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Griffin Land & Nurseries Inc. Reports Operating Results (10-Q)

July 07, 2010 | About:
10qk

10qk

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Griffin Land & Nurseries Inc. (GRIF) filed Quarterly Report for the period ended 2010-05-29.

Griffin Land & Nurseries Inc. has a market cap of $129.8 million; its shares were traded at around $25.44 with and P/S ratio of 3.3. The dividend yield of Griffin Land & Nurseries Inc. stocks is 1.6%.GRIF is in the portfolios of David Swensen of Yale University, Chuck Royce of Royce& Associates.

Highlight of Business Operations:

Griffin incurred a net loss of $0.8 million for the thirteen weeks ended May 29, 2010 (the “2010 second quarter”) as compared to a net loss of $1.0 million for the thirteen weeks ended May 30, 2009 (the “2009 second quarter”). The lower net loss in the 2010 second quarter principally reflects a decrease of approximately $0.6 million in the operating loss incurred by Griffin in the 2010 second quarter as compared to the 2009 second quarter partially offset by an increase of approximately $0.3 million in interest expense. Griffin s lower operating loss reflects an increase of approximately $0.3 million in operating profit at Griffin Land and essentially break-even operating results at Imperial in the 2010 second quarter as compared to an operating loss of $0.2 million at Imperial in the 2009 second quarter. The higher operating profit at Griffin Land in the 2010 second quarter as compared to the 2009 second quarter principally reflects higher rental revenue from an increase in leased space in the current quarter as compared to the prior year quarter. The improved operating results at Imperial principally reflect a decrease in Imperial s selling, general and administrative expenses. The higher interest expense in the 2010 second quarter as compared to the 2009 second quarter reflects a higher level of debt in the 2010 second quarter as a result of new borrowings used to finance Griffin Land s construction of a new building and to finance Griffin Land s acquisition of a building. The occupancy of these two buildings contributed significantly to the increase in space being leased in the current quarter over the prior year quarter.

30, 2009 (the “2009 six month period”). The lower net loss in the 2010 six month period principally reflects a decrease of approximately $0.6 million in the operating loss incurred by Griffin and slight increases in investment income and Griffin s income tax benefit in the 2010 six month period as compared to the 2009 six month period partially offset by an increase of approximately $0.6 million in interest expense. Griffin s lower operating loss reflects a decrease of approximately $0.3 million in the operating loss incurred by Imperial, an increase of approximately $0.2 million in operating profit at Griffin Land and a decrease of approximately $0.1 million in general corporate expense. The lower operating loss at Imperial principally reflects a decrease in Imperial s selling, general and administrative expenses. The higher operating profit at Griffin Land principally reflects higher rental revenue from its leasing operations. The lower general corporate expense was due to timing. The higher interest expense in the 2010 six month period as compared to the 2009 six month period reflects a higher level of debt in the 2010 six month period as a result of new borrowings used to finance Griffin Land s construction of a new building in fiscal 2009 and to finance Griffin Land s acquisition of a building in the 2010 first quarter. The occupancy of these two buildings contributed significantly to the increase in leased space in the current six month period over the prior year six month period.

Total revenue at Griffin Land increased from $4.1 million in the 2009 second quarter to $4.6 million in the 2010 second quarter. The increase of $0.5 million was due entirely to an increase in rental revenue, reflecting: (a) approximately $0.6 million of rental revenue from leasing much of the new space in Griffin Land s real estate portfolio, comprised of the 304,000 square foot building in Tradeport that was completed and placed in service in the 2009 third quarter (257,000 square feet of which is currently under a ten-year lease pursuant to which the current tenant is required to lease the balance of the building no later than August 2014, the beginning of the sixth year of the lease) and the 120,000 square foot industrial building in Breinigsville, Pennsylvania acquired during the 2010 first quarter; (b) approximately $0.2 million of rental revenue from leasing previously vacant space subsequent to the end of the 2009 second quarter; partially offset by (c) an approximately $0.3 million reduction in rental revenue as a result of leases that expired subsequent to the 2009 second quarter and were not renewed.

Griffin s consolidated interest expense increased from $0.8 million in the 2009 second quarter to $1.1 million in the 2010 second quarter due principally to an increased debt level in the 2010 second quarter. Griffin s average outstanding debt was $66.6 million in the 2010 second quarter as compared to $49.6 million in the 2009 second quarter. The increased debt principally reflects borrowings made subsequent to the 2009 second quarter under a $12 million nonrecourse mortgage that financed a significant portion of the construction of the 304,000 square foot built-to-suit Tradeport warehouse built in fiscal 2009 and a $4.3 million mortgage taken out in the 2010 first quarter on the industrial building in Pennsylvania that was acquired in the 2010 first quarter.

Total revenue at Griffin Land increased from approximately $8.3 million in the 2009 six month period to approximately $9.1 million in the 2010 six month period. The increase of approximately $0.8 million was due entirely to an increase in rental revenue, reflecting: (a) approximately $1.0 million of revenue from leasing much of the new space in Griffin Land s real estate portfolio, comprised of the 304,000 square foot building in Tradeport that was completed and placed in service in the 2009 third quarter and the 120,000 square foot industrial building in Breinigsville, Pennsylvania acquired during the 2010 first quarter; and (b) approximately $0.4 million from leasing previously vacant space subsequent to the end of the 2009 second quarter; partially offset by (c) an approximately $0.6 million reduction in rental revenue as a result of leases that expired subsequent to the 2009 second quarter and were not renewed.

Griffin incurred a consolidated operating loss, including general corporate expense, of approximately $2.2 million in the 2010 six month period as compared to a consolidated operating loss, including general corporate expense, of $2.8 million in the 2009 six month period. The lower operating loss in the 2010 six month period principally reflects a decrease of approximately $0.3 million in the operating loss incurred by Imperial, an increase of approximately $0.3 million in operating profit at Griffin Land and a decrease of approximately $0.1 million in general corporate expense in the 2010 six month period as compared to the 2009 six month period.

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