JACKSON, Miss., Feb. 5 /PRNewswire-FirstCall/ -- Parkway Properties,
Inc. (NYSE: PKY) today announced results for its fourth quarter ended
December 31, 2006.
(Logo: http://www.newscom.com/cgi-bin/prnh/20030513/PARKLOGO )
Consolidated Financial Results
- Funds from operations ("FFO") applicable to common shareholders totaled
$15.5 million ($1.03 per diluted share) for the three months ended
December 31, 2006 compared to $14.3 million ($0.99 per diluted share)
for the three months ended December 31, 2005. FFO totaled $60 million
($4.10 per diluted share) for the year ended December 31, 2006 compared
to $60.3 million ($4.16 per diluted share) for the year ended December
31, 2005.
The following items contributed to FFO YTD YTD
(in thousands) 4Q06 4Q05 2006 2005
Lease termination fees $29 $1,075 $617 $2,147
Straight line rent 1,364 903 5,192 4,237
Amortization of above market rent (411) (570) (1,582) (1,970)
Placement fee on Maitland 200 joint venture - - - 947
Gain (loss) on land and securities - 74 (119) (292)
Prepayment expense on extinguishment of debt - - (325) -
Incentive and management fees earned on Viad - - 4,218 -
Incentive fee earned on 233 North Michigan - - - 400
Average occupancy 91.3% 89.9% 90.2% 90.6%
- Funds available for distribution ("FAD") totaled $7.5 million for the
three months ended December 31, 2006 compared to $8.8 million for the
three months ended December 31, 2005. FAD totaled $28.9 million for
the year ended December 31, 2006 compared to $31.6 million for the year
ended December 31, 2005.
- Net income available to common shareholders for the three months ended
December 31, 2006 was $5.4 million ($.36 per diluted share) compared to
$166,000 ($0.01 per diluted share) for the three months ended December
31, 2005. Net income available to common shareholders for the year
ended December 31, 2006 was $19.1 million ($1.32 per diluted share)
compared to $13.7 million ($0.96 per diluted share) for the year ended
December 31, 2005. A net gain of $9.1 million and $22.7 million was
included in net income for the three months and year ended December 31,
2006, respectively, and primarily represents the gain on the sale of
Viad Corporate Center in June 2006 and six office properties in the
fourth quarter of 2006. A net gain of $74,000 and $5.2 million was
included in net income for the three months and year ended December 31,
2005, respectively, and primarily represents the net gain on the sale
of a joint venture interest and two office properties.
Asset Recycling
- During the fourth quarter of 2006, the Company sold six wholly-owned
buildings located in Atlanta, Charlotte and Houston. The sales are
described below.
- On November 29, 2006, the Company sold Richmond Centre, a 92,000
square foot office building in Houston, Texas for $6.9 million.
Richmond Centre was 88.7% occupied on the date of sale. The
Company recorded a gain on the sale for financial reporting
purposes of $2 million. In accordance with generally accepted
accounting principles ("GAAP"), all current and prior period income
from the office property has been classified as discontinued
operations.
- On December 7, 2006, the Company sold Ashford II, a 59,000 square
foot office building in Houston, Texas for $5.25 million. Ashford
II was 99.8% occupied on the date of sale. The Company recorded a
gain on the sale for financial reporting purposes of $2.9 million.
In accordance with GAAP, all current and prior period income from
the office property has been classified as discontinued operations.
- On December 14, 2006, the Company sold a three-building portfolio
in Atlanta, Georgia for a combined sales price of $17.2 million.
The three properties, Hightower Centre, Pavilion Center and Roswell
North, total 181,000 square feet and were 76.6% occupied on the
date of sale. The Company recorded a gain on the sale for
financial reporting purposes of $1.6 million.
- On December 20, 2006, the Company sold Charlotte Park, a 187,000
square foot office park in Charlotte, North Carolina, for a sales
price of $18.8 million. Charlotte Park was 91.2% occupied on the
date of sale. The Company recorded a gain on the sale for
financial reporting purposes of $2.6 million.
- The discretionary fund with Ohio PERS (the "Fund"), of which Parkway
owns 25%, purchased assets in Memphis, Atlanta and suburban Chicago
during the fourth quarter of 2006. In accordance with GAAP, the Fund
has been included in the consolidated financial statements of Parkway
since Parkway is the sole general partner and has authority to make
major decisions on behalf of the fund, thereby giving Parkway a
controlling interest. The assets are described below.
- On December 1, 2006, the Fund purchased Chatham Centre, a 206,000
square foot office building in Schaumburg, Illinois for a purchase
price of $28.25 million. The Fund expects to spend an additional
$1.7 million for closing costs, building improvements, lease costs
and tenant improvements during the first two years of ownership.
- On December 20, 2006, the Fund purchased Renaissance Center, a
190,000 square foot office building in Memphis, Tennessee for a
purchase price of $38.1 million. The Fund expects to spend an
additional $903,000 for closing costs, building improvements, lease
costs and tenant improvements during the first two years of
ownership.
- On December 27, 2006, the Fund purchased Overlook II, a 262,000
square foot office building in Atlanta, Georgia for a purchase
price of $44.65 million. The Fund expects to spend an additional
$2.2 million for closing costs, building improvements, lease costs
and tenant improvements during the first two years of ownership.
- On December 27, 2006, the Fund purchased a two-building portfolio
in Atlanta, Georgia for a combined purchase price of $48.7 million.
The Fund expects to spend an additional $3.6 million for closing
costs, building improvements, lease costs and tenant improvements
during the first two years of ownership. 100 Ashford Center is a
154,000 square foot office building in the Central Perimeter
submarket and Peachtree Ridge is a 159,000 square foot office
building in the Peachtree Corners submarket.
Operations and Leasing
- Parkway's customer retention rate for the quarter ending December 31,
2006 was 76% compared to 74% for the quarter ending September 30, 2006
and 56% for the quarter ending December 31, 2005. Customer retention
for the year ended December 31, 2006 and 2005 was 73% and 70%,
respectively.
- As of January 1, 2007, occupancy of the office portfolio was 90.8%
compared to 91.0% as of October 1, 2006 and 88.9% as of January 1,
2006. Not included in the January 1, 2007 occupancy rate are 21 signed
leases totaling 132,000 square feet, which commence in the first
through the third quarters of 2007. Including these leases, the
portfolio is 91.8% leased as of January 22, 2007. Average occupancy
for the fourth quarter was 91.3%, which is consistent with prior
earnings guidance. This compares to average occupancy for the fourth
quarter of 2005 of 89.9%.
- During the quarter ended December 31, 2006, 93 leases were renewed or
expanded on 722,000 rentable square feet at an average rental rate
increase of 2.1% on a cash basis and a cost of $2.99 per square foot
per year of the lease term in committed tenant improvements and leasing
commissions ("leasing costs"). During the year ended December 31,
2006, leases were renewed or expanded on 2 million rentable square feet
at an average cost of $2.15 per square foot per year of the lease term
in committed leasing costs.
- During the quarter ended December 31, 2006, 28 new leases were signed
on 87,000 rentable square feet at a cost of $4.28 per square foot per
year of the lease term in committed leasing costs. New leases were
signed during the year ended December 31, 2006 on 541,000 rentable
square feet at an average cost of $3.79 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 $244,000 or .97% for the three months ended December 31, 2006
compared to the same period of the prior year. Same store NOI for the
year ended December 31, 2006 decreased $3.1 million or 3.3% compared to
the same period of 2005.
Capital Markets and Financing
- The Company's previously announced cash dividend of $0.65 per share for
the quarter ended December 31, 2006 represents a payout of
approximately 63.3% of FFO per diluted share. The fourth quarter
dividend was paid on December 27, 2006 and equates to an annualized
dividend of $2.60 per share, a yield of 4.7% on the closing stock
price on February 2, 2006 of $55.48. This dividend is the 81st
consecutive quarterly distribution to Parkway's shareholders of common
stock.
- As of December 31, 2006, the Company's debt-to-total market
capitalization ratio was 47.9% based on a stock price of $51.01
compared to 52.1% as of September 30, 2006 based on a stock price of
$46.49 and 49.6% as of December 31, 2005 based on a stock price of
$40.14.
- Mortgages were placed or assumed in connection with the asset purchases
by the Fund during the quarter ended December 31, 2006 and are
described below.
- On December 1, 2006, the Fund placed a $17.1 million ten-year non-
recourse first mortgage at a fixed rate of 5.56% in connection with
the purchase of the Chatham Centre. Payments during the mortgage
term will be on an interest-only basis and the loan matures January
10, 2017.
- The Renaissance Center was acquired subject to an existing non-
recourse first mortgage with an outstanding balance of
approximately $17.2 million, which matures June 2012 and carries a
fixed interest rate of 5.23%. In accordance with GAAP, the
mortgage was recorded at $17 million to reflect the fair value of
the instrument based on the market rate of 5.469% on the date of
purchase.
- The acquisition of 100 Ashford Center and Peachtree Ridge was
subject to an existing non-recourse first mortgage with an
outstanding balance of approximately $30.9 million, which matures
January 2016 and carries a fixed interest rate of 5.68%. In
accordance with GAAP, the mortgage was recorded at $31.1 million to
reflect the fair value of the instrument based on the market rate
of 5.606% on the date of purchase.
- On December 18, 2006, the Company sold 600,000 shares of common stock
to Banc of America Securities LLC at a gross offering price of $50.25
per share and a net price of $49.37 per share. The Company used the net
proceeds of approximately $29.6 million to repay indebtedness
outstanding under a $19.3 million mezzanine loan incurred in connection
with the purchase of One Illinois Center and to purchase additional
investments in office properties.
- During the quarter ended December 31, 2006, 270,000 shares of Series B
Convertible Preferred Stock were converted into an equal number of
shares of common stock. As of December 31, 2006 there were no shares
of Series B Convertible Preferred Stock authorized and outstanding.
- On January 31, 2007, the Company amended and renewed the one-year $15
million unsecured line of credit with PNC Bank. This unsecured line of
credit matures January 29, 2008 and is expected to fund the daily cash
requirements of the Company's treasury management system. The $15
million line has a current interest rate equal to the 30-day LIBOR rate
plus 130 basis points. The Company paid a facility fee of $15,000 (10
basis points) upon closing of the loan agreement. Under the $15
million line, the Company does not pay annual administration fees or
fees on the unused portion of the line.
Outlook for 2007
The Company is forecasting FFO per diluted share of $3.80 to $4.00 and
EPS of $3.50 to $3.70 for 2007. The reconciliation of forecasted EPS to
forecasted FFO per diluted share is as follows:
Guidance for 2007 Range
Fully diluted EPS $3.50 - $3.70
Plus: Real estate depreciation and amortization $4.12 - $4.18
Plus: Depreciation on unconsolidated joint ventures $0.07 - $0.11
Less: Gain on sale of real estate and joint venture
interests ($3.55 - $3.65)
Less: Minority interest depreciation and amortization ($0.34 - $0.34)
Fully diluted FFO per share $3.80 - $4.00
Earnings guidance is based on the following assumptions:
- An average occupancy for the first, second, third and fourth quarters
of 91%, 91%, 93% and 94%, respectively, with an average occupancy of
92%.
- An average same store net operating income growth for the first half of
2007 of 3%; and an average same store net operating income growth for
the second half of 2007 of 6%; for an annual increase in same store net
operating income of approximately 5% on a GAAP basis. On a cash basis,
annual same store net operating income is expected to increase
approximately 8%.
- Straight line rent adjustment is expected to be approximately $2.3
million for 2007 versus $5.2 million for 2006, reflecting the reduction
in rent concessions in 2007 as compared to 2006.
- Interest rate on non-hedged floating rate debt of 6.62% and 6.50% for
first and second half of year respectively, for an average interest
rate of 6.56%.
- New investments for the discretionary fund in addition to the
investments projected for 2007 totaling $170 million at an average
acquisition capitalization rate of 7% on the assets and 9% to Parkway
when including various recurring fees.
- No lease termination fee income is assumed for 2007 as compared to
$617,000 recorded in 2006.
- One fee simple sale of an asset in Columbia, South Carolina valued at
$9 million is projected to take place on May 1, 2007.
- Contributions of assets to funds or similar ventures, where the Company
will retain 25% ownership interest, are projected to be made as shown
below:
- Assets in Knoxville, Tennessee totaling 549,000 square feet with an
estimated value of $59 million on July 1, 2007;
- Assets in Virginia totaling 883,000 square feet with an estimated
value of $97 million on July 1, 2007;
- Two assets in Columbia, South Carolina totaling 759,000 square feet
with an estimated value of $97 million on October 1, 2007.
- Debt prepayment penalties and expense of $2.8 million, or $.18 per
diluted share in FFO, are projected on the dispositions in 2007.
- The Company's debt to market capitalization is expected to range from
45% to 48% throughout 2007 as these capital events take place, with a
projected ending debt to market capitalization of 48%, calculated using
the December 29, 2006 closing stock price of $51.01 per share.
- Proceeds from dispositions are used to pay down short-term debt with an
interest rate of 6.5% at the time of sale.
- Fee simple acquisitions of $150 million are projected as follows:
- $50 million on June 1, 2007 at a 7% cap rate;
- $50 million on August 1, 2007 at a 7% cap rate;
- $50 million on November 1, 2007 at a 7% cap rate.
Steven G. Rogers, President and Chief Executive Officer stated, "I am
pleased with our fourth quarter results. We finished the year strong on all
fronts with significant asset recycling completed toward our Gear Up Plan
goals. Occupancy and rental rate increases reflect the improved
fundamentals in our markets. Our outlook for 2007 shows continued
improvement across a broad spectrum of metrics."
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.
Actual adjusted funds available for distribution for 2006 exceeded the
amount projected by the Company at the beginning of the plan by $.29 per
diluted share.
Additional Information
The Company will conduct a conference call to discuss the results of
its fourth quarter operations on Tuesday, February 6, 2007, at 11:00 a.m.
Eastern Time. The number for the conference call is 800-289-0518. A taped
replay of the call can be accessed 24 hours a day through February 16, 2007
by dialing 888-203-1112 and using the pass code of 2926274. 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 2006 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 2006 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 66 office
properties located in 11 states with an aggregate of approximately 13.3
million square feet of leasable space as of February 5, 2007. Included in
the portfolio are 17 properties totaling 2.5 million square feet that are
owned jointly with other investors, representing 19% 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 goal to transform its strategy from
being an owner-operator to being 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 1.2 million square feet for third party
owners as of February 5, 2007.
Certain statements in this release that are not in the present 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.
FOR FURTHER INFORMATION:
Steven G. Rogers
President & Chief Executive Officer
William R. Flatt
Chief Financial Officer
(601) 948-4091
PARKWAY PROPERTIES, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
December 31 December 31
2006 2005
(Unaudited)
Assets
Real estate related investments:
Office and parking properties $1,517,468 $1,220,565
Accumulated depreciation (211,187) (179,636)
1,306,281 1,040,929
Land available for sale 1,467 1,467
Investment in unconsolidated joint ventures 11,179 12,942
1,318,927 1,055,338
Rents receivable and other assets 107,145 69,480
Intangible assets, net 81,800 60,161
Cash and cash equivalents 4,474 3,363
$1,512,346 $1,188,342
Liabilities
Notes payable to banks $152,312 $150,371
Mortgage notes payable 696,012 483,270
Accounts payable and other liabilities 72,659 56,628
Subsidiary redeemable preferred
membership interests 10,741 10,741
931,724 701,010
Minority Interest
Minority Interest - unit holders 36 38
Minority Interest - real estate partnerships 90,280 12,778
90,316 12,816
Stockholders' Equity
8.34% Series B Cumulative Convertible Preferred
stock, $.001 par value, 2,142,857 shares
authorized in 2005, 803,499 shares issued
and outstanding in 2005 - 28,122
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 and
65,457,143 shares authorized in 2006 and 2005,
respectively, 15,764,799 and 14,167,292 shares
issued and outstanding in 2006 and 2005,
respectively 16 14
Common stock held in trust, at cost, 115,000 and
124,000 shares in 2006 and 2005, respectively (3,894) (4,198)
Additional paid-in capital 449,141 389,971
Unearned compensation - (3,101)
Accumulated other comprehensive income 828 826
Retained earnings (deficit) (13,761) 4,906
490,306 474,516
$1,512,346 $1,188,342
PARKWAY PROPERTIES, INC.
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
Three Months Ended
December 31
2006 2005
(Unaudited)
Revenues
Income from office and parking properties $57,547 $49,029
Management company income 247 400
Total revenues 57,794 49,429
Expenses
Property operating expense 26,119 23,157
Depreciation and amortization 19,790 14,130
Operating expense for other real estate properties 1 1
Management company expenses 243 129
General and administrative 1,246 1,127
Total expenses 47,399 38,544
Operating income 10,395 10,885
Other income and expenses
Interest and other income 6 9
Equity in earnings of unconsolidated joint ventures 227 401
Gain on sale of real estate 4,181 74
Interest expense (12,845) (9,872)
Income before minority interest and discontinued
operations 1,964 1,497
Minority interest - unit holders - (1)
Minority interest - real estate partnerships 116 114
Income from continuing operations 2,080 1,610
Discontinued operations:
Income (loss) from discontinued operations (230) 343
Gain on sale of real estate from discontinued
operations 4,872 -
Net income 6,722 1,953
Dividends on preferred stock (1,200) (1,200)
Dividends on convertible preferred stock (119) (587)
Net income available to common stockholders $5,403 $166
Net income (loss) per common share:
Basic:
Income (loss) from continuing operations $0.05 $(0.01)
Discontinued operations 0.31 0.02
Net income $0.36 $0.01
Diluted:
Income (loss) from continuing operations $0.05 $(0.01)
Discontinued operations 0.31 0.02
Net income $0.36 $0.01
Dividends per common share $0.65 $0.65
Weighted average shares outstanding:
Basic 14,895 14,154
Diluted 15,086 14,281
PARKWAY PROPERTIES, INC.
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
Year Ended
December 31
2006 2005
(Unaudited)
Revenues
Income from office and parking properties $210,007 $188,486
Management company income 5,329 2,997
Total revenues 215,336 191,483
Expenses
Property operating expense 99,130 88,254
Depreciation and amortization 64,655 51,046
Operating expense for other real estate properties 5 5
Management company expenses 1,141 607
General and administrative 4,651 4,468
169,582 144,380
Operating income 45,754 47,103
Other income and expenses
Interest and other income 40 255
Equity in earnings of unconsolidated joint ventures 751 1,496
Gain on sale of joint venture interests, real
estate and other assets 17,646 1,039
Interest expense (44,632) (35,444)
Income before minority interest and discontinued
operations 19,559 14,449
Minority interest - unit holders (1) (2)
Minority interest - real estate partnerships 485 (187)
Income from continuing operations 20,043 14,260
Discontinued operations:
Income from discontinued operations 556 2,366
Gain on sale of real estate from discontinued
operations 5,083 4,181
Net income 25,682 20,807
Dividends on preferred stock (4,800) (4,800)
Dividends on convertible preferred stock (1,773) (2,346)
Net income available to common stockholders $19,109 $13,661
Net income per common share:
Basic:
Income from continuing operations $0.95 $0.50
Discontinued operations 0.39 0.47
Net income $1.34 $0.97
Diluted:
Income from continuing operations $0.93 $0.50
Discontinued operations 0.39 0.46
Net income $1.32 $0.96
Dividends per common share $2.60 $2.60
Weighted average shares outstanding:
Basic 14,306 14,065
Diluted 14,487 14,233
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, 2006 AND 2005
(In thousands, except per share data)
Three Months Ended Year Ended
December 31 December 31
2006 2005 2006 2005
(Unaudited) (Unaudited)
Net Income (Loss) $6,722 $1,953 $25,682 $20,807
Adjustments to Net Income (Loss):
Preferred Dividends (1,200) (1,200) (4,800) (4,800)
Convertible Preferred Dividends (119) (587) (1,773) (2,346)
Depreciation and Amortization 19,790 14,130 64,655 51,046
Depreciation and Amortization -
Discontinued Operations 48 198 582 1,050
Minority Interest Depreciation
and Amortization (802) (428) (2,275) (1,019)
Adjustments for Unconsolidated
Joint Ventures 156 276 815 1,057
Minority Interest - Unit Holders - 1 1 2
Gain on Sale of Real Estate and
Joint Venture Interests (9,053) - (22,848) (5,512)
Funds From Operations Applicable to
Common Shareholders (1) $15,542 $14,343 $60,039 $60,285
Funds Available for Distribution
Funds From Operations Applicable
to Common Shareholders $15,542 $14,343 $60,039 $60,285
Add (Deduct):
Adjustments for Unconsolidated
Joint Ventures (104) (242) (1,159) (1,071)
Adjustments for Minority Interest
in Real Estate Partnerships 98 (20) 431 73
Straight-line Rents (1,346) (862) (5,259) (4,192)
Straight-line Rents -
Discontinued Operations (18) (41) 67 (45)
Amortization of Above/Below
Market Leases 411 570 1,582 1,970
Amortization of Share Based
Compensation 279 182 863 533
Capital Expenditures:
Building Improvements (1,289) (1,837) (5,435) (7,579)
Tenant Improvements - New
Leases (2,199) (560) (8,434) (6,216)
Tenant Improvements - Renewal
Leases (2,889) (908) (9,386) (6,363)
Leasing Costs - New Leases (566) (776) (2,292) (2,255)
Leasing Costs - Renewal Leases (416) (1,085) (2,127) (3,497)
Funds Available for Distribution (1) $7,503 $8,764 $28,890 $31,643
Diluted Per Common Share/Unit
Information (**)
FFO per share $1.03 $0.99 $4.10 $4.16
Dividends paid $0.65 $0.65 $2.60 $2.60
Dividend payout ratio for FFO 63.28% 65.68% 63.48% 62.43%
Weighted average shares/units
outstanding 15,248 15,086 15,092 15,038
Other Supplemental Information
Upgrades on Acquisitions $2,414 $1,549 $6,486 $6,531
Loss on Non Depreciable Assets $- $74 $(119) $(292)
**Information for Diluted Computations:
Convertible Preferred Dividends $119 $587 $1,773 $2,346
Basic Common Shares/Units
Outstanding 14,896 14,155 14,307 14,066
Convertible Preferred Shares
Outstanding 161 803 603 803
Dilutive Effect of Other Share
Equivalents 191 128 182 169
(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, 2006 AND 2005
(In thousands)
Three Months Ended Year Ended
December 31 December 31
2006 2005 2006 2005
(Unaudited) (Unaudited)
Net Income (Loss) $6,722 $1,953 $25,682 $20,807
Adjustments to Net Income (Loss):
Interest Expense 12,569 8,789 43,532 33,409
Amortization of Financing Costs 276 528 1,100 1,480
Prepayment Expenses - Early
Extinguishment of Debt - 555 - 555
Depreciation and Amortization 19,838 14,328 65,237 52,096
Amortization of Share Based
Compensation 279 182 863 533
Net Gain on Joint Venture Interests,
Real Estate and Other Assets (9,053) (74) (22,729) (5,220)
Tax Expense 29 (2) 30 6
EBITDA Adjustments - Unconsolidated
Joint Ventures 288 671 2,203 2,593
EBITDA Adjustments - Minority
Interest in Real Estate
Partnerships (1,257) (861) (3,803) (2,378)
EBITDA (1) $29,691 $26,069 $112,115 $103,881
Interest Coverage Ratio:
EBITDA $29,691 $26,069 $112,115 $103,881
Interest Expense:
Interest Expense $12,569 $8,789 $43,532 $33,409
Capitalized Interest - - - 52
Interest Expense - Unconsolidated
Joint Ventures 129 368 1,015 1,400
Interest Expense - Minority
Interest in Real Estate
Partnerships (440) (421) (1,479) (1,328)
Total Interest Expense $12,258 $8,736 $43,068 $33,533
Interest Coverage Ratio 2.42 2.98 2.60 3.10
Fixed Charge Coverage Ratio:
EBITDA $29,691 $26,069 $112,115 $103,881
Fixed Charges:
Interest Expense $12,258 $8,736 $43,068 $33,533
Preferred Dividends 1,319 1,787 6,573 7,146
Preferred Distributions
- Unconsolidated Joint Ventures - - - 21
Principal Payments (Excluding Early
Extinguishment of Debt) 4,039 4,783 15,366 17,724
Principal Payments - Unconsolidated
Joint Ventures 12 10 45 108
Principal Payments - Minority
Interest in Real Estate
Partnerships (46) (74) (222) (497)
Total Fixed Charges $17,582 $15,242 $64,830 $58,035
Fixed Charge Coverage Ratio 1.69 1.71 1.73 1.79
Modified Fixed Charge Coverage Ratio:
EBITDA $29,691 $26,069 $112,115 $103,881
Modified Fixed Charges:
Interest Expense $12,258 $8,736 $43,068 $33,533
Preferred Dividends 1,319 1,787 6,573 7,146
Preferred Distributions
- Unconsolidated Joint Ventures - - - 21
Total Modified Fixed Charges $13,577 $10,523 $49,641 $40,700
Modified Fixed Charge Coverage Ratio 2.19 2.48 2.26 2.55
The following table reconciles EBITDA
to cash flows provided by
operating activities:
EBITDA $29,691 $26,069 $112,115 $103,881
Amortization of Above Market
Leases 411 570 1,582 1,970
Operating Distributions from
Unconsolidated Joint Ventures 184 293 1,334 2,587
Interest Expense (12,569) (8,789) (43,532) (33,409)
Prepayment Expenses - Early
Extinguishment of Debt - (555) - (555)
Tax Expense (29) 2 (30) (6)
Increase in Receivables and Other
Assets (7,037) (289) (25,465) (11,571)
Increase (Decrease) in Accounts
Payable and Other Liabilities (3,431) (18,764) 7,118 (1,320)
Adjustments for Minority Interests 1,141 748 3,319 2,567
Adjustments for Unconsolidated
Joint Ventures (514) (1,072) (2,954) (4,089)
Cash Flows Provided by Operating
Activities $7,847 $(1,787) $53,487 $60,055
(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, 2006 AND 2005
(In thousands, except number of properties data)
Net Operating
Income Occupancy
Number of Percentage
Properties of Portfolio (1) 2006 2005 2006 2005
Same store properties (2) 51 80.74% $25,376 $25,132 91.5% 88.6%
2005 acquisitions 1 1.54% 485 132 97.9% N/A
2006 acquisitions 8 16.13% 5,069 - 84.8% N/A
Assets sold - 1.59% 498 608 N/A N/A
Net operating income
from office and
parking properties 60 100.00% $31,428 $25,872
(1) Percentage of portfolio based on 2006 net operating income.
(2) Parkway defines Same Store Properties as those properties that
were owned for the entire three-month periods ended December 31, 2006 and
2005 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
2006 2005 2006 2005
Net income $6,722 $1,953 $25,682 $20,807
Add (deduct):
Interest expense 12,845 9,872 44,632 35,444
Depreciation and amortization 19,790 14,130 64,655 51,046
Operating expense for other real
estate properties 1 1 5 5
Management company expenses 243 129 1,141 607
General and administrative expenses 1,246 1,127 4,651 4,468
Equity in earnings of unconsolidated
joint ventures (227) (401) (751) (1,496)
Gain on sale of joint venture interests,
real estate and other assets (4,181) (74) (17,646) (1,039)
Minority interest - unit holders - 1 1 2
Minority interest - real estate
partnerships (116) (114) (485) 187
(Income) loss from discontinued
operations 230 (343) (556) (2,366)
Gain on sale of real estate from
discontinued operations (4,872) - (5,083) (4,181)
Management company income (247) (400) (5,329) (2,997)
Interest and other income (6) (9) (40) (255)
Net operating income from office and
parking properties 31,428 25,872 110,877 100,232
Less: Net operating income from non
same store properties (6,052) (740) (19,476) (5,735)
Same store net operating income $25,376 $25,132 $91,401 $94,497
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 William R. Flatt, Chief Financial Officer, both of
Parkway Properties, Inc., +1-601-948-4091
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