BETHESDA, Md., Feb. 19, 2015 /PRNewswire/ -- First Potomac
Realty Trust (NYSE: FPO), a leader in the ownership, management,
development and redevelopment of office and business park
properties in the greater Washington,
D.C. region, reported results for the three and twelve
months ended December 31, 2014.
Logo -
http://photos.prnewswire.com/prnh/20130604/MM26388LOGO
Fourth Quarter 2014 Highlights
- Reported Core Funds From Operations of
$16.4 million, or $0.27 per diluted share.
- Executed 252,000 square feet of leases,
including 139,000 square feet of new leases.
- Increased leased percentage in
consolidated portfolio to 91.3% from 88.1% at December 31, 2013.
- Sold Owings Mills Business Park, a
four-building, 180,500 square foot business park, for net proceeds
of $12.4 million, bringing aggregate
net proceeds from dispositions for the year to $97.7 million.
- Same-property net operating income
increased by 6.4% on an accrual basis and 6.8% on a cash basis
compared with the same period in 2013.
Full-Year 2014 Highlights
- Reported Core Funds From Operations of
$59.7 million, or $0.98 per diluted share.
- Acquired three office buildings, which
totaled 401,000 square feet, for an aggregate purchase price of
$188.0 million.
- Executed 1.6 million square feet of
leases, including 838,000 square feet of new leases.
- Same property net operating income
increased 2.8% on an accrual basis and 2.7% on a cash basis
compared with the same period in 2013.
- Signed an 82,000 square foot lease with
the GSA at Atlantic Corporate Park, a 220,000 square foot office
property, bringing the property to 81.3% leased.
- Signed a 167,000 square foot lease with
the GSA at a to-be constructed building in Northern Virginia on vacant land that we have
in our portfolio.
Douglas J. Donatelli, Chairman
and CEO of First Potomac Realty Trust, stated, "Over the course of
2014 we crossed several key milestones with respect to the
strategic and capital plan we presented in January 2013. In the last two years, we have
sold, or have under contract, over $400
million of non-core flex and industrial assets, utilizing
almost $200 million of those proceeds
to acquire core office assets with the remainder going to improve
our balance sheet. As a result, our capital recycling initiatives
are nearing completion. Despite the difficult operating environment
in the DC Metro area, our portfolio is now over 91% leased, with 12
consecutive quarters of positive net absorption and with strong
occupancy growth driving improvements in same-property net
operating income. Most importantly, I have been able to
assemble a highly motivated executive team with the passion and the
skill to drive future performance. I am pleased with what we have
been able to accomplish in the face of weak office demand in our
region, and look forward to demonstrating how our portfolio and
people can deliver results in what will be a recovering
Washington market."
Funds From Operations ("FFO") and Core FFO increased for the
three months ended December 31, 2014
compared with the same period in 2013 due to an increase in same
property net operating income, as well as an increase in overall
net operating income as the result of acquisitions made during the
year. FFO and Core FFO increased for the twelve months ended
December 31, 2014 compared with the
same period in 2013 due to an increase in same-property net
operating income and a reduction in interest expense, as we
decreased our outstanding debt by over $120
million and decreased the weighted average interest rate on
our outstanding debt by over 90 basis points since January 1, 2013. The increase in FFO and Core FFO
for the twelve months ended December 31,
2014 compared with the same period in 2013 was partially
offset by a reduction in net operating income, primarily as a
result of selling our industrial portfolio in June 2013, as well as the disposition of other
non-core industrial and business park assets since the announcement
of our strategic and capital plan in January
2013. While Core FFO increased for the twelve months ended
December 31, 2014 compared with the
same period in 2013, Core FFO per diluted share decreased over the
same period due to a higher diluted share count as we issued 7.5
million common shares in May
2013.
A reconciliation between Core FFO and FFO available to common
shareholders for the three and twelve months ended December 31, 2014 and 2013 is presented below (in
thousands, except per share amounts):
|
Three Months Ended
December 31,
|
|
Twelve Months Ended
December 31,
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
|
Amount
|
|
Per diluted
share
|
|
Amount
|
|
Per diluted
share
|
|
Amount
|
|
Per diluted
share
|
|
Amount
|
|
Per diluted
share
|
Core FFO
|
$ 16,424
|
|
$ 0.27
|
|
$ 13,950
|
|
$ 0.23
|
|
$ 59,682
|
|
$ 0.98
|
|
$ 59,207
|
|
$ 1.03
|
Loss on debt
extinguishment
|
-
|
|
-
|
|
(1,485)
|
|
(0.02)
|
|
-
|
|
-
|
|
(6,224)
|
|
(0.11)
|
Deferred abatement
and straight-line amortization(1)
|
-
|
|
-
|
|
-
|
|
-
|
|
(1,045)
|
|
(0.02)
|
|
1,567
|
|
0.03
|
Acquisition
costs
|
(14)
|
|
-
|
|
(429)
|
|
(0.01)
|
|
(2,681)
|
|
(0.04)
|
|
(602)
|
|
(0.01)
|
Personnel separation
costs
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
(1,777)
|
|
(0.03)
|
Contingent
consideration related to acquisition of
property(2)
|
-
|
|
-
|
|
287
|
|
-
|
|
-
|
|
-
|
|
213
|
|
-
|
Legal costs
associated with informal SEC inquiry
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
(391)
|
|
(0.01)
|
FFO available to
common shareholders
|
$ 16,410
|
|
$ 0.27
|
|
$ 12,323
|
|
$ 0.20
|
|
$ 55,956
|
|
$ 0.92
|
|
$ 51,993
|
|
$ 0.90
|
Net income
(loss)
|
$ 103
|
|
|
|
$ (3,741)
|
|
|
|
$ 17,043
|
|
|
|
$ 10,981
|
|
|
Net (loss) income
attributable to common shareholders per diluted common
share(3)
|
$ (0.05)
|
|
|
|
$ (0.11)
|
|
|
|
$ 0.07
|
|
|
|
$ (0.03)
|
|
|
(1)
|
As a result of the
sale of Girard Business Center and Gateway Center in January 2014,
we accelerated the amortization of straight-line rents and deferred
abatement related to those properties. During the first
quarter of 2013, we accelerated the amortization of the
straight-line balance and the deferred abatement for Engineering
Solutions at I-66 Commerce Center, which terminated its lease prior
to completion. The tenant vacated the property at the end of March
2013. The property was sold in May 2013.
|
(2)
|
Reflects an increase
in our contingent consideration liability related to our
acquisition of Corporate Campus at Ashburn Center in 2009. We paid
$1.7 million to the seller of the property in the third quarter of
2013 to fulfill our obligation. The property was subsequently sold
in June 2014 for a gain of $21.2 million.
|
(3)
|
Reflects amounts
attributable to noncontrolling interests and the impact of
dividends on our preferred shares to arrive at net (loss) income
attributable to common shareholders.
|
A reconciliation of net income (loss) to FFO available to common
shareholders and Core FFO, as well as definitions and statements of
purpose, are included below in the financial tables accompanying
this press release and under "Non-GAAP Financial Measures,"
respectively.
Operating Performance
At December 31, 2014, our
consolidated portfolio consisted of 131 buildings totaling 8.8
million square feet. Our consolidated portfolio was 91.3% leased
and 87.9% occupied at December 31,
2014, compared with 90.6% leased and 87.0% occupied at
September 30, 2014 and 88.1% leased
and 85.8% occupied at December 31,
2013. Year over year, our consolidated portfolio experienced
a 320 basis-point increase in our leased percentage and a 210
basis-point increase in our occupied percentage.
During the fourth quarter of 2014, we executed 252,000 square
feet of leases, which consisted of 139,000 square feet of new
leases and 113,000 square feet of renewal leases, and we achieved a
tenant retention rate of 70%. We had positive net absorption of
92,000 square feet in the fourth quarter of 2014, which resulted in
our twelfth consecutive quarter of positive net absorption. New
leases executed during the fourth quarter included a 13-year lease
for 33,000 square feet, at Hillside II, located in the Maryland region. The majority of the newly
leased space at Hillside II had been vacant for over two years. For
the twelve months ended December 31,
2014, we executed over 1.6 million square feet of leases,
which included 838,000 square feet of new leases, and achieved a
tenant retention rate of 69%.
Same-Property Net Operating Income ("Same-Property NOI")
increased 6.4% and 2.8% on an accrual basis for the three and
twelve months ended December 31,
2014, respectively, compared with the same periods in 2013.
For both the three and twelve months ended December 31, 2014, the increase in Same-Property
NOI was primarily due to increases in occupancy at 840 First
Street, NE, which is located in Washington, D.C., Redland Corporate Center,
which is located in Maryland,
Three Flint Hill, which is located in Northern Virginia, and Norfolk Commerce Park,
which is located in Southern Virginia. For the twelve months
ended December 31, 2014,
Same-Property NOI for the Washington,
D.C. region decreased compared with the same period in 2013
due to a decrease in occupancy at 1211 Connecticut Avenue, NW,
which more than offset the increase in occupancy at 840 First
Street, NE.
A reconciliation of net income (loss) to Same-Property NOI and a
definition and statement of purpose are included below in the
financial tables accompanying this press release and under
"Non-GAAP Financial Measures," respectively.
A list of our properties, as well as additional information
regarding our results of operations, and our definition of
"strategic hold," "value add" and "non-core" as they relate to our
portfolio, can be found in our Fourth Quarter 2014 Supplemental
Financial Information Report, which is posted on our website,
www.first-potomac.com.
Dispositions
In the second quarter of 2014, we prospectively adopted new
accounting standards that impact the presentation of the results of
operations of disposed properties and properties classified as
held-for-sale at the balance sheet date. In accordance with the new
accounting standards, the disposal of a property or group of
properties that represents a strategic shift that has, or will
have, a major effect on an entity's operations and financial
results will have its operating results reflected within
discontinued operations for all periods presented on the
consolidated statements of operations. All other disposed
properties or groups of properties will have its operating results
reflected within continuing operations on the consolidated
statements of operations for all periods presented.
On October 16, 2014, we sold
Owings Mills Business Park, a four-building, 180,500 square foot
business park located in Owings Mills,
Maryland, for net proceeds of $12.4
million. We recorded an impairment charge of $4.0 million in the second quarter of 2014. We
had previously sold two separate buildings at Owings Mills Business
Park in 2012. Proceeds from the sale were used to pay down
outstanding debt. The operating results and impairment of Owings
Mills Business Park are reflected in continuing operations in our
consolidated statements of operations for each of the periods
presented in this press release.
Consistent with our previously disclosed capital recycling
strategy, effective as of February 9,
2015, we entered into a binding contract to sell our
Richmond, Virginia portfolio,
which includes Chesterfield Business Center, Hanover Business
Center, Park Central and Virginia
Technology Center and in the aggregate is comprised of 19 buildings
totaling 828,000 square feet. We anticipate closing the sale in the
first half of 2015. However, we can provide no assurances
regarding the timing or pricing of the sale of the Richmond
Portfolio, or that the sale will occur at all. With the sale of our
Richmond portfolio, we will no
longer own any properties in the Richmond area and will have made a strategic
shift away from the Richmond
market. In accordance with the recently adopted accounting
policies, our Richmond portfolio
was classified as held-for-sale at December
31, 2014 and the operating results were reflected within
discontinued operations for each of the periods presented in this
press release.
America's Square Mezzanine Loan
On January 27, 2015, the owners of
America's Square, a 461,000 square foot office complex located in
Washington, D.C., gave notice of
their intent to prepay, on or about February
24, 2015, a mezzanine loan which has an outstanding balance
of $29.7 million. We provided the
owners of America's Square a $30.0
million loan in April 2011,
which was secured by a portion of the owner's interest in the
property. The loan had a fixed-interest rate of 9.0% and was
scheduled to mature on May 1, 2016.
We expect to receive a yield maintenance payment of $2.4 million with the repayment of the loan. The
proceeds from the loan repayment will be used to pay down a portion
of the outstanding balance of our unsecured revolving credit
facility.
Financing Activity
On October 16, 2014, our 97% owned
consolidated joint venture repaid a $22.0
million loan that was subject to a 5.0% interest rate floor.
The loan encumbered the Storey Park land which is located in
Washington, D.C. Simultaneously
with the repayment, the joint venture entered into a new
$22.0 million loan with a
variable-interest rate of LIBOR plus 2.50%. The new loan requires
interest only payments, has a maturity date of October 16, 2016, with a one-year extension at
our option, and is repayable in full without penalty at any time
during the term of the loan.
On November 12, 2014, our 51%
owned unconsolidated joint venture repaid a $48.3 million mortgage loan that encumbered
Prosperity Metro Plaza, a two-building, 327,000 square-foot office
building located in Merrifield,
Virginia. Simultaneously with the repayment, the joint
venture entered into a new $50.0
million mortgage loan that has a fixed-interest rate of
3.91%. The new loan requires interest only payments through
December 2024, at which time the loan
requires principal and interest payments through its maturity date.
The loan has a maturity date of December 1,
2029 and is repayable in full without penalty on or after
June 1, 2029.
Balance Sheet
We had $813.6 million of debt
outstanding at December 31, 2014, of
which $254.4 million was fixed-rate
debt ($3.5 million of our fixed-rate
debt is included within "Liabilities held-for-sale" on our
consolidated balance sheet), $300.0
million was hedged variable-rate debt and $259.2 million was unhedged variable-rate
debt.
Dividends
On January 27, 2015, we declared a
dividend of $0.15 per common share,
equating to an annualized dividend of $0.60 per common share. The dividend was paid on
February 17, 2015 to common
shareholders of record as of February 10,
2015. We also declared a dividend of $0.484375 per share on our Series A Preferred
Shares. The dividend was paid on February
17, 2015 to preferred shareholders of record as of
February 10, 2015.
Core FFO Guidance
We issued our full-year 2015 Core FFO guidance of $0.92 to $0.98 per diluted share. The following
is a summary of the assumptions that we used in arriving at our
guidance (unaudited, amounts in thousands except percentages and
per share amounts):
|
|
Expected
Ranges
|
Portfolio
NOI(1)
|
|
$ 105,500
|
-
|
$ 108,500
|
Interest and Other
Income(2)
|
|
$ 4,000
|
-
|
$ 4,500
|
|
|
|
|
|
FFO from
Unconsolidated Joint Ventures
|
|
$ 5,000
|
-
|
$ 5,500
|
|
|
|
|
|
Interest
Expense(3)
|
|
$ 27,000
|
-
|
$ 29,000
|
|
|
|
|
|
G&A
|
|
$ 19,500
|
-
|
$ 20,500
|
|
|
|
Preferred
Dividends
|
|
$ 12,400
|
|
|
|
|
|
Weighted Average
Shares and Units
|
|
60,750
|
-
|
61,250
|
|
|
|
|
|
Year-End
Occupancy
|
|
90.0%
|
-
|
92.0%
|
Same Property NOI
Growth – Accrual Basis (4)
|
|
1.0%
|
-
|
2.5%
|
(1)
|
The range assumes the
Richmond portfolio is sold late in the first quarter of 2015.
This is solely an assumption for the purposes of providing
guidance. We can provide no assurances regarding the timing
or pricing of the sale of the Richmond portfolio, or that the sale
will occur at all. No additional acquisitions or dispositions are
assumed.
|
(2)
|
The range excludes
the yield maintenance fee of $2.4 million related to the repayment
of the America's Square mezzanine loan, which we expect to receive
on or about February 24, 2015.
|
(3)
|
Assumes proceeds from
the sale of the Richmond Portfolio are used to repay amounts
outstanding under our unsecured revolving credit facility.
Proceeds from the America's Square mezzanine loan repayment will be
used to pay down a portion of the outstanding unsecured revolving
credit facility balance.
|
(4)
|
Assumes the Richmond
portfolio is the only 2015 disposition.
|
Our guidance is also based on a number of other assumptions,
many of which are outside our control and all of which are subject
to change. We may change our guidance as actual and anticipated
results vary from these assumptions.
Guidance Range for
2015
|
|
Low Range
|
|
High Range
|
Net loss attributable
to common shareholders per diluted share
|
|
$ (0.12)
|
|
$ (0.09)
|
Real estate
depreciation(1)
|
|
1.04
|
|
1.05
|
Net gain attributable
to noncontrolling interests and items excluded from Core FFO per
diluted share(2)
|
|
-
|
|
0.02
|
Core FFO per diluted
share
|
|
$ 0.92
|
|
$ 0.98
|
|
|
|
|
|
(1)
|
Includes our pro-rata
share of depreciation from our unconsolidated joint ventures and
depreciation related to our assumption for disposed
properties.
|
(2)
|
Items excluded from
Core FFO consist of the gains or losses associated with disposed
properties, and prepayment penalties associated with the America's
Square mezzanine loan repayment.
|
Investor Conference Call and Webcast
We will host a conference call on February 20, 2015 at 9:00
AM ET to discuss fourth quarter and full-year 2014 results,
and our 2015 Core FFO guidance in greater detail. The conference
call can be accessed by dialing (877) 705-6003 or (201) 493-6725
for international participants. A replay of the call will be
available from 12:00 Noon ET on
February 20, 2015, until midnight ET on February
27, 2015. The replay can be accessed by dialing (877)
870-5176 or (858) 384-5517 for international callers, and entering
pin number 13595312.
A live broadcast of the conference call will also be available
online at our website, www.first-potomac.com, on February 20, 2015, beginning at 9:00 AM ET. An online replay will follow
shortly after the call and will continue for 90 days.
About First Potomac Realty Trust
First Potomac Realty Trust is a self-administered, self-managed
real estate investment trust that focuses on owning, operating,
developing and redeveloping office and business park properties in
the greater Washington, D.C.
region. As of December 31,
2014, our consolidated portfolio totaled 8.8 million square
feet. Based on annualized cash basis rent, our portfolio consists
of 60% office properties and 40% business park and industrial
properties. A key element of First Potomac's overarching strategy
is its dedication to sustainability. Over one million square feet
of First Potomac property is LEED Certified, with the potential for
another 700,000 square feet in future development projects.
Approximately half of the portfolio's multi-story office
square footage is LEED or Energy Star Certified. FPO common shares
(NYSE: FPO) and preferred shares (NYSE: FPO-PA) are publicly traded
on the New York Stock Exchange.
Non-GAAP Financial Measures
Funds from Operations – Funds from operations ("FFO")
represents net income (computed in accordance with U.S. generally
accepted accounting principles ("GAAP")), excluding gains (losses)
on sales of rental property and impairments of rental property,
plus real estate-related depreciation and amortization and after
adjustments for unconsolidated partnerships and joint ventures. We
also exclude any depreciation and amortization related to third
parties from our consolidated joint ventures from our FFO
calculation.
We consider FFO a useful measure of performance for an equity
real estate investment trust ("REIT") because it facilitates an
understanding of the operating performance of our properties
without giving effect to real estate depreciation and amortization,
which assume that the value of real estate assets diminishes
predictably over time. Since real estate values have
historically risen or fallen with market conditions, we believe
that FFO provides a meaningful indication of our performance. We
also consider FFO an appropriate performance measure given its wide
use by investors and analysts. We compute FFO in accordance with
standards established by the Board of Governors of NAREIT in its
March 1995 White Paper (as amended in
November 1999, April 2002 and January
2012), 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, nor is it indicative of
funds available to fund our cash needs, including our ability to
make distributions. We present FFO per diluted share calculations
that are based on the outstanding dilutive common shares plus the
outstanding common Operating Partnership units for the periods
presented.
Core FFO – Management believes that the computation of
FFO in accordance with NAREIT's definition includes certain items
that are not indicative of the results provided by our operating
portfolio and affect the comparability of our period-over-period
performance. These items include, but are not limited to, gains and
losses on the retirement of debt, legal costs associated with the
informal SEC inquiry, personnel separation costs, contingent
consideration charges and acquisition costs.
Our presentation of FFO in accordance with the NAREIT white
paper, or presentation of Core FFO, should not be considered as an
alternative to net income (computed in accordance with GAAP) as an
indicator of our financial performance or to cash flow from
operating activities (computed in accordance with GAAP) as an
indicator of our liquidity. Our FFO and Core FFO calculations are
reconciled to net income (loss) in our Consolidated Statements of
Operations included in this release.
NOI – We define net operating income ("NOI") as operating
revenues (rental income, tenant reimbursements and other income)
less property and related expenses (property expenses, real estate
taxes and insurance). Management believes that NOI is a
useful measure of our property operating performance as it provides
a performance measure of the revenues and expenses directly
associated with owning, operating, developing and redeveloping
office and business park properties, and provides a perspective not
immediately apparent from net income or FFO. Other REITs may
use different methodologies for calculating NOI and, accordingly,
our NOI may not be comparable to other REITs. Our NOI calculations
are reconciled to total revenues and total operating expenses at
the end of this release.
Same-Property NOI – Same-Property Net Operating Income
("Same-Property NOI"), defined as operating revenues (rental,
tenant reimbursements and other revenues) less operating expenses
(property operating expenses, real estate taxes and insurance) from
the consolidated properties owned by us and in-service for the
entirety of the periods compared, is a primary performance measure
we use to assess the results of operations at our properties.
As an indication of our operating performance, Same-Property NOI
should not be considered an alternative to net income calculated in
accordance with GAAP. A reconciliation of our Same-Property NOI to
net income from our consolidated statements of operations is
presented below. The Same-Property NOI results exclude
corporate-level expenses, as well as certain transactions, such as
the collection of termination fees, as these items vary
significantly period-over-period, thus impacting trends and
comparability. Also, we eliminate depreciation and amortization
expense, which are property level expenses, in computing
Same-Property NOI as these are non-cash expenses that are based on
historical cost accounting assumptions and do not offer the
investor significant insight into the operations of the property.
This presentation allows management and investors to
distinguish whether growth or declines in net operating income are
a result of increases or decreases in property operations or the
acquisition of additional properties. While this presentation
provides useful information to management and investors, the
results below should be read in conjunction with the results from
the consolidated statements of operations to provide a complete
depiction of total Company performance.
Forward Looking Statements
The forward-looking statements contained in this press release,
including statements regarding our 2015 Core FFO guidance and
related assumptions, potential sales and the timing of such sales,
and future acquisition and growth opportunities, are subject to
various risks and uncertainties. Although we believe the
expectations reflected in such forward-looking statements are based
on reasonable assumptions, there can be no assurance that our
expectations will be achieved. Certain factors that could cause
actual results to differ materially from our expectations include
changes in general or regional economic conditions; our ability to
timely lease or re-lease space at current or anticipated rents;
changes in interest rates; changes in operating costs; our ability
to complete acquisitions on acceptable terms; our ability to manage
our current debt levels and repay or refinance our indebtedness
upon maturity or other required payment dates; our ability to
maintain financial covenant compliance under our debt agreements;
our ability to maintain effective internal controls over financial
reporting and disclosure controls and procedures; any impact of the
informal inquiry initiated by the U.S. Securities and Exchange
Commission (the "SEC"); our ability to obtain debt and/or financing
on attractive terms, or at all; changes in the assumptions
underlying our earnings and Core FFO guidance and other risks
detailed in our Annual Report on Form 10-K and described from time
to time in our filings with the SEC. Many of these factors are
beyond our ability to control or predict. Forward-looking
statements are not guarantees of performance. For forward-looking
statements herein, we claim the protection of the safe harbor for
forward-looking statements contained in the Private Securities
Litigation Reform Act of 1995. We assume no obligation to update or
supplement forward-looking statements that become untrue because of
subsequent events.
Consolidated
Statements of Operations
|
(unaudited,
amounts in thousands, except per share amounts)
|
|
|
|
|
|
|
Three Months Ended
December 31,
|
|
Twelve Months Ended
December 31,
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
Revenues:
|
|
|
|
|
|
|
|
Rental
|
$
34,260
|
|
$
30,029
|
|
$
128,226
|
|
$
118,337
|
Tenant reimbursements
and other
|
8,668
|
|
7,488
|
|
33,426
|
|
30,478
|
|
|
|
|
|
|
|
|
Total
revenues
|
42,928
|
|
37,517
|
|
161,652
|
|
148,815
|
|
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
Property
operating
|
10,427
|
|
10,081
|
|
43,252
|
|
38,280
|
Real estate taxes and
insurance
|
4,928
|
|
3,942
|
|
17,360
|
|
16,074
|
General and
administrative
|
5,787
|
|
5,380
|
|
21,156
|
|
21,979
|
Acquisition
costs
|
14
|
|
429
|
|
2,681
|
|
602
|
Depreciation and
amortization
|
17,439
|
|
14,354
|
|
61,796
|
|
54,567
|
Impairment of rental
property
|
-
|
|
-
|
|
3,956
|
|
-
|
Contingent
consideration related to acquisition of property
|
-
|
|
(287)
|
|
-
|
|
(213)
|
Total operating
expenses
|
38,595
|
|
33,899
|
|
150,201
|
|
131,289
|
|
|
|
|
|
|
|
|
Operating
income
|
4,333
|
|
3,618
|
|
11,451
|
|
17,526
|
|
|
|
|
|
|
|
|
Other expenses
(income):
|
|
|
|
|
|
|
|
Interest
expense
|
6,812
|
|
6,025
|
|
24,696
|
|
32,803
|
Interest and other
income
|
(1,687)
|
|
(1,573)
|
|
(6,799)
|
|
(6,373)
|
Equity in (earnings)
losses of affiliates
|
(390)
|
|
101
|
|
(775)
|
|
47
|
Loss on debt extinguishment
/ modification
|
-
|
|
1,486
|
|
-
|
|
1,810
|
Gain on sale of rental
property
|
-
|
|
-
|
|
(21,230)
|
|
-
|
|
|
|
|
|
|
|
|
Total other expenses
(income)
|
4,735
|
|
6,039
|
|
(4,108)
|
|
28,287
|
|
|
|
|
|
|
|
|
(Loss) income from
continuing operations
|
(402)
|
|
(2,421)
|
|
15,559
|
|
(10,761)
|
|
|
|
|
|
|
|
|
Discontinued
operations:
|
|
|
|
|
|
|
|
Income (loss) from
operations
|
505
|
|
(1,320)
|
|
146
|
|
6,793
|
Loss on debt
extinguishment
|
-
|
|
-
|
|
-
|
|
(4,414)
|
Gain on sale of rental
property
|
-
|
|
-
|
|
1,338
|
|
19,363
|
Income (loss) from
discontinued operations
|
505
|
|
(1,320)
|
|
1,484
|
|
21,742
|
|
|
|
|
|
|
|
|
Net income
(loss)
|
103
|
|
(3,741)
|
|
17,043
|
|
10,981
|
|
|
|
|
|
|
|
|
Less: Net loss
(income) attributable to noncontrolling interests
|
128
|
|
288
|
|
(199)
|
|
93
|
|
|
|
|
|
|
|
|
Net income (loss)
attributable to First Potomac Realty Trust
|
231
|
|
(3,453)
|
|
16,844
|
|
11,074
|
|
|
|
|
|
|
|
|
Less: Dividends on
preferred shares
|
(3,100)
|
|
(3,100)
|
|
(12,400)
|
|
(12,400)
|
|
|
|
|
|
|
|
|
Net (loss) income
attributable to common shareholders
|
$
(2,869)
|
|
$
(6,553)
|
|
$
4,444
|
|
$
(1,326)
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
December 31,
|
|
Twelve Months Ended
December 31,
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
Net (loss) income
attributable to common shareholders
|
$
(2,869)
|
|
$
(6,553)
|
|
$
4,444
|
|
$
(1,326)
|
|
|
|
|
|
|
|
|
Depreciation and
amortization:
|
|
|
|
|
|
|
|
Rental
property
|
17,439
|
|
14,354
|
|
61,796
|
|
54,567
|
Discontinued
operations
|
809
|
|
1,331
|
|
3,662
|
|
8,937
|
Unconsolidated joint
ventures
|
1,159
|
|
1,323
|
|
4,466
|
|
5,323
|
Consolidated joint
ventures
|
-
|
|
(13)
|
|
-
|
|
(163)
|
Impairment of rental
property
|
-
|
|
2,171
|
|
3,957
|
|
4,092
|
Gain on sale of
rental property
|
-
|
|
-
|
|
(22,568)
|
|
(19,363)
|
Net (loss) income
attributable to noncontrolling interests in the
Operating
Partnership
|
(128)
|
|
(290)
|
|
199
|
|
(74)
|
|
|
|
|
|
|
|
|
Funds from operations
available to common shareholders
|
$
16,410
|
|
$
12,323
|
|
$
55,956
|
|
$
51,993
|
Consolidated
Statements of Operations
|
(unaudited,
amounts in thousands, except per share amounts)
|
|
|
|
|
|
|
Three Months Ended
December 31,
|
|
|
Twelve Months Ended
December 31,
|
|
|
2014
|
|
2013
|
|
|
2014
|
|
2013
|
|
|
|
|
|
|
|
|
|
|
|
Funds from operations
(FFO)
|
$
19,510
|
|
$
15,423
|
|
|
$
68,356
|
|
$
64,393
|
|
Less: Dividends on
preferred shares
|
(3,100)
|
|
(3,100)
|
|
|
(12,400)
|
|
(12,400)
|
|
FFO available to
common shareholders
|
16,410
|
|
12,323
|
|
|
55,956
|
|
51,993
|
|
Personnel separation
costs
|
-
|
|
-
|
|
|
-
|
|
1,777
|
|
Loss on debt
extinguishment
|
-
|
|
1,485
|
|
|
-
|
|
6,224
|
|
Deferred
abatement and straight-line amortization
|
-
|
|
-
|
|
|
1,045
|
|
(1,567)
|
|
Acquisition costs
|
14
|
|
429
|
|
|
2,681
|
|
602
|
|
Contingent consideration related to acquisition of
property
|
-
|
|
(287)
|
|
|
-
|
|
(213)
|
|
Legal
costs associated with informal SEC inquiry
|
-
|
|
-
|
|
|
-
|
|
391
|
|
|
|
|
|
|
|
|
|
|
|
Core FFO
|
$
16,424
|
|
$
13,950
|
|
|
$
59,682
|
|
$
59,207
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted
earnings per common share:
|
|
|
|
|
|
|
|
|
|
(Loss) income from
continuing operations available to common shareholders
|
$
(0.06)
|
|
$
(0.09)
|
|
|
$
0.05
|
|
$
(0.41)
|
|
Income (loss) from
discontinued operations available to common shareholders
|
0.01
|
|
(0.02)
|
|
|
0.02
|
|
0.38
|
|
Net (loss) income
available to common shareholders
|
$
(0.05)
|
|
$
(0.11)
|
|
|
$
0.07
|
|
$
(0.03)
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
common shares outstanding:
|
|
|
|
|
|
|
|
|
|
Basic
|
58,188
|
|
58,061
|
|
|
58,150
|
|
55,034
|
|
Diluted
|
58,188
|
|
58,061
|
|
|
58,220
|
|
55,034
|
|
|
|
|
|
|
|
|
|
|
|
FFO available to
common shareholders per share – basic and
diluted
|
$
0.27
|
|
$
0.20
|
|
|
$
0.92
|
|
$
0.90
|
|
|
|
|
|
|
|
|
|
|
|
Core FFO per share –
diluted
|
$
0.27
|
|
$
0.23
|
|
|
$
0.98
|
|
$
1.03
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
common shares and units outstanding:
|
|
|
|
|
|
|
|
|
|
Basic
|
60,819
|
|
60,657
|
|
|
60,780
|
|
57,630
|
|
Diluted
|
60,898
|
|
60,697
|
|
|
60,851
|
|
57,706
|
|
Consolidated
Balance Sheets
|
(Amounts in
thousands, except per share amounts)
|
|
|
|
|
|
December 31,
2014
|
|
December 31,
2013
|
|
(unaudited)
|
|
|
Assets:
|
|
|
|
Rental property,
net
|
$
1,288,873
|
|
$
1,144,455
|
Assets
held-for-sale
|
59,717
|
|
106,468
|
Cash and cash
equivalents
|
13,323
|
|
8,740
|
Escrows and
reserves
|
2,986
|
|
7,673
|
Accounts and other
receivables, net of allowance for doubtful accounts of $1,207 and
$1,181, respectively
|
10,587
|
|
12,384
|
Accrued straight-line
rents, net of allowance for doubtful accounts of $104 and $92,
respectively
|
34,226
|
|
29,531
|
Notes receivable,
net
|
63,679
|
|
54,696
|
Investment in
affiliates
|
47,482
|
|
49,150
|
Deferred costs,
net
|
43,991
|
|
42,311
|
Prepaid expenses and
other assets
|
7,712
|
|
8,261
|
Intangible assets,
net
|
45,884
|
|
38,791
|
|
|
|
|
Total
assets
|
$
1,618,460
|
|
$
1,502,460
|
|
|
|
|
Liabilities:
|
|
|
|
Mortgage
loans
|
$
305,139
|
|
$
270,167
|
Unsecured term
loan
|
300,000
|
|
300,000
|
Unsecured revolving
credit facility
|
205,000
|
|
99,000
|
Liabilities
held-for-sale
|
4,562
|
|
5,541
|
Accounts payable and
other liabilities
|
41,113
|
|
41,296
|
Accrued
interest
|
1,720
|
|
1,663
|
Rents received in
advance
|
7,971
|
|
5,898
|
Tenant security
deposits
|
5,891
|
|
4,861
|
Deferred market rent,
net
|
2,827
|
|
1,522
|
|
|
|
|
Total
liabilities
|
874,223
|
|
729,948
|
|
|
|
|
Noncontrolling
interests in the Operating Partnership
|
33,332
|
|
33,221
|
|
|
|
|
Equity:
|
|
|
|
Preferred Shares, $0.001 par value, 50,000
shares authorized; Series A Preferred
Shares, $25 liquidation preference, 6,400 shares
issued and outstanding
|
160,000
|
|
160,000
|
Common shares,
$0.001 par value, 150,000
shares
authorized; 58,815 and 58,704 shares issued
and
outstanding, respectively
|
59
|
|
59
|
Additional paid-in
capital
|
913,282
|
|
911,533
|
Noncontrolling
interests in a consolidated partnership
|
898
|
|
781
|
Accumulated other
comprehensive loss
|
(3,268)
|
|
(3,836)
|
Dividends in excess of
accumulated earnings
|
(360,066)
|
|
(329,246)
|
|
|
|
|
Total
equity
|
710,905
|
|
739,291
|
|
|
|
|
Total liabilities,
noncontrolling interests and equity
|
$
1,618,460
|
|
$
1,502,460
|
Same-Property
Analysis
|
(unaudited,
dollars in thousands)
|
|
|
|
|
|
Same-Property
NOI(1)
|
|
Three Months Ended
December 31,
|
|
Twelve Months Ended
December 31,
|
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
Total base
rent
|
|
$
29,382
|
|
$
28,891
|
|
$
113,416
|
|
$
111,513
|
Tenant reimbursements
and other
|
|
7,147
|
|
6,764
|
|
28,374
|
|
26,699
|
Property operating
expenses
|
|
(8,479)
|
|
(9,252)
|
|
(35,494)
|
|
(34,788)
|
Real estate taxes and
insurance
|
|
(3,919)
|
|
(3,733)
|
|
(14,852)
|
|
(14,490)
|
|
|
|
|
|
|
|
|
|
Same-Property NOI -
accrual basis
|
|
24,131
|
|
22,670
|
|
91,444
|
|
88,934
|
|
|
|
|
|
|
|
|
|
Straight-line revenue,
net
|
|
(367)
|
|
(478)
|
|
(1,363)
|
|
(1,458)
|
Deferred market rental
revenue, net
|
|
(11)
|
|
49
|
|
(79)
|
|
119
|
|
|
|
|
|
|
|
|
|
Same-Property NOI -
cash basis
|
|
$
23,753
|
|
$
22,241
|
|
$
90,002
|
|
$
87,595
|
|
|
|
|
|
|
|
|
|
Change in
same-property NOI - accrual basis
|
|
6.4%
|
|
|
|
2.8%
|
|
|
Change in
same-property NOI - cash basis
|
|
6.8%
|
|
|
|
2.7%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Same-property
percentage of total portfolio (sf)
|
|
84.4%
|
|
|
|
82.9%
|
|
|
|
|
|
|
|
Reconciliation of
Consolidated NOI to
Same-Property NOI
|
|
Three Months Ended
December 31,
|
|
Twelve Months Ended
December 31,
|
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
Total
revenues
|
|
$
42,928
|
|
$
37,517
|
|
$
161,652
|
|
$
148,815
|
Property operating
expenses
|
|
(10,427)
|
|
(10,081)
|
|
(43,252)
|
|
(38,280)
|
Real estate taxes and
insurance
|
|
(4,928)
|
|
(3,942)
|
|
(17,360)
|
|
(16,074)
|
NOI
|
|
27,573
|
|
23,494
|
|
101,040
|
|
94,461
|
|
|
|
|
|
|
|
|
|
Less: Non-same
property NOI(2)
|
|
(3,442)
|
|
(824)
|
|
(9,596)
|
|
(5,527)
|
|
|
|
|
|
|
|
|
|
Same-Property NOI –
accrual basis
|
|
$
24,131
|
|
$
22,670
|
|
$
91,444
|
|
$
88,934
|
|
|
|
|
|
|
|
|
|
Change in
Same-Property NOI (accrual basis)
|
|
|
By
Region
|
|
Three Months
Ended
December 31, 2014
|
|
Percentage of
Base Rent
|
|
Twelve Months
Ended
December 31, 2014
|
|
Percentage
of
Base Rent
|
Washington,
D.C.
|
|
2.6%
|
|
15%
|
|
(2.6)%
|
|
15%
|
Maryland
|
|
8.5%
|
|
30%
|
|
4.7%
|
|
29%
|
Northern
Virginia
|
|
7.7%
|
|
35%
|
|
3.3%
|
|
36%
|
Southern
Virginia
|
|
4.4%
|
|
20%
|
|
4.3%
|
|
20%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
By
Type
|
|
|
|
|
|
|
|
|
Business Park /
Industrial
|
|
8.9%
|
|
39%
|
|
6.1%
|
|
40%
|
Office
|
|
4.6%
|
|
61%
|
|
0.4%
|
|
60%
|
(1)
|
Same-property
comparisons are based upon those consolidated properties owned and
in-service for the entirety of the periods presented. Same-property
results exclude the operating results of the following non
same-properties that were owned as of December 31, 2014: 440 First
Street, NW, Storey Park, 1401 K Street, NW, 1775 Wiehle Avenue, 11
Dupont Circle, NW, and the Richmond Portfolio (Chesterfield
Business Center, Hanover Business Center, Park Central and Virginia
Technology Center), which was classified as held-for-sale as of
December 31, 2014. Same-property results for the twelve months
ended December 31, 2014 and 2013 also exclude the operating results
of a building at Redland Corporate Center.
|
(2)
|
Non-same property NOI
has been adjusted to reflect a normalized management fee percentage
in lieu of an administrative overhead allocation for comparative
purposes.
|
CONTACT:
Randy L. Haugh
Director,
Finance
(301)
986-9200
rhaugh@first-potomac.com
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/first-potomac-realty-trust-reports-fourth-quarter-and-full-year-2014-results-300038712.html
SOURCE First Potomac Realty Trust