Increased average rents and higher average occupancy in the mall portfolio also contributed to the revenue increase, the retail REIT reports.
However, the company also had a $3.7-million increase in bad debt expense over the fourth quarter of 2000. That cut FFO by $0.11 per share.
"Our enthusiasm over the successful opening Polaris Fashion Place is tempered by our reporting lower FFO per share for the fourth quarter," says president Michael P. Glimcher. "And, while specific retailer difficulties may continue to have a negative impact during 2002, we now have the opportunity to regain control of the vacancies and aggressively move forward with our program to re-tenant these spaces.
"Our primary focus is on releasing the space that is being rejected and returning the community center portfolio to its traditional 95% occupancy level in the next 24 months," Glimcher adds. "We are also reviewing our cost structure and have implemented a 10% reduction in corporate headcount, imposed a salary freeze for 2002 and are aggressively cutting overhead costs in all areas of the business. With both a stronger balance sheet and a dividend payout ratio of 70%, we continue to be well positioned to maintain our current annual dividend of $1.92 per share throughout 2002."
The company continues to actively market selected single-tenant and community center assets, and currently is in discussion with several potential buyers. The company has completed the sales of 16 single tenant assets, 11 community centers and 14 outparcels for total proceeds of $103.7 million since the third quarter of 1999.
A more immediate impact of the slower economy has been bankruptcy filings amongretailers including such tenants as Ames, Phar Mor, Lechters, HomePlace and Grand Union during 2001 and Kmart in January 2002. The rejection of tenant leases as a result of these filings will reduce 2002 occupancy and rents while these spaces are re-tenanted. Company officials anticipate lower revenue and higher carrying costs for 2002 as a result of these lease rejections.
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