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8-K - FORM 8-K - PS BUSINESS PARKS, INC./MD | c13019e8vk.htm |
Exhibit 99.1
News Release
PS Business Parks, Inc.
701 Western Avenue
Glendale, CA 91201-2349
www.psbusinessparks.com
701 Western Avenue
Glendale, CA 91201-2349
www.psbusinessparks.com
For Release: | Immediately | |||
Date: | February 22, 2011 | |||
Contact: | Edward A. Stokx | |||
(818) 244-8080, Ext. 1649 |
PS Business Parks, Inc. Reports Results for the Fourth Quarter Ended December 31, 2010
GLENDALE, California PS Business Parks, Inc. (NYSE:PSB) reported operating results for the
fourth quarter ended December 31, 2010.
Net income allocable to common shareholders for the three months ended December 31, 2010 was $8.4
million, or $0.34 per diluted share, on revenues of $71.4 million compared to $9.9 million, or
$0.40 per diluted share, on revenues of $67.7 million for the same period in 2009. Net income
allocable to common shareholders for the year ended December 31, 2010 was $39.0 million, or $1.58
per diluted share, on revenues of $279.1 million compared to $59.4 million, or $2.68 per diluted
share, on revenues of $271.7 million for the same period in 2009.
Revenues for the three months ended December 31, 2010 increased $3.7 million, or 5.4%, over the
same period in 2009 as a result of rental income from acquired properties of $6.4 million partially
offset by a decrease in revenues from the Companys Same Park portfolio of $2.7 million primarily
due to a decrease in rental rates. Net income allocable to common shareholders for the three months
ended December 31, 2010 decreased $1.5 million over the same period in 2009 primarily due to
non-cash distributions of $1.6 million related to the preferred equity redemption during the fourth
quarter of 2010 combined with increases in depreciation expense and acquisition transaction costs.
These decreases were partially offset by an increase in net operating income and a reduction in
preferred equity cash distributions as a result of preferred equity redemptions in 2010.
Revenues for the year ended December 31, 2010 increased $7.4 million, or 2.7%, over the same period
in 2009 as a result of rental income from acquired properties of $15.5 million partially offset by
a decrease in revenues from the Companys Same Park portfolio of $8.0 million due to a decrease in
rental rates. Net income allocable to common shareholders for the year ended December 31, 2010
decreased $20.5 million over the same period in 2009 primarily due to the net gain of $35.6 million
on the repurchase of preferred equity reported during the first quarter of 2009 combined with
acquisition transaction costs of $3.3 million related to 2010 acquisitions. These decreases were
partially offset by reductions in depreciation expense, preferred equity cash distributions and net
income allocable to noncontrolling interests common units.
Funds From Operations
Funds from operations (FFO) allocable to common and dilutive shares for the three months ended
December 31, 2010 and 2009 were $31.7 million, or $0.99 per common and dilutive share, and $32.7
million, or $1.02 per common and dilutive share, respectively. The decrease in FFO per common and
dilutive share for the three months ended December 31, 2010 over the same period in 2009 was
primarily due to non-cash distributions related to the preferred equity redemption during the
fourth quarter of 2010 and an increase in general and administrative costs due primarily to
acquisition transaction costs. The decrease was partially offset by an increase in net operating
income and a decrease in preferred equity cash distributions as a result of the preferred equity
redemptions noted above. FFO allocable to common and dilutive shares for the year ended December
31, 2010 was $124.4 million, or $3.88 per common and dilutive share, compared to $163.1 million, or
$5.52 per common and dilutive share, for the year ended December 31, 2009. The decrease in FFO per
common and dilutive share for the year ended December 31, 2010 over the same period in 2009 was
primarily due to the net gain of $35.6 million, or $1.21 per common and dilutive share, on the
repurchase of preferred equity during the first quarter of 2009 and the impact from the issuance of
3,833,333 shares of common stock during the third quarter of 2009.
The following table summarizes the impact of the non-cash distributions related to the preferred
equity redemptions, acquisition transaction costs and gain on repurchase of preferred equity on the
Companys FFO per common and dilutive share for the three months and years ended December 31, 2010
and 2009:
For The Three Months | For The Years | |||||||||||||||
Ended December 31, | Ended December 31, | |||||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||
FFO per common and dilutive share, before
non-cash and other adjustments |
$ | 1.07 | $ | 1.02 | $ | 4.11 | $ | 4.31 | ||||||||
Non-cash distributions related to the
redemption of preferred equity |
(0.05 | ) | | (0.13 | ) | | ||||||||||
Acquisition transaction costs |
(0.03 | ) | | (0.10 | ) | | ||||||||||
Gain on the repurchase of preferred equity |
| | | 1.21 | ||||||||||||
FFO per common and dilutive share, as reported |
$ | 0.99 | $ | 1.02 | $ | 3.88 | $ | 5.52 | ||||||||
Property Operations
In order to evaluate the performance of the Companys overall portfolio over two comparable
periods, management analyzes the operating performance of a consistent group of properties owned
and operated throughout both periods (herein referred to as Same Park). Operating properties that
the Company acquired subsequent to January 1, 2009 are referred to as Non-Same Park. For the
three months and years ended December 31, 2010 and 2009, the Same Park facilities constitute 19.4
million rentable square feet, which includes all assets in continuing operations that the Company
owned from January 1, 2009 through December 31, 2010, representing 89.1% of the total square
footage of the Companys portfolio as of December 31, 2010.
2
The Companys property operations account for substantially all of the net operating income earned
by the Company. The following table presents the operating results of the Companys properties for
the three months and years ended December 31, 2010 and 2009 in addition to other income and expense
items affecting income from continuing operations (unaudited, in thousands, except per square foot
amounts):
For The Three Months | For The Years | |||||||||||||||||||||||
Ended December 31, | Ended December 31, | |||||||||||||||||||||||
2010 | 2009 | Change | 2010 | 2009 | Change | |||||||||||||||||||
Rental income: |
||||||||||||||||||||||||
Same Park (19.4 million rentable
square feet) (1) |
$ | 64,862 | $ | 67,565 | (4.0 | %) | $ | 262,963 | $ | 270,957 | (3.0 | %) | ||||||||||||
Non-Same Park (2.4 million rentable
square feet) (2) |
6,358 | | 100.0 | % | 15,454 | | 100.0 | % | ||||||||||||||||
Total rental income |
71,220 | 67,565 | 5.4 | % | 278,417 | 270,957 | 2.8 | % | ||||||||||||||||
Cost of operations: |
||||||||||||||||||||||||
Same Park |
20,325 | 20,905 | (2.8 | %) | 84,762 | 85,912 | (1.3 | %) | ||||||||||||||||
Non-Same Park |
2,576 | | 100.0 | % | 5,772 | | 100.0 | % | ||||||||||||||||
Total cost of operations |
22,901 | 20,905 | 9.5 | % | 90,534 | 85,912 | 5.4 | % | ||||||||||||||||
Net operating income (3): |
||||||||||||||||||||||||
Same Park |
44,537 | 46,660 | (4.5 | %) | 178,201 | 185,045 | (3.7 | %) | ||||||||||||||||
Non-Same Park |
3,782 | | 100.0 | % | 9,682 | | 100.0 | % | ||||||||||||||||
Total net operating income |
48,319 | 46,660 | 3.6 | % | 187,883 | 185,045 | 1.5 | % | ||||||||||||||||
Other income and expenses: |
||||||||||||||||||||||||
Facility management fees |
171 | 176 | (2.8 | %) | 672 | 698 | (3.7 | %) | ||||||||||||||||
Interest and other income |
73 | 155 | (52.9 | %) | 333 | 536 | (37.9 | %) | ||||||||||||||||
Interest expense |
(948 | ) | (866 | ) | 9.5 | % | (3,534 | ) | (3,552 | ) | (0.5 | %) | ||||||||||||
Depreciation and amortization |
(20,812 | ) | (19,650 | ) | 5.9 | % | (78,868 | ) | (84,504 | ) | (6.7 | %) | ||||||||||||
General and administrative |
(1,718 | ) | (1,275 | ) | 34.7 | % | (6,389 | ) | (6,202 | ) | 3.0 | % | ||||||||||||
Acquisition transaction costs |
(953 | ) | | 100.0 | % | (3,262 | ) | | 100.0 | % | ||||||||||||||
Income from continuing operations |
$ | 24,132 | $ | 25,200 | (4.2 | %) | $ | 96,835 | $ | 92,021 | 5.2 | % | ||||||||||||
Same Park gross margin (4) |
68.7 | % | 69.1 | % | (0.6 | %) | 67.8 | % | 68.3 | % | (0.7 | %) | ||||||||||||
Same Park weighted average occupancy |
91.5 | % | 91.2 | % | 0.3 | % | 91.5 | % | 90.4 | % | 1.2 | % | ||||||||||||
Same Park annualized realized rent
per square foot (5) |
$ | 14.60 | $ | 15.26 | (4.3 | %) | $ | 14.79 | $ | 15.43 | (4.1 | %) |
(1) | See above for a definition of Same Park. |
|
(2) | See above for a definition of Non-Same Park. |
|
(3) | Net operating income (NOI) is an important measurement in the commercial real
estate industry for determining the value of the real estate generating the NOI. The Companys
calculation of NOI may not be comparable to those of other companies and should not be used as
an alternative to measures of performance in accordance with generally accepted accounting
principles (GAAP). |
|
(4) | Same Park gross margin is computed by dividing Same Park NOI by Same Park rental
income. |
|
(5) | Same Park realized rent per square foot represents the annualized Same Park rental
income earned per occupied square foot. |
Financial Condition
The following are key financial ratios with respect to the Companys leverage at and for the three
months ended December 31, 2010:
Ratio of FFO to fixed charges (1) |
48.4x | |||
Ratio of FFO to fixed charges and preferred distributions (1) |
3.7x | |||
Debt and preferred equity to total market capitalization (based on
common stock price of $55.72 at December 31, 2010) |
30.9 | % | ||
Available balance under the $100.0 million unsecured credit facility at
December 31, 2010 (2) |
$7.0 million |
(1) | Fixed charges include interest expense of $948,000. |
|
(2) | In February, 2011, the
$93.0 million balance outstanding was
repaid in full. |
3
Property Acquisitions
On December 15, 2010, the Company acquired Westpark Business Campus, a 735,000 square foot
seven-building multi-tenant office park in Tysons Corner, Virginia, for $140.0 million.
During 2010, the Company also acquired Shady Grove Executive Center, a 350,000 square foot
multi-tenant office park located in Rockville, Maryland, a portfolio of assets in Austin, Texas,
aggregating 704,000 square feet of multi-tenant flex parks, Parklawn Business Park, a 232,000
square foot multi-tenant office and flex park located in Rockville, Maryland, and Tysons Corporate
Center, a 270,000 square foot two-building multi-tenant office park in Tysons Corner, Virginia, for
an aggregate cost of $161.7 million.
In connection with the 2010 acquisitions, the Company incurred acquisition transaction costs of
$953,000 and $3.3 million for the three months and year ended December 31, 2010, respectively,
which have been included in general and administrative expenses.
Credit Facility
As of December 31, 2010, the Company had $93.0 million outstanding on its credit facility at an
interest rate of 2.11%. The credit facility has a borrowing capacity of $100.0 million. The Company
utilized the credit facility, along with cash from operations, to acquire the seven-building
multi-tenant office park located in Tysons Corner, Virginia. In February, 2011, the Company
used funds borrowed from Public Storage (PS), as discussed below, to pay down the credit facility
in full and, as such, the available balance is $100.0 million.
Related Party Transaction
On February 9, 2011, the Company entered into an agreement with PS to borrow $121.0 million with a
maturity date of August 9, 2011 at an interest rate of LIBOR plus 0.85%. Funds from the loan were
used to repurchase the 7.50% Series J Cumulative Redeemable Preferred Units and to repay, in full,
the balance outstanding on the Companys credit facility.
Preferred Equity Transactions
On October 15, 2010, the Company issued 3.0 million depositary shares, each representing 1/1,000 of
a share of the 6.875% Cumulative Preferred Stock, Series R, at $25.00 per depositary share for
gross proceeds of $75.0 million.
On November 8, 2010, the Company redeemed its 7.60% Cumulative Preferred Stock, Series L, at its
aggregate par value of $48.4 million. On May 12, 2010, the Company redeemed its 7.950% Series G
Cumulative Redeemable Preferred Units at its aggregate par value of $20.0 million and on June 7,
2010, the Company redeemed its 7.950% Cumulative Preferred Stock, Series K, at its aggregate par
value of $54.1 million, in each case, together with accrued dividends.
In connection with the 2010 preferred equity redemptions, the Company reported non-cash
distributions of $1.6 million and $4.1 million for the three months and year ended December 31,
2010, respectively.
In
February, 2011, the Company repurchased the outstanding balance of its 7.50% Series J Cumulative
Redeemable Preferred Units and its 6.55% Series Q Cumulative Redeemable Preferred Units at a
combined discount of 18.3% to par. The aggregate purchase price of $39.1 million compared to the
par value of $47.8 million will result in a net gain for FFO purposes in the first quarter of 2011
of $7.4 million, which also includes non-cash distributions of $1.4 million representing
original issuance costs.
4
Distributions Declared
The Board of Directors declared a quarterly dividend of $0.44 per common share on February 18,
2011. Distributions were also declared on the various series of depositary shares, each
representing 1/1,000 of a share of preferred stock listed below. Distributions are payable March
31, 2011 to shareholders of record on March 16, 2011.
Series | Dividend Rate | Dividend Declared | ||||||
Series H |
7.000 | % | $ | 0.437500 | ||||
Series I |
6.875 | % | $ | 0.429688 | ||||
Series M |
7.200 | % | $ | 0.450000 | ||||
Series O |
7.375 | % | $ | 0.460938 | ||||
Series P |
6.700 | % | $ | 0.418750 | ||||
Series R |
6.875 | % | $ | 0.429688 |
Company Information
PS Business Parks, Inc., a member of the S&P SmallCap 600, is a self-advised and self-managed
equity real estate investment trust (REIT) that acquires, develops, owns and operates commercial
properties, primarily multi-tenant flex, office and industrial space. The Company defines flex
space as buildings that are configured with a combination of office and warehouse space and can be
designed to fit a number of uses (including office, assembly, showroom, laboratory, light
manufacturing and warehouse space). As of December 31, 2010, PSB wholly owned 21.8 million rentable
square feet with approximately 4,100 customers located in eight states, concentrated in California
(5.8 million sq. ft.), Virginia (4.0 million sq. ft.), Florida (3.7 million sq. ft.), Texas (3.4
million sq. ft.), Maryland (2.4 million sq. ft.), Oregon (1.3 million sq. ft.), Arizona (0.7
million sq. ft.) and Washington (0.5 million sq. ft.).
Forward-Looking Statements
When used within this press release, the words may, believes, anticipates, plans,
expects, seeks, estimates, intends and similar expressions are intended to identify
forward-looking statements. Such forward-looking statements involve known and unknown risks,
uncertainties and other factors, which may cause the actual results and performance of the Company
to be materially different from those expressed or implied in the forward-looking statements. Such
factors include the impact of competition from new and existing commercial facilities which could
impact rents and occupancy levels at the Companys facilities; the Companys ability to evaluate,
finance and integrate acquired and developed properties into the Companys existing operations; the
Companys ability to effectively compete in the markets that it does business in; the impact of the
regulatory environment as well as national, state and local laws and regulations including, without
limitation, those governing REITs; the impact of general economic conditions upon rental rates and
occupancy levels at the Companys facilities; the availability of permanent capital at attractive
rates, the outlook and actions of Rating Agencies and risks detailed from time to time in the
Companys SEC reports, including quarterly reports on Form 10-Q, reports on Form 8-K and annual
reports on Form 10-K.
Additional information about PS Business Parks, Inc., including more financial analysis of the
fourth quarter operating results, is available on the Internet. The Companys website is
www.psbusinessparks.com.
A conference call is scheduled for Tuesday, February 22, 2011, at 10:00 a.m. (PST) to discuss the
fourth quarter results. The toll free number is (888) 299-3246; the conference ID is 43327096. The
call will also be available via a live webcast on the Companys website. A replay of the conference
call will be available through March 1, 2011 at (800) 642-1687. A replay of the conference call
will also be available on the Companys website.
Additional financial data attached.
5
PS BUSINESS PARKS, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
December 31, | December 31, | |||||||
2010 | 2009 | |||||||
(Unaudited) | ||||||||
ASSETS |
||||||||
Cash and cash equivalents |
$ | 5,066 | $ | 208,229 | ||||
Real estate facilities, at cost: |
||||||||
Land |
564,851 | 493,709 | ||||||
Buildings and equipment |
1,782,613 | 1,528,044 | ||||||
2,347,464 | 2,021,753 | |||||||
Accumulated depreciation |
(776,840 | ) | (707,209 | ) | ||||
1,570,624 | 1,314,544 | |||||||
Properties held for disposition, net |
| 4,260 | ||||||
Land held for development |
6,829 | 6,829 | ||||||
1,577,453 | 1,325,633 | |||||||
Rent receivable |
3,127 | 2,313 | ||||||
Deferred rent receivable |
22,277 | 21,596 | ||||||
Other assets |
13,134 | 7,051 | ||||||
Total assets |
$ | 1,621,057 | $ | 1,564,822 | ||||
LIABILITIES AND EQUITY |
||||||||
Accrued and other liabilities |
$ | 53,421 | $ | 46,298 | ||||
Credit facility |
93,000 | | ||||||
Mortgage notes payable |
51,511 | 52,887 | ||||||
Total liabilities |
197,932 | 99,185 | ||||||
Commitments and contingencies |
||||||||
Equity: |
||||||||
PS Business Parks, Inc.s shareholders equity: |
||||||||
Preferred stock, $0.01 par value, 50,000,000 shares authorized,
23,942 and 25,042 shares issued and outstanding at
December 31, 2010 and 2009, respectively |
598,546 | 626,046 | ||||||
Common stock, $0.01 par value, 100,000,000 shares authorized,
24,671,177 and 24,399,509 shares issued and outstanding at
December 31, 2010 and 2009, respectively |
246 | 243 | ||||||
Paid-in capital |
557,882 | 548,393 | ||||||
Cumulative net income |
784,616 | 699,291 | ||||||
Cumulative distributions |
(747,762 | ) | (658,294 | ) | ||||
Total PS Business Parks, Inc.s shareholders equity |
1,193,528 | 1,215,679 | ||||||
Noncontrolling interests: |
||||||||
Preferred units |
53,418 | 73,418 | ||||||
Common units |
176,179 | 176,540 | ||||||
Total noncontrolling interests |
229,597 | 249,958 | ||||||
Total equity |
1,423,125 | 1,465,637 | ||||||
Total liabilities and equity |
$ | 1,621,057 | $ | 1,564,822 | ||||
6
PS BUSINESS PARKS, INC.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited, in thousands, except per share amounts)
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited, in thousands, except per share amounts)
For The Three Months | For The Years | |||||||||||||||
Ended December 31, | Ended December 31, | |||||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||
Revenues: |
||||||||||||||||
Rental income |
$ | 71,220 | $ | 67,565 | $ | 278,417 | $ | 270,957 | ||||||||
Facility management fees |
171 | 176 | 672 | 698 | ||||||||||||
Total operating revenues |
71,391 | 67,741 | 279,089 | 271,655 | ||||||||||||
Expenses: |
||||||||||||||||
Cost of operations |
22,901 | 20,905 | 90,534 | 85,912 | ||||||||||||
Depreciation and amortization |
20,812 | 19,650 | 78,868 | 84,504 | ||||||||||||
General and administrative |
2,671 | 1,275 | 9,651 | 6,202 | ||||||||||||
Total operating expenses |
46,384 | 41,830 | 179,053 | 176,618 | ||||||||||||
Other income and expenses: |
||||||||||||||||
Interest and other income |
73 | 155 | 333 | 536 | ||||||||||||
Interest expense |
(948 | ) | (866 | ) | (3,534 | ) | (3,552 | ) | ||||||||
Total other income and expenses |
(875 | ) | (711 | ) | (3,201 | ) | (3,016 | ) | ||||||||
Income from continuing operations |
24,132 | 25,200 | 96,835 | 92,021 | ||||||||||||
Discontinued operations: |
||||||||||||||||
Income from discontinued operations |
| 190 | 34 | 830 | ||||||||||||
Gain on sale of land and real estate facility |
| | 5,153 | 1,488 | ||||||||||||
Total discontinued operations |
| 190 | 5,187 | 2,318 | ||||||||||||
Net income |
$ | 24,132 | $ | 25,390 | $ | 102,022 | $ | 94,339 | ||||||||
Net income allocation: |
||||||||||||||||
Net income allocable to noncontrolling interests: |
||||||||||||||||
Noncontrolling interests common units |
$ | 2,483 | $ | 2,951 | $ | 11,594 | $ | 19,730 | ||||||||
Noncontrolling interests preferred units |
985 | 1,382 | 5,103 | (2,569 | ) | |||||||||||
Total net income allocable to noncontrolling interests |
3,468 | 4,333 | 16,697 | 17,161 | ||||||||||||
Net income allocable to PS Business Parks, Inc.: |
||||||||||||||||
Common shareholders |
8,375 | 9,855 | 38,959 | 59,413 | ||||||||||||
Preferred shareholders |
12,256 | 11,155 | 46,214 | 17,440 | ||||||||||||
Restricted stock unit holders |
33 | 47 | 152 | 325 | ||||||||||||
Total net income allocable to PS Business Parks, Inc. |
20,664 | 21,057 | 85,325 | 77,178 | ||||||||||||
$ | 24,132 | $ | 25,390 | $ | 102,022 | $ | 94,339 | |||||||||
Net income per common share basic: |
||||||||||||||||
Continuing operations |
$ | 0.34 | $ | 0.40 | $ | 1.42 | $ | 2.62 | ||||||||
Discontinued operations |
$ | | $ | 0.01 | $ | 0.16 | $ | 0.08 | ||||||||
Net income |
$ | 0.34 | $ | 0.40 | $ | 1.59 | $ | 2.70 | ||||||||
Net income per common share diluted: |
||||||||||||||||
Continuing operations |
$ | 0.34 | $ | 0.40 | $ | 1.42 | $ | 2.61 | ||||||||
Discontinued operations |
$ | | $ | 0.01 | $ | 0.16 | $ | 0.08 | ||||||||
Net income |
$ | 0.34 | $ | 0.40 | $ | 1.58 | $ | 2.68 | ||||||||
Weighted average common shares outstanding: |
||||||||||||||||
Basic |
24,635 | 24,393 | 24,546 | 21,998 | ||||||||||||
Diluted |
24,741 | 24,550 | 24,687 | 22,128 | ||||||||||||
7
PS BUSINESS PARKS, INC.
Computation of Diluted Funds from Operations (FFO) and Funds Available for Distribution (FAD)
(Unaudited, in thousands, except per share amounts)
Computation of Diluted Funds from Operations (FFO) and Funds Available for Distribution (FAD)
(Unaudited, in thousands, except per share amounts)
For The Three Months | For The Years | |||||||||||||||
Ended December 31, | Ended December 31, | |||||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||
Computation of Diluted Funds From Operations (FFO)
(1): |
||||||||||||||||
Net income allocable to common shareholders |
$ | 8,375 | $ | 9,855 | $ | 38,959 | $ | 59,413 | ||||||||
Adjustments: |
||||||||||||||||
Gain on sale of land and real estate facility |
| | (5,153 | ) | (1,488 | ) | ||||||||||
Depreciation and amortization |
20,812 | 19,850 | 78,868 | 85,094 | ||||||||||||
Net income allocable to noncontrolling
interests common units |
2,483 | 2,951 | 11,594 | 19,730 | ||||||||||||
Net income allocable to restricted stock unit holders |
33 | 47 | 152 | 325 | ||||||||||||
FFO allocable to common and dilutive shares |
$ | 31,703 | $ | 32,703 | $ | 124,420 | $ | 163,074 | ||||||||
Weighted average common shares outstanding |
24,635 | 24,393 | 24,546 | 21,998 | ||||||||||||
Weighted average common OP units outstanding |
7,305 | 7,305 | 7,305 | 7,305 | ||||||||||||
Weighted average restricted stock units outstanding |
87 | 120 | 96 | 131 | ||||||||||||
Weighted average common share equivalents outstanding |
106 | 157 | 141 | 130 | ||||||||||||
Total common and dilutive shares |
32,133 | 31,975 | 32,088 | 29,564 | ||||||||||||
FFO per common and dilutive share |
$ | 0.99 | $ | 1.02 | $ | 3.88 | $ | 5.52 | ||||||||
Computation of Funds Available for Distribution (FAD)
(2): |
||||||||||||||||
FFO allocable to common and dilutive shares |
$ | 31,703 | $ | 32,703 | $ | 124,420 | $ | 163,074 | ||||||||
Adjustments: |
||||||||||||||||
Recurring capital improvements |
(2,787 | ) | (2,705 | ) | (8,536 | ) | (6,853 | ) | ||||||||
Tenant improvements |
(5,823 | ) | (5,408 | ) | (16,197 | ) | (16,613 | ) | ||||||||
Lease commissions |
(1,557 | ) | (1,179 | ) | (4,761 | ) | (4,879 | ) | ||||||||
Straight-line rent |
(194 | ) | 356 | (912 | ) | 37 | ||||||||||
Stock compensation expense |
465 | 575 | 2,117 | 2,899 | ||||||||||||
In-place lease adjustment |
238 | (38 | ) | 571 | (252 | ) | ||||||||||
Tenant improvement reimbursements, net of lease incentives |
(213 | ) | (32 | ) | (603 | ) | (326 | ) | ||||||||
Non-cash distributions related to the redemption of
preferred equity |
1,630 | | 4,066 | | ||||||||||||
Gain on repurchase of preferred equity, net of issuance costs |
| | | (35,639 | ) | |||||||||||
FAD |
$ | 23,462 | $ | 24,272 | $ | 100,165 | $ | 101,448 | ||||||||
Distributions to common and dilutive shares |
$ | 14,103 | $ | 13,997 | $ | 56,262 | $ | 52,570 | ||||||||
Distribution payout ratio |
60.1 | % | 57.7 | % | 56.2 | % | 51.8 | % | ||||||||
(1) | Funds From Operations (FFO) is computed in accordance with the White Paper on FFO
approved by the Board of Governors of the National Association of Real Estate Investment
Trusts (NAREIT). The White Paper defines FFO as net income, computed in accordance with
GAAP, before depreciation, amortization, gains or losses on asset dispositions and
nonrecurring items. FFO should be analyzed in conjunction with net income. However, FFO
should not be viewed as a substitute for net income as a measure of operating performance or
liquidity as it does not reflect depreciation and amortization costs or the level of capital
expenditure and leasing costs necessary to maintain the operating performance of the Companys
properties, which are significant economic costs and could materially impact the Companys
results from operations. Other REITs may use different methods for calculating FFO and,
accordingly, the Companys FFO may not be comparable to other real estate companies. |
|
(2) | Funds Available for Distribution (FAD) is computed by adjusting consolidated FFO
for recurring capital improvements, which the Company defines as those costs incurred to
maintain the assets value, tenant improvements, lease commissions, straight-line rent, stock
compensation expense, impairment charges, amortization of lease incentives and tenant
improvement reimbursements, in-place lease adjustment and the effect of redemption/repurchase
of preferred equity. Like FFO, the Company considers FAD to be a useful measure for investors
to evaluate the operations and cash flows of a REIT. FAD does not represent net income or
cash flow from operations as defined by GAAP. |
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