Arden Realty, Inc. Reports Third Quarter 2005 FFO of $0.63 Per Share and Announces Sale Activities.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 third quarter of 2005 of $43.1 million or $0.63 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 $43.0 million or $0.64 per share on a fully diluted basis for the third 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 third quarter of 2005 were $114.6 million, compared with $99.6 million for the third quarter of 2004. Net income for the third quarter of 2005 was $41.6 million or $0.62 per share on a fully diluted basis, compared with $11.2 million or $0.17 per share on a fully diluted basis for the third quarter of 2004. Gains on sale of discontinued dis·con·tin·ue v. dis·con·tin·ued, dis·con·tin·u·ing, dis·con·tin·ues v.tr. 1. To stop doing or providing (something); end or abandon: properties were $33.9 million for the third quarter of 2005 or $0.50 per share on a fully diluted basis, compared with $0.9 million or $0.01 per share on a fully diluted basis for the third quarter of 2004. At the end of the third quarter of 2005, our portfolio was 91.3% 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 93.1% leased, compared to 91.1% occupied and 92.5% leased at the end of the third quarter of 2004. 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 September September: see month. 8, 2005 for holders of record as of September 30, 2005. Total debt at September 30, 2005 was approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $1.6 billion, representing approximately 36.1% of total market capitalization Total Market Capitalization The total market value of all of a firm's outstanding securities. and 48.3% of gross asset value. Arden Realty also announced the sale of the following properties for a total of approximately $55.8 million:
Property Submarket County Date of Sale Square
Feet
---------------- --------------- ------------- ------------- ---------
Irvine Corporate Greater Airport Orange County September 28,
Center 2005 127,600
Oceangate Tower Downtown Long Los Angeles September 28,
Beach County 2005 211,600
---------
339,200
=========
Including the sale of the two properties listed above, Arden has acquired approximately $349 million in office properties while selling approximately $149 million of non-core assets in 2005. Arden Realty will host a conference call to discuss third quarter 2005 operating results on October October: see month. 31, 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 888-843-8996 (U.S.) or 630-652-3044 (International), access code 5488537, from 3:00 p.m. Eastern time on October 31, 2005 through 3:00 p.m. Eastern time on November November: see month. 14, 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 September 30, 2005, our portfolio contained 116 properties comprised of 192 buildings and approximately 18.5 million net rentable square feet. For more information on our 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 of 1933, as amended a·mend v. a·mend·ed, a·mend·ing, a·mends v.tr. 1. To change for the better; improve: amended the earlier proposal so as to make it more comprehensive. 2. , and Section 21E of the Securities Exchange Act of 1934, as amended, 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 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 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)
September December
30, 2005 31, 2004
----------- -----------
(unaudited)
Assets
Investment in real estate:
Commercial properties $3,287,868 $2,876,989
Less: accumulated depreciation and
amortization (535,465) (468,716)
----------- -----------
2,752,403 2,408,273
Properties under renovation -- 16,295
Land available for development 24,355 23,795
Properties held for disposition, net -- 103,618
----------- -----------
Net investment in real estate 2,776,758 2,551,981
Cash and cash equivalents 12,465 13,040
Restricted cash 71,119 27,285
Rent and other receivables 6,609 5,953
Deferred rent 39,638 42,886
Prepaid financing costs, expenses and other
assets, net 22,349 18,852
----------- -----------
Total assets $2,928,938 $2,659,997
=========== ===========
Liabilities and Stockholders' Equity
Mortgage loans payable $ 422,114 $ 371,548
Mortgage loans payable - properties held for
disposition -- 11,091
Unsecured lines of credit 234,000 121,500
Unsecured loans 150,000 125,000
Unsecured senior notes, net of discount 794,417 696,945
Accounts payable and accrued expenses 68,776 58,215
Security deposits 25,411 25,498
Dividends payable 33,845 33,494
----------- -----------
Total liabilities 1,728,563 1,443,291
Minority interest 21,115 20,414
Stockholders' Equity
Common stock 670 664
Additional paid-in capital 1,188,709 1,212,508
Deferred compensation (10,240) (12,830)
Accumulated other comprehensive income
(loss) 121 (4,050)
----------- -----------
Total stockholders' equity 1,179,260 1,196,292
----------- -----------
Total liabilities and stockholders'
equity $2,928,938 $2,659,997
=========== ===========
Note: Prior period balance sheets have been reclassified to conform to
the current period presentation.
ARDEN REALTY, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
For the Three Months For the Nine Months
Ended September 30, Ended September 30,
------------------ -------------------
2005 2004 2005 2004
--------- -------- --------- ---------
(unaudited) (unaudited)
Revenue
Revenues from rental
operations:
Scheduled cash rents $ 97,642 $84,964 $283,043 $251,023
Straight-line rents 532 27 2,210 1,427
Tenant reimbursements 5,522 5,227 14,984 13,892
Parking, net of expenses 7,409 6,062 20,098 17,418
Other rental operations 3,494 3,281 7,253 7,519
--------- -------- --------- ---------
Total revenue 114,599 99,561 327,588 291,279
Expenses
Property expenses:
Repairs and maintenance 13,293 10,695 37,943 31,489
Utilities 10,936 9,254 26,504 23,468
Real estate taxes 8,335 7,277 25,097 22,038
Insurance 1,828 1,762 5,404 5,397
Ground rent 317 207 954 539
Property administrative 5,062 3,929 14,880 12,333
--------- -------- --------- ---------
Total property
expenses 39,771 33,124 110,782 95,264
General and administrative
expense 7,101 4,823 22,906 13,972
Interest expense 25,030 21,264 72,869 65,253
Depreciation and
amortization 34,331 29,414 101,224 85,457
Interest and other loss
(income) 289 179 1,433 (151)
Impairment on investment
in securities -- -- -- 2,700
Minority interest 201 2,398 (1) 461 4,954 (1)
--------- -------- --------- ---------
Income from continuing
operations 7,876 8,359 17,913 23,830
Discontinued operations,
net of minority interest 80 1,880 3,714 7,568
Gain on sale of
discontinued properties 33,923 937 40,299 7,766
Loss from debt defeasance
related to sales of
discontinued properties (278) -- (835) --
--------- -------- --------- ---------
Net income $ 41,601 $11,176 $ 61,091 $ 39,164
========= ======== ========= =========
Net income per share:
Basic $ 0.62 $ 0.17 $ 0.92 $ 0.60
========= ======== ========= =========
Diluted $ 0.62 0.17 $ 0.91 $ 0.60
========= ======== ========= =========
Weighted average common
shares:
Basic 66,784 65,485 66,545 65,141
========= ======== ========= =========
Diluted 67,222 65,892 66,921 65,511
========= ======== ========= =========
(1) Includes approximately $1.1 million of issuance costs expensed in
conjunction with the redemption of our Preferred Operating
Partnership Units on September 28, 2004.
Note: Operating results in prior periods have been reclassified to
conform to the current period presentation for the properties which
have been classified as "discontinued operations."
ARDEN REALTY, INC.
RECONCILIATION OF NET INCOME TO FUNDS FROM OPERATIONS
(in thousands, except per share amounts)
(unaudited)
For the Three Months For the Nine Months
Ended September 30, Ended September 30,
----------------- -------------------
2005 2004 2005 2004
-------- -------- --------- ---------
Funds From Operations:(1)
Net Income $41,601 $11,176 $ 61,091 $ 39,164
Plus -
Depreciation and minority
interest from
discontinued operations 910 3,094 2,399 9,691
Depreciation and
amortization 34,331 29,414 101,224 85,457
Minority interest 201 1,322 (2) 461 3,878 (2)
Less -
Gain on sale of
discontinued properties 33,923 937 40,299 7,766
Income allocated to
Preferred Operating
Partnership Units -- 1,078 (2) -- 3,234 (2)
-------- -------- --------- ---------
Funds From Operations:(3) $43,120 $42,991 $124,876 $127,190
======== ======== ========= =========
Per share:
Funds from Operations -
Diluted $ 0.63 $ 0.64 $ 1.82 $ 1.89
======== ======== ========= =========
Dividends declared $ 0.505 $ 0.505 $ 1.515 $ 1.515
======== ======== ========= =========
Weighted average shares and
Operating Partnership Units
outstanding - Diluted 68,927 67,564 68,636 67,188
======== ======== ========= =========
(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) Excludes approximately $1.1 million of issuance costs expensed in
conjunction with the redemption of our Preferred Operating
Partnership Units on September 28, 2004.
(3) Includes approximately $1.6 million and $0.8 million in non-cash
compensation expense for the three months ended September 30, 2005
and 2004, respectively, and approximately $3.8 million and $2.3
million in non-cash compensation expense for the nine months ended
September 30, 2005 and 2004, respectively.
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