PR Newswire
JACKSON, Miss., Feb. 7, 2011
JACKSON, Miss.,Feb. 7, 2011 /PRNewswire/ --
Highlights
Parkway Properties, Inc. (NYSE: PKY) today announced results for its fourth quarter ended December 31, 2010.
(Logo: http://www.newscom.com/cgi-bin/prnh/20030513/PARKLOGO )
Steven G. Rogers, President and Chief Executive Officer stated, "I am pleased that we met many important goals in 2010 with recurring funds from operations of $2.54 per diluted share and an annual average same-store occupancy of 85.8%. Additionally, the Company has made progress on investing in office properties on behalf of Fund II. Since the end of the quarter, the Company closed on its new $200 million revolving credit facilities and Fund II purchased 3344 Peachtree, one of the premier assets in Atlanta."
Consolidated Financial Results
Included in FFO per diluted share are the following amounts (in thousands, except average rent per square foot and average occupancy):
YTD | YTD | ||||||||
Description | Q4 2010 | Q4 2009 | 2010 | 2009 | |||||
Unusual Items: | |||||||||
Gain on involuntary conversion | $ | - | $ | 81 | $ | 40 | $ | 823 | |
Non-cash impairment losses | $ | (4,120) | $ | (8,817) | $ | (4,120) | $ | (8,817) | |
Loss on extinguishment of debt | $ | - | $ | - | $ | (189) | $ | - | |
Acquisition costs | $ | (266) | $ | - | $ | (266) | $ | - | |
Reserve and expenses related to litigation | $ | (532) | $ | - | $ | (1,251) | $ | - | |
Other Items of Note: | |||||||||
Non-recurring lease termination fees (1)(6) | $ | 1,628 | $ | 738 | $ | 8,706 | $ | 1,167 | |
Straight-line rent (1) | $ | 231 | $ | 1,315 | $ | 3,530 | $ | 5,056 | |
Amortization of (above) below market rent (1) | $ | 333 | $ | (302) | $ | 259 | $ | (498) | |
Bad debt expense (1) | $ | (207) | $ | (779) | $ | (1,214) | $ | (2,431) | |
Portfolio Information: | |||||||||
Average rent per square foot (2)(3) | $ | 23.07 | $ | 23.07 | $ | 23.05 | $ | 23.01 | |
Average occupancy (2)(4) | 85.7% | 88.1% | 85.9% | 89.0% | |||||
Same-store average rent per square foot (2)(3) | $ | 23.07 | $ | 23.09 | $ | 23.05 | $ | 23.05 | |
Same-store average occupancy (2)(4) | 85.7% | 88.0% | 85.8% | 89.0% | |||||
Total office square feet under ownership (2) | 13,196 | 13,359 | 13,196 | 13,359 | |||||
Total office square feet under management (5) | 13,902 | 14,176 | 13,902 | 14,176 | |||||
(1) These items include 100% of amounts from wholly-owned assets plus the Company's allocable share of amounts recognized from the assets held in consolidated joint ventures and unconsolidated joint ventures for properties included in continuing operations.
(2) These items include total office square feet of wholly-owned assets, consolidated joint ventures and unconsolidated joint ventures.
(3) Average rent per square foot is defined as the weighted average annual gross rental rate, including escalations for operating expenses, divided by occupied square feet.
(4) Average occupancy is defined as average occupied square feet divided by average total rentable square feet.
(5) Total office square feet under management includes wholly-owned assets, consolidated joint ventures, unconsolidated joint ventures and third-party management agreements at the end of the period.
(6) Parkway's share of lease termination fees recognized during the year ended December 31, 2010 were $9.7 million, of which $1.0 million was included in recurring revenue as it represents the rental revenue during the period after the prior lease was terminated and the space was being prepared for the new customer during the first quarter of 2010.
Asset Recycling
Operations and Leasing
Capital Structure
2011 Outlook
Parkway has historically provided an annual earnings outlook for the year to its investors, analysts and other public constituencies, consisting of FFO per diluted share and net income per diluted share (EPS) and the major assumptions used in preparing the earnings outlook. Variance within the outlook range may occur due to variations in the recurring revenue and expenses of the Company, as well as certain non-recurring items. The earnings outlook does not include the impact of possible future gains or losses on early extinguishment of debt, possible future acquisitions or dispositions and related costs, possible future impairment charges or other unusual charges that may occur during the year. These assumptions reflect the Company's expectations based on its knowledge of current market conditions and historical experience. It has been and will continue to be the Company's policy to not issue quarterly earnings guidance or revise the annual earnings outlook unless such estimates are outside of the original annual outlook range. This policy is intended to lessen the emphasis on short-term movements that do not have a material impact on earnings or long-term value of the Company.
For 2011, the Company estimates reported FFO per diluted share of $2.35 to $2.50 and earnings (loss) per diluted share ("EPS") of ($0.85) to ($0.70). The reconciliation of projected EPS to projected FFO per diluted share is as follows:
Outlook for 2011 | Range | ||
Fully diluted EPS | ($0.85-$0.70) | ||
Parkway's share of depreciation and amortization | $3.20-$3.20 | ||
Reported FFO per diluted share | $2.35-$2.50 | ||
The 2011 outlook is based on the core operating, financing and capital assumptions described below. These assumptions reflect the Company's expectations based on its knowledge of current market conditions and historical experience.
2011 Core Operating Assumptions
2011 Financial and Capital Assumptions
About Parkway Properties
Parkway Properties, Inc., a member of the S&P Small Cap 600 Index, is a self-administered real estate investment trust specializing in the operation, leasing, acquisition, and ownership of office properties. The Company is geographically focused on the Southeastern and Southwestern United States and Chicago. Parkway owns or has an interest in 65 office properties located in 11 states with an aggregate of approximately 13.7 million square feet of leasable space at February 7, 2011. Included in the portfolio are 21 properties totaling 4.2 million square feet that are owned jointly with other investors, representing 30.5% of the portfolio. Fee-based real estate services are offered through the Company's wholly-owned subsidiary, Parkway Realty Services, which also manages and/or leases approximately 1.6 million square feet for third-party owners at February 7, 2011.
Additional Information
The Company will conduct a conference call to discuss the results of its fourth quarter operations on Tuesday, February 8, 2011, at 11:00 a.m. Eastern Time. To participate in the conference call, please dial 800-857-4978 and use the verbal pass code "PARKWAY". A live audio webcast will also be available by selecting the "4Q Call" icon on the Company's website at www.pky.com. An audio replay of the call can be accessed 24 hours a day through February 21, 2011, by dialing 800-925-4265 and using the pass code of 7275929. An audio replay will be archived and indexed in the investor relations section of the Company's website at www.pky.com. A copy of the Company's 2010 fourth quarter supplemental financial and property information package is available by accessing the Company's website, emailing your request to rjordan@pky.com or calling Rita Jordan at 6019484091. Please participate in the visual portion of the conference call by accessing the Company's website and clicking on the "4Q Call" icon.
Additional information on Parkway Properties, Inc., including an archive of corporate press releases and conference calls, is available on the Company's website. The Company's fourth quarter 2010 Supplemental Operating and Financial Data, which includes a reconciliation of Non-GAAP financial measures, is available on the Company's website.
Forward Looking Statement
Certain statements in this release that are not in the present or past tense or discuss the Company's expectations (including the use of the words anticipate, believe, forecast, intends or project) are forward-looking statements within the meaning of the federal securities laws and as such are based upon the Company's current belief as to the outcome and timing of future events. There can be no assurance that future developments affecting the Company will be those anticipated by the Company. These forward-looking statements involve risks and uncertainties (some of which are beyond the control of the Company) and are subject to change based upon various factors, including but not limited to the following risks and uncertainties: changes in the real estate industry and in performance of the financial markets; the demand for and market acceptance of the Company's properties for rental purposes; the amount and growth of the Company's expenses; tenant financial difficulties and general economic conditions, including interest rates, as well as economic conditions in those areas where the Company owns properties; risks associated with joint venture partners; the risks associated with the ownership and development of real property; the failure to acquire or sell properties as and when anticipated; the outcome of claims and litigation involving and affecting the Company and other risks and uncertainties detailed from time to time on the Company's SEC filings. Should one or more of these risks or uncertainties occur, or should underlying assumptions prove incorrect, the Company's results could differ materially from those expressed in the forward-looking statements. The Company does not undertake to update forward-looking statements.
Company's Use of Non-GAAP Financial Measures
FFO, FAD, NOI, and EBITDA, including related per share amounts, are used by management, investors and industry analysts as supplemental measures of operating performance of equity REITs and should be evaluated along with GAAP net income and income per diluted share (the most directly comparable GAAP measures), as well as cash flow from operating activities, investing activities and financing activities, in evaluating the operating performance of equity REITs. Management believes that FFO, FAD, NOI, and EBITDA are helpful to investors as supplemental performance measures because these measures exclude the effect of depreciation, amortization and gains or losses from sales of real estate, all of which are based on historical costs which implicitly assumes that the value of real estate diminishes predictably over time. Since real estate values instead have historically risen or fallen with market conditions, these non-GAAP measures can facilitate comparisons of operating performance between periods and among other equity REITs. FFO, FAD, NOI and EBITDA do not represent cash generated from operating activities in accordance with GAAP and are not necessarily indicative of cash available to fund cash needs as disclosed in the Company's Consolidated Statements of Cash Flows. FFO, FAD, NOI and EBITDA should not be considered as an alternative to net income as an indicator of the Company's operating performance or as an alternative to cash flows as a measure of liquidity.
In addition to FFO, Parkway also discloses Recurring FFO, which considers adjustments for non-recurring lease termination fees, gains and losses on extinguishment of debt, non-cash gains and losses, acquisition costs, or other unusual items. Although this is a non-GAAP measure that differs from NAREIT's definition of FFO, we believe it is an appropriate measure for the Company and that it provides a meaningful presentation of operating performance.
NOI includes income from real estate operations less property operating expenses (before interest expense and depreciation and amortization). In addition to NOI, Parkway discloses Recurring NOI, which considers adjustments for non-recurring lease termination fees or other unusual items. The Company’s disclosure of same-store NOI and recurring same-store NOI includes those properties that were owned during the entire current and prior reporting periods and excludes properties classified as discontinued operations.
FOR FURTHER INFORMATION: | |
Steven G. Rogers | |
President & Chief Executive Officer | |
Richard G. Hickson IV | |
Chief Financial Officer | |
(601) 948-4091 | |
PARKWAY PROPERTIES, INC. | ||||
CONSOLIDATED BALANCE SHEETS | ||||
(In thousands, except share data) | ||||
December 31 | December 31 | |||
2010 | 2009 | |||
(Unaudited) | ||||
Assets | ||||
Real estate related investments: | ||||
Office and parking properties | $ 1,755,310 | $ 1,738,040 | ||
Land held for development | 609 | 609 | ||
Accumulated depreciation | (366,152) | (336,759) | ||
1,389,767 | 1,401,890 | |||
Land available for sale | 750 | 750 | ||
Mortgage loans | 10,336 | 8,126 | ||
Investment in unconsolidated joint ventures | 2,892 | 2,512 | ||
1,403,745 | 1,413,278 | |||
Rents receivable and other assets | 129,638 | 116,437 | ||
Intangible assets, net | 50,629 | 61,734 | ||
Cash and cash equivalents | 19,670 | 20,697 | ||
$ 1,603,682 | $ 1,612,146 | |||
Liabilities | ||||
Notes payable to banks | $ 110,839 | $ 100,000 | ||
Mortgage notes payable | 773,535 | 852,700 | ||
Accounts payable and other liabilities | 98,818 | 88,614 | ||
983,192 | 1,041,314 | |||
Equity | ||||
Parkway Properties, Inc. stockholders' equity: | ||||
8.00% Series D Preferred stock, $.001 par value, | ||||
4,374,896 and 2,400,000 shares authorized, issued and | ||||
outstanding in 2010 and 2009, respectively | 102,787 | 57,976 | ||
Common stock, $.001 par value, 65,625,104 and 67,600,000 | ||||
shares authorized in 2010 and 2009, respectively, 21,923,610 | ||||
and 21,624,228 shares issued and outstanding in 2010 and | ||||
2009, respectively | 22 | 22 | ||
Common stock held in trust, at cost, 58,134 and 71,255 | ||||
shares in 2010 and 2009, respectively | (1,896) | (2,399) | ||
Additional paid-in capital | 516,167 | 515,398 | ||
Accumulated other comprehensive loss | (3,003) | (4,892) | ||
Accumulated deficit | (127,575) | (111,960) | ||
Total Parkway Properties, Inc. stockholders' equity | 486,502 | 454,145 | ||
Noncontrolling interest - real estate partnerships | 133,988 | 116,687 | ||
Total equity | 620,490 | 570,832 | ||
$ 1,603,682 | $ 1,612,146 | |||
PARKWAY PROPERTIES, INC. | ||||
CONSOLIDATED STATEMENTS OF OPERATIONS | ||||
(In thousands, except per share data) | ||||
Three Months Ended | ||||
December 31 | ||||
2010 | 2009 | |||
(Unaudited) | ||||
Revenues | ||||
Income from office and parking properties | $ 61,997 | $ 64,741 | ||
Management company income | 321 | 384 | ||
Total revenues | 62,318 | 65,125 | ||
Expenses | ||||
Property operating expense | 27,957 | 30,576 | ||
Depreciation and amortization | 26,933 | 23,880 | ||
Impairment loss on real estate | 4,120 | - | ||
Management company expenses | 1,718 | 589 | ||
General and administrative | 1,845 | 1,374 | ||
Total expenses | 62,573 | 56,419 | ||
Operating income (loss) | (255) | 8,706 | ||
Other income and expenses | ||||
Interest and other income | 382 | 326 | ||
Equity in earnings (loss) of unconsolidated joint ventures | 73 | (30) | ||
Other-than-temporary impairment loss on investment in unconsolidated joint ventures | - | (8,817) | ||
Gain on involuntary conversion | - | 81 | ||
Interest expense | (13,596) | (13,594) | ||
Loss from continuing operations | (13,396) | (13,328) | ||
Discontinued operations: | ||||
Income from discontinued operations | - | 95 | ||
Net loss | (13,396) | (13,233) | ||
Net loss attributable to noncontrolling interest - real estate partnerships | 3,208 | 3,054 | ||
Net loss for Parkway Properties, Inc. | (10,188) | (10,179) | ||
Dividends on preferred stock | (2,188) | (1,200) | ||
Net loss attributable to common stockholders | $ (12,376) | $ (11,379) | ||
Net loss per common share attributable to Parkway Properties, Inc.: | ||||
Basic: | ||||
Loss from continuing operations attributable to Parkway Properties, Inc. | $ (0.58) | $ (0.53) | ||
Discontinued operations | - | - | ||
Basic net loss attributable to Parkway Properties, Inc. | $ (0.58) | $ (0.53) | ||
Diluted: | ||||
Loss from continuing operations attributable to Parkway Properties, Inc. | $ (0.58) | $ (0.53) | ||
Discontinued operations | - | - | ||
Diluted net loss attributable to Parkway Properties, Inc. | $ (0.58) | $ (0.53) | ||
Weighted average shares outstanding: | ||||
Basic | 21,443 | 21,315 | ||
Diluted | 21,443 | 21,315 | ||
PARKWAY PROPERTIES, INC. | ||||
CONSOLIDATED STATEMENTS OF OPERATIONS | ||||
(In thousands, except per share data) | ||||
Year Ended | ||||
December 31 | ||||
2010 | 2009 | |||
(Unaudited) | ||||
Revenues | ||||
Income from office and parking properties | $ 254,611 | $ 262,951 | ||
Management company income | 1,652 | 1,870 | ||
Total revenues | 256,263 | 264,821 | ||
Expenses | ||||
Property operating expense | 117,935 | 126,343 | ||
Depreciation and amortization | 92,190 | 92,126 | ||
Impairment loss on real estate | 4,120 | - | ||
Management company expenses | 3,961 | 2,299 | ||
General and administrative | 7,382 | 6,108 | ||
Total expenses | 225,588 | 226,876 | ||
Operating income | 30,675 | 37,945 | ||
Other income and expenses | ||||
Interest and other income | 1,487 | 1,609 | ||
Equity in earnings of unconsolidated joint ventures | 326 | 445 | ||
Other-than-temporary impairment loss on investment in unconsolidated joint ventures | - | (8,817) | ||
Gain on involuntary conversion | 40 | 823 | ||
Gain on sale of real estate | - | 470 | ||
Interest expense | (54,647) | (55,044) | ||
Loss from continuing operations | (22,119) | (22,569) | ||
Discontinued operations: | ||||
Income from discontinued operations | 194 | 404 | ||
Gain on sale of real estate from discontinued operations | 8,518 | - | ||
Total discontinued operations | 8,712 | 404 | ||
Net loss | (13,407) | (22,165) | ||
Net loss attributable to noncontrolling interest - real estate partnerships | 10,789 | 10,562 | ||
Net loss for Parkway Properties, Inc. | (2,618) | (11,603) | ||
Dividends on preferred stock | (6,325) | (4,800) | ||
Net loss attributable to common stockholders | $ (8,943) | $ (16,403) | ||
Net loss per common share attributable to Parkway Properties, Inc.: | ||||
Basic: | ||||
Loss from continuing operations attributable to Parkway Properties, Inc. | $ (0.82) | $ (0.87) | ||
Discontinued operations | 0.40 | 0.02 | ||
Basic net loss attributable to Parkway Properties, Inc. | $ (0.42) | $ (0.85) | ||
Diluted: | ||||
Loss from continuing operations attributable to Parkway Properties, Inc. | $ (0.82) | $ (0.87) | ||
Discontinued operations | 0.40 | 0.02 | ||
Diluted net loss attributable to Parkway Properties, Inc. | $ (0.42) | $ (0.85) | ||
Weighted average shares outstanding: | ||||
Basic | 21,421 | 19,304 | ||
Diluted | 21,421 | 19,304 | ||
PARKWAY PROPERTIES, INC. | ||||||||
RECONCILIATION OF FUNDS FROM OPERATIONS AND | ||||||||
FUNDS AVAILABLE FOR DISTRIBUTION TO NET INCOME | ||||||||
FOR THE THREE MONTHS AND YEAR ENDED DECEMBER 31, 2010 AND 2009 | ||||||||
(In thousands, except per share data) | ||||||||
Three Months Ended | Year Ended | |||||||
December 31 | December 31 | |||||||
2010 | 2009 | 2010 | 2009 | |||||
(Unaudited) | (Unaudited) | |||||||
Net Loss for Parkway Properties, Inc. | $ (10,188) | $ (10,179) | $ (2,618) | $ (11,603) | ||||
Adjustments to Net Loss for Parkway Properties, Inc.: | ||||||||
Preferred Dividends | (2,188) | (1,200) | (6,325) | (4,800) | ||||
Depreciation and Amortization | 26,933 | 23,880 | 92,190 | 92,126 | ||||
Depreciation and Amortization - Discontinued Operations | - | 145 | 121 | 600 | ||||
Noncontrolling Interest Depreciation and Amortization | (4,831) | (5,199) | (17,668) | (20,138) | ||||
Unconsolidated Joint Ventures Depreciation and Amortization | 89 | 218 | 342 | 848 | ||||
Gain on Sale of Real Estate | - | - | (8,518) | (470) | ||||
Funds From Operations ("FFO") Available to Common Stockholders (1) | $ 9,815 | $ 7,665 | $ 57,524 | $ 56,563 | ||||
Adjustments to Derive Recurring FFO: | ||||||||
Net Non-Cash Losses | 4,120 | 8,736 | 4,080 | 7,994 | ||||
Non-Recurring Lease Termination Fee Income (2) | (1,628) | (738) | (8,706) | (1,167) | ||||
Loss on Early Extinguishment of Debt | - | - | 189 | - | ||||
Acquisition Costs | 266 | - | 266 | - | ||||
Reserve and Expenses Related to Litigation | 532 | - | 1,251 | - | ||||
Recurring FFO | $ 13,105 | $ 15,663 | $ 54,604 | $ 63,390 | ||||
Funds Available for Distribution | ||||||||
FFO Available to Common Stockholders (1) | $ 9,815 | $ 7,665 | $ 57,524 | $ 56,563 | ||||
Add (Deduct) : | ||||||||
Adjustments for Unconsolidated Joint Ventures | (114) | (64) | (350) | (652) | ||||
Adjustments for Noncontrolling Interest in Real Estate Partnerships | 3,654 | 1,130 | 8,865 | 4,692 | ||||
Straight-line Rents | (296) | (1,381) | (4,165) | (6,639) | ||||
Straight-line Rents - Discontinued Operations | - | (19) | (22) | (95) | ||||
Amortization of Above/Below Market Leases | (419) | 149 | (566) | 51 | ||||
Amortization of Share-Based Compensation | 442 | 641 | 1,319 | 2,581 | ||||
Net Non-Cash Losses | 4,120 | 8,736 | 4,080 | 7,994 | ||||
Recurring Capital Expenditures: | ||||||||
Building Improvements | (2,191) | (2,533) | (5,449) | (6,079) | ||||
Tenant Improvements - New Leases | (5,760) | (4,292) | (17,659) | (11,369) | ||||
Tenant Improvements - Renewal Leases | (4,458) | (2,020) | (9,959) | (5,781) | ||||
Leasing Costs - New Leases | (1,640) | (3,778) | (4,434) | (6,057) | ||||
Leasing Costs - Renewal Leases | (4,189) | (4,988) | (8,364) | (9,065) | ||||
Funds Available for Distribution (1) | $ (1,036) | $ (754) | $ 20,820 | $ 26,144 | ||||
Diluted Per Common Share/Unit Information (**) | ||||||||
FFO per share | $ 0.46 | $ 0.36 | $ 2.67 | $ 2.91 | ||||
Recurring FFO per share | $ 0.61 | $ 0.73 | $ 2.54 | $ 3.27 | ||||
FAD per share | $ (0.05) | $ (0.04) | $ 0.97 | $ 1.35 | ||||
Dividends paid | $ 0.075 | $ 0.325 | $ 0.30 | $ 1.30 | ||||
Dividend payout ratio for FFO | 16.47% | 91.23% | 11.23% | 44.61% | ||||
Dividend payout ratio for Recurring FFO | 12.33% | 44.64% | 11.83% | 39.80% | ||||
Dividend payout ratio for FAD | N/M | N/M | 31.02% | 96.52% | ||||
Weighted average shares/units outstanding | 21,552 | 21,512 | 21,526 | 19,409 | ||||
Other Supplemental Information | ||||||||
Recurring Consolidated Capital Expenditures Above | $ 18,238 | $ 17,611 | $ 45,865 | $ 38,351 | ||||
Consolidated Upgrades on Acquisitions | 202 | 597 | 2,166 | 6,220 | ||||
Consolidated Major Renovations | 370 | 197 | 1,729 | 197 | ||||
Total Consolidated Real Estate Improvements and Leasing Costs Per Cash Flow | $ 18,810 | $ 18,405 | $ 49,760 | $ 44,768 | ||||
Parkway's Share of Recurring Capital Expenditures | $ 14,834 | $ 16,856 | $ 38,291 | $ 37,046 | ||||
Parkway's Share of Upgrades on Acquisitions | 77 | (29) | 1,147 | 3,279 | ||||
Parkway's Share of Major Renovations | 370 | 197 | 1,729 | 197 | ||||
Parkway's Share of Total Real Estate Improvements and Leasing Costs | $ 15,281 | $ 17,024 | $ 41,167 | $ 40,522 | ||||
Impairment Losses | $ (4,120) | $ (8,817) | $ (4,120) | $ (8,817) | ||||
Gain on Involuntary Conversion | - | 81 | 40 | 823 | ||||
Net Loss Included in FFO | $ (4,120) | $ (8,736) | $ (4,080) | $ (7,994) | ||||
**Information for Diluted Computations: | ||||||||
Basic Common Shares/Units Outstanding | 21,445 | 21,316 | 21,422 | 19,306 | ||||
Dilutive Effect of Other Share Equivalents | 107 | 196 | 104 | 103 | ||||
(1) Parkway computes FFO in accordance with standards established by the National Association of Real Estate Investment Trusts ("NAREIT"), which may not be comparable to FFO reported by other REITs that do not define the term in accordance with the current NAREIT definition. FFO is defined as net income, computed in accordance with generally accepted accounting principles ("GAAP"), excluding gains or losses from the sales of properties, plus real estate related depreciation and amortization and after adjustments for unconsolidated partnerships and joint ventures. | |
There is not a standard definition established for FAD. Therefore, our measure of FAD may not be comparable to FAD reported by other REITs. We define FAD as FFO, excluding the amortization of restricted shares, amortization of above/below market leases, straight line rent adjustments and non-cash gains/losses, and reduced by recurring non-revenue enhancing capital expenditures for building improvements, tenant improvements and leasing costs. Adjustments for unconsolidated partnerships and joint ventures are included in the computation of FAD on the same basis. | |
(2) Parkway's share of total lease termination fees recognized during the year ended December 31, 2010 were $9.7 million, of which $1.0 million were included in recurring revenue as it represents the rental revenue during the period after the prior lease was terminated and the space was being prepared for the new customer. | |
PARKWAY PROPERTIES, INC. | ||||||||
CALCULATION OF EBITDA AND COVERAGE RATIOS | ||||||||
FOR THE THREE MONTHS AND YEAR ENDED DECEMBER 31, 2010 AND 2009 | ||||||||
(In thousands) | ||||||||
Three Months Ended | Year Ended | |||||||
December 31 | December 31 | |||||||
2010 | 2009 | 2010 | 2009 | |||||
(Unaudited) | (Unaudited) | |||||||
Net Loss for Parkway Properties, Inc. | $ (10,188) | $ (10,179) | $ (2,618) | $ (11,603) | ||||
Adjustments to Net Loss for Parkway Properties, Inc.: | ||||||||
Interest Expense | 13,200 | 13,210 | 53,062 | 53,374 | ||||
Amortization of Financing Costs | 396 | 547 | 1,713 | 2,319 | ||||
Loss on Early Extinguishment of Debt | - | - | 189 | - | ||||
Depreciation and Amortization | 26,933 | 24,025 | 92,311 | 92,726 | ||||
Amortization of Share-Based Compensation | 442 | 641 | 1,319 | 2,581 | ||||
Net (Gain) Loss on Real Estate Investments and Involuntary Conversion | 4,120 | 8,736 | (4,438) | 7,524 | ||||
Tax Expense | (174) | - | 2 | 2 | ||||
EBITDA Adjustments - Unconsolidated Joint Ventures | 125 | 344 | 488 | 1,358 | ||||
EBITDA Adjustments - Noncontrolling Interest in Real Estate Partnerships | (7,903) | (8,342) | (29,939) | (32,698) | ||||
EBITDA (1) | $ 26,951 | $ 28,982 | $ 112,089 | $ 115,583 | ||||
Interest Coverage Ratio: | ||||||||
EBITDA | $ 26,951 | $ 28,982 | $ 112,089 | $ 115,583 | ||||
Interest Expense: | ||||||||
Interest Expense | $ 13,200 | $ 13,210 | $ 53,062 | $ 53,374 | ||||
Interest Expense - Unconsolidated Joint Ventures | 35 | 125 | 145 | 501 | ||||
Interest Expense - Noncontrolling Interest in Real Estate Partnerships | (3,005) | (3,074) | (12,000) | (12,283) | ||||
Total Interest Expense | $ 10,230 | $ 10,261 | $ 41,207 | $ 41,592 | ||||
Interest Coverage Ratio | 2.63 | 2.82 | 2.72 | 2.78 | ||||
Fixed Charge Coverage Ratio: | ||||||||
EBITDA | $ 26,951 | $ 28,982 | $ 112,089 | $ 115,583 | ||||
Fixed Charges: | ||||||||
Interest Expense | $ 10,230 | $ 10,261 | $ 41,207 | $ 41,592 | ||||
Preferred Dividends | 2,188 | 1,200 | 6,325 | 4,800 | ||||
Principal Payments (Excluding Early Extinguishment of Debt) | 3,428 | 3,532 | 14,222 | 13,615 | ||||
Principal Payments - Unconsolidated Joint Ventures | 9 | 34 | 33 | 142 | ||||
Principal Payments - Noncontrolling Interest in Real Estate Partnerships | (294) | (286) | (1,056) | (981) | ||||
Total Fixed Charges | $ 15,561 | $ 14,741 | $ 60,731 | $ 59,168 | ||||
Fixed Charge Coverage Ratio | 1.73 | 1.97 | 1.85 | 1.95 | ||||
Modified Fixed Charge Coverage Ratio: | ||||||||
EBITDA | $ 26,951 | $ 28,982 | $ 112,089 | $ 115,583 | ||||
Modified Fixed Charges: | ||||||||
Interest Expense | $ 10,230 | $ 10,261 | $ 41,207 | $ 41,592 | ||||
Preferred Dividends | 2,188 | 1,200 | 6,325 | 4,800 | ||||
Total Modified Fixed Charges | $ 12,418 | $ 11,461 | $ 47,532 | $ 46,392 | ||||
Modified Fixed Charge Coverage Ratio | 2.17 | 2.53 | 2.36 | 2.49 | ||||
The following table reconciles EBITDA to cash flows provided by operating activities: | ||||||||
EBITDA | $ 26,951 | $ 28,982 | $ 112,089 | $ 115,583 | ||||
Amortization of Above (Below) Market Leases | (419) | 149 | (566) | 51 | ||||
Amortization of Mortgage Loan Discount | (188) | (160) | (710) | (607) | ||||
Operating Distributions from Unconsolidated Joint Ventures | - | - | - | 392 | ||||
Interest Expense | (13,200) | (13,210) | (53,062) | (53,374) | ||||
Loss on Early Extinguishment of Debt | - | - | (189) | - | ||||
Tax Expense | 174 | - | (2) | (2) | ||||
Change in Deferred Leasing Costs | (5,882) | (8,935) | (13,425) | (16,348) | ||||
Change in Receivables and Other Assets | 3,935 | 998 | (4,194) | 3,678 | ||||
Change in Accounts Payable and Other Liabilities | (968) | (6,412) | 9,782 | 228 | ||||
Adjustments for Noncontrolling Interests | 4,695 | 5,288 | 19,150 | 22,136 | ||||
Adjustments for Unconsolidated Joint Ventures | (198) | (314) | (814) | (1,803) | ||||
Cash Flows Provided by Operating Activities | $ 14,900 | $ 6,386 | $ 68,059 | $ 69,934 | ||||
(1) Parkway defines EBITDA, a non-GAAP financial measure, as net income before interest expense, income taxes, depreciation, amortization, losses on early extinguishment of debt and other gains and losses. EBITDA, as calculated by us, is not comparable to EBITDA reported by other REITs that do not define EBITDA exactly as we do. EBITDA does not represent cash generated from operating activities in accordance with generally accepted accounting principles, and should not be considered an alternative to operating income or net income as an indicator of performance or as an alternative to cash flows from operating activities as an indicator of liquidity. | |
PARKWAY PROPERTIES, INC. | ||||||||
NET OPERATING INCOME FROM OFFICE AND PARKING PROPERTIES | ||||||||
THREE MONTHS ENDED DECEMBER 31, 2010 AND 2009 | ||||||||
(In thousands, except number of properties data) | ||||||||
Average | ||||||||
Net Operating Income | Occupancy | |||||||
Number of | Percentage | |||||||
Properties | of Portfolio (1) | 2010 | 2009 | 2010 | 2009 | |||
Same-store properties (2): | ||||||||
Wholly-owned | 45 | 73.15% | $ 25,918 | $ 26,241 | 86.8% | 88.4% | ||
Parkway Properties Office Fund, LP | 13 | 22.25% | 7,883 | 7,907 | 83.6% | 86.7% | ||
Parkway Properties Office Fund II, LP | 3 | 0.67% | 239 | - | 75.8% | N/A | ||
Unconsolidated joint ventures | 4 | 3.93% | 1,390 | 1,732 | 81.6% | 87.9% | ||
Total same-store properties | 65 | 100.00% | 35,430 | 35,880 | 85.7% | 88.0% | ||
Assets sold | - | 0.00% | - | 17 | N/A | N/A | ||
Net operating income from | ||||||||
office and parking properties | 65 | 100.00% | $ 35,430 | $ 35,897 | ||||
(1) Percentage of portfolio based on 2010 net operating income. | ||||||||
(2) Parkway defines same-store properties as those properties that were owned for the entire current and prior reporting periods and excludes properties classified as discontinued operations. Same-store net operating income ("SSNOI") includes income from real estate operations less property operating expenses (before interest and depreciation and amortization) for same-store properties. Recurring SSNOI involves adjustments for non-recurring lease termination fees or other unusual items. SSNOI as computed by Parkway may not be comparable to SSNOI reported by other REITs that do not define the measure exactly as we do. SSNOI is a supplemental industry reporting measurement used to evaluate the performance of the Company's investments in real estate assets. | ||||||||
The following table is a reconciliation of net income (loss) to SSNOI and recurring SSNOI:
Three Months Ended | Year Ended | ||||||
December 31 | December 31 | ||||||
2010 | 2009 | 2010 | 2009 | ||||
Net income (loss) for Parkway Properties, Inc. | $ (10,188) | $ (10,179) | $ (2,618) | $ (11,603) | |||
Add (deduct): | |||||||
Interest expense | 13,596 | 13,594 | 54,647 | 55,044 | |||
Depreciation and amortization | 26,933 | 23,880 | 92,190 | 92,126 | |||
Management company expenses | 1,718 | 589 | 3,961 | 2,299 | |||
General and administrative expenses | 1,845 | 1,374 | 7,382 | 6,108 | |||
Equity in earnings of unconsolidated joint ventures | (73) | 30 | (326) | (445) | |||
Gain on involuntary conversion | - | (81) | (40) | (823) | |||
Gain on sale of real estate | - | - | - | (470) | |||
Impairment loss on real estate investments | 4,120 | 8,817 | 4,120 | 8,817 | |||
Net loss attributable to noncontrolling interests - real estate partnerships | (3,208) | (3,054) | (10,789) | (10,562) | |||
Income from discontinued operations | - | (95) | (194) | (404) | |||
Gain on sale of real estate from discontinued operations | - | - | (8,518) | - | |||
Management company income | (321) | (384) | (1,652) | (1,870) | |||
Interest and other income | (382) | (326) | (1,487) | (1,609) | |||
Net operating income from consolidated office and parking properties | 34,040 | 34,165 | 136,676 | 136,608 | |||
Net operating income from unconsolidated joint ventures | 1,390 | 1,732 | 7,156 | 8,955 | |||
Less: Net operating income from non same-store properties | - | (17) | (48) | (501) | |||
Same-store net operating income (SSNOI) | 35,430 | 35,880 | 143,784 | 145,062 | |||
Less: non-recurring lease termination fees | (2,240) | (749) | (9,775) | (1,363) | |||
Recurring same-store net operating income (Recurring SSNOI) | $ 33,190 | $ 35,131 | $ 134,009 | $ 143699 | |||
Parkway's share of SSNOI | $ 28,218 | $ 28,725 | $ 115,199 | $ 114,021 | |||
Parkway's share of recurring SSNOI | $ 26,599 | $ 29,988 | $ 106,502 | $ 112,862 | |||
SOURCE Parkway Properties, Inc.