Arden Realty, Inc. Reports First Quarter 2003 FFO of $0.71 Per Share and Reports Leasing Progress at 6100 Center Drive.Business Editors/Real Estate Writers LOS LOS Length of stay, see there ANGELES--(BUSINESS WIRE)--April 29, 2003 Arden Ar·den An unincorporated city of north-central California, a residential suburb of Sacramento. Population: 101,400. Arden, Elizabeth 1884?-1966. Realty realty n. a short form of "real estate." (See: real estate) REALTY. An abstract of real, as distinguished from personalty. Realty relates to lands and tenements, rents or other hereditaments. Vide Real Property. , Inc. (NYSE NYSE See: New York Stock Exchange :ARI ARI Acute respiratory infection, see there ), a Los Angeles-based office real estate investment trust, today reported Funds From Operations Funds From Operations (FFO) Used by real estate and other investment trusts to define the cash flow from trust operations; earnings with depreciation and amortization added back. (FFO FFO See: Funds from operations ) for the first quarter of 2003 of $46.1 million, or $0.71 per share on a fully diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. basis, compared with FFO of $47.1 million, or $0.71 per share on a fully diluted basis, for the first quarter of 2002. Revenues for the first quarter of 2003 were $104.4 million, compared with $100.2 million for the first quarter of 2002. Net income for the first quarter of 2003 was $15.4 million, or $0.24 per share on a fully diluted basis, compared with $21.4 million, or $0.33 per share on a fully diluted basis, for the first quarter of 2002. Adjusting FFO for non-cash compensation expense, the amortization of prepaid pre·pay tr.v. pre·paid, pre·pay·ing, pre·pays To pay or pay for beforehand. pre·pay  ment n. financing costs, straight-line straight-lineadj. 1. Lying in a straight line. 2. Relating to a device whose linkage produces or copies motion in straight lines. 3. rents and costs incurred for recurring re·cur intr.v. re·curred, re·cur·ring, re·curs 1. To happen, come up, or show up again or repeatedly. 2. To return to one's attention or memory. 3. To return in thought or discourse. capital expenditures, second-generation sec·ond-gen·er·a·tion adj. 1. Of or relating to a person or persons whose parents are immigrants. 2. Of or relating to a person or persons whose parents are citizens by birth and whose grandparents are immigrants. 3. tenant improvements and leasing commissions resulted in Funds Available for Distribution (FAD FAD - ["FAD, A Simple and Powerful Database Language", F. Bancilon et al, Proc 13th Intl Conf on VLDB, Brighton, England, Sep 1987]. ) for the first quarter of 2003 of $36.1 million, or $0.56 per share on a fully diluted basis, compared with FAD of $41.7 million, or $0.63 per share on a fully diluted basis, for the first quarter of 2002. A dividend of $0.505 per share was declared de·clare v. de·clared, de·clar·ing, de·clares v.tr. 1. To make known formally or officially. See Synonyms at announce. 2. To state emphatically or authoritatively; affirm. 3. for the first quarter of 2003. Total debt was approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $1.4 billion, representing approximately 44.7% of gross asset value at March 31, 2003. The Company also announced that it has leased 137,000 square feet at its 6100 Center Drive building at the Howard Howard, English noble family. Landowners in Norfolk from the 13th cent., the Howards obtained the duchy of Norfolk through the marriage of Sir Robert Howard to Margaret Mowbray, daughter of Thomas Mowbray, 1st duke of Norfolk. Hughes Center. The largest transaction was a 112,500-square-foot lease for a satellite facility to house faculty and administrative offices and the graduate school for Pepperdine University Pepperdine University is a private institution of higher learning affiliated with the Church of Christ in unincorporated Los Angeles County, California, United States. The university's location overlooks the Pacific Ocean and is adjacent to the city limits of Malibu. . Pepperdine will relocate re·lo·cate v. re·lo·cat·ed, re·lo·cat·ing, re·lo·cates v.tr. To move to or establish in a new place: relocated the business. v.intr. out of 90,000 square feet it currently occupies in two of Arden's buildings in the Culver City Culver City, city (1990 pop. 38,793), Los Angeles co., S Calif., a residential suburb of Los Angeles; inc. 1917. It is a center of the U.S. motion-picture industry, whose roots in the city date to c.1915. Its chief manufactures are rubber products and computers. submarket sub·mar·ket n. A geographic, economic, or specialized subdivision of a market. adj. Being below what is usual in a particular market: submarket wages; submarket interest rates. . Arden Realty will host a conference call to discuss first quarter 2003 operating results on April 30, 2003, at 1:00 p.m. Eastern time. A live webcast (listen-only mode) of the conference call will be available at this time. A hyperlink A predefined linkage between one object and another. See hypertext. hyperlink - anchor to the live webcast will be available from the Investor Information section of our website at www.ardenrealty.com or at www.companyboardroom.com. A replay of the conference call may be heard by calling (800) 642-1687 (U.S.) or (706) 645-9291 (International), access code 9772986, from 3:00 p.m. Eastern time on April 30, 2003, through 3:00 p.m. Eastern time on May 14, 2003. During this period, an on-demand On-Demand refers to a service or feature which addresses the user's need for instant gratification and immediacy of use. In most cases the value proposition for an on-demand service is wrapped up in the fact that the user or consumer of the service avoids a significant up-front webcast replay of the call will also be available from the Investor Information section of our website at www.ardenrealty.com or at www.companyboardroom.com. Financial schedules follow. A detailed analysis of the quarter's results can be obtained by viewing the Supplemental Operating and Financial Data available in the Investor Information section (Financial Reports) of our website at www.ardenrealty.com, or by calling Rick Davis
Arden Realty is a self-administered, self-managed REIT REIT See: Real Estate Investment Trust REIT See real estate investment trust (REIT). which owns, manages, leases, develops, renovates and acquires commercial office properties located in Southern California Southern California, also colloquially known as SoCal, is the southern portion of the U.S. state of California. Centered on the cities of Los Angeles and San Diego, Southern California is home to nearly 24 million people and is the nation's second most populated region, . As of March 31, 2003, the Company's portfolio contained 136 properties comprising 222 buildings and approximately 19.3 million rentable square feet, including a development property with approximately 283,000 rentable square feet under lease-up. Statements made in this press release or during the conference call which are not historical may contain forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. within the meaning of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. Although Arden Realty believes the expectations reflected in any forward-looking statements are based on reasonable assumptions, these statements are subject to various risks and uncertainties that may prevent the Company's expectations from being achieved. Factors that could cause actual results to differ materially from the Company's expectations include general and Southern California-specific real estate and economic conditions, competition within the industry, the availability and cost of capital for future investments and other risks detailed from time to time in the Company's filings with the Securities and Exchange Commission, including the Company's quarterly reports on Form 10-Q Form 10-Q See 10-Q. and annual reports on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. .
ARDEN REALTY, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands)
March 31, Dec. 31,
2003 2002
------------ -----------
(unaudited)
Assets
Investment in real estate:
Commercial properties $2,971,047 $2,960,583
Less: accumulated depreciation and
amortization (403,521) (381,557)
------------ -----------
2,567,526 2,579,026
Properties under development 66,915 65,296
Land available for development 23,765 23,731
Properties held for disposition, net 40,756 73,571
------------ -----------
Net investment in real estate 2,698,962 2,741,624
Cash and cash equivalents 15,428 4,063
Restricted cash 23,588 20,498
Rent and other receivables 3,559 2,917
Deferred rent 43,764 43,646
Prepaid financing costs, expenses and other
assets, net of amortization 20,305 19,661
------------ -----------
Total assets $2,805,606 $2,832,409
============ ===========
Liabilities and Stockholders' Equity
Mortgage loans payable $569,905 $570,654
Unsecured lines of credit 195,587 208,587
Unsecured term loan 125,000 125,000
Unsecured senior notes, net of discount 498,159 498,063
Accounts payable and accrued expenses 60,082 55,705
Security deposits 20,517 20,645
Dividends payable 31,849 31,807
------------ -----------
Total liabilities 1,501,099 1,510,461
Minority interest 74,124 74,571
Stockholders' equity:
Common stock 632 631
Additional paid-in capital 1,246,081 1,260,773
Deferred compensation (12,465) (11,259)
Accumulated other comprehensive loss (3,865) (2,768)
------------ -----------
Total stockholders' equity 1,230,383 1,247,377
------------ -----------
Total liabilities and stockholders' equity $2,805,606 $2,832,409
============ ===========
ARDEN REALTY, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
For the Three
Months
Ended March 31,
-------------------
2003 2002
--------- ---------
(unaudited)
Revenue:
Revenues from rental operations:
Scheduled cash rents $90,226 $85,042
Straight-line rents 611 1,595
Tenant reimbursements 7,035 6,885
Parking, net of expenses 5,119 4,964
Other rental operations 1,285 1,215
--------- ---------
104,276 99,701
Interest and other income 132 540
--------- ---------
Total revenue 104,408 100,241
--------- ---------
Expenses:
Property expenses:
Repairs and maintenance 10,421 9,128
Utilities 8,033 7,575
Real estate taxes 7,508 7,201
Insurance 2,125 1,614
Ground rent 42 68
Property administrative 4,138 3,697
--------- ---------
Total property expenses 32,267 29,283
General and administrative 3,652 2,960
Interest 23,035 21,397
Depreciation and amortization 28,961 25,580
--------- ---------
Income from continuing operations before gain on
sale of operating properties and minority interest 16,493 21,021
Gain on sale of operating properties -- 1,192
--------- ---------
Income from continuing operations before minority
interest 16,493 22,213
Minority interest (1,486) (1,655)
--------- ---------
Income from continuing operations 15,007 20,558
Discontinued operations, net of minority interest 1,070 795
Loss on sale of discontinued properties (639) --
--------- ---------
Net income $15,438 $21,353
========= =========
Net income per share:
Basic $0.24 $0.33
========= =========
Diluted $0.24 $0.33
========= =========
Weighted average common shares:
Basic 63,040 64,405
========= =========
Diluted 63,126 64,683
========= =========
ARDEN REALTY, INC.
CALCULATION OF FUNDS FROM OPERATIONS
AND FUNDS AVAILABLE FOR DISTRIBUTION
(in thousands, except per share amounts)
(unaudited)
For the Three Months
Ended March 31,
--------------------
2003 2002
---------- ---------
Funds From Operations:(1)
Net Income $15,438 $21,353
Plus -
Depreciation and minority interest from
discontinued operations 673 825
Loss on sale of discontinued properties 639 --
Depreciation and amortization of
real estate assets 28,961 25,580
Minority interest 1,486 1,655
Less -
Gain on sale of operating properties -- (1,192)
Income allocated to Preferred Operating
Partnership Units (1,078) (1,078)
---------- ---------
Funds From Operations(2) $46,119 $47,143
========== =========
Funds Available for Distribution:(3)
Funds From Operations $46,119 $47,143
Plus -
Non-cash compensation expense 389 245
Amortization of prepaid financing costs 946 937
Less -
Straight-line rent (613) (1,650)
Recurring capital expenditures, second-
generation tenant improvements and leasing
commissions (10,782) (4,994)
---------- ---------
Funds Available for Distribution $36,059 $41,681
========== =========
Per share:
Funds From Operations - Diluted $0.71 $0.71
========== =========
Funds Available for Distribution - Diluted $0.56 $0.63
========== =========
Dividends declared $0.505 $0.505
========== =========
Weighted average shares and Operating
Partnership Units outstanding - Diluted 64,843 66,488
========== =========
(1) We believe that funds from operations, or FFO, is a useful
supplemental measure of our operating performance. We compute FFO
in accordance with standards established by the White Paper on FFO
approved by the Board of Governors of the National Association of
Real Estate Investment Trusts, or NAREIT, in April 2002. The White
Paper defines FFO as net income or loss computed in accordance
with generally accepted accounting principles, or GAAP, excluding
extraordinary items, as defined by GAAP, and gains and losses from
sales of depreciable operating property plus real estate-related
depreciation and amortization and after adjustments for
unconsolidated partnerships and joint ventures.
We believe that FFO, by excluding depreciation costs, the gains or
losses from the sale of operating real estate properties and
extraordinary items as defined by GAAP, provides an additional
perspective on our operating results. However, because these
excluded items have real economic effect, FFO is a limited measure
of performance.
FFO captures trends in occupancy rates, rental rates and operating
costs. FFO excludes depreciation and amortization costs and it
does not capture the changes in value in our properties that
result from use or changes in market conditions or the level of
capital expenditures and leasing costs necessary to maintain the
operating performance of our properties, all of which are
significant economic costs. Therefore, its ability to measure
performance is limited.
Because FFO excludes significant economic components of net income
determined in accordance with GAAP, FFO should be used as an
adjunct to net income and not as an alternative to net income. FFO
should also not be used as an indicator of our financial
performance, or as a substitute for cash flow from operating
activities determined in accordance with GAAP or as a measure of
our liquidity.
FFO is used by investors to compare our performance with other
REITs. Other REITs may use different methodologies for calculating
FFO and, accordingly, our FFO may not be comparable to other
REITs.
(2) Includes $389,000 and $245,000 in non-cash compensation expense
for the three months ended March 31, 2003, and March 31, 2002,
respectively.
(3) Consists of FFO excluding non-cash compensation expense,
amortization of prepaid financing costs, straight-line rents and
less costs incurred for recurring capital expenditures, second-
generation tenant improvements and leasing commissions.
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