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San Diego-based REITs post strong results

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A pair of locally based retail real estate investment trusts continued to post strong results in the third quarter, and a recently formed biomedical REIT continues to acquire properties across the country.

Realty Income

Escondido-based Realty Income Corp. (NYSE: O, News) and Vista-based Pan Pacific Retail Properties (NYSE: PNP, News) both recorded solid third quarter numbers as San Diego-based Biomed Realty Trust (NYSE: BMR, News) announced it has acquired two properties in Pennsylvania and Delaware.

Realty Income reported net income of $23.1 million on revenues of $49.7 million for the third quarter ended Sept. 30. This was compared with $25.2 million in net income on $43.7 million in revenues for the same quarter a year ago.

For the first nine months of 2005, the REIT posted $71.3 million in net income on $143.3 million in revenues, compared with $76.8 million in net income on $128.7 million in revenues during the same period of 2004.

The Escondido REIT posted $31.7 million in funds from operations (FFO) in the third quarter, up modestly from the $29.5 million in the same quarter last year. For the first nine months of 2005, Realty Income recorded $93.8 million in funds from operations, up slightly from the $89.4 million during the first three quarters last year.

FFO is based on a net income analysis of property portfolio performance that excludes noncash items such as depreciation.

As of Sept.30 Realty Income's portfolio of freestanding, single-tenant, retail holdings consisted of 1,605 properties in 48 states, leased to 101 retail chains doing business in 30 retail industries. The properties are leased under long-term net leases with a weighted average remaining lease term of approximately 12.4 years.

As of Sept. 30 total portfolio occupancy was 98.4 percent with only 26 properties available for lease.

During the third quarter, Realty Income and its wholly owned subsidiary, Crest Net Lease Inc., invested $245.3 million in 32 new properties and properties under development. The tenants are in the convenience store, health and fitness, restaurant and theater industries.

During the nine months ended Sept. 30, Realty Income and Crest Net Lease invested $412.1 million in 104 new properties and properties under development.

The REIT's activities were fueled by an unsecured acquisition credit facility with a $300 million borrowing capacity used to fund property acquisitions in the near term. The outstanding balance on the company's credit facility at the end of the third quarter was $15.5 million, with $284.5 million available to fund new acquisitions.

"Increases in property acquisitions, total revenue and funds from operations allowed us to raise the dividend two times during the third quarter," said Tom A. Lewis, Realty Income chief executive officer. "As a result, the amount of the monthly dividends paid per share in the first nine months of 2005 increased 9.4 percent compared to the same nine-month period in 2004."

Realty Income shares rose 55 cents to $22.27 during trading on Monday.

Pan Pacific

The Pan Pacific REIT, reportedly the largest neighborhood shopping center REIT on the West Coast, posted $24.8 million in net income on revenues of $78.2 million in the third quarter. This compared to $31 million in net income on $73.5 million in revenues during the same quarter in 2004.

Pan Pacific had $73.2 million in net income on $230.9 million in revenues through the first three quarters of 2005. Those figures compare with net income of $77.9 million on $212.6 million in revenues for the same period in 2004.

The Vista REIT posted $39.5 million in FFO for the third quarter, up slightly from $36.6 million in FFO during the same quarter a year ago.

For the first nine months of 2005, Pan Pacific posted FFO of $116.2 million, 9.87 percent more than $105.8 million in the same period last year.

During the third quarter the company acquired two grocery-anchored neighborhood centers within the greater Seattle metropolitan region for a total investment of $60 million: Silverdale Plaza, a 170,332-square-foot, grocery-anchored community shopping center for $33 million; and Jefferson Square, a 146,829-square-foot, grocery-anchored community shopping center for $27 million.

Silverdale Plaza is presently 100 percent leased, anchored by Safeway Supermarket (NYSE: SWY), Rite Aid drugstore (NYSE: RAD), Jo-Ann Fabrics & Crafts and Staples (Nasdaq: SPLS). Jefferson Square is presently 98.4 percent leased, anchored by Safeway Supermarket and Bartell drugstore.

"Following our exceptionally strong results in the first half of the year, our business continued to advance on all fronts during the third quarter... ," said Stuart A. Tanz, Pan Pacific president and chief executive officer. "Year-to-date we have acquired $101.7 million of grocery-anchored shopping centers in our strategic West Coast markets, while disposing of $30.4 million of non-strategic properties. ... "In summary, we are squarely on track to achieve our stated objectives for 2005 and are building good momentum as we head toward 2006."

Pan Pacific's portfolio currently totals 137 properties, encompassing approximately 22.3 million square feet of retail space. The portfolio is principally across five regions in the Western United States: Northern California, Southern California, Washington, Oregon and Nevada.

PNP shares rose 91 cents to $63.51 during regular trading on Monday.

BioMed

BioMed does not yet have its third-quarter numbers but announced it has just acquired two properties: a research laboratory facility located in Bristol, Penn., and the U.S. corporate headquarters of Uniqema in New Castle, Del.

The 71,500-square-foot facility in the Bridge Business Center in Bristol was purchased for approximately $14.9 million in cash and is fully leased to Rhodia Inc. (NYSE: RHA), a public specialty chemicals company.

The 59,800-square-foot New Castle property was acquired for approximately $15.5 million in cash and is fully leased to Uniqema, a subsidiary of publicly traded Imperial Chemical Industries plc.

BioMed also entered into an agreement to acquire the adjacent property located at 900 Uniqema Boulevard, consisting of an approximately 11,200 square-foot laboratory facility that is fully leased to Uniqema. The acquisition is expected to close during the fourth quarter.

"These transactions further exemplify our focus on providing real estate to the life science industry, and our stated growth strategy. We are gaining both a stronger footprint in the important Pennsylvania market and adding two solid global companies to our tenant base," said Alan D. Gold, BioMed president and chief executive officer. "We continue to execute on acquisitions within our targeted range of 9 to 11 percent cap rates, and are encouraged by the healthy pipeline that we have exposure to."

The two acquisitions increase BioMed's real estate portfolio to 37 properties representing 60 buildings with approximately 4.5 million rentable square feet in major life science markets across the United States.

BMR shares rose 91 cents to $25.02 during regular trading on Monday.


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