Attached files
| file | filename |
|---|---|
| 8-K - FORM 8-K - PACIFIC OFFICE PROPERTIES TRUST, INC. | form8k.htm |
| EX-99.2 - EXH 99.2 SUPPLEMENTAL PACKAGE - PACIFIC OFFICE PROPERTIES TRUST, INC. | exh99_2.htm |
For
additional information, contact:
Lawrence
Taff
Chief
Financial Officer
Pacific
Office Properties Trust, Inc.
233
Wilshire Boulevard, Suite 310
Santa
Monica, CA 90401
(808)
544-1219
PACIFIC OFFICE PROPERTIES
ANNOUNCES
THIRD QUARTER 2009 FINANCIAL
RESULTS
Santa
Monica, California – November 23, 2009 – Pacific Office Properties Trust, Inc.
(NYSE Amex: PCE), a West Coast office REIT, today announced its financial
results for the three and nine months ended September 30, 2009. The
Company also announced financial and portfolio highlights as well as recent
corporate milestones.
Financial
Highlights
|
·
|
No
debt maturities in 2009 and only $69.8 million, or 17.5%, of consolidated
mortgage debt matures before 2016
|
|
·
|
Substantially
all mortgage debt is fixed rate
|
|
·
|
Entered
into a new credit facility with First Hawaiian Bank for $10.0 million with
a two-year term. Amounts borrowed under the new credit facility
will bear interest at a fluctuating annual rate equal to the effective
rate of interest paid by First Hawaiian Bank on time certificates of
deposit, plus 1.00%. For the first 12 months the interest rate
will be 1.85%. The credit facility with KeyBank was terminated
in September 2009.
|
Portfolio
Highlights
|
·
|
Steady
leasing activity results in total portfolio being 85.5% leased at
September 30, 2009 compared to 84.3% leased at September 30, 2008 and
slightly down from 86.2% leased at June 30,
2009
|
|
·
|
Approximately
156,000 square feet of new and renewal leases signed during the three
months ended September 30, 2009
|
|
·
|
75%
of our revenues derived from one of the healthiest office markets in the
U.S. (Honolulu)
|
Approximately
60% of the Company’s investment in real property, on an effective square foot
basis, consists of properties located in Honolulu, with approximately 73% of the
Company’s net operating income, on an effective basis, for the three months
ended September 30, 2009 being derived from this market. Honolulu’s
office vacancy rate of 10.3% is the second lowest vacancy rate in the nation,
according to a recent report published by CB Richard Ellis, Inc., significantly
better than the national office vacancy rate of 17.2%.
Three
Month Financial and Operating Results
The
Company reported Funds from Operations (FFO) for the quarter ended September 30,
2009 of $0.9 million, or $0.05 per diluted share/common unit, compared to $0.5
million, or $0.03 per diluted share/common unit, for the quarter ended September
30, 2008.
The
Company reported Adjusted Funds from Operations (AFFO) for the quarter ended
September 30, 2009 of $1.8 million, or $0.10 per diluted share/common unit,
compared to $0.8 million, or $0.05 per diluted share/common unit, for the
quarter ended September 30, 2008.
The
Company also reported a GAAP net loss attributable to common stockholders for
the quarters ended September 30, 2009 and 2008 of $1.2 million and $1.2 million,
which include the Company’s portion of depreciation and amortization expense of
$1.4 million and $1.3 million, respectively. The loss per diluted
share for the quarters ended September 30, 2009 and 2008 were $0.40 and $0.39
per share, respectively.
Nine
Month Financial and Operating Results
The
Company reported Funds from Operations (FFO) for the nine months ended September
30, 2009 of $3.3 million, or $0.19 per diluted share/common unit. The
Company’s FFO for the nine months ended September 30, 2008 is not comparable due
to the Company’s formation on March 20, 2008.
The
Company reported Adjusted Funds from Operations (AFFO) for the nine months ended
September 30, 2009 of $5.9 million, or $0.34 per diluted share/common unit. The
Company’s AFFO for the nine months ended September 30, 2008 is not comparable
due to the Company’s formation on March 20, 2008.
The
Company also reported a GAAP net loss attributable to common stockholders for
the nine months ended September 30, 2009 of $3.4 million, or $1.12 loss per
diluted share. The Company’s combined GAAP net loss attributable for
the nine months ended September 30, 2008 was $6.7 million. Both
periods include $4.4 million and $3.3 million of the Company’s portion of
depreciation and amortization expense, respectively. The per share calculation
is not comparable due to the Company’s formation on March 20, 2008.
Recent
Corporate Milestones
|
·
|
On
September 10, 2009, the Board of Directors of the Company declared a cash
dividend of $0.05 per share of our common stock for the third quarter
2009, which was paid on October 15, 2009 to shareholders of record on
September 30, 2009. This represents an AFFO payout ratio of
49.8%, based on our AFFO for the quarter ended September 30, 2009 of $0.10
per diluted share/unit.
|
|
·
|
The Company’s current total
market capitalization is $644.7 million, including approximately $220.2
million in equity, assuming the conversion of all outstanding interests in
our operating partnership, based on our closing price on the NYSE Amex on
September 30, 2009.
|
|
·
|
As
of September 30, 2009, the Company’s property portfolio, including those
properties owned in partnership with institutional co-investors, included
23 office properties consisting of 40 office buildings totaling
approximately 4.3 million leasable square
feet.
|
“We are
pleased to report another quarter of solid results supported by the continued
resilience of the Honolulu market, our core geography. While general
office fundamentals remain challenging, we are confident in our ability to
outperform the market in the regions where we compete. Our presence
in the Honolulu market, which boasts stronger occupancy and rent metrics than
most U.S. markets, has had a stabilizing effect on the overall
portfolio. Current market conditions continue to present attractive
investment opportunities, which we are always evaluating in our effort to
augment our existing portfolio. We are positioning ourselves so that
we will be able to capitalize on appropriate opportunities,” said Jay H.
Shidler, President and Chief Executive Officer.
Supplemental
Information
Supplemental
financial information for the Company’s quarterly financial results may be
accessed on the Company’s website under the Investor Relations section at www.pacificofficeproperties.com.
About
Pacific Office Properties Trust, Inc.
Pacific
Office Properties Trust, Inc. (www.pacificofficeproperties.com)
is a real estate investment trust that acquires, owns, and operates office
properties in the Western U.S., focusing initially on the long-term growth
sub-markets of Honolulu, San Diego, Los Angeles, and Phoenix.
The
Company’s strategy is to acquire, often in partnership with institutional
co-investors, value-added office buildings whose potential can be maximized
through improvements, repositioning, and superior leasing and
management. The Company continues in the tradition of The Shidler
Group’s highly successful institutional joint-venture operations, which focus on
acquiring opportunistic and value-added commercial real estate in partnership
with institutional co-investors.
Certain
Information About Forward Looking Statements
This
press release contains certain forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, and Section 21E of the Securities
Exchange Act of 1934. We intend such forward-looking statements to be
covered by the safe harbor provisions for forward-looking statements contained
in the Private Securities Litigation Reform Act of 1995, and are including this
statement for purposes of complying with those safe harbor
provisions. Forward-looking statements are not historical information
and are based on current expectations and involve risks and uncertainties.
Without limiting the generality of the foregoing, words such as “should”, “may”,
“will”, “expect”, “believe”, “anticipate”, “intend”, “could”, “estimate”, or
“continue”, or the negative or other variations thereof or comparable
terminology, are intended to identify forward-looking statements. The risks and
uncertainties inherent in such statements may cause actual future events or
results to differ materially and adversely from those described in the
forward-looking statements. Important factors that may cause a difference
between projected and actual results for Pacific Office Properties Trust, Inc.
are discussed in the Company’s filings from time to time with the
SEC. Pacific Office Properties Trust, Inc. and The Shidler Group
disclaim any obligation to revise or update any forward-looking statements that
may be made from time to time by any of them or on their behalf.
FINANCIAL
TABLES FOLLOW
Pacific
Office Properties Trust, Inc.
Consolidated
Balance Sheet
(unaudited
and in thousands, except share data)
|
September
30, 2009
|
December
31, 2008
|
|||||||
|
ASSETS
|
||||||||
|
Investments
in real estate, net
|
$ | 385,431 | $ | 392,657 | ||||
|
Cash
and cash equivalents
|
3,405 | 4,463 | ||||||
|
Restricted
cash
|
5,444 | 7,267 | ||||||
|
Rents
and other receivables, net
|
6,004 | 6,342 | ||||||
|
Intangible
assets, net
|
35,079 | 41,379 | ||||||
|
Other
assets, net
|
5,822 | 4,680 | ||||||
|
Goodwill
|
62,019 | 61,519 | ||||||
|
Investment
in unconsolidated joint ventures
|
10,016 | 11,590 | ||||||
|
Total
assets
|
$ | 513,220 | $ | 529,897 | ||||
|
LIABILITIES
AND EQUITY
|
||||||||
|
Mortgage
and other loans, net
|
$ | 403,347 | $ | 400,108 | ||||
|
Unsecured
notes payable to related parties
|
21,104 | 23,776 | ||||||
|
Accounts
payable and other liabilities
|
20,257 | 17,088 | ||||||
|
Acquired
below market leases, net
|
9,997 | 11,817 | ||||||
|
Total
liabilities
|
454,705 | 452,789 | ||||||
|
Commitments
and contingencies
|
||||||||
|
Non-controlling
interests
|
130,679 | 133,250 | ||||||
|
Equity:
|
||||||||
|
Proportionate
Voting Preferred Stock
|
- | - | ||||||
|
Preferred
stock, $0.0001 par value, 100,000,000 shares authorized,
|
||||||||
|
no
shares issued and outstanding at September 30, 2009 and December 31,
2008
|
- | - | ||||||
|
Common
Stock, $0.0001 par value, 200,000,000 shares authorized,
|
||||||||
|
3,850,420
shares issued and outstanding at September 30, 2009 and December 31,
2008
|
185 | 185 | ||||||
|
Class
B Common Stock, $0.0001 par value, 200,000 shares
authorized,
|
||||||||
|
100
shares issued and outstanding at September 30, 2009 and December 31,
2008
|
- | - | ||||||
|
Additional
paid-in capital
|
- | - | ||||||
|
Retained
deficit
|
(72,349 | ) | (56,327 | ) | ||||
|
Total
equity
|
(72,164 | ) | (56,142 | ) | ||||
|
Total
liabilities and equity
|
$ | 513,220 | $ | 529,897 | ||||
Pacific
Office Properties Trust, Inc
Consolidated
Statement of Operations
(unaudited
and in thousands, except share and per share data)
|
For
the three months ended September 30,
|
||||||||
|
2009
|
2008
|
|||||||
|
Revenue:
|
||||||||
|
Rental
|
$ | 10,486 | $ | 10,899 | ||||
|
Tenant
reimbursements
|
5,163 | 5,583 | ||||||
|
Parking
|
2,012 | 1,981 | ||||||
|
Other
|
83 | 136 | ||||||
|
Total
revenue
|
17,744 | 18,599 | ||||||
|
Expenses:
|
||||||||
|
Rental
property operating
|
9,781 | 11,067 | ||||||
|
General
and administrative
|
351 | 429 | ||||||
|
Depreciation
and amortization
|
6,913 | 6,740 | ||||||
|
Interest
|
6,823 | 6,769 | ||||||
|
Loss
on extinguishment of debt
|
171 | - | ||||||
|
Total
expenses
|
24,039 | 25,005 | ||||||
|
Loss
before equity in net earnings of unconsolidated
|
||||||||
|
joint
ventures and non-operating income
|
(6,295 | ) | (6,406 | ) | ||||
|
Equity
in net earnings of unconsolidated
|
||||||||
|
joint
ventures
|
189 | 185 | ||||||
|
Non-operating
income
|
2 | - | ||||||
|
Net
loss
|
(6,104 | ) | (6,221 | ) | ||||
|
Less:
net loss attributable to non-controlling
|
||||||||
|
interests
|
4,863 | 5,033 | ||||||
|
Net
loss attributable to common stockholders
|
$ | (1,241 | ) | $ | (1,188 | ) | ||
|
Net
loss per common share - basic and diluted
|
$ | (0.40 | ) | $ | (0.39 | ) | ||
|
Weighted
average number of common shares
|
||||||||
|
outstanding
- basic and diluted
|
3,112,888 | 3,031,125 | ||||||
Pacific
Office Properties Trust, Inc
Consolidated
Statement of Operations
(unaudited
and in thousands, except share and per share data)
|
For
the nine months ended September 30,
|
||||||||
|
2009
|
2008
(1)
|
|||||||
|
Revenue:
|
||||||||
|
Rental
|
$ | 31,999 | $ | 26,401 | ||||
|
Tenant
reimbursements
|
16,184 | 12,740 | ||||||
|
Parking
|
6,080 | 4,855 | ||||||
|
Other
|
270 | 345 | ||||||
|
Total
revenue
|
54,533 | 44,341 | ||||||
|
Expenses:
|
||||||||
|
Rental
property operating
|
29,356 | 26,412 | ||||||
|
General
and administrative
|
1,997 | 17,837 | ||||||
|
Depreciation
and amortization
|
20,470 | 15,503 | ||||||
|
Interest
|
20,348 | 15,822 | ||||||
|
Loss
on extinguishment of debt
|
171 | - | ||||||
|
Other
|
- | 143 | ||||||
|
Total
expenses
|
72,342 | 75,717 | ||||||
|
Loss
before equity in net earnings of unconsolidated
|
||||||||
|
joint
ventures and non-operating income
|
(17,809 | ) | (31,376 | ) | ||||
|
Equity
in net earnings of unconsolidated
|
||||||||
|
joint
ventures
|
406 | 156 | ||||||
|
Non-operating
income
|
6 | - | ||||||
|
Net
loss
|
(17,397 | ) | (31,220 | ) | ||||
|
Less:
net loss attributable to non-controlling
|
||||||||
|
interests
|
13,984 | 24,563 | ||||||
|
Net
loss attributable to common stockholders
|
$ | (3,413 | ) | $ | (6,657 | ) | ||
|
Net
loss per common share - basic and diluted
|
$ | (1.12 | ) | (2) | ||||
|
Weighted
average number of common shares
|
||||||||
|
outstanding
- basic and diluted
|
3,059,678 | (2) | ||||||
_________
|
(1)
|
Amounts
reflected in 2008 represent the sum of the amounts included herein as the
consolidated results of operations of Waterfront and the Company (the
“Combined Entity”) for the period from January 1, 2008 through September
30, 2008.
|
|
(2)
|
The
per share calculation is not comparable due to the Company’s formation on
March 20, 2008.
|
Pacific
Office Properties Trust, Inc
Funds
from Operations (FFO) and Adjusted Funds from Operations (AFFO)
(unaudited
and in thousands, except share and per share data)
|
For
the three months ended September 30,
|
For
the nine months ended September 30,
|
|||||||||||
|
2009
|
2008
|
2009 | ||||||||||
|
Reconciliation
of net loss to FFO and AFFO (1)(2)(3)(4)(5):
|
||||||||||||
|
Net
loss attributable to stockholders
|
$ | (1,241 | ) | $ | (1,188 | ) | $ | (3,413 | ) | |||
|
Add:
|
||||||||||||
|
Depreciation
and amortization of real estate assets
|
6,913 | 6,740 | 20,470 | |||||||||
|
Depreciation
and amortization of real estate assets -
|
||||||||||||
|
unconsolidated
joint ventures
|
621 | 542 | 1,897 | |||||||||
|
Less:
|
||||||||||||
|
Distributions
to preferred unitholders
|
(568 | ) | (568 | ) | (1,704 | ) | ||||||
|
Net
loss attributable to non-controlling interests
|
(4,863 | ) | (5,033 | ) | (13,984 | ) | ||||||
|
FFO
|
$ | 862 | $ | 493 | $ | 3,266 | ||||||
|
Amortization
of interest rate contracts, loan premiums
|
||||||||||||
|
and
prepaid financings
|
368 | 254 | 1,214 | |||||||||
|
Non-cash
compensation expense
|
50 | 40 | 139 | |||||||||
|
Interest
expense deferred on unsecured notes payable
|
453 | 426 | 1,333 | |||||||||
|
Straight-line
rent adjustments, net
|
281 | (23 | ) | 592 | ||||||||
|
Recurring
capital expenditures, tenant improvements
|
||||||||||||
|
and
leasing commissions
|
(193 | ) | (352 | ) | (606 | ) | ||||||
|
AFFO
|
$ | 1,821 | $ | 838 | $ | 5,937 | ||||||
|
FFO
per share - basic and diluted
|
$ | 0.05 | $ | 0.03 | $ | 0.19 | ||||||
|
AFFO
per share - basic and diluted
|
$ | 0.10 | $ | 0.05 | $ | 0.34 | ||||||
|
Weighted
average number of common shares and common
|
||||||||||||
|
share
equivalents outstanding - basic and diluted
|
17,412,155 | 17,330,392 | 17,412,155 | |||||||||
Explanation of Notations
|
(1)
|
FFO
is a widely recognized measure of REIT performance. We calculate FFO as
defined by the National Association of Real Estate Investment Trusts, or
NAREIT. FFO represents net income (loss) attributable to stockholders (as
computed in accordance with accounting principles generally accepted in
the United States of America, or GAAP), excluding gains (or losses) from
dispositions of property, extraordinary items, real estate-related
depreciation and amortization (including capitalized leasing expenses,
tenant allowances or improvements and excluding amortization of deferred
financing costs) and after adjustments for unconsolidated partnerships and
joint ventures. Management uses FFO as a supplemental performance measure
because, in excluding real estate-related depreciation and amortization,
gains (or losses) from property dispositions and extraordinary items, it
provides a performance measure that, when compared year over year,
captures trends in occupancy rates, rental rates and operating costs. We
also believe that, as a widely recognized measure of the performance of
REITs, FFO will be used by investors as a basis to compare our operating
performance with that of other
REITs.
|
However,
because FFO excludes depreciation and amortization and captures neither the
changes in the value of our properties that result from use or market conditions
nor the level of capital expenditures and leasing commissions necessary to
maintain the operating performance of our properties, all of which have real
economic effect and could materially impact our results from operations, the
utility of FFO as a measure of our performance is limited. Other Equity REITs
may not calculate FFO in accordance with the NAREIT definition and, accordingly,
our FFO may not be comparable to such other Equity REITs' FFO. As a result, FFO
should be considered only as a supplement to net income (loss) as a measure of
our performance. FFO should not be used as a measure of our liquidity, nor is it
indicative of funds available to fund our cash needs, including our ability to
pay dividends or make distributions. FFO also should not be used as a supplement
to or substitute for cash flow from operating activities (computed in accordance
with GAAP).
|
(2)
|
AFFO
is a non-GAAP financial measure we believe is a useful supplemental
measure of our performance. We compute AFFO by subtracting from
FFO the straight-line rent adjustments and recurring capital expenditures,
tenant improvements and leasing commissions, and then adding the
amortization of interest rate contracts, loan premium and prepaid
financing costs, non-cash compensation expense, and interest expense
deferred on unsecured notes. AFFO is not intended to represent
cash flow for the period, and it only provides an additional perspective
on our ability to fund cash needs and make distributions to shareholders
by adjusting the effect of the non-cash items included in FFO, as well as
recurring capital expenditures and leasing costs. We believe
that net income or loss is the most directly comparable GAAP financial
measure to AFFO. We also believe that AFFO provides useful
information to the investment community about the Company’s financial
position as compared to other REITs since AFFO is a widely reported
measure used by other REITs. However, other REITs may use
different methodologies for calculating AFFO and, accordingly, our AFFO
may not be comparable to other
REITs.
|
|
(3)
|
The
weighted average number of common shares and common share equivalents
outstanding – basic and diluted includes common unit limited partnership
interests in our Operating
Partnership.
|
Our
outstanding preferred unit interests in our Operating Partnership are
convertible into common unit limited partnership interests in our Operating
Partnership, but no earlier than the later of March 19, 2010 and the date an
underwritten public equity offering of our common stock in an amount equal to or
greater than $75 million is consummated, which is a contingent event and not yet
probable as of September 30, 2009. These common unit interests will become
exchangeable for shares of our common stock one year after such conversion. Our
outstanding preferred unit interests at September 30, 2009 represent 32,597,528
common share equivalents, on an as-if converted basis, and any impact related to
these outstanding limited preferred interests have not been included in our
calculation of diluted earnings per share or FFO per share, including our
calculation of the weighted average number of common and common equivalent
shares outstanding, in accordance with GAAP. Assuming the full conversion of our
outstanding preferred unit interests at September 30, 2009 and September 30,
2008, our FFO per share/unit, on a fully diluted basis, would have been $0.03
and $0.02, and our AFFO per share/unit, on a fully diluted basis, would have
been $0.05 and $0.03 for the three months then ended,
respectively. Assuming the full conversion of our outstanding
preferred unit interests at September 30, 2009, our FFO per share/unit, on a
fully diluted basis, would have been $0.10, and our AFFO per share/unit, on a
fully diluted basis, would have been $0.15 for the nine months then
ended.
|
(4)
|
The
Company has provided additional disclosure in this press release by
including both FFO and AFFO information. Note that, unlike many
REITs, AFFO has often been higher than FFO for Pacific Office Properties
Trust, Inc. due to the addition of the noncash impact of straightlining
ground lease rent expense for AFFO. Beginning with the period
ended September 30, 2009, the Company will deduct the distributions on its
preferred unit interests from both its FFO and AFFO
calculations. Prior periods will be presented utilizing this
new calculation for comparative purposes. FFO per share/unit
and AFFO per share/unit under this revised calculation are as follows
(please refer to the Company’s supplemental package for detailed
calculations):
|
|
For
the three months ended
|
||||||||||||
|
June
30, 2009
|
March
31, 2009
|
December
31, 2008
|
||||||||||
|
FFO/Share
|
$ | 0.07 | $ | 0.07 | $ | 0.04 | ||||||
|
AFFO/Share
|
$ | 0.11 | $ | 0.12 | $ | 0.07 | ||||||
|
(5)
|
The
revised calculation for the three months ended June 30, 2008 is presented
below (as it is not included in the Company’s supplemental
package).
|
|
Reconciliation
of net loss to FFO and AFFO:
|
||||
|
Net
loss attributable to stockholders
|
$ | (1,374 | ) | |
|
Add:
|
||||
|
Depreciation
and amortization of real estate assets
|
7,056 | |||
|
Depreciation
and amortization of real estate assets -
|
||||
|
unconsolidated
joint ventures
|
233 | |||
|
Less:
|
||||
|
Distributions
to preferred unitholders
|
(568 | ) | ||
|
Net
loss attributable to non-controlling interests
|
(5,732 | ) | ||
|
FFO
|
$ | (385 | ) | |
|
Amortization
of interest rate contracts, loan premiums
|
||||
|
and
prepaid financings
|
206 | |||
|
Non-cash
compensation expense
|
13 | |||
|
Interest
expense deferred on unsecured notes payable
|
318 | |||
|
Straight-line
rent adjustments, net
|
227 | |||
|
Recurring
capital expenditures, tenant improvements
|
||||
|
and
leasing commissions
|
(362 | ) | ||
|
AFFO
|
$ | 17 | ||
|
FFO
per share - basic and diluted
|
$ | (0.03 | ) | |
|
AFFO
per share - basic and diluted
|
$ | 0.00 | ||
|
Weighted
average number of common shares and common
|
||||
|
share
equivalents outstanding - basic and diluted
|
14,299,267 | |||
________
###