JACKSON, Miss., Feb. 4 /PRNewswire-FirstCall/ -- Parkway Properties,
Inc. (NYSE: PKY) today announced results for its fourth quarter ended
December 31, 2007.
(Logo: http://www.newscom.com/cgi-bin/prnh/20030513/PARKLOGO )
Consolidated Financial Results
-- Funds from operations ("FFO") available to common shareholders totaled
$16.5 million ($1.08 per diluted share) for the three months ended
December 31, 2007 compared to $15.5 million ($1.03 per diluted share)
for the three months ended December 31, 2006. FFO totaled $62.5 million
($4.00 per diluted share) for the year ended December 31, 2007 compared
to $60.0 million ($4.10 per diluted share) for the year ended December
31, 2006.
The following items contributed to FFO
(in thousands, except percentages)
4Q07 4Q06 2007 2006
Lease termination fees* $796 $29 $1,412 $617
Straight line rent* 1,066 1,262 2,297 4,656
Amortization of above
market rent* (257) (407) (1,269) (1,467)
Gain (loss) on land
and securities - - 47 (119)
Prepayment expense on
extinguishment of debt - - (370) (325)
Incentive and management
fees earned on Viad - - 27 4,218
Average occupancy 92.3% 91.3% 91.6% 90.2%
*These items include 100% of amounts from wholly-owned assets plus
Parkway's allocable share of these items recognized from the assets held
in consolidated joint ventures.
-- Funds available for distribution ("FAD") totaled $10.1 million for the
three months ended December 31, 2007 compared to $7.5 million for the
three months ended December 31, 2006. FAD totaled $42.4 million for the
year ended December 31, 2007 compared to $28.9 million for the year
ended December 31, 2006.
-- Net loss available to common shareholders for the three months ended
December 31, 2007 was $282,000 ($0.02 per diluted share) compared to
net income available to common shareholders of $5.4 million ($0.36 per
diluted share) for the three months ended December 31, 2006. Net
income available to common shareholders for the year ended December 31,
2007 was $14.9 million ($.95 per diluted share) compared to $19.1
million ($1.32 per diluted share) for the year ended December 31, 2006.
Net gains on the sale of real estate and other assets of $20.3 million
and $22.7 million were included in net income available to common
shareholders for the year ended December 31, 2007 and 2006,
respectively.
Asset Recycling
-- On January 18, 2008, the discretionary fund with Ohio PERS (the
"Fund"), of which Parkway owns 25%, purchased Gateway Center, a 228,000
square foot office property in the central business district of
Orlando, Florida for a purchase price of $55.0 million. The Property
consists of ten floors of office space above a six-story, 817-space
structured parking facility, as well as an adjacent 98-space surface
parking area. The Fund expects to spend an additional $2.8 million for
closing costs, building improvements, leasing costs and tenant
improvements during the first two years of ownership.
-- On January 31, 2008, the Company purchased Desert Ridge, a 293,000
square foot office project in Phoenix, Arizona for a purchase price of
$81.6 million on behalf of the Fund. The project consists of two four-
story Class A office buildings totaling 275,000 square feet, a free-
standing retail building totaling 18,000 square feet, an adjacent 765-
space structured parking facility and a 596 space surface parking lot.
An additional $2.25 million is expected to be spent for closing costs,
building improvements, leasing costs and tenant improvements during the
first two years of ownership. Due to the Fund's $80 million limit on a
single investment, Parkway's effective ownership interest in this asset
is 26.5%.
-- The Company has contracted to purchase on behalf of the Fund, and
currently has earnest money at risk, a $100 million office property
that is scheduled to close February 18, 2008. After this purchase, the
Fund's $500 million in investments will be complete, ahead of schedule.
Operations and Leasing
-- Parkway's customer retention rate for the quarter ending December 31,
2007 was 77.2% compared to 69.8% for the quarter ending September 30,
2007 and 76.0% for the quarter ending December 31, 2006. Customer
retention for the year ended December 31, 2007 and 2006 was 72.0% and
73.0%, respectively.
-- As of January 1, 2008, occupancy of the office portfolio was 92.0%
compared to 92.3% as of October 1, 2007 and 90.8% as of January 1,
2007. Not included in the January 1, 2008 occupancy rate are 14 signed
leases totaling 76,000 square feet, which commence in the first and
second quarters of 2008. Including these leases, the portfolio was
92.6% leased as of January 16, 2008. Average occupancy for the fourth
quarter of 2007 was 92.3% compared to average occupancy for the fourth
quarter of 2006 of 91.3%.
-- During the quarter ended December 31, 2007, 77 leases were renewed or
expanded on 644,000 rentable square feet at an average rental rate
increase of 2.9% on a cash basis and a cost of $2.62 per square foot
per year of the lease term in committed tenant improvements and leasing
commissions ("leasing costs"). During the year ended December 31,
2007, leases were renewed or expanded on 1.8 million rentable square
feet at an average cost of $2.60 per square foot per year of the lease
term in committed leasing costs.
-- During the quarter, 29 new leases were signed on 87,000 rentable square
feet at a cost of $5.09 per square foot per year of the lease term in
committed leasing costs. New leases were signed during the year ended
December 31, 2007 on 484,000 rentable square feet at an average cost of
$4.21 per square foot per year of the lease term in committed leasing
costs.
-- Same store assets produced an increase in net operating income ("NOI")
of $337,000 or 1.2% for the quarter ended December 31, 2007 compared to
the same period of the prior year on a GAAP basis. Same store NOI
increased $460,000 or 1.7% for the three months ended December 31, 2007
compared to the same period of the prior year on a cash basis. The
increase in same store NOI is primarily attributable to an increase in
same store average occupancy from 91.4% during the fourth quarter of
2006 to 92.0% during the fourth quarter of 2007. Additionally, same
store rental rates increased 2.7% during the same period. Same store
NOI for the year ended December 31, 2007 increased $4.3 million or 4.3%
compared to the same period of 2006 on a GAAP basis and $6.7 million or
6.9% on a cash basis.
Capital Markets and Financing
-- The Company's previously announced cash dividend of $0.65 per share for
the quarter ended December 31, 2007 represents a payout of
approximately 60.1% of FFO per diluted share. The fourth quarter
dividend was paid on December 26, 2007 and equates to an annualized
dividend of $2.60 per share, a yield of 7.2% on the closing stock price
on February 1, 2008 of $36.05. This dividend is the 85th consecutive
quarterly distribution to Parkway's shareholders of common stock.
-- As of December 31, 2007, the Company's debt-to-total market
capitalization ratio was 56.8% based on a stock price of $36.98
compared to 51.8% as of September 30, 2007 based on a stock price of
$44.14 and 47.9% as of December 31, 2006 based on a stock price of
$51.01. The Company's modified fixed charge coverage ratio has
remained stable. The ratio was 2.25 times as of December 31, 2007
compared to 2.26 times as of December 31, 2006.
-- On August 3, 2007, the Company announced that its Board of Directors
had authorized the repurchase of up to 1.7 million shares of
outstanding common stock through July 30, 2008. As of December 31,
2007, the Company had purchased 688,000 shares for $29.1 million, which
equates to an average price of $42.36 per share.
-- On November 7, 2007, the Company purchased the B participation piece
(the "B piece") of a first mortgage secured by an 844,000 square foot
office building in Dallas, Texas known as 2100 Ross for $6.9 million.
The B piece was originated by Wachovia Bank, N.A. and has a face value
of $10 million and a stated coupon rate of 6.065%. Upon maturity in
May 2012, the Company will receive a principal payment of $10 million,
which produces a yield to maturity of 15.6%.
-- On December 3, 2007, the Company entered into an interest rate swap
agreement with JP Morgan. The interest rate swap is for a $50 million
notional amount and fixes the 30-day LIBOR interest rate at 4.38%,
which equates to a total interest rate of 5.68%, for the period
December 31, 2007 through June 30, 2008. The swap agreement serves as a
hedge of the variable interest rates on a portion of the borrowings
under the Company's $296 million line of credit.
-- On December 13, 2007, the Company exercised $96 million of the $110
million accordion feature of its existing unsecured bank credit
facility. The Company's credit facility increased from $200 million to
$296 million and is comprised of a $60 million term loan maturing April
2011 and a $236 million revolving loan maturing in April 2010 which
includes rights to a one-year extension with the same terms through
April 2011. The interest rate on the credit facility is currently
LIBOR plus 130 basis points.
-- On December 28, 2007, the Company completed the financing facility of
The Pinnacle at Jackson Place for a total of $37.6 million. The
facility consists of two mortgages, proceeds of which will be used to
complete the construction and long-term financing of the building. One
of the mortgages is being funded under the Federal New Markets Tax
Credit ("NMTC") program, which provides funding for development in
certain geographic areas. The NMTC mortgage consists of a $23.5
million senior loan and a $6 million subordinate loan, both having a
stated maturity of December 2047. Additionally, the facility consists
of an $8.1 million direct loan with the primary arranger of the
facility with a stated maturity of December 2047.
-- In connection with the January 18, 2008 purchase of Gateway Center, the
Fund placed a $33.0 million non-recourse first mortgage with a fixed
interest rate of 5.92%, an initial thirty-six month interest only
period, and a maturity date of January 2016. Parkway's initial equity
contribution of $5.5 million was provided by advances under the
Company's existing lines of credit.
-- In connection with the January 31, 2008 purchase of Desert Ridge, a
$49.2 million non-recourse first mortgage was secured with a fixed
interest rate of 5.77%, an initial thirty-six month interest only
period, and a maturity date of January 2016. Parkway's initial equity
contribution of $8.6 million was provided by advances under the
Company's existing lines of credit.
-- In connection with the scheduled first quarter $100 million purchase
described above, the Company has a commitment for first mortgage
financing of approximately 60% of the purchase price on this investment
which is expected to close simultaneously with the purchase on February
18, 2008. This mortgage is locked at a 5.53% fixed interest rate with
various terms that will be disclosed upon closing.
Outlook for 2008
The Company is forecasting FFO per diluted share of $4.00 to $4.20 for
2008.
The reconciliation of forecasted EPS to forecasted FFO per diluted share
is as follows:
Guidance for 2008 Range
Fully diluted EPS $0.00 - $0.10
Plus: Real estate depreciation and amortization $4.75 - $4.87
Plus: Depreciation on unconsolidated joint ventures $0.03 - $0.04
Less: Minority interest depreciation and amortization ($0.78 - $0.81)
Fully diluted FFO per share $4.00 - $4.20
Earnings guidance is based on the assumptions discussed in the November
27, 2007 earnings outlook press release.
Steven G. Rogers, President and Chief Executive Officer stated, "We
finished 2007 and the fourth quarter with solid operating results across a
wide spectrum of metrics, as evidenced by same store cash NOI growth of
6.9% for the year. We are delighted that the purchase scheduled for
February 18, 2007 will complete the Fund's $500 million investment ahead of
schedule. We are pleased with the high-quality, well-diversified portfolio
that we have assembled on behalf of our Fund partner, Ohio PERS, and our
shareholders. We have begun marketing efforts for our second Fund and have
already seen considerable interest for a similar type offering. Completion
of the Fund investments and solid operating performance in 2007 puts us in
a strong position as we start 2008, the last year of our GEAR UP Plan."
GEAR UP
On January 1, 2006, the Company initiated a new operating plan that
will be referred to as the "GEAR UP" Plan. At the heart of the GEAR UP Plan
are Great People transforming Parkway through Equity Opportunities and
Asset Recycling from an owner-operator to an operator-owner. Our
long-standing commitment to Retain our Customers and provide an
Uncompromising Focus on Operations remains steadfast. We believe that by
accomplishing these goals we can deliver excellent Performance to our
shareholders. Performance for the GEAR UP Plan will be measured as the sum
of adjusted funds available for distribution, as defined by the Company,
cumulative over the three years of the plan. The goal for cumulative
adjusted funds available for distribution is $7.18 per diluted share.
Additional Information
The Company will conduct a conference call to discuss the results of
its fourth quarter operations on Tuesday, February 5, 2008, at 11:00 a.m.
Eastern Time. The number for the conference call is 888-254-3595. A taped
replay of the call can be accessed 24 hours a day through February 15,
2008, by dialing 888-203-1112 and using the pass code of 2879540. An audio
replay will be archived and indexed in the investor relations section of
the Company's website at http://www.pky.com. A copy of the Company's 2007 fourth
quarter supplemental financial and property information package is
available by accessing the Company's website, emailing your request to
rjordan@pky.com or calling Rita Jordan at 601-948-4091. Please participate
in the visual portion of the conference call by accessing the Company's
website and clicking on the "4Q Call" icon. By clicking on topics in the
left margin, you can follow visual representations of the presentation.
Additional information on Parkway Properties, Inc., including an
archive of corporate press releases and conference calls, is available on
the Company's website. The Company's fourth quarter 2007 Supplemental
Operating and Financial Data, which includes a reconciliation of Non-GAAP
financial measures, is available on the Company's website.
About Parkway Properties
Parkway Properties, Inc., a member of the S&P Small Cap 600 Index, is a
self-administered real estate investment trust specializing in the
operation, leasing, acquisition, and ownership of office properties. The
Company is geographically focused on the Southeastern and Southwestern
United States and Chicago. Parkway owns or has an interest in 68 office
properties located in 11 states with an aggregate of approximately 13.5
million square feet of leasable space as of February 4, 2008. Included in
the portfolio are 20 properties totaling 3.2 million square feet that are
owned jointly with other investors, representing 24% of the portfolio.
Under the Company's GEAR UP Plan, which started January 1, 2006 and ends
December 31, 2008, it is the Company's strategy to transform from an
owner-operator to an operator-owner. The strategy highlights the Company's
strength in providing excellent service in the operation of office
properties in addition to its direct ownership of real estate assets.
Fee-based real estate services are offered through the Company's wholly
owned subsidiary, Parkway Realty Services, which also manages and/or leases
approximately 1.8 million square feet for third party owners as of February
4, 2008.
Certain statements in this release that are not in the present or past
tense or discuss the Company's expectations (including the use of the words
anticipate, forecast or project) are forward-looking statements within the
meaning of the federal securities laws and as such are based upon the
Company's current belief as to the outcome and timing of future events.
There can be no assurance that future developments affecting the Company
will be those anticipated by the Company. These forward-looking statements
involve risks and uncertainties (some of which are beyond the control of
the Company) and are subject to change based upon various factors,
including but not limited to the following risks and uncertainties: changes
in the real estate industry and in performance of the financial markets;
the demand for and market acceptance of the Company's properties for rental
purposes; the amount and growth of the Company's expenses; tenant financial
difficulties and general economic conditions, including interest rates, as
well as economic conditions in those areas where the Company owns
properties; the risks associated with the ownership and development of real
property; the failure to acquire or sell properties as and when
anticipated; and other risks and uncertainties detailed from time to time
on the Company's SEC filings. Should one or more of these risks or
uncertainties occur, or should underlying assumptions prove incorrect, the
Company's results could differ materially from those expressed in the
forward-looking statements. The Company does not undertake to update
forward-looking statements.
PARKWAY PROPERTIES, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
December 31 December 31
2007 2006
(Unaudited)
Assets
Real estate related investments:
Office and parking properties $1,552,982 $1,512,104
Office property development 13,411 -
Accumulated depreciation (251,791) (208,891)
1,314,602 1,303,213
Land available for sale 1,467 1,467
Mortgage loan 7,001 -
Investment in unconsolidated joint
ventures 11,236 11,179
1,334,306 1,315,859
Rents receivable and other assets 119,457 110,213
Intangible assets, net 70,719 81,800
Cash and cash equivalents 11,312 4,474
$1,535,794 $1,512,346
Liabilities
Notes payable to banks $212,349 $152,312
Mortgage notes payable 714,501 696,012
Accounts payable and other
liabilities 88,496 72,659
Subsidiary redeemable preferred
membership interests - 10,741
1,015,346 931,724
Minority Interest
Minority Interest - unit holders 34 36
Minority Interest - real estate
partnerships 80,506 90,280
80,540 90,316
Stockholders' Equity
8.00% Series D Preferred stock, $.001
par value, 2,400,000 shares
authorized, issued and outstanding 57,976 57,976
Common stock, $.001 par value,
67,600,000 shares authorized,
15,223,350 and 15,764,799 shares
issued and outstanding
in 2007 and 2006, respectively 15 16
Common stock held in trust, at cost,
104,500 and 115,000 shares in 2007
and 2006, respectively (3,540) (3,894)
Additional paid-in capital 425,221 449,141
Accumulated other comprehensive
income (loss) (358) 828
Accumulated deficit (39,406) (13,761)
439,908 490,306
$1,535,794 $1,512,346
PARKWAY PROPERTIES, INC.
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
Three Months Ended
December 31
2007 2006
(Unaudited)
Revenues
Income from office and parking
properties $63,269 $57,547
Management company income 409 247
Total revenues 63,678 57,794
Expenses
Property operating expense 28,921 26,119
Depreciation and amortization 19,501 19,790
Operating expense for other real
estate properties 1 1
Management company expenses 301 243
General and administrative 1,492 1,246
Total expenses 50,216 47,399
Operating income 13,462 10,395
Other income and expenses
Interest and other income 220 6
Equity in earnings of unconsolidated
joint ventures 226 227
Gain on sale of real estate - 4,181
Interest expense (13,589) (12,845)
Income before minority interest and
discontinued operations 319 1,964
Minority interest - real estate
partnerships 599 116
Income from continuing operations 918 2,080
Discontinued operations:
Loss from discontinued operations - (230)
Gain on sale of real estate from
discontinued operations - 4,872
Net income 918 6,722
Dividends on preferred stock (1,200) (1,200)
Dividends on convertible preferred
stock - (119)
Net income (loss) available to common
stockholders $(282) $5,403
Net income (loss) per common share:
Basic:
Income (loss) from continuing
operations $(0.02) $0.05
Discontinued operations - 0.31
Net income (loss) $(0.02) $0.36
Diluted:
Income (loss) from continuing
operations $(0.02) $0.05
Discontinued operations - 0.31
Net income (loss) $(0.02) $0.36
Dividends per common share $0.65 $0.65
Weighted average shares outstanding:
Basic 15,138 14,895
Diluted 15,138 15,086
PARKWAY PROPERTIES, INC.
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
Year Ended
December 31
2007 2006
(Unaudited)
Revenues
Income from office and parking
properties $246,677 $210,007
Management company income 1,605 5,329
Total revenues 248,282 215,336
Expenses
Property operating expense 114,312 99,130
Depreciation and amortization 77,574 64,655
Operating expense for other real
estate properties 5 5
Management company expenses 1,188 1,141
General and administrative 6,597 4,651
Total expenses 199,676 169,582
Operating income 48,606 45,754
Other income and expenses
Interest and other income 528 40
Equity in earnings of unconsolidated
joint ventures 1,008 751
Gain on sale of real estate and other
assets 20,307 17,646
Interest expense (54,099) (44,632)
Income before minority interest and
discontinued operations 16,350 19,559
Minority interest - unit holders (2) (1)
Minority interest - real estate
partnerships 3,174 485
Income from continuing operations 19,522 20,043
Discontinued operations:
Income from discontinued operations 170 556
Gain on sale of real estate from
discontinued operations - 5,083
Net income 19,692 25,682
Dividends on preferred stock (4,800) (4,800)
Dividends on convertible preferred
stock - (1,773)
Net income available to common
stockholders $14,892 $19,109
Net income per common share:
Basic:
Income from continuing operations $0.95 $0.95
Discontinued operations 0.01 0.39
Net income $0.96 $1.34
Diluted:
Income from continuing operations $0.94 $0.93
Discontinued operations 0.01 0.39
Net income $0.95 $1.32
Dividends per common share $2.60 $2.60
Weighted average shares outstanding:
Basic 15,482 14,306
Diluted 15,648 14,487
PARKWAY PROPERTIES, INC.
RECONCILIATION OF FUNDS FROM OPERATIONS AND
FUNDS AVAILABLE FOR DISTRIBUTION TO NET INCOME
FOR THE THREE MONTHS AND YEAR ENDED DECEMBER 31, 2007 AND 2006
(In thousands, except per share data)
Three Months Ended Year Ended
December 31 December 31
2007 2006 2007 2006
(Unaudited) (Unaudited)
Net Income $918 $6,722 $19,692 $25,682
Adjustments to Net
Income:
Preferred Dividends (1,200) (1,200) (4,800) (4,800)
Convertible
Preferred Dividends - (119) - (1,773)
Depreciation and
Amortization 19,501 19,790 77,574 64,655
Depreciation and
Amortization -
Discontinued
Operations - 48 1 582
Minority Interest
Depreciation and
Amortization (2,940) (802) (10,414) (2,275)
Adjustments for
Unconsolidated
Joint Ventures 241 156 732 815
Minority Interest -
Unit Holders - - 2 1
Gain on Sale of Real
Estate - (9,053) (20,260) (22,848)
Funds From Operations
Available to Common
Shareholders $16,520 $15,542 $62,527 $60,039
Funds Available for
Distribution
Funds From Operations
Available to Common
Shareholders $16,520 $15,542 $62,527 $60,039
Add (Deduct) :
Adjustments for
Unconsolidated
Joint Ventures (200) (104) (547) (1,159)
Adjustments for
Minority Interest
in Real Estate
Partnerships 390 98 1,456 431
Straight-line Rents (1,197) (1,346) (3,232) (5,259)
Straight-line Rents
- Discontinued
Operations - (18) - 67
Amortization of
Above/Below Market
Leases 34 411 788 1,582
Amortization of
Share Based
Compensation 407 279 1,521 863
Capital Expenditures:
Building
Improvements (1,839) (1,289) (6,663) (5,435)
Tenant
Improvements
- New Leases (862) (2,199) (3,172) (8,434)
Tenant
Improvements
- Renewal Leases (1,081) (2,889) (5,446) (9,386)
Leasing Costs
- New Leases (210) (566) (1,094) (2,292)
Leasing Costs
- Renewal Leases (1,850) (416) (3,758) (2,127)
Funds Available for
Distribution (1) $10,112 $7,503 $42,380 $28,890
Diluted Per Common
Share/Unit
Information (**)
FFO per share $1.08 $1.03 $4.00 $4.10
Dividends paid $0.65 $0.65 $2.60 $2.60
Dividend payout
ratio for FFO 60.10% 63.28% 65.07% 63.48%
Weighted average
shares/units
outstanding 15,274 15,248 15,649 15,092
Other Supplemental
Information
Upgrades on
Acquisitions $5,172 $2,414 $26,824 $6,486
Gain (Loss) on
Non Depreciable
Assets $- $- $47 $(119)
**Information for
Diluted
Computations:
Convertible
Preferred Dividends $- $119 $- $1,773
Basic Common
Shares/Units
Outstanding 15,139 14,896 15,483 14,307
Convertible
Preferred Shares
Outstanding - 161 - 603
Dilutive Effect of
Other Share
Equivalents 135 191 166 182
(1) Parkway computes FFO in accordance with standards established by
the National Association of Real Estate Investment Trusts ("NAREIT"),
which may not be comparable to FFO reported by other REITs that do not
define the term in accordance with the current NAREIT definition. FFO is
defined as net income, computed in accordance with generally accepted
accounting principles ("GAAP"), excluding gains or losses from the sales
of properties, plus real estate related depreciation and amortization and
after adjustments for unconsolidated partnerships and joint ventures.
There is not a standard definition established for FAD. Therefore,
our measure of FAD may not be comparable to FAD reported by other REITs.
We define FAD as FFO, excluding the amortization of restricted shares,
amortization of above/below market leases and straight line rent
adjustments, and reduced by non-revenue enhancing capital expenditures for
building improvements, tenant improvements and leasing costs. Adjustments
for unconsolidated partnerships and joint ventures are included in the
computation of FAD on the same basis.
PARKWAY PROPERTIES, INC.
CALCULATION OF EBITDA AND COVERAGE RATIOS
FOR THE THREE MONTHS AND YEAR ENDED DECEMBER 31, 2007 AND 2006
(In thousands)
Three Months Ended Year Ended
December 31 December 31
2007 2006 2007 2006
(Unaudited) (Unaudited)
Net Income $918 $6,722 $19,692 $25,682
Adjustments to Net
Income:
Interest Expense 13,285 12,569 52,527 43,532
Amortization of
Financing Costs 304 276 1,202 1,100
Prepayment Expense -
Early Extinguishment
of Debt - - 370 -
Depreciation and
Amortization 19,501 19,838 77,575 65,237
Amortization of
Share Based
Compensation 407 279 1,521 863
Gain on Real Estate
and Non Depreciable
Assets - (9,053) (20,307) (22,729)
Tax Expense (156) 29 (27) 30
EBITDA Adjustments -
Unconsolidated
Joint Ventures 373 288 1,255 2,203
EBITDA Adjustments -
Minority Interest
in Real Estate
Partnerships (4,690) (1,257) (16,709) (3,803)
EBITDA (1) $29,942 $29,691 $117,099 $112,115
Interest Coverage
Ratio:
EBITDA $29,942 $29,691 $117,099 $112,115
Interest Expense:
Interest Expense $13,285 $12,569 $52,527 $43,532
Capitalized Interest 127 - 242 -
Interest Expense -
Unconsolidated
Joint Ventures 130 129 513 1,015
Interest Expense -
Minority Interest
in Real Estate
Partnerships (1,705) (440) (6,133) (1,479)
Total Interest
Expense $11,837 $12,258 $47,149 $43,068
Interest Coverage
Ratio 2.53 2.42 2.48 2.60
Fixed Charge
Coverage Ratio:
EBITDA $29,942 $29,691 $117,099 $112,115
Fixed Charges:
Interest Expense $11,837 $12,258 $47,149 $43,068
Preferred Dividends 1,200 1,319 4,800 6,573
Principal Payments
(Excluding Early
Extinguishment of
Debt) 3,810 4,039 15,580 15,366
Principal Payments -
Unconsolidated
Joint Ventures 13 12 50 45
Principal Payments -
Minority Interest
in Real Estate
Partnerships (84) (46) (313) (222)
Total Fixed Charges $16,776 $17,582 $67,266 $64,830
Fixed Charge
Coverage Ratio 1.78 1.69 1.74 1.73
Modified Fixed
Charge Coverage
Ratio:
EBITDA $29,942 $29,691 $117,099 $112,115
Modified Fixed
Charges:
Interest Expense $11,837 $12,258 $47,149 $43,068
Preferred Dividends 1,200 1,319 4,800 6,573
Total Modified Fixed
Charges $13,037 $13,577 $51,949 $49,641
Modified Fixed
Charge Coverage
Ratio 2.30 2.19 2.25 2.26
The following table reconciles EBITDA
to cash flows provided by operating
activities:
EBITDA $29,942 $29,691 $117,099 $112,115
Amortization of
Above Market
Leases 34 411 788 1,582
Amortization of
Mortgage Loan
Discount (71) - (71) -
Operating
Distributions from
Unconsolidated
Joint Ventures 134 184 1,036 1,334
Interest Expense (13,285) (12,569) (52,527) (43,532)
Prepayment Expense -
Early Extinguishment
of Debt - - (370) -
Tax Expense 156 (29) 27 (30)
Increase in Deferred
Leasing Costs (2,638) (1,621) (7,080) (5,937)
Increase in
Receivables and
Other Assets 1,624 (7,037) (5,736) (25,465)
Increase (Decrease)
in Accounts Payable
and Other
Liabilities 2,742 (3,431) 11,491 7,118
Adjustments for
Minority Interests 4,091 1,141 13,537 3,319
Adjustments for
Unconsolidated
Joint Ventures (599) (514) (2,263) (2,954)
Cash Flows Provided
by Operating
Activities $22,130 $6,226 $75,931 $47,550
(1) Parkway defines EBITDA, a non-GAAP financial measure, as net income
before interest expense, income taxes, depreciation, amortization, losses
on early extinguishment of debt and other gains and losses. EBITDA, as
calculated by us, is not comparable to EBITDA reported by other REITs that
do not define EBITDA exactly as we do. EBITDA does not represent cash
generated from operating activities in accordance with generally accepted
accounting principles, and should not be considered an alternative to
operating income or net income as an indicator of performance or as an
alternative to cash flows from operating activities as an indicator of
liquidity.
PARKWAY PROPERTIES, INC.
NET OPERATING INCOME FROM OFFICE AND PARKING PROPERTIES
THREE MONTHS ENDED DECEMBER 31, 2007 AND 2006
(In thousands, except number of properties data)
Average
Net Operating Income Occupancy
Number of Percentage
Properties of Portfolio (1) 2007 2006 2007 2006
Same store
properties
(2):
Wholly owned 48 82.00% $28,165 $27,806 92.0% 91.4%
Parkway
Properties
Office Fund LP 4 2.82% 968 1,184 93.8% 94.0%
Other
consolidated
joint venture 1 1.83% 629 586 87.6% 87.6%
Total same store
properties 53 86.65% 29,762 29,576 92.0% 91.4%
2006 acquisitions 5 10.76% 3,695 332 92.9% 88.8%
2007 acquisitions 2 2.65% 912 - 92.5% N/A
Office property
development - -0.03% (10) - N/A N/A
Assets sold - -0.03% (11) 1,520 N/A N/A
Net operating
income from
office and
parking
properties 60 100.00% $34,348 $31,428
(1) Percentage of portfolio based on 2007 net operating income.
(2) Parkway defines Same Store Properties as those properties that were
owned for the entire three-month periods ended December 31, 2007 and 2006
and excludes properties classified as discontinued operations. Same
Store net operating income ("SSNOI") includes income from real estate
operations less property operating expenses (before interest and
depreciation and amortization) for Same Store Properties. SSNOI as
computed by Parkway may not be comparable to SSNOI reported by other
REITs that do not define the measure exactly as we do. SSNOI is a
supplemental industry reporting measurement used to evaluate the
performance of the Company's investments in real estate assets. The
following table is a reconciliation of net income to SSNOI:
Three Months Ended Year Ended
December 31 December 31
2007 2006 2007 2006
Net income $918 $6,722 $19,692 $25,682
Add (deduct):
Interest expense 13,589 12,845 54,099 44,632
Depreciation and
amortization 19,501 19,790 77,574 64,655
Operating expense
for other real
estate properties 1 1 5 5
Management company
expenses 301 243 1,188 1,141
General and
administrative
expenses 1,492 1,246 6,597 4,651
Equity in earnings
of unconsolidated
joint ventures (226) (227) (1,008) (751)
Gain on sale of real
estate and other
assets - (4,181) (20,307) (17,646)
Minority interest -
unit holders - - 2 1
Minority interest -
real estate
partnerships (599) (116) (3,174) (485)
Income (loss) from
discontinued
operations - 230 (170) (556)
Gain on sale of real
estate from
discontinued
operations - (4,872) - (5,083)
Management company
income (409) (247) (1,605) (5,329)
Interest and other
income (220) (6) (528) (40)
Net operating income
from office and
parking properties 34,348 31,428 132,365 110,877
Less: Net operating
income from non same
store properties (4,586) (1,852) (25,219) (7,858)
Same store net
operating income $29,762 $29,576 $107,146 $103,019
FOR FURTHER INFORMATION:
188 E. Capitol Street, Suite 1000 Steven G. Rogers
Jackson, MS 39201-2136 President & Chief Executive Officer
http://www.pky.com Mandy M. Pope
(601) 948-4091 Chief Financial Officer
SOURCE Parkway Properties, Inc.
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Related links:
http://www.pky.com
Photo Notes:
NewsCom: http://www.newscom.com/cgi-bin/prnh/20030513/PARKLOGO
AP Archive: http://photoarchive.ap.org
PRN Photo Desk, photodesk@prnewswire.com
http://www.prnewswire.com/comp/103115.html /
CONTACT:
Steven G. Rogers, President & Chief Executive
Officer, or Mandy M. Pope, Chief Financial Officer, both of
Parkway Properties, Inc., +1-601-948-4091
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