EX-99.1 2 a09-18500_2ex99d1.htm EX-99.1

Exhibit 99.1

 

 

 

 

400 Centre Street, Newton, MA 02458-2076

 

 

 

tel: (617) 332-3990     fax: (617) 332-2261

 

FOR IMMEDIATE RELEASE

Contacts:

 

Timothy A. Bonang, Director of Investor Relations, or

 

Carlynn Finn, Manager of Investor Relations

 

(617) 796-8222

 

www.hrpreit.com

 

HRPT Properties Trust Announces Results for the Periods

Ended June 30, 2009

 

 

 

 

Newton, MA (August 10, 2009): HRPT Properties Trust (NYSE: HRP) today announced financial results for the quarter and six months ended June 30, 2009.

 

Results for the quarter ended June 30, 2009:

 

Net income available for common shareholders was $46.9 million for the quarter ended June 30, 2009, compared to $55.4 million for the same quarter last year.  Net income available for common shareholders per share, basic and diluted, (EPS) for the quarters ended June 30, 2009 and 2008 was $0.21 and $0.25, respectively.  Net income for the quarter ended June 30, 2009 includes $20.3 million, or $0.09 per share, of gain on sale of properties and $13.2 million, or $0.06 per share, of gain on early extinguishment of debt.  Net income for the quarter ended June 30, 2008 includes $40.0 million, or $0.18 per share, of gain on sale of properties.

 

Funds from operations (FFO) available for common shareholders for the quarter ended June 30, 2009 was $63.9 million, or $0.29 and $0.28 per share basic and diluted, respectively, compared to FFO available for common shareholders for the quarter ended June 30, 2008 of $64.1 million, or $0.28 per share basic and diluted.

 

The weighted average number of basic and diluted common shares outstanding totaled 223,696,703 and 252,889,361, respectively, for the quarter ended June 30, 2009, and 225,448,673 and 254,641,331, respectively, for the quarter ended June 30, 2008.

 

 

A Maryland Real Estate Investment Trust with transferable shares of beneficial interest listed on the New York Stock Exchange.  No shareholder, Trustee or officer is personally liable for any act or obligation of the Trust.

 


 

Results for the six months ended June 30, 2009:

 

Net income available for common shareholders was $77.4 million for the six months ended June 30, 2009, compared to $70.1 million for the same period last year.  Net income available for common shareholders per share, basic and diluted, (EPS) for the six months ended June 30, 2009 and 2008 was $0.34 and $0.31, respectively.  Net income for the six months ended June 30, 2009 includes $29.1 million, or $0.13 per share, of gain on sale of properties and $20.7 million, or $0.09 per share, of gain on early extinguishment of debt.  Net income for the six months ended June 30, 2008 includes $40.0 million, or $0.18 per share, of gain on sale of properties.

 

Funds from operations (FFO) available for common shareholders for the six months ended June 30, 2009 was $126.7 million, or $0.56 and $0.55 per share basic and diluted, respectively, compared to FFO available for common shareholders for the six months ended June 30, 2008 of $127.2 million, or $0.56 and $0.55 per share basic and diluted, respectively.

 

The weighted average number of basic and diluted common shares outstanding totaled 224,652,791 and 253,845,449, respectively, for the six months ended June 30, 2009, and 225,446,585 and 254,639,243, respectively, for the six months ended June 30, 2008.

 

Occupancy and Leasing Results (excluding properties classified in discontinued operations):

 

As of June 30, 2009, 89.1% of HRP’s total square feet was leased, compared to 89.5% as of March 31, 2009 and 90.9% as of June 30, 2008.

 

HRP signed lease renewals for 992,000 square feet and new leases for 650,000 square feet during the quarter ended June 30, 2009, for weighted average rental rates that were 2% below prior rents for the same space.  Average lease terms for leases signed during the second quarter of 2009 were 7.7 years.  Commitments for tenant improvement and leasing commission (TI/LC) costs for leases signed during the quarter ended June 30, 2009 totaled $13.25 per square foot on a weighted average basis.

 

Investing Activities:

 

During the second quarter of 2009, HRP acquired one office property with 670,000 square feet of space for $134.3 million, excluding closing costs and one industrial property with 645,000 square feet of space for $34.0 million, excluding closing costs.  HRP also sold two properties during the second quarter of 2009 with 193,000 square feet of space for $50.8 million, excluding closing costs, and realized a gain on sale of properties of $20.3 million.

 

Financing Activities:

 

During the second quarter of 2009, HRP repurchased and retired $77.7 million face amount of its publicly issued debt securities for $64.0 million and realized a gain on early extinguishment of debt of $13.2 million, net of unamortized issuance costs and discounts.

 

 

2


 

During April 2009, HRP transferred 29 properties with 3.3 million square feet to its wholly owned subsidiary, Government Properties Income Trust, or GOV, a real estate investment trust that owns properties that are majority leased to government tenants.  Also in April 2009, GOV entered into a new $250 million secured credit facility with a group of commercial banks.  The $250 million proceeds of this credit facility were distributed by GOV to HRP and used to repay amounts outstanding under HRP’s revolving credit facility.  In June 2009, GOV completed an initial public offering of 11.5 million common shares and became a separate public company.  Simultaneous with the closing of the GOV IPO, the $250 million secured credit facility was transferred to GOV and is no longer an obligation of HRP’s.  HRP continues to own 9.95 million common shares, or 46.4%, of GOV with a book carrying value of $153.1 million and a market value of $204.3 million as of June 30, 2009.

 

In January 2009, HRP announced that its Board authorized a buy back program for up to $100 million of common shares during 2009.  Through June 30, 2009 HRP has purchased 4,050,000 common shares at an average price of $3.57/share.  HRP has not repurchased any additional shares since June 30 through today.  Although this repurchase authority has not been rescinded, in view of the recent increases in the trading prices of common shares of REITs, including HRP, and the continuation of restrictive conditions in the debt markets, it now appears that HRP may not spend the full authorized amount for common share purchases before the end of 2009, unless capital market conditions change.

 

Conference Call:

 

On Tuesday, August 11, 2009, at 10:00 a.m. Eastern Time, Adam Portnoy, Managing Trustee, and John Popeo, Chief Financial Officer, will host a conference call to discuss the second quarter 2009 results.

 

The conference call telephone number is (888) 632-5009.  Participants calling from outside the United States and Canada should dial (913) 312-0388.  No pass code is necessary to access either call.  Participants should dial in about 15 minutes prior to the scheduled start of the call.  A replay of the conference call will be available through 1:00 p.m. Eastern Time on Tuesday, August 18, 2009.  To hear the replay, dial (719) 457-0820.  The replay pass code is 9325774.

 

A live audio webcast of the conference call will also be available in a listen only mode on HRP’s web site, which is located at www.hrpreit.com.  Participants wanting to access the webcast should visit HRP’s web site about five minutes before the call.  The archived webcast will be available for replay on HRP’s web site for about one week after the call.

 

 

3


 

Supplemental Data:

 

A copy of HRP’s Second Quarter 2009 Supplemental Operating and Financial Data is available for download at HRP’s web site, www.hrpreit.com.

 

HRPT Properties Trust is a real estate investment trust, or REIT, which primarily owns office and industrial buildings located throughout the United States.  As of June 30, 2009, HRP owned 512 operating properties with 65.3 million square feet, including approximately 17 million square feet of leased industrial and commercial lands in Oahu, Hawaii.  HRP is headquartered in Newton, Massachusetts.

 

Please see the pages attached hereto for a more detailed statement of our operating results and financial condition, along with an explanation of our calculation of FFO.  HRP’s web site is not incorporated as part of this press release.

 

WARNING REGARDING FORWARD LOOKING STATEMENTS

 

THIS PRESS RELEASE CONTAINS FORWARD LOOKING STATEMENTS WITHIN THE MEANING OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 AND OTHER SECURITIES LAWS.  THESE FORWARD LOOKING STATEMENTS ARE BASED UPON HRP’S PRESENT BELIEFS AND EXPECTATIONS, BUT THEY ARE NOT GUARANTEED TO OCCUR AND MAY NOT OCCUR.  FOR EXAMPLE:

 

·                  THIS PRESS RELEASE STATES THAT HRP HAS REPURCHASED SOME OF ITS EQUITY AND DEBT SECURITIES.  THE IMPLICATIONS OF THIS STATEMENT MAY BE THAT HRP WILL CONTINUE TO REPURCHASE ITS EQUITY AND DEBT SECURITIES.  IN FACT, HRP HAS REPURCHASED ITS SECURITIES ON AN OPPORTUNISTIC BASIS, WHEN OPPORTUNITIES TO DO SO HAVE BEEN AVAILABLE AT PRICES HRP BELIEVES ARE ATTRACTIVE AND HRP HAS AVAILABLE FINANCIAL RESOURCES. HRP MAY ACCELERATE, DELAY, DISCONTINUE OR RESTART MAKING SUCH PURCHASES AT ANY TIME, IN ITS DISCRETION.

 

RESULTS DIFFERENT FROM THOSE STATED OR IMPLIED BY FORWARD LOOKING STATEMENTS MAY OCCUR FOR MANY DIFFERENT REASONS, SOME OF WHICH, LIKE CHANGES IN THE PRICES OF THE SECURITIES AVAILABLE FOR PURCHASE, MAY BE AT MOST ONLY PARTIALLY WITHIN HRP’S CONTROL, AND SOME OF WHICH, SUCH AS CHANGES IN FINANCIAL MARKET CONDITIONS GENERALLY, ARE BEYOND HRP’S CONTROL.

 

INVESTORS SHOULD NOT PLACE UNDUE RELIANCE UPON FORWARD LOOKING STATEMENTS AND THEIR IMPLICATIONS IN THIS PRESS RELEASE.

 

EXCEPT AS REQUIRED BY LAW, HRP DOES NOT ASSUME ANY OBLIGATIONS TO UPDATE ANY FORWARD LOOKING STATEMENTS AS A RESULT OF NEW INFORMATION, CHANGED CIRCUMSTANCES, FUTURE EVENTS OR OTHERWISE.

 

 

4


 

HRPT Properties Trust

Consolidated Statements of Income and Funds from Operations

(amounts in thousands, except per share data)

 

 

 

Quarter Ended June 30,

 

Six Months Ended June 30,

 

 

 

2009

 

2008

 

2009

 

2008

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Rental income

 

$212,729

 

 

$204,273

 

 

$429,652

 

 

$405,445

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses

 

86,686

 

 

83,747

 

 

178,425

 

 

164,964

 

 

Depreciation and amortization

 

49,604

 

 

45,228

 

 

97,994

 

 

90,041

 

 

General and administrative

 

9,792

 

 

8,991

 

 

19,279

 

 

17,853

 

 

Acquisition costs

 

489

 

 

 

 

748

 

 

 

 

Total expenses

 

146,571

 

 

137,966

 

 

296,446

 

 

272,858

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

66,158

 

 

66,307

 

 

133,206

 

 

132,587

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

363

 

 

89

 

 

508

 

 

418

 

 

Interest expense (including amortization of debt discounts, premiums and deferred financing fees of $1,886, $1,431, $3,528 and $2,526, respectively)

 

(44,267

)

 

(44,383

)

 

(88,126

)

 

(89,423

)

 

Gain on early extinguishment of debt

 

13,173

 

 

 

 

20,686

 

 

 

 

Equity in earnings of equity investments

 

861

 

 

 

 

861

 

 

 

 

Income from continuing operations before income tax expense

 

36,288

 

 

22,013

 

 

67,135

 

 

43,582

 

 

Income tax (expense) benefit

 

(190

)

 

4

 

 

(342

)

 

(160

)

 

Income from continuing operations

 

36,098

 

 

22,017

 

 

66,793

 

 

43,422

 

 

Discontinued operations:

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from discontinued operations

 

3,212

 

 

6,068

 

 

6,884

 

 

12,069

 

 

Gain on sale of properties

 

20,306

 

 

39,967

 

 

29,051

 

 

39,967

 

 

Net income

 

59,616

 

 

68,052

 

 

102,728

 

 

95,458

 

 

Preferred distributions

 

(12,667

)

 

(12,667

)

 

(25,334

)

 

(25,334

)

 

Net income available for common shareholders

 

$46,949

 

 

$55,385

 

 

$77,394

 

 

$70,124

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Calculation of Funds from Operations, or FFO (1):

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$59,616

 

 

$68,052

 

 

$102,728

 

 

$95,458

 

 

Plus: depreciation and amortization from continuing operations

 

49,604

 

 

45,228

 

 

97,994

 

 

90,041

 

 

Plus: depreciation and amortization from discontinued operations

 

(11

)

 

3,454

 

 

 

 

7,004

 

 

Plus: acquisition costs (2)

 

489

 

 

 

 

748

 

 

 

 

Plus: FFO from equity investments

 

1,170

 

 

 

 

1,170

 

 

 

 

Less: gain on early extinguishment of debt

 

(13,173

)

 

 

 

(20,686

)

 

 

 

Less: gain on sale of properties

 

(20,306

)

 

(39,967

)

 

(29,051

)

 

(39,967

)

 

Less: equity in earnings of equity investments

 

(861

)

 

 

 

(861

)

 

 

 

FFO

 

76,528

 

 

76,767

 

 

152,042

 

 

152,536

 

 

Less: preferred distributions

 

(12,667

)

 

(12,667

)

 

(25,334

)

 

(25,334

)

 

FFO available for common shareholders

 

$63,861

 

 

$64,100

 

 

$126,708

 

 

$127,202

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding – basic

 

223,697

 

 

225,449

 

 

224,653

 

 

225,447

 

 

Weighted average common shares outstanding – diluted (3)

 

252,890

 

 

254,642

 

 

253,846

 

 

254,640

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Per common share:

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from continuing operations available for commonshareholders — basic and diluted

 

$0.10

 

 

$0.04

 

 

$0.18

 

 

$0.08

 

 

Income from discontinued operations – basic and diluted

 

$0.11

 

 

$0.20

 

 

$0.16

 

 

$0.23

 

 

Net income available for common shareholders – basic and diluted

 

$0.21

 

 

$0.25

 

 

$0.34

 

 

$0.31

 

 

FFO available for common shareholders – basic

 

$0.29

 

 

$0.28

 

 

$0.56

 

 

$0.56

 

 

FFO available for common shareholders – diluted

 

$0.28

 

 

$0.28

 

 

$0.55

 

 

$0.55

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common distributions paid

 

$0.12

 

 

$0.21

 

 

$0.24

 

 

$0.42

 

 

 

 

5


 

HRPT Properties Trust

Consolidated Statements of Income and Funds from Operations

(amounts in thousands, except per share data)

 

(1)     We compute FFO as shown in the calculations above.  Our calculations of FFO differ from the National Association of Real Estate Investment Trusts, or NAREIT, definition because we exclude acquisition costs as described in Note 2 below, gain on early extinguishment of debt and loss on early extinguishment of debt unless settled in cash.  We consider FFO to be an appropriate measure of performance for a REIT, along with net income and cash flow from operating, investing and financing activities.  We believe that FFO provides useful information to investors because by excluding the effects of certain historical amounts, such as depreciation expense and gains or losses on sales of depreciated operating properties, FFO can facilitate a comparison of operating performance between periods and among REITs.  FFO does not represent cash generated by operating activities in accordance with generally accepted accounting principles, or GAAP, and should not be considered an alternative to net income or cash flow from operating activities as a measure of financial performance or liquidity.  Also, some REITs may calculate FFO differently than us.

 

(2)     Acquisition costs have been expensed under Statement of Financial Accounting Standards No. 141(R), “Business Combinations” since January 1, 2009.

 

(3)     As of June 30, 2009, our 15,180 outstanding series D preferred shares were convertible into 29,193 common shares.  The effect of a conversion of our series D convertible preferred shares on income from continuing operations available for common shareholders per share is anti-dilutive to income, but dilutive to FFO for the quarters and six months ended June 30, 2009 and 2008.  Set forth below is the calculation of diluted net income available for common shareholders, diluted FFO available for common shareholders and diluted weighted average common shares outstanding.

 

 

 

Quarter Ended
June 30,

 

Six Months Ended
June 30,

 

 

 

2009

 

2008

 

2009

 

2008

 

 

 

 

 

 

 

 

 

 

 

Net income available for common shareholders

 

$46,949

 

$55,385

 

$77,394

 

$70,124

 

Add - Series D convertible preferred distributions

 

6,167

 

6,167

 

12,334

 

12,334

 

Net income available for common shareholders – diluted

 

$53,116

 

$61,552

 

$89,728

 

$82,458

 

 

 

 

 

 

 

 

 

 

 

FFO available for common shareholders

 

$63,861

 

$64,100

 

$126,708

 

$127,202

 

Add - Series D convertible preferred distributions

 

6,167

 

6,167

 

12,334

 

12,334

 

FFO available for common shareholders – diluted

 

$70,028

 

$70,267

 

$139,042

 

$139,536

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding – basic

 

223,697

 

225,449

 

224,653

 

225,447

 

Effect of dilutive Series D preferred shares

 

29,193

 

29,193

 

29,193

 

29,193

 

Weighted average common shares outstanding – diluted

 

252,890

 

254,642

 

253,846

 

254,640

 

 

 

6


 

HRPT Properties Trust

Consolidated Balance Sheets

(amounts in thousands, except share data)

 

 

 

June 30,

 

December 31,

 

 

 

2009

 

2008

 

 

 

 

 

 

(audited)

 

ASSETS

 

 

 

 

 

 

 

Real estate properties:

 

 

 

 

 

 

 

Land

 

$1,200,934

 

 

$1,220,554

 

 

Buildings and improvements

 

4,768,406

 

 

5,021,703

 

 

 

 

5,969,340

 

 

6,242,257

 

 

Accumulated depreciation

 

(823,527

)

 

(862,958

)

 

 

 

5,145,813

 

 

5,379,299

 

 

Properties held for sale

 

105,234

 

 

145,849

 

 

Acquired real estate leases, net

 

157,428

 

 

164,308

 

 

Equity investments

 

158,053

 

 

 

 

Cash and cash equivalents

 

38,138

 

 

15,518

 

 

Restricted cash

 

8,993

 

 

10,837

 

 

Rents receivable, net of allowance for doubtful accounts of $8,351 and $8,492, respectively

 

188,512

 

 

196,839

 

 

Other assets, net

 

123,919

 

 

103,449

 

 

Total assets

 

$5,926,090

 

 

$6,016,099

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

 

 

 

 

Revolving credit facility

 

$201,000

 

 

$201,000

 

 

Senior unsecured debt, net

 

2,132,795

 

 

2,241,225

 

 

Mortgage notes payable, net

 

443,908

 

 

447,693

 

 

Other liabilities related to properties held for sale

 

2,987

 

 

3,400

 

 

Accounts payable and accrued expenses

 

101,886

 

 

99,285

 

 

Acquired real estate lease obligations, net

 

46,989

 

 

47,839

 

 

Rent collected in advance

 

27,486

 

 

26,537

 

 

Security deposits

 

21,375

 

 

17,935

 

 

Due to affiliates

 

17,705

 

 

10,073

 

 

Total liabilities

 

2,996,131

 

 

3,094,987

 

 

 

 

 

 

 

 

 

 

Shareholders’ equity:

 

 

 

 

 

 

 

Preferred shares of beneficial interest, $0.01 par value: 50,000,000 shares authorized;

 

 

 

 

 

 

 

Series B preferred shares; 8 3/4% cumulative redeemable at par on or after September 12, 2007; 7,000,000 shares issued and outstanding, aggregate liquidation preference $175,000

 

169,079

 

 

169,079

 

 

Series C preferred shares; 7 1/8% cumulative redeemable at par on or after February 15, 2011; 6,000,000 shares issued and outstanding, aggregate liquidation preference $150,000

 

145,015

 

 

145,015

 

 

Series D preferred shares; 6 1/2% cumulative convertible; 15,180,000 shares issued and outstanding, aggregate liquidation preference $379,500

 

368,270

 

 

368,270

 

 

Common shares of beneficial interest, $0.01 par value: 350,000,000 shares authorized; 223,708,241 and 227,731,938 shares issued and outstanding, respectively

 

2,237

 

 

2,277

 

 

Additional paid in capital

 

2,923,649

 

 

2,937,986

 

 

Cumulative net income

 

2,174,982

 

 

2,072,254

 

 

Cumulative common distributions

 

(2,496,011

)

 

(2,441,841

)

 

Cumulative preferred distributions

 

(357,262

)

 

(331,928

)

 

Total shareholders’ equity

 

2,929,959

 

 

2,921,112

 

 

Total liabilities and shareholders’ equity

 

$5,926,090

 

 

$6,016,099

 

 

 

 

7