Cogdell Spencer Inc. - FORM 8-K - EX-99.2

Attached files

file	filename
EX-99.1 - EX-99.1 - Cogdell Spencer Inc.	c24197exv99w1.htm
8-K - FORM 8-K - Cogdell Spencer Inc.	c24197e8vk.htm

Exhibit 99.2


1. Investor Information			1

2. Summary			2

3. Capitalization			3

4. Results			4

5. Condensed Consolidated Balance Sheets			5

6. Condensed Consolidated Statements of Operations			6

7. Business Segment Reporting			7

8. Reconciliation of Net Loss to FFO and FFOM			9

9. Coverage Ratios			10

10. Consolidated Debt Analysis			11

11. Property Summary			15

12. Stabilized Property Listing			16

13. Stabilized Property Occupancy Rates			19

14. Tenant Lease Expirations			22

15. Ten Largest Tenants			23

16. Ground & Air Rights Leases			24

17. Pipeline			25

18. Inter-company Profit Elimination Example			26

19. Acquisitions, Completed Developments, & Properties in Fill-up			27

20. Development Construction and Capital Expenditures			28

21. Appendix			29

Reconciliation of Earnings to EBITDA			i

Reconciliation of Gross Assets to Total Assets			i

Reconciliation of Same Property Adjusted Net Operating Income			ii

Reconciliation of Total Property Adjusted Net Operating Income			iii

Board of Directors


Richard C. Neugent		Raymond W. Braun
Chairman		President & CEO

John R. Georgius		Richard B. Jennings

Christopher E. Lee		David J. Lubar

Randolph D. Smoak, Jr. M.D.

Executive Management


Raymond W. Braun	Brian L. Happ	Rex A. Noble
Chief Executive Officer & President	Executive VP & Chief Operating Officer	Executive VP Portfolio Management

Charles M. Handy	Andrea L. Hopkins	Sal G. Parente
Executive VP & Chief Financial Officer	VP Human Resources	Executive VP Business Development

Equity Research Coverage


BMO Capital Markets	Jefferies & Co.	Raymond James & Associates
Richard Anderson — 212.885.4180	Tayo Okusanya — 212.336.7076	Paul Puryear — 727.567.2253

Janney Montgomery Scott	KeyBanc Capital Markets	SmithBarney Citigroup
Dan Donlan — 215.665.6476	Karin Ford — 917.368.2293	Quentin Velleley — 212.816.6981

Company Information


Corporate Headquarters	Trading Symbol	Transfer Agent
4401 Barclay Downs Drive, Suite 300	CSA	First Stockholder Services
Charlotte, NC 28209
Tel: 704.940.2900	Stock Exchange Listing	Investor Relations
Fax: 704.940.2959	New York Stock Exchange	Jaime Buell — 704.940.2929
www.cogdell.com

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 ability to execute our business strategy; our ability to comply with financial covenants in our debt instruments; our ability to raise capital on terms that are favorable to us; our ability to obtain future financing arrangements; estimates relating to our future distributions; increased competition for tenants and new properties; 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; 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.



	For 3 Months Ended						For 9 Months Ended
(in thousands, except per share amounts and portfolio statistics)	Sept. 30, 2011			Sept. 30, 2010			Sept. 30, 2011			Sept. 30, 2010

Revenue	$	47,177		$	39,309		$	127,889		$	133,920
EBITDA⁽¹⁾		13,144			9,906			34,885			40,379
Net loss attributable to Cogdell Spencer Inc. common stockholders		(1,834	)		(1,838	)		(9,950	)		(10,574	)
Net loss per share attributable to Cogdell Spencer Inc. common stockholder	$	(0.04	)	$	(0.04	)	$	(0.19	)	$	(0.23	)

FFOM attributable to common stockholders and operating partnership unitholders⁽²⁾	$	5,858		$	5,322		$	11,603		$	9,623
FFOM attributable to common stockholders and operating partnership unitholders, excluding litigation gains and losses, impairment charges, and CEO retirement expense⁽²⁾	$	5,019		$	5,322		$	12,564		$	23,016

Per share and operating partnership unit data:
FFOM attributable to common stockholders and operating partnership unitholders⁽²⁾	$	0.10		$	0.09		$	0.20		$	0.18
FFOM attributable to common stockholders and operating partnership unitholders, excluding litigation gains and losses, impairment charges, and CEO retirement expense ⁽²⁾	$	0.09		$	0.09		$	0.21		$	0.43

Debt / Gross Assets⁽³⁾		48	%		45	%		48	%		45	%

Portfolio statistics:
Total properties		70			66			70			66
Total square footage		3,949			3,676			3,949			3,676


Property Distribution		Occupancy⁽⁴⁾


(1)		For a reconciliation EBITDA to net loss, see page i in the appendix to this Supplemental Operating and Financial Data package.

(2)		For a definition, discussion, and a quantitative reconciliation of the differences between FFOM and net income (loss), see page 9.

		For a detailed listing of non-recurring events and impairment charges, see FFO reconciliation on page 9.

(3)		Gross Assets represents total assets before accumulated depreciation and amortization. For a reconciliation Gross Assets to Total Assets, see page i in the appendix to this Supplemental Operating and Financial Data package.

(4)		Stabilized properties.


	Sept. 30, 2011
	Shares/Units		Share Price		Value
Common Stock		51,080	$	3.77	$	192,572
Common Operating Partnership Units		7,477		3.77		28,188
Preferred Stock		2,940		23.35		68,649

Equity value						289,409
Consolidated debt						434,254

Market capitalization					$	723,663

200 Andrews — Greenville, SC


	For the 3 Months Ended						For the 9 Months Ended
	Sept. 30, 2011			Sept. 30, 2010			Sept. 30, 2011			Sept. 30, 2010
FFOM and FFOM per share and operating partnership unit for the three months and nine months ended Sept. 30, 2011, and a comparison to our prior year results:
FFOM⁽¹⁾	$	5,858		$	5,322		$	11,603		$	9,623
Impact of litigation gains and losses, impairment charges, and CEO retirement expense		(839	)		—			961			13,393

FFOM, excluding litigation gains and losses, impairment charges, and CEO retirement expense	$	5,019		$	5,322		$	12,564		$	23,016


Per share and operating partnership unit data:
FFOM⁽¹⁾	$	0.10		$	0.09		$	0.20		$	0.18
Impact of litigation gains and losses, impairment charges, and CEO retirement expense⁽²⁾		(0.01	)		—			0.01			0.25
FFOM, excluding litigation gains and losses, impairment charges, and CEO retirement expense		0.09			0.09			0.21			0.43

	Sept. 30, 2011			Sept. 30, 2010			Sept. 30, 2011			Sept. 30, 2010
FFO and FFO per share and operating partnership unit for the three months and nine months ended Sept. 30, 2011, and a comparison to our prior year results:
FFO⁽¹⁾	$	5,627		$	4,948		$	10,909		$	8,502
Impact of litigation gains and losses, impairment charges, and CEO retirement expense		(839	)		—			961			13,393

FFO, excluding litigation gains and losses, impairment charges and CEO retirement expenses	$	4,788		$	4,948		$	11,870		$	21,895


Per share and operating partnership unit data:
FFO⁽¹⁾	$	0.10		$	0.09		$	0.19		$	0.16
Impact of litigation gains and losses, impairment charges, and CEO retirement expenses⁽²⁾		(0.01	)		—			0.01			0.25
FFO, excluding litigation gains and losses, impairment charges, and CEO retirement expense		0.09			0.09			0.20			0.41

	Sept. 30, 2011			Sept. 30, 2010			Sept. 30, 2011			Sept. 30, 2010
Net loss attributable to Cogdell Spencer Inc. and net loss attributable to Cogdell Spencer Inc. per share for the three and nine months ended September 30, 2011, and a comparison to our prior year results:

Net loss available to Cogdell Spencer Inc. common stockholders	$	(1,834	)	$	(1,838	)	$	(9,950	)	$	(10,574	)

Gain from sale of real estate partnership, litigation gains and losses, impairment charges, and CEO retirement expense attributable to Cogdell Spencer Inc. common stockholders⁽²⁾		(732	)		—			839			11,451


Net income (loss) available to Cogdell Spencer Inc. common stockholders, excluding gain from sale of real estate partnership, litigation gains and losses, impairment charges, and CEO retirement expense⁽²⁾	$	(2,566	)	$	(1,838	)	$	(9,111	)	$	877


Per share data:

Net loss available to Cogdell Spencer Inc. common stockholders	$	(0.04	)	$	(0.04	)	$	(0.19	)	$	(0.24	)

Gain from sale of real estate partnership, litigation gains and losses, impairment charges, and CEO retirement expense attributable to Cogdell Spencer Inc. common stockholders⁽²⁾		(0.01	)		—			0.01			0.25

Net income (loss) available to Cogdell Spencer Inc. common stockholders, excluding gain from sale of real estate partnership, litigation gains and losses, impairment charges, and CEO retirement expense⁽²⁾		(0.05	)		(0.04	)		(0.18	)		0.01


(1)		For a definition and discussion and a quantitative reconciliation of the differences between FFO, FFOM, and net loss, see page 9.

(2)		For a detailed listing of gain from sale of real estate partnership, litigation gains and losses, impairment charges, and CEO retirement expense, see FFO reconciliation on page 9.


	Sept. 30, 2011			June 30, 2011			March 31, 2011			Dec. 31, 2010			Sept. 30, 2010
Assets
Real estate properties:
Operating real estate properties	$	709,091		$	677,880		$	41,712		$	34,291		$	632,844
Less: Accumulated depreciation		(139,212	)		(132,198	)		(125,610	)		(119,141	)		(112,581	)

Total real estate properties, net		569,879			545,682			516,102			515,150			520,263
Construction in process		31,546			45,010			29,985			22,243			15,120

Total real estate properties, net		601,425			590,692			546,087			537,393			535,383
Cash and cash equivalents		16,033			16,383			17,235			12,203			16,028
Restricted cash		2,952			4,241			6,784			6,794			11,649
Tenant and accounts receivable, net		14,831			12,368			10,247			11,383			9,656
Goodwill		22,882			22,882			22,882			22,882			102,195
Trade names and trademarks		—			—			—			—			34,093
Intangible assets, net		20,943			22,249			18,418			18,601			20,025
Other assets		30,718			27,551			28,162			23,684			23,642

Total assets	$	709,784		$	696,366		$	649,815		$	632,940		$	752,671


Liabilities and Equity
Mortgage notes payable	$	271,454		$	325,644		$	319,419		$	317,303		$	296,701
Term loan		80,800			—			—			—			50,000
Revolving credit facility		82,000			95,000			55,000			45,000			65,000
Accounts payable		15,782			15,315			11,628			11,368			11,814
Billings in excess of costs and estimated earnings on uncompleted contracts		1,284			2,432			2,314			1,930			2,145
Deferred income taxes		—			—			—			—			11,406
Other liabilities		60,886			52,707			43,558			39,819			51,991

Total liabilities		512,206			491,098			431,919			415,420			489,057
Commitments and contingencies
Equity:
Cogdell Spencer Inc. stockholders’ equity:
Preferred stock		73,500			73,500			73,500			65,000			—
Common stock		511			511			510			509			507
Additional paid-in capital		419,564			418,553			418,374			417,960			419,439
Accumulated other comprehensive loss		(5,852	)		(3,772	)		(2,712	)		(3,339	)		(6,011	)
Accumulated deficit		(312,939	)		(306,022	)		(295,981	)		(287,798	)		(189,219	)

Total Cogdell Spencer Inc. stockholders’ equity		174,784			182,770			193,691			192,332			224,716
Noncontrolling interests:
Real estate partnerships		8,057			6,756			6,772			6,452			5,660
Operating partnership		14,737			15,742			17,433			18,736			33,238

Total noncontrolling interests		22,794			22,498			24,205			25,188			38,898

Total equity		197,578			205,268			217,896			217,520			263,614

Total liabilities and equity	$	709,784		$	696,366		$	649,815		$	632,940		$	752,671


	Three Months Ended
	Sept. 30, 2011			June 30, 2011			March 31, 2011			Dec. 31, 2010			Sept. 30, 2010
Revenues:
Rental revenue	$	24,762		$	23,136		$	23,054		$	22,799		$	22,765
Design-Build contract revenue and other sales		21,619			17,641			15,241			24,850			15,734
Property management and other fees		789			760			775			824			809
Development management and other income		7			41			74			25			1

Total revenues		47,177			41,578			39,144			48,498			39,309

Expenses:
Property operating and management		10,069			9,824			9,287			8,012			9,067
Design-Build contracts and development management		18,567			15,977			13,013			22,169			13,806
Selling, general, and administrative		5,198			6,822			6,208			8,561			6,684
Depreciation and amortization		8,623			7,986			7,830			8,283			8,293
Impairment charges		—			—			—			113,406			—

Total expenses		42,457			40,609			36,338			160,431			37,850

Income (loss) from continuing operations before other income (expense) and income tax benefit (expense)		4,720			969			2,806			(111,933	)		1,459
Other income (expense):
Interest and other income		641			159			178			210			151
Interest expense		(5,564	)		(5,027	)		(4,850	)		(5,662	)		(5,851	)
Debt extinguishment and interest rate derivative expense		—			—			—			(339	)		(7	)
Equity in earnings of unconsolidated partnerships		(1	)		5			8			7			3

Total other income (expense)		(4,924	)		(4,863	)		(4,664	)		(5,784	)		(5,704	)

Loss from operations before gain from sale of real estate partnership and income tax expense		(204	)		(3,894	)		(1,858	)		(117,717	)		(4,245	)
Income tax benefit (expense)		(32	)		(19	)		(18	)		10,611			2,294

Net loss		(236	)		(3,913	)		(1,876	)		(107,106	)		(1,951	)


Net income attributable to the noncontrolling interest in real estate partnerships		(290	)		(235	)		(200	)		(171	)		(172	)
Net loss attributable to the noncontrolling interest in operating partnership		254			724			508			13,970			285
Dividends on preferred stock		(1,562	)		(1,562	)		(1,562	)		(208	)		—

Net loss attributable to Cogdell Spencer Inc. common stockholders	$	(1,834	)	$	(4,986	)	$	(3,130	)	$	(93,515	)	$	(1,838	)


Per share data — basic and diluted:
Net loss per share attributable to Cogdell Spencer Inc. common stockholders	$	(0.04	)	$	(0.10	)	$	(0.06	)	$	(1.84	)	$	(0.04	)
Weighted average common shares — basic and diluted		51,080			51,058			51,009			50,745			50,083


				Design-Build
	Property			and			Intersegment			Unallocated
Three months ended Sept. 30, 2011	Operations			Development			Eliminations			and Other			Total
Revenues:
Rental revenue	$	24,762		$	—		$	—		$	—		$	24,762
Design-Build contract revenue and other sales		—			34,072			(12,453	)		—			21,619
Property management and other fees		789			—			—			—			789
Development management and other income		—			288			(281	)		—			7

Total revenues		25,551			34,360			(12,734	)		—			47,177

Certain operating expenses:
Property operating and management		10,046			—			—			—			10,046
Design-Build contracts and development management		—			31,135			(12,568	)		—			18,567
Selling, general, and administrative		—			3,110			—			—			3,110

Total certain operating expenses		10,046			34,245			(12,568	)		—			31,723

		15,505			115			(166	)		—			15,454

Interest and other income		136			500			—			5			641
Corporate general and administrative expenses		—			—			—			(2,088	)		(2,088	)
Interest expense		—			—			—			(5,564	)		(5,564	)
Income taxes expense applicable to funds from operations modified		—			—			—			(32	)		(32	)
Non-real estate related depreciation and amortization		—			(270	)		—			(45	)		(315	)
Earnings from unconsolidated real estate partnerships, before real estate related depreciation and amortization		1			—			—			—			1
Noncontrolling interests in real estate partnerships, before real estate related depreciation and amortization		(677	)		—			—			—			(677	)

Dividends on preferred stock		—			—			—			(1,562	)		(1,562	)

Funds from operations modified (FFOM)		14,965			345			(166	)		(9,286	)		5,858

Amortization of intangibles related to purchase accounting		(42	)		(189	)		—			—			(231	)

Funds from operations (FFO)		14,923			156			(166	)		(9,286	)		5,627

Real estate related depreciation and amortization		(8,079	)		—			—			—			(8,079	)
Noncontrolling interests in real estate partnerships, before real estate related depreciation and amortization		677			—			—			—			677

Acquisition-related expenses		(23	)											(23	)
Dividends on preferred stock		—			—			—			1,562			1,562

Net income (loss)	$	7,498		$	156		$	(166	)	$	(7,724	)	$	(236	)


				Design-Build
	Property			and			Intersegment			Unallocated
Nine months ended Sept. 30, 2011	Operations			Development			Eliminations			and Other			Total
Revenues:
Rental revenue	$	70,952		$	—		$	—		$	—		$	70,952
Design-Build contract revenue and other sales		—			89,598			(35,098	)		—			54,500
Property management and other fees		2,325			—			—			—			2,325
Development management and other income		—			1,738			(1,616	)		—			122

Total revenues		73,277			91,336			(36,714	)		—			127,899

Certain operating expenses:
Property operating and management		28,675			—			—			—			28,675
Design-Build contracts and development management		—			82,631			(35,074	)		—			47,557
Selling, general, and administrative		—			11,772			—			—			11,772

Total certain operating expenses		28,675			94,403			(35,074	)		—			88,004

		44,602			(3,067	)		(1,640	)		—			39,895

Interest and other income		444			516			—			18			978
Corporate general and administrative expenses		—			—			—			(6,455	)		(6,455	)
Interest expense		—			—			—			(15,441	)		(15,441	)
Income taxes expense applicable to funds from operations modified		—			—			—			(69	)		(69	)
Non-real estate related depreciation and amortization		—			(825	)		—			(131	)		(956	)
Earnings from unconsolidated real estate partnerships, before real estate related depreciation and amortization		19			—			—			—			19
Noncontrolling interests in real estate partnerships, before real estate related depreciation and amortization		(1,681	)		—			—			—			(1,681	)

Dividends on preferred stock		—			—			—			(4,686	)		(4,686	)

Funds from operations modified (FFOM)		43,384			(3,376	)		(1,640	)		(26,764	)		11,604

Amortization of intangibles related to purchase accounting		(127	)		(567	)		—			—			(694	)

Funds from operations (FFO)		43,257			(3,943	)		(1,640	)		(26,764	)		10,910

Real estate related depreciation and amortization		(22,796	)		—			—			—			(22,796	)
Noncontrolling interests in real estate partnerships, before real estate related depreciation and amortization		1,681			—			—			—			1,681

Acquisition-related expenses		(505	)											(505	)
Dividends on preferred stock		—			—			—			4,685			4,685

Net income (loss)	$	21,637		$	(3,943	)	$	(1,640	)	$	(22,079	)	$	(6,025	)


	Three Months Ended
	Sept. 30, 2011			June 30, 2011			March 31, 2011			Dec. 31, 2010			Sept. 30, 2010
Net loss	$	(236	)	$	(3,913	)	$	(1,876	)	$	(107,106	)	$	(1,951	)
Add:
Real estate related depreciation and amortization:
Wholly-owned and consolidated properties		8,077			7,433			7,277			7,327			7,372
Unconsolidated real estate partnerships		2			3			2			3			3
Acquisition-related expenses		23			398			84			—			—
Less:
Noncontrolling interests in real estate partnerships, before real estate related depreciation and amortization		(677	)		(526	)		(498	)		(472	)		(476	)
Dividends on preferred stock		(1,562	)		(1,562	)		(1,562	)		(208	)		—

Funds from Operations (FFO)⁽¹⁾		5,627			1,833			3,427			(100,456	)		4,948
Amortization of intangibles related to purchase accounting, net of tax benefit		231			231			231			374			374

Funds from Operations Modified (FFOM)⁽¹⁾		5,858			2,064			3,658			(100,082	)		5,322
Non-recurring events and certain other charges:
Litigation loss (gain) provision		(339	)		1,800			—			—			—
Litigation gain settlement		(500	)		—			—			—			—
Goodwill and intangible asset impairment charges, net of tax benefit		—			—			—			93,826			—
Tax valuation allowance		—			—			—			10,553			—
Mr. Cogdell’s employment non-renewal compensation expense		—			—			—			1,493			—

Impact of litigation gains and losses, impairment charges, and employment non-renewal expense		(839	)		1,800			—			105,872			—

FFOM, excluding litigation gains and losses, impairment charges, and employment non-renewal expense	$	5,019		$	3,864		$	3,658		$	5,790		$	5,322


FFO per share and unit — basic and diluted	$	0.10		$	0.03		$	0.06		$	(1.72	)	$	0.09
FFOM per share and unit — basic and diluted	$	0.10		$	0.04		$	0.06		$	(1.71	)	$	0.09
FFOM per share and unit — basic and diluted, excluding litigation gains and losses, impairment charges, and employment non-renewal expense	$	0.09		$	0.07		$	0.06		$	0.10		$	0.09

Weighted average shares and units outstanding		58,503			58,465			58,438			58,389			57,849


(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. To calculate FFOM, we adjust the NAREIT definition to add back noncontrolling interests in consolidated real estate partnerships and limited liability companies before real estate related depreciation and amortization, acquisition-related expenses, 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.

(2)		Real estate depreciation and amortization consists of depreciation and amortization from wholly-owned real estate properties and the Company’s share of real estate depreciation and amortization from consolidated and unconsolidated real estate partnerships.


	Three Months Ended
	Sept. 30, 2011		June 30, 2011		March 31, 2011		Dec. 31, 2010		Sept. 30, 2010
Interest coverage ratio:
EBITDA⁽¹⁾	$	13,144	$	10,919	$	10,822	$	11,466	$	9,906
Cash paid for interest		5,473		5,055		4,622		5,901		5,515

Interest coverage ratio		2.40		2.16		2.34		1.94		1.80


Fixed charge coverage ratio:
EBITDA⁽¹⁾	$	13,144	$	10,919	$	10,822	$	11,466	$	9,906
Fixed charges:
Cash paid for interest		5,473		5,055		4,622		5,901		5,515
Principal payments		1,144		1,220		1,258		1,111		1,096
Dividends on preferred stock		1,562		1,562		1,562		208		—

Total fixed charges	$	8,179	$	7,837	$	7,442	$	7,220	$	6,611

Fixed charge coverage ratio		1.61		1.39		1.45		1.59		1.50

St. Francis Medical Plaza — Charleston, SC


(1)		For a reconcilliation of EBITDA to net loss, see page i in the appendix to this Supplemental Operating & Financial Data package.


	Stated Interest		Interest			Principal		Maturity		Amortization
	Rate (%)		Rate (%)			Balance		Date		(years)
Secured mortgage loans — wholly-owned properties:
St. Francis CMOB, St. Francis Professional Medical Center	LIBOR + 1.85			2.09		$	6,536		11/15/2011		39
St. Francis Medical Plaza (Greenville), St. Francis Women’s	LIBOR + 1.85			2.09			7,037		11/15/2011		39
Barclay Downs		6.50		6.50			4,200		11/15/2012		25
Providence Medical Office Building I, II and III		6.12		6.12			7,862		1/12/2013		25
One Medical Park		5.93		5.93			4,660		11/1/2013		20
Three Medical Park		5.55		5.55			7,283		3/25/2014		25
Medical Arts Center of Orangeburg	LIBOR + 3.25			6.00	⁽²⁾		2,176		5/5/2014		20
Lancaster Rehabilitation Hospital		6.71		6.71			9,337		6/26/2014		25
Lancaster Rehabilitation Hospital		6.79		6.79			2,059		6/26/2014		25
Rowan Outpatient Surgery Center		6.00		6.00			3,077		7/6/2014		25
East Jefferson MOB		6.01		6.01			8,550		8/10/2014		25
Rocky Mount Kidney Center		6.75		6.75			932		8/21/2014		15
Randolph Medical Park, Lincoln/Lakemont Family Practice, and Northcross Family Physicians		7.00		7.00			7,161		10/15/2014		20
MRMC MOB I		7.33		7.33			5,835		11/1/2014		25
HealthPartners Medical & Dental Clinics	LIBOR + 3.25			6.80	⁽¹⁾		11,878		11/1/2014		22.5
Copperfield Medical Mall, Harrisburg Medical Mall, Midland Medical Park and Weddington & Internal/Pediatric Medicine	LIBOR + 1.50			3.25	⁽⁵⁾		7,817		12/15/2014		25
Good Sam Medical Office Building		7.85		7.85	⁽⁸⁾		10,259		6/30/2015		25
Peerless Crossing Medical Center		6.06		6.06			7,173		9/1/2016		30
Rocky Mount Medical Park	LIBOR + 3.50			3.74	⁽³⁾		10,136		10/22/2016		25
Palmetto Health Parkridge		5.68		5.68			13,500		6/1/2017	Interest only		⁽⁶⁾
Central NY Medical Center		6.22		6.22			24,500		7/1/2017	Interest only
Summit Professional Plaza I and II		6.18		6.18			15,925		9/1/2017	Interest only
University Physicians MOB & Outpatient Clinic	LIBOR + 2.25			5.95	⁽¹⁾		10,267		4/20/2019		25
Roper Medical Office Building		7.10		7.10			9,163		6/1/2019		25
Health Park Medical Office Building		7.50		7.50			6,821		12/1/2019		25

Total / weighted average mortgages — wholly-owned properties				5.89			204,144


(1)		Represents the fixed rate for floating rate loans that have been swapped to fixed.

(2)		Minimum interest of 6.00%.

(3)		Maximum interest of 6.50%.

(4)		Interest only during construction period.

(5)		Maximum interest of 8.25%; minimum interest of 3.25%.

(6)		Interest only through June 2012. Principal and interest payments from July 2012 through June 2017.

(7)		The Company has entered into a forward starting interest rate swap agreement that effectively fixes the interest rate 6.44% beginning October 2011, when the construction phase of the loan expires and converts to an amortizing loan.

(8)		Interest of 7.85% during construction, 7.5% @ occupancy, 7.1% @ 75% occupancy with $1,615,000 NOI.

Stated Interest

Interest

Principal

Maturity

Amortization

Rate (%)

Balance

Date

(years)

Secured revolving credit facility:

Tranche I

LIBOR + 3.25

3.49

82,000

3/1/2014

Interest only

Total / weighted average secured revolving credit facility

3.49

82,000

Term loan

LIBOR + 3.50

3.74

80,800

8/2/2014

Interest only

Consolidated real estate partnerships:

Alamance Regional Mebane Outpatient Center

LIBOR + 1.30

1.54

10,809

5/15/2012

Alamance Regional Mebane Outpatient Center

LIBOR + 4.00

4.24

1,465

5/15/2012

Lancaster ASC MOB

LIBOR + 1.20

5.23

⁽¹⁾

10,034

3/2/2015

English Road Medical Center

4.99

5,072

4/1/2016

Woodlands Center for Specialized Medicine

LIBOR + 1.50

6.21

⁽¹⁾

16,388

9/26/2018

Bonney Lake Medical Office Building

LIBOR + 3.25

3.49

⁽⁷⁾

8,980

2/5/2019

⁽⁴⁾

Medical Center Physicians Tower

LIBOR + 2.50

6.19

⁽¹⁾

14,517

3/1/2019

Total / weighted average consolidated real estate partnerships

4.81

67,265

Total / weighted average debt

434,209

Unamortized premium

Total / weighted average debt

4.87

434,254

Summit Professional Plaza I — Brunswick, GA


(1)		Represents the fixed rate for floating rate loans that have been swapped to fixed.

(2)		Minimum interest of 6.00%.

(3)		Maximum interest of 6.50%.

(4)		Interest only during construction period.

(5)		Maximum interest of 8.25%; minimum interest of 3.25%.

(6)		Interest only through June 2012. Principal and interest payments from July 2012 through June 2017.

(7)		The Company has entered into a forward starting interest rate swap agreement that effectively fixes the interest rate 6.44% beginning October 2011, when the construction phase of the loan expires and converts to an amortizing loan.

(8)		Interest of 7.85% during construction, 7.5% @ occupancy, 7.1% @ 75% occupancy with $1,615,000 NOI.

Future Maturities and Principal Payments


	Future Scheduled Repayments
										Weighted
										Average
										Interest Rate on
							Percent of Total			Maturing
Year	Amortization		Maturities		Total		Mortgages			Debt⁽¹⁾
2011		1,087		13,542		14,629		5	%		2.1	%
2012		4,394		16,270		20,664		8	%		3.0	%
2013		4,294		11,577		15,871		6	%		6.0	%
2014		3,518		60,616		64,134		24	%		6.1	%
2015		2,140		19,492		21,632		8	%		6.6	%
Thereafter		5,524		128,955		134,479		50	%		5.9	%

Total mortgages	$	20,957	$	250,452	$	271,409		100	%		5.6	%
Secured revolving credit facility (March 2014 maturity)		—		82,000		82,000					3.5	%
Term Loan (August 2014 maturity)		—		80,800		80,800					3.7	%

Total	$	20,957	$	413,252	$	434,209					4.9	%


(1)		Includes the fixed rate swapped interest rates.

(2)		For covenant definitions and a listing of non-financial debt covenants, please refer to the Company’s filings with the Securities and Exchange Commission.


	Weighted Average
Debt Profile	Balance			Percent of Total			Interest Rate⁽¹⁾			Maturity (Years)
Fixed rate mortgages — wholly-owned properties	$	180,435			42	%		6.3	%		4.5
Variable rate mortgages — wholly-owned properties		23,709			5	%		2.8	%		2.2
Secured revolving credit facility		82,000			19	%		3.5	%		2.4
Term loan		80,800			19	%		3.7	%		2.8
Mortgages — consolidated real estate partnerships		67,265			15	%		4.8	%		5.3

Total	$	353,409			100	%		4.9	%		3.8


Secured revolving credit facility — matures March 2014
Facility	$	200,000


Borrowing base availability	$	121,471
Less: Outstanding		(82,000	)
Less: Letters of credit		(7,954	)

Availability	$	31,517


Capitalized interest 3Q 2011	$	339

Current

Covenant summary

Required

Quarter

In Compliance

Secured revolving credit facility⁽²⁾:

Maximum total leverage ratio

< 65

Yes

Maximum secured recourse indebtedness ratio

< 15

Yes

Minimum fixed charge coverage ratio

> 1.35

1.55

Yes

Minimum required tangible net worth

> 237,106

284,909

Yes

Minimum facility interest coverage

> 1.50

6.95

Yes


(1)		Includes the fixed rate swapped interest rates.

(2)		For covenant definitions and a listing of non-financial debt covenants, please refer to the Company’s filings with the Securities and Exchange Commission.

Same Property Net Operating Income


	Same Property Operating Results
	As of and for Quarter Ended									As of and for Year Ended
	Sept. 30, 2011			June 30, 2011			Sept. 30, 2010			Sept. 30, 2011			Sept. 30, 2010
Property count		63			63			63			61			61
Square feet		3,501			3,501			3,501			3,390			3,390
Occupancy		91.6	%		90.8	%		91.0	%		91.4	%		91.0	%

Rental revenue	$	21,909		$	21,785		$	21,814		$	83,040		$	80,272
Costs related to property operations		(9,098	)		(8,633	)		(8,846	)		(33,416	)		(32,706	)

Net operating income		12,811			13,152			12,968			49,624			47,566
Straight line rent		(439	)		(451	)		(316	)		(1,561	)		(780	)
Fair value of lease revenues⁽¹⁾		(96	)		(100	)		(100	)		(400	)		(471	)

Adjusted net operating income	$	12,276		$	12,601		$	12,552		$	47,663		$	46,315


	Total Property Operating Results
	As of and for Quarter Ended									As of and for Year Ended
	Sept. 30, 2011			June 30, 2011			Sept. 30, 2010			Sept. 30, 2011			Sept. 30, 2010
Property count		70			69			66			70			66
Square feet		3,949			3,889			3,676			3,949			3,676
Occupancy		92.3	%		91.2	%		91.4	%		92.3	%		91.4	%

Rental revenue	$	24,762		$	23,136		$	22,765		$	93,751		$	85,380
Property management and other fees		789			760			809			3,148			3,195
Costs related to property operations		(10,046	)		(9,426	)		(9,067	)		(36,687	)		(33,673	)
Acquisition-related expenses		(23	)		(398	)		—			(505	)		0

Net operating income		15,482			14,072			14,507			59,707			54,902
Straight line rent		(457	)		(463	)		(323	)		(1,816	)		(924	)
Fair value of lease revenues⁽¹⁾		(108	)		(98	)		(97	)		(412	)		(463	)

Adjusted net operating income	$	14,917		$	13,511		$	14,087		$	57,479		$	53,515


(1)		Represents the net adjustment for above and below market leases which are being amortized over the remaining term of the respective lease from the date of the acquisition.


												Annualized
												Rent Per
					Net Rentable		Occupancy			Annualized		Leased
	Location	Ownership			Square Feet		Rate			Rent		Square Foot
California
Verdugo Hills Professional Bldg I	Glendale		100.0	%		64,056		92.0	%	$	1,939,176	$	32.90
Verdugo Hills Professional Bldg II	Glendale		100.0	%		42,906		99.5	%		1,462,618		34.26

						106,962		95.0	%		3,401,794		33.47
Florida
Woodlands Center for Specialized Medicine	Pensacola		40.0	%		75,985		100.0	%		2,544,183		33.48

Georgia
Augusta POB I	Augusta		100.0	%		99,494		95.1	%		1,387,647		14.66
Augusta POB II	Augusta		100.0	%		125,634		86.1	%		2,288,946		21.16
Augusta POB III	Augusta		100.0	%		47,034		100.0	%		958,294		20.37
Augusta POB IV	Augusta		100.0	%		55,134		70.6	%		717,224		18.42
Summit Professional Plaza I	Brunswick		100.0	%		33,039		93.5	%		861,470		27.89
Summit Professional Plaza II	Brunswick		100.0	%		64,233		96.7	%		1,779,432		28.63

						424,568		89.9	%		7,993,013		20.94
Indiana
Methodist Professional Center I⁽¹⁾	Indianapolis		100.0	%		150,243		100.0	%		3,696,384		24.60
Methodist Professional Center II (sub-lease)	Indianapolis		100.0	%		24,080		100.0	%		679,892		28.23

						174,323		100.0	%		4,376,276		25.10
Kentucky
OLBH Same Day Surgery Center and MOB	Ashland		100.0	%		46,907		100.0	%		1,007,283		21.47
OLBH Parking Garage											880,000

						46,907		100.0	%		1,887,283		21.47	⁽²⁾
Louisiana
East Jefferson MOB	Metairie		100.0	%		119,921		95.9	%		2,472,103		21.49
East Jefferson Medical Plaza	Metairie		100.0	%		123,184		100.0	%		2,894,023		23.49
East Jefferson MRI	Metairie		100.0	%		10,809		100.0	%		1,005,991		93.07

						253,914		98.1	%		6,372,117		25.59
Minnesota
Health Partners Medical & Dental Clinics	Sartell		100.0	%		60,108		94.9	%		2,232,530		39.12

Mississippi
University Physicians — Grants Ferry	Flowood		100.0	%		50,575		100.0	%		1,717,816		33.97

New York
Central NY Medical Center⁽³⁾	Syracuse		100.0	%		111,634		97.8	%		2,871,587		26.31


(1)		Parking revenue from an adjacent parking deck is approximately $90,000 per month, or $1,080,000 annualized.

(2)		Excludes annualized rent of adjacent parking decks to OLBH Same Day Surgery Center and MOB and Gaston Professional Center from calculation.

(3)		Parking revenue from an adjacent parking deck is approximately $100,000 per month, or $1,200,000 annualized.


												Annualized
												Rent Per
					Net Rentable		Occupancy			Annualized		Leased
	Location	Ownership			Square Feet		Rate			Rent		Square Foot
North Carolina
Alamance Regional Mebane Outpatient Center	Mebane		35.1	%		68,206		71.1	%		1,868,562		38.55
Barclay Downs	Charlotte		100.0	%		38,395		100.0	%		683,077		17.79
Birkdale Bldgs C, D, E and Birkdale Wellness	Huntersville		100.0	%		64,669		93.0	%		1,347,156		22.40
Birkdale II	Huntersville		100.0	%		8,269		100.0	%		204,850		24.77
Copperfield Medical Mall	Concord		100.0	%		26,000		100.0	%		634,655		24.41
East Rocky Mount Kidney Center	Rocky Mount		100.0	%		8,043		100.0	%		163,650		20.35
English Road Medical Center	Rocky Mount		34.5	%		35,393		95.7	%		960,002		28.36
Gaston Professional & Ambulatory Surgery Centers	Gastonia		100.0	%		114,956		100.0	%		2,819,916		24.53
Gaston Parking											606,141
Gateway Medical Office Building	Concord		100.0	%		61,789		69.1	%		1,123,454		26.30
Harrisburg Family Physicians	Harrisburg		100.0	%		10,802		100.0	%		294,354		27.25
Harrisburg Medical Mall	Harrisburg		100.0	%		18,360		100.0	%		514,742		28.04
Lincoln/Lakemont Family Practice	Lincolnton		100.0	%		16,500		100.0	%		405,458		24.57
Mallard Crossing Medical Park	Charlotte		100.0	%		52,540		69.0	%		871,511		24.03
Medical Arts Building	Concord		100.0	%		84,972		93.3	%		1,863,557		23.51
Midland Medical Park	Midland		100.0	%		14,610		100.0	%		449,849		30.79
Mulberry Medical Park	Lenoir		100.0	%		24,992		100.0	%		508,347		20.34
Northcross Family Physicians	Charlotte		100.0	%		8,018		100.0	%		239,186		29.83
Randolph Medical Park	Charlotte		100.0	%		84,131		76.4	%		1,391,949		21.65
Rocky Mount Kidney Center	Rocky Mount		100.0	%		10,105		100.0	%		205,606		20.35
Rocky Mount Medical Park	Rocky Mount		100.0	%		96,993		100.0	%		2,088,260		21.53
Rowan Outpatient Surgery Center	Salisbury		100.0	%		19,464		100.0	%		440,139		22.61
Weddington Internal & Pediatric Medicine	Concord		100.0	%		7,750		100.0	%		204,204		26.35	⁽²⁾

						874,957		90.1	%		19,888,625		24.46
Pennsylvania
Doylestown Health & Wellness Center	Doylestown		99.0	%		99,132		98.8	%		3,092,451		31.56
Lancaster Rehabilitation Hospital	Lancaster		100.0	%		57,508		100.0	%		1,517,947		26.40
Lancaster ASC MOB	Lancaster		80.9	%		64,214		100.0	%		2,220,166		34.57

						220,854		99.5	%		6,830,564		31.09


(1)		Parking revenue from an adjacent parking deck is approximately $90,000 per month, or $1,080,000 annualized.

(2)		Excludes annualized rent of adjacent parking decks to OLBH Same Day Surgery Center and MOB and Gaston Professional Center from calculation.

(3)		Parking revenue from an adjacent parking deck is approximately $100,000 per month, or $1,200,000 annualized.


												Annualized
												Rent Per
					Net Rentable		Occupancy			Annualized		Leased
	Location	Ownership			Square Feet		Rate			Rent		Square Foot
South Carolina
200 Andrews	Greenville		100.0	%		25,902		100.0	%		635,812		24.55
Beaufort Medical Plaza	Beaufort		100.0	%		59,340		100.0	%		1,385,972		23.36
Carolina Forest Medical Plaza	Myrtle Beach		100.0	%		38,902		43.5	%		547,848		32.40
Mary Black Westside Medical Office Bldg	Spartanburg		100.0	%		37,455		100.0	%		732,042		19.54
Medical Arts Center of Orangeburg	Orangeburg		100.0	%		49,324		78.0	%		674,507		17.54
Mount Pleasant Medical Office Long Point	Mt. Pleasant		100.0	%		38,735		69.8	%		726,111		26.84
One Medical Park	Columbia		100.0	%		69,840		79.3	%		1,342,602		24.23
Palmetto Health Parkridge	Columbia		100.0	%		89,451		94.6	%		2,243,493		26.51
Providence MOB I	Columbia		100.0	%		48,500		82.0	%		818,816		20.58
Providence MOB II	Columbia		100.0	%		23,280		88.8	%		427,479		20.69
Providence MOB III	Columbia		100.0	%		54,417		78.8	%		751,543		17.52
River Hills Medical Plaza	Little River		100.0	%		27,566		70.9	%		636,227		32.55
Roper Medical Office Building	Charleston		100.0	%		122,784		82.7	%		2,211,106		21.77
St. Francis CMOB	Greenville		100.0	%		45,140		96.6	%		1,189,373		27.27
St. Francis Medical Plaza (Charleston)	Charleston		100.0	%		28,734		86.1	%		737,671		29.81
St. Francis Medical Plaza (Greenville)	Greenville		100.0	%		62,724		99.1	%		1,136,605		18.29
St. Francis Outpatient Surgery Center	Greenville		100.0	%		72,491		100.0	%		2,225,464		30.70
St. Francis Professional Medical Center	Greenville		100.0	%		49,767		100.0	%		1,169,200		23.49
St. Francis Women’s	Greenville		100.0	%		57,590		89.3	%		1,058,158		20.57
Three Medical Park	Columbia		100.0	%		88,755		84.1	%		1,779,367		23.82

						1,090,697		87.0	%		22,429,396		23.65
Tennessee
Health Park Medical Office Building	Chattanooga		100.0	%		52,151		100.0	%		1,604,890		30.77
Medical Center Physicians Tower	Jackson		50.5	%		106,772		100.0	%		2,765,248		25.90
Peerless Crossing Medical Center	Cleveland		100.0	%		40,506		100.0	%		1,033,384		25.51

						199,429		100.0	%		5,403,522		27.09
Virginia
MRMC MOB I	Mechanicsville		100.0	%		56,610		89.1	%		1,405,075		27.55
St. Mary’s MOB North — (Floors 6 & 7)	Richmond		100.0	%		30,617		100.0	%		763,822		24.95

Washington
Bonney Lake Medical Office Building	Bonney Lake		61.7	%		55,991		96.9	%		2,382,533		43.90


Total						3,834,767		92.3	%	$	92,500,136	$	25.72	⁽²⁾


(1)		Parking revenue from an adjacent parking deck is approximately $94,000 per month, or $1,128,000 annualized.

(2)		Excludes annualized rent of adjacent parking decks to OLBH Same Day Surgery Center and MOB and Gaston Professional Center from calculation.

(3)		Parking revenue from an adjacent parking deck is approximately $102,000 per month, or $1,224,000 annualized.


	Sept. 30, 2011			June 30, 2011			March 31, 2011			Dec. 31, 2010			Sept. 30, 2010
California
Verdugo Professional Bldg I		92.0	%		94.3	%		91.2	%		93.1	%		94.3	%
Verdugo Professional Bldg II		99.5	%		99.5	%		99.5	%		99.5	%		99.5	%

Florida
Woodlands Center for Specialized Medicine		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%

Georgia
Augusta POB I		95.1	%		95.1	%		97.2	%		93.2	%		90.7	%
Augusta POB II		86.1	%		86.1	%		86.1	%		87.6	%		87.6	%
Augusta POB III		100.0	%		100.0	%		90.0	%		90.0	%		90.0	%
Augusta POB IV		70.6	%		70.6	%		83.1	%		83.1	%		82.5	%
Summit Professional Plaza I		93.5	%		93.5	%		93.5	%		93.5	%		93.5	%
Summit Professional Plaza II		96.7	%		96.7	%		96.7	%		96.7	%		96.7	%

Indiana
Methodist Professional Center I		100.0	%		100.0	%		96.4	%		95.2	%		95.2	%
Methodist Professional Center II		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%

Kentucky
OLBH Same Day Surgery Center and MOB		100.0	%		100.0	%		91.8	%		95.7	%		100.0	%

Louisiana
East Jefferson MOB		95.9	%		95.9	%		99.1	%		99.1	%		98.8	%
East Jefferson Medical Plaza		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%
East Jefferson MRI		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%

Minnesota
Health Partners Medical & Dental Clinics		94.9	%		94.9	%		94.9	%		94.9	%		94.9	%

Mississippi
University Physicians — Grants Ferry		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%

New York
Central NY Medical Center		97.8	%		97.8	%		97.8	%		97.8	%		97.8	%


	Sept. 30, 2011			June 30, 2011			March 31, 2011			Dec. 31, 2010			Sept. 30, 2010
North Carolina
Alamance Regional Mebane Outpatient Ctr		71.1	%		71.1	%		71.1	%		71.1	%		71.1	%
Barclay Downs		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%
Birkdale Bldgs C, D, E and Birkdale Wellness		93.0	%		93.0	%		96.4	%		96.4	%		96.4	%
Birkdale II		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%
Copperfield Medical Mall		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%
East Rocky Mount Kidney Center		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%
English Road Medical Center		95.7	%		95.7	%		95.7	%		95.7	%		95.7	%
Gaston Professional & Ambulatory Surgery Centers		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%
Gateway Medical Office Building		69.1	%		69.1	%		69.1	%		69.1	%		69.1	%
Harrisburg Family Physicians		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%
Harrisburg Medical Mall		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%
Lincoln/Lakemont Family Practice		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%
Mallard Crossing Medical Park		69.0	%		63.8	%		63.8	%		66.0	%		66.0	%
Medical Arts Building		93.3	%		93.3	%		93.3	%		93.3	%		93.3	%
Midland Medical Park		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%
Mulberry Medical Park		100.0	%		100.0	%		77.6	%		87.0	%		87.0	%
Northcross Family Physicians		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%
Randolph Medical Park		76.4	%		69.2	%		69.2	%		69.2	%		69.2	%
Rocky Mount Kidney Center		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%
Rocky Mount Medical Park		100.0	%		100.0	%		100.0	%		100.0	%		92.8	%
Rowan Outpatient Surgery Center		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%
Weddington Internal & Pediatric Medicine		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%

Pennsylvania
Doylestown Health & Wellness Center		98.8	%		98.8	%		n/a			n/a			n/a
Lancaster Rehabilitation Hospital		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%
Lancaster ASC MOB		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%


	Sept. 30, 2011			June 30, 2011			March 31, 2011			Dec. 31, 2010			Sept. 30, 2010
South Carolina
200 Andrews		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%
Beaufort Medical Plaza		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%
Carolina Forest Medical Plaza		43.5	%		43.5	%		43.5	%		43.5	%		43.5	%
Mary Black Westside Medical Office Bldg		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%
Medical Arts Center of Orangeburg		78.0	%		78.0	%		78.0	%		78.0	%		78.0	%
Mount Pleasant Medical Office Long Point		69.8	%		69.8	%		77.4	%		77.4	%		77.4	%
One Medical Park		79.3	%		79.3	%		83.9	%		83.9	%		78.2	%
Palmetto Health Parkridge		94.6	%		94.6	%		94.6	%		94.6	%		94.6	%
Providence MOB I		82.0	%		82.0	%		82.0	%		82.0	%		87.2	%
Providence MOB II		88.8	%		80.6	%		80.6	%		88.8	%		100.0	%
Providence MOB III		78.8	%		78.8	%		73.3	%		73.3	%		55.5	%
River Hills Medical Plaza		70.9	%		70.9	%		70.9	%		70.9	%		70.9	%
Roper Medical Office Building		82.7	%		82.7	%		82.7	%		84.7	%		95.6	%
St. Francis CMOB		96.6	%		96.6	%		96.6	%		96.6	%		100.0	%
St. Francis Medical Plaza (Charleston)		86.1	%		100.0	%		100.0	%		100.0	%		100.0	%
St. Francis Medical Plaza (Greenville)		99.1	%		88.1	%		88.1	%		67.6	%		61.5	%
St. Francis Outpatient Surgery Center		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%
St. Francis Professional Medical Center		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%
St. Francis Women’s		89.3	%		79.2	%		79.2	%		79.2	%		79.2	%
Three Medical Park		84.1	%		84.1	%		84.1	%		82.3	%		100.0	%

Tennessee
Health Park Medical Office Building		100.0	%		100.0	%		100.0	%		88.8	%		88.8	%
Medical Center Physicians Tower		100.0	%		n/a			n/a			n/a			n/a
Peerless Crossing Medical Center		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%

Virginia
MRMC MOB I		89.1	%		73.6	%		77.2	%		77.2	%		92.7	%
St. Mary’s MOB North — (Floors 6 & 7)		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%

Washington
Bonney Lake Medical Office Building		96.9	%		n/a			n/a			n/a			n/a

Lease Expirations


	Number of		Net Rentable Square		Percentage of Net			Annualized		Percentage of Property			Annualized Rent Per
	Leases Expiring		Feet		Rentable Square Feet			Rent		Annualized Rent			Leased Square Foot
Available		—		296,510		7.7	%	$	—		—		$	—
2011		48		146,561		3.8	%		3,183,327		3.4	%		21.72
2012		139		555,380		14.5	%		14,407,221		15.6	%		24.85	⁽¹⁾
2013		91		353,962		9.2	%		8,348,265		9.0	%		23.59
2014		88		388,835		10.1	%		9,821,705		10.6	%		25.26
2015		77		296,936		7.7	%		8,074,531		8.7	%		24.23	⁽¹⁾
2016		78		334,865		8.7	%		7,521,283		8.1	%		22.46
2017		53		311,015		8.1	%		8,382,983		9.1	%		26.95
2018		28		176,523		4.6	%		4,374,629		4.7	%		24.78
2019		20		144,265		3.8	%		3,230,588		3.5	%		22.39
2020		17		115,296		3.0	%		2,727,447		2.9	%		23.66
Thereafter		35		714,619		18.6	%		22,428,157		24.2	%		31.38

Total		674		3,834,767		100.0	%	$	92,500,136		100.0	%	$	25.72	⁽¹⁾


(1)		Excludes annualized rent of adjacent parking decks to OLBH Same Day Surgery Center and MOB and Gaston Professional Center from calculation.


	Annualized		Percent of
Tenant	Rent		Portfolio
1. Bon Secours St. Francis Hospital	$	6,285,596		6.8	%
2. Carolinas Healthcare System		5,976,872		6.5	%
3. East Jefferson General Hospital		3,590,729		3.9	%
4. Lancaster General Hospital		3,021,814		3.3	%
5. Palmetto Health Alliance		2,606,076		2.8	%
6. IU Health (formerly Clarion)		2,572,015		2.8	%
7. Woodlands Medical		2,544,183		2.8	%
8. Caromont Health		2,406,875		2.6	%
9. HealthPartners Inc.		2,079,978		2.2	%
10. University Hospital, Augusta, GA		1,839,594		2.0	%

	$	32,923,732		35.6	%

Medical Arts Building — Concord, North Carolina

Ground and Air Rights Maturities


			Ground or Air
	Net Rentable		Rights Lease
	Square Feet		Expiration⁽¹⁾
East Jefferson MRI		10,809		2027
One Medical Park		69,840		2033
Providence MOB II		23,280		2034
East Jefferson MOB		119,921		2035
Gaston MOB and Surgery Center		114,956		2035
Three Medical Park		88,755		2039
Roper Medical Office Building		122,784		2042
East Jefferson Medical Plaza		123,184		2043
Providence MOB I		48,500		2049
St. Francis Professional Medical Center		49,767		2050
Palmetto Health Parkridge		89,451		2053
Gateway Medical Office Building		61,789		2054
Mulberry Medical Park		24,992		2057
St. Mary’s MOB North (Floors 6 & 7)		30,617		2058
Methodist Professional Center I (and adjacent parking deck)		150,243		2060
St Francis CMOB		45,140		2060
St Francis Outpatient Surgery Center		72,491		2060
Mary Black Westside Medical Office Building		37,455		2061
200 Andrews		25,902		2063
OLBH Same Day Surgery MOB/Parking Garage		46,907		2067
St. Elizabeth Covington Medical Center		59,794		2068
Beaufort Medical Plaza		59,340		2070
Medical Arts Building		84,972		2070
Mount Pleasant Medical Office Longpoint		38,735		2070
St Francis Medical Plaza (Greenville)		62,724		2070
St Francis Women’s		57,590		2070
St. Francis Medical Plaza (Charleston)		28,734		2073
St. Elizabeth Florence MOB		53,833		2080
St. Lukes Medical Office Building		176,000		2081
Alamance Regional Mebane Outpatient Ctr		68,206		2086
Medical Center Physicians Tower		106,772		2089
Lancaster ASC MOB		64,215		2091
Lancaster Rehabilitation Hosp		57,508		2092
Good Samaritan Medical Office Building ⁽²⁾		79,641		2111


(1)		Year of expiration assumes we have exercised lease renewal options.

(2)		Property in construction as of Sept. 30, 2011.

Rowan Outpatient Surgery Center — Salisbury, NC

We are required to account for the operations of our Design-Build and Development segment separately from that of our Property Operations segment due to federal income tax guidelines (see Note 2 in our Consolidated Financial Statements on Form 10-K or 10-Q for further explanation of Real Estate Investment Trust organizational and operational guidance). Generally accepted accounting principles require that we eliminate these inter-company profits upon consolidation.

At times, the Design-Build and Development segment will construct a building for the Property Operations segment. Upon consolidation, the profits earned by the Design-Build and Development segment must be eliminated and the corresponding value of the building reduced by the same amount.

In the example below, Property Operations pays Design-Build and Development a market value of $10.0 million to construct a building. Design-Build and Development’s cost to construct the building is $9.0 million. Upon consolidation, we eliminate the $1.0 million profit and reduce the carrying value of the building to $9.0 million. Had we hired a third party general contractor, our carrying value would have been $10.0 million.

Regardless of who constructs the building, Property Operations establishes the rental rate based on the building’s market value of $10.0 million. Assuming an 8.0% return on cost, the rental rate is set at $0.8 million. Since we self-constructed the building, our consolidated (and internal) cost is actually $9.0 million which then increases our return on investment to 8.9% ($0.8 million divided by $9.0 million).


	Building		Return on
	Carrying Value		Investment
Building results as constructed by a third-party	$	10,000,000		8.0	%
Building results as constructed internally	$	9,000,000		8.9	%


	Property			Design-Build &			Profit			Consolidated
	Operations			Development			Elimination			Cogdell Spencer
Assets:
Cash	$	(10,000,000	)	$	1,000,000		$	—		$	(9,000,000	)
Building		10,000,000			—			(1,000,000	)		9,000,000

	$	—		$	1,000,000		$	(1,000,000	)		—


Liabilities and equity:
Secured Credit Facility	$	—		$	—		$	—		$	—
Equity (current year earnings)		—			1,000,000			(1,000,000	)		—

	$	—		$	1,000,000		$	(1,000,000	)	$	—


Income statement:
Design-Build Revenue	$	—		$	10,000,000		$	(10,000,000	)	$	—
Design-Build Cost of Sales		—			(9,000,000	)		9,000,000			—

Gross Margin	$	—			1,000,000		$	(1,000,000	)	$	—


											Fill-up
			Completion/	Net Rentable		Percentage					Underwriting
Property	Location	Type	Acquired Date	Square Feet		Leased			Investment		Date
Stabilized:
HealthPartners Medical Office Building	St. Cloud, MN	Development	2Q 2010		60,108		95	%	$	15,624	N/a
University Physicians — Grant’s Ferry	Brandon, MS	Development	2Q 2010		50,575		100	%		14,032	N/a
Lancaster Rehabilitation Hospital⁽¹⁾	Lancaster, PA	Development	2Q 2010		4,630		100	%		1,991	N/a
St. Francis Outpatient Surgery Center	Greenville, SC	Acquisition	3Q 2010		72,491		100	%		16,638	N/a
Medical Center Physicians Tower	Jackson, TN	Development	2Q 2010		106,772		100	%		25,577	N/a
Doylestown Health & Wellness Center	Doylestown, PA	Acquisition	2Q 2011		99,132		99	%		22,500	N/a
Bonney Lake Medical Office Building	Bonney Lake, WA	Development	3Q 2011		55,991		97	%		21,763	N/a

					449,699				$	113,687

Fill-up:
St. Elizabeth Florence Medical Office Building	Florence, KY	Acquisition	1Q 2011		53,833		76	%	$	6,150	1Q 2013
St. Elizabeth Covington Medical Center	Covington, KY	Acquisition	2Q 2011		59,794		58	%		12,300	2Q 2013

					113,627				$	18,450

Bonney Lake Medical Office Building — Bonney Lake, WA


(1)		Represents 4,630 square foot expansion to the existing property.

Estimated

Completion

Net Rentable

Investment to

Estimated Total

Percentage

Development Construction

Location

Date

Square Feet

Date⁽¹⁾

Investment

Leased

Good Sam Medical Office Building

Puyallup, WA

4Q 2011

80,000

20,329

24,700

St. Luke’s Medical Office Building

Duluth, MN

3Q 2012

176,000

6,183

27,800

100


	Three Months		Nine Months
	Ended		Ended
Capital Expenditures	Sept. 30, 2011		Sept. 30, 2011
Development, redevelopment, and acquisitions	$	28,088	$	77,723
Second generation tenant improvements		3,778		7,567
Recurring property capital expenditures		637		2,213

Total	$	32,503	$	87,503

Bonney Lake Medical Office Building — Bonney Lake, WA


(1)		Represents our investment in the project before intersegment eliminations.

(2)		We had a 61.7% ownership interest at Sept. 30, 2011.

APPENDIX


	Three Months Ended
	Sept. 30, 2011			June 30, 2011			March 31, 2011			Dec. 31, 2010			Sept. 30, 2010
Reconciliation of net loss to EBITDA:
Net loss	$	(236	)	$	(3,913	)	$	(1,876	)	$	(107,106	)	$	(1,951	)
Interest expense		5,564			5,027			4,850			5,662			5,851
Income tax expense (benefit)		32			19			18			(10,611	)		(2,294	)
Depreciation and amortization		8,623			7,986			7,830			8,283			8,293
Litigation loss (gain) provision		(339	)		1,800			—			—			—
Litigation gain settlement		(500	)		—			—			—			—
Goodwill and impairment charges		—			—			—			113,406			—
Mr. Cogdell’s retirement compensation expense		—			—			—			1,493			—
Debt extinguishment and interest rate derivative expense		—			—			—			339			7

EBITDA	$	13,144		$	10,919		$	10,822		$	11,466		$	9,906


	For the 3 Months Ended						For the 9 Months Ended
	Sept. 30, 2011			Sept. 30, 2010			Sept. 30, 2011			Sept. 30, 2010
Total debt	$	434,254		$	411,701		$	434,254		$	411,701

Total assets	$	709,784		$	752,671		$	709,784		$	752,671
Accumulated depreciation of real estate properties		139,212			112,581			139,212			112,581
Accumulated amortization of intangible assets		52,688			47,863			52,688			47,863

Gross assets	$	901,684		$	913,115		$	901,684		$	913,115


Debt / Gross Assets		48	%		45	%		48	%		45	%


(1)		We believe that earnings before interest, income taxes, depreciation and amortization, or EBITDA, is a useful supplemental performance measure because it allows investors to view our performance without the impact of noncash depreciation and amortization or the cost of debt or minority interests. In addition, we believe that EBITDA is frequently used by securities analysts, investors, and other interested parties in the evaluation of REITs. Because EBITDA is calculated before recurring cash charges including interest expense and income taxes, and is not adjusted for capital expenditures or other recurring cash requirements of our business, its utility as a measure of our performance is limited. Accordingly, EBITDA should be considered only as a supplement to net loss (computed in accordance with GAAP) as a measure of financial performance. Other equity REITs may calculate EBITDA differently; accordingly, our EBITDA may not be comparable to such other equity REITs’ EBITDA.


	As of and for Quarter Ended									As of and for Year Ended
	Sept. 30, 2011			June 30, 2011			Sept. 30, 2010			Sept. 30, 2011			Sept. 30, 2010
Adjusted net operating income for same properties	$	12,276		$	12,601		$	12,552		$	47,663		$	46,315
Straight line rent		439			451			316			1,561			780
Fair value of lease revenues⁽¹⁾		96			100			100			400			471

Net operating income for same properties		12,811			13,152			12,968			49,624			47,566
Net operating income for recently acquired or developed properties		1,905			558			730			7,440			4,141
Property management and other fees		789			760			809			3,148			3,195

Total property net operating income		15,505			14,470			14,507			60,212			54,902
Portfolio operations interest and other income		136			144			145			622			556
Earnings from unconsolidated real estate partnerships, before real estate related depreciation and amortization		1			8			6			29			28
Noncontrolling interests in real estate partnerships, before real estate related depreciation and amortization		(677	)		(526	)		(476	)		(2,173	)		(1,945	)
Intersegment eliminations related to portfolio operations		—			—			23			22			92
Discontinued operations and impairment from real estate, before real estate related depreciation and amortization		—			—			—			—			(1,325	)

Property operations FFOM		14,965			14,096			14,205			58,712			52,308
Design-Build and development FFOM		345			(2,851	)		(2,221	)		(118,674	)		(572	)
Intersegment eliminations FFOM		(166	)		(601	)		(323	)		(1,986	)		(7,025	)
Unallocated FFOM		(9,286	)		(8,580	)		(6,339	)		(26,554	)		(26,276	)

FFOM		5,858			2,064			5,322			(88,502	)		18,435
Amortization of intangibles related to purchase accounting		(231	)		(231	)		(374	)		(1,067	)		(1,151	)

FFO		5,627			1,833			4,948			(89,569	)		17,284
Real estate related depreciation and amortization		(8,079	)		(7,436	)		(7,375	)		(30,124	)		(29,047	)
Noncontrolling interests in real estate partnerships, before real estate related depreciation and amortization		677			526			476			2,173			1,946
Acquisition-related expenses		(23	)		(398	)		—			(505	)		—
Gain on sale of real estate property		—			—			—			—			264
Dividends on preferred stock		1,562			1,562			—			4,894			—

Net loss	$	(236	)	$	(3,913	)	$	(1,951	)	$	(113,131	)	$	(9,553	)


(1)		Represents the net adjustment for above and below market leases which are being amortized over the remaining term of the respective lease from the date of the acquisition.


	As of and for Quarter Ended									As of and for Year Ended
	Sept. 30, 2011			June 30, 2011			Sept. 30, 2010			Sept. 30, 2011			Sept. 30, 2010
Adjusted net operating income for total properties	$	14,917		$	13,511		$	14,087		$	57,479		$	53,515
Straight line rent		457			463			323			1,816			924
Fair value of lease revenues⁽¹⁾		108			98			97			412			463

Net operating income for total properties		15,482			14,072			14,507			59,707			54,902

Acquisition-related expenses		23			398			—			505			—
Total property net operating income		15,505			14,470			14,507			60,212			54,902
Portfolio operations interest and other income		136			144			145			622			556
Earnings from unconsolidated real estate partnerships, before real estate related depreciation and amortization		1			8			6			29			28
Noncontrolling interests in real estate partnerships, before real estate related depreciation and amortization		(677	)		(526	)		(476	)		(2,173	)		(1,945	)
Intersegment eliminations related to portfolio operations		—			—			23			22			92
Discontinued operations and impairment from real estate,before real estate related depreciation and amortization		—			—			—			—			(1,325	)

Property operations FFOM		14,965			14,096			14,205			58,712			52,308
Design-Build and development FFOM		345			(2,851	)		(2,221	)		(118,674	)		(572	)
Intersegment eliminations FFOM		(166	)		(601	)		(323	)		(1,986	)		(7,025	)
Unallocated FFOM		(9,286	)		(8,580	)		(6,339	)		(26,554	)		(26,276	)

FFOM		5,858			2,064			5,322			(88,502	)		18,435
Amortization of intangibles related to purchase accounting		(231	)		(231	)		(374	)		(1,067	)		(1,151	)

FFO		5,627			1,833			4,948			(89,569	)		17,284
Real estate related depreciation and amortization		(8,079	)		(7,436	)		(7,375	)		(30,124	)		(29,047	)
Noncontrolling interests in real estate partnerships, before real estate related depreciation and amortization		677			526			476			2,173			1,946
Acquisition-related expenses		(23	)		(398	)		—			(505	)		—
Gain on sale of real estate property		—			—			—			—			264
Dividends on preferred stock		1,562			1,562			—			4,894			—

Net loss	$	(236	)	$	(3,913	)	$	(1,951	)	$	(113,131	)	$	(9,553	)


(1)		Represents the net adjustment for above and below market leases which are being amortized over the remaining term of the respective lease from the date of the acquisition.

iii

Cogdell Spencer Inc. - FORM 8-K - EX-99.2 - November 4, 2011

Attached files

Cogdell Spencer Inc. Reports