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8-K - FORM 8-K - BioMed Realty Trust Inc | a58574e8vk.htm |
EX-99.2 - EX-99.2 - BioMed Realty Trust Inc | a58574exv99w2.htm |
Exhibit 99.1
CONTACT:
|
Rick Howe Director, Corporate Communications 858.207.5859 richard.howe@biomedrealty.com |
BIOMED REALTY TRUST REPORTS
FOURTH QUARTER AND FULL-YEAR 2010 FINANCIAL RESULTS
FOURTH QUARTER AND FULL-YEAR 2010 FINANCIAL RESULTS
SAN DIEGO, Calif. February 7, 2011 BioMed Realty Trust, Inc. (NYSE: BMR), a real estate
investment trust focused on Providing Real Estate to the Life Science Industry®, today announced
financial results for the fourth quarter and full-year ended December 31, 2010.
Fourth Quarter 2010 Highlights
| Generated record total revenues for the fourth quarter of $105.0 million, up 19.1% from $88.2 million in the same period in 2009. |
| Increased rental revenues for the quarter by 17.6% to a record $79.2 million from $67.3 million in the same period in 2009. |
| Reported funds from operations (FFO) for the quarter of $43.6 million, or $0.30 per diluted share, as compared to FFO of $28.0 million, or $0.28 per diluted share, in the fourth quarter of 2009, an increase of 7.1%. |
| Increased adjusted funds from operations (AFFO) per diluted share by 16.7% to $0.28 as compared to $0.24 for the same period in 2009. |
| Increased same property net operating income (NOI) for the quarter by 6.0% and same property NOI on a cash basis for the quarter by 13.1% as compared to the same period in 2009. |
| Increased net income to $8.5 million, or $0.06 per diluted share, for the quarter, as compared to $477,000, or $0.00 per diluted share, for the same period in 2009. |
| Executed 13 leasing transactions representing approximately 329,000 square feet: |
| Eight new leases totaling approximately 162,000 square feet. | ||
| Five leases amended to extend their terms, totaling approximately 167,000 square feet. | ||
| Current operating portfolio 88.6% leased on a weighted average basis. |
| Acquired two adjacent life science campuses in South San Francisco for $298.2 million. The properties are fully leased and comprise approximately 489,000 square feet of rentable space with development rights for an additional 946,000 square feet. |
| Acquired three properties in San Diego, California for a total investment of $64.2 million. The properties were 96.2% leased at acquisition and comprise approximately 243,000 rentable square feet. |
| Acquired two life science properties in North Carolinas Research Triangle for a total investment of $14.7 million. The two properties are 89% leased and comprise approximately 79,000 rentable square feet. | |
| Promoted Stephen A. Willey to Vice President, Chief Accounting Officer and Jonathan P. Klassen to Vice President, Assistant General Counsel and Secretary, and added Anne L. Hoffman as Senior Vice President, Leasing & Development. |
BioMeds fourth quarter results exemplify the truly outstanding execution of our business model
during 2010, said Alan D. Gold, Chairman and Chief Executive Officer of BioMed. On the strength
of over 329,000 square feet of leasing during the quarter, we exceeded our five-quarter leasing
goal set in the third quarter of 2009 by 46%. The acquisition of seven high-quality properties
completed in the fourth quarter brought our total new investments in life science real estate for
the full year to over $675 million and forged important new tenant relationships in the San
Francisco Bay Area, San Diego and North Carolina. The results throughout 2010 demonstrate, yet
again, the benefits of disciplined execution of our strategy for investing in high-quality,
state-of-the-art research facilities, well-located within the core life science markets. I want to
express my sincere thanks to our tenants, business and financial partners and, of course, our
best-in-class professionals throughout the country for continuing to make BioMed the leading
provider of real estate to the life science industry.
2010 Highlights
During the full year 2010, the company:
| Increased total revenues 7.0% to $386.4 million from $361.2 million in 2009. |
| Generated FFO for the year of $147.4 million, or $1.16 per diluted share, compared to $155.5 million, or $1.64 per diluted share, in 2009. | |
| Reported net income available to common stockholders of $21.9 million, or $0.19 per diluted share, as compared to $41.8 million, or $0.45 per diluted share, for 2009. | |
| Executed 52 leasing transactions representing approximately 876,000 square feet: |
| 35 new leases totaling approximately 463,000 square feet. | ||
| 17 leases amended to extend their terms, totaling approximately 413,000 square feet. |
| Acquired 15 new properties for a total investment of $597.1 million. The properties were 94.6% leased at acquisition and comprise approximately 1.5 million rentable square feet: |
| South San Francisco: Acquired two properties for a total investment of $298.2 million. The properties are 100% leased and comprise approximately 489,000 rentable square feet with development rights for an additional 946,000 square feet. | ||
| San Diego: Acquired seven properties for a total investment of $185.1 million. The properties were 86.0% leased at acquisition and comprise approximately 516,700 rentable square feet. |
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| Maryland: Acquired three properties for a total investment of $81.6 million. The properties are 100% leased and comprise approximately 357,800 rentable square feet. | ||
| North Carolina: Acquired three properties for a total investment of approximately $32.2 million. The properties were 93.8% leased at acquisition and comprise approximately 140,600 rentable square feet. |
| Completed the acquisition of a land parcel in the San Diego market and entered into an agreement with Isis Pharmaceuticals, Inc. to lease 100% of a 176,000 square foot research facility being developed by BioMed with a total expected investment of approximately $77.5 million. |
| Further enhanced the companys liquidity position and balance sheet: |
| Received investment grade corporate credit ratings from Standard & Poors Ratings Services and Moodys Investors Service. | ||
| Completed a private placement of $180.0 million of 3.75% exchangeable senior notes due 2030. | ||
| Completed a private placement of $250.0 million of 6.125% unsecured senior notes due 2020. | ||
| Completed two follow-on public offerings of common stock, raising approximately $508.2 million in net proceeds. | ||
| Raised approximately $15.4 million in net proceeds from the sale of 951,000 shares of common stock under the companys continuous equity offering program established in September 2009. | ||
| Voluntarily prepaid the $250.0 million previously outstanding under the companys secured term loan. | ||
| Repurchased approximately $26.4 million principal amount of the companys exchangeable senior notes due 2026. |
| Continued to enhance the breadth and depth of the companys organization: |
| Promoted Matthew G. McDevitt to Executive Vice President, Real Estate. | ||
| Promoted Greg N. Lubushkin to Chief Financial Officer. | ||
| Added Bruce D. Steel as Managing Director, BioMed Ventures. | ||
| Promoted John P. Bonanno to Senior Vice President, Leasing & Development. | ||
| Added Anne L. Hoffman as Senior Vice President, Leasing & Development. | ||
| Promoted Jonathan P. Klassen to Vice President, Assistant General Counsel and Secretary. | ||
| Promoted Stephen A. Willey to Vice President, Chief Accounting Officer. |
Commenting on the full-year results, Kent Griffin, President and Chief Operating Officer of BioMed,
said, 2010 was a momentous year for BioMed from a strategic perspective. We continued to achieve
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sustained leasing success. We raised efficient capital at a time when few companies could and
utilized our strong capital position to continue to invest in exceptional properties with
attractive anticipated returns. In addition, we further strengthened the breadth and depth of our
management team and our organization as a whole, positioning ourselves well to capture
opportunities and continue our growth into 2011 and beyond.
Fourth Quarter and Full-Year 2010 Financial Results
Total revenues for the fourth quarter were $105.0 million, compared to $88.2 million for the same
period in 2009, an increase of 19.1%, and the highest in the companys history. For 2010, total
revenues increased 7.0% to $386.4 million from $361.2 million in 2009. Rental revenues for the
fourth quarter were $79.2 million compared to $67.3 million for the same period in 2009, an
increase of 17.6% and the highest in the companys history. Rental revenues for 2010 were $295.1
million, compared to $269.9 million in 2009, an increase of 9.3%.
The current operating portfolios weighted average leased percentage was 88.6% as of December 31,
2010. Same property net operating income on a cash basis increased 13.1% for the quarter compared
to the same period in 2009, primarily as a result of the commencement of cash rents driven by
sustained leasing success and contractual rent escalations.
FFO for the quarter was $43.6 million, or $0.30 per diluted share, compared to $28.0 million, or
$0.28 per diluted share, for the same period in 2009. FFO for the fourth quarter of 2010 included
approximately $2.2 million of other income related to the settlement of certain lease terminations
that occurred in 2009. FFO for the fourth quarter of 2009 included a loss of $2.9 million
resulting from the extinguishment of debt associated with the repurchase of exchangeable senior
notes due 2026 during the quarter pursuant to a cash tender offer. AFFO per diluted share for the
quarter was $0.28 compared to $0.24 for the same period in 2009.
FFO for 2010 was $147.4 million, or $1.16 per diluted share, compared to $155.5 million, or $1.64
per diluted share, for 2009.
FFO and AFFO are supplemental non-GAAP financial measures used in the real estate industry to
measure and compare the operating performance of real estate companies. A complete reconciliation
containing adjustments from GAAP net income available to common stockholders to FFO and AFFO and
definitions of terms are included at the end of this release.
Portfolio Update
During the quarter ended December 31, 2010, the company executed 13 leasing transactions
representing approximately 329,000 square feet, comprised of:
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| Eight new leases totaling approximately 162,000 square feet with three new leases at the companys Pacific Research Center in Newark, California totaling approximately 108,000 square feet, including: |
| a 50,000 square foot lease with CCBR-SYNARC Inc., and | ||
| a 43,000 square foot lease with StemCells, Inc. |
| Five leases amended to extend their terms, totaling approximately 167,000 square feet, including: |
| a 71,500 square foot lease extension with Rhodia, Inc. at the companys Bridge Business Center in Bristol, Pennsylvania, and | ||
| a 46,000 square foot lease extension with XDx, Inc. at the companys Bayshore Boulevard property in Brisbane, California. |
During 2010, the company executed a total of 52 leasing transactions representing approximately
876,000 square feet, including 35 new leases totaling approximately 463,000 square feet and 17
leases amended to extend their terms totaling approximately 413,000 square feet. Including leasing
activity in the fourth quarter of 2009, the company executed approximately 1.5 million square feet
of gross leasing transactions, representing approximately 146% of its original five-quarter goal of
1.0 million square feet.
During the quarter ended December 31, 2010, the company completed the following acquisitions:
| Two adjacent life science campuses in South San Francisco for $298.2 million comprising approximately 489,000 square feet of rentable space. The acquisition included the following properties: |
| The Science Center at Oyster Point comprised of two newly constructed, state-of-the-art research facilities with an aggregate of approximately 205,000 square feet of office and laboratory space. These buildings are 100% leased to Elan Corporation, plc. | ||
| The Gateway Business Park, a research and development park comprised of six buildings with an aggregate of approximately 284,000 square feet, which is 100% leased. Approximately 215,000 square feet is leased to Elan, approximately 50,000 square feet is leased to FedEx Corporation, and approximately 19,000 square feet is leased to Genentech, Inc., a member of the Roche Group. As part of the acquisition, the company assumed a development agreement with the city of South San Francisco that permits redevelopment of the campus to a total of approximately 1.23 million square feet of rentable space, representing a net increase of approximately 946,000 square feet. |
| Two multi-building properties in the Sorrento Valley submarket of San Diego for $39.3 million comprising approximately 195,000 square feet of rentable space. The acquisitions included the following properties: |
| Sorrento West, a nine-building business park of approximately 164,000 square feet which is 94.3% leased in the aggregate. | ||
| 11404 and 11408 Sorrento Valley Road, a two-building property of approximately 31,000 square feet which is 100% leased to Halozyme Therapeutics, Inc. |
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| 3525 John Hopkins Court, a single-building property in the Torrey Pines submarket of San Diego for $24.9 million comprising approximately 48,000 square feet of rentable space which is 100% leased to the University of California, San Diego. |
| Two single-building properties in North Carolinas Research Triangle for $14.7 million comprising approximately 79,000 square feet of rentable space: Patriot Science Center comprising approximately 48,000 square feet and Weston Parkway comprising approximately 31,000 square feet. In aggregate, the two properties are 89% leased. |
For the full year 2010, the company acquired 15 new properties for a total investment of
approximately $597.1 million comprising approximately 1.5 million rentable square feet, which were
94.6% leased at acquisition in the aggregate. In addition, the company completed the acquisition
of a land parcel in the San Diego market and entered into an agreement to lease 100% of a 176,000
square foot research facility to be developed by BioMed at the new property.
At December 31, 2010, the companys total portfolio comprised 85 properties and 12.2 million square
feet and an additional 2.6 million square feet of development potential.
The companys property portfolio included the following as of December 31, 2010:
Rentable Square Feet | ||||
Current operating |
10,471,387 | |||
Long-term lease up |
1,389,517 | |||
Development |
176,000 | |||
Pre-development |
152,145 | |||
Total property portfolio |
12,189,049 | |||
Development potential |
2,626,000 | |||
Total portfolio |
14,815,049 | |||
Financing Activity
During the fourth quarter, the company voluntarily prepaid approximately $16.1 million of mortgage
debt prior to the scheduled maturities.
In addition, the company completed the following debt-related transactions in 2010:
| Completed a private placement of $180.0 million of 3.75% exchangeable senior notes due 2030. |
| Completed a private placement of $250.0 million of 6.125% unsecured senior notes due 2020. | |
| Voluntarily prepaid the $250.0 million previously outstanding under the companys secured term loan, resulting in a loss on extinguishment of debt of approximately $1.4 million. | |
| Repurchased approximately $26.4 million principal amount of the companys exchangeable senior notes due 2026, resulting in a loss on extinguishment of debt of approximately $863,000. |
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During 2010, the company completed the following equity issuances, the net proceeds of which were
used to fund previously announced acquisitions, repay a portion of the outstanding borrowings on
the companys unsecured line of credit and for other general corporate and working capital
purposes:
| Completed two follow-on public offerings of common stock, raising approximately $508.2 million in net proceeds. | |
| Raised approximately $15.4 million in net proceeds from the sale of 951,000 shares of common stock under the companys continuous equity offering program established in September 2009. |
At December 31, 2010, the companys debt to total assets ratio was 37.7% and its secured debt to
total assets ratio was 16.6%. Subsequent to quarter end, the company prepaid another $14.7 million
of mortgage debt and successfully extended the maturities of the $245 million construction loan and
the $203.3 million term loan in the companys joint venture with Prudential Real Estate Investors
to August 2011 and February 2012, respectively.
Greg Lubushkin, BioMeds Chief Financial Officer, remarked, We produced record quarterly total and
rental revenues for the third consecutive quarter, largely the result of our ongoing leasing
success and strategic investments throughout the year, and generated over $43 million of FFO. The
prudent, measured steps taken over the last two years have resulted in BioMed having one of the
strongest capital and liquidity positions in the industry and have laid the foundation for our
continued growth in 2011 and beyond.
Quarterly and Annual Distributions
BioMed Realty Trusts board of directors previously declared a fourth quarter 2010 dividend of
$0.17 per share of common stock, and a dividend of $0.46094 per share of the companys 7.375%
Series A Cumulative Redeemable Preferred Stock for the period from October 16, 2010 through January
15, 2011. The fourth quarter common share dividend represented a 21.4% increase over the fourth
quarter 2009 dividend, and is equivalent to an annualized dividend of $0.68 per common share. For
the full year 2010, the company declared dividends totaling $0.63 per common share and $1.84376 per
Series A preferred share.
Supplemental Information
Supplemental operating and financial data, as well as the updated Investor Presentation, are
available in the Investor Relations section of the companys
website at www.biomedrealty.com.
Teleconference and Webcast
BioMed will conduct a conference call and webcast at 10:00 a.m. Pacific Time (1:00 p.m. Eastern
Time) on Tuesday, February 8, 2011 to discuss the companys financial results and operations for
the year. The call will be open to all interested investors either through a live audio web cast at
the Investor Relations
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section of the companys web site at www.biomedrealty.com and at www.earnings.com, which will
include an online slide presentation to accompany the call, or live by calling 866-730-5766
(domestic) or 857-350-1590 (international) with call ID number 86388073. The complete webcast will
be archived for 30 days on both web sites. A telephone playback of the conference call will also be
available from 1:00 p.m. Pacific Time on Tuesday, February 8, 2011 until midnight Pacific Time on
Monday, February 14, 2011 by calling 888-286-8010 (domestic) or 617-801-6888 (international) and
using access code 18885489.
About BioMed Realty Trust
BioMed Realty Trust, Inc. is a real estate investment trust (REIT) focused on Providing Real Estate
to the Life Science Industry®. The companys tenants primarily include biotechnology and
pharmaceutical companies, scientific research institutions, government agencies and other entities
involved in the life science industry. BioMed owns or has interests in 85 properties, representing
147 buildings with approximately 12.2 million rentable square feet. The companys properties are
located predominantly in the major U.S. life science markets of Boston, San Diego, San Francisco,
Seattle, Maryland, Pennsylvania and New York/New Jersey, which have well-established reputations as
centers for scientific research.
This
press release contains forward-looking statements within the meaning
of the Private
Securities Litigation Reform Act of 1995 based on current expectations, forecasts and assumptions
that involve risks and uncertainties that could cause actual outcomes and results to differ
materially. These risks and uncertainties include, without limitation: general risks affecting the
real estate industry (including, without limitation, the inability to enter into or renew leases,
dependence on tenants financial condition, and competition from other developers, owners and
operators of real estate); adverse economic or real estate developments in the life science
industry or the companys target markets; risks associated with the availability and terms of
financing, the use of debt to fund acquisitions and developments, and the ability to refinance
indebtedness as it comes due; failure to maintain the companys investment grade credit ratings
with the ratings agencies; failure to manage effectively the companys growth and expansion into
new markets, or to complete or integrate acquisitions and developments successfully; reductions in
asset valuations and related impairment charges; risks and uncertainties affecting property
development and construction; risks associated with downturns in the national and local economies,
increases in interest rates, and volatility in the securities markets; potential liability for
uninsured losses and environmental contamination; risks associated with the companys potential
failure to qualify as a REIT under the Internal Revenue Code of 1986, as amended, and possible
adverse changes in tax and environmental laws; and risks associated with the companys dependence
on key personnel whose continued service is not guaranteed. 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 companys most recent annual report on Form 10-K and quarterly reports on
Form 10-Q. 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.
# # #
(Financial Tables Follow)
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BIOMED REALTY TRUST, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
(Unaudited)
(In thousands, except share data)
(Unaudited)
December 31, | December 31, | |||||||
2010 | 2009 | |||||||
ASSETS |
||||||||
Investments in real estate, net
|
$ | 3,536,114 | $ | 2,971,767 | ||||
Investments in unconsolidated partnerships
|
57,265 | 56,909 | ||||||
Cash and cash equivalents
|
21,467 | 19,922 | ||||||
Restricted cash
|
9,971 | 15,355 | ||||||
Accounts receivable, net
|
5,874 | 4,135 | ||||||
Accrued straight-line rents, net
|
106,905 | 82,066 | ||||||
Acquired above-market leases, net
|
30,566 | 3,047 | ||||||
Deferred leasing costs, net
|
125,060 | 83,274 | ||||||
Deferred loan costs, net
|
11,499 | 8,123 | ||||||
Other assets
|
55,033 | 38,676 | ||||||
Total assets
|
$ | 3,959,754 | $ | 3,283,274 | ||||
LIABILITIES AND EQUITY |
||||||||
Mortgage notes payable, net
|
$ | 657,922 | $ | 669,454 | ||||
Secured term loan
|
| 250,000 | ||||||
Exchangeable senior notes due 2026, net
|
19,522 | 44,685 | ||||||
Exchangeable senior notes due 2030
|
180,000 | | ||||||
Unsecured senior notes due 2020, net
|
247,571 | | ||||||
Unsecured line of credit
|
392,450 | 397,666 | ||||||
Security deposits
|
11,749 | 7,929 | ||||||
Dividends and distributions payable
|
27,029 | 18,531 | ||||||
Accounts payable, accrued expenses, and other liabilities
|
98,826 | 47,388 | ||||||
Derivative instruments
|
3,826 | 12,551 | ||||||
Acquired below-market leases, net
|
7,963 | 11,138 | ||||||
Total liabilities
|
1,646,858 | 1,459,342 | ||||||
Equity: |
||||||||
Stockholders equity: |
||||||||
Preferred stock, $.01 par value, 15,000,000 shares
authorized: 7.375% Series A cumulative redeemable
preferred stock, $230,000,000 liquidation preference
($25.00 per share), 9,200,000 shares issued and
outstanding at December 31, 2010 and December 31, 2009
|
222,413 | 222,413 | ||||||
Common stock, $.01 par value, 200,000,000 and
150,000,000 shares authorized and 131,046,509 and
99,000,269 shares issued and outstanding at December 31,
2010 and December 31, 2009, respectively
|
1,310 | 990 | ||||||
Additional paid-in capital
|
2,371,488 | 1,843,551 | ||||||
Accumulated other comprehensive loss
|
(70,857 | ) | (85,183 | ) | ||||
Dividends in excess of earnings
|
(221,176 | ) | (167,429 | ) | ||||
Total stockholders equity
|
2,303,178 | 1,814,342 | ||||||
Noncontrolling interests
|
9,718 | 9,590 | ||||||
Total equity
|
2,312,896 | 1,823,932 | ||||||
Total liabilities and equity
|
$ | 3,959,754 | $ | 3,283,274 | ||||
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BIOMED REALTY TRUST, INC.
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except share data)
(Unaudited)
(In thousands, except share data)
(Unaudited)
For the Three Months Ended | For the Twelve Months Ended | |||||||||||||||
December 31, | December 31, | |||||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||
Revenues: |
||||||||||||||||
Rental |
$ | 79,157 | $ | 67,294 | $ | 295,107 | $ | 269,901 | ||||||||
Tenant recoveries |
23,580 | 19,895 | 87,403 | 77,406 | ||||||||||||
Other income |
2,299 | 982 | 3,927 | 13,859 | ||||||||||||
Total revenues |
105,036 | 88,171 | 386,437 | 361,166 | ||||||||||||
Expenses: |
||||||||||||||||
Rental operations |
20,935 | 17,675 | 75,861 | 73,213 | ||||||||||||
Real estate taxes |
9,745 | 8,532 | 36,577 | 31,611 | ||||||||||||
Depreciation and amortization |
32,196 | 26,853 | 115,355 | 109,620 | ||||||||||||
General and administrative |
6,379 | 6,336 | 25,901 | 22,455 | ||||||||||||
Acquisition related expenses |
665 | 220 | 3,053 | 464 | ||||||||||||
Total expenses |
69,920 | 59,616 | 256,747 | 237,363 | ||||||||||||
Income from operations |
35,116 | 28,555 | 129,690 | 123,803 | ||||||||||||
Equity in net loss of unconsolidated
partnerships |
(958 | ) | (506 | ) | (1,645 | ) | (2,390 | ) | ||||||||
Interest income |
46 | 82 | 172 | 308 | ||||||||||||
Interest expense |
(21,526 | ) | (20,429 | ) | (86,245 | ) | (64,998 | ) | ||||||||
Gain/(loss) on derivative instruments |
181 | (86 | ) | (453 | ) | 203 | ||||||||||
Gain/(loss) on extinguishment of debt |
81 | (2,888 | ) | (2,205 | ) | 3,264 | ||||||||||
Net income |
12,940 | 4,728 | 39,314 | 60,190 | ||||||||||||
Net income attributable to noncontrolling
interests |
(178 | ) | (10 | ) | (498 | ) | (1,468 | ) | ||||||||
Net income attributable to Company |
12,762 | 4,718 | 38,816 | 58,722 | ||||||||||||
Preferred stock dividends |
(4,241 | ) | (4,241 | ) | (16,963 | ) | (16,963 | ) | ||||||||
Net income available to common stockholders |
$ | 8,521 | $ | 477 | $ | 21,853 | $ | 41,759 | ||||||||
Net income per share available to common
stockholders: |
||||||||||||||||
Basic and diluted earnings per share |
$ | 0.06 | $ | 0.00 | $ | 0.19 | $ | 0.45 | ||||||||
Weighted-average common shares outstanding: |
||||||||||||||||
Basic |
129,599,798 | 97,706,262 | 112,698,704 | 91,011,123 | ||||||||||||
Diluted |
132,601,048 | 101,666,673 | 115,718,199 | 91,851,002 | ||||||||||||
10
BIOMED REALTY TRUST, INC.
CONSOLIDATED FUNDS FROM OPERATIONS
(In thousands, except share data)
(Unaudited)
(In thousands, except share data)
(Unaudited)
Our FFO available to common shares and partnership and LTIP units and a reconciliation to net
income for the three and twelve months ended December 31, 2010 and 2009 was as follows:
Three Months Ended | Twelve Months Ended | |||||||||||||||
December 31, | December 31, | |||||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||
Net income available to common stockholders |
$ | 8,521 | $ | 477 | $ | 21,853 | $ | 41,759 | ||||||||
Adjustments: |
||||||||||||||||
Noncontrolling interests in operating
partnership |
188 | 30 | 546 | 1,532 | ||||||||||||
Interest expense on exchangeable
senior notes due 2030 |
1,688 | | 6,563 | | ||||||||||||
Depreciation and amortization
unconsolidated partnerships |
1,014 | 662 | 3,206 | 2,647 | ||||||||||||
Depreciation and amortization
consolidated entities |
32,196 | 26,853 | 115,355 | 109,620 | ||||||||||||
Depreciation and amortization
allocable to noncontrolling interest of
consolidated joint ventures |
(26 | ) | (23 | ) | (93 | ) | (81 | ) | ||||||||
Funds from operations available to common
shares and Units diluted |
$ | 43,581 | $ | 27,999 | $ | 147,430 | $ | 155,477 | ||||||||
Funds from operations per share diluted |
$ | 0.30 | $ | 0.28 | $ | 1.16 | $ | 1.64 | ||||||||
Weighted-average common shares and Units
outstanding diluted (1) |
143,819,711 | 101,666,673 | 126,895,309 | 95,082,074 | ||||||||||||
Our AFFO available to common shares and partnership and LTIP units and a reconciliation
of FFO to AFFO for the three and twelve months ended December 31, 2010 and 2009 was as follows:
Three Months Ended | Twelve Months Ended | |||||||||||||||
December 31, | December 31, | |||||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||
Funds from operations available to
common shares and Units diluted |
$ | 43,581 | $ | 27,999 | $ | 147,430 | $ | 155,477 | ||||||||
Adjustments: |
||||||||||||||||
Recurring capital expenditures
and tenant improvements |
(2,867 | ) | (978 | ) | (10,726 | ) | (2,792 | ) | ||||||||
Leasing commissions |
(1,799 | ) | (3,471 | ) | (5,224 | ) | (7,664 | ) | ||||||||
Non-cash revenue adjustments |
(3,617 | ) | (6,916 | ) | (24,518 | ) | (28,124 | ) | ||||||||
Non-cash debt adjustments |
2,204 | 5,509 | 12,837 | 4,304 | ||||||||||||
Non-cash equity compensation |
1,673 | 1,462 | 6,989 | 5,625 | ||||||||||||
Depreciation included in
general and administrative
expenses |
376 | 396 | 1,445 | 1,508 | ||||||||||||
Share of non-cash
unconsolidated partnership
adjustments |
146 | 244 | 1,245 | 1,443 | ||||||||||||
Adjusted funds from operations
available to common shares and
Units |
$ | 39,697 | $ | 24,245 | $ | 129,478 | $ | 129,777 | ||||||||
Adjusted funds from operations
per share diluted |
$ | 0.28 | $ | 0.24 | $ | 1.02 | $ | 1.36 | ||||||||
Weighted-average common shares
and Units outstanding diluted
(1) |
143,819,711 | 101,666,673 | 126,895,309 | 95,082,074 | ||||||||||||
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(1) | The three and twelve months ended December 31, 2010 each include 9,914,076 shares of common stock potentially issuable pursuant to the exchange feature of the exchangeable senior notes due 2030 based on the if converted method, and 1,304,587 and 1,263,034 shares of unvested restricted stock, respectively, which are considered anti-dilutive for purposes of calculating diluted earnings per share. |
We present funds from operations, or FFO, available to common shares and partnership and LTIP
units because we consider it an important supplemental measure of our operating performance and
believe it 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 perspective not immediately apparent from net income. We
compute FFO in accordance with standards established by the Board of Governors of the National
Association of Real Estate Investment Trusts, or NAREIT, in its March 1995 White Paper (as amended
in November 1999 and April 2002). As defined by NAREIT, FFO represents net income (computed in
accordance with GAAP), excluding gains (or losses) from sales of property, plus real estate related
depreciation and amortization (excluding amortization of loan origination costs) and after
adjustments for unconsolidated partnerships and joint ventures. Our computation 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 managements
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 our financial performance or to cash
flow from operating activities (computed in accordance with GAAP) as an indicator of our liquidity,
nor is it indicative of funds available to fund our cash needs, including our ability to pay
dividends or make distributions.
We present adjusted funds from operations, or AFFO, as a supplemental operating measure
because, when compared year over year, it assesses our ability to fund dividend and distribution
requirements from our operating activities. We also believe that, as a widely recognized measure of
the operations of REITs, AFFO will be used by investors as a basis to assess our ability to fund
dividend payments in comparison to other REITs. We calculate AFFO by adding to FFO: (a) amounts
received pursuant to master lease agreements on certain properties, which are not included in
rental income for GAAP purposes, (b) non-cash revenues and expenses, (c) recurring capital
expenditures and tenant improvements, and (d) leasing commissions. Other equity REITs may not
calculate AFFO in a consistent manner. Accordingly, our AFFO may not be comparable to other equity
REITs AFFO. AFFO should be considered only as a supplement to net income computed in accordance
with GAAP as a measure of our operations.
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