Crescent Announces Second Quarter 2006 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 of 2006. Net loss available to common shareholders for the three months ended June June: see month. 30, 2006, was ($4.7) million, or ($0.05) per share (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. ). These compare to net loss available to common shareholders of ($13.6) million, or ($0.14) per share (diluted), for the three months ended June 30, 2005. Net loss available to common shareholders for the six months ended June 30, 2006, was ($17.8) million, or ($0.18) per share (diluted). These compare to net loss available to common shareholders of ($22.8) million, or ($0.23) per share (diluted) for the six months ended June 30, 2005. 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 - diluted, as adjusted to exclude 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 and debt 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. charges related to the sale of real estate assets ("FFO FFO See: Funds from operations , as adjusted"), was $31.4 million, or $0.26 per share and equivalent unit, for the three months ended June 30, 2006, compared to $33.1 million, or $0.28 per share and equivalent unit, for the three months ended June 30, 2005. FFO, as adjusted to exclude debt extinguishment charges related to the sale of real estate assets for the six months ended June 30, 2006, was $56.2 million, or $0.46 per share and equivalent unit, compared to $62.0 million, or $0.53 per share and equivalent unit for the six months ended June 30, 2005. 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. provides this calculation of FFO, as adjusted, because management utilizes it in making operating decisions and assessing performance, and to assist investors in assessing Crescent's operating performance. Funds from operations available to common shareholders - diluted, calculated 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 the NAREIT NAREIT National Association of Real Estate Investment Trusts definition ("FFO"), was $31.4 million, or $0.26 per share and equivalent unit, for the three months ended June 30, 2006, compared to $33.8 million, or $0.29 per share and equivalent unit, for the three months ended June 30, 2005. FFO for the six months ended June 30, 2006, was $56.2 million, or $0.46 per share and equivalent unit, compared to $61.6 million, or $0.53 per share and equivalent unit, for the six months ended June 30, 2005. Both uses of FFO are non-GAAP financial measures, and as such, are reconciled rec·on·cile v. rec·on·ciled, rec·on·cil·ing, rec·on·ciles v.tr. 1. To reestablish a close relationship between. 2. To settle or resolve. 3. to net income in the documents accompanying ac·com·pa·ny v. ac·com·pa·nied, ac·com·pa·ny·ing, ac·com·pa·nies v.tr. 1. To be or go with as a companion. 2. this press release. The definitions of FFO and FFO, as adjusted, are set forth in the press release in the section labeled "Funds From Operations." 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 per share of $0.26 exceeded our previously issued guidance of $0.20 to $0.22 per share primarily due to the acceleration acceleration, change in the velocity of a body with respect to time. Since velocity is a vector quantity, involving both magnitude and direction, acceleration is also a vector. In order to produce an acceleration, a force must be applied to the body. of 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. Energy's 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. for approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 258,000 square feet of re-leased space in 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. , which was signed during second quarter. Re-leasing the El Paso space is proceeding well, and we are encouraged by the prospects. As for 2006 results, we anticipate modest growth in 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 and rental RENTAL. A roll or list of the rents of an estate containing the description of the lands let, the names of the tenants, and other particulars connected with such estate. This is the same as rent roll, from which it is said to be corrupted. rates in our portfolio as demand continues to improve in our markets. We remain comfortable with our 2006 full year guidance of $1.25 to $1.40 in FFO, as adjusted, per share." On July July: see month. 14, 2006, Crescent announced that its Board of Trust Managers had declared de·clare v. de·clared, de·clar·ing, de·clares v.tr. 1. To make known formally or officially. See Synonyms at announce. 2. To state emphatically or authoritatively; affirm. 3. cash dividends of $0.375 per share for its Common Shares, $0.421875 per share for its Series A Convertible Preferred Shares Preferred shares Preferred shares give investors a fixed dividend from the company's earnings and entitle them to be paid before common shareholders. See: Preferred stock. , and $0.59375 per share for its Series B Redeemable Redeemable Eligible for redemption under the terms of an indenture. Preferred Shares. The dividends are payable August 15, 2006, to shareholders of record on July 31, 2006. BUSINESS SECTOR REVIEW Office Segment (58% of Gross Book Value of Real Estate Assets as of June 30, 2006) Operating Results Crescent reports operating statistics in this press release assuming 100% ownership without adjusting for joint-venture interests. Crescent owned and managed, through its subsidiaries and joint ventures, 30.1 million square feet at June 30, 2006, including 14.3 million square feet of office properties in joint ventures. - Same-store 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 - 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") declined 0.9% for the three months ended June 30, 2006, from the same period in 2005, for the 27.4 million square feet of office property space owned during both periods. Average economic occupancy for these same-store properties for the three months ended June 30, 2006, was 88.4% compared to 88.0% for the same period in 2005. Management expects full year 2006 same-store NOI growth of 0% to 2%. Office property same-store net operating income ("NOI") declined 2.3% for the six months ended June 30, 2006, from the same period in 2005 for the 27.4 million square feet of office property space owned during both periods. Average economic occupancy for these same-store properties for the six months ended June 30, 2006, was 88.5% compared to 88.1% for the same period in 2005. -Total Portfolio Occupancy - As of June 30, 2006, leased occupancy was 91.1%, and economic occupancy was 88.2%. - Leasing Activity - Crescent leased 1.7 million net rentable square feet during the three months ended June 30, 2006, of which 0.9 million square feet were 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. or re-leased. The weighted average full service rental rate (which includes expense reimbursements) increased 3% 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 $2.06 per square foot per year, and leasing costs were $1.08 per square foot per year. The Company leased 2.5 million net rentable square feet during the six months ended June 30, 2006, of which 1.3 million square feet were renewed or re-leased. The weighted average full service rental rate (which includes expense reimbursements) increased 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 $2.15 per square foot per year, and leasing costs were $1.15 per square foot per year. - Lease Termination Fees - Crescent earned $16.4 million and $24.1 million of lease termination fees during the three months and six months ended June 30, 2006, respectively. This compares to $2.2 million and $2.6 million of lease termination fees earned during the three months and six months ended June 30, 2005, respectively. The increase in lease termination fees is primarily the result of accelerated El Paso termination fees. Crescent's policy is to exclude lease termination fees from its same-store NOI calculation. 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, "Our office portfolio continues to rebound rebound (rē´bownd), n/v 1. a recovery from illness. n 2. an outbreak of fresh reflex activity after withdrawal of a stimulus rebound adjective . Each of our markets is consistently experiencing healthy job growth, and we anticipate this trend to continue, further increasing demand for office space. Overall, we expect to end 2006 at 91% to 92% leased for our 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. office portfolio." Mr. Alberts added, "For 2006, we have gross expirations of 4.1 million square feet; to date, we have addressed 86% of 2006 gross expirations - 79% by signed leases and 7% by leases in negotiation." Disposition Act of disposing; transferring to the care or possession of another. The parting with, alienation of, or giving up of property. The final settlement of a matter and, with reference to decisions announced by a court, a judge's ruling is commonly referred to as disposition, regardless of On June 20, 2006, Crescent sold Chase Tower on behalf of the owner, Austin Austin. 1 City (1990 pop. 21,907), seat of Mower co., SE Minn., on the Cedar River, near the Iowa line; inc. 1868. The commercial and industrial center of a rich farm region, it is noted as home to the Hormel meatpacking company, whose Spam Town museum PT BK One Tower Office Limited Partnership. Chase Tower is a 389,503 square-foot office property located in downtown Downtown (called a "city centre" in British English) is a term used in North America when referring to a city's core, usually both in a geographical and commercial / community sense. Austin, in which Crescent owned a 20% interest. Crescent recorded a gain on the sale of approximately $4.3 million, which includes a deferred gain recorded on the initial joint venture in 2001. Resort Residential Development Segment (21% of Gross Book Value of Real Estate Assets as of June 30, 2006) Operating Results Crescent's overall resort residential investments generated $3.3 million and $4.3 million in FFO for the three and six months ended June 30, 2006. This compares to $11.1 million and $16.0 million in FFO generated for the three and six months ended June 30, 2005. The decline from year to year is primarily the result of reduced sales at Desert Mountain due to limited remaining inventory. Development On June 20, 2006, Crescent announced phase two of The Residences at The Ritz-Carlton
Ritz-Carlton is a brand of luxury hotel and resort with 63 properties that are located in major cities and exclusive resort destinations 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 Tower Residences will feature a 23-story Regency-designed tower consisting of 96 units. Development costs are estimated to be $138.8 million. Residences will range from $700,000 to $8 million, and delivery is scheduled for late 2008. Luxury Resorts and Upscale Business-Class Hotels (10% of Gross Book Value of Real Estate Assets as of June 30, 2006) Crescent reports operating statistics in this press release for its three luxury resorts and three upscale business-class hotels and assuming 100% ownership without adjusting for joint-venture interests. - Same-store NOI - For the three months ended June 30, 2006, Crescent's three luxury resorts and three upscale business-class hotels generated same-store NOI of $7.6 million, which is a 13% increase from $6.7 million generated for the same period in 2005. For the six months ended June 30, 2006, Crescent's three luxury resorts and three upscale business-class hotels generated same-store NOI of $18.6 million, which is a 21% increase from $15.4 million generated for the same period in 2005. - Operating Statistics - The average daily rate increased 12%, and revenue per available room increased 12% for the three months ended June 30, 2006, compared to the same period in 2005. Weighted average occupancy was 71% for both periods. The average daily rate increased 10%, and revenue per available room increased 15% for the six months ended June 30, 2006, compared to the same period in 2005. Weighted average occupancy was 72% for the six months ended June 30, 2006, compared to 70% for the six months ended June 30, 2005. Temperature-Controlled Logistics logistics In military science, all the activities of armed-force units in support of combat units, including transport, supply, communications, and medical aid. The term, first used by Henri Jomini, Alfred Thayer Mahan, and others, was adopted by the U.S. Segment (11% of Gross Book Value of Real Estate Assets as of June 30, 2006) Crescent's investment in temperature-controlled logistics properties generated $2.0 million and $5.2 million in FFO for the three and six months ended June 30, 2006. This compares to $3.3 million and $6.9 million of FFO generated for the three months and six months ended June 30, 2005. Continuing improved operations, primarily due to increased occupancy levels, were offset this quarter by the write-off Write-Off A reduction in the value of an asset or earnings by the amount of an expense or loss. Companies are able to write off certain expenses that are required to run the business, or have been incurred in the operation of the business and detract from retained revenues. of deferred financing charges associated with the pay-off of the Morgan Stanley  To comply with Wikipedia's , the introduction of this article needs a complete rewrite. note as a result of the debt refinancing RefinancingAn extension and/or increase in amount of existing debt. which occurred during the quarter ended June 30, 2006. On June 30, 2006, AmeriCold Realty realty n. a short form of "real estate." (See: real estate) REALTY. An abstract of real, as distinguished from personalty. Realty relates to lands and tenements, rents or other hereditaments. Vide Real Property. Trust, of which Crescent owns a 31.7% interest, entered into a $400 million, one-year adj. 1. completing its life cycle within a year. Adj. 1. one-year - completing its life cycle within a year; "a border of annual flowering plants" annual phytology, botany - the branch of biology that studies plants , interest-only line of credit that is collateralized by 21 of its owned and six of its leased temperature-controlled warehouses. Approximately $243 million of this loan has been drawn to repay the Morgan Stanley loan, which had an interest rate of LIBOR LIBOR See: London Interbank Offered Rate LIBOR See London interbank offered rate (LIBOR). plus 295 basis points. The initial interest rate on this loan is LIBOR plus 60 basis points and increases to LIBOR plus 110 basis points when the remaining balance is drawn. BALANCE SHEET REVIEW Investment Activity Year-to-date Year-to-date (YTD) The period beginning at the start of the calendar year up to the current date. 2006 through the date of this release, Crescent had invested $63.8 million in Mezzanine mez·za·nine n. 1. A partial story between two main stories of a building. 2. The lowest balcony in a theater or the first few rows of that balcony. investments, all of which float over LIBOR at an average current yield of 14.45%. EARNINGS OUTLOOK Crescent addresses earnings guidance in its earnings conference calls and provides documentation of 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. FUNDS FROM OPERATIONS 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 those companies may calculate funds from operations in different ways. The National Association of Real Estate Investment Trusts ("NAREIT") defines funds from operations as Net Income (Loss) determined in accordance with generally accepted accounting principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting ("GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). "), excluding gains (or losses) from sales of depreciable depreciable Of, relating to, or being a long-term tangible asset that is subject to depreciation. operating property, excluding extraordinary items (determined by GAAP), excluding depreciation and amortization of real estate assets, and including the impact of adjustments for unconsolidated partnerships and joint ventures. Crescent's FFO, as adjusted, follows the NAREIT definition, but is adjusted to (i) exclude the impact of impairment charges and debt extinguishment charges related to the sale of real estate assets and (ii) include the impact of gains on sale of developed operating properties and promoted interests. Crescent provides this additional calculation of FFO, as adjusted, because management utilizes it in making operating decisions and assessing performance, and to assist investors in assessing the operating performance of Crescent. A reconciliation of Crescent's FFO before and after such adjustments to GAAP net income is included in the financial statements accompanying this press release and in the "Second Quarter 2006 Supplemental Operating and Financial Data" located on Crescent's website. FFO should not be considered an alternative to net income. SUPPLEMENTAL OPERATING AND FINANCIAL DATA Crescent's Second Quarter 2006 Supplemental Operating and Financial Data report is available on Crescent's website (www.crescent.com) in the investor relations Investor relations The process by which the corporation communicates with its investors. section. To request a hard copy, please call Crescent at (817) 321-1478. CONFERENCE CALL, WEBCAST AND PRESENTATION Crescent 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 1, 2006, to discuss the second quarter results and provide a company update. To participate in the conference call, please dial (877) 392-0083 domestically or (706) 679-3110 internationally, or you may access the audio webcast on Crescent's website (www.crescent.com) in the investor relations section. A replay of the conference call will be available through August 8, 2006, by dialing (800) 642-1687 domestically or (706) 645-9291 internationally with a passcode of 2747538. 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 Crescent believes that the expectations reflected in such forward-looking statements are based upon reasonable assumptions, Crescent's actual results could differ materially from those described in the forward-looking statements. The following factors might cause such a difference: --Crescent'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 oc·cu·py tr.v. oc·cu·pied, oc·cu·py·ing, oc·cu·pies 1. To fill up (time or space): a lecture that occupied three hours. 2. To dwell or reside in. 3. 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 or termination The point where a line, channel or circuit ends. See SCSI termination and hybrid. 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 the 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. levels in particular markets, decreased rental rates and competition from other properties) and may also be adversely affected by general economic downturns; --Adverse changes in the financial condition of existing office customers and the ability of these office customers to pay rent; --Lack of control and limited flexibility in dealing with Crescent's jointly owned investments; --The ability of Crescent 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 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. anticipated office acquisitions on favorable terms and within anticipated time frames; --The ability of El Paso Energy to satisfy its obligations to pay rent and termination fees in accordance with the terms of its agreement with Crescent; --The concentration of a significant percentage of Crescent's office assets in Texas; --The ability to develop, sell and deliver resort residential units and lots within anticipated time frames and within anticipated profit margins; --Deterioration in the market or in the economy generally and increases in construction cost associated with development of 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, town homes and condominiums; --Financing risks, such as Crescent'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, Crescent's ability to meet financial and other covenants, liquidity risks related to the use of warehouse facilities governed gov·ern v. gov·erned, gov·ern·ing, gov·erns v.tr. 1. To make and administer the public policy and affairs of; exercise sovereign authority in. 2. by repurchase agreements Repurchase agreement An agreement with a commitment by the seller (dealer) to buy a security back from the purchaser (customer) at a specified price at a designated future date. to fund certain of our mezzanine investments, and Crescent's ability to consummate financings and refinancings on favorable terms and within any applicable time frames; --Deterioration in Crescent's resort/business-class hotel markets or in the economy generally and increase in construction cost associated with the development of resort/hotel properties; --The inherent risk of mezzanine investments, which are structurally or contractually con·trac·tu·al adj. Of, relating to, or having the nature of a contract. con·trac  tu·al·ly adv.Adv. 1. subordinated Subordinated A claim ranked lower in priority than other claims. Common stock claims are always subordinated to debt. to senior debt, may become unsecured Unsecured A loan or equity interest that is given without any guarantee of payment, performance, satisfaction or opportunity for return from the recipient. No property, interest or security is used as collateral in either a guarantee or a pledge. as a result of foreclosure foreclosure Legal proceeding by which a borrower's rights to a mortgaged property may be extinguished if the borrower fails to live up to the obligations agreed to in the loan contract. by a senior lender LENDER, contracts. He from whom a thing is borrowed. 2. The contract of loan confers rights, and imposes duties on the lender. 1. The lender has the right to revoke the loan at his mere pleasure; 9 Cowen, R. 687; 8 Johns. Rep. 432; 1 T. R. 480; 2 Campb. Rep. on its collateral collateral (kəlăt`ərəl), something of value given or pledged as security for payment of a loan. Collateral consists usually of financial instruments, such as stocks, bonds, and negotiable paper, rather than physical goods, although , and are riskier than conventional mortgage loans; --The existence of complex regulations relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc Crescent'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 Crescent's filings with the SEC. Given these uncertainties, readers are cautioned not to place undue reliance on such statements. Crescent 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 CRESCENT Crescent Real Estate Equities Company (NYSE: CEI) is a real estate investment trust headquartered in Fort Worth, Texas. Through its subsidiaries and joint ventures, Crescent owns and manages a portfolio of 74 premier office buildings totaling 30 million square feet located in select markets across 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. , with major concentrations in Dallas, 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; , Austin, Denver Denver, city (1990 pop. 467,610), alt. 5,280 ft (1,609 m), state capital, coextensive with Denver co., N central Colo., on a plateau at the foot of the Front Range of the Rocky Mts., along the South Platte River where Cherry Creek meets it; inc. 1861. , Miami and 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. . Crescent also makes strategic investments in resort residential development, as well as destination resorts, including Canyon Ranch Canyon Ranch is a brand associated with several properties, communities, resorts, and spas. Properties & communities
CRESCENT REAL ESTATE EQUITIES COMPANY
CONSOLIDATED BALANCE SHEETS
(dollars in thousands)
June 30, December 31,
2006 2005
---- ----
(unaudited) (unaudited)
ASSETS:
Investments in real estate:
Land $ 191,025 $ 183,228
Land improvements, net of accumulated
depreciation of $33,141 and $29,784 at
June 30, 2006 and December 31, 2005,
respectively 73,962 70,494
Buildings and improvements, net of
accumulated depreciation of $493,122 and
$456,628 at June 30, 2006 and December
31, 2005, respectively 1,850,516 1,760,920
Furniture, fixtures and equipment, net
of accumulated depreciation of $36,847
and $34,129 at June 30, 2006 and
December 31, 2005, respectively 38,914 37,236
Land held for investment or development 688,008 574,527
Properties held for disposition, net 4,139 28,918
------------ ------------
Net investment in real estate $ 2,846,564 $ 2,655,323
Cash and cash equivalents $ 81,222 $ 86,228
Restricted cash and cash equivalents 71,018 84,699
Defeasance investments 115,318 274,134
Accounts receivable, net 49,373 56,356
Deferred rent receivable 63,789 70,074
Investments in unconsolidated companies 397,191 393,535
Notes receivable, net 248,034 219,016
Income tax asset - current 11,516 8,291
Other assets, net 287,716 294,206
------------ ------------
Total assets $ 4,171,741 $ 4,141,862
============ ============
LIABILITIES:
Borrowings under Credit Facility $ 310,000 $ 234,000
Notes payable 2,007,535 1,948,152
Junior subordinated notes 77,321 77,321
Accounts payable, accrued expenses and
other liabilities 463,440 471,920
Deferred tax liability 1,093 1,093
------------ ------------
Total liabilities $ 2,859,389 $ 2,732,486
------------ ------------
COMMITMENTS AND CONTINGENCIES:
MINORITY INTERESTS:
Operating partnership, 11,428,673 and
11,416,173 units, at June 30, 2006 and
December 31, 2005, respectively $ 105,531 $ 113,819
Consolidated real estate partnerships 54,619 53,562
------------ ------------
Total minority interests $ 160,150 $ 167,381
------------ ------------
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 shares issued and
outstanding at June 30, 2006 and
December 31, 2005 $ 319,166 $ 319,166
Series B Cumulative Redeemable
Preferred Shares, liquidation
preference of $25.00 per share,
3,400,000 shares issued and
outstanding at June 30, 2006 and
December 31, 2005 81,923 81,923
Common shares, $0.01 par value, authorized
250,000,000 shares, 126,855,000 and
126,562,980 shares issued at June 30,
2006 and December 31, 2005, respectively 1,269 1,266
Additional paid-in capital 2,276,224 2,271,888
Deferred compensation on restricted
shares - (1,182)
Accumulated deficit (1,066,392) (972,319)
Accumulated other comprehensive income 144 1,385
------------ ------------
$ 1,612,334 $ 1,702,127
Less - shares held in treasury, at cost,
25,120,917 common shares at June 30, 2006
and December 31, 2005 (460,132) (460,132)
------------ ------------
Total shareholders' equity $ 1,152,202 $ 1,241,995
------------ ------------
Total liabilities and
shareholders' equity $ 4,171,741 $ 4,141,862
============ ============
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,
-------------------------- -------------------------
2006 2005 2006 2005
---- ---- ---- ----
(unaudited) (unaudited)
REVENUE:
Office Property $ 110,407 $ 92,651 $ 210,073 $ 181,566
Resort Residential
Development
Property 53,716 85,838 152,855 140,313
Resort/Hotel
Property 30,941 29,925 70,739 69,759
------------- ------------ ------------- ------------
Total Property
Revenue $ 195,064 $ 208,414 $ 433,667 $ 391,638
------------- ------------ ------------- ------------
EXPENSE:
Office Property
real estate
taxes $ 10,716 $ 9,843 $ 20,282 $ 19,911
Office Property
operating
expenses 39,588 37,523 81,142 73,872
Resort Residential
Development
Property expense 49,683 73,611 141,380 122,447
Resort/Hotel
Property
expense 23,815 23,723 53,272 55,458
------------- ------------ ------------- ------------
Total Property
Expense $ 123,802 $ 144,700 $ 296,076 $ 271,688
------------- ------------ ------------- ------------
Income from
Property
Operations $ 71,262 $ 63,714 $ 137,591 $ 119,950
------------- ------------ ------------- ------------
OTHER INCOME (EXPENSE):
Income from sale of
investment in
unconsolidated
company $ 4,297 $ - $ 4,297 $ -
Income from
investment
land sales - 4,963 - 8,424
Gain on joint
venture of
properties - 1,008 - 1,540
Gain on property
sales 298 180 298 180
Interest and
other income 9,291 7,906 25,179 13,210
Corporate
general and
administrative (11,812) (11,063) (26,638) (21,392)
Interest expense (32,644) (36,078) (66,054) (69,358)
Amortization of
deferred financing
costs (1,843) (2,116) (3,613) (4,045)
Extinguishment
of debt - (240) - (1,667)
Depreciation
and
amortization (37,191) (40,977) (73,635) (75,004)
Other expenses (1,845) (8) (3,778) (676)
Equity in net
income (loss)
of unconsolidated
companies:
Office Properties 2,691 3,355 4,868 6,685
Resort Residential
Development
Properties (597) 71 (124) 192
Resort/Hotel
Properties (1,216) (645) (2,086) 760
Temperature-
Controlled
Logistics
Properties (2,278) (1,211) (2,600) (2,342)
Other 410 4,571 525 10,761
------------- ------------ ------------- ------------
Total other
income
(expense) $ (72,439) $ (70,284) $ (143,361) $ (132,732)
------------- ------------ ------------- ------------
LOSS FROM CONTINUING
OPERATIONS BEFORE
MINORITY INTERESTS AND
INCOME TAXES $ (1,177) $ (6,570) $ (5,770) $ (12,782)
Minority
interests (1,066) (1,011) (568) (492)
Income tax
benefit 5,429 329 4325 1545
------------- ------------ ------------- ------------
INCOME (LOSS) BEFORE
DISCONTINUED
OPERATIONS $ 3,186 $ (7,252) $ (2,013) $ (11,729)
Income from
discontinued
operations,
net of minority
interests 113 1,710 135 3,397
(Loss) gain on
sale of real
estate from
discontinued
operations, net
of minority
interests (8) 0 88 1,503
------------- ------------ ------------- ------------
NET INCOME
(LOSS) $ 3,291 $ (5,542) $ (1,790) $ (6,829)
Series A
Preferred Share
distributions (5,991) (5,991) (11,981) (11,981)
Series B
Preferred Share
distributions (2,019) (2,019) (4,038) (4,038)
------------- ------------ ------------- ------------
NET LOSS
AVAILABLE TO
COMMON
SHAREHOLDERS $ (4,719) $ (13,552) $ (17,809) $ (22,848)
============= ============ ============= ============
BASIC EARNINGS PER SHARE DATA:
Loss available
to common
shareholders
before
discontinued
operations $ (0.05) $ (0.16) $ (0.18) $ (0.28)
Income from
discontinued
operations,
net of
minority
interests - 0.02 - 0.03
(Loss) gain on
sale of real
estate from
discontinued
operations, net
of minority
interests - - - 0.02
------------- ------------ ------------- ------------
Net loss
available to
common
shareholders -
basic $ (0.05) $ (0.14) $ (0.18) $ (0.23)
============= ============ ============= ============
DILUTED EARNINGS PER SHARE DATA:
Loss available
to common
shareholders
before
discontinued
operations $ (0.05) $ (0.16) $ (0.18) $ (0.28)
Income from
discontinued
operations,
net of
minority
interests - 0.02 - 0.03
(Loss) gain on
sale of real
estate from
discontinued
operations, net
of minority
interests - - - 0.02
------------- ------------ ------------- ------------
Net loss
available to
common
shareholders -
diluted $ (0.05) $ (0.14) $ (0.18) $ (0.23)
============= ============ ============= ============
WEIGHTED AVERAGE SHARES
OUTSTANDING -
BASIC 101,632,363 99,676,059 101,554,571 99,593,593
============= ============ ============= ============
WEIGHTED AVERAGE SHARES
OUTSTANDING -
DILUTED 101,632,363 99,676,059 101,554,571 99,593,593
============= ============ ============= ============
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)
2006 2006 2005 2005
Per Per
$ share $ share
------------ ------ ------------ ------
NET INCOME (LOSS) 3,291 0.03 (5,542) (0.05)
ADJUSTMENTS:
Depreciation and amortization
of real estate assets 32,514 0.27 38,039 0.33
Gain on property sales (4,407) (0.04) (1,188) (0.01)
Extinguishment of debt
expense directly related to
real estate asset sales (a) - - (668) (0.01)
Adjustment for investments in
unconsolidated companies:
Office Properties 4,871 0.04 4,956 0.04
Resort Residential
Development Properties (2,908) (0.02) 947 0.01
Resort/Hotel Properties 1,172 0.01 999 0.01
Temperature-Controlled
Logistics Properties 4,269 0.04 4,554 0.04
Unitholder minority interest 603 - (973) (0.01)
Series A Preferred Share
distributions (5,991) (0.05) (5,991) (0.05)
Series B Preferred Share
distributions (2,019) (0.02) (2,019) (0.02)
------------ ------ ------------ ------
FUNDS FROM OPERATIONS
AVAILABLE TO COMMON SHAREHOLDERS
- DILUTED, AS ADJUSTED (b) 31,395 0.26 33,114 0.28
============ ====== ============ ======
Extinguishment of debt
expense directly related to
real estate asset sales (a) - - 668 0.01
------------ ------ ------------ ------
FUNDS FROM OPERATIONS
AVAILABLE TO COMMON
SHAREHOLDERS - DILUTED (b)
- NAREIT DEFINITION 31,395 0.26 33,782 0.29
============ ====== ============ ======
INVESTMENT SEGMENTS:
Office Properties 65,801 0.55 54,505 0.46
Resort Residential
Development Properties 3,273 0.03 11,056 0.09
Resort/Hotel Properties 7,784 0.06 7,637 0.07
Temperature-Controlled
Logistics Properties 1,990 0.02 3,343 0.03
OTHER:
Corporate general and
administrative (11,812) (0.10) (11,063) (0.09)
Interest expense (32,644) (0.27) (36,078) (0.31)
Series A Preferred Share
distributions (5,991) (0.05) (5,991) (0.05)
Series B Preferred Share
distributions (2,019) (0.02) (2,019) (0.02)
Income from mezzanine loans
and other loans 5,768 0.05 2,148 0.02
Other (c) (755) (0.01) 9,576 0.08
------------ ------ ------------ ------
FUNDS FROM OPERATIONS
AVAILABLE TO COMMON
SHAREHOLDERS - DILUTED, AS
ADJUSTED (b) 31,395 0.26 33,114 0.28
============ ====== ============ ======
Extinguishment of debt
expense directly related to
real estate asset sales (a) - - 668 0.01
------------ ------ ------------ ------
FUNDS FROM OPERATIONS
AVAILABLE TO COMMON
SHAREHOLDERS - DILUTED (b)
- NAREIT DEFINITION 31,395 0.26 33,782 0.29
============ ====== ============ ======
WEIGHTED AVERAGE SHARES
OUTSTANDING - BASIC 101,632,363 99,676,059
WEIGHTED AVERAGE SHARES/UNITS
OUTSTANDING - DILUTED 122,186,713 117,484,930
DIVIDEND PAID PER SHARE
DURING PERIOD 0.375 0.375
For the six months
ended June 30,
--------------------------------------------
(unaudited)
2006 2006 2005 2005
Per Per
$ share $ share
------------ --------- ------------ --------
NET INCOME (LOSS) (1,790) (0.01) (6,829) (0.06)
ADJUSTMENTS:
Depreciation and
amortization of real
estate assets 64,553 0.53 68,793 0.59
Gain on property sales (4,520) (0.04) (3,777) (0.03)
Extinguishment of debt
expense directly
related to real estate
asset sales (a) - - 388 -
Adjustment for investments
in unconsolidated companies:
Office Properties 10,255 0.08 10,079 0.08
Resort Residential
Development Properties (6,000) (0.05) (448) -
Resort/Hotel Properties 2,293 0.02 1,809 0.01
Temperature-Controlled
Logistics Properties 7,779 0.06 9,199 0.08
Unitholder minority
interest (339) - (1,200) (0.01)
Series A Preferred Share
distributions (11,981) (0.10) (11,981) (0.10)
Series B Preferred Share
distributions (4,038) (0.03) (4,038) (0.03)
------------ --------- ------------ --------
FUNDS FROM OPERATIONS
AVAILABLE TO COMMON
SHAREHOLDERS - DILUTED, AS
ADJUSTED (b) 56,212 0.46 61,995 0.53
============ ========= ============ ========
Extinguishment of debt
expense directly related
to real estate asset
sales (a) - - (388) -
------------ --------- ------------ --------
FUNDS FROM OPERATIONS
AVAILABLE TO COMMON
SHAREHOLDERS - DILUTED (b)
- NAREIT DEFINITION 56,212 0.46 61,607 0.53
============ ========= ============ ========
INVESTMENT SEGMENTS:
Office Properties 120,496 0.98 106,930 0.91
Resort Residential
Development Properties 4,308 0.04 15,963 0.14
Resort/Hotel Properties 18,414 0.15 19,081 0.16
Temperature-Controlled
Logistics Properties 5,178 0.04 6,857 0.06
OTHER:
Corporate general and
administrative (26,638) (0.22) (21,392) (0.18)
Interest expense (66,054) (0.54) (69,358) (0.60)
Series A Preferred Share
distributions (11,981) (0.10) (11,981) (0.10)
Series B Preferred Share
distributions (4,038) (0.03) (4,038) (0.03)
Income from mezzanine loans
and other loans 16,736 0.14 3,087 0.03
Other (c) (209) - 16,846 0.14
------------ --------- ------------ --------
FUNDS FROM OPERATIONS
AVAILABLE TO COMMON
SHAREHOLDERS - DILUTED, AS
ADJUSTED (b) 56,212 0.46 61,995 0.53
============ ========= ============ ========
Extinguishment of debt
expense directly
related to real estate
asset sales (a) - - (388) -
------------ --------- ------------ --------
FUNDS FROM OPERATIONS
AVAILABLE TO COMMON
SHAREHOLDERS - DILUTED (b)
- NAREIT DEFINITION 56,212 0.46 61,607 0.53
============ ========= ============ ========
WEIGHTED AVERAGE SHARES
OUTSTANDING - BASIC 101,554,571 99,593,593
WEIGHTED AVERAGE SHARES/UNITS
OUTSTANDING - DILUTED 122,099,870 117,337,663
DIVIDEND PAID PER SHARE
DURING PERIOD 0.750 0.750
(a) Extinguishment of debt expense directly related to real estate
assets. An additional $0.9 million for the second quarter 2005 and
$1.3 million for year-to-date 2005 of extinguishment of debt that
is not related to the sale of real estate assets is included in
funds from operations available to common shareholders.
(b) 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 those companies may calculate funds from operations in
different ways. The National Association of Real Estate Investment
Trusts ("NAREIT") defines funds from operations as Net Income
(Loss) determined in accordance with generally accepted accounting
principles ("GAAP"), excluding gains (or losses) from sales of
depreciable operating property, excluding extraordinary items
(determined by GAAP), excluding depreciation and amortization of
real estate assets, and including the impact of adjustments for
unconsolidated partnerships and joint ventures.
Crescent's FFO, as adjusted, follows the NAREIT definition, but is
adjusted to (i) exclude the impact of impairment charges and debt
extinguishment charges related to the sale of real estate assets
and (ii) include gains on sale of developed operating properties
and promoted interests. Crescent provides this additional
calculation of FFO, as adjusted, because management utilizes it in
making operating decisions and assessing performance, and to
assist investors in assessing the operating performance of
Crescent. FFO should not be considered an alternative to net
income.
(c) Includes income from investment land sales, interest and other
income, extinguishment of debt, 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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