Exhibit 99.1
FOR IMMEDIATE RELEASE
AMB PROPERTY CORPORATION ANNOUNCES SECOND QUARTER
2004 RESULTS
Strengthening Core Operations and Development Program Drive
Better-Than-Expected Quarterly Results
SAN FRANCISCO, July 13, 2004 – AMB Property Corporation (NYSE:AMB), a leading
global developer and owner of industrial real estate, today reported second
quarter 2004 earnings per share (EPS) of $0.22 exceeding the company’s guidance
of $0.19 to $0.20 per share. The
better-than-expected EPS results stem from strong core operations and timing of
profits from the company’s land and development sales program that had been
anticipated later in the year. The quarter’s EPS results compare to EPS of
$0.19 reported in the same period last year.
In the first half of 2004, EPS was $0.41 per share compared with $0.89 in the
first half of 2003. The first half 2003 results included $0.47 of gains on sale
from discontinued operations and dispositions, compared with $0.02 in the first
six months of 2004.
The company’s industrial operating portfolio was 93.6% leased as of June 30,
2004, up 90 basis points from March 31, 2004 and up 210 basis points from June
30, 2003. Preliminary data from Torto Wheaton Research indicate national
industrial occupancy at the end of the second quarter was 88.6%, representing a
30 basis point increase from March 31, 2004 — the first improvement in national
occupancy in 14 quarters.
Cash-basis same store net operating income (NOI) decreased 6.1% in second
quarter 2004, driven by lower rents on lease renewals in the current period and
receipt of lease termination fees in the same quarter in 2003, partially offset
by current period occupancy improvements. Without the effect of lease
termination fees, same store NOI declined 1.6%. For the year to date, same
store NOI declined 4.4%; without the impact of lease termination fees, year to
date same store NOI was down 2.3%.
Hamid R. Moghadam, chairman and CEO, said, “The industrial market continued to
strengthen in the quarter. The Industrial Production index exceeds its June
2000 peak level and has now posted 11 consecutive months of expansion. The
combination of increased levels of business spending and the historically low
inventory-to-sales ratio appear to be translating into increased demand for
industrial real estate. Preliminary estimates indicate that positive absorption
of industrial space nationally now exceeds its normalized level of 40 million
square feet per quarter — a level not seen since year-end 2000. AMB is well
positioned to help our customers in this environment.”
Pier 1, Bay 1 San Francisco, California
94111 Main 415
394.9000 Fax
415 394.9001 www.amb.com
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Page 2 |
Investment Activity
During the second quarter, AMB acquired 2.7 million square feet in 39 buildings
for a total acquisition cost of $305.1 million. Significant acquisitions in the
quarter expanded the company’s industrial holdings in northern New Jersey,
marked AMB’s initial investment at Amsterdam Airport Schiphol, and completed
the acquisition of the final phase of the previously announced International
Airport Centers (IAC) portfolio with four buildings at JFK International
Airport and a single facility at Houston’s George Bush Intercontinental
Airport.
During the quarter, the company stabilized 470,600 square feet of newly
developed facilities in Los Angeles and Mexico City. Together, the fully leased
facilities have a total investment of $26.9 million. The company’s industrial
development and renovation pipeline in North America, Europe and Asia totals an
estimated 6.2 million square feet with deliveries slated through 2006. Expected
investment in the current development pipeline now totals $353.8 million.
AMB’s president, W. Blake Baird, commented, “We continue to grow our global
trade-focused portfolio of distribution properties through new development and
acquisition. We added more than 1.5 million square feet in the quarter to our
northern New Jersey/New York portfolio and now can offer customers facility
options in more than 10 million square feet in this important gateway market.
“In Europe,” continued Baird, “we entered Amsterdam, the fourth of our European
target markets, with the acquisition of the newly developed and
airport-adjacent AMB Capronilaan Logistics Center. Amsterdam serves as our
European headquarters and Amsterdam Airport Schiphol is Europe’s third largest
cargo airport and an important link in both pan-European and global trade.
Demand for state-of-the-art distribution space in this market is strong and
allowed us to fully lease the new facility prior to completion of
construction.”
The quarter included dispositions of two buildings for an aggregate $12.9
million. In addition, the company generated $2.6 million of net development
profits through sales of land and projects from the company’s development for
sale pipeline.
Prospective Target Markets
In May, AMB appointed executive vice president David S. Fries as chairman of
AMB China, Ltd. Mr. Fries has relocated to Shanghai and is leading the
company’s evaluation of industrial development opportunities at airport and
seaport locations in Shanghai, Beijing and the Pearl River Delta.
“Explosive growth in China’s economy and its position as a world trading
partner are creating significant customer demand for distribution facilities
that meet international design specifications,” said Mr. Moghadam. “Our
logistics facilities experience at global ports and airports is of interest to
both government and corporate real estate leaders who are seeking partners in
the planning and building of China’s emerging logistics real estate market. To
the extent we can
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Page 3 |
identify value-enhancing solutions for both our customers and shareholders, we
would expect China to represent an important part of our expanding global
platform. David’s professional background, strategic acumen, and management
skills uniquely qualify him to evaluate AMB’s opportunities in China.”
Financing Activities
Also during the quarter and as previously announced, AMB completed the early
renewal of its senior unsecured revolving line of credit in the amount of $500
million. The three-year credit facility includes a multi-currency component
under which up to $250 million can be drawn in yen, euros or pounds sterling.
The line, which matures in June 2007 and carries a one-year extension option,
can be increased to $700 million upon certain conditions, and replaces the
company’s previous $500 million credit facility that was to mature in December
2005. The line is priced at 60 basis points over the applicable LIBOR index,
with an annual facility fee of 20 basis points, based on the current credit
rating of AMB’s long-term debt.
During the quarter, the company completed a series of financings in support of
its global operations. AMB, through a subsidiary, entered into an unsecured
revolving credit facility for loans of up to 24 billion Japanese yen
(approximately $220 million at current exchange rates). The facility is
currently priced at TIBOR plus 60 basis points with an annual facility fee of
20 basis points. The facility matures in June 2007 and has a one-year extension
option.
Continuing the company’s strategy of borrowing in local currencies to fund
international investments, the company completed its first yen-based long-term
financing with the closing of seven-year financing on four AMB-owned properties
in greater Tokyo totaling 4.5 billion Japanese yen (approximately $41 million
at current exchange rates). The debt carries a fixed interest rate of 2.94
percent.
Staffing Updates
During the quarter, the company announced three officer promotions. In Chicago,
Steven T. Kimball has been named Senior Vice President, Regional Manager. In
San Francisco, Tracy M. Abels has been promoted to Vice President, Associate
Counsel and Michael P. Brown has been promoted to Vice President, Capital
Markets. Further, in Amsterdam, AMB announced the appointment of Arthur Tielens
as Vice President and Regional Manager Europe, and Mo Barzegar as Chief
Investment Officer Europe.
Mr. Baird stated, “Our customers around the world should benefit from the
abilities and sustained contributions of these officers. They are committed to
helping create superior total returns for our investors and enduring excellence
for AMB.”
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Page 4 |
Supplemental Earnings Measure
AMB reports funds from operations per fully diluted share and unit (FFOPS) in
accordance with the standards established by NAREIT. Second quarter 2004 FFOPS
increased nearly six percent to $0.55 from $0.52 at June 30, 2003, exceeding
the company’s guidance of $0.52 — $0.53 per share. The improved results were
due to stronger core operations and $0.02 of development profits realized in
the quarter that had been expected later in the year. FFOPS for the first half
of 2004 was $1.08, below 2003 FFOPS for the same period of $1.13.
Included in the footnotes to the company’s attached financial statements is a
discussion of why management believes FFO is a useful supplemental measure of
operating performance, of ways in which investors might use FFO when assessing
the company’s financial performance, and of FFO’s limitations as a measurement
tool.
A reconciliation from net income to funds from operations is provided in the
attached tables and published in AMB’s quarterly supplemental analyst package,
available on the company’s website at www.amb.com.
Conference Call and Supplemental Information
The company will host a conference call to discuss the quarter’s results on
Wednesday, July 14, 2004 at 1:00 PM EDT/10:00 AM PDT. Stockholders and
interested parties may listen to a live broadcast of the conference call by
dialing +1 877 359 6098 and using reservation code 8349916 or by webcast
through a link on the company’s website at www.amb.com.
If you are unable to listen to the live conference call, a telephone and
webcast replay will be available after 12:00 PM PDT on Wednesday, July 14,
2004. The telephone replay will be available until 5:00 PM PDT on Friday,
August 13, 2004 and can be accessed by dialing +1 800 642 1687 or
+1 706 645 9291 and using reservation code 8349916. The webcast can be accessed
through a link on the company’s website at www.amb.com and will be available
until 5:00 PM PDT on Friday, August 13, 2004.
In addition, the company will post a summary of the guidance given on the call
and a supplement detailing the components of net asset value to the Investor
Information portion of its website on Wednesday, July 21, 2004 by 5:00 PM PDT.
AMB Property Corporation. Local partner to global trade.™
AMB Property Corporation is a leading owner and operator of industrial real
estate, focused on major hub and gateway distribution markets throughout North
America, Europe and Asia. As of June 30, 2004 AMB owned, managed and had
renovation and development projects totaling 106.7 million square feet (9.9
million square meters) and 1,105 buildings in 37 markets within eight
countries. AMB invests in properties located predominantly in the infill
submarkets of its targeted markets. The company’s portfolio is comprised of
High Throughput Distribution® facilities –
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Page 5 |
industrial properties built for speed and located near airports, seaports and
ground transportation systems.
AMB’s press releases are available on the company website at www.amb.com or by
contacting the Investor Relations department at +1 877 285 3111.
This document contains forward-looking statements such as the company’s
interpretation of trends regarding national and portfolio industrial space
absorption; size and timing of deliveries and total investment in development
projects; goals regarding amount of non-U.S. investment; and timing and use of
funds for planned refinancing activity, which are made pursuant to the
safe-harbor provisions of Section 21E of the Securities Exchange Act of 1934.
Forward-looking statements involve numerous risks and uncertainties and should
not be relied upon as predictions of future events. The events or circumstances
reflected in our forward-looking statements might not occur. We assume no
obligation to update or supplement forward-looking statements. For further
information on factors that could impact AMB and the statements contained
herein, reference should be made to AMB’s filings with the Securities and
Exchange Commission, including AMB’s annual report on Form 10-K for the year
ended December 31, 2003.
AMB CONTACT
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| Lauren L. Barr |
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Direct
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+1 415 733 9477
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Fax
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+1 415 394 9001 |
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Email
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lbarr@amb.com |
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CONSOLIDATED BALANCE SHEETS
(dollars in thousands)
| |
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|
|
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|
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| |
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As of
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| |
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June 30, 2004
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|
March 31, 2004
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|
December 31, 2003
|
Assets |
|
|
|
|
|
|
|
|
|
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|
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Investments in real estate: |
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|
|
|
|
|
|
|
|
|
|
|
Total investments in properties |
|
$ |
6,062,451 |
|
|
$ |
5,730,654 |
|
|
$ |
5,491,707 |
|
Accumulated depreciation |
|
|
(546,881 |
) |
|
|
(511,611 |
) |
|
|
(474,452 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net investments in properties |
|
|
5,515,570 |
|
|
|
5,219,043 |
|
|
|
5,017,255 |
|
Investment in unconsolidated joint ventures |
|
|
52,579 |
|
|
|
54,006 |
|
|
|
52,009 |
|
Properties held for divestiture, net |
|
|
39,246 |
|
|
|
9,628 |
|
|
|
11,751 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net investments in real estate |
|
|
5,607,395 |
|
|
|
5,282,677 |
|
|
|
5,081,015 |
|
Cash and cash equivalents |
|
|
146,136 |
|
|
|
150,903 |
|
|
|
156,663 |
|
Mortgages receivable |
|
|
23,594 |
|
|
|
23,620 |
|
|
|
43,145 |
|
Accounts receivable, net |
|
|
96,524 |
|
|
|
92,081 |
|
|
|
88,452 |
|
Other assets |
|
|
76,958 |
|
|
|
69,669 |
|
|
|
51,391 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets |
|
$ |
5,950,607 |
|
|
$ |
5,618,950 |
|
|
$ |
5,420,666 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Stockholders’ Equity |
|
|
|
|
|
|
|
|
|
|
|
|
Secured debt |
|
$ |
1,552,084 |
|
|
$ |
1,457,630 |
|
|
$ |
1,363,890 |
|
Unsecured senior debt securities |
|
|
1,025,000 |
|
|
|
1,025,000 |
|
|
|
925,000 |
|
Unsecured debt |
|
|
9,334 |
|
|
|
9,482 |
|
|
|
9,628 |
|
Unsecured credit facilities |
|
|
428,502 |
|
|
|
261,369 |
|
|
|
275,739 |
|
Accounts payable and other liabilities |
|
|
256,574 |
|
|
|
208,614 |
|
|
|
187,095 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities |
|
|
3,271,494 |
|
|
|
2,962,095 |
|
|
|
2,761,352 |
|
Minority interests: |
|
|
|
|
|
|
|
|
|
|
|
|
Joint venture partners |
|
|
699,521 |
|
|
|
663,087 |
|
|
|
659,487 |
|
Preferred unitholders |
|
|
241,899 |
|
|
|
241,873 |
|
|
|
241,899 |
|
Limited partnership unitholders |
|
|
88,917 |
|
|
|
89,688 |
|
|
|
91,029 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total minority interests |
|
|
1,030,337 |
|
|
|
994,648 |
|
|
|
992,415 |
|
Stockholders’ equity: |
|
|
|
|
|
|
|
|
|
|
|
|
Common stock |
|
|
1,545,572 |
|
|
|
1,558,995 |
|
|
|
1,563,526 |
|
Preferred stock |
|
|
103,204 |
|
|
|
103,212 |
|
|
|
103,373 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total stockholders’ equity |
|
|
1,648,776 |
|
|
|
1,662,207 |
|
|
|
1,666,899 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and stockholders’ equity |
|
$ |
5,950,607 |
|
|
$ |
5,618,950 |
|
|
$ |
5,420,666 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CONSOLIDATED STATEMENTS OF OPERATIONS
(dollars in thousands, except share data)
| |
|
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|
|
|
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|
|
|
|
|
|
|
|
|
| |
|
For the Quarters Ended |
|
For the Six Months Ended |
| |
|
June 30,
|
|
June 30,
|
| |
|
2004
|
|
2003
|
|
2004
|
|
2003
|
Revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rental revenues |
|
$ |
162,704 |
|
|
$ |
145,433 |
|
|
$ |
326,300 |
|
|
$ |
293,215 |
|
Private capital income |
|
|
2,922 |
|
|
|
3,555 |
|
|
|
5,351 |
|
|
|
5,916 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenues |
|
|
165,626 |
|
|
|
148,988 |
|
|
|
331,651 |
|
|
|
299,131 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs and expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property operating costs |
|
|
(42,763 |
) |
|
|
(38,053 |
) |
|
|
(85,981 |
) |
|
|
(77,493 |
) |
Depreciation and amortization |
|
|
(38,880 |
) |
|
|
(38,150 |
) |
|
|
(76,487 |
) |
|
|
(71,500 |
) |
General and administrative |
|
|
(15,081 |
) |
|
|
(12,122 |
) |
|
|
(29,959 |
) |
|
|
(24,010 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total costs and expenses |
|
|
(96,724 |
) |
|
|
(88,325 |
) |
|
|
(192,427 |
) |
|
|
(173,003 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income |
|
|
68,902 |
|
|
|
60,663 |
|
|
|
139,224 |
|
|
|
126,128 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income and expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity in earnings of unconsolidated joint
ventures |
|
|
944 |
|
|
|
1,622 |
|
|
|
2,653 |
|
|
|
2,857 |
|
Interest income and other, net |
|
|
486 |
|
|
|
1,384 |
|
|
|
1,992 |
|
|
|
2,491 |
|
Gains from dispositions of real estate |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
7,429 |
|
Development profits, net of taxes |
|
|
3,235 |
|
|
|
— |
|
|
|
3,235 |
|
|
|
— |
|
Interest expense, including amortization |
|
|
(39,961 |
) |
|
|
(36,242 |
) |
|
|
(79,784 |
) |
|
|
(72,157 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total other income and expenses |
|
|
(35,296 |
) |
|
|
(33,236 |
) |
|
|
(71,904 |
) |
|
|
(59,380 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before minority interests and
discontinued operations |
|
|
33,606 |
|
|
|
27,427 |
|
|
|
67,320 |
|
|
|
66,748 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Minority interests’ share of income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Joint venture partners’ share of operating income |
|
|
(9,379 |
) |
|
|
(8,242 |
) |
|
|
(18,335 |
) |
|
|
(15,779 |
) |
Joint venture partners’ share of development
profits |
|
|
(749 |
) |
|
|
— |
|
|
|
(749 |
) |
|
|
— |
|
Preferred unitholders |
|
|
(4,912 |
) |
|
|
(6,379 |
) |
|
|
(9,824 |
) |
|
|
(12,759 |
) |
Limited partnership unitholders |
|
|
(777 |
) |
|
|
(601 |
) |
|
|
(1,761 |
) |
|
|
(1,967 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total minority interests’ share of income |
|
|
(15,817 |
) |
|
|
(15,222 |
) |
|
|
(30,669 |
) |
|
|
(30,505 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations |
|
|
17,789 |
|
|
|
12,205 |
|
|
|
36,651 |
|
|
|
36,243 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Discontinued operations: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income attributable to discontinued operations,
net of minority interests |
|
|
253 |
|
|
|
2,259 |
|
|
|
(503 |
) |
|
|
9,570 |
|
Gain from disposition of real estate, net of
minority interests |
|
|
2,161 |
|
|
|
3,662 |
|
|
|
1,875 |
|
|
|
31,691 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total discontinued operations |
|
|
2,414 |
|
|
|
5,921 |
|
|
|
1,372 |
|
|
|
41,261 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
|
20,203 |
|
|
|
18,126 |
|
|
|
38,023 |
|
|
|
77,504 |
|
Preferred stock dividends |
|
|
(1,783 |
) |
|
|
(2,195 |
) |
|
|
(3,566 |
) |
|
|
(4,318 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income available to common stockholders |
|
$ |
18,420 |
|
|
$ |
15,931 |
|
|
$ |
34,457 |
|
|
$ |
73,186 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per common share (diluted) |
|
$ |
0.22 |
|
|
$ |
0.19 |
|
|
$ |
0.41 |
|
|
$ |
0.89 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares (diluted) |
|
|
84,535,762 |
|
|
|
82,465,984 |
|
|
|
84,765,719 |
|
|
|
82,520,038 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CONSOLIDATED STATEMENTS OF FUNDS FROM OPERATIONS (1)
(dollars in thousands, except share data)
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
For the Quarters Ended |
|
For the Six Months Ended |
| |
|
June 30,
|
|
June 30,
|
| |
|
2004
|
|
2003 (2)
|
|
2004
|
|
2003 (2)
|
Net income |
|
$ |
20,203 |
|
|
$ |
18,126 |
|
|
$ |
38,023 |
|
|
$ |
77,504 |
|
Gain from disposition of real estate, net of minority
interests |
|
|
(2,161 |
) |
|
|
(3,662 |
) |
|
|
(1,875 |
) |
|
|
(39,120 |
) |
Real estate related depreciation and amortization: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total depreciation and amortization |
|
|
38,880 |
|
|
|
38,150 |
|
|
|
76,487 |
|
|
|
71,500 |
|
Discontinued operations’ depreciation |
|
|
87 |
|
|
|
184 |
|
|
|
731 |
|
|
|
2,007 |
|
FF& E depreciation |
|
|
(161 |
) |
|
|
(189 |
) |
|
|
(336 |
) |
|
|
(378 |
) |
Adjustments to derive FFO from consolidated JVs: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Joint venture partners’ minority interests (NI) |
|
|
9,379 |
|
|
|
8,242 |
|
|
|
18,335 |
|
|
|
15,779 |
|
Limited partnership unitholders’ minority interests (NI) |
|
|
777 |
|
|
|
601 |
|
|
|
1,761 |
|
|
|
1,967 |
|
Limited partnership unitholders’ minority interests
(Development profits) |
|
|
143 |
|
|
|
— |
|
|
|
143 |
|
|
|
— |
|
Discontinued operations’ minority interests (NI) |
|
|
558 |
|
|
|
786 |
|
|
|
786 |
|
|
|
1,451 |
|
FFO attributable to minority interests |
|
|
(18,118 |
) |
|
|
(15,519 |
) |
|
|
(35,979 |
) |
|
|
(30,502 |
) |
Adjustments to derive FFO from unconsolidated JVs: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AMB’s share of net income |
|
|
(944 |
) |
|
|
(1,622 |
) |
|
|
(2,653 |
) |
|
|
(2,857 |
) |
AMB’s share of FFO |
|
|
1,935 |
|
|
|
2,645 |
|
|
|
4,428 |
|
|
|
5,275 |
|
Preferred stock dividends |
|
|
(1,783 |
) |
|
|
(2,195 |
) |
|
|
(3,566 |
) |
|
|
(4,318 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Funds from operations |
|
$ |
48,795 |
|
|
$ |
45,547 |
|
|
$ |
96,285 |
|
|
$ |
98,308 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FFO per common share and unit (diluted) |
|
$ |
0.55 |
|
|
$ |
0.52 |
|
|
$ |
1.08 |
|
|
$ |
1.13 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares and units (diluted) |
|
|
89,288,954 |
|
|
|
87,302,896 |
|
|
|
89,520,249 |
|
|
|
87,364,056 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (1) |
|
The Company believes that net income, as defined by GAAP, is the most
appropriate earnings measure. However, the Company considers funds from
operations, or FFO, as defined by NAREIT, to be a useful supplemental measure
of its operating performance. FFO is defined as net income, calculated in
accordance with GAAP, less gains (or losses) from dispositions of real estate
held for investment purposes and real estate-related depreciation, and
adjustments to derive the Company’s pro rata share of FFO of consolidated and
unconsolidated joint ventures. Further, the Company does not adjust FFO to
eliminate the effects of non-recurring charges. The Company believes that FFO,
as defined by NAREIT, is a meaningful supplemental measure of its operating
performance because historical cost accounting for real estate assets in
accordance with GAAP implicitly assumes that the value of real estate assets
diminishes predictably over time, as reflected through depreciation and
amortization expenses. However, since real estate values have historically
risen or fallen with market and other conditions, many industry investors and
analysts have considered presentation of operating results for real estate
companies that use historical cost accounting to be insufficient. Thus, NAREIT
created FFO as a supplemental measure of operating performance for real estate
investment trusts that excludes historical cost depreciation and amortization,
among other items, from net income, as defined by GAAP. The Company believes
that the use of FFO, combined with the required GAAP presentations, has been
beneficial in improving the understanding of operating results of real estate
investment trusts among the investing public and making comparisons of
operating results among such companies more meaningful. The Company considers
FFO to be a useful measure for reviewing comparative operating and financial
performance because, by excluding gains or losses related to sales of
previously depreciated operating real estate assets and real estate
depreciation and amortization, FFO can help the investing public compare the
operating performance of a company’s real estate between periods or as compared
to other companies. While FFO is a relevant and widely used measure of
operating performance of real estate investment trusts, it does not represent
cash flow from operations or net income as defined by GAAP and should not be
considered as an alternative to those measures in evaluating the Company’s
liquidity or operating performance. FFO also does not consider the costs
associated with capital expenditures related to the Company’s real estate
assets nor is FFO necessarily indicative of cash available to fund the
Company’s future cash requirements. Further, the Company’s computation of FFO
may not be comparable to FFO reported by other real estate investment trusts
that do not define the term in accordance with the current NAREIT definition or
that interpret the current NAREIT definition differently than the Company does. |
| |
| (2) |
|
Effective January 1, 2003, the Company discontinued its practice of
deducting amortization of investments in leasehold interest from FFO as such an
adjustment is not provided for in NAREIT’s FFO definition. As a result, FFO for
the periods presented has been adjusted to reflect the changes. |