Exhibit 99.1
Parkway Properties, Inc. Reports 2003 Fourth Quarter Results
JACKSON, Miss., Feb. 9 /PRNewswire-FirstCall/ -- Parkway Properties, Inc.
(NYSE: PKY) today announced results for its fourth quarter and twelve months
ended December 31, 2003.
Consolidated Financial Results
* Net income available to common shareholders for the three months ended
December 31, 2003 was $4,717,000 ($.43 per diluted share) compared to
$2,197,000 ($.23 per diluted share) for the three months ended December
31, 2002. Net income available to common shareholders for the twelve
months ended December 31, 2003 was $29,119,000 ($2.79 per diluted
share) compared to $17,458,000 ($1.84 per diluted share) for the twelve
months ended December 31, 2002. Gains on the sale of joint venture
interests and real estate of $10,661,000 were included in net income
available to common shareholders for the twelve months ended December
31, 2003. A net gain on the sale of a joint venture interest and real
estate of $501,000, an impairment loss on an office property of
$1,594,000 and an impairment loss on land of $205,000 was included in
net income available to common shareholders for the twelve months ended
December 31, 2002. A $2,619,000 non-cash charge for original issue
costs related to the redemption of Series A Preferred Stock was
recorded during the twelve months ended December 31, 2003. The Series A
Preferred Stock was originally issued in April of 1998.
* Funds from operations ("FFO") applicable to common shareholders totaled
$12,612,000 ($1.08 per diluted share) for the three months ended
December 31, 2003 compared to $9,275,000 ($.93 per diluted share) for
the three months ended December 31, 2002. FFO totaled $48,857,000
($4.38 per diluted share) for the twelve months ended December 31, 2003
compared to $45,243,000 ($4.43 per diluted share) for the twelve months
ended December 31, 2002. FFO per diluted share for the three months
and twelve months ended December 31, 2002 as originally reported of
$1.14 and $4.64 has been revised and reduced to $.93 and $4.43,
respectively. Please reference the footnote following the FFO and
funds available for distribution ("FAD") table of the press
release for further explanation of the decrease.
* FAD totaled $8,705,000 for the three months ended December 31, 2003
compared to $4,618,000 for the three months ended December 31, 2002.
FAD totaled $30,254,000 for the twelve months ended December 31, 2003
compared to $26,614,000 for the twelve months ended December 31, 2002.
FAD as originally reported of $7,027,000 and $29,041,000 for the three
months and twelve months ending December 31, 2002, respectively, has
been revised to $4,618,000 and $26,614,000 for the three months and
twelve months ending December 31, 2002, respectively. Please reference
the footnote following the FFO and FAD table of the press release for
further explanation of the decrease.
Acquisitions and Sales
* On November 24, 2003, the Company purchased Carmel Crossing, a 324,000
square foot, three-building office campus located in the 51 Perimeter
submarket of Charlotte, North Carolina. Carmel Crossing is 94% leased
and was purchased for $41 million plus $1.5 million in closing costs
and anticipated capital expenditures and leasing commissions during the
first two years of ownership.
* On January 29, 2004, the Company purchased Maitland 200, a 206,000
foot, four-story office building located in the Maitland Center
submarket of Orlando, Florida. Maitland 200 is 95% leased and was
purchased for $26.3 million plus $1.4 million in closing costs and
anticipated capital expenditures and leasing commissions during the
first two years of ownership.
* The Company has completed its due diligence for the $76.3 million
acquisition of the 410,000 square foot, 92% leased Capital City Plaza
in the Buckhead sub-market of Atlanta, Georgia. Parkway's request to
assume an existing first mortgage in the amount of $43 million is under
review by the lender. The proposed acquisition, which is projected for
late March 2004, is subject to customary closing conditions, and there
can be no assurance that this acquisition will occur.
Operations and Leasing
* Parkway's customer retention rate for the three months ending December
31, 2003 was 48.4% compared to 58.8% for the quarter ending September
30, 2003 and 65.5% for the quarter ending December 31, 2002. Customer
retention for the twelve months ending December 31, 2003 was 58.1%
compared to 71.3% for the twelve months ending December 31, 2002.
* As of January 1, 2004, occupancy of the office portfolio was 87.9%
compared to 91.1% as of October 1, 2003 and 92.3% as of January 1,
2003. Not included in the January 1, 2004 occupancy rate are 38 signed
leases totaling 288,000 square feet, which commence during the first
through third quarter and raise our percentage leased to 90.7%.
* As previously announced, Skytel vacated its 156,000 square foot lease
at the Skytel Centre in Jackson, Mississippi leaving the building 25%
occupied. Subsequent to December 31, 2003, the Company announced the
renaming of the building to City Centre, the signing of leases which
raise the building occupancy to approximately 92% and the development
of a $6.5 million, 500-space parking facility to accommodate building
customers. The largest lease was signed with Forman Perry Watkins
Krutz & Tardy LLP subsequent to December 31, 2003 for 145,000 square
feet, commencing upon completion of the improvements to the space in
the third quarter of 2004. Forman Perry will occupy the space through
December 31, 2011, subject to certain termination rights beginning July
31, 2008. The firm is consolidating employees from two buildings in
Jackson and will vacate approximately 70,000 square feet in One Jackson
Place, another Parkway-owned asset. The other large new customers
include Entergy Mississippi, Inc. and Ross & Yerger, which leased
19,500 and 14,500 square feet, respectively.
* As previously reported, Burlington Industries vacated 137,000 square
feet at 400 North Belt in Houston, Texas effective December 31, 2003.
Subsequent to December 31, 2003, the Company signed two leases for
58,800 square feet within the former Burlington space. One of the
leases was with Merchant Metals, Inc., presently a 19,100 square foot
Parkway customer at One Commerce Green, who is expanding and relocating
into 39,400 square feet, for a net increase of 20,300 square feet.
* During the quarter ending December 31, 2003, leases were renewed or
expanded on 410,000 net rentable square feet at an average rental rate
decrease of 11.2% and a cost of $1.68 per square foot per year of the
lease term in committed tenant improvements and leasing commissions.
New leases were signed during the quarter on 238,000 net rentable
square feet at a cost of $3.77 per square foot per year of the lease
term in committed tenant improvements and leasing commissions.
* Same store assets produced a decrease in net operating income ("NOI")
of $2,108,000 or 2.9% for the twelve months ended December 31, 2003
compared to the same period of the prior year. Same store assets
produced a decrease in NOI of $1,550,000 or 8.5% during the quarter
compared to the fourth quarter of 2002. Without the impact of straight
line rents, the decrease in same store results for the fourth quarter
and 2003 would have been 4.3% and 2.0%, respectively. The decrease of
the twelve months ended December 31, 2003 compared to the same period
of 2002 was primarily attributable to the fourth quarter 2003 write off
of the Burlington straight line rent receivable in the amount of
$485,000, lower rents and increased utilities and insurance expense.
The decrease in same store net operating income for the fourth quarter
2003 was primarily attributable to lower rents and occupancy in
addition to the Burlington straight line rent write off.
Capital Markets and Financing
* The Company's previously announced cash dividend of $.65 per share for
the quarter ended December 31, 2003 represents a payout of
approximately 60.1% of FFO per diluted share. The fourth quarter
dividend was paid on December 29, 2003 and equates to an annualized
dividend of $2.60 per share, a yield of 5.4% on the closing stock price
on February 6, 2004 of $47.95.
* The Company closed a $24,000,000 non-recourse first mortgage secured by
three properties in Houston on December 18, 2003. The mortgage, which
is interest only for the first year, has a fixed interest rate of 4.83%
with a 5-year term and a 25-year amortization. Proceeds from the
mortgage were used to reduce amounts outstanding under the Company's
lines of credit, pending future reinvestment in operating properties.
* As of December 31, 2003 the Company's debt-to-total market
capitalization ratio was 41.2% compared to 38.0% as of September 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 in 2003.
* On February 6, 2004, the Company closed a new $170,000,000 line of
credit led by Wachovia Bank and syndicated to ten other banks. This
line replaces its $135,000,000 line, which was to mature June 2004. The
new line affords the Company greater financial flexibility at a lower
interest cost.
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 $0.16 - $0.20
Plus: Diluted share adjustment for convertible preferred $0.16 - $0.15
Fully diluted FFO per share $4.30 - $4.50
The following assumptions were used in making this forecast:
* Occupancy in the range of 87% to 91%, with average occupancy of 89%;
* Due to the vacancies discussed earlier, same store net operating income
growth in the range of negative 5% to negative 8%;
* Average interest rate of 3% on short-term, floating rate debt;
* Purchase of the Capital City Plaza in Atlanta in late March 2004.
* No additional acquisitions or dispositions of property;
* No equity offerings or redemptions; and
* Placement of a fixed rate 6% $25 million mortgage on July 1, 2004.
Steven G. Rogers, President and Chief Executive Officer stated, "We are
encouraged by signs of a strengthening economy which should translate into
better lease economics in the future. In the meantime, we are focused on
backfilling our vacancies quickly to restore our retention and occupancy to
normal levels. We anticipate that these efforts combined with significant
investment activity will boost our 2004 profitability. We are making good
progress on all aspects of our VALUE2 plan."
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
fourth quarter operations on Tuesday, February 10, 2004, at 10:00 a.m. ET.
The number for the conference call is 800-474-8920. A taped replay of the
call can be accessed 24 hours a day through February 20, 2004 by dialing 888-
203-1112 and using the pass code of 211059. 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 fourth 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 "4Q
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 fourth 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 59 office properties located in 11 states with an aggregate of
approximately 10,683,000 square feet of leasable space as of February 9, 2004.
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.
FOR FURTHER INFORMATION:
Steven G. Rogers
President & Chief Executive Officer
Marshall A. Loeb
Chief Financial Officer
(601) 948-4091
PARKWAY PROPERTIES, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
December 31 December 31
2003 2002
(Unaudited)
Assets
Real estate related investments:
Office and parking properties $844,168 $806,000
Accumulated depreciation (115,473) (99,449)
728,695 706,551
Land available for sale 3,528 3,528
Note receivable from Moore Building
Associates LP 5,926 5,996
Mortgage loans 861 869
Investment in unconsolidated joint
ventures 20,026 15,640
759,036 732,584
Interest, rents receivable and other assets 42,804 29,759
Cash and cash equivalents 468 1,594
$802,308 $763,937
Liabilities
Notes payable to banks $110,075 $141,970
Mortgage notes payable without recourse 247,190 209,746
Accounts payable and other liabilities 37,063 35,400
394,328 387,116
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, 10,808,131 and
9,385,420 shares issued and outstanding
in 2003 and 2002, respectively 11 9
Common stock held in trust, at cost,
128,000 shares in 2003 (4,321) -
Additional paid-in capital 252,695 199,979
Unearned compensation (4,634) -
Accumulated other comprehensive loss - (170)
Retained earnings 38,253 35,753
407,980 376,821
$802,308 $763,937
PARKWAY PROPERTIES, INC.
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
Three Months Ended
December 31
2003 2002
(Unaudited)
Revenues
Income from office and parking properties $35,089 $36,684
Management company income 448 346
Interest on note receivable from
Moore Building Associates LP 206 206
Incentive management fee from Moore
Building Associates LP 79 72
Other income and deferred gains 48 39
35,870 37,347
Expenses
Office and parking properties:
Operating expense 15,754 15,968
Interest expense:
Contractual 3,963 3,989
Prepayment expenses - 815
Amortization of loan costs 84 54
Depreciation and amortization 7,356 6,715
Operating expense for other real
estate properties 6 8
Interest expense on bank notes:
Contractual 696 1,535
Amortization of loan costs 137 174
Management company expenses 89 63
General and administrative 1,017 1,369
29,102 30,690
Income before equity in earnings,
loss and minority interest 6,768 6,657
Equity in earnings of unconsolidated
joint ventures 568 353
Loss on real estate - (205)
Impairment loss on office property (1,594)
Minority interest - unit holders (1) (1)
Net Income 7,335 5,210
Dividends on preferred stock (1,200) (1,449)
Dividends on convertible preferred stock (1,418) (1,564)
Net income available to common stockholders $4,717 $2,197
Net income per common share:
Basic $0.44 $0.23
Diluted $0.43 $0.23
Dividends per common share $0.65 $0.65
Weighted average shares outstanding:
Basic 10,795 9,376
Diluted 11,030 9,520
PARKWAY PROPERTIES, INC.
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
Twelve Months Ended
December 31
2003 2002
(Unaudited)
Revenues
Income from office and parking properties $142,196 $152,442
Management company income 2,136 1,197
Interest on note receivable from
Moore Building Associates LP 819 895
Incentive management fee from Moore
Building Associates LP 300 325
Other income and deferred gains 599 401
146,050 155,260
Expenses
Office and parking properties:
Operating expense 63,362 65,942
Interest expense:
Contractual 16,026 18,766
Prepayment expenses - 833
Amortization of loan costs 293 240
Depreciation and amortization 28,030 27,412
Operating expense for other real
estate properties 37 34
Interest expense on bank notes:
Contractual 2,834 6,055
Amortization of loan costs 565 592
Management company expenses 391 416
General and administrative 4,201 5,029
115,739 125,319
Income before equity in earnings,
gain (loss), minority interest and
discontinued operations 30,311 29,941
Equity in earnings of unconsolidated
joint ventures 2,212 824
Gain (loss) on sale of joint venture
interests and real estate 10,661 (474)
Impairment loss on office property - (1,594)
Minority interest - unit holders (3) (2)
Income from continuing operations 43,181 28,695
Discontinued operations:
Income from discontinued operations - 47
Gain on sale of real estate from
discontinued operations - 770
Net Income 43,181 29,512
Original issue costs associated with
redemption of preferred stock (2,619) -
Dividends on preferred stock (5,352) (5,797)
Dividends on convertible preferred stock (6,091) (6,257)
Net income available to common
stockholders $29,119 $17,458
Net income per common share:
Basic $2.85 $1.87
Diluted $2.79 $1.84
Dividends per common share $2.60 $2.56
Weighted average shares outstanding:
Basic 10,224 9,312
Diluted 10,453 9,480
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 TWELVE MONTHS ENDED DECEMBER 31, 2003 AND 2002
(In thousands, except per share data)
Three Months Ended Twelve Months Ended
December 31 December 31
2003 2002 2003 2002
(Unaudited) (Unaudited)
Net Income $7,335 $5,210 $43,181 $29,512
Adjustments to Net Income:
Preferred Dividends (1,200) (1,449) (5,352) (5,797)
Convertible Preferred
Dividends (1,418) (1,564) (6,091) (6,257)
Original Issue Costs
- Redemption of
Preferred Stock (2) - - (2,619) -
Depreciation and Amortization 7,356 6,715 28,030 27,412
Depreciation and Amortization
- Discontinued Operations - - - 22
Adjustments for Unconsolidated
Joint Ventures 556 366 2,030 861
Amortization of Deferred Gains (18) (4) (26) (11)
Minority Interest
- Unit Holders 1 1 3 2
Gain on Sale of Joint Venture
Interests and Real Estate - - (10,299) (501)
Funds From Operations Applicable
to Common Shareholders (1) $12,612 $9,275 $48,857 $45,243
(3) (3)
Funds Available for
Distribution (1)
Funds From Operations
Applicable to Common
Shareholders $12,612 $9,275 $48,857 $45,243
Add (Deduct) :
Adjustments for Unconsolidated
Joint Ventures (316) (403) (2,147) (881)
Straight-line Rents 233 (543) (1,385) (2,229)
Amortization of Above/Below
Market Leases (29) - (29) -
Amortization of Restricted
Stock Grants 194 548 694 2,190
Capital Expenditures:
Building Improvements (960) (692) (4,606) (2,729)
Tenant Improvements
- New Leases (740) (1,515) (3,881) (6,251)
Tenant Improvements
- Renewal Leases (1,718) (1,433) (4,869) (3,979)
Leasing Costs
- New Leases (334) (445) (1,002) (3,305)
Leasing Costs
- Renewal Leases (237) (174) (1,378) (1,445)
Funds Available for
Distribution (1) $8,705 $4,618 $30,254 $26,614
Diluted Per Common
Share/Unit Information (**)
FFO per share $1.08 $0.93 $4.38 $4.43
Dividends paid $0.65 $0.65 $2.60 $2.56
Dividend payout ratio for FFO 60.11% 69.95% 59.33% 57.78%
Weighted average shares/units
outstanding 12,974 11,664 12,539 11,624
Other Supplemental Information
Upgrades on Acquisitions $2,454 $750 $6,463 $2,354
Gain (Loss) on Land $- $(205) $362 $(205)
Impairment Loss on
Office Property $- $(1,594) $- $(1,594)
**Information for
Diluted Computations:
Convertible Preferred
Dividends $1,418 $1,564 $6,091 $6,257
Basic Common Shares/Units
Outstanding 10,797 9,378 10,225 9,313
Convertible Preferred
Shares Outstanding 1,943 2,143 2,085 2,143
Dilutive Effect of Stock
Options and Warrants 235 144 229 168
(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 twelve
months ending December 31, 2003 has been 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.
(3) In the 4th quarter of 2002, Parkway recorded an impairment loss on
land of $205,000 and an impairment loss on an office property of $1,594,000.
Consistent with NAREIT's current definition of FFO, Parkway excluded the
impairment loss on the office property from FFO and included the impairment
loss on land in FFO. In October, 2003, the SEC staff shared with NAREIT its
position that all impairment write-downs must be included in FFO for all
periods included in future filings. Therefore, FFO per diluted share for the
three months and twelve months ended December 31, 2002 has been reduced by the
impairment loss on the office property in the amount of $1,594,000 ($.14 per
diluted share). Additionally, in accordance with SFAS 145, 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. The amounts recognized by Parkway for the three months
($815,000 or $.07 per diluted share) and the twelve months ($833,000 or $.07
per diluted share) ended December 31, 2002 have been reclassified to "Interest
expense - prepayment expenses" and included in FFO. Considering the items
discussed above, FFO per diluted share as originally reported of $1.14 and
$4.64 for the three months and twelve months ended December 31, 2002,
respectively, has been revised to $.93 and $4.43 for the same periods.
PARKWAY PROPERTIES, INC.
CALCULATION OF EBITDA AND COVERAGE RATIOS
FOR THE THREE MONTHS AND TWELVE MONTHS ENDED DECEMBER 31, 2003 AND 2002
(In thousands)
Three Months Twelve Months
Ended Ended
December 31 December 31
2003 2002 2003 2002
(Unaudited) (Unaudited)
Net Income $7,335 $5,210 $43,181 $29,512
Adjustments to Net Income:
Interest Expense 4,659 5,524 18,860 24,821
Amortization of Financing Costs 221 228 858 832
Prepayment Expenses - Early
Extinguishment of Debt - 815 - 833
Depreciation and Amortization 7,356 6,715 28,030 27,434
Amortization of Deferred Compensation 194 548 694 2,190
(Gain) Loss on Sale of Joint Venture
Interests and Real Estate - 205 (10,661) (296)
Impairment Loss on Office Property - 1,594 - 1,594
Tax Expenses (127) (65) 5 (23)
EBITDA Adjustments - Unconsolidated
Joint Ventures 1,433 1,078 5,455 2,550
EBITDA (1) $21,071 $21,852 $86,422 $89,447
Interest Coverage Ratio:
EBITDA $21,071 $21,852 $86,422 $89,447
Interest Expense:
Interest Expense $4,659 $5,524 $18,860 $24,821
Interest Expense -
Unconsolidated
Joint Ventures 717 570 2,796 1,353
Total Interest Expense $5,376 $6,094 $21,656 $26,174
Interest Coverage Ratio 3.92 3.59 3.99 3.42
Fixed Charge Coverage Ratio:
EBITDA $21,071 $21,852 $86,422 $89,447
Fixed Charges:
Interest Expense $5,376 $6,094 $21,656 $26,174
Preferred Dividends 2,618 3,013 11,443 12,054
Preferred Distributions
- Unconsolidated Joint Ventures 123 133 499 314
Principal Payments (Excluding Early
Extinguishment of Debt) 2,687 2,746 11,005 10,965
Principal Payments - Unconsolidated
Joint Ventures 150 133 573 320
Total Fixed Charges $10,954 $12,119 $45,176 $49,827
Fixed Charge Coverage Ratio 1.92 1.80 1.91 1.80
(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 DECEMBER 31, 2003 AND 2002
(In thousands, except number of properties data)
Net Operating
Income Occupancy
Number of Percentage of
Properties Portfolio (1) 2003 2002 2003 2002
Same store
properties (2) 50 86.34% $16,693 $18,243 86.6% 92.2%
2003 Acquisitions 4 13.85% 2,678 - 90.8% N/A
Assets sold - -0.19% (36) 2,473 N/A N/A
Net Operating Income
from Office
and Parking
Properties 54 100.00% $19,335 $20,716
(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 December 31, 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 Twelve Months Ended
December 31 December 31
2003 2002 2003 2002
Net income $7,335 $5,210 $43,181 $29,512
Add (Deduct):
Interest expense 4,880 6,567 19,718 26,486
Depreciation and amortization 7,356 6,715 28,030 27,412
Operating expense for other real
estate properties 6 8 37 34
Management company expenses 89 63 391 416
General and administrative expenses 1,017 1,369 4,201 5,029
(Gain) loss on sale of joint venture
interests and real estate - 205 (10,661) 474
Impairment loss on office property - 1,594 - 1,594
Minority interest - unit holders 1 1 3 2
Income from discontinued operations - - - (47)
Gain on sale of real estate from
discontinued operations - - - (770)
Management company income (448) (346) (2,136) (1,197)
Interest income (206) (206) (819) (895)
Incentive management fee income (79) (72) (300) (325)
Equity in earnings of unconsolidated
joint ventures (568) (353) (2,212) (824)
Other income and deferred gains (48) (39) (599) (401)
Net operating income from office and
parking properties 19,335 20,716 78,834 86,500
Less: Net operating income from non
same store properties (2,642) (2,473) (8,927) (14,485)
Same Store net operating income $16,693 $18,243 $69,907 $72,015
SOURCE Parkway Properties, Inc.
-0- 02/09/2004
/CONTACT: Steven G. Rogers, President & Chief Executive Officer, or
Marshall A. Loeb, Chief Financial Officer of Parkway Properties, Inc.,
+1-601-948-4091/
/Photo: NewsCom: http://www.newscom.com/cgi-bin/prnh/20030513/PARKLOGO
AP Archive: http://photoarchive.ap.org
PRN Photo Desk, photodesk@prnewswire.com/
/Company News On-Call: http://www.prnewswire.com/comp/103115.html /
/Web site: http://www.pky.com /
(PKY)
CO: Parkway Properties, Inc.
ST: Mississippi, Texas, Illinois
IN: RLT CST
SU: ERN ERP CCA MAV DIV