JACKSON, Miss., July 31 /PRNewswire-FirstCall/ -- Parkway Properties,
Inc. (NYSE: PKY) today announced results for its second quarter ended June
30, 2006.
(Logo: http://www.newscom.com/cgi-bin/prnh/20030513/PARKLOGO)
Consolidated Financial Results
- Funds from operations ("FFO") applicable to common shareholders totaled
$17.9 million ($1.23 per diluted share) for the three months ended
June 30, 2006 compared to $15.8 million ($1.09 per diluted share) for
the three months ended June 30, 2005. FFO totaled $31.4 million ($2.17
per diluted share) for the six months ended June 30, 2006 compared to
$31.6 million ($2.19 per diluted share) for the six months ended
June 30, 2005.
The following items contributed to FFO YTD YTD
(in thousands) 2Q06 2Q05 2006 2005
Lease termination fees $234 $88 $464 $425
Straight line rent 1,309 919 2,867 2,457
Amortization of above market rent (269) (283) (678) (867)
Placement fee on Maitland 200 joint venture - 947 - 947
Impairment loss on land and securities (119) (340) (119) (340)
Prepayment expense on extinguishment of debt (325) - (325) -
Incentive and management fees earned on Viad 4,218 - 4,218 -
Incentive fee earned on 233 North Michigan - 40 - 400
Average occupancy 89.8% 90.6% 89.4% 90.9%
- Funds available for distribution ("FAD") totaled $10.2 million for the
three months ended June 30, 2006 compared to $6.6 million for the three
months ended June 30, 2005. FAD totaled $16.6 million for the six
months ended June 30, 2006 compared to $15.5 for the six months ended
June 30, 2005.
- Net income available to common shareholders for the three months ended
June 30, 2006 was $17.4 million ($1.20 per diluted share) compared to
net income available to common shareholders of $2.3 million ($.16 per
diluted share) for the three months ended June 30, 2005. Net income
available to common shareholders for the six months ended June 30, 2006
was $17.3 million ($1.22 per diluted share) compared to $6.8 million
($.48 per diluted share) for the six months ended June 30, 2005. A
net gain of $13.5 million was included in net income for the three
months and six months ended June 30, 2006, which primarily represents
the gain on the sale of Viad Corporate Center. A net gain of $991,000
was included in net income for the three months and six months ended
June 30, 2005, which primarily represents the gain on the sale of a
joint venture interest.
Asset Recycling
- On May 15, 2006, the Company purchased a two-building office portfolio
in Jacksonville, Florida on behalf of the discretionary fund with Ohio
Public Employee Retirement System ("Ohio PERS"). The BellSouth
Building is a four-story, 92,000 square foot office project constructed
in 1996. The second property, Centurion Centre, is a four-story,
88,000 square foot office project and was constructed in 1993. Both
properties are located in the Butler Corridor submarket. The two
buildings were acquired for a combined purchase price of $24 million.
The fund expects to spend an additional $901,000 for closing costs,
building improvements, leasing costs and tenant improvements during the
first two years of ownership. In accordance with GAAP, the
discretionary 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.
- On June 23, 2006, the Company and its joint venture partner sold the
Viad Corporate Center in Phoenix, Arizona for $105.5 million. The
buyer assumed the existing mortgage debt of $50 million in the sale.
The Company received cash proceeds from the sale of approximately
$15.5 million and recognized a gain of $13.6 million. In addition to
the gain, Parkway recognized management and incentive fees of
$4.2 million as a result of the economic returns generated above an IRR
hurdle rate achieved over the life of the Viad joint venture and
incurred $325,000 in costs associated with the loan transfer. The
incentive and management fee, net of the loan transfer fees, total $.26
per diluted share of FFO and are included in FFO in the quarter ending
June 30, 2006.
- On July 11, 2006, the Company purchased One Illinois Center, a
1,003,000 square foot office building with an attached four-level
structured parking garage located at 111 East Wacker Drive in the East
Loop sub-market of Chicago. The property was acquired for $198 million
plus closing costs and transfer taxes of approximately $1.6 million,
anticipated building improvements of $3.7 million and projected leasing
costs of $12.1 million during the first two years of ownership, for a
total purchase price of $215.4 million or $215 per rentable square
foot.
- On July 17, 2006, the Company entered into an agreement to sell the
Central Station building in St. Petersburg, Florida for $15 million.
Parkway will recognize a gain on the sale of approximately $200,000.
The sale is expected to occur in the third quarter of 2006. There can
be no assurances that conditions of the agreement will be satisfied, or
if satisfied that such closing will occur.
Operations and Leasing
- Parkway's customer retention rate for the three months ending June 30,
2006 was 61.3% compared to 77.4% for the quarter ending March 31, 2006
and 78.4% for the quarter ending June 30, 2005. Customer retention for
the six months ended June 30, 2006 was 70.9% compared to 76.0% for the
six months ended June 30, 2005.
- As of July 1, 2006, occupancy of the office portfolio was 90.0%
compared to 89.4% as of April 1, 2006 and 90.4% as of July 1, 2005.
Not included in the July 1, 2006 occupancy rate are 30 signed leases
totaling 162,000 square feet, which commence in 2006. Including these
leases, the portfolio is 91.4% leased as of July 10, 2006. Average
occupancy for the second quarter was 89.8%, which is consistent with
the Company's earnings guidance provided at the beginning of the
quarter. This compares to average occupancy for the second quarter of
2005 of 90.6%.
- During the three months ended June 30, 2006, 102 leases were renewed or
expanded on 393,000 rentable square feet at an average rental rate
decrease of 0.9% on a cash basis and a cost of $2.06 per square foot
per year of the lease term in committed tenant improvements and leasing
commissions ("leasing costs"). During the six months ending June 30,
2006, leases were renewed or expanded on 910,000 rentable square feet
at an average cost of $1.44 per square foot per year of the lease term
in committed tenant improvements and leasing commissions.
- During the quarter, 37 new leases were signed on 114,000 rentable
square feet at a cost of $3.97 per square foot per year of the lease
term in committed leasing costs. New leases were signed during the six
months ending June 30, 2006 on 299,000 rentable square feet at an
average cost of $3.65 per square foot per year of the lease term in
committed tenant improvements and leasing commissions.
- Same store assets produced a decrease in net operating income ("NOI")
of $330,000 or 1.3% for the three months ended June 30, 2006 compared
to the same period of the prior year. The primary reasons for the
decline in same store NOI are a decrease in same store occupancy from
90.0% to 89.4% from June 30, 2005 to June 30, 2006 and an increase in
utility costs. Same store NOI for the six months ending June 30, 2006
decreased $2.6 million or 5.6% compared to the same period of 2005.
Capital Markets and Financing
- The Company's previously announced cash dividend of $.65 per share for
the quarter ended June 30, 2006 represents a payout of approximately
52.8% of FFO per diluted share. The second quarter dividend was paid on
June 28, 2006 and equates to an annualized dividend of $2.60 per share,
a yield of 5.6% on the closing stock price on July 28, 2006 of $46.13.
This dividend is the 79th consecutive quarterly distribution to
Parkway's shareholders of common stock.
- As of June 30, 2006, the Company's debt-to-total market capitalization
ratio was 47.2% based on a stock price of $45.50 compared to 48.5% as
of March 31, 2006 based on a stock price of $43.68 and 43.5% as of June
30, 2005 based on a stock price of $50.01. Following the July 11, 2006
purchase of One Illinois Center and the projected August 2006 sale of
Central Station, the Company's debt-to-total market capitalization rate
will be approximately 53%.
- On February 9, 2006, the Company announced that its Board of Directors
had authorized the repurchase of up to 1 million shares of outstanding
common stock through August 2006. As of June 30, 2006 the Company has
purchased 71,400 shares for $2.8 million, which equates to an average
price of $39.41 per share, under the authorization.
- On April 27, 2006, the Company closed a new $200 million credit
facility led by Wachovia Bank and syndicated to nine other banks. This
line replaces the existing $190 million revolver, which was to mature
in February 2007. The facility is comprised of a $60 million term loan
maturing in April 2011 and a $140 million revolving loan maturing in
April 2010. The interest rate on the $200 million line is based on
LIBOR plus 80 to 130 basis points, depending upon overall Company
leverage. The Company paid a facility fee of $200,000 (10 basis
points) and origination fees of $688,000 (34.4 basis points) upon
closing of the loan agreement. Additionally, the Company pays an
annual administration fee of $35,000 and fees on the unused portion of
the revolver ranging between 12.5 and 20 basis points based upon
overall Company leverage. This new line affords the Company greater
financial flexibility and lower interest cost.
- In connection with the purchase of the BellSouth Building and Centurion
Centre on behalf of the discretionary fund with Ohio PERS, on May 19,
2006, the fund placed a $14.4 million ten-year first mortgage at a
fixed rate of 5.90%. Payments during the first five years of the
mortgage term will be on an interest-only basis and the loan matures
June 10, 2016.
- The purchase of One Illinois Center on July 11, 2006 was funded by a
$148.5 million non-recourse first mortgage at a fixed interest rate of
6.29% with interest only payments for five years and a ten-year
maturity. In connection with the first-mortgage, the Company delivered
$11.3 million in letters of credit to satisfy the various escrow
requirements made by the lender. These letters of credit expire
June 30, 2007. Additional purchase funding was provided by a
$33.7 million mezzanine loan with a six-month term at an interest rate
of LIBOR plus 130 basis points (current rate set at 6.65%), proceeds
from the recent sale of Viad Corporate Center in Phoenix and amounts
drawn under existing lines of credit.
Outlook for 2006
The Company is forecasting FFO per diluted share of $4.05 to $4.25 and
earnings per diluted share ("EPS") of $1.05 to $1.25 for 2006. The
reconciliation of forecasted earnings per diluted share to forecasted FFO
per diluted share is as follows:
Guidance for 2006 Range
Fully diluted EPS $1.05 - $1.25
Plus: Real estate depreciation and amortization $3.90 - $3.91
Plus: Diluted share adjustment for convertible preferred $0.10 - $0.10
Plus: Depreciation on unconsolidated joint ventures $0.05 - $0.05
Less: Minority interest depreciation and amortization ($0.13 - $0.13)
Less: Gain on sale of real estate ($0.92 - $0.93)
Fully diluted FFO per share $4.05 - $4.25
Earnings guidance is based on the following information which has been
updated from May's assumptions:
- Average occupancy for the third and fourth quarter is projected to be
91% and 92%, respectively, with year end occupancy projected at
approximately 93%.
- Annual same store net operating income is projected to decrease in the
range of zero to 3% over the remainder of 2006.
- Average interest rate of 6.8% is projected on non-hedged, floating rate
debt for the remainder of 2006.
- The sale of Central Station is projected August 2, 2006 for $15 million
at an estimated gain of $200,000.
- Investments on behalf of the discretionary fund are projected in the
fourth quarter totaling $150 million at an average acquisition cap rate
of 7%. Acquisitions to be funded 60% with first mortgage debt and 40%
with equity contributions from partners. Parkway's equity
contributions will be funded with bank lines of credit and proceeds
from sales transactions.
- No lease termination fees are projected for the remainder of 2006.
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.
Effective July 1, 2006, the Board of Directors granted 33,750 shares of
restricted stock to 25 officers of the Company that will be earned if this
goal is met. In addition to these performance shares, the Board of
Directors also granted 33,750 shares that will vest at the end of four
years from the date of grant. All employees of the Company will receive
bonus compensation for meeting the goals of the GEAR UP Plan.
Steven G. Rogers, President and Chief Executive Officer stated, "We
made good progress on our Asset Recycling goals in the first seven months
of the GEAR UP Plan with the sale of Viad, the agreement to sell Central
Station and the purchase of One Illinois Center. We will turn our attention
to Equity Opportunities by combining One and Two Illinois Center and fully
marketing the joint venture of a 70% to 75% interest. In addition, we are
actively seeking joint venture partners for select other assets identified
for disposition in the GEAR UP Plan. We still have some work cut out for us
on the leasing front and are diligently working toward increasing
occupancy. We are raising rental rates at most properties and are reporting
positive embedded growth for the first time since July 1, 2002. We are
encouraged by this upward trend in rental rates and expect to see this
trend continue in most of our markets."
Additional Information
The Company will conduct a conference call to discuss the results of
its second quarter operations on Tuesday, August 1, 2006, at 1:00 p.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 August 11, 2006
by dialing 888-203-1112 and using the pass code of 7461792. 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
second 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 "2Q 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 second quarter 2006 Supplemental
Operating and Financial Data, which includes a reconciliation of GAAP to
Non-GAAP financial measures, is available on the Company's website.
The Company will conduct a building tour and informational presentation
for analyst and investors featuring Illinois Center in Chicago on September
14, 2006. Additional information is available by contacting Will Flatt or
Sarah Clark at 601-948-4091.
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, acquisition, ownership, management, and leasing 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 12,937,000 square feet of leasable space as of July 31, 2006.
The Company also offers fee-based real estate services through its wholly
owned subsidiary, Parkway Realty Services, to its owned properties and to
its third party and minority interest properties.
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 of real property; 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)
June 30 December 31
2006 2005
(Unaudited)
Assets
Real estate related investments:
Office and parking properties $1,252,980 $1,220,565
Accumulated depreciation (200,481) (179,636)
1,052,499 1,040,929
Land available for sale 1,467 1,467
Investment in unconsolidated joint
ventures 11,280 12,942
1,065,246 1,055,338
Rents receivable and other assets 88,546 69,480
Intangible assets, net 56,659 60,161
Cash and cash equivalents 3,762 3,363
$1,214,213 $1,188,342
Liabilities
Notes payable to banks $167,369 $150,371
Mortgage notes payable 490,295 483,270
Accounts payable and other liabilities 56,012 56,628
Subsidiary redeemable preferred
membership interests 10,741 10,741
724,417 701,010
Minority Interest
Minority Interest - unit holders 36 38
Minority Interest - real estate partnerships 16,163 12,778
16,199 12,816
Stockholders' Equity
8.34% Series B Cumulative Convertible
Preferred stock, $.001 par value,
2,142,857 shares authorized, 803,499
shares issued and outstanding 28,122 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,
65,457,143 shares authorized, 14,148,016 and
14,167,292 shares issued and outstanding in
2006 and 2005, respectively 14 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 385,898 389,971
Unearned compensation - (3,101)
Accumulated other comprehensive income 1,631 826
Retained earnings 3,850 4,906
473,597 474,516
$1,214,213 $1,188,342
PARKWAY PROPERTIES, INC.
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
Three Months Ended
June 30
2006 2005
(Unaudited)
Revenues
Income from office and parking properties $49,897 $47,972
Management company income 4,436 1,231
Total revenues 54,333 49,203
Expenses
Property operating expense 23,252 22,341
Depreciation and amortization 14,295 14,595
Operating expense for other real
estate properties 2 1
Management company expenses 300 123
General and administrative 977 832
Total expenses 38,826 37,892
Operating income 15,507 11,311
Other income and expenses
Interest and other income 7 106
Equity in earnings of unconsolidated
joint ventures (84) 250
Gain on sale of joint venture
interests, real estate and other
assets 13,465 991
Interest expense (9,796) (8,784)
Income before minority interest and
discontinued operations 19,099 3,874
Minority interest - real estate partnerships 64 (16)
Income from continuing operations 19,163 3,858
Discontinued operations:
Income (loss) from discontinued operations (4) 219
Net income 19,159 4,077
Dividends on preferred stock (1,200) (1,200)
Dividends on convertible preferred stock (586) (586)
Net income available to common stockholders $17,373 $2,291
Net income per common share:
Basic:
Income from continuing operations $1.24 $0.15
Discontinued operations - 0.01
Net income $1.24 $0.16
Diluted:
Income from continuing operations $1.20 $0.15
Discontinued operations - 0.01
Net income $1.20 $0.16
Dividends per common share $0.65 $0.65
Weighted average shares outstanding:
Basic 14,036 14,080
Diluted 15,000 14,250
PARKWAY PROPERTIES, INC.
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
Six Months Ended
June 30
2006 2005
(Unaudited)
Revenues
Income from office and parking properties $99,594 $94,560
Management company income 4,798 2,282
Total revenues 104,392 96,842
Expenses
Property operating expense 47,407 43,275
Depreciation and amortization 28,021 25,739
Operating expense for other real
estate properties 3 2
Management company expenses 675 358
General and administrative 2,123 2,550
78,229 71,924
Operating income 26,163 24,918
Other income and expenses
Interest and other income 26 241
Equity in earnings of unconsolidated
joint ventures 326 765
Gain on sale of joint venture
interests, real estate and other
assets 13,465 991
Interest expense (19,222) (16,767)
Income before minority interest and
discontinued operations 20,758 10,148
Minority interest - unit holders - (1)
Minority interest - real estate
partnerships 144 (321)
Income from continuing operations 20,902 9,826
Discontinued operations:
Income (loss) from discontinued operations (2) 527
Net income 20,900 10,353
Dividends on preferred stock (2,400) (2,400)
Dividends on convertible preferred stock (1,173) (1,173)
Net income available to common stockholders $17,327 $6,780
Net income per common share:
Basic:
Income from continuing operations $1.23 $0.44
Discontinued operations - 0.04
Net income $1.23 $0.48
Diluted:
Income from continuing operations $1.22 $0.44
Discontinued operations - 0.04
Net income $1.22 $0.48
Dividends per common share $1.30 $1.30
Weighted average shares outstanding:
Basic 14,042 13,994
Diluted 14,214 14,168
PARKWAY PROPERTIES, INC.
RECONCILIATION OF FUNDS FROM OPERATIONS AND
FUNDS AVAILABLE FOR DISTRIBUTION TO NET INCOME
FOR THE THREE MONTHS AND SIX MONTHS ENDED JUNE 30, 2006 AND 2005
(In thousands, except per share data)
Three Months Ended Six Months Ended
June 30 June 30
2006 2005 2006 2005
(Unaudited) (Unaudited)
Net Income $19,159 $4,077 $20,900 $10,353
Adjustments to Net Income:
Preferred Dividends (1,200) (1,200) (2,400) (2,400)
Convertible Preferred Dividends (586) (586) (1,173) (1,173)
Depreciation and Amortization 14,295 14,595 28,021 25,739
Depreciation and Amortization -
Discontinued Operations - 185 - 315
Minority Interest Depreciation and
Amortization (415) (190) (825) (423)
Adjustments for Unconsolidated Joint
Ventures 214 232 503 515
Minority Interest - Unit Holders - - - 1
Gain on Sale of Joint Venture
Interests (13,584) (1,331) (13,584) (1,331)
Funds From Operations Applicable to
Common Shareholders (1) $17,883 $15,782 $31,442 $31,596
Funds Available for Distribution
Funds From Operations Applicable to
Common Shareholders $17,883 $15,782 $31,442 $31,596
Add (Deduct):
Adjustments for Unconsolidated Joint
Ventures (507) (491) (973) (666)
Adjustments for Minority Interest in
Real Estate Partnerships 98 32 143 69
Straight-line Rents (1,309) (901) (2,867) (2,420)
Straight-line Rents - Discontinued
Operations - (18) - (37)
Amortization of Above/Below Market
Leases 269 283 678 867
Amortization of Nonvested Shares and
Share Equivalents 161 (44) 308 167
Capital Expenditures:
Building Improvements (1,516) (1,997) (2,723) (3,526)
Tenant Improvements - New Leases (1,735) (1,993) (3,449) (4,569)
Tenant Improvements - Renewal
Leases (2,128) (2,409) (3,802) (3,617)
Leasing Costs - New Leases (585) (748) (847) (1,156)
Leasing Costs - Renewal Leases (425) (861) (1,353) (1,197)
Funds Available for
Distribution (1) $10,206 $6,635 $16,557 $15,511
Diluted Per Common Share/Unit
Information (**)
FFO per share $1.23 $1.09 $2.17 $2.19
Dividends paid $0.65 $0.65 $1.30 $1.30
Dividend payout ratio for FFO 52.79% 59.78% 59.86% 59.40%
Weighted average shares/units
outstanding 15,001 15,055 15,019 14,973
Other Supplemental Information
Upgrades on Acquisitions $1,645 $1,752 $3,170 $3,237
Loss on Non Depreciable Assets $(119) $(340) $(119) $(340)
**Information for Diluted Computations:
Convertible Preferred Dividends $586 $586 $1,173 $1,173
Basic Common Shares/Units Outstanding 14,037 14,081 14,044 13,995
Convertible Preferred Shares
Outstanding 803 803 803 803
Dilutive Effect of Other Share
Equivalents 161 171 172 175
(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 SIX MONTHS
ENDED JUNE 30, 2006 AND 2005
(In thousands)
Three Months Ended Six Months Ended
June 30 June 30
2006 2005 2006 2005
(Unaudited) (Unaudited)
Net Income $19,159 $4,077 $20,900 $10,353
Adjustments to Net Income:
Interest Expense 9,521 8,463 18,665 16,174
Amortization of Financing Costs 275 321 557 593
Depreciation and Amortization 14,295 14,780 28,021 26,054
Amortization of Nonvested Shares and
Share Equivalents 161 (44) 308 167
Net Gain on Joint Venture Interests,
Real Estate and Other Assets (13,465) (991) (13,465) (991)
Tax Expense - 27 - 55
EBITDA Adjustments - Unconsolidated
Joint Ventures 930 597 1,627 1,290
EBITDA Adjustments - Minority Interest
in Real Estate Partnerships (723) (484) (1,505) (1,074)
EBITDA (1) $30,153 $26,746 $55,108 $52,621
Interest Coverage Ratio:
EBITDA $30,153 $26,746 $55,108 $52,621
Interest Expense:
Interest Expense $9,521 $8,463 $18,665 $16,174
Capitalized Interest - (52) - 52
Interest Expense - Unconsolidated
Joint Ventures 376 329 756 695
Interest Expense - Minority Interest
in Real Estate Partnerships (298) (288) (658) (639)
Total Interest Expense $9,599 $8,452 $18,763 $16,282
Interest Coverage Ratio 3.14 3.16 2.94 3.23
Fixed Charge Coverage Ratio:
EBITDA $30,153 $26,746 $55,108 $52,621
Fixed Charges:
Interest Expense $9,599 $8,452 $18,763 $16,282
Preferred Dividends 1,786 1,786 3,573 3,573
Preferred Distributions -
Unconsolidated Joint Ventures - - - 21
Principal Payments (Excluding Early
Extinguishment of Debt) 3,781 3,882 7,375 8,094
Principal Payments - Unconsolidated
Joint Ventures 11 19 22 87
Principal Payments - Minority Interest
in Real Estate Partnerships (29) (129) (147) (315)
Total Fixed Charges $15,148 $14,010 $29,586 $27,742
Fixed Charge Coverage Ratio 1.99 1.91 1.86 1.90
Modified Fixed Charge Coverage Ratio:
EBITDA $30,153 $26,746 $55,108 $52,621
Modified Fixed Charges:
Interest Expense $9,599 $8,452 $18,763 $16,282
Preferred Dividends 1,786 1,786 3,573 3,573
Preferred Distributions -
Unconsolidated Joint Ventures - - - 21
Total Modified Fixed Charges $11,385 $10,238 $22,336 $19,876
Modified Fixed Charge Coverage Ratio 2.65 2.61 2.47 2.65
The following table reconciles EBITDA
to cash flows provided by operating
activities:
EBITDA $30,153 $26,746 $55,108 $52,621
Amortization of Above Market Leases 269 283 678 867
Operating Distributions from
Unconsolidated Joint Ventures 428 450 785 966
Interest Expense (9,521) (8,463) (18,665) (16,174)
Tax Expense - (27) - (55)
Increase in Receivables and Other
Assets (20,476) (6,849) (17,569) (5,898)
Increase (Decrease) in Accounts
Payable and Other Liabilities 5,340 7,068 (812) (2,530)
Adjustments for Minority Interests 659 500 1,361 1,396
Adjustments for Unconsolidated Joint
Ventures (846) (847) (1,953) (2,055)
Cash Flows Provided by Operating
Activities $6,006 $18,861 $18,933 $29,138
(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 JUNE 30, 2006 AND 2005
(In thousands, except number of properties data)
Net Operating Occupancy
Number Percentage Income
of of
Properties Portfolio 2006 2005 2006 2005
(1)
Same store properties (2) 55 93.38% $24,882 $25,212 89.4% 90.0%
2005 acquisitions 4 5.90% 1,572 - 93.7% N/A
2006 acquisitions 2 0.87% 233 - 99.5% N/A
Assets sold - -0.15% (42) 419 N/A N/A
Net operating income
from office and parking
properties 61 100.00% $26,645 $25,631
(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 June 30, 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 Six Months Ended
June 30 June 30
2006 2005 2006 2005
Net income $19,159 $4,077 $20,900 $10,353
Add (deduct):
Interest expense 9,796 8,784 19,222 16,767
Depreciation and amortization 14,295 14,595 28,021 25,739
Operating expense for other real
estate properties 2 1 3 2
Management company expenses 300 123 675 358
General and administrative expenses 977 832 2,123 2,550
Equity in earnings of unconsolidated
joint ventures 84 (250) (326) (765)
Gain on sale of joint venture
interests, real estate and
other assets (13,465) (991) (13,465) (991)
Minority interest - unit holders - - - 1
Minority interest - real estate
partnerships (64) 16 (144) 321
(Income) loss from discontinued
operations 4 (219) 2 (527)
Management company income (4,436) (1,231) (4,798) (2,282)
Other income (7) (106) (26) (241)
Net operating income from office
and parking properties 26,645 25,631 52,187 51,285
Less: Net operating income from non
same store properties (1,763) (419) (8,274) (4,752)
Same store net operating income $24,882 $25,212 $43,913 $46,533
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 of Parkway
Properties, Inc., +1-601-948-4091
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