Exhibit 99.1
AmeriVest Announces Second Quarter 2003 Results
DENVER, Aug. 11 /PRNewswire-FirstCall/ -- AmeriVest Properties Inc.
(Amex: AMV) reported results today for the second quarter ended June 30, 2003.
Funds from operations (FFO) for the second quarter of 2003 were $1,823,639, or
$0.14 per diluted share, compared with $1,087,106, or $0.12 per diluted share,
in the second quarter of 2002. This represents a 68% increase in FFO and a
17% increase in FFO per diluted share. The company recorded a loss of
$1,110,051, or $0.09 per share in the quarter, compared to net income of
$373,330, or $0.04 per diluted share during the comparable period of 2002.
The financial results for the second quarter of 2003 included non-cash
impairment charges in the aggregate amount of $1,465,932 for certain non-core
properties previously leased to the State of Texas. See the Summary Financial
Information for a reconciliation of FFO and FFO per share from net
(loss)/income and (loss)/earnings per share, the most directly comparable GAAP
measures.
"Our second quarter results reflect significant increases in revenues, FFO
and FFO per share over last year and, except for the impairment charges that
resulted in a net loss for the quarter, are generally consistent with our
first quarter results, although impacted on a per share basis by the public
offering completed in early June 2003," stated Charles Knight, president and
chief operating officer of AmeriVest. "These results include a full quarter
of operations from the Southwest Gas Building in Phoenix, Arizona, acquired in
February, but do not reflect any new acquisitions. Assuming all contingencies
are satisfied, we hope to close on the acquisition of two office buildings in
metropolitan Phoenix, Arizona during the third quarter of 2003, which should
contribute to our fourth quarter results. Obviously, our third quarter
results on a per share basis will reflect the full dilutive impact of the
recent offering."
Revenues for the second quarter of 2003 increased 97% to $6,947,717 from
$3,528,818 in the prior year period, reflecting the revenues from the
acquisition of three properties in late 2002 (Parkway Centre II, Centerra and
Chateau Plaza) and one property in early 2003 (Southwest Gas). In addition to
property operating expenses, which increased due to the additional properties
acquired, general and administrative expenses also increased 96% from the
second quarter of 2002. This increase is primarily attributable to the
consolidation of the Company's former outside advisor effective November 1,
2002. Interest expense increased due to an increase in borrowings used to
finance the properties acquired and depreciation and amortization expense
increased due to the increase in depreciable assets. The weighted-average
number of common shares outstanding during the quarter, assuming full
dilution, increased by more than 40% from the second quarter of 2002,
primarily due to a common stock offering completed in June 2003.
The quarter included a $334,592 charge for impairment in the value of a
12,979 square foot building in Clint, Texas and a $1,131,340 impairment charge
for a 33,312 square foot building in Paris, Texas. Both properties had been
previously leased to agencies of the State of Texas. The Clint building has
been vacant since November 2001 and the Paris building has been vacant since
December 2002. The Company has been unsuccessful in re-leasing these
properties but will continue in its efforts, however there are no near term
prospects. Therefore, the Company has recorded impairment charges this
quarter to reduce the net book values of the properties to their estimated
fair value of the land. The impairment charge is added back for purposes of
calculating FFO. The Company will continue to monitor their non-core
properties for any indications of impairment.
"As we said at the end of last year, the economic viability of certain
buildings in our non-core portfolio leased primarily to the State of Texas may
be dependent on our ability to retain the State as a tenant. Because we have
had no success in re-leasing either the Clint or Paris buildings we have
elected to take additional impairment charges in the second quarter," said
Knight. "In the event more buildings in this non-core portfolio become vacant
and we are unable to find replacement tenants, we may incur additional
impairment charges in the future."
Year to Date Results
For the six months ended June 30, 2003, FFO totaled $3,609,251, or
$0.30 per diluted share, compared to $2,169,560, or $0.28 per diluted share,
for the same period in 2002. This represents an increase of 66% in FFO and
7% in FFO per diluted share. Net loss for the six-months ended June 30, 2003
was $705,087, or $0.06 per share, down from net income of $764,292, or
$0.10 per diluted share, for the comparable prior year period. As previously
mentioned, the increase in revenues and expenses is primarily due to the
late-2002 and early-2003 property acquisitions, consolidation of the Company's
former outside advisor and continued growth of the Company.
Operating Results
At June 30, 2003, the Company's portfolio included 27 office properties
totaling approximately 1.5 million square feet located in Colorado, Texas,
Arizona and Indiana. The Company's core portfolio (which excludes assets it
owns less than 100% and smaller office buildings primarily leased to the State
of Texas and Bank of America) included 9 properties totaling approximately 1.2
million square feet located in metropolitan Denver, Phoenix, Dallas and
Indianapolis. Core portfolio occupancy at the end of June was 91.0%, compared
to a weighted average occupancy in AmeriVest's core markets of 80.2%.
"We are very pleased to have been able to maintain our core portfolio
occupancy at 90%, generally consistent with last quarter," said Knight.
"Notwithstanding office markets that further deteriorated during the quarter,
we continue to see activity with our small and mid-size tenants. Our primary
opportunities to increase portfolio occupancy remain at the Centerra and
Sheridan Center buildings, where we are beginning to see results of our
marketing efforts," continued Knight.
Second Quarter Highlights
* In June, the Company completed a 5,750,000-share common stock
offering, which raised approximately $33,300,000 after the
underwriting commission and offering expenses. RBC Capital Markets
and Ferris, Baker Watts, Incorporated were the joint lead managers of
the offering and BB&T Capital Markets, J.J.B. Hilliard,
W.L. Lyons, Inc., Morgan Keegan & Company, Inc. and Stifel, Nicolaus &
Company, Incorporated were co-managers. During June and July, the
Company used $28,957,660 of the proceeds to repay a portion of the
outstanding balance on the revolving line of credit with Fleet
National Bank. This left an outstanding balance on the line of credit
of $11,400,000 at July 31, 2003 with $30,600,000 of availability.
The Company intends to use available amounts under this line of credit
to fund future property acquisitions.
* The Company entered into two separate contracts to acquire two office
properties within the next 60 days for an aggregate purchase price of
approximately $51,250,000. The buildings contain an aggregate of
approximately 390,000 rentable square feet. Both contracts are
subject to a number of contingencies and there is no assurance that
either of these acquisitions will occur.
* During the second quarter, the Company entered into a commitment for a
$42,000,000 long-term fixed-rate credit facility from a financial
services company. This facility will be secured by mortgages on
Parkway Centre II, Centerra and Southwest Gas. The proceeds will be
used to repay the variable-rate loan on Parkway Centre II, which has
an outstanding balance of $17,000,000 and a maturity of August 2004,
and to acquire additional properties as the proceeds from the common
stock offering were used to repay the loans on Centerra and Southwest
Gas. This refinancing is expected to close in late-August 2003,
however the loan is subject to a number of contingencies and there is
no assurance that this refinancing will actually occur.
* In June, the board of directors declared a quarterly dividend of
$0.13 per common share, which was paid on July 15, 2003, and
represents our 28th consecutive quarterly dividend.
Subsequent Events
On August 1, 2003, the Company refinanced its short-term loan with Fleet
National Bank. The facility was increased from $5,100,000 to $15,000,000 and
the term was extended from August 6, 2003 to November 12, 2005. Upon closing,
the Company drew down $10,000,000 under this facility, of which $5,100,000 was
used to repay the existing balance and the remainder will be used to repay the
mortgage loan on Panorama Falls in the amount of $4,214,408, which is due on
September 1, and as working capital. The Company may draw down an additional
$5,000,000 under this facility within 90 days of closing. This loan bears
interest at LIBOR plus 450 basis points, due in monthly installments of
interest only.
Conference Call
The Company will hold an investor/analyst conference call on August 11,
2003, beginning at 9:00 a.m. MDT (11:00 a.m. EDT, 10:00 a.m. CDT, 8:00 a.m.
PDT) to discuss its second quarter financial results. The conference call may
be joined by dialing (800) 374-0258. The password for the call is:
"AmeriVest." Calls from outside North America should be directed to
(706) 634-4978. A digital replay will be available two hours after completion
of the call until August 15, 2003 by calling (800) 642-1687 or for calls from
outside North America, (706) 645-9291. The conference ID for the replay is
1806881. A live webcast of the conference call will be available at
www.amvproperties.com. You must have Windows Media Player installed on your
computer in order to listen to the webcast. Windows Media Player may be
downloaded for free at the website listed above.
Company Information
AmeriVest Properties Inc., with its principal office in Denver, Colorado,
owns 27 office properties and provides Smart Space for Small Business(SM) in
select markets. To receive AmeriVest's latest news and information, visit our
website at www.amvproperties.com.
In addition to historical information, this press release contains
forward-looking statements and information under the federal securities laws.
These statements are based on expectations, estimates and projections about
the industry and markets in which AmeriVest operates, management's beliefs and
assumptions made by management. While AmeriVest management believes the
assumptions underlying its forward-looking statements and information are
reasonable, such information is necessarily subject to uncertainties and may
involve certain risks, many of which are difficult to predict and are beyond
management's control. As such, these statements and information are not
guarantees of future performance, and actual operating results may differ
materially from what is expressed or forecasted in this press release. In
particular, the factors that could cause actual operating results to differ
materially include, without limitation, continued qualification as a real
estate investment trust, the effects of general and local economic and market
conditions, competition, regulatory changes, the ability to enter into new
leases or renew leases on favorable terms, dependence on tenants' financial
condition, the uncertainties of real estate development and acquisition
activity, development and construction costs, insurance risks, the costs and
availability of financing, potential liability relating to environmental
matters and liquidity of real estate investments and other risks and
uncertainties detailed in AmeriVest's 2002 Annual Report on Form 10-KSB and
from time to time in the Company's filings with the Securities and Exchange
Commission.
For further information, please contact: Kim P. Boswood, Investor
Relations of AmeriVest Properties Inc., +1-303-297-1800, ext. 118,
kim@amvproperties.com .
AMERIVEST PROPERTIES INC.
Summary Financial Information
(unaudited)
Three Months Six Months
Ended June 30, Ended June 30,
2003 2002 2003 2002
Selected Income
Statement Information:
REAL ESTATE
OPERATING REVENUE
Rental revenue $6,947,717 $3,528,818 $13,762,245 $7,154,870
REAL ESTATE
OPERATING EXPENSES
Property operating
expenses:
Operating expenses 1,761,815 887,391 3,397,293 1,773,486
Real estate taxes 783,642 257,799 1,555,403 624,822
Management fees 42,897 31,820 86,374 59,882
General and
administrative
expenses 742,773 379,326 1,579,853 731,634
Impairment of
investment
in real estate 1,465,932 -- 1,465,932 --
Interest expense 1,811,907 920,170 3,568,177 1,818,526
Depreciation and
amortization
expense 1,447,426 706,149 2,808,139 1,391,079
Total operating
expenses 8,056,392 3,182,655 14,461,171 6,399,429
OTHER INCOME/(LOSS)
Interest income 11,936 50,816 17,753 52,897
Equity in loss
of unconsolidated
affiliate (13,312) (23,649) (23,914) (44,046)
(1,376) 27,167 (6,161) 8,851
NET (LOSS)/INCOME $(1,110,051) $373,330 $(705,087) $764,292
(LOSS)/EARNINGS PER SHARE
Basic $(0.09) $0.04 $(0.06) $0.10
Diluted $(0.09) $0.04 $(0.06) $0.10
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING -
NET (LOSS)/INCOME
Basic 12,806,389 8,688,314 11,958,053 7,698,139
Diluted 12,806,389 8,891,825 11,958,053 7,879,376
FUNDS FROM OPERATIONS:
Net (loss)/
income $(1,110,051) $373,330 $(705,087) $764,292
Depreciation and
amortization
expense 1,447,426 706,149 2,808,139 1,391,079
Impairment of
investment
in real estate 1,465,932 -- 1,465,932 --
Share of
depreciation
of unconsolidated
affiliate 20,332 7,627 40,267 14,189
FUNDS FROM
OPERATIONS $1,823,639 $1,087,106 $3,609,251 $2,169,560
FUNDS FROM OPERATIONS
PER SHARE
Basic $0.14 $0.13 $0.30 $0.28
Diluted $0.14 $0.12 $0.30 $0.28
WEIGHTED AVERAGE
COMMON SHARES OUTSTANDING -
FUNDS FROM OPERATIONS
Basic 12,806,389 8,688,314 11,958,053 7,698,139
Diluted 12,906,283 8,891,825 12,055,179 7,879,376
Funds from Operations ("FFO") is a non-GAAP financial measure. We
believe FFO, as defined by the Board of Governors of the National
Association of Real Estate Investment Trusts ("NAREIT"), to be an
appropriate measure of performance for an equity REIT, for the reasons,
and subject to the qualifications, specified in the paragraph entitled
"Non-GAAP Financial Measures" below. The above summary financial
information table reflects the reconciliation of FFO from net income and
a comparison to earnings per share, the most directly comparable GAAP
measure, for the periods presented.
AMERIVEST PROPERTIES INC.
Summary Financial Information (continued)
(unaudited)
June 30, December 31,
2003 2002
Selected Balance Sheet Information:
Assets at cost $190,358,577 $163,697,991
Less: accumulated depreciation
and amortization (9,140,705) (6,514,404)
Total assets $181,217,872 $157,183,587
Total mortgage loans and notes payable $97,891,676 $106,094,232
Total stockholders' equity $75,488,547 $43,895,800
Common shares issued and outstanding 17,348,052 11,060,260
Selected Property Information:
Number of operating properties owned 27 26
Total rentable square feet 1,563,063 1,416,350
Occupancy 89.0% 88.0%
Number of core(1) operating properties owned 9 8
Total rentable square feet 1,220,422 1,073,709
Occupancy 91.0% 90.6%
See chart below for detailed property occupancy information
Selected Stock Information:
Common share price (as of period end) $6.26 $6.20
Equity market capitalization $108,598,806 $68,573,612
Common share dividend rate $0.13 $0.13
Common share annualized dividend yield
(as of period end) 8.31% 8.39%
Non-GAAP Financial Measures. Funds from Operations ("FFO") is a non-GAAP
financial measure. FFO is defined as net income, computed in accordance
with generally accepted accounting principles ("GAAP"), excluding gains
(or losses) from sales of properties, plus real estate related
depreciation and amortization and after adjustments for unconsolidated
partnerships and joint ventures. We believe that FFO is helpful to
investors as a measure of the performance of an equity REIT because,
along with cash flow from operating activities, investing activities and
financing activities, it provides investors with an indication of the
ability of a company to incur and service debt, to make capital
expenditures and to fund other cash needs. We compute FFO in accordance
with standards established by the Board of Governors of the National
Association of Real Estate Investment Trusts ("NAREIT"), which may not
be comparable to FFO reported by other REITs that do not define the term
in accordance with the current NAREIT definition or that interpret the
current NAREIT definition differently than we do.
-------------------------
(1) "Core" properties exclude properties owned less than
100% (Panorama Falls) and smaller office buildings leased primarily
to Bank of America and the State of Texas.
AmeriVest Properties Inc. Property Occupancy(1) Information
Core Portfolio:
Average Average
Percentage Rent Percentage Rent
Occupancy Per SF Occupancy Per SF
Building/ Year Rentable at at at at
Location Acquired Area (2) 6/30/03 6/30/03(3) 12/31/02 12/31/02(3)
Southwest Gas
Phoenix, AZ 2003 147,660 99.20% $21.68 N/A N/A
Chateau Plaza
Dallas, TX 2002 171,236 99.40% $22.76 97.60% $22.79
Centerra
Denver, CO 2002 186,377 72.30% $20.28 68.10% $20.78
Parkway Centre II
Dallas, TX 2002 151,988 92.50% $20.65 97.90% $20.84
Kellogg Building
Littleton, CO 2001 111,580 96.30% $21.93 98.60% $21.92
Arrowhead Fountains
Peoria, AZ 2001 96,092 100.00% $21.66 100.00% $21.41
AmeriVest Plaza
Englewood,
CO(4) 2001 118,720 91.50% $23.38 99.20% $23.57
Sheridan Center
Denver, CO 2000 140,208 83.90% $16.08 79.50% $15.83
Keystone Office Park
Indianapolis,
IN 1999 96,561 92.00% $17.51 97.10% $17.33
Total Core
Portfolio 1,220,422 91.00% $20.81 90.60% $20.76
Non-Core Portfolio:
Panorama Falls
Englewood,
CO(5) 2000 60,004 78.30% $18.88 70.80% $19.15
Bank of America
Buildings -
Texas(6) 1998 60,095 100.00% $15.87 97.40% $16.00
State of Texas
Buildings -
Texas(7) 1997-98 222,542 77.70% $9.13 77.70% $9.05
Total Non-Core
Portfolio 342,641 81.70% $12.21 80.00% $12.10
Total Portfolio 1,563,063 89.00% $19.08 88.00% $18.86
(1) Includes office space leased but not yet occupied.
(2) Includes office space but excludes storage, telecommunications and
garage space.
(3) Annualized base rent divided by leased rentable area. Annualized
base rent is original base rent plus contractual increases, but
excludes percentage rent, additional rent (operating expense
reimbursements) and parking.
(4) Formerly known as Sheridan Plaza at Inverness.
(5) 20% of the property is owned by AmeriVest and 80% by Freemark Abbey
Panorama, LLC as tenants in common.
(6) Buildings leased approximately 63% to Bank of America, with the
remainder leased to a number of small tenants.
(7) Buildings leased primarily to various agencies of the
State of Texas.
SOURCE AmeriVest Properties Inc.
-0- 08/11/2003
/CONTACT: Kim P. Boswood, Investor Relations of AmeriVest Properties
Inc., +1-303-297-1800, ext. 118, kim@amvproperties.com /
/Web site: http://www.amvproperties.com /
(AMV)