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Thomas Properties Group Inc. Reports Operating Results (10-Q)
Posted by: gurufocus (IP Logged)
Date: May 9, 2012 06:00PM
Thomas Properties Group Inc. (TPGI) filed Quarterly Report for the period ended 2012-03-31.
Highlight of Business Operations:We have sold 237 units at Murano as of March 31, 2012. Revenue from unit settlements increased from one unit settled in the three months ended March 31, 2011 to two units in 2012. Fee revenue from our investment advisory, management, leasing and development services business decreased $0.5 million or 9.1% for the three months ended March 31, 2012 compared to the same period for 2011. The decrease was primarily attributable to leasing commission revenues, advisor fee revenues and management fee revenues from our properties which were sold in 2011. Additionally, our net loss decreased by $0.2 million in 2012 due to a decrease in our share of loss of unconsolidated real estate entities due to the sale of a property by our TPG/CalSTRS joint venture in the quarter ended March 31, 2012.
Total revenues decreased by approximately $0.4 million to $21.5 million for the three months ended March 31, 2012 from $21.9 million for the same period for 2011. The decrease was primarily due to $0.9 million decrease in tenant reimbursements due to billing adjustments in the prior year and a decrease of $0.6 million in investment advisory, management, leasing and development services for our unconsolidated real estate entities as a result of properties which were sold in 2011 and the current quarter. These decreases were offset by $0.5 million increase of rental revenue at Commerce Square due to new leases and an increase in condominium sales by $0.4 million resulting from one additional unit settling in the current period compared to the same period in the prior year.
Aggregate revenues for the unconsolidated real estate entities for the three months ended March 31, 2012 increased approximately $1.9 million or 2.8% to $69.4 million compared to $67.5 million for the three months ended March 31, 2011. The increase is primarily due to higher revenues within our TPG/CalSTRS joint venture resulting from increased occupancy and rental rates at City West Place and City National Plaza. Aggregate operating and other expenses for unconsolidated real estate entities increased by $2.5 million, or 7.6%, to $35.5 million for the three months ended March 31, 2012 compared to $33.0 million for three months ended March 31, 2011. The increase was due primarily to increases at City West Place, primarily for cafeteria expenses and HVAC repairs, and City National Plaza, primarily for contract cleaning, earthquake insurance, and parking operations. Interest expense increased by approximately $1.7 million, or 7.0%, to $25.9 million for the three months ended March 31, 2012 as compared to $24.2 million for the three months ended March 31, 2011. The increase was due primarily to higher interest rates and greater outstanding loan balances on the Austin Portfolio Bank Term Loan and the Austin Senior Secured Priority Facility. Income (loss) associated with real estate held for disposition increased by approximately $2.0 million, or 111.1%, to income of $0.2 million for the three months ended March 31, 2012 compared to a loss of $1.8 million for the three months ended March 31, 2011. Net income for the three months ended March 31, 2012 includes a partial month of operation results from Brookhollow, which was sold in January 2012. The net loss for the three months ended March 31, 2011 included a full year's operating results from 2500 City West Boulevard, Centerpointe and Brookhollow.
The Murano mortgage loan has a balance of $15.1 million as of March 31, 2012. The loan bears interest at the one-month LIBOR plus 3.75% and the interest rate as of March 31, 2012 was 4.0% per annum. The loan is scheduled to mature on December 15, 2013. On each June 30th and December 31st through and including June 30, 2013, the loan is required to be reduced to a stated maximum balance. On June 30, 2012 and December 31, 2012, the next amortization dates, we will be required to make a rebalancing payment if the outstanding principal amount on such dates exceed $12.9 million and $8.6 million, respectively. Repayment of this loan is being made with proceeds from the sales of condominium units. TPG is subject to a limited guaranty which (i) guarantees repayment of the loan in the event of certain bankruptcy events affecting the borrower, (ii) guarantees payment of the lender's damages from customary “bad boy” actions of the borrower or TPG (such as fraud, physical waste of the property, misappropriation of funds and similar bad acts); and (iii) guarantees payment of the amount, if any, by which the loan balance exceeds 80% of the bulk sale value of the collateral upon an acceleration of the loan triggered by a borrower default.
Our cash flows from operating activities are primarily dependent upon the occupancy level of our portfolio, the rental rates achieved on our leases, the collectability of rent and recoveries from our tenants, revenues generated and collected from our investment advisory, management, leasing and development services and the level of operating expenses and other general and administrative costs. Net cash used in operating activities was $8.9 million for the three months ended March 31, 2012, which represented an increase of $1.6 million from the net cash used in operations of $7.4 million for the three months ended March 31, 2011. This was primarily due to an increase of $1.8 million in accounts receivable from our unconsolidated real estate entities due to an increase in lease commissions receivable, as well as increased intercompany amounts due from our Austin Portfolio Joint Venture properties, as of March 31, 2012 offset by a decrease in net loss of $0.3 million for the three months ended March 31, 2012 compared to three months ended March 31, 2011.
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