BETHESDA, Md., April 24, 2014 /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 months ended
March 31, 2014.
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First Quarter 2014 and Subsequent Highlights
- Reported Core Funds From Operations of $13.4 million, or $0.22 per diluted share.
- Executed 257,000 square feet of leases, including 145,000
square feet of new leases.
- 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.
- Increased leased percentage on consolidated portfolio to
88.9% from 86.3% at March 31, 2013,
and increased leased percentage on strategic hold portfolio to
93.1% from 89.8% at March 31,
2013.
- In January, sold a three-property portfolio, totaling
342,000 square feet, located in Gaithersburg, Maryland, for net proceeds of
$31.6 million.
- In April, sold West Park, a 29,000 square-foot office
building and Patrick Center, a 66,000 square-foot office building,
for aggregate net proceeds of $13.8
million, bringing aggregate net proceeds from dispositions
for the year to $45.4
million.
- In April, acquired 1401 K Street, NW, a twelve-story,
117,000 square foot office building located in downtown
Washington, D.C., for $58.0 million, which was partially funded with
the assumption of an existing mortgage loan totaling $37.3 million.
Douglas J. Donatelli, Chairman
and CEO of First Potomac Realty Trust, stated, "Our first quarter
results provided the Company with a very strong start to
2014. We ended the quarter with solid leasing momentum,
including signing a lease with the GSA at Atlantic Corporate Park,
and as a result, delivered our ninth consecutive quarter of
positive net absorption. We continued to improve our
operating metrics, realized positive NOI growth, despite higher
than normal snow removal costs, and closed on the acquisition of a
high-quality, multi-story office building in downtown
Washington, D.C. We
continued to execute on the capital recycling strategy we have
outlined, and we look forward to growing the office portion of our
portfolio through selective, opportunistic acquisitions in the
coming months."
Funds From Operations ("FFO") and Core FFO decreased for the
three months ended March 31, 2014
compared with the same period in 2013 due to a reduction in net
operating income as a result of the sale of the majority of the
Company's industrial properties in June
2013, the operations of which are presented in discontinued
operations. The reduction in net operating income from the
industrial portfolio sale was partially offset by improvements in
net operating income on a same-property basis, as well as, a
reduction in interest expense as the Company reduced its
outstanding debt by approximately $284
million and decreased the weighted average interest rate on
its total outstanding debt by 35 basis points since March 31, 2013.
A reconciliation between Core FFO and FFO available to common
shareholders for the three months ended March 31, 2014 and 2013 is presented below (in
thousands, except per share amounts):
|
Three Months Ended
March 31,
|
|
2014
|
|
2013
|
|
Amount
|
|
Per diluted
share
|
|
Amount
|
|
Per diluted
share
|
Core FFO
|
$
13,364
|
|
$
0.22
|
|
$
15,846
|
|
$
0.30
|
Deferred
abatement and straight-line amortization(1)
|
(1,045)
|
|
(0.02)
|
|
1,567
|
|
0.03
|
Acquisition costs
|
(68)
|
|
-
|
|
-
|
|
-
|
Legal
costs associated with informal SEC inquiry
|
-
|
|
-
|
|
(336)
|
|
(0.01)
|
FFO available to
common shareholders
|
$
12,251
|
|
$
0.20
|
|
$
17,077
|
|
$
0.32
|
Net (loss)
income
|
$
(1,443)
|
|
|
|
$
1,963
|
|
|
Net loss attributable
to common shareholders per diluted
common share(2)
|
$
(0.08)
|
|
|
|
$
(0.02)
|
|
|
|
|
|
|
|
|
|
|
(1)
|
As the result of the
sale of Girard Business Center and Gateway Center in January 2014,
the Company accelerated the amortization of straight-line rents and
deferred abatement related to those properties. For the three
months ended March 31, 2013, the Company accelerated 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 amounts
attributable to noncontrolling interests and the impact of
dividends on the Company's preferred shares to arrive at net loss
attributable to common shareholders.
|
A reconciliation of net (loss) income 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 March 31, 2014, the Company's
consolidated portfolio consisted of 137 buildings totaling 8.7
million square feet. The Company's consolidated portfolio was
88.9% leased and 86.0% occupied at March 31,
2014 and 86.3% leased and 83.9% occupied at March 31, 2013. Year-over-year, the
Company's consolidated portfolio experienced a 260 basis-point
increase in its leased percentage and a 210 basis-point increase in
its occupied percentage. The Company's strategic hold
portfolio was 93.1% leased and 91.1% occupied at March 31, 2014 and 89.8% leased and 86.7%
occupied at March 31, 2013. The
Company's value-add portfolio was 81.8% leased and 53.4% occupied
at March 31, 2014 and 59.5% leased
and 52.3% occupied at March 31,
2013. The Company's non-core portfolio was 78.9% leased and
77.9% occupied at March 31, 2014 and
81.9% leased and 78.3% occupied at March 31,
2013.
During the first quarter of 2014, the Company executed 257,000
square feet of leases, which consisted of 145,000 square feet of
new leases and 112,000 square feet of renewal leases. As a
result, the Company delivered its ninth consecutive quarter of
positive net absorption, which totaled 28,000 square feet in the
first quarter of 2014. The Company's executed new leases
during the quarter included a 10-year lease for 82,000 square feet
at Atlantic Corporate Park in Sterling,
Virginia, which brings the property to 81.3% leased.
Atlantic Corporate Park was vacant at the time of its
acquisition in November 2010. The
112,000 square feet of renewal leases in the quarter reflected a
tenant retention rate of 53%.
Same-Property Net Operating Income ("Same-Property NOI")
increased 1.2% on an accrual basis for the three months ended
March 31, 2014 compared with the same
period in 2013. The increase in Same-Property NOI was
primarily due to increases in occupancy at Three Flint Hill,
located in Northern Virginia, and
Crossways Commerce Center and Norfolk Commerce Park, which are both
located in Southern Virginia.
The Company reported positive Same-Property NOI growth for
its Southern Virginia,
Northern Virginia and Washington, D.C. regions. Same-Property
NOI decreased for the Maryland
region for the three months ended March 31,
2014 compared with the same period in 2013 as a result of a
decrease in occupancy at Metro Park North. However, the
decrease in Same-Property NOI for the Maryland region was partially offset by an
increase in occupancy at Redland Corporate Center, which became
fully occupied during the first quarter of 2014. During the
three months ended March 31, 2014,
the Company incurred an additional $600,000 of snow and ice removal costs, net of
recoveries, in the same-property pool than in the first quarter of
2013. Excluding the impact of the additional snow and ice
removal costs, the Company's Same-Property NOI increased 3.5%.
A reconciliation of net (loss) income 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 the Company's properties, as well as additional
information regarding the Company's results of operations, and the
Company's definition of "strategic hold," "value add" and
"non-core" as they relate to its portfolio, can be found in the
Company's First Quarter 2014 Supplemental Financial Information
Report, which is posted on the Company's website,
www.first-potomac.com.
Acquisition
On April 8, 2014, the Company
acquired 1401 K Street, NW, a twelve-story, 117,000 square foot
office building in Washington,
D.C. for $58.0 million.
The property is currently 88% leased to 22 tenants. The
acquisition was funded with the assumption of a $37.3 million mortgage loan, a $20.0 million draw under the Company's unsecured
revolving credit facility and available cash.
Dispositions
Consistent with the Company's previously disclosed strategy of
focusing on high-quality, multi-story office properties, the
Company continued to dispose of certain non-core properties.
In January 2014, the Company sold a
portfolio of properties that consisted of Girard Business Center, a
seven-building, 297,000 square foot business park, and Gateway
Center, a two-building, 45,000 square foot office park, which are
both located in Gaithersburg,
Maryland, for aggregate net proceeds of $31.6 million. Proceeds from the sale were used
to pay down outstanding debt. The Company reported a gain on
the sale of the portfolio of $0.1
million in its first quarter results.
In April 2014, the Company sold
West Park, a 29,000 square foot four-story office building, and
Patrick Center, a 66,000 square foot seven-story office building,
which are both located in Frederick,
Maryland, for aggregate net proceeds of $13.8 million. As previously disclosed, the
Company recorded an impairment charge of $2.2 million on West Park in the fourth quarter
of 2013.
At March 31, 2014, the Company
classified West Park and Patrick Center as "held-for-sale" on its
consolidated balance sheet. The operating results of Girard
Business Center, Gateway Center, West Park and Patrick Center for
each of the periods presented in this press release and the gain on
the sale of Girard Business Center and Gateway Center are reflected
as discontinued operations in the Company's consolidated statements
of operations.
Mezzanine Loan Modification
In December 2010, the Company
provided a $25.0 million mezzanine
loan to the owners of 950 F Street, NW, a ten-story, 287,000 square
foot, office/retail building located in Washington, D.C., which is secured by a
portion of the owners' interest in the property. The loan was
pre-payable without penalty as of December
21, 2013. As previously disclosed, on January 10, 2014, the Company amended and
restated the loan to increase the outstanding balance to
$34.0 million and reduced the fixed
interest rate from 12.5% to 9.75%. The amended and restated
mezzanine loan matures on April 1, 2017 and is pre-payable in
full on or after December 21, 2015.
The $9.0 million increase in
the loan was provided by a draw under the Company's unsecured
revolving credit facility.
Balance Sheet
The Company had $671.1 million of
debt outstanding at March 31, 2014
compared with $954.9 million of debt
outstanding at March 31, 2013.
Of the Company's outstanding debt at March
31, 2014, $229.6 million was
fixed-rate debt, $300.0 million was
hedged variable-rate debt, and $141.5
million was unhedged variable-rate debt.
Dividends
On April 22, 2014, the Company
declared a dividend of $0.15 per
common share, equating to an annualized dividend of $0.60 per common share. The dividend will
be paid on May 15, 2014 to common
shareholders of record as of May 6,
2014. The Company also declared a dividend of
$0.484375 per share on its Series A
Preferred Shares. The dividend will be paid on May 15, 2014 to preferred shareholders of record
as of May 6, 2014.
Core FFO Guidance
The Company reaffirmed its full-year 2014 Core FFO per share
guidance of $0.92 to $1.00 per
diluted share. In reaffirming its guidance, the Company has
included all completed capital recycling activities as of the date
of this release. As previously disclosed, the Core FFO guidance
range is particularly wide as a result of potential additional
capital recycling activities during 2014 (the assumptions of which
are set forth in the footnotes to the table below). The following
is a summary of the assumptions that the Company used in arriving
at its guidance (unaudited, amounts in thousands except percentages
and per share amounts):
|
|
Expected
Ranges
|
Portfolio
NOI
|
|
|
|
|
|
|
|
|
|
Properties Owned
December 31, 2013
|
|
$
104,000
|
-
|
$
107,000
|
Properties
Sold(1)
|
|
|
(3,875)
|
|
Assumption for
Additional Dispositions(2)
|
|
|
(2,000)
|
|
Properties Acquired
(3)
|
|
|
2,400
|
|
Assumption for
Additional Acquisitions (4)
|
|
|
2,475
|
|
|
|
|
|
|
Total NOI
|
|
$
103,000
|
|
$
106,000
|
|
|
|
|
|
Interest and Other
Income
|
|
|
$ 6,500
|
|
|
|
|
|
|
FFO from
Unconsolidated Joint Ventures
|
|
$
4,750
|
-
|
$
5,250
|
|
|
|
|
|
Interest
Expense(5)
|
|
$
24,000
|
-
|
$
26,000
|
|
|
|
|
|
G&A
|
|
$
20,000
|
-
|
$
22,000
|
|
|
|
|
|
Preferred
Dividends
|
|
|
$ 12,400
|
|
|
|
|
|
|
Weighted Average
Shares and Units
|
|
60,500
|
-
|
61,000
|
|
|
|
|
|
Year-End Occupancy
(6)
|
|
88.0%
|
-
|
89.5%
|
Same Property NOI –
Accrual Basis (7)
|
|
2.5%
|
-
|
4.0%
|
|
|
(1)
|
Reflects the
disposition of Girard Business Center and Gateway Center which were
sold in January 2014, and the disposition of West Park and Patrick
Center, which were sold in April 2014.
|
(2)
|
Assumes $100 million
of additional dispositions are made throughout 2014. This is solely
an assumption for the purposes of providing guidance and is in
addition to the properties sold as of the date hereof and listed in
footnote (1) above. The Company has not identified any specific
properties in its additional disposition guidance. As such, no
properties in the assumed $100 million of additional dispositions
were held-for-sale at March 31, 2014. In addition, the Company can
provide no assurances regarding the timing or pricing of any
potential dispositions, or that such dispositions will occur at
all.
|
(3)
|
Reflects the
anticipated 2014 NOI from the acquisition of 1401 K Street, NW,
which the Company acquired on April 8, 2014.
|
(4)
|
Reflects the assumed
NOI contribution from additional acquisitions made throughout 2014,
excluding the 2014 NOI from 1401 K Street, NW. However, the Company
can provide no assurances regarding the timing or pricing of any
potential acquisitions, or that such additional acquisitions will
occur at all.
|
(5)
|
Assumes proceeds from
properties sold, as well as the assumed additional dispositions are
used to repay amounts outstanding under the Company's unsecured
revolving credit facility, and capital for additional acquisitions
are drawn from the unsecured revolving credit facility, with the
exception of the $37.3 million mortgage the Company assumed with
the acquisition of 1401 K Street, NW.
|
(6)
|
Assumes Gateway
Center, Girard Business Center, West Park and Patrick Center are
the only 2014 dispositions, and 1401 K Street, NW is the only 2014
acquisition.
|
(7)
|
Assumes Gateway
Center, Girard Business Center, West Park and Patrick Center are
the only 2014 dispositions.
|
The Company's guidance is also based on a number of other
assumptions, many of which are outside the Company's control and
all of which are subject to change. The Company may change
its guidance as actual and anticipated results vary from these
assumptions.
Guidance Range for
2014
|
|
Low Range
|
|
High Range
|
Net loss attributable
to common shareholders per diluted share
|
|
$
(0.15)
|
|
$
(0.09)
|
Real estate
depreciation(1)
|
|
1.08
|
|
1.09
|
Net loss attributable
to noncontrolling interests and items excluded from Core FFO
per diluted share(2)
|
|
(0.01)
|
|
-
|
Core FFO per diluted
share
|
|
$
0.92
|
|
$
1.00
|
|
|
|
|
|
|
|
(1)
|
Includes the
Company's pro-rata share of depreciation from its unconsolidated
joint ventures and depreciation related to the Company's disposed
properties.
|
(2)
|
Items excluded from
Core FFO consist of the gains or losses associated with disposed
properties, the costs associated with the informal SEC inquiry, if
any, and acquisition costs.
|
Investor Conference Call and Webcast
First Potomac Realty
Trust will host a conference call on April
25, 2014 at 9:00 AM ET to
discuss first quarter results. 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
April 25, 2014, until midnight ET on May
2, 2014. The replay can be accessed by dialing (877)
870-5176 or (858) 384-5517 for international callers, and entering
pin number 13577954.
A live broadcast of the conference call will also be available
online at the Company's website, www.first-potomac.com, on
April 25, 2014, beginning at
9:00 AM ET. An online replay
will follow shortly after the call and will continue for 90
days.
Annual Meeting of Shareholders
First Potomac Realty Trust will hold its 2014 Annual Meeting of
Shareholders on Tuesday, May 20,
2014, at 11:00 a.m. ET at the
Company's corporate headquarters at 7600 Wisconsin Avenue,
10th Floor in Bethesda,
Maryland for shareholders of record as of the close of
business on March 14, 2014. The
Company's proxy statement was filed on April
4, 2014 with the Securities and Exchange
Commission.
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 March 31, 2014,
the Company's consolidated portfolio totaled 8.7 million square
feet. Based on annualized cash basis rent, the Company's
portfolio consists of 54% office properties and 46% 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 real estate and impairments of real estate assets, plus
real estate-related depreciation and amortization and after
adjustments for unconsolidated partnerships and joint ventures.
The Company also excludes any depreciation and
amortization related to third parties from its consolidated joint
ventures from its FFO calculation.
The Company considers FFO a useful measure of performance for an
equity REIT because it facilitates an understanding of the
operating performance of its 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, the Company believes that FFO provides a
meaningful indication of its performance. The Company also
considers FFO an appropriate performance measure given its wide use
by investors and analysts. The Company computes FFO in
accordance with standards established by the Board of Governors of
NAREIT in its March 1995 White Paper
(as amended in November 1999,
April 2002 and January 2012), which may differ from the
methodology for calculating FFO utilized by other equity real
estate investment trusts ("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 the Company's cash needs, including its
ability to make distributions. The Company presents 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 the Company's
operating portfolio and affect the comparability of the Company's
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.
The Company's 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 the Company's financial performance or to cash
flow from operating activities (computed in accordance with GAAP)
as an indicator of its liquidity. The Company's FFO and Core
FFO calculations are reconciled to net income in the Company's
Consolidated Statements of Operations included in this release.
NOI – The Company defines 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 the Company's 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, the Company's NOI may not be comparable to
other REITs. The Company's 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 properties owned by the Company for the entirety of the periods
compared, is a primary performance measure the Company uses to
assess the results of operations at its properties. As an
indication of the Company's operating performance, Same-Property
NOI should not be considered an alternative to net income
calculated in accordance with GAAP. A reconciliation of
the Company's Same-Property NOI to net income from its 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, the Company
eliminates 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 the Company's 2014 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 the Company believes
the expectations reflected in such forward-looking statements are
based on reasonable assumptions, there can be no assurance that its
expectations will be achieved. Certain factors that could cause
actual results to differ materially from the Company's expectations
include changes in general or regional economic conditions; the
Company's ability to timely lease or re-lease space at current or
anticipated rents; changes in interest rates; changes in operating
costs; the Company's ability to complete acquisitions on acceptable
terms; the Company's ability to manage its current debt levels and
repay or refinance its indebtedness upon maturity or other required
payment dates; the Company's ability to maintain financial covenant
compliance under its debt agreements; the Company's 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"); the Company's ability to obtain debt and/or financing
on attractive terms, or at all; changes in the assumptions
underlying the Company's earnings and Core FFO guidance and other
risks detailed in the Company's Annual Report on Form 10-K and
described from time to time in the Company's filings with the SEC.
Many of these factors are beyond the Company's ability to control
or predict. Forward-looking statements are not guarantees of
performance. For forward-looking statements herein, the Company
claims the protection of the safe harbor for forward-looking
statements contained in the Private Securities Litigation Reform
Act of 1995. The Company assumes 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
March 31,
|
|
|
2014
|
|
2013
|
Revenues:
|
|
|
|
|
Rental
|
|
$
31,940
|
|
$
30,693
|
Tenant reimbursements
and other
|
|
9,474
|
|
8,465
|
|
|
|
|
|
Total
revenues
|
|
41,414
|
|
39,158
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
Property
operating
|
|
12,898
|
|
10,311
|
Real estate taxes and
insurance
|
|
4,269
|
|
4,511
|
General and
administrative
|
|
5,196
|
|
5,267
|
Acquisition
costs
|
|
68
|
|
-
|
Depreciation and
amortization
|
|
15,104
|
|
13,987
|
Total operating
expenses
|
|
37,535
|
|
34,076
|
|
|
|
|
|
Operating
income
|
|
3,879
|
|
5,082
|
|
|
|
|
|
Other expenses,
net:
|
|
|
|
|
Interest
expense
|
|
5,812
|
|
9,958
|
Interest and other
income
|
|
(1,759)
|
|
(1,530)
|
Equity in losses
(earnings) of affiliates
|
|
227
|
|
(28)
|
|
|
|
|
|
Total other expenses,
net
|
|
4,280
|
|
8,400
|
|
|
|
|
|
|
|
|
|
|
Loss from continuing
operations
|
|
(401)
|
|
(3,318)
|
|
|
|
|
|
Discontinued
operations:
|
|
|
|
|
(Loss) income from
operations
|
|
(1,096)
|
|
5,281
|
Gain on sale of real estate
property
|
|
54
|
|
-
|
(Loss) income from
discontinued operations
|
|
(1,042)
|
|
5,281
|
|
|
|
|
|
Net (loss)
income
|
|
(1,443)
|
|
1,963
|
|
|
|
|
|
Less: Net loss
attributable to noncontrolling interests
|
|
195
|
|
59
|
|
|
|
|
|
Net (loss) income
attributable to First Potomac Realty Trust
|
|
(1,248)
|
|
2,022
|
|
|
|
|
|
Less: Dividends on
preferred shares
|
|
(3,100)
|
|
(3,100)
|
|
|
|
|
|
Net loss attributable
to common shareholders
|
|
$
(4,348)
|
|
$
(1,078)
|
|
|
|
|
|
|
|
Three Months Ended
March 31,
|
|
|
2014
|
|
2013
|
Net loss attributable
to common shareholders
|
|
$
(4,348)
|
|
$
(1,078)
|
|
|
|
|
|
Depreciation and
amortization:
|
|
|
|
|
Real
estate assets
|
|
15,104
|
|
13,987
|
Discontinued operations
|
|
455
|
|
2,921
|
Unconsolidated joint
ventures
|
|
1,289
|
|
1,352
|
Consolidated joint
ventures
|
|
-
|
|
(51)
|
Gain on sale of real
estate property
|
|
(54)
|
|
-
|
Net loss attributable
to noncontrolling interests in the Operating Partnership
|
|
(195)
|
|
(54)
|
|
|
|
|
|
Funds from operations
available to common shareholders
|
|
$
12,251
|
|
$
17,077
|
Consolidated
Statements of Operations
(unaudited, amounts in thousands, except per share
amounts)
|
|
|
|
|
Three Months Ended
March 31,
|
|
|
|
2014
|
|
2013
|
|
|
|
|
|
|
|
|
Funds from operations
(FFO)
|
|
|
$
15,351
|
|
$
20,177
|
|
Less: Dividends on
preferred shares
|
|
|
(3,100)
|
|
(3,100)
|
|
FFO available to
common shareholders
|
|
|
12,251
|
|
17,077
|
|
Deferred
abatement and straight-line amortization
|
|
|
1,045
|
|
(1,567)
|
|
Acquisition costs
|
|
|
68
|
|
-
|
|
Legal
costs associated with informal SEC inquiry
|
|
|
-
|
|
336
|
|
|
|
|
|
|
|
|
Core FFO
|
|
|
$
13,364
|
|
$
15,846
|
|
|
|
|
|
|
|
|
Basic and diluted
earnings per common share:
|
|
|
|
|
|
|
Loss from continuing
operations
|
|
|
$
(0.06)
|
|
$
(0.12)
|
|
(Loss) income from
discontinued operations
|
|
|
(0.02)
|
|
0.10
|
|
Net loss
|
|
|
$
(0.08)
|
|
$
(0.02)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
common shares outstanding – basic and diluted
|
|
|
58,097
|
|
50,404
|
|
|
|
|
|
|
|
|
FFO available to
common shareholders per share – basic and diluted
|
|
|
$
0.20
|
|
$
0.32
|
|
|
|
|
|
|
|
|
Core FFO per share –
diluted
|
|
|
$
0.22
|
|
$
0.30
|
|
|
|
|
|
|
|
|
Weighted average
common shares and units outstanding:
|
|
|
|
|
|
|
Basic
|
|
|
60,726
|
|
53,002
|
|
Diluted
|
|
|
60,794
|
|
53,106
|
|
Consolidated
Balance Sheets
(Amounts in thousands, except per share amounts)
|
|
|
March 31,
2014
|
|
December 31,
2013
|
|
(unaudited)
|
|
|
Assets:
|
|
|
|
Rental property,
net
|
$
1,201,015
|
|
$
1,203,299
|
Assets
held-for-sale
|
12,564
|
|
45,861
|
Cash and cash
equivalents
|
14,842
|
|
8,740
|
Escrows and
reserves
|
3,669
|
|
7,673
|
Accounts and other
receivables, net of allowance for doubtful accounts of $896 and
$1,181, respectively
|
14,853
|
|
12,384
|
Accrued straight-line
rents, net of allowance for doubtful accounts of $109 and $92,
respectively
|
32,863
|
|
30,332
|
Notes receivable,
net
|
63,782
|
|
54,696
|
Investment in
affiliates
|
48,818
|
|
49,150
|
Deferred costs,
net
|
42,085
|
|
43,198
|
Prepaid expenses and
other assets
|
10,139
|
|
8,279
|
Intangible assets,
net
|
36,706
|
|
38,848
|
|
|
|
|
Total
assets
|
$
1,481,336
|
|
$
1,502,460
|
|
|
|
|
Liabilities:
|
|
|
|
Mortgage
loans
|
$
275,095
|
|
$
274,648
|
Unsecured term
loan
|
300,000
|
|
300,000
|
Unsecured revolving
credit facility
|
96,000
|
|
99,000
|
Accounts payable and
other liabilities
|
36,003
|
|
41,296
|
Accrued
interest
|
1,646
|
|
1,663
|
Rents received in
advance
|
5,627
|
|
6,118
|
Tenant security
deposits
|
5,917
|
|
5,666
|
Deferred market rent,
net
|
1,432
|
|
1,557
|
|
|
|
|
Total
liabilities
|
721,720
|
|
729,948
|
|
|
|
|
Noncontrolling
interests in the Operating Partnership
|
34,707
|
|
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; 58,758 and 58,704 shares issued
and
outstanding, respectively
|
59
|
|
59
|
Additional paid-in
capital
|
910,047
|
|
911,533
|
Noncontrolling
interests in consolidated partnerships
|
870
|
|
781
|
Accumulated other
comprehensive loss
|
(3,668)
|
|
(3,836)
|
Dividends in excess
of accumulated earnings
|
(342,399)
|
|
(329,246)
|
|
|
|
|
Total
equity
|
724,909
|
|
739,291
|
|
|
|
|
Total liabilities,
noncontrolling interests and equity
|
$
1,481,336
|
|
$
1,502,460
|
Same-Property
Analysis
(unaudited, dollars in thousands)
|
|
Same-Property
NOI(1)
|
|
Three Months Ended
March 31,
|
|
|
2014
|
|
2013
|
Total base
rent
|
|
$
30,916
|
|
$
30,069
|
Tenant reimbursements
and other
|
|
8,885
|
|
7,730
|
Property operating
expenses
|
|
(11,588)
|
|
(9,786)
|
Real estate taxes and
insurance
|
|
(4,100)
|
|
(4,181)
|
Same-Property NOI
- accrual basis
|
|
24,113
|
|
23,832
|
Straight-line
revenue, net
|
|
(362)
|
|
(407)
|
Deferred market
rental revenue, net
|
|
(17)
|
|
19
|
Same-Property NOI
- cash basis
|
|
$
23,734
|
|
$
23,444
|
|
|
|
|
|
Change in
same-property NOI – accrual basis
|
|
1.2%
|
|
|
Change in
same-property NOI – cash basis
|
|
1.2%
|
|
|
|
|
|
|
|
Same-property
percentage of total portfolio on a square foot basis
|
|
97.2%
|
|
|
Reconciliation of
Consolidated NOI to
Same-Property
NOI
|
|
Three Months Ended
March 31,
|
|
|
2014
|
|
2013
|
Total
revenues
|
|
$
41,414
|
|
$
39,158
|
Property operating
expenses
|
|
(12,898)
|
|
(10,311)
|
Real estate taxes and
insurance
|
|
(4,269)
|
|
(4,511)
|
NOI
|
|
|
24,247
|
|
24,336
|
|
|
|
|
|
Less: Non-same
property NOI(2)
|
|
(134)
|
|
(504)
|
Same-Property NOI
– accrual basis
|
|
24,113
|
|
23,832
|
Snow and ice removal
costs, net of recoveries
|
|
884
|
|
310
|
Same-Property NOI
– accrual basis (excluding snow and ice removal
costs)
|
|
$
24,997
|
|
$
24,142
|
|
|
|
|
|
|
Change in
same-property NOI – accrual basis (excluding snow and ice removal
costs)
|
|
3.5%
|
|
|
Change in
Same-Property NOI (accrual basis)
|
|
By
Region
|
|
Three Months
Ended
March 31,
2014
|
|
Percentage
of
Base Rent
|
Washington,
D.C.
|
|
4.4%
|
|
14%
|
Maryland
|
|
(8.0)%
|
|
27%
|
Northern
Virginia
|
|
3.9%
|
|
35%
|
Southern
Virginia
|
|
6.4%
|
|
24%
|
|
|
|
|
|
|
|
|
|
|
By Property
Type
|
|
|
|
|
Business Park /
Industrial
|
|
5.7%
|
|
45%
|
Office
|
|
(2.7)%
|
|
55%
|
|
|
(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 March 31, 2014: 440 First
Street, NW, Storey Park, West Park, Patrick Center and 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:
Jaime N.
Marcus
Manager, Investor
Relations
(301)
986-9200
jmarcus@first-potomac.com
SOURCE First Potomac Realty Trust