-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, NjSTh32kvYIn3q/VhiQU8d8N6V3zlAVSO0OkqQVXFP8etwa67ZQ9+5WcQ8CfI88C yS0MOtZGQbLi5Yjop4SoMg== 0001157523-04-004494.txt : 20040506 0001157523-04-004494.hdr.sgml : 20040506 20040505210424 ACCESSION NUMBER: 0001157523-04-004494 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20040505 ITEM INFORMATION: FILED AS OF DATE: 20040506 FILER: COMPANY DATA: COMPANY CONFORMED NAME: AMERIVEST PROPERTIES INC CENTRAL INDEX KEY: 0000927102 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 841240264 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-14462 FILM NUMBER: 04783141 BUSINESS ADDRESS: STREET 1: 1780 S BELLAIRE ST STREET 2: SUITE 515 CITY: DENVER STATE: CO ZIP: 80222 BUSINESS PHONE: 3032971800 MAIL ADDRESS: STREET 1: 1780 S. BELLAIRE ST. STREET 2: SUITE 515 CITY: DENVER STATE: CO ZIP: 80222 8-K 1 a4634075.txt AMERIVEST PROPERTIES INC. UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): May 5, 2004 AmeriVest Properties Inc. (Exact name of small business issuer as specified in its charter) Maryland 1-14462 84-1240264 (State or other jurisdiction of (Commission File No.) (I.R.S. Employer incorporation or organization) Identification No.) 1780 South Bellaire Street Suite 100, Denver, Colorado 80222 (Address of principal executive offices) (303) 297-1800 (Registrant's telephone number) Item 12. Results of Operations and Financial Condition. On May 5, 2004, AmeriVest Properties Inc. ("AmeriVest") announced its consolidated financial results for the quarter ended March 31, 2004. A copy of AmeriVest's earnings press release is furnished as Exhibit 99.1 to this report on Form 8-K. A copy of AmeriVest's First Quarter 2004 Supplemental Operating and Financial Information package is furnished as Exhibit 99.2 to this report on Form 8-K. The information contained in this report on Form 8-K, including Exhibits 99.1 and 99.2, shall not be deemed "filed" with the Securities and Exchange Commission nor incorporated by reference in any registration statement filed by AmeriVest under the Securities Act of 1933, as amended. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. AMERIVEST PROPERTIES INC. Dated: May 5, 2004 By: /s/ Kathryn L. Hale --------------------------------- Kathryn L. Hale Chief Financial Officer EX-99.1 2 a4634075ex991.txt PRESS RELEASE Exhibit 99.1 AmeriVest Announces Performance and Operating Results for First Quarter 2004 DENVER--(BUSINESS WIRE)--May 5, 2004--AmeriVest Properties Inc. (AMEX: AMV) reported results today for the first quarter ended March 31, 2004. Funds From Operations (FFO) for the first quarter of 2004 were $1,877,696 or $0.11 per diluted share, compared with $1,785,612, or $0.16 per diluted share, for the same period in 2003. The Company reported a net loss for the quarter of $375,011, or $0.02 per share, compared with net income of $404,964, or $0.04 per share, for the prior year period. See the Summary Financial Information for a reconciliation of FFO and FFO per share from net (loss)/income and (loss)/earnings per share, the most directly comparable GAAP measures. Revenues for the first quarter of 2004 increased 47% over the prior year period primarily due to the Company's continued growth, consisting of the inclusion of the operations from the Southwest Gas Building for a full quarter in 2004 versus a partial quarter in 2003, the late-2003 acquisitions (Financial Plaza, Scottsdale Norte and Greenhill Park) for a full quarter in 2004, and the March 2004 Camelback Lakes acquisition for a partial month. Property operating expenses increased by 74% from 2003 to 2004 because of these transactions as well as increases in property taxes and utility costs, which were previously discussed in the Company's 2003 year-end earnings release. Additionally, the Company added regional operating management personnel in the Phoenix and Dallas markets during the latter half of 2003 and in the Denver market in the first quarter of 2004. Management believes it is important to the Company's strategy to have experienced property management personnel in its local markets; the regional offices are positioned to absorb management of existing properties and future acquisitions within each market. "Our first quarter financial results were generally in line with our expectations," commented William Atkins, Chairman and Chief Executive Officer of AmeriVest. "Compared to the fourth quarter of 2003, revenues were up 11%, operating margins were up 2%, general and administrative expenses, as a percentage of revenue, were down almost 4% and FFO per diluted share was up 57%. In addition, our leasing activity increased markedly during the quarter, with more than 50% of the square footage leased during the quarter occurring in March. As our markets continue to improve, we believe we are well positioned to continue to make operating progress during the remainder of the year," continued Atkins. First Quarter Highlights -- On March 16, the Company acquired the Camelback Lakes office complex. Camelback Lakes is located in Phoenix, Arizona and contains approximately 203,000 square feet on 12.04 acres of land. The purchase price for Camelback Lakes was $31,980,000, which was paid with the proceeds from the Company's revolving lines of credit from Fleet National Bank. -- On March 16, the Company sold its Texas Bank Buildings for $4,100,000. The four properties are located in Clifton, Georgetown, Henderson and Mineral Wells, Texas and contain an aggregate of 60,095 square feet. This sale resulted in a gain of approximately $574,000. The operations of these properties, including the gain on sale, have been reclassified on the Company's consolidated statements of operations to discontinued operations for the current and comparable prior year period. -- During the first quarter, the Company entered into a contract to acquire an office property in metropolitan Dallas for $16,800,000. The property contains approximately 115,000 square feet and the transaction is expected to close during May. The contract is subject to a number of contingencies and there is no assurance that this acquisition will occur. -- In March, the Company completed a 6,325,000 share common stock offering, which raised approximately $39,940,000 after underwriting commissions and offering expenses. RBC Capital Markets acted as the sole book-runner, with Ferris, Baker Watts, Incorporated, BB&T Capital Markets (a division of Scott & Stingfellow, Inc.), J.J.B. Hilliard, W.L. Lyons, Inc. and Stifel, Nicolaus & Company, Incorporated, having served as co-managers of the offering. The proceeds were used to repay the outstanding balance on the unsecured revolving line of credit with Fleet National Bank and a portion of the outstanding balance on the senior secured revolving line of credit, also with Fleet. The Company intends to use available amounts under these facilities to fund future property acquisitions and other working capital needs. -- In March, the Board of Directors declared a quarterly dividend of $0.13 per common share, which was paid on April 15, 2004, and represents our 31st consecutive quarterly dividend. Supplemental Operating and Financial Information The Supplemental Operating and Financial Information for the first quarter of 2004 is available online at the Company's website, www.amvproperties.com by clicking the Investor Relations link and then the Supplemental Information link. Conference Call Information The Company will hold an investor/analyst conference call on May 6, 2004, beginning at 9:00 am MST (11:00 am EST, 10:00 am CST and 8:00 am PST) to discuss its first quarter financial results. To participate in the conference call, please dial (800) 548-8725 approximately ten minutes before the scheduled start of the call. If you are calling from outside North America, please call (706) 634-5929. A digital replay will be available two hours after the completion of the conference call until May 13, 2004 by calling (800) 642-1687 or for participants outside North America, please call (706) 645-9291 and enter conference ID# 6880560. A live webcast of the conference call will be available at www.amvproperties.com. You must have Windows Media Player installed on your computer in order to listen to the webcast, which may be downloaded for free at the website listed above. Company Information AmeriVest Properties Inc., with its principal office in Denver, Colorado, provides Smart Space for Small Business(SM) in Denver, Phoenix, Dallas, and Indianapolis through the acquisition, repositioning and operation of multi-tenant office buildings in those markets. To receive AmeriVest's latest news and information, visit our website at www.amvproperties.com. In addition to historical information, this press release contains forward-looking statements and information under the federal securities laws. These statements are based on expectations, estimates and projections about the industry and markets in which AmeriVest operates, management's beliefs and assumptions made by management. While AmeriVest management believes the assumptions underlying its forward-looking statements and information are reasonable, such information is necessarily subject to uncertainties and may involve certain risks, many of which are difficult to predict and are beyond management's control. As such, these statements and information are not guarantees of future performance, and actual operating results may differ materially from what is expressed or forecasted in this press release. In particular, the factors that could cause actual operating results to differ materially include, without limitation, continued qualification as a real estate investment trust, the effects of general and local economic and market conditions, competition, regulatory changes, the ability to enter into new leases or renew leases on favorable terms, dependence on tenants' financial condition, the uncertainties of real estate development and acquisition activity, development and construction costs, insurance risks, the costs and availability of financing, potential liability relating to environmental matters and liquidity of real estate investments and other risks and uncertainties detailed in AmeriVest's 2003 Annual Report on Form 10-KSB and from time to time in the Company's filings with the Securities and Exchange Commission. AMERIVEST PROPERTIES INC. Summary Financial Information (unaudited) Three months ended March 31, 2004 2003 ----------- ----------- Selected Income Statement Information: - -------------------------------------- REAL ESTATE OPERATING REVENUE Rental revenue $9,593,895 $6,548,627 REAL ESTATE OPERATING EXPENSES Property operating expenses Operating expenses 2,805,894 1,548,705 Real estate taxes 1,237,864 751,838 Management fees 17,322 33,877 General and administrative expenses 932,549 837,080 Ground rent expense 161,141 - Interest expense 2,722,067 1,725,435 Depreciation and amortization expense 2,777,091 1,327,966 ----------- ----------- 10,653,928 6,224,901 ----------- ----------- OTHER INCOME/(LOSS) Interest income 15,363 5,817 Equity in loss of unconsolidated affiliate (18,076) (10,602) ----------- ----------- (2,713) (4,785) ----------- ----------- (LOSS)/INCOME FROM CONTINUING OPERATIONS (1,062,746) 318,941 DISCONTINUED OPERATIONS 687,735 86,023 ----------- ----------- NET (LOSS)/INCOME $(375,011) $404,964 =========== =========== (LOSS)/EARNINGS PER SHARE Basic $(0.02) $0.04 =========== =========== Diluted $(0.02) $0.04 =========== =========== WEIGHTED AVERAGE COMMON SHARES OUTSTANDING Basic 17,567,414 11,100,292 =========== =========== Diluted 17,567,414 11,203,104 =========== =========== FUNDS FROM OPERATIONS Net (loss)/income $(375,011) $404,964 Depreciation and amortization expense 2,804,661 1,360,713 Share of depreciation of unconsolidated affiliate 22,322 19,935 Gain on sale (574,276) - ----------- ----------- FUNDS FROM OPERATIONS $1,877,696 $1,785,612 =========== =========== FUNDS FROM OPERATIONS PER SHARE Basic $0.11 $0.16 =========== =========== Diluted $0.11 $0.16 =========== =========== WEIGHTED AVERAGE COMMON SHARES OUTSTANDING Basic 17,567,414 11,100,292 =========== =========== Diluted 17,721,219 11,203,104 =========== =========== Funds From Operations (FFO) is a non-GAAP financial measure. We believe FFO, as defined by the Board of Governors of the National Association of Real Estate Investment Trusts (NAREIT), to be an appropriate measure of performance for an equity REIT, for the reasons, and subject to the qualifications, specified in the paragraph entitled "Non-GAAP Financial Measures" below. The above summary financial information table reflects the reconciliation of FFO from net income or (loss) and a comparison to earnings or (loss) per share, the most directly comparable GAAP measure, for the periods presented. AMERIVEST PROPERTIES INC. Summary Financial Information (continued) (unaudited) March 31, December 31, 2004 2003 ------------- ------------- Selected Balance Sheet Information: - ----------------------------------- Assets at cost $292,244,142 $253,826,130 Less: accumulated depreciation and amortization (16,333,209) (13,325,668) ------------- ------------- Total assets $275,910,933 $240,500,462 Total mortgage loans and notes payable $154,739,860 $159,530,410 Total stockholders' equity $107,597,554 $70,104,407 Common shares issued and outstanding 23,859,639 17,401,309 Selected Property Information: - ------------------------------ Number of operating properties owned 27 30 Total rentable square feet 2,365,640 2,222,079 Occupancy 84.5% 84.2% Selected Stock Information: - --------------------------- Common share price (as of period end) $6.75 $7.18 Equity market capitalization $161,052,563 $124,941,399 Common share annualized dividends $0.52 $0.52 Common share annualized dividend yield (as of period end) 7.7% 7.2% Non-GAAP Financial Measures. Funds From Operations (FFO) is a non-GAAP financial measure. FFO is defined as net income or (loss), computed in accordance with generally accepted accounting principles (GAAP), excluding gains or (losses) from sales of properties, plus real estate related depreciation and amortization and after adjustments for unconsolidated partnerships and joint ventures. We believe that FFO is helpful to investors as a measure of the performance of 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 assumes that the value of real estate assets diminishes predictably over time. Since real estate values have historically risen or fallen with market conditions, we believe that FFO provides a more meaningful and accurate indication of our performance. We compute FFO in accordance with standards established by the Board of Governors of 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 or that interpret the current NAREIT definition differently than we do. FFO does not represent cash generated from operating activities determined by GAAP and should not be considered as an alternative to net income or (loss) (determined in accordance with GAAP) as an indication of our financial performance or to cash flows from operating activities (determined in accordance with GAAP) as a measure of our liquidity, nor is it indicative of funds available to fund our cash needs, including our ability to make cash distributions. FFO may include funds that may not be available for our management's discretionary use due to requirements to conserve funds for capital expenditures, debt repayments, property acquisitions and other commitments and uncertainties. CONTACT: AmeriVest Properties Inc. Kim P. Boswood, 303-297-1800, ext. 118 Fax: 303-296-7353 kim@amvproperties.com www.amvproperties.com EX-99.2 3 a4634075supplement.txt SUPPLEMENTAL OPERATING AND FINANCIAL INFORMATION Exhibit 99.2 AmeriVest Properties Inc. Supplemental Operating and Financial Information First Quarter 2004 As of and for the three months ended March 31, 2004. All dollar amounts shown in this report are unaudited. This Supplemental Operating and Financial Information is not an offer to sell or solicitation to buy any securities of AmeriVest Properties Inc. Any offers to sell or solicitations to buy any securities of AmeriVest Properties Inc. shall be made by means of a prospectus. Table of Contents Corporate Information 1 Financial Information Selected Financial Data 3 Consolidated Statements of Operations 4 Geographic Operating Information - 2004 5 Geographic Operating Information - 2003 6 Non-GAAP Financial Measures 7 Consolidated Balance Sheets 8 Debt Summary 9 Portfolio Information Property Summary 10 Lease Expiration Information 11 Other Property Information 14 Corporate Information Company Overview AmeriVest Properties Inc. is a real estate investment trust (REIT) which owns and operates commercial office buildings in select markets catering to small and medium size businesses. At March 31, 2004, AmeriVest owned 27 properties totaling 2,365,640 square feet located in Colorado, Texas, Arizona and Indiana. The Company's core portfolio (which excludes assets it owns less than 100% and smaller office buildings primarily leased to the State of Texas) included 13 properties totaling 2,083,537 square feet located in metropolitan Denver, Dallas, Phoenix and Indianapolis. Strategy We believe that office space for small to medium size businesses is a large and underserved market. According to data compiled by the Office of Advocacy of the U.S. Small Business Administration in 2001, 89% of all U.S. businesses employed fewer than 20 employees. As a result, we believe that many businesses have office space requirements of no more than 4,000 square feet. Small to medium size businesses often have specific needs and limitations that are different from larger businesses. For example, small and medium size businesses cannot usually afford large corporate staffs to manage office leasing. These businesses have needs similar to larger firms, such as access to cutting edge technology, conference facilities, high quality telecommunications equipment and other amenities, but usually do not have a comparable budget to those firms. Our strategy is to focus on providing an office product targeted to this large market and its unmet needs in a cost effective manner. The key elements of our strategy include: -- Provide a superior, consistent product - We seek to provide a level of amenities to small and medium size businesses in our office properties that usually only larger companies would be able to obtain, such as keyless entry card systems, use of conference rooms with the latest telecommunication and presentation equipment, and the ability to access high speed voice and data service from multiple providers. -- Simplify the leasing process - Our leasing process is designed to meet the unique needs of a small to medium size customer base with limited staffing through our "no hassle" leasing philosophy which reduces the per lease cost for us and the customer. -- Provide a high level of service - With our deliberate focus on small and medium size businesses, we have developed a positive, service-oriented approach specifically tailored for our customer base. -- Target select cities - We target cities that meet specific criteria where we hope to build meaningful multi-property portfolios over the near term. As a result of our focused strategy, we believe that our properties provide office space that is particularly attractive for small and medium size businesses. By executing on our strategy, we believe we have been able to maintain high occupancy rates while still maintaining strong rent per square foot trends in our core markets as compared to the general office market. 1 Directors and Executive Officers
Initial Date Name Position as Director ---- -------- ----------- William T. Atkins Chief Executive Officer, Director and Chairman of 1999 the Board Charles K. Knight President, Chief Operating Officer and Director 1999 Kathryn L. Hale Chief Financial Officer and Secretary - John B. Greenman Chief Investment Officer and Vice President - Patrice Derrington Outside Director 2003 James F. Etter Outside Director 1995 Harry P. Gelles Outside Director 2000 Alexander S. Hewitt Director and Vice Chairman 2004 Robert W. Holman, Jr. Outside Director and Lead Outside Director 2001 John A. Labate Outside Director 1995 Jerry J. Tepper Outside Director 2000 Corporate Headquarters Investor Relations 1780 South Bellaire Street Kim P. Boswood Suite 100 (303) 297-1800 x118 Denver, Colorado 80222 kim@amvproperties.com (303) 297-1800 Stock Exchange Ticker American Stock Exchange AMV
2 Financial Information Selected Financial Data
As of and for the three months ended- ---------------------------------------------------------------- 3/31/04 12/31/2003 9/30/2003 6/30/2003 3/31/2003 ------------ ------------ ------------ ------------ ------------ (Amounts in thousands, except share, per share and property data) Operating Data- Real estate operating revenue(1) $9,594 $8,669 $6,895 $6,681 $6,549 General and administrative expenses 933 1,171 777 743 837 G&A as a percentage of revenue 9.7% 13.5% 11.3% 11.1% 12.8% Earnings Per Share- Net (loss)/income $(375) $(1,251) $(24) $(1,110) $405 (Loss)/earnings per share - basic (0.02) (0.07) 0.00 (0.09) 0.04 (Loss)/earnings per share - diluted (0.02) (0.07) 0.00 (0.09) 0.04 Funds From Operations (FFO)(2)- FFO $1,878 $1,317 $1,667 $358 $1,786 FFO per share - basic 0.11 0.08 0.10 0.03 0.16 FFO per share - diluted 0.11 0.07 0.10 0.03 0.16 Balance Sheet Data- Net investment in real estate(3) $259,921 $220,698 $197,671 $157,661 $158,802 Total assets 275,911 240,500 216,245 181,218 175,764 Total liabilities 166,477 170,396 142,834 105,729 130,527 Minority interest 1,836 - - - - Total stockholders' equity 107,598 70,104 73,411 75,489 45,237 Common Stock Data- Common shares outstanding 23,859,639 17,401,309 17,375,467 17,348,052 11,542,713 Weighted average shares - basic 17,567,414 17,383,652 17,356,751 12,806,389 11,100,292 Weighted average shares - diluted 17,721,219 17,633,834 17,459,294 12,906,283 11,203,104 Closing share price $6.75 $7.18 $6.50 $6.26 $6.29 Share price range for period (high - low) 7.64 - 6.40 6.50 - 7.21 6.75 - 6.11 6.65 - 5.85 6.55 - 5.66 Dividends declared per share 0.13 0.13 0.13 0.13 0.13 Annualized dividend yield 7.7% 7.2% 8.0% 8.3% 8.3% Market value of common equity $161,053 $124,941 $112,941 $108,599 $72,604 Total liabilities 166,477 170,396 142,834 105,729 130,527 ------------ ------------ ------------ ------------ ------------ Total market capitalization $327,530 $295,337 $255,775 $214,328 $203,131 ============ ============ ============ ============ ============ Cash Flow Data- Net cash flow from operating activities $1,719 $3,265 $2,812 $2,590 $1,984 Net cash flow from investing activities (31,231) (18,859) (16,536) (2,199) (18,468) Net cash flow from financing activities 30,061 15,899 6,441 5,306 16,925 ------------ ------------ ------------ ------------ ------------ Net change in cash and cash equivalents $549 $305 $(7,283) $5,697 $441 ============ ============ ============ ============ ============ Property Data- Properties owned 27 30 28 27 27 Rentable square feet 2,365,640 2,222,079 1,891,352 1,563,063 1,564,090 Occupancy 84.5% 84.2% 86.8% 89.0% 88.5%
(1) Excludes the revenues of assets classified as held for sale (Texas Bank Buildings - sold March 16, 2004). (2) See page 7 for a reconciliation of FFO from net (loss)/income and a comparison of FFO per share to (loss)/earnings per share, the most directly comparable GAAP measures. (3) Excludes the real estate assets of properties classified as held for sale (Texas Bank Buildings - sold March 16, 2004). 3 Consolidated Statements of Operations For the three months ended March 31, -------------------------- 2004 2003 ------------- ------------ Real Estate Operating Revenue Rental revenue $9,593,895 $6,548,627 Real Estate Operating Expenses Property operating expenses- Operating expenses 2,805,894 1,548,705 Real estate taxes 1,237,864 751,838 Management fees 17,322 33,877 General and administrative expenses 932,549 837,080 Ground rent expense 161,141 - Interest expense 2,722,067 1,725,435 Depreciation and amortization expense 2,777,091 1,327,966 ------------- ------------ Total operating expenses 10,653,928 6,224,901 ------------- ------------ Other Income/(Loss) Interest income 15,363 5,817 Equity in loss of unconsolidated affiliate (18,076) (10,602) ------------- ------------ Total other income/(loss) (2,713) (4,785) ------------- ------------ (Loss)/Income from Continuing Operations (1,062,746) 318,941 Discontinued Operations 687,735 86,023 ------------- ------------ Net (Loss)/Income $(375,011) $404,964 ============= ============ (Loss)/Earnings Per Share Basic $(0.02) $0.04 ============= ============ Diluted $(0.02) $0.04 ============= ============ Weighted Average Common Shares Outstanding Basic 17,567,414 11,100,292 ============= ============ Diluted 17,567,414 11,203,104 ============= ============ Geographic Operating Information - 2004 As of and for the three months ended March 31, 2004-
Denver Dallas Phoenix Indianapolis Non-core(1) Corporate Consolidated ------------ ------------ ------------- ------------ ------------ --------- ------------- Real estate operating revenue $2,395,260 $3,129,393 $3,235,429 $434,474 $399,339 $ - $9,593,895 Real estate operating expenses 1,100,393 1,254,726 1,329,912 167,963 208,086 - 4,061,080 ------------ ------------ ------------- ------------ ------------ --------- ------------- Net operating income 1,294,867 1,874,667 1,905,517 266,511 191,253 - 5,532,815 ------------ ------------ ------------- ------------ ------------ --------- ------------- Percent of total 23.4% 33.9% 34.4% 4.8% 3.5% 0.0% 100.0% Adjustments to arrive at net loss- General and administrative expenses (932,549) Ground rent expense (161,141) Interest expense (2,722,067) Depreciation and amortization expense (2,777,091) Interest income 15,363 Equity in loss of unconsolidated affiliate (18,076) Discontinued operations(2) 687,735 ------------- Total adjustments (5,907,826) ------------- Net loss $(375,011) ============= Net investment in real estate $70,218,380 $53,687,207 $112,234,408 $10,194,853 $13,486,581 $99,368 $259,920,797 ============ ============ ============= ============ ============ ========= ============= Properties owned 4 3 5 1 14 - 27 Rentable square feet 557,044 575,179 837,109 114,205 282,103 - 2,365,640 Occupancy 85.3% 86.5% 85.3% 84.9% 76.3% - 84.5%
(1) Includes the Texas State Buildings and Panorama Falls. Due to the adoption of FASB Interpretation No. 46R, the assets and liabilities of Panorama Falls are consolidated with those of AmeriVest effective March 31, 2004 and the real estate assets are reflected in the `net investment in real estate' balance in the `non-core' column. Beginning April 1, 2004, the operations of Panorama Falls will also be consolidated with those of AmeriVest. For the three months ended March 31, 2004, the investment in Panorama Falls was accounted for under the equity method and AmeriVest's share of the net loss of the entity is reflected above as `equity in loss of unconsolidated affiliate'. (2) Includes the net operations, including gain on sale, of the Texas Bank Buildings which were sold March 16, 2004. 5 Geographic Operating Information - 2003 As of and for the three months ended March 31, 2003-
Denver Dallas Phoenix Indianapolis Non-core(1) Corporate Consolidated ------------ ------------ ------------ ------------ ----------- --------- ------------- Real estate operating revenue $2,614,471 $1,993,374 $1,075,610 $459,990 $405,182 $ - $6,548,627 Real estate operating expenses 984,201 644,918 315,822 159,539 229,940 - 2,334,420 ------------ ------------ ------------ ------------ ----------- --------- ------------- Net operating income 1,630,270 1,348,456 759,788 300,451 175,242 - 4,214,207 ------------ ------------ ------------ ------------ ----------- --------- ------------- Percent of total 38.7% 32.0% 18.0% 7.1% 4.2% 0.0% 100.0% Adjustments to arrive at net income- General and administrative expenses (837,080) Interest expense (1,725,435) Depreciation and amortization expense (1,327,966) Interest income 5,817 Equity in loss of unconsolidated affiliate (10,602) Discontinued operations(2) 86,023 ------------- Total adjustments (3,809,243) ------------- Net income $404,964 ============= Net investment in real estate $66,975,428 $43,693,948 $30,246,165 $9,417,795 $8,369,239 $99,405 $158,801,980 ============ ============ ============ ============ =========== ========= ============= Properties owned 4 2 2 1 18 - 27 Rentable square feet 557,854 323,323 243,752 96,520 342,641 - 1,564,090 Occupancy 83.3% 96.7% 98.4% 95.8% 80.0% - 88.5%
(1) Includes the Texas State Buildings and Panorama Falls. (2) Includes the net operations of the Texas Bank Buildings which were sold March 16, 2004. The Texas Bank Buildings real estate assets are no longer reflected in the `net investment in real estate' amount under the `non-core' column as they have been reclassified to `assets - held for sale'. The property information (i.e. `properties owned', `rentable square feet' and `occupancy') as of March 31, 2003 still reflects these properties. 6 Non-GAAP Financial Measures Funds From Operations (FFO) is a non-GAAP financial measure. We believe FFO, as defined by the Board of Governors of the National Association of Real Estate Investment Trusts (NAREIT), to be an appropriate measure of performance for an equity REIT, for reasons, and subject to the qualifications, specified in the paragraph entitled "Non-GAAP Financial Measures" below. The following table reflects the reconciliation of FFO from net (loss)/income and a comparison of FFO per share to (loss)/earnings per share, the most directly comparable GAAP measures:
As of and for the three months ended- ------------------------------------------------------------ 3/31/2004 12/31/2003 9/30/2003 6/30/2003 3/31/2003 ----------- ----------- ----------- ----------- ------------ (Amounts in thousands except share and per share data) Funds From Operations (FFO)- Net (loss)/income $(375) $(1,251) $(24) $(1,110) $405 Depreciation and amortization expense 2,805 2,546 1,669 1,448 1,361 Share of depreciation and amortization expense of unconsolidated affiliate 22 22 22 20 20 Gain on sale (574) - - - - ----------- ----------- ----------- ----------- ------------ FFO $1,878 $1,317 $1,667 $358 $1,786 =========== =========== =========== =========== ============ (Loss)/earnings per share - diluted $(0.02) $(0.07) $0.00 $(0.09) $0.04 =========== =========== =========== =========== ============ FFO per share - diluted $0.11 $0.07 $0.10 $0.03 $0.16 =========== =========== =========== =========== ============ Common Stock Data- Weighted average shares - diluted 17,721,219 17,633,834 17,459,294 12,906,283 11,203,104
Non-GAAP Financial Measures: Funds From Operations (FFO) is a non-GAAP financial measure. FFO is defined as net income or (loss), computed in accordance with generally accepted accounting principles (GAAP), excluding gains or (losses) from sales of properties, plus real estate related depreciation and amortization and after adjustments for unconsolidated partnerships and joint ventures. We believe that FFO is helpful to investors as a measure of the performance of 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 assumes that the value of real estate assets diminishes predictably over time. Since real estate values have historically risen or fallen with market conditions, we believe that FFO provides a more meaningful and accurate indication of our performance. We compute FFO in accordance with standards established by the Board of Governors of 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 or that interpret the current NAREIT definition differently than we do. FFO does not represent cash generated from operating activities determined by GAAP and should not be considered as an alternative to net income or (loss) (determined in accordance with GAAP) as an indication of our financial performance or to cash flows from operating activities (determined in accordance with GAAP) as a measure of our liquidity, nor is it indicative of funds available to fund our cash needs, including our ability to make cash distributions. FFO may include funds that may not be available for our management's discretionary use due to requirements to conserve funds for capital expenditures, debt repayments, property acquisitions and other commitments and uncertainties. 7 Consolidated Balance Sheets
March 31, December 31, 2004 2003 --------------- --------------- Assets Investment in real estate- Land $35,758,606 $28,838,214 Buildings and improvements 212,271,792 184,519,890 Furniture, fixtures and equipment 981,909 799,730 Tenant improvements 9,155,780 6,144,440 Tenant leasing commissions 1,535,091 1,061,160 Intangible assets 15,853,841 11,468,120 Less: accumulated depreciation and amortization (15,636,222) (12,134,025) --------------- --------------- Net investment in real estate 259,920,797 220,697,529 Cash and cash equivalents 2,026,534 1,477,585 Escrow deposits 8,604,459 5,778,427 Assets - held for sale - 3,196,877 Investment in unconsolidated affiliate - 1,364,032 Due from related party - 3,371,526 Due from unconsolidated affiliate - 262,347 Accounts receivable 902,943 296,377 Deferred rents receivable 1,506,143 1,401,455 Deferred financing costs, net 2,289,316 2,301,043 Prepaid expenses and other assets 660,741 353,264 --------------- --------------- Total assets $275,910,933 $240,500,462 =============== =============== Liabilities Mortgage loans and notes payable $154,739,860 $158,237,661 Liabilities - held for sale - 1,296,049 Accounts payable and accrued expenses 3,308,924 2,736,657 Accrued real estate taxes 3,070,667 3,169,183 Prepaid rents, deferred revenue and security deposits 3,079,427 2,694,335 Dividends payable 2,278,197 2,262,170 --------------- --------------- Total liabilities 166,477,075 170,396,055 --------------- --------------- Minority interest 1,836,304 - --------------- --------------- Stockholders' Equity Preferred stock, $.001 par value Authorized - 5,000,000 shares Issued and outstanding - none - - Common stock, $.001 par value Authorized - 75,000,000 shares Issued and outstanding - 23,859,639 and 17,401,309 shares, respectively 23,860 17,401 Capital in excess of par value 131,846,267 91,706,371 Distributions in excess of accumulated earnings (24,272,573) (21,619,365) --------------- --------------- Total stockholders' equity 107,597,554 70,104,407 --------------- --------------- Total liabilities and stockholders' equity $275,910,933 $240,500,462 =============== ===============
8 Debt Summary
March 31, 2004 December 31, 2003 ---------------------- ---------------------- Maturity Principal Interest Principal Interest Lender Mortgaged Property Date Balance Rate(1) Balance Rate(1) - --------------------------- ------------------ ----------- ------------- -------- ------------- -------- Fixed rate- Teachers Insurance and AmeriVest Plaza at 1/10/2006 $14,533,930 7.90% $14,572,888 7.90% Annuity Association of Inverness America Greenwich Capital Parkway Centre II 10/1/2008 38,687,371 5.13% 38,876,849 5.13% Financial Products Centerra Southwest Gas Building Allstate Life Insurance Financial Plaza 10/5/2010 24,548,078 5.25% 24,669,760 5.25% Company Southern Farm Bureau Life Scottsdale Norte 4/1/2011 6,611,661 7.90% 6,625,460 7.90% Insurance Company Teachers Insurance and Sheridan Center 1/1/2013 29,198,575 7.40% 29,309,686 7.40% Annuity Association Arrowhead of America Fountains Kellogg Building Security Life of Denver Keystone Office 5/1/2022 4,308,486 8.00% 4,334,828 8.00% Insurance Park - 1st Company Security Life of Denver Keystone Office 5/1/2022 482,889 8.63% 485,638 8.63% Insurance Company Park - 2nd Transatlantic Capital Texas State 8/1/2028 5,640,873 7.66% 5,660,436 7.66% Company, LLC Buildings ------------- -------- ------------- -------- Subtotal $124,011,863 6.39% $124,535,545 6.39% ------------- -------- ------------- -------- Variable rate- Fleet National Bank - Chateau Plaza 11/12/2005 $30,650,000 3.85% $18,470,020 3.90% Senior Secured Line of Greenhill Park Credit Camelback Lakes Fleet National Bank - Unsecured 11/12/2005 - - 15,149,725 5.17% Unsecured Line of Credit ------------- -------- ------------- -------- Subtotal $30,650,000 3.85% $33,619,745 4.47% ------------- -------- ------------- -------- Other notes payable- Lease Capital Corporation Phone system 10/31/2007 $77,997 11.11% $82,371 11.11% ------------- -------- ------------- -------- Subtotal $77,997 11.11% $82,371 11.11% ------------- -------- ------------- -------- Total mortgage loans and notes payable $154,739,860 5.89% $158,237,661 5.98% ============= ======== ============= ======== Liabilities - held for sale Jefferson Pilot Texas Bank Buildings 5/1/2013 $ - - $1,292,749 9.00% ------------- -------- ------------- -------- Total including mortgage loan included in 'liabilities - held for sale' $154,739,860 5.89% $159,530,410 6.01% ============= ======== ============= ========
Scheduled maturities (for the years ended December 31,)- 2004 $1,623,505 2005 32,946,055 2006 16,495,075 2007 2,394,890 2008 37,136,849 Thereafter 64,143,486 ------------- Total $154,739,860 ============= Cash flow information (for the three months ended March 31, 2004)- Additions $36,017,462 Repayments (40,264,964) Scheduled principal repayments (543,048) ------------- Total $(4,790,550) =============
(1) Interest only, does not include amortization of deferred financing costs or unused facility fees. 9 Portfolio Information Property Summary
March 31, 2004 December 31, 2003 -------------------------- --------------------------- Building/ Year Rentable Occupancy Average Occupancy Average Location Acquired Area(1) Rate(2) Rent Per Rate(2) Rent Per SF(3) SF(3) - ----------------------------------- ---------- ------------ ------------- ------------ -------------- Same Store- Southwest Gas Building Phoenix, AZ 2003 147,660 82.7% $ 22.21 80.4% $ 22.10 Chateau Plaza Dallas, TX 2002 171,294 97.4% 23.08 100.0% 22.70 Centerra Denver, CO 2002 186,582 82.1% 18.26 72.9% 19.89 Parkway Centre II Plano, TX 2002 151,968 91.8% 20.50 95.4% 20.61 Kellogg Building Littleton, CO 2001 111,580 92.2% 20.78 85.8% 21.04 Arrowhead Fountains Peoria, AZ 2001 96,092 100.0% 22.71 100.0% 21.85 AmeriVest Plaza at Inverness Englewood, CO 2001 118,720 90.9% 23.12 91.3% 23.10 Sheridan Center Denver, CO 2000 140,162 79.4% 16.52 82.7% 16.36 ---------- ------------ ------------- ------------ -------------- Subtotal 1,124,058 88.9% $20.88 87.8% $20.99 ---------- ------------ ------------- ------------ -------------- 2003 Acquisitions and Developments- Greenhill Park Addison, TX 2003 251,917 76.0% $ 18.74 76.7% $ 18.84 Scottsdale Norte Scottsdale, AZ 2003 79,233 71.1% 22.95 80.9% 23.16 Financial Plaza Mesa, AZ 2003 310,830 82.3% 23.05 80.5% 23.02 Keystone Office Park Indianapolis, IN 1999/2003 114,205 84.9% 17.77 86.4% 17.71 ---------- ------------ ------------- ------------ -------------- Subtotal 756,185 79.4% $20.82 80.2% $20.84 ---------- ------------ ------------- ------------ -------------- 2004 Acquisitions- Camelback Lakes Phoenix, AZ 2004 203,294 90.2% $ 21.14 N/A N/A ---------- ------------ ------------- ------------ -------------- Subtotal 203,294 90.2% $21.14 N/A N/A ---------- ------------ ------------- ------------ -------------- Joint Ventures- Panorama Falls(4) Englewood, CO 2000 59,561 74.1% $ 19.37 78.0% $ 19.01 ---------- ------------ ------------- ------------ -------------- Subtotal 59,561 74.1% $19.37 78.0% $19.01 ---------- ------------ ------------- ------------ -------------- Non-Core- Texas Bank Buildings(5) Texas 1998 N/A N/A N/A 100.0% $ 15.88 Texas State Buildings(6) Texas 1997/1998 222,542 76.8% $ 9.00 76.8% 9.00 ---------- ------------ ------------- ------------ -------------- Subtotal 222,542 76.8% $9.00 81.7% $10.79 ---------- ------------ ------------- ------------ -------------- Total 2,365,640 84.5% $19.83 84.2% $19.63 ========== ============ ============= ============ ==============
(1) Includes office space but excludes storage, telecommunications and garage space. (2) Includes space leased but not yet occupied. (3) Annualized cash basis revenue divided by leased area. (4) 20% of the property is owned by AmeriVest and 80% of the property is owned by The John M. and Florence Bryan Trust as tenants in common. (5) These buildings were sold March 16, 2004. (6) 11 of 13 buildings are leased primarily to various agencies of the State of Texas. The Clint and Paris, Texas buildings are currently vacant. 10 Lease Expiration Information The following schedules detail the tenant(1) lease expirations for our 100%-owned properties(2) at March 31, 2004 in total and by geographic region: Consolidated Number of Square Annual Percentage of Total Year Leases Footage Revenue Annual Revenue - ---------------------------------------------------------------------------- 2004 76 234,364 $4,392,387 11.6% 2005 101 480,969 10,105,809 26.7% 2006 92 286,531 5,343,585 14.1% 2007 68 339,587 6,821,565 18.0% 2008 41 167,520 3,305,130 8.7% 2009 29 186,579 3,903,111 10.3% 2010 7 135,003 2,325,566 6.2% 2011 4 30,489 576,185 1.5% 2012 2 32,910 749,794 2.0% 2013 - - - - 2014 1 19,798 235,200 0.6% 2015 2 6,120 116,280 0.3% -------------------------------------------------------------- Total 423 1,919,870 $37,874,612 100.0% ============================================================== Denver Number of Square Annual Percentage of Total Year Leases Footage Revenue Annual Revenue - ---------------------------------------------------------------------------- 2004 45 66,792 $1,376,780 15.9% 2005 60 140,966 3,038,695 35.1% 2006 41 59,825 1,088,540 12.6% 2007 27 58,460 1,080,549 12.5% 2008 21 69,741 1,310,175 15.1% 2009 8 18,855 323,763 3.7% 2010 - - - - 2011 1 5,460 92,984 1.1% 2012 - - - - 2013 - - - - 2014 1 19,798 235,200 2.7% 2015 2 6,120 116,280 1.3% -------------------------------------------------------------- Total 206 446,017 $8,662,966 100.0% ============================================================== 11 Lease Expiration Information - continued Phoenix Number of Square Annual Percentage of Total Year Leases Footage Revenue Annual Revenue - ---------------------------------------------------------------------------- 2004 14 51,867 $1,207,656 7.7% 2005 17 102,985 2,294,158 14.5% 2006 29 117,713 2,651,452 16.8% 2007 26 136,283 3,021,338 19.1% 2008 8 32,266 745,639 4.7% 2009 14 147,683 3,223,919 20.4% 2010 3 81,463 1,704,587 10.8% 2011 1 16,879 388,217 2.5% 2012 1 24,444 546,610 3.5% 2013 - - - - 2014 - - - - 2015 - - - - -------------------------------------------------------------- Total 113 711,583 $15,783,576 100.0% ============================================================== Dallas Number of Square Annual Percentage of Total Year Leases Footage Revenue Annual Revenue - ---------------------------------------------------------------------------- 2004 7 51,175 $1,038,224 10.2% 2005 15 192,253 4,298,812 42.3% 2006 9 28,661 594,913 5.8% 2007 12 137,686 2,592,389 25.5% 2008 10 62,133 1,192,210 11.7% 2009 4 11,329 200,320 2.0% 2010 1 2,612 47,016 0.5% 2011 - - - - 2012 1 8,466 203,184 2.0% 2013 - - - - 2014 - - - - 2015 - - - - -------------------------------------------------------------- Total 59 494,315 $10,167,068 100.0% ============================================================== 12 Lease Expiration Information - continued Indianapolis Number of Square Annual Percentage of Total Year Leases Footage Revenue Annual Revenue - ---------------------------------------------------------------------------- 2004 8 26,501 $461,637 26.8% 2005 7 11,910 208,997 12.2% 2006 9 31,534 576,802 33.5% 2007 3 7,158 127,289 7.4% 2008 2 3,380 57,106 3.3% 2009 3 8,712 155,109 9.0% 2010 1 5,343 93,503 5.4% 2011 1 2,400 40,800 2.4% 2012 - - - - 2013 - - - - 2014 - - - - 2015 - - - - -------------------------------------------------------------- Total 34 96,938 $1,721,243 100.0% ============================================================== Non-core Number of Square Annual Percentage of Total Year Leases Footage Revenue Annual Revenue - ---------------------------------------------------------------------------- 2004 2 38,029 $308,090 20.0% 2005 2 32,855 265,147 17.2% 2006 4 48,798 431,878 28.1% 2007 - - - - 2008 - - - - 2009 - - - - 2010 2 45,585 480,460 31.2% 2011 1 5,750 54,184 3.5% 2012 - - - - 2013 - - - - 2014 - - - - 2015 - - - - -------------------------------------------------------------- Total 11 171,017 $1,539,759 100.0% ============================================================== (1) Excludes Kellogg Executive Suite and month-to-month tenants. (2) Does not include Panorama Falls. 13 Other Property Information The following chart illustrates the geographic distribution of our 100%-owned core properties(1) by square footage at March 31, 2004: [CHART OMITTED] Denver 27% Dallas 28% Phoenix 40% Indianapolis 5% The following table categorizes the leased area of our 100%-owned core properties(1) by our tenant's industry at March 31, 2004: Percentage Industry of Area -------- ---------- Wholesale trade and manufacturing 13.6% Healthcare 10.0% Real estate 9.8% Financial services - advisement and brokerage 9.1% Consulting and business services 8.7% Financial services - insurance 7.3% Financial services - mortgage 6.3% Legal 6.2% Energy 5.6% Travel, entertainment and food service 5.3% Computer systems and software 4.8% Telecommunications 3.4% Financial services - banking 3.4% Other 2.9% Accounting 2.8% Engineering 0.5% Advertising and marketing 0.3% (1) Does not include the Texas State Buildings or Panorama Falls. 14 -----END PRIVACY-ENHANCED MESSAGE-----