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.
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.
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.
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.
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.
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HRPT Properties Trust
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Consolidated Statements of Income and Funds from Operations
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(amounts in thousands, except per share data)
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Quarter Ended June 30,
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Six Months Ended June 30,
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2009
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2008
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2009
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2008
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Rental income
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$212,729
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$204,273
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$429,652
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$405,445
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Expenses:
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Operating expenses
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86,686
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83,747
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178,425
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164,964
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Depreciation and amortization
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49,604
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45,228
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97,994
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90,041
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General and administrative
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9,792
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8,991
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19,279
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17,853
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Acquisition costs
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489
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—
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748
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—
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Total expenses
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146,571
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137,966
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296,446
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272,858
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Operating income
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66,158
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66,307
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133,206
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132,587
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Interest income
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363
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89
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508
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418
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Interest expense (including amortization of debt discounts, premiums
and deferred financing fees of $1,886, $1,431, $3,528 and $2,526,
respectively)
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(44,267
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)
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(44,383
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)
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(88,126
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)
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(89,423
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)
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Gain on early extinguishment of debt
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13,173
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—
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20,686
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—
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Equity in earnings of equity investments
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861
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—
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861
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—
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Income from continuing operations before income tax expense
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36,288
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22,013
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67,135
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43,582
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Income tax (expense) benefit
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(190
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)
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4
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(342
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)
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(160
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Income from continuing operations
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36,098
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22,017
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66,793
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43,422
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Discontinued operations:
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Income from discontinued operations
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3,212
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6,068
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6,884
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12,069
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Gain on sale of properties
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20,306
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39,967
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29,051
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39,967
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Net income
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59,616
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68,052
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102,728
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95,458
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Preferred distributions
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(12,667
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)
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(12,667
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)
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(25,334
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)
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(25,334
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)
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Net income available for common shareholders
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$46,949
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$55,385
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$77,394
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$70,124
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Calculation of Funds from Operations, or FFO (1):
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Net income
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$59,616
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$68,052
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$102,728
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$95,458
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Plus: depreciation and amortization from continuing operations
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49,604
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45,228
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97,994
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90,041
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Plus: depreciation and amortization from discontinued operations
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(11
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)
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3,454
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—
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7,004
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Plus: acquisition costs (2)
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489
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—
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748
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—
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Plus: FFO from equity investments
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1,170
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—
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1,170
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—
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Less: gain on early extinguishment of debt
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(13,173
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)
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—
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(20,686
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)
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—
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Less: gain on sale of properties
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(20,306
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)
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(39,967
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)
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(29,051
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)
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(39,967
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Less: equity in earnings of equity investments
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(861
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)
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—
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(861
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—
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FFO
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76,528
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76,767
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152,042
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152,536
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Less: preferred distributions
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(12,667
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)
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(12,667
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(25,334
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(25,334
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FFO available for common shareholders
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$63,861
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$64,100
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$126,708
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$127,202
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Weighted average common shares outstanding – basic
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223,697
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225,449
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224,653
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225,447
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Weighted average common shares outstanding – diluted (3)
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252,890
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254,642
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253,846
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254,640
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Per common share:
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Income from continuing operations available for common shareholders
– basic and diluted
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$0.10
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$0.04
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$0.18
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$0.08
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Income from discontinued operations – basic and diluted
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$0.11
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$0.20
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$0.16
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$0.23
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Net income available for common shareholders – basic and diluted
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$0.21
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$0.25
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$0.34
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$0.31
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FFO available for common shareholders – basic
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$0.29
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$0.28
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$0.56
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$0.56
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FFO available for common shareholders – diluted
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$0.28
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$0.28
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$0.55
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$0.55
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Common distributions paid
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$0.12
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$0.21
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$0.24
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$0.42
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HRPT Properties Trust
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Consolidated Statements of Income and Funds from Operations
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(amounts in thousands, except per share data)
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(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.
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(2) Acquisition costs have been expensed under
Statement of Financial Accounting Standards No. 141(R), “Business
Combinations” since January 1, 2009.
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(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.
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Quarter Ended
June 30,
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Six Months Ended
June 30,
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2009
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2008
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2009
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2008
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Net income available for common shareholders
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$46,949
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$55,385
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$77,394
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$70,124
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Add - Series D convertible preferred distributions
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6,167
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6,167
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12,334
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12,334
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Net income available for common shareholders – diluted
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$53,116
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$61,552
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$89,728
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$82,458
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FFO available for common shareholders
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$63,861
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$64,100
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$126,708
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$127,202
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Add - Series D convertible preferred distributions
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6,167
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6,167
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12,334
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12,334
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FFO available for common shareholders – diluted
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$70,028
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$70,267
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$139,042
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$139,536
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|
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Weighted average common shares outstanding – basic
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223,697
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225,449
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224,653
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225,447
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Effect of dilutive Series D preferred shares
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29,193
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29,193
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29,193
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29,193
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Weighted average common shares outstanding – diluted
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252,890
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254,642
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253,846
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254,640
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HRPT Properties Trust
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Consolidated Balance Sheets
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(amounts in thousands, except share data)
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June 30,
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December 31,
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2009
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2008
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(audited)
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ASSETS
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Real estate properties:
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Land
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$1,200,934
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$1,220,554
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Buildings and improvements
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4,768,406
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5,021,703
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5,969,340
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6,242,257
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Accumulated depreciation
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(823,527
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)
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(862,958
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)
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5,145,813
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5,379,299
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Properties held for sale
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105,234
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145,849
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Acquired real estate leases, net
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157,428
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164,308
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Equity investments
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158,053
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-
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Cash and cash equivalents
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38,138
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15,518
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Restricted cash
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8,993
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10,837
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Rents receivable, net of allowance for doubtful accounts of $8,351
and $8,492, respectively
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188,512
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196,839
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Other assets, net
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123,919
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103,449
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Total assets
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$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
|
|
HRPT Properties Trust
Timothy A. Bonang, 617-796-8222
Director
of Investor Relations
or
Carlynn Finn, 617-796-8222
Manager
of Investor Relations
www.hrpreit.com
