HRPT Properties Trust Announces Financial Results for the Periods Ended September 30, 2002.Business Editors NEWTON Newton, cities, United States Newton. 1 City (1990 pop. 16,700), seat of Harvey co., S central Kans., in an agricultural area; inc. 1872. , Mass.--(BUSINESS WIRE)--Nov. 7, 2002 HRPT HRPT High-Resolution Picture Transmission HRPT High Rate Picture Transmission HRPT Hyperparathyroidism HRPT Highway Regulating Point Team Properties Trust (NYSE NYSE See: New York Stock Exchange : HRP) today announced its financial results for the periods ended September September: see month. 30, 2002, together with comparative results for the 2001 periods as follows:
(in thousands, except per share amounts)
Quarter Ended Nine Months Ended
September 30, September 30,
2002 2001 2002 2001
Revenues $102,067 $96,784 $301,471 $295,260
Net income $27,203 $19,763 $75,179 $71,275
Net income available for common
shareholders $20,953 $14,825 $59,054 $59,370
FFO from property operations $32,455 $31,158 $97,604 $97,294
FFO $41,255 $39,901 $123,884 $124,206
Weighted average common shares
outstanding 128,824 129,937 128,814 130,710
Per common share:
Basic and diluted net income
available for common
shareholders $0.16 $0.11 $0.46 $0.45
FFO from property operations $0.25 $0.24 $0.76 $0.74
FFO $0.32 $0.31 $0.96 $0.95
Net income available for common shareholders is net income reduced by preferred distributions. 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 ") is net income available for common shareholders adjusted as follows: excluding (a) equity in earnings of equity investments, the reversal reversal n. the decision of a court of appeal ruling that the judgment of a lower court was incorrect and is reversed. The result is that the lower court which tried the case is instructed to dismiss the original action, retry the case, or is ordered to change its of 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. of assets, extraordinary items, and loss on equity transactions; and adding (b) funds from operations from equity investments, and depreciation and non-cash expenses Noun 1. non-cash expense - an expense (such as depreciation) that is not paid for in cash disbursal, disbursement, expense - amounts paid for goods and services that may be currently tax deductible (as opposed to capital expenditures) . FFO from property operations is FFO excluding funds from operations from equity investments. The increase in net income and net income available for common shareholders is due primarily to property acquisitions in 2002 and 2001 and the prior period non cash loss recognized from the issuance of common shares by Senior Housing Properties Trust ("SNH SNH Scottish Natural Heritage SNH Sunday Night Heat (wrestling) SNH Society for Netherlandic History SNH Supervision Network Hub "). The decrease in net income available for common shareholders, FFO from property operations and FFO in Q302 compared to Q202 reflects distributions accrued ac·crue v. ac·crued, ac·cru·ing, ac·crues v.intr. 1. To come to one as a gain, addition, or increment: interest accruing in my savings account. 2. on series B 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. issued on September 12, 2002. HRPT Properties Trust is a real estate investment trust headquartered in Newton, MA. HRPT currently owns office buildings with approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 22 million square feet that are located throughout the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. . THIS PRESS RELEASE CONTAINS FORWARD LOOKING STATEMENTS WITHIN THE MEANING OF THE PRIVATE SECURITIES LITIGATION REFORM ACT The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and OF 1995. THESE FORWARD LOOKING STATEMENTS ARE BASED UPON HRPT'S CURRENT BELIEFS AND EXPECTATIONS, BUT THEY ARE NOT GUARANTEED. FOR EXAMPLE, THE IMPLICATION implication In logic, a relation that holds between two propositions when they are linked as antecedent and consequent of a true conditional proposition. Logicians distinguish two main types of implication, material and strict. WHICH MIGHT BE DRAWN FROM HRPT'S RECENT LEASING EXPERIENCE (AS DESCRIBED IN THE ADDITIONAL DATA SHEET ATTACHED HERETO here·to adv. To this document, matter, or proposition. hereto Adverb Formal or law to this place, matter, or document Adv. 1. ) IS THAT RENTS WILL CONTINUE TO INCREASE AS LEASES 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. . HOWEVER, CHANGING MARKET CONDITIONS MAY MEAN THAT 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 WILL CAUSE VACANCIES TO INCREASE OR PROPERTIES TO BE LEASED AT LOWER RENTS. ALSO, ALTHOUGH HRPT EXPECTS TO PURSUE ADDITIONAL PROPERTY ACQUISITIONS DURING 2002, ADDITIONAL PROPERTY ACQUISITIONS MAY NOT BE COMPLETED BECAUSE PRICES WHICH HRPT CONSIDERS ACCEPTABLE ARE NOT ACHIEVABLE. INVESTORS ARE CAUTIONED NOT TO PLACE UNDUE RELIANCE UPON FORWARD LOOKING STATEMENTS.
HRPT Properties Trust
Financial Information
(in thousands, except per share amounts)
Quarter Ended Nine Months Ended
September 30, September 30,
2002 2001 2002 2001
Revenues:
Rent and other income $102,067 $96,784 $301,471 $295,260
Expenses:
Operating expenses 37,339 34,247 109,222 104,424
Interest 21,346 21,986 64,505 68,654
Depreciation and amortization 16,928 15,371 49,731 45,913
General and administrative 3,916 4,061 11,792 11,794
Non-recurring item: reversal
of impairment of assets -- -- -- (3,955)
Total expenses 79,529 75,665 235,250 226,830
Income before equity in
earnings of equity investments
and extraordinary item 22,538 21,119 66,221 68,430
Equity in earnings of equity
investments of Senior Housing
Properties Trust and
Hospitality Properties Trust 4,784 4,280 13,842 10,630
Loss on equity transactions of
equity investments (A) -- (5,636) (1,421) (5,636)
Extraordinary item - early
extinguishment of debt (119) -- (3,463) (2,149)
Net income 27,203 19,763 75,179 71,275
Preferred distributions (6,250) (4,938) (16,125) (11,905)
Net income available for common
shareholders $20,953 $14,825 $59,054 $59,370
Calculation of FFO:
Income before equity in
earnings of equity investments
and extraordinary item $22,538 $21,119 $66,221 $68,430
Non-recurring item -- -- -- (3,955)
Preferred distributions (6,250) (4,938) (16,125) (11,905)
Depreciation and non-cash
expenses 16,167 14,977 47,508 44,724
Funds from operations from
property operations (B) 32,455 31,158 97,604 97,294
Funds from operations from
equity investments of Senior
Housing Properties Trust and
Hospitality Properties Trust (B) 8,800 8,743 26,280 26,912
Funds from operations (B) $41,255 $39,901 $123,884 $124,206
Weighted average common shares
outstanding 128,824 129,937 128,814 130,710
Per common share:
Basic and diluted net
income available for
common shareholders $0.16 $0.11 $0.46 $0.45
Funds from operations from
property operations (B) $0.25 $0.24 $0.76 $0.74
Funds from operations (B) $0.32 $0.31 $0.96 $0.95
(A) HRPT accounts for its common share investments in SNH and HPT
using the GAAP equity method of accounting. Accordingly, HRPT
recognized losses of $1.4 million and $5.6 million during the nine
months ended September 30, 2002 and 2001, respectively, reflecting
the issuance of shares by SNH at a price below HRPT's per share
carrying value.
(B) HRPT computes FFO as net income available for common shareholders,
adjusted for its pro rata share of FFO of HPT and SNH, and
excluding depreciation, gains on sales of properties and
extraordinary and non-recurring items. HRPT considers FFO to be an
appropriate measure of performance for a REIT, along with cash
flow from operating activities, financing activities and investing
activities, because it provides investors with an indication of an
equity REIT's operating performance and its ability to incur and
service debt, make capital expenditures, pay distributions and
fund other cash needs. HRPT's method of computing FFO may not be
comparable to FFO reported by other REITs that define the term
differently. HRPT's FFO is an important factor considered by
HRPT's Board of Trustees in determining the amount of
distributions to shareholders. FFO does not represent cash
generated by operating activities in accordance with generally
accepted accounting principles, or GAAP, and should not be
considered an alternative to net income or cash flow from
operating activities as a measure of financial performance or
liquidity.
HRPT Properties Trust
Financial Information
(dollars in thousands)
Balance Sheet Data: September 30, December 31,
2002 2001
Assets
Real estate investments, at cost $2,806,939 $2,592,487
Accumulated depreciation (266,493) (219,140)
2,540,446 2,373,347
Equity investments 265,519 273,442
Cash and cash equivalents 185,182 50,555
Other assets 116,716 108,082
$3,107,863 $2,805,426
Liabilities and Shareholders' Equity
Indebtedness $1,109,950 $1,097,217
Other liabilities 67,597 51,709
Shareholders' equity:
Preferred (20,000,000 and 8,000,000 shares
outstanding) 483,266 193,086
Common (128,825,247 and 128,808,747 shares
outstanding) 1,447,050 1,463,414
$3,107,863 $2,805,426
HRPT Properties Trust
Additional Data
(amounts in thousands unless otherwise stated)
-- Total revenues include non-cash straight line rent adjustments and
lease termination fees as follows:
Quarter Ended Nine Months Ended
September 30, September 30,
2002 2001 2002 2001
Non-Cash Straight Line Rent
Adjustments $2,493 $2,395 $7,317 $6,860
Lease Termination Fees $70 $470 $1,442 $2,219
-- Equity in earnings, FFO and cash distributions from equity
investments includes earnings, FFO and cash distributions from
Hospitality Properties Trust ("HPT") and Senior Housing Properties
Trust ("SNH") as follows:
Quarter Ended Nine Months Ended
September 30, September 30,
2002 2001 2002 2001
Equity in Earnings of Equity Investments:
HPT $1,948 $1,937 $5,823 $5,740
SNH 2,836 2,343 8,019 4,890
$4,784 $4,280 $13,842 $10,630
FFO from Equity Investments:
HPT $4,039 $3,893 $11,841 $11,921
SNH 4,761 4,850 14,439 14,991
$8,800 $8,743 $26,280 $26,912
Cash Distributions from Equity Investments:
HPT $2,880 $2,840 $8,560 $8,440
SNH 3,971 3,842 11,784 11,528
$6,851 $6,682 $20,344 $19,968
-- Capitalized expenditures for building and tenant improvements and
leasing commissions (excluding development and redevelopment
activities) were as follows:
Quarter Ended Nine Months Ended
September 30, September 30,
2002 2001 2002 2001
$12,923 $4,792 $29,215 $20,901
-- Capitalized expenditures for development and redevelopment
activities were as follows:
Quarter Ended Nine Months Ended
September 30, September 30,
2002 2001 2002 2001
Costs Incurred $7,733 $846 $13,033 $5,327
Capitalized Interest $1,389 $80 $2,832 $603
HRPT Properties Trust
Additional Data
(amounts in thousands unless otherwise stated)
-- At September 30, 2002, 92% of total office space was occupied:
Total Sq. Ft. 20,664
Total Sq. Ft. Leased(a) 19,047
Percentage Leased 92%
(a) Sq. ft. leased includes space being fitted out for occupancy
pursuant to signed leases and some space which is leased but being
offered for sublease by tenants.
-- Rents charged for approximately 735,000 square feet of office
space which were renewed or released during the quarter ended
September 30, 2002, were approximately 7% higher than rents
previously charged for the same space.
-- For the 186 properties owned by HRPT for the full quarters ended
September 30, 2002 and 2001 ("same store properties"): total
revenues decreased to $92,739 from $94,874, and total expenses
increased to $34,331 from $33,811. These same store properties
constitute approximately 18.7 million square feet and 91% of the
office properties owned by HRPT on September 30, 2002. Same store
revenues and expenses exclude gains on land sales, lease
termination revenues and non-recurring property operating income
and expenses.
-- At September 30, 2002, the five geographic areas which contain the
largest concentration of properties were as follows:
Annualized % of
Rent Annualized
Property Location Sq. Ft. (in millions) Rent
Metro Philadelphia, PA 3,680 $92.0 22.0%
Metro Washington, DC 2,295 65.2 15.6%
Southern California 1,729 49.0 11.7%
Metro Austin, TX 2,844 48.5 11.6%
Metro Boston, MA 1,773 34.0 8.1%
Other Markets 8,343 129.3 31.0%
Total 20,664 $418.0 100.0%
Annualized rent includes expense reimbursements.
HRPT Properties Trust
Additional Data
(amounts in thousands unless otherwise stated)
-- As of September 30, 2002, tenants responsible for more than 1% of
total annualized rent were as follows:
Annualized % of
Rent Annualized
Tenant (in millions) Rent
U. S. Government $84.8 20.3%
GlaxoSmithKline plc 13.9 3.3%
Solectron Corporation 10.0 2.4%
PNC Financial Services Group 9.9 2.4%
Ballard Spahr Andrews & Ingersoll, LLP 7.4 1.8%
FMC Corporation 7.3 1.7%
Fallon Clinics 7.2 1.7%
Mellon Financial Corporation 7.1 1.7%
Schnader Harrison Segal & Lewis LLP 6.8 1.6%
Tyco International Ltd 4.9 1.2%
Cedars Sinai Medical Center 4.7 1.1%
General Dynamics Corporation 4.4 1.1%
Other Tenants 249.6 59.7%
Over 900 Tenants $418.0 100.0%
-- Lease expirations as of September 30, 2002, were as follows:
Annualized % of
Rent Annualized
Year of Expiration (in millions) Rent
2002 $11.6 2.8%
2003 49.2 11.8%
2004 44.0 10.5%
2005 49.2 11.8%
2006 and Thereafter 264.0 63.1%
Total $418.0 100.0%
-- Debt maturities as of September 30, 2002, were as follows:
% of Total
Year of Maturity Amount Debt
2002 $129,894 (a) 11.5%
2003 5,594 .5%
2004 9,908 .9%
2005 107,119 9.5%
2006 7,656 .7%
2007 17,400 1.6%
2008 23,954 2.1%
2009 95,862 8.5%
2010 55,567 4.9%
2011 and Thereafter 672,354 59.8%
Total $1,125,308 100.0%
(a) Includes $128.3 million prepaid in October 2002.
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