<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 March 31, 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 April 25, 1997, there were 21,902,427 Common Shares of Beneficial Interest
outstanding, par value $.01 per share.
1 of 19 pages
<PAGE> 2
GLIMCHER REALTY TRUST
FORM 10-Q
INDEX
-----
<TABLE>
<CAPTION>
PART I: FINANCIAL INFORMATION PAGE
----
<S> <C>
Item 1. Financial Statements
Consolidated Balance Sheets as of March 31, 1997 and December 31, 1996 3
Consolidated Statements of Operations for the three months ended March 31, 1997 and 1996 4
Consolidated Statements of Cash Flows for the three months ended March 31, 1997 and 1996 5
Notes to Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 11
PART II: OTHER INFORMATION
Item 1. Legal Proceedings 18
Item 2. Changes in Securities 18
Item 3. Defaults Upon Senior Securities 18
Item 4. Submission of Matters to a Vote of Security Holders 18
Item 5. Other Information 18
Item 6. Exhibits and Reports on Form 8-K 18
SIGNATURES 19
2
</TABLE>
<PAGE> 3
GLIMCHER REALTY TRUST
CONSOLIDATED BALANCE SHEETS
as of March 31, 1997 and December 31, 1996
(dollars in thousands, except par value amounts)
<TABLE>
<CAPTION>
ASSETS
(Unaudited)
March 31, 1997 December 31, 1996
-------------- -----------------
<S> <C> <C>
Investment in real estate:
Land ................................................................... $ 78,701 $ 78,339
Buildings, improvements and equipment .................................. 851,376 846,500
Developments in progress:
Land ............................................................ 6,706 6,852
Developments .................................................... 12,479 17,447
--------- ---------
949,262 949,138
Less accumulated depreciation .......................................... 88,690 86,421
--------- ---------
Net investment in real estate ................................... 860,572 862,717
Cash and cash equivalents ................................................ 6,300 8,968
Cash in escrow ........................................................... 4,546 5,008
Investment in and advances to unconsolidated entities .................... 45,324 41,351
Tenant accounts receivable, net .......................................... 23,294 21,068
Deferred expenses, net ................................................... 8,129 8,644
Prepaid and other assets ................................................. 1,623 1,646
--------- ---------
$ 949,788 $ 949,402
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Mortgage notes payable ................................................... $ 473,620 $ 470,929
Notes payable ............................................................ 110,285 104,318
Accounts payable and accrued expenses .................................... 23,490 26,770
Distributions payable .................................................... 11,776 12,044
--------- ---------
619,171 614,061
Commitments and contingencies
Minority interest in partnership ......................................... 31,715 32,130
Redeemable preferred stock:
Series A convertible preferred shares of beneficial interest, 40,000
shares authorized, 34,000 shares issued and outstanding as of
March 31, 1997 and December 31, 1996 ............................... 34,000 34,000
Shareholders' equity:
Common shares of beneficial interest, $.01 par value, 100,000,000 shares
authorized, 21,888,931 shares issued and outstanding as of
March 31, 1997 and December 31, 1996 ................................ 219 219
Additional paid-in capital ............................................. 316,673 316,673
Distributions in excess of accumulated earnings ........................ (51,990) (47,681)
--------- ---------
$ 949,788 $ 949,402
========= =========
The accompanying notes are an integral part of these consolidated financial statements
</TABLE>
3
<PAGE> 4
GLIMCHER REALTY TRUST
CONSOLIDATED STATEMENTS OF OPERATIONS
for the three months ended March 31, 1997 and 1996
(unaudited)
(dollars in thousands, except shares and per share amounts)
<TABLE>
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
Revenues:
Minimum rents ................................................ $26,904 $20,433
Percentage rents ............................................. 1,016 867
Tenant recoveries ............................................ 5,762 5,569
Other ........................................................ 708 379
---------- ----------
Total revenues ............................................ 34,390 27,248
---------- ----------
Operating expenses:
Real estate taxes ............................................ 2,563 2,431
Recoverable operating expenses ............................... 3,609 3,558
Other operating expenses ..................................... 789 664
---------- ----------
Total operating expenses .................................. 6,961 6,653
---------- ----------
Property net operating income ............................. 27,429 20,595
Depreciation and amortization ..................................... 6,816 5,274
General and administrative ........................................ 2,163 1,898
Interest income ................................................... 109 113
Interest expense .................................................. 10,267 6,373
Equity in income (loss) of unconsolidated entities ................ (523)
Minority interest in operating partnership ........................ 837 751
---------- ----------
Net income ........................................................ 6,932 6,412
Preferred stock dividends ......................................... 715
---------- ----------
Net income available to common shareholders .................. $6,217 $6,412
========== ==========
Earnings per share available to common shareholders ............... $0.28 $0.29
========== ==========
Cash distributions declared per common share of beneficial interest $0.4808 $0.4808
========== ==========
Weighted average number of common shares of beneficial interest
outstanding .................................................. 21,888,931 21,886,428
========== ==========
The accompanying notes are an integral part of these consolidated financial statements
</TABLE>
4
<PAGE> 5
GLIMCHER REALTY TRUST
CONSOLIDATED STATEMENTS OF CASH FLOWS
for the three months ended March 31, 1997 and 1996
(unaudited)
(dollars in thousands)
<TABLE>
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income ....................................................... $6,932 $6,412
Adjustments to reconcile net income to net cash provided by
operating activities:
Provision for doubtful accounts ......................... 629 506
Depreciation and amortization ........................... 6,816 5,274
Other non-cash expenses ................................. 194 234
Equity in income/loss of unconsolidated entities ........ 523
Minority interest in operating partnership .............. 837 751
Net changes in operating assets and liabilities:
Tenant accounts receivable, net ......................... (2,637) (636)
Prepaid and other assets ................................ 23 73
Accounts payable and accrued expenses ................... (3,453) (3,118)
------ ------
Net cash provided by operating activities .................... 9,864 9,496
------ ------
Cash flows from investing activities:
Additions to investment in real estate .................. (4,009) (17,034)
Acquisition of properties ............................... (5,167)
Investment in unconsolidated entities ................... (4,714)
Withdrawals from cash in escrow ......................... 551 923
Additions to deferred expenses .......................... (257) (99)
------ ------
Net cash used in investing activities ........................ (8,429) (21,377)
------ ------
Cash flows from financing activities:
Proceeds from (payments to) revolving line of credit, net 6,400 23,600
Proceeds from issuance of mortgage and notes payable .... 3,068 2,407
Principal payments on mortgage and notes payable ........ (810) (2,566)
Proceeds from issuance of shares ........................ 60
Cash distributions ...................................... (12,761) (11,773)
------ ------
Net cash (used in) provided by financing activities .......... (4,103) 11,728
------ ------
Net change in cash and cash equivalents ............................... (2,668) (153)
Cash and cash equivalents, at beginning of period ..................... 8,968 5,832
------ ------
Cash and cash equivalents, at end of period ........................... $6,300 $5,679
====== ======
The accompanying notes are an integral part of these consolidated financial statements
</TABLE>
5
<PAGE> 6
GLIMCHER REALTY TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands, except share and per share amounts)
1. BASIS OF PRESENTATION
The accompanying consolidated financial statements include Glimcher
Realty Trust (the "Company" or "GRT"), Glimcher Properties Limited Partnership
(the "Operating Partnership")(89.4% owned by GRT as of March 31, 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 two 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 three months ended March 31, 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 $4,439 and $1,122 for real
estate improvements as of March 31, 1997 and March 31, 1996, respectively.
The Company, through the Operating Partnership, acquired one community
shopping center during the three months ended March 31, 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. ("Great Plains") and a 33.3% interest
in Johnson City Venture L.L.C.
The Company owns preferred and common stock in GDC entitling it to
approximately 95.0% of the net profits 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.
6
<PAGE> 7
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 from such unconsolidated
entities which ranges from 33.3% to 95.0% are presented below:
<TABLE>
<CAPTION>
BALANCE SHEETS
For three months ended
March 31, 1997 December 31, 1996
-------------- -----------------
Assets:
<S> <C> <C>
Investment properties at cost, net ............. $80,654 $80,902
Cash and cash equivalents ...................... 727 711
Tenant accounts receivable ..................... 199 218
Other assets ................................... 4,082 659
------- -------
$85,662 $82,490
======= =======
Liabilities and Members' Equity:
Mortgage note payable .......................... $31,000 $31,000
Accounts payable and accrued expenses 7,123 3,559
------- -------
38,123 34,559
Members' equity ................................ 47,539 47,931
------- -------
$85,662 $82,490
======= =======
Operating Partnership's Share of:
Members' equity ................................ $39,921 $40,439
======= =======
<CAPTION>
STATEMENT OF OPERATIONS
For three months ended
March 31, 1997
--------------
<S> <C>
Total revenues ..................................... $ 2,174
Operating expenses ................................. 1,782
--------
Net operating income ............................... 392
Depreciation and amortization ...................... 261
Interest expense ................................... 528
--------
Net loss .................................... $ (397)
========
Operating Partnership's share of net loss .......... $ (523)
========
Reconciliation of members' equity to Company
investment in unconsolidated entities:
Members' equity ................................ $ 39,921
Advances and additional costs .................. 5,403
--------
Investment in unconsolidated entities .......... $ 45,324
========
</TABLE>
7
<PAGE> 8
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(continued)
(dollars in thousands, except share and per share amounts)
3. MORTGAGE NOTES PAYABLE
Mortgage notes payable at March 31, 1997 and December 31, 1996 consist
of the following:
<TABLE>
<CAPTION>
Estimated
Carrying Balloon
Amount of Mortgage Payment Payment at Final
Description Notes Payable Interest Rate Terms Maturity Maturity Date
- ------------------------------------------------------------------------------------------------------------------------------------
March 31, Dec. 31, March 31, Dec. 31,
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Grand Central Limited Partnership ..................... $25,000 $25,000 6.935 6.935 (a) $25,000 October 1, 2000
Glimcher Holdings Limited Partnership - Loan A ........ 40,000 40,000 6.995 6.995 (a) 40,000 February 1, 1999
Glimcher Holdings Limited Partnership - Loan B ........ 40,000 40,000 7.505 7.505 (a) 40,000 February 1, 2003
Glimcher Centers Limited Partnership .................. 76,000 76,000 7.625 7.625 (a) 76,000 August 1, 2000
Morgantown Mall Associates Limited Partnership ........ 50,200 50,200 7.500 7.500 (a) 50,200 April 1, 1999
Glimcher Properties Limited Partnership -
Mortgage Notes Payable:
Glimcher Properties Limited Partnership ......... 50,000 50,000 7.470 7.470 (a) 50,000 October 26, 2002
Delaware Community Shopping Center .............. 8,333 8,380 7.875 7.875 (b) April 1, 2016
Retail Property Investors, Inc. - Assumed loans:
Applewood Village ............................ 3,760 3,797 9.000 9.000 (b)(g)
Artesian Square .............................. 5,340 5,340 8.000 8.000 (b) 5,190 May 1, 2000
Audubon Village .............................. 4,317 4,350 8.750 8.750 (b) 3,813 July 1, 2000
Aviation Plaza ............................... 6,708 6,723 8.000 8.000 (b) 6,561 June 1, 1999
Barren River Plaza ........................... 8,077 8,101 8.750 8.750 (b) 7,592 June 10, 2001
Crossing Meadows ............................. 9,348 9,375 8.000 8.000 (b) 9,096 June 1, 1999
Crossroads Center ............................ 6,590 6,590 8.000 8.000 (a) 6,590 July 1, 2000
Cumberland Crossing .......................... 5,122 5,137 8.750 8.750 (b) 4,814 June 10, 2001
East Pointe Plaza ............................ 11,091 11,111 8.750 8.750 (b) 10,679 June 10, 2001
Lexington Parkway Plaza ...................... 7,496 7,538 9.125 9.125 (b) 6,941 March 1, 2000
Logan Place .................................. 2,415 2,415 8.000 8.000 (a) 1,948 May 1, 2000
Marion Towne Center .......................... 5,723 5,740 7.375 7.375 (b) 5.268 July 1, 2002
Piedmont Plaza ............................... 10,118 10,125 8.000 8.000 (a) 9,850 March 1, 2000
Roane County Plaza ........................... 5,095 5,123 9.125 9.125 (b) 4,722 March 1, 2000
Southside Plaza .............................. 6,520 6,547 8.000 8.000 (b) 6,452 November 5, 1997
Village Plaza ................................ 18,849 18,887 8.000 8.000 (b) 18,402 November 1, 1999
Retail Property Investors, Inc. - Bridge Facility 34,372 34,372 (e) (e) (a)(f) 34,372 October 17, 1997
Construction Loans:
Morgantown Commons ($10,500 available) .......... 9,455 9,455 (d) (d) (a) Jun. 1, 1998
Georgesville Square ($16,900 available) ......... 15,350 13,515 (c) (c) (a)(f) October 1, 1999
Meadowview Square ($9,800 available) ............ 8,341 7,108 (c) (c) (a)(f) November 1, 1999
-------- --------
Total Mortgage Notes Payable........................... $473,620 $470,929
======== ========
<FN>
(a) The loan requires monthly payments of interest only.
(b) The loan requires monthly payments of principal and interest only.
(c) The loan bears interest at LIBOR plus 200 basis points (7.375% at March 31,
1997 and 7.625% at December 31, 1996, respectively).
(d) The loan bears interest at LIBOR plus 200 basis points (7.438% at March 31,
1997 and 7.625% at December 31, 1996, respectively).
(e) The loan bears interest at LIBOR plus 175 basis points (7.188% at March 31,
1997 and 7.375% at December 31, 1996, respectively).
(f) The loan can be extended for up to one year.
(g) This property was sold on April 9, 1997.
</TABLE>
8
<PAGE> 9
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (continued)
(dollars in thousands, except share and 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
At March 31, 1997, the Company maintained a revolving line of credit
(the "Credit Facility") with two banks, as agents, of $175,000 which is due in
June 1998. All borrowings under the Credit Facility are unsecured and bear
interest at variable rates ranging from LIBOR plus 150 basis points to LIBOR
plus 250 basis points. At March 31, 1997, the Credit Facility interest rate was
LIBOR plus 225 basis points (7.938%).
5. RECLASSIFICATIONS
Certain reclassifications of prior period amounts have been made in the
financial statements to conform to the 1997 presentation.
6. ACCOUNTING CHANGE
In February 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 128, "Earnings Per Share"
("FAS 128"). FAS 128 is effective for financial statements issued for periods
ending after December 15, 1997, including interim periods. 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.
9
<PAGE> 10
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (continued)
(dollars in thousands, except share and per share amounts)
7. SHAREHOLDERS' EQUITY
The following table summarizes the change in the shareholders' equity
since January 1, 1997:
<TABLE>
<CAPTION>
DISTRIBUTIONS IN EXCESS
OF ACCUMULATED EARNINGS
-----------------------
<S> <C>
Balance, January 1, 1997 ..................... $(47,681)
Distributions declared, $0.4808 per Share (10,526)
Preferred stock dividends ............... (715)
Net income .............................. 6,932
--------
Balance, March 31, 1997 ...................... $(51,990)
========
</TABLE>
8. PRO FORMA FINANCIAL INFORMATION (UNAUDITED)
The accompanying unaudited pro forma consolidated statements of
operations for the three months ended March 31, 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 months ended March 31, 1996
(dollars in thousands, except per share amount)
<TABLE>
<S> <C>
Total revenues ................................................ $33,840
-------
Operating expenses:
Real estate taxes ......................................... 2,803
Recoverable operating expenses ............................ 4,113
Other operating expenses .................................. 665
-------
Total operating expenses ............................ 7,581
-------
Property net operating income ..................... 26,259
Depreciation and amortization ................................. 6,444
General and administrative .................................... 1,996
Interest income ............................................... 235
Interest expense .............................................. 10,305
Minority interest in operating partnership .................... 824
-------
Net income .................................................... $ 6,925
=======
Earnings per share available to common shareholders ........... $ 0.32
=======
</TABLE>
10
<PAGE> 11
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 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. 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 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; 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 newly formed
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 March 31, 1997 Compared to Three Months Ended March 31, 1996
Revenues
Total revenues increased 26.2%, or $7.1 million, for the three months
ended March 31, 1997. Of the $7.1 million increase, $7.0 million was primarily
the result of increased revenues at the Community Shopping Centers.
Minimum rents
Minimum rents increased 31.7%, or $6.5 million, for the three months
ended March 31, 1997. The table below summarizes the 31.7% increase :
<TABLE>
<CAPTION>
Increase (dollars in millions)
-------------------------------------------
Mall Community Shopping Centers/ Percent
Properties Single Tenant Retail Properties Total Total
---------- ------------------------------- ----- -----
<S> <C> <C> <C> <C>
Same center $ 0.3 $ 0.2 $ 0.5 2.3%
Acquisitions/Developments 0.0 6.0 6.0 29.4
------ ------ ----- ----
$ 0.3 $ 6.2 $ 6.5 31.7%
====== ====== ===== ====
</TABLE>
11
<PAGE> 12
Percentage rents
Percentage rents increased $150,000 for the three months ended March
31, 1997. Of the $1.0 million in percentage rents for 1997, $400,000 was earned
at the Mall Properties and $600,000 was earned at the Community Shopping
Centers.
Tenant recoveries
Tenant recoveries reflect a net of increase 3.5% or $190,000 for the
three months ended March 31, 1997 compared to the first quarter of 1996. The
recovery ratio for the three months ended March 31, 1997 was 91.1% compared to
93.0% for the three months ended March 31, 1996. The summary below identifies
the 3.5% increase by its various components.
<TABLE>
<CAPTION>
Increase (dollars in millions)
-------------------------------------------------
Mall Community Shopping Centers/ Percent
Properties Single Tenant Retail Properties Total Total
---------- ------------------------------- ----- -------
<S> <C> <C> <C> <C>
Same center $ (0.4) $ 0.0 $ (0.4) (7.8)%
Acquisitions/Developments 0.0 0.6 0.6 11.3
------ ----- ----- ----
$ (0.4) $ 0.6 $ 0.2 3.5%
====== ===== ===== ====
</TABLE>
The same center decreases in recoveries reflect the lower first quarter
1997 expenses discussed below.
Other revenues
The $330,000 increase in other revenues was primarily the result of an
increase in temporary tenant revenues at the Mall Properties, and the management
fee revenue the Company receives for the management of the ventures it
participates in.
Operating Expenses
Total operating expenses increased 4.6%, or $310,000, for the three
months ended March 31, 1997. Recoverable expenses increased $190,000 and the
provision for credit losses increased $120,000.
Recoverable expenses
Recoverable operating expenses increased 3.1% or $190,000, for the
three months ended March 31, 1997. The summary below identifies the 3.1%
increase by its various components.
<TABLE>
<CAPTION>
Increase (dollars in millions)
-------------------------------------------------
Mall Community Shopping Centers/ Percent
Properties Single Tenant Retail Properties Total Total
---------- ------------------------------- ----- -------
<S> <C> <C> <C> <C>
Same center $ (0.5) $ 0.0 $ (0.5) (9.1)%
Acquisitions/Developments 0.0 0.7 0.7 12.2
------- ----- ------ ----
$ (0.5) $ 0.7 $ 0.2 3.1%
======= ===== ====== ====
</TABLE>
The decline in the same center expenses at the malls reflect a net
$300,000 reduction in real estate taxes, a $100,000 reduction in other operating
expenses and an $80,000 decrease in snow removal costs compared to the prior
year. Same center community center expenses reflected a net increase in real
estate taxes of $220,000 offset by a decrease of $240,000 in snow removal costs.
Provision for credit losses
The provision for credit losses was $630,000 and represented 1.8% of
total revenues for the three months ended March 31, 1997, compared to 1.9% of
total revenues for the three months ended March 31, 1996.
12
<PAGE> 13
Depreciation and amortization
The $1.5 million increase in depreciation and amortization was
primarily the result of an increase of $1.1 million from acquisitions
(principally the acquisition of 22 properties from Retail Property Investors,
Inc. on October 17, 1996 (the "RPI transaction")); $100,000 from the opening at
three new community center developments since the end of 1996 and an increase of
$300,000 in the core portfolio properties.
General and administrative
Beginning in the second quarter of 1996, the Company increased its
staff levels to support the significant RPI acquisition and expanded
developments and construction activities. Accordingly, general and
administrative expense for the first quarter of 1997 is significantly higher
than the first quarter of 1996 but is comparable to the level of general and
administrative expense incurred in the fourth quarter of 1996. 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 for a fee, to the Company, to ventures in which the Company has
an ownership interest and to third parties. GDC, an unconsolidated non-qualified
REIT subsidiary, is permitted to earn non-qualified revenues but the income from
such services will be subject to federal income taxes. The Company will also
receive 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 income statement of the Company and GDC:
<TABLE>
<CAPTION>
Three months ended March 31,
----------------------------
(in thousands)
1997 1996
---- ----
<S> <C> <C>
General and administrative expense $ 2,163 $ 1,898
Equity in loss of GDC 612
-------- --------
$ 2,775 $ 1,898
======== ========
</TABLE>
Interest Expense/Capitalized Interest
Interest expense increased 61.1% or $3.9 million, for the three months
ended March 31, 1997. The summary below identifies the increase by its various
components (dollars in thousands).
<TABLE>
<CAPTION>
Three months ended March 31,
----------------------------
1997 1996 Inc. (Dec.)
---- ---- -----------
<S> <C> <C> <C>
Average loan balance $ 581,191 $ 349,585 $ 231,606
Average rate 7.61% 7.45% 0.61%
--------- --------- ---------
Total interest 11,057 6,511 4,546
Less: Capitalized interest (1,033) (402) (631)
Add: Amortization of rate buydown 194 194
Other 49 70 (21)
--------- --------- ---------
Interest expense $ 10,267 $ 6,373 $ 3,894
========= ========= =========
</TABLE>
The primary reason for the increase in outstanding debt from March 31,
1996 to March 31, 1997 was the RPI Transaction in October, 1996. The $197.0
million purchase 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
13
<PAGE> 14
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 revolving line of credit (the
"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 March 31, 1997 the Company's debt to total market capitalization was
53.8% which is consistent with the current policy of the Company to maintain
this ratio between 40.0% and 60.0%.
Net cash provided by operating activities for the three months ended
March 31, 1997 was $9.9 million for the first quarter of 1997 versus $9.5
million for the corresponding quarter of 1996. The increase reflects additional
net income of $520,000, and an increase in depreciation and amortization offset
by an increase in receivables.
Net cash used in investment activities for the three months ended March
31, 1997 was $8.4 million, and reflects additional investments in real estate
assets and unconsolidated entities.
Net cash used in financing activities for the three months ended March
31, 1997 was $4.1 million. Cash was provided by additional borrowings of $8.6
million primarily used to fund the increase in real estate investments. Cash was
used to fund distributions of $12.8 million and principal payments of $810,000.
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 Property located in
Parkersburg, West Virginia continues and will increase this property's gross
leasable area ("GLA") to 887,000 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 Property 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 $5.0
million of which $1.8 million has been expended at March 31, 1997.
Indian Mound Mall
The expansion of this Mall Property located in Newark/Heath, Ohio,
will add approximately 120,000 square feet and increase this property's GLA to
539,000 square feet. The expansion includes the addition of a 92,000 square foot
Sears, expanding the current cinema from 18,000 square feet to 42,000 square
feet and the addition of 6,000 square feet of small shops. The opening of the
new retail space is projected for the fall of 1997. The estimated cost of the
expansion is $3.9 million of which $1.9 million has been expended at March 31,
1997.
Development Activity
- --------------------
Georgesville Square
This development is a Community Shopping Center containing 232,000
square feet of GLA located in Columbus, Ohio. The center will be 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, with Kroger and the small
shops
14
<PAGE> 15
expected to open in the second quarter of 1997. The estimated cost of the
development is $18.2 million, of which $16.9 million is being financed from a
construction loan which bears interest at LIBOR plus 200 basis points (7.375% at
March 31, 1997) and matures October 1, 1999, subject to two extensions of six
months each. As of March 31, 1997, expended dollars totaled $17.1 million of
which $15.4 million was drawn under the construction loan. 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 early 1998. The
Company has also expended an additional $3.4 million relating to land costs for
future phases of this development.
Meadowview Square
This development is a Community Shopping 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 will open later in 1997. The
estimated cost of the development is $11.1 million, of which $9.8 million is
being financed from a construction loan which bears interest at LIBOR plus 200
basis points (7.375% at March 31, 1997) and matures November 1, 1999 subject to
two extensions of six months each. As of March 31, 1997, expended dollars
totaled $8.7 million of which $8.3 million was drawn under the construction
loan. The Company has also expended an additional $1.7 million relating to land
costs for future phases of this development.
The Great Mall of the Great Plains
Glimcher Properties Limited Partnership (the "Operating 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 850,000 square feet of
GLA located in Olathe, Kansas (Kansas City, Kansas metropolitan area). The cost
of the project is being financed through the member contributions of investors
and a construction loan of $74.1 million. The property will consist 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 is
scheduled for August 1997.
Acquisition Activity
- --------------------
The Company continues to pursue strategic acquisitions which will
complement and enhance its existing portfolio. In April, the Company announced
that the Operating Partnership entered into a contract for the purchase of the
Dayton Mall in Dayton, Ohio. Due diligence for the 1.3 million square foot mall
is currently under way and the acquisition is expected to be completed in the
second quarter of 1997.
15
<PAGE> 16
PORTFOLIO DATA
Tenants reporting sales data for the twelve month period ended March
31, 1997 and March 31, 1996 represented 11.6 million square feet of GLA, or
80.0% of the 1997/1996 "same store" population. Below is a summary of the "same
store" data:
<TABLE>
<CAPTION>
Community Single Tenant
Mall Properties Shopping Centers Retail Properties
--------------------- --------------------- -----------------------
Property Type Sales PSF % Increase Sales PSF % Increase Sales PSF % Increase
- ------------- --------- ---------- --------- ---------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
Anchors ....... $ 117.41 1.5% $ 225.88 0.9% $ 182.06 5.3%
Stores ........ $ 264.75 0.8% 178.77 3.2% -- --
Total ....... $ 208.57 1.2% $ 216.69 1.1% $ 182.06 5.3%
</TABLE>
The Company has focused significant efforts on maintaining its
occupancy levels during the difficult retail environment experienced over the
past several years. The occupancy levels by property type are summarized below:
<TABLE>
Property Type Occupancy
- ------------------------------- ----------------------------------------------------------------
3/31/97 12/31/96 9/30/96 6/30/96 3/31/96
------- -------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Malls Properties:
Anchors................... 99.1% 99.1% 95.7% 95.8% 95.8%
Stores.................... 83.1% 84.2% 83.1% 84.2% 84.2%
Total.................. 92.6% 93.0% 90.6% 91.2% 91.2%
Community Shopping Centers:
Anchors .................. 98.2% 98.3% 97.8% 97.0% 97.2%
Stores.................... 86.5% 87.7% 87.1% 87.9% 87.9%
Total.................. 95.5% 95.8% 95.1% 94.7% 94.9%
Single Tenant Retail Properties: 100.0% 100.0% 100.0% 100.0% 100.0%
</TABLE>
The 0.9% mall anchor tenant vacancy represents one space totaling
27,000 square feet of GLA. The 1.8% community shopping center anchor tenant
vacancy represents 4 spaces totaling 168,000 square feet of GLA. Mall store
vacancies total 349,000 square feet of GLA and community shopping centers store
vacancies total 383,000 square feet of GLA.
16
<PAGE> 17
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 months ended March 31, 1997 and 1996 (in thousands):
<TABLE>
<CAPTION>
1996 NAREIT FFO Definition
--------------------------
Three Months Ended March 31,
---------------------------
1997 1996
---- ----
<S> <C> <C>
Net income available to common shareholders....................... $6,217 $ 6,412
Add back:
Real estate depreciation and amortization.................... 6,244 4,724
Minority interest in operating partnership................... 837 751
GRT share of joint venture depreciation and amortization..... 121
------- -------
Funds from operations............................................. $13,419 $11,887
======= =======
Weighted average shares/units outstanding......................... 24,493 24,490
======= =======
</TABLE>
FFO increased 12.9%, or $1.5 million for the three months ended March
31, 1997. The increase was the result of improved property net operating income
of $6.8 million partially offset by increased interest expense of $3.9 million,
the loss from unconsolidated entities of $400,000, preferred stock dividends of
$720,000 and increased general and administrative expense of $260,000.
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 and occupancy trends and in bankruptcies and restructuring of some
prominent retail organizations. Continuation of these trends could impact future
earnings performance.
17
<PAGE> 18
PART II
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None
ITEM 2. CHANGES IN SECURITIES
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
Exhibits - None
During the three months ended March 31, 1997, the Company filed a
Report on Form 8-K with the Securities and Exchange Commission on
February 5, 1997, in connection with the sale of its Series A
Convertible Preferred Shares. This report contained Items 5 and 7.
18
<PAGE> 19
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
4/30/97 /s/ David J. Glimcher
- ---------------- -------------------------------------------------------
(Date) David J. Glimcher
Chief Executive Officer
4/30/97 /s/ William G. Cornely
- ---------------- -------------------------------------------------------
(Date) William G. Cornely
Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 6,300
<SECURITIES> 0
<RECEIVABLES> 23,294
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 949,262
<DEPRECIATION> 88,690
<TOTAL-ASSETS> 949,788
<CURRENT-LIABILITIES> 0
<BONDS> 473,620
<COMMON> 219
34,000
0
<OTHER-SE> 316,673
<TOTAL-LIABILITY-AND-EQUITY> 949,788
<SALES> 0
<TOTAL-REVENUES> 34,390
<CGS> 0
<TOTAL-COSTS> 6,961
<OTHER-EXPENSES> 8,979
<LOSS-PROVISION> 629
<INTEREST-EXPENSE> 10,267
<INCOME-PRETAX> 6,217
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 6,217
<EPS-PRIMARY> .28
<EPS-DILUTED> .28
</TABLE>
