<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission file number 1-12482
GLIMCHER REALTY TRUST
(Exact name of registrant as specified in its charter)
MARYLAND 31-1390518
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
20 SOUTH THIRD STREET 43215
COLUMBUS, OHIO (Zip Code)
(Address of principal executive offices)
Registrant's telephone number, including area code: (614) 621-9000
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
------------------- -----------------------------------------
COMMON SHARES OF BENEFICIAL INTEREST, NEW YORK STOCK EXCHANGE
PAR VALUE $.01 PER SHARE
-------------------------------------
Securities registered pursuant to Section 12(g) of the Act: NONE
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. YES X NO
---
As of October 24, 1997, there were 23,667,381 Common Shares of Beneficial
Interest outstanding, par value $ .01 per share.
1 of 22 pages
<PAGE> 2
GLIMCHER REALTY TRUST
FORM 10-Q
<TABLE>
<CAPTION>
INDEX
-----
<S> <C>
PART I: FINANCIAL INFORMATION PAGE
----
Item 1. Financial Statements
Consolidated Balance Sheets as of September 30, 1997 and December 31, 1996 3
Consolidated Statements of Operations for the three months ended September 30, 1997 and 1996 4
Consolidated Statements of Operations for the nine months ended September 30, 1997 and 1996 5
Consolidated Statements of Cash Flows for the nine months ended September 30, 1997 and 1996 6
Notes to Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 12
PART II: OTHER INFORMATION
Item 1. Legal Proceedings 21
Item 2. Changes in Securities and Use of Proceeds 21
Item 3. Defaults Upon Senior Securities 21
Item 4. Submission of Matters to a Vote of Security Holders 21
Item 5. Other Information 21
Item 6. Exhibits 21
SIGNATURES 22
</TABLE>
2
<PAGE> 3
PART 1
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
GLIMCHER REALTY TRUST
CONSOLIDATED BALANCE SHEETS
AS OF SEPTEMBER 30, 1997 AND DECEMBER 31, 1996
(DOLLARS IN THOUSANDS, EXCEPT PAR VALUE AMOUNTS)
<TABLE>
<CAPTION>
ASSETS
(UNAUDITED)
SEPTEMBER 30, 1997 DECEMBER 31, 1996
------------------ -----------------
Investment in real estate:
<S> <C> <C>
Land................................................................... $ 78,717 $ 78,339
Buildings, improvements and equipment.................................. 860,680 846,500
Developments in progress:
Land............................................................ 6,281 6,852
Developments.................................................... 11,876 17,447
---------- ---------
957,554 949,138
Less accumulated depreciation............................................ 101,193 86,421
---------- ---------
Net investment in real estate................................... 856,361 862,717
Cash and cash equivalents................................................ 7,345 8,968
Cash in escrow........................................................... 5,138 5,008
Investment in and advances to unconsolidated entities.................... 69,962 41,351
Tenant accounts receivable, net.......................................... 22,369 21,068
Deferred expenses, net................................................... 6,971 8,644
Prepaid and other assets................................................. 10,144 1,646
---------- ---------
$ 978,290 $ 949,402
========== =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Mortgage notes payable................................................... $ 470,550 $ 470,929
Notes payable............................................................ 152,064 104,318
Accounts payable and accrued expenses.................................... 22,743 26,770
Distributions payable.................................................... 11,787 12,044
---------- ---------
657,144 614,061
Commitments and contingencies
Minority interest in partnership......................................... 30,884 32,130
Redeemable preferred stock:
Series A convertible preferred shares of beneficial interest,
34,000 shares issued and outstanding as of September 30, 1997
and December 31, 1996............................................... 34,000 34,000
Shareholders' equity:
Common shares of beneficial interest, $.01 par value,
21,910,544 and 21,888,931 shares issued and outstanding at
September 30, 1997 and December 31, 1996, respectively.............. 219 219
Additional paid-in capital............................................. 317,061 316,673
Distributions in excess of accumulated earnings........................ (61,018) (47,681)
---------- ---------
$ 978,290 $ 949,402
========== =========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements
3
<PAGE> 4
GLIMCHER REALTY TRUST
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996
(UNAUDITED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
Revenues:
Minimum rents ................................................ $ 26,813 $ 20,887
Percentage rents ............................................. 873 592
Tenant recoveries ............................................ 5,887 5,641
Other ........................................................ 828 514
----------- -----------
Total revenues.............................................. 34,401 27,634
----------- -----------
Operating expenses:
Real estate taxes ............................................ 2,852 2,536
Recoverable operating expenses ............................... 3,697 3,116
Other operating expenses ..................................... 863 653
----------- -----------
Total operating expenses ................................... 7,412 6,305
----------- -----------
Property net operating income .............................. 26,989 21,329
Depreciation and amortization ..................................... 7,001 5,456
General and administrative ........................................ 1,952 2,354
Gain on sales of property/outparcels .............................. 382
Interest income ................................................... 265 121
Interest expense .................................................. 11,229 6,514
Equity in income (loss) of unconsolidated entities ................ 124
Minority interest in operating partnership ........................ 791 829
----------- -----------
Net income ........................................................ 6,405 6,679
Preferred stock dividends ......................................... 728
----------- -----------
Net income available to common shareholders ................... $ 5,677 $ 6,679
=========== ===========
Earnings per share available to common shareholders ............... $ 0.26 $ 0.31
=========== ===========
Cash distributions declared per common share of beneficial interest $ 0.4808 $ 0.4808
=========== ===========
Weighted average number of common shares of beneficial interest
outstanding ................................................... 21,907,885 21,888,931
=========== ===========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements
4
<PAGE> 5
GLIMCHER REALTY TRUST
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996
(UNAUDITED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
Revenues:
Minimum rents ................................................ $ 80,539 $ 62,104
Percentage rents ............................................. 2,720 2,199
Tenant recoveries ............................................ 17,575 16,315
Other ........................................................ 2,678 1,359
------------ ------------
Total revenues ............................................. 103,512 81,977
------------ ------------
Operating expenses:
Real estate taxes ............................................ 8,059 7,453
Recoverable operating expenses ............................... 10,993 9,855
Other operating expenses...................................... 2,483 1,986
------------ ------------
Total operating expenses ................................... 21,535 19,294
------------ ------------
Property net operating income .............................. 81,977 62,683
Depreciation and amortization ..................................... 20,658 16,157
General and administrative ........................................ 6,255 6,583
Gain on sales of property/outparcels .............................. 155 1,501
Interest income ................................................... 507 332
Interest expense .................................................. 31,850 19,477
Equity in income (loss) of unconsolidated entities ................ (951)
Minority interest in operating partnership ........................ 2,502 2,406
------------ ------------
Net income ........................................................ 20,423 19,893
Preferred stock dividends ......................................... 2,169
------------ ------------
Net income available to common shareholders .................. $ 18,254 $ 19,893
============ ============
Earnings per share available to common shareholders ............... $ 0.83 $ 0.91
============ ============
Cash distributions declared per common share of beneficial interest $ 1.4424 $ 1.4424
============ ============
Weighted average number of common shares of beneficial interest
outstanding .................................................. 21,899,383 21,887,778
============ ============
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements
5
<PAGE> 6
GLIMCHER REALTY TRUST
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996
(UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income .................................................... $ 20,423 $ 19,893
Adjustments to reconcile net income to net cash provided by
operating activities:
Provision for doubtful accounts ...................... 1,865 1,461
Depreciation and amortization ........................ 20,658 16,157
Gain on sales of property/outparcels ................. (155) (1,501)
Other non-cash expenses .............................. 582 622
Equity in loss of unconsolidated entities ............ 951
Minority interest in operating partnership ........... 2,502 2,406
Net changes in operating assets and liabilities:
Tenant accounts receivable, net ...................... (2,981) (5,518)
Prepaid and other assets ............................. 577 885
Accounts payable and accrued expenses ................ (3,501) (1,889)
-------- --------
Net cash provided by operating activities ................. 40,921 32,516
-------- --------
Cash flows from investing activities:
Proceeds of sales ......................................... 253 4,325
Additions to investment in real estate .................... (16,766) (59,252)
Acquisition of properties ................................. (5,167)
Investment in and advances to unconsolidated entities ..... (29,780)
Additions to cash in escrow ............................... (130) (27,132)
Additions to deferred expenses and other .................. (9,711) (116)
-------- --------
Net cash used in investing activities ..................... (56,134) (87,342)
-------- --------
Cash flows from financing activities:
Proceeds from revolving line of credit, net ............... 48,600 75,600
Proceeds from issuance of mortgage and notes payable ...... 4,559 17,372
Principal payments on mortgage and notes payable .......... (2,192) (2,733)
Proceeds from issuance of shares .......................... 395 77
Cash distributions ........................................ (37,772) (35,326)
-------- --------
Net cash provided by financing activities ................. 13,590 54,990
-------- --------
Net change in cash and cash equivalents ............................ (1,623) 164
Cash and cash equivalents, at beginning of period .................. 8,968 5,832
-------- --------
Cash and cash equivalents, at end of period ........................ $ 7,345 $ 5,996
======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements
6
<PAGE> 7
GLIMCHER REALTY TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
1. BASIS OF PRESENTATION
The accompanying consolidated financial statements include the accounts
of Glimcher Realty Trust (the "Company" or "GRT"), Glimcher Properties Limited
Partnership (the "Operating Partnership") (89.4% owned by GRT as of September
30, 1997 and December 31, 1996), four Delaware limited partnerships (Glimcher
Holdings Limited Partnership, Glimcher Centers Limited Partnership, Grand
Central Limited Partnership, and Glimcher York Associates Limited Partnership)
and one Ohio limited partnership (Morgantown Mall Associates Limited
Partnership), all of which are wholly-owned, directly or indirectly by GRT. The
Operating Partnership has an investment in three corporate ventures and one
other corporation which are accounted for under the equity method. All
significant inter-company balances and transactions have been eliminated.
The consolidated financial statements have been prepared in accordance
with generally accepted accounting principles for interim financial information
and in accordance with instructions to Form 10-Q and Article 10 of Regulation
S-X. Accordingly, they do not include all of the information and footnotes
required by generally accepted accounting principles for complete financial
statements. The information furnished in the accompanying consolidated balance
sheets, statements of operations, and statements of cash flows reflect all
adjustments which are, in the opinion of management, necessary for a fair
presentation of the aforementioned financial statements for the interim periods.
Operating results for the nine months ended September 30, 1997, are not
necessarily indicative of the results that may be expected for the year ending
December 31, 1997.
The consolidated financial statements should be read in conjunction
with the notes to the consolidated financial statements, Management's Discussion
and Analysis of Financial Condition and Results of Operations included in
Glimcher Realty Trust's Form 10-K for year ended December 31, 1996.
Supplemental disclosure of non-cash financing and investing activities:
The Company accrued accounts payable of $356 and $2,623 for real estate
improvements as of September 30, 1997 and September 30, 1996, respectively.
The Company, through the Operating Partnership, acquired one community
shopping center during the nine months ended September 30, 1996. The purchase
price of $12,553 included $5,167 in cash and the assumption of net liabilities
and mortgage debt of $7,386.
2. INVESTMENT IN UNCONSOLIDATED ENTITIES
Investments in unconsolidated entities consist of preferred stock and
non-voting common stock of Glimcher Development Corporation ("GDC"), a 45.0%
interest in Great Plains Metro Mall L.L.C., a 33.3% interest in Johnson City
Venture L.L.C. and a 40.0% interest in Dayton Mall L.L.C.
The Company owns preferred and common stock in GDC entitling it to
approximately 95.0% of the net profits or losses of GDC and has the ability to
exercise significant influence but not voting control with respect to GDC. The
Company is accounting for its investment in GDC using the equity method of
accounting.
The net income (loss) for each unconsolidated entity is allocated in
accordance with the provisions of the applicable operating agreements. The
allocation provisions in these agreements may differ from the ownership interest
held by each member under the terms of these agreements.
7
<PAGE> 8
NOTES TO CONSOLIDATED FINANCIAL STATEMENT--(CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
The summary financial information of the Company's unconsolidated
entities accounted for using the equity method, and a summary of the Operating
Partnership's investment in and share of net income (loss) from such
unconsolidated entities which ranges from 33.3% to 95.0% are presented below:
BALANCE SHEETS
<TABLE>
<CAPTION>
SEPTEMBER 30, 1997 DECEMBER 31, 1996
------------------ -----------------
<S> <C> <C>
Assets:
Investment properties at cost, net .... $254,648 $110,281
Cash and cash equivalents ............. 2,508 409
Tenant accounts receivable ............ 2,228 228
Other assets .......................... 14,810 673
-------- --------
$274,194 $111,591
======== ========
Liabilities and Members' Equity:
Mortgage note payable ................. 163,909 $ 57,978
Accounts payable and accrued expenses . 32,917 5,682
-------- --------
196,826 63,660
Members' equity ............................ 77,368 47,931
-------- --------
$274,194 $111,591
======== ========
Operating Partnership's Share of:
Members' equity ....................... $ 51,250 $ 40,439
======== ========
RECONCILIATION OF MEMBERS' EQUITY TO COMPANY
INVESTMENT IN UNCONSOLIDATED ENTITIES:
Members' equity ....................... $ 51,250 $ 40,439
Advances and additional costs ......... 18,712 912
-------- --------
Investment in unconsolidated entities . $ 69,962 $ 41,351
======== ========
</TABLE>
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
FOR THREE MONTHS ENDED FOR NINE MONTHS ENDED
SEPTEMBER 30, 1997 SEPTEMBER 30, 1997
------------------ ------------------
<S> <C> <C>
Total revenues ............................. $ 8,401 $ 12,867
Operating expenses ......................... (4,029) (7,562)
-------- --------
Net operating income ....................... 4,372 5,305
Depreciation and amortization .............. (1,415) (1,940)
Interest expense ........................... (2,416) (3,498)
-------- --------
Net income (loss) ..................... $ 541 $ (133)
======== ========
Operating Partnership's share of net income (loss) $ 124 $ (951)
======== ========
</TABLE>
8
<PAGE> 9
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
3. MORTGAGE NOTES PAYABLE
Mortgage notes payable at September 30, 1997 and December 31, 1996
consist of the following:
<TABLE>
<CAPTION>
CARRYING
AMOUNT OF MORTGAGE
DESCRIPTION NOTES PAYABLE INTEREST RATE
- --------------------------------------------------------------------------------------------------------------------
SEPT 30, DEC. 31, SEPT 30, DEC. 31,
1997 1996 1997 1996
---- ---- ---- ----
Grand Central Limited Partnership................. $ 25,000 $ 25,000 6.935% 6.935%
Glimcher Holdings Limited Partnership - Loan A.... 40,000 40,000 6.995% 6.995%
Glimcher Holdings Limited Partnership - Loan B.... 40,000 40,000 7.505% 7.505%
Glimcher Centers Limited Partnership.............. 76,000 76,000 7.625% 7.625%
Morgantown Mall Associates Limited Partnership 50,200 50,200 7.500% 7.500%
Glimcher Properties Limited Partnership -
Mortgage Notes Payable:
Glimcher Properties Limited Partnership..... 50,000 50,000 7.470% 7.470%
Delaware Community Shopping Center.......... 8,237 8,380 7.875% 7.875%
Retail Property Investors, Inc. - Assumed loans:
Applewood Village........................ 3,797 9.000%
Artesian Square.......................... 5,326 5,340 8.000% 8.000%
Audubon Village.......................... 4,249 4,350 8.750% 8.750%
Aviation Plaza........................... 6,676 6,723 8.000% 8.000%
Barren River Plaza....................... 8,028 8,101 8.750% 8.750%
Crossing Meadows......................... 9,294 9,375 8.000% 8.000%
Crossroads Center........................ 6,580 6,590 8.000% 8.000%
Cumberland Crossing...................... 5,090 5,137 8.750% 8.750%
East Pointe Plaza........................ 11,049 11,111 8.750% 8.750%
Lexington Parkway Plaza.................. 7,411 7,538 9.125% 9.125%
Logan Place.............................. 2,370 2,415 8.000% 8.000%
Marion Towne Center...................... 5,686 5,740 7.375% 7.375%
Piedmont Plaza........................... 10,077 10,125 8.000% 8.000%
Roane County Plaza....................... 5,038 5,123 9.125% 9.125%
Southside Plaza.......................... 6,462 6,547 8.000% 8.000%
Village Plaza............................ 18,769 18,887 8.000% 8.000%
Retail Property Investors, Inc. - Bridge Facility 34,372 34,372 (f) (f)
Construction Loans:
Morgantown Commons ($10,500 available)...... 9,455 9,455 (g) (g)
Georgesville Square ($16,900 available)..... 16,142 13,515 (h) (h)
Meadowview Square ($9,800 available)........ 9,039 7,108 (h) (h)
-------- --------
Total Mortgage Notes Payable...................... $470,550 $470,929
======== ========
<CAPTION>
ESTIMATED
BALLOON
PAYMENT PAYMENT AT FINAL
DESCRIPTION (Continued) TERMS MATURITY MATURITY DATE
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Grand Central Limited Partnership................. (a) $25,000 October 1, 2000
Glimcher Holdings Limited Partnership - Loan A.... (a) 40,000 February 1, 1999
Glimcher Holdings Limited Partnership - Loan B.... (a) 40,000 February 1, 2003
Glimcher Centers Limited Partnership.............. (a) 76,000 August 1, 2000
Morgantown Mall Associates Limited Partnership (a) 50,200 April 1, 1999
Glimcher Properties Limited Partnership -
Mortgage Notes Payable:
Glimcher Properties Limited Partnership..... (a) 50,000 October 26, 2002
Delaware Community Shopping Center.......... (b) April 1, 2016
Retail Property Investors, Inc. - Assumed loans:
Applewood Village........................ (c)
Artesian Square.......................... (b) 5,190 June 1, 2000
Audubon Village.......................... (b) 3,813 July 1, 2000
Aviation Plaza........................... (b) 6,561 June 1, 1999
Barren River Plaza....................... (b) 7,592 June 10, 2001
Crossing Meadows......................... (b) 9,096 June 1, 1999
Crossroads Center........................ (b) 6,203 July 1, 2000
Cumberland Crossing...................... (b) 4,814 June 10, 2001
East Pointe Plaza........................ (b) 10,679 June 10, 2001
Lexington Parkway Plaza.................. (b) 6,941 March 1, 2000
Logan Place.............................. (b) 1,948 May 1, 2000
Marion Towne Center...................... (b) 5,268 July 1, 2002
Piedmont Plaza........................... (b) 9,850 March 1, 2000
Roane County Plaza....................... (b) 4,722 March 1, 2000
Southside Plaza.......................... (b) 6,452 November 5, 1997
Village Plaza............................ (b) 18,402 November 1, 1999
Retail Property Investors, Inc. - Bridge Facility (a)(d) 34,372 April 17, 1998
Construction Loans:
Morgantown Commons ($10,500 available)...... (a) June 1, 1998
Georgesville Square ($16,900 available)..... (a)(e) October 1, 1999
Meadowview Square ($9,800 available)........ (a)(e) November 1, 1999
Total Mortgage Notes Payable......................
<FN>
(a) The loan requires monthly payments of interest only. (b) The loan requires
monthly payments of principal and interest only.
(c) This property was sold on April 9, 1997.
(d) The loan has been extended from October 17, 1997 until April 17, 1998 and
can be extended for an additional six months.
(e) The loan can be extended for up to one year.
(f) The loan bears interest at LIBOR plus 175 basis points (7.438% at September
30, 1997 and 7.375% at December 31, 1996, respectively).
(g) The loan bears interest at LIBOR plus 200 basis points (7.687% at September
30, 1997 and 7.625% at December 31, 1996, respectively).
(h) The loan bears interest at LIBOR plus 200 basis points (7.6328% at
September 30, 1997 and 7.625% at December 31, 1996, respectively).
</TABLE>
9
<PAGE> 10
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
All mortgage notes payable are collateralized by certain properties
held within the respective partnerships. The loan agreement for Grand Central
Limited Partnership, Glimcher Holdings Limited Partnership and Glimcher Centers
Limited Partnership contains financial covenants regarding minimum net operating
income and coverage ratios.
4. NOTES PAYABLE
On May 15, 1997, the Company, through the Operating Partnership,
amended its existing line of credit (the "Credit Facility"). The amended Credit
Facility provides for an increase in the amount the Company can borrow from
$175,000 to $190,000, extends the term from June 30, 1998 to July 31, 1998, and
provides an option to extend the term to July 31, 1999. The amended Credit
Facility also provides for a reduction in the tiered interest rate schedule with
borrowings bearing interest at a variable rate of not more than LIBOR plus 170
basis points. At September 30, 1997, the Company's interest rate under the
amended agreement was LIBOR plus 170 basis points (7.356%).
5. RECLASSIFICATIONS
Certain reclassifications of prior period amounts have been made in the
financial statements to conform to the 1997 presentation.
6. RECENTLY ISSUED ACCOUNTING STANDARD
In February 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 128, "Earnings Per Share" ("FAS
128"). FAS 128 revised the method of computing and the form for presentation of
earnings per share and is effective for financial statements issued for periods
ending after December 15, 1997. Early adoption is not permitted and the
statement requires restatement of all prior-period EPS date presented after the
effective date.
The Company will adopt FAS 128 effective with its 1997 year end. The
impact of FAS 128 on GRT Earnings Per Share is not expected to be material.
7. SHAREHOLDERS EQUITY
The Company's Declaration of Trust authorizes the Company to issue up
to an aggregate of 100,000,000 shares of beneficial interest, consisting of
common shares or one or more series of preferred shares of beneficial interest.
The following table summarizes the change in distributions in excess of
accumulated earnings since January 1, 1997:
<TABLE>
<CAPTION>
<S> <C>
Balance, January 1, 1997......................... $ (47,681)
----------
Distributions declared, $1.4424 per Share... (31,591)
Preferred stock dividends................... (2,169)
Net income.................................. 20,423
----------
Balance, September 30, 1997...................... $ (61,018)
==========
</TABLE>
10
<PAGE> 11
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
8. SUBSEQUENT EVENT
On October 6, 1997, the Company completed a public offering of an
additional 1,750,000 common shares of beneficial interest to the public,
resulting in net proceeds to the Company of $37,885. The Company used the net
proceeds to repay a portion of the outstanding borrowings on the Company's
Credit Facility.
9. PRO FORMA FINANCIAL INFORMATION
The accompanying unaudited pro forma consolidated statements of
operations for the three and nine months ended September 30, 1996, are presented
as if the acquisition of Retail Properties Investors, Inc. properties (RPI) and
Delaware Community Plaza had been made as of January 1, 1996.
The unaudited pro forma statements of operations are not necessarily
indicative of what the actual results of operations of the Company would have
been assuming the acquisition of RPI and Delaware Community Plaza had been
completed as of the beginning of the periods presented, nor are they indicative
of the results of operations for future periods.
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1996
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
THREE MONTHS NINE MONTHS
ENDED ENDED
SEPT 30, 1996 SEPT 30, 1996
------------- -------------
<S> <C> <C>
Total revenue ................................................. $33,681 $101,137
------- --------
Operating expenses:
Real estate taxes ......................................... 2,905 8,570
Recoverable operating expenses ............................ 3,519 11,640
Other operating expenses .................................. 653 2,138
------- --------
Total operating expenses ............................ 7,077 22,348
------- --------
Property net operating income ..................... 26,604 78,789
Depreciation and amortization ................................. 6,611 20,499
General and administrative .................................... 2,452 6,870
Gain on sales of outparcels ................................... 382 1,501
Interest income ............................................... 261 712
Interest expense .............................................. 10,411 30,785
Minority interest in operating partnership .................... 826 2,433
------- --------
Net income .................................................... $ 6,947 $ 20,415
======= ========
Earnings per share available to common shareholders $ 0.32 $ 0.93
======= ========
</TABLE>
11
<PAGE> 12
PART I
FINANCIAL INFORMATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
OVERVIEW
The following should be read in conjunction with the unaudited
consolidated financial statements of Glimcher Realty Trust (the "Company" or
"GRT") including the respective notes thereto, all of which are included in this
Form 10-Q.
This Form 10-Q, together with other statements and information
publicly disseminated by GRT, contains certain statements which may be deemed to
be forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the Securities Exchange
Act of 1934, as amended. Such statements are based on assumptions and
expectations which may not be realized and are inherently subject to risks and
uncertainties, many of which cannot be predicted with accuracy and some of which
might not even be anticipated. Such statements are not guaranties of future
performance, future events and actual results, financial and otherwise, may
differ from the results discussed in the forward-looking statements. Risks and
other factors that might cause differences, some of which could be material,
include, but are not limited to: the effect of economic and market conditions;
failure to consummate financing and venture arrangements, including the failure
of Nomura Asset Capital Corporation ("Nomura") (as discussed below under
Liquidity and Capital Resources) to acquire preferred shares or provide
permanent financing; development risks, including lack of satisfactory
financing, construction and lease-up delays and cost overruns; the level and
volatility of interest rates; the financial stability of tenants within the
retail industry; the rate of revenue increases versus expense increases; the
ability of Glimcher Development Corporation ("GDC"), GRT's non-qualified real
estate investment trust subsidiary, to generate fees from future developments,
as well as other risks listed from time to time in this Form 10-Q and in GRT's
other reports filed with the Securities and Exchange Commission.
RESULTS OF OPERATIONS
THREE MONTHS ENDED SEPTEMBER 30, 1997 COMPARED TO THREE MONTHS ENDED SEPTEMBER
30, 1996
REVENUES
Total revenues increased 24.5%, or $6.8 million, for the three months
ended September 30, 1997. Of the $6.8 million increase, $6.6 million was the
result of increased revenues at the Community Shopping Centers ("Community
Centers") and $150,000 related to other revenue increases.
Minimum rents
Minimum rents increased 28.4%, or $5.9 million, for the three months
ended September 30, 1997. The summary below identifies the 28.4% increase.
<TABLE>
<CAPTION>
INCREASE (DOLLARS IN MILLIONS)
----------------------------------------
PERCENT
MALLS COMMUNITY CENTERS TOTAL TOTAL
<S> <C> <C> <C> <C>
Same Center $ 0.0 $ (0.1) $ (0.1) (0.3)%
Acquisitions/Developments 0.0 6.0 6.0 28.7
------- ------- ------- ----
$ 0.0 $ 5.9 $ 5.9 28.4%
======= ====== ====== ====
</TABLE>
12
<PAGE> 13
Percentage rents
Percentage rents increased $280,000 for the three months ended
September 30, 1997. Of this increase, $130,000 was earned at the mall properties
("Malls") and $150,000 was earned at the Community Centers.
Tenant recoveries
Tenant recoveries reflect a net increase of 4.4% or $250,000 for the
three months ended September 30, 1997 compared to the third quarter of 1996. The
summary below identifies the 4.4% increase by its various components.
<TABLE>
<CAPTION>
INCREASE (DOLLARS IN MILLIONS)
--------------------------------------- PERCENT
MALLS COMMUNITY CENTERS TOTAL TOTAL
-----
<S> <C> <C> <C> <C>
Same center $ (0.2) $ (0.3) $ (0.5) (9.4)%
Acquisitions/Developments 0.0 0.8 0.8 13.8
------ ------ ------ -------
$ (0.2) $ 0.5 $ 0.3 4.4%
====== ====== ====== =======
</TABLE>
Other revenues
The $310,000 increase in other revenues is primarily the result of
increases in management fee revenues from unconsolidated joint ventures. During
the third quarter of 1997, joint ventures in which the Company has an interest,
acquired The Dayton Mall and opened The Great Mall of the Great Plains.
OPERATING EXPENSES
Total operating expenses increased 17.6%, or $1.1 million, for the
three months ended September 30, 1997. Recoverable expenses increased $900,000,
the provision for credit losses increased $160,000 and other operating expenses
increased $50,000, primarily as a result of the acquisition and development
activities described above.
Recoverable expenses
Recoverable operating expenses increased 15.9% or $900,000 for the
three months ended September 30, 1997. The summary below identifies the 15.9%
increase by its various components.
<TABLE>
<CAPTION>
INCREASE (DOLLARS IN MILLIONS)
----------------------------------- PERCENT
MALLS COMMUNITY CENTERS TOTAL TOTAL
------- ----------------- ------ -------
<S> <C> <C> <C> <C>
Same center $ 0.2 $ (0.2) $ 0.0 0.0%
Acquisitions/Developments 0.0 0.9 0.9 15.9
------ ------- ------ ----
$ 0.2 $ 0.7 $ 0.9 15.9%
====== ======= ====== ====
</TABLE>
The increase in the same center expenses at the Malls reflect a
$130,000 decrease in real estate taxes and a $350,000 increase in other
operating expenses. Same center Community Center expenses reflect a decrease in
real estate taxes of $70,000 and a decrease of $140,000 in other operating
expenses. The increase in recoverable operating expenses from acquisitions and
developments was primarily the result of the Retail Property Investors, Inc.
properties ("RPI Properties") acquisition.
13
<PAGE> 14
Provision for credit losses
The provision for credit losses was $620,000 and represented 1.8% of
total revenues for the three months ended September 30, 1997, compared to 1.6%
of total revenues for the third quarter of 1996.
Depreciation and amortization
The $1.5 million increase in depreciation and amortization consists of
an increase of $1.1 million from acquisitions (principally the RPI Properties),
$130,000 from the opening of two new Community Centers since the end of 1996 and
an increase of $270,000 in the core portfolio properties.
GENERAL AND ADMINISTRATIVE
In the second quarter of 1996, the Company began to increase its staff
levels to support the RPI Properties acquisition and expand development and
construction activities. In addition, the Company formed GDC on October 16,
1996, and transferred 51 employees in the construction, development, leasing and
legal departments to GDC. The GDC staff provide services to the Company, to
ventures in which the Company has an ownership interest and to third parties for
a fee. GDC, an unconsolidated non-qualified REIT subsidiary, is subject to
federal income taxes. The Company also receives management fees for the services
provided by its operations staff to ventures.
As a result, portions of general and administrative expense are now
reflected both in the GDC statement operations of the Company and GDC:
<TABLE>
<CAPTION>
THREE MONTHS ENDED SEPTEMBER 30,
--------------------------------
1997 1996
---- ----
<S> <C> <C>
General and administrative expense $ 1,952 $ 2,354
Equity in loss of GDC 117
</TABLE>
INTEREST EXPENSE/CAPITALIZED INTEREST
Interest expense increased 72.4% or $4.7 million, for the three months
ended September 30, 1997. The summary below identifies the increase by its
various components (dollars in thousands).
<TABLE>
<CAPTION>
THREE MONTHS ENDED SEPTEMBER 30,
------------------------------------------
1997 1996 INC. (DEC.)
---- ---- -----------
<S> <C> <C> <C>
Average loan balance $ 614,208 $ 413,965 $ 200,243
Average rate 7.65% 7.42% 0.23%
---------- --------- ---------
Total interest 11,747 7,679 4,068
Less: Capitalized interest (766) (1,427) 661
Add: Amortization of rate buydown 194 194
Other 54 68 (14)
--------- --------- ---------
Interest expense $ 11,229 $ 6,514 $ 4,715
========= ========= =========
</TABLE>
The primary reason for the increase in outstanding debt from September
30, 1996 to September 30, 1997 was the RPI Properties acquisition which was
financed through loan assumptions and increased borrowings.
14
<PAGE> 15
RESULTS OF OPERATIONS
NINE MONTHS ENDED SEPTEMBER 30, 1997 COMPARED TO NINE MONTHS ENDED SEPTEMBER 30,
1996
REVENUES
Total revenues increased 26.3%, or $21.5 million, for the nine months
ended September 30, 1997. Of the $21.5 million increase, $400,000 was the result
of increased revenues at the Malls, $20.2 million was the result of increased
revenues at the Community Centers, and $940,000 related to other revenue
increases.
Minimum rents
Minimum rents increased 29.7%, or $18.4 million, for the nine months
ended September 30, 1997. The summary below identifies the 29.7% increase.
<TABLE>
<CAPTION>
INCREASE (DOLLARS IN MILLIONS)
--------------------------------------------------- PERCENT
MALLS COMMUNITY CENTERS TOTAL TOTAL
----- ----------------- ----- -----
<S> <C> <C> <C> <C>
Same Center $ 0.4 $ 0.2 $ 0.6 0.9%
Acquisitions/Developments 0.0 17.8 17.8 28.8
------ ------ ------ ----
$ 0.4 $ 18.0 $ 18.4 29.7%
====== ====== ====== ====
</TABLE>
Percentage rents
Percentage rents increased $520,000 for the nine months ended September
30, 1997. Of the $2.7 million in percentage rents for 1997, $1.3 million was
earned at the Malls and $1.4 million was earned at the Community Centers.
Tenant recoveries
Tenant recoveries reflect a net increase of 7.7% or $1.3 million for
the nine months ended September 30, 1997. The recovery ratio for the nine months
ended September 30, 1997 was 92.2% compared to 94.3% for the same period of
1996. The summary below identifies the 7.7% increase by its various components.
<TABLE>
<CAPTION>
INCREASE (DOLLARS IN MILLIONS)
-------------------------------------------------------- PERCENT
MALLS COMMUNITY CENTERS TOTAL TOTAL
----- ----------------- ----- -----
<S> <C> <C> <C> <C>
Same center $ (0.5) $ (0.4) $ (0.9) (5.8)%
Acquisitions/Developments 0.0 2.2 2.2 13.5
------ ------ ------ ---
$ (0.5) $ 1.8 $ 1.3 7.7%
====== ====== ====== ===
</TABLE>
Other revenues
The $1.3 million increase in other revenues was the result of an increase
in temporary tenant revenues of $315,000 and increases in management fee
revenues of 1.0 million from unconsolidated joint ventures. During the third
quarter of 1997, joint ventures in which the Company has an interest, acquired
The Dayton Mall and opened The Great Mall of the Great Plains.
15
<PAGE> 16
OPERATING EXPENSES
Total operating expenses increased 11.6%, or $2.2 million, for the nine
months ended September 30, 1997. Recoverable expenses increased $1.7 million,
the provision for credit losses increased $400,000 and other operating expenses
increased $90,000, primarily as a result of the acquisition and development
activities described above.
Recoverable expenses
Recoverable operating expenses increased 10.1% or $1.7 million, for the
nine months ended September 30, 1997. The summary below identifies the 10.1%
increase by its various components.
<TABLE>
<CAPTION>
INCREASE (DOLLARS IN MILLIONS)
----------------------------------------------
COMMUNITY PERCENT
MALLS CENTERS TOTAL TOTAL
----- ------- ----- -----
<S> <C> <C> <C> <C>
Same center $ (0.7) $ (0.2) $ (0.9) (4.8)%
Acquisitions/Developments 0.0 2.6 2.6 14.9
------ ------ ------ ----
$ (0.7) $ 2.4 $ 1.7 10.1%
====== ====== ====== ====
</TABLE>
The decline in the same center expenses at the Malls reflect a $1.1
million reduction in real estate taxes, a $520,000 increase in other operating
expenses, and a $160,000 decrease in snow removal costs compared to the same
period in the prior year. Same center Community Center expenses reflect an
increase in real estate taxes of $190,000 offset by decreases of $240,000 in
snow removal costs and $110,000 in other operating expenses. The increase in
recoverable operating expenses from acquisitions and developments was primarily
the result of the RPI Properties acquisition.
Provision for credit losses
The provision for credit losses was $1.9 million and represented 1.8%
of total revenues for the nine months ended September 30, 1997, compared to 1.8%
of total revenues for the nine months ended September 30, 1996.
Depreciation and amortization
The $4.5 million increase in depreciation and amortization was
primarily the result of an increase of $3.5 million from acquisitions
(principally the RPI Properties), $300,000 from the opening of two new Community
Centers since the end of 1996 and an increase of $740,000 in the core portfolio
properties.
GENERAL AND ADMINISTRATIVE
In the second quarter of 1996, the Company began to increase its staff
levels to support the RPI Properties acquisition and expand development and
construction activities. In addition, the Company formed GDC on October 16,
1996, and transferred 51 employees in the construction, development, leasing and
legal departments to GDC. The GDC staff provide services to the Company, to
ventures in which the Company has an ownership interest and to third parties for
a fee. GDC, an unconsolidated non-qualified REIT subsidiary, is subject to
federal income taxes. GDC also receives management fees for the services
provided by its operations staff to ventures.
As a result, portions of general and administrative expense are now
reflected both in the GDC statement of the Company and GDC:
<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30, 1997
------------------------------------
1997 1996
---- ----
<S> <C> <C>
General and administrative expense $ 6,255 $ 6,583
Equity in loss of GDC 1,494
</TABLE>
16
<PAGE> 17
INTEREST EXPENSE/CAPITALIZED INTEREST
Interest expense increased 63.5% or $12.4 million, for the nine months
ended September 30, 1997. The summary below identifies the increase by its
various components (dollars in thousands).
<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30, 1997
------------------------------------
1997 1996 INC. (DEC.)
---- ---- -----------
<S> <C> <C> <C>
Average loan balance $ 595,338 $ 377,271 $ 218,067
Average rate 7.65% 7.42% 0.23%
--------- ---------
Total interest 34,158 20,995 13,163
Less: Capitalized interest (3,039) (2,302) (737)
Add: Amortization of rate buydown 582 582
Other 149 202 (53)
--------- --------- ---------
Interest expense $ 31,850 $ 19,477 $ 12,373
========= ========= =========
</TABLE>
The primary reason for the increase in outstanding debt from September
30, 1996 to September 30, 1997 was the RPI Properties acquisition which was
financed through loan assumptions and increased borrowings.
LIQUIDITY AND CAPITAL RESOURCES
Liquidity
The Company has several active development, renovation and expansion
projects and will continue to be active in these areas. Future development
projects being considered include those relating to the commitment between the
Company and Nomura, pursuant to which Nomura has agreed, subject to satisfaction
of certain conditions, to provide equity to the Company and permanent debt
financing for certain of the Company's developments. Management anticipates that
the funds available under its Credit Facility and the Company's plan to utilize
construction financing, long-term mortgage debt and the venture structure to
raise equity and financing for acquisitions and developments and the issuance of
preferred and common stock will provide sufficient capital resources to carry
out the Company's business strategy relative to the acquisitions, renovations,
expansions and developments discussed herein.
At September 30, 1997 the Company's debt to total market capitalization
was 51.1% which is consistent with the current policy of the Company to maintain
this ratio between 40.0% and 60.0%. On October 6, 1997, the Company completed a
public offering of an additional 1,750,000 shares of beneficial interest to the
public, resulting in net proceeds to the Company of $37.9 million. The Company
used the net proceeds to repay a portion of the outstanding borrowings on the
Company's revolving line of credit. The Company's total debt to total market
capitalization as of September 30, 1997, would be reduced to 47.9%, on a pro
forma basis, as a result of this offering.
Net cash provided by operating activities for the nine months ended
September 30, 1997 was $40.9 million versus $32.5 million for the corresponding
period of 1996. Net income adjusted for non-cash items accounted for a $7.8
million increase, while changes in operating assets and liabilities accounted
for a $620,000 increase.
Net cash used in investing activities for the nine months ended
September 30, 1997 was $56.1 million, and reflects additional direct investments
in real estate assets and additional indirect investments in real estate through
investments in unconsolidated entities.
17
<PAGE> 18
Net cash provided by financing activities for the nine months ended
September 30, 1997 was $13.6 million. Cash was provided by additional borrowings
of $53.2 million primarily used to fund the increase in real estate investments.
Cash was used to fund distributions of $37.8 million and principal payments or
mortgages and notes payable of $2.2 million.
RENOVATION, EXPANSION, DEVELOPMENT AND ACQUISITION ACTIVITY
The Company continues to be very active in its renovation, expansion,
development and acquisition activities. Its business strategy is to set in place
activities that will allow the Company's assets and cash flow to grow.
Renovation and Expansion Activity
- ---------------------------------
Grand Central Mall
The renovation and expansion of this Mall located in Parkersburg, West
Virginia, continues and will increase this property's gross leasable area
("GLA") to 882,000 square feet upon its completion. The addition of a food court
and the expansion of the existing cinema to a 37,000 square foot 12-screen
cinema were completed and opened in 1996. Additional expansion of the Mall will
include an 83,000 square foot Proffitt's which is projected to open in March
1998. The estimated cost of the Proffitt's expansion is $5.4 million of which
$4.6 million had been expended at September 30, 1997.
Indian Mound Mall
The expansion of this Mall located in Newark/Heath, Ohio, will add
approximately 122,000 square feet and increase this property's GLA to 543,000
square feet. The expansion includes the addition of a 93,000 square foot Sears,
which opened in late September 1997 expanding the current cinema from 18,000
square feet to 42,000 square feet and the addition of 5,000 square feet of small
shops. The opening of the remainder of the new retail space is projected for the
fourth quarter of 1997. The estimated cost of the expansion is $3.9 million of
which $2.5 million had been expended at September 30, 1997.
Development Activity
- --------------------
Georgesville Square
This development is a Community Center containing 232,000 square feet
of GLA located in Columbus, Ohio. The center is anchored by a 132,000 square
foot Lowe's and a 63,000 square foot Kroger, with the balance of the GLA in
small shops. Lowe's opened in October 1996, and Kroger and the small shops
opened in the second quarter of 1997. The cost of the development was $18.4
million of which $16.1 million has been advanced from a construction loan as of
September 30, 1997. An additional $800,000 is available from the construction
loan which bears interest at LIBOR plus 200 basis points (7.633% at September
30, 1997) and matures October 1, 1999, subject to two extensions of six months
each. Additionally, the Company announced the construction of a 70,000 square
foot 16-screen cinema on one of the center's outparcel lots which is scheduled
to open in the fourth quarter of 1997. The Company has also expended an
additional $2.5 million relating to land costs for future phases of this
development.
Meadowview Square
This development is a Community Center containing 151,000 square feet
of GLA located in Kent/Ravenna, Ohio. The center is anchored by a 126,000 square
foot Wal-Mart with the balance of the space in small shops. Wal-Mart opened in
January 1997 and the small shops opened in the second quarter of 1997. The cost
of the development was $11.1 million of which $9.0 million had been advanced
from a construction loan as of September 30, 1997. An additional $800,000 is
available from the construction loan which bears interest at LIBOR plus 200
basis points (7.633% at September 30, 1997) and matures October 1, 1999, subject
to two extensions of six months each. The Company has also expended an
additional $1.7 million relating to land costs for future phases of this
development.
18
<PAGE> 19
The Great Mall of the Great Plains
Glimcher Properties Limited Partnership maintains a 45.0% interest in
Great Plains Metro Mall L.L.C. which owns The Great Mall of the Great Plains, a
single level enclosed super-regional, value and entertainment oriented mall
totaling approximately 782,000 square feet of GLA located in Olathe, Kansas
(Kansas City, Kansas metropolitan area). The cost of the project through
September 30, 1997, was financed through member equity and advances and a
construction loan of $74.1 million of which $71.5 million was outstanding at
September 30, 1997. The property consists of 10 anchors including a 16-screen
cinema, approximately 150 small shop tenants and 20 food court and kiosk units.
The grand opening of the Mall Property was on August 14, 1997.
Acquisition Activity
- --------------------
The Company continues to pursue strategic acquisitions which will
complement and enhance its existing portfolio. On July 2, 1997, the Company, in
a joint venture partnership with Nomura, completed the acquisition of The Dayton
Mall in Dayton, Ohio for a purchase price of $91.0 million. The Mall consists of
approximately 1.3 million square feet of GLA including four anchors. On October
1, 1997, the Company, in a joint venture with Nomura, completed the acquisition
of Colonial Park Mall in Harrisburg, Pennsylvania for a purchase price of $48.0
million. Colonial Park Mall consists of approximately 744,000 square feet of GLA
including three anchors.
PORTFOLIO DATA
Tenants reporting sales data for the twelve month period ended
September 30, 1997 and September 30, 1996 represented 9.8 million square feet of
GLA, or 68.7% of the 1997/1996 "same store" population. Below is a summary of
the "same store" data:
<TABLE>
<CAPTION>
MALLS COMMUNITY CENTERS
-------------------- ------------------------
PROPERTY TYPE SALES PSF %INCREASE SALES PSF %INCREASE
- ------------- --------- --------- --------- ---------
<S> <C> <C> <C> <C>
Anchors $170.42 5.0% $237.28 1.9%
Stores $244.00 1.2% $186.48 3.1%
Total $194.43 3.5% $231.73 2.0%
</TABLE>
Portfolio occupancy statistics (1) by property type are summarized
below:
<TABLE>
<CAPTION>
OCCUPANCY (2)
---------------------------------------------------------------
9/30/97 6/30/97 3/31/97 12/31/96 9/30/96
------- ------- ------- -------- -------
<S> <C> <C> <C> <C> <C>
Mall Anchors(3) 99.4% 99.1% 99.1% 99.1% 95.7%
Mall Stores 79.4% 82.6% 83.1% 84.2% 83.1%
Total Mall portfolio 91.7% 92.8% 92.6% 93.0% 90.6%
Community Centers Anchors(3) 97.6% 97.9% 98.2% 98.3% 97.8%
Community Centers Stores 83.8% 86.0% 86.0% 87.1% 87.1%
Total Community Centers 94.4% 95.4% 95.5% 95.8% 95.1%
Single Tenant Retail Properties 92.2% 100.0% 100.0% 100.0% 100.0%
Total Community Center Portfolio 94.2% 95.8% 96.0% 96.2% 95.5%
</TABLE>
The Mall store occupancy at September 30, 1997, reflects the acquisition of
The Dayton Mall, expansion and renovation activities at Grand Central Mall and
at Indian Mound Mall and the opening of The Great Mall of the Great Plains. The
stabilized Mall portfolio, (excluding The Great Mall of the Great Plains which
opened recently) had Mall store occupancy of 80.9% at September 30, 1997.
(1) Occupancy statistics included in the above table are based on the total
Company portfolio which includes properties owned by the Company and
properties held in joint ventures.
(2) The 0.6% Mall anchor tenant vacancy represents one space totaling 27,500
square feet of GLA. The 2.4% Community Center anchor tenant vacancy
represents 6 spaces totaling 225,300 square feet of GLA.
(3) Occupied space is defined as any space where a tenant is occupying the
space and/or paying rent at the date indicated, excluding all tenants with
leases having an initial terms of less than one year.
19
<PAGE> 20
FUNDS FROM OPERATIONS
Management considers funds from operations ("FFO") to be a supplemental
measure of the Company's operating performance. FFO does not represent cash
generated from operating activities in accordance with GAAP and is not
necessarily indicative of cash available to fund cash needs. FFO should not be
considered as an alternative to net income as the primary indicator of the
Company's operating performance or as an alternative to cash flow as a measure
of liquidity. The following table illustrates the calculation of FFO for the
three and nine months ended September 30, 1997 and 1996 (in thousands):
<TABLE>
<CAPTION>
1996 NAREIT FFO DEFINITION
------------------------------------------------------
THREE MONTHS NINE MONTHS
ENDED SEPTEMBER 30, ENDED SEPTEMBER 30,
----------------------- ---------------------
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net income available to common shareholders .. $ 5,677 $ 6,679 $18,254 $19,893
Real estate depreciation and amortization 6,298 4,890 18,780 14,473
Gain on sale of property ................ (155)
GRT share of joint venture depreciation
and amortization .................... 967 1,209
Minority interest in partnership ........ 791 829 2,502 2,406
-------- ------- ------- -------
Funds from operations ........................ $ 13,733 $12,398 $40,590 $36,772
======== ======= ======= =======
Weighted average shares/units outstanding .... 24,512 24,493 24,503 24,492
======== ======= ======= =======
</TABLE>
FFO increased 10.8%, or $1.3 million for the three months ended
September 30, 1997. The increase was the result of improved property net
operating income of $5.7 million, a decrease in general and administrative
expense of $400,000 and an increase in the FFO from unconsolidated entities of
$1.1 million, partially offset by increased interest expense of $4.7 million, a
decrease in gain on sale of outparcels of $380,000 and an increase in preferred
stock dividends of $730,000.
FFO increased 10.4%, or $3.8 million for the nine months ended
September 30, 1997. The increase was the result of improved property net
operating income of $19.3 and an increase in the FFO from unconsolidated
entities of $260,000, partially offset by increased interest expense of $12.4
million, a decrease in gain on sale of outparcels of $1.3 million and an
increase in preferred stock dividends of $2.2 million.
OTHER
The shopping center industry is seasonal in nature, particularly in the
fourth quarter during the holiday season, when tenant occupancy and retail sales
are typically at their highest levels. In addition, shopping malls achieve most
of their temporary tenant rents during the holiday season. As a result of the
above, earnings are generally highest in the fourth quarter of each year.
The retail industry has experienced some difficulty, which is reflected
in sales trends and in the bankruptcies and continued restructuring of several
prominent retail organizations. Continuation of these trends could impact future
earnings performance.
20
<PAGE> 21
PART II
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
3.1 Amendment of Declaration of Trust of the Company,
dated July 23, 1997, and filed with the Maryland
State Department of Assessments and Taxation on
July 28, 1997.
21
<PAGE> 22
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
GLIMCHER REALTY TRUST
November 3, 1997 /s/ David J. Glimcher
- ------------------- ---------------------------------
(Date) David J. Glimcher, President &
Chief Operating Officer
November 3, 1997 /s/ William G. Cornely
- ------------------- ---------------------------------
(Date) William G. Cornely, Senior Vice President &
Chief Financial Officer
22
<PAGE> 1
Exhibit 3.1
GLIMCHER REALTY TRUST
---------------------
AMENDMENT OF DECLARATION OF TRUST
THIS IS TO CERTIFY THAT:
FIRST: Section 2.2 of Article II of the Amended and Restated
Declaration of Trust, dated as of November 1, 1993, as amended (the
"Declaration"), of Glimcher Realty Trust, a Maryland real estate investment
trust (the "Company"), is hereby amended by inserting the following names and
addresses to the current list of trustees of the Company:
Name Address
---- -------
Harvey Weinberg c/o Glimcher Realty Trust
20 South Third Street
Columbus, OH 43215; and
Michael Glimcher c/o Glimcher Realty Trust
20 South Third Street
Columbus, OH 43215
SECOND: The foregoing amendment to the Declaration has
been duly approved by the Board of Trustees of the Company by at
least a two-thirds vote as required by law.
THIRD: Each of the undersigned acknowledges this amendment to
be the trust act of the Company and, as to all matters or facts required to be
verified under oath, each of the undersigned acknowledges that, to the best of
his knowledge, information and belief, these matters and facts are true in all
material respects and that this statement is made under the penalties for
perjury.
<PAGE> 2
IN WITNESS WHEREOF, the Company has caused this amendment to
be signed in its name and on its behalf by the entire Board of Trustees of the
Company this 23rd day of July, 1997.
/s/ Herbert Glimcher (SEAL)
--------------------------------------
Herbert Glimcher, Trustee
/s/ David J. Glimcher (SEAL)
--------------------------------------
David J. Glimcher, Trustee
/s/ William R. Husted (SEAL)
--------------------------------------
William R. Husted, Trustee
/s/ Philip G. Barach (SEAL)
--------------------------------------
Philip G. Barach, Trustee
/s/ Oliver Birckhead (SEAL)
--------------------------------------
Oliver Birckhead, Trustee
/s/ E. Gordon Gee (SEAL)
--------------------------------------
E. Gordon Gee, Trustee
/s/ Alan R. Weiler (SEAL)
--------------------------------------
Alan R. Weiler, Trustee
/s/ Harvey Weinberg (SEAL)
--------------------------------------
Harvey Weinberg, Trustee
/s/ Michael Glimcher (SEAL)
--------------------------------------
Michael Glimcher, Trustee
-2-
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