during the six months ended June 30, 2006, offset partially by dividends paid on the Series B-1 Preferred Shares. Shareholders equity, under generally accepted accounting principles, attributable to the common shares increased from $3.97 per common share at December 31, 2005 (after giving effect to the conversion of the Series A Preferred Shares) to $4.35 per common share at June 30, 2006. In addition, common shareholders received a distribution of $0.11 per common share in January 2006. Adjusted Funds From Operations We compute funds from operations ("FFO") as shown in the calculation below. Funds from operations is a non-GAAP financial measure which represents "funds from operations" as defined by NAREIT. NAREIT defines funds from operations as net income, computed in accordance with generally accepted accounting principles or GAAP, excluding gains (or losses) from debt restructuring and sales of property, plus depreciation and amortization on real estate assets, and after adjustments for unconsolidated partnerships and joint ventures. We have also reported our adjusted FFO ("AFFO") as adjusted for the non-cash income incurred in connection with the receipt of shares from Newkirk Realty Trust in exchange for certain exclusivity rights with respect to net-lease business opportunities offered to or generated by senior management. We consider AFFO a useful additional measure of performance because it can also facilitate a comparison of current operating performance among REITs. AFFO does not represent cash generated by operating activities in accordance with GAAP and should not be considered an alternative to net income or cash flow from operating activities as a measure of financial performance or liquidity. The following presents a reconciliation of our income from operations to our adjusted funds from operations for the six months ended June 30, 2006 and June 30, 2005 (in thousands):
For the Six Months Ended June 30, 2006 June 30, 2005 ------------- ------------- Net income $ 17,282 $ 3,544 Real estate depreciation 2,869 1,285 Amortization of capitalized leasing costs 2,374 490 Real estate depreciation of unconsolidated interests 1,951 111 Less: Minority interest share of depreciation and amortization (1,453) -- ------------- ------------- Funds from operations 23,023 5,430 Less: Other income recognized for exclusivity rights 1,667 -- ------------- ------------- Adjusted funds from operations $ 21,356 $ 5,430 ============= =============
Further details regarding the Company's results of operations, properties and tenants are available in the Company's Quarterly Report filed on Form 10-Q for the quarter ended June 30, 2006 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. 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 Winthrop Realty Trust can be found in Winthrop's Annual Report on Form 10-K and Quarterly Reports on Form 10-Q filed with the Securities and Exchange Commission.