Thomas Properties Group, Inc. Announces Third Quarter 2009 Results

Thomas Properties Group, Inc. (Nasdaq:TPGI) reported today the results of operations for the quarter ended September 30, 2009.

The results of operations presented in this release include TPGI’s results of operations for the three months ended September 30, 2009 and 2008. The consolidated net loss for the three months ended September 30, 2009 was $(10.9) million or $(0.43) per share compared to consolidated net loss of $(2.9) million or $(0.13) per share for the three months ended September 30, 2008. The consolidated net loss for the nine months ended September 30, 2009 was $(13.8) million or $(0.56) per share compared to consolidated net income of $2.2 million or $0.09 per share for the nine months ended September 30, 2008. Included in the consolidated net loss for both the three and nine months ended September 30, 2009 are pre-tax, non-cash impairment charges of $8.6 million related to our Murano condominium project and $2.0 million related to our joint venture investments. Both the condominium units and the joint venture investments are recorded at their estimated fair value on September 30, 2009.

After tax cash flow (a non-GAAP financial measure) for the three months ended September 30, 2009 was $0.5 million or $0.02 per share compared to after tax cash flow of $3.6 million or $0.15 per share for the three months ended September 30, 2008. After tax cash flow for the nine months ended September 30, 2009 was $8.8 million or $0.35 per share compared to after tax cash flow of $22.0 million or $0.93 per share for the nine months ended September 30, 2008. The reduction in after tax cash flow for the quarter ended September 30, 2009 compared with the quarter ended September 30, 2008 was primarily the result of an income tax benefit recognized during the third quarter of 2008 which resulted from a change in our estimated tax rate. We also experienced an occupancy decline from 87% at September 30, 2008 to 84% at September 30, 2009, which resulted in a decline in property operating revenues. The reduction in after tax cash flow for the nine months ended September 30, 2009 compared with the nine months ended September 30, 2008 resulted from a decline in gains from sales of condominium units at our Murano property and a reduction in our property operating revenues, partially offset by an increase in net revenues from our investment advisory, management, leasing and development services business and by expense reductions. We define after tax cash flow (ATCF) as net income (loss) excluding the following items: noncontrolling interests, deferred income taxes, non-cash charges for depreciation and amortization and asset impairment, amortization of loan costs, non-cash compensation expense, straight-line rent adjustments and adjustments to reflect the fair market value of rent. ATCF is further described in note (c) to the financial statements below.

Commenting on the company’s results and recent activities, Jim Thomas, Chairman and CEO, said, "In spite of a tough operating environment, we have accomplished a number of important objectives. We have reduced our exposure to near-term debt maturities by modifying and extending our Four Points Centre and Campus El Segundo loans. We successfully negotiated a payoff of the mezzanine loans at Commerce Square at a discount of approximately 30%, which will result in a $6.6 million reduction in our annual interest expense. We continue to be focused on reducing overall leverage levels. Our accelerated marketing event at Murano ignited a resumption of sales of condominium units at the beginning of the third quarter, and the momentum in condo sales continues. At 84% portfolio occupancy, our properties are performing at or above market occupancies, and we have been successful at reducing operating expenses.”

TPGI’s recent activities include:

• On October 10, 2009, the Campus El Segundo construction loan in the amount of $17.0 million was modified. The loan has been extended to July 31, 2011, and has three one-year extension options at our election subject to us complying with certain loan covenants.
• On October 13, 2009, the Four Points Centre construction loan was modified and extended to July 31, 2012 with two one-year extension options subject to certain conditions. We have also provided additional collateral of approximately 62.4 acres of fully entitled unimproved land, which is immediately adjacent to our Four Points Centre office buildings located in Austin, Texas. We have committed to pay down the principal amount of the loan in the total amount of $7.8 million and $10.8 million remains unfunded and available to be drawn.
• On October 14, 2009, we entered into a discounted payoff agreement with the holders of the existing mezzanine debt on Two Commerce Square. We have agreed to pay off the two mezzanine loans, with a principal amount of approximately $36.1 million, for a discounted amount of $25.0 million on or before November 30, 2009 (subject to an extension right of up to 29 days).
• Continuing the condominium sales momentum at the Murano, we entered into contracts for an additional 24 units and settled 56 units during the quarter; resulting in approximately $25.0 million reduction in our construction loan balance. Subsequent to September 30, 2009, we have entered into contracts to sell an additional six units.
• On October 6, 2009 we sold a 1.9 acre land parcel adjacent to our Four Points Centre development property in Austin, Texas, which is subject to a ground lease to a retail tenant. The land was sold for $2.1 million; we expect to recognize a gain of approximately $1.2 million in the fourth quarter, 2009.

Supplemental Materials

The company will publish a Supplemental Financial Information package which will be available at www.tpgre.com in the Investor Relations tab, Supplemental Financial Information section.

Teleconference and Webcast

TPGI will hold a quarterly earnings conference call on Monday, November 2, 2009 at 2:00 p.m. Pacific Time. To participate in the call, dial (866) 804-6923 and (857) 350-1669 internationally, and provide confirmation code 71208810.

A live webcast (listen only mode) of the conference call will also be available at this time. A hyperlink to the live webcast will be available from the Investor Relations section of our website at www.tpgre.com. A replay of the call will be available through November 23, 2009, by calling (888) 286-8010 and (617) 801-6888 internationally, and providing confirmation code 27707903. The replay will also be available on Thomas Properties Group, Inc.'s web site at www.tpgre.com.

The webcast is also being distributed through the Thomson StreetEvents Network to both institutional and individual investors. Individual investors can listen to the call at www.fulldisclosure.com, Thomson/CCBN’s individual investor portal, powered by StreetEvents. Institutional investors can access the call via Thomson’s password-protected event management site, StreetEvents (www.streetevents.com).

About Thomas Properties Group, Inc.

Thomas Properties Group, Inc., with headquarters in Los Angeles, is a full-service real estate company that owns, acquires, develops and manages primarily office, as well as mixed-use and residential, properties on a nationwide basis. The company's primary areas of focus are the acquisition and ownership of premier properties, property development and redevelopment, and property and investment management activities. The company seeks to capitalize on opportunities for above-average risk-adjusted investment returns from real estate, while managing the volatility associated with the real estate industry, through joint-venture ownership structures. For more information on Thomas Properties Group, Inc., visit www.tpgre.com.

Forward Looking Statements

Statements made in this press release or during the quarterly earnings conference call that are not historical may contain forward-looking statements. Although TPGI believes the expectations reflected in any forward-looking statements are based on reasonable assumptions, these statements are subject to numerous risks and uncertainties. Factors that could cause actual results to differ materially from TPGI’s expectations include actual and perceived trends in various national and economic conditions that affect global and regional markets for commercial real estate services (including interest rates), the availability of credit and equity investors to finance commercial real estate transactions, our ability to enter into or renew leases at favorable rates, which can be impacted by the financial condition of our tenants, risks associated with the success of our development and property redevelopment projects, general volatility in the securities and credit markets, and the impact of tax laws affecting real estate. For a discussion of some of the factors that may cause our results to differ from management’s expectations, see the information under the captions "Risk Factors” and "Management’s Discussion and Analysis of Financial Condition and Results of Operations - Factors That May Influence Future Results of Operations” in our Form 10-K for the year ended December 31, 2008, which is filed with the SEC. TPGI disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.