Bedford Property Investors Announces Third Quarter 2003 Results.Business Editors/Real Estate Writers 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)--Oct. 20, 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 its financial results for the third quarter ended September September: see month. 30, 2003. 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 $0.78, an increase of 3% when compared with the same period in 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 was $0.41, a decrease of $0.19 or 32% when compared with the same period in 2002. Financial Results FFO for the third quarter of 2003 of $12,694,000 was essentially flat when compared to $12,662,000 for the same period in 2002. FFO for the first nine months of 2003 was $37,572,000 or $2.29 per share compared to $37,569,000 or $2.26 per share for the same period in 2002. This represents an increase of 1% in FFO per share. FFO is a non-GAAP financial measurement used by real estate investment trusts to measure and compare operating performance. FFO generally is defined by the National Association of Real Estate Investment Trusts as net income (loss) (computed in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with accounting principles generally accepted in the United States of America UNITED STATES OF AMERICA. The name of this country. The United States, now thirty-one in number, are Alabama, Arkansas, Connecticut, Delaware, Florida, Georgia, Illinois, Indiana, Iowa, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Mississippi, Missouri, New Hampshire, ), excluding extraordinary items such as gains (losses) from debt restructurings Debt Restructuring A method used by companies with outstanding debt obligations to alter the terms of the debt agreements in order to achieve some advantage. Notes: and sales of property, plus depreciation and amortization of assets related to real estate activities, and after adjustments for unconsolidated partnerships and joint ventures. A reconciliation of FFO to net income, which is the most directly comparable GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). measure, is included in the financial data accompanying this press release. Excluding the gain on sale of operating properties, net income per 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. share was $0.41 for the third quarter of 2003, a decrease of $0.09 or 18% over the same period in 2002. Excluding the gain on sale of operating properties, net income per diluted share was $1.32 for the first nine months of 2003, a decrease of $0.18 or 12% over the same period in 2002. In addition, net income in 2003 reflects the following items: -- Effective July July: see month. 1, 2002, we hired Bedford Acquisitions Inc.'s personnel. This partially contributed to the increase in general and administrative expenses of $799,000 for the nine months ended September 30, 2003. -- Beginning January January: see month. 1, 2003, we adopted SFAS SFAS Statement of Financial Accounting Standards SFAS Special Forces Assessment and Selection SFAS Student Financial Aid Services SFAS Sport Fishing Association of Singapore SFAS Safety Features Actuation System SFAS Statewide Fixed Assets System 148 on a modified prospective basis, expensing the fair value of all options granted subsequent to December December: see month. 15, 1994 that remained unvested at January 1, 2003. The impact of adopting SFAS 148 was an increase in compensation expense of $49,000 and $146,000 for the three and nine months ended September 30, 2003, respectively. Under the modified prospective basis, prior quarters are not restated. -- The adoption of SFAS 141, which requires the purchase price allocation The apportionment or designation of an item for a specific purpose or to a particular place. In the law of trusts, the allocation of cash dividends earned by a stock that makes up the principal of a trust for a beneficiary usually means that the dividends will be treated as and amortization of the origination Origination The process through which a mortgage lender creates a mortgage secured by some amount of the mortgagor's real property. Notes: Also known as loan origination, everyone must go through the origination process when securing a mortgage for a piece of real value and fair market value of acquired leases associated with properties acquired after July 1, 2001, decreased revenue by $56,000 and $164,000 for the three months and nine months ended September 30, 2003, respectively. We had no acquisitions from July 2001 through June June: see month. 2002. We did not allocate To reserve a resource such as memory or disk. See memory allocation. any purchase price to the fair market or origination value of acquired leases until the fourth quarter 2002. Therefore, net income was not impacted by SFAS 141 in the first nine months of 2002. Property Operations As of September 30, 2003, our operating portfolio occupancy was 94%, a decrease of one percentage point from June 30, 2003. During the third quarter of 2003, we renewed and released 376,872 square feet, or 78%, of the 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. footage. The average change in rental rates (on a cash basis) in these new leases was a decrease of 28.5%. This decrease was primarily attributable to a 49% decrease in the average rental rate of three renewals and one new lease, totaling 128,602 square feet, in the Silicon Valley. If these four transactions were removed, the average change in rental rates (on a cash basis) would have been a decrease of 9%. Property Disposition and Acquisition In August 2003, we acquired 250,164 square feet of real estate, which consisted of a 151,830 square-foot bulk and R & D project in Tempe, Arizona Tempe (pronounced /tɛm.'piː/) is a city in Maricopa County, Arizona, USA, with a population of 169,712 according to 2006 Census Bureau estimates. for $7,805,000 and a 98,334 square-foot service center flex project in Las Vegas Las Vegas (läs vā`gəs), city (1990 pop. 258,295), seat of Clark co., S Nev.; inc. 1911. It is the largest city in Nevada and the center of one of the fastest-growing urban areas in the United States. , 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). for $10,955,000. These properties are expected to generate an average cash yield in the first year of 9.1%. No sales were completed during the third quarter of 2003. Capital In August 2003, we completed a private placement of $40,250,000 of our 8.75% Series A Cumulative Redeemable Redeemable Eligible for redemption under the terms of an indenture. Preferred Stock Stock shares that have preferential rights to dividends or to amounts distributable on liquidation, or to both, ahead of common shareholders. Preferred stock is given preference over common stock. Holders of preferred stock receive dividends at a fixed annual rate. . Proceeds from the offering have been and will be used to finance acquisitions or development of properties and to 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. our common stock. On October October: see month. 1, 2003, our board of directors declared an initial dividend totaling $685,000, which was paid on October 15, 2003 to the holders of the preferred stock. This amount will be reflected in our fourth quarter 2003 financial statements. Stock Repurchase Stock repurchase A firm's repurchase of outstanding shares of its common stock. During the three and nine months ended September 30, 2003, we repurchased 280,100 and 387,029 shares of our common stock, respectively. The average cost of the shares repurchased during these periods was $25.86 per share. Since the inception of the repurchase program in November 1998, we have repurchased a total of 7,921,551 shares of our common stock at an average cost of $18.63 per share, which represents 35% of the shares of common stock outstanding at November 1998. In January 2002, our board of directors increased the maximum size of the 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 own and manage approximately 7.4 million square feet of commercial space located 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). , 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). , Washington, Colorado and Nevada. As of September 30, 2003, we had 473 tenants. We are 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 Pacific Exchange under the symbol "BED" and our website is www.bedfordproperty.com. Investors, analysts and other interested parties are invited to join our quarterly conference call on Tuesday, October 21, 2003 at 8:00 a.m. PDT PDT abbr. Pacific Daylight Time PDT Pacific Daylight Time PDT n abbr (US) (= Pacific Daylight Time) → hora de verano del Pacífico PDT . 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 #266358). 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, including, among other things, our current expectations concerning the first year cash yield from the newly acquired property. 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 our actual results to differ from management's estimates and expectations are contained in our filings with the Securities and Exchange Commission, including our 2002 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. , our most recent Quarterly Report on Form 10-Q Form 10-Q See 10-Q. and our Registration Statement on Form S-3 filed with the Commission on September 18, 2003. We do not undertake to update forward-looking information contained herein or elsewhere to reflect actual results, changes in assumptions or changes in other factors affecting such forward-looking information.
BEDFORD PROPERTY INVESTORS, INC.
BALANCE SHEETS
AS OF SEPTEMBER 30, 2003 AND DECEMBER 31, 2002
(Unaudited; in thousands, except share and per share amounts)
September 30, December 31,
2003 2002
------------- -------------
Assets:
Real estate investments:
Industrial buildings $395,185 $372,105
Office buildings 340,138 336,472
Properties under development - 2,864
Land held for development 13,936 13,747
------------- -------------
749,259 725,188
Less accumulated depreciation 76,533 62,562
------------- -------------
Total real estate investments 672,726 662,626
Cash and cash equivalents 4,762 3,727
Other assets 28,081 27,978
------------- -------------
$705,569 $694,331
============= =============
Liabilities and Stockholders' Equity:
Bank loans payable $ 82,195 $124,681
Mortgage loans payable 285,342 259,496
Accounts payable and accrued expenses 8,386 10,173
Dividends payable 8,305 8,222
Other liabilities 14,430 15,702
------------- -------------
Total liabilities 398,658 418,274
------------- -------------
Stockholders' equity:
Preferred stock, par value $0.01 per
share; authorized 49,195,000 shares;
issued none - -
Series A 8.75% Cumulative Redeemable
Preferred stock, par value $0.01 per
share; authorized and issued 805,000
shares in 2003 and none in 2002;
stated liquidation preference of
$40,250 39,042 -
Common stock, par value $0.02 per share;
authorized 50,000,000 shares;
issued and outstanding 16,284,725
shares in 2003 and 16,443,664 shares
in 2002 326 329
Additional paid-in capital 289,953 293,864
Deferred stock compensation (5,735) (4,622)
Accumulated dividends in excess of net
income (16,689) (13,514)
Accumulated other comprehensive income 14 -
------------- -------------
Total stockholders' equity 306,911 276,057
------------- -------------
$705,569 $694,331
============= =============
BEDFORD PROPERTY INVESTORS, INC.
STATEMENTS OF INCOME
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2003 AND 2002
(Unaudited; in thousands, except share and per share amounts)
Three Months Nine Months
2003 2002 2003 2002
------------ ------------ ------------ ------------
Property operations:
Rental income $26,396 $25,655 $79,857 $73,782
Rental expenses:
Operating
expenses 4,664 4,338 14,107 12,443
Real estate
taxes 2,441 2,382 7,810 6,727
Depreciation
and
amortization 5,975 4,403 15,879 12,231
------------ ------------ ------------ ------------
Income from
property
operations 13,316 14,532 42,061 42,381
General and
administrative
expenses (1,373) (1,478) (4,308) (3,509)
Interest income 22 66 94 151
Interest expense (5,246) (5,084) (16,154) (14,879)
------------ ------------ ------------ ------------
Income from
continuing
operations 6,719 8,036 21,693 24,144
------------ ------------ ------------ ------------
Discontinued operations:
Income from
operating
properties sold,
net - 223 - 749
Gain on sale of
operating
properties - 1,777 - 3,575
------------ ------------ ------------ ------------
Income from
discontinued
operations - 2,000 - 4,324
------------ ------------ ------------ ------------
Net income 6,719 10,036 21,693 28,468
Preferred dividends
-- Series A - - - -
------------ ------------ ------------ ------------
Net income
available to
common
shareholders $ 6,719 $10,036 $21,693 $28,468
============ ============ ============ ============
Income per common share -- basic:
Income from
continuing
operations $ 0.42 $ 0.49 $ 1.35 $ 1.48
Income from
discontinued
operations - 0.12 - 0.27
------------ ------------ ------------ ------------
Net income
available to
common
shareholders $ 0.42 $ 0.61 $ 1.35 $ 1.75
============ ============ ============ ============
Weighted average
number of shares
-- basic 16,007,170 16,327,406 16,070,459 16,258,442
============ ============ ============ ============
Income per common share -- diluted:
Income from
continuing
operations $ 0.41 $ 0.48 $ 1.32 $ 1.45
Income from
discontinued
operations - 0.12 - 0.26
------------ ------------ ------------ ------------
Net income
available to
common
shareholders $ 0.41 $ 0.60 $ 1.32 $ 1.71
============ ============ ============ ============
Weighted average
number of shares
-- diluted 16,298,297 16,626,201 16,386,088 16,624,449
============ ============ ============ ============
BEDFORD PROPERTY INVESTORS, INC.
RECONCILIATION OF NET INCOME AVAILABLE TO COMMON SHAREHOLDERS
TO FUNDS FROM OPERATIONS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2003 AND 2002
(Unaudited; in thousands, except share and per share amounts)
Three Months Nine Months
2003 2002 2003 2002
----------- ----------- ----------- -----------
Net income available to
common shareholders $ 6,719 $10,036 $21,693 $28,468
Adjustments:
Depreciation and
amortization:
Continuing
operations 5,975 4,403 15,879 12,231
Discontinued
operations - - - 445
Gain on sale of
operating
properties - (1,777) - (3,575)
----------- ----------- ----------- -----------
Funds from Operations
(FFO) (1) $12,694 $12,662 $37,572 $37,569
=========== =========== =========== ===========
FFO per share --
diluted $ 0.78 $ 0.76 $ 2.29 $ 2.26
=========== =========== =========== ===========
Weighted average number
of shares -- diluted 16,298,297 16,626,201 16,386,088 16,624,449
=========== =========== =========== ===========
(1) Our management considers FFO to be one measure of the performance
of an equity real estate investment trust (REIT). Presentation of
this information provides the reader with an additional measure to
compare the performance of REITs. FFO generally is defined by the
National Association of Real Estate Investment Trusts as net
income (loss) (computed in accordance with accounting principles
generally accepted in the United States of America), excluding
extraordinary items such as gains (losses) from debt
restructurings and sales of property, plus depreciation and
amortization of assets related to real estate activities, and
after adjustments for unconsolidated partnerships and joint
ventures. FFO as set forth in the table above has been computed in
accordance with this definition. FFO does not represent cash
generated by operating activities in accordance with accounting
principles generally accepted in the United States of America; it
is not necessarily indicative of cash available to fund cash needs
and should not be considered as an alternative to net income
(loss) as an indicator of our operating performance or as an
alternative to cash flow as a measure of liquidity. Further, FFO
as disclosed by other REITs may not be comparable to our
presentation.
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