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Chelsea Property Group, Inc. (ticker: CPG, exchange: New York Stock Exchange) News Release - 5-May-2004
Chelsea Property Group Reports 19% Increase in First Quarter Funds from Operations; Premium Outlet Same-Space Sales Up 15%
ROSELAND, N.J.--(BUSINESS WIRE)--May 5, 2004--Chelsea Property Group, Inc. (NYSE: CPG) today reported operating results for the first quarter ended March 31, 2004.
First quarter funds from operations (FFO) before minority interest rose 19% to $47.1 million from $39.4 million in the first quarter of 2003, and diluted FFO per share rose 16% to $0.89 from $0.77, respectively. First quarter net income available to common shareholders rose to $24.2 million, or $0.53 per diluted share, from $18.4 million, or $0.43 per diluted share, in the year-earlier period.
First quarter rental revenues from wholly-owned assets rose 11% to $70.5 million from $63.3 million, and total revenues from wholly-owned assets rose 12% to $93.1 million from $83.3 million, respectively. FFO from unconsolidated investments rose to $6.7 million from $2.1 million, primarily due to the openings in 2003 of Sano Premium Outlets and Phase II of Gotemba Premium Outlets (40%-owned) and Las Vegas Premium Outlets (50%-owned). First quarter earnings before interest, depreciation and amortization (EBITDA) rose 18% to $69.9 million from $59.3 million.
First quarter revenue and earnings comparisons were positively impacted by the acquisitions in 2003 of The Crossings Factory Stores (June) and Belz Factory Outlet World - Las Vegas (August); the above mentioned openings at Sano (March), Gotemba (July) and Las Vegas Premium Outlets (August); internal rent growth; higher percentage rents; and the wind-down of Chelsea Interactive.
Gross leasable area (GLA) in operation, including joint venture projects, totaled 16.3 million square feet at March 31, 2004, compared to 14.6 million square feet a year earlier. The Premium Outlet portfolio was 98% leased at the end of the quarter.
Same-space sales (weighted average sales per square foot reported in space open for the full duration of both comparison periods) at U.S. Premium Outlet centers were up 15% in the first quarter. During 2003, sales in Chelsea's U.S. Premium Outlet portfolio averaged an industry-leading $399 per square foot.
The 187,000 square-foot first phase of Tosu Premium Outlets, Chelsea Japan's fourth project, opened near Fukuoka, Japan, in March 2004. Additionally, during the next 15-18 months, approximately 1.3 million square feet of new space is scheduled for completion, including Chicago Premium Outlets, a new single-phase center located in Aurora, Illinois (438,000 square feet in June 2004); the first phase of Punta Norte Premium Outlets, in Mexico City (230,000 square feet in late 2004); the first phase of Toki Premium Outlets, near Nagoya, Japan (175,000 square feet in the spring of 2005); the first phase of Seattle Premium Outlets, a new center located in Tulalip, Washington (355,000 square feet in the summer of 2005); and expansions at Sano Premium Outlets (51,000 square feet in July 2004) and Rinku Premium Outlets (70,000 square feet in December 2004). Tosu, Sano, Rinku and Toki Premium Outlets are 40%-owned, and Chicago and Punta Norte Premium Outlets are 50%-owned by Chelsea.
David Bloom, Chairman and Chief Executive Officer, said, "First quarter operating results were very strong. Most pleasing of all was our 15% same-space sales increase - a spectacular performance even considering an easier comparison due to last year's severe winter. Sales momentum over the last 12 months has been robust, and 2004 clearly is off to an extremely good start.
"We are also pleased to report that Tosu Premium Outlets opened very strongly, while bringing Chelsea Japan's portfolio to a milestone of one million square feet of GLA. We now look forward to the opening of Chicago Premium Outlets in the next several weeks and to delivering our substantial pipeline during the remainder of 2004 and into 2005. The benefits of establishing our new Office of the President, shared by Les Chao and Tom Davis, are already evident as the re-organization has enabled us to re-deploy key people and resources to international development, streamline our decision-making processes, and take fuller advantage of our worldwide tenant relationships," Mr. Bloom added.
Chelsea's first-quarter conference call with investors and analysts will be held tomorrow, Thursday, May 6, 2004, at 2:00 p.m. eastern time. The call may be accessed by dialing 800-901-5241 (U.S. callers) or 617-786-2963 (international callers) and referencing reservation No. 74782629. A taped replay will be available through May 13, 2004 by dialing 888-286-8010 (U.S. callers) or 617-801-6888 (international callers) and referencing reservation No. 27560541. The call will also be available in listen-only mode by logging on to the Company's website, www.cpgi.com; a link to the call will be located in the "Investor Information" section, and a replay will be available for 45 days.
Chelsea Property Group, Inc. is a fully integrated, self-administered and self-managed real estate investment trust (REIT) with interests in 60 Premium Outlet(R) and other shopping centers - containing 16.3 million square feet of GLA - in 31 states and Japan. The Company's leading properties include Woodbury Common Premium Outlets, near New York City; Orlando Premium Outlets, in Orlando, Florida; Wrentham Village Premium Outlets, near Boston; Desert Hills Premium Outlets, near Palm Springs, California; and Gotemba Premium Outlets, near Tokyo. Please see www.cpgi.com for more information.
This news release includes "forward-looking" statements under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Although Chelsea Property Group believes that 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. Risks include, without limitation, obtaining regulatory entitlements for and completion of development projects; construction risks; 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 related to e-commerce and the development of technology-based systems; 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 Three Months Ended
(In thousands, except per share data) March 31,
2004 2003
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Revenues:
Base rent (a) $65,644 $59,159
Percentage rent 4,806 4,121
Expense reimbursements 20,729 18,553
Other income 1,923 1,449
-------- --------
Total revenues 93,102 83,282
Expenses:
Operating and maintenance 25,101 22,521
Depreciation and amortization 17,816 17,283
General and administrative 3,590 2,202
Other 2,436 2,195
-------- --------
Total expenses 48,943 44,201
Income before unconsolidated investments,
interest expense, minority interest and
discontinued operations 44,159 39,081
Income from unconsolidated investments 5,042 1,451
Interest expense (18,650) (16,775)
-------- --------
Income from continuing operations before
minority interest 30,551 23,757
Minority interest attributed to continuing operations (5,509) (4,765)
-------- --------
Income from continuing operations 25,042 18,992
Income from discontinued operations,
net of minority interest - 255
-------- --------
Net income $25,042 $19,247
Preferred dividends (834) (834)
-------- --------
Net income - common shareholders $24,208 $18,413
Net income per common share (diluted)(b) $0.53 $0.43
Funds from operations (FFO) (c) $47,055 $39,393
FFO per common share (diluted) $0.89 $0.77
Dividends per common share $0.60 $0.535
(a) Base rent includes straight-line rent of $1,364 and $1,760 in the
first quarter of 2004 and 2003, respectively.
(b) Basic earnings per share were $0.55 and $0.44 in the first quarter
of 2004 and 2003, respectively.
(c) FFO per common share is defined as income before minority
interest, gain or loss on sale of assets and depreciation and
amortization, reduced by amortization of deferred financing costs,
depreciation of non-real estate assets, and preferred dividends.
CHELSEA PROPERTY GROUP, INC.
CALCULATION OF FFO - Unaudited
Management believes that FFO should be considered in conjunction with
net income, as presented in the statement of operations, to facilitate
a clearer understanding of the operating results of the Company.
The Company believes that FFO is helpful to investors as a measure of
the performance of an equity REIT because, along with cash flow from
operating activities, financing activities and investing activities,
it provides investors with an indication of the ability of the Company
to incur and service debt, to make capital expenditures and to fund
other cash needs.
Three Months Ended
March 31,
(Amounts in thousands) 2004 2003
--------- --------
Net income - common shareholders $24,208 $18,413
Add:
Depreciation and amortization - wholly-owned 17,816 17,632
Depreciation and amortization - joint ventures 1,664 599
Amortization of deferred financing costs and
depreciation of non-real estate assets (680) (600)
Preferred unit distributions (1,462) (1,462)
Minority interest 5,509 4,811
-------- --------
FFO $47,055 $39,393
Ownership interests:
REIT common shares 45,815 43,322
Partnership units held by minority interest 7,314 7,561
-------- --------
Weighted average shares/units outstanding 53,129 50,883
CALCULATION OF EBITDA - Unaudited
Management believes that earnings before interest, depreciation and
amortization ("EBITDA") should be considered in conjunction with net
income, as presented in the statement of operations to facilitate a
clearer understanding of the operating results of the Company. The
Company believes that EBITDA is helpful to investors as a measure of
the performance of an equity REIT because, along with cash flow from
operating activities, financing activities and investing activities,
it provides investors with an indication of the ability of the Company
to incur and service debt, to make capital expenditures and to fund
other cash needs.
Three Months Ended
March 31,
(Amounts in thousands) 2004 2003
--------- --------
Net income $25,042 $19,247
Interest expense - wholly-owned 18,650 16,634
Interest expense - joint ventures 307 144
Depreciation and amortization - wholly-owned 17,816 17,632
Depreciation and amortization - joint ventures 1,664 599
Income tax - joint ventures 888 220
Minority interest 5,509 4,811
-------- --------
EBITDA $69,876 $59,287
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CHELSEA PROPERTY GROUP, INC.
SELECTED BALANCE SHEET DATA - Unaudited March 31, December 31,
(In thousands, except center data) 2004 2003
---------- ------------
Real estate assets, before depreciation $2,082,135 $2,072,783
Cash and cash equivalents 16,296 18,476
Total assets 1,984,393 1,970,414
Total liabilities 1,315,284 1,304,880
Minority interest 143,086 144,688
Stockholders' equity 526,023 520,846
Shares and units outstanding at period-end 51,269 50,948
DEBT DATA:
Unsecured bank debt 162,870 204,035
Mortgage debt 322,227 385,634
Unsecured notes due 2005 - 2013 721,451 621,803
Interest coverage ratio - trailing 12 months 3.9x 3.8x
OPERATING DATA: (sq ft in thousands)
Gross leasable area at period end 16,318 16,127
Gross leasable area at period end -
Premium Outlets 11,106 10,603
Weighted average GLA during period 16,158 15,249
Weighted average GLA during period -
Premium Outlets 10,946 10,239
Lease-up at period-end -
Domestic Premium Outlets 98% 99%
Number of centers 61 60
Number of states and foreign countries 32 32
CONTACT: Chelsea Property Group, Inc.
Leslie T. Chao or Michael J. Clarke, 973-228-6111
SOURCE: Chelsea Property Group, Inc.
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