Pan Pacific FFO, Net Rise

VISTA, CA-Pan Pacific Retail Properties Inc. posted higher funds from operations and net income for the second quarter ended June 30 and set near-record marks for lease renewal rates during the second quarter, the company reported Wednesday. The neighborhood shopping center REIT, which focuses exclusively on the West Coast, reported gains in virtually all year-to-year financial comparisons.

“The first six months of 2005 have been exceptionally strong for the company,” Stuart A. Tanz, Pan Pacific’s president and CEO, commented during the REIT’s quarterly conference call with financial analysts. Tanz pointed out that the company followed a strong first-quarter showing in lease renewal rates with an even stronger second-quarter showing.

The company has been able to “capitalize on strong demand for space across our portfolio to aggressively drive rental rates,” Tanz said. Pan Pacific signed tenants to leases at rates 17% higher during the first quarter, the biggest increase in four years at the time, then followed that with an increase of 22.1% in the second quarter. The combination of rising rents and increased operating efficiencies resulted in a 3.8% increase in same-property net operating income for the second quarter of this year versus the second quarter of last year.

FFO for the three months increased 12.3% to $38.6 million, compared with $34.4 million for last year’s second quarter. On a per share basis, FFO increased 11.9% to 94 cents, compared with 84 cents last year. Net income was $24.4 million, or 60 cents per share, compared to $23.1 million, or 57 cents per share. Total revenue increased 8.6% to $76.4 million for the three months ended June 30, versus $70.3 million for the same period last year.

Pan Pacific owns 137 properties totaling 22.4 million sf of retail space that is 96.9% leased, and the company continues to growth through acquisitions. It has spent $68.7 million to buy four grocery-anchored shopping centers year-to-date.