Crescent Real Estate Equities Company Announces 63% Increase in per Share Funds from Operations.FORT WORTH, Texas--(BUSINESS WIRE)--April 23, 1998--Crescent Real Estate Equities Company (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 its operating results for the quarter ended March 31, 1998. Funds from operations Funds From Operations (FFO) Used by real estate and other investment trusts to define the cash flow from trust operations; earnings with depreciation and amortization added back. ("FFO FFO See: Funds from operations ") for the first quarter of 1998 was $83.5 million, or $.62 per share and equivalent unit (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. ), as compared to $33.6 million, or $.38 per share and equivalent unit (diluted), for the first quarter of 1997, representing a 63% increase per share and equivalent unit. For the first quarter of 1998, net income was $40.8 million, or $.33 per share (diluted), on total revenues of $161.1 million, compared with net income of $16.8 million, or $.22 per share (diluted), on total revenues of $80.9 million, for the first quarter of 1997. Gerald Gerald - ["Gerald: An Exceptional Lazy Functional Programming Language", A.C. Reeves et al, in Functional Programming, Glasgow 1989, K. Davis et al eds, Springer 1990]. W. Haddock haddock: see cod. haddock Valuable North American food fish (Melanogrammus aeglefinus, family Gadidae). A bottom-dweller that feeds on invertebrates and fishes, it resembles the cod, with its chin barbel (fleshy feeler) and two anal and three dorsal , Crescent's president and chief executive officer commented, "This is the second consecutive quarter we have reported better than expected operating results, led by the strength of our office and residential development properties. The fundamentals of each of our investment sectors continue to be very positive." The following is a summary of year-to-date Year-to-date (YTD) The period beginning at the start of the calendar year up to the current date. operating highlights: Office Properties For the quarter ended March 31, 1998, leases were executed (all of which have commenced or will commence during the next twelve months) renewing or re-leasing 279,069 net rentable square feet of office space at a weighted average full-service full-ser·vice adj. Associated with or offering complete service: full-service gasoline pumps; full-service banks. rental rate (including expense recoveries) and a FFO annual net effective rate (calculated as weighted average full-service rental rate minus operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. ) of $20.43 and $12.92 per square foot, respectively, compared to 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. leases with a weighted average full-service rental rate and a FFO annual net effective rate of $16.51 and $9.44 per square foot, respectively, (with each of these weighted average full-service rental rates including free rent and scheduled rent increases that would be taken into account under 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 ) a 24% and 37% increase, respectively. The leases executed for the quarter ended March 31, 1998, all of which have commenced or will commence during the next twelve months, required tenant improvement and leasing costs of $3.03 and $2.41 per square foot, respectively, or $.62 and $.65 per square foot per year, respectively. The overall office portfolio was approximately 89% leased (based on commenced leases) and 92% leased (based on executed leases) at March 31, 1998. 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. growth for the quarter ended March 31, 1998 compared to the quarter ended March 31, 1997, was approximately 11% for the 16.3 million square feet of office properties owned as of January January: see month. 1, 1997. For these properties, the average occupancy for the first quarter 1998 and 1997 was approximately 89% and 84%, respectively. During the first quarter, the following significant new and renewal lease transactions were completed: -- 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. , Houston, Texas “Houston” redirects here. For other uses, see Houston (disambiguation). Houston (pronounced /'hjuːstən/) is the largest city in the state of Texas and the - 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. entered into (i) a six-year lease with Parson's Process Group, Inc. for 44,986 net rentable square feet commencing during February February: see month. and June June: see month. 1998, (ii) a 13-year lease with Sonat Services, Inc. for 45,288 net rentable square feet commencing in June 1998, and (iii) a 10-year lease with Camden Property Trust for 39,447 net rentable square feet commencing in July 1998. With the completion of these leases and others, Greenway Plaza is approximately 91% leased (based on executed leases) as of March 31, 1998, compared to 73% when the property was acquired in October 1996. -- Fountain Place Fountain Place, located at 1445 Ross Avenue in the Arts District of downtown Dallas, Texas is a 62-story modern-styled skyscraper. Standing at a structural height of 720 feet (219 m) , Dallas, Texas “Dallas” redirects here. For other uses, see Dallas (disambiguation). The City of Dallas (pronounced [ˈdæl.əs] or [ˈdæl. - Crescent entered into a seven-year lease with Hunt Consolidated, Inc. to renew 276,572 net rentable square feet commencing in January 2000. The building was approximately 95% leased (based on executed leases) as of March 31, 1998. Hotel & Resort Properties For the first quarter of 1998, weighted-average occupancy, average daily rate and revenue per available room for the six full-service hotel properties and two Canyon Ranch Canyon Ranch is a brand associated with several properties, communities, resorts, and spas. Properties & communities
Scenic region along the Pacific coast of California, U.S. It comprises a ruggedly beautiful stretch of seacoast 100 mi (160 km) long. Popular with tourists and naturalists, it extends southward from Carmel to the Hearst Castle at San Simeon. , California California (kăl'ĭfôr`nyə), most populous state in the United States, located in the Far West; bordered by Oregon (N), Nevada and, across the Colorado River, Arizona (E), Mexico (S), and the Pacific Ocean (W). , which was temporarily closed from February to March 1998 due to flooding in the region affecting roadway passage to the hotel). Residential Development Properties -- The Woodlands, Houston, Texas - For the quarter ended March 31, 1998, The Woodlands sold 417 lots with an average sales price of $51,500 per lot and 80.36 commercial acreage, compared to 266 lots with an average sales price of $47,800 per lot and 3.06 commercial acreage, for the same period of 1997. In March 1998, Hewitt Holdings, LLC (Logical Link Control) See "LANs" under data link protocol. LLC - Logical Link Control ("Hewitt") acquired a 76.75 acre parcel upon which it intends to initially construct a 375,000 square foot office complex that should be completed by the fall of 1999. -- Desert Mountain, Scottsdale, Arizona Scottsdale (O'odham Vaṣai S-vaṣonĭ) is a city in Maricopa County, Arizona, United States, adjacent to Phoenix. Scottsdale has become internationally recognized as a premier and posh tourist destination, while maintaining its own identity and culture as " - For the quarter ended March 31, 1998, Desert Mountain sold 52 lots with an average sales price of $358,000 per lot (including club membership), compared to 22 lots with an average sales price of $329,000 per lot (including club membership), for the same period of 1997. Certain matters discussed within this press release are forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. within the meaning of the federal securities laws, and the transactions contemplated herein are subject to certain closing conditions. 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 set forth in the forward-looking statements. Certain factors that could cause actual results to differ materially from Crescent's expectations include changes in real estate conditions (including rental rates and competing properties) or in industries in which our principal tenants compete, failure 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. anticipated transactions, timely leasing of unoccupied square footage, timely releasing of 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 , the ability to close pending transactions, finding acquisition opportunities which meet Crescent's investment strategy, the nature and structure of new investments, financing risks (such as the availability of equity and debt financing Debt Financing When a firm raises money for working capital or capital expenditures by selling bonds, bills, or notes to individual and/or institutional investors. In return for lending the money, the individuals or institutions become creditors and receive a promise to repay , Crescent's ability to service existing debt, the possibility that Crescent's outstanding debt (which requires so-called balloon payments The final installment of a loan to be paid in an amount that is disproportionately larger than the regular installment. When a loan is made, repayment of the principal, which is the amount of the loan, plus the interest that is owed on it, is divided into installments due at of principal) may be refinanced at higher interest rates or otherwise on terms less favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. to Crescent and the fact that interest rates under the credit facility and certain other loans may increase, and other risks detailed from time to time in Crescent's SEC reports, including quarterly reports on Form 10-Q Form 10-Q See 10-Q. , reports on Form 8-K Form 8-K The form required by the SEC when a publicly held company incurs any event that might affect its financial situation or the share value of its stock. Form 8-K See 8-K. , and annual reports on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. . Crescent is a fully integrated real estate company, which upon completion of the pending transactions, will own through its subsidiaries a portfolio of real estate assets, consisting primarily of 86 office properties and 7 retail properties totaling 31.6 million square feet, a 38% interest in 89 refrigerated re·frig·er·ate tr.v. re·frig·er·at·ed, re·frig·er·at·ing, re·frig·er·ates 1. To cool or chill (a substance). 2. To preserve (food) by chilling. warehouse facilities, 89 behavioral behavioral pertaining to behavior. behavioral disorders see vice. behavioral seizure see psychomotor seizure. healthcare facilities, 6 casino/hotel properties, 7 full-service hotel properties totaling 2,276 rooms, 2 destination health and fitness resorts and economic interests in 5 residential development corporations. The office rental properties are located primarily in 21 metropolitan submarkets in Texas and Colorado. For further information, please contact Dallas E. Lucas, Chief Financial Officer at (817) 878-0426 or refer to Crescent's web page at cei-crescent.com. -0-
CRESCENT REAL ESTATE EQUITIES COMPANY
CONSOLIDATED BALANCE SHEETS
(dollars in thousands)
March 31, December 31,
1998 1997
(unaudited) (audited)
ASSETS:
Investments in Real Estate:
Land $ 485,695 $ 448,328
Building and improvements 3,338,133 2,923,097
Furniture, fixtures and equipment 53,185 51,705
Less - accumulated depreciation (302,826) (278,194)
------------- -------------
Net investment in real estate 3,574,187 3,144,936
Cash and cash equivalents 68,548 66,622
Restricted cash and cash equivalents 26,519 41,528
Accounts receivable, net 24,047 30,179
Deferred rent receivable 48,397 39,588
Investments in real estate
mortgages and equity of
unconsolidated companies 583,262 601,770
Notes receivable, net 148,482 156,676
Other assets, net 118,286 98,681
------------- -------------
Total assets $ 4,591,728 $ 4,179,980
============= =============
LIABILITIES:
Borrowings under credit facility $ 457,000 $ 350,000
Notes payable 1,517,927 1,360,124
Accounts payable, accrued
expenses and other liabilities 79,222 127,258
------------ ------------
Total liabilities 2,054,149 1,837,382
------------- -------------
MINORITY INTERESTS:
Operating partnership, 6,416,642
and 6,397,072 units,
respectively 121,806 117,103
Investment joint ventures 27,815 28,178
------------- -------------
Total minority interests 149,621 145,281
------------- -------------
SHAREHOLDERS' EQUITY:
6 3/4% Series A Convertible
Cumulative Preferred Stock,
$.01 par value, authorized
100,000,000 shares, 8,000,000
shares issued and outstanding
at March 31, 1998 200,000 -
Common shares, $.01 par value,
authorized 250,000,000 shares,
118,725,105 and 117,977,907
shares issued and outstanding
at March 31, 1998 and
December 31, 1997, respectively 1,186 1,179
Additional paid-in capital 2,248,628 2,253,928
Deferred compensation on
restricted shares (281) (283)
Retained deficit (61,575) (57,507)
------------- -------------
Total shareholders' equity 2,387,958 2,197,317
------------- -------------
Total liabilities and
shareholders' equity $ 4,591,728 $ 4,179,980
============= =============
TOTAL SHARES AND UNITS OUTSTANDING 131,558,389 (a) 130,772,051 (a)
STOCK PRICE $36.000 $39.375
MARKET VALUE OF EQUITY $4,936,102 $5,149,150
TOTAL MARKET CAPITALIZATION
INCLUDING DEBT $6,911,029 $6,859,274
DEBT AS A % OF TOTAL MARKET
CAPITALIZATION 29% 25%
(a) Units are exchangeable on a one-for-two basis for Common Shares.
CRESCENT REAL ESTATE EQUITIES COMPANY
CONSOLIDATED STATEMENTS OF OPERATIONS
(dollars in thousands,
except per share data)
For the three months
ended March 31,
(unaudited)
1998 1997
---- ----
REVENUES:
Office and retail properties $ 126,428 $ 70,415
Hotel properties 12,874 8,985
Behavioral Healthcare 13,823 -
Interest and other income 8,024 1,530
------------- -------------
Total revenues 161,149 80,930
------------- -------------
EXPENSES:
Real estate taxes 16,097 7,925
Repairs and maintenance 8,700 5,151
Other rental property operating 29,891 17,520
Corporate general and administrative 3,147 4,845
Interest expense 34,283 14,744
Amortization of deferred financing
costs 1,140 649
Depreciation and amortization 26,582 13,952
------------- -------------
Total expenses 119,840 64,786
------------- -------------
Operating income 41,309 16,144
OTHER INCOME:
Equity in net income of unconsolidated
companies 5,845 4,101
------------- ------------
INCOME BEFORE MINORITY INTERESTS 47,154 20,245
Minority interests (4,746) (3,494)
------------- ------------
NET INCOME 42,408 16,751
PREFERRED STOCK DIVIDENDS (1,575) -
------------- -------------
NET INCOME APPLICABLE TO COMMON
SHAREHOLDERS $ 40,833 $ 16,751
============= =============
PER COMMON SHARE DATA:
Net Income - Basic $ 0.35 $ 0.23
============= =============
Net Income - Diluted $ 0.33 $ 0.22
============= =============
WEIGHTED AVERAGE SHARES
OUTSTANDING - BASIC 118,379,709 72,305,184
============= =============
WEIGHTED AVERAGE SHARES
OUTSTANDING - DILUTED 123,068,052 75,858,825
============= =============
DEBT SERVICE COVERAGE RATIO 3.1 3.4
CRESCENT REAL ESTATE EQUITIES COMPANY
STATEMENTS OF FUNDS FROM OPERATIONS
(dollars in thousands,
except per share data)
For the three months
ended March 31,
1998 1997
---- ----
INCOME BEFORE MINORITY INTERESTS $ 47,154 $ 20,245
ADJUSTMENTS:
Depreciation and amortization of real
estate assets 26,051 13,496
Adjustment for investments in real estate
mortgages and equity of
unconsolidated companies 12,314 266
Minority interest in joint ventures (400) (416)
Preferred stock dividends (1,575) -
FUNDS FROM OPERATIONS $ 83,544 $ 33,591
WEIGHTED AVERAGE SHARES/UNITS
OUTSTANDING - BASIC 131,063 85,586
WEIGHTED AVERAGE SHARES/UNITS
OUTSTANDING - DILUTED 135,751 89,140
DIVIDEND PAID PER SHARE DURING PERIOD $ 0.380 $ 0.305
SUPPLEMENTAL INFORMATION:
Rental income from straight-line rents $ (8,809) $ (3,276)
Residential development capital expenditures (325) (454)
Non-incremental revenue generating exp.:
Hotel property capital expenditures (943) (675)
Office and retail property capital
expenditures (339) (491)
Tenant improvement and leasing costs (6,945) (2,614)
Depreciation and amortization of non-real
estate assets 345 293
Amortization of deferred financing costs 1,140 649
CONTACT: 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. Dallas E. Lucas, 817/878-0426 |
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