EXHIBIT 99.1
Contact: Janie Maddox
Post Properties, Inc.
(404) 846-5056
POST PROPERTIES ANNOUNCES THIRD QUARTER EARNINGS
Investor/Analyst Conference Call Scheduled for November 2, 2004 at 10:00 a.m.
EST
ATLANTA, November 1, 2004 - Post Properties, Inc. (NYSE: PPS) announced today a
net loss available to common shareholders of $5.5 million for the third quarter
of 2004, compared to a net loss available to common shareholders of $4.5 million
for the third quarter of 2003. On a diluted per share basis, the net loss
available to common shareholders was $0.14 for the third quarter of 2004,
compared to a net loss available to common shareholders of $0.12 for the third
quarter of 2003.
For the nine months ended September 30, 2004, net income available to common
shareholders was $92.8 million, compared to a net loss of $3.1 million for the
nine months ended September 30, 2003. On a diluted per share basis, net income
available to common shareholders was $2.34 for the first nine months of 2004,
compared to a net loss of $0.08 for the same period of 2003.
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. A reconciliation of FFO to GAAP net
income is included in the financial data (Table 1) accompanying this press
release.
FFO for the third quarter of 2004 totaled $15.2 million, or $0.36 per diluted
share, compared to $16.8 million, or $0.40 per diluted share, for the third
quarter of 2003. Excluding non-cash preferred unit redemption costs, FFO for the
third quarter of 2004 was $17.0 million, or $0.40 per diluted share.
For the nine months ended September 30, 2004, FFO totaled $47.7 million, or
$1.12 per diluted share, compared to $20.2 million, or $0.48 per diluted share,
for the nine months ended September 30, 2003. Excluding a net non-cash loss on
early extinguishment of indebtedness, a non-cash asset impairment charge and
non-cash preferred stock and unit redemption costs, FFO for the nine months
ended September 30, 2004 was $56.0 million, or $1.32 per diluted share.
Excluding severance, proxy contest and related charges and asset impairment
charges, FFO for the nine months ended September 30, 2003 was $64.4 million, or
$1.53 per diluted share.
The company's FFO per share of $0.40, excluding preferred unit redemption costs,
for the third quarter of 2004 was lower than its prior quarter's forecast of
$0.42 to $0.43 due primarily to the following items impacting FFO during the
quarter:
- As previously announced on October 4, 2004, as a result of the
cumulative damage caused at the company's Tampa, Florida and
Orlando, Florida properties by Hurricanes Charley, Frances and
Jeanne, the company recorded an additional expense accrual of
approximately $703,000, or $0.02 per diluted share, based on
preliminary estimates of the casualty losses incurred.
- The company recorded a severance accrual of approximately $569,000,
or $0.01 per diluted share, relating to the elimination of certain
property management positions resulting primarily from company
downsizing due to recent asset sales.
- The company incurred consulting expenses of approximately $530,000,
or $0.01 per diluted share, relating to a review and valuation of
each asset in its real estate portfolio to assist the company with
future capital investment decisions and strategic planning.
- Offsetting these amounts, the company recognized other income of
approximately $684,000, or $0.02 per diluted share, relating to
forfeited earnest money deposits from terminated property and land
sale contracts. As the company previously announced, one of these
contracts related to a community held for sale in Atlanta, Georgia
that was expected to close in the third quarter of 2004. The company
had expected to recognize a net gain of $0.40 per
share in connection with the sale of this asset and the assumption
of related indebtedness. Since the sale did not close, this net gain
was not recognized in the third quarter. The company currently
intends to remarket this property for sale.
Total revenues from continuing operations were $79.8 million for the third
quarter of 2004, compared to $75.0 million for the third quarter of 2003. For
the nine months ended September 30, 2004, total revenues from continuing
operations were $232.0 million, compared to $221.8 million for the same period
in 2003.
MATURE COMMUNITY DATA
For the third quarter of 2004, average economic occupancy at the company's 57
mature (same store) communities, containing 21,954 apartment units, was 94.2%,
compared to 92.7% for the third quarter of 2003. For the nine months ended
September 30, 2004, average economic occupancy for these mature communities was
93.5%, compared to 91.5% for the same period in 2003.
Total revenues for the mature communities increased 0.5% during the third
quarter of 2004, compared to the third quarter of 2003, and operating expenses
increased 2.5%, resulting in a 0.8% decline in same store net operating income
(NOI), or $0.3 million. For the nine months ended September 30, 2004, total
revenues for the mature communities increased 0.4% compared to the same period
in 2003, while operating expenses increased 4.0%, resulting in a 1.9% decline in
same store NOI, or $2.2 million.
On a sequential basis, total revenues for the mature communities increased 0.7%
and operating expenses increased 1.8%, resulting in substantially equivalent NOI
for the third and second quarters of 2004. For the third quarter of 2004,
average economic occupancy was 94.2% compared to 93.6% for the second quarter of
2004.
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
geographic market is also included in the financial data (Table 3) accompanying
this press release.
Said David P. Stockert, CEO and President, "We are pleased that we were able to
produce growth in revenue from our core portfolio during the third quarter
consistent with our expectations. Occupancy and average rents increased modestly
on a sequential basis reflecting the gradual firming of apartment market
conditions."
CAPITAL REINVESTMENT AND FINANCING ACTIVITY
During the third quarter of 2004, the Company used a portion of the proceeds
from prior quarter asset sales to redeem its 8.0% Series D cumulative redeemable
preferred units totaling $70 million on September 3, 2004, and to repay its
6.69% medium term notes totaling $10 million, which matured on September 22,
2004.
Total debt as a percentage of undepreciated real estate assets (adjusted for
joint venture partner's share of debt) decreased from 44.7% at September 30,
2003 to 44.4% at September 30, 2004. Total debt and preferred equity as a
percentage of undepreciated real estate assets (adjusted for joint venture
partner's share of debt) also decreased from 52.7% at September 30, 2003 to
48.1% at September 30, 2004. Variable rate debt as a percentage of total debt
decreased from 20.3% at September 30, 2003 to 12.9% at September 30, 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.
On October 12, 2004, Post Apartment Homes, L.P., the operating subsidiary of
Post Properties, Inc., closed a public offering of $100 million aggregate
principal amount of senior unsecured notes due October 2011. The notes bear
interest at a rate of 5-1/8% and were purchased by investors at a price of
$998.31 per $1,000 in principal amount.
On October 7, 2004, Post Apartment Homes completed its tender offer to purchase
for cash any and all of its outstanding 8-1/8% notes due June 2005.
Approximately $88.0 million aggregate principal amount of the notes were validly
tendered prior to the expiration of the offer for a purchase price of $1,039.81
per $1,000 in principal amount. In the fourth quarter of 2004, the company
expects to record a charge of approximately $4.0 million relating to the early
extinguishment of this indebtedness. Post Apartment Homes paid for such notes
validly tendered by borrowing under its revolving credit facility. Post
Apartment Homes repaid amounts outstanding under its revolving credit facility
with the proceeds of the offering of its senior unsecured 5-1/8% notes due
October 2011.
Said Christopher J. Papa, EVP & CFO, "We continued to strengthen our balance
sheet by delivering on our intended redemption of high-coupon preferred equity
and debt, and by successfully reducing our exposure to 2005 debt maturities
while taking advantage of the prevailing low interest rate environment."
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 loss available to common shareholders
per diluted share for the fourth quarter of 2004 will be in a range of $0.12 to
$0.14. Management believes that the Company's FFO per share for the fourth
quarter of 2004 will be in a range of $0.35 to $0.37, or $0.44 to $0.46,
excluding the loss on early extinguishment of indebtedness.
The estimates of per share FFO for the fourth quarter of 2004 are based on the
following assumptions: same store NOI comparable to or slightly higher than in
the third quarter; lower preferred unit distribution requirements resulting from
the preferred unit redemption in the third quarter of 2004; reduced interest
expense on fixed-rate debt resulting from the tender and refinancing of bonds
described above; increased short-term interest rates; and lower general and
administrative costs and property operating and maintenance expenses, compared
to the third quarter, primarily due to certain expenses incurred during the
third quarter, which are not expected to recur in the fourth quarter. The
company expects, however, that general and administrative costs will continue to
be modestly higher than normal due to higher legal and professional fees
associated with shareholder litigation and other related matters and the
company's initial implementation of the internal control compliance requirements
of Sarbanes-Oxley.
A reconciliation of projected net income per diluted share to projected FFO per
diluted share for the fourth quarter of 2004 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 are available through the Company's
web site at
http://www.corporate-ir.net/ireye/ir_site.zhtml?ticker=PPS&script=700.
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 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,
FFO and AFFO excluding certain accounting charges, certain debt statistics and
ratios and economic gains on property sales. The definitions of these non-GAAP
financial measures are summarized below and on page 19 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 treatment of these costs under GAAP. The Company has
adopted the modifications to the definition of FFO for all periods presented.
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 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" 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, sold properties 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 and unit redemption costs, severance, proxy, loss on
early extinguishment of debt 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
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 ON PROPERTY SALES - The Company uses economic gains on property
sales as a supplemental measure of operating performance. Economic gains on
property sales are defined as gains 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 on
property sales is an important supplemental measure to gains 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 on property sales -
discontinued operations" is the most directly comparable GAAP measure to
economic gains 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, November 2,
2004, at 10 a.m. EST. The telephone numbers are 800-565-5442 for US and Canada
callers and 913-981-5591 for international callers. The access code is 842912.
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. The
replay will begin at 1:00 p.m. EST on November 2, and will be available until
Monday, November 8, at 11:59 p.m. EST. The telephone numbers for the replay are
888-203-1112 for US and Canada callers and 719-457-0820 for international
callers. The access code for the replay is 842912. A replay of the call also
will be available through Friday, December 31, 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.corporate-ir.net/ireye/ir_site.zhtml?ticker=PPS&script=700 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 24,700 apartment homes in 65
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 projected net income per diluted share and projected FFO per diluted
share for the fourth 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 current report on Form 8-K dated October
6, 2004 and may be discussed in subsequent filings with the SEC. The risk
factors discussed in Form 8-K under the caption "Risk Factors" are specifically
incorporated by reference into this press release.
FINANCIAL HIGHLIGHTS
(Unaudited; in thousands, except per share and unit amounts)
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
--------------------- ---------------------
2004 2003 2004 2003
-------- -------- -------- ---------
OPERATING DATA
Revenues from continuing operations...................... $ 79,792 $ 75,027 $232,027 $ 221,761
Net income (loss) available to common shareholders....... $ (5,512) $ (4,514) $ 92,785 $ (3,135)
Funds from operations available to common shareholders
and unitholders (Table 1).............................. $ 15,176 $ 16,759 $ 47,678 $ 20,194
Funds from operations available to common shareholders
and unitholders, excluding certain charges (Table 1)... $ 16,986 $ 20,103 $ 55,958 $ 64,393
Weighted average shares outstanding - diluted............ 39,892 37,857 39,694 37,524
Weighted average shares and units outstanding - diluted.. 42,433 42,206 42,457 42,104
PER COMMON SHARE DATA - DILUTED
Net income (loss) available to common shareholders....... $ (0.14) $ (0.12) $ 2.34 $ (0.08)
Funds from operations available to common shareholders
and unitholders (Table 1)(1)........................... $ 0.36 $ 0.40 $ 1.12 $ 0.48
Funds from operations available to common shareholders
and unitholders, excluding certain charges (Table 1)(1) $ 0.40 $ 0.48 $ 1.32 $ 1.53
Dividends declared....................................... $ 0.45 $ 0.45 $ 1.35 $ 1.35
(1) Funds from operations per share for the three and nine months ended
September 30, 2004 were computed using weighted average shares and
units outstanding, including the impact of dilutive securities
totaling 98 and 67 shares, respectively. Such dilutive securities
were antidilutive to all income per share computations in 2004.
TABLE 1
RECONCILIATION OF NET INCOME(LOSS) AVAILABLE TO COMMON SHAREHOLDERS TO
FUNDS FROM OPERATIONS AVAILABLE TO COMMON SHAREHOLDERS AND UNITHOLDERS
(Unaudited; in thousands, except per share amounts)
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
2004 2003 2004 2003
-------- -------- --------- --------
Net income (loss) available to common shareholders......... $ (5,512) $ (4,514) $ 92,785 $ (3,135)
Minority interest of common unitholders - continuing
operations............................................... (406) (457) (1,125) (3,160)
Minority interest in discontinued operations............... (273) 11 7,584 2,783
Gains on property sales - discontinued operations.......... - (185) (113,739) (33,690)
Gains on property sales - unconsolidated entities.......... - - - (8,395)
Depreciation on wholly-owned real estate assets, net....... 21,035 21,571 61,180 64,555
Depreciation on real estate assets held in unconsolidated
entities................................................. 332 333 993 1,236
-------- -------- --------- --------
Funds from operations available to common shareholders
and unitholders.......................................... 15,176 16,759 47,678 20,194
Redemption costs on preferred stock and preferred units.... 1,810 - 3,526 -
Severance charges.......................................... - - - 21,506
Proxy contest and related costs............................ - - - 5,231
Loss on early extinguishment of indebtedness associated
with asset sales (1)..................................... - - 4,128 -
Asset impairment charges................................... - 3,344 626 17,462
-------- -------- --------- --------
Funds from operations available to common shareholders
and unitholders, excluding certain charges............... $ 16,986 $ 20,103 $ 55,958 $ 64,393
======== ======== ========= ========
Weighted average shares and units outstanding - diluted (2) 42,531 42,206 42,524 42,104
======== ======== ========= ========
Funds from operations - per diluted share and unit (2)..... $ 0.36 $ 0.40 $ 1.12 $ 0.48
======== ======== ========= ========
Funds from operations, excluding certain charges - per
diluted share and unit (2)............................... $ 0.40 $ 0.48 $ 1.32 $ 1.53
======== ======== ========= ========
(1) Includes the write-off of unamortized deferred costs of $3,187
relating to tax-exempt indebtedness assumed in connection with the
sale of five properties in June 2004, plus a loss of $941 relating
to terminated interest rate cap agreements that were used as cash
flow hedges of the assumed debt.
(2) Funds from operations per share for the three and nine months ended
September 30, 2004 were computed using weighted average shares and
units outstanding, including the impact of dilutive securities
totaling 98 and 67 shares, respectively. Such dilutive securities
were antidilutive to all income per share computations in 2004.
TABLE 2
RECONCILIATION OF SAME STORE NET OPERATING INCOME (NOI) TO GAAP NET INCOME
(In thousands)
THREE MONTHS ENDED NINE MONTHS ENDED
--------------------------------------- ---------------------------
SEPTEMBER 30, SEPTEMBER 30, JUNE 30, SEPTEMBER 30, SEPTEMBER 30,
2004 2003 2004 2004 2003
------------ ------------ --------- ------------ ------------
Total same store NOI............................ $ 39,715 $ 40,041 $ 39,699 $ 118,849 $ 121,090
Property NOI from other operating
segments...................................... 3,209 1,867 3,603 9,583 3,945
-------- -------- --------- --------- ---------
Consolidated property NOI....................... 42,924 41,908 43,302 128,432 125,035
Add (subtract):
Other revenues............................... 814 102 45 936 379
Interest income.............................. 247 223 213 639 708
Minority interest in consolidated property
partnerships................................ 167 677 303 742 1,359
Depreciation................................. (21,864) (21,553) (21,177) (64,227) (62,096)
Interest expense............................. (17,299) (17,122) (16,726) (50,306) (49,001)
Amortization of deferred financing costs..... (1,066) (1,084) (1,092) (3,273) (2,839)
General and administrative................... (6,017) (3,738) (5,477) (16,136) (10,703)
Development costs and other expenses......... (283) (274) (381) (1,200) (841)
Proxy contest and related costs.............. - - - - (5,231)
Severance charges............................ - - - - (21,506)
Equity in income of unconsolidated
entities.................................... 420 60 207 843 7,768
Minority interest of preferred unitholders... (980) (1,400) (1,400) (3,780) (4,200)
Minority interest of common unitholders...... 406 457 246 1,125 3,160
-------- -------- --------- --------- ---------
Income (loss) from continuing operations..... (2,531) (1,744) (1,937) (6,205) (18,008)
Income from discontinued operations.......... 738 92 103,047 108,932 23,460
-------- -------- --------- --------- ---------
Net income (loss)............................... $ (1,793) $ (1,652) $ 101,110 $ 102,727 $ 5,452
======== ======== ========= ========= =========
TABLE 3
SAME STORE NET OPERATING INCOME (NOI) SUMMARY BY MARKET
(In thousands)
THREE MONTHS ENDED,
------------------------------------- 3Q `04
SEPTEMBER 30, SEPTEMBER 30, JUNE 30, 3Q `03 2Q `04 % SAME
2004 2003 2004 % CHANGE % CHANGE STORE NOI
------------ ------------ ------- -------- -------- ---------
Rental and other revenues
Atlanta................................... $33,503 $33,613 $33,386 (0.3)% 0.4% -
Dallas.................................... 12,538 12,681 12,481 (1.1)% 0.5% -
Tampa..................................... 4,641 4,504 4,517 3.0% 2.7% -
Washington, DC............................ 5,522 5,266 5,444 4.9% 1.4% -
Charlotte................................. 3,229 3,127 3,226 3.3% 0.1% -
Other..................................... 6,329 6,261 6,220 1.1% 1.8% -
------- ------- -------
Total rental and other revenues......... 65,762 65,452 65,274 0.5% 0.7% -
------- ------- -------
Property operating and maintenance expenses
(exclusive of depreciation and amortization)
Atlanta................................... 12,609 12,601 12,480 0.1% 1.0% -
Dallas.................................... 5,971 5,423 5,788 10.1% 3.2% -
Tampa..................................... 1,887 1,857 1,806 1.6% 4.5% -
Washington, DC............................ 1,708 1,764 1,760 (3.2)% (3.0)% -
Charlotte................................. 1,105 1,136 1,022 (2.7)% 8.1% -
Other..................................... 2,767 2,630 2,719 5.2% 1.8% -
------- ------- -------
Total................................... 26,047 25,411 25,575 2.5% 1.8% -
------- ------- -------
Net operating income
Atlanta................................... 20,894 21,012 20,906 (0.6)% (0.1)% 52.6%
Dallas.................................... 6,567 7,258 6,693 (9.5)% (1.9)% 16.5%
Tampa..................................... 2,754 2,647 2,711 4.0% 1.6% 6.9%
Washington, DC............................ 3,814 3,502 3,684 8.9% 3.5% 9.6%
Charlotte................................. 2,124 1,991 2,204 6.7% (3.6)% 5.3%
Other..................................... 3,562 3,631 3,501 (1.9)% 1.7% 9.1%
------- ------- -------
Total same store NOI.................... $39,715 $40,041 $39,699 (0.8)% 0.0% 100.0%
======= ======= =======
NINE MONTHS ENDED
SEPTEMBER 30,
----------------------
2004 2003 % CHANGE
-------- -------- --------
Rental and other revenues
Atlanta................................... $ 99,776 $100,091 (0.3)%
Dallas.................................... 37,500 37,603 (0.3)%
Tampa..................................... 13,715 13,350 2.7%
Washington, DC............................ 16,331 15,667 4.2%
Charlotte................................. 9,606 9,207 4.3%
Other..................................... 18,817 19,081 (1.4)%
-------- --------
Total rental and other revenues......... 195,745 194,999 0.4%
-------- --------
Property operating and maintenance expenses
(exclusive of depreciation and amortization)
Atlanta................................... 37,441 36,364 3.0%
Dallas.................................... 17,188 15,972 7.6%
Tampa..................................... 5,683 5,445 4.4%
Washington, DC............................ 5,274 5,130 2.8%
Charlotte................................. 3,162 3,270 (3.3)%
Other..................................... 8,148 7,728 5.4%
-------- --------
Total................................... 76,896 73,909 4.0%
-------- --------
Net operating income
Atlanta................................... 62,335 63,727 (2.2)%
Dallas.................................... 20,312 21,631 (6.1)%
Tampa..................................... 8,032 7,905 1.6%
Washington, DC............................ 11,057 10,537 4.9%
Charlotte................................. 6,444 5,937 8.5%
Other..................................... 10,669 11,353 (6.0)%
-------- --------
Total same store NOI.................... $118,849 $121,090 (1.9)%
======== ========
TABLE 4
COMPUTATION OF DEBT RATIOS
(In thousands)
AS OF SEPTEMBER 30,
----------------------------
2004 2003
---------- -----------
Total real estate assets per balance sheet....................................... $1,996,269 $ 2,158,879
Plus:
Company share of real estate assets held in unconsolidated entities.............. 43,715 44,897
Company share of accumulated depreciation - assets held in unconsolidated
entities........................................................................ 3,065 1,738
Accumulated depreciation per balance sheet....................................... 495,048 411,312
Accumulated depreciation on assets held for sale................................. 7,836 82,286
---------- -----------
Total undepreciated real estate assets (A)....................................... $2,545,933 $ 2,699,112
========== ===========
Total debt per balance sheet..................................................... $1,099,980 $ 1,255,280
Plus:
Company share of third party debt held in unconsolidated entities................ 29,240 5,892
Less:
Joint venture partner's share of construction debt to the Company................ - (54,309)
---------- -----------
Total debt (adjusted for joint venture partner's share of debt) (B).............. $1,129,220 $ 1,206,863
========== ===========
Total debt as a % of undepreciated real estate assets (adjusted for joint venture
partner's share of debt) (B/A).................................................. 44.4% 44.7%
========== ===========
Total debt per balance sheet..................................................... $1,099,980 $ 1,255,280
Plus:
Company share of third party debt held in unconsolidated entities................ 29,240 5,892
Preferred shares at liquidation value............................................ 95,000 145,000
Preferred units at liquidation value............................................. - 70,000
Less:
Joint venture partner's share of construction debt to the Company................ - (54,309)
---------- -----------
Total debt and preferred equity (adjusted for joint venture partner's share of
debt) (C)....................................................................... $1,224,220 $ 1,421,863
========== ===========
Total debt and preferred equity as a % of undepreciated assets (adjusted for
joint venture partner's share of debt) (C/A).................................... 48.1% 52.7%
========== ===========
TABLE 5
RECONCILIATION OF FORECASTED NET LOSS PER COMMON SHARE TO
FORECASTED FUNDS FROM OPERATIONS PER COMMON SHARE
THREE MONTHS ENDED
DECEMBER 31, 2004
----------------------
LOW RANGE HIGH RANGE
--------- ----------
Forecasted net loss, per share ........................... $(0.14) $(0.12)
Forecasted real estate depreciation, per share ........... 0.49 0.49
------ ------
Forecasted funds from operations, per share .............. 0.35 0.37
Forecasted loss on early extinguishment of debt, per share 0.09 0.09
------ ------
Forecasted funds from operations, excluding debt
extinguishment costs, per share ........................ $ 0.44 $ 0.46
====== ======