Columbia Equity Trust, Inc. Announces Third Quarter 2006 Results.WASHINGTON -- Columbia 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 in the Greater Washington, D.C. area, announced today its results of operations for the third quarter ended September 30, 2006. The financial results presented in this press release reflect the operating results of Columbia from July 5, 2005 to September 30, 2005 and the operating results of the Company for the three and nine months ended September 30, 2006. The financial results presented also contain the results of Columbia Predecessor ("Predecessor") from January 1, 2005 to July 4, 2005 which represents the period prior to the completion of our 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. ") and various formation transactions. Management does not believe that the Predecessor's historical financial results are necessarily comparable to its current financial results nor indicative of the Company's expected future operating performance, since year-to-year financial comparisons with the Predecessor are not meaningful given the Predecessor's limited scope of operations. In addition to the information included in this earnings release, Columbia has attached supplemental operating and financial data for the third quarter of 2006. This supplemental data also 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). Third Quarter Highlights Results for the quarter ended September 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 $3.9 million or $0.26 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 nine months ended September 30, 2006, FFO was $11.5 million or $0.77 per diluted share. * Quarterly Adjusted Funds from Operations ("AFFO AFFO Adjusted Funds From Operation ") totaled $3.5 million. For the nine months ended September 30, 2006, AFFO was $8.4 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 in the supplemental financial data attached to this release. * The net loss for the quarter was $1.1 million or $(0.08) per diluted share. The net loss for the nine months ended September 30, 2006 was $3.2 million or $(0.23) per share. * Declared a dividend of $0.15 per share for the quarter which was paid on October 31, 2006. * Completed the acquisition of 101 Orchard Ridge Drive, a 100% leased 102,400 square foot office property, for a purchase price of approximately $26.7 million at an expected first-year net operating income-to-purchase price return (cash basis) of approximately 7.6%. * Completed the acquisition of a leasehold interest in Georgetown Plaza, a 67% leased 148,000 square foot office and retail property, through a joint venture with an institutional partner. The joint venture acquired Georgetown Plaza for a purchase price of $23.0 million. Georgetown Plaza is expected to generate a first year net operating income-to-purchase price return of 5.9% on a cash basis, which was calculated after including a deduction for ground rent expense. Columbia maintains a 40% ownership interest in the Georgetown Plaza joint venture. * Entered into a purchase contract to acquire Stafford Commerce Center, a portfolio of four multi-tenant office buildings, for a combined purchase price of $30.2 million. * Executed nine leases during the quarter totaling 30,329 square feet at a weighted average rental rate of $31.90. Leases covering approximately 36,224 square feet of space expired during the quarter of which we renewed approximately 18,694 square feet resulting in a retention rate of 52%. * Overall portfolio occupancy for in-service properties at September 30, 2006 was 91% compared to 91% at the end of the second quarter of 2006. Recent Developments * On November 3, 2006 Columbia entered into an agreement to sell its Greenbriar property for $21,400,000. Columbia's investment in the property as of September 30, 2006 was $15,833,000. The Company intends to use the proceeds from the sale of Greenbriar to fund, in part, the acquisition of Stafford Commerce Center. The sale is subject to usual and customary closing conditions. * On November 5, 2006, Columbia announced that it had entered into a definitive agreement with an affiliate of JPMorgan Asset Management's Special Situation Property Fund ("SSPF SSPF Space Station Processing Facility SSPF Sequential Sampling Particle Filter ") whereby SSPF will acquire Columbia in an all cash merger for $19.00 per share. The merger agreement and related transactions were approved by the full Board of Directors of Columbia and a committee of independent directors. Completion of the merger is currently expected to occur during the first quarter of 2007 and is subject to the requisite approval of Columbia's stockholders and certain other conditions set forth in the merger agreement. Completion of the merger is not contingent on Adj. 1. contingent on - determined by conditions or circumstances that follow; "arms sales contingent on the approval of congress" contingent upon, dependant on, dependant upon, dependent on, dependent upon, depending on, contingent receipt of financing by SSPF. Portfolio Overview At the end of the third quarter of 2006, we owned or maintained interests in a portfolio of 21 commercial office properties containing an aggregate of approximately 2.9 million net rentable square feet and two properties under development or pre-development that, upon completion, will comprise approximately 225,000 net rentable square feet. Overall portfolio occupancy for in-service properties at September 30, 2006 was 91% compared to 91% at the end of the second quarter of 2006. 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 6.2% 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 September 30, 2006. Financial Structure At September 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 46%, based on the Company's closing stock price of $16.17 on that date. Total debt outstanding, including our pro rata share of joint venture debt, was $212.7 million at September 30, 2006. Of that amount, $180.3 million (85% of total debt) was fixed rate with a weighted average interest rate of 5.43% and a weighted average maturity of 5.6 years. The remaining $32.7 million was floating-rate debt, of which $30.9 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. The weighted average interest rate on our pro rata share of floating rate debt was 6.55%. Forward Guidance As announced on Columbia's Fourth Quarter earnings call in March 2006, the Company does not currently intend to provide quarterly guidance or update its 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 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 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 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. 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 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; completion of the Company's merger with Special Situation Property Fund; 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. 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 31, 2005 filed on March 31, 2006. The forward-looking statements contained herein represent the Company's judgment as of the date hereof 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 September 30, 2006. [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] |
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