PREIT (PEI) Tops Q3 EPS by 27c, Revenues Miss

PREIT (NYSE: PEI) reported Q3 EPS of $0.22, $0.27 better than the analyst estimate of ($0.05). Revenue for the quarter came in at $81.37 million versus the consensus estimate of $84 million.

"PREIT's 2019 performance has been impacted by a challenging backdrop resulting from major bankruptcies, including Charlotte Russe, Forever 21 and others, as well as anchor downtime. At the same time, we opened transformative projects - Fashion District, which has welcomed over a million visitors thus far, along with Woodland and Plymouth Meeting Malls, where traffic is up 40% and 23%, respectively, since opening. We are very pleased with early results and are confident that our strategy has paved the way to deliver strong results for 2020 and beyond," said Joseph F. Coradino, Chairman and Chief Executive Officer of PREIT. "PREIT is a different company than we were seven years ago and we are well aware that our ability to demonstrate earnings growth and meaningful balance sheet improvement following our multi-year redevelopment program is paramount to generating strong shareholder returns. With the majority of our projects complete, our attention is focused on driving top line revenue growth and continuing to creatively improve our balance sheet."

2019 OutlookThe Company is revising its July 31, 2019 guidance for GAAP net loss allocable to common shareholders to $0.38 and $0.31 per diluted share for the year ending December 31, 2019 due to the inclusion of the gain on conveyance of Wyoming Valley Mall and the factors set forth below.

The Company is revising its July 31, 2019 guidance for FFO as adjusted to $1.08 to $1.14 per share. FFO is expected to be between $1.37 and $1.44 per share. Same Store NOI, excluding termination revenue, is expected to decline between 2.5% and 1.5% with wholly-owned properties declining 2.1% to 1.1 % and joint venture properties declining between 5.1% and 3.7%.

Key drivers accounting for our change in FFO as adjusted guidance include:

• Lower land sale gains. Previously, we guided to a range of $8.1 million to $11.1 million. We now expect land sale gains to be in the range of $4.0 million to $4.6 million. At the mid-point, this decrease is $5.3 million, or $0.07 per share. We currently expect to enter into one or more contracts to sell land parcels as part of our multifamily program before the end of 2019, with the first closing anticipated in the first half of 2020.
• Lower lease termination revenues. Previously, we guided to a range of $3.0 million to $4.0 million based on our historical experience and potential lease terminations. We now expect lease termination fees in a range of $1.4 million to $1.6 million. At the mid-point, this decrease is $2.0 million, or $0.03 per share.
• A reduction in our Same Store NOI guidance due to the impact of additional bankruptcies in the third and fourth quarters, lower than expected revenues from our common area program and delays in the opening of certain stores, among other factors.

For earnings history and earnings-related data on PREIT (PEI) click here.

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