2008-07-30 15:00:00
Cogdell Spencer Inc. Reports Second Quarter 2008 Financial Results
CHARLOTTE, N.C., July 30 /EMWNews/ -- Cogdell Spencer Inc. (NYSE: CSA), a real estate investment trust (REIT) that invests in specialty office buildings, including medical offices and ambulatory surgery and diagnostic centers, and provides advanced planning and design-build services for the medical profession, today announced financial results for the quarter ended June 30, 2008. Second Quarter 2008 Results Cogdell Spencer Inc. reports Funds from Operations Modified (FFOM) per share and operating partnership unit of $0.30, Funds from Operations (FFO) per share and operating partnership unit of $0.20, and net income (loss) per share of ($0.12) for the three months ended June 30, 2008. FFOM for the three months ended June 30, 2008 was $7.3 million, or $0.30 per share and operating partnership unit, basic and diluted. FFOM adds back to traditionally defined FFO non-cash amortization of non-real estate related intangible assets associated with purchase accounting. FFO for the three months ended June 30, 2008 was $4.8 million, or $0.20 per share and operating partnership unit, basic and diluted. The weighted average number of basic and diluted shares and operating partnership units outstanding totaled 24,347,634 and 24,486,032, respectively, for the three months ended June, 2008. Net income (loss) was ($1.8 million) for the three months ended June 30, 2008, or ($0.12) per share basic and diluted. The weighted average number of basic and diluted shares outstanding totaled 15,392,983 for the three months ended June 30, 2008. As of June 30, 2008, the Company's portfolio consisted of 62 consolidated wholly-owned and joint venture properties and three unconsolidated joint venture properties, comprising a total of approximately 3.3 million square feet. The overall percentage of leased space at the Company's in-service, consolidated properties as of June 30, 2008, was 92.5%. In addition, the Company manages 51 properties for third party clients totaling approximately 2.2 million square feet. Results for the Six Months Ended June 30, 2008 FFOM for the six months ended June 30, 2008 was $13.1 million, or $0.59 per share and operating partnership unit, basic and diluted. FFO for the six months ended June 30, 2008 was $9.9 million, or $0.45 per share and operating partnership unit, basic and diluted. The weighted average number of basic and diluted shares and operating partnership units outstanding totaled 22,159,621 and 22,234,469, respectively, for the six months ended June 30, 2008. Net income (loss) was ($3.6 million) for the six months ended June 30, 2008, or ($0.24) per share basic and diluted. The weighted average number of basic and diluted shares outstanding totaled 14,878,718 for the six months ended June 30, 2008. Dividend On June 13, 2008, Cogdell Spencer Inc. announced that its Board of Directors had declared a quarterly dividend of $0.35 per share of common stock payable on July 21, 2008 to stockholders of record on June 25, 2008. The dividend covers the second quarter of 2008. Outlook Cogdell Spencer Inc.'s management expects that FFOM per share and operating partnership unit for the year ending December 31, 2008 will be between $1.20 and $1.24 and expects that FFO per share and operating partnership unit will be between $0.86 and $0.90. A reconciliation of the range of projected net income (loss) to projected FFO and FFOM for the year ending December 31, 2008 is below:
Guidance Range for the Year Ending December 31, 2008 Low High (In thousands, except per share and operating partnership unit data) Net loss before minority interests in Operating Partnership $(6,900) - - $(5,900) Plus real estate related depreciation and amortization 27,500 - - 27,500 Funds from Operations (FFO) 20,600 - - 21,600 Plus amortization of intangibles related to purchase accounting, net of income tax benefit 8,150 - - 8,150 Funds from Operations Modified (FFOM) $28,750 - - $29,750 FFO per share and unit - diluted $0.86 - - $0.90 FFOM per share and unit - diluted $1.20 - - $1.24 Weighted average shares and units outstanding - diluted 24,000 - - 24,000 Supplemental operating and financial data are available in the Investor Relations section of the Company's Web site at http://www.cogdellspencer.com . The reported results are unaudited and there can be no assurance that the results will not vary from the final information for the three and six months ended June 30, 2008. In the opinion of management, all adjustments considered necessary for a fair presentation of these reported results have been made. FFO is a supplemental non-GAAP financial measure used by the real estate industry to measure the operating performance of real estate companies. FFOM adds back to traditionally defined FFO non-cash amortization of non-real estate related intangible assets associated with purchase accounting. The Company presents FFO and FFOM because it considers them important supplemental measures of operational performance. The Company believes FFO is frequently used by securities analysts, investors and other interested parties in the evaluation of REITs, many of which present FFO when reporting their results. FFO is intended to exclude GAAP historical cost depreciation and amortization of real estate and related assets, which assumes that the value of real estate assets diminishes ratably over time. Historically, however, real estate values have risen or fallen with market conditions. Because FFO excludes depreciation and amortization unique to real estate, gains and losses from property dispositions and extraordinary items, it provides a performance measure that, when compared year over year, reflects the impact to operations from trends in occupancy rates, rental rates, operating costs, development activities and interest costs, providing a perspective not immediately apparent from net income. The Company computes FFO in accordance with standards established by the Board of Governors of NAREIT in its March 1995 White Paper (as amended in November 1999 and April 2002), which may differ from the methodology for calculating FFO utilized by other equity REITs and, accordingly, may not be comparable to such other REITs. Further, FFO does not represent amounts available for management's discretionary use because of needed capital replacement or expansion, debt service obligations, or other commitments and uncertainties. FFO should not be considered as an alternative to net income (loss) (computed in accordance with GAAP) as an indicator of the Company's performance, nor is it indicative of funds available to fund its cash needs, including its ability to pay dividends or make distributions. A reconciliation from GAAP net loss to FFO and FFOM is included as an attachment to this press release. Conference Call Cogdell Spencer Inc. invites you to attend the Second Quarter 2008 Conference Call on Thursday, July 31, 2008 at 10:00 a.m. (Eastern Daylight Time). The number to call for this teleconference is (800) 860-2442 (domestic) or (412) 858-4600 (international), and no passcode is required. In addition, the conference call can be accessed via the Internet at http://www.cogdellspencer.com through the "Q2 2008 Cogdell Spencer Earnings Conference Call" link on the Investor Relations page. A playback will be available until August 7, 2008. To access the playback, please dial (877) 344-7529 (domestic) or (412) 317-0088 (international) and enter the passcode: 421319. The replay can also be accessed via the Internet at http://www.cogdellspencer.com through the "Q2 2008 Cogdell Spencer Earnings Conference Call" link on the Investor Relations page.
About Cogdell Spencer Inc.
Charlotte-based Cogdell Spencer Inc. (NYSE: CSA) is a fully-integrated,
self-administered, and self-managed real estate investment trust ("REIT")
that invests in specialty office buildings for the medical profession,
including medical offices, ambulatory surgery and diagnostic centers. On
March 10, 2008, the Company merged with Marshall Erdman & Associates, Inc.
Erdman is a market-leading provider of design-build healthcare facilities
throughout the United States of America. Erdman's service offerings include
advanced planning, architecture, engineering, and construction. Combined,
the Company is a fully integrated healthcare facilities company providing
services from conceptual planning to long-term property ownership and
management.
At present, the Cogdell Spencer Inc. portfolio consists of 62
consolidated wholly-owned properties and joint venture properties, three
unconsolidated joint venture properties, and 51 managed medical office
buildings. For more information on Cogdell Spencer Inc., please visit the
company's Web site at http://www.cogdellspencer.com .
Forward-Looking Statements
This press release contains forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995. The
forward-looking statements reflect the Company's views about future events
and are subject to risks, uncertainties, assumptions and changes in
circumstances that may cause actual results to differ materially. Factors
that may contribute to these differences include, but are not limited to
the following: market trends; our ability to obtain future financing
arrangements; our ability to renew ground leases; our ability to integrate
the operations of Marshall Erdman & Associates, Inc. with our operations;
defaults by tenants; and changes in the reimbursement available to our
tenants by government or private payors. For a further list and description
of such risks and uncertainties, see the reports filed by the Company with
the Securities and Exchange Commission, including the Company's Form 10-K
for the year ended December 31, 2007. Although the Company believes the
expectations reflected in such forward-looking statements are based on
reasonable assumptions, it can give no assurance that its expectations will
be realized. The Company disclaims any intention or obligation to update or
revise any forward-looking statements, whether as a result of new
information, future events or otherwise.
Cogdell Spencer Inc.
Condensed Consolidated Balance Sheets
(In thousands)
(unaudited)
June 30, 2008 December 31, 2007
Assets
Real estate properties:
Operating real estate properties $526,937 $486,279
Less: Accumulated depreciation (56,974) (44,596)
Total operating real estate
properties, net 469,963 441,683
Construction in progress 2,889 13,380
Total real estate properties, net 472,852 455,063
Cash and cash equivalents 5,088 3,555
Restricted cash 18,078 1,803
Tenant and accounts receivable, net 49,827 2,249
Goodwill and intangible assets, net 313,151 31,589
Other assets 30,558 11,978
Total assets $889,554 $506,237
Liabilities and stockholders' equity
Mortgage notes payable $242,033 $237,504
Revolving credit facility 114,000 79,200
Term loan 100,000 -
Accounts payable 29,028 5,817
Billings in excess of costs and estimated
earnings on uncompleted contracts 32,796 -
Deferred income taxes 40,107 217
Payable to MEA shareholders 24,003 -
Other liabilities 40,359 21,243
Total liabilities 622,326 343,981
Minority interests 96,074 47,221
Stockholders' equity 171,154 115,035
Total liabilities and stockholders'
equity $889,554 $506,237
Cogdell Spencer Inc.
Condensed Consolidated Statement of Operations
(In thousands, except per share amounts)
(unaudited)
For the Three For the Six Months
Months Ended Ended
June 30, June 30, June 30, June 30,
2008 2007 2008 (1) 2007 (1)
Revenues:
Rental revenue $19,300 $14,624 $37,991 $28,945
Design-Build contract revenue and
other sales 78,021 - 101,956 -
Property management and other fees 835 826 1,672 1,770
Development management and other
income 110 21 129 251
Total revenues 98,266 15,471 141,748 30,966
Expenses:
Property operating and management 7,841 6,065 15,040 11,969
Costs related to design-build revenue
and other sales 66,286 - 87,330 -
Selling, general, and administrative 8,488 1,657 12,789 3,764
Depreciation and amortization 12,380 6,749 21,404 13,391
Total expenses 94,995 14,471 136,563 29,124
Income from operations before other
income (expense) 3,271 1,000 5,185 1,842
Other income (expense):
Interest and other income, net 218 179 473 580
Interest expense (6,857) (3,188) (11,952) (7,223)
Equity in earnings (loss) of
unconsolidated partnerships 5 4 7 (5)
Total other income (expense) (6,634) (3,005) (11,472) (6,648)
Loss from operations before income tax
expense (benefit) (3,363) (2,005) (6,287) (4,806)
Income tax expense (benefit) (383) 26 (740) 170
Loss from operations (2,980) (2,031) (5,547) (4,976)
Minority interests in real estate
partnerships 48 (22) 62 (39)
Minority interests in operating
partnership 1,089 562 1,841 1,611
Net loss $(1,843) $(1,491) $(3,644) $(3,404)
Net loss per share - basic and diluted $(0.12) $(0.12) $(0.24) $(0.34)
Weighted average common shares - basic
and diluted (2) 15,393 11,931 14,879 10,153
(1) The six months ended June 30, 2008, include four months of activity
related to the Marshall Erdman & Associates subsidiary.
(2) 10 and 18 shares of unvested restricted common stock are anti-
dilutive due to the net loss for the three months ended June 30, 2008 and
2007, respectively. 11 and 19 shares of unvested restricted common stock
are anti-dilutive due to the net loss for the six months ended June, 2008
and 2007, respectively.
Cogdell Spencer Inc.
Business Segment Reporting
(In thousands)
(unaudited)
Design-Build Unallocated
Three months ended June 30, Property and and
2008: Operations Development Other Total
Revenues:
Rental revenue $19,300 $- $- $19,300
Design-Build contract
revenue and other sales - 78,021 - 78,021
Property management and
other fees 835 - - 835
Development management
and other income - 110 - 110
Total revenues 20,135 78,131 - 98,266
Operating expenses:
Property operating and
management 7,841 - - 7,841
Costs related to design-
build revenue and other
sales - 66,286 - 66,286
Selling, general, and
administrative - 5,800 - 5,800
Total operating expenses 7,841 72,086 - 79,927
12,294 6,045 - 18,339
Other income (expense) 151 46 21 218
Corporate general and
administrative expenses - - (2,688) (2,688)
Interest expense - - (6,857) (6,857)
Provision for income taxes
applicable to funds from
operations modified - - (1,248) (1,248)
Depreciation and amortization - (306) (66) (372)
Earnings from unconsolidated
real estate partnerships,
before real estate related
depreciation and amortization 8 - - 8
Minority interests in real
estate partnerships, before
real estate related
depreciation and amortization (74) - - (74)
Funds from operations
modified ("FFOM") 12,379 5,785 (10,838) 7,326
Amortization of intangibles
related to purchase accounting,
net of income tax benefit (42) (4,140) 1,631 (2,551)
Funds from operations
("FFO") 12,337 1,645 (9,207) 4,775
Real estate related
depreciation and
amortization (7,707) - - (7,707)
Minority interests in operating
partnership - - 1,089 1,089
Net income (loss) $4,630 $1,645 $(8,118) $(1,843)
Cogdell Spencer Inc.
Business Segment Reporting
(In thousands)
(unaudited)
Design-Build Unallocated
Six months ended June 30, Property and and
2008: Operations Development Other Total
Revenues:
Rental revenue $37,991 $- $- $37,991
Design-Build contract
revenue and other sales - 101,956 - 101,956
Property management and
other fees 1,672 - - 1,672
Development management
and other income - 129 - 129
Total revenues 39,663 102,085 - 141,748
Operating expenses:
Property operating and
management 15,040 - - 15,040
Costs related to design-
build revenue and other
sales - 87,330 - 87,330
Selling, general, and
administrative - 7,681 - 7,681
Total operating expenses 15,040 95,011 - 110,051
24,623 7,074 - 31,697
Other income (expense) 319 85 69 473
Corporate general and
administrative expenses - - (5,108) (5,108)
Interest expense - - (11,952) (11,952)
Provision for income taxes
applicable to funds from
operations modified - - (1,312) (1,312)
Depreciation and amortization - (421) (112) (533)
Earnings from unconsolidated
real estate partnerships,
before real estate related
depreciation and amortization 13 - - 13
Minority interests in real
estate partnerships, before
real estate related
depreciation and amortization (152) - - (152)
Funds from operations
modified ("FFOM") 24,803 6,738 (18,415) 13,126
Amortization of intangibles
related to purchase accounting,
net of income tax benefit (84) (5,172) 2,052 (3,204)
Funds from operations
("FFO") 24,719 1,566 (16,363) 9,922
Real estate related
depreciation and
amortization (15,407) - - (15,407)
Minority interests in
operating partnership - - 1,841 1,841
Net income (loss) $9,312 $1,566 $(14,522) $(3,644)
Cogdell Spencer Inc.
Reconciliation of Net Loss to Funds from Operations Modified (FFOM) (1)
(In thousands, except per share and unit amounts)
(unaudited)
Three Months Ended Six Months Ended
June 30, June 30, June 30, June 30,
2008 2007 2008 2007
Net loss $(1,843) $(1,491) $(3,644) $(3,404)
Plus minority interests in
operating partnership (1,089) (562) (1,841) (1,611)
Plus real estate related
depreciation and
amortization (2) 7,707 6,658 15,407 13,212
Funds from Operations (FFO) (1) 4,775 4,605 9,922 8,197
Plus amortization of intangibles
related to purchase accounting,
net of income tax benefit 2,551 26 3,204 52
Funds from Operations Modified
(FFOM) (1) $7,326 $4,631 $13,126 $8,249
FFO per share and unit - basic
and diluted $0.20 $0.28 $0.45 $0.56
FFOM per share and unit - basic
and diluted $0.30 $0.28 $0.59 $0.56
Weighted average shares and units
outstanding - basic 24,348 16,437 22,160 14,697
Weighted average shares and units
outstanding - diluted 24,486 16,455 22,234 14,717
(1) FFO is a supplemental non-GAAP financial measure used by the real
estate industry to measure the operating performance of real estate
companies. FFOM adds back to traditionally defined FFO non-cash
amortization of non-real estate related intangible assets associated with
purchase accounting. The Company presents FFO and FFOM because it considers
them important supplemental measures of operational performance. The
Company believes FFO is frequently used by securities analysts, investors
and other interested parties in the evaluation of REITs, many of which
present FFO when reporting their results. FFO is intended to exclude GAAP
historical cost depreciation and amortization of real estate and related
assets, which assumes that the value of real estate assets diminishes
ratably over time. Historically, however, real estate values have risen or
fallen with market conditions. Because FFO excludes depreciation and
amortization unique to real estate, gains and losses from property
dispositions and extraordinary items, it provides a performance measure
that, when compared year over year, reflects the impact to operations from
trends in occupancy rates, rental rates, operating costs, development
activities and interest costs, providing a perspective not immediately
apparent from net income. The Company computes FFO in accordance with
standards established by the Board of Governors of NAREIT in its March 1995
White Paper (as amended in November 1999 and April 2002), which may differ
from the methodology for calculating FFO utilized by other equity REITs
and, accordingly, may not be comparable to such other REITs. Further, FFO
does not represent amounts available for management's discretionary use
because of needed capital replacement or expansion, debt service
obligations, or other commitments and uncertainties. FFO should not be
considered as an alternative to net income (loss) (computed in accordance
with GAAP) as an indicator of the Company's performance, nor is it
indicative of funds available to fund its cash needs, including its ability
to pay dividends or make distributions.
(2) Real estate depreciation and amortization consists of depreciation
and amortization from wholly-owned real estate properties of $7,388 and
$6,640 and the Company's share of joint venture real estate depreciation
and amortization of $319 and $18 for the three months ended June 30, 2008
and 2007, respectively. Real estate depreciation and amortization consists
of depreciation and amortization from wholly-owned real estate properties
of $14,827 and $13,174 and the Company's share of joint venture real estate
depreciation and amortization of $580 and $38 for the six months ended June
30, 2008 and 2007, respectively.
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