Catellus Reports 56% Increase in Third Quarter 1998 Earnings Before Depreciation and Deferred Taxes.SAN FRANCISCO--(BUSINESS WIRE)--Oct. 27, 1998--Catellus Development Corp. (NYSE NYSE See: New York Stock Exchange :CDX CDX Companion Dog Excellent (AKC Obedience Title) CDX Cyber-Defense Exercise CDX Central Data Exchange CDX Community Development Exchange (UK community development organization) CDX Commercial Data Exchange ) today reported earnings before depreciation and deferred taxes (EBDDT) of $27.0 million for the third quarter of 1998 compared to $17.2 million for the same quarter in 1997. 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. per share basis, EBDDT for the quarter was $0.25 per share, a 56% increase over $0.16 per share in the third quarter of 1997. Net income applicable to common shareholders for the third quarter of 1998 was $11.4 million, or $0.10 per share on a diluted basis, versus $6.3 million, or $0.06 per share on a diluted basis, during the third quarter of 1997. For the nine months ended September September: see month. 30, 1998, EBDDT was $68.6 million versus $44.1 million in the same period in 1997. On a diluted per share basis, EBDDT was up 40% for the first nine months of 1998 at $0.63 per share versus $0.45 for the first nine months of 1997. Net income applicable to common shareholders for the first nine months of 1998 was $31.1 million, or $0.28 per share on a diluted basis, versus $15.7 million, or $0.16 per share on a diluted basis, during the same period in 1997. "We continue to be excited about our ability to generate strong earnings across all of our lines of business, especially in the areas of commercial and residential development," said Nelson C. Rising, president and chief executive officer. "During the third quarter, we started or contracted to start over 726,000 square feet of new build-to-suit, design-build Design-build (or design/build, and abbreviated D-B or D/B accordingly) is a construction project delivery system where, in contrast to traditional "design-bid-build" (or "design-tender"), the design and construction aspects are contracted for with a single or build-to-sell commercial space. With over 2.6 million square feet of new space started year-to-date Year-to-date (YTD) The period beginning at the start of the calendar year up to the current date. , we remain confident that we can meet our 1998 goal of exceeding last year's construction starts of 3.9 million square feet." "In addition, our residential development group has contributed $5.0 million to pre-tax pre-tax adj → anterior al impuesto pre-tax adj → avant impôt(s) pre-tax adj → al lordo d'imposta earnings year-to-date versus $1.6 million in the first nine months of 1997. With over $100 million in residential sales under contract, the majority of which are expected to close in the fourth quarter, the group is poised to contribute significantly to earnings in 1998," continued Rising. "We are also extremely pleased that we have closed over $500 million of new long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. fixed rate financings since the end of the second quarter which will give us the flexibility to be opportunistic opportunistic /op·por·tu·nis·tic/ (op?er-tldbomacn-is´tik) 1. denoting a microorganism which does not ordinarily cause disease but becomes pathogenic under certain circumstances. 2. in our investment strategy moving forward," added Rising. "Finally, we have made significant progress on our entitlements at Mission Bay year-to-date," Rising concluded. "The Final Subsequent Environmental Impact Report was certified See certification. by the San Francisco San Francisco (săn frănsĭs`kō), city (1990 pop. 723,959), coextensive with San Francisco co., W Calif., on the tip of a peninsula between the Pacific Ocean and San Francisco Bay, which are connected by the strait known as the Golden Redevelopment Agency, Planning Commission Noun 1. planning commission - a commission delegated to propose plans for future activities and developments commission, committee - a special group delegated to consider some matter; "a committee is a group that keeps minutes and loses hours" - Milton Berle and the Board of Supervisors. The Board of Supervisors also unanimously approved the ordinances needed for final approval of the entire project and the last actions are scheduled to occur next week."
Highlights for the third quarter of 1998 and year-to-date
include:
-- Development Activity:
-- Commercial Development - The company started, or signed
contracts to start, over 726,000 square feet of new commercial
development for clients in the third quarter of 1998. Of this, 296,000
square feet is a build-to-sell facility for Bridgestone/Firestone,
Inc., located at Catellus' newly-acquired business park in Portland,
Oregon. The remainder is build-to-suit space for tenants that is
expected to be added to the company's portfolio.
The company has started a total of 2.6 million square feet of new
commercial space in the first three quarters of 1998. At September 30,
1998, the company had a total of 4.9 million square feet of new
commercial buildings under construction, of which 3.1 million are
expected to be added to the company's portfolio and the remainder will
be sold to users or investors upon completion.
At September 30, 1998, Catellus had a total of 2,369 acres of
industrial land available for development or sale in its portfolio,
which has the potential for up to an estimated 32.3 million square
feet of new industrial space, when fully entitled and approved. The
Company has a total of 54.7 million square feet of development
potential in its commercial land portfolio, which includes both its
industrial and its mixed-use projects.
-- Commercial Development Property Sales - The company had a
total of $50.4 million in sales of commercial properties in the third
quarter which resulted in $8.0 million in gains, primarily from the
sales of completed industrial buildings. Gains from commercial
property sales year-to-date at the end of the third quarter were $15.3
million compared to $5.9 million in the same period of 1997. The
backlog of commercial development property sales at September 30, 1998
totaled $45.6 million versus $13.9 million at the end of the third
quarter of 1997.
-- Residential Development - Catellus Residential Group (CRG) had
a total of $10.1 million in sales of residential properties in the
third quarter which resulted in $1.7 million of gross profit.
At September 30, 1998, CRG had a total sales backlog of $100.2
million representing approximately 216 residential lot/unit sales
contracts at 5 of its owned projects and 55 residential unit sales
contracts at its joint venture projects. The majority of these
contracts are expected to close in the fourth quarter of 1998. Lot
sales are also expected to commence during the fourth quarter of this
year at two of its California projects - the Tal CRG acquired a
majority interest in the Serrano masterplanned community in El Dorado
Hills, California, which can support up to 4,000 residential
lots/units. At Septemb owns an interest, owned a total of 20 projects
Francisco Redevelopment Agency Commission and
Planning Commission on September 18, 1998 and by the City and County
of San Francisco Board of Supervisors on October 19, 1998. In
addition, the Board of Supervisors unanimously approved a series of
ordinances necessary for final San Francisco approval of the entire
Mission Bay project. The remaining procedural votes for Mission Bay
are scheduled for next week.
Proposed development by Catellus at Mission Bay includes: 4,300
market-rate and 255 affordable housing residential units; 5.0 million
square feet of office, research and development and biotech space
surrounding the 2.65-million-square-foot University of California at
San Francisco expansion campus; 250,000 square feet of entertainment
retail adjacent to the new Giants ballpark, Pacific Bell Park; 500,000
square feet of neighborhood and community-supporting retail; and a
500-room hotel with 50,000 square feet of additional retail. Planned
development also includes 1,445 affordable housing units to be
developed by other developers.
-- Refinancings - In early September, the company signed separate
commitment letters with the Teachers Insurance and Annuity Association
College Retirement Equities Fund and Prudential Mortgage Capital
Company Inc., for a total of $526.5 million in long-term non-recourse
fixed rate financing between the two lenders. As of October 26,
approximately $522 million of these loans were closed, at a blended
fixed interest rate of approximately 6.2%. Approximately $117 million
of these loans closed during the third quarter resulting in
recognition of a $3.3 million extraordinary charge, net of tax,
related to yield maintenance payments and a write-off of unamortized
loan issuance costs. The company expects to recognize an $18 million
extraordinary charge, net of tax, related to the closing of the
remaining $409.5 million of these loans in the fourth quarter of 1998.
This will not affect earnings before depreciation and deferred taxes.
-- Income-Producing Portfolio - At September 30, 1998, the
company's income-producing portfolio included 18.9 million square feet
of buildings and was 94.2% leased. Operating income from
income-producing properties, including equity in earnings from joint
ventures, was $27.9 million in the third quarter of 1998 versus $24.3
million in the third quarter of 1997, a 15% increase. This increase
was primarily from the addition of 1.1 million square feet of
industrial properties to the portfolio and a weighted average 4%
increase in roll-over rental rates across the portfolio. Operating
income from income-producing properties was $86.8 million for the nine
months ended September 30, 1998, a 20% increase over $72.2 million for
the first nine months of 1997.
Catellus Development Corporation is one of the nation's premier
diversified real estate operating companies with one of the largest
portfolios of developable land in the western United States. The
company develops, manages and owns a broad range of product types
including industrial, residential, office, retail and major mixed-use
projects. Catellus' strategic land portfolio has a development
potential of over 54.7 million square feet of new commercial
development and an estimated 21,000 residential units. At September
30, 1998, the company's portfolio included 18.9 million square fee For more
information on Catellus, please visitthey are sold. Sales of
non-strategic assets are generally subject to lengthy negotiations and
contingencies that need to be resolved prior to closing. These factors
tend to "bunch" income in particular periods rather than producing a
more even pattern throughout a year. In addition, gross margins vary
significantly as the mix of properties varies. The cost basis of the
properties sold varies because a) a number of properties have been
owned for many decades; b) some properties were acquired within the
last ten to fifteen years; and c) properties are owned in various
geographical locations.
This release includes forward-looking statements concerning
market conditions, development activities, sales activities,
governmental action, economic forecasts, strategic plans, commitments
of third parties, and other factors, which by their nature, involve
risk and uncertainties. In particular, among the factors that could
cause actual results to differ materially are the following: interest
rates; business and general economic conditions; the possible failure
of third parties to fulfill their commitments; competitive facts;
weather conditions affecting construction, the Year 2000 problem;
supply and demand for office, industrial, and residential space;
political decisions affecting land use permits; discretionary
government decisions affecting use of and access to land; and other
risks inherent in the real estate business. For further information on
factors which could affect the company and the statements, the reader
should refer to the company's report on Form 10-K for the fiscal year
ended December 31, 1997 filed with the Securities and Exchange
Commission.
CATELLUS DEVELOPMENT CORPORATION Catellus Development Corporation is a real estate landowner that was spun off of the real estate holdings of Santa Fe and Southern Pacific Railroad. They are one of the largest landowners in California. CONSOLIDATED con·sol·i·date v. con·sol·i·dat·ed, con·sol·i·dat·ing, con·sol·i·dates v.tr. 1. To unite into one system or whole; combine: STATEMENT OF OPERATIONS See Income statement. (In thousands, except per share data) Three months ended Nine months ended September 30, September 30, 1998 1997 1998 1997 (Unaudited) (Unaudited) Income producing properties 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. revenue $ 37,145 $ 32,901 $ 110,425 $ 95,127 Property operating costs (10,910) (9,747) (30,983) (28,848) Equity in earnings of joint ventures, net 1,674 1,096 7,354 5,963 27,909 24,250 86,796 72,242 Development activities and fee services Gain on property sales 10,144 3,368 20,240 7,006 Development and management fee income, net 2,602 2,223 5,745 4,377 Equity in earnings of joint ventures, net 1,489 282 1,605 1,507 Land holding costs, net (432) (492) (1,537) (834) 13,803 5,381 26,053 12,056 Interest expense (9,043) (10,035) (29,052) (30,034) Depreciation and amortization (8,230) (7,839) (25,001) (23,038) General and administrative expense (3,214) (2,926) (9,577) (8,242) Gain on non-strategic land and other asset sales 2,858 570 7,228 4,628 Litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. and environmental costs, net -- 1,100 -- 1,142 Other, net 550 90 979 45 Income before income taxes and extraordinary expense 24,633 34,358 17,072 Extraordinary expense related to early retirement of debt, net of income tax be1 17,072 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. dividends share before extraordinary expense expense Basic $ (0.03) $ $ 0.11 $ 0.06 $ 0.29 $ 0E DEPRECIATION AND DEFERRED TAXES (In thousands, except per share data) Three months ended Nine months ended September 30, September 30, dinary expense 3,307 476 9,930 Gain on non-strategic land and other asset sales (2,858) (570) (7,228) (4,628) Earnings before depreciation an059 Earnings before depreciation and defesuming dilution Dilution A reduction in earnings per share of common stock that occurs through the issuance of additional shares or the conversion of convertible securities. Notes: Adding to the number of shares outstanding reduces the value of holdings of existing shareholders. $ 0.25 $ diluted 109,190 109,924 1ds and should not be considered as an alternative to cash flows as a measure of liquidity. However, the Company believes that EBDDT provides relevant information about its operations and is necessary, along with net income, for an understanding of its operating results. EBDDT is calculated by taking net income and making various adjustments. Depreciation, amortization and deferred income taxes are excluded from EBDDT as they represent non-cash charges Non-Cash Charge A charge off, made by a company against earnings, that does not require an initial outlay of cash. Notes: Non-cash charges are typically against the depreciation, amortization, and depletion accounts on a company's balance sheet. . In addition, gains on the sale of non-strategic land and other assets other assets Assets of relatively small value. For financial reporting purposes, firms frequently combine small assets into a single category rather than listing each item separately. and extraordinary expense related to early retirement of debt represent unusual and/or and/or conj. Used to indicate that either or both of the items connected by it are involved. Usage Note: And/or is widely used in legal and business writing. non-recurring items and are excluded from the EBDDT calculation. CATELLUS DEVELOPMENT CORPORATION CONSOLIDATED BALANCE SHEET consolidated balance sheet A balance sheet in which assets and liabilities of a parent company and its controlled subsidiaries are combined, thereby presenting balance sheet items for the parent and its subsidiaries as if they were a single firm. (In thousands) September 30, December December: see month. 31, 1998 1997 (Unaudited) Assets Properties $ 1,607,178 $ 1,358,807 Less accumulated ac·cu·mu·late v. ac·cu·mu·lat·ed, ac·cu·mu·lat·ing, ac·cu·mu·lates v.tr. To gather or pile up; amass. See Synonyms at gather. v.intr. To mount up; increase. depreciation (257,779) (235,832) 1,349,399 1,122,975 Other assets and deferred charges, net 57,103 50,138 Notes receivable, less allowance 20,639 30,971 Accounts receivable, less allowance 35,604 19,641 Restricted cash 31,235 -- Cash and cash equivalents 30,156 17,294 Total $ 1,524,136 $ 1,241,019 Liabilities and stockholders' equity Mortgage and other debt $ 774,262 $ 568,699 Accounts payable and accrued ac·crue v. ac·crued, ac·cru·ing, ac·crues v.intr. 1. To come to one as a gain, addition, or increment: interest accruing in my savings account. 2. expenses 83,516 62,681 Deferred credits and other liabilities 48,081 40,035 Deferred income taxes 132,334 117,705 Total liabilities 1,038,193 789,120 Stockholders' equity Stockholders' Equity The portion of the balance sheet that includes capital received from investors in exchange for stock (paid-in capital), donated capital, and retained earnings. This is equal to total assets minus liabilities, preferred stock and intangible assets. Preferred stock -- -- Common stock - 106,749 and 106,503 shares issued at September 30, 1998 and December 31, 1997, respectively 1,067 1,065 Paid-in capital Paid-in capital Capital received from investors in exchange for stock, but not stock from capital generated from earnings or donated. This account includes capital stock and contributions of stockholders credited to accounts other than capital stock. 479,038 476,047 Accumulated earnings (deficit) 5,838 (25,213) Total stockholders' equity 485,943 451,899 Total $ 1,524,136 $ 1,241,019 CATELLUS DEVELOPMENT CORPORATION ADDITIONAL INFORMATION (In thousands, except percentages) Three months ended Nine months ended September 30, September 30, 1998 1997 1998 1997 (Unaudited) (Unaudited) Income producing properties: Property 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. by property type: (1) Industrial buildings $14,983 $13,602 $45,723 $38,424 Office buildings 4,368 4,408 14,105 12,411 Retail buildings 2,157 2,356 7,051 7,087 Land development 1,070 1,143 3,187 3,215 Ground leases 3,657 1,645 9,376 5,142 26,235 997 (Unaudited) Industrial buildings Square feet owned 15,105 13,963 Square feet leased 14,370 13,675 Percent leased 95.1% 97.9% Office buildings Square feet owned 1,620 1,620 Square feet leased 1,528 1,542 Percent leased Three months ended Nine months ended September 30, September 34.89 Retail buildings 0% 3.92 3.91 -1% 11.77 11.88 Land development 19% 2.89 2.42 15% 8.48 7.35 Weighted Average 4% $ 1.99 $ 1.91 5% $ 5.93 $ 5.65 (1) Same store propert 1998 1997 1998 1997 elopment $ 8,014 $ 3,398 $ 15,285 $ 5,904 Residential development 1,680 (30) 3,368 $ 20,240 $ 7,006 September 30, 1998 1997 (Unaudited) Property sales backlog Backlog The total value of sales orders waiting to be fulfilled. Notes: This figure is used mainly in the manufacturing industry. Increases or decreases in a company's backlog indicate the future direction of sales and earnings. - sales under contract (in thousands): Commercial development $45,574 $13,924 Residential development Owned projects Units $59,256 $ -- Lots 10,326 -- $69,582 $ -- Joint venture projects - Units (1) $30,629 $45,720 (1) The amounts shown are 100% of the gross sales Gross Sales A measure of overall sales that isn't adjusted for customer discounts or returns, calculated simply by adding all sales invoices, and not including operating expenses, cost of goods sold, payment of taxes, or any other charge. price. The Company is entitled en·ti·tle tr.v. en·ti·tled, en·ti·tling, en·ti·tles 1. To give a name or title to. 2. To furnish with a right or claim to something: to receive 25%-50% of the net profits from these joint ventures. CATELLUS DEVELOPMENT CORPORATION ADDITIONAL INFORMATION Additional Information (continued) September 30, 1998 1997 (Unaudited) Residential development property backlog - sales under contract (lots and units): Residential Owned projects Units 169 -- Lots 47 -- 216 -- Joint venture projects - Units (1) 55 -- (1) The Company is entitled to receive 25%-50% of the net profits from these joint ventures. As of or for the As of or for the three months ended nine months ended September 30, September 30, 1998 1997 1998 1997 (Unaudited) (Unaudited) Development Activity (in square feet): Construction and completion Under construction, beginning of period 5,444,000 1,786,200 3,774,000 2,286,961 Construction starts 468,000 906,000 2,613,000 1,252,000 Completed - Retained in Portfolio -- (881,200) (240,000) (1,727,961) Completed - Design/Build or Sold (992,000) -- (1,227,000) -- Under construction, end of period 4,920,000(1) 1,811,000 4,920,000(1) 1,811,000 Contracts signed, construction not started 258,000 109,450 (1) Includes 1,117,000 square feet of development that will be sold on completion and 676,000 square feet of of 'design-build' development for third party owners. CATELLUS DEVELOPMENT CORPORATION ADDITIONAL INFORMATION Additional Information (continued) Three months Nine months ended ended September 30, September 30, 1998 1997 1998 1997 (Unaudited) (Unaudited) Residential net orders and deliveries: Net Orders: Lots -- -- 883 -- Units 74 74 264 158 Deliveries: Lots 19 -- 836 -- Units 23 43 96 108 Three months ended Nine months ended September 30, September 30, 1998 1997 1998 1997 (Unaudited) (Unaudited) Interest costs and preferred stock dividends (in thousands): Interest Costs: Total interest costs $ 15,104 $ 11,749 $ 41,161 $ 34,354 Interest capitalized Capitalized Recorded in asset accounts and then depreciated or amortized, as is appropriate for expenditures for items with useful lives longer than one year. (6,061) (1,714) (12,109) (4,320) Interest expensed $ 9,043 $ 10,035 $ 29,052 $ 30,034 Preferred stock dividends: $ -- $ -- $ -- $ 1,353 Sale of non-strategic land and other assets (in thousands): Sales Proceeds: Non-strategic land $ 4,478 $ 9,857 $ 6,249 $ 16,347 Buildings -- -- -- 2,775 Land leases 1,200 -- 5,050 -- $ 5,678 $ 9,857 $ 11,299 $ 19,122 Gain: Non-strategic land $ 1,979 $ 570 $ 2,699 $ 3,028 Buildings -- -- -- 1,600 Land leases 879 -- 4,529 -- $ 2,858 $ 570 $ 7,228 $ 4,628 September 30, 1998 1997 Backlog - sales under contract (in thousands): Non-strategic land $62,626 $66,586 Buildings -- -- Total $62,626 $66,586 |
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