Contact: Janie Maddox
Post Properties, Inc.
(404) 846-5056
POST PROPERTIES ANNOUNCES THIRD QUARTER EARNINGS
Investor/Analyst Conference Call Scheduled for November 4, 2003
at 10:00 a.m. EST
ATLANTA, November 3, 2003 - Post Properties, Inc. (NYSE: PPS) announced today a
net loss available to common shareholders of $4.5 million for the third quarter
of 2003, compared to net income available to common shareholders of $3.3 million
for the third quarter of 2002. On a diluted per share basis, the net loss
available to common shareholders was $0.12 for the third quarter of 2003,
compared to net income available to common shareholders of $0.09 for the third
quarter of 2002.
For the nine months ended September 30, 2003, the net loss available to common
shareholders was $3.1 million, compared to net income available to common
shareholders of $39.6 million for the nine months ended September 30, 2002. On a
diluted per share basis, the net loss available to common shareholders was $0.08
for the first nine months of 2003, compared to net income available to common
shareholders of $1.07 for the same period of 2002. Excluding severance and proxy
charges, net income available to common shareholders totaled $20.7 million, or
$0.55 per diluted share, for the first nine months of 2003. A reconciliation of
net income available to common shareholders to net income available to common
shareholders excluding severance and proxy charges is provided in Table 1.
In October 2003, the National Association of Real Estate Investment Trusts
("NAREIT") issued additional guidance modifying the definition of funds from
operations ("FFO"). The first modification revised the treatment of asset
impairment losses and impairment losses incurred to write-down assets to their
fair value at the date assets are classified as held for sale, to include such
losses in FFO. Previously such losses were excluded from FFO, consistent with
the treatment of gains on property sales. The second modification clarified the
treatment of original issue costs and premiums paid on preferred stock
redemptions to deduct such costs and premiums in determining FFO available to
common shareholders. This modification was consistent with the recently
clarified treatment of these costs under GAAP. The company has adopted the
modifications to the definition of FFO effective with its reported results for
the period ended September 30, 2003. The modification of FFO related to
preferred stock redemption costs was not applicable for the company for the
periods presented. Prior period and prior year presentations of FFO have been
restated to conform with the revised NAREIT definition of FFO. FFO is a
supplemental non-GAAP financial measure used by real estate investment trusts to
measure and compare operating performance.
FFO for the third quarter of 2003 totaled $16.8 million, or $0.40 per diluted
share, compared to $25.3 million, or $0.60 per diluted share, for the third
quarter of 2002. Excluding asset impairment charges, FFO for the third quarter
of 2003 totaled $20.1 million, or $0.48 per diluted share, compared to $27.2
million, or $0.65 per diluted share, for the third quarter of 2002. FFO
excluding asset impairment charges was consistent with management's previously
issued guidance.
FFO for the nine months ended September 30, 2003 totaled $20.2 million, or $0.48
per diluted share, compared to $75.2 million, or $1.79 per diluted share, for
the nine months ended September 30, 2002.
Excluding severance, proxy and asset impairment charges, FFO for the nine months
ended September 30, 2003 totaled $64.4 million, or $1.53 per diluted share,
compared to $84.7 million, or $2.01 per diluted share, for the nine months ended
September 30, 2002. A reconciliation of FFO to GAAP net income is included in
the financial data (Table 2) accompanying this press release.
Total revenues from continuing operations were $73.5 million for the third
quarter of 2003, compared to $73.2 million for the third quarter of 2002. For
the nine months ended September 30, 2003, total revenues from continuing
operations were $217.5 million, compared to $215.1 million for the same period
in 2002.
MATURE COMMUNITY DATA
For the third quarter of 2003, average economic occupancy at the company's 57
mature (same store) communities, containing 19,646 apartment units, was 93.1%,
compared to 93.0% for the third quarter of 2002. For the nine months ended
September 30, 2003, average economic occupancy for these mature communities was
91.5%, compared to 91.0% for the same period in 2002.
Total revenues for the mature communities decreased 3.5% during the third
quarter of 2003, compared to the third quarter of 2002, and operating expenses
increased 1.0%, resulting in a 6.0% decline in same store net operating income
(NOI), or $2.2 million ($0.05 per diluted share). For the nine months ended
September 30, 2003, total revenues for the mature communities decreased 4.0%
compared to the same period in 2002, while operating expenses increased 0.8%,
resulting in a 6.5% decline in same store NOI, or $7.4 million ($0.18 per
diluted share).
On a sequential basis, total revenues for the mature communities increased 1.5%
during the third quarter of 2003, compared to the second quarter of 2003, and
operating expenses increased 2.2%, resulting in a 1.1% increase in same store
NOI, or $0.4 million ($0.01 per diluted share). For the third quarter of 2003,
average economic occupancy was 93.1% compared to 91.4% for the second quarter of
2003.
Same store NOI is a supplemental non-GAAP financial measure. A reconciliation of
same store NOI to the comparable GAAP financial measure is included in the
financial data (Table 3) accompanying this press release.
ASSET SALES AND CAPITAL REINVESTMENT STRATEGY
For the nine months ended September 30, 2003, the company's net proceeds from
the sale of three assets totaled approximately $170 million (including the
repayment of a joint venture loan). The company realized GAAP accounting gains
on the sale of these three properties of approximately $42 million, and gains on
gross book value (before depreciation) of approximately $25 million. The company
sold no apartment communities during the third quarter of 2003.
Consistent with its previously announced strategy, the company is currently
marketing 11 additional properties, with 5,175 apartment units, for sale over
approximately the next six months. These properties, which are being marketed by
a number of third-party brokers, consist of the company's only apartment
community, with 403 units, located in Phoenix, AZ, six apartment communities,
with 2,728 units and an average age of approximately 16 years, located in
Atlanta, GA, three apartment communities, with 1,304 units and an average age of
approximately 14 years, located in Dallas, TX, and one approximately 15-year
old, 740-unit apartment community, located in Orlando, FL. These sales are
part of the company's plans to focus its operations in fewer key markets,
maintain the low average age and high quality of the portfolio, reduce the
company's market concentration in Atlanta, GA and Dallas, TX, take advantage of
strong asset pricing for apartments and enhance per share net asset value.
Total estimated gross proceeds from these sales are expected to be approximately
$340 million to $350 million -- up from the previously announced $250 million to
$300 million -- and would bring the total gross proceeds from Post's asset sales
over the past four years to more than $1 billion. The estimated closing dates of
the 11 properties currently being marketed range from late in the fourth quarter
of 2003 to early in the second quarter of 2004.
The company intends to use the proceeds of these sales for various purposes,
which may include common equity repurchases, preferred equity redemptions, debt
reduction, new development and acquisitions that further the geographic
diversification and quality of the portfolio. In connection with the sale of six
of the properties discussed above (five in Atlanta, GA and one in Orlando, FL),
the company expects that the purchaser(s) will acquire those properties subject
to a combined total of approximately $119 million of tax-exempt mortgage debt.
Merrill Lynch, the company's financial advisor, as part of its ongoing review of
strategies to increase shareholder value, is assisting the company in evaluating
capital reinvestment alternatives.
The planned asset sales discussed above are expected to produce GAAP accounting
gains (before the effect of asset impairment charges) of approximately $125
million to $135 million and gains in excess of gross book value (before
depreciation and write-downs for asset impairment charges) of approximately $40
million to $50 million. Taxable capital gains to the company from these sales
are estimated to total more than $100 million. The company expects to be able to
use its regular quarterly dividend of 45 cents per share, as well as other tax
planning strategies, to pay out or otherwise mitigate the impact of these
taxable capital gains, but may evaluate a special dividend in 2004.
Said David Stockert, Post's CEO and President, "We continue to pursue an
aggressive and successful program of asset sales designed to achieve several
important benefits. We are taking advantage of high demand for apartment
properties as a net seller, and realizing the value of our assets, while shaping
the portfolio to produce over time a more diversified and stable cash flow
stream."
One of the properties discussed above, a 166-unit apartment community located in
Atlanta, GA, is currently under contract to be sold to an entity controlled by
L. Barry Teague, a unitholder who served as a director of Post from February
2003 to September 2003. Mr. Teague was the high bidder for the asset in an
auction sales process conducted by a third-party broker. The contract with Mr.
Teague stipulates that approximately 40% of the $13 million purchase price will
consist of a redemption of a portion of Mr. Teague's partnership units in Post
Apartment Homes, L.P., the operating partnership that owns substantially all of
Post's assets. Partnership units are convertible, on a one-for-one basis, into
shares of Post, or into cash at the company's option. The redemption price per
unit has been set at $24.83, which is a discount of 10% to the average daily
closing price of Post common stock on the New York Stock Exchange for the twenty
consecutive trading days prior to the effective date of the contract.
DEVELOPMENT ACTIVITY
The company currently has two high-rise apartment communities in lease-up. Post
Toscana, located in New York City, and Post Massachusetts Avenue, located in
Washington, D.C., are both complete and are expected to achieve stabilized
occupancy as scheduled.
The company is continuing to pursue the pre-development of its project located
in the Carlyle master-planned development in Alexandria, VA and expects to
commence construction in the late Spring of 2004. The project is to comprise 353
high-rise and mid-rise luxury apartments and 20,000 square feet of retail space
in phase one, with development costs currently estimated at approximately $81
million. It is located adjacent to the 2.4 million square foot campus of the
U.S. Patent and Trade Office (PTO) currently under construction and is within
walking distance of the King Street Metro station. The PTO is expected to employ
more than 7,000 employees at Carlyle and is expected to begin taking occupancy
by year-end 2003. Post also owns land on which it ultimately expects to develop
a second phase, which includes an additional 325,000 square feet of residential
entitlements. Post's development partner, the New York State Common Retirement
Fund, is currently reviewing the opportunity to participate in phase one of
Post's Carlyle development.
REFINANCING ACTIVITY
Upon their maturity on October 1, 2003, the company repaid $100 million of its
7.25% unsecured notes, using borrowings under its unsecured line of credit.
COMPENSATION PACKAGE FOR CHAIRMAN OF THE BOARD
The company also announced today a compensation package for its Chairman, Robert
C. Goddard, III. As consideration for his services as non-executive Chairman,
Mr. Goddard will receive an annual retainer of $100,000. In addition, Mr.
Goddard received a stock option grant to purchase 100,000 shares of common
stock, at the current market price on the date of the grant, and a grant of
shares of restricted stock equal to $200,000 in value, each such grant vesting
over five years. The company's compensation committee also agreed that it would
annually consider granting Mr. Goddard additional stock options and restricted
stock based on performance. Mr. Stockert remarked, "Bob has provided valuable
leadership since his election as Chairman of the Board in February. The
compensation committee, acting with the assistance of independent compensation
consultants, put together a package to provide appropriate incentives to drive
shareholder value and recognize that Bob will continue to spend significant time
and energy in his role as Chairman."
OUTLOOK
The estimates presented below are forward-looking and are based on current
apartment market and general economic conditions and other risks outlined below.
Management believes that the company's net income per diluted share for the
fourth quarter of 2003 will be in a range of $0.30 to $0.31. Management is
currently expecting to close the sale of two assets in the fourth quarter of
2003. Management believes that the company's FFO per share for the fourth
quarter of 2003 will be in a range of $0.47 to $0.48. Management's estimates of
per share FFO for the fourth quarter of 2003 are based on the following
assumptions: reduced interest expense resulting from the retirement of $100
million of 7.25% senior unsecured notes with the proceeds from short-term
floating rate debt; seasonal decreases in same store NOI, as compared to same
store NOI for the third quarter of 2003; dilution from asset sales which are
expected to be completed in the fourth quarter of 2003, the proceeds of which
will be used primarily to pay down short-term floating rate debt; the impact of
reducing the amount of internal
personnel costs capitalized to development projects as those properties were
completed and placed in service; and increased general and administrative
expenses. A reconciliation of projected net income per diluted share to
projected FFO per diluted share for the fourth quarter of 2003 is included in
the financial data (Table 5) accompanying this press release.
SUPPLEMENTAL FINANCIAL DATA
The company also produces Supplemental Financial Data that includes detailed
information regarding the company's operating results and balance sheet. This
Supplemental Financial Data is considered an integral part of this earnings
release and is available on the Company's website. The Company's earnings
release and the Supplemental Financial Data is available through the company's
web site at "http://www.postproperties.com/posthome.nsf/ExtList/2003-
3QFinancials".
The ability to access the attachments on the company's web site requires the
Adobe Acrobat 4.0 Reader, which may be downloaded at http://www.adobe.com/
products/acrobat/readstep.html.
NON-GAAP FINANCIAL MEASURES
The company uses certain non-GAAP financial measures in this earnings release
and in its Supplemental Financial Data available on the company's website. These
non-GAAP financial measures include FFO, net operating income, same store
capital expenditures, net income, FFO and FAD excluding certain accounting
charges, and certain debt statistics and ratios. The definitions of these
non-GAAP financial measures are summarized below and on page 21 of the
Supplemental Financial Data. The company believes that these measures are
helpful to investors in measuring financial performance and/or liquidity and
comparing such performance and/or liquidity to other REITS.
FUNDS FROM OPERATIONS - The company uses FFO as an operating measure.
The company uses the NAREIT definition of FFO. FFO is defined by NAREIT
to mean net income (loss) available to common shareholders determined
in accordance with GAAP, excluding gains (or losses) from debt
restructuring and sales of property, plus depreciation of real estate
assets, and after adjustment for unconsolidated partnerships and joint
ventures all determined on a consistent basis in accordance with GAAP.
In October 2003, NAREIT issued additional guidance modifying the
definition of FFO. The first modification revised the treatment of
asset impairment losses and impairment losses incurred to write-down
assets to their fair value at the date assets are classified as held
for sale, to include such losses in FFO. Previously such losses were
excluded from FFO consistent with the treatment of gains on property
sales. The second modification clarified the treatment of original
issue costs and premiums paid on preferred stock redemptions to deduct
such costs and premiums in determining FFO available to common
shareholders. This modification was consistent with the recently
clarified treatment of these costs under GAAP. The company has adopted
the modifications to the definition of FFO effective with its reported
results for the period ended September 30, 2003. Prior period and prior
year presentations of FFO have been restated to conform with the
revised definition of FFO. FFO presented in the company's earnings
release and Supplemental Financial Data is not necessarily comparable
to FFO presented by other real estate companies because not all real
estate companies use the same definition. The company's FFO is
comparable to the FFO of real estate companies that use the current
NAREIT definition.
Accounting for real estate assets using historical cost accounting
under GAAP assumes that the value of real estate assets diminishes
predictably over time. NAREIT stated in its April 2002 White
Paper on Funds from Operations "since real estate asset values have
historically risen or fallen with market conditions, many industry
investors have considered presentations of operating results for real
estate companies that use historical cost accounting to be insufficient
by themselves." As a result, the concept of FFO was created by NAREIT
for the REIT industry to provide an alternate measure. Since the
company agrees with the concept of FFO and appreciates the reasons
surrounding its creation, the company believes that FFO is an important
supplemental measure of operating performance. In addition, since most
equity REITs provide FFO information to the investment community, the
company believes that FFO is a useful supplemental measure for
comparing the company's results to those of other equity REITs. The
company believes that the line on its consolidated statement of
operations entitled "net income (loss) available to common
shareholders" is the most directly comparable GAAP measure to FFO. The
company also computes a dividend payout ratio using dividends declared
during the quarter divided by FFO per diluted share in order to provide
investors with one alternate earnings measure to compare the
relationship of FFO to the company's quarterly dividends and
distributions.
FUNDS AVAILABLE FOR DISTRIBUTION - The company also uses funds
available for distribution ("FAD") as an operating measure. FAD is
defined as FFO less capital expenditures funded by operations. The
company believes that FAD is an important supplemental measure of
operating performance for an equity REIT because it provides investors
with an indication of the REIT's ability to fund its cash needs through
earnings, including debt service requirements, capital expenditures and
dividends and distributions. In addition, since most equity REITs
provide FAD information to the investment community, the company
believes that FAD is a useful supplemental measure for comparing the
company to other equity REITs. The company believes that the line on
its consolidated statement of operations entitled "net income (loss)
available to common shareholders" is the most directly comparable GAAP
measure to FAD. The company also computes a dividend payout ratio using
dividends declared during the quarter divided by FAD per diluted share
in order to provide investors with one alternate earnings measure to
compare the relationship of FAD to the company's quarterly dividends
and distributions.
PROPERTY NET OPERATING INCOME - The company uses property NOI,
including same store NOI and same store NOI by market, as an operating
measure. NOI is defined as rental and other revenues from real estate
operations less total property and maintenance expenses from real
estate operations (exclusive of depreciation and amortization). The
company believes that NOI is an important supplemental measure of
operating performance for a REIT's operating real estate because it
provides a measure of the core operations, rather than factoring in
depreciation and amortization, financing costs and general and
administrative expenses generally incurred at the corporate level. This
measure is particularly useful, in the opinion of the company, in
evaluating the performance of geographic operations, same store
groupings and individual properties. Additionally, the company believes
that NOI, as defined, is a widely accepted measure of comparative
operating performance in the real estate investment community. The
company believes that the line on its consolidated statement of
operations entitled "income from continuing operations before equity in
losses of unconsolidated entities, gains on property sales and minority
interest" is the most directly comparable GAAP measure to NOI.
SAME STORE CAPITAL EXPENDITURES - The company uses same store recurring
and non-recurring capital expenditures as cash flow measures. Same
store recurring and non-recurring capital
expenditures are supplemental non-GAAP financial measures. The company
believes that same store recurring and non-recurring capital
expenditures are important indicators of the costs incurred by the
company in maintaining its same store communities on an ongoing basis.
The corresponding GAAP measures include information with respect to the
company's other operating segments consisting of communities stabilized
in the prior year, lease-up communities, and sold communities in
addition to same store information. Therefore, the company believes
that the company's presentation of same store recurring and
non-recurring capital expenditures is necessary to demonstrate same
store replacement costs over time. The company believes that the most
directly comparable GAAP measure to same store recurring and
non-recurring capital expenditures are the lines on the company's
consolidated statements of cash flows entitled "recurring capital
expenditures" and "non-recurring capital expenditures."
NET INCOME, FFO AND FAD EXCLUDING CERTAIN CHARGES - The company uses
net income, FFO and FAD excluding one-time severance, proxy and
impairment charges as operating measures. The company reports net
income, FFO and FAD excluding certain one-time, non-cash charges as
alternative financial measures of core operating performance. The
company believes net income, FFO and FAD before one-time, non-cash
charges are informative measures for comparing operating performance
between periods and for comparing operating performance to other
companies that have not incurred such charges. The company further
believes that one-time, non-cash charges of the nature incurred in 2003
are not necessarily repetitive in nature and that it is therefore
meaningful to compare operating performance using alternative, non-GAAP
measures. In addition, the company believes the investment and analyst
communities desire to understand the meaningful components of the
company's performance and that these non-GAAP measures assist in
providing such supplemental measures. The company believes that the
most directly comparable GAAP financial measures to each of net income,
FFO and FAD, excluding certain one-time, non-cash charges, is the line
on the company's consolidated statements of operations entitled "net
income (loss) available to common shareholders." The company computes
dividend payout ratios using dividends declared during the quarter
divided by FFO and FAD per diluted share, excluding certain one-time,
non-cash charges in order to provide investors with alternate earnings
measures to compare the relationship of FFO and FAD, excluding certain
one-time, non-cash charges, to the company's quarterly dividends and
distributions.
DEBT STATISTICS AND DEBT RATIOS - The company uses a number of debt
statistics and ratios as supplemental measures of liquidity. The
numerator and/or the denominator of certain of these statistics and/or
ratios include non-GAAP financial measures that have been reconciled to
the most directly comparable GAAP financial measure. These debt
statistics and ratios include: (1) an interest coverage ratio; (2) a
fixed charge coverage ratio; (3) total debt as a percentage of
undepreciated real estate (unadjusted and adjusted for joint venture
partners' share of debt); (4) a ratio of consolidated debt to total
assets; (5) a ratio of secured debt to total assets; (6) a ratio of
total unencumbered assets to unsecured debt; and (7) a ratio of
consolidated income available to debt service to annual debt service
charge. A number of these debt statistics and ratios are derived from
covenants found in the company's debt agreements, including, among
others, the company's revolving line of credit and the company's senior
unsecured notes. In addition, the company presents these measures
because the degree of leverage could affect the company's ability to
obtain additional financing for working capital, capital expenditures,
acquisitions, development or other general corporate purposes. The
company uses these measures internally as an indicator of liquidity and
the company believes that
these measures are also utilized by the investment and analyst
communities to better understand the company's liquidity.
CONFERENCE CALL INFORMATION
The company will hold its quarterly conference call on Tuesday, November 4,
2003, at 10 a.m. EST. The telephone numbers are 1-800-256-8682 for domestic
calls and 334-323-7224 for international callers. Callers should reference "Post
Properties' Third Quarter 2003 Earnings Call." The conference call will be open
to the public and can be listened to live on Post's web site at
www.postproperties.com under Corporate Information/Investor Info. The replay
will begin two hours after the completion of the call and will be available
until Monday, November 17, at 11:59 p.m. EST. The telephone numbers for the
replay are 1-800-858-5309 for domestic callers and 334-323-7226 for
international callers. The access code for the replay is 40970. The passcode for
the replay is 38791. A replay of the call also will be available through
Tuesday, December 30, on Post's web site. The financial and statistical
information that will be discussed on the call is contained in this press
release and the Supplemental Financial Data. Both documents will be available on
the company's website at "http://www.postproperties.com/posthome.nsf/ExtList/
2003-3QFinancials" prior to the quarterly conference call.
Post Properties, Inc., a leading developer and operator of upscale apartment
communities in the United States, pioneered building and branding resort-style
garden apartments for more than 30 years. Post now also focuses on the creation
of high-quality, high-density, live-work-walk neighborhoods in infill locations
in major urban markets. The company has been recognized locally, nationally and
internationally for building better neighborhoods and the preservation of
historic buildings. Operating as a self-administered and self-managed equity
real estate investment trust (REIT), the company's primary business consists of
developing and managing Post(R) brand-name apartment communities.
Nationwide, Post Properties owns approximately 28,917 apartment homes in 78
communities, including 468 units currently under development and lease-up.
FORWARD LOOKING STATEMENT:
Certain statements made in this press release and other written or oral
statements made by or on behalf of the company, may constitute "forward-looking
statements" within the meaning of the federal securities laws. Statements
regarding future events and developments and the company's future performance,
as well as management's expectations, beliefs, plans, estimates or projections
relating to the future, are forward-looking statements within the meaning of
these laws. Examples of such statements in this press release include the
company's anticipated asset sales during the fourth quarter of 2003 and the
first half of 2004 (including the estimated proceeds and the use of proceeds
from such sales) and the company's projected net income per diluted share and
projected FFO per diluted share for the fourth quarter of 2003. All
forward-looking statements are subject to certain risks and uncertainties that
could cause actual events to differ materially from those projected. Management
believes that these forward-looking statements are reasonable; however, you
should not place undue reliance on such statements. These statements are based
on current expectations and speak only as of the date of such statements. The
company undertakes no obligation to publicly update or revise any
forward-looking statement, whether as a result of future events, new information
or otherwise.
The following are some of the factors that could cause the company's actual
results to differ materially from the expected results described in the
company's forward-looking statements: future local and national economic
conditions, including changes in job growth, interest rates, the availability of
financing and other factors; demand for apartments in the company's markets and
the effect on occupancy and rental rates; the impact of competition on the
company's business, including competition for tenants and development locations;
the company's ability to obtain financing or self-fund the development or
acquisition of additional apartment communities; the uncertainties associated
with the company's current and planned future real estate development, including
actual costs exceeding the company's budgets or development periods exceeding
expectations; uncertainties associated with the timing and amount of asset sales
and the resulting gains/losses associated with such asset sales; conditions
affecting ownership of residential real estate and general conditions in the
multi-family residential real estate market; the effects of changes in
accounting policies and other regulatory matters detailed in the company's
filings with the Securities and Exchange Commission and uncertainties of
litigation; and the company's ability to continue to qualify as a real estate
investment trust under the Internal Revenue Code. Other important risk factors
regarding the company are included under the caption "Risk Factors" in the
company's Annual Report on Form 10-K for the year ended December 31, 2002 and
may be discussed in subsequent filings with the SEC. The risk factors discussed
in such Form 10-K under the caption "Risk Factors" are specifically incorporated
by reference into this press release.
FINANCIAL HIGHLIGHTS
(Unaudited; in thousands, except per share amounts)
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
----------------------------- -----------------------------
2003 2002 2003 2002
------------ ------------ ------------ ------------
OPERATING DATA
Revenues $ 73,480 $ 73,246 $ 217,460 $ 215,074
Net income (loss) available to common shareholders (4,514) 3,291 (3,135) 39,649
Net income (loss) available to common shareholders,
excluding severance and proxy charges (Table 1) (4,514) 3,291 20,693 39,649
Funds from operations available to common shareholders
(Table 2) 16,759 25,307 20,194 75,170
Funds from operations available to common shareholders,
excluding severance, proxy and asset impairment charges
(Table 2) 20,103 27,156 64,393 84,672
Weighted average shares outstanding - diluted 37,857,411 36,916,835 37,524,488 36,941,598
Weighted average shares and units outstanding - diluted 42,206,352 42,035,723 42,103,916 42,060,486
PER COMMON SHARE DATA - DILUTED
Net income (loss) available to common shareholders $ (0.12) $ 0.09 $ (0.08) $ 1.07
Net income (loss) available to common shareholders,
excluding severance and proxy charges (Table 1) $ (0.12) $ 0.09 $ 0.55 $ 1.07
Funds from operations available to common shareholders
(Table 2) $ 0.40 $ 0.60 $ 0.48 $ 1.79
Funds from operations available to common shareholders,
excluding severance, proxy and asset impairment charges
(Table 2) $ 0.48 $ 0.65 $ 1.53 $ 2.01
Dividends declared $ 0.45 $ 0.78 $ 1.35 $ 2.34
TABLE 1
RECONCILIATION OF NET INCOME AVAILABLE TO COMMON SHAREHOLDERS TO NET INCOME
AVAILABLE TO COMMON SHAREHOLDERS, EXCLUDING SEVERANCE AND PROXY CHARGES
(Unaudited; in thousands, except per share amounts)
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
--------------------- ---------------------
2003 2002 2003 2002
-------- -------- -------- --------
Net income (loss) available to common shareholders $ (4,514) $ 3,291 $ (3,135) $ 39,649
Severance charges - - 21,506 -
Proxy and related costs - - 5,231 -
Minority interest impact of charges (1) - - (2,909) -
-------- -------- -------- --------
Net income (loss) available to common shareholders,
excluding severance and proxy charges $ (4,514) $ 3,291 20,693 39,649
======== ======== ======== ========
Weighted average shares outstanding - diluted 37,857 36,917 37,524 36,942
======== ======== ======== ========
Net income available to common shareholders,
excluding severance, proxy and asset impairment
charges - per diluted share $ (0.12) $ 0.09 $ 0.55 $ 1.07
======== ======== ======== ========
(1) Computed at 10.88% for the nine months ended September 30, 2003.
TABLE 2
RECONCILIATION OF NET INCOME AVAILABLE TO COMMON SHAREHOLDERS TO
FUNDS FROM OPERATIONS AVAILABLE TO COMMON SHAREHOLDERS
(Unaudited; in thousands, except per share amounts)
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
-------------------- --------------------
2003 2002 2003 2002
-------- -------- -------- --------
NET INCOME (LOSS) AVAILABLE TO COMMON SHAREHOLDERS $ (4,514) $ 3,291 $ (3,135) $ 39,649
Minority interest of common unitholders -
continuing operations (457) 244 (3,160) 2,791
Minority interest in discontinued operations 11 211 2,783 2,699
Gains on property sales - continuing operations - - - (13,275)
Gains on property sales - unconsolidated entities - - (8,395) -
Losses (gains) on property sales - discontinued operations
(excluding asset impairment losses) (185) 321 (33,690) (18,065)
Depreciation on wholly-owned real estate assets, net 21,571 20,904 64,555 60,635
Depreciation on real estate assets held in
unconsolidated entities 333 336 1,236 736
-------- -------- -------- --------
FUNDS FROM OPERATIONS AVAILABLE TO
COMMON SHAREHOLDERS (1) 16,759 25,307 20,194 75,170
Severance charges - - 21,506 -
Proxy and related costs - - 5,231 -
Asset impairment charges 3,344 1,849 17,462 9,502
-------- -------- -------- --------
FUNDS FROM OPERATIONS AVAILABLE TO COMMON SHAREHOLDERS,
EXCLUDING SEVERANCE, PROXY AND ASSET IMPAIRMENT CHARGES $ 20,103 $ 27,156 $ 64,393 $ 84,672
======== ======== ======== ========
Weighted average shares and units outstanding - diluted 42,206 42,036 42,104 42,060
======== ======== ======== ========
Funds from operations - per diluted share $ 0.40 $ 0.60 $ 0.48 $ 1.79
======== ======== ======== ========
Funds from operations, excluding severance, proxy and
asset impairment charges - per diluted share $ 0.48 $ 0.65 $ 1.53 $ 2.01
======== ======== ======== ========
(1) For the three and nine months ended September 30, 2002, FFO available
to common shareholders has been restated from the prior year
presentation to reflect a reduction of $1,849 and $9,502 for impairment
losses on real estate assets resulting from the NAREIT modification of
the definition of FFO. For the nine months ended September 30, 2003,
FFO available to common shareholders has been restated to reflect a
reduction of $14,118 for impairment losses on real estate recognized in
the first half of 2003. Additionally for the nine months ended
September 30, 2002, FFO has been restated from the prior year
presentation to reflect a reduction of $136 for early debt
extinguishment costs reclassified from extraordinary items to operating
expenses under SFAS No. 145.
TABLE 3
RECONCILIATION OF SAME STORE NET OPERATING INCOME (NOI) TO INCOME FROM
CONTINUING OPERATIONS BEFORE EQUITY IN INCOME (LOSSES) OF UNCONSOLIDATED
ENTITIES, GAINS ON PROPERTY SALES AND MINORITY INTEREST
(Dollars in thousands)
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
--------------------------- ---------------------------
2003 2002 2003 2002
------------ ------------ ------------ ------------
Total same store NOI $ 35,247 $ 37,483 $ 105,980 $ 113,376
Property NOI from other operating segments 6,763 5,452 19,424 13,771
------------ ------------ ------------ ------------
Consolidated property NOI 42,010 42,935 125,404 127,147
Add:
Interest income 223 316 708 1,002
Minority interest in consolidated property partnerships 677 537 1,359 1,480
Less:
Depreciation (21,553) (19,311) (62,097) (55,637)
Interest (17,122) (13,676) (48,992) (37,386)
Amortization of deferred loan costs (1,084) (588) (2,840) (1,711)
General and administrative (3,735) (3,495) (10,697) (10,980)
Other expenses (277) - (844) (136)
Severance charges - - (21,506) -
Proxy and related charges - - (5,231) -
Income (loss) from continuing operations before equity in
income (losses) of unconsolidated entities, gains on ------------ ------------ ------------ ------------
property sales and minority interest $ (861) $ 6,718 $ (24,736) $ 23,779
============ ============ ============ ============
TABLE 4
SAME STORE NET OPERATING INCOME (NOI) SUMMARY BY MARKET
(Dollars in thousands)
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
----------------------- -----------------------
2003 2002 % CHANGE 2003 2002 % CHANGE
---------- ---------- ---------- --------- ---------- ----------
Rental and other revenues
Atlanta $ 32,740 $ 34,242 (4.40)% $ 97,509 $ 102,398 (4.80)%
Dallas 12,200 12,591 (3.10)% 36,362 37,598 (3.30)%
Tampa 4,400 4,577 (3.90)% 13,051 13,829 (5.60)%
Other 6,634 6,597 0.60% 19,619 19,611 -
---------- ---------- --------- ----------
Total rental and other revenues 55,974 58,007 (3.50)% 166,541 173,436 (4.00)%
---------- ---------- --------- ----------
Property operating and maintenance expenses
(excluding depreciation and amortization)
Atlanta 11,727 11,247 4.30% 33,782 32,881 2.70%
Dallas 4,941 5,236 (5.60)% 14,731 15,018 (1.90)%
Tampa 1,753 1,753 - 5,146 5,233 (1.70)%
Other 2,306 2,288 0.80% 6,902 6,928 (0.40)%
---------- ---------- --------- ----------
Total property operating and maintenance expenses
(excluding depreciation and amortization) 20,727 20,524 1.00% 60,561 60,060 0.80%
---------- ---------- --------- ----------
Net operating income
Atlanta 21,013 22,995 (8.60)% 63,727 69,517 (8.30)%
Dallas 7,259 7,355 (1.30)% 21,631 22,580 (4.20)%
Tampa 2,647 2,824 (6.30)% 7,905 8,596 (8.00)%
Other 4,328 4,309 0.50 % 12,717 12,683 0.30 %
---------- ---------- --------- ----------
Total same store NOI $ 35,247 $ 37,483 (6.00)% $ 105,980 $ 113,376 (6.50)%
---------- ---------- --------- ----------
TABLE 5
RECONCILIATION OF FORECASTED NET INCOME PER COMMON SHARE TO
FORECASTED FUNDS FROM OPERATIONS PER COMMON SHARE
Three months ended
December 31, 2003
------------------------
Low Range High Range
Forecasted net income, per share $ 0.30 $ 0.31
Forecasted gains on property sales, per share (0.30) (0.31)
Forecasted real estate depreciation, per share 0.47 0.48
--------- ----------
Forecasted funds from operations, per share $ 0.47 $ 0.48
========= ==========
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