MMPI responds to report of Merchandise Mart sale
Calls Crain's Chicago Business article erroneous
Casual Living Staff -- Casual Living, 9/9/2010 9:17:00 AM
CHICAGO — In response to a recent Crain's report that The Merchandise Mart is for sale for $1 billion, a spokesperson for MMPI issued the following statement:
While we appreciate the interest Crain's Chicago Business has shown in our company, we have an obligation to our tenants, employees and patrons to our buildings and shows to clarify a few points.
Allusions and rumors regarding MMPI being offered for sale are erroneous and therefore unhelpful to those involved with our business and to the ongoing, successful relationships which have defined our decades-long history in Chicago and throughout our properties. Specifically, the quote from Chris Kennedy that "Vornado's management will look at yield above everything else, and if they can reinvest a higher yield, they will. Always." should not be taken as an indication that MMPI or The Mart is "up for sale." That same statement could and should apply to any entity owned by a publicly traded company. Any asset should be sold at the right price where capital can be redeployed at a higher yield. In MMPI's case, however, there is no book prepared, no retained counsel, no investment banker, no broker, no process being pursued - all things that would indicate a property described as being "up for sale."
While the characterization of our financial performance in the article is certainly helpful to generate interest in a story, the data presented is far from complete and is not helpful in establishing a fair mood in the market. The article referenced that profitability for MMPI decreased, but that reference was not based on the most recently reported period.
MMPI has reported consistent profitability. Operating income and EBITDA in the most recent quarter is higher than all but one of the past eight quarters. The one quarter that experienced higher operating income and EBITDA was in Q4 2008 when we benefited from a one-time event related to the reversal of a prior period over accrual. For the most recent quarter reported June 30, MMPI profitability, or EBITDA, increased by nearly $1 million versus the same quarter last year. Looking at the last 12 months through June 30, our EBITDA increased more than $2 million compared to the same period last year.
As to our ability to retain tenants amid the recession, our property-wide occupancy rate is nearly 92% as of June 30, about the same as a year ago and well above the average of about 84% for the Chicago central business district, according to CoStar. We outperform the real estate occupancy rates for any of the relevant sub-markets in which we operate. Looking forward, we will benefit from the exceptional leasing activity we achieved in 2010, generating leasing velocity of 1.1 million square feet from new and renewing tenants in the first half of the year. In the 12 months ended June 30, we leased more than 2 million square feet, a 39% increase from the average over the past three years.
Even in one of the most uncertain economic climates of our time, MMPI is strong, and our commitment to our customers, tenants and patrons remains unwavering. We enjoy great leasing velocity and retention rates, a best-in-class management team, an iconic brand in the marketplace, a supportive parent company and a dynamic, entrepreneurial staff committed to the success of our business and our customers.
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