Crescent Announces Second Quarter 2004 Results.FORT WORTH, Texas Fort Worth is the fifth-largest city in the state of Texas, 18th-largest city in the United States[1], and voted one of "America’s Most Livable Communities. -- Crescent Real Estate Equities Company Crescent Real Estate Equities Co. (NYSE: CEI) is a Fort Worth, Texas-based real estate investor with holdings mainly in office and hotel properties, including several landmark buildings in the southern United States. (NYSE NYSE See: New York Stock Exchange :CEI CEI Competitive Enterprise Institute CEI Conferenza Episcopale Italiana (Italian bishop conference) CEI Central European Initiative CEI Comitato Elettrotecnico Italiano (Italian Electrotechnical Committee) ) today announced results for the second quarter 2004. 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. available to common shareholders before impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. charges related to real estate assets - 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. ("FFO FFO See: Funds from operations ") for the three months ended June June: see month. 30, 2004 was $31.0 million, or $0.27 per share and equivalent unit. These compare to FFO of $36.4 million or $0.31 per share and equivalent unit, for the three months ended June 30, 2003. FFO for the six months ended June 30, 2004 was $58.6 million, or $0.50 per share and equivalent unit. These compare to FFO of $77.9 million, or $0.67 per share and equivalent unit, for the six months ended June 30, 2003. Net loss available to common shareholders for the three months ended June 30, 2004 was ($17.5) million, or ($0.18) per share (diluted). This compares to a net loss of ($6.1) million, or ($0.06) per share (diluted), for the three months ended June 30, 2003. Net loss available to common shareholders for the six months ended June 30, 2004 was ($36.1) million, or ($0.36) per share (diluted). This compares to a net loss of ($25.4) million, or ($0.26) per share (diluted), for the six months ended June 30, 2003. Funds from operations is a supplemental non-GAAP financial measurement used in the real estate industry to measure and compare the operating performance of real estate companies, although these companies may calculate funds from operations in different ways. Crescent crescent, emblematic representation of the quarter moon. The crescent and star, ancient Byzantine symbols that became the emblems of Constantinople, were also assumed as the standard of the Ottoman Turks. reports FFO before taking into account impairment charges required by GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). which are related to its real estate assets. A reconciliation of Crescent's FFO before and after such impairments to GAAP net income is included in the Company's financial statements accompanying this press release and in the "Second Quarter 2004 Supplemental Operating and Financial Data" located on the Company's website. FFO should not be considered an alternative to net income. According to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. John C. Goff n. 1. A silly clown. 1. A game. See Golf. , Vice Chairman and Chief Executive Officer, "Our second quarter FFO of $0.27 per share was in line with our expectations of $0.26 to $0.28 per share. Although our markets continue to be challenging, we still see 2004 as a year of stabilization Stabilization The action undertakes a country when it buys and sells its own currency to protect its exchange value. Actions registered competitive traders undertake by on the NYSE to meet the exchange requirement that 75% of their traded be stabilizing, meaning that sell orders , and we continue to actively manage and reposition our portfolio for improving fundamentals. "Strategically, we are adapting to the current real estate environment in which many investors are seeking direct real estate ownership. We continue to capitalize on Cap´i`tal`ize on` v. t. 1. To turn (an opportunity) to one's advantage; to take advantage of (a situation); to profit from; as, to capitalize on an opponent's mistakes s>. this meaningful trend through joint ventures with institutional partners who seek the alignment of interests with our equity investments and who value our management platform. Additionally, we continue to sell non-core assets and expand our joint-venture program on our existing portfolio, as well as on new acquisitions. In the second quarter alone, we were successful in selling three office properties totaling 784,000 square feet that did not meet our 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. investment criteria. We are also under contract to acquire a high-quality Miami office property, The Alhambra Alhambra, Moorish citadel, Spain Alhambra [Arab.,=the red], extensive group of buildings on a hill overlooking Granada, Spain. They were built chiefly between 1230 and 1354 and they formed a great citadel of the Moorish kings of Spain. , which will be a future candidate for joint venture." On July July: see month. 15, 2004, Crescent announced that its Board of Trust Managers had declared cash dividends of $0.375 per share for Common, $0.421875 per share for Series A Convertible Preferred, and $0.59375 per share for Series B Redeemable Redeemable Eligible for redemption under the terms of an indenture. Preferred. The dividends are payable August 13, 2004, to shareholders of record on July 30, 2004. BUSINESS SECTOR REVIEW Office Sector (67% of Gross Book Value of Real Estate Assets as of June 30, 2004) Operating Results Office property 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. ("NOI NOI Net Operating Income NOI Notice of Intent NOI Nation of Islam NOI Notice of Inquiry NOI Neuro Orthopaedic Institute NOI New Organizing Institute NOI Notice of Interest NOI No Offense Intended NOI National Olympiad in Informatics ") declined 2.9% for the three months ended June 30, 2004 from the same period in 2003 for the 26.0 million square feet of office property space owned during both periods, excluding properties held for sale. Average occupancy for these same-store properties for the three months ended June 30, 2004 was 86.1% compared to 85.7% for the same period in 2003. Crescent's overall office portfolio, excluding properties held for sale, was 88.1% leased and 87.0% occupied as of June 30, 2004. During the three months ended June 30, 2004 and 2003, Crescent received $5.9 million and $0.9 million, respectively, of lease termination fees termination fee The one-time charge for terminating or transferring an individual retirement account. If a financial institution charges a termination fee, the fee must be spelled out in the original agreement that is signed when the account is opened. . Crescent's policy is to exclude lease termination fees from its same-store NOI calculation. Office property same-store net operating income ("NOI") declined 3.5% for the six months ended June 30, 2004 from the same period in 2003 for the 26.0 million square feet of office property space owned during both periods, excluding properties held for sale. Average occupancy for these same-store properties for the six months ended June 30, 2004 was 85.8% compared to 85.7% for the same period in 2003. During the six months ended June 30, 2004 and 2003, Crescent received $7.2 million and $3.0 million, respectively, of lease termination fees. Crescent's policy is to exclude lease termination fees from its same-store NOI calculation. The Company leased 1.0 million net rentable square feet during the three months ended June 30, 2004, of which 509,000 square feet were renewed or re-leased. The weighted average full service rental rate (which includes expense reimbursements) decreased 9.0% from the expiring ex·pire v. ex·pired, ex·pir·ing, ex·pires v.intr. 1. To come to an end; terminate: My membership in the club has expired. 2. rates for the leases of the renewed or re-leased space. All of these leases have commenced or will commence within the next twelve months. Tenant improvements related to these leases were $1.87 per square foot per year and leasing costs were $1.17 per square foot per year. The Company leased 2.3 million net rentable square feet during the six months ended June 30, 2004, of which 1.2 million square feet were renewed or re-leased. The weighted average full service rental rate (which includes expense reimbursements) decreased 13.1% from the expiring rates for the leases of the renewed or re-leased space. All of these leases have commenced or will commence within the next twelve months. Tenant improvements related to these leases were $1.77 per square foot per year and leasing costs were $1.00 per square foot per year. Denny Denny may refer to:
The officer of a firm responsible for day-to-day management, usually the president or an executive vice-president. , commented, "We saw a modest rise in our office occupancy which ended the second quarter at 87.0%, up from 86.4% at the end of the first quarter, both excluding properties held for sale. We are still focused on achieving 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. occupancy levels over the next 12 to 18 months and, upon stabilization, we expect to begin to see meaningful pricing power Pricing Power An economic term referring to the effect that a change in a firm's product price has on the quantity demanded of that product. Pricing power ties in with the "Price Elasticity of Demand. . "Today, our portfolio expirations continue to be manageable. At the beginning of 2004, we had 5.4 million gross square feet of leases scheduled to expire expire /ex·pire/ (ek-spi´er) 1. to exhale. 2. to die. ex·pire v. 1. To breathe one's last breath; die. 2. To exhale. for the year. Of that, 90% has been addressed - 86% by signed leases and 4% by leases in negotiation. 2005 expirations represent approximately 10% of the portfolio, for which our leasing teams have already made progress." Acquisitions The pending acquisition of The Alhambra, a 318,000 square-foot Class A office property located in the Coral Gables Coral Gables, city (1990 pop. 40,091), Miami-Dade co., SE Fla., SW of Miami; inc. 1925. Founded at the height of the Florida land boom, Coral Gables is a noted planned city, with tree-lined boulevards and Mediterranean-style buildings. 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. in Miami, is expected to close in August. The office property is currently 93% leased. On May 10, 2004, Crescent acquired the remaining office property within the Hughes Center office complex in Las Vegas Las Vegas (läs vā`gəs), city (1990 pop. 258,295), seat of Clark co., S Nev.; inc. 1911. It is the largest city in Nevada and the center of one of the fastest-growing urban areas in the United States. for $18.3 million. This 86,000 square-foot office property was not a part of the original portfolio acquisition, as a third-party joint-venture partner expressed the desire to exercise its right of first refusal Right of First Refusal In general, the right of a person or company to purchase something before the offering is made available to others. Notes: For example, a football team may have the right of first refusal on a player's contract. . However, this exercise option was later declined, at which time, Crescent agreed to purchase the property. Dispositions On July 29, 2004, Crescent sold 12404 Park Central, a 239,000 square-foot Class A office property located in the LBJ Freeway submarket of Dallas Dallas, city (1990 pop. 1,006,877), seat of Dallas co., N Tex., on the Trinity River near the junction of its three forks; inc. 1871. The second largest Texas city, after Houston, and the eighth largest U.S. . The sale generated proceeds, net of selling costs, of approximately $9.3 million, which were used to pay down property-level secured debt. On July 2, 2004, Crescent sold 5050 Quorum A majority of an entire body; e.g., a quorum of a legislative assembly. A quorum is the minimum number of people who must be present to pass a law, make a judgment, or conduct business. , a 134,000 square-foot Class A office property located in the Quorum/Bent Tree submarket of Dallas. The sale generated proceeds, net of selling costs, of approximately $8.9 million, which were used to pay down debt on the Company's 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. Crescent retained the management and leasing responsibilities for this property. On June 29, 2004, Crescent sold Addison Addison, village (1990 pop. 32,058), Du Page co., NE Ill.; inc. 1884. An industrial suburb of Chicago, it manufactures machinery and plastic items. Tower, a 146,000 square-foot Class A office property located in the Quorum/Bent Tree submarket of Dallas. The sale generated proceeds, net of selling costs, of approximately $8.8 million, which were used to pay down debt on the Company's revolving credit facility. On June 17, 2004, Crescent sold Ptarmigan ptarmigan (tär`məgən): see grouse. ptarmigan Any of three or four species of grouse (genus Lagopus) of cold regions. Ptarmigan plumage changes from white in winter to gray or brown, with barring, in spring and summer. Place, a 419,000 square-foot Class A office property located in the Cherry Creek Cherry Creek may refer to:
On April 13, 2004, Crescent sold Liberty Plaza, a 219,000 square-foot Class A office property located in North Dallas North Dallas is an expansive area of numerous communities and neighborhoods in Dallas, Texas, (USA). It spans portions of three counties: Collin, Dallas, and Denton, and has strong social ties to two enclaves of Dallas (University Park and Highland Park) and a near-enclave . The sale generated proceeds, net of selling costs, to Crescent of approximately $10.8 million, which were used to pay down the Company's revolving credit facility. Other Announcements On May 17, 2004, Crescent announced that El Paso El Paso (ĕl pă`sō), city (1990 pop. 515,342), seat of El Paso co., extreme W Tex., on the Rio Grande opposite Juárez, Mex.; inc. 1873. Corporation plans to move all personnel from Crescent's Greenway Plaza Greenway Plaza is a master-planned mixed-use development off of U.S. Highway 59 in Houston, Texas, five miles (8 kilometers) west of Downtown Houston and three miles (5 kilometers) east of Uptown Houston. complex, located in the Buffalo Speedway Speedway, town (1990 pop. 13,092), Marion co., central Ind., just W of Indianapolis; inc. 1926. The Indianapolis Speedway, site of the annual Indianapolis 500 car race, is located there. There is also light manufacturing. submarket of Houston Houston, city (1990 pop. 1,630,553), seat of Harris co., SE Tex., a deepwater port on the Houston Ship Channel; inc. 1837. Economy The fourth largest city in the nation and the largest in the entire South and Southwest, Houston is a port of entry; , to El Paso's existing headquarters in downtown Houston Downtown Houston is Houston's largest business district. In terms of office square footage, it is the seventh largest in the United States. Downtown Houston contains the headquarters of many prominent companies. . The move is expected to be complete by year end 2004. As of June 30, 2004, three El Paso subsidiaries leased a combined total of 912,000 square feet in Greenway Plaza which, under current terms, translates into 4.6% of Crescent's total annual office revenue. The El Paso subsidiaries are current on their rental obligations to Crescent, and Crescent's management expects that they will uphold up·hold tr.v. up·held , up·hold·ing, up·holds 1. To hold aloft; raise: upheld the banner proudly. 2. To prevent from falling or sinking; support. 3. the terms of their respective leases in Greenway Plaza, the majority of which expires in 2014. Resort / Hotel Sector (12% of Gross Book Value of Real Estate Assets as of June 30, 2004) Destination Resort Properties Same-store NOI for Crescent's five resort properties declined 26% for the three months ended June 30, 2004 from the same period in 2003. The average daily rate increased 10% and revenue per available room increased 3% for the three months ended June 30, 2004, compared to the same period in 2003. Weighted average occupancy was 64% for the three months ended June 30, 2004, compared to 68% for the three months ended June 30, 2003. Same-store NOI for Crescent's five resort properties declined 11% for the six months ended June 30, 2004 from the same period in 2003. The average daily rate increased 7% and revenue per available room increased 2% for the six months ended June 30, 2004, compared to the same period in 2003. Weighted average occupancy was 66% for the six months ended June 30, 2004, compared to 69% for the six months ended June 30, 2003. The decline in NOI for the three months and six months ended June 30, 2004, as compared to the prior year, is primarily the result of lower occupancy at Fairmont Fairmont, city (1990 pop. 20,210), seat of Marion co., N central W.Va., where the West Fork and Tygart rivers form the Monongahela; settled 1793 around Prickett's Fort (1774), inc. as Fairmont 1843. Sonoma Sonoma may refer to
Ventana Medical is one of the world’s leading developers and manufacturers of medical diagnostic instrument and reagent systems providing leading-edge automation technology for use in slide-based diagnosis of cancer and infectious disease. Inn & Spa due to renovations requiring 43% and 19% of the resort rooms, respectively, to be out of service for a period of time. The Sonoma renovation began in November November: see month. 2003 and was completed in July, while the Ventana renovation began in April 2004 and will be completed by the end of September September: see month. 2004. Residential Development Sector (16% of Gross Book Value of Real Estate Assets as of June 30, 2004) Upscale Residential Development Properties Crescent's overall residential investment generated $5.2 million and $11.3 million in FFO for the three months and six months ended June 30, 2004, respectively. This compares to $5.7 million and $11.0 million in FFO generated for the three months and six months ended June 30, 2003, respectively. Temperature-Controlled Logistics Sector (5% of Gross Book Value of Real Estate Assets as of June 30, 2004) Temperature-Controlled Logistics Properties Crescent's investment in temperature-controlled logistics properties generated $3.1 million and $8.0 million in FFO for the three months and six months ended June 30, 2004, respectively. This compares to $5.1 million and $12.1 million of FFO generated for the three months and six months ended June 30, 2003, respectively. The decline in FFO is primarily due to an increase in interest expense associated with the $254 million financing with Morgan Stanley  To comply with Wikipedia's , the introduction of this article needs a complete rewrite. completed in February February: see month. 2004
and a decrease in rental payments as a result of start-up Start-upThe earliest stage of a new business venture. costs incurred by the tenant in connection with its preparation of warehouse space for new customer business. BALANCE SHEET REVIEW On June 28, 2004, the Company obtained a loan from an affiliate of Lehman Brothers Lehman Brothers Holdings Inc. (NYSE: LEH), founded in 1850, is a diversified, global financial services firm. It is a participant in investment banking, equity and fixed income sales, research and trading, investment management, private equity, and private banking. Holding, Inc. ("Lehman Lehman is a common Germanic surname derived from the German word Lehen, meaning fiefdom. It may refer to: Surnames
See: London Interbank Offered Rate LIBOR See London interbank offered rate (LIBOR). + 150 basis points and matures in March 2005. Subsequently, on June 28, the Company entered into a transaction with Lehman, allowing Crescent, for tax purposes, to take advantage of a reverse Section 1031 like-kind exchange, following the acquisition of the Hughes Center office portfolio in Las Vegas. Crescent sold its interest, subject to the $90 million financing mentioned above, in the Fountain Place office property in Dallas to Crescent FP Investors, L.P., an entity which is owned 99.9% by an affiliate of Lehman and 0.1% by Crescent. The sale generated net proceeds Net Proceeds The amount received after all costs are deducted from the sale of a piece of property or security. Notes: In the case of an investor selling a security, net proceeds represent the proceeds from the sale minus any trading costs (i.e. commissions). of approximately $78.2 million. As part of the transaction, Lehman has an unconditional HEIR, UNCONDITIONAL. A term used in the civil law, adopted by the Civil Code of Louisiana. Unconditional heirs are those who inherit without any reservation, or without making an inventory, whether their acceptance be express or tacit. Civ. Code of Lo. art. 878. UNCONDITIONAL. right to sell its interest to Crescent at any time prior to November 30, 2004, for an agreed upon Adj. 1. agreed upon - constituted or contracted by stipulation or agreement; "stipulatory obligations" stipulatory noncontroversial, uncontroversial - not likely to arouse controversy fair value of $79.9 million. Because a contingency contingency n. an event that might not occur. exists, the sale is accounted for as a financing transaction for GAAP purposes. Therefore, both the asset and related debt remain on the Company's 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. until the contingency is satisfied. Crescent has retained the management and leasing responsibilities for Fountain Place. Also, on June 28, the Company paid off the $220 million Deutsche Bank Deutsche Bank AG (IPA: /'dɔɪ.tʃə/[1]) (ISIN: DE0005140008, NYSE: DB) (English: German Bank - CMBS CMBS See: Commercial Mortgage Backed Securities loan with approximately $168.2 million in proceeds from the aforementioned a·fore·men·tioned adj. Mentioned previously. n. The one or ones mentioned previously. aforementioned Adjective mentioned before Adj. 1. loan on Fountain Place and sale of interest to Lehman and $51.8 million in borrowings from the Company's revolving credit facility. EARNINGS OUTLOOK Crescent addresses earnings guidance in its earnings conference calls and provides documentation in its quarterly supplemental operating and financial data reports. Refer to the following paragraphs for details about accessing today's conference call, presentation, and supplemental operating and financial data report. CHANGES IN STATISTICAL REPORTING METHODS Beginning in the first quarter of 2004, the Company implemented two changes in office segment statistical reporting methods. First, to more appropriately reflect occupancy trends in continuing operations continuing operations Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the , the Company now excludes properties held for sale from occupancy and same-store statistics as noted. In addition, the Company's same-store statistics now include 100% of operations for all consolidated and unconsolidated joint-venture properties, rather than the Company's 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 joint-venture properties as in previous disclosures. In addition, beginning in the second quarter of 2004, the Company is no longer providing same-store statistics for its business-class hotel properties. Out of four hotels owned, two are now categorized cat·e·go·rize tr.v. cat·e·go·rized, cat·e·go·riz·ing, cat·e·go·riz·es To put into a category or categories; classify. cat as properties held for sale; therefore, same-store statistics for continuing operations are no longer considered useful. SUPPLEMENTAL OPERATING AND FINANCIAL DATA Crescent's "Second Quarter Supplemental Operating and Financial Data" is available on the Company's website (www.crescent.com) on the Investor Relations Investor relations The process by which the corporation communicates with its investors. page. To request a hard copy, please call the Company's investor relations department at (817) 321-2180. CONFERENCE CALL, WEBCAST AND PRESENTATION The Company will also host a conference call and audio webcast, both open to the general public, at 10:00 A.M. Central Time on Tuesday Tuesday: see week. , August 3, 2004, to discuss the second quarter results and provide a Company update. To participate in the conference call, please dial (800) 818-4442 domestically or (706) 679-3110 internationally, or you may access the audio webcast on the Company's website (www.crescent.com) in the investor relations section. A replay of the conference call will be available through August 17, 2004, by dialing (800) 642-1687 domestically or (706) 645-9291 internationally with a passcode of 8752623. 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. This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended a·mend v. a·mend·ed, a·mend·ing, a·mends v.tr. 1. To change for the better; improve: amended the earlier proposal so as to make it more comprehensive. 2. , and Section 21E of the Securities Exchange Act of 1934, as amended. These statements are generally characterized char·ac·ter·ize tr.v. character·ized, character·iz·ing, character·iz·es 1. To describe the qualities or peculiarities of: characterized the warden as ruthless. 2. by terms such as "believe," "expect," "anticipate" and "may". Although the Company believes that the expectations reflected in such forward-looking statements are based upon reasonable assumptions, the Company's actual results could differ materially from those described in the forward-looking statements. The following factors might cause such a difference: --The Company's ability, at its office properties, to timely lease unoccupied square footage and timely re-lease re-lease tr.v. re-leased, re-leas·ing, re-leas·es To lease again: re-leased the car. occupied square footage upon expiration EXPIRATION. Cessation; end. As, the expiration of, a lease, of a contract, or statute. 2. In general, the expiration of a contract puts an end to all the engagements of the parties, except to those which arise from the non- fulfillment of obligations created on favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. terms, which continue to be adversely affected by existing real estate conditions (including 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 in particular markets, decreased rental rates and competition from other properties) and may also be adversely affected by general economic downturns; --The continuation of relatively high vacancy rates and reduced rental rates in the Company's office portfolio as a result of conditions within the Company's principal markets; --Adverse changes in the financial condition of existing tenants, in particular El Paso Energy and its affiliates which provide 4.6% of the Company's 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. office revenues; --Further deterioration de·te·ri·o·ra·tion n. The process or condition of becoming worse. in the resort/business-class hotel markets or in the market for residential land or luxury residences, including single-family sin·gle-fam·i·ly adj. Relating to or being a dwelling designed for one family only: a single-family home; single-family occupancy. homes, townhomes and condominiums, or in the economy generally; --Financing risks, such as the Company's ability to generate revenue sufficient to service and repay existing or additional debt, increases in debt service associated with increased debt and with variable-rate Variable-rate A varible-rate agreement, as distinguished from a fixed-rate agreement, calls for an interest rate that may fluctuate over the life of the loan. The rate is often tied to an index that reflects changes in market rates of interest. debt, the Company's ability to meet financial and other covenants and the Company's ability to consummate To carry into completion; to fulfill; to accomplish. A Common-Law Marriage is consummated when the parties live in a manner intended to bring about public recognition of their relationship as Husband and Wife. financings and refinancings on favorable terms and within any applicable time frames; --The ability of the Company to dispose of To determine the fate of; to exercise the power of control over; to fix the condition, application, employment, etc. of; to direct or assign for a use. See also: Dispose its investment land, and other non-core assets, on favorable terms and within anticipated time frames; --The ability of the Company to reinvest re·in·vest tr.v. re·in·vest·ed, re·in·vest·ing, re·in·vests To invest (capital or earnings) again, especially to invest (income from securities or funds) in additional shares. available funds at anticipated returns and consummate anticipated office acquisitions on favorable terms and within anticipated time frames; --Further or continued adverse conditions in the temperature-controlled logistics business (including both industry-specific conditions and a general downturn Downturn The transition point between a rising, expanding economy to a falling, contracting one. downturn A decline in security prices or economic activity following a period of rising or stable prices or activity. in the economy) which may further jeopardize jeop·ard·ize tr.v. jeop·ard·ized, jeop·ard·iz·ing, jeop·ard·izes To expose to loss or injury; imperil. See Synonyms at endanger. the ability of the tenant to pay all current and deferred rent due; --The ability of the Company and Crescent Operating, Inc. ("COPI COPI Chevron Overseas Petroleum Inc. COPI Construction Output Price Index (UK) COPI Court-Ordered Protected Individual ") to satisfy the remaining conditions to achieve effectiveness of the COPI bankruptcy bankruptcy, in law, settlement of the liabilities of a person or organization wholly or partially unable to meet financial obligations. The purposes are to distribute, through a court-appointed receiver, the bankrupt's assets equitably among creditors and, in most plan, including COPI's sale of the temperature-controlled logistics tenant, its repayment of the loan from Bank of America
Bank of America (NYSE: BAC TYO: 8648 ) is the largest commercial bank in the United States in terms of deposits, and the largest company of its kind in the world. prior to October October: see month. 21, 2004, and the Company's issuance of Company common shares to the COPI stockholders; --The concentration of a significant percentage of the Company's assets in Texas; --The existence of complex regulations relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc the Company's status as a REIT REIT See: Real Estate Investment Trust REIT See real estate investment trust (REIT). , the effect of future changes in REIT requirements as a result of new legislation and the adverse consequences of the failure to qualify as a REIT; and --Other risks detailed from time to time in the Company's filings with the SEC. Given these uncertainties, readers are cautioned not to place undue reliance on such statements. The Company is not obligated ob·li·gate tr.v. ob·li·gat·ed, ob·li·gat·ing, ob·li·gates 1. To bind, compel, or constrain by a social, legal, or moral tie. See Synonyms at force. 2. To cause to be grateful or indebted; oblige. to update these forward-looking statements to reflect any future events or circumstances CIRCUMSTANCES, evidence. The particulars which accompany a fact. 2. The facts proved are either possible or impossible, ordinary and probable, or extraordinary and improbable, recent or ancient; they may have happened near us, or afar off; they are public or . ABOUT THE COMPANY Celebrating its tenth year, Crescent Real Estate Equities Company (NYSE:CEI) is one of the largest publicly held real estate investment trusts in the nation. Through its subsidiaries and joint ventures, Crescent owns and manages a portfolio of 75 premier office buildings totaling 30 million square feet primarily located in the Southwestern 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. , with major concentrations in Dallas, Houston, Austin, Denver, Miami and Las Vegas. In addition, Crescent has investments in world-class resorts and spas and upscale residential developments. For more information, visit the Company's website at http://www.crescent.com.
CRESCENT REAL ESTATE EQUITIES COMPANY
CONSOLIDATED BALANCE SHEETS
(dollars in thousands)
June 30, December 31,
2004 2003
------------ ------------
(unaudited) (unaudited)
ASSETS:
Investments in real estate:
Land $ 264,276 $ 236,956
Land improvements, net of accumulated
depreciation of $21,253 and $19,270
at June 30, 2004 and December
31, 2003, respectively 108,949 105,236
Building and improvements, net of
accumulated depreciation of $613,103
and $576,682 at June 30, 2004 and December
31, 2003, respectively 2,293,002 2,103,718
Furniture, fixtures and equipment, net
of accumulated depreciation of $41,263
and $33,344 at June 30, 2004 and December
31, 2003, respectively 50,977 43,227
Land held for investment or development 480,159 450,279
Properties held for disposition, net 138,333 219,786
------------- -------------
Net investment in real estate $ 3,335,696 $ 3,159,202
Cash and cash equivalents $ 57,026 $ 78,052
Restricted cash and cash equivalents 61,311 217,329
Defeasance investments 173,903 9,620
Accounts receivable, net 46,514 40,740
Deferred rent receivable 74,685 65,266
Investments in unconsolidated companies 346,637 440,594
Notes receivable, net 73,992 78,453
Income tax asset-current and deferred,
net 27,929 17,506
Other assets, net 269,813 207,701
------------- -------------
Total assets $ 4,467,506 $ 4,314,463
============= =============
LIABILITIES:
Borrowings under Credit Facility $ 232,500 $ 239,000
Notes payable 2,478,149 2,319,699
Accounts payable, accrued expenses and
other liabilities 428,319 370,136
Current income tax payable - 7,995
------------- -------------
Total liabilities $ 3,138,968 $ 2,936,830
------------- -------------
COMMITMENTS AND CONTINGENCIES:
MINORITY INTERESTS:
Operating partnership, 8,864,311 and
8,873,347 units, at June 30, 2004
and December 31, 2003, respectively $ 91,844 $ 108,706
Consolidated real estate partnerships 43,882 47,123
------------- -------------
Total minority interests $ 135,726 $ 155,829
------------- -------------
SHAREHOLDERS' EQUITY:
Preferred shares, $0.01 par value,
authorized 100,000,000 shares:
Series A Convertible Cumulative
Preferred Shares, liquidation preference
of $25.00 per share, 14,200,000 and
10,800,000 shares issued and
outstanding at June 30, 2004 and
December 31, 2003, respectively $ 319,166 $ 248,160
Series B Cumulative Preferred Shares,
liquidation preference of $25.00 per
share, 3,400,000 shares issued and
outstanding at June 30, 2004 and
December 31, 2003 81,923 81,923
Common shares, $0.01 par value, authorized
250,000,000 shares, 124,444,012 and
124,396,168 shares issued and outstanding
at June 30, 2004 and December 31, 2003,
respectively 1,238 1,237
Additional paid-in capital 2,245,955 2,245,683
Deferred compensation on restricted
shares (3,450) (4,102)
Accumulated deficit (987,744) (877,120)
Accumulated other comprehensive income (4,128) (13,829)
------------- -------------
$ 1,652,960 $ 1,681,952
Less - shares held in treasury, at cost,
25,121,861 common shares at June 30,
2004 and December 31, 2003 (460,148) (460,148)
------------- -------------
Total shareholders' equity $ 1,192,812 $ 1,221,804
------------- -------------
Total liabilities and
shareholders' equity $ 4,467,506 $ 4,314,463
============= =============
CRESCENT REAL ESTATE EQUITIES COMPANY
CONSOLIDATED STATEMENTS OF OPERATIONS
(dollars in thousands, except share data)
For the three months For the six months
ended June 30, ended June 30,
------------------------- -------------------------
2004 2003 2004 2003
----------- ----------- ----------- -----------
(unaudited) (unaudited)
REVENUE:
Office Property $ 131,752 $ 118,761 $ 254,370 $ 239,608
Resort/Hotel
Property 40,253 39,291 90,255 90,554
Residential
Development
Property 55,591 61,973 103,279 105,694
------------ ------------ ------------ ------------
Total Property
revenue $ 227,596 $ 220,025 $ 447,904 $ 435,856
------------ ------------ ------------ ------------
EXPENSE:
Office Property
real estate
taxes $ 16,719 $ 17,120 $ 33,779 $ 34,323
Office Property
operating
expenses 43,654 41,423 85,415 82,066
Resort/Hotel
Property
expense 35,833 33,361 75,903 73,308
Residential
Development
Property
expense 51,761 55,572 92,323 97,002
------------ ------------ ------------ ------------
Total Property
expense $ 147,967 $ 147,476 $ 287,420 $ 286,699
------------ ------------ ------------ ------------
Income from
Property
Operations $ 79,629 $ 72,549 $ 160,484 $ 149,157
------------ ------------ ------------ ------------
OTHER INCOME
(EXPENSE):
Income from
investment
land sales,
net 949 1,628 949 1,628
Gain on joint
venture of
properties,
net - - - 100
Interest and
other income 2,942 1,155 5,685 2,586
Corporate
general and
administrative (6,794) (5,729) (13,711) (11,610)
Interest
expense (45,429) (43,046) (90,437) (86,254)
Amortization of
deferred
financing
costs (3,076) (2,545) (6,790) (4,969)
Extinguishment
of debt (988) - (2,927) -
Depreciation
and
amortization (42,390) (32,864) (81,643) (68,554)
Impairment
charges related
to real estate
assets - - - (1,200)
Other expenses (94) (785) (149) (912)
Equity in net
income (loss) of
unconsolidated
companies:
Office Properties 748 1,864 1,690 3,322
Resort/Hotel
Properties (18) 1,382 (247) 2,125
Residential
Development
Properties (393) 1,540 (307) 2,510
Temperature-
Controlled
Logistics
Properties (2,707) (406) (3,608) 1,101
Other (515) 214 (581) (815)
------------ ------------ ------------ ------------
Total Other
Income
(Expense) $ (97,765) $ (77,592) $ (192,076) $ (160,942)
------------ ------------ ------------ ------------
LOSS FROM CONTINUING
OPERATIONS BEFORE
MINORITY
INTERESTS AND
INCOME TAXES $ (18,136) $ (5,043) $ (31,592) $ (11,785)
Minority
interests 2,205 (1,117) 4,126 580
Income tax
benefit 5,324 3,067 6,601 5,470
------------ ------------ ------------ ------------
LOSS BEFORE
DISCONTINUED
OPERATIONS AND
CUMULATIVE
EFFECT OF A
CHANGE IN
ACCOUNTING
PRINCIPLE $ (10,607) $ (3,093) $ (20,865) $ (5,735)
Income from
discontinued
operations, net
of minority
interests 3,621 4,496 5,456 8,096
Impairment
charges related
to real estate
assets from
discontinued
operations,
net of
minority
interests (424) (840) (2,418) (14,265)
Loss on real
estate from
discontinued
operations, net
of minority
interests (2,073) (41) (2,120) (329)
Cumulative effect
of a change in
accounting
principle, net
of minority
interests - - (363) -
------------ ------------ ------------ ------------
NET (LOSS)
INCOME $ (9,483) $ 522 $ (20,310) $ (12,233)
Series A
Preferred Share
distributions (5,991) (4,556) (11,742) (9,112)
Series B
Preferred Share
distributions (2,019) (2,019) (4,038) (4,038)
------------ ------------ ------------ ------------
NET LOSS AVAILABLE
TO COMMON
SHAREHOLDERS $ (17,493) $ (6,053) $ (36,090) $ (25,383)
============ ============ ============ ============
BASIC EARNINGS
PER SHARE DATA:
Loss available to
common shareholders
before
discontinued
operations and
cumulative
effect of a
change in
accounting
principle $ (0.19) $ (0.10) $ (0.38) $ (0.20)
Income from
discontinued
operations, net
of minority
interests 0.03 0.05 0.06 0.08
Impairment
charges
related to
real estate
assets from
discontinued
operations,
net of
minority
interests - (0.01) (0.02) (0.14)
Loss on real
estate from
discontinued
operations, net
of minority
interests (0.02) - (0.02) -
Cumulative effect
of a change in
accounting
principle, net of
minority
interests - - - -
------------ ------------ ------------ ------------
Net loss
available to
common
shareholders -
basic $ (0.18) $ (0.06) $ (0.36) $ (0.26)
============ ============ ============ ============
DILUTED EARNINGS
PER SHARE DATA:
Loss available to
common
shareholders
before discontinued
operations and
cumulative
effect of a
change in
accounting
principle $ (0.19) $ (0.10) $ (0.38) $ (0.20)
Income from
discontinued
operations, net
of minority
interests 0.03 0.05 0.06 0.08
Impairment
charges
related to
real estate
assets from
discontinued
operations,
net of
minority
interests - (0.01) (0.02) (0.14)
Loss on real
estate from
discontinued
operations, net
of minority
interests (0.02) - (0.02) -
Cumulative effect
of a change in
accounting
principle, net of
minority
interests - - - -
------------ ------------ ------------ ------------
Net loss
available to
common
shareholders -
diluted $ (0.18) $ (0.06) $ (0.36) $ (0.26)
============ ============ ============ ============
WEIGHTED AVERAGE
SHARES
OUTSTANDING -
BASIC 99,021,830 99,170,151 99,007,386 99,193,715
============ ============ ============ ============
WEIGHTED AVERAGE
SHARES
OUTSTANDING -
DILUTED 99,021,830 99,170,151 99,007,386 99,193,715
============ ============ ============ ============
CRESCENT REAL ESTATE EQUITIES COMPANY
CONSOLIDATED STATEMENTS OF FUNDS FROM OPERATIONS
(dollars in thousands, except share data)
For the three months
ended June 30,
-------------------------------------------------
(unaudited)
2004 2003
2004 Per 2003 Per
$ share $ share
------------ -------- ---------- -----------
NET (LOSS) INCOME (9,483) (0.08) 522 -
ADJUSTMENTS:
Depreciation and
amortization of
real estate assets 38,382 0.32 33,099 0.28
Loss on property
sales, net 2,437 0.02 479 0.01
Impairment charges
related to real
estate assets
and assets held for
sale 500 0.01 990 0.01
Adjustment for
investments in
unconsolidated companies:
Office
Properties 2,497 0.02 2,596 0.02
Resort/Hotel
Properties - - 355 -
Residential
Development
Properties 629 0.01 (512) -
Temperature-
Controlled
Logistics
Properties 5,785 0.05 5,486 0.05
Other - - (104) -
Unitholder
minority interest (1,700) (0.02) 105 -
Series A Preferred
Share distributions (5,991) (0.05) (4,556) (0.04)
Series B Preferred
Share distributions (2,019) (0.01) (2,019) (0.02)
------------ -------- ------------ -------------
FUNDS FROM OPERATIONS
AVAILABLE TO COMMON
SHAREHOLDERS BEFORE
IMPAIRMENT CHARGES
RELATED TO REAL
ESTATE ASSETS -
DILUTED (A) 31,037 0.27 36,441 0.31
============ ======== ============ =============
Impairment charges
related to real
estate assets (500) (0.01) (990) (0.01)
------------ -------- ------------ -------------
FUNDS FROM OPERATIONS
AVAILABLE TO COMMON
SHAREHOLDERS AFTER
IMPAIRMENT CHARGES
RELATED TO REAL
ESTATE ASSETS -
DILUTED (A) 30,537 0.26 35,451 0.30
============ ======== ============ =============
INVESTMENT
SEGMENTS:
Office Properties 75,326 0.64 69,555 0.60
Resort/Hotel
Properties 9,991 0.09 12,356 0.11
Residential
Development
Properties 5,168 0.04 5,705 0.05
Temperature-
Controlled
Logistics
Properties 3,078 0.03 5,079 0.04
OTHER:
Corporate general &
administrative (6,794) (0.06) (5,729) (0.05)
Interest expense (45,429) (0.39) (43,073) (0.37)
Series A Preferred
Share distributions (5,991) (0.05) (4,556) (0.04)
Series B Preferred
Share distributions (2,019) (0.01) (2,019) (0.02)
Other (B) (2,293) (0.02) (877) (0.01)
------------ -------- ------------ -------------
FUNDS FROM OPERATIONS
AVAILABLE TO COMMON
SHAREHOLDERS BEFORE
IMPAIRMENT CHARGES
RELATED TO REAL
ESTATE ASSETS -
DILUTED (A) 31,037 0.27 36,441 0.31
============ ======== ============ =============
Impairment charges
related to real
estate assets (500) (0.01) (990) (0.01)
------------ -------- ------------ -------------
FUNDS FROM OPERATIONS
AVAILABLE TO COMMON
SHAREHOLDERS AFTER
IMPAIRMENT CHARGES
RELATED TO REAL
ESTATE ASSETS -
DILUTED (A) 30,537 0.26 35,451 0.30
============ ======== ============ =============
WEIGHTED AVERAGE
SHARES
OUTSTANDING -
BASIC 99,021,830 99,170,151
WEIGHTED AVERAGE
SHARES/UNITS
OUTSTANDING -
DILUTED 116,864,647 116,931,793
DIVIDEND PAID PER
SHARE DURING PERIOD 0.375 0.375
SUPPLEMENTAL
INFORMATION:
Rental income
(expense) from
straight-line rents (3,816) 398
Temperature-
controlled capital
expenditures (557) -
Non Revenue-
enhancing capital
expenditures:
Resort/hotel
property
capital
expenditures (2,550) (1,525)
Office property
capital
expenditures (1,841) (2,109)
Office property
tenant
improvement
and leasing
costs (12,323) (10,562)
Depreciation and
amortization of
non-real estate
assets 3,284 2,239
Extinguishment of
debt 988 -
Amortization of
deferred financing
costs 3,076 2,545
FAS 141 Fair Market
Value Adjustments 42 -
For the six months
ended June 30,
--------------------
(unaudited)
2004 2003
2004 Per 2003 Per
$ share $ share
------------ -------- ----------- --------
NET (LOSS) INCOME (20,310) (0.17) (12,233) (0.10)
ADJUSTMENTS:
Depreciation and
amortization of real
estate assets 76,423 0.65 69,400 0.59
Loss on property sales, net 2,493 0.02 705 0.01
Impairment charges related
to real estate assets and
assets held for sale 2,851 0.02 18,018 0.15
Adjustment for investments in
unconsolidated companies:
Office Properties 4,905 0.04 5,418 0.05
Resort/Hotel
Properties - - 749 0.01
Residential
Development
Properties 52 - 227 -
Temperature-Controlled
Logistics Properties 11,580 0.10 10,996 0.09
Other - - (82) -
Unitholder minority interest (3,638) (0.03) (2,190) (0.02)
Series A Preferred Share
distributions (11,742) (0.10) (9,112) (0.08)
Series B Preferred Share
distributions (4,038) (0.03) (4,038) (0.03)
------------ ------- ------------ --------
FUNDS FROM OPERATIONS
AVAILABLE TO COMMON
SHAREHOLDERS BEFORE
IMPAIRMENT CHARGES
RELATED TO REAL ESTATE
ASSETS - DILUTED (A) 58,576 0.50 77,858 0.67
============ ======= ============ ========
Impairment charges related
to real estate assets (2,851) (0.02) (18,018) (0.15)
------------ ------- ------------ --------
FUNDS FROM OPERATIONS
AVAILABLE TO COMMON
SHAREHOLDERS AFTER
IMPAIRMENT CHARGES
RELATED TO REAL ESTATE
ASSETS - DILUTED (A) 55,725 0.48 59,840 0.52
============ ======= ============ ========
INVESTMENT SEGMENTS:
Office Properties 143,298 1.22 141,281 1.21
Resort/Hotel Properties 23,021 0.19 27,987 0.24
Residential Development
Properties 11,342 0.10 10,993 0.09
Temperature-Controlled
Logistics Properties 7,972 0.07 12,096 0.10
OTHER:
Corporate general &
administrative (13,711) (0.12) (11,610) (0.09)
Interest expense (90,437) (0.77) (86,306) (0.74)
Series A Preferred Share
distributions (11,742) (0.10) (9,112) (0.08)
Series B Preferred Share
distributions (4,038) (0.03) (4,038) (0.03)
Other (B) (7,129) (0.06) (3,433) (0.03)
------------ -------------------- --------
FUNDS FROM OPERATIONS
AVAILABLE TO COMMON
SHAREHOLDERS BEFORE
IMPAIRMENT CHARGES
RELATED TO REAL ESTATE
ASSETS - DILUTED (A) 58,576 0.50 77,858 0.67
============ ======= ============ ========
Impairment charges related
to real estate assets (2,851) (0.02) (18,018) (0.15)
------------ ------- ------------ --------
FUNDS FROM OPERATIONS
AVAILABLE TO COMMON
SHAREHOLDERS AFTER
IMPAIRMENT CHARGES
RELATED TO REAL ESTATE
ASSETS - DILUTED (A) 55,725 0.48 59,840 0.52
============ ======= ============ ========
WEIGHTED AVERAGE SHARES
OUTSTANDING - BASIC 99,007,386 99,193,715
WEIGHTED AVERAGE
SHARES/UNITS
OUTSTANDING - DILUTED 116,956,079 116,951,935
DIVIDEND PAID PER SHARE
DURING PERIOD 0.750 0.750
SUPPLEMENTAL INFORMATION:
Rental income (expense) from
straight-line rents (6,608) (415)
Temperature-controlled
capital expenditures (640) (951)
Non Revenue-enhancing
capital expenditures:
Resort/hotel property
capital expenditures (4,528) (3,346)
Office property
capital expenditures (2,565) (2,673)
Office property tenant
improvement and
leasing costs (28,334) (20,895)
Depreciation and
amortization of non-real
estate assets 5,748 4,710
Extinguishment of debt 2,927 -
Amortization of deferred
financing costs 6,790 4,969
FAS 141 Fair Market Value
Adjustments 284 -
(A) Funds from operations available to common shareholders before
impairment charges related to real estate assets - diluted, or
FFO, as the Company uses it, means net income (loss) available to
common shareholders, determined in accordance with Generally
Accepted Accounting Principles in the United States (GAAP),
excluding gains (losses) from sales of depreciable operating
property, excluding extraordinary items, as defined by GAAP, plus
depreciation and amortization of real estate assets, and after
adjustments for unconsolidated partnerships and joint ventures.
FFO is calculated on a diluted basis, which includes the effect of
operating partnership Unitholder minority interest. To calculate
basic FFO per share, the Company excludes Unitholder minority
interest from FFO and divides by basic weighted average shares
outstanding. FFO is a supplemental non-GAAP financial measurement
used in the real estate industry to measure and compare the
operating performance of real estate companies, although these
companies may calculate funds from operations in different ways.
Crescent reports FFO before taking into account impairment charges
required by GAAP which are related to its real estate assets. FFO
should not be considered an alternative to net income.
(B) Includes interest and other income, income/loss from other
unconsolidated companies, other expenses, depreciation and
amortization of non-real estate assets, and amortization of
deferred financing costs.
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