Attached files
| file | filename |
|---|---|
| 8-K - FORM 8K - PACIFIC OFFICE PROPERTIES TRUST, INC. | form8k.htm |
| EX-99.2 - SUPPLEMENTAL PACKAGE - PACIFIC OFFICE PROPERTIES TRUST, INC. | exh99_2.htm |
For
additional information, contact:
Lawrence
Taff
Chief
Financial Officer
Pacific
Office Properties Trust, Inc.
233
Wilshire Boulevard, Suite 310
Santa
Monica, CA 90401
(808)
544-1829
PACIFIC OFFICE PROPERTIES
ANNOUNCES
FOURTH QUARTER 2009
FINANCIAL RESULTS
Santa
Monica, California – March 16, 2010 – Pacific Office Properties Trust, Inc.
(NYSE Amex: PCE), a West Coast office REIT, today announced its financial
results for the quarter and year ended December 31, 2009. The Company
also announced financial and portfolio highlights as well as recent corporate
milestones.
Financial
Highlights
|
·
|
Substantially
all mortgage debt is fixed rate.
|
|
·
|
Completed
the acquisition of Seaview Corporate Center in partnership with an
institutional investor for $75 million, thereby increasing the Company’s
total portfolio under management to 4.7 million square
feet.
|
|
·
|
Increased
our credit facility borrowing base to $15
million.
|
|
·
|
Commenced
the offering of up to $400 million of Senior Common
Stock.
|
Portfolio
Highlights
|
·
|
Steady
leasing activity results in total portfolio being 85.2% leased at December
31, 2009 compared to 85.2% leased at December 31, 2008 and slightly down
from 85.5% leased at September 30,
2009.
|
|
·
|
Approximately
160,200 square feet of new and renewal leases signed during the three
months ended December 31, 2009.
|
|
·
|
76.5%
of our revenues derived from one of the healthiest office markets in the
U.S. (Honolulu).
|
|
·
|
As
of December 31, 2009, Honolulu’s office market vacancy rate of 10.3% was
the second lowest vacancy rate in the Western region, according to a
recent report published by Colliers Monroe
Friedlander.
|
Three
Month Financial and Operating Results
During
the quarter ended December 31, 2009, the Company changed the redemption features
of its Common and Preferred Units. The change to the Preferred Units
resulted in a one-time non-cash fair value adjustment of $58.6 million, which
represents the increase of the book value of the units to their fair market
value. The change also resulted in a reclassification of the
Non-Controlling Interests from the mezzanine equity section of the Company’s
balance sheet to permanent equity, thus increasing total equity.
The
Company reported Funds from Operations (FFO) for the quarter ended December 31,
2009 of $(57.6) million, or $(3.17) per diluted share/common unit, compared to
$0.8 million, or $0.04 per diluted share/common unit, for the quarter ended
December 31, 2008. FFO excluding the non-cash fair value adjustment
of the Preferred Units for the quarter ended December 31, 2009 was $1.1 million,
or $0.06 per diluted share/common unit.
The
Company reported Adjusted Funds from Operations (AFFO) for the quarter ended
December 31, 2009 of $1.4 million, or $0.08 per diluted share/common unit,
compared to $1.2 million, or $0.07 per diluted share/common unit, for the
quarter ended December 31, 2008.
The
Company also reported a GAAP net loss attributable to common stockholders for
the quarter ended December 31, 2009 of $12.2 million, which includes the
Company’s portion of the one-time fair value adjustment charge of the Preferred
Units of $10.9 million and depreciation and amortization expense of $1.3
million. The Company also reported a GAAP net loss attributable to common
stockholders for the quarter ended December 31, 2008 of $1.2 million, which
includes the Company’s portion of depreciation and amortization expense of $1.2
million. The net loss per basic and diluted share for the
quarters ended December 31, 2009 and 2008 were $3.17 and $0.38 per share,
respectively.
Twelve
Month Financial and Operating Results
The
Company reported Funds from Operations (FFO) for the year ended December 31,
2009 of $(54.3) million, or $(3.09) per diluted share/common
unit. FFO excluding the one-time fair value adjustment of the
Preferred Units for the year ended December 31, 2009 was $4.3 million, or $0.25
per diluted share/common unit. The Company’s FFO for the year ended
December 31, 2008 is not comparable due to the Company’s formation on March 20,
2008.
The
Company reported Adjusted Funds from Operations (AFFO) for the year ended
December 31, 2009 of $7.4 million, or $0.42 per diluted share/common unit. The
Company’s AFFO for the year ended December 31, 2008 is not comparable due to the
Company’s formation on March 20, 2008.
The
Company also reported a GAAP net loss attributable to common stockholders for
the year ended December 31, 2009 of $15.6 million, or $4.79 net loss per basic
and diluted share, which includes the Company’s portion of the fair value
adjustment charge of the Preferred Units of $10.9 million and depreciation and
amortization expense of $5.1 million. The Company’s combined GAAP net
loss attributable to common stockholders for the year ended December 31, 2008
was $7.8 million, which includes the Company’s portion of the non-cash
share-based compensation charge attributable to the Company’s formation of $2.9
million and depreciation and amortization expense of $3.9 million. The per share
calculation is not comparable due to the Company’s formation on March 20,
2008.
Recent
Corporate Milestones
|
·
|
On
December 3, 2009, the Board of Directors of the Company declared a cash
dividend of $0.05 per share of our common stock for the fourth quarter
2009, which was paid on January 15, 2010 to shareholders of record on
December 31, 2009.
|
|
·
|
The Company’s current total
market capitalization is $625.0 million, including approximately $197.4
million in equity, assuming the conversion of all outstanding interests in
our operating partnership, based on our closing price on the NYSE Amex on
December 31, 2009.
|
|
·
|
As
of December 31, 2009, the Company’s property portfolio, including those
properties owned in partnership with institutional co-investors, included
24 office properties consisting of 45 office buildings totaling
approximately 4.7 million leasable square
feet.
|
“We are
pleased to report another quarter of solid results supported by the continued
resilience of the Honolulu market, our core geography. While general
office fundamentals remain challenging, we are confident in our ability to
outperform the market in the regions where we compete. We generate
approximately 75% of our rental revenues from the Honolulu
market. This market continues to show stronger occupancy and rent
metrics than most U.S. markets, and has had a stabilizing effect on the overall
portfolio.” said Jay H. Shidler, Chairman, President and Chief Executive
Officer. “We are also very pleased with our acquisition of Seaview
Corporate Center, which is accretive to our shareholders. We believe
that this acquisition is indicative of currently favorable market conditions
that will continue to present attractive investment opportunities during the
coming year.”
Mr.
Shidler continued “Our Senior Common Stock offering commenced in
January. The proceeds from this offering will provide us with an
excellent source of low cost capital that we expect will allow us to compete
effectively for the investment opportunities that we are seeing in the
marketplace.”
Supplemental Information
Supplemental
financial information for the Company’s quarterly financial results may be
accessed on the Company’s website under the Investor Relations section at www.pacificofficeproperties.com.
About
Pacific Office Properties Trust, Inc.
Pacific
Office Properties Trust, Inc. (www.pacificofficeproperties.com)
is a real estate investment trust that acquires, owns, and operates office
properties in the Western U.S., focusing initially on the long-term growth
sub-markets of Honolulu, San Diego, Los Angeles, and Phoenix.
The
Company’s strategy is to acquire, often in partnership with institutional
co-investors, value-added office buildings whose potential can be maximized
through improvements, repositioning, and superior leasing and
management. The Company continues in the tradition of The Shidler
Group’s highly successful institutional joint-venture operations, which focus on
acquiring opportunistic and value-added commercial real estate in partnership
with institutional co-investors.
Certain
Information About Forward Looking Statements
This
press release contains certain forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, and Section 21E of the Securities
Exchange Act of 1934. We intend such forward-looking statements to be
covered by the safe harbor provisions for forward-looking statements contained
in the Private Securities Litigation Reform Act of 1995, and are including this
statement for purposes of complying with those safe harbor
provisions. Forward-looking statements are not historical information
and are based on current expectations and involve risks and uncertainties.
Without limiting the generality of the foregoing, words such as “should”, “may”,
“will”, “expect”, “believe”, “anticipate”, “intend”, “could”, “estimate”, or
“continue”, or the negative or other variations thereof or comparable
terminology, are intended to identify forward-looking statements. The risks and
uncertainties inherent in such statements may cause actual future events or
results to differ materially and adversely from those described in the
forward-looking statements. Important factors that may cause a difference
between projected and actual results for Pacific Office Properties Trust, Inc.
are discussed in the Company’s filings from time to time with the
SEC. Pacific Office Properties Trust, Inc. and The Shidler Group
disclaim any obligation to revise or update any forward-looking statements that
may be made from time to time by any of them or on their behalf.
FINANCIAL
TABLES FOLLOW
Pacific
Office Properties Trust, Inc.
Consolidated
Balance Sheets
(unaudited
and in thousands, except share data)
|
December
31, 2009
|
December
31, 2008
|
|||||||
|
ASSETS
|
||||||||
|
Investments
in real estate, net
|
$ | 382,950 | $ | 392,657 | ||||
|
Cash
and cash equivalents
|
3,195 | 4,463 | ||||||
|
Restricted
cash
|
6,507 | 7,267 | ||||||
|
Rents
and other receivables, net
|
6,471 | 6,342 | ||||||
|
Intangible
assets, net
|
33,228 | 41,379 | ||||||
|
Other
assets, net
|
5,055 | 4,680 | ||||||
|
Goodwill
|
62,019 | 61,519 | ||||||
|
Investment
in unconsolidated joint ventures
|
10,911 | 11,590 | ||||||
|
Total
assets
|
$ | 510,336 | $ | 529,897 | ||||
|
LIABILITIES
AND EQUITY
|
||||||||
|
Mortgage
and other loans, net
|
$ | 406,439 | $ | 400,108 | ||||
|
Unsecured
notes payable to related parties
|
21,104 | 23,776 | ||||||
|
Accounts
payable and other liabilities
|
22,000 | 17,088 | ||||||
|
Acquired
below market leases, net
|
9,512 | 11,817 | ||||||
|
Total
liabilities
|
459,055 | 452,789 | ||||||
|
Commitments
and contingencies
|
||||||||
|
Non-controlling
interests
|
- | 133,250 | ||||||
|
Equity:
|
||||||||
|
Preferred
stock, $0.0001 par value, 100,000,000 shares authorized, one share of
Proportionate
|
||||||||
|
Voting
Preferred Stock issued and outstanding at December 31, 2009 and December
31, 2008
|
- | - | ||||||
|
Common
Stock, $0.0001 par value, 639,999,900 shares authorized, 3,850,420 shares
issued and outstanding at
|
- | - | ||||||
|
December
31, 2009; 200,000,000 shares authorized, 3,031,025 shares issued and
outstanding at December 31, 2008
|
185 | 185 | ||||||
|
Class
B Common Stock, $0.0001 par value, 100 shares authorized, issued and
outstanding at December 31, 2009;
|
- | - | ||||||
|
200,000
shares authorized, 100 shares issued and outstanding at December 31,
2008
|
- | - | ||||||
|
Additional
paid-in capital
|
- | - | ||||||
|
Retained
deficit
|
(132,511 | ) | (56,327 | ) | ||||
|
Total
stockholders' equity
|
(132,326 | ) | (56,142 | ) | ||||
|
Non-controlling
interests
|
183,607 | - | ||||||
|
Total
equity
|
51,281 | (56,142 | ) | |||||
|
Total
liabilities and equity
|
$ | 510,336 | $ | 529,897 | ||||
Pacific
Office Properties Trust, Inc
Consolidated
Statements of Operations
(unaudited
and in thousands, except share and per share data)
|
For
the three months ended December 31,
|
||||||||
|
2009
|
2008
|
|||||||
|
Revenue:
|
||||||||
|
Rental
|
$ | 10,463 | $ | 11,046 | ||||
|
Tenant
reimbursements
|
5,478 | 6,635 | ||||||
|
Parking
|
2,070 | 2,035 | ||||||
|
Other
|
95 | 49 | ||||||
|
Total
revenue
|
18,106 | 19,765 | ||||||
|
Expenses:
|
||||||||
|
Rental
property operating
|
10,124 | 11,302 | ||||||
|
General
and administrative
|
652 | 740 | ||||||
|
Depreciation
and amortization
|
6,770 | 6,792 | ||||||
|
Interest
|
6,703 | 7,110 | ||||||
|
Other
|
- | |||||||
|
Total
expenses
|
24,249 | 25,944 | ||||||
|
Loss
before equity in net earnings of unconsolidated
|
||||||||
|
joint
ventures and non-operating income
|
(6,143 | ) | (6,179 | ) | ||||
|
Equity
in net earnings of unconsolidated
|
||||||||
|
joint
ventures
|
(93 | ) | (63 | ) | ||||
|
Non-operating
income
|
428 | 85 | ||||||
|
Net
loss
|
(5,808 | ) | (6,157 | ) | ||||
|
Fair
value adjustment of Preferred Units
|
(58,645 | ) | - | |||||
|
Net
loss attributable to non-controlling
|
||||||||
|
interests
|
52,253 | 4,994 | ||||||
|
Net
loss attributable to common stockholders
|
$ | (12,200 | ) | $ | (1,163 | ) | ||
|
Net
loss per common share - basic and diluted
|
$ | (3.17 | ) | $ | (0.38 | ) | ||
|
Weighted
average number of common shares
|
||||||||
|
outstanding
- basic and diluted
|
3,850,520 | 3,031,125 | ||||||
Pacific
Office Properties Trust, Inc
Combined
Consolidated Statements of Operations
(unaudited
and in thousands, except share and per share data)
|
For
the year ended December 31,
|
||||||||
|
2009
|
2008
(1)
|
|||||||
|
Revenue:
|
||||||||
|
Rental
|
$ | 42,462 | $ | 37,447 | ||||
|
Tenant
reimbursements
|
21,662 | 19,375 | ||||||
|
Parking
|
8,150 | 6,890 | ||||||
|
Other
|
365 | 394 | ||||||
|
Total
revenue
|
72,639 | 64,106 | ||||||
|
Expenses:
|
||||||||
|
Rental
property operating
|
39,480 | 37,714 | ||||||
|
General
and administrative
|
2,649 | 18,577 | ||||||
|
Depreciation
and amortization
|
27,240 | 22,295 | ||||||
|
Interest
|
27,051 | 22,932 | ||||||
|
Loss
on extinguishment of debt
|
171 | - | ||||||
|
Other
|
- | 143 | ||||||
|
Total
expenses
|
96,591 | 101,661 | ||||||
|
Loss
before equity in net earnings of unconsolidated
|
||||||||
|
joint
ventures and non-operating income
|
(23,952 | ) | (37,555 | ) | ||||
|
Equity
in net earnings of unconsolidated
|
||||||||
|
joint
ventures
|
313 | 93 | ||||||
|
Non-operating
income
|
434 | 85 | ||||||
|
Net
loss
|
(23,205 | ) | (37,377 | ) | ||||
|
Fair
value adjustment of Preferred Units
|
(58,645 | ) | - | |||||
|
Net
loss attributable to non-controlling
|
||||||||
|
interests
|
66,237 | 29,557 | ||||||
|
Net
loss attributable to common stockholders
|
$ | (15,613 | ) | $ | (7,820 | ) | ||
|
Net
loss per common share - basic and diluted
|
$ | (4.79 | ) | (2) | ||||
|
Weighted
average number of common shares
|
||||||||
|
outstanding
- basic and diluted
|
3,259,013 | (2) | ||||||
_________
|
(1)
|
Amounts
reflected in 2008 represent the sum of the amounts included herein as the
consolidated results of operations of Waterfront and the Company for the
period from January 1, 2008 through December 31,
2008.
|
|
(2)
|
The
per share calculation is not comparable due to the Company’s formation on
March 20, 2008.
|
Pacific
Office Properties Trust, Inc.
Funds
from Operations (FFO) and Adjusted Funds from Operations (AFFO)
(unaudited
and in thousands, except share and per share data)
|
For
the three months ended December,
|
||||||||
|
2009
|
2008
|
|||||||
|
Reconciliation
of net loss to FFO (1):
|
||||||||
|
Net
loss attributable to stockholders
|
$ | (12,200 | ) | $ | (1,163 | ) | ||
|
Add:
|
||||||||
|
Depreciation
and amortization of real estate assets
|
6,770 | 6,792 | ||||||
|
Depreciation
and amortization of real estate assets -
|
||||||||
|
unconsolidated
joint ventures
|
676 | 697 | ||||||
|
Less:
|
||||||||
|
Distributions
to preferred unitholders
|
(568 | ) | (568 | ) | ||||
|
Net
loss attributable to non-controlling interests
|
(52,253 | ) | (4,994 | ) | ||||
|
FFO
|
$ | (57,575 | ) | $ | 764 | |||
|
Reconciliation
of FFO to FFO, excluding fair value adjustment of Preferred
Units:
|
||||||||
|
FFO
|
$ | (57,575 | ) | $ | 764 | |||
|
Add:
|
||||||||
|
Fair
value adjustment of Preferred Units
|
58,645 | - | ||||||
|
FFO,
excluding fair value adjustment of Preferred Units
|
$ | 1,070 | $ | 764 | ||||
|
Reconciliation
of FFO to AFFO (2)(3):
|
||||||||
|
FFO
|
$ | (57,575 | ) | $ | 764 | |||
|
Fair
value adjustment of Preferred Units
|
58,645 | - | ||||||
|
Amortization
of interest rate contracts, loan premiums
|
||||||||
|
and
prepaid financings
|
286 | 426 | ||||||
|
Non-cash
compensation expense
|
50 | 40 | ||||||
|
Interest
expense deferred on unsecured notes payable
|
410 | 437 | ||||||
|
Straight-line
rent adjustments, net
|
150 | (147 | ) | |||||
|
Recurring
capital expenditures, tenant improvements
|
||||||||
|
and
leasing commissions
|
(533 | ) | (319 | ) | ||||
|
AFFO
|
$ | 1,433 | $ | 1,201 | ||||
|
FFO
per share - basic and diluted
|
$ | (3.17 | ) | $ | 0.04 | |||
|
FFO,
excluding fair value adjustment of Preferred Units
|
||||||||
|
per
share - basic and diluted
|
$ | 0.06 | $ | 0.04 | ||||
|
AFFO
per share - basic and diluted
|
$ | 0.08 | $ | 0.07 | ||||
|
Weighted
average number of common shares and common
|
||||||||
|
share
equivalents outstanding - basic and diluted
|
18,149,787 | 17,330,392 | ||||||
Explanation
of Notations
|
(1)
|
FFO
is a widely recognized measure of REIT performance. We calculate FFO as
defined by the National Association of Real Estate Investment Trusts, or
NAREIT. FFO represents net income (loss) attributable to stockholders (as
computed in accordance with accounting principles generally accepted in
the United States of America, or GAAP), excluding gains (or losses) from
dispositions of property, extraordinary items, real estate-related
depreciation and amortization (including capitalized leasing expenses,
tenant allowances or improvements and excluding amortization of deferred
financing costs) and after adjustments for unconsolidated partnerships and
joint ventures. Management uses FFO as a supplemental performance measure
because, in excluding real estate-related depreciation and amortization,
gains (or losses) from property dispositions and extraordinary items, it
provides a performance measure that, when compared year over year,
captures trends in occupancy rates, rental rates and operating costs. We
also believe that, as a widely recognized measure of the performance of
REITs, FFO will be used by investors as a basis to compare our operating
performance with that of other
REITs.
|
However,
because FFO excludes depreciation and amortization and captures neither the
changes in the value of our properties that result from use or market conditions
nor the level of capital expenditures and leasing commissions necessary to
maintain the operating performance of our properties, all of which have real
economic effect and could materially impact our results from operations, the
utility of FFO as a measure of our performance is limited. Other Equity REITs
may not calculate FFO in accordance with the NAREIT definition and, accordingly,
our FFO may not be comparable to such other Equity REITs' FFO. As a result, FFO
should be considered only as a supplement to net income (loss) as a measure of
our performance. FFO should not be used as a measure of our liquidity, nor is it
indicative of funds available to fund our cash needs, including our ability to
pay dividends or make distributions. FFO also should not be used as a supplement
to or substitute for cash flow from operating activities (computed in accordance
with GAAP).
|
(2)
|
AFFO
is a non-GAAP financial measure we believe is a useful supplemental
measure of our performance. We compute AFFO by subtracting from
FFO the straight-line rent adjustments and recurring capital expenditures,
tenant improvements and leasing commissions, and then adding the
amortization of interest rate contracts, loan premium and prepaid
financing costs, non-cash compensation expense, and interest expense
deferred on unsecured notes. AFFO is not intended to represent
cash flow for the period, and it only provides an additional perspective
on our ability to fund cash needs and make distributions to shareholders
by adjusting the effect of the non-cash items included in FFO, as well as
recurring capital expenditures and leasing costs. We believe
that net income or loss is the most directly comparable GAAP financial
measure to AFFO. We also believe that AFFO provides useful
information to the investment community about the Company’s financial
position as compared to other REITs since AFFO is a widely reported
measure used by other REITs. However, other REITs may use
different methodologies for calculating AFFO and, accordingly, our AFFO
may not be comparable to other
REITs.
|
|
(3)
|
The
weighted average number of common shares and common share equivalents
outstanding – basic and diluted includes common unit limited partnership
interests in our Operating
Partnership.
|
Our
outstanding preferred unit interests in our Operating Partnership are
convertible into common unit limited partnership interests in our Operating
Partnership, but no earlier than the later of March 19, 2010 and the date an
underwritten public equity offering of our common stock in an amount equal to or
greater than $75 million is consummated, which is a contingent event as of
December 31, 2009. These common unit interests will become exchangeable for
shares of our common stock one year after such conversion. Our outstanding
preferred unit interests at December 31, 2009 represent 32,597,528 common share
equivalents, on an as-if converted basis, and any impact related to these
outstanding limited preferred interests have not been included in our
calculation of diluted earnings per share or FFO per share, including our
calculation of the weighted average number of common and common equivalent
shares outstanding, in accordance with GAAP. Assuming the full conversion of our
outstanding preferred unit interests at December 31, 2009 and December 31, 2008,
our FFO per share/unit, on a fully diluted basis, would have been $(1.13) and
$0.02, and our AFFO per share/unit, on a fully diluted basis, would have been
$0.03 and $0.02, for the three months then ended,
respectively. Assuming the full conversion of our outstanding
preferred unit interests at December 31, 2009, our FFO excluding the fair value
adjustment for the Preferred Units per share/unit would have been $0.02 for the
three months ended December 31, 2009. Assuming the full conversion of our
outstanding preferred unit interests at December 31, 2009, our FFO per
share/unit, on a fully diluted basis, would have been $(1.08), our FFO excluding
the fair value adjustment for the Preferred Units per share/unit, on a fully
diluted basis, would have been $0.09 and our AFFO per share/unit, on a fully
diluted basis, would have been $0.15 for the year then ended.
________
###