Bedford Property Investors Announces Fourth Quarter 2002 Results.Business Editors LAFAYETTE Lafayette (lä'fēĕt`, lăf'ēĕt`). 1 City (1990 pop. 23,501), Contra Costa co., NW Calif., a residential suburb in the San Francisco–Oakland area; settled 1848, inc. 1968. , Calif.--(BUSINESS WIRE)--Feb. 10, 2003 Bedford Bedford, town, England Bedford, town (1991 pop. 75,632), county seat of Bedfordshire, central England, on the Ouse River. It is an important industrial center; diesel engines, pumps, turbines, agricultural machinery, electrical equipment, and transistors Property Investors, Inc. (NYSE NYSE See: New York Stock Exchange :BED) today announced financial results for the fourth quarter ended December December: see month. 31, 2002. Diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of (EPS (Encapsulated PostScript) A PostScript file format used to transfer a graphic image between applications and platforms. EPS files contain PostScript code as well as an optional preview image in TIFF, WMF, PICT or EPSI, the latter being an ASCII-only format. ) was $0.46, reflecting an increase of 7% when compared with EPS before gain on sale of $0.43 achieved for the fourth quarter of 2001. 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 ) per share was $0.76, reflecting an increase of 9% over the same period in 2001. Financial Results Net income for the fourth quarter of 2002 was $7,535,000 or $0.46 per share on a 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. Net income for the twelve months of 2002 was $36,003,000 or $2.17 per share on a diluted basis. This amount included a gain on the sale of operating properties of $3,575,000 or $0.22 per share. Excluding the gain on sale of operating properties, net income per diluted share was $1.95 for the twelve months of 2002, reflecting an increase of 14% over the same period in 2001. The calculation of the diluted weighted average number of shares in 2001 and the first quarter of 2002 includes partnership units that were fully redeemed re·deem tr.v. re·deemed, re·deem·ing, re·deems 1. To recover ownership of by paying a specified sum. 2. To pay off (a promissory note, for example). 3. in the first quarter of 2002, the dilutive effect Dilutive effect Result of a transaction that decreases earnings per common share (EPS). of stock options, and restricted stock grants. FFO for the fourth quarter of 2002 was $12,514,000 or $0.76 per share compared to $11,616,000 or $0.70 per share for the same period in 2001. This represents an increase of 9% in FFO per share. FFO for the twelve months of 2002 was $50,083,000 or $3.02 per share compared to $45,250,000 or $2.65 per share for the same period in 2001. This represents an increase of 14% in FFO per share. FFO is defined as net income, excluding extraordinary items and gains or losses from sales of property, plus depreciation and amortization of assets related to real estate. The growth in EPS and FFO per share for the twelve months of 2002 over the same period of 2001 is partially due to our repurchase re·pur·chase tr.v. re·pur·chased, re·pur·chas·ing, re·pur·chas·es To buy (something) again. n. The act of buying something that one previously sold or owned. Noun 1. of approximately 1.4 million shares of our common stock in 2001, lower interest expense as a result of reduced interest rates, and lower general and administrative expenses. Additionally, we acquired $86.6 million of operating properties in the third quarter of 2002 and sold $32.7 million of operating properties during 2002, which resulted in a net increase in income from property operations. Property Operations At December 31, 2002, our operating portfolio occupancy was 94%, an increase of one percentage point from the prior quarter, but down two percentage points from 96% at 2001 year end. Occupancy at our same-store operating properties, which consist of approximately 6.3 million rentable square feet or 89% of the square footage of our operating portfolio, was 95%. Same store net operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. decreased 2.4% on a GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). and cash basis due to a decrease in occupancy. During the quarter, we renewed re·new v. re·newed, re·new·ing, re·news v.tr. 1. To make new or as if new again; restore: renewed the antique chair. 2. or released 23 of 28 leases expiring ex·pire v. ex·pired, ex·pir·ing, ex·pires v.intr. 1. To come to an end; terminate: My membership in the club has expired. 2. , a total of 175,739 square feet, and 90 % of the expiring footage. The average change in rental rate in these new leases was a decrease of 13.7%. This decline was driven, as it was in the preceding quarter, by several transactions in which we reduced rent in return for extra term. These were primarily in Silicon Valley, and if they are extracted from the data, weighted average rental rates increased by 2.7% during the quarter. For the twelve months ended December 31, 2002, we renewed and released 88% of the expiring footage at a 7.2% decrease in weighted average rental rates. Removing the several transactions referred to above, the full-year rate of change in weighted average rental rates was an increase of 0.8%. Property Acquisitions and Dispositions No acquisitions or sales were completed during the fourth quarter of 2002. During the third quarter 2002, we purchased 544,426 square feet of operating properties and a 5.2 acre parcel of land for a total purchase price of approximately $87.5 million. The operating properties are expected to generate a cash yield averaging 9.7% for the first year. The acquisitions were funded with debt financings Debt Financing When a firm raises money for working capital or capital expenditures by selling bonds, bills, or notes to individual and/or institutional investors. In return for lending the money, the individuals or institutions become creditors and receive a promise to repay and proceeds from the sale of real estate assets. During 2002, we sold 364,356 square feet of operating properties in California California (kăl'ĭfôr`nyə), most populous state in the United States, located in the Far West; bordered by Oregon (N), Nevada and, across the Colorado River, Arizona (E), Mexico (S), and the Pacific Ocean (W). and Arizona Arizona (âr'əzō`nə), state in the southwestern United States. It is bordered by Utah (N), New Mexico (E), Mexico (S), and, across the Colorado R., Nevada and California (W). for approximately $32.7 million and realized approximately $3.6 million of gain on the sales. Financing In October October: see month. 2002, we obtained a $22,600,000 new mortgage from Nationwide Life Insurance Company. The loan has a nine-year term and carries a fixed interest rate of 4.61% for the first three years, with resets in years three and six. At the time of each reset, we have the option to pay off the loan without penalty. Stock Repurchase Stock repurchase A firm's repurchase of outstanding shares of its common stock. From January January: see month. 1, 2002 through December 31, 2002, we repurchased 401,667 shares of our common stock at an average cost of $24.49 per share. Of these, 347,300 shares were repurchased in the fourth quarter of 2002 at an average cost of $24.55 per share. Since the inception of our repurchase program in November November: see month. 1998, we have repurchased a total of 7,534,522 shares at an average cost of $18.25 per share, which represents 33% of the shares outstanding at November 1998. In January 2002, our board of directors increased the maximum size of our share repurchase Share Repurchase A program by which a company buys back its own shares from the marketplace, reducing the number of outstanding shares. This is usually an indication that the company's management thinks the shares are undervalued. program from 8 million to 10 million shares. Company Information We are a self-administered equity real estate investment trust that acquires, develops, owns and operates suburban office and industrial properties. Currently, we wholly own and manage approximately 7.2 million square feet of commercial space located in California, Arizona, Washington Washington, town, England Washington, town (1991 pop. 48,856), Sunderland metropolitan district, NE England. Washington was designated one of the new towns in 1964 to alleviate overpopulation in the Tyneside-Wearside area. , Colorado Colorado, state, United States Colorado (kŏlərăd`ə, –răd`ō, –rä`dō), state, W central United States, one of the Rocky Mt. states. and Nevada Nevada (nəvăd`ə, –vä–), far western state of the United States. It is bordered by Utah (E), Arizona (SE), California (SW, W), and Oregon and Idaho (N). . On December 31, 2002 we had 435 tenants. Our company is traded on the New York Stock Exchange New York Stock Exchange (NYSE) World's largest marketplace for securities. The exchange began as an informal meeting of 24 men in 1792 on what is now Wall Street in New York City. and the Pacific Exchange under the symbol "BED" and our website is www.bedfordproperty.com. We are in the process of drafting our 2002 annual report which will be posted on our website by March 31, 2003. Investors, analysts and other interested parties are invited to join our quarterly conference call on Tuesday Tuesday: see week. , February February: see month. 11, 2003 at 8:00 a.m. PST PST Paroxysmal supraventricular tachycardia, see there . To participate, callers may dial 800/283-1693 five minutes beforehand. Investors also have the opportunity to listen to the conference call live on the Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the , at our website at www.bedfordproperty.com, under Investor Relations Investor relations The process by which the corporation communicates with its investors. -- Investor Overview, by clicking on the webcast icon. A replay of the call is available for one week at 888/266-2081 (Passcode #6376258). The Company's fourth quarter 2002 Supplemental Operating and Financial Data and 2003 Projected Operations will also be available on its website beginning on February 10, 2003. Please note: This press release 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 21E of the Securities Exchange Act of 1934 that represent our current expectations and beliefs. These forward-looking statements are subject to certain risks and uncertainties that could cause the actual results, performance or achievements to be materially different from those expressed, expected or implied by the forward-looking statements. The risks and uncertainties that could cause actual results to differ from management's estimates and expectations are contained in our filings with the Securities and Exchange Commission, including our 2001 Annual Report on Form 10-K/A and our most recent Quarterly Report on Form 10-Q Form 10-Q See 10-Q. . We do not undertake to update forward-looking for·ward-look·ing adj. Concerned with or making provision for the future: forward-looking educators; a forward-looking corporate plan. Adj. 1. information contained herein or elsewhere to reflect actual results, changes in assumptions or changes in other factors affecting such forward-looking information.
-- Financial Tables Follow --
BEDFORD PROPERTY INVESTORS, INC.
BALANCE SHEETS
AS OF DECEMBER 31, 2002 AND 2001
(Unaudited; in thousands, except share and per share amounts)
2002 2001
--------- ---------
Assets:
Real estate investments:
Industrial buildings $372,105 $303,169
Office buildings 336,472 326,459
Operating properties held for sale - 11,036
Properties under development 2,864 -
Land held for development 13,747 13,398
--------- ---------
725,188 654,062
Less accumulated depreciation 62,562 48,984
--------- ---------
Total real estate investments 662,626 605,078
Cash and cash equivalents 3,727 5,512
Other assets 27,978 20,215
--------- ---------
$694,331 $630,805
========= =========
Liabilities and Stockholders' Equity:
Bank loans payable $124,681 $80,925
Mortgage loans payable 259,496 242,066
Accounts payable and accrued expenses 10,173 11,653
Dividends and distributions payable 8,222 7,962
Other liabilities 15,702 11,184
--------- ---------
Total liabilities 418,274 353,790
--------- ---------
Minority interest in consolidated partnership - 1,135
--------- ---------
Stockholders' equity:
Common stock, par value $0.02 per share;
authorized 50,000,000 shares;
issued and outstanding 16,443,664
shares in 2002 and 16,515,200 shares in 2001 329 330
Additional paid-in capital 289,242 292,731
Accumulated dividends in excess of net income (13,514) (16,871)
Accumulated other comprehensive loss - (310)
--------- ---------
Total stockholders' equity 276,057 275,880
--------- ---------
$694,331 $630,805
========= =========
BEDFORD PROPERTY INVESTORS, INC.
STATEMENTS OF INCOME
FOR THE THREE AND TWELVE MONTHS ENDED DECEMBER 31, 2002 AND 2001
(Unaudited; in thousands, except share and per share amounts)
Three Months Twelve Months
------------------------ -----------------------
2002 2001 2002 2001
------------ ----------- ----------- -----------
Property operations:
Rental income $25,951 $24,296 $99,740 $95,842
Rental expenses:
Operating
expenses 4,574 3,822 17,012 15,457
Real estate taxes 2,142 2,182 8,865 8,817
Depreciation and
amortization 4,979 4,357 17,209 15,688
------------ ----------- ----------- -----------
Income from property
operations 14,256 13,935 56,654 55,880
General and
administrative
expenses (1,108) (1,470) (4,616) (6,506)
Interest income 48 42 199 202
Interest expense (5,661) (5,263) (20,555) (21,470)
Other expense - (461) - (526)
------------ ----------- ----------- -----------
Income from continuing
operations before
gain on sales of real
estate investments,
minority interest,
and discontinued
operations 7,535 6,783 31,682 27,580
Gain on sales of real
estate investments,
net - 5,976 - 5,976
Minority interest - (34) - (142)
------------ ----------- ----------- -----------
Income from continuing
operations 7,535 12,725 31,682 33,414
------------ ----------- ----------- -----------
Discontinued
operations:
Income from operating
properties sold, net - 344 746 1,536
Gain on sale of
operating properties - - 3,575 -
------------ ----------- ----------- -----------
Income from
discontinued
operations - 344 4,321 1,536
------------ ----------- ----------- -----------
Net income $7,535 $13,069 $36,003 $34,950
============ =========== =========== ===========
Earnings per share --
basic:
----------------------
Income from
continuing
operations $0.47 $0.79 $1.95 $2.00
Income from
discontinued
operations - 0.02 0.27 0.09
------------ ----------- ----------- -----------
Net income per share
-- basic $0.47 $0.81 $2.22 $2.09
============ =========== =========== ===========
Weighted average
number of shares --
basic 16,188,139 16,152,340 16,240,722 16,747,498
============ =========== =========== ===========
Earnings per share --
diluted:
----------------------
Income from
continuing
operations $0.46 $0.77 $1.91 $1.97
Income from
discontinued
operations - 0.02 0.26 0.09
------------ ----------- ----------- -----------
Net income per share
-- diluted $0.46 $0.79 $2.17 $2.06
============ =========== =========== ===========
Weighted average
number of shares --
diluted 16,509,319 16,531,537 16,604,069 17,045,493
============ =========== =========== ===========
BEDFORD PROPERTY INVESTORS, INC.
FUNDS FROM OPERATIONS
FOR THE THREE AND TWELVE MONTHS ENDED DECEMBER 31, 2002 AND 2001
(Unaudited; in thousands, except share and per share amounts)
Three Months Twelve Months
----------------------- -----------------------
2002 2001 2002 2001
----------- ----------- ----------- -----------
Net income $7,535 $13,069 $36,003 $34,950
Adjustments:
Depreciation and
amortization:
Continuing operations 4,979 4,357 17,209 15,688
Discontinued
operations - 132 446 446
Minority interest - 34 - 142
Gain on sale of
operating properties - (5,976) (3,575) (5,976)
----------- ----------- ----------- -----------
Funds from Operations
(FFO) $12,514 $11,616 $50,083 $45,250
=========== =========== =========== ===========
FFO per share --
diluted $0.76 $0.70 $3.02 $2.65
=========== =========== =========== ===========
Weighted average
number of shares --
diluted 16,509,319 16,531,537 16,604,069 17,045,493
=========== =========== =========== ===========
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