Factory Stores Of America, Inc. Reports Results For Third Quarter And Nine Months; Declares Quarterly Dividend Of $0.51 Per Share; C. Cammack Morton Named Coo

Business Wire, Nov 15, 1995

of America, Inc. (NYSE:FAC), one of the nation's largest owner and operator of factory outlet centers, today announced results for the third quarter and nine months ended September 30, 1995.

Funds from operations (FFO) were $5.9 million, or $0.50 per share, for the third quarter compared with $6.6 million, or $0.56 per share, for the third quarter of 1994. Revenues increased 9% for the quarter to $14.0 million from revenues of $12.9 million for the same quarter a year ago. Base rental income was $10.1 million for the quarter compared with $9.5 for the year-earlier period. Percentage rental income was $3.8 million compared with $3.3 million for the third quarter of 1994. Net income for the period was $2.5 million, or $0.21 per common share, compared with net income of $4.2 million, or $0.36 per common share for the year-earlier period. Net income for the third quarter of 1995 included a gain of $345,000, or $0.03 per share, on the sale of land.

For the nine months, FFO, as adjusted, decreased to $18.0 million, or $1.53 per share, from FFO, as adjusted, of $21.8 million, or $1.85 per share, for the year-earlier period. FFO has been adjusted to reflect revenue received from the managing partner of the Willey Creek properties. Revenues for the nine months increased to $40.3 million from revenues of $34.5 million for the first nine months of 1994. Base rental income for the nine months was $29.5 million compared with $25.5 for the same period of 1994. Percentage rental income was $10.2 million compared with $8.2 million for the nine months. Net income for the nine months was $7.4 million, or $0.63 per share, compared with net income for the prior-year period of $11.3 million, or $0.96 per common share.

J. Dixon Fleming, Jr., chairman and chief executive officer, said, "Overall, we have been pleased with the performance of our portfolio, in spite of a weak retail environment. However, we have been disappointed with the performance at three of our centers and, coupled with the increasing interest rates associated with borrowings to support our growth plans, funds from operations declined for the quarter compared with the same period last year. We have a number of expansion projects underway and the new center in Branson, Missouri, which opened to the first tenants in September, has been well-received. These projects will be completed in 1996 and we are looking forward to a stronger retail environment after the first of the year."

The Board of Directors today declared a cash dividend of $.51 (fifty-one cents) per share for the period October 1, 1995, to December 31, 1995, on its common stock outstanding. The dividend will be payable on January 11, 1996, to stockholders of record on December 20, 1995.

The Board also announced today that David A. Hodson has resigned as president, effective December 31, 1995. He will remain on the Board of Directors and will act as a financial advisor and sports marketing consultant to the Company. "David was one of the founders of Factory Stores, and we are pleased that we will have a continuing relationship with him," said Fleming. "We wish him well in his new endeavors."

Additionally, C. Cammack Morton, current chairman, president and chief executive officer of Charter Oak Group, Ltd. and a managing director of Rothschild Realty, Inc., has been named Chief Operating Officer of Factory Stores of America. He will assume the title of president upon Hodson's departure. Morton has been involved in the shopping center industry for more than 15 years. Prior to founding Charter Oak in 1989, Morton was president of retail development for the Western Development Corp. (now the Mills Corp.), where he was instrumental in the development of "The Mills Concept" and part of the team that created Potomac Mills in suburban Washington, D.C., now the number one tourist attraction in the state of Virginia. At Kravco Co., where he was a vice president, Morton had responsibility for approximately 10 million square feet of regional mall development and redevelopment as well as all department store leasing activities. At Federal Realty Investment Trust, which specializes in shopping center acquisition and redevelopment, Morton headed up the development division overseeing all of the redevelopment projects. Morton has an MBA from East Carolina University and a B.A. in economics and psychology from Hampden-Sydney College.

Fleming added, "We are proceeding as planned with our previously announced combination of the factory outlet centers owned by The Public Employees Retirement System of Ohio (OPERS) and the management and business operations of Charter Oak Group Ltd., a subsidiary of Rothschild Realty, Inc., with Factory Stores of America. A special shareholders meeting has been set for December 15 to vote upon the transaction."

The combined company is expected to be the nation's largest owner and operator of factory outlet centers and will be comprised of 49 outlet centers in 26 states, including new centers scheduled for delivery in 1995. The combined portfolio, including properties under development, will total approximately 7.9 million square feet of gross leasable area (GLA), representing an approximate 20% market share of the total outlet industry. The tenant roster includes such well-known names as: Eddie Bauer, J. Crew, Levi's, Polo/Ralph Lauren, Mikasa, Nike, Phillips Van Heusen, Reebok, Spiegel and Vanity Fair.