Attached files
| file | filename |
|---|---|
| 8-K - FORM 8-K - Cogdell Spencer Inc. | c16598e8vk.htm |
| EX-99.2 - EXHIBIT 99.2 - Cogdell Spencer Inc. | c16598exv99w2.htm |
Exhibit 99.1
Investor and Media Contact: Jaime Buell
Investor Relations Manager
704.940.2929
jbuell@cogdell.com
Investor Relations Manager
704.940.2929
jbuell@cogdell.com
FOR IMMEDIATE RELEASE
Thursday, May 5, 2011
Thursday, May 5, 2011
COGDELL SPENCER ANNOUNCES FIRST QUARTER 2011 RESULTS
Recent Highlights
| • | Increased portfolio occupancy to 91% |
| • | Acquired building with a new strategic joint venture partner |
| • | Entered into a new development agreement for $27.8 million |
| • | Executed five design-build contracts totaling $45.2 million (including $24.4 million
with new development) |
Charlotte, N.C. (May 5, 2011) – Cogdell Spencer Inc. (the “Company” or “we”) (NYSE:CSA),
healthcare’s preferred real estate partner, is a real estate investment trust (“REIT”) focused on
planning, owning, developing, constructing, and managing medical facilities. Through strategically
managed, customized facilities, we help our clients deliver superior healthcare.
Recent highlights will be covered in detail on our First Quarter 2011 Earnings Call and Webcast.
We encourage participants to access the webcast for our slide show presentation.
Conference Call and Webcast
The webcast is accessible live via the Internet at www.cogdell.com through the “First Quarter 2011
Earnings Call” link on the Investor Relations homepage. In addition to webcast access, you may
attend the First Quarter 2011 Earnings Call on Friday, May 6, 2011 at 10:00 a.m. Eastern Time (ET)
via teleconference. The number to call is (877) 317-6789 (domestic) or +1 (412) 317-6789
(international). A conference identification number is not required.
An audio playback will be available until June 6, 2011 at 9:00 a.m. ET. To access the playback,
please dial (877) 344-7529 (domestic) or +1 (412) 317-0088 (international) and enter the passcode:
449616. The replay can also be accessed for one year via the Internet at www.cogdell.com through
the “First Quarter 2011 Earnings Call” link on the Investor Relations page, under Press Releases
and News and Audio Archives.
First Quarter 2011 Financial Results
Results for the three months ended March 31, 2011
The Company’s financial results for the three months ended March 31, 2011, and a comparison to our
prior year results, are as follows (in thousands, except per share and operating partnership unit
data):
| For the Three Months Ended | ||||||||
| March 31, 2011 | March 31, 2010 | |||||||
Funds from Operations Modified (“FFOM”) |
$ | 3,574 | $ | 11,149 | ||||
Funds from Operations (“FFO”) |
3,343 | 10,776 | ||||||
Net income (loss) attributable to Cogdell Spencer Inc. common shareholders |
(3,130 | ) | 3,286 | |||||
Per share and operating partnership unit data: |
||||||||
FFOM |
$ | 0.06 | $ | 0.22 | ||||
FFO |
0.06 | 0.21 | ||||||
Net income (loss) attributable to Cogdell Spencer Inc. common shareholders |
(0.06 | ) | 0.08 | |||||
FFOM adds back to traditionally defined FFO non-cash amortization of non-real estate related
intangible assets associated with purchase accounting. A reconciliation of net income (loss) to
FFOM and FFO for the three months ended March 31, 2011 and 2010 is set forth in the tables attached
to this press release.
As of March 31, 2011, we owned and/or managed 114 medical office buildings and healthcare related
facilities, totaling 5.9 million net rentable square feet. Our portfolio is comprised of the
following:
| • | 65 consolidated wholly-owned and joint venture properties, comprising a total of
approximately 3.6 million net rentable square feet, 91.0% leased; |
| • | One wholly-owned property in the lease-up phase, comprising approximately 0.1 million
net rentable square feet, 75% leased and income producing with the remaining 25% leased and
under construction for a third quarter 2011 scheduled date of occupancy; |
| • | One consolidated joint venture acquisition property in the lease-up phase, comprising
approximately 0.1 million net rentable square feet, 76.1% leased; |
| • | Three unconsolidated joint venture properties comprising a total of approximately 0.2
million net rentable square feet; and |
| • | 44 properties managed for third party clients comprising a total of approximately 2.0
million net rentable square feet. |
Property Acquisition
In January 2011, we acquired St. Elizabeth Florence Medical Office Building, located in Florence,
Kentucky, for $6.2 million. The building is located on the campus of St. Elizabeth Florence
Hospital and is connected to the hospital by a covered walkway. As of March 31, 2011, the building
was 76.1% leased. We own 95% of the new strategic joint venture that acquired the building. The
acquisition was funded using cash and borrowing on our revolving credit facility.
New Development
In 2011, we began construction on a new project located in Duluth, Minnesota. The project is an
approximately 176,000 square foot medical office building and parking structure and is 100% owned
by us. The estimated $27.8 million medical office building ($24.4 million inter-company
design-build contract) will be located on the campus of St. Luke’s Hospital and the hospital will
serve as the anchor tenant. The medical office building is 100% pre-leased and construction is
expected to be completed in the third quarter of 2012. We obtained construction financing with a
maximum principal balance of $19.0 million and an interest rate of LIBOR plus 3.25%, with a minimum
interest rate of 5.5%. Monthly payments are interest only during the construction period and after
construction completion, the monthly payments will be principal and interest based on a 22.5 year
amortization. The mortgage note payable matures in September 2016.
Design-Build Contracts
During the first quarter of 2011, we signed two new third party design-build contracts totaling
$9.2 million and three inter-company design-build contracts totaling $36.2 million.
Capital Transactions
In January 2011, we issued 340,000 shares of Series A 8.500% cumulative redeemable perpetual
preferred stock pursuant to the exercise of the overallotment option granted to our underwriters.
The net proceeds were approximately $8.2 million.
In March 2011, we amended and restated our revolving credit facility and it now matures in March
2014 with a one-year extension option. The amended and restated revolving credit facility
increases the maximum amounts that may be borrowed from $150 million to $200 million and provides
the option to increase the aggregate commitments to $350 million. Borrowings under the amended and
restated revolving credit facility bear interest at LIBOR plus a margin, ranging from 2.75% to
3.50%, based on a total leverage ratio.
In April 2011, we refinanced a $5.1 million mortgage note payable on the English Road Medical
Center property. The principal balance was unchanged and the note matures in April 2016. The
interest rate decreased from 6.0% to 5.0% and with monthly principal and interest payments based
approximately on a 25-year amortization.
Dividend
On March 11, 2011, we announced our Board of Directors declared a quarterly dividend of $0.10 per
share and operating partnership unit that was paid in cash on April 20, 2011 to holders of record
on March 25, 2011. The dividend covered the first quarter of 2011.
On May 4, 2011, we announced that our Board of Directors declared a quarterly dividend of $0.53125
per share on our Series A cumulative redeemable perpetual preferred shares for the period March 1,
2011 to May 31, 2011. The dividend will be paid on June 1, 2011, to holders of record on May 18,
2011.
Outlook
We are revising our annual FFOM
guidance to be in the range of $0.30 to $0.37 per share and operating partnership unit for the year ending
December 31, 2011. Our previous guidance assumed approximately $0.03 per share and operating
partnership unit capitalized income tax for on-balance sheet developments, thereby reducing intercompany
profit elimination. Because we expect to continue to record a full deferred tax asset valuation allowance
related to the Design-Build and Development business segment, we do not expect to incur income tax
expense which would otherwise be capitalized for on-balance sheet developments in accordance with Generally
Accepted Accounting Principles. This revision is a non-cash item and does not affect net cash
provided by operating activities. Our guidance assumes the following: (i)
acquisitions of $6.2 million to $25.0 million; (ii) no dispositions; (iii) developments of $40.0
million to $60.0 million; (iv) third party design-build revenue of $90.0 million to $120.0 million;
(v) design-build gross margins of 13.0% to 17.0%; and (vi) corporate general and administrative
expenses of $9.5 million to $10.5 million. Our guidance excludes any additional capital
transaction or impairments.
A reconciliation of the range of projected net income (loss) to projected FFO and FFOM for the year
ending December 31, 2011 is set forth below:
| Guidance Range for the | ||||||||
| Year Ending December 31, 2011 | ||||||||
| (In thousands, except per share and unit data) | Low | High | ||||||
Net income (loss) |
$ | (2,500 | ) | — | $ | 500 | ||
Plus real estate related depreciation and amortization |
28,500 | — | 30,000 | |||||
Less noncontrolling interests in real estate partnerships, before real estate
related depreciation and amortization |
(2,500 | ) | — | (2,500 | ) | |||
Less dividends on preferred stock |
(6,300 | ) | (6,300 | ) | ||||
Funds from Operations (FFO) |
17,200 | — | 21,700 | |||||
Plus amortization of intangibles related to purchase accounting, net of
income tax benefit |
500 | — | 500 | |||||
Funds from Operations Modified (FFOM) |
$ | 17,700 | — | $ | 22,200 | |||
FFO per share and unit — diluted |
$ | 0.29 | — | $ | 0.36 | |||
FFOM per share and unit — diluted |
$ | 0.30 | — | $ | 0.37 | |||
Weighted average shares and units outstanding — basic and diluted |
59,500 | — | 59,500 | |||||
Supplemental operating and financial data are available in the Investor Relations section of
our Web site at www.cogdell.com.
FFO is a supplemental non-GAAP financial measure used by the real estate industry to measure the
operating performance of real estate companies. FFOM adds back to traditionally defined FFO
non-cash amortization of non-real estate related intangible assets associated with purchase
accounting. We present FFO and FFOM because we consider them important supplemental measures of
operational performance. We believe FFO is frequently used by securities analysts, investors and
other interested parties in the evaluation of REITs, many of which present FFO when reporting their
results. We believe that FFOM allows securities analysts, investors and other interested parties
to evaluate current period results to results prior to the acquisition of MEA Holdings, Inc. FFO
and FFOM are intended to exclude GAAP historical cost depreciation and amortization of real estate
and related assets, which assumes that the value of real estate assets diminishes ratably over
time. Historically, however, real estate values have risen or fallen with market conditions.
Because FFO and FFOM excludes depreciation and amortization unique to real estate, gains and losses
from property dispositions and extraordinary items, they provide performance measures that, when
compared year over year, reflect the
impact to operations from trends in occupancy rates,
rental rates, operating costs, development activities and interest costs, providing a perspective not
immediately apparent from net income. We compute FFO in accordance with standards established by
the Board of Governors of NAREIT in its March 1995 White Paper (as amended in November 1999 and
April 2002), which may differ from the methodology for calculating FFO and FFOM utilized by other
equity REITs and, accordingly, may not be comparable to such other REITs. We adjust the NAREIT
definition to add back
noncontrolling interests in consolidated real estate partnerships before real estate related
depreciation and amortization and deduct dividends on preferred stock. Further, FFO and FFOM do
not represent amounts available for management’s discretionary use because of needed capital
replacement or expansion, debt service obligations, or other commitments and uncertainties. FFO
and FFOM should not be considered as an alternative to net income (loss) (computed in accordance
with GAAP) as an indicator of our performance, nor are they indicative of funds available to fund
our cash needs, including our ability to pay dividends or make distributions. A reconciliation
from GAAP net loss to FFO and FFOM is included as an attachment to this press release.
About Cogdell Spencer Inc.
Charlotte-based Cogdell Spencer Inc. (NYSE:CSA), healthcare’s preferred real estate partner, is a
REIT focused on planning, owning, developing, constructing, and managing medical facilities.
Through strategically managed, customized facilities, we help our clients deliver superior
healthcare. Learn more about Cogdell Spencer Inc. and its subsidiaries at www.cogdell.com.
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995. The forward-looking statements reflect our views about future events
and are subject to risks, uncertainties, assumptions, and changes in circumstances that may cause
actual results to differ materially. Factors that may contribute to these differences include, but
are not limited to the following: our business strategy; our ability to comply with financial
covenants in our debt instruments; our access to capital; our ability to obtain future financing
arrangements, including refinancing existing arrangements; estimates relating to our future
distributions; our understanding of our competition; our ability to renew our ground leases;
legislative and regulatory changes (including changes to laws governing the taxation of REITs and
individuals); increases in costs of borrowing as a result of changes in interest rates and other
factors; our ability to maintain our qualification as a REIT due to economic, market, legal, tax,
or other considerations; changes in the reimbursement available to our tenants by government or
private payors; our tenants’ ability to make rent payments; defaults by tenants and customers;
customers’ access to financing; delays in project starts and cancellations by customers; our
ability to convert design-build project opportunities into new engagements for us; market trends;
and projected capital expenditures. For a further list and description of such risks and
uncertainties, see our reports filed with the Securities and Exchange Commission, including our
Annual Report on Form 10-K for the year ended December 31, 2010. Although we believe the
expectations reflected in such forward-looking statements are based on reasonable assumptions, it
can give no assurance that its expectations will be realized. We disclaim any intention or
obligation to update or revise any forward-looking statements, whether as a result of new
information, future events or otherwise.
Cogdell Spencer Inc.
Condensed Consolidated Balance Sheets
(In thousands)
(unaudited)
Condensed Consolidated Balance Sheets
(In thousands)
(unaudited)
| March 31, 2011 | December 31, 2010 | |||||||
Assets |
||||||||
Real estate properties: |
||||||||
Operating real estate properties |
$ | 641,712 | $ | 634,291 | ||||
Less: Accumulated depreciation |
(125,610 | ) | (119,141 | ) | ||||
Total operating real estate properties, net |
516,102 | 515,150 | ||||||
Construction in progress |
29,985 | 22,243 | ||||||
Total real estate properties, net |
546,087 | 537,393 | ||||||
Cash and cash equivalents |
17,235 | 12,203 | ||||||
Restricted cash |
6,784 | 6,794 | ||||||
Tenant and accounts receivable, net |
10,247 | 11,383 | ||||||
Goodwill |
22,882 | 22,882 | ||||||
Intangible assets, net |
18,418 | 18,601 | ||||||
Other assets |
28,162 | 23,684 | ||||||
Total assets |
$ | 649,815 | $ | 632,940 | ||||
Liabilities and Equity |
||||||||
Mortgage notes payable |
$ | 319,419 | $ | 317,303 | ||||
Revolving credit facility |
55,000 | 45,000 | ||||||
Accounts payable |
11,628 | 11,368 | ||||||
Billings in excess of costs and estimated earnings on uncompleted contracts |
2,314 | 1,930 | ||||||
Other liabilities |
43,558 | 39,819 | ||||||
Total liabilities |
431,919 | 415,420 | ||||||
Commitments and contingencies |
||||||||
Equity: |
||||||||
Cogdell Spencer Inc. stockholders’ equity: |
||||||||
Preferred stock, $0.01 par value; 50,000 shares authorized: 8.5000% Series A Cumulative Redeemable Perpetual Preferred Shares (liquidation preference $25.00 per share), 2,940 and 2,600 shares issued and outstanding in 2011 and 2010, respectively |
73,500 | 65,000 | ||||||
Common stock, $0.01 par value, 200,000 shares authorized, 51,042 and 50,870 shares
issued and outstanding in 2011 and 2010, respectively |
510 | 509 | ||||||
Additional paid-in capital |
418,374 | 417,960 | ||||||
Accumulated other comprehensive loss |
(2,712 | ) | (3,339 | ) | ||||
Accumulated deficit |
(295,981 | ) | (287,798 | ) | ||||
Total Cogdell Spencer Inc. stockholders’ equity |
193,691 | 192,332 | ||||||
Noncontrolling interests: |
||||||||
Real estate partnerships |
6,772 | 6,452 | ||||||
Operating partnership |
17,433 | 18,736 | ||||||
Total noncontrolling interests |
24,205 | 25,188 | ||||||
Total equity |
217,896 | 217,520 | ||||||
Total liabilities and equity |
$ | 649,815 | $ | 632,940 | ||||
Cogdell Spencer Inc.
Condensed Consolidated Statements of Operations
(In thousands, except per share amounts)
(unaudited)
Condensed Consolidated Statements of Operations
(In thousands, except per share amounts)
(unaudited)
| For the Three Months Ended | ||||||||
| March 31, 2011 | March 31, 2010 | |||||||
Revenues: |
||||||||
Rental revenue |
$ | 23,054 | $ | 21,245 | ||||
Design-Build contract revenue and other sales |
15,241 | 35,436 | ||||||
Property management and other fees |
775 | 818 | ||||||
Development management and other income |
74 | 103 | ||||||
Total revenues |
39,144 | 57,602 | ||||||
Expenses: |
||||||||
Property operating and management |
9,287 | 8,198 | ||||||
Design-Build contracts and development management |
13,013 | 24,619 | ||||||
Selling, general, and administrative |
6,208 | 5,820 | ||||||
Depreciation and amortization |
7,830 | 8,085 | ||||||
Total expenses |
36,338 | 46,722 | ||||||
Income (loss) from continuing operations before other income (expense) and
income tax expense |
2,806 | 10,880 | ||||||
Other income (expense): |
||||||||
Interest and other income |
178 | 160 | ||||||
Interest expense |
(4,850 | ) | (5,089 | ) | ||||
Debt extinguishment and interest rate derivative expense |
— | (15 | ) | |||||
Equity in earnings of unconsolidated real estate partnerships |
8 | 3 | ||||||
Total other income (expense) |
(4,664 | ) | (4,941 | ) | ||||
Income (loss) from continuing operations before income tax expense |
(1,858 | ) | 5,939 | |||||
Income tax expense |
(18 | ) | (1,726 | ) | ||||
Income (loss) from continuing operations |
(1,876 | ) | 4,213 | |||||
Loss from discontinued operations |
— | (18 | ) | |||||
Net income (loss) |
(1,876 | ) | 4,195 | |||||
Net income attributable to the noncontrolling interests in real estate partnerships |
(200 | ) | (311 | ) | ||||
Net loss (income) attributable to the noncontrolling interests in operating partnership |
508 | (598 | ) | |||||
Dividends on preferred stock |
(1,562 | ) | — | |||||
Net income (loss) attributable to Cogdell Spencer Inc. common shareholders |
$ | (3,130 | ) | $ | 3,286 | |||
Per share data — basic and diluted |
||||||||
Income (loss) from continuing operations attributable to Cogdell
Spencer Inc. common shareholders |
$ | (0.06 | ) | $ | 0.08 | |||
Loss from discontinued operations attributable to Cogdell
Spencer Inc. common shareholders |
— | — | ||||||
Net income (loss) per common share available to Cogdell Spencer Inc. common
shareholders |
$ | (0.06 | ) | $ | 0.08 | |||
Weighted average common shares — basic and diluted |
51,009 | 42,768 | ||||||
Net income (loss) attributable to Cogdell Spencer Inc. common shareholders: |
||||||||
Continuing operations, net of tax |
$ | (3,130 | ) | $ | 3,301 | |||
Discontinued operations |
— | (15 | ) | |||||
Net income (loss) attributable to Cogdell Spencer Inc. common shareholders |
$ | (3,130 | ) | $ | 3,286 | |||
Cogdell Spencer Inc.
Business Segment Reporting
(In thousands)
(unaudited)
Business Segment Reporting
(In thousands)
(unaudited)
| Design-Build | ||||||||||||||||||||
| Property | and | Intersegment | Unallocated | |||||||||||||||||
| Three months ended March 31, 2011: | Operations | Development | Eliminations | and Other | Total | |||||||||||||||
Revenues: |
||||||||||||||||||||
Rental revenue |
$ | 23,054 | $ | — | $ | — | $ | — | $ | 23,054 | ||||||||||
Design-Build contract revenue and other sales |
— | 23,784 | (8,543 | ) | — | 15,241 | ||||||||||||||
Property management and other fees |
775 | — | — | — | 775 | |||||||||||||||
Development management and other income |
— | 879 | (805 | ) | — | 74 | ||||||||||||||
Total revenues |
23,829 | 24,663 | (9,348 | ) | — | 39,144 | ||||||||||||||
Certain operating expenses: |
||||||||||||||||||||
Property operating and management |
9,287 | — | — | — | 9,287 | |||||||||||||||
Design-Build contracts and development management |
— | 21,488 | (8,475 | ) | — | 13,013 | ||||||||||||||
Selling, general, and administrative |
— | 3,776 | — | — | 3,776 | |||||||||||||||
Total certain operating expenses |
9,287 | 25,264 | (8,475 | ) | — | 26,076 | ||||||||||||||
| 14,542 | (601 | ) | (873 | ) | — | 13,068 | ||||||||||||||
Interest and other income |
164 | 8 | — | 6 | 178 | |||||||||||||||
Corporate general and administrative expenses |
— | — | — | (2,432 | ) | (2,432 | ) | |||||||||||||
Interest expense |
— | — | — | (4,850 | ) | (4,850 | ) | |||||||||||||
Income tax expense applicable to funds from operations modified |
— | — | — | (18 | ) | (18 | ) | |||||||||||||
Non-real estate related depreciation and amortization |
— | (278 | ) | — | (44 | ) | (322 | ) | ||||||||||||
Earnings from unconsolidated real estate partnerships,
before real estate related depreciation and amortization |
10 | — | — | — | 10 | |||||||||||||||
Noncontrolling interests in real estate partnerships, before
real estate related depreciation and amortization |
(498 | ) | — | — | — | (498 | ) | |||||||||||||
Dividends on preferred stock |
— | — | — | (1,562 | ) | (1,562 | ) | |||||||||||||
Funds from operations modified (FFOM) |
14,218 | (871 | ) | (873 | ) | (8,900 | ) | 3,574 | ||||||||||||
Amortization of intangibles related to purchase
accounting, net of income tax benefit |
(42 | ) | (189 | ) | — | — | (231 | ) | ||||||||||||
Funds from operations (FFO) |
14,176 | (1,060 | ) | (873 | ) | (8,900 | ) | 3,343 | ||||||||||||
Real estate related depreciation and amortization |
(7,279 | ) | — | — | — | (7,279 | ) | |||||||||||||
Noncontrolling interests in real estate partnerships, before
real estate related depreciation and amortization |
498 | — | — | — | 498 | |||||||||||||||
Dividends on preferred stock |
— | — | — | 1,562 | 1,562 | |||||||||||||||
Net income (loss) |
$ | 7,395 | $ | (1,060 | ) | $ | (873 | ) | $ | (7,338 | ) | $ | (1,876 | ) | ||||||
Cogdell Spencer Inc.
Reconciliation of Net Income (Loss) to Funds from Operations Modified (FFOM) (1)
(In thousands, except per share and unit amounts)
(unaudited)
Reconciliation of Net Income (Loss) to Funds from Operations Modified (FFOM) (1)
(In thousands, except per share and unit amounts)
(unaudited)
| For the Three Months Ended | ||||||||
| March 31, 2011 | March 31, 2010 | |||||||
Net income (loss) |
$ | (1,876 | ) | $ | 4,195 | |||
Add: |
||||||||
Real estate related depreciation and amortization: |
||||||||
Wholly-owned and consolidated properties |
7,277 | 7,194 | ||||||
Unconsolidated real estate partnerships |
2 | 3 | ||||||
Less: |
||||||||
Noncontrolling interests in real estate partnerships,
before real estate related depreciation and amortization |
(498 | ) | (616 | ) | ||||
Dividends on preferred stock |
(1,562 | ) | — | |||||
Funds from Operations (FFO) (1) |
3,343 | 10,776 | ||||||
Amortization of intangibles related to purchase
accounting, net of income tax benefit |
231 | 373 | ||||||
Funds from Operations Modified (FFOM) (1) |
$ | 3,574 | $ | 11,149 | ||||
FFO per share and unit — basic and diluted |
$ | 0.06 | $ | 0.21 | ||||
FFOM per share and unit — basic and diluted |
$ | 0.06 | $ | 0.22 | ||||
Weighted average shares and units outstanding — basic and diluted |
58,438 | 50,559 | ||||||
| (1) | FFO is a supplemental non-GAAP financial measure used by the real estate
industry to measure the operating performance of real estate companies. FFOM adds back to
traditionally defined FFO non-cash amortization of non-real estate related intangible assets
associated with purchase accounting. We present FFO and FFOM because we consider them
important supplemental measures of operational performance. We believe FFO is frequently used
by securities analysts, investors and other interested parties in the evaluation of REITs,
many of which present FFO when reporting their results. We believe that FFOM allows
securities analysts, investors and other interested parties to evaluate current period results
to results prior to the acquisition of MEA Holdings, Inc. FFO and FFOM are intended to
exclude GAAP historical cost depreciation and amortization of real estate and related assets,
which assumes that the value of real estate assets diminishes ratably over time.
Historically, however, real estate values have risen or fallen with market conditions.
Because FFO and FFOM excludes depreciation and amortization unique to real estate, gains and
losses from property dispositions and extraordinary items, they provide performance measures
that, when compared year over year, reflect the impact to operations from trends in occupancy
rates, rental rates, operating costs, development activities and interest costs, providing a
perspective not immediately apparent from net income. We compute FFO in accordance with
standards established by the Board of Governors of NAREIT in its March 1995 White Paper (as
amended in November 1999 and April 2002), which may differ from the methodology for
calculating FFO and FFOM utilized by other equity REITs and, accordingly, may not be
comparable to such other REITs. We adjust the NAREIT definition to add back noncontrolling
interests in consolidated real estate partnerships before real estate related depreciation and
amortization and deduct dividends on preferred stock. Further, FFO and FFOM do not represent
amounts available for management’s discretionary use because of needed capital replacement or
expansion, debt service obligations, or other commitments and uncertainties. FFO and FFOM
should not be considered as an alternative to net income (loss) (computed in accordance with
GAAP) as an indicator of our performance, nor are they indicative of funds available to fund
our cash needs, including our ability to pay dividends or make distributions. |
#####