Exhibit 99.1
Parkway Properties, Inc. Reports Third Quarter 2003 Results
JACKSON, Miss., Nov. 3 /PRNewswire-FirstCall/ -- Parkway Properties, Inc.
(NYSE: PKY) today announced results for its third quarter ended September 30,
2003.
(Logo: http://www.newscom.com/cgi-bin/prnh/20030513/PARKLOGO)
Consolidated Financial Results
- Net income available to common shareholders for the three months ended
September 30, 2003 was $10,779,000 ($.96 per diluted share) compared to
$4,555,000 ($.48 per diluted share) for the three months ended
September 30, 2002. Net income available to common shareholders for
the nine months ended September 30, 2003 was $24,402,000 ($2.35 per
diluted share) compared to $15,261,000 ($1.61 per diluted share) for
the nine months ended September 30, 2002. Gains on the sale of joint
venture interests and real estate of $5,020,000 and $10,661,000 were
included in net income available to common shareholders for the three
months and nine months ended September 30, 2003, respectively. A net
gain on the sale of a joint venture interest and real estate of
$501,000 was included in net income available to common shareholders
for the nine months ended September 30, 2002. A $2,619,000 ($.21 per
diluted share) non-cash charge for original issue costs related to the
redemption of Series A Preferred Stock was recorded during the nine
months ended September 30, 2003. The Series A Preferred Stock was
originally issued in April of 1998.
- Funds from operations ("FFO") totaled $13,014,000 ($1.14 per diluted
share) for the three months ended September 30, 2003 compared to
$11,557,000 ($1.13 per diluted share) for the three months ended
September 30, 2002. FFO totaled $36,245,000 ($3.30 per diluted share)
for the nine months ended September 30, 2003 compared to $35,968,000
($3.50 per diluted share) for the nine months ended September 30, 2002.
- FFO applicable to common shareholders for the three months and six
months ending June 30, 2003 has been revised and reduced by original
issue costs of $2,619,000 ($.21 per diluted share) associated with the
second quarter 2003 redemption of Series A Preferred Stock. On
July 31, 2003, the SEC announced a position that for purposes of
calculating earnings per share when there has been a redemption of
preferred stock, the issuance costs of the preferred stock should be
removed from the balance sheet in a manner similar to dividends on
preferred stock, regardless of where in the stockholders' equity
section those costs were initially classified on issuance. Prior to
this announcement, there was diversity in practice. Consistent with
the SEC's announcement, for the purposes of computing earnings per
share for the three and six months ended June 30, 2003, the Company
deducted approximately $2,619,000 of issuance costs associated with its
Series A Preferred stock in determining net income available to common
stockholders. The Company, as did other REITs, excluded this deduction
in computing FFO applicable to common shareholders for the three and
six months ended June 30, 2003. However in October, 2003, NAREIT
announced its position that FFO applicable to common shareholders
should be reduced for these dividends. Accordingly, we have revised
our previous FFO calculations. Therefore, FFO per diluted share as
originally reported of $1.16 and $2.38 for the three months and six
months ending June 30, 2003, respectively, has been revised to $.95 and
$2.17 for the three months and six months ending June 30, 2003,
respectively. There was no adjustment to previously reported earnings
per share.
- Funds available for distribution ("FAD") totaled $10,707,000 for the
three months ended September 30, 2003 compared to $6,539,000 for the
three months ended September 30, 2002. FAD totaled $21,549,000 for the
nine months ended September 30, 2003 compared to $21,996,000 for the
nine months ended September 30, 2002. In accordance with the NAREIT
clarification discussed above, total FAD as originally reported of
$7,098,000 and $13,461,000 for the three months and six months ending
June 30, 2003, respectively, has been revised to $4,479,000 and
$10,842,000 for the three months and six months ending June 30, 2003,
respectively.
Acquisitions and Sales
- On August 1, 2003, the Company sold its investment in the BB&T
Financial Center in Winston-Salem, North Carolina to Cabot Investment
Properties for $27.5 million plus the assumption of future tenant
improvements of approximately $500,000. Parkway Realty Services
continues to manage and lease the property under a ten-year management
agreement and recognized a third quarter acquisition fee of $186,000.
The Company recorded a third quarter gain on this sale of $5,020,000.
The taxable gain from this sale was deferred through a Section 1031
like-kind exchange and accordingly, no special dividend of capital gain
is anticipated.
- On August 28, 2003, the Company purchased the 88% leased Peachtree
Dunwoody Pavilion, a 366,000 square foot four-building office campus in
the Central Perimeter submarket of Atlanta, Georgia for $40 million
plus $2 million in closing costs and anticipated first year capital
expenditures and leasing commissions. Since closing, we are pleased to
announce the renewal of Cox Communications for 66,000 square feet
through December 2008. Simultaneous with this renewal, Auto Trader
expanded by 22,000 square feet into the former Cox space.
- On September 12, 2003, the Company purchased the 91% leased Wells Fargo
Building, a 135,000 square foot, eight-story office building in the
Northwest Freeway Corridor submarket of Houston, Texas. The property
was acquired for $12 million plus $1 million in closing costs and
anticipated first year capital expenditures and leasing commissions.
Operations and Leasing
- Parkway's customer retention rate for the three months ending
September 30, 2003 was 59% compared to 66% for the quarter ending
June 30, 2003 and 75% for the quarter ending September 30, 2002.
Customer retention for the nine months ending September 30, 2003 was
66% compared to 73% for the nine months ending September 30, 2002.
- As of October 1, 2003, occupancy of the office portfolio was 91.1%
compared to 91.8% as of July 1, 2003 and 92.4% as of October 1, 2002.
- During the quarter ending September 30, 2003, leases were renewed or
expanded on 187,000 net rentable square feet at an average rental rate
decrease of 4.7% and a cost of $1.70 per square foot per year of the
lease term in committed tenant improvements and leasing commissions.
New leases were signed during the quarter on 101,000 net rentable
square feet at a cost of $2.21 per square foot per year of the lease
term in committed tenant improvements and leasing commissions.
- Same store assets produced a decrease in NOI of $558,000 or 1% for the
nine months ended September 30, 2003 compared to the same period of the
prior year. Same store assets produced an increase in net operating
income ("NOI") of $680,000 or 3.9% during the quarter compared to the
third quarter of 2002. The increase in same store revenue was
attributable mainly to increased operating expense reimbursements and
lower bad debt and utility expense.
- During the third quarter and through November 1, 2003, the Company
collected all rents from WorldCom, Inc. or its subsidiaries as called
for under current leases. The Company currently recognizes rental
income from these leases on the cash basis. WorldCom announced during
the third quarter that its Skytel subsidiary would not be sold and the
Skytel operations would be consolidated into its Clinton, Mississippi
facility. Consequently, we do not expect WorldCom to renew its 156,000
square foot lease in Jackson, MS when it matures on December 31, 2003.
The Company currently receives $2,500,000 annually in total revenue
from this lease.
- As previously reported, in early 2003, the Company received notice from
Burlington Industries that they will be exercising an early termination
right on 137,000 square feet at 400 North Belt in Houston, Texas.
Burlington will vacate the space effective December 31, 2003. The
Company currently receives $2,314,000 annually in total revenue from
this customer and is aggressively seeking new customers for the space.
In connection with the early termination, straight line rent receivable
of $485,000 will be written off in the fourth quarter of 2003.
Capital Markets and Financing
- The Company's previously announced cash dividend of $.65 per share for
the quarter ended September 30, 2003 represents a payout of
approximately 57% of FFO per diluted share. The third quarter dividend
was paid on September 26, 2003 and equates to an annualized dividend of
$2.60 per share, a yield of 5.9% on the closing stock price on
October 31, 2003 of $44.05.
- As of September 30, 2003 the Company's debt-to-total market
capitalization ratio was 38.0% compared to 38.4% as of June 30, 2003.
The Company anticipates that the debt-to-total market capitalization
will increase to approximately 45% upon reinvestment of the remaining
proceeds from the joint ventures and equity issuance completed earlier
in the year.
- During the third quarter of 2003, 200,000 shares of 8.34% Series B
Cumulative Convertible Preferred Stock were converted into 200,000
shares of common stock. As of September 30, 2003, there were 1,942,857
shares of Series B Convertible Preferred Stock outstanding.
- Through the Company's Dividend Reinvestment and Stock Purchase Plan
("DRIP Plan"), 171,845 common shares were sold during the third quarter
of 2003. Net proceeds received on the issuance of shares were
$7,386,000, which equates to an average price per share of $42.98,
which is net of a 2.2% discount. For the nine months ending
September 30, 2003, 177,590 common shares were sold through the DRIP
Plan for net proceeds of $7,611,000, which equates to an average price
per share of $42.85, which is net of a 2.1% discount.
Outlook for 2003
The Company is forecasting FFO per diluted share of $4.41 to $4.44 and
earnings per diluted share ("EPS") of $2.88 to $2.91 for 2003. The
reconciliation of forecasted earnings per diluted share to forecasted FFO per
diluted share is as follows:
Guidance for 2003 Range
Fully diluted EPS $2.88 - $2.91
Plus: Real estate depreciation and amortization $2.19 - $2.19
Plus: Depreciation on unconsolidated joint ventures $0.16 - $0.16
Less: Gain on sale of joint ventures and real estate ($0.82 - $0.82)
Fully diluted FFO per share $4.41 - $4.44
The following assumptions were used in making this forecast:
- Occupancy of approximately 91% for the 4th quarter;
- Annual same store net operating income growth in the range of negative
2% to negative 3%;
- Average interest rate of 2.5% on short-term, floating rate debt in the
4th quarter; and,
- Proceeds from the joint ventures and the issuance of common shares were
assumed to be reinvested as $40 million at a 9% cap rate on December 1,
2003 and $80 million during December at an 8.75% cap rate. No
additional acquisitions or dispositions were assumed in the 2003
budget.
The 2003 projections are lower than previous FFO guidance of $4.67 to
$4.75 per diluted share due to the $.21 per share original issuance cost
discussed earlier, the $.04 per share write off of Burlington's straight line
rent receivable in the fourth quarter and a delay in reinvesting capital into
new acquisitions.
Outlook for 2004
The Company is forecasting FFO per diluted share of $4.30 to $4.50 and
earnings per diluted share ("EPS") of $1.82 to $1.92 for 2004. The
reconciliation of forecasted earnings per diluted share to forecasted FFO per
diluted share is as follows:
Guidance for 2004 Range
Fully diluted EPS $1.82 - $1.92
Plus: Real estate depreciation and amortization $2.16 - $2.23
Plus: Depreciation on unconsolidated joint ventures $0.15 - $0.19
Plus: Diluted share adjustment for convertible preferred $0.17 - $0.16
Fully diluted FFO per share $4.30 - $4.50
The following assumptions were used in making this forecast:
- Occupancy in the range of 88% to 92%, with average occupancy of 90%;
- Due to the pending vacancies discussed earlier, same store net
operating income growth in the range of negative 5% to negative 9%;
- Average interest rate of 3% on short-term, floating rate debt;
- No additional acquisitions or dispositions of property above that
projected for 2003; and,
- No equity offerings or redemptions.
- Placement of a fixed rate 6% $90 million mortgage on September 1, 2004.
The decrease in 2004 FFO as compared to 2003 is primarily due to a decline
in net operating income (NOI) at the Skytel building in Jackson of $1,800,000
($.14 per diluted share) and a decline in NOI at 400 North Belt in Houston of
$1,300,000 ($.10 per diluted share). The $.21 per diluted share original
issuance cost reflected in 2003 FFO will not be repeated in 2004.
Steven G. Rogers, President and Chief Executive Officer stated, "The
leasing challenges we face in the next year are manageable and well within our
leasing team's ability to backfill. We are making concrete progress on each
of the prospective vacancies. I am confident in our ability to meet the
challenge."
Additional Information
January 1, 2003 marked the beginning of Parkway's VALUE2 Operating Plan,
which will span the three-year period ending December 31, 2005. This plan
reflects the employees' commitment to create Value for its shareholders while
holding firm to the core Values as espoused in the Parkway Commitment to
Excellence. The Company plans to create value by Venturing with best
partners, Asset recycling, Leverage neutral growth, Uncompromising focus on
operations, and providing an Equity return to its shareholders that is 10%
greater than that of its peer group, the NAREIT Office Index. Equity return
is defined as growth in FFO per diluted share.
Parkway will conduct a conference call to discuss the results of its third
quarter operations on Tuesday, November 4, 2003, at 1:00 pm ET. The number
for the conference call is 800-818-5264. A taped replay of the call can be
accessed 24 hours a day through November 14, 2003 by dialing 888-203-1112 and
using the pass code of 507000. An audio replay will be archived and indexed
in the investor relations section of Parkway's website at www.pky.com . A
copy of the Company's 2003 third quarter supplemental financial and property
information package is available by accessing the Company's website, emailing
your request to rjordan@pky.com or calling Rita Jordan at 601-948-4091.
Please participate in the visual portion of the conference call by accessing
the Company's website and clicking on the "3Q Call" Icon. By clicking on
topics in the left margin, you can follow visual representations of the
presentation.
Additional information on Parkway Properties, Inc., including an archive
of corporate press releases and conference calls, is available on the
Company's website. The Company's third quarter 2003 Supplemental Operating
and Financial Data, which includes a reconciliation of GAAP to Non-GAAP
financial measures, will be available on the Company's website prior to the
start of the conference call.
About Parkway Properties
Parkway Properties, Inc. is a self-administered real estate investment
trust specializing in the operations, acquisition, ownership, management, and
leasing of office properties. The Company is geographically focused on the
Southeastern and Southwestern United States and Chicago. Parkway owns or has
an interest in 57 office properties located in 11 states with an aggregate of
approximately 10,151,000 square feet of leasable space as of November 3, 2003.
The Company also offers fee based real estate services through its wholly
owned subsidiary, Parkway Realty Services.
Certain statements in this release that are not in the present tense or
discuss the Company's expectations (including the use of the words anticipate,
forecast or project) are forward-looking statements within the meaning of the
federal securities laws and as such are based upon the Company's current
belief as to the outcome and timing of future events. There can be no
assurance that future developments affecting the Company will be those
anticipated by the Company. These forward-looking statements involve risks
and uncertainties (some of which are beyond the control of the Company) and
are subject to change based upon various factors, including but not limited to
the following risks and uncertainties: changes in the real estate industry and
in performance of the financial markets; the demand for and market acceptance
of the Company's properties for rental purposes; the amount and growth of the
Company's expenses; tenant financial difficulties and general economic
conditions, including interest rates, as well as economic conditions in those
areas where the Company owns properties; the risks associated with the
ownership of real property; and other risks and uncertainties detailed from
time to time on the Company's SEC filings. Should one or more of these risks
or uncertainties occur, or should underlying assumptions prove incorrect, the
Company's results could differ materially from those expressed in the forward-
looking statements. The Company does not undertake to update forward-looking
statements.
PARKWAY PROPERTIES, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
September 30 December 31
2003 2002
(Unaudited)
Assets
Real estate related investments:
Office and parking properties $807,295 $806,000
Accumulated depreciation (109,199) (99,449)
698,096 706,551
Land available for sale 3,528 3,528
Note receivable from Moore Building
Associates LP 5,996 5,996
Mortgage loans 863 869
Investment in unconsolidated joint
ventures 20,267 15,640
728,750 732,584
Interest, rents receivable and other
assets 32,338 29,759
Cash and cash equivalents 2,924 1,594
$764,012 $763,937
Liabilities
Notes payable to banks $93,372 $141,970
Mortgage notes payable without
recourse 225,934 209,746
Accounts payable and other
liabilities 35,411 35,400
354,717 387,116
Stockholders' Equity
8.75% Series A Preferred stock, $.001
par value, 2,760,000 shares authorized
and 2,650,000 shares issued and
outstanding in 2002 - 66,250
8.34% Series B Cumulative Convertible
Preferred stock, $.001 par value,
2,142,857 shares authorized, 1,942,857
and 2,142,857 shares issued and
outstanding in 2003 and 2002,
respectively 68,000 75,000
8.00% Series D Preferred stock, $.001
par value, 2,400,000 shares authorized,
issued and outstanding in 2003 57,976 -
Common stock, $.001 par value,
65,057,143 shares authorized, 10,783,908
and 9,385,420 shares issued and
outstanding in 2003 and 2002,
respectively 10 9
Common stock held in trust, at cost,
128,000 shares in 2003 (4,321) -
Additional paid-in capital 251,716 199,979
Unearned compensation (4,592) -
Accumulated other comprehensive loss (51) (170)
Retained earnings 40,557 35,753
409,295 376,821
$764,012 $763,937
PARKWAY PROPERTIES, INC.
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
Three Months Ended
September 30
2003 2002
(Unaudited)
Revenues
Income from office and parking
properties $34,888 $36,747
Management company income 546 367
Interest on note receivable from
Moore Building Associates LP 207 207
Incentive management fee from Moore
Building Associates LP 66 93
Other income and deferred gains 64 39
35,771 37,453
Expenses
Office and parking properties:
Operating expense 15,229 16,512
Interest expense:
Contractual 4,037 4,060
Amortization of loan costs 77 46
Depreciation and amortization 6,722 6,644
Operating expense for other real
estate properties 11 9
Interest expense on bank notes:
Contractual 615 1,585
Amortization of loan costs 64 169
Management company expenses 61 102
General and administrative 1,040 1,079
27,856 30,206
Income before equity in earnings,
gain and minority interest 7,915 7,247
Equity in earnings of unconsolidated
joint ventures 590 322
Gain on sale of real estate 5,020 -
Minority interest - unit holders (1) -
Net Income 13,524 7,569
Dividends on preferred stock (1,200) (1,450)
Dividends on convertible preferred
stock (1,545) (1,564)
Net income available to common
stockholders $10,779 $4,555
Net income per common share:
Basic $1.04 $0.49
Diluted $0.96 $0.48
Dividends per common share $0.65 $0.65
Weighted average shares outstanding:
Basic 10,411 9,329
Diluted 12,790 9,493
PARKWAY PROPERTIES, INC.
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
Nine Months Ended
September 30
2003 2002
(Unaudited)
Revenues
Income from office and parking
properties $107,107 $115,758
Management company income 1,688 851
Interest on note receivable from
Moore Building Associates LP 613 689
Incentive management fee from Moore
Building Associates LP 221 253
Other income and deferred gains 551 362
110,180 117,913
Expenses
Office and parking properties:
Operating expense 47,608 49,974
Interest expense:
Contractual 12,063 14,777
Prepayment expenses - 18
Amortization of loan costs 209 186
Depreciation and amortization 20,674 20,697
Operating expense for other real
estate properties 31 26
Interest expense on bank notes:
Contractual 2,138 4,520
Amortization of loan costs 428 418
Management company expenses 302 353
General and administrative 3,184 3,660
86,637 94,629
Income before equity in earnings,
gain (loss), minority interest
and discontinued operations 23,543 23,284
Equity in earnings of unconsolidated
joint ventures 1,644 471
Gain (loss) on sale of joint venture
interests and real estate 10,661 (269)
Minority interest - unit holders (2) (1)
Income from continuing operations 35,846 23,485
Discontinued operations:
Income from discontinued operations - 47
Gain on sale of real estate from
discontinued operations - 770
Net Income 35,846 24,302
Original issue costs associated with
redemption of preferred stock (2,619) -
Dividends on preferred stock (4,152) (4,348)
Dividends on convertible preferred
stock (4,673) (4,693)
Net income available to common
stockholders $24,402 $15,261
Net income per common share:
Basic $2.43 $1.64
Diluted $2.35 $1.61
Dividends per common share $1.95 $1.91
Weighted average shares outstanding:
Basic 10,031 9,290
Diluted 12,390 9,467
In accordance with SFAS 145 "Rescission of FASB Statements No. 4, 44 and
64, Amendment of FASB Statement No. 13 and Technical Corrections",
effective for fiscal years beginning after May 15, 2002, any gain or loss
on extinguishment of debt that was classified as an extraordinary item in
prior periods shall be reclassified. All such amounts recognized by
Parkway have been reclassified to "Interest expense - prepayment
expenses".
PARKWAY PROPERTIES, INC.
FUNDS FROM OPERATIONS AND FUNDS AVAILABLE FOR DISTRIBUTION
FOR THE THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 2003 AND 2002
(In thousands, except per share data)
Three Months Ended Nine Months Ended
September 30 September 30
2003 2002 2003 2002
(Unaudited) (Unaudited)
Net Income $13,524 $7,569 $35,846 $24,302
Adjustments to Net Income:
Preferred Dividends (1,200) (1,450) (4,152) (4,348)
Convertible Preferred Dividends (1,545) (1,564) (4,673) (4,693)
Original Issue Costs - Redemption of
Preferred Stock (2) - - (2,619) -
Depreciation and Amortization 6,722 6,644 20,674 20,697
Depreciation and Amortization -
Discontinued Operations - - - 22
Adjustments for Unconsolidated Joint
Ventures 536 360 1,474 495
Amortization of Deferred Gains (4) (2) (8) (7)
Minority Interest - Unit Holders 1 - 2 1
Gain on Sale of Joint Venture
Interests and Real Estate (5,020) - (10,299) (501)
Funds From Operations Applicable to
Common Shareholders (1) $13,014 $11,557 $36,245 $35,968
Funds Available for Distribution
Funds From Operations $13,014 $11,557 $36,245 $35,968
Add (Deduct) :
Adjustments for Unconsolidated Joint
Ventures (194) (446) (1,831) (478)
Straight-line rents (589) (501) (1,618) (1,686)
Amortization of Restricted Stock
Grants 168 547 500 1,642
Capital Expenditures:
Building Improvements (912) (688) (3,646) (2,037)
Tenant Improvements - New Leases (70) (1,680) (3,141) (4,736)
Tenant Improvements - Lease Renewals (346) (1,167) (3,151) (2,546)
Leasing Commissions - New Leases (173) (459) (668) (2,860)
Leasing Commissions - Lease Renewals (191) (624) (1,141) (1,271)
Funds Available for Distribution (1) $10,707 $6,539 $21,549 $21,996
Diluted Per Common Share/Unit
Information (**)
FFO per share $1.14 $1.13 $3.30 $3.50
Dividends paid $0.65 $0.65 $1.95 $1.91
Dividend payout ratio for FFO 57.11% 57.65% 59.05% 54.54%
Weighted average shares/units
outstanding 12,792 11,637 12,392 11,611
Other Supplemental Information
Upgrades on Acquisitions $1,321 $819 $4,009 $1,604
Gain on Sale of Land $- $- $362 $-
**Information for Diluted
Computations:
Convertible Preferred Dividends $1,545 $1,564 $4,673 $4,693
Basic Common Shares/Units Outstanding 10,412 9,331 10,033 9,291
Convertible Preferred Shares
Outstanding 2,112 2,143 2,133 2,143
Dilutive Effect of Stock Options and
Warrants 268 164 226 177
(1) Funds from operations ("FFO") applicable to common shareholders and
funds available for distribution ("FAD") are included herein because
we believe that these measures are helpful to investors and our
management as measures of the performance of an equity REIT. These
measures, along with cash flow from operating, financing and
investing activities, provide investors with an indication of our
ability to incur and service debt, to make capital expenditures and
to fund other cash needs.
Parkway computes FFO in accordance with standards established by
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. FFO is defined as net income, computed in accordance with
generally accepted accounting principles ("GAAP"), excluding gains or
losses from the sales of properties, plus real estate related
depreciation and amortization and after adjustments for unconsolidated
partnerships and joint ventures.
There is not a standard definition established for FAD. Therefore,
our measure of FAD may not be comparable to FAD reported by other
REITs. We define FAD as FFO increased by amortization of restricted
stock grants and reduced by straight line rents, non-revenue enhancing
capital expenditures for building improvements, tenant improvements
and leasing costs. Adjustments for unconsolidated partnerships and
joint ventures are included in the computation of FAD on the same
basis.
(2) In accordance with the FASB EITF Topic D-42 "The Effect on the
Calculation of Earnings per Share for the Redemption or Induced
Conversion of Preferred Stock," the difference between the redemption
value and carrying value attributable to issuance costs of the
preferred shares that were redeemed must be treated as a preferred
dividend and deducted from net income available to common
shareholders. Accordingly, the amount treated as a preferred dividend
must be deducted from FFO applicable to common shareholders.
Therefore, FFO applicable to common shareholders for the nine months
ending September 30, 2003 will be reduced by original issue costs of
$2,619,000 or $.21 per diluted share associated with the redemption of
Series A Preferred Stock which occurred during the second quarter of
2003. The Series A Preferred Stock was originally issued in April of
1998.
PARKWAY PROPERTIES, INC.
CALCULATION OF EBITDA AND COVERAGE RATIOS
FOR THE THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 2003 AND 2002
(In thousands)
Three Months Ended Nine Months Ended
September 30 September 30
2003 2002 2003 2002
(Unaudited) (Unaudited)
Net Income $13,524 $7,569 $35,846 $24,302
Adjustments to Net Income:
Interest Expense 4,652 5,645 14,201 19,297
Amortization of Financing Costs 141 215 637 604
Prepayment Expenses - Early
Extinguishment of Debt - - - 18
Depreciation and Amortization 6,722 6,644 20,674 20,719
Amortization of Deferred Compensation 168 547 500 1,642
Gain on Sale of Joint Venture
Interests and Real Estate (5,020) - (10,661) (501)
Tax Expenses 44 (20) 132 41
EBITDA Adjustments - Unconsolidated
Joint Ventures 1,458 1,077 4,022 1,473
EBITDA (1) $21,689 $21,677 $65,351 $67,595
Interest Coverage Ratio:
EBITDA $21,689 $21,677 $65,351 $67,595
Interest Expense:
Interest Expense $4,652 $5,645 $14,201 $19,297
Interest Expense - Unconsolidated
Joint Ventures 762 571 2,079 783
Total Interest Expense $5,414 $6,216 $16,280 $20,080
Interest Coverage Ratio 4.01 3.49 4.01 3.37
Fixed Charge Coverage Ratio:
EBITDA $21,689 $21,677 $65,351 $67,595
Fixed Charges:
Interest Expense $5,414 $6,216 $16,280 $20,080
Preferred Dividends 2,745 3,014 8,825 9,041
Preferred Distributions -
Unconsolidated Joint Ventures 123 137 376 181
Principal Payments (Excluding Early
Extinguishment of Debt) 2,626 2,756 8,318 8,219
Principal Payments - Unconsolidated
Joint Ventures 146 131 423 187
Total Fixed Charges $11,054 $12,254 $34,222 $37,708
Fixed Charge Coverage Ratio 1.96 1.77 1.91 1.79
(1) EBITDA, a non-GAAP financial measure, means operating income before
mortgage and other interest expense, income taxes, depreciation and
amortization. We believe that EBITDA is useful to investors and
Parkway's management as an indication of the Company's ability to
service debt and pay cash distributions. EBITDA, as calculated by us,
is not comparable to EBITDA reported by other REITs that do not define
EBITDA exactly as we do. EBITDA does not represent cash generated
from operating activities in accordance with generally accepted
accounting principles, and should not be considered an alternative to
operating income or net income as an indicator of performance or as an
alternative to cash flows from operating activities as an indicator of
liquidity.
PARKWAY PROPERTIES, INC.
NET OPERATING INCOME FROM OFFICE AND PARKING PROPERTIES
THREE MONTHS ENDED SEPTEMBER 30, 2003 AND 2002
(In thousands, except number of properties data)
Net Operating Occupancy
Number Percentage Income
of of
Properties Portfolio (1) 2003 2002 2003 2002
Same store
properties (2) 50 91.65% $18,017 $17,337 91.0% 92.4%
2002 Acquisitions - 0.00% - - N/A N/A
2003 Acquisitions 3 7.13% 1,402 - 89.6% N/A
Assets sold - 1.22% 240 2,898 N/A N/A
Net Operating Income
from Office and
Parking Properties 53 100.00% $19,659 $20,235
(1) Percentage of portfolio based on 2003 net operating income.
(2) Parkway defines Same Store Properties as those properties that were
owned for the entire three-month periods ended September 30, 2003 and
2002. Same Store net operating income ("SSNOI") includes income from
real estate operations less property operating expenses (before
interest and depreciation and amortization) for Same Store Properties.
SSNOI as computed by Parkway may not be comparable to SSNOI reported
by other REITs that do not define the measure exactly as we do.
SSNOI is a supplemental industry reporting measurement used to
evaluate the performance of the Company's investments in real estate
assets. The following table is a reconciliation of net income to
SSNOI:
Three Months Ended Nine Months Ended
September 30 September 30
2003 2002 2003 2002
Net income $13,524 $7,569 $35,846 $24,302
Add (Deduct):
Interest expense 4,793 5,860 14,838 19,919
Depreciation and amortization 6,722 6,644 20,674 20,697
Operating expense for other real
estate properties 11 9 31 26
Management company expenses 61 102 302 353
General and administrative expenses 1,040 1,079 3,184 3,660
(Gain) loss on sale of joint venture
interests and real estate (5,020) - (10,661) 269
Minority interest - unit holders 1 - 2 1
Income from discontinued operations - - - (47)
Gain on sale of real estate from
discontinued operations - - - (770)
Management company income (546) (367) (1,688) (851)
Interest income (207) (207) (613) (689)
Incentive management fee income (66) (93) (221) (253)
Equity in earnings of unconsolidated
joint ventures (590) (322) (1,644) (471)
Other income and deferred gains (64) (39) (551) (362)
Net operating income from office and
parking properties 19,659 20,235 59,499 65,784
Less: Net operating income from non
same store properties (1,642) (2,898) (6,285) (12,012)
Same Store net operating income $18,017 $17,337 $53,214 $53,772
FOR FURTHER INFORMATION:
Steven G. Rogers
President & Chief Executive Officer
Marshall A. Loeb
Chief Financial Officer of Parkway Properties, Inc.
(601)-948-4091
SOURCE Parkway Properties, Inc.
-0- 11/03/2003
/CONTACT: Steven G. Rogers, President & Chief Executive Officer, or
Marshall A. Loeb, Chief Financial Officer of Parkway Properties, Inc.,
+1-601-948-4091/
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/Company News On-Call: http://www.prnewswire.com/comp/103115.html/
/Web site: http://www.pky.com/
(PKY)
CO: Parkway Properties, Inc.
ST: Mississippi, Illinois
IN: RLT
SU: ERN ERP CCA MAV