EXHIBIT 99.1
Contact: Janie Maddox
Post Properties, Inc.
(404) 846-5056
POST PROPERTIES ANNOUNCES FIRST QUARTER 2005 EARNINGS
Investor/Analyst Conference Call Scheduled for May 3, 2005 at 10:00 a.m. EDT
ATLANTA, May 2, 2005 - Post Properties, Inc. (NYSE: PPS) announced today net
income available to common shareholders of $2.8 million for the first quarter of
2005, compared to a net loss attributable to common shareholders of $0.9 million
for the first quarter of 2004. On a diluted per share basis, net income
available to common shareholders was $0.07 for the first quarter of 2005,
compared to a net loss attributable to common shareholders of $0.02 for the
first quarter of 2004.
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 (loss) is included in the financial data (Table 1) accompanying this
press release.
FFO for the first quarter of 2005 totaled $22.0 million, or $0.51 per diluted
share, compared to $17.8 million, or $0.42 per diluted share, for the first
quarter of 2004.
As previously announced and included in the Company's earnings guidance for the
first quarter of 2005, the Company's reported FFO of $0.51 per diluted share
included a gain of approximately $5.3 million, or $0.12 per diluted share,
relating to the sale of its investment in privately-held Rent.com.
A reconciliation of FFO to FFO excluding certain items and accounting charges is
included in the financial data (Table 1) accompanying this press release.
MATURE (SAME STORE) COMMUNITY DATA
For the first quarter of 2005, average economic occupancy at the Company's 52
mature (same store) communities, containing 20,028 apartment units, was 93.5%,
compared to 93.0% for the first quarter of 2004.
Total revenues for the mature communities increased 0.9% during the first
quarter of 2005, compared to the first quarter of 2004, and operating expenses
increased 3.7%, producing a 0.9% decrease in same store net operating income
(NOI), or $0.3 million. Excluding the impact of straight-lining long-term ground
lease expense, total revenues for the mature communities increased 0.9% during
the first quarter of 2005, compared to the first quarter of 2004, and operating
expenses increased 2.4%, resulting in comparable same store NOI between periods.
On a sequential basis, total revenues for the mature communities increased 0.5%,
while operating expenses increased 5.7%, producing a 2.7% decrease in same store
NOI for the first quarter of 2005, compared to the fourth quarter of 2004.
Excluding the impact of straight-lining long-term ground lease expense, on a
sequential basis, total revenues for the mature communities increased 0.5%,
while operating expenses increased 4.4%, producing a 1.9% decrease in same store
NOI for the first quarter of 2005, compared to the fourth quarter of 2004. For
the first quarter of 2005, average economic occupancy at the mature communities
was 93.5% compared to 93.2% for the fourth quarter of 2004.
The Company has long-term ground leases at two of its mature communities located
in Atlanta, GA and Washington, D.C. with terms expiring in 2066 and 2074,
respectively. These ground leases provide for future increases in minimum lease
payments of approximately 2% to 3% per annum that generally compensate for the
impact of inflation. The Company has historically expensed these ground leases
as incurred, which has not been materially different than recognizing expense on
a straight-line basis. Notwithstanding, in the first quarter of 2005, the
Company elected to commence straight-lining the future annual escalating rent
payments under these long-term ground leases on an undiscounted basis over their
respective lives. As a result of this change in the first quarter of 2005, the
Company began recognizing approximately $0.3 million, or $0.01 per diluted
share, of additional non-cash ground lease expense related to these long-term
ground leases. The impact of this additional non-cash ground lease expense had
not been included in the Company's previously issued first quarter and full year
2005 earnings guidance.
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.
CONDOMINIUM CONVERSION ACTIVITY
In February 2005, the Company announced that it would convert two apartment
communities to condominiums through a taxable REIT subsidiary. 588(TM) is
comprised of 127 units and is located in the Uptown submarket of Dallas, TX.
Hyde Park Walk(TM) is comprised of 134 units and is located in the Hyde Park
submarket of Tampa, FL. In the first quarter of 2005, the Company closed the
sales of 18 units at 588(TM) for aggregate gross sales prices of approximately
$3.5 million and recognized approximately $0.4 million, or $0.01 per diluted
share, of incremental gains on condominium sales in FFO. As of April 25, 2005,
the Company in the aggregate has closed or has under contract 74 units at
588(TM) and 124 units at Hyde Park Walk(TM). There can be no assurance that
condominium units under contract will close.
The Company also announced in April 2005, that it would convert its Post
Peachtree(TM) apartment community to condominiums through a taxable REIT
subsidiary. The community, which has been renamed The Peachtree Residences(TM),
is a 19-story, 121-unit high-rise located in the Buckhead submarket of Atlanta,
GA. It is owned through an unconsolidated joint venture and the Company's
interest in this venture is 35%. As of April 25, 2005, the joint venture has
under contract 10 units at The Peachtree Residences(TM). There can be no
assurance that condominium units under contract will close.
ASSET SALES AND DEVELOPMENT ACTIVITY
The Company also announced today that in April 2005, the Company sold Post
Bennie Dillon(TM), an 86-unit apartment community in Nashville, TN, and Post
American Beauty Mill(TM), an 80-unit apartment community in Dallas, TX, for
aggregate gross proceeds of approximately $15.4 million. With the sale of Post
Bennie Dillon(TM), the Company has exited the Nashville market and has reduced
the number of markets in which it operates to nine. The Company is continuing to
hold for sale an additional 2,881 units in Atlanta, GA and Dallas, TX. The
aggregate gross sales price for these properties held for sale is expected to
total at least $180 million, including the assumption or repayment of
approximately $81.6 million of tax-exempt secured indebtedness. The Company
expects to close these asset sales in the second and third quarters of 2005.
The Company also announced today that is has closed on the purchase of an
approximately 16.7 acre site in the Citrus Park submarket of Tampa, FL where it
is in the planning stage of the development of approximately 210 multifamily
rental units and 100 for-sale townhouses. The Company currently expects to begin
construction in late 2005 or early 2006.
FINANCING ACTIVITY
Total debt and preferred equity as a percentage of undepreciated real estate
assets (adjusted for joint venture partners' share of debt) was 49.6% at March
31, 2005. Variable rate debt as a percentage of total debt was 27.4% at March
31, 2005, reflecting the Company's repayment of approximately $125 million of
fixed rate, unsecured notes during the first quarter with borrowings from its
unsecured revolving lines of credit (including the redemption on March 15, 2005
of its $100 million of 6.85% Mandatory Par Put Remarketed Securities
("MOPPRS")). The Company intends to reduce its outstanding floating rate
indebtedness through a combination of permanent financing and asset sales.
During the first quarter of 2005, the Company recorded additional amortization
expense of approximately $0.65 million, or $0.015 per diluted share, associated
with the redemption of the MOPPRS.
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.
STOCK REPURCHASE PROGRAM
From January 1, 2005 through April 25, 2005, the Company repurchased 492,200
shares of its common stock totaling approximately $15.4 million under 10b5-1
stock purchase plans, the most recent of which expires on May 31, 2005. These
shares were repurchased at an average price of $31.24 per share.
2005 OUTLOOK
The estimates and assumptions presented below are forward-looking and are based
on the Company's current and future expected view of apartment market and
general economic conditions as well as other factors outlined below. There can
be no assurance that assets or condominium units being marketed for sale will
close or that the Company's actual results will not differ materially from the
estimates set forth below. The Company assumes no obligation to update this
guidance in the future.
Based on its current financial outlook for 2005, the Company expects that net
income per share for the full year 2005 will be in the range of $2.31 to $2.89
per diluted share and that FFO will be in the range of $1.77 to $1.93 per
diluted share. The Company's net income guidance is unchanged from management's
previously issued earnings guidance. The lower end of the Company's FFO range is
$0.02 per share higher than management's previously issued earnings guidance,
while the upper end of the range is unchanged.
The Company's outlook is based on assumptions that are discussed in detail in
the Company's prior quarter earnings release dated February 7, 2005, which is
available through the investor relations section of the Company's website at
www.postproperties.com. Changes to the assumptions detailed in the February 7,
2005 earnings release include:
- The Company recognized a gain of $0.12 per diluted share as a result
of the sale of its investment in Rent.com. This was at the upper end
of the Company's previously estimated range of $0.10 to $0.12 per
diluted share.
- Based on management's expectations regarding the timing and
estimates of condominium sales, the Company currently expects that
its incremental gains on condominium sales in FFO will be in the
range of $0.12 to $0.15 per diluted share as compared to its
previously estimated range of $0.07 to $0.13 per diluted share. The
Company also expects to realize GAAP accounting gains on condominium
sales in 2005 in the range of $0.25 to $0.30 per diluted share as
compared to its previously estimated range of $0.22 to $0.28 per
diluted share.
- Partly offsetting the above, the Company expects that interest
expense for 2005 will be modestly higher than it had projected,
primarily due to management's current assumptions regarding interest
rates and its overall capital plan. The Company also expects that
property operating expense will be approximately $0.03 per diluted
share higher than previously estimated as a result of the Company's
decision to begin straight-lining future annual escalating rent
payments relating to certain long-term ground leases, as discussed
above.
A reconciliation of forecasted net income per diluted share to forecasted FFO
per diluted share for 2005 is included in the financial data (Table 5)
accompanying this press release.
SECOND QUARTER 2005 OUTLOOK
For the second quarter of 2005, the Company expects that its net income per
share will be in the range of $1.14 to $1.29 per diluted share and that FFO will
be in the range of $0.41 to $0.46 per diluted share. The Company's FFO per share
outlook range for the second quarter of 2005 includes losses on early
extinguishment of indebtedness of approximately $0.03 per diluted share
associated with asset sales and related debt assumptions that the Company
expects will occur during the quarter. Excluding the losses on early
extinguishment of debt, the Company expects that FFO will be in the range of
$0.44 to $0.49 per diluted share.
The estimates of per share FFO for the second quarter of 2005 are also based on
the following assumptions: an expected increase in same store NOI of 1.0% to
2.0% sequentially, compared to the first quarter 2005, based primarily on
revenues that are expected to increase 1.8% to 2.4% sequentially and operating
expenses that are expected to increase 2.5% to 3.1% sequentially; incremental
condominium gains in FFO expected to be $0.05 to $0.08 per diluted share;
increasing short-term interest rates; general and administrative expenses,
property management expenses and development costs being relatively in line with
the first quarter of 2005; and the sale of five apartment communities held for
sale expected to close during the quarter (including the sales of Post American
Beauty Mill(TM) and Post Bennie Dillon(TM) discussed above).
A reconciliation of forecasted net income per diluted share to forecasted FFO
per diluted share for the second quarter of 2005 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 investor
relations section of the Company's web site at www.postproperties.com.
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
depreciable 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. 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 and after adjusting for the impact of
straight-line, long-term ground lease expense. 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" 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 items and charges, such as preferred stock redemption costs and gains on
the sale of technology investments as operating measures. The Company reports
FFO and AFFO excluding certain items and charges as alternative financial
measures of core operating performance. The Company believes FFO and AFFO before
certain items and charges are informative measures for comparing operating
performance between periods and for comparing operating performance to other
companies that have not incurred such items and charges. The Company further
believes that certain items and charges of the nature incurred in 2005 and 2004
are not necessarily repetitive in nature and that it is therefore meaningful to
compare operating performance using alternative, non-GAAP measures. The Company
adjusts FFO and AFFO for preferred stock redemption costs because this item
results from financing transactions that are not related to core business
performance. The Company further adjusts FFO and AFFO for gains on sales of
technology investments because this item is not expected to be repetitive over
the long-term and it is therefore meaningful to compute operating performance
using adjusted, non-GAAP measures. In addition to the foregoing, 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 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 sales of real estate
assets - 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, May 3, 2005, at
10 a.m. EDT. The telephone numbers are 877-502-9274 for US and Canada callers
and 913-981-5584 for international callers. The access code is 4499652. 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
information. The replay will begin at 1:00 p.m. EDT on May 3, and will be
available until Monday, May 9, at 11:59 p.m. EDT. 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 4499652. A replay of
the call also will be archived on Post's web site under corporate
information/investor information. 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 through the
investor relations section of the Company's web site at www.postproperties.com.
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 9 markets across the country.
Nationwide, Post Properties owns 24,357 apartment homes in 61 communities,
including 545 apartment units in two communities held in unconsolidated entities
and 205 apartment units in one community currently under development. The
Company is also developing 145 for-sale condominium homes and is converting 382
apartment units in three communities (including 121 units in one community held
in an unconsolidated entity) into for-sale condominium homes through a taxable
REIT subsidiary.
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 performance for the three months ending June 30, 2005 and
the twelve months ending December 31, 2005, asset acquisitions and dispositions
planned for 2005 and the sources of financing for acquisitions and the use of
proceeds from dispositions, planned condominium conversions, future development
activities, plans to access the capital markets for new debt financing and plans
to invest in the Company's technology infrastructure. 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; uncertainties
associated with the Company's expansion into the condominium conversion and
for-sale housing business; 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 dated
December 31, 2004 and may be discussed in subsequent filings with the SEC. The
risk factors discussed in 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 and unit amounts)
THREE MONTHS ENDED
MARCH 31,
------------------
2005 2004
-------- --------
OPERATING DATA
Revenues from continuing operations................................... $ 71,580 $ 68,686
Net income (loss) available to common shareholders.................... $ 2,767 $ (902)
Funds from operations available to common shareholders and
unitholders (Table 1)............................................... $ 21,981 $ 17,766
Funds from operations available to common shareholders and
unitholders, excluding certain items and charges (Table 1).......... $ 16,714 $ 19,482
Weighted average shares outstanding - diluted......................... 40,167 39,382
Weighted average shares and units outstanding - diluted............... 42,614 42,461
PER COMMON SHARE DATA - DILUTED
Net income (loss) available to common shareholders.................... $ 0.07 $ (0.02)
Funds from operations available to common shareholders and
unitholders (Table 1)(1)............................................ $ 0.51 $ 0.42
Funds from operations available to common shareholders and
unitholders, excluding certain items and charges (Table 1)(1)....... $ 0.39 $ 0.46
Dividends declared.................................................... $ 0.45 $ 0.45
(1) Funds from operations per share for the three months ended March 31, 2005
and 2004 were computed using weighted average shares and units
outstanding, including the impact of dilutive securities totaling 219 and
55 shares, respectively. Such dilutive securities were antidilutive to all
income per share computations in the three months ended March 31, 2005 and
2004, since the Company reported a per share loss from continuing
operations (after reduction for preferred dividends) under generally
accepted accounting principles.
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
MARCH 31,
---------------------
2005 2004
-------- --------
NET INCOME (LOSS) AVAILABLE TO COMMON SHAREHOLDERS.................... $ 2,767 $ (902)
Minority interest of common unitholders - continuing operations..... (42) (599)
Minority interest in discontinued operations........................ 210 528
Depreciation on wholly-owned real estate assets, net................ 18,749 20,039
Depreciation on real estate assets held in unconsolidated entities.. 297 327
Gains on sales of real estate assets - discontinued operations...... (358) (1,627)
Incremental gains on condominium sales.............................. 358 -
-------- --------
FUNDS FROM OPERATIONS AVAILABLE TO COMMON SHAREHOLDERS AND
UNITHOLDERS, AS DEFINED............................................. 21,981 17,766
Gain on sale of technology investment............................... (5,267) -
Redemption costs on preferred stock................................. - 1,716
-------- --------
FUNDS FROM OPERATIONS AVAILABLE TO COMMON SHAREHOLDERS AND
UNITHOLDERS, EXCLUDING CERTAIN ITEMS AND CHARGES.................... $ 16,714 $ 19,482
======== ========
Weighted average shares and units outstanding - diluted (1)........... 42,833 42,516
======== ========
Funds from operations - per diluted share and unit (1)................ $ 0.51 $ 0.42
======== ========
Funds from operations, excluding certain items and charges -
per diluted share and unit (1)...................................... $ 0.39 $ 0.46
======== ========
(1) Funds from operations per share for the three months ended March 31, 2005
and 2004 were computed using weighted average shares and units
outstanding, including the impact of dilutive securities totaling 219 and
55 shares, respectively. Such dilutive securities were antidilutive to all
income per share computations in the three months ended March 31, 2005 and
2004, since the Company reported a per share loss from continuing
operations (after reduction for preferred dividends) 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,
2005 2004 2004
--------- --------- ------------
Total same store NOI.......................................... $ 37,569 $ 37,903 $ 38,631
Property NOI from other operating segments.................... 1,147 235 990
--------- --------- ------------
Consolidated property NOI..................................... 38,716 38,138 39,621
Add (subtract):
Other revenues............................................. 71 76 64
Interest income............................................ 165 180 177
Minority interest in consolidated property partnerships.... 113 183 133
Depreciation............................................... (19,532) (19,621) (19,790)
Interest expense........................................... (15,679) (15,421) (16,006)
Amortization of deferred financing costs................... (1,688) (1,116) (1,030)
General and administrative................................. (5,295) (4,642) (5,139)
Development costs and other expenses....................... (1,097) (535) (136)
Termination of debt remarketing agreement (interest
expense).................................................. - - (10,615)
Loss on early extinguishment of indebtedness............... - - (4,011)
Equity in income of unconsolidated entities................ 147 216 241
Gain on sale of technology investment...................... 5,267 - -
Minority interest of preferred unitholders................. - (1,400) -
Minority interest of common unitholders.................... 42 599 1,139
--------- --------- ------------
Income (loss) from continuing operations................... 1,230 (3,343) (15,352)
Income (loss) from discontinued operations................. 3,446 6,754 845
--------- --------- ------------
Net income (loss)............................................. $ 4,676 $ 3,411 $ (14,507)
========= ========= ============
TABLE 3
Same Store Net Operating Income (NOI) Summary by Market
(In thousands)
THREE MONTHS ENDED,
---------------------------------------- 1Q '05 VS 1Q '05 VS 1Q '05
MARCH 31, MARCH 31, DECEMBER 31, 1Q `04 4Q `04 % SAME
2005 2004 2004 % CHANGE % CHANGE STORE NOI
---------- --------- ------------ --------- --------- ---------
Rental and other revenues
Atlanta............................... $ 27,969 $ 27,992 $ 28,168 (0.1)% (0.7)%
Dallas................................ 11,299 11,284 11,291 0.1% 0.1%
Tampa................................. 7,120 6,796 6,965 4.8% 2.2%
Washington, DC........................ 5,618 5,375 5,530 4.5% 1.6%
Charlotte............................. 3,168 3,156 3,154 0.4% 0.4%
Other (1)............................. 7,239 7,260 7,017 (0.3)% 3.2%
---------- --------- ------------
Total rental and other revenues..... 62,413 61,863 62,125 0.9% 0.5%
---------- --------- ------------
Property operating and maintenance
expenses (exclusive of
depreciation and amortization)
Atlanta (2)........................... 10,693 10,390 9,653 2.9% 10.8%
Dallas................................ 5,198 4,914 5,092 5.8% 2.1%
Tampa................................. 2,820 2,855 3,109 (1.2)% (9.3)%
Washington, DC (2).................... 2,026 1,817 1,646 11.5% 23.1%
Charlotte............................. 1,063 1,041 1,048 2.1% 1.4%
Other (1)............................. 3,044 2,943 2,946 3.4% 3.3%
---------- --------- ------------
Total............................... 24,844 23,960 23,494 3.7% 5.7%
---------- --------- ------------
Net operating income
Atlanta (2)........................... 17,276 17,602 18,515 (1.9)% (6.7)% 46.0%
Dallas................................ 6,101 6,370 6,199 (4.2)% (1.6)% 16.2%
Tampa................................. 4,300 3,941 3,856 9.1% 11.5% 11.4%
Washington, DC (2).................... 3,592 3,558 3,884 1.0% (7.5)% 9.6%
Charlotte............................. 2,105 2,115 2,106 (0.5)% - 5.6%
Other (1)............................. 4,195 4,317 4,071 (2.8)% 3.1% 11.2%
---------- --------- ------------ -----
Total same store NOI ............... $ 37,569 $ 37,903 $ 38,631 (0.9)% (2.7)% 100.0%
========== ========= ============ =====
(1) Includes communities located in Orlando, FL, Houston, TX, Denver, CO and
New York, NY.
(2) Excluding the impact of straight-lining long-term ground lease expense of
$145 in Atlanta and $172 in Washington, D.C., property operating and
maintenance expenses (exclusive of depreciation and amortization) would
have increased 1.5%, 2.0% and 2.4% in Atlanta, Washington, D.C. and in
total, respectively, in the first quarter of 2005, compared to the first
quarter of 2004, and 9.3%, 12.7% and 4.4% in Atlanta, Washington, D.C. and
in total, respectively, in the first quarter of 2005, compared to the
fourth quarter of 2004. Excluding the impact of straight-lining long-term
ground lease expense, NOI would have increased/(decreased) (1.0)%, 5.8%
and 0.0% in Atlanta, Washington, D.C. and in total, respectively, in the
first quarter of 2005, compared to the first quarter of 2004, and (5.9)%,
(3.1)% and (1.9)% in Atlanta, Washington, D.C. and in total, respectively,
in the first quarter of 2005, compared to the fourth quarter of 2004.
TABLE 4
Computation of Debt Ratios
(In thousands)
AS OF MARCH 31,
------------------------------
2005 2004
------------ ------------
Total real estate assets per balance sheet............................ $ 1,973,778 $ 2,050,422
Plus:
Company share of real estate assets held in unconsolidated entities... 43,287 44,329
Company share of accumulated depreciation - assets held in
unconsolidated entities............................................. 2,250 2,411
Accumulated depreciation per balance sheet............................ 470,721 453,077
Accumulated depreciation on assets held for sale...................... 69,537 69,822
------------ ------------
Total undepreciated real estate assets (A)............................ $ 2,559,573 $ 2,620,061
============ ============
Total debt per balance sheet.......................................... $ 1,161,240 $ 1,198,629
Plus:
Company share of third party debt held in unconsolidated entities..... 23,450 29,292
Less:
Joint venture partners' share of mortgage debt of the company......... (11,047) -
------------ ------------
Total debt (adjusted for joint venture partners' share of debt) (B)... $ 1,173,643 $ 1,227,921
============ ============
Total debt as a % of undepreciated real estate assets (adjusted for
joint venture partners' share of debt) (B/A)........................ 45.9% 46.9%
============ ============
Total debt per balance sheet.......................................... $ 1,161,240 $ 1,198,629
Plus:
Company share of third party debt held in unconsolidated entities..... 23,450 29,292
Preferred shares at liquidation value................................. 95,000 95,000
Preferred units at liquidation value.................................. - 70,000
Less:
Joint venture partners' share of mortgage debt of the company......... (11,047) -
------------ ------------
Total debt and preferred equity (adjusted for joint venture partners'
share of debt) (C).................................................. $ 1,268,643 $ 1,392,921
============ ============
Total debt and preferred equity as a % of undepreciated assets
(adjusted for joint venture partners' share of debt) (C/A).......... 49.6% 53.2%
============ ============
TABLE 5
Reconciliation of Forecasted Net Income (Loss) Per Common Share to
Forecasted Funds From Operations Per Common Share
THREE MONTHS ENDED TWELVE MONTHS ENDED
JUNE 30, 2005 DECEMBER 31, 2005
--------------------------- ---------------------------
LOW RANGE HIGH RANGE LOW RANGE HIGH RANGE
---------- ---------- ---------- ----------
Forecasted net income, per share................ $ 1.14 $ 1.29 $ 2.31 $ 2.89
Forecasted real estate depreciation, per share.. 0.45 0.44 1.74 1.70
Forecasted gains on property sales, per share... (1.14) (1.20) (2.15) (2.51)
Forecasted gains on condominium sales, per
share......................................... (0.09) (0.15) (0.25) (0.30)
Forecasted incremental gains on condominium
sales included in funds from operations, per
share......................................... 0.05 0.08 0.12 0.15
---------- ---------- ---------- ----------
Forecasted funds from operations, per share..... 0.41 0.46 1.77 1.93
Forecasted loss on early extinguishment of debt
associated with asset sales, per share........ 0.03 0.03 0.08 0.07
Gain on sale of technology investment, per
share......................................... - - (0.12) (0.12)
---------- ---------- ---------- ----------
Forecasted funds from operations, excluding
debt extinguishment costs and technology
investment gain, per share.................... $ 0.44 $ 0.49 $ 1.73 $ 1.88
========== ========== ========== ==========