Factory Stores of America

Factory Stores of America, a self-administered real estate investment trust, is a leading factory outlet REIT in terms of numbers of centers and square footage. Headquartered in Smithfield, North Carolina, the Factory Stores' portfolio at June 30, 1995, included 35 outlet centers in operation totaling 4.3 million square feet of gross leasable area in 21 states, a 281,000 square foot center under development in Branson, Missouri; and planned expansions of 177,000 square feet.

* On August 25, 1995, Factory Stores and Rothschild Realty, Inc. announced that definitive agreements have been signed to combine 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, with Factory Stores of America. Charter Oak is one of the largest privately held outlet center developers in the country and manages all aspects of the OPERS' factory outlet portfolio. Rothschild Realty is an affiliate of Rothschild North America Inc. and serves as OPERS' advisor. The combined company will be the largest factory outlet REIT in the U.S. 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 7.9 million square feet of gross leasable area, 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. The transaction is subject to approval by the shareholders of Factory Stores of America, completion of financing and customary closing conditions. It is expected that shareholders will vote on the proposed merger in the fall and that the transaction will be completed by year end.

* For the six months ended June 30, 1995, Factory Stores' revenues increased 22% to $26.3 million from $21.6 million for the same period a year ago. Net income for the six months was $5.0 million, or $0.42 per common share, compared with $7.1 million, or $0.60 per common share. FFO as adjusted for the first half of 1995 was $12.2 million, or $1.03 per common share. Net income and adjusted FFO for the six months ended June 30, 1995, include a first quarter downward revision of $383,000, or $0.03 per common share, for the delay in receiving final payment of a scheduled land sale by the Company. The Company expects to close this transaction by year-end and thus recognize this gain on sale during the current fiscal year. In the second half of the year, the Company expects to complete several outparcel sales, which should contribute approximately $1.0 million to FFO for the year.

* Total center sales increased 11.4% for the first six months of 1995 versus the first six months of 1994.

* The first tenants have begun opening in Branson, Missouri. This center, which is the Company's largest to date, is 82% committed and will feature a wide-range of nationally recognized manufacturers. Expansion projects are underway at centers in Nashville, Tennessee; Smithfield, North Carolina; Story City, Iowa; and Nebraska City, Nebraska. With the opening of Branson and the completion of the expansion projects that are currently underway, 458,000 square feet will be added to the portfolio.

* For the first half of 1995, Factory Stores' declared dividends of $1.02 per share, or $2.04 on an annualized basis.

* In May, the Company completed a $95 million rated debt securitization by FSA Finance, Inc., its wholly owned subsidiary. The all-in blended rate of 7.75% provided the Company the opportunity to convert a substantial portion of its debt to a long-term fixed rate at an annual interest rate savings of approximately 120 basis points.

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