WASHINGTON, April 28 /PRNewswire-FirstCall/ -- CarrAmerica Realty
Corporation (NYSE: CRE) today reported first quarter 2005 diluted earnings per
share of $1.54 on net income of $95.0 million, compared to diluted earnings
per share of $0.21 on net income of $15.2 million for the first quarter of
2004. First quarter 2005 net income includes gains from the disposition of
real estate of $88.1 million ($1.46 per diluted share).
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For the first quarter of 2005, diluted funds from operations available to
common shareholders (Diluted FFO), including the impairment charges discussed
below, were $41.4 million or $0.69 per share compared to $48.4 million or
$0.81 per share for the first quarter of 2004. The gains associated with the
disposition of real estate had no impact on reported Diluted FFO or Diluted
FFO per share.
First quarter 2005 results also were negatively impacted by impairment
charges on two properties which we expect to sell during 2005 which totaled
$4.0 million and reduced earnings per share and Diluted FFO per share for the
quarter by $0.07 per share.
Portfolio Report
CarrAmerica President and COO, Philip L. Hawkins, commented, "CarrAmerica
is very pleased with the level of leasing activity experienced across our
markets in the first quarter." Mr. Hawkins continued, "Occupancy increased
within our portfolio for the second consecutive quarter, demonstrating
continuing economic recovery and renewed vigor in demand for office space."
Occupancy for consolidated stabilized properties was 88.6% at March 31,
2005, up from 88.2% at December 31, 2004 and up from 87.4% at March 31, 2004.
Same store property operating income for the first quarter of 2005 decreased
4.6% on a GAAP basis over the same period in 2004 due primarily to rental
rates on new leases being substantially lower than rental rates in expiring
leases in many of CarrAmerica's markets. Adjusting for termination fees, same
store property operating income for the first quarter of 2005 decreased by
3.8% as compared to the previous year. The average occupancy rate for same
store properties was 88.4% in the first quarter, up from 88.0% at the end of
the fourth quarter.
For the first quarter, rental rates decreased 11.7% on average on the
leases executed during the quarter. The Company leased 502,000 square feet of
office space in the first quarter.
Acquisitions
There were no new building acquisitions completed during the first quarter
of 2005. Subsequent to the end of the first quarter, a joint venture in which
CarrAmerica is a 20% partner acquired Colonnade I, II & III, a 984,000 square
foot Class A property located in Dallas, Texas for $153.5 million.
CarrAmerica will also lease and manage the property. CarrAmerica expects to
receive a year one unleveraged GAAP return on its investment of 8.1% and a
stabilized unleveraged GAAP return on its investment of approximately 9.25%.
CarrAmerica's investment net of property level debt was approximately $11.0
million.
Dispositions
During the first quarter, CarrAmerica entered into a joint venture with
RREEF, a subsidiary of Deutsche Bank AG, to own CarrAmerica Corporate Center,
an approximately 1.0 million square foot office property located in
Pleasanton, California. The property was valued at $197.3 million for the
purpose of the venture. CarrAmerica received approximately $154.0 million in
net proceeds in connection with its sale of an 81% interest in the property.
In addition to retaining a 19% ownership interest, CarrAmerica will continue
to manage and oversee leasing of the property. The Company recorded a gain of
$77.4 million in connection with the sale.
Also in the first quarter, CarrAmerica closed on the sale of Alton Deere
Plaza, a six-building, 183,000 square foot office property in Orange County,
California for $33.7 million. The Company recorded a first quarter gain of
approximately $9.0 million associated with this sale.
Also in the first quarter, a joint venture in which CarrAmerica owns a 30%
interest closed on the sale of approximately 82,000 square feet of office
space in its Terrell Place project in Washington, D.C. for $32.6 million.
CarrAmerica's share of the proceeds was $6.5 million and our gain on the sale
was approximately $1.7 million.
Subsequent to the end of the first quarter, CarrAmerica closed on the sale
of Westlake Spectrum, a two building, 107,000 square foot office property in
Los Angeles for $21.3 million. The Company recorded a gain of approximately
$3.8 million in connection with this sale.
The Company has been reviewing selected properties for possible sale and
has determined that 11 properties would be marketed for sale over the next
three to nine months. Of those properties to be marketed for sale, two had
book values in excess of their market values less costs to sell and net
operating cash during the holding period. The Company recognized an
impairment loss of $4.0 million related to these two properties in the first
quarter of 2005.
The gains on the first quarter sales and the impairment of two of the
properties to be sold were not included in our previously issued earnings per
share or FFO guidance. The property gains had no impact on FFO while the
impairment charges will reduce full year Diluted FFO per share by $0.07 per
share.
Capital Markets
Subsequent to the end of the quarter, on April 18, 2005, CarrAmerica
terminated a $175.0 million interest rate swap agreement for a payment of
approximately $2.0 million. This cost will be amortized as an increase of
interest expense over the remaining term of the Company's $175.0 million,
5.25% senior unsecured notes maturing in 2007 resulting in a new effective
interest rate to maturity of 5.69%.
CarrAmerica Earnings Estimates
On Friday, April 29, CarrAmerica management will discuss earnings guidance
for 2005 which includes the impairment charges previously disclosed. Diluted
earnings per share of $1.74 - $1.94 and Diluted FFO per share of $2.66 - $2.86
for 2005 will be discussed. Second quarter 2005 diluted earnings per share
and Diluted FFO per share of $0.10 to $0.15 and $0.66 to $0.71, respectively,
will also be discussed. The projections for 2005 are based in part on the
following assumptions:
2005
Average Office Portfolio Occupancy 88.0% - 90.0%
Real Estate Service Revenue $18.0 - $21.0 million
General and Administrative Expense $40.0 - $42.0 million
Termination Fees $ 1.0 - $ 2.0 million
Estimates for full year 2005 include gains on the sale of Alton Deere
Plaza, Westlake Spectrum and the partial interests in the Terrell Place
project as well as CarrAmerica Corporate Center and the impairment charges
previously disclosed (see Dispositions section earlier in this document) but
exclude any other potential gains, losses or asset impairments associated with
property dispositions currently contemplated or otherwise. Any gains or
losses on the sales of real estate will have an impact on net income, which
may be material, but will not have an impact on FFO, since those amounts are
not added back in the calculation of FFO. Any impairments of real estate will
negatively impact both net income and FFO, which may be material. The 2005
estimates also include the impact of lost property income of approximately
$6.5-$7.0 million associated with the vacancy of the International Monetary
Fund from our International Square property in Washington, D.C. The Company
expects to incur approximately 2-4 months of downtime associated with the
commencement of a 394,000 square foot lease in approximately 80.0% of the
vacated space. Our 2005 estimate also assumes that straight-line rents on in-
place leases that expire in 2005 exceed market rental rates by 8.0% - 12.0%
and that, on a weighted average basis, dispositions will exceed acquisitions
by approximately $150.0 million for the year.
CarrAmerica Announces First Quarter Dividend
The Board of Directors of CarrAmerica today declared a first quarter
dividend for its common stock of $0.50 per share. The dividend will be
payable to shareholders of record as of the close of business May 20, 2005.
CarrAmerica's common stock will begin trading ex-dividend on May 18, 2005 and
the dividend will be paid on May 31, 2005. The company also declared a
dividend on its Series E preferred stock. The Series E Cumulative Redeemable
preferred stock dividend is $.46875 per share. The Series E preferred stock
dividends are payable to shareholders of record as of the close of business on
May 20, 2005. The preferred stock will begin trading ex-dividend on May 18,
2005 and the dividends will be paid on May 31, 2005.
CarrAmerica First Quarter Webcast and Conference Call
CarrAmerica will conduct a conference call to discuss 2005 first quarter
results on Friday, April 29, 2005 at 11:00 A.M., ET. A live webcast of the
call will be available through a link at CarrAmerica's web site,
http://www.carramerica.com. The phone number for the conference call is
1-800-475-3716 for U.S. participants and 1-719-457-2728 for international
participants. The call is open to all interested persons. A taped replay of
the conference call can be accessed from 3:00 P.M. on April 29, 2005 until
midnight May 4, 2005, by dialing 1-888-203-1112 for U.S. callers and
1-719-457-0820 for international callers, passcode 8646454.
A copy of supplemental material on the company's first quarter operations
is available on the company's web site, http://www.carramerica.com, or by
request from:
Stephen Walsh
CarrAmerica Realty Corporation
1850 K Street, NW, Suite 500
Washington, D.C. 20006
(Telephone) 202-729-1764
E-mail: stephen.walsh@carramerica.com
CarrAmerica owns, develops and operates office properties in 12 markets
throughout the United States. The company has become one of America's leading
office workplace companies by meeting the rapidly changing needs of its
customers with superior service, a large portfolio of quality office
properties and extraordinary development capabilities. Currently, CarrAmerica
and its affiliates own, directly or through joint ventures, interests in a
portfolio of 288 operating office properties, totaling over 26 million square
feet. CarrAmerica's markets include Austin, Chicago, Dallas, Denver, Los
Angeles, Orange County, Portland, Salt Lake City, San Diego, San Francisco Bay
Area, Seattle and metropolitan Washington, D.C. For additional information on
CarrAmerica, including space availability, visit our web site at
http://www.carramerica.com.
Estimates of Diluted FFO and earnings per share and certain other
statements in this release, including management's expectations about, among
other things, operating performance and financial conditions, may constitute
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995 (the "Reform Act"). Such forward-looking
statements involve known and unknown risks, uncertainties and other factors
that may cause the actual results, performance, dividends, achievements or
transactions of the company and its affiliates or industry results to be
materially different from any future results, performance, achievements or
transactions expressed or implied by such forward-looking statements. Such
factors include, among others, the following: national and local economic,
business and real estate conditions that will, among other things, affect
demand for office space, the extent, strength and duration of any economic
recovery, including the effect on demand for office space and the creation of
new office development, availability and creditworthiness of tenants, the
level of lease rents, and the availability of financing for both tenants and
us; adverse changes in real estate markets, including, among other things, the
extent of tenant bankruptcies, financial difficulties and defaults, the extent
of future demand for office space in our core markets and barriers to entry
into markets which we may seek to enter in the future, the extent of the
decreases in rental rates, our ability to identify and consummate attractive
acquisitions on favorable terms, our ability to consummate any planned
dispositions in a timely manner on acceptable terms, and changes in operating
costs, including real estate taxes, utilities, insurance and security costs;
actions, strategies and performance of affiliates that we may not control or
companies in which we have made investments; ability to obtain insurance at a
reasonable cost; ability to maintain our status as a REIT for federal and
state income tax purposes; ability to raise capital; effect of any terrorist
activity or other heightened geopolitical crisis; governmental actions and
initiatives; and environmental/safety requirements. For a further discussion
of these and other factors that could impact the company's future results,
performance, achievements or transactions, see the documents filed by the
company from time to time with the Securities and Exchange Commission, and in
particular the section titled, "The Company - Risk Factors" in the company's
Annual Report or Form 10-K.
CARRAMERICA REALTY CORPORATION
Consolidated Balance Sheets
March 31, December 31,
(In thousands) 2005 2004
(Unaudited)
Assets
Rental property:
Land $ 740,859 $ 779,482
Buildings 1,977,970 2,064,678
Tenant improvements 425,128 448,515
Furniture, fixtures and equipment 46,186 45,879
3,190,143 3,338,554
Less: Accumulated depreciation (734,092) (750,530)
Net rental property 2,456,051 2,588,024
Land held for future development or sale 41,811 41,676
Cash and cash equivalents 153,236 4,735
Restricted deposits 2,019 1,364
Accounts and notes receivable, net 53,342 52,438
Investments in unconsolidated entities 154,883 138,127
Accrued straight-line rents 83,505 84,396
Tenant leasing costs, net 50,284 53,908
Intangible assets, net 91,991 98,354
Prepaid expenses and other assets 20,367 18,170
$ 3,107,489 $ 3,081,192
Liabilities and Stockholders' Equity
Liabilities:
Mortgages and notes payable, net $ 1,928,172 $ 1,941,130
Accounts payable and accrued expenses 89,858 107,409
Rent received in advance and
security deposits 34,403 40,304
2,052,433 2,088,843
Minority interest 61,050 65,378
Stockholders' equity:
Preferred stock 201,250 201,250
Common stock 552 548
Additional paid-in capital 1,028,827 1,025,388
Cumulative dividends in excess of
net income (236,817) (300,500)
Accumulated other comprehensive income 194 285
994,006 926,971
Commitments and contingencies
$ 3,107,489 $ 3,081,192
CARRAMERICA REALTY CORPORATION
Consolidated Statements of Operations
Three Months Ended
March 31,
(In thousands, except per share amounts) 2005 2004
(Unaudited)
Revenues:
Rental income (1):
Minimum base rent $ 104,050 $ 96,738
Recoveries from tenants 14,739 13,439
Parking and other tenant charges 3,580 4,105
Total rental revenue 122,369 114,282
Real estate service revenue 5,573 5,466
Total operating revenues 127,942 119,748
Operating expenses:
Property expenses:
Operating expenses 31,108 28,801
Real estate taxes 11,234 10,756
General and administrative 10,749 10,272
Depreciation and amortization 34,961 30,844
Total operating expenses 88,052 80,673
Real estate operating income 39,890 39,075
Other (expense) income:
Interest expense (29,499) (26,341)
Equity in earnings of unconsolidated
entities 1,070 1,998
Interest and other income 1,450 694
Net other expense (26,979) (23,649)
Income from continuing operations
before income taxes, minority
interest, impairment losses on real
estates and gain (loss) on sale of
properties 12,911 15,426
Income taxes (172) (122)
Minority interest (1,791) (2,026)
Impairment losses on real estate (4,000) -
Gain (loss) on sale of properties 88,094 (10)
Income from continuing operations 95,042 13,268
Discontinued operations - Net operations
of sold properties - 1,962
Net income 95,042 15,230
Less: Dividends on preferred and
restricted stock (4,031) (3,940)
Net income available to common
shareholders $ 91,011 $ 11,290
Basic net income per share:
Continuing operations $ 1.67 $ 0.17
Discontinued operations - 0.04
Net income $ 1.67 $ 0.21
Diluted net income per share:
Continuing operations $ 1.54 $ 0.17
Discontinued operations - 0.04
Net income $ 1.54 $ 0.21
NOTE: (1) Rental income includes $2,487 and $2,236 of accrued straight
line rents for the three months period ended Mar. 31, 2005 and 2004,
respectively.
CARRAMERICA REALTY CORPORATION
Consolidated Statements of Cash Flow
Three Months Ended
(In thousands) March 31,
2005 2004
(Unaudited)
Cash flow from operating activities:
Net income $ 95,042 $ 15,230
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization 34,961 33,446
Minority interest 1,791 2,026
Equity in earnings of unconsolidated
entities (1,070) (1,998)
(Gain) loss sale of properties (88,094) 10
Gain on sale of properties -
discontinued operations - (66)
Gain on sale of residential
property - (225)
Impairment losses on real estate 4,000 -
Above/(below) market lease amortization 2,009 (270)
Amortization of deferred financing
costs 1,003 1,342
(Recovery of) provision for
uncollectible accounts (69) 80
Stock based compensation 1,305 905
Other 622 425
Change in assets and liabilities:
Decrease in accounts receivable 5,214 705
Increase in accrued straight-line rents (3,015) (2,236)
Additions to tenant leasing costs (4,271) (2,276)
Increase in intangible assets, prepaid
expenses and other assets (2,666) (1,213)
Decrease in accounts payable and
accrued expenses (24,781) (8,083)
Decrease in rent received in
advance and security deposits (5,878) (4,471)
Total adjustments (78,939) 18,101
Net cash provided by operating
activities 16,103 33,331
Cash flows from investing activities:
Rental property additions (1,859) (1,592)
Additions to tenant improvements (6,063) (10,040)
Additions to land held for development
or sale and construction in progress (134) (1,776)
Issuance of notes receivable (6,540) (2,081)
Payments on notes receivable 419 -
Distributions from unconsolidated entities 1,770 1,383
Investments in unconsolidated entities (3,119) (178)
Acquisition of minority interest (3,831) (1,079)
Increase in restricted deposits (655) (533)
Proceeds from sale of residential property 930 2,060
Proceeds from sales of properties 191,940 10,512
Net cash provided by (used in)
investing activities 172,858 (3,324)
Cash flows from financing activities:
Exercises of stock options 2,129 31,589
Repayment of unsecured notes (100,000) -
Proceeds from the issuance of unsecured
notes, net - 222,892
Net borrowings (repayments) on unsecured
credit facility 93,000 (228,000)
Net repayments of mortgages and notes
payable (1,497) (21,785)
Dividends and distributions to minority
interests (34,092) (33,246)
Net cash used in financing activities (40,460) (28,550)
Increase in cash and cash equivalents 148,501 1,457
Cash and cash equivalents, beginning
of the period 4,735 4,299
Cash and cash equivalents, end of the
period $ 153,236 $ 5,756
Supplemental disclosure of cash flow
information:
Cash paid for interest (net of
capitalized interest of $176 for the
three months ended Mar. 31, 2004) $ 40,376 $ 38,763
Income tax payments (refunds), net $ 184 $ (23)
CARRAMERICA REALTY CORPORATION
Funds From Operations
Funds from operations ("FFO") and funds available for distribution ("FAD")
are used as measures of operating performance for real estate companies. We
provide FFO and FAD as a supplement to net income calculated in accordance
with accounting principles generally accepted in the United States of America
("GAAP"). Although FFO and FAD are widely used measures of operating
performance for equity REITs, they do not represent net income calculated in
accordance with GAAP. As such, they should not be considered an alternative
to net income as an indication of our operating performance. In addition, FFO
or FAD does not represent cash generated from operating activities in
accordance with GAAP, nor do they represent cash available to pay
distributions and should not be considered as an alternative to cash flow from
operating activities, determined in accordance with GAAP, as a measure of our
liquidity, nor are they indicative of funds available to fund our cash needs,
including our ability to make cash distributions. The National Association of
Real Estate Investment Trusts (NAREIT) defines FFO as net income (computed in
accordance GAAP), excluding gains (losses) on sales of property, plus
depreciation and amortization of assets uniquely significant to the real
estate industry and after adjustments for unconsolidated partnerships and
joint ventures. Adjustments for unconsolidated partnerships and joint
ventures are calculated to reflect FFO on the same basis.
We believe that FFO and FAD are helpful to investors as a measure of our
performance because they exclude various items included in net income that do
not relate to or are not indicative of our operating performance, such as
gains and losses on sales of real estate and real estate related depreciation
and amortization, which can make periodic analyses of operating performance
more difficult to compare. FAD deducts various capital items and non-cash
revenue from diluted FFO available to common shareholders. Our management
believes, however, that FFO and FAD, by excluding such items, which can vary
among owners of identical assets in similar condition based on historical cost
accounting and useful life estimates, can help compare the operating
performance of a company's real estate between periods or as compared to
different companies. Our FFO or FAD may not be comparable to FFO or FAD
reported by other REITs. These REITs may not define FFO in accordance with
the current NAREIT definition or may interpret the current NAREIT definition
differently than us. They may include or exclude items which we include or
exclude from FAD.
(Unaudited and in thousands) Three Months Ended
March 31,
2005 2004
Net income $ 95,042 $ 15,230
Adjustments: Minority interest 1,791 2,026
FFO allocable to the
minority Unitholders (3,357) (3,558)
Depreciation and amortization
- REIT properties 33,152 29,154
Depreciation and amortization
- Equity properties 3,576 3,481
Depreciation and amortization
- Discontinued operations - 2,602
Minority interests' (non
Unitholders) share of
depreciation, amortization
and net income (285) (273)
Gain on sale of properties (88,094) (56)
FFO as defined by NAREIT 41,825 48,606
Less: Preferred dividends and
dividends on unvested
restricted stock (3,780) (3,799)
FFO attributable to common shareholders 38,045 44,807
3,357 3,558
Diluted FFO available to common shareholders(1) $ 41,402 $ 48,365
Less: Lease commissions (4,271) (2,276)
Tenant improvements (6,063) (10,040)
Building capital additions (1,848) (1,408)
Above/below market leases 2,009 (270)
Impairment losses 4,000 -
Straight line rent (2,487) (2,236)
Funds available for distribution to
common shareholders(2) $ 32,742 $ 32,135
(1) Diluted funds from operations is computed as FFO attributable to
common shareholders adjusted to reflect all operating partnership
units as if they were converted to common shares for any period in
which they are not antidilutive.
(2) Adjustments to arrive at FAD do not include amounts associated with
properties in unconsolidated entities.
CARRAMERICA REALTY CORPORATION
Funds From Operations (con't)
(Unaudited and in thousands,
except per share amounts) Three Months Ended
March 31,
2005 2004
Diluted net income per common share $1.54 $0.21
Add: Depreciation and amortization 0.58 0.59
Gain on sale of properties (1.46) -
Minority interest adjustment 0.03 0.03
Adjustment for share difference - (0.02)
Diluted funds from operations available to
common shareholders $0.69 $0.81
Weighted average common shares outstanding:
Diluted net income 60,239 53,794
Diluted funds from operations 60,239 59,355
CARRAMERICA REALTY CORPORATION
Funds From Operations (con't)
(Unaudited and in thousands,
except per share amounts) Projected Projected
Three Months Ended Twelve Months Ended
June 30, 2005 December 31, 2005
Projected diluted net income per
common share $ 0.10 - 0.15 $ 1.74 - 1.94
Add: Projected depreciation and
amortization 0.59 2.43
Projected minority interest 0.04 0.01
Les: Gain on sale of properties (0.06) (1.52)
Projected adjustment for share
difference (0.01) -
Projected diluted funds from
operations per common share $ 0.66 - 0.71 $ 2.66 - 2.86
Projected weighted average
common shares outstanding:
Projected diluted net income 55,300 60,600
Projected diluted funds from
operations 60,500 60,600
SOURCE CarrAmerica Realty Corporation
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Related links:
http://www.carramerica.com
Photo Notes:
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CONTACT:
Media: Karen Widmayer, +1-202-729-1789,
karen.widmayer@carramerica.com, or Analysts: Stephen Walsh,
+1-202-729-1764, stephen.walsh@carramerica.com, both of
CarrAmerica Realty Corporation
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