Chelsea Property Group, Inc. (ticker: CPG, exchange: New York Stock Exchange) News Release - 26-Feb-2002
Chelsea Property Group Reports 18% Growth In Fourth Quarter Funds From Operations
ROSELAND, N.J., Feb 26, 2002 /PRNewswire-FirstCall via COMTEX/ --FFO Per Share Up 10% for the Year Chelsea
Property Group, Inc. (NYSE: CPG) today announced operating results for its
fourth quarter and fiscal year ended December 31, 2001.
Fourth quarter funds from operations ("FFO") before minority interest rose 18%
to $34.4 million from $29.1 million in the fourth quarter of 2000, and diluted
FFO per share rose 4% to $1.55 from $1.49, respectively. For the full year, FFO
rose 16% to $108.9 million from $93.6 million in 2000, and diluted FFO per share
rose 10% to $5.30 from $4.80, respectively.
Fourth quarter rental revenues from wholly-owned assets rose 31% to $47.5
million from $36.3 million in 2000, and total revenues from wholly-owned assets
rose 24% to $66.7 million from $53.7 million, respectively. During the quarter,
income from unconsolidated entities rose 26% to $5.1 million from $4.1 million;
this increase was partially offset by a $1.9 million loss related to the
Company's investment in Chelsea Interactive. Fourth quarter earnings before
interest, depreciation and amortization (EBITDA) rose 22% to $49.2 million from
$40.3 million, respectively.
For the full year, rental revenues from wholly-owned assets rose 16% to $145.3
million from $125.8 million in 2000; total revenues from wholly-owned assets
rose 15% to $206.9 million from $179.9 million; income from unconsolidated
entities rose 133% to $15.6 million from $6.7 million; the loss from Chelsea
Interactive was $5.3 million; and EBITDA rose 23% to $162.0 million from $132.0
million, respectively.
Fourth quarter and full-year comparisons were positively impacted by internal
rent growth; higher percentage rents; full-year contributions from projects
opened in 2000 including Orlando, Allen, Gotemba and Rinku Premium Outlets; the
expansions of four U.S. properties in 2000 and 2001; a full-year contribution
from four properties acquired on a joint venture basis in December 2000 (Gilroy,
California; Michigan City, Indiana; Waterloo, New York; and Kittery, Maine); and
the acquisition of 31 retail properties from Konover Property Trust in September
2001. Orlando Premium Outlets is a 50%-owned joint venture with Simon Property
Group, Inc. (NYSE: SPG), and Gotemba and Rinku Premium Outlets were developed by
Chelsea Japan Co., Ltd., a 40%-owned joint venture. Chelsea also recognized
income of $1.3 million during the quarter and $5.1 million during the year in
connection with a non-compete agreement covering the Houston, Texas market; this
income commenced in the fourth quarter of 1998 and is scheduled to recur
quarterly through the end of 2002.
Including joint venture projects, Chelsea's portfolio grew by a record 4.4
million square feet of gross leasable area (GLA) during 2001, ending the year at
12.6 million square feet. The Premium Outlet(TM) center portfolio (including
Japan), comprising 8.3 million square feet of GLA, remained 98% leased at
December 31, 2001.
Same-space sales (weighted average sales per square foot reported in space open
for the full duration of both comparison periods) in the domestic Premium Outlet
portfolio were down 1% for the quarter and for the full year; and average tenant
sales were $379 per square foot in 2001 compared to $400 per square foot the
year before. Excluding the four properties acquired from Prime Retail at the end
of 2000, weighted average domestic Premium Outlet sales in 2001 were $393 per
square foot. Total reported domestic Premium Outlet tenant sales rose to $2.72
billion from $2.07 billion.
The 70,000 square-foot second phase of Rinku Premium Outlets, near Osaka, Japan,
is nearing completion and scheduled to open on March 8, 2002. The expansion is
expected to be fully leased upon opening, with approximately 40 new tenants
including Versace, Lanvin, Royal Copenhagen, La Perla, Tommy Hilfiger, Skechers
and The North Face. Following the expansion, Rinku Premium Outlets will be the
largest outlet center in Japan at 250,000 square feet of GLA, followed by
Gotemba Premium Outlets (outside Tokyo) at 220,000 square feet.
During 2001, Chelsea raised approximately $250 million of new equity and
long-term debt financing to support its growth, including $150 million of
10-year senior unsecured notes (January) and common stock issuances yielding net
proceeds of approximately $100 million (July and October). As a result of these
transactions, the Company's $160 million bank line of credit has been unused
since October.
David Bloom, Chairman and Chief Executive Officer, said, "2001 was our eighth
consecutive year of record operating results since going public, as well as a
significant milestone in terms of Chelsea's size and market position. In spite
of an extremely challenging retail and tourism environment worldwide,
particularly in the weeks immediately following September 11, our core Premium
Outlet business in both the United States and Japan remained solid. During the
fourth quarter, very strong late-November and December sales largely offset
negative comparisons in October and early November. We are extremely pleased
with the way our portfolio held up during this difficult time given our
relatively high concentration of luxury brands and our sensitivity to both
international and domestic tourism.
"As we enter 2002, our development pipeline is intact, and the quality of our
cash flow and balance sheet should position us extremely well to take advantage
of other growth opportunities including single-property or portfolio
acquisitions," Mr. Bloom added.
Chelsea Property Group, Inc. is a fully integrated, self-administered and
self-managed real estate investment trust (REIT) that wholly or partially owns
57 Premium Outlet and other shopping centers -- containing 12.6 million square
feet of GLA -- in 28 states and Japan. The Company's leading properties include
Woodbury Common Premium Outlets, near New York City; Orlando Premium Outlets, in
Orlando, Florida; Desert Hills Premium Outlets, near Palm Springs, California;
Wrentham Village Premium Outlets, near Boston; and Gotemba Premium Outlets, near
Tokyo, Japan. The Company has also developed, through its Chelsea Interactive
affiliate, an e-commerce technology platform for use by brands going online. See
http://www.cpgi.com, http://www.premiumoutlets.co.jp and
http://www.chelseainteractive.com for more information.
The Company's fourth quarter conference call with investors and analysts will be
held on Wednesday, February 27, 2002, at 2:00 p.m. eastern time. The call may be
accessed by dialing 800-670-3545 (U.S. callers) or 212-346-6601 (international
callers) and referencing reservation No. 20358666. A replay of the call will be
available through March 8, 2002 by dialing 800-633-8284 (U.S. callers) or
858-812-6440 (international callers) and using the same reservation number.
Statements in this news release that are not strictly historical are
"forward-looking" statements under the safe harbor provisions of the Private
Securities Litigation Reform Act of 1995. Although Chelsea Property Group
believes the expectations reflected in such statements are based on reasonable
assumptions, it can give no assurance that its expectations will be attained.
Forward-looking statements involve known and unknown risks that may cause actual
results to differ materially from expected results. Risk factors include,
without limitation, the receipt of regulatory entitlements for and completion of
development projects, in the United States or abroad; the availability and cost
of capital and foreign currency; credit risk; the Company's ability to lease its
properties; retail, real estate and economic conditions; risks inherent to being
a partner in joint ventures; competition; and other risks detailed from time to
time in Chelsea Property Group's reports to the Securities and Exchange
Commission. The Company accepts no responsibility for updating forward-looking
statements.
CHELSEA PROPERTY GROUP, INC.
STATEMENT OF OPERATIONS - Unaudited
(In thousands, except per share data)
Three Months Ended Year Ended
December 31, December 31,
2001 2000 2001 2000
Revenues:
Base rent (a) $39,299 $28,397 $127,229 $108,123
Percentage rent 8,198 7,889 18,049 17,701
Expense reimbursements 16,557 14,529 50,559 44,116
Other income 2,615 2,877 11,018 9,963
Total revenues 66,669 53,692 206,855 179,903
Expenses:
Operating and
maintenance 20,286 15,860 57,791 48,992
Depreciation and
amortization 13,075 11,155 48,554 42,978
General and
administrative 1,565 2,187 4,611 4,784
Other 1,099 339 2,819 2,663
Total expenses 36,025 29,541 113,775 99,417
Income before
unconsolidated
investments, interest
expense and minority
interest 30,644 24,151 93,080 80,486
Income from
unconsolidated
investments 5,133 4,079 15,642 6,723
Loss from Chelsea
Interactive (1,890) (1,559) (5,337) (2,364)
Interest expense (10,539) (6,978) (36,865) (24,459)
Income before
minority interest 23,348 19,693 66,520 60,386
Less minority interest (4,493) (4,449) (14,706) (14,606)
Net income 18,855 15,244 51,814 45,780
Preferred dividends (1,047) (1,047) (4,188) (4,188)
Net income - common
shareholders $17,808 $14,197 $47,626 $41,592
Net income per common
share (diluted) (b) $0.93 $0.88 $2.74 $2.58
Funds from
operations (FFO) (c) $34,364 $29,062 $108,862 $93,556
FFO per common
share (diluted) $1.55 $1.49 $5.30 $4.80
Dividends per
common share $0.78 $0.75 $3.12 $3.00
(a)Base rent includes straight-line rent of $580 and $488 in the fourth
quarters of 2001 and 2000, respectively, and $1,761 and $1,536 for the
year ended December 31, 2001 and 2000, respectively.
(b) Basic earnings per share were $0.96 and $0.89 in the fourth quarters
of 2001 and 2000, respectively, and $2.83 and $2.61 for the year ended
December 31, 2001 and 2000, respectively.
(c) FFO per common share is defined as income before minority interest,
gain or loss on sale or writedown of asset and depreciation and
amortization, reduced by amortization of deferred financing costs,
depreciation of non-real estate assets, and preferred dividends.
CALCULATION OF FFO
(Amounts in thousands) Three Months Ended Year Ended
December 31, December 31,
2001 2000 2001 2000
Net income - common
shareholders $17,808 $14,197 $47,626 $41,592
Add:
Depreciation and
amortization -
wholly-owned 13,075 11,155 48,554 42,978
Depreciation and
amortization- joint
ventures 1,264 1,159 5,964 2,024
Amortization of deferred
financing costs and
depreciation of
non-real estate
assets (481) (436) (1,807) (1,796)
Gain(loss) on sale
or writedown of assets (333) -- (333) --
Preferred unit
distributions (1,462) (1,462) (5,848) (5,848)
Minority interest 4,493 4,449 14,706 14,606
FFO $34,364 $29,062 $108,862 $93,556
Ownership interests:
REIT common shares 19,074 16,201 17,355 16,126
Partnership units
held by minority
interest 3,152 3,355 3,179 3,356
Weighted average
shares/units
outstanding 22,226 19,556 20,534 19,482
CHELSEA PROPERTY GROUP, INC.
SELECTED BALANCE SHEET DATA - Unaudited December 31, December 31,
(In thousands, except center data) 2001 2000
Real estate assets, before depreciation $1,118,303 $908,344
Cash and cash equivalents 24,604 18,036
Total assets 1,099,308 901,437
Total liabilities 624,246
528,752
Minority interest 97,347 101,203
Stockholders' equity 377,715 271,482
Shares and units outstanding at period-end 21,920 19,305
DEBT DATA:
Unsecured bank debt 5,035 35,035
Mortgage debt 170,209 90,776
7.75% Notes due 2001 -- 99,987
8.375% Notes due 2005 49,892 49,877
7.25% Notes due 2007 124,809 124,776
8.625% Notes due 2009 49,923 49,902
8.25% Notes due 2011 148,670 --
Interest coverage ratio - trailing 12 months 4.3x 5.1x
OPERATING DATA: (sq ft in thousands)
Gross leasable area at period-end 12,574 8,159
Weighted average GLA during period 9,349 5,701
Lease-up at period-end - Domestic Premium Outlets 98% 98%
Number of centers (including two international) 57 27
Number of states and foreign countries 29 16
SOURCE Chelsea Property Group, Inc.
CONTACT:
Leslie T. Chao, President, or Michael J. Clarke, CFO,
+1-973-228-6111
URL: http://www.chelseagca.com
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