JACKSON, Miss., Oct. 30 /PRNewswire-FirstCall/ -- Parkway Properties,
Inc. (NYSE: PKY) today announced results for its third quarter ended
September 30, 2006.
(Logo: http://www.newscom.com/cgi-bin/prnh/20030513/PARKLOGO )
Consolidated Financial Results
- Funds from operations ("FFO") applicable to common shareholders totaled
$13.1 million ($0.90 per diluted share) for the three months ended
September 30, 2006 compared to $14.3 million ($0.99 per diluted share)
for the three months ended September 30, 2005. FFO totaled $44.5
million ($3.07 per diluted share) for the nine months ended September
30, 2006 compared to $45.9 million ($3.18 per diluted share) for the
nine months ended September 30, 2005.
The following items contributed to FFO YTD YTD
(in thousands) 3Q06 3Q05 2006 2005
Lease termination fees $124 $648 $588 $1,072
Straight line rent 961 877 3,828 3,334
Amortization of above market rent (493) (533) (1,171) (1,400)
Placement fee on Maitland 200 joint
venture - - - 947
Loss on land and securities - (26) (119) (366)
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 90.5% 90.5% 89.8% 90.8%
- Funds available for distribution ("FAD") totaled $4.8 million for the
three months ended September 30, 2006 compared to $7.4 million for the
three months ended September 30, 2005. FAD totaled $21.4 million for
the nine months ended September 30, 2006 compared to $22.9 million for
the nine months ended September 30, 2005.
- Net loss available to common shareholders for the three months ended
September 30, 2006 was $3.6 million ($0.25 per diluted share) compared
to net income available to common shareholders of $6.7 million ($0.47
per diluted share) for the three months ended September 30, 2005. Net
income available to common shareholders for the nine months ended
September 30, 2006 was $13.7 million ($0.96 per diluted share) compared
to $13.5 million ($0.95 per diluted share) for the nine months ended
September 30, 2005. A net gain of $211,000 and $13.7 million was
included in net income for the three months and nine months ended
September 30, 2006, respectively and primarily represents the gain on
the sale of Viad Corporate Center in June 2006. A net gain of $4.2
million and $5.1 million was included in net income for the three
months and nine months ended September 30, 2005, respectively and
primarily represents the net gain on the sale of a joint venture
interest and two office properties.
Asset Recycling
- 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 August 2, 2006, the Company sold Central Station, a 133,000 square
foot building in St. Petersburg, Florida, for $15 million. The Company
recorded a gain on the sale for financial reporting purposes of
$211,000. In accordance with generally accepted accounting principles
("GAAP"), all current and prior period income from the office property
has been classified as discontinued operations.
- Subsequent to quarter end, the discretionary fund with Ohio PERS (the
"Fund"), of which Parkway owns 25%, entered into agreements for the
purchase of assets in Memphis, Atlanta and suburban Chicago.
Consistent with past practice, the Company plans to publish detailed
information on these purchases upon closing, each of which is scheduled
for late fourth quarter. The assets, which represent a total
investment by the Fund of approximately $120 million, are described
below.
- Renaissance Center is a 190,000 square foot office building in
Memphis, Tennessee. The purchase price is estimated to be $38.1
million plus $780,000 in anticipated closing costs, building
improvements, customer improvements and leasing commissions during
the first two years of ownership. The Fund has $1 million of
earnest money at risk and closing is scheduled for late November
2006.
- A 206,000 square foot building located in suburban Chicago at an
estimated total investment of $30 million and a 313,000 square
foot two-building portfolio located in Atlanta, Georgia at an
estimated total investment of $51 million.
- Subsequent to quarter end, the Company reached agreement with unrelated
purchasers for the sale of six wholly-owned buildings located in
Charlotte, Houston and Atlanta. These properties represent
approximately 518,000 rentable square feet. The estimated gross sales
proceeds are expected to be approximately $48 million, which represents
a blended capitalization rate of approximately 7% based on projected
2007 GAAP net operating income. The gain for financial reporting
purposes is estimated to be approximately $9 million. The Company will
release detailed information about the sales upon the various closings,
which are scheduled to be completed late in the fourth quarter of 2006.
- Subsequent to quarter end, the Company announced the proposed
development of a 175,000 square foot Class A+ office building in
Jackson, Mississippi known as The Pinnacle at Jackson Place, adjacent
to the Company's headquarters building. The estimated cost of the
development is $39 million and it is expected to be completed in the
fall of 2008. The Company has received commitments to lease
approximately 75% of the new office space from four major customers.
Parkway will be seeking partners for an 80% ownership interest in the
development. More information about the project and project renderings
can be found at http://www.thepinnacleatjacksonplace.com.
Operations and Leasing
- Parkway's customer retention rate for the three months ending September
30, 2006 was 73.8% compared to 61.3% for the quarter ending June 30,
2006 and 68.9% for the quarter ending September 30, 2005. Customer
retention for the nine months ended September 30, 2006 was 71.6%
compared to 73.4% for the nine months ended September 30, 2005.
- As of October 1, 2006, occupancy of the office portfolio was 91.0%
compared to 90.0% as of July 1, 2006 and 90.0% as of October 1, 2005.
Not included in the October 1, 2006 occupancy rate are 30 signed leases
totaling 111,000 square feet, which commence in the fourth quarter of
2006 through the second quarter of 2007. Including these leases, the
portfolio is 91.9% leased as of October 10, 2006. Average occupancy
for the third quarter was 90.5%, which is consistent with the Company's
earnings guidance provided at the beginning of the quarter. This
compares to average occupancy for the third quarter of 2005 of 90.5%.
- During the quarter ended September 30, 2006, 93 leases were renewed or
expanded on 333,000 rentable square feet at an average rental rate
increase of 1.2% on a cash basis and a cost of $2.26 per square foot
per year of the lease term in committed tenant improvements and leasing
commissions ("leasing costs"). This is the first increase in cash
rental rates for renewals since the second quarter of 2002. During the
nine months ending September 30, 2006, leases were renewed or expanded
on 1.2 million rentable square feet at an average cost of $1.66 per
square foot per year of the lease term in committed leasing costs.
- During the quarter, 41 new leases were signed on 156,000 rentable
square feet at a cost of $3.79 per square foot per year of the lease
term in committed leasing costs. New leases were signed during the
nine months ending September 30, 2006 on 454,000 rentable square feet
at an average cost of $3.70 per square foot per year of the lease term
in committed leasing costs.
- Same store assets produced a decrease in net operating income ("NOI")
of $802,000 or 3.3% for the three months ended September 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 lease termination fees
and escalation income and an increase in rent concessions and utility
costs. Same store NOI for the nine months ending September 30, 2006
decreased $3.4 million or 4.9% 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 September 30, 2006 represents a payout of
approximately 72.4% of FFO per diluted share. The third quarter
dividend was paid on September 27, 2006 and equates to an annualized
dividend of $2.60 per share, a yield of 5.1% on the closing stock price
on October 27, 2006 of $50.60. This dividend is the 80th consecutive
quarterly distribution to Parkway's shareholders of common stock.
- As of September 30, 2006, the Company's debt-to-total market
capitalization ratio was 52.1% based on a stock price of $46.49
compared to 47.2% as of June 30, 2006 based on a stock price of $45.50
and 45.2% as of September 30, 2005 based on a stock price of $46.92.
The primary driver of the increase in debt to market capitalization was
the previously announced purchase of One Illinois Center which the
Company is currently marketing as a joint venture together with Two
Illinois Center.
- The purchase of One Illinois Center on July 11, 2006 was funded by a
10-year, $148.5 million non-recourse first mortgage. The loan bears
interest at a fixed interest rate of 6.29%, with interest only payments
for five years and principal payments based on a 30-year amortization
thereafter. 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 secured recourse mezzanine loan with a six-month term at an
interest rate of LIBOR plus 130 basis points (current rate set at
6.63%), proceeds from the recent sale of Viad Corporate Center in
Phoenix and amounts drawn under existing lines of credit. During the
quarter, the Company reduced the mezzanine loan to a balance of $19.3
million by applying funds from the sale of Central Station.
- During the quarter, 533,499 shares of Series B Convertible Preferred
Stock were converted into an equal number of shares of common stock.
As of September 30, 2006 there were 270,000 Series B Convertible shares
outstanding. In addition, during the quarter 75,000 warrants to
purchase common stock were exercised at a purchase price of $35 per
share or a total of $2.6 million.
Outlook for 2006
The Company is forecasting FFO per diluted share of $4.05 to $4.11 and
earnings per diluted share ("EPS") of $0.85 to $1.45 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 $0.85 - $1.45
Plus: Real estate depreciation and $4.14 - $4.16
Plus: Diluted share adjustment for convertible preferred $0.09 - $0.06
Plus: Depreciation on unconsolidated joint ventures $0.05 - $0.05
Less: Minority interest depreciation and amortization ($0.15 - $0.15)
Less: Gain on sale of real estate ($0.92 - $1.46)
Fully diluted FFO per share $4.05 - $4.11
Earnings guidance is based on the following information which has been
updated from the August assumptions:
- Average and ending occupancy for the fourth quarter is projected to be
92%.
- Same store net operating income for the fourth quarter is projected to
be flat as compared to 2005.
- Average interest rate of 6.7% is projected on non-hedged, floating rate
debt for the remainder of 2006.
- Discretionary fund investments, of which Parkway owns 25%, are
projected late in the fourth quarter totaling $120 million at an
average acquisition cap rate of 7%. Acquisitions to be funded 60% with
first mortgage debt and 40% with equity contributions from Parkway and
Ohio PERS. Parkway's equity contributions will be funded with bank
lines of credit and proceeds from the sale of assets.
- Sale of six wholly-owned office properties at the end of 2006 for a
total sales price of approximately $48 million and an estimated gain
for financial reporting purposes of approximately $9 million.
Outlook for 2007
The Company is forecasting FFO per diluted share of $4.00 to $4.20 and
EPS of $0.00 to $0.05 for 2007. The reconciliation of forecasted EPS to
forecasted FFO per diluted share is as follows:
Guidance for 2007 Range
Fully diluted EPS $0.00 - $0.05
Plus: Real estate depreciation and amortization $4.10 - $4.41
Plus: Diluted share adjustment for convertible preferred $0.04 - $0.05
Plus: Depreciation on unconsolidated joint ventures $0.03 - $0.03
Less: Minority interest depreciation and amortization ($0.17 - $0.34)
Fully diluted FFO per share $4.00 - $4.20
Earnings guidance is based on the following assumptions.
- An average occupancy for the first, second, third and fourth quarters
of 91%, 92%, 93% and 94%, respectively.
- 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 8%; for an annual increase in same store net
operating income of 5% on a GAAP basis. On a cash basis, annual same
store net operating income is expected to increase 8%.
- Straight line rent adjustment is expected to be approximately $2.2
million for 2007 versus $4.9 million for 2006, reflecting the reduction
in rent concessions in 2007 as compared to 2006.
- Interest rate on non-hedged floating rate debt of 6.70% and 6.50% for
first and second half of year respectively, for an average interest
rate of 6.60%.
- New investments for the discretionary fund in addition to the
investments projected for 2006 totaling $150 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
$588,000 recorded in 2006.
Earnings guidance does not include the proposed joint venture of One
and Two Illinois Center, the acquisition of any wholly-owned assets, or the
disposition or joint venture contribution of any assets, other than the
sale of six properties outlined earlier in this release. On or before
December 15, 2006, the Company intends to issue a release with additional
information as to the timing of these asset recycling events and the
accretive or dilutive effects they are expected to have on 2007 FFO.
Steven G. Rogers, President and Chief Executive Officer stated, "We
achieved solid results on all fronts this quarter. Our operating results
exceeded our internal projections and we are seeing occupancy and rental
rate growth this quarter, accelerating into 2007. In addition, we made
visible progress in the Asset Recycling component of our GEAR UP Plan. The
combination of these actions should result in core portfolio growth in 2007
from operations and absolute growth for 2008 and beyond from improving
operations and additional asset recycling."
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 third quarter operations on Tuesday, October 31, 2006, at 1:00 p.m.
Eastern Time. The number for the conference call is 800-406-5345. A taped
replay of the call can be accessed 24 hours a day through November 10, 2006
by dialing 888-203-1112 and using the pass code of 4558266. 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 third
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 "3Q 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 third 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, 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
67 office properties located in 11 states with an aggregate of
approximately 12,812,000 square feet of leasable space as of October 30,
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 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)
September 30 December 31
2006 2005
(Unaudited)
Assets
Real estate related investments:
Office and parking properties $1,415,654 $1,220,565
Accumulated depreciation (210,531) (179,636)
1,205,123 1,040,929
Land available for sale 1,467 1,467
Investment in unconsolidated joint
ventures 11,126 12,942
1,217,716 1,055,338
Rents receivable and other assets 96,195 69,480
Intangible assets, net 73,751 60,161
Cash and cash equivalents 5,168 3,363
$1,392,830 $1,188,342
Liabilities
Notes payable to banks $176,167 $150,371
Mortgage notes payable 654,143 483,270
Accounts payable and other liabilities 71,402 56,628
Subsidiary redeemable preferred
membership interests 10,741 10,741
912,453 701,010
Minority Interest
Minority Interest - unit holders 37 38
Minority Interest - real estate
partnerships 16,012 12,778
16,049 12,816
Stockholders' Equity
8.34% Series B Cumulative Convertible
Preferred stock, $.001 par value,
2,142,857 shares authorized,
270,000 and 803,499 shares issued
and outstanding in 2006 and 2005,
respectively 9,450 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, 14,878,975
and 14,167,292 shares issued and
outstanding in 2006 and 2005,
respectively 15 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 409,279 389,971
Unearned compensation - (3,101)
Accumulated other comprehensive income 832 826
Retained earnings (deficit) (9,330) 4,906
464,328 474,516
$1,392,830 $1,188,342
PARKWAY PROPERTIES, INC.
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
Three Months Ended
September 30
2006 2005
(Unaudited)
Revenues
Income from office and parking
properties $55,401 $47,423
Management company income 284 315
Total revenues 55,685 47,738
Expenses
Property operating expense 26,917 23,043
Depreciation and amortization 17,360 11,583
Operating expense for other real
estate properties 1 2
Management company expenses 223 121
General and administrative 1,282 791
Total expenses 45,783 35,540
Operating income 9,902 12,198
Other income and expenses
Interest and other income 8 5
Equity in earnings of unconsolidated
joint ventures 198 330
Loss on sale of real estate - (26)
Interest expense (12,565) (8,805)
Income (loss) before minority
interest and discontinued operations (2,457) 3,702
Minority interest - unit holders (1) -
Minority interest - real estate
partnerships 225 20
Income (loss) from continuing
operations (2,233) 3,722
Discontinued operations:
Income from discontinued operations 82 597
Gain on sale of real estate from
discontinued operations 211 4,181
Net income (loss) (1,940) 8,500
Dividends on preferred stock (1,200) (1,200)
Dividends on convertible preferred
stock (481) (586)
Net income (loss) available to common
stockholders $(3,621) $6,714
Net income (loss) per common share:
Basic:
Income (loss) from continuing
operations $(0.27) $0.14
Discontinued operations 0.02 0.34
Net income (loss) $(0.25) $0.48
Diluted:
Income (loss) from continuing
operations $(0.27) $0.14
Discontinued operations 0.02 0.33
Net income (loss) $(0.25) $0.47
Dividends per common share $0.65 $0.65
Weighted average shares outstanding:
Basic 14,236 14,116
Diluted 14,236 14,295
PARKWAY PROPERTIES, INC.
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
Nine Months Ended
September 30
2006 2005
(Unaudited)
Revenues
Income from office and parking
properties $153,768 $140,770
Management company income 5,082 2,597
Total revenues 158,850 143,367
Expenses
Property operating expense 74,031 66,035
Depreciation and amortization 45,175 37,115
Operating expense for other real
estate properties 4 4
Management company expenses 898 478
General and administrative 3,405 3,341
123,513 106,973
Operating income 35,337 36,394
Other income and expenses
Interest and other income 34 246
Equity in earnings of unconsolidated
joint ventures 524 1,095
Gain on sale of joint venture
interests, real estate and other
assets 13,465 965
Interest expense (31,787) (25,572)
Income before minority interest and
discontinued operations 17,573 13,128
Minority interest - unit holders (1) (1)
Minority interest - real estate
partnerships 369 (301)
Income from continuing operations 17,941 12,826
Discontinued operations:
Income from discontinued operations 808 1,847
Gain on sale of real estate from
discontinued operations 211 4,181
Net income 18,960 18,854
Dividends on preferred stock (3,600) (3,600)
Dividends on convertible preferred
stock (1,654) (1,759)
Net income available to common
stockholders $13,706 $13,495
Net income per common share:
Basic:
Income from continuing operations $0.90 $0.53
Discontinued operations 0.07 0.43
Net income $0.97 $0.96
Diluted:
Income from continuing operations $0.89 $0.53
Discontinued operations 0.07 0.42
Net income $0.96 $0.95
Dividends per common share $1.95 $1.95
Weighted average shares outstanding:
Basic 14,108 14,035
Diluted 14,284 14,216
PARKWAY PROPERTIES, INC.
RECONCILIATION OF FUNDS FROM OPERATIONS AND
FUNDS AVAILABLE FOR DISTRIBUTION TO NET INCOME
FOR THE THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 2006 AND 2005
(In thousands, except per share data)
Three Months Ended Nine Months Ended
September 30 September 30
2006 2005 2006 2005
(Unaudited) (Unaudited)
Net Income $(1,940) $8,500 $18,960 $18,854
Adjustments to Net
Income:
Preferred Dividends (1,200) (1,200) (3,600) (3,600)
Convertible
Preferred
Dividends (481) (586) (1,654) (1,759)
Depreciation and
Amortization 17,360 11,583 45,175 37,115
Depreciation and
Amortization -
Discontinued
Operations 18 131 224 653
Minority Interest
Depreciation and
Amortization (648) (168) (1,473) (591)
Adjustments for
Unconsolidated
Joint Ventures 156 266 659 781
Minority Interest -
Unit Holders 1 - 1 1
Gain on Sale of Real
Estate and Joint
Venture Interests (211) (4,181) (13,795) (5,512)
Funds From Operations
Applicable to Common
Shareholders (1) $13,055 $14,345 $44,497 $45,942
Funds Available for
Distribution
Funds From Operations
Applicable to
Common
Shareholders $13,055 $14,345 $44,497 $45,942
Add (Deduct):
Adjustments for
Unconsolidated Joint
Ventures (82) (163) (1,055) (829)
Adjustments for
Minority Interest in
Real Estate
Partnerships 190 24 333 93
Straight-line Rents (972) (899) (3,880) (3,332)
Straight-line Rents -
Discontinued
Operations 11 22 52 (2)
Amortization of
Above/Below Market
Leases 493 533 1,171 1,400
Amortization of Share
Based Compensation 276 184 584 351
Capital Expenditures:
Building
Improvements (1,423) (2,216) (4,146) (5,742)
Tenant
Improvements -
New Leases (2,786) (1,087) (6,235) (5,656)
Tenant
Improvements -
Renewal Leases (2,695) (1,838) (6,497) (5,455)
Leasing Costs -
New Leases (879) (323) (1,726) (1,479)
Leasing Costs -
Renewal Leases (358) (1,215) (1,711) (2,412)
Funds Available for
Distribution (1) $4,830 $7,367 $21,387 $22,879
Diluted Per Common
Share/Unit
Information (**)
FFO per share $0.90 $0.99 $3.07 $3.18
Dividends paid $0.65 $0.65 $1.95 $1.95
Dividend payout
ratio for FFO 72.40% 65.73% 63.54% 61.40%
Weighted average
shares/units
outstanding 15,076 15,100 15,038 15,020
Other Supplemental
Information
Upgrades on
Acquisitions $902 $1,745 $4,072 $4,982
Loss on Non
Depreciable Assets $- $(26) $(119) $(366)
**Information for
Diluted Computations:
Convertible Preferred
Dividends $481 $586 $1,654 $1,759
Basic Common
Shares/Units
Outstanding 14,237 14,118 14,109 14,036
Convertible
Preferred Shares
Outstanding 652 803 753 803
Dilutive Effect of
Other Share
Equivalents 187 179 176 181
(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 NINE MONTHS ENDED SEPTEMBER 30, 2006 AND 2005
(In thousands)
Three Months Ended Nine Months Ended
September 30 September 30
2006 2005 2006 2005
(Unaudited) (Unaudited)
Net Income $(1,940) $8,500 $18,960 $18,854
Adjustments to Net
Income:
Interest Expense 12,298 8,446 30,963 24,620
Amortization of
Financing Costs 267 359 824 952
Depreciation and
Amortization 17,378 11,714 45,399 37,768
Amortization of Share
Based Compensation 276 184 584 351
Net Gain on Joint
Venture Interests,
Real Estate and
Other Assets (211) (4,155) (13,676) (5,146)
Tax Expense 1 (47) 1 8
EBITDA
Adjustments -
Unconsolidated
Joint Ventures 288 632 1,915 1,922
EBITDA
Adjustments -
Minority Interest in
Real Estate
Partnerships (1,041) (443) (2,546) (1,517)
EBITDA (1) $27,316 $25,190 $82,424 $77,812
Interest Coverage
Ratio:
EBITDA $27,316 $25,190 $82,424 $77,812
Interest Expense:
Interest Expense $12,298 $8,446 $30,963 $24,620
Capitalized Interest - - - 52
Interest Expense -
Unconsolidated
Joint Ventures 129 337 886 1,032
Interest Expense -
Minority Interest
in Real Estate
Partnerships (381) (268) (1,039) (907)
Total Interest Expense $12,046 $8,515 $30,810 $24,797
Interest Coverage
Ratio 2.27 2.96 2.68 3.14
Fixed Charge Coverage
Ratio:
EBITDA $27,316 $25,190 $82,424 $77,812
Fixed Charges:
Interest Expense $12,046 $8,515 $30,810 $24,797
Preferred Dividends 1,681 1,786 5,254 5,359
Preferred
Distributions -
Unconsolidated
Joint Ventures - - - 21
Principal Payments
(Excluding Early
Extinguishment of
Debt) 3,952 4,847 11,327 12,941
Principal Payments -
Unconsolidated
Joint Ventures 11 11 34 98
Principal Payments -
Minority Interest
in Real Estate
Partnerships (29) (108) (176) (423)
Total Fixed Charges $17,661 $15,051 $47,249 $42,793
Fixed Charge Coverage
Ratio 1.55 1.67 1.74 1.82
Modified Fixed Charge
Coverage Ratio:
EBITDA $27,316 $25,190 $82,424 $77,812
Modified Fixed
Charges:
Interest Expense $12,046 $8,515 $30,810 $24,797
Preferred Dividends 1,681 1,786 5,254 5,359
Preferred
Distributions -
Unconsolidated
Joint Ventures - - - 21
Total Modified Fixed
Charges $13,727 $10,301 $36,064 $30,177
Modified Fixed Charge
Coverage Ratio 1.99 2.45 2.29 2.58
The following table
reconciles EBITDA to
cash flows provided
by operating
activities:
EBITDA $27,316 $25,190 $82,424 $77,812
Amortization of
Above Market
Leases 493 533 1,171 1,400
Operating
Distributions from
Unconsolidated Joint
Ventures 365 1,328 1,150 2,294
Interest Expense (12,298) (8,446) (30,963) (24,620)
Tax Expense (1) 47 (1) (8)
Increase in
Receivables and
Other Assets (15,902) (4,883) (18,428) (10,781)
Increase in Accounts
Payable and Other
Liabilities 11,362 19,975 10,550 17,445
Adjustments for
Minority Interests 818 423 2,178 1,819
Adjustments for
Unconsolidated
Joint Ventures (486) (962) (2,439) (3,017)
Cash Flows Provided by
Operating Activities $11,667 $33,205 $45,642 $62,344
(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 SEPTEMBER 30, 2006 AND 2005
(In thousands, except number of properties data)
Net Operating
Income Occupancy
Percent-
Number age of
of Port-
Proper- folio
ties (1) 2006 2005 2006 2005
Same store
properties (2) 54 81.92% $23,334 $24,136 90.4% 89.7%
2005 acquisitions 4 4.74% 1,350 393 94.8% N/A
2006 acquisitions 3 13.29% 3,785 - 91.1% N/A
Assets sold - 0.05% 15 (149) N/A N/A
Net operating income
from office and parking
properties 61 100.00% $28,484 $24,380
(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 September 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 Nine Months Ended
September 30 September 30
2006 2005 2006 2005
Net income (loss) $(1,940) $8,500 $18,960 $18,854
Add (deduct):
Interest expense 12,565 8,805 31,787 25,572
Depreciation and amortization 17,360 11,583 45,175 37,115
Operating expense for other real
estate properties 1 2 4 4
Management company expenses 223 121 898 478
General and administrative expenses 1,282 791 3,405 3,341
Equity in earnings of unconsolidated
joint ventures (198) (330) (524) (1,095)
(Gain) loss on sale of joint venture
interests, real estate and other
assets - 26 (13,465) (965)
Minority interest - unit holders 1 - 1 1
Minority interest - real estate
partnerships (225) (20) (369) 301
Income from discontinued operations (82) (597) (808) (1,847)
Gain on sale of real estate from
discontinued operations (211) (4,181) (211) (4,181)
Management company income (284) (315) (5,082) (2,597)
Other income (8) (5) (34) (246)
Net operating income from office and
parking properties 28,484 24,380 79,737 74,735
Less: Net operating income from non
same store properties (5,150) (244) (13,424) (4,995)
Same store net operating income $23,334 $24,136 $66,313 $69,740
SOURCE Parkway Properties, Inc.
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Related links:
http://www.pky.com
http://www.thepinnacleatjacksonplace.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,
+1-601-948-4091, of Parkway Properties, Inc.
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