EXHIBIT 99.1
(POST PROPERTIES LOGO)
Contact: Janie Maddox
Post Properties, Inc.
(404) 846-5056
POST PROPERTIES ANNOUNCES THIRD QUARTER 2005 EARNINGS
Investor/Analyst Conference Call Scheduled for November 1, 2005 at
10:00 a.m. EST
ATLANTA, October 31, 2005 -- Post Properties, Inc. (NYSE: PPS) announced today
net income available to common shareholders of $71.3 million for the third
quarter of 2005, compared to a net loss of $5.5 million for the third quarter of
2004. On a diluted per share basis, net income available to common shareholders
was $1.75 for the third quarter of 2005 compared to a net loss of $0.14 for the
third quarter of 2004.
Net income available to common shareholders was $130.6 million for the nine
months ended September 30, 2005, compared to $92.8 million for nine months ended
September 30, 2004. On a diluted per share basis, net income available to common
shareholders was $3.25 for the nine months ended September 30, 2005 compared to
$2.34 for nine months ended September 30, 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 third quarter of 2005 totaled $18.4 million, or $0.43 per diluted
share, compared to $15.2 million, or $0.36 per diluted share, for the third
quarter of 2004. The Company's reported FFO for the third quarter of 2005
included a $1.8 million, or $0.04 per diluted share, non-cash loss on the early
extinguishment of tax-exempt secured indebtedness assumed in connection with
asset sales and the termination of related interest rate cap agreements.
FFO for the nine months ended September 30, 2005 totaled $62.6 million, or $1.46
per diluted share, compared to $47.7 million, or $1.12 per diluted share, for
the nine months ended September 30, 2004. The Company's reported FFO for the
nine months ended September 30, 2005 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 and a $3.2 million, or $0.07 per diluted share, non-cash
loss on the early extinguishment of tax-exempt secured indebtedness assumed in
connection with asset sales and the termination of related interest rate cap
agreements.
The Company's reported FFO for the three and nine months ended September 30,
2004 also included non-cash losses on early extinguishment of debt, asset
impairment charges and non-cash redemption costs on preferred stock and units. A
reconciliation of FFO to FFO excluding certain items and accounting charges is
included in the financial data (Table 1) accompanying this press release.
Said David Stockert, CEO and President of Post Properties, "Results this quarter
were solid in each area of our business. Apartment revenues increased in all of
our markets on a year-over-year basis and when compared to the prior quarter.
We're moving successfully through contracts and closings at our condominium
conversions, and we strengthened our balance sheet again this quarter through
asset sales proceeds and debt repayment."
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MATURE (SAME STORE) COMMUNITY DATA
For the third quarter of 2005, average economic occupancy at the Company's 52
mature (same store) communities, containing 20,024 apartment units, was 95.1%
compared to 94.4% for the third quarter of 2004.
Total revenues for the mature communities increased 3.8% during the third
quarter of 2005, compared to the third quarter of 2004, and operating expenses
increased 3.7%, producing a 4.0% increase in same store net operating income
(NOI), or $1.5 million. Excluding the impact of straight-lining long-term ground
lease expense, operating expenses for the mature communities increased 2.4%
during the third quarter of 2005, compared to the third quarter of 2004, and
same store NOI increased 4.8% between periods.
On a sequential basis, total revenues for the mature communities increased 2.7%,
and operating expenses increased 3.4%, producing a 2.3% increase in same store
NOI for the third quarter of 2005, compared to the second quarter of 2005. For
the third quarter of 2005, average economic occupancy at the mature communities
was 95.1% compared to 93.7% for the second quarter of 2005.
Same store NOI and same store NOI, excluding straight-line long-term ground
lease expense, are supplemental non-GAAP financial measures. A reconciliation of
these measures to the comparable GAAP financial measures 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 ACTIVITY
In the third quarter of 2005, the Company completed its sell out of Hyde Park
Walk(TM), a 134-unit condominium conversion located in the Hyde Park submarket
of Tampa, FL. During the three and nine months ended September 30, 2005, the
Company closed the sales of 6 units and 134 units, respectively, for aggregate
gross sales prices of approximately $2.7 million and $29.3 million,
respectively.
The Company is converting two additional apartment communities to condominiums
through a taxable REIT subsidiary: 588(TM), comprised of 127 units located in
the Uptown submarket of Dallas, TX, and The Peachtree Residences(TM), a
19-story, 121-unit high-rise located in the Buckhead submarket of Atlanta, GA.
The Peachtree Residences(TM) is owned through an unconsolidated joint venture in
which the Company's interest is 35%.
During the three and nine months ended September 30, 2005, the Company closed
the sales of 29 units and 82 units, respectively, at 588(TM) for aggregate gross
sales prices of approximately $9.2 million and $20.7 million, respectively; and
closed the sales of 13 units and 25 units, respectively, at The Peachtree
Residences(TM) for aggregate gross sales prices of approximately $4.8 million
and $9.2 million, respectively. As of October 25, 2005, the Company in the
aggregate had closed or had under contract 102 units at 588(TM) and 48 units at
The Peachtree Residences(TM). In addition, to date the Company has entered into
contracts to sell 71 units at the Condominiums at Carlyle Square(TM), a 145-unit
for-sale condominium development located within the master-planned Carlyle
submarket in the Washington, D.C. suburb of Alexandria, VA. The first
condominium units at that development are expected to be delivered in late 2006.
There can be no assurance that condominium units under contract will close.
During the three and nine months ended September 30, 2005, the Company
recognized approximately $1.8 million, or $0.04 per diluted share, and $8.1
million, or $0.19 per diluted share, respectively, of incremental gains on
condominium sales in FFO, net of provision for income taxes. Such gains are
reported as gains on sales of real
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estate assets in discontinued operations and in the equity in earnings of
unconsolidated entities in the Company's consolidated statement of operations.
In addition, during the three and nine months ended September 30, 2005, the
Company recognized in continuing operations certain costs which are not
capitalized totaling approximately $99,000 and $369,000, respectively,
associated with The Condominiums at Carlyle Square(TM) development.
ASSET SALES ACTIVITY
During the third quarter of 2005, the Company sold the properties collectively
operated as Post Village(TM), a 1,738-unit apartment community in suburban
Atlanta, GA for aggregate gross proceeds of approximately $132.5 million,
including the assumption by the buyer of approximately $47.5 million of
tax-exempt secured indebtedness. For the third quarter of 2005, the Company
realized accounting gains on asset sales, in accordance with generally accepted
accounting principles (GAAP), of approximately $74.7 million ($70.7 million, net
of minority interest).
As a result of its 2005 asset sales program, the Company has, in the aggregate,
realized approximately $231.6 million of gross asset sales proceeds, including
the assumption by the buyers of approximately $81.6 million of tax-exempt
secured indebtedness. In addition, after taking into account its 2005 asset
sales and the expected sales of its three condominium conversion projects, the
Company in 2005 will have reduced its total units in Atlanta, GA by
approximately 22%, its total units in Dallas, TX by approximately 10% and exited
the Nashville, TN market.
DEVELOPMENT ACTIVITY
The Company announced today that it has closed on the purchase of a land site in
the Hyde Park submarket of Tampa, FL for approximately $4.0 million where it is
in the planning stage for an approximately 80-unit expansion of its Post Hyde
Park(R) apartment community. The Company currently expects to start construction
at this site in the third quarter of 2006. There can be no assurance that future
developments will commence as planned.
FINANCING ACTIVITY
Total debt and preferred equity as a percentage of undepreciated real estate
assets (adjusted for joint venture partners' share of debt) was 43.6% at
September 30, 2005. Variable rate debt as a percentage of total debt was 11.1%
at September 30, 2005, reflecting the Company's repayment of $25 million of
6.78% unsecured notes through borrowings under its unsecured revolving lines of
credit and the assumption by the buyer of approximately $47.5 million of
variable rate, tax-exempt debt in connection with asset sales during the third
quarter of 2005.
As of September 30, 2005, the Company had outstanding borrowings of
approximately $77.6 million on its combined $370 million unsecured lines of
credit.
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
During the third quarter of 2005, the Company repurchased 87,800 shares of its
common stock totaling approximately $3.2 million under 10b5-1 stock purchase
plans, the most recent of which will expire on November 30, 2005. These shares
were repurchased at an average price of $36.25 per share. From October 1, 2005
to
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October 28, 2005, the Company repurchased an additional 282,000 shares of its
common stock totaling approximately $9.9 million. These shares were repurchased
at an average price of $35.23 per share.
Year-to-date through October 28, 2005, the Company has repurchased 1,030,600
shares of its common stock totaling approximately $34.4 million under 10b5-1
stock purchase plans at an average price of $33.38 per share.
INFORMATION TECHNOLOGY SYSTEMS IMPLEMENTATION COMPLETED
The Company also announced today that it has completed the implementation of its
new web-based property operating system at each of its apartment communities.
Said Tom Wilkes, EVP and President of Post Apartment Homes, "We expect the
implementation of this new system to result in improved operating efficiencies
at our apartment communities and, among other benefits, will lead to delivery of
internet leasing, automated maintenance requests, centralized procurement and
resident portals."
NEW BOARD MEMBER
On October 3, 2005, the Company announced the appointment of Stella Ferguson
Thayer to serve on the Board of Directors. Ms. Thayer is an attorney and
shareholder of the law firm of Macfarlane Ferguson & McMullen, Tampa, Florida,
as well as the President and director of Tampa Bay Downs, Inc. In addition, Ms.
Thayer is a member of The Florida Council of 100, the Board of Trustees of Tampa
General Hospital Foundation, the Board of Trustees of the University of South
Florida Foundation, and the Board of Advisors of Columbia Law School.
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 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 the Company's actual results for the first nine months of 2005 and its
current financial outlook for the fourth quarter discussed below, the Company
expects that net income per diluted share for the full year 2005 will be in the
range of $3.25 to $3.28 and that FFO per diluted share will be in the range of
$1.90 to $1.93.
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.
FOURTH QUARTER 2005 OUTLOOK
For the fourth quarter of 2005, the Company expects that its net income per
diluted share will be in the range of $0.03 to $0.06 and that FFO per diluted
share will be in the range of $0.44 to $0.47.
The estimates of per share FFO for the fourth quarter of 2005 are also based on
the following assumptions: an expected increase in same store NOI of 1.0% to
2.5% in the fourth quarter of 2005, compared to the third quarter 2005, based
primarily on revenues that are expected to decrease 0.6% to 1.2% and operating
expenses that are expected to decrease 4.4% to 5.4%; incremental condominium
gains in FFO, net of provision for income taxes, expected to be approximately
$0.01 per diluted share; reduced interest expense from increasing capitalization
to development projects; and general and administrative expenses, property
management expenses and development costs in the aggregate being relatively in
line with the third quarter of 2005.
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A reconciliation of forecasted net income per diluted share to forecasted FFO
per diluted share for the fourth quarter of 2005 is included in the financial
data (Table 5) accompanying this press release.
2006 OUTLOOK
The Company plans to present its financial outlook for 2006 when it reports its
earnings for the fourth quarter and full year of 2005 in its earnings release
and related investor conference call scheduled for February 2006.
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 24 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
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Company's results to those of other equity REITs. The Company believes that the
line on its consolidated statement of operations entitled "net income (loss)
available to common shareholders" is the most directly comparable GAAP measure
to FFO.
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. The
Company also uses property NOI, excluding the impact of straight-line, long-term
ground lease expense, as an operating measure. This measure is particularly
useful, in the opinion of the Company, in evaluating the comparative performance
of NOI between periods, since the Company began straight-lining ground lease
expense in 2005.
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 and unit redemption
costs, losses on early extinguishment of debt associated with asset sales, gains
on the sale of technology investments and asset impairment charges as operating
measures. The
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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 losses on early extinguishment of
debt and preferred stock and unit redemption costs because these items result
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 and asset impairment charges because these items are 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.
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.
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CONFERENCE CALL INFORMATION
The Company will hold its quarterly conference call on Tuesday, November 1,
2005, at 10 a.m. EST. The telephone numbers are 800-819-9193 for US and Canada
callers and 913-981-4911 for international callers. The access code is 9667048.
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. EST on November 1, 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 9667048. 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, with a vision of being the first
choice in quality multifamily living. Operating as a real estate investment
trust (REIT), the Company focuses on developing and managing Post(R) branded
resort-style garden and high density urban apartments. In addition, the Company
develops high-quality condominiums and converts existing apartments to for-sale
multifamily communities. Post Properties is headquartered in Atlanta, Georgia,
and has operations in nine markets across the country.
Post Properties owns 21,791 apartment homes in 58 communities, including 545
apartment units in two communities held in unconsolidated entities and 205
apartment units in one community currently under construction. The Company is
also developing 145 for-sale condominium homes and is converting 248 apartment
units in two 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 and twelve months ending
December 31, 2005, anticipated condominium sales activities, anticipated future
development activities and anticipated future benefits from the implementation
of technology systems. 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
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on the Company's business, including competition for tenants and development
locations for its apartment communities and competing for-sale housing in the
markets where the Company is completing condominium conversions or developing
new condominiums; the Company's ability to obtain financing or self-fund the
development or acquisition of additional multifamily rental and for-sale
housing; 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)
<Table>
<Caption>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
----------------------------- -----------------------------
2005 2004 2005 2004
------------ ------------ ------------ ------------
OPERATING DATA
Revenues from continuing operations ................... $ 76,071 $ 72,912 $ 220,773 $ 211,459
Net income (loss) available to common shareholders .... $ 71,332 $ (5,512) $ 130,634 $ 92,785
Funds from operations available to common shareholders
and unitholders (Table 1) ........................... $ 18,449 $ 15,176 $ 62,565 $ 47,678
Funds from operations available to common shareholders
and unitholders, excluding certain items and charges
(Table 1) ........................................... $ 20,295 $ 16,986 $ 60,518 $ 55,958
Weighted average shares outstanding -- diluted ........ 40,813 39,892 40,157 39,694
Weighted average shares and units outstanding --
diluted ............................................. 42,977 42,433 42,492 42,457
PER COMMON SHARE DATA -- DILUTED
Net income (loss) available to common shareholders .... $ 1.75 $ (0.14) $ 3.25 $ 2.34
Funds from operations available to common shareholders
and unitholders (Table 1)(1) ........................ $ 0.43 $ 0.36 $ 1.46 $ 1.12
Funds from operations available to common shareholders
and unitholders, excluding certain items and charges
(Table 1)(1) ........................................ $ 0.47 $ 0.40 $ 1.41 $ 1.32
Dividends declared .................................... $ 0.45 $ 0.45 $ 1.35 $ 1.35
</Table>
(1) Funds from operations per share were computed using weighted average
shares and units outstanding, including the impact of dilutive
securities totaling 441 and 98 shares and units for the three months
ended September 30, 2005 and 2004, respectively, and 293 and 67 shares
and units for the nine months ended September 30, 2005 and 2004,
respectively. Such dilutive securities were antidilutive to the income
per share computations in the three months ended September 30, 2004 and
the nine months ended September 30, 2005 and 2004, since the Company
reported a per share loss from continuing operations (after reduction
for preferred dividends) under generally accepted accounting principles
for such periods.
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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)
<Table>
<Caption>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
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2005 2004 2005 2004
------------ ------------ ------------ ------------
NET INCOME (LOSS) AVAILABLE TO COMMON SHAREHOLDERS ....... $ 71,332 $ (5,512) $ 130,634 $ 92,785
Minority interest of common unitholders -- continuing
operations ............................................ 12 (499) (188) (1,463)
Minority interest in discontinued operations ........... 3,992 (180) 7,775 7,922
Depreciation on wholly-owned real estate assets, net ... 18,199 21,035 55,584 61,180
Depreciation on real estate assets held in
unconsolidated entities ............................... 224 332 745 993
Gains on sales of real estate assets, net of
provision for income taxes -- discontinued
operations ............................................ (76,819) -- (139,658) (113,739)
Incremental gains on condominium sales, net of
provision for income taxes (2) ........................ 1,497 -- 7,827 --
Gains on sales of real estate assets -- unconsolidated
entities ............................................. (246) -- (445) --
Incremental gains on condominium sales --
unconsolidated entities (2) ........................... 258 -- 291 --
------------ ------------ ------------ ------------
FUNDS FROM OPERATIONS AVAILABLE TO COMMON SHAREHOLDERS
AND UNITHOLDERS, AS DEFINED ............................ 18,449 15,176 62,565 47,678
Gain on sale of technology investment .................. -- -- (5,267) --
Loss on early extinguishment of indebtedness
associated with property sales ........................ 1,846 -- 3,220 4,128
Redemption costs on preferred stock and units .......... -- 1,810 -- 3,526
Asset impairment charge ................................ -- -- -- 626
------------ ------------ ------------ ------------
FUNDS FROM OPERATIONS AVAILABLE TO COMMON SHAREHOLDERS
AND UNITHOLDERS, EXCLUDING CERTAIN ITEMS AND CHARGES ... $ 20,295 $ 16,986 $ 60,518 $ 55,958
============ ============ ============ ============
Weighted average shares and units outstanding -- diluted
(1) .................................................... 42,977 42,531 42,785 42,524
============ ============ ============ ============
Funds from operations -- per share and unit -- diluted
(1) .................................................... $ 0.43 $ 0.36 $ 1.46 $ 1.12
============ ============ ============ ============
Funds from operations, excluding certain items and
charges -- per share and unit (1) ...................... $ 0.47 $ 0.40 $ 1.41 $ 1.32
============ ============ ============ ============
</Table>
(1) Funds from operations per share were computed using weighted average
shares and units outstanding, including the impact of dilutive
securities totaling 441 and 98 shares and units for the three months
ended September 30, 2005 and 2004, respectively, and 293 and 67 shares
and units for the nine months ended September 30, 2005 and 2004,
respectively. Such dilutive securities were antidilutive to the income
per share computations in the three months ended September 30, 2004 and
the nine months ended September 30, 2005 and 2004, since the Company
reported a per share loss from continuing operations (after reduction
for preferred dividends) under generally accepted accounting
principles.
(2) The Company recognizes incremental gains on condominium sales in FFO,
net of provision for income taxes, to the extent that net sales
proceeds, less costs of sales and expenses, from the sale of
condominium units exceeds the greater of their fair value or net book
value as of the date the property is acquired by the Company's taxable
REIT subsidiary. See page 16 of the Supplemental Financial Data for
further detail.
-10-
TABLE 2
Reconciliation of Same Store Net Operating Income (NOI) to GAAP Net Income
(Unaudited In thousands)
<Table>
<Caption>
THREE MONTHS ENDED NINE MONTHS ENDED
-------------------------------------------- -----------------------------
SEPTEMBER 30, SEPTEMBER 30, JUNE 30, SEPTEMBER 30, SEPTEMBER 30,
2005 2004 2005 2005 2004
------------ ------------ ------------ ------------ ------------
Total same store NOI ............................ $ 39,698 $ 38,186 $ 38,788 $ 116,055 $ 114,190
Property NOI from other operating segments ...... 2,235 769 1,299 4,682 2,097
------------ ------------ ------------ ------------ ------------
Consolidated property NOI ....................... 41,933 38,955 40,087 120,737 116,287
Add (subtract):
Other revenues ............................... 64 814 61 196 936
Interest income .............................. 230 246 189 583 639
Minority interest in consolidated property
partnerships ................................ 34 106 64 212 538
Depreciation ................................. (18,950) (20,371) (19,414) (57,896) (59,683)
Interest expense ............................. (14,455) (16,316) (15,206) (45,340) (47,678)
Amortization of deferred financing costs ..... (991) (1,065) (1,029) (3,707) (3,273)
General and administrative ................... (5,421) (6,018) (5,433) (16,150) (16,137)
Development costs and other expenses ......... (1,042) (284) (740) (2,879) (1,200)
Equity in income of unconsolidated entities .. 593 420 553 1,294 843
Gain on sale of technology investment ........ -- -- -- 5,267 --
Minority interest of preferred unitholders ... -- (980) -- -- (3,780)
Minority interest of common unitholders ...... (12) 499 159 188 1,463
------------ ------------ ------------ ------------ ------------
Income (loss) from continuing operations ..... 1,983 (3,994) (709) 2,505 (11,045)
Income from discontinued operations .......... 71,258 2,201 59,152 133,857 113,772
------------ ------------ ------------ ------------ ------------
Net income (loss) ............................... $ 73,241 $ (1,793) $ 58,443 $ 136,362 $ 102,727
============ ============ ============ ============ ============
</Table>
-11-
TABLE 3
Same Store Net Operating Income (NOI) Summary by Market
(In thousands)
<Table>
<Caption>
THREE MONTHS ENDED,
------------------------------------------ 3Q '05 VS. 3Q '05 VS. 3Q '05
SEPTEMBER 30, SEPTEMBER 30, JUNE 30, 3Q '04 2Q '05 % SAME
2005 2004 2005 % CHANGE % CHANGE STORE NOI
------------ ------------ ------------ ------------ ------------ ------------
Rental and other revenues
Atlanta ............................ $ 28,987 $ 28,532 $ 28,501 1.6% 1.7%
Dallas ............................. 12,029 11,327 11,633 6.2% 3.4%
Tampa .............................. 7,342 6,911 7,120 6.2% 3.1%
Washington, DC ..................... 5,831 5,536 5,751 5.3% 1.4%
Charlotte .......................... 3,419 3,238 3,313 5.6% 3.2%
Houston ............................ 3,292 3,142 3,067 4.8% 7.3%
Denver ............................. 2,094 2,037 1,970 2.8% 6.3%
New York ........................... 1,330 1,231 1,270 8.0% 4.7%
Orlando ............................ 931 885 890 5.2% 4.6%
------------ ------------ ------------
Total rental and other revenues .. 65,255 62,839 63,515 3.8% 2.7%
------------ ------------ ------------
Property operating and maintenance
expenses (exclusive of
depreciation and amortization)
Atlanta (1) ........................ 10,684 10,594 10,625 0.8% 0.6%
Dallas ............................. 5,411 5,393 5,189 0.3% 4.3%
Tampa .............................. 2,894 2,788 2,824 3.8% 2.5%
Washington, DC (1) ................. 1,974 1,721 2,083 14.7% (5.2)%
Charlotte .......................... 1,141 1,114 1,042 2.4% 9.5%
Houston ............................ 2,013 1,572 1,577 28.1% 27.6%
Denver ............................. 729 709 667 2.8% 9.3%
New York ........................... 353 381 352 (7.3)% 0.3%
Orlando ............................ 358 381 368 (6.0)% (2.7)%
------------ ------------ ------------
Total (1) ........................ 25,557 24,653 24,727 3.7% 3.4%
------------ ------------ ------------
Net operating income
Atlanta (1) ........................ 18,303 17,938 17,876 2.0% 2.4% 46.2%
Dallas ............................. 6,618 5,934 6,444 11.5% 2.7% 16.7%
Tampa .............................. 4,448 4,123 4,296 7.9% 3.5% 11.2%
Washington, DC (1) ................. 3,857 3,815 3,668 1.1% 5.2% 9.7%
Charlotte .......................... 2,278 2,124 2,271 7.3% 0.3% 5.7%
Houston ............................ 1,279 1,570 1,490 (18.5)% (14.2)% 3.2%
Denver ............................. 1,365 1,328 1,303 2.8% 4.8% 3.4%
New York ........................... 977 850 918 14.9% 6.4% 2.5%
Orlando ............................ 573 504 522 13.7% 9.8% 1.4%
------------ ------------ ------------ ------------
Total same store NOI (1) ......... $ 39,698 $ 38,186 $ 38,788 4.0% 2.3% 100.0%
============ ============ ============ ============
</Table>
See footnotes on page 12.
-12-
TABLE 3 (CON'T)
Same Store Net Operating Income (NOI) Summary by Market
(In thousands)
<Table>
<Caption>
NINE MONTHS ENDED,
--------------------------------------------
SEPTEMBER 30, SEPTEMBER 30,
2005 2004 % CHANGE
------------ ------------ ------------
Rental and other revenues
Atlanta ............................. $ 85,456 $ 84,990 0.5%
Dallas .............................. 34,962 33,886 3.2%
Tampa ............................... 21,582 20,432 5.6%
Washington, DC ...................... 17,200 16,369 5.1%
Charlotte ........................... 9,900 9,626 2.8%
Houston ............................. 9,488 9,427 0.6%
Denver .............................. 6,068 6,004 1.1%
New York ............................ 3,804 3,689 3.1%
Orlando ............................. 2,723 2,598 4.8%
------------ ------------
Total rental and other revenues ... 191,183 187,021 2.2%
------------ ------------
Property operating and maintenance
expenses (exclusive of
depreciation and amortization)
Atlanta (2) ......................... 32,001 31,504 1.6%
Dallas .............................. 15,798 15,561 1.5%
Tampa ............................... 8,538 8,330 2.5%
Washington, DC (2) .................. 6,084 5,312 14.5%
Charlotte ........................... 3,246 3,182 2.0%
Houston ............................. 5,149 4,467 15.3%
Denver .............................. 2,045 2,187 (6.5)%
New York ............................ 1,118 1,125 (0.6)%
Orlando ............................. 1,149 1,163 (1.2)%
------------ ------------
Total (2) ......................... 75,128 72,831 3.2%
------------ ------------
Net operating income
Atlanta (2) ......................... 53,455 53,486 (0.1)%
Dallas .............................. 19,164 18,325 4.6%
Tampa ............................... 13,044 12,102 7.8%
Washington, DC (2) .................. 11,116 11,057 0.5%
Charlotte ........................... 6,654 6,444 3.3%
Houston ............................. 4,339 4,960 (12.5)%
Denver .............................. 4,023 3,817 5.4%
New York ............................ 2,686 2,564 4.8%
Orlando ............................. 1,574 1,435 9.7%
------------ ------------
Total same store NOI (2) .......... $ 116,055 $ 114,190 1.6%
============ ============
</Table>
(1) Excluding the impact of straight-lining long-term ground lease expense
of $142 in Atlanta and $168 in Washington, D.C. property operating and
maintenance expenses (exclusive of depreciation and amortization) would
have been $10,542, $1,806 and $25,247, in Atlanta, Washington, D.C. and
in total, respectively, and would have (decreased) increased (0.5)%,
4.9% and 2.4% in Atlanta, Washington, D.C. and in total, respectively,
for the third quarter of 2005, compared to the third quarter of 2004.
Excluding the impact of straight-lining long-term ground lease expense,
NOI would have been $18,445, $4,025 and $40,008, in Atlanta,
Washington, D.C. and in total, respectively, and would have increased
2.8%, 5.5% and 4.8% in Atlanta, Washington, D.C. and in total,
respectively, for the third quarter of 2005, compared the third quarter
of 2004.
(2) Excluding the impact of straight-lining long-term ground lease expense
of $429 in Atlanta and $512 in Washington, D.C. property operating and
maintenance expenses (exclusive of depreciation and amortization) would
have been $31,572, $5,572 and $74,187, in Atlanta, Washington, D.C. and
in total, respectively, and would have increased 0.2%, 4.9% and 1.9% in
Atlanta, Washington, D.C. and in total, respectively, for the nine
months ended September 30, 2005, compared to the same period in the
prior year. Excluding the impact of straight-lining long-term ground
lease expense, NOI would have been $53,884, $11,628 and $116,996, in
Atlanta, Washington, D.C. and in total, respectively, and would have
increased 0.7%, 5.2% and 2.5% in Atlanta, Washington, D.C. and in
total, respectively, for the nine months ended September 30, 2005,
compared the same period in the prior year.
-13-
TABLE 4
Computation of Debt Ratios
(In thousands)
<Table>
<Caption>
AS OF SEPTEMBER 30,
-------------------------------
2005 2004
------------ ------------
Total real estate assets per balance sheet .................................. $ 1,901,826 $ 1,996,269
Plus:
Company share of real estate assets held in unconsolidated entities ......... 41,236 43,715
Company share of accumulated depreciation -- assets held in
unconsolidated entities ................................................... 2,698 3,065
Accumulated depreciation per balance sheet .................................. 508,386 495,048
Accumulated depreciation on assets held for sale ............................ -- 7,836
------------ ------------
Total undepreciated real estate assets (A) .................................. $ 2,454,146 $ 2,545,933
============ ============
Total debt per balance sheet ................................................ $ 957,985 $ 1,099,980
Plus:
Company share of third party debt held in unconsolidated entities ........... 23,450 29,240
Less:
Joint venture partners' share of mortgage debt of the company ............... (6,679) --
------------ ------------
Total debt (adjusted for joint venture partners' share of debt) (B) ......... $ 974,756 $ 1,129,220
============ ============
Total debt as a % of undepreciated real estate assets (adjusted for
joint venture partners' share of debt) (B/A) .............................. 39.7% 44.4%
============ ============
Total debt per balance sheet ................................................ $ 957,985 $ 1,099,980
Plus:
Company share of third party debt held in unconsolidated entities ........... 23,450 29,240
Preferred shares at liquidation value ....................................... 95,000 95,000
Less:
Joint venture partners' share of mortgage debt of the company ............... (6,679) --
------------ ------------
Total debt and preferred equity (adjusted for joint venture partner's
share of debt) (C) ........................................................ $ 1,069,756 $ 1,224,220
============ ============
Total debt and preferred equity as a % of undepreciated assets
(adjusted for joint venture partners' share of debt) (C/A) ................ 43.6% 48.1%
============ ============
</Table>
-14-
TABLE 5
Reconciliation of Forecasted Net Income Per Common Share to
Forecasted Funds From Operations Per Common Share
<Table>
<Caption>
THREE MONTHS ENDED TWELVE MONTHS ENDED
DECEMBER 31, 2005 DECEMBER 31, 2005
------------------------------ ------------------------------
LOW RANGE HIGH RANGE LOW RANGE HIGH RANGE
------------ ------------ ------------ ------------
Forecasted net income, per share ...................... $ 0.03 $ 0.06 $ 3.25 $ 3.28
Forecasted real estate depreciation, per share ........ 0.41 0.41 1.73 1.73
Forecasted gains on property sales, per share ......... -- -- (2.90) (2.90)
Forecasted gains on condominium sales, net of
provision for income taxes, per share ............... (0.01) (0.01) (0.38) (0.38)
Forecasted incremental gains on condominium
sales included in funds from operations, net
of provision for income taxes, per share ............ 0.01 0.01 0.20 0.20
------------ ------------ ------------ ------------
Forecasted funds from operations, per share ........... 0.44 0.47 1.90 1.93
Forecasted loss on early extinguishment of debt
associated with asset sales, per share .............. -- -- 0.07 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 $ 0.47 $ 1.85 $ 1.88
============ ============ ============ ============
</Table>
-15-