JACKSON, Miss., Aug. 6 /PRNewswire-FirstCall/ -- Parkway Properties,
Inc. (NYSE: PKY) today announced results for its second quarter ended June
30, 2007.
(Logo: http://www.newscom.com/cgi-bin/prnh/20030513/PARKLOGO )
Consolidated Financial Results
- Funds from operations ("FFO") applicable to common shareholders totaled
$14.8 million ($0.94 per diluted share) for the three months ended June
30, 2007 compared to $17.9 million ($1.23 per diluted share) for the
three months ended June 30, 2006. FFO totaled $31.0 million ($1.96 per
diluted share) for the six months ended June 30, 2007 compared to $31.4
million ($2.17 per diluted share) for the six months ended June 30,
2006. FFO for the three months and six months ended June 30, 2006
included incentive and management fees of $4.2 million and debt
prepayments costs of $325,000 related to the sale of the Viad Corporate
Center in Phoenix, Arizona.
The following items contributed to FFO
(in thousands, except percentages) Through Through
June 30 June 30
2Q07 2Q06 2007 2006
Lease termination fees* $354 $234 $548 $464
Straight line rent* 238 1,207 1,197 2,702
Amortization of above
market rent* (430) (235) (856) (592)
Impairment loss on
securities - (119) - (119)
Prepayment expense on
extinguishment of debt (494) (325) (370) (325)
Incentive and management
fees earned on Viad 27 4,218 27 4,218
Average occupancy 91.3% 89.8% 91.2% 89.4%
*These items include 100% of amounts from wholly-owned assets plus
Parkway's allocable share of these items recognized from the assets held
in consolidated joint ventures.
- Funds available for distribution ("FAD") totaled $10.2 million for the
three months ended June 30, 2007 compared to $10.2 million for the
three months ended June 30, 2006. FAD totaled $21.7 million for the six
months ended June 30, 2007 compared to $16.6 million for the six months
ended June 30, 2006.
- Net income available to common shareholders for the three months ended
June 30, 2007 was $18.0 million ($1.14 per diluted share) compared to
$17.4 million ($1.20 per diluted share) for the three months ended June
30, 2006. Net income available to common shareholders for the six
months ended June 30, 2007 was $17.3 million ($1.09 per diluted share)
compared to $17.3 million ($1.22 per diluted share) for the six months
ended June 30, 2006. Net gains of $20.3 million and $13.5 million were
included in net income available to common shareholders for the three
months and six months ended June 30, 2007 and 2006, respectively.
Asset Recycling
- On June 14, 2007 the discretionary fund with Ohio PERS (the "Fund"), of
which Parkway owns 25%, purchased 1401 Enclave Parkway, a 209,000
square foot, six-story office property in Houston, Texas for a purchase
price of $46.5 million. The Fund expects to spend an additional
$346,000 for closing costs, building improvements, leasing costs and
tenant improvements during the first two years of ownership.
- On June 29, 2007, the Company sold two properties, First Tennessee
Plaza and Cedar Ridge, totaling 549,000 square feet located in
Knoxville, Tennessee for a gross sales price of $59 million. The
Company received net cash proceeds from the sale of $56.8 million and
recorded a gain on the sale for financial reporting purposes of $20.3
million in the second quarter. Parkway Realty Services LLC was
retained to provide management services for the properties under a
five-year agreement.
Operations and Leasing
- Parkway's customer retention rate for the three months ending June 30,
2007 was 81.0% compared to 52.4% for the quarter ending March 31, 2007
and 61.3% for the quarter ending June 30, 2006. Customer retention for
the six months ended June 30, 2007 and 2006 was 69.2% and 70.9%,
respectively.
- As of July 1, 2007, occupancy of the office portfolio was 91.6%
compared to 90.9% as of April 1, 2007 and 90.0% as of July 1, 2006.
Not included in the July 1, 2007 occupancy rate are 19 signed leases
totaling 129,000 square feet, which commence in the third and fourth
quarters of 2007. Including these leases, the portfolio was 92.6%
leased as of July 12, 2007. Average occupancy for the second quarter
of 2007 was 91.3%, which is consistent with the assumptions made in
providing the annual earnings guidance at the beginning of the quarter.
This compares to average occupancy for the second quarter of 2006 of
89.8%.
- During the three months ending June 30, 2007, 70 leases were renewed or
expanded on 623,000 rentable square feet at an average rental rate
increase of 4.3% on a cash basis and a cost of $2.79 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,
2007, leases were renewed or expanded on 902,000 rentable square feet
at an average cost of $2.61 per square foot per year of the lease term
in committed leasing costs.
- During the quarter, 28 new leases were signed on 86,000 rentable square
feet at a cost of $4.14 per square foot per year of the lease term in
committed leasing costs. New leases were signed during the six months
ending June 30, 2007 on 228,000 rentable square feet at an average cost
of $4.18 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 $581,000 or 2.3% for the quarter ended June 30, 2007 compared to the
same period of the prior year on a GAAP basis. Same store NOI
increased $1.6 million or 6.5% for the three months ended June 30, 2007
compared to the same period of the prior year on a cash basis. The
increase in same store NOI is primarily attributable to an increase in
same store average occupancy from 89.5% during the second quarter of
2006 to 91.4% during the second quarter of 2007. Additionally, same
store rental rates increased 2.3% during the same period. Same store
NOI for the six months ending June 30, 2007 increased $2.8 million or
5.6% compared to the same period of 2006 on a GAAP basis and $4.5
million or 9.4% on a cash basis.
Capital Markets and Financing
- The Company's previously announced cash dividend of $0.65 per share for
the quarter ended June 30, 2007 represents a payout of approximately
69.5% of FFO per diluted share. The second quarter dividend was paid on
June 27, 2007 and equates to an annualized dividend of $2.60 per share,
a yield of 6.4% on the closing stock price on August 3, 2007 of $40.65.
This dividend is the 83rd consecutive quarterly distribution to
Parkway's shareholders of common stock.
- As of June 30, 2007, the Company's debt-to-total market capitalization
ratio was 48.3% based on a stock price of $48.03 compared to 47.4% as
of March 31, 2007 based on a stock price of $52.25 and 47.2% as of June
30, 2006 based on a stock price of $45.50
- In connection with the purchase of 1401 Enclave on June 14, 2007, the
Fund placed a $28 million non-recourse first mortgage with a fixed
interest rate of 5.76%. Payments during the mortgage term will be on
an interest only basis for five years and the loan matures on July 10,
2015.
- In connection with the sale of the two Knoxville properties on June 29,
2007, the Company paid off the $7.4 million first mortgage secured by
First Tennessee Plaza and recorded expenses related to the prepayment
of the mortgage of $494,000 in the second quarter. The mortgage had an
interest rate of 7.17% and was previously scheduled to mature on
December 15, 2012.
Outlook for 2007
The Company is forecasting FFO per diluted share of $3.80 to $4.00 and
EPS of $3.35 to $3.55 for 2007. Current annual assumptions for prepayment
penalties related to anticipated dispositions have decreased to $.14 per
diluted share as compared to $.18 per diluted share projected last quarter.
This increase to annual FFO and EPS was offset by several updates to the
budget assumptions.
The reconciliation of forecasted EPS to forecasted FFO per diluted share
is as follows:
Guidance for 2007 Range
Fully diluted EPS $3.35 - $3.55
Plus: Real estate depreciation and amortization $4.72 - $4.82
Plus: Depreciation on unconsolidated joint ventures $0.07 - $0.11
Less: Gain on sale of real estate and joint
venture interests ($3.71 - $3.85)
Less: Minority interest depreciation and amortization ($0.63 - $0.63)
Fully diluted FFO per share $3.80 - $4.00
Earnings guidance is based on the following assumptions:
- Average occupancy for the third and fourth quarters of 92% and 94%,
respectively, with an average annual occupancy of 92%.
- An average same store NOI growth for the remainder of 2007 of
approximately 3% on a GAAP basis representing an annual same store NOI
growth of 5%. On a cash basis, annual same store NOI is expected to
increase approximately 8%.
- Straight line rent adjustment is expected to be approximately $800,000
for the remainder of 2007 versus $2.3 million for same period during
2006, reflecting the reduction in rent concessions in 2007 as compared
to 2006.
- Interest rate on non-hedged floating rate debt of 6.62% for the third
quarter and 6.50% for the fourth quarter of the year for an average
interest rate of 6.56%.
- New investments for the discretionary fund totaling $124 million at an
average acquisition capitalization rate of 7% on the assets and 9% to
Parkway when including various recurring fees. The investments are
projected as follows:
- $40 million on September 1, 2007;
- $40 million on October 1, 2007;
- $44 million on November 1, 2007.
- Lease termination fee income of $118,000 is assumed for the third and
fourth quarters of 2007 as compared to $147,000 recorded during the
same periods in 2006.
- 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 Virginia totaling 883,000 square feet with an estimated
net value of $95.5 million on September 1, 2007;
- Assets in Columbia, South Carolina totaling 867,000 square feet
with an estimated value of $106 million on November 1, 2007.
- Debt prepayment penalties and expense of $1.7 million, or $.11 per
diluted share in FFO, are projected on the dispositions in 2007.
- The Company's debt to market capitalization is expected to range from
46% to 49% throughout the rest of 2007 as these capital events take
place, with a projected ending debt to market capitalization of 49%,
calculated using the June 29, 2007 closing stock price of $48.03 per
share.
- Proceeds from dispositions are assumed to be used to pay down short-
term debt with an interest rate of 6.5% at the time of sale.
- Fee simple acquisitions of $100 million are projected on November 1,
2007 at a 7.5% cap rate.
Steven G. Rogers, President and Chief Executive Officer stated, "Second
quarter results showed marked improvement in a variety of operating areas.
We have completed our halftime report on GEAR UP and believe we are on
track to accomplish the strategic and financial goals set forth in the
plan."
GEAR UP
On January 1, 2006, the Company initiated a new operating plan that
will be referred to as the "GEAR UP" Plan. At the heart of the GEAR UP Plan
are Great People transforming Parkway through Equity Opportunities and
Asset Recycling from an owner-operator to an operator-owner. Our
long-standing commitment to Retain our Customers and provide an
Uncompromising Focus on Operations remains steadfast. We believe that by
accomplishing these goals we can deliver excellent Performance to our
shareholders. Performance for the GEAR UP Plan will be measured as the sum
of adjusted funds available for distribution, as defined by the Company,
cumulative over the three years of the plan. The goal for cumulative
adjusted funds available for distribution is $7.18 per diluted share.
Additional Information
The Company will conduct a conference call to discuss the results of
its second quarter operations on Tuesday, August 7, 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 August 17, 2007
by dialing 888-203-1112 and using the pass code of 6941112. An audio replay
will be archived and indexed in the investor relations section of the
Company's website at http://www.pky.com. A copy of the Company's 2007 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 2007 Supplemental
Operating and Financial Data, which includes a reconciliation of Non-GAAP
financial measures, is available on the Company's website.
About Parkway Properties
Parkway Properties, Inc., a member of the S&P Small Cap 600 Index, is a
self-administered real estate investment trust specializing in the
operation, leasing, acquisition, and ownership of office properties. The
Company is geographically focused on the Southeastern and Southwestern
United States and Chicago. Parkway owns or has an interest in 65 office
properties located in 11 states with an aggregate of approximately 12.9
million square feet of leasable space as of August 6, 2007. Included in the
portfolio are 18 properties totaling 2.7 million square feet that are owned
jointly with other investors, representing 21% of the portfolio. Under the
Company's GEAR UP Plan, which started January 1, 2006 and ends December 31,
2008, it is the Company's strategy to transform from an owner-operator to
an operator-owner. The strategy highlights the Company's strength in
providing excellent service in the operation of office properties in
addition to its direct ownership of real estate assets. Fee-based real
estate services are offered through the Company's wholly owned subsidiary,
Parkway Realty Services, which also manages and/or leases approximately 1.8
million square feet for third party owners as of August 6, 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)
June 30 December 31
2007 2006
(Unaudited)
Assets
Real estate related investments:
Office and parking properties $1,538,263 $1,517,468
Office property development 3,768 -
Accumulated depreciation (225,821) (211,187)
1,316,210 1,306,281
Land available for sale 1,467 1,467
Investment in unconsolidated joint
ventures 11,066 11,179
1,328,743 1,318,927
Rents receivable and other assets 107,204 107,145
Intangible assets, net 77,663 81,800
Cash and cash equivalents 8,159 4,474
$1,521,769 $1,512,346
Liabilities
Notes payable to banks $144,139 $152,312
Mortgage notes payable 722,022 696,012
Accounts payable and other
liabilities 75,098 72,659
Subsidiary redeemable preferred
membership interests 10,741 10,741
952,000 931,724
Minority Interest
Minority Interest - unit holders 35 36
Minority Interest - real estate
partnerships 78,331 90,280
78,366 90,316
Stockholders' Equity
8.00% Series D Preferred stock, $.001
par value, 2,400,000 shares authorized,
issued and outstanding 57,976 57,976
Common stock, $.001 par value,
67,600,000 shares authorized,
15,899,907 and 15,764,799 shares
issued and outstanding
in 2007 and 2006, respectively 16 16
Common stock held in trust, at cost,
104,500 and 115,000 shares in
2007 and 2006, respectively (3,540) (3,894)
Additional paid-in capital 453,276 449,141
Accumulated other comprehensive
income 784 828
Accumulated deficit (17,109) (13,761)
491,403 490,306
$1,521,769 $1,512,346
PARKWAY PROPERTIES, INC.
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
Three Months Ended
June 30
2007 2006
(Unaudited)
Revenues
Income from office and parking
properties $61,085 $48,876
Management company income 431 4,436
Total revenues 61,516 53,312
Expenses
Property operating expense 28,819 22,792
Depreciation and amortization 19,168 14,082
Operating expense for other real
estate properties 1 2
Management company expenses 276 300
General and administrative 1,600 977
Total expenses 49,864 38,153
Operating income 11,652 15,159
Other income and expenses
Interest and other income 72 7
Equity in earnings of unconsolidated
joint ventures 243 (84)
Gain on sale of real estate and
other assets 20,260 13,465
Interest expense (14,052) (9,796)
Income before minority interest and
discontinued operations 18,175 18,751
Minority interest - real estate
partnerships 1,016 64
Income from continuing operations 19,191 18,815
Discontinued operations:
Income from discontinued operations 49 344
Net income 19,240 19,159
Dividends on preferred stock (1,200) (1,200)
Dividends on convertible preferred
stock - (586)
Net income available to common
stockholders $18,040 $17,373
Net income per common share:
Basic:
Income from continuing operations $1.15 $1.21
Discontinued operations - 0.03
Net income $1.15 $1.24
Diluted:
Income from continuing operations $1.14 $1.18
Discontinued operations - 0.02
Net income $1.14 $1.20
Dividends per common share $0.65 $0.65
Weighted average shares outstanding:
Basic 15,672 14,036
Diluted 15,847 15,000
PARKWAY PROPERTIES, INC.
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
Six Months Ended
June 30
2007 2006
(Unaudited)
Revenues
Income from office and parking
properties $122,623 $97,537
Management company income 764 4,798
Total revenues 123,387 102,335
Expenses
Property operating expense 57,053 46,421
Depreciation and amortization 38,379 27,608
Operating expense for other real
estate properties 2 3
Management company expenses 544 675
General and administrative 3,245 2,123
Total expenses 99,223 76,830
Operating income 24,164 25,505
Other income and expenses
Interest and other income 218 26
Equity in earnings of unconsolidated
joint ventures 548 326
Gain on sale of joint venture
interests, real estate and other
assets 20,310 13,465
Interest expense (27,136) (19,222)
Income before minority interest and
discontinued operations 18,104 20,100
Minority interest - real estate
partnerships 1,487 144
Income from continuing operations 19,591 20,244
Discontinued operations:
Income from discontinued operations 77 656
Net income 19,668 20,900
Dividends on preferred stock (2,400) (2,400)
Dividends on convertible preferred
stock - (1,173)
Net income available to common
stockholders $17,268 $17,327
Net income per common share:
Basic:
Income from continuing operations $1.10 $1.19
Discontinued operations - 0.04
Net income $1.10 $1.23
Diluted:
Income from continuing operations $1.09 $1.17
Discontinued operations - 0.05
Net income $1.09 $1.22
Dividends per common share $1.30 $1.30
Weighted average shares outstanding:
Basic 15,644 14,042
Diluted 15,831 14,214
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, 2007
AND 2006
(In thousands, except per share data)
Three Months Ended Six Months Ended
June 30 June 30
2007 2006 2007 2006
(Unaudited) (Unaudited)
Net Income $19,240 $19,159 $19,668 $20,900
Adjustments to Net
Income:
Preferred Dividends (1,200) (1,200) (2,400) (2,400)
Convertible Preferred
Dividends - (586) - (1,173)
Depreciation and
Amortization 19,168 14,082 38,379 27,608
Depreciation and
Amortization -
Discontinued
Operations 1 213 1 413
Minority Interest
Depreciation and
Amortization (2,284) (415) (4,675) (825)
Adjustments for
Unconsolidated Joint
Ventures 161 214 322 503
Minority Interest -
Unit Holders - - - -
Gain on Sale of Real
Estate (20,260) (13,584) (20,260) (13,584)
Funds From Operations
Applicable to Common
Shareholders (1) $14,826 $17,883 $31,035 $31,442
Funds Available for
Distribution
Funds From Operations
Applicable to Common
Shareholders $14,826 $17,883 $31,035 $31,442
Add (Deduct) :
Adjustments for
Unconsolidated Joint
Ventures (147) (507) (231) (973)
Adjustments for
Minority Interest in
Real Estate
Partnerships 352 98 770 143
Straight-line Rents (506) (1,340) (1,809) (2,921)
Straight-line Rents -
Discontinued
Operations - 31 - 54
Amortization of
Above/Below Market
Leases 346 269 698 678
Amortization of Share
Based Compensation 374 161 727 308
Capital Expenditures:
Building Improvements (2,014) (1,516) (2,932) (2,723)
Tenant Improvements -
New Leases (657) (1,735) (1,694) (3,449)
Tenant Improvements -
Renewal Leases (1,457) (2,128) (3,084) (3,802)
Leasing Costs - New
Leases 61 (585) (380) (847)
Leasing Costs -
Renewal Leases (1,005) (425) (1,400) (1,353)
Funds Available for
Distribution (1) $10,173 $10,206 $21,700 $16,557
Diluted Per Common
Share/Unit
Information (**)
FFO per share $0.94 $1.23 $1.96 $2.17
Dividends paid $0.65 $0.65 $1.30 $1.30
Dividend payout ratio
for FFO 69.48% 52.79% 66.32% 59.86%
Weighted average
shares/units
outstanding 15,848 15,001 15,832 15,019
Other Supplemental
Information
Upgrades on
Acquisitions $13,556 $1,645 $15,502 $3,170
Gain on Non
Depreciable Assets $- $(119) $50 $(119)
**Information for
Diluted Computations:
Convertible Preferred
Dividends $- $586 $- $1,173
Basic Common
Shares/Units
Outstanding 15,673 14,037 15,645 14,044
Convertible Preferred
Shares Outstanding - 803 - 803
Dilutive Effect of
Other Share
Equivalents 175 161 187 172
(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, 2007 AND 2006
(In thousands)
Three Months Ended Six Months Ended
June 30 June 30
2007 2006 2007 2006
(Unaudited) (Unaudited)
Net Income $19,240 $19,159 $19,668 $20,900
Adjustments to Net
Income:
Interest Expense 13,268 9,521 26,183 18,665
Amortization of
Financing Costs 290 275 583 557
Prepayment Expense -
Early Extinguishment
of Debt 494 - 370 -
Depreciation and
Amortization 19,169 14,295 38,380 28,021
Amortization of Share
Based Compensation 374 161 727 308
Gain on Real Estate (20,260) (13,465) (20,310) (13,465)
Tax Expense 92 - 105 -
EBITDA Adjustments -
Unconsolidated Joint
Ventures 292 930 583 1,627
EBITDA Adjustments -
Minority Interest in
Real Estate
Partnerships (3,841) (723) (7,470) (1,505)
EBITDA (1) $29,118 $30,153 $58,819 $55,108
Interest Coverage
Ratio:
EBITDA $29,118 $30,153 $58,819 $55,108
Interest Expense:
Interest Expense $13,268 $9,521 $26,183 $18,665
Capitalized Interest 37 - 37 -
Interest Expense -
Unconsolidated Joint
Ventures 128 376 255 756
Interest Expense -
Minority Interest in
Real Estate
Partnerships (1,520) (298) (2,723) (658)
Total Interest Expense $11,913 $9,599 $23,752 $18,763
Interest Coverage
Ratio 2.44 3.14 2.48 2.94
Fixed Charge Coverage
Ratio:
EBITDA $29,118 $30,153 $58,819 $55,108
Fixed Charges:
Interest Expense $11,913 $9,599 $23,752 $18,763
Preferred Dividends 1,200 1,786 2,400 3,573
Principal Payments
(Excluding Early
Extinguishment of
Debt) 4,008 3,781 8,059 7,375
Principal Payments -
Unconsolidated Joint
Ventures 12 11 24 22
Principal Payments -
Minority Interest in
Real Estate
Partnerships (81) (29) (146) (147)
Total Fixed Charges $17,052 $15,148 $34,089 $29,586
Fixed Charge Coverage
Ratio 1.71 1.99 1.73 1.86
Modified Fixed Charge
Coverage Ratio:
EBITDA $29,118 $30,153 $58,819 $55,108
Modified Fixed
Charges:
Interest Expense $11,913 $9,599 $23,752 $18,763
Preferred Dividends 1,200 1,786 2,400 3,573
Total Modified Fixed
Charges $13,113 $11,385 $26,152 $22,336
Modified Fixed Charge
Coverage Ratio 2.22 2.65 2.25 2.47
The following table
reconciles EBITDA to
cash flows provided
by operating
activities:
EBITDA $29,118 $30,153 $58,819 $55,108
Amortization of Above
Market Leases 346 269 698 678
Operating
Distributions from
Unconsolidated Joint
Ventures 265 428 670 785
Interest Expense (13,268) (9,521) (26,183) (18,665)
Prepayment Expense -
Early Extinguishment
of Debt (494) - (370) -
Tax Expense (92) - (105) -
(Increase) Decrease in
Receivables and Other
Assets (4,660) (20,476) (2,434) (2,526)
Increase (Decrease) in
Accounts Payable and
Other Liabilities 8,545 5,340 1,171 (812)
Adjustments for
Minority Interests 2,825 659 5,983 1,361
Adjustments for
Unconsolidated Joint
Ventures (535) (846) (1,131) (1,953)
Cash Flows Provided by
Operating Activities $22,050 $6,006 $37,118 $33,976
(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, 2007 AND 2006
(In thousands, except number of properties data)
Net Operating Average
Income Occupancy
Number of Percentage
Proper- of Port- 2007 2006 2007 2006
ties folio (1)
Same store properties (2):
Wholly owned 49 76.82% $24,786 $24,163 91.6% 89.7%
Parkway Properties Office
Fund LP 2 1.59% 513 531 84.5% 81.9%
Other consolidated joint
venture 1 1.69% 545 569 87.6% 87.6%
Total same store properties 52 80.10% 25,844 25,263 91.4% 89.5%
2006 acquisitions 8 19.68% 6,349 303 89.2% 90.9%
2007 acquisitions 1 0.51% 164 - 100.0% N/A
Office property development - -0.18% (57) - N/A N/A
Assets sold - -0.11% (34) 518 N/A N/A
Net operating income from
office and parking
properties 61 100.00% $32,266 $26,084
(1) Percentage of portfolio based on 2007 net operating income.
(2) Parkway defines Same Store Properties as those properties that were
owned for the entire three-month periods ended June 30, 2007 and 2006 and
excludes properties classified as discontinued operations. Same Store net
operating income ("SSNOI") includes income from real estate operations
less property operating expenses (before interest and depreciation and
amortization) for Same Store Properties. SSNOI as computed by Parkway may
not be comparable to SSNOI reported by other REITs that do not define the
measure exactly as we do. SSNOI is a supplemental industry reporting
measurement used to evaluate the performance of the Company's investments
in real estate assets. The following table is a reconciliation of net
income to SSNOI:
Three Months Ended Six Months Ended
June 30 June 30
2007 2006 2007 2006
Net income $19,240 $19,159 $19,668 $20,900
Add (deduct):
Interest expense 14,052 9,796 27,136 19,222
Depreciation and amortization 19,168 14,082 38,379 27,608
Operating expense for other real
estate properties 1 2 2 3
Management company expenses 276 300 544 675
General and administrative expenses 1,600 977 3,245 2,123
Equity in earnings of unconsolidated
joint ventures (243) 84 (548) (326)
Gain on sale of real estate (20,260) (13,465) (20,310) (13,465)
Minority interest - real estate
partnerships (1,016) (64) (1,487) (144)
Income from discontinued operations (49) (344) (77) (656)
Management company income (431) (4,436) (764) (4,798)
Interest and other income (72) (7) (218) (26)
Net operating income from office and
parking properties 32,266 26,084 65,570 51,116
Less: Net operating income from non
same store properties (6,422) (821) (13,098) (1,401)
Same store net operating income $25,844 $25,263 $52,472 $49,715
SOURCE Parkway Properties, Inc.
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Related links:
http://www.pky.com/
Photo Notes: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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