EXHIBIT 99.1
Contact: Janie Maddox
Post Properties, Inc.
(404) 846-5056
POST PROPERTIES ANNOUNCES FIRST QUARTER EARNINGS
Investor/Analyst Conference Call Scheduled for May 4, 2004 at 10:00 a.m. EDT
ATLANTA, May 3, 2004 - Post Properties, Inc. (NYSE: PPS) announced today a net
loss attributable to common shareholders of $0.9 million for the first quarter
of 2004, compared to a net loss of $23.5 million for the first quarter of 2003.
On a diluted per share basis, the net loss attributable to common shareholders
was $0.02 for the first quarter of 2004, compared to a net loss of $0.63 for the
first quarter of 2003.
The net loss attributable to common shareholders in the first quarter of 2004
includes a $1.7 million non-cash charge ($0.04 per diluted share) for redemption
costs incurred on the 7-5/8% Series C Cumulative Redeemable Preferred Shares
(the "Series C Preferred Shares") that were redeemed by the company on March 5,
2004. The net loss attributable to common shareholders in the first quarter of
2003 included severance and asset impairment charges totaling $30.0 million, net
of minority interest, or $0.80 per diluted share.
The company uses the National Association of Real Estate Investment Trusts
("NAREIT") definition of Funds from Operations ("FFO") as an operating measure
of the company's financial performance. In October 2003, NAREIT clarified the
definition of FFO to include impairment losses. As such, prior period
presentations of FFO have been restated to conform with the revised NAREIT
definition of FFO. A reconciliation of FFO to GAAP net income is included in the
financial data (Table 1) accompanying this press release.
FFO for the first quarter of 2004 totaled $17.8 million, or $0.42 per diluted
share, compared to $(11.3) million, or $(0.27) per diluted share, for the first
quarter of 2003. Excluding preferred stock redemption costs, FFO for the first
quarter of 2004 was $19.5 million, or $0.46 per diluted share. Excluding
severance and asset impairment charges, FFO for the first quarter of 2003 was
$22.6 million, or $0.54 per diluted share.
Total revenues from continuing operations were $75.5 million for the first
quarter of 2004, compared to $73.0 million for the first quarter of 2003.
Said David P. Stockert, Post's CEO and President, "Operating results for the
first quarter modestly exceeded our expectations and our previously issued
earnings guidance, with ongoing signs of firming market conditions. During the
quarter we continued along the path to focus the business, sell commodity-like
assets, diversify the portfolio, strengthen the balance sheet and pursue
value-added investments. These steps should strengthen the company's growth
prospects in the improving economy."
MATURE COMMUNITY DATA
For the first quarter of 2004, average economic occupancy at the company's 57
mature (same store) communities, containing 21,954 apartment units, was 92.8%,
compared to 90.2% for the first quarter of 2003.
Total revenues for the mature communities decreased 0.4% during the first
quarter of 2004, compared to the first quarter of 2003, and operating expenses
increased 5.8%, resulting in a 4.0% decline in same store net operating income
(NOI), or $1.6 million.
On a sequential basis, total revenues for the mature communities increased 0.4%
and operating expenses increased 4.5%, resulting in a decline in same store NOI
of 2.0%, or $0.8 million during the first quarter of 2004, compared to the
fourth quarter of 2003. For the first quarter of 2004, average economic
occupancy was 92.8% compared to 92.9% for the fourth 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 2) accompanying this press release. Same store NOI by
market data is also included in the financial data (Table 3) accompanying this
press release.
LEASE-UP ACTIVITY
As of March 31, 2004, the company was concluding the lease-up of two
communities, Post Toscana(TM) in New York City and Post Massachusetts Avenue(TM)
in Washington, D.C. At May 1, 2004, Post Toscana(TM) was 97.0% leased and 93.0%
occupied and Post Massachusetts Avenue(TM) was 96.3% leased and 91.8% occupied.
ASSET SALES AND CAPITAL REINVESTMENT ACTIVITY
During the first quarter of 2004, the company completed the sale of Post
Townlake(R), a 398-unit apartment community located in suburban Dallas, TX, and
certain land parcels, realizing net proceeds of approximately $24.0 million. The
company realized GAAP accounting gains on these sales of approximately $1.6
million and economic losses (before accumulated depreciation) of approximately
$3.2 million. Post Townlake(R) was acquired as part of the Columbus Realty
acquisition in 1997. A reconciliation of GAAP accounting gains on property sales
to economic gains (losses) on property sales is included in the financial data
(Table 5) accompanying this press release.
In connection with its previously announced asset sales program, the company
plans to sell eight additional apartment communities for expected sales prices
totaling approximately $248 to $250 million. These asset sales are currently
expected to close late in the second quarter or early in the third quarter.
Seven of the apartment communities are under contract to sell to a single buyer,
whom the company expects will acquire six of those properties subject to a
combined total of approximately $119 million of tax-exempt bond financing. The
assumption of the tax-exempt bond financing and, consequently the timing of the
closing of these sales transactions, are subject to the buyer obtaining the
requisite approvals from the local municipal bond authorities where the
properties are located. The apartment communities currently held for sale
include six properties in Atlanta, GA, one property in Dallas, TX and one
property in Orlando, FL. The properties have an average age of approximately 17
years.
The company intends to use the proceeds of its asset sales program for various
corporate purposes. The company expects to use approximately half of the
proceeds from its 2004 asset sales to redeem preferred stock and preferred units
and pay down additional debt, and may invest in common share repurchases if the
company can buy back stock at substantial discounts to its estimates of
per-share net asset value. Another substantial portion of this year's asset
sales proceeds is targeted for acquisitions that will help balance the portfolio
and achieve Post's critical mass objectives, and where value can be enhanced
through management, renovation or redevelopment opportunities.
Thus far in 2004, the company has utilized proceeds from its asset sales program
to redeem its 7-5/8% Series C Preferred Shares totaling $50 million on March 5,
2004 and its 7.3% Medium Term Notes (the "7.3% MTN") totaling $13 million on
April 1, 2004. The company is also currently planning to use expected asset
sales proceeds to redeem its 8% Series D Cumulative Redeemable Preferred Units
totaling $70 million, which first become callable by the company on September 3,
2004, and its 6.69% Medium Term Notes totaling $10 million, which mature on
September 22, 2004.
With respect to the sales of nine apartment communities and certain land parcels
in 2004 discussed above, the company expects to realize GAAP accounting gains of
approximately $130 million to $132 million (including $1.6 million of gains
recognized in the first quarter of 2004) and economic gains on property sales
(before accumulated depreciation and write-downs for asset impairment charges)
of approximately $52 million to $54 million (including $3.2 million of economic
losses recognized in the first quarter of 2004). A reconciliation of GAAP
accounting gains on property sales to economic gains (losses) on property sales
is included in the financial data (Table 5) accompanying this press release.
The company also expects to realize aggregate taxable capital gains in 2004 from
its asset sales totaling approximately $100 million. The company expects to be
able to use its regular quarterly dividend of $0.45 per share, as well as other
tax planning strategies, to pay out or otherwise mitigate the impact of these
taxable capital gains.
FINANCING ACTIVITY
As discussed above, during the first quarter of 2004, the company utilized
proceeds from its asset sales program to redeem its Series C Preferred Shares
and the 7.3% MTN. In addition, in April 2004, the company renewed and extended
its $20 million unsecured line of credit with Wachovia Bank of Georgia, N.A.
(the "Cash Management Line"), which was originally scheduled to expire on April
30, 2004. The pricing, maturity and terms, including debt covenants, of the Cash
Management Line are generally consistent with the company's $350 million,
three-year unsecured revolving line of credit facility that was provided by a
syndicate of nine banks led by Wachovia and that closed in January 2004. At
March 31, 2004, amounts outstanding under the company's combined $370 million
credit facilities totaled $50 million.
During the first quarter of 2004, the company also closed 5-year mortgage loans
on each of Post Luminaria(TM) located in New York, NY and Post Massachusetts
Avenue(TM) located in Washington, D.C. The Post Luminaria(TM) mortgage loan is
$35 million, bears interest at a rate of 4.27% per annum and matures on March
10, 2009. Post Luminaria(TM) is owned in a consolidated joint venture with a
third party investor. The Post Massachusetts Avenue(TM) mortgage loan is $50
million, bears interest at a rate of 4.13% per annum, is first callable by the
lender on May 1, 2009 and is first prepayable without a prepayment premium by
the joint venture on May 1, 2008. Post Massachusetts Avenue(TM) is owned in an
unconsolidated joint venture with the New York State Common Retirement Fund. The
net proceeds of the above-described loans were used primarily to repay
construction loans that Post had made to each of these entities to fund the
development and construction of the properties.
Total debt as a percentage of undepreciated real estate assets (adjusted for
joint venture partner's share of debt) decreased from 47.3% at March 31, 2003 to
46.9% at March 31, 2004. Total debt and preferred equity as a percentage of
undepreciated assets (adjusted for joint venture partner's share of debt) also
decreased from 55.2% at March 31, 2003 to 53.2% at March 31, 2004. A computation
of debt ratios and reconciliation of the ratios to the appropriate GAAP measures
in the company's financial statements is
included in the financial data (Table 4) accompanying this press release.
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
second quarter of 2004 will be in a range of $2.92 to $2.97. Management is
currently assuming the closing of the sale of eight apartment communities in the
second quarter of 2004. Management believes that the company's FFO per share for
the second quarter of 2004 will be in a range of $0.38 to $0.39, or $0.45 to
$0.46, excluding non-cash charges for the write-off of unamortized deferred loan
costs and interest rate hedge costs related to tax-exempt debt to be assumed in
connection with the asset sales program. Management's estimates of per share FFO
for the second quarter of 2004, excluding charges for the write-off of
unamortized deferred loan costs and interest rate hedge costs related to
tax-exempt debt to be assumed in connection with asset sales, are based on the
following assumptions: seasonally higher same store NOI, due primarily to
seasonally higher operating revenues; the benefits from redemption of the Series
C Preferred Shares on March 5, 2004; offset by the dilution from the sale of one
apartment community in the first quarter of 2004 and the forecasted sale of
eight apartment communities during the second quarter of 2004. A reconciliation
of projected net income per diluted share to projected FFO per diluted share for
the second quarter of 2004 is included in the financial data (Table 6)
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 are available through the company's
web site at "http://www.postproperties.com/posthome.nsf/ExtList/2004-1Q
Financials".
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.htm1.
NON-GAAP FINANCIAL MEASURES AND OTHER DEFINED TERMS
The company uses certain non-GAAP financial measures and other defined terms in
this press release and in its Supplemental Financial Data available on the
company's website. The non-GAAP financial measures include FFO, Adjusted Funds
from Operations ("AFFO"), net operating income, same store capital expenditures,
net income, FFO and AFFO excluding certain accountifng charges, certain debt
statistics and ratios and economic gains (losses) on property sales. The
definitions of these non-GAAP financial measures are summarized below and on
page 17 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 extraordinary items and sales of
property, plus depreciation and amortization 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 and losses 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 adopted the
modifications to the definition of FFO effective with its reported results for
the third quarter of 2003. Prior period presentations of FFO have been restated
to conform with the revised definition of FFO. FFO presented in the company's
press 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 that "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 available to common shareholders"
is the most directly comparable GAAP measure to FFO.
ADJUSTED FUNDS FROM OPERATIONS - The company also uses adjusted funds from
operations ("AFFO") as an operating measure. AFFO is defined as FFO less
operating capital expenditures. The company believes that AFFO 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
operating capital expenditures through earnings. In addition, since most equity
REITs provide AFFO information to the investment community, the company believes
that AFFO 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 AFFO.
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 "net income (loss)" 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 commercial properties 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."
FFO AND AFFO EXCLUDING CERTAIN CHARGES - The company uses FFO and AFFO excluding
certain preferred stock redemption costs, severance and impairment charges as
operating measures. The company reports FFO and AFFO excluding certain charges
as alternative financial measures of core operating performance. The company
believes FFO and AFFO before certain 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 charges of the nature incurred in 2004 and 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 FFO and AFFO,
excluding certain charges, is the line on the company's consolidated statements
of operations entitled "net income (loss) available to common shareholders."
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 assets (adjusted for joint venture
partner's share of debt); (4) total debt plus preferred equity as a percentage
of undepreciated real estate assets (adjusted for joint venture partner's share
of debt); (5) a ratio of consolidated debt to total assets; (6) a ratio of
secured debt to total assets; (7) a ratio of total unencumbered assets to
unsecured debt; and (8) 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 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.
ECONOMIC GAINS (LOSSES) ON PROPERTY SALES - The company uses economic gains
(losses) on property sales as a supplemental measure of operating performance.
Economic gains (losses) on property sales are defined as gains (losses) on
property sales in accordance with GAAP, before accumulated depreciation and any
prior period write-downs for asset impairment charges on such assets. The
company believes economic gains (losses) on property sales is an important
supplemental measure to
gains (losses) on property sales in accordance with GAAP because it assists
investors and analysts in understanding the relationship between the cash
proceeds from the sale of an asset and the cash invested in that asset. The
company believes the line on its consolidated statement of operations entitled
"gains (losses) on property sales - discontinued operations" is the most
directly comparable GAAP measure to economic gains (losses) on property sales.
AVERAGE ECONOMIC OCCUPANCY - The company uses average economic occupancy as a
statistical measure of operating performance. The company defines average
economic occupancy as gross potential rent less vacancy losses, model expenses
and bad debt expenses divided by gross potential rent for the period, expressed
as a percentage.
CONFERENCE CALL INFORMATION
The company will hold its quarterly conference call on Tuesday, May 4, 2004, at
10 a.m. EDT. The telephone numbers are 1-800-811-0667 for domestic calls and
913-981-4901 for international callers. The access code is 528444. 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 at 1:00 p.m. EDT on May 4, and will be available until
Monday, May 10, 2004, at 11:59 p.m. EDT. The telephone numbers for the replay
are 1-888-203-1112 for domestic callers and 719-457-0820 for international
callers. The access code for the replay is 528444. A replay of the call also
will be available through Wednesday, June 30, 2004, 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/2004-1QFinancials" prior to
the quarterly conference call.
Post Properties, founded more than 30 years ago, is one of the largest
developers and operators of upscale multifamily communities in the United
States. The Company's mission is delivering superior satisfaction and value to
its residents, associates, and investors. Operating as a real estate investment
trust (REIT), the Company focuses on developing and managing Post(R) branded
resort-style garden apartments and high-density urban apartments with a vision
of being the first choice in quality multifamily living. Post is headquartered
in Atlanta, Georgia, and has operations in 10 markets across the country.
Nationwide, Post Properties owns approximately 27,683 apartment homes in 71
communities, including 666 apartment homes held in three
unconsolidated joint ventures.
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 second quarter of 2004 (including
the estimated proceeds, estimated gains on sales and the use of proceeds from
such sales), the company's projected net income per diluted share and projected
FFO per diluted share for the second quarter of 2004. 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, 2003 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
MARCH 31,
-----------------------------
2004 2003
------------ ------------
OPERATING DATA
Revenues from continuing operations ......................................... $ 75,468 $ 72,955
Net loss attributable to common shareholders ................................ $ (902) $ (23,450)
Funds from operations available to common shareholders (Table 2) ............ $ 17,766 $ (11,255)
Funds from operations available to common shareholders, excluding preferred
stock redemption costs, severance and asset impairment charges (Table 2) .. $ 19,482 $ 22,575
Weighted average shares outstanding - diluted ............................... 39,382 37,262
Weighted average shares and units outstanding - diluted ..................... 42,461 42,049
PER COMMON SHARE DATA - DILUTED
Net loss attributable to common shareholders ................................ $ (0.02) $ (0.63)
Funds from operations available to common shareholders (Table 1)(1) ......... $ 0.42 $ (0.27)
Funds from operations available to common shareholders, excluding preferred
stock redemption costs, severance and asset impairment charges (Table
1)(1) ..................................................................... $ 0.46 $ 0.54
Dividends declared ........................................................ $ 0.45 $ 0.45
(1) Funds from operations per share for the three months ended March 31, 2004
were computed using weighted average shares and units outstanding,
including the impact of dilutive securities totaling 55. Such dilutive
securities were antidilutive to all income (loss) per share computations.
TABLE 1
RECONCILIATION OF NET LOSS ATTRIBUTABLE TO COMMON SHAREHOLDERS TO
FUNDS FROM OPERATIONS AVAILABLE TO COMMON SHAREHOLDERS
(Unaudited; in thousands, except per share amounts)
THREE MONTH ENDED
MARCH 31,
------------------------------
2004 2003
------------ -------------
Net loss attributable to common shareholders ................................ $ (902) $ (23,450)
Minority interest of common unitholders - continuing operations ............. (473) (2,623)
Minority interest in discontinued operations ................................ 402 (391)
Gains on property sales - discontinued operations ........................... (1,627) (6,875)
Depreciation on wholly-owned real estate assets, net ........................ 20,039 21,618
Depreciation on real estate assets held in unconsolidated entities .......... 327 466
------------ ------------
Funds from operations available to common shareholders (1)(2) ............... 17,766 (11,255)
Redemption costs on preferred stock ......................................... 1,716 -
Severance charges ........................................................... - 19,712
Asset impairment charges .................................................... - 14,118
------------ ------------
Funds from operations available to common shareholders, excluding preferred
stock redemption costs, severance and asset impairment charges ............ $ 19,482 $ 22,575
============ ============
Weighted average shares and units outstanding - diluted (3) ................. 42,516 42,049
============ ============
Funds from operations - per diluted share ................................... $ 0.42 $ (0.27)
============ ============
Funds from operations, excluding preferred stock redemption costs, severance
and asset impairment charges - per diluted share .......................... $ 0.46 $ 0.54
============ ============
(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 adopted the modifications to the definition of FFO effective
with its reported results for the third quarter of 2003. Prior period
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.
(2) For the three months ended March 31, 2003, FFO available to common
shareholders has been restated from the prior year presentation to reflect
a reduction of $14,118 for impairment losses on real estate assets
resulting from the NAREIT modification of the definition of FFO.
(3) Diluted weighted average shares and units for the three months ended March
31, 2004 include 55 shares and units that were antidilutive to all income
(loss) per share computations under generally accepted accounting
principles.
TABLE 2
RECONCILIATION OF SAME STORE NET OPERATING INCOME (NOI) TO GAAP NET INCOME
(LOSS)
(In thousands)
THREE MONTHS ENDED
-------------------------------------------------------------
MARCH 31, MARCH 31, DECEMBER 31,
2004 2003 2003
---- ---- ----
Total same store NOI ............................ $ 39,435 $ 41,063 $ 40,243
Property NOI from other operating segments ...... 2,772 472 2,024
-------- -------- --------
Consolidated property NOI ....................... 42,207 41,535 42,267
Add (subtract):
Other revenues ............................... 76 130 78
Interest income .............................. 180 234 187
Minority interest in consolidated property
partnerships ................................ 272 334 665
Depreciation ................................. (21,186) (20,290) (21,603)
Interest ..................................... (16,281) (15,629) (15,914)
Amortization of deferred loan costs .......... (1,116) (788) (962)
General and administrative ................... (4,642) (3,624) (4,400)
Development costs and other expenses ......... (535) (567) (1,298)
Severance charges ............................ -- (19,712) --
Equity in income (losses) of unconsolidated
entities .................................... 216 (393) 23
Minority interest of preferred unitholders ... (1,400) (1,400) (1,400)
Minority interest of common unitholders ...... 473 2,623 393
-------- -------- --------
Income (loss) from continuing operations ..... (1,736) (17,547) (1,964)
Income (loss) from discontinued operations ... 5,147 (3,041) 10,669
-------- -------- --------
Net income (loss) ............................... $ 3,411 $(20,588) $ 8,705
======== ======== ========
TABLE 3
SAME STORE NET OPERATING INCOME (NOI) SUMMARY BY MARKET
(In thousands)
THREE MONTHS ENDED
------------------------------------------------ 1Q'04 VS 1Q'04 VS
MARCH 31, MARCH 31, DECEMBER 31, 1Q'03 4Q'03
2004 2003 2003 % CHANGE % CHANGE
------------ ------------ ------------- --------- ---------
Rental and other revenues
Atlanta $ 32,887 $ 33,467 $ 32,961 (1.7)% (0.2)%
Dallas 12,481 12,403 12,435 0.6% 0.4%
Tampa 4,558 4,415 4,514 3.2% 1.0%
Washington, DC 5,364 5,166 5,257 3.8% 2.0%
Charlotte 3,151 3,012 3,078 4.6% 2.4%
Other 6,268 6,481 6,187 (3.3)% 1.3%
------------ ------------ ------------
Total rental and other revenues 64,709 64,944 64,432 (0.4)% 0.4%
------------ ------------ ------------
Property operating and maintenance
expenses (exclusive of depreciation and
amortization)
Atlanta 12,352 11,569 11,979 6.8% 3.1%
Dallas 5,429 5,237 5,174 3.7% 4.9%
Tampa 1,990 1,787 1,726 11.4% 15.3%
Washington, DC 1,807 1,718 1,684 5.2% 7.3%
Charlotte 1,035 1,045 999 (1.0)% 3.6%
Other 2,661 2,525 2,627 5.4% 1.3%
------------ ------------ ------------
Total 25,274 23,881 24,189 5.8% 4.5%
------------ ------------ ------------
Net operating income
Atlanta 20,535 21,898 20,982 (6.2)% (2.1)%
Dallas 7,052 7,166 7,261 (1.6)% (2.9)%
Tampa 2,568 2,628 2,788 (2.3)% (7.9)%
Washington, DC 3,557 3,448 3,573 3.2% (0.4)%
Charlotte 2,116 1,967 2,079 7.6% 1.8%
Other 3,607 3,956 3,560 (8.8)% 1.3%
------------ ------------ ------------
Total same store NOI $ 39,435 $ 41,063 $ 40,243 (4.0)% (2.0)%
============ ============ ============
TABLE 4
COMPUTATION OF DEBT RATIOS
(In thousands)
AS OF MARCH 31,
---------------------------------
2004 2003
------------ ------------
Total real estate assets per balance sheet .................................. $ 2,050,422 $ 2,210,379
Plus:
Company share of real estate assets held in unconsolidated entities ......... 44,329 69,678
Company share of accumulated depreciation - assets held in unconsolidated
entities .................................................................. 2,411 1,637
Accumulated depreciation per balance sheet .................................. 453,077 448,341
Accumulated depreciation on assets held for sale ............................ 69,822 16,336
------------ ------------
Total undepreciated real estate assets (A) .................................. $ 2,620,061 $ 2,746,371
============ ============
Total debt per balance sheet ................................................ $ 1,198,629 $ 1,384,266
Plus:
Company share of debt held in unconsolidated entities 29,292 5,942
Less:
Joint venture partner's share of construction debt to the company ........... - (90,214)
------------ ------------
Total debt (adjusted for joint venture partner's share of debt) (B) ......... $ 1,227,921 $ 1,299,994
============ ============
Total debt as a % of undepreciated real estate assets (adjusted for joint
venture partner's share of debt) (B/A) .................................... 46.9% 47.3%
============ ============
Total debt per balance sheet ................................................ $ 1,198,629 $ 1,384,266
Plus:
Company share of debt held in unconsolidated entities ....................... 29,292 5,942
Preferred shares at liquidation value ....................................... 95,000 145,000
Preferred units at liquidation value ........................................ 70,000 70,000
Less:
Joint venture partner's share of construction debt to the company ........... - (90,214)
------------ ------------
Total debt and preferred equity (adjusted for joint venture partner's share
of debt) (C) ................................................................ $ 1,392,921 $ 1,514,994
============ ============
Total debt and preferred equity as a % of undepreciated assets (adjusted
for joint venture partner's share of debt) (C/A) .......................... 53.2% 55.2%
============ ============
TABLE 5
RECONCILIATION OF GAINS ON PROPERTY SALES TO ECONOMIC GAINS (LOSSES) ON PROPERTY
SALES
FORECASTED
YEAR ENDED DECEMBER 31, 2004 (1)
THREE MONTHS ENDED -----------------------------------
MARCH 31, 2004 LOW RANGE HIGH RANGE
-------------- --------- ----------
Gains on property sales $ 1,627 $ 130,000 $ 132,000
Less:
Accumulated depreciation on properties sold ..... (4,792) (74,614) (74,614)
Prior period asset impairment losses on
properties sold ................................ - (3,344) (3,344)
------------ ------------ ------------
Economic gains (losses) on property sales .......... $ (3,165) $ 52,042 $ 54,042
============ ============ ============
(1) Forecasted gains on property sales and economic gains on property sales for
the year ended December 31, 2004 include actual amounts recognized in the
three months ended March 31, 2004.
TABLE 6
RECONCILIATION OF FORECASTED NET INCOME PER COMMON SHARE TO
FORECASTED FUNDS FROM OPERATIONS PER COMMON SHARE
THREE MONTHS ENDED
JUNE 30, 2004
-----------------------------
LOW RANGE HIGH RANGE
--------- ----------
Forecasted net income, per share ............................................ $ 2.92 $ 2.97
Forecasted gains on property sales, per share ............................... (3.02) (3.06)
Forecasted real estate depreciation, per share .............................. 0.48 0.48
------------ ------------
Forecasted funds from operations, per share 0.38 0.39
Forecasted write-off of unamortized deferred loan costs and interest rate
hedge costs related to debt assumed in forecasted sales ................... 0.07 0.07
------------ ------------
Forecasted funds from operations, excluding write-off of unamortized loan
and interest rate hedge costs, per share .................................. $ 0.45 $ 0.46
============ ============