HRPT Properties Trust Announces Financial Results for the Periods Ended December 31, 2001.Business Editors NEWTON, Mass.--(BUSINESS WIRE)--March 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 December December: see month. 31, 2001, together with comparative results for the 2000 periods as follows:
(in thousands, except per share amounts)
Quarter Ended Year Ended
December 31, December 31,
2001 2000 2001 2000
Revenues $ 98,912 $100,532 $394,172 $405,006
Net income $ 11,529 $ 57,156 $ 82,804 $142,272
Net income
available for
common shareholders
$ 6,592 $ 57,156 $ 65,962 $142,272
FFO from property
operations $ 31,581 $ 35,580 $128,875 $145,150
FFO $ 38,592 $ 44,832 $162,798 $183,947
Weighted average
common shares
outstanding
128,896 131,949 130,253 131,937
Per common share:
Basic and diluted
net income available
for common
shareholders $ 0.05 $ 0.43 $ 0.51 $ 1.08
FFO from property
operations $ 0.25 $ 0.27 $ 0.99 $ 1.10
FFO $ 0.30 $ 0.34 $ 1.25 $ 1.39
Net income available for common shareholders is net income reduced by preferred distributions. The decreases in net income and net income available for common shareholders are due primarily to the following: (i) non-cash losses recognized by HRPT under the equity method of accounting primarily resulting from equity issuances In financial markets, an Equity Issuance is the sale of new equity or "stocks" by a firm to investors. Equity Issuance can involve a private sale, in which the transaction between investors and the firm takes place directly, or publicly, in which case the firm has to in 2001 by HRPT's former subsidiary, Senior Housing Properties Trust (NYSE: SNH SNH Scottish Natural Heritage SNH Sunday Night Heat (wrestling) SNH Society for Netherlandic History SNH Supervision Network Hub ) at prices below the carrying value Carrying Value Also know as "book value," it is a company's total assets minus intangible assets and liabilities, such as debt. Notes: This is different than market value, as it can be higher or lower depending on the circumstances. of residual shares in SNH held by HRPT ($13.6 million in the fourth quarter 2001 and $19.3 million in the full year 2001); (ii) $18.0 million in the fourth quarter and $24.6 million in the full year of gains on property sales realized in 2000 which were not repeated in 2001; (iii) the decrease in 2001 from 2000 in equity in earnings of SNH ($14.3 million in the fourth quarter and $18.7 million in the full year); and (iv) declines resulting from the sale of office properties in 2000 and 2001 and lower average property occupancy in 2001. Distributions on series A 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 during February February: see month. 2001 also reduced net income available for common shareholders. 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: (a) excluding loss on equity transactions, equity in earnings of equity investments, gain on sale of properties, extraordinary items, the reversal 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; plus (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 decreases in FFO for the quarter and year ended December 31, 2001, were principally the result of the decrease in equity in FFO of SNH, the sale of properties during 2000 and 2001, a decrease in average property occupancy and distributions on series A preferred shares issued during February 2001. 2001 Activities Capital Markets Activities In February 2001 HRPT issued 8 million 9 7/8% series A cumulative redeemable Redeemable Eligible for redemption under the terms of an indenture. preferred shares ($25 per share redemption value Redemption Value refers to the value that is placed on a party's head after they wrong you in some way. It is seen as the payment you are willing to make to get justice. ) in a public offering for 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 $193 million. HRPT used the proceeds from this offering and cash on hand to redeem redeem v. to buy back, as when an owner who had mortgaged his/her real property pays off the debt. The term also refers to paying the amount due and all charges after a foreclosure (due to failure to make payments when due) has begun. at par all $202 million of its 7.25% and 7.5% convertible subordinated debentures subordinated debenture An unsecured bond with a claim to assets that is subordinate to all existing and future debt. Thus, in the event that the issuer encounters financial difficulties and must be liquidated, all other claims must be satisfied before due in 2001 and 2003. During April 2001 HRPT closed on a new $425 million revolving bank credit facility. The new credit facility matures in April 2005 and replaced a credit facility which was scheduled to mature in April 2002. The new facility has an accordion accordion, musical instrument consisting of a rectangular bellows expanded and contracted between the hands. Buttons or keys operated by the player open valves, allowing air to enter or to escape. The air sets in motion free reeds, frequently made of metal. feature which allows it to be expanded in certain 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 by up to $200 million. Dividends HRPT paid dividends on its common shares during 2001 at a rate of $0.20 per quarter, or $0.80 per annum Per annum Yearly. . On January January: see month. 4, 2002, HRPT announced that its regular quarterly common dividend of $0.20 per share for the quarter ended December 31, 2001, would be paid to shareholders of record as of the close of business on January 18, 2002, and distributed on or about February 22, 2002. HRPT paid dividends on its preferred shares at a rate of $0.6172 per quarter, on the 15th of May, August and November November: see month. 2001. On January 8, 2002, HRPT announced that its regular quarterly preferred dividend preferred dividend n. a payment of a corporation's profits to holders of preferred shares of stock. (See: preferred stock) of $0.6172 per preferred share would be paid to holders of record as of the close of business on February 1, 2002, and distributed on or about February 15, 2002. Share Buy Back Program During the twelve months ended December 31, 2001, HRPT repurchased 3,154,100 of its common shares for $26.2 million, including transaction costs Transaction Costs Costs incurred when buying or selling securities. These include brokers' commissions and spreads (the difference between the price the dealer paid for a security and the price they can sell it). . Investment Activities During the third and fourth quarters of 2001, HRPT acquired two commercial office buildings containing approximately 240,000 square feet for $26.4 million as follows: 1. A 98,000 square foot office building in suburban Boston Boston, town, England Boston, town (1991 pop. 26,495), E central England, on the Witham River. Boston's fame as a port dates from the 13th cent., when it was a Hanseatic port trading wool and wine. Having recovered from a decline in the 18th and 19th cent. 94% leased by four tenants. The largest tenant at this property is the Food and Drug Administration, an agency of the U.S. Government. This tenant leases approximately one-third of the property until 2020. Other major tenants include the U.S. Internal Revenue Service and The Massachusetts Eye and Ear Infirmary Massachusetts Eye and Ear Infirmary, known locally as Mass. Eye & Ear, is a specialty hospital providing patient care for disorders of the eye, ear, nose, throat, head and neck. , an affiliate of The Massachusetts General Hospital Massachusetts General Hospital Health care The major teaching hospital for Harvard Medical School, widely regarded as one of the best health care centers in the world and Harvard University Harvard University, mainly at Cambridge, Mass., including Harvard College, the oldest American college. Harvard College Harvard College, originally for men, was founded in 1636 with a grant from the General Court of the Massachusetts Bay Colony. Medical School. 2. A 142,000 square foot office building in suburban 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. 98% leased to various commercial tenants. During 2001 HRPT sold four properties for net cash proceeds of approximately $10.6 million. HRPT expects to selectively pursue acquisitions and dispositions during 2002; however, no pre-set amounts of property acquisitions or sales have been established for 2002. Distribution of Five Star Shares On December 31, 2001, HRPT completed the distribution of 1.3 million shares of Five Star Quality Care, Inc. (AMEX AMEX See: American Stock Exchange : FVE FVE Federation of Veterinarians of Europe FVE Fluid Volume Excess FVE Functional Vocational Evaluation FVE Frequent Value Encoding FVE Florida Visual Ensemble FVE Flash Video Encoder FVE Flash Video Exporter FVE Full Volume Encryption ) to HRPT shareholders. HRPT received shares of FVE on December 31, 2001, through its ownership of 12.8 million shares of SNH. The FVE shares were distributed to HRPT shareholders on the basis of one FVE share for every 100 HRPT shares owned. FVE was a wholly owned subsidiary Wholly Owned Subsidiary A subsidiary whose parent company owns 100% of its common stock. Notes: In other words, the parent company owns the company outright and there are no minority owners. of SNH prior to being spun off by SNH on December 31, 2001. HRPT Properties Trust is a real estate investment trust headquartered in Newton, MA. HRPT currently owns office buildings with approximately 19 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 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 PROPERTY SALES AND ACQUISITIONS DURING 2002, PROPERTY SALES OR 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 Year Ended
December 31, December 31,
2001 2000 2001 2000
Revenues:
Rent and other
income $ 98,912 $ 100,532 $ 394,172 $ 405,006
Expenses:
Operating expenses 36,168 35,965 140,592 138,937
Interest 20,911 24,225 87,075 100,074
Depreciation and
amortization 16,784 15,864 65,187 63,213
General and
administrative 3,820 3,760 15,614 17,271
Non-recurring item:
Impairment
of assets -- -- (3,955) --
Total expenses 77,683 79,814 304,513 319,495
Income before equity
in earnings of
equity investments,
gain on sale of
properties and
extraordinary item 21,229 20,718 89,659 85,511
Equity in earnings of
equity investments
of Senior Housing
Properties Trust and
Hospitality
Properties Trust 3,929 18,345 14,559 33,280
Loss on equity
transactions of
equity investments (1) (13,629) -- (19,265) --
Gain on sale of
properties, net -- 17,977 -- 24,575
Extraordinary item -
early extinguishment
of debt -- 116 (2,149) (1,094)
Net income 11,529 57,156 82,804 142,272
Preferred distributions (4,937) -- (16,842) --
Net income
available for
common shareholders $ 6,592 $ 57,156 $ 65,962 $ 142,272
Calculation of FFO:
Income before equity
in earnings of
equity investments,
gain on sale of
properties and
extraordinary item $ 21,229 $ 20,718 $ 89,659 $ 85,511
Non-recurring item -- -- (3,955) --
Preferred distributions (4,937) -- (16,842) --
Depreciation and
non-cash expenses 15,289 14,862 60,013 59,639
Funds from operations
from property
operations (2) 31,581 35,580 128,875 145,150
Funds from operations
from equity investments
of Senior Housing
Properties Trust and
Hospitality Properties
Trust (2) 7,011 9,252 33,923 38,797
Funds from
operations (2) $ 38,592 $ 44,832 $ 162,798 $ 183,947
Weighted average
common shares
outstanding 128,896 131,949 130,253 131,937
Per common share:
Basic and diluted
net income
available for common
shareholders $ 0.05 $ 0.43 $ 0.51 $ 1.08
Funds from operations
from property
operations (2) $ 0.25 $ 0.27 $ 0.99 $ 1.10
Funds from
operations (2) $ 0.30 $ 0.34 $ 1.25 $ 1.39
(1) HRPT accounts for its common share investments in SNH and HPT
using the GAAP equity method of accounting. Accordingly, HRPT
recognized losses of $13.6 million and $19.3 million during the
quarter and year ended December 31, 2001, respectively, reflecting
the issuance of shares by SNH at a price below HRPT's per-share
carrying value.
(2) Funds from operations, or "FFO", as defined in the White Paper on
Funds from Operations which was approved by the Board of Governors
of the National Association of Real Estate Investment Trusts
("NAREIT") in March 1995 and as clarified from time to time, is
"net income (computed in accordance with generally accepted
accounting principles), excluding gains (or losses) from sales of
property, plus depreciation and amortization, and after adjustment
for unconsolidated partnerships and joint ventures. Adjustments
for unconsolidated partnerships and joint ventures will be
calculated to reflect funds from operations on the same basis."
HRPT considers FFO to be an appropriate measure of performance for
an equity 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 ability to incur
and service debt, make capital expenditures, pay distributions and
fund other cash needs. HRPT computes FFO in accordance with the
standards established by NAREIT including adjustments for our pro
rata share of FFO of HPT and SNH, but excluding unusual and
non-recurring items, certain non-cash items, and gains on sales of
undepreciated properties, which may not be comparable to FFO
reported by other REITs that define the term differently. FFO does
not represent cash generated by operating activities in accordance
with GAAP and should not be considered as an alternative to net
income, determined in accordance with GAAP, as an indication of
financial performance or the cash flow from operating activities,
determined in accordance with GAAP, or as a measure of liquidity.
HRPT Properties Trust
Financial Information
(in thousands, except per share amounts)
Balance Sheet Data: December 31, December 31,
2001 2000
Assets
Real estate investments, at cost $2,592,487 $2,552,472
Accumulated depreciation (219,140) (160,015)
2,373,347 2,392,457
Equity investments 273,442 314,099
Other assets 158,637 193,587
$2,805,426 $2,900,143
Liabilities and Shareholders' Equity
Indebtedness $1,097,217 $1,302,950
Other liabilities 51,709 67,981
Shareholders' equity 1,656,500 1,529,212
$2,805,426 $2,900,143
HRPT Properties Trust
Additional Data
HRPT has determined to publish the following Additional Data which
is intended to respond to frequently asked questions (dollar amounts
are in thousands).
----------------------------------------------------------------------
-- Total revenues include non-cash straight-line rent adjustments as
follows:
Quarter Ended December 31, Year Ended December 31,
2001 2000 2001 2000
$2,196 $2,651 $9,056 $10,930
----------------------------------------------------------------------
-- Equity in earnings and FFO from equity investments includes
earnings and FFO from Hospitality Properties Trust ("HPT") and
Senior Housing Properties Trust ("SNH") as follows:
Quarter Ended Year Ended
December 31, December 31,
2001 2000 2001 2000
Equity in Earnings of Equity Investments:
HPT $ 2,123 $ 2,272 $ 7,863 $ 7,835
SNH 1,806 16,073 6,696 25,445
$ 3,929 $18,345 $14,559 $33,280
FFO from Equity Investments:
HPT $ 3,712 $ 3,940 $15,633 $15,486
SNH 3,299 5,312 18,290 23,311
$ 7,011 $ 9,252 $33,923 $38,797
-- Cash Distributions from Equity Investments:
HPT $ 2,840 $ 2,800 $11,280 $11,080
SNH 3,843 3,843 15,371 19,214
$ 6,683 $ 6,643 $26,651 $30,294
----------------------------------------------------------------------
-- Capitalized expenditures for building maintenance, tenant
improvements and leasing commissions (excluding development and
redevelopment activities) were as follows:
Quarter Ended December 31, Year Ended December 31,
2001 2000 2001 2000
$7,485 $8,622 $28,386 $23,735
----------------------------------------------------------------------
-- For the 187 properties owned by HRPT for the full quarters ended
December 31, 2001 and 2000 ("same store properties"): total
revenues decreased to $96,064 from $96,782, and total expenses
increased to $35,549 from $34,640. These same store properties
constitute approximately 19 million square feet and 98.5% of the
office properties owned by HRPT on December 31, 2001.
-- Same store revenues and expenses exclude gains on land sales,
lease termination revenues and non-recurring property operating
income and expenses.
-- Property occupancy decreased from 96% at December 31, 2000, to 92%
at December 31, 2001.
-- Rents charged for approximately 493,000 square feet of office
space which were renewed or released during the quarter ended
December 31, 2001, were approximately 20% higher than rents
previously charged for the same space.
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