Columbia Equity Trust, Inc. Announces Second Quarter 2006 Results.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. -- Columbia Columbia, cities, United States Columbia (kəlŭm`bēə). 1 City (1990 pop. 75,883), Howard co., central Md., between Washington, D.C., and Baltimore. Equity Trust, Inc. (NYSE NYSE See: New York Stock Exchange :COE See common operating environment. ), a real estate investment trust ("REIT REIT See: Real Estate Investment Trust REIT See real estate investment trust (REIT). ") which focuses on the acquisition, development and ownership of commercial office properties predominantly pre·dom·i·nant adj. 1. Having greatest ascendancy, importance, influence, authority, or force. See Synonyms at dominant. 2. in the Greater Washington, D.C. area, announced today its results of operations for the second quarter ended June June: see month. 30, 2006. The financial results presented in this press release reflect the operating results of Columbia's predecessor (the "Predecessor") prior to the completion of the Company's Initial Public Offering ("IPO (Initial Public Offering) The first time a company offers shares of stock to the public. While not a computer term per se, many founders, employees and insiders of computer companies have found this acronym more exciting than any tech term they ever heard. ") in July July: see month. of 2005 and the operating results of the Company for the three and six months ended June 30, 2006. Management does not believe that the Predecessor's historical financial results are indicative of the Company's expected future operating performance, since year-to-year financial comparisons with the predecessor company are not meaningful given the Predecessor's limited scope of operations. In addition to the information included in this earnings release, Columbia will also provide supplemental operating and financial data for the second quarter of 2006. This supplemental data will be available under Quarterly Supplementals in the Investor Relations Investor relations The process by which the corporation communicates with its investors. section of the Company's website (www.ColumbiaREIT.com). Second Quarter Highlights Results for the quarter ended June 30, 2006 included the following: --Quarterly 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 ") totaled $3.8 million or $0.25 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. For the six months ended June 30, 2006, FFO was $7.6 million or $0.50 per diluted share. --Quarterly Adjusted Funds from Operations ("AFFO AFFO Adjusted Funds From Operation ") totaled $2.4 million. For the six months ended June 30, 2006, AFFO was $4.9 million. FFO and AFFO are supplemental non-GAAP financial measures used in the real estate industry to measure and compare the operating performance of real estate companies. A complete reconciliation containing adjustments from GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). net income to FFO and AFFO is included at the end of this release. --The net loss for the quarter was $1.1 million or $(0.08) per diluted share. The net loss for the six months ended June 30, 2006 was $2.1 million or $(0.15) per share. --Declared a dividend of $0.15 per share for the quarter which was paid on July 28, 2006. --Completed the acquisition of 1741 Business Center Drive for a purchase price of approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $11.5 million at an expected first-year adj. 1. Being in the first year of an experience especially in a U. S. high school or college; - of a person. Adj. 1. first-year - used of a person in the first year of an experience (especially in United States high school or college); "a net operating income-to-purchase price return (cash basis) of approximately 7.6%, after incorporating the cost to defease the existing financing. --Entered into a purchase contract to acquire 101 Orchard orchard, generally an area on which fruit or nut trees are planted and cultivated. The words grove and plantation are often used when the fruits are tropical, e.g., a "citrus grove" or a "banana plantation. Ridge Drive for $27.4 million. Subsequent to the completion of due diligence Research; analysis; your homework. This term has caught on in all industries, because it sounds so "wired." Who would want to do analysis or research when they can do due diligence. See wired. , the contract price was renegotiated to $26.7 million. The acquisition is projected to close in the next 30 days pending the completion of the loan assumption. --Remained under contract to acquire Georgetown Georgetown, city, Guyana Georgetown, city (1985 est. pop. 75,000), capital and largest city of Guyana, on the Atlantic Ocean at the mouth of the Demerara River. Plaza For the hotel in New York City, see . Plaza (IPA /'plaθa/ or /'plasa/ . During the quarter, the contract price was reduced from $23.5 million to $23.0 million based on diligence Vigilant activity; attentiveness; or care, of which there are infinite shades, from the slightest momentary thought to the most vigilant anxiety. Attentive and persistent in doing a thing; steadily applied; active; sedulous; laborious; unremitting; untiring. findings. In addition, the renegotiation of the terms of the underlying ground lease was completed, including an extension of the ground lease maturity date from 2058 to 2105. Lastly, the decision was made to acquire the property in an equity joint venture with an institutional partner in which the company will own a 40% interest. The closing of the acquisition and the joint venture is projected to occur in the next 30 days pending the completion of the loan assumption and certain other closing conditions. --Entered into a 99 year ground lease for the purpose of developing and owning a class "A" commercial office building which will include approximately 110,000 square feet of rentable area together with an underground parking facility located in Alexandria, Virginia Alexandria is an independent city in the Commonwealth of Virginia. As of the 2000 census, the city had a total population of 128,284. Located along the Western bank of the Potomac River, Alexandria is approximately 6 miles (9.6 kilometers) south of downtown Washington, DC. . On a preliminary basis, the project cost is estimated at approximately $30.0 million to $35.0 million. --Subsequent to the end of the quarter, we entered into a purchase contract to acquire Stafford Stafford, city (1991 pop. 60,915) and district, Staffordshire, W central England, on the Sow River, above its junction with the Trent. Stafford's chief industry is the manufacture of electrical goods; other products are concrete, shoes and shoe-repairing machinery, Commerce Center, a portfolio of four multi-tenant In the Software as a Service (SaaS) software architecture, multi-tenant refers to the ability of the hosting site to support multiple organizations ("tenants") at the same time. Multi-tenancy is a key feature of a true SaaS architecture. office buildings, for a combined purchase price of $30.2 million --Executed fourteen leases totaling approximately 23,500 square feet during the quarter at a weighted average rental rate of $32.51 per square foot. Leases covering approximately 23,800 square feet of space expired 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. throughout our portfolio during the quarter of which 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. approximately 14,200 square feet resulting in a retention rate of 60%. --Overall 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 for in-service in-service In-service training adjective Referring to any form of on-the-job training noun In-service training of an employee properties at June 30, 2006 was 91% compared to 95% at the end of the first quarter of 2006. Occupancy declined as a result of transitioning our Victory Point property into service. Victory Point, which we acquired in 2005 100% vacant, is currently 17% leased. Management Comments Oliver Ol·i·ver , Joseph Known as "King Oliver." 1885?-1938. American jazz musician and composer who had a great influence on the style of Louis Armstrong. His Creole Jazz Band was the first Black group to make jazz recordings. T. Carr CARR Carrier CARR Customer Acceptance Readiness Review CARR Carrollton Railroad CARR Corrective Action Request and Report CARR City Area Rural Rides (Texas) CARR Configuration Audit Readiness Review CARR Customer Acceptance Requirements Review , III, Chairman and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. of Columbia Equity Trust, stated, "During the Second Quarter of 2006, we continued to execute on our plan of building value for our shareholders through the targeted acquisition of well-leased, income oriented o·ri·ent n. 1. Orient The countries of Asia, especially of eastern Asia. 2. a. The luster characteristic of a pearl of high quality. b. A pearl having exceptional luster. 3. properties that will drive our near-term near-term adj. Of, for, or involving a short period of time in the near future. earnings growth, combined with investments in value added Value Added The enhancement a company gives its product or service before offering the product to customers. Notes: This can either increase the products price or value. properties and new development. We believe that this blend of income and growth investing Growth Investing A strategy whereby an investor seeks out stocks with what they deem good growth potential. In most cases a growth stock is defined as a company whose earnings are expected to grow at an above-average rate than its industry or the overall market. , supported by sound underwriting Underwriting 1. The process by which investment bankers raise investment capital from investors on behalf of corporations and governments that are issuing securities (both equity and debt). 2. The process of issuing insurance policies. fundamentals, will create value for our shareholders over the long term. In our first four quarters as a public company, we successfully acquired $135 million of office properties at an expected average capitalization rate Capitalization Rate According to the Appraisal Institute, it is a method used to convert an estimate of a single year's income expectancy into an indication of value in one direct step, by dividing the income estimate by an appropriate rate. in excess of 7% on a cash basis. Looking forward, we have an additional $115 million of acquisition and development properties under agreement, including our proposed $35 million development project in Alexandria, Virginia. We are very pleased with this level of activity in the competitive Washington investment market. It speaks to the strength of our relationships in this market and the ability of our team to uncover private investment opportunities. Approximately 65% of the properties we have acquired since our IPO have been purchased outside of a normal marketing process. The Washington economy remains strong as evidenced by the creation of 77,000 new jobs over the twelve months ended June 30, 2006. Continued job growth is fueling the demand for office space in the region, which absorbed Absorbed 1. In a general business sense, when a cost is treated as an expense instead of being passed on to the customer in the form of higher prices. 2. In underwriting, when an issue has been completely sold to the public. 3. approximately four million square feet of space through the first half of the year. Office vacancy VACANCY. A place which is empty. The term is principally applied to cases where an office is not filled. 2. By the constitution of the United States, the president has the power to fill up vacancies that may happen during the recess of the senate. rates remain below 10% market wide and asking rents across the market increased by approximately 3% over the first half of 2006. While net absorption absorption [Lat.,=sucking from], taking of molecules of one substance directly into another substance. It is contrasted with adsorption, in which the molecules adhere only to the surface of the second substance. of space remains positive, certain sub-markets, especially in Northern Virginia Northern Virginia (NoVA) consists of Arlington, Fairfax, Loudoun, and Prince William counties and the independent cities of Alexandria, Falls Church, Fairfax, Manassas, and Manassas Park. , have experienced a slowing pace of leasing as tenants take longer to negotiate and execute leasing decisions. It is too early to tell if this slowdown For articles with similar titles, see Slow Down (disambiguation). A slowdown is an industrial action in which employees perform their duties but seek to reduce productivity or efficiency in their performance of these duties. in leasing activity is a trend or is more of a seasonal attribute (1) In relational database management, a field within a record. (2) In object technology, a single element of data. See instance attribute and static attribute. ; however it bears watching. The pace of new development remains active, with approximately 16 million square feet in production that is scheduled to deliver over the next two years, of which just under 40% is pre-leased market wide. Several new projects commenced development in Northern Virginia, specifically in the Dulles Dul·les , Allen Welsh 1893-1969. American public official. Director of the CIA (1953-1961), he resigned after the failed invasion of the Bay of Pigs. Noun 1. Corner and Westfields submarkets, and we believe that these new deliveries will lead to an increase in vacancy rates in these submarkets unless the pace of leasing activity improves. I remain confident that our business strategy of investing tactically tac·ti·cal adj. 1. Of, relating to, or using tactics. 2. a. Of, relating to, used in, or involving military or naval operations that are smaller, closer to base, and of less long-term significance than strategic in the market, utilizing our local relationships, combined with the underlying strength of the Washington office market should build value for our shareholders over the long term." Portfolio Overview At the end of the second quarter 2006, we owned or maintained interests in a portfolio of 19 commercial office properties containing an aggregate of approximately 2.7 million net rentable square feet and two properties under development that, upon completion, will comprise approximately 225,000 net rentable square feet. Overall portfolio occupancy for in-service properties at June 30, 2006 was 91% compared to 95% at the end of the first quarter of 2006. Occupancy declined as a result of transitioning our Victory Point property, which we acquired in 2005 100% vacant, into service. Victory Point is currently 17% leased. After giving effect to our pro rata [Latin, Proportionately.] A phrase that describes a division made according to a certain rate, percentage, or share. In a Bankruptcy case, when the debtor is insolvent, creditors generally agree to accept a pro rata share of what is owed to them. share of rental revenues in our joint venture properties, no one tenant accounted for more than 6.9% of our annualized annualized Of or relating to a variable that has been mathematically converted to a yearly rate. Inflation and interest rates are generally annualized since it is on this basis that these two variables are ordinarily stated and compared. base rental revenue as of June 30, 2006. Acquisitions/Development: During the second quarter of 2006, Columbia acquired one property for a total purchase price of $11.5 million (before transaction costs Transaction Costs Costs incurred when buying or selling securities. These include brokers' commissions and spreads (the difference between the price the dealer paid for a security and the price they can sell it). ) and was under contract to acquire two additional office buildings for approximately $49.7 million. In addition, Columbia entered into a 99 year ground lease for the purpose of developing a 110,000 square foot office building at a projected cost of approximately $30.0 million to $35.0 million. Subsequent to the end of the quarter, Columbia contracted to purchase an additional property for approximately $30.2 million. --1741 Business Center Drive, an approximately 41,300 square foot, Class B office building located in Reston, Virginia Reston is an internationally known planned community whose goal was to revolutionize post-World War II concepts of land use and residential/corporate development in American suburbia. , was acquired for approximately $11.5 million at an expected first-year net operating income-to-purchase price return (cash basis) of approximately 7.6%, after incorporating the cost to defease the existing financing into the purchase price. The property, built in 2000, was 100% leased to a subsidiary of Chubb Chubb is the name of several individuals and companies:
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 that matures in August 2011 and is secured by a mortgage deed Noun 1. mortgage deed - deed embodying a mortgage deed, deed of conveyance, title - a legal document signed and sealed and delivered to effect a transfer of property and to show the legal right to possess it; "he signed the deed"; "he kept the title to his car in of trust on the property. The financing requires monthly payments of interest-only at a fixed rate interest rate of 6.11%. The property was acquired in an off-market transaction. --101 Orchard Ridge Drive, an approximately 102,400 square foot, Class A suburban office building located in Gaithersburg, Maryland Maryland (mâr`ələnd), one of the Middle Atlantic states of the United States. It is bounded by Delaware and the Atlantic Ocean (E), the District of Columbia (S), Virginia and West Virginia (S, W), and Pennsylvania (N). was placed under contract for a purchase price of approximately $27.4 million. Subsequent to completion of due diligence, the contract price was renegotiated to $26.7 million. We expect to fund the transaction with proceeds from our credit facility. Concurrent At the same time. It implies that multiple processes are taking place simultaneously. See concurrent operation. with the acquisition, we will assume a $15.5 million mortgage loan which bears interest at 6.06% and matures in May 2014. The purchase of 101 Orchard Ridge is subject to customary closing conditions, including the assumption of the existing mortgage. The acquisition is projected to close in the next 30 days at an expected first-year net operating income-to-purchase price return (cash basis) of approximately 7.5%. The multi-tenant building is currently 100% leased and is being acquired in an off-market transaction. --Georgetown Plaza, an approximately 151,000 square foot, Class B office building located in the Georgetown submarket sub·mar·ket n. A geographic, economic, or specialized subdivision of a market. adj. Being below what is usual in a particular market: submarket wages; submarket interest rates. of Washington, D.C., remained under contract for purchase. During the quarter the contract price was reduced from $23.5 million to $23 million as a result of diligence findings. In addition, the renegotiation of the terms of the underlying ground was completed, including an extension of the maturity date from 2058 to 2105. Lastly, the decision was made to acquire the property in an equity joint venture with an institutional partner in which the company will own a 40% interest. Under the proposed terms of the joint venture, we will receive fee income from providing asset management and leasing services and will receive a performance based promote dependent on the success of the investment. The joint venture intends to assume an approximately $16.1 million mortgage loan which bears interest at 5.78% and matures in June 2013. The closing of the acquisition and the joint venture is projected to occur in the next 30 days pending the completion of the loan assumption and certain other closing conditions at an expected first-year net operating income-to-purchase price return (cash basis) of approximately 5.5%. The property is approximately 67% leased at this time. --Subsequent to the end of the quarter, we contracted to purchase Stafford Commerce Center ("Stafford"), a four building portfolio of office buildings totaling approximately 149,200 square feet. The Stafford portfolio is being acquired subject to existing mortgage loans on each of the Stafford properties with a combined principal balance outstanding of approximately $17.2 million. As part of the acquisition of the Stafford portfolio, we will also receive options to acquire three additional office properties which are currently in various stages of development and are projected to comprise approximately 110,000 square feet upon completion. Stafford Commerce Center is approximately 98% leased and the majority of its tenants are defense contractors Noun 1. defense contractor - a contractor concerned with the development and manufacture of systems of defense armed forces, armed services, military, military machine, war machine - the military forces of a nation; "their military is the largest in the region"; serving clients located at the Marine Corps Base in Quantico, Virginia Quantico, Virginia lies in Prince William County, 23 miles north-northeast of Fredericksburg, Virginia, United States, near Dumfries and Stafford along Highway 619. It is totally surrounded by Marine Corps Base Quantico and the Potomac River. , which is located less than one mile from the Stafford properties. The sale and closing of any one of the four properties is conditioned upon acquiring all four properties and is subject to the usual and customary closing conditions, including satisfactory completion by us of a due diligence review during the inspection period and the assumption of the existing mortgage debt. --During the quarter, we entered into a 99 year ground lease for the purpose of developing and owning a class "A" commercial office building which we expect will include approximately 110,000 square feet of rentable area together with an underground parking facility located at 1707 Duke Street in Alexandria, Virginia. The term of the ground lease together with initial rent payments will commence upon our receipt of a building permit from the City of Alexandria Alexandria, city, Egypt Alexandria, Arabic Al Iskandariyah, city (1996 pop. 3,328,196), N Egypt, on the Mediterranean Sea. It is at the western extremity of the Nile River delta, situated on a narrow isthmus between the sea and Lake Mareotis (Maryut). which is anticipated in approximately 12 to 18 months and is conditioned upon receipt of all necessary zoning and planning approvals. Upon receipt of the requisite approvals, the construction period is estimated at an additional 12 to 14 months. The site includes approximately 0.84 acres of land and is located in a commercial corridor approximately two blocks from the King Street metro station For the band, see . A metro station is a railway station for a rapid transit system, often known by names such as "metro", "underground" and "subway". It is often underground or elevated. At crossings of metro lines they are multi-level. and directly across Duke Street from the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. Patent and Trade Office. While preliminary, we anticipate that total development costs will be approximately $30.0 million to $35.0 million. We expect to fund the development costs with proceeds from our credit facility or with new construction financing. In addition, we are considering financing a portion of the project costs by creating an equity joint venture. --The development of Independence Center II, an approximately 115,000 square foot office building in the Westfields Corporate Office Park in Fairfax, Virginia Fairfax is an independent city forming an enclave within the confines of Fairfax County, in the Commonwealth of Virginia. Although politically independent of the surrounding county, the City of Fairfax is nevertheless its county seatGR6. continued during the second quarter. The total cost of the development is expected to be approximately $24.5 million. The unleveraged stabilized sta·bi·lize v. sta·bi·lized, sta·bi·liz·ing, sta·bi·liz·es v.tr. 1. To make stable or steadfast. 2. yield (cash basis) of the Independence Center II development is expected to be approximately 8.7% with completion of the base building scheduled in 30 to 60 days. Columbia maintains an 8.1% interest in the joint venture which owns the development. An affiliate of JP Morgan Morgan, American family of financiers and philanthropists. Junius Spencer Morgan, 1813–90, b. West Springfield, Mass., prospered at investment banking. Investment Management is the primary investor in the venture. Financial Structure At June 30, 2006, Columbia's debt-to-total market capitalization Market Capitalization A measure of a public company's size. Market capitalization is the total dollar value of all outstanding shares. It's calculated by multiplying the number of shares times the current market price. This term is often referred to as market cap. ratio was approximately 43%, based on the Company's closing stock price of $15.36 on that date. Earnings before interest expense, taxes, depreciation and amortization, including our pro rata share of joint venture earnings before interest expense, taxes, depreciation and amortization, covered interest charges by a measure of approximately 2.5 times compared to 2.8 times for the prior period ended March 31, 2006. Total debt outstanding, including our pro rata share of joint venture debt, was $173.6 million at June 30, 2006. Of that amount, $150.3 million (87% of total debt) was fixed rate with a weighted average interest rate of 5.31% and a weighted average maturity of 5.6 years. The remaining $23.3 million was floating-rate debt, of which $21.5 million represented borrowings on our revolving credit Revolving Credit A line of credit where the customer pays a commitment fee and is then allowed to use the funds when they are needed. It is usually used for operating purposes, fluctuating each month depending on the customers current cash flow needs. facility. Forward Guidance As announced on the Company's Fourth Quarter earnings call in March 2006, we do not currently intend to provide quarterly guidance or update our 2006 guidance during subsequent quarters. Funds from Operations, Adjusted Funds from Operations and 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. Funds from operations is a widely recognized measure of REIT operating performance. FFO is a non-GAAP financial measure. As defined by the National Association of Real Estate Investment Trusts, or NAREIT NAREIT National Association of Real Estate Investment Trusts , funds from operations, or FFO, represents 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 GAAP), excluding gains (or losses) from sales of property, plus real estate-related depreciation and amortization and after adjustments for unconsolidated partnerships and joint ventures. Adjustments for unconsolidated partnerships and joint ventures are calculated to reflect FFO on the same basis. Our interpretation of the NAREIT definition is that minority interest in net income (loss) should be added back (deducted de·duct v. de·duct·ed, de·duct·ing, de·ducts v.tr. 1. To take away (a quantity) from another; subtract. 2. To derive by deduction; deduce. v.intr. ) from net income (loss) as part of reconciling net income (loss) to FFO. We present FFO because we believe it facilitates an understanding of the operating performance of our Company without giving effect to real estate depreciation and amortization, which assumes that the value of real estate diminishes ratably over time. Historically, however, real estate values have risen or fallen with market conditions. Because FFO excludes depreciation and amortization unique to real estate, gains and losses from property dispositions and extraordinary items, it provides a performance measure that, when compared year over year, reflects the impact to operations from trends in occupancy rates Noun 1. occupancy rate - the percentage of all rental units (as in hotels) are occupied or rented at a given time pct, per centum, percent, percentage - a proportion in relation to a whole (which is usually the amount per hundred) , rental rates, operating costs operating costs npl → gastos mpl operacionales , development activities and interest costs, providing perspective not immediately apparent from net income. Our FFO computation Computation is a general term for any type of information processing that can be represented mathematically. This includes phenomena ranging from simple calculations to human thinking. may not be comparable to FFO reported by other REITs that do not compute To perform mathematical operations or general computer processing. For an explanation of "The 3 C's," or how the computer processes data, see computer. FFO in accordance with the NAREIT definition or that interpret the NAREIT definition differently than we do. FFO does not represent cash generated from operating activities in accordance with GAAP and should not be considered to be an alternative to net income (loss) (determined in accordance with GAAP) as a measure of our operating performance, nor is it indicative of funds available for our cash needs, including cash distributions to stockholders. A reconciliation of net income, the most directly comparable GAAP measure, to FFO is attached as a schedule to this press release. Certain prior quarter amounts have been reclassified to conform to Verb 1. conform to - satisfy a condition or restriction; "Does this paper meet the requirements for the degree?" fit, meet coordinate - be co-ordinated; "These activities coordinate well" the current quarter's presentation. Adjusted funds from operations is a non-GAAP financial measure. We present adjusted funds from operations, or AFFO, as a supplemental operating measure because, when compared year over year, it assesses our ability to fund dividend and distribution requirements from our operating activities. We calculate adjusted funds from operations, or AFFO, by adding to or subtracting from FFO (i) non real estate depreciation; (ii) amortization of deferred financing costs; (iii) non cash compensation; (iv) loss from early extinguishment The destruction or cancellation of a right, a power, a contract, or an estate. Extinguishment is sometimes confused with merger, though there is a clear distinction between them. of debt; (v) straight line rents; (vi) fair value of lease revenue amortization; (vii) expenditures for second generation tenant improvements and leasing commissions; and (viii) non-revenue enhancing and recurring re·cur intr.v. re·curred, re·cur·ring, re·curs 1. To happen, come up, or show up again or repeatedly. 2. To return to one's attention or memory. 3. To return in thought or discourse. capital expenditures. Other equity REITs Equity REIT A Real Estate Investment Trust that assumes ownership status in the property it invests in enabling investors of the REIT to earn dividends on rental income from the property and appreciation in property resale. Antithesis of a Mortgage REIT. may not calculate AFFO or may not calculate AFFO in a consistent manner. Accordingly, our AFFO may not be comparable to AFFO as reported by other equity REITs. Adjusted FFO does not represent cash generated from operating activities in accordance with GAAP and should not be considered as an alternative to net income as an indication of our performance or to cash flows as a measure of liquidity or ability to make distributions. Net operating income is defined as revenues (excluding interest income) of the property, minus property expenses such as real estate taxes, depreciation and amortization, repairs and maintenance, property management, utilities, insurance and other expenses. Investor Conference Call and Webcast Columbia Equity Trust, Inc. will hold a conference call on Monday Monday: see week. , August 14, 2006, at 2:00 P.M. Eastern Time. Shareholders and interested parties may access the call by dialing 800-510-9661 (access code 44696251). A hyperlink A predefined linkage between one object and another. See hypertext. hyperlink - anchor to the live webcast of this call will be available in the Investor Relations section of the Company's website at www.columbiareit.com. The webcast is also being distributed through the Thomson StreetEvents Network. Individual Investors can listen to the call at www.earnings.com. Institutional investors Institutional Investor A non-bank person or organization that trades securities in large enough share quantities or dollar amounts that they qualify for preferential treatment and lower commissions. can access the call via Thomson StreetEvents at www.streetevents.com. A replay will be available after the call from 4:00 P.M. Eastern Time on August 14, 2006 through August 21, 2006 by dialing 888-286-8010 (access code 66775312). 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 will also be available from a hyperlink in the Investor Relations section of the Company's website. About Columbia Equity Trust, Inc. Columbia Equity Trust is a self-advised, self-managed Maryland corporation focused on the acquisition, development, renovation, repositioning repositioning Laparoscopic surgery The changing of a Pt's position during a procedure to improve access or visualization of the operative field, which may be linked to complications, as it changes anatomic planes of operation. Cf Laparoscopic surgery. , ownership, management and operation of commercial office properties located predominantly in the Greater Washington, D.C. area. For additional information please visit our web site at http://www.columbiareit.com. Forward Looking Statements Certain statements in this release that are not historical fact may constitute 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 the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. Such statements include, in particular, statements about the Company's beliefs, expectations, plans and strategies that are not historical facts, and earnings per share, funds from operations, development activities, real estate depreciation and amortization for 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: and unconsolidated entities, minority interests in the Company's operating partnership, statements concerning completion of the acquisition of properties under contract and stockholder value. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results of the Company to differ materially from historical results or from any results expressed or implied by such forward-looking statements, including without limitation: national and local economic, business, real estate and other market conditions; the competitive environment in which the Company operates; the execution of its business plan; availability of additional financing; financing risks; the Company's ability to maintain its status as a REIT for federal income tax purposes; acquisition and development risks; potential environmental and other liabilities other liabilities Small and relatively insignificant liabilities. For financial reporting purposes, firms often combine small liabilities into this single category rather than listing each liability separately. ; and other factors affecting the real estate industry generally or the office industry in particular. Although the Company believes the expectations reflected in any forward-looking statements are based on reasonable assumptions, it can give no assurance that its 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. . For a further discussion of these and other factors that could impact the Company's future results, performance, achievements or transactions, see the documents filed by the Company from time to time with the Securities and Exchange Commission, and in particular the section titled, "Risk Factors" 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, 2005 filed on March 31, 2006. The forward-looking statements contained herein represent the Company's judgment as of the date hereof here·of adv. Of this. hereof Adverb Formal or law of or concerning this Adv. 1. hereof - of or concerning this; "the twigs hereof are physic" and we caution readers not to place undue reliance on such statements. The Company does not undertake to publicly update or revise any forward-looking statement whether as a result of new information, future events or otherwise. The information provided in this press release is unaudited and there can be no assurance that the information will not vary from the financial information filed with the Securities Exchange Commission for the quarter ended June 30, 2006.
COLUMBIA EQUITY TRUST, INC.
CONSOLIDATED BALANCE SHEETS
June 30, December 31,
2006 2005
------------- -------------
(Unaudited)
Assets
Rental property
Land $27,087,572 $19,300,819
Buildings 147,901,486 120,509,954
Tenant improvements 31,492,146 24,377,997
Furniture, fixtures and equipment 1,098,705 1,088,989
------------- -------------
207,579,909 165,277,759
Accumulated depreciation (7,053,609) (2,805,222)
------------- -------------
Total rental property, net 200,526,300 162,472,537
Cash and cash equivalents 8,387,651 8,149,634
Restricted deposits 562,234 256,356
Accounts and other receivables, net of
reserves for doubtful
accounts of $35,093 and $39,401,
respectively 861,240 1,039,510
Investments in unconsolidated real estate
entities 40,694,318 42,308,003
Accrued straight-line rents 1,504,403 524,258
Deferred leasing costs, net 749,245 490,609
Deferred financing costs, net 1,107,525 955,129
Intangible assets
Above market leases, net 4,404,617 3,610,453
In-place leases, net 18,534,256 15,813,098
Tenant relationships, net 7,133,283 6,387,594
Prepaid expenses and other assets 959,103 1,323,308
------------- -------------
Total assets $285,424,175 $243,330,489
============= =============
Liabilities and Stockholders' Equity
Liabilities
Revolving loan payable $21,450,000 $22,000,000
Mortgage notes payable 74,096,914 27,358,998
Accounts payable and accrued expenses 2,669,903 2,252,575
Security deposits 1,220,555 945,158
Dividends payable 2,079,500 1,940,867
Rent received in advance 1,361,215 758,265
Deferred credits - Below market leases,
net 2,337,327 1,593,812
Other liabilities 95,179 -
------------- -------------
Total liabilities 105,310,593 56,849,675
Commitments and contingencies
Minority interest 14,107,493 14,205,638
------------- -------------
Stockholders' equity
Preferred stock, $0.001 par value,
100,000,000 shares authorized in
2006 and 2005, no shares issued or
outstanding in either period - -
Common stock, $0.001 par value,
500,000,000 shares authorized
and 13,863,334 shares issued and
outstanding in 2006 and 2005 13,863 13,863
Additional paid-in capital 178,366,298 178,366,298
Cumulative dividends in excess of net
income (12,374,072) (6,104,985)
------------- -------------
Total stockholders' equity 166,006,089 172,275,176
------------- -------------
Total liabilities and stockholders'
equity $285,424,175 $243,330,489
============= =============
COLUMBIA EQUITY TRUST, INC.
AND COLUMBIA EQUITY TRUST, INC. PREDECESSOR
CONSOLIDATED AND COMBINED STATEMENTS OF OPERATIONS
Consolidated Combined
Columbia Equity Columbia
Trust, Inc. for Predecessor for
the the
Three Months Three Months
Ended Ended
June 30, 2006 June 30, 2005
---------------- ----------------
(Unaudited) (Unaudited)
Revenues
Base rents $6,510,618 $-
Recoveries from tenants 401,718 -
Fee income, primarily from related
parties 263,973 815,997
Parking and other income 157,964 -
---------------- ----------------
Total revenues 7,334,273 815,997
---------------- ----------------
Operating expenses
Property operating 1,099,415 -
Utilities 597,659 -
Real estate taxes and insurance 620,465 -
General and administrative, including share-based
compensation cost of $234,750,
$0, $469,500
and $0, respectively 1,344,597 1,165,924
Depreciation and amortization 3,547,507 4,357
---------------- ----------------
Total operating expenses 7,209,643 1,170,281
---------------- ----------------
Operating income (loss) 124,630 (354,284)
Other income and expense
Interest income 72,418 14,546
Interest expense (1,409,609) (2,250)
---------------- ----------------
Loss before income taxes,
equity in net income (loss) of
unconsolidated
real estate entities and
minority interest (1,212,561) (341,988)
Equity in net income (loss) of
unconsolidated
real estate entities 38,071 2,202,058
Minority interest 84,152 -
---------------- ----------------
(Loss) income before income taxes (1,090,338) 1,860,070
Provision for income taxes 8,000 197,823
---------------- ----------------
Net (loss) income $(1,098,338) $1,662,247
================ ================
Net loss per common share - Basic
and diluted $(0.08)
================
Weighted average shares of common
stock outstanding -
Basic and diluted 13,863,334
================
Consolidated
Columbia Combined
Equity Columbia
Trust, Inc. Predecessor
for the for the
Six Months Six Months
Ended Ended
June 30, June 30,
2006 2005
------------- ------------
(Unaudited) (Unaudited)
Revenues
Base rents $12,704,599 $-
Recoveries from tenants 711,016 -
Fee income, primarily from
related parties 668,321 1,438,356
Parking and
other income 294,173 -
------------- ------------
Total revenues 14,378,109 1,438,356
------------- ------------
Operating expenses
Property operating 2,240,608 -
Utilities 1,129,844 -
Real estate taxes and
insurance 1,277,302 -
General and
administrative,
including share-
based
compensation cost
of $234,750, $0,
$469,500
and $0,
respectively 2,408,971 1,544,898
Depreciation and
amortization 7,005,896 7,360
------------- ------------
Total operating
expenses 14,062,621 1,552,258
------------- ------------
Operating income
(loss) 315,488 (113,902)
Other income and expense
Interest income 115,753 19,878
Interest expense (2,561,582) (4,500)
------------- ------------
Loss before income taxes, equity in net income (loss) of
unconsolidated real estate
entities and minority interest (2,130,341) (98,524)
Equity in net
income (loss)
of unconsolidated
real estate entities (97,900) 2,304,975
Minority interest 159,654 -
------------- ------------
(Loss) income before
income taxes (2,068,587) 2,206,451
Provision for
income taxes 41,500 231,884
------------- ------------
Net (loss) income $(2,110,087) $1,974,567
============= ============
Net loss per
common share -
Basic and diluted $(0.15)
=============
Weighted average
shares of common
stock outstanding -
Basic and diluted 13,863,334
=============
Funds from Operations and Adjusted Funds from Operations
For the For the For the
Three Months Three Months Six Months
Ended Ended Ended
3/31/2006 6/30/2006 6/30/2006
------------ ------------ ------------
----------------------
Funds From Operations
----------------------
Net income available to
common shareholders $(1,011,750) $(1,098,338) $(2,110,087)
Adjust for: Real estate
depreciation
and
amortization -
consolidated
entities 3,453,202 3,542,235 6,995,437
Real estate
depreciation
and
amortization -
unconsolidated
entities 1,423,675 1,431,860 2,855,535
Minority
interests in
operating
partnership (75,501) (84,152) (159,654)
------------ ------------ ------------
Funds From Operations (FFO) 3,789,626 3,791,605 7,581,231
============ ============ ============
-------------------------------
Adjusted Funds From Operations
-------------------------------
Funds From Operations (FFO) $3,789,626 $3,791,605 $7,581,231
Adjust for: Non real
estate
depreciation 5,187 5,273 10,460
Amortization
of deferred
financing
costs 107,174 160,054 267,227
Amortization
of
above/below
market leases (16,217) (15,346) (31,563)
Non cash
compensation 234,750 234,750 469,500
Straight-line
rental income (645,592) (617,047) (1,262,639)
Non-revenue
enhancing/
recurring
capital
expenditures (189,168) (243,294) (432,462)
Second
generation
tenant
improvements (814,720) (925,517) (1,740,237)
------------ ------------ ------------
Adjusted Funds From
Operations (AFFO) 2,471,039 2,390,478 4,861,517
============ ============ ============
---------------------
Distribution Metrics
---------------------
Dividends paid to common
shareholders $2,079,500 $2,079,500 4,159,000
Dividends paid to operating
partnership unit holders 203,996 203,996 407,992
------------ ------------ ------------
Total dividends paid 2,283,496 2,283,496 4,566,992
============ ============ ============
Payout Ratios
Dividends Paid (Shares and
Units) / Funds from
Operations (diluted) 60.3% 60.2% 60.2%
Dividends Paid (Shares and
Units) / Adjusted Funds from
Operations (diluted) 92.4% 95.5% 93.9%
-------------
Reconciliation of Earnings Per Share and Funds
From Operations Per Share
Three months Three months Six months
ended ended ended
3/31/2006 6/30/2006 6/30/2006
------------ ------------ ------------
Earnings Per Share (EPS)
------------------------
Net Income for Common
Shareholders $(1,011,750) $(1,098,338) $(2,110,087)
plus: distributions paid on
vested LTIPS (if dilutive) 0 0 0
------------ ------------ ------------
Net Income for Basic EPS (1,011,750) (1,098,338) (2,110,087)
============ ============ ============
plus: dividends paid on
nonvested LTIPs (if
dilutive) 0 0 0
------------ ------------ ------------
Net Income for Diluted EPS (1,011,750) (1,098,338) (2,110,087)
============ ============ ============
-------------------------------------------------------- ------------
Earnings Per Share (EPS)
Basic (0.07) (0.08) (0.15)
Diluted (0.07) (0.08) (0.15)
-------------------------------------------------------- ------------
Funds From Operations Per Share (FFO)
-------------------------------------
Funds from Operations $3,789,626 $3,791,605 $7,581,231
adjust: minority interests
in operating partnership (271,527) (271,668) (543,195)
plus: distributions paid on
vested LTIPs 5,250 5,250 10,500
------------ ------------ ------------
Funds from Operations for
Basic FFO 3,523,349 3,525,187 7,048,536
adjust: minority interests
in operating partnership 271,527 271,668 543,195
plus: distributions paid on
nonvested LTIPs 38,250 38,250 38,250
------------ ------------ ------------
Funds from Operations for
Diluted FFO 3,833,126 3,835,105 7,629,981
============ ============ ============
Funds from Operations per Share
Basic 0.25 0.25 0.51
Diluted 0.25 0.25 0.50
-------------------------------------------------------- ------------
Weighted Average Shares Outstanding - EPS
-----------------------------------------
Weighted Average Shares for
Earnings Per Share
Common Shares - weighted
average 13,863,334 13,863,334 13,863,334
plus: vested LTIP Units (if
dilutive) 0 0 0
------------ ------------ ------------
Weighted Average Shares -
Basic EPS 13,863,334 13,863,334 13,863,334
============ ============ ============
plus: non vested LTIP
units (if dilutive) 0 0 0
------------ ------------ ------------
Weighted Average Shares -
Diluted EPS 13,863,334 13,863,334 13,863,334
============ ============ ============
Weighted Average Shares Outstanding - FFO
-----------------------------------------
Weighted Average Shares for Funds From Operations
Common Shares - weighted
average 13,863,334 13,863,334 13,863,334
plus: vested LTIP Units (if
dilutive) 35,000 35,000 35,000
------------ ------------ ------------
Weighted Average Shares -
Basic FFO 13,898,334 13,898,334 13,898,334
============ ============ ============
plus: Operating
Partnership Units -
weighted average 1,069,973 1,069,973 1,069,973
plus: non vested LTIP
units (if dilutive) 255,000 255,000 255,000
------------ ------------ ------------
Weighted Average Shares -
Diluted FFO 15,223,307 15,223,307 15,223,307
============ ============ ============
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