Cornerstone Properties Inc. Announces 1999 Third Quarter and Nine Months Results.NEW YORK--(BUSINESS WIRE)--Nov. 1, 1999-- Cornerstone cornerstone Ceremonial building block, dated or otherwise inscribed, usually placed in an outer wall of a building to commemorate its dedication. Often the stone is hollowed out to contain newspapers, photographs, or other documents reflecting current customs, with a view to Properties Inc. (NYSE NYSE See: New York Stock Exchange :CPP cpp - C preprocessor. ) Third Quarter and Year-to-Date Year-to-date (YTD) The period beginning at the start of the calendar year up to the current date. 1999 Highlights -- FFO FFO See: Funds from operations 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 1999 third quarter increased approximately 11% over the 1998 period. -- Year-to-date same store net operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. up 4.54% over the same period in 1998. -- Year-to-date FFO per share increased over 9.3% as compared to the same period in 1998. Occupancy increased to 97.6% from 96.8%. -- Sales of nine non-core properties totaling over $200 million in the Charlotte, Phoenix, Northern and Southern California Southern California, also colloquially known as SoCal, is the southern portion of the U.S. state of California. Centered on the cities of Los Angeles and San Diego, Southern California is home to nearly 24 million people and is the nation's second most populated region, markets. -- The company signed an agreement with Allied Riser Communications to provide state of the art data, voice, and video capabilities to tenants. Cornerstone Properties Inc. (NYSE:CPP), a real estate investment trust, announced today results for its third quarter and nine months ended September September: see month. 30, 1999. 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) allocated to shareholders (adjusted for convertible debt) amounted to $60,587,000 or $0.40 per share calculated on 152,793,000 average diluted total shares outstanding, compared to $39,396,000, or $0.36 per diluted share on 109,931,000 average diluted total shares outstanding for the three months ended September 30, 1998. Revenues for the 1999 quarter were $156,539,000 compared to $89,038,000 in the 1998 third quarter. Net income for the third quarter of 1999 grew to $42,267,000 compared to $18,958,000 in the third quarter of 1998. The increase in FFO per share was due to the accretive impact of the Company's acquisitions over the past twelve months and internal growth. As defined by NAREIT NAREIT National Association of Real Estate Investment Trusts , funds from operations is net income excluding expenses from debt restructuring Debt Restructuring A method used by companies with outstanding debt obligations to alter the terms of the debt agreements in order to achieve some advantage. Notes: , gains (or losses) on sale of property, plus depreciation and amortization. Year-to-date FFO allocated to shareholders (adjusted for convertible debt) amounted to $180,332,000 or $1.18 per share calculated on 152,698,000 average diluted total shares outstanding, compared to $113,420,000, or $1.08 per diluted share on 104,940,000 average diluted total shares outstanding for the nine months ended September 30, 1998. Year-to-date net operating income before depreciation from Cornerstone Properties' real estate assets increased 85.2% to $306,692,000 for the nine months ended September 30, 1999, from $165,624,000 for the comparable period in 1998. Revenues for the 1999 nine months were $461,933,000 compared to $257,084,000 in 1998. Year-to-date net income increased to $97,039,000 compared to $60,964,000 for 1998. John S. Moody mood·y adj. 1. Given to frequent changes of mood; temperamental. 2. Subject to periods of depression; sulky. 3. Expressive of a mood, especially a sullen or gloomy mood. , President 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. said, "Cornerstone Properties' third quarter results continue to reflect the benefits of Cornerstone's current business plan. While the public markets continue to constrain con·strain tr.v. con·strained, con·strain·ing, con·strains 1. To compel by physical, moral, or circumstantial force; oblige: felt constrained to object. See Synonyms at force. 2. access to capital for REITs, the Company continues to increase shareholder value through the disposition of non-core assets, accretive development and focus on its core markets. Over 70% of our portfolio is situated in the top five office markets per a recent survey in Emerging Trends, as measured by growth and constraints CONSTRAINTS - A language for solving constraints using value inference. ["CONSTRAINTS: A Language for Expressing Almost-Hierarchical Descriptions", G.J. Sussman et al, Artif Intell 14(1):1-39 (Aug 1980)]. in new supply. We continue to see strong absorption, increasing rental rates and reduced 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. in these markets." Quarterly Dividend Declared The Company declared a quarterly dividend of $0.30 per share payable on November November: see month. 30, 1999 to shareholders of record as of October 29, 1999. "Same Store" Revenue Growth Continues The Company achieved year to date "same store" net operating income growth of 4.54% over 1998 at the 20 properties owned over the same period. This increase is due to a 3.76% increase in revenues while expenses increased only 2.76% and reflects the strengthening of fundamentals in the Company's core markets. Leasing Update: Tenant Retention Rate 70% and Overall Occupancy Rate 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) 97.6% During the third quarter of 1999, strong leasing in several core markets provided the catalyst to increase occupancy from 96.8% to 97.6% at a 70% year-to-date tenant retention ratio. The San Mateo San Mateo (săn mətā`ō), city (1990 pop. 85,486), San Mateo co., W Calif., on San Francisco Bay; inc. 1894. It is a commercial and retail center with some high-technology manufacturing. San Mateo, Spanish for St. County and West Los Angeles
Sale of None-Core Properties Thus far in 1999, a total of nine non-core properties totaling more than $200,000,000 were sold in the Phoenix, Charlotte, Northern and Southern California markets. Cornerstone Properties has now withdrawn completely from Charlotte and Phoenix -- markets which did not fit the Cornerstone model of high demand growth and supply constraint Constraint A restriction on the natural degrees of freedom of a system. If n and m are the numbers of the natural and actual degrees of freedom, the difference n - m is the number of constraints. . Properties sold in the Northern and Southern California markets, while in strong sub-markets, do not fit the current Cornerstone investment criteria in terms of size and quality. John S. Moody, commented, "These sales are consistent with a focus on core assets in core markets and our increasing focus on improving our return on invested assets. We anticipate completing another $300 million in sales by year-end and will continue to direct the proceeds to debt reduction, funding of our development pipeline and new acquisitions." Agreement Signed with Allied Riser Communications Cornerstone announced during the third quarter the signing of a non-exclusive agreement with Allied Riser Communications Corp. (ARC) to provide high capacity, high performance telecommunications services In telecommunication, the term telecommunications service has the following meanings: 1. Any service provided by a telecommunication provider. 2. to its tenants. ARC offerings to Cornerstone's 1900-plus tenants will include ultra high-speed internet See broadband. access, advanced conference-calling services, video links to computer screens and other enhanced telecommunications services. As part of the ARC/Cornerstone arrangement, Cornerstone will receive warrants for shares of common stock in ARC. Cornerstone will also participate in the revenues ARC generates in Cornerstone's buildings, through a revenue sharing revenue sharing Funding arrangement in which one government unit grants a portion of its tax income to another government unit. For example, provinces or states may share revenue with local governments, or national governments may share revenue with provinces or states. program. Additionally, Cornerstone has made a $1.5 million equity investment in ARC. The Cornerstone Properties Third Quarter Supplemental Package is available online at www.cstoneprop.com. Cornerstone Properties Inc. is a self-administered equity real estate investment trust (REIT REIT See: Real Estate Investment Trust REIT See real estate investment trust (REIT). ) investing in Class A office properties in prime locations in major suburban markets and central business districts. The Company, through its subsidiaries, currently owns interests in 89 Class A office properties throughout 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. totaling approximately 19 million square feet. Cornerstone's common stock is traded on the New York Stock Exchange New York Stock Exchange (NYSE) World's largest marketplace for securities. The exchange began as an informal meeting of 24 men in 1792 on what is now Wall Street in New York City. under the ticker symbol Ticker Symbol An arrangement of characters (usually letters) representing a particular security listed on an exchange or otherwise traded publicly. When a company issues securities to the public marketplace, it selects an available ticker symbol for its securities which investors CPP. This press release contains forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. within the meaning of the Federal securities laws. Forward-looking statements are inherently subject to risks and uncertainties, many of which cannot be predicted with accuracy, that could cause the actual results, performance or achievements of Cornerstone to differ materially from those reflected in such forward-looking statements. Information contained in this press release regarding current and future market conditions is based on Cornerstone's and assessment of real estate markets as of this date and is subject to the uncertainties inherent in such an assessment. In particular, but not exclusively, national and regional economic conditions, the rate of new construction, and demand and supply in a given market will affect leasing activity, projected rents and the cost of lease renewals. For more information on Cornerstone Properties visit Cornerstone Properties' Web site at http://www.cstoneprop.com -0-
Cornerstone Properties Inc.
Funds From Operations
September 30, 1999
3 Months 3 Months 9 Months 9 Months
Ended Ended Ended Ended
9/30/99 9/30/98 9/30/99 9/30/98
(in thousands, except per share amounts)
Rental Income (1) $ 156,876 $ 90,897 $ 464,325 $ 259,992
Building Operating
Expenses (1) 53,520 33,364 157,363 94,368
--------------------------------------------------
Building Net
Operating Income 103,356 57,533 306,962 165,624
--------------------------------------------------
Corporate General and
Administrative(1)(2) (8,777) (3,169) (24,512) (8,713)
Interest and Other
Income (1) 3,937 1,955 10,832 7,167
--------------------------------------------------
EBITDA 98,516 56,319 293,282 164,078
--------------------------------------------------
Interest Expense (1) (35,726) (16,057) (106,005) (47,724)
Minority
Adjustments(1) (2,384) (1,453) (7,502) (4,671)
Rent Notes - 387 - 1,133
--------------------------------------------------
Funds From Operations 60,406 39,196 179,775 112,816
Interest on
Convertible Debt 181 200 557 604
Funds From Operations
(Adjusted for
convertible debt) $ 60,587 $ 39,396 $ 180,332 $ 113,420
--------------------------------------------------
Weighted Average
Diluted
Shares/Units 152,793 109,931 152,698 104,940
FFO Per Share/Unit
(Diluted) $ 0.40 $ 0.36 $ 1.18 $ 1.08
Less: Capital
Expenditures Per
Share/Unit 0.04 0.02 0.11 $ 0.05
--------------------------------------------------
AFFO Per Share/Unit $ 0.36 $ 0.34 $ 1.07 $ 1.04
--------------------------------------------------
Funds From
Operations $ 60,406 $ 39,196 $ 179,775 $ 112,816
Less: Preferred
Dividends (875) (875) (2,625) (2,625)
Less: Recurring Lease
Costs and Capital
Expenditures (3) (5,547) (2,062) (16,757) (5,690)
Less: Straight Line
Rents Adjusted For
Minority Interest (6,266) (3,483) (19,738) (10,392)
--------------------------------------------------
Funds Available for
Distribution $ 47,718 $ 32,776 $ 140,655 $ 94,109
--------------------------------------------------
Weighted Average
Common Shares and
Units Outstanding 148,648 105,720 148,648 100,729
Funds Available for
Distribution Per
Share/Unit $ 0.32 $ 0.31 $ 0.95 $ 0.93
Distribution Per
Share/Unit $ 0.30 $ 0.30 $ 0.90 $ 0.90
(1) For the three months ended September 30, 1999 rental income has
been increased by $3,017,000 building operating expenses have
been increased by $1,146,000, corporate general and
administrative expense has been increased by $1,553,000, interest
and other income has been increased by $1,560,000, interest
expense has been increased by $599,000 and minority adjustments
have been increased $602,000 in order to show Cornerstone's
equity investments had they been consolidated. For the three
months ended September 30, 1998 rental income has been increased
by $7,670,000 and building operating expenses have been increased
by $2,434,000 in order to show Cornerstone's equity investments
had they been consolidated.
For the nine months ended September 30, 1999 rental income has
been increased by $8,816,000, building operating expenses have
been increased by $3,712,000, corporate general and
administrative expense has been increased by $4,963,000, interest
and other income has been increased by $5,093,000, interest
expense has been increased by $1,806,000 and minority adjustments
have been increased $1,620,000 in order to show Cornerstone's
equity investments had they been consolidated. For the nine
months ended September 30, 1998 rental income has been increased
by $20,225,000 and building operating expenses have been
increased by $6,521,000 in order to show Cornerstone's equity
investments had they been consolidated.
(2) Non-recurring merger severance costs of $247,000 have been
deducted from general and administrative expenses.
(3) Based on a five year 1995-1999 average of recurring (non revenue
generating) tenant leasing costs of $9.25 per square foot leased
times the five year (1999-2003) average quarterly lease
expiration (adjusted for minority interest) of 528,615 square
feet or $4,889,689, plus a capital expenditure reserve (adjusted
for minority interest) of $0.14 per square foot ($657,197).
Year to date the Company has incurred $17,762,292 in recurring
tenant costs (adjusted for minority interest) in leasing
1,732,437 square feet or a cost of $10.25 per square foot. Year
to date the Company has incurred $2,367,641 in recurring capital
costs (adjusted for minority interest) or $0.17 per square foot
on an annualized basis.
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