Maryland | 1-11533 | 74-2123597 |
(State or Other Jurisdiction of Incorporation)
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(Commission File Number) | (IRS Employer Identification No.) |
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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99.1
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Press Release of the Company dated November 7, 2011, announcing the results of operations of the Company for the quarter ended September 30, 2011.
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PARKWAY PROPERTIES, INC.
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By:
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/s/ Mandy M. Pope | |
Mandy M. Pope
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Executive Vice President and Chief Accounting Officer
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Parkway Reports 2011 Third Quarter Results
JACKSON, Miss., Nov. 7, 2011 /PRNewswire/ --
Highlights
Parkway Properties, Inc. (NYSE: PKY) today announced results for its third quarter ended September 30, 2011.
(Logo: http://photos.prnewswire.com/prnh/20030513/PARKLOGO )
Steven G. Rogers, President and Chief Executive Officer, stated, "As previously announced, I've decided to retire from Parkway. It has been my great pleasure to be associated with Parkway and serve as its President over the past 18 years. We have seen many changes in the public REIT space and in the real estate market during this time, and throughout the years we have adjusted our strategy to attempt to take advantage of changing market conditions. I have great confidence in the excellent management team and property operations team at Parkway, and I am certain that they are prepared to confront both the challenges and opportunities in the future. We have a unique culture at Parkway and I will miss the day-to-day camaraderie with the professionals that work here. Our team accomplished much this year and positioned the company for a transition that should serve as a solid base from which to grow our business and build value."
James R. Heistand, Executive Chairman, stated, "I want to publicly thank Steve for his tireless leadership of Parkway during the last 18 years. We have accomplished many important goals this year including the acceleration of our asset recycling program by selling several non-core assets, which contributed to our overall goal of improving our balance sheet and completing the majority of the Fund II investments. Additionally, we are announcing today our decision to sell our interests in the Fund I portfolio. We expect this sale to further improve the Company’s balance sheet and result in future increased cash flow and greater flexibility to pursue additional investments in the future. As Steve and I continue to work together to insure a smooth transition, you can look for more specific communications regarding changes to our strategy soon."
Consolidated Financial Results
Description | Q3 2011 | Q3 2010 | YTD 2011 | YTD 2010 | |||||
Unusual Items (1): | |||||||||
Non-cash impairment loss on mortgage loan | $ | (9,235) | $ | - | $ | (9,235) | $ | - | |
Acquisition costs | $ | 29 | $ | - | $ | (15,060) | $ | - | |
Fair value adjustment-contingent consideration | $ | 12,000 | $ | - | $ | 12,000 | $ | - | |
Gain (loss) on extinguishment of debt | $ | - | $ | - | $ | 302 | $ | (189) | |
Expenses related to litigation | $ | (75) | $ | (174) | $ | (119) | $ | (719) | |
Other Items of Note (1): | |||||||||
Non-recurring lease termination fees (6) | $ | 1,796 | $ | 633 | $ | 5,554 | $ | 7,078 | |
Straight-line rent | $ | 1,189 | $ | 325 | $ | 4,212 | $ | 2,817 | |
Amortization of below market rent | $ | 82 | $ | 95 | $ | 674 | $ | (74) | |
Bad debt expense | $ | (110) | $ | (51) | $ | (1,263) | $ | (1,007) | |
Portfolio Information: | |||||||||
Average rent per square foot (2)(3) | $ | 22.84 | $ | 23.07 | $ | 22.91 | $ | 23.04 | |
Average occupancy (2)(4) | 84.5% | 86.0% | 84.5% | 85.9% | |||||
Same-store average rent per square foot (2)(3) | $ | 21.21 | $ | 21.70 | $ | 21.24 | $ | 21.68 | |
Same-store average occupancy (2)(4) | 82.2% | 85.1% | 82.6% | 85.4% | |||||
Total office square feet under ownership (2) | 14,532 | 13,195 | 14,532 | 13,195 | |||||
Total office square feet under management (5) | 26,825 | 14,012 | 26,825 | 14,012 | |||||
(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 and discontinued operations. | |
(2) | These items include total office square feet of wholly-owned assets, consolidated joint ventures and unconsolidated joint ventures for the period. | |
(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 nine months ended September 30, 2010, were $8.1 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. | |
Operations and Leasing
Asset Recycling
Capital Structure
2011 Outlook
Management is in the process of critically evaluating the Company's investment, financial and operational strategy. In light of the uncertainty of potential changes that may result from this review, as well as the continued uncertainty around the exact timing and closing of the announced dispositions and the potential impact all of these items may have on the Company for the balance of 2011, we believe it would not be meaningful to provide a revised 2011 outlook at this time. The Company will publicly communicate any specific changes in strategy as soon as it is practical to do so and will announce the 2011 final earnings results with the fourth quarter 2011 earnings press release.
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. Parkway owns or has an interest in 67 office properties located in 12 states with an aggregate of approximately 14.5 million square feet of leasable space at November 7, 2011. Included in the portfolio are 26 properties totaling 6.6 million square feet that are owned jointly with other investors, representing 45.5% of the portfolio. Fee-based real estate services are offered through wholly-owned subsidiaries of the Company, which in total manage and/or lease approximately 12.9 million square feet for third-party owners at November 7, 2011.
Additional Information
The Company will conduct a conference call to discuss the results of its third quarter operations on Tuesday, November 8, 2011, at 11:00 a.m. Eastern Time. To participate in the conference call, please dial 800-857-4978 and use the verbal passcode "PARKWAY". A live audio webcast will also be available by selecting the "3Q 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 November 22, 2011, by dialing 800-239-4561 and using the pass code of 9285. An audio replay will be archived and indexed in the Corporate section of the Company's website at www.pky.com. A copy of the Company's 2011 third quarter Supplemental Financial & Portfolio Information report is available by accessing the Company's website, emailing your request to rjordan@pky.com, or calling Rita Jordan at 601-948-4091. The Company's Supplemental Financial & Portfolio information report will serve as the Company Presentation for the conference call.
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 third quarter 2011 Supplemental Financial & Portfolio Information report, which includes a reconciliation of all non-GAAP financial measures to their directly comparable 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, expects, project, or similar expressions) 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. Examples of forward-looking statements include projected net operating income, cap rates, internal rates of return, forecasts of FFO accretion, projected capital improvements, expected sources of financing, expectations as to the timing of acquisitions or dispositions, and descriptions relating to these expectations. 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; termination of property management contracts, the bankruptcy or insolvency of companies for which Eola or Parkway provide property management services; the ability of Parkway to integrate the business of Eola and unanticipated costs in connection with such integration; the outcome of claims and litigation involving or affecting the Company; and other risks and uncertainties detailed from time to time in the Company's SEC filings. Should one or more of these risks or uncertainties occur, or should underlying assumptions prove incorrect, the Company's business, financial condition, liquidity, cash flows and results could differ materially from those expressed in the forward-looking statements. Any forward looking statements speaks only as of the date on which it is made. New risks and uncertainties arise over time, and it is not possible for us to predict the occurrence of those matters or the manner in which they may affect us. The Company does not undertake to update forward-looking statements except as may be required by law.
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 the Company. 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. Non-GAAP measures have limitations in that they do not reflect all of the amounts associated with the Company's results of operations determined in accordance with GAAP. 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. The Company's calculation of these non-GAAP measures may not be comparable to similarly titled measures reported by other companies.
FFO – 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 GAAP, reduced by preferred dividends, excluding gains or losses on depreciable real estate, plus real estate related depreciation and amortization. Adjustments for Parkway's share of partnerships and joint ventures are included in the computation of FFO on the same basis. On October 31, 2011, NAREIT issued updated guidance on reporting FFO such that impairment losses on depreciable real estate should be excluded from the computation of FFO for current and prior periods presented.
Recurring FFO – In addition to FFO, Parkway also discloses recurring FFO, which considers Parkway's share of adjustments for non-recurring lease termination fees, gains and losses on extinguishment of debt, gains and losses, acquisition costs, fair value adjustments or other unusual items. Although this is a non-GAAP measure that differs from NAREIT's definition of FFO, the Company believes it provides a meaningful presentation of operating performance.
FAD – There is not a generally accepted definition established for FAD. Therefore, the Company's measure of FAD may not be comparable to FAD reported by other REITs. Parkway defines FAD as FFO, excluding the amortization of share-based compensation, amortization of above and below market leases, straight line rent adjustments, gains and losses, acquisition costs, fair value adjustments and reduced by recurring non-revenue enhancing capital expenditures for building improvements, tenant improvements and leasing costs. Adjustments for Parkway's share of partnerships and joint ventures are included in the computation of FAD on the same basis.
EBITDA – Parkway defines EBITDA, a non-GAAP financial measure, as net income before interest expense, amortization of financing costs, amortization of share-based compensation, income taxes, depreciation, amortization, acquisition costs, gains and losses on early extinguishment of debt, other gains and losses and fair value adjustments. Adjustments for Parkway's share of partnerships and joint ventures are included in the computation of EBITDA on the same basis. 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 GAAP, 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.
NOI, Recurring NOI, Same-Store NOI and Recurring Same-Store NOI – 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 year 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) | ||||
September 30 | December 31 | |||
2011 | 2010 | |||
(Unaudited) | ||||
Assets | ||||
Real estate related investments: | ||||
Office and parking properties | $ 1,685,906 | $ 1,755,310 | ||
Office property held for sale | 134,963 | - | ||
Land held for development | 609 | 609 | ||
Accumulated depreciation | (275,729) | (366,152) | ||
1,545,749 | 1,389,767 | |||
Land available for sale | 750 | 750 | ||
Mortgage loans | 1,500 | 10,336 | ||
1,547,999 | 1,400,853 | |||
Receivables and other assets | 133,799 | 132,530 | ||
Intangible assets, net | 116,736 | 50,629 | ||
Other assets held for sale | 31,983 | - | ||
Management contracts, net | 50,714 | - | ||
Cash and cash equivalents | 32,951 | 19,670 | ||
$ 1,914,182 | $ 1,603,682 | |||
Liabilities | ||||
Notes payable to banks | $ 113,852 | $ 110,839 | ||
Mortgage notes payable | 830,709 | 773,535 | ||
Accounts payable and other liabilities | 123,409 | 98,818 | ||
Liabilities held for sale | 165,340 | - | ||
1,233,310 | 983,192 | |||
Equity | ||||
Parkway Properties, Inc. stockholders' equity: | ||||
8.00% Series D Preferred stock, $.001 par value, 5,421,296 and | ||||
4,374,896 shares authorized, issued and outstanding in | 128,942 | 102,787 | ||
2011 and 2010, respectively | ||||
Common stock, $.001 par value, 64,578,704 and 65,625,104 | ||||
shares authorized in 2011 and 2010, respectively, 22,118,817 | ||||
and 21,923,610 shares issued and outstanding in 2011 and | ||||
and 2010, respectively | 22 | 22 | ||
Common stock held in trust, at cost, 12,070 and 58,134 | ||||
shares in 2011 and 2010, respectively | (309) | (1,896) | ||
Additional paid-in capital | 517,527 | 516,167 | ||
Accumulated other comprehensive loss | (5,704) | (3,003) | ||
Accumulated deficit | (209,732) | (127,575) | ||
Total Parkway Properties, Inc. stockholders' equity | 430,746 | 486,502 | ||
Noncontrolling interest - real estate partnerships | 250,126 | 133,988 | ||
Total equity | 680,872 | 620,490 | ||
$ 1,914,182 | $ 1,603,682 | |||
PARKWAY PROPERTIES, INC. | ||||
CONSOLIDATED STATEMENTS OF OPERATIONS | ||||
(In thousands, except per share data) | ||||
Three Months Ended | ||||
September 30 | ||||
2011 | 2010 | |||
(Unaudited) | ||||
Revenues | ||||
Income from office and parking properties | $ 63,594 | $ 45,095 | ||
Management company income | 6,120 | 585 | ||
Total revenues | 69,714 | 45,680 | ||
Expenses | ||||
Property operating expense | 30,639 | 21,612 | ||
Depreciation and amortization | 26,087 | 14,825 | ||
Impairment loss on real estate | 107,240 | - | ||
Impairment loss on mortgage loan receivable | 9,235 | - | ||
Change in fair value of contingent consideration | (12,000) | - | ||
Management company expenses | 4,319 | 858 | ||
General and administrative | 1,902 | 1,758 | ||
Acquisition costs | 25 | - | ||
Total expenses and other | 167,447 | 39,053 | ||
Operating income (loss) | (97,733) | 6,627 | ||
Other income and expenses | ||||
Interest and other income | 87 | 354 | ||
Equity in earnings (loss) of unconsolidated joint ventures | (14) | 62 | ||
Gain on involuntary conversion | - | 40 | ||
Gain on sale of real estate | 743 | - | ||
Interest expense | (13,473) | (10,164) | ||
Loss before income taxes | (110,390) | (3,081) | ||
Income tax (expense) benefit | 174 | (59) | ||
Loss from continuing operations | (110,216) | (3,140) | ||
Discontinued operations: | ||||
Loss from discontinued operations | (22,633) | (1,048) | ||
Gain on sale of real estate from discontinued operations | 2,275 | - | ||
Total discontinued operations | (20,358) | (1,048) | ||
Net loss | (130,574) | (4,188) | ||
Net loss attributable to noncontrolling interest - real estate partnerships | 77,546 | 2,356 | ||
Net loss for Parkway Properties, Inc. | (53,028) | (1,832) | ||
Dividends on preferred stock | (2,710) | (1,737) | ||
Net loss attributable to common stockholders | $ (55,738) | $ (3,569) | ||
Net loss per common share attributable to Parkway Properties, Inc.: | ||||
Basic: | ||||
Loss from continuing operations attributable to Parkway Properties, Inc. | $ (1.64) | $ (0.12) | ||
Discontinued operations | (0.95) | (0.05) | ||
Basic net loss attributable to Parkway Properties, Inc. | $ (2.59) | $ (0.17) | ||
Diluted: | ||||
Loss from continuing operations attributable to Parkway Properties, Inc. | $ (1.64) | $ (0.12) | ||
Discontinued operations | (0.95) | (0.05) | ||
Diluted net loss attributable to Parkway Properties, Inc. | $ (2.59) | $ (0.17) | ||
Weighted average shares outstanding: | ||||
Basic | 21,502 | 21,438 | ||
Diluted | 21,502 | 21,438 | ||
PARKWAY PROPERTIES, INC. | ||||
CONSOLIDATED STATEMENTS OF OPERATIONS | ||||
(In thousands, except per share data) | ||||
Nine Months Ended | ||||
September 30 | ||||
2011 | 2010 | |||
(Unaudited) | ||||
Revenues | ||||
Income from office and parking properties | $ 170,244 | $ 137,392 | ||
Management company income | 9,990 | 1,331 | ||
Total revenues | 180,234 | 138,723 | ||
Expenses | ||||
Property operating expense | 79,156 | 65,478 | ||
Depreciation and amortization | 64,519 | 46,260 | ||
Impairment loss on real estate | 107,240 | - | ||
Impairment loss on mortgage loan receivable | 9,235 | - | ||
Change in fair value of contingent consideration | (12,000) | - | ||
Management company expenses | 8,398 | 2,243 | ||
General and administrative | 5,380 | 5,361 | ||
Acquisition costs | 16,754 | - | ||
Total expenses and other | 278,682 | 119,342 | ||
Operating income (loss) | (98,448) | 19,381 | ||
Other income and expenses | ||||
Interest and other income | 849 | 1,105 | ||
Equity in earnings of unconsolidated joint ventures | 65 | 253 | ||
Gain on involuntary conversion | - | 40 | ||
Gain on sale of real estate | 743 | - | ||
Interest expense | (37,280) | (30,576) | ||
Loss before income taxes | (134,071) | (9,797) | ||
Income tax expense | (50) | (176) | ||
Loss from continuing operations | (134,121) | (9,973) | ||
Discontinued operations: | ||||
Income (loss) from discontinued operations | (26,410) | 1,444 | ||
Gain on sale of real estate from discontinued operations | 6,567 | 8,518 | ||
Total discontinued operations | (19,843) | 9,962 | ||
Net loss | (153,964) | (11) | ||
Net loss attributable to noncontrolling interest - real estate partnerships | 84,112 | 7,581 | ||
Net income (loss) for Parkway Properties, Inc. | (69,852) | 7,570 | ||
Dividends on preferred stock | (7,341) | (4,137) | ||
Net income (loss) attributable to common stockholders | $ (77,193) | $ 3,433 | ||
Net income (loss) per common share attributable to Parkway Properties, Inc.: | ||||
Basic: | ||||
Loss from continuing operations attributable to Parkway Properties, Inc. | $ (2.67) | $ (0.30) | ||
Discontinued operations | (0.92) | 0.46 | ||
Basic net income (loss) attributable to Parkway Properties, Inc. | $ (3.59) | $ 0.16 | ||
Diluted: | ||||
Loss from continuing operations attributable to Parkway Properties, Inc. | $ (2.67) | $ (0.30) | ||
Discontinued operations | (0.92) | 0.46 | ||
Diluted net income (loss) attributable to Parkway Properties, Inc. | $ (3.59) | $ 0.16 | ||
Weighted average shares outstanding: | ||||
Basic | 21,489 | 21,413 | ||
Diluted | 21,489 | 21,413 | ||
PARKWAY PROPERTIES, INC. | ||||||||
RECONCILIATION OF FUNDS FROM OPERATIONS AND | ||||||||
FUNDS AVAILABLE FOR DISTRIBUTION TO NET INCOME | ||||||||
FOR THE THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 2011 AND 2010 | ||||||||
(In thousands, except per share data) | ||||||||
Three Months Ended | Nine Months Ended | |||||||
September 30 | September 30 | |||||||
2011 | 2010 | 2011 | 2010 | |||||
(Unaudited) | (Unaudited) | |||||||
Net Income (Loss) for Parkway Properties, Inc. | $ (53,028) | $ (1,832) | $ (69,852) | $ 7,570 | ||||
Adjustments to Net Income (Loss) for Parkway Properties, Inc.: | ||||||||
Preferred Dividends | (2,710) | (1,737) | (7,341) | (4,137) | ||||
Depreciation and Amortization | 26,087 | 14,825 | 64,519 | 46,260 | ||||
Depreciation and Amortization - Discontinued Operations | 6,203 | 6,301 | 19,787 | 19,118 | ||||
Noncontrolling Interest Depreciation and Amortization | (11,574) | (4,011) | (25,351) | (12,837) | ||||
Unconsolidated Joint Ventures Depreciation and Amortization | 38 | 85 | 198 | 253 | ||||
Impairment Loss on Real Estate (Parkway's Share) | 54,767 | - | 56,467 | - | ||||
Gain on Sale of Real Estate | (3,018) | - | (7,310) | (8,518) | ||||
FFO Available to Common Stockholders | $ 16,765 | $ 13,631 | $ 31,117 | $ 47,709 | ||||
Adjustments to Derive Recurring FFO (at Parkway's Share): | ||||||||
Non-Cash (Gain) Loss | 9,235 | (40) | 9,235 | (40) | ||||
Change in Fair Value of Contingent Consideration | (12,000) | - | (12,000) | - | ||||
Non-Recurring Lease Termination Fee Income (1) | (1,796) | (633) | (5,554) | (7,078) | ||||
(Gain) Loss on Early Extinguishment of Debt | - | - | (302) | 189 | ||||
Acquisition Costs-Building Purchases | - | - | 1,124 | - | ||||
Acquisition Costs-Combination | (29) | - | 13,936 | - | ||||
Expenses Related to Litigation | 75 | 174 | 119 | 719 | ||||
Recurring FFO | $ 12,250 | $ 13,132 | $ 37,675 | $ 41,499 | ||||
Funds Available for Distribution | ||||||||
FFO Available to Common Stockholders | $ 16,765 | $ 13,631 | $ 31,117 | $ 47,709 | ||||
Add (Deduct) : | ||||||||
Adjustments for Unconsolidated Joint Ventures | (33) | (118) | (203) | (236) | ||||
Adjustments for Noncontrolling Interest in Real Estate Partnerships | 2,894 | 3,055 | 9,056 | 5,211 | ||||
Straight-line Rents | (2,952) | (14) | (6,391) | (3,059) | ||||
Straight-line Rents - Discontinued Operations | 101 | (129) | (1,845) | (832) | ||||
Amortization of Above/Below Market Leases | 1,215 | (127) | 1,463 | (364) | ||||
Amortization of Above/Below Market Leases-Discontinued Operations | (477) | (39) | (1,069) | 217 | ||||
Amortization of Share-Based Compensation | 501 | 486 | 1,389 | 877 | ||||
Acquisition Costs (Parkway's Share) | (29) | - | 15,060 | - | ||||
Non-Cash (Gain) Loss (Parkway's Share) | 9,235 | (40) | 9,235 | (40) | ||||
Change in Fair Value of Contingent Consideration | (12,000) | - | (12,000) | - | ||||
Recurring Capital Expenditures: | ||||||||
Building Improvements | (2,622) | (788) | (6,441) | (3,258) | ||||
Tenant Improvements - New Leases | (3,303) | (3,710) | (9,753) | (11,899) | ||||
Tenant Improvements - Renewal Leases | (1,856) | (2,207) | (6,284) | (5,501) | ||||
Leasing Costs - New Leases | (1,367) | (1,329) | (5,144) | (2,794) | ||||
Leasing Costs - Renewal Leases | (799) | (3,461) | (4,030) | (4,175) | ||||
Total Recurring Capital Expenditures | (9,947) | (11,495) | (31,652) | (27,627) | ||||
Funds Available for Distribution | $ 5,273 | $ 5,210 | $ 14,160 | $ 21,856 | ||||
Diluted Per Common Share/Unit Information (**) | ||||||||
FFO per share | $ 0.78 | $ 0.63 | $ 1.44 | $ 2.22 | ||||
Recurring FFO per share | $ 0.57 | $ 0.61 | $ 1.75 | $ 1.93 | ||||
FAD per share | $ 0.24 | $ 0.24 | $ 0.66 | $ 1.02 | ||||
Dividends paid | $ 0.075 | $ 0.075 | $ 0.225 | $ 0.225 | ||||
Dividend payout ratio for FFO | 9.65% | 11.84% | 15.60% | 10.15% | ||||
Dividend payout ratio for Recurring FFO | 13.21% | 12.29% | 12.88% | 11.67% | ||||
Dividend payout ratio for FAD | 30.68% | 30.99% | 34.28% | 22.15% | ||||
Other Supplemental Information | ||||||||
Recurring Consolidated Capital Expenditures Above | $ 9,947 | $ 11,495 | $ 31,652 | $ 27,627 | ||||
Consolidated Upgrades on Acquisitions | 2,611 | 144 | 8,441 | 1,964 | ||||
Consolidated Major Renovations | 348 | 990 | 461 | 1,359 | ||||
Total Consolidated Real Estate Improvements and Leasing Costs Per Cash Flow | $ 12,906 | $ 12,629 | $ 40,554 | $ 30,950 | ||||
Parkway's Share of Recurring Capital Expenditures | $ 7,928 | $ 8,456 | $ 25,756 | $ 23,457 | ||||
Parkway's Share of Upgrades on Acquisitions | 804 | 105 | 2,598 | 1,070 | ||||
Parkway's Share of Major Renovations | 348 | 990 | 461 | 1,359 | ||||
Parkway's Share of Total Real Estate Improvements and Leasing Costs | $ 9,080 | $ 9,551 | $ 28,815 | $ 25,886 | ||||
Impairment Loss on Mortgage Loan Receivable | $ (9,235) | $ - | $ (9,235) | $ - | ||||
Gain on Involuntary Conversion | - | 40 | - | 40 | ||||
Gain Included in FFO | $ (9,235) | $ 40 | $ (9,235) | $ 40 | ||||
**Information for Diluted Computations: | ||||||||
Basic Common Shares/Units Outstanding | 21,504 | 21,439 | 21,491 | 21,414 | ||||
Dilutive Effect of Other Share Equivalents | 79 | 86 | 81 | 103 | ||||
Diluted Weighted Average Shares/Units Outstanding | 21,583 | 21,525 | 21,572 | 21,517 | ||||
(1) Parkway's share of total lease termination fees recognized during the nine months ended September 30, 2010 were $8.1 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 NINE MONTHS ENDED SEPTEMBER 30, 2011 AND 2010 | ||||||||
(In thousands) | ||||||||
Three Months Ended | Nine Months Ended | |||||||
September 30 | September 30 | |||||||
2011 | 2010 | 2011 | 2010 | |||||
(Unaudited) | (Unaudited) | |||||||
Net Income (Loss) for Parkway Properties, Inc. | $ (53,028) | $ (1,832) | $ (69,852) | $ 7,570 | ||||
Adjustments to Net Income (Loss) for Parkway Properties, Inc.: | ||||||||
Interest Expense | 15,297 | 13,276 | 44,367 | 39,862 | ||||
Amortization of Financing Costs | 566 | 393 | 1,573 | 1,317 | ||||
(Gain) Loss on Early Extinguishment of Debt | - | - | (302) | 189 | ||||
Acquisition Costs | (29) | - | 15,060 | - | ||||
Depreciation and Amortization | 32,290 | 21,126 | 84,306 | 65,378 | ||||
Amortization of Share-Based Compensation | 501 | 486 | 1,389 | 877 | ||||
Gain on Sale of Real Estate | (3,018) | - | (7,310) | (8,518) | ||||
Non-Cash (Gain) Loss (Parkway's Share) | 64,002 | (40) | 65,702 | (40) | ||||
Change in Fair Value of Contingent Consideration | (12,000) | - | (12,000) | - | ||||
Tax Expense | (174) | 59 | 50 | 176 | ||||
EBITDA Adjustments - Unconsolidated Joint Ventures | 74 | 122 | 306 | 363 | ||||
EBITDA Adjustments - Noncontrolling Interest in Real Estate Partnerships | (17,513) | (6,987) | (39,963) | (22,036) | ||||
EBITDA | $ 26,968 | $ 26,603 | $ 83,326 | $ 85,138 | ||||
Interest Coverage Ratio: | ||||||||
EBITDA | $ 26,968 | $ 26,603 | $ 83,326 | $ 85,138 | ||||
Interest Expense: | ||||||||
Interest Expense | $ 15,297 | $ 13,276 | $ 44,367 | $ 39,862 | ||||
Interest Expense - Unconsolidated Joint Ventures | 36 | 37 | 108 | 110 | ||||
Interest Expense - Noncontrolling Interest in Real Estate Partnerships | (5,808) | (2,911) | (14,306) | (8,995) | ||||
Total Interest Expense | $ 9,525 | $ 10,402 | $ 30,169 | $ 30,977 | ||||
Interest Coverage Ratio | 2.83 | 2.56 | 2.76 | 2.75 | ||||
Fixed Charge Coverage Ratio: | ||||||||
EBITDA | $ 26,968 | $ 26,603 | $ 83,326 | $ 85,138 | ||||
Fixed Charges: | ||||||||
Interest Expense | $ 9,525 | $ 10,402 | $ 30,169 | $ 30,977 | ||||
Preferred Dividends | 2,710 | 1,737 | 7,341 | 4,137 | ||||
Principal Payments (Excluding Early Extinguishment of Debt) | 2,559 | 3,600 | 9,246 | 10,794 | ||||
Principal Payments - Unconsolidated Joint Ventures | 9 | 8 | 26 | 24 | ||||
Principal Payments - Noncontrolling Interest in Real Estate Partnerships | (757) | (189) | (1,990) | (762) | ||||
Total Fixed Charges | $ 14,046 | $ 15,558 | $ 44,792 | $ 45,170 | ||||
Fixed Charge Coverage Ratio | 1.92 | 1.71 | 1.86 | 1.88 | ||||
Modified Fixed Charge Coverage Ratio: | ||||||||
EBITDA | $ 26,968 | $ 26,603 | $ 83,326 | $ 85,138 | ||||
Modified Fixed Charges: | ||||||||
Interest Expense | $ 9,525 | $ 10,402 | $ 30,169 | $ 30,977 | ||||
Preferred Dividends | 2,710 | 1,737 | 7,341 | 4,137 | ||||
Total Modified Fixed Charges | $ 12,235 | $ 12,139 | $ 37,510 | $ 35,114 | ||||
Modified Fixed Charge Coverage Ratio | 2.20 | 2.19 | 2.22 | 2.42 | ||||
The following table reconciles EBITDA to cash flows provided by operating activities: | ||||||||
EBITDA | $ 26,968 | $ 26,603 | $ 83,326 | $ 85,138 | ||||
Amortization of Above (Below) Market Leases | 738 | (166) | 394 | (147) | ||||
Amortization of Mortgage Loan Discount | - | (180) | (400) | (522) | ||||
Operating Distributions from Unconsolidated Joint Ventures | - | - | 507 | - | ||||
Interest Expense | (15,297) | (13,276) | (44,367) | (39,862) | ||||
Gain (Loss) on Early Extinguishment of Debt | - | - | 302 | (189) | ||||
Acquisition Costs | 29 | - | (15,060) | - | ||||
Tax Expense-Current | (190) | (59) | (414) | (176) | ||||
Change in Deferred Leasing Costs | (2,947) | (4,801) | (11,434) | (7,543) | ||||
Change in Receivables and Other Assets | (12,057) | (2,496) | (20,990) | (8,129) | ||||
Change in Accounts Payable and Other Liabilities | 5,229 | 12,396 | 5,443 | 10,750 | ||||
Adjustments for Noncontrolling Interests | 12,207 | 4,631 | 28,091 | 14,455 | ||||
Adjustments for Unconsolidated Joint Ventures | (60) | (183) | (371) | (616) | ||||
Cash Flows Provided by Operating Activities | $ 14,620 | $ 22,469 | $ 25,027 | $ 53,159 | ||||
PARKWAY PROPERTIES, INC. | |||||||||
NET OPERATING INCOME FROM OFFICE AND PARKING PROPERTIES | |||||||||
THREE MONTHS ENDED SEPTEMBER 30, 2011 AND 2010 | |||||||||
(In thousands, except number of properties data) | |||||||||
Average | |||||||||
Net Operating Income | Occupancy | ||||||||
Number of | Percentage | ||||||||
Square Feet | Properties | of Portfolio (1) | 2011 | 2010 | 2011 | 2010 | |||
Same-store properties: | |||||||||
Wholly-owned | 6,911 | 41 | 43.45% | $ 14,447 | $ 16,067 | 82.0% | 87.0% | ||
Fund I | 2,726 | 13 | 19.92% | 6,622 | 7,416 | 82.8% | 81.9% | ||
Fund II | 556 | 3 | 2.98% | 991 | - | 82.3% | N/A | ||
Unconsolidated joint ventures | 167 | 2 | 0.74% | 246 | 909 | 83.8% | 82.4% | ||
Total same-store properties | 10,360 | 59 | 67.09% | 22,306 | 24,392 | 82.2% | 85.1% | ||
Net operating income from all | |||||||||
office and parking properties | 14,532 | 67 | 100.00% | $ 33,247 | $ 25,066 | ||||
(1) Percentage of portfolio based on 2011 net operating income. | |||||||||
The following table is a reconciliation of net income (loss) to SSNOI and Recurring SSNOI: | |||||||||
Three Months Ended | Nine Months Ended | ||||||||
September 30 | September 30 | ||||||||
2011 | 2010 | 2011 | 2010 | ||||||
Net income (loss) for Parkway Properties, Inc. | $ (53,028) | $ (1,832) | $ (69,852) | $ 7,570 | |||||
Add (deduct): | |||||||||
Interest expense | 13,473 | 10,164 | 37,280 | 30,576 | |||||
Depreciation and amortization | 26,087 | 14,825 | 64,519 | 46,260 | |||||
Management company expenses | 4,319 | 858 | 8,398 | 2,243 | |||||
Income tax expense (benefit) | (174) | 59 | 50 | 176 | |||||
General and administrative expenses | 1,902 | 1,758 | 5,380 | 5,361 | |||||
Acquisition costs | 25 | - | 16,754 | - | |||||
Equity in (earnings) loss of unconsolidated joint ventures | 14 | (62) | (65) | (253) | |||||
Gain on involuntary conversion | - | (40) | - | (40) | |||||
Gain on sale of real estate | (743) | - | (743) | - | |||||
Non-cash impairment loss on real estate | 107,240 | - | 107,240 | - | |||||
Non-cash impairment loss on mortgage loan receivable | 9,235 | - | 9,235 | - | |||||
Change in fair value of contingent consideration | (12,000) | - | (12,000) | - | |||||
Net loss attributable to noncontrolling interests - real estate partnerships | (77,546) | (2,356) | (84,112) | (7,581) | |||||
(Income) loss from discontinued operations | 22,633 | 1,048 | 26,410 | (1,444) | |||||
Gain on sale of real estate from discontinued operations | (2,275) | - | (6,567) | (8,518) | |||||
Management company income | (6,120) | (585) | (9,990) | (1,331) | |||||
Interest and other income | (87) | (354) | (849) | (1,105) | |||||
Net operating income from consolidated office and parking properties | 32,955 | 23,483 | 91,088 | 71,914 | |||||
Net operating income from unconsolidated joint ventures | 292 | 1,583 | 1,840 | 5,763 | |||||
Less: Net operating income from non same-store properties | (10,941) | (674) | (21,307) | (683) | |||||
Same-store net operating income (SSNOI) | 22,306 | 24,392 | 71,621 | 76,994 | |||||
Less: non-recurring lease termination fee income | (625) | (777) | (1,135) | (2,025) | |||||
Recurring SSNOI | $ 21,681 | $ 23,615 | $ 70,486 | $ 74,969 | |||||
Parkway's share of SSNOI | $ 16,553 | $ 18,174 | $ 52,658 | $ 56,595 | |||||
Parkway's share of recurring SSNOI | $ 16,260 | $ 17,762 | $ 51,856 | $ 55,027 | |||||