Cogdell Spencer Inc. Reports Fourth Quarter and Year End 2009 Financial Results
CHARLOTTE, N.C., Feb. 25 /PRNewswire-FirstCall/ --
- Funds from Operations Modified (FFOM), excluding the non-recurring events summarized below, for fourth quarter 2009 was $7.9 million, or $0.16 per share and operating partnership unit.
- Net income attributable to Cogdell Spencer Inc., excluding the non-recurring events summarized below, for fourth quarter 2009 was $1.0 million, or $0.02 per share.
- FFOM, excluding the non-recurring events summarized below, for the year ended December 31, 2009 was $31.2 million, or $0.77 per share and operating partnership unit.
- As of December 31, 2009, the Company had $25.9 million of unrestricted cash and $61.7 million available under its secured revolving credit facility for a total liquidity of $87.6 million, compared to $52.1 million for the same period last year, a 68.2% increase.
Cogdell Spencer Inc. (NYSE: CSA), a real estate investment trust (REIT) that invests in specialty office buildings, including medical offices and ambulatory surgery and diagnostic centers, and provides strategic planning and design and construction services for the medical profession, announces financial results for the quarter and year ended December 31, 2009.
Fourth Quarter 2009 Results
For the fourth quarter of 2009, Cogdell Spencer Inc. reports FFOM of $7.9 million, or $0.16 per share and operating partnership unit, excluding the $0.9 million net gain from the non-recurring events summarized below FFOM, including the non-recurring events summarized below was $8.8 million, or $0.17 per share and operating partnership unit. During the same period in 2008, FFOM was $8.1 million, or $0.30 per share and operating partnership unit. FFOM adds back to traditionally defined Funds from Operations (FFO) non-cash amortization of non-real estate related intangible assets associated with purchase accounting.
FFO for the fourth quarter of 2009 was $8.8 million, or $0.17 per share and operating partnership unit. FFO, excluding the $0.9 million net gain from the non-recurring events summarized below was $7.9 million, or $0.16 per share and operating partnership unit. During the same period in 2008, FFO was $5.7 million, or $0.21 per share and operating partnership unit.
Net income attributable to Cogdell Spencer Inc. for the fourth quarter of 2009 was $1.6 million, or $0.04 per share. Net income attributable to Cogdell Spencer Inc. excluding the non-recurring events summarized below was $1.0 million, or $0.02 per share, for the fourth quarter of 2009. During the same period in 2008, net income (loss) was ($1.0 million), or ($0.06) per share.
A reconciliation of net income (loss) to FFOM and FFO for the three months and year ended December 31, 2009 is set forth on page 13.
As of December 31, 2009, the Company's portfolio consisted of 62 consolidated wholly-owned and joint venture properties, comprising a total of approximately 3.4 million net rentable square feet. The overall percentage of leased space at these 62 properties as of December 31, 2009, was 91.5%. In addition, the Company has one wholly-owned property held for sale totaling 38,703 net rentable square feet, three unconsolidated joint venture properties comprising a total of approximately 0.2 million net rentable square feet and manages 45 properties for third party clients comprising a total of approximately 2.1 million net rentable square feet.
Results for the Year Ended December 31, 2009
FFOM for the year ended December 31, 2009 was $31.2 million, or $0.77 per share and operating partnership unit, excluding the ($102.3 million) net loss from the non-recurring events summarized below. FFOM for the year ended December 31, 2009, including the non-recurring events summarized below, was ($71.1 million), or ($1.75) per share and operating partnership unit. During the same period in 2008, FFOM was $29.4 million, or $1.22 per share and operating partnership unit.
FFO for the year ended December 31, 2009 was $28.4 million, or $0.70 per share and operating partnership unit, excluding the ($102.3) million net loss from the non-recurring events summarized below. FFO for the year ended December 31, 2009, including the non-recurring events summarized below was ($73.9 million), or ($1.82) per share and operating partnership unit. During the same period in 2008, FFO was $21.4 million, or $0.89 per share and operating partnership unit.
Net income attributable to Cogdell Spencer Inc. for the year ended December 31, 2009, was $12.6 million, or $0.38 per share, excluding the ($82.3) million net loss applicable to Cogdell Spencer Inc. from the non-recurring events summarized below. Net income (loss) attributable to Cogdell Spencer Inc. including the non-recurring events summarized below was ($69.7 million), or ($2.14) per share, for the year ended December 31, 2009. During the same period in 2008, net income (loss) was ($5.8 million), or ($0.37) per share.
A reconciliation of net income (loss) to FFOM and FFO for the year ended December 31, 2009 is set forth on page 13.
Non-Recurring Events
For the Three For the
Months Ended Year Ended
December 31, 2009 December 31, 2009
----------------- -----------------
(in thousands)
Intangible asset impairment charges, net
of tax benefit $ - $ (101,746)
Debt extinguishment and interest rate
derivative expense, net of tax benefit - (1,520)
Gain on settlement from
MEA Holdings, Inc. transaction 4,905 4,905
Impairment of real estate property
held for sale (1,359) (1,359)
Strategic planning professional fees (2,641) (2,641)
-------- -----------
Total non-recurring events $ 905 $ (102,361)
-------- -----------
During the year ended December 31, 2009, the Company recorded a pre-tax, non-cash intangible asset impairment charge of ($120.9 million) and the Company recognized a non-cash income tax benefit related to the charge of $19.2 million resulting in an after-tax impairment charge of ($101.7 million). The charge was recorded during the first quarter of 2009.
During the year ended December 31, 2009, the Company repaid $50.0 million of the $100.0 million outstanding under the senior secured term loan agreement ("Term Loan"). In connection with this repayment, the Term Loan interest rate and financial covenants were amended. As a result of the amendment, all unamortized Term Loan deferred finance costs and costs paid to the lenders that were party to the amendment were expensed. The charge to debt extinguishment and interest rate derivative expense was approximately $0.9 million, before income tax benefit. The Company recorded an income tax benefit of approximately $0.4 million related to this charge, resulting in an after-tax charge of approximately $0.5 million. The charge was recorded during the second quarter of 2009.
The Company previously entered into a $100.0 million interest rate swap agreement that fixed the floating rate portion of the $100.0 million Term Loan. Due to the repayment and the amendment to the Term Loan, approximately $1.6 million related to swap derivative hedge ineffectiveness was charged to debt extinguishment and interest rate derivative expense. The non-cash charge represents the portion of the mark to market fair value liability of the interest rate swap agreement for which there are no more future interest payments under the Term Loan. The Company recorded an income tax benefit of approximately $0.6 million related to this charge, resulting in an after-tax charge of approximately $1.0 million. The charge was recorded during the second quarter of 2009.
The Company has not terminated the $100.0 million interest rate swap agreement. The $100.0 million interest rate swap agreement is being used to fix the floating rate portion on $50.0 million outstanding on the Term Loan and $50.0 million outstanding under the secured revolving Credit Facility.
During the three months ended December 31, 2009, the final escrow release related to the MEA Holdings, Inc. ("MEA") acquisition occurred. Pursuant to an agreement between the Company and the MEA Holdings, Inc. Seller Representatives, $5.0 million of the escrow was paid to the Company in consideration of full and final settlement of certain claims made by the Company in connection with the MEA transaction. During fourth quarter 2009, the Company recorded other income of $4.9 million related to this settlement.
During the three months ended December 31, 2009, the Company reclassified the wholly-owned property Harbison Medical Office Building (formerly known as Baptist Northwest) as held for sale discontinued operations. Related to this property, the Company recorded a non-cash impairment charge of ($1.4 million) in order to reduce the carrying value of the real estate property to its estimated net sale proceeds.
The Company's results for the three months ended December 31, 2009 includes costs associated with the Company's exploration of a range of strategic alternatives that included: an assessment of potential change of control transactions; asset dispositions and acquisitions; business and portfolio combinations; debt financings and refinancings. The costs associated with this exercise totaled approximately $2.6 million and included fees for consultants, accountants, attorneys, and other service providers. At this time, the Company is not engaged in any negotiation for a change of control transaction. The Company does not intend to make further disclosures relating to any such transaction unless the Company enters into a definitive agreement.
Capital Transactions
In October 2009, the Company obtained a $7.5 million mortgage note payable collateralized by the Randolph Medical Park, Lincoln/Lakemont Family Practice Center, and Northcross Family Physicians properties, all of which are located in Charlotte, North Carolina. The mortgage note payable matures in October 2014, has a fixed interest rate of 7.00%, and requires monthly principal and interest payments based on a 20-year amortization.
In October 2009, the Company exercised its extension option for Methodist Professional Center I (located in Indianapolis, Indiana) mortgage note payable for a two year period. Associated with this extension, the Company repaid $4.5 million of the $30.0 million outstanding principal. The remaining $25.5 million balance on the mortgage note payable matures in October 2011, has an interest rate of LIBOR plus 1.30% (1.53% as of December 31, 2009), and requires monthly principal and interest payments based on a 30-year amortization.
In October 2009, the Company refinanced the MRMC MOB I (formerly known as Hanover Medical Office Building One), located in Richmond, Virginia, mortgage note payable. The principal balance was increased from $4.7 million to $6.0 million and the $1.3 million additional proceeds were used for general corporate purposes. The $6.0 million mortgage note payable matures in November 2014, has a fixed interest rate of 7.35%, and requires monthly principal and interest payments based on a 25-year amortization.
In November 2009, the Company refinanced the Health Park Medical Office Building (located in Chattanooga, TN) mortgage note payable, which was to mature on January 1, 2010. The principal balance was reduced from $8.7 million to $7.0 million. The $7.0 million mortgage note payable matures in December 2019, has a fixed interest rate of 7.50%, and requires monthly principal and interest payments based on a 25-year amortization.
In December 2009, the Company began construction on a 4,630 square foot expansion to the wholly-owned Lancaster Rehabilitation Hospital (located in Lancaster, PA). The $2.1 million expansion project is 100% pre-leased and scheduled for completion during second quarter 2010. The Company obtained financing in the amount of $2.1 million from a construction loan which provides interest-only payments during the construction period at a rate of LIBOR plus 3.75% (3.98% as of December 31, 2009). Upon the earlier of completion of construction or June 2010, the loan converts to an amortizing loan with monthly payments based on a 25-year amortization schedule. The loan matures June 2014.
Build to Suit
In December 2009, the Company completed The Woodlands Center for Specialized Medicine building in Pensacola, Florida. The 75,985 square foot facility marked the construction completion of the first fully integrated project for the Company. The Company provided development, design/build (architectural, engineering and construction), and property management services on the medical office building and outpatient treatment center. The three-story project is 100% leased by the physicians of Woodlands Medical Specialists. The facility is a joint venture with the Company owning 40% and Gen-Ex Holdings, LLC (a group of local physicians) owning 60%.
Dividend
On December 17, 2009, the Company announced that its Board of Directors had declared a quarterly dividend of $0.10 per share and operating partnership unit that was paid in cash on January 21, 2010 to holders of record on December 31, 2009. The dividend covered the Company's fourth quarter of 2009.
Outlook
The Company's management team expects that FFOM per share and operating partnership unit for the year ending December 31, 2010, will be between $0.42 and $0.50. A reconciliation of the range of projected net income (loss) to projected FFO and FFOM for the year ending December 31, 2010 is set forth below:
Guidance Range for the
Year Ending December 31, 2010
-----------------------------
Low High
------- -------
(In thousands, except per share and
operating partnership unit data)
Net loss $ (5,000) - - $ (1,000)
Plus real estate related depreciation
and amortization 27,000 - - 27,000
Less noncontrolling interests in
real estate partnerships, before
real estate related depreciation
and amortization (2,000) - - (2,000)
--------- --------
Funds from Operations (FFO) 20,000 - - 24,000
Plus amortization of intangibles related
to purchase accounting, net of
income tax benefit 1,500 - - 1,500
--------- --------
Funds from Operations Modified (FFOM) $ 21,500 - - $ 25,500
========= =========
FFO per share and unit - diluted $ 0.39 - - $ 0.47
FFOM per share and unit - diluted $ 0.42 - - $ 0.50
Weighted average shares and units
outstanding - basic and diluted 50,700 - - 50,700
Supplemental operating and financial data are available in the Investor Relations section of the Company's Web site at www.cogdell.com. The reported results are unaudited and there can be no assurance that the results will not vary from the final information for the three months and year ended December 31, 2009. In the opinion of management, all adjustments considered necessary for a fair presentation of these reported results have been made.
FFO is a supplemental non-GAAP financial measure used by the real estate industry to measure the operating performance of real estate companies. FFOM adds back to traditionally defined FFO non-cash amortization of non-real estate related intangible assets associated with purchase accounting. The Company presents FFO and FFOM because it considers them important supplemental measures of operational performance. The Company believes FFO is frequently used by securities analysts, investors and other interested parties in the evaluation of REITs, many of which present FFO when reporting their results. The Company believes that FFOM allows securities analysts, investors and other interested parties in evaluating current period results to results prior to the MEA Holdings, Inc. transaction. FFO and FFOM are intended to exclude GAAP historical cost depreciation and amortization of real estate and related assets, which assumes that the value of real estate assets diminishes ratably over time. Historically, however, real estate values have risen or fallen with market conditions. Because FFO and FFOM excludes depreciation and amortization unique to real estate, gains and losses from property dispositions and extraordinary items, it provides a performance measure that, when compared year over year, reflects the impact to operations from trends in occupancy rates, rental rates, operating costs, development activities and interest costs, providing a perspective not immediately apparent from net income. The Company computes FFO in accordance with standards established by the Board of Governors of NAREIT in its March 1995 White Paper (as amended in November 1999 and April 2002), which may differ from the methodology for calculating FFO utilized by other equity REITs and, accordingly, may not be comparable to such other REITs. The Company adjusts the NAREIT definition to add back noncontrolling interests in consolidated real estate partnerships before real estate related depreciation and amortization. Further, FFO and FFOM do not represent amounts available for management's discretionary use because of needed capital replacement or expansion, debt service obligations, or other commitments and uncertainties. FFO and FFOM should not be considered as an alternative to net income (loss) (computed in accordance with GAAP) as an indicator of the Company's performance, nor are they indicative of funds available to fund its cash needs, including its ability to pay dividends or make distributions. A reconciliation from GAAP net loss to FFO and FFOM is included as an attachment to this press release.
Conference Call
Cogdell Spencer Inc. invites you to attend the Company's Fourth Quarter 2009 Conference Call on Friday, February 26, 2010 at 10:00 a.m. (Eastern Standard Time). The number to call for this teleconference is (800) 860-2442 (domestic) or (412) 858-4600 (international), and no passcode is required. In addition, the conference call can be accessed via the Internet at www.cogdell.com through the "Q4 2009 Cogdell Spencer Earnings Conference Call" link on the Investor Relations page.
A playback will be available until March 15, 2010. To access the playback, please dial (877) 344-7529 (domestic) or (412) 317-0088 (international) and enter the passcode: 437310. The replay can also be accessed via the Internet at www.cogdell.com through the "Q4 2009 Cogdell Spencer Earnings Conference Call" link on the Investor Relations page.
About Cogdell Spencer Inc.
Charlotte-based Cogdell Spencer Inc. (NYSE: CSA) is a fully-integrated, self-administered, and self-managed real estate investment trust that invests in specialty office buildings for the medical profession, including medical offices and ambulatory surgery and diagnostic centers. The Company focuses on the ownership, delivery, acquisition, and management of strategically located medical office buildings and other healthcare related facilities in the United States of America. The Company has been built around understanding and addressing the full range of specialized real estate needs of the healthcare industry. Learn more about Cogdell Spencer Inc. and its subsidiaries at www.cogdell.com.
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The forward-looking statements reflect the Company's views about future events and are subject to risks, uncertainties, assumptions and changes in circumstances that may cause actual results to differ materially. Factors that may contribute to these differences include, but are not limited to the following: our business strategy; our ability to comply with financial covenants in our debt instruments; our ability to obtain future financing arrangements; estimates relating to our future distributions; our understanding of our competition; our ability to renew our ground leases; changes in the reimbursement available to our tenants by government or private payors; our tenants' ability to make rent payments; defaults by tenants; customers' access to financing; delays in project starts and cancellations by customers; the timing of capital expenditures by healthcare systems and providers; market trends; and projected capital expenditures.
For a further list and description of such risks and uncertainties, see the reports filed by the Company with the Securities and Exchange Commission, including the Company's Form 10-K for the year ended December 31, 2008. Although the Company believes the expectations reflected in such forward-looking statements are based on reasonable assumptions, it can give no assurance that its expectations will be realized. The Company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
Cogdell Spencer Inc.
Condensed Consolidated Balance Sheets
(In thousands)
(unaudited)
Assets December 31, December 31,
2009 2008
Real estate properties:
Operating real estate properties $561,124 $527,710
Less: Accumulated depreciation (93,247) (68,764)
------- -------
Total operating real estate properties, net 467,877 458,946
Construction in progress 43,338 15,314
------ ------
Total real estate properties, net 511,215 474,260
------- -------
Cash and cash equivalents 25,914 34,668
Restricted cash 3,060 12,959
Tenant and accounts receivable, net 12,993 43,520
Goodwill 108,683 180,435
Trade names and trademarks 41,240 75,969
Intangible assets, net 21,742 45,363
Other assets 25,599 29,180
Other assets -held for sale 2,217 3,736
----- -----
Total assets $752,663 $900,090
======== ========
Liabilities and Equity
Mortgage notes payable $280,892 $238,448
Revolving credit facility 80,000 124,500
Term loan 50,000 100,000
Accounts payable 15,293 22,775
Billings in excess of costs and estimated
earnings on uncompleted contracts 13,189 17,025
Deferred income taxes 15,993 34,176
Payable to prior MEA Holdings shareholders - 18,002
Other liabilities 47,312 59,860
Other liabilities - held for sale 2,204 2,310
----- ----
Total liabilities 504,883 617,096
Commitments and contingencies
Equity:
Cogdell Spencer Inc. stockholders' equity:
Preferred stock, $0.01 par value;
50,000 shares authorized, none issued or
outstanding - -
Common stock, $0.01 par value, 200,000 shares
authorized, 42,729 and 17,699 shares issued
and outstanding in 2009 and 2008, respectively 427 177
Additional paid-in capital 370,593 275,380
Accumulated other comprehensive loss (1,861) (5,106)
Accumulated deficit (164,321) (77,438)
-------- -------
Total Cogdell Spencer Inc.
stockholders' equity 204,838 193,013
Noncontrolling interests:
Real estate partnerships 5,220 4,657
Operating partnership 37,722 85,324
------ ------
Total noncontrolling interests 42,942 89,981
------ ------
Total equity 247,780 282,994
------- -------
Total liabilities and equity $752,663 $900,090
======== ========
Cogdell Spencer Inc.
Condensed Consolidated Statements of Operations
(In thousands, except per share amounts)
(unaudited)
For the Three Months For the Year
Ended Ended
-------------------- -----------------
Dec. 31, Dec. 31, Dec. 31, Dec. 31,
2009 2008 2009 2008
-------- -------- -------- --------
Revenues:
Rental revenue $20,375 $20,089 $79,486 $77,421
Design-Build contract revenue
and other sales 30,016 78,726 143,416 253,596
Property management
and other fees 807 935 3,336 3,460
Development management
and other income 98 134 3,363 885
------ ------- -------- -------
Total revenues 51,296 99,884 229,601 335,362
Expenses:
Property operating
and management 8,021 7,920 31,810 31,065
Design-Build contracts
and development
management 21,388 67,112 113,961 214,019
Selling, general,
and administrative 11,067 9,819 32,285 30,215
Depreciation and
amortization 7,470 11,706 34,502 44,879
Impairment charges - - 120,920 -
------ ------- -------- -------
Total expenses 47,946 96,557 333,478 320,178
------ ------- -------- -------
Income (loss) from operations
before other income (expense) 3,350 3,327 (103,877) 15,184
Other income (expense):
Interest and other income 164 239 620 922
Gain on settlement
from MEA Holdings, Inc.
transaction 4905 - 4905 -
Interest expense (5,123) (6,428) (21,711) (25,017)
Debt extinguishment
and interest rate
derivative expense (10) - (2,511) -
Equity in earnings of
unconsolidated
partnerships 10 4 15 22
------ ------- -------- -------
Total other income (expense) (54) (6,185) (18,682) (24,073)
------ ------- -------- -------
Income (loss) from continuing
operations before income tax
benefit (expense) 3,296 (2,858)(122,559) (8,889)
Income tax benefit 60 1,387 22,124 1,244
------ ------- -------- -------
Net income (loss) from
continuing operations 3,356 (1,471)(100,435) (7,645)
Discontinued operations:
Loss from discontinued operations (41) (34) (168) (212)
Impairment of real
estate property (1,359) - (1,359) -
------ ------- -------- -------
Total discontinued
operations (1,400) (34) (1,527) (212)
------ ------- -------- -------
Net income (loss) 1,956 (1,505)(101,962) (7,857)
Net loss (income) attributable
to the noncontrolling
interest in:
Real estate partnerships (131) (105) (288) (964)
Operating partnership (269) 568 32,522 3,048
------ ------- -------- -------
Net income (loss) attributable
to Cogdell Spencer Inc. $ 1,556 $(1,042) $(69,728) $(5,773)
====== ======= ======== =======
Per share data - basic and diluted
Income (loss) from
continuing operations
attributable to Cogdell
Spencer Inc. $0.06 $(0.06) $(2.10) $(0.36)
Loss from discontinued
operations attributable
to Cogdell Spencer Inc. $(0.02) $ - $(0.04) $(0.01)
------ ------- -------- -------
Net income (loss) per share
attributable to Cogdell
Spencer Inc. $0.04 $(0.06) $(2.14) $(0.37)
====== ======= ======== =======
Weighted average common
shares - basic and diluted 42,615 17,557 32,655 15,770
====== ======= ======== =======
Net income (loss) attributable
to Cogdell Spencer Inc.:
Income from continuing
operations, net of tax $2,956 $(1,008) $(68,201) $(5,561)
Discontinued operations,
net of tax (1,400) (34) (1,527) (212)
------ ------- -------- -------
Net income (loss) $1,556 $(1,042) $(69,728) $(5,773)
====== ======= ======== =======
Cogdell Spencer Inc.
Business Segment Reporting
(In thousands)
(unaudited)
Three months ended
December 31, 2009:
Design- Inter- Unal-
Build segment located
Property and Elimi- and
Operations Development nations Other Total
------------------------------------------
Revenues:
Rental revenue $20,398 $ - $(23) $ - $20,375
Design-Build contract
revenue and other sales - 42,310 (12,294) - 30,016
Property management and
other fees 807 - - - 807
Development management
and other income - 959 (861) - 98
------ ------ ------- ------- ------
Total revenues 21,205 43,269 (13,178) - 51,296
Certain operating expenses:
Property operating and
management 8,021 - - - 8,021
Design-Build contracts and
development management - 30,069 (8,681) - 21,388
Selling, general, and
administrative - 5,783 (23) - 5,760
------ ------ ------- ------- ------
Total certain operating
expenses 8,021 35,852 (8,704) - 35,169
------ ------ ------- ------- ------
13,184 7,417 (4,474) - 16,127
Interest and other income 137 20 - 7 164
Gain on settlement from MEA
Holdings Inc. transaction - - - 4,905 4,905
Corporate general and
administrative expenses - - - (5,307) (5,307)
Interest expense - - - (5,123) (5,123)
Debt extinguishment and interest
rate derivative expense - - - (10) (10)
Benefit from income taxes
applicable to funds
from operations modified - - - 41 41
Non-real estate related
depreciation and amortization - (199) - (59) (258)
Earnings from unconsolidated
real estate partnerships,
before real estate related
depreciation and amortization 13 - - - 13
Noncontrolling interests
in real estate partnerships,
before real estate related
depreciation and amortization (374) - - - (374)
Discontinued operations and
impairment from real estate
property, before real estate
related depreciation and
amortization (1,332) - - (34) (1,366)
------ ------ ------- ------- ------
Funds from operations
modified (FFOM) 11,628 7,238 (4,474) (5,580) 8,812
Amortization of intangibles
related to purchase accounting,
net of income tax benefit (42) (7) - 19 (30)
------ ------ ------- ------- ------
Funds from operations (FFO) 11,586 7,231 (4,474) (5,561) 8,782
Real estate related
depreciation and
amortization, including
amounts in discontinued
operations (7,200) - - - (7,200)
Noncontrolling interests in
real estate partnerships,
before real estate related
depreciation and amortization 374 - - - 374
------ ------ ------- ------- ------
Net income (loss) 4,760 7,231 (4,474) (5,561) 1,956
Net income attributable
to the noncontrolling
interest in:
Real estate partnerships (131) - - - (131)
Operating partnership - - - (269) (269)
------ ------ ------- ------- ------
Net income (loss) attributable
to Cogdell Spencer Inc. $4,629 $7,231 $(4,474) $(5,830) $1,556
====== ====== ======= ======= ======
Cogdell Spencer Inc.
Business Segment Reporting
(In thousands)
(unaudited)
Year ended
December 31, Design-Build Unallocated
2009: Property and Intersegment and
Operations Development Eliminations Other Total
Revenues:
Rental revenue $79,578 $ - $ (92) $ - $79,486
Design-Build
contract revenue
and other sales - 176,124 (32,708) - 143,416
Property management
and other fees 3,336 - - - 3,336
Development
management
and other income - 6,750 (3,387) - 3,363
--- ----- ------ --- -----
Total revenues 82,914 182,874 (36,187) - 229,601
Certain operating
expenses:
Property operating
and management 31,810 - - - 31,810
Design-Build
contracts and
development
management - 142,305 (28,344) - 113,961
Selling, general,
and administrative - 20,541 (92) - 20,449
Impairment charges - 120,920 - - 120,920
--- ------- --- --- -------
Total certain
operating
expenses 31,810 283,766 (28,436) - 287,140
------ ------- -------- --- -------
51,104 (100,892) (7,751) - (57,539)
Interest and
other income 541 48 - 31 620
Gain on settlement
from MEA Holdings
Inc. transaction - - - 4,905 4,905
Corporate general
and administrative
expenses - - - (11,836) (11,836)
Interest expense - - - (21,711) (21,711) Debt extinguishment
and interest rate
derivative expense - - - (2,511) (2,511)
Benefit from income
taxes applicable to
funds from operations
modified - - - 20,356 20,356
Non-real estate
related depreciation
and amortization - (779) - (225) (1,004)
Earnings from
unconsolidated real
estate partnerships,
before real estate
related depreciation
and amortization 27 - - - 27
Noncontrolling
interests in real
estate partnerships,
before real estate
related depreciation
and amortization (1,049) - - - (1,049)
Discontinued operations
and impairment from
real estate property,
before real estate
related depreciation
and amortization (1,253) - - (137) (1,390)
------- --- --- ----- -------
Funds from
operations modified
(FFOM) 49,370 (101,623) (7,751) (11,128) (71,132)
Amortization of
intangibles related
to purchase
accounting, net of
income tax benefit (169) (4,364) - 1,768 (2,765)
----- ------- --- ----- -------
Funds from
operations (FFO) 49,201 (105,987) (7,751) (9,360) (73,897)
Real estate related
depreciation and
amortization,
including amounts
in discontinued
operations (29,114) - - - (29,114)
Noncontrolling
interests in
real estate
partnerships,
before real
estate related
depreciation
and amortization 1,049 - - - 1,049
----- --- --- --- -----
Net income (loss) 21,136 (105,987) (7,751) (9,360) (101,962)
Net loss (income)
attributable to
the noncontrolling
interest in:
Real estate
partnerships (288) - - - (288)
Operating
partnership - - - 32,522 32,522
--- --- --- ------ ------
Net income (loss)
attributable to
Cogdell Spencer
Inc. $20,848 $(105,987) $(7,751) $23,162 $(69,728)
Cogdell Spencer Inc.
Reconciliation of Net Income (Loss) to Funds from
Operations Modified (FFOM) (1)
(In thousands, except per share and unit amounts)
(unaudited)
For the Three Months For the Year
Ended Ended
Dec. 31, Dec. 31, Dec. 31, Dec. 31,
2009 2008 2009 2008
Net income (loss) $ 1,956 $ (1,505) $ (101,962) $ (7,857)
Add:
Real estate related
depreciation and amortization:
Wholly-owned and consolidated
properties, including amounts
in discontinued operations 7,197 7,304 29,102 30,570
Unconsolidated real estate
partnerships 3 3 12 13
Less:
Noncontrolling interests in
real estate partnerships,
before real estate related
depreciation and amortization (374) (111) (1,049) (1,346)
----- ----- ------- -------
Funds from Operations (FFO) (1) 8,782 5,691 (73,897) 21,380
Amortization of intangibles
related to purchase
accounting, net of income
tax benefit 30 2,390 2,765 7,983
--- ----- ----- -----
Funds from Operations
Modified (FFOM) (1) $ 8,812 $ 8,081 $ (71,132) $ 29,363
======= ======= ========== ========
FFO per share and unit
- basic and diluted $ 0.17 $ 0.21 $ (1.82) $ 0.89
FFOM per share and unit
- basic and diluted $ 0.17 $ 0.30 $ (1.75) $ 1.22
Weighted average shares and
units outstanding
- basic and diluted 50,386 26,890 40,616 24,098
====== ====== ====== ======
Non-recurring events:
Gain on settlement from
MEA Holdings, Inc.
transaction $ (4,905) $ - $ (4,905) $ -
Impairment of real estate
property held for sale 1,359 - 1,359 -
Strategic planning
professional fees 2,641 - 2,641 -
Intangible asset impairment
charges, net of tax benefit - - 101,746 -
Debt extinguishment and
interest rate derivative
expense, net of tax benefit - - 1,520 -
Restructuring and severance
charges, net of tax benefit - 912 - 1,312
--- --- --- -----
Impact of non-recurring events $ (905) $ 912 $ 102,361 $ 1,312
======= ===== ========= =======
FFOM, excluding non-recurring
events $ 7,907 $ 8,993 $ 31,229 $ 30,675
======= ======= ======== ========
FFOM, excluding non-recurring
events per share and unit
- basic and diluted $ 0.16 $ 0.33 $ 0.77 $ 1.27
FFO is a supplemental non-GAAP financial measure used by the real estate
industry to measure the operating performance of real estate companies.
FFOM adds back to traditionally defined FFO non-cash amortization of non-real estate related intangible assets associated with purchase accounting.
The Company presents FFO and FFOM because it considers them important
supplemental measures of operational performance. The Company believes
FFO is frequently used by securities analysts, investors and other
interested parties in the evaluation of REITs, many of which present FFO
when reporting their results. FFO is intended to exclude GAAP historical
cost depreciation and amortization of real estate and related assets,
which assumes that the value of real estate assets diminishes ratably over
time. Historically, however, real estate values have risen or fallen with
market conditions. Because FFO excludes depreciation and amortization
unique to real estate, gains and losses from property dispositions and
extraordinary items, it provides a performance measure that, when compared
year over year, reflects the impact to operations from trends in occupancy
rates, rental rates, operating costs, development activities and interest
costs, providing a perspective not immediately apparent from net income.
The Company computes FFO in accordance with standards established by the
Board of Governors of NAREIT in its March 1995 White Paper (as amended in
November 1999 and April 2002), which may differ from the methodology for
calculating FFO utilized by other equity REITs and, accordingly, may not
be comparable to such other REITs. The Company adjusts the NAREIT
definition to add back noncontrolling interests in consolidated real
estate partnerships before real estate related depreciation and
amortization. Further, FFO and FFOM do not represent amounts available
for management's discretionary use because of needed capital replacement
or expansion, debt service obligations, or other commitments and
uncertainties. FFO and FFOM should not be considered as an alternative to
net income (loss) (computed in accordance with GAAP) as an indicator of
the Company's performance, nor are they indicative of funds available to
fund its cash needs, including its ability to pay dividends or make
distributions.
SOURCE Cogdell Spencer Inc.
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