Arden Realty, Inc. Reports Second Quarter 2005 FFO of $0.62 Per Share.LOS ANGELES Los Angeles (lôs ăn`jələs, lŏs, ăn`jəlēz'), city (1990 pop. 3,485,398), seat of Los Angeles co., S Calif.; inc. 1850. -- 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 LOS Length of stay, see there 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 second quarter of 2005 of $42.3 million or $0.62 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 $40.9 million or $0.61 per share on a fully diluted basis for the second quarter of 2004. Revenues from rental RENTAL. A roll or list of the rents of an estate containing the description of the lands let, the names of the tenants, and other particulars connected with such estate. This is the same as rent roll, from which it is said to be corrupted. operations for the properties included in continuing operations continuing operations Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the for the second quarter of 2005 were $109.7 million, compared with $96.3 million for the second quarter of 2004. Net income for the second quarter of 2005 was $10.4 million or $0.16 per share on a fully diluted basis, compared with $9.1 million or $0.14 per share on a fully diluted basis for the second quarter of 2004. At the end of the second quarter of 2005, portfolio occupancy Gaining or having physical possession of real property subject to, or in the absence of, legal right or title. In a fire insurance policy, for example, the term occupancy was 90.5% and 92.2% leased, compared to 89.6% occupied oc·cu·py tr.v. oc·cu·pied, oc·cu·py·ing, oc·cu·pies 1. To fill up (time or space): a lecture that occupied three hours. 2. To dwell or reside in. 3. and 91.5% leased at the end of the second quarter of 2004. Excluding the six properties currently held for disposition Act of disposing; transferring to the care or possession of another. The parting with, alienation of, or giving up of property. The final settlement of a matter and, with reference to decisions announced by a court, a judge's ruling is commonly referred to as disposition, regardless of , the portfolio was 90.8% occupied and 92.5% leased at the end of the second quarter of 2005. A quarterly 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. on June June: see month. 10, 2005 for holders of record as of June 30, 2005. Total debt at June 30, 2005 was approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $1.64 billion, representing approximately 39.9% of total market capitalization Total Market Capitalization The total market value of all of a firm's outstanding securities. and 48.6% of gross asset value. Arden Realty will host a conference call to discuss second quarter 2005 operating results on August 4, 2005, 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 7665508, from 3:00 p.m. Eastern time on August 4, 2005 through 3:00 p.m. Eastern time on August 18, 2005. 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, including a reconciliation of net income to FFO, 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 Richard Davis
Arden Realty is a self-administered, self-managed real estate investment trust that 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 June 30, 2005, the Company's portfolio contained 121 properties comprised of 198 buildings and approximately 19.2 million rentable square feet, including six properties comprised of eight buildings currently held for disposition. For more information on the Company, visit the Arden website at www.ardenrealty.com. This press release, including the documents incorporated herein by reference, contains 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 Section 27A of the Securities Act and Section 21E of the Exchange Act pertaining per·tain intr.v. per·tained, per·tain·ing, per·tains 1. To have reference; relate: evidence that pertains to the accident. 2. to, among other things, our future results of operations, capital resources, portfolio performance, cash available for distribution, acquisitions, lease renewals, property development, property renovation, capital requirements Capital requirements Financing required for the operation of a business, composed of long-term and working capital plus fixed assets. , funds from operations, anticipated market and demographic See demographics. conditions and general business, industry and economic conditions applicable to us. Forward-looking statements can be identified by the use of words such as "may," "will," "should," "expect," "anticipate," "estimate," "continue" or comparable terminology The terminology used in the computer and telecommunications field adds tremendous confusion not only for the lay person, but for the technicians themselves. What many do not realize is that terms are made up by anybody and everybody in a nonchalant, casual manner without any regard or . Although we believe the expectations reflected in any forward-looking statements are based on reasonable assumptions, we can give no assurance that our expectations will be attained at·tain v. at·tained, at·tain·ing, at·tains v.tr. 1. To gain as an objective; achieve: attain a diploma by hard work. 2. . Forward-looking statements are inherently subject to certain risks, trends and uncertainties, many of which we cannot predict with accuracy and some of which we might not even anticipate. Future events and actual results, financial and otherwise, may differ materially from the results discussed in the forward-looking statements. Factors that could cause actual results to differ materially from our expectations include the availability and cost of capital for future investments, our ability to lease or re-lease re-lease tr.v. re-leased, re-leas·ing, re-leas·es To lease again: re-leased the car. space at current or anticipated rents, changes in the supply of and demand for our properties, changes in interest rate levels, risks associated with the development, acquisition or disposition of properties, competition within the industry, real estate and market conditions, and other risks detailed from time to time in our SEC filings. The risks included here are not exhaustive, and additional factors could adversely affect our business and financial performance, including risks and factors included in other sections of this press release. In addition, we discussed a number of material risks in our annual report 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. for the year ended December December: see month. 31, 2004. Those risks continue to be relevant to our performance and financial condition. We also operate in a very competitive and rapidly changing environment. New risk factors emerge from time to time and it is not possible for management to predict all such risk factors, nor can it assess the impact of all such risk factors on our company's business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. Given these risks and uncertainties, investors should not place undue reliance on forward-looking statements as a prediction "Prediction is very difficult, especially if it's about the future." - Niels Bohr A prediction is a statement or claim that a particular event will occur in the future in more certain terms than a forecast. of actual results. In addition, we expressly disclaim dis·claim v. dis·claimed, dis·claim·ing, dis·claims v.tr. 1. To deny or renounce any claim to or connection with; disown. 2. To deny the validity of; repudiate. 3. any responsibility to update forward-looking statements, whether as a result of new information, future events or otherwise. Accordingly, investors should use caution in relying on past forward-looking statements, which are based on results and trends at the time they were made, to anticipate future results or trends.
ARDEN REALTY, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands)
June 30, December 31,
2005 2004
----------- -----------
(unaudited)
Assets
Investment in real estate:
Commercial properties $3,254,984 $2,876,989
Less: accumulated depreciation and
amortization (514,885) (468,716)
----------- -----------
2,740,099 2,408,273
Properties under renovation -- 16,295
Land available for development 23,795 23,795
Properties held for disposition, net 85,434 103,618
----------- -----------
Net investment in real estate 2,849,328 2,551,981
Cash and cash equivalents 12,934 13,040
Restricted cash 13,449 14,788
Rent and other receivables 7,657 5,953
Deferred rent 40,626 42,886
Prepaid financing costs, expenses and other
assets, net 17,187 31,349
----------- -----------
Total assets $2,941,181 $2,659,997
=========== ===========
Liabilities and Stockholders' Equity
Mortgage loans payable $ 424,910 $ 371,548
Mortgage loans payable - properties held for
disposition 3,845 11,091
Unsecured lines of credit 296,000 121,500
Unsecured term loan 125,000 125,000
Unsecured senior notes, net of discount 794,161 696,945
Accounts payable and accrued expenses 53,666 58,215
Security deposits 26,209 25,498
Dividends payable 33,844 33,494
----------- -----------
Total liabilities 1,757,635 1,443,291
Minority interest 20,946 20,414
Stockholders' Equity
Common stock 670 664
Additional paid-in capital 1,180,112 1,212,508
Deferred compensation (11,169) (12,830)
Accumulated other comprehensive loss (7,013) (4,050)
----------- -----------
Total stockholders' equity 1,162,600 1,196,292
----------- -----------
Total liabilities and stockholders'
equity $2,941,181 $2,659,997
=========== ===========
Note: Prior period balance sheets have been reclassified to conform to
the current period presentation for the properties sold or
classified as "held for disposition" as of June 30, 2005.
ARDEN REALTY, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
For the Three For the Six
Months Ended Months Ended
June 30, June 30,
------------------ -------------------
2005 2004 2005 2004
--------- -------- -------- ---------
(unaudited) (unaudited)
Revenue
Revenues from rental
operations:
Scheduled cash rents $ 96,079 $83,384 $185,401 $166,059
Straight-line rents 973 468 1,678 1,400
Tenant reimbursements 4,371 4,341 9,462 8,665
Parking, net of expenses 6,740 5,891 12,689 11,356
Other rental operations 1,565 2,212 3,759 4,238
--------- -------- --------- ---------
Total revenue 109,728 96,296 212,989 191,718
Expenses
Property expenses:
Repairs and maintenance 12,694 10,496 24,650 20,794
Utilities 8,076 7,350 15,568 14,214
Real estate taxes 8,660 7,314 16,762 14,761
Insurance 1,845 1,788 3,576 3,635
Ground rent 334 207 637 332
Property administrative 5,336 3,997 9,818 8,404
--------- -------- --------- ---------
Total property expenses 36,945 31,152 71,011 62,140
General and administrative
expense 7,560 4,665 15,805 9,149
Interest expense 24,913 20,931 47,839 43,989
Depreciation and amortization 35,880 28,617 66,893 56,043
Interest and other loss
(income) 893 435 1,144 (330)
Impairment on investment in
securities -- 2,700 -- 2,700
Minority interest 89 1,245 260 2,556
--------- -------- --------- ---------
Income from continuing
operations 3,448 6,551 10,037 15,471
Discontinued operations, net
of minority interest 2,682 2,176 3,634 5,688
Gain on sale of discontinued
properties 4,319 400 6,376 6,829
Loss from debt defeasance
related to sale of
discontinued property -- -- (557) --
--------- -------- --------- ---------
Net income $ 10,449 $ 9,127 $ 19,490 $ 27,988
========= ======== ========= =========
Net income per share:
Basic $ 0.16 $ 0.14 $ 0.29 $ 0.43
========= ======== ========= =========
Diluted $ 0.16 0.14 $ 0.29 $ 0.43
========= ======== ========= =========
Weighted average common shares:
Basic 66,587 65,464 66,423 65,139
========= ======== ========= =========
Diluted 66,923 65,759 66,754 65,496
========= ======== ========= =========
Note: Operating results in prior periods have been reclassified to
conform to the current period presentation for the properties
sold or classified as "held for disposition" as of June 30,
2005. The operating results for properties sold or classified as
"held for disposition" as of June 30, 2005 are classified as
"discontinued operations" for all periods presented.
ARDEN REALTY, INC.
RECONCILIATION OF NET INCOME TO FUNDS FROM OPERATIONS
(in thousands, except per share amounts)
(unaudited)
For the Three For the Six
Months Ended Months Ended
June 30, June 30,
----------------- -----------------
2005 2004 2005 2004
-------- -------- ------- --------
Funds From Operations:(1)
Net Income $10,449 $ 9,127 $19,490 $27,988
Plus -
Depreciation and minority
interest from discontinued
operations 191 3,434 1,489 6,597
Depreciation and amortization 35,880 28,617 66,893 56,043
Minority interest 89 1,245 260 2,556
Less -
Gain on sale of discontinued
properties 4,319 400 6,376 6,829
Income allocated to Preferred
Operating Partnership Units -- 1,078 -- 2,156
-------- -------- -------- --------
Funds From Operations:(2) $42,290 $40,945 $81,756 $84,199
======== ======== ======== ========
Per share:
Funds from Operations - Diluted $ 0.62 $ 0.61 $ 1.19 $ 1.25
======== ======== ======== ========
Dividends declared $ 0.505 $ 0.505 $ 1.01 $ 1.01
======== ======== ======== ========
Weighted average shares and
Operating Partnership Units
outstanding - Diluted 68,638 67,430 68,473 67,173
======== ======== ======== ========
(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 approximately $1.7 million and $0.8 million in
non-cash compensation expense for the three months ended June
30, 2005 and 2004, respectively, and approximately $2.2
million and $1.5 million in non-cash compensation expense for
the six months ended June 30, 2005 and 2004, respectively.
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