Oct. 29, 2009 (PR Newswire) -- CHARLOTTE, N.C., Oct. 29 /PRNewswire-FirstCall/ --
-- Funds from Operations Modified (FFOM) for third quarter 2009 was $8.8
million, an 8.2% increase from the same period last year
-- Funds from Operations (FFO) for third quarter 2009 was $8.5 million, a
46.9% increase from the same period last year
-- Net income attributable to Cogdell Spencer Inc. for third quarter 2009
was $1.2 million compared to a net income (loss) attributable to Cogdell
Spencer Inc. of ($1.1 million) for third quarter 2008
-- As of September 30, 2009, the Company had $25.8 million of unrestricted
cash and $61.7 million available under its secured revolving credit
facility for a total liquidity of $87.5 million, compared to $62.6
million for the same period last year, a 40% increase
-- The Company increases its 2009 FFOM per share and operating partnership
unit, excluding charges, guidance range from $0.63 - $0.69 per share and
operating partnership unit to $0.72 - $0.75 per share and operating
partnership unit
Cogdell Spencer Inc. (NYSE: CSA), a real estate investment trust (REIT) that invests in specialty office buildings, including medical offices and ambulatory surgery and diagnostic centers, and provides strategic planning and design and construction services for the medical profession, announces financial results for the quarter ended September 30, 2009.
Third Quarter 2009 Results
For the third quarter of 2009, Cogdell Spencer Inc. reports FFOM of $8.8 million, or $0.18 per share and operating partnership unit. During the same period in 2008, FFOM was $8.2 million, or $0.33 per share and operating partnership unit. FFOM adds back to traditionally defined FFO non-cash amortization of non-real estate related intangible assets associated with purchase accounting.
FFO for the third quarter of 2009 was $8.5 million, or $0.17 per share and operating partnership unit. During the same period in 2008, FFO was $5.8 million, or $0.23 per share and operating partnership unit.
Net income attributable to Cogdell Spencer Inc. for the third quarter of 2009 was $1.2 million, or $0.03 per share. During the same period in 2008, net income (loss) was ($1.1 million), or ($0.07) per share.
A reconciliation of net income (loss) to FFOM and FFO for the three months ended September 30, 2009 is set forth on page 11.
As of September 30, 2009, the Company's portfolio consisted of 62 consolidated wholly-owned and joint venture properties, comprising a total of approximately 3.3 million net rentable square feet. The overall percentage of leased space at the Company's 62 in-service, consolidated properties as of September 30, 2009, was 90.6%. In addition, the Company has three unconsolidated joint venture properties comprising a total of approximately 0.2 million net rentable square feet and manages 48 properties for third party clients comprising a total of approximately 2.2 million net rentable square feet.
Results for the Nine Months Ended September 30, 2009
FFOM for the nine months ended September 30, 2009 was $23.3 million, or $0.62 per share and operating partnership unit, excluding after-tax charges totaling ($103.3 million), or ($2.77) per share and operating partnership unit, related to asset impairment, debt extinguishment and an interest rate derivative (see additional description below). FFOM for the nine months ended September 30, 2009, including the charges described above, was ($79.9 million), or ($2.14) per share and operating partnership unit. During the same period in 2008, FFOM was $21.3 million, or $0.92 per share and operating partnership unit.
FFO for the nine months ended September 30, 2009 was $20.6 million, or $0.55 per share and operating partnership unit, excluding the charges described above. FFO including the charges described above was ($82.7 million), or ($2.22) per share and operating partnership unit, for the nine months ended September 30, 2009. During the same period in 2008, FFO was $15.7 million, or $0.68 per share and operating partnership unit.
A reconciliation of net income (loss) to FFOM and FFO for the nine months ended September 30, 2009 is set forth on page 11.
Net income (loss) attributable to Cogdell Spencer Inc. for the nine months ended September 30, 2009, was ($0.2 million), or ($0.01) per share, excluding the charges described above. Net income (loss) attributable to Cogdell Spencer Inc. including the charges described above was ($71.3 million), or ($2.43) per share, for the nine months ended September 30, 2009. During the same period in 2008, net income (loss) was ($4.7 million), or ($0.31) per share.
During the nine months ended September 30, 2009, the Company recorded a pre-tax, non-cash impairment charge of ($120.9 million), or ($3.24) per share and operating partnership unit, and the Company recognized a non-cash income tax benefit related to the charge of $19.2 million, or $0.51 per share and operating partnership unit, resulting in an after-tax impairment charge of ($101.7 million), or ($2.73) per share and operating partnership unit. The charge was recorded during the first quarter of 2009. No impairment charge was recorded during the second or third quarters of 2009.
During the nine months ended September 30, 2009, the Company repaid $50.0 million of the $100.0 million outstanding under the Erdman senior secured term loan agreement ("Term Loan"). In connection with this repayment, the Term Loan interest rate and financial covenants were amended. As a result of the amendment, all unamortized Term Loan deferred finance costs and costs paid to the lenders that were party to the amendment were expensed. The charge to debt extinguishment and interest rate derivative expense was approximately $0.9 million, before income tax benefit. The Company recorded an income tax benefit of approximately $0.4 million related to this charge. The charge was recorded during the second quarter of 2009.
The Company previously entered into a $100.0 million interest rate swap agreement that fixed the floating rate portion of the $100.0 million Term Loan. Due to the repayment and the amendment to the Term Loan, approximately $1.6 million related to swap derivative hedge ineffectiveness was charged to debt extinguishment and interest rate derivative expense. The non-cash charge represents the portion of the mark to market fair value liability of the interest rate swap agreement for which there are no more future interest payments under the Term Loan. The Company recorded an income tax benefit of approximately $0.6 million related to this charge, resulting in after-tax charge of approximately $1.0 million. The charge was recorded during the second quarter of 2009.
The Company has not terminated the $100.0 million interest rate swap agreement. The $100.0 million interest rate swap agreement is being used to fix the floating rate portion on $50.0 million outstanding on the Term Loan and $50.0 million outstanding under the secured revolving Credit Facility.
Capital Transactions
In August 2009, the Company completed construction on the Alamance Regional Cancer Center, an 8,527 square foot, 100% leased addition to the medical office building located in Mebane, North Carolina. In connection with this addition, the Company obtained a $1.5 million mortgage note payable through Mebane Medical Investors, LLC, a consolidated real estate partnership of the Company. The mortgage note payable matures in May 2010 and has two one-year conditional extension options, an interest rate of LIBOR plus 4.00%, and monthly payments are interest-only.
In August 2009, the Company refinanced the Rocky Mount Kidney Center (located in Rocky Mount, North Carolina) mortgage note payable and extended the maturity date to August 2014. The interest rate is fixed at 6.75% and monthly principal and interest payments are based on a 15-year amortization schedule.
In October 2009, the Company obtained a $7.5 million mortgage note payable that is collateralized by the Randolph Medical Park, Lincoln/Lakemont Family Practice Center, and Northcross Family Medical Practice Building properties, all of which are located in Charlotte, North Carolina. The mortgage note payable matures in October 2014, has a fixed interest rate of 7.00%, and requires monthly principal and interest payments based on a 20-year amortization.
In October 2009, the Company exercised its extension option and extended the Methodist Professional Center I (located in Indianapolis, Indiana) mortgage note payable for a two year period. Associated with this extension, the Company repaid $4.5 million of the $30.0 million outstanding principal. The extended $25.5 million mortgage note payable matures in October 2011, has an interest rate of LIBOR plus 1.30%, and requires monthly principal and interest payments based on a 30-year amortization.
In October 2009, the Company refinanced the Hanover Medical Office Building One (located in Richmond, Virginia) mortgage note payable, which was to mature on November 1, 2009. The principal balance was increased from $4.7 million to $6.0 million and the $1.3 million additional proceeds will be used for general corporate purposes. The $6.0 million mortgage note payable matures in November 2014, has a fixed interest rate of 7.35%, and requires monthly principal and interest payments based on a 25-year amortization.
Dividend
On September 15, 2009, the Company announced that its Board of Directors had declared a quarterly dividend of $0.10 per share and operating partnership unit that was paid in cash on October 21, 2009 to holders of record on September 25, 2009. The dividend covered the Company's third quarter of 2009.
Outlook
The Company's management team expects that FFOM per share and operating partnership unit for the year ending December 31, 2009, will be between $0.72 and $0.75, excluding the impairment charges and debt extinguishment charges described above.
