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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
October 22, 2003
Date of Report (Date of earliest event reported)
FIRST INDUSTRIAL REALTY TRUST, INC.
(Exact name of registrant as specified in its charter)
MARYLAND 1-13102 36-3935116
(State or other jurisdiction of (Commission file number) (I.R.S. Employer
incorporation or organization) Identification No.)
311 S. WACKER DRIVE, SUITE 4000
CHICAGO, ILLINOIS 60606
(Address of principal executive offices, zip code)
(312) 344-4300
(Registrant's telephone number, including area code)
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ITEM 5. OTHER EVENTS.
On October 22, 2003, First Industrial Realty Trust, Inc. (the
"Company") issued a press release announcing its financial results for the
fiscal quarter ended September 30, 2003 and certain other information.
ITEM 9. REGULATION FD DISCLOSURE
The information set forth under "Item 9. Regulation FD Disclosure" is
intended to be furnished under "Item 12. Results of Operations and Financial
Condition" in accordance with SEC Release No. 33-8216. Such information,
including the Exhibit attached hereto, shall not be deemed "filed" for purposes
of Section 18 of the Securities Exchange Act of 1934, nor shall it be deemed
incorporated by reference in any filing under the Securities Act of 1933, except
as shall be expressly set forth by specific reference to such filing.
Attached and incorporated by reference as Exhibit 99.1 is a copy of
the Company's press release dated October 22, 2003, announcing its financial
results for the fiscal quarter ended September 30, 2003.
On October 23, 2003, the Company will hold an investor conference and
webcast at 11a.m. EDT to disclose and discuss the financial results for the
third fiscal quarter of 2003.
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 hereunto duly authorized.
FIRST INDUSTRIAL REALTY TRUST, INC.
By: /s/ Michael J. Havala
------------------------------------
Name: Michael J. Havala
Title: Chief Financial Officer
Date: October 22, 2003
EXHIBIT INDEX
Number Description
- ------ -----------
99.1 Press Release, dated October 22, 2003.
EXHIBIT 99.1
FIRST INDUSTRIAL REALTY TRUST REPORTS
THIRD QUARTER RESULTS
o EARNINGS PER SHARE INCREASE 12.1%
o 5.7 MILLION SQUARE FEET LEASED IN THIRD QUARTER
o OCCUPANCY IMPROVES TO 87.7%
o HIGH TENANT RETENTION AT 79.8%
CHICAGO, October 22, 2003 - First Industrial Realty Trust, Inc. (NYSE: FR), the
nation's largest provider of diversified industrial real estate, announced
results for the quarter ended September 30, 2003. Fully-diluted earnings per
share, including income from discontinued operations and before extraordinary
items (EPS), was $0.65 compared to $0.58 per share for the same quarter last
year, representing an increase of 12.1 percent. Earnings in the quarter were
$25.7 million compared to $23.2 million for the same quarter last year,
representing an increase of 10.8 percent year over year. For the nine months
ended September 30, 2003, EPS increased 2.9 percent to $1.77 from $1.72.
Results for the nine months ended September 30, 2002 have been adjusted to
comply with the Securities and Exchange Commission's (the "SEC") July 31, 2003
clarification on Emerging Issues Task Force ("EITF") Abstract, Topic No. D 42,
"The Effect on the Calculation of Earnings per Share for the Redemption or
Induced Conversion of Preferred Stock" ("EITF 42"). This clarification of EITF
42, states that for the purpose of calculating the excess of (1) fair value of
the consideration to the holders of the preferred stock over (2) the carrying
amount of the preferred stock in the balance sheet, the carrying amount of the
preferred stock should be reduced by the issuance costs of the preferred stock.
This clarification is effective in the first fiscal period ending after
September 15, 2003 and requires prior periods to be reclassified. Accordingly,
the application of this clarification results in a $0.08 reduction in EPS and
funds from operations (FFO) per share/unit for the nine months ended September
30, 2002 for the initial issuance costs of the Company's 8.75%, $.01 par value,
Series B Cumulative Preferred Stock, which the Company redeemed on May 14, 2002.
The application of this clarification does not impact 2003 EPS or FFO per
share/unit.
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Page 2 of 8
"The industrial market exhibited signs of firming and during the quarter we
experienced sequential improvement in occupancy, tenant retention and same
property net operating income," said Mike Brennan, president and chief executive
officer. "Our team continues to execute on the leasing front, having completed
leases on 5.7 million square feet in the third quarter, and our capital
recycling program again produced significant profits for shareholders,
generating a record $16.0 million in profits in the third quarter."
A summary of the Company's portfolio and investment performance and solid
financial position is listed below:
Portfolio Performance
o For the quarter, leased 5.7 million square feet and year-to-date leased 15.9
million square feet.
o Occupancy increased to 87.7% and tenant retention was 79.8%.
o Actual cash-on-cash rents declined 6.4%.
o Same property net operating income (NOI) declined by 4.5%.
Investment Performance
o For the quarter, net economic gains were $16.0 million, comprised of $9.6
million from existing property sales, $5.3 million from merchant
development/redevelopment and $1.1 million from land sales. Year-to-date, net
economic gains were $39.4 million, comprised of $22.6 million from existing
property sales, $14.0 million from merchant development/redevelopment and
$2.8 million from land sales.
o For the quarter, acquired $30.1 million of property, comprising 1.0 million
square feet, at a stabilized weighted average 11.9% capitalization (cap)
rate. Year-to-date, acquired $161.1 million of property, comprising 4.7
million square feet, at a stabilized weighted average 10.5% cap rate.
o For the quarter, placed in service $25.1 million of new developments
comprising 503,654 square feet, with an expected aggregate first-year
stabilized yield of approximately 9.5%. Year-to-date, placed in service $46.4
million of new developments comprising 1.0 million square feet, with an
expected aggregate first-year stabilized yield of approximately 9.5%.
o Development under construction at the end of the quarter stood at $173.5
million with an expected aggregate first-year stabilized yield of 9.0%.
o For the quarter, sold 52 properties and 4 parcels of land for $143.3 million
at a weighted average 8.3% cap rate and a weighted average 18.1% unleveraged
internal rate of return (IRR). Year-to-date, sold 97 properties and 7 parcels
of land for $287.6 million at a weighted average 8.5% capitalization (cap)
rate and a weighted average 16.0% unleveraged internal rate of return (IRR).
Proceeds from dispositions will be used to fund new investments pursuant to
the Company's investment strategy.
o Third quarter property dispositions included $13.1 million of property sold
to the Company's fund with the Kuwait Finance House (KFH). The fund's
capitalization is now approximately $267 million.
o The pipeline of properties that the Company currently has under contract or
letter of intent to purchase is over $130 million.
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Page 3 of 8
Solid Financial Position
o Fixed-charge coverage improved sequentially to 2.4 times and interest
coverage improved sequentially to 2.9 times.
o Unencumbered assets represent 97.2% of total assets.
o The weighted average maturity of permanent debt is 10.9 years, one of the
longest in the REIT industry.
o 100% of the Company's permanent debt is fixed rate.
Supplemental Reporting Measure
For the three months ended September 30, 2003, funds from operations (FFO) per
share/unit was $0.88 on a fully-diluted basis and totaled $40.7 million. For the
nine months ended September 30, 2003, FFO per share/unit was $2.51 and totaled
$115.4 million. As previously announced, the Company simplified and revised its
calculation of FFO effective January 1, 2003. Accordingly, for the three and
nine months ended September 30, 2003, the Company computed FFO to be equal to
net income available to common stockholders, plus depreciation/
amortization/impairment of real estate, minus accumulated
depreciation/amortization/ impairment on real estate sold. For prior periods,
including the three and nine months ended September 30, 2002, the Company
computed FFO to be equal to net income available to common stockholders,
excluding extraordinary gains/losses from debt restructuring and sales of
depreciated property (other than net economic gains/losses from sales of
properties related to the Company's Integrated Industrial Solutions(TM)
activities), plus depreciation and amortization (other than amortization of
deferred financing costs, interest rate protection agreements and corporate
furniture, fixtures & equipment), and after adjustments for unconsolidated
partnerships and joint ventures. For the three months ended September 30, 2002,
FFO per share/unit was $0.94 on a fully-diluted basis and totaled $43.8 million.
For the nine months ended September 30, 2002, FFO per share/unit was $2.62 and
totaled $121.9 million.
Outlook for 2003 and 2004
"We are pleased with the leasing success we have had year to date and, in
particular, with the sequential improvement in certain key portfolio statistics
in the third quarter," Brennan continued. "While we believe this and other data
point to a stabilization of overall market conditions, we expect the environment
in general, and the economics of leasing in particular, to remain challenging
until the economy more fully recovers.
"We are estimating full-year 2003 EPS in the range of $2.30 to $2.40. Sales
volume in 2003 is assumed to be approximately $350 million to $450 million with
a 8.5% to 9.5% average cap rate, with book gains from property sales/fees of
between $85 million and $90 million, which equates to between $55 million and
$60 million in economic profit contribution to FFO in 2003. Investment volume
assumptions for 2003, which include both new developments and acquisitions, are
approximately $300 million to $400 million with a 9.5% to 10.5% average cap
rate. We assume no significant changes in our balance sheet structure.
"We are estimating full-year 2003 FFO per share/unit in the range of $3.40 to
$3.50. For full-year 2003, we continue to expect to generate cash flow in excess
of our common stock dividend."
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Page 4 of 8
Low End of High End of
Guidance for 2003 Guidance for 2003
(Per share/unit) (Per share/unit)
------------------ ------------------
Net Income Available to Common Stockholders $ 2.30 $ 2.40
Add: Real Estate Depreciation/Amortization 1.77 1.77
Less: Accumulated Depreciation/Amortization on Real Estate Sold (0.67) (0.67)
------------------ ------------------
FFO $ 3.40 $ 3.50
================== ==================
Brennan added, "We are initiating our guidance for full-year 2004 with an
estimated EPS range of between $2.10 and $2.30. This estimate assumes slightly
negative same property NOI growth in 2004. Sales volume in 2004 is assumed to be
approximately $400 million to $500 million with a 8.5% to 9.5% average cap rate,
with book gains from property sales/fees of between $87 million and $92 million.
Investment volume assumptions for 2004, which include both new developments and
acquisitions, are approximately $400 million to $500 million with a 9.5% to
10.5% average cap rate. We assume no significant changes in relative G&A or
capital expenditures, nor do we assume any significant changes in our balance
sheet structure. We estimate full-year 2004 FFO per share/unit in the range of
$3.35 and $3.55, with first quarter 2004 FFO per share/unit in the range of
$0.75 to $0.85. Our assumption for net economic gains for 2004 is between $57
million and $62 million."
Low End of High End of
Guidance for Guidance for
1Q 2004 1Q 2004
(Per share/unit) (Per share/unit)
------------------ -----------------
Net Income Available to Common Stockholders $ 0.44 $ 0.54
Add: Real Estate Depreciation/Amortization 0.48 0.48
Less: Accumulated Depreciation/Amortization on Real Estate Sold (0.17) (0.17)
------------------ -----------------
FFO $ 0.75 $ 0.85
================== =================
Low End of High End of
Guidance for 2004 Guidance for 2004
(Per share/unit) (Per share/unit)
------------------ -----------------
Net Income Available to Common Stockholders $ 2.10 $ 2.30
Add: Real Estate Depreciation/Amortization 1.91 1.91
Less: Accumulated Depreciation/Amortization on Real Estate Sold (0.66) (0.66)
------------------ -----------------
FFO $ 3.35 $ 3.55
================== =================
Brennan continued, "A number of factors could impact our ability to deliver
results in line with our assumptions, such as interest rates, the overall
economy, the supply and demand of industrial real estate, the timing and yields
for divestment and investment, and numerous other variables. There can be no
assurance that First Industrial can achieve such results for 2003 or 2004.
However, I believe that First Industrial has the proper strategic and tactical
design to deliver such results. We believe our I-N-D-L infrastructure - with its
offensive and defensive characteristics - will continue to support our efforts
and prove its value."
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Page 5 of 8
COMPANY INFORMATION
First Industrial Realty Trust, Inc., the nation's largest provider of
diversified industrial real estate, serves every aspect of Corporate America's
industrial real estate needs, including customized supply chain solutions,
through its unique I-N-D-L operating platform, which utilizes a pure Industrial
focus and National scope to provide Diverse facility types, while offering
Local, full-service management and expertise. Building, buying, selling, leasing
and managing industrial property in major markets nationwide, First Industrial
develops long term relationships with corporate real estate directors, tenants
and brokers to better serve customers with creative, flexible industrial real
estate solutions.
FORWARD-LOOKING INFORMATION
This press release contains forward-looking information about the Company. A
number of factors could cause the Company's actual results to differ materially
from those anticipated, including changes in: economic conditions generally and
the real estate market specifically, legislative/regulatory changes (including
changes to laws governing the taxation of real estate investment trusts),
availability of financing, interest rate levels, competition, supply and demand
for industrial properties in the Company's current and proposed market areas,
potential environmental liabilities, slippage in development or lease-up
schedules, tenant credit risks, higher-than-expected costs and changes in
general accounting principles, policies and guidelines applicable to real estate
investment trusts. For further information on these and other factors that could
impact the Company and the statements contained herein, reference should be made
to the Company's filings with the Securities and Exchange Commission.
A schedule of selected financial information is attached.
First Industrial will host a quarterly conference call at 10 a.m. CDT, 11 a.m.
EDT, on Thursday, October 23, 2003. The call-in number is (800) 865-4460 and the
passcode is "First Industrial." The conference call will also be available live
on First Industrial's web site, www.firstindustrial.com, under the "Investor
Relations" tab. Replay will also be available on the web site.
The company's third quarter supplemental information can be viewed on First
Industrial's web site, www.firstindustrial.com, under the "Financials" tab. For
a hard copy of the Company's quarterly supplemental information report or other
investor materials, please contact:
Karen Henderson
First Industrial Realty Trust, Inc.
311 South Wacker Drive, Suite 4000
Chicago, IL 60606
Phone: (312) 344-4335 - Facsimile: (312) 922-9851
-more-
FIRST INDUSTRIAL REALTY TRUST, INC.
SELECTED FINANCIAL DATA
(IN THOUSANDS, EXCEPT FOR PER SHARE/UNIT AND PROPERTY DATA)
(UNAUDITED)
THREE MONTHS ENDED NINE MONTHS ENDED
----------------------------- -----------------------------
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
2003 2002 2003 2002
------------- ------------- ------------- -------------
STATEMENT OF OPERATIONS AND OTHER DATA:
Total Revenues $ 86,560 $ 81,504 $ 262,518 $ 239,033
Property Expenses 27,932 25,269 84,784 74,694
General & Administrative Expense 6,525 3,759 20,512 13,782
Interest Expense 23,925 23,810 71,717 66,514
Amortization of Deferred Financing Costs 444 505 1,319 1,464
Amortization of Corporate F,F&E 328 266 955 1,090
Depreciation and Amortization of Real Estate 20,392 17,053 57,091 49,237
Loss from Early Retirement of Debt(b) -- -- 1,466 888
------------- ------------- ------------- -------------
Total Expenses 79,546 70,662 237,844 207,669
INCOME FROM CONTINUING OPERATIONS BEFORE EQUITY IN NET
INCOME OF JOINT VENTURES, GAIN ON SALE OF REAL
ESTATE AND INCOME ALLOCATED TO MINORITY INTEREST 7,014 10,842 24,674 31,364
Equity in Net Income of Joint Ventures(d) 262 559 705 1,135
Gain on Sale of Real Estate 4,641 8,176 11,259 18,360
Minority Interest Allocable to Continuing Operations (999) (2,156) (3,187) (4,249)
------------- ------------- ------------- -------------
INCOME FROM CONTINUING OPERATIONS 10,918 17,421 33,451 46,610
Income from Discontinued Operations (Including Gain on Sale
of Real Estate of $21,837 and $6,895 for the Three
Months Ended September 30, 2003 and 2002,
respectively, and $54,686 and$32,206 for the Nine
Months Ended September 30, 2003 and 2002,
respectively(c)) 23,178 12,679 60,164 51,334
Minority Interest Allocable to Discontinued Operations(c) (3,402) (1,870) (8,898) (7,695)
------------- ------------- ------------- -------------
NET INCOME 30,694 28,230 84,717 90,249
Preferred Dividends (5,044) (5,044) (15,132) (18,388)
Redemption of Series B Preferred Stock(e) -- -- -- (3,707)
------------- ------------- ------------- -------------
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS $ 25,650 $ 23,186 $ 69,585 $ 68,154
Add: Depreciation and Amortization of Real Estate - Including
Discontinued Operations 20,852 19,056 59,527 56,352
Add: Minority Interest 4,401 4,026 12,085 11,944
Add: Depreciation and Amortization of Real Estate - Joint
Ventures(d) 337 512 1,022 981
Less: Accumulated Depreciation/Amortization on Real Estate Sold (10,485) -- (26,569) --
Less: Accumulated Depreciation/Amortization on Real Estate Sold
and Non-IIS Gains (Losses) -- (2,303) -- (14,528)
Less: Accumulated Depreciation/Amortization on Real Estate
Sold- Joint Ventures(d) (31) (705) (253) (976)
------------- ------------- ------------- -------------
FUNDS FROM OPERATIONS ("FFO")(a) $ 40,724 $ 43,772 $ 115,397 $ 121,927
Add: Loss From Early Retirement of Debt(b) -- -- 1,466 888
Add: Restricted Stock Amortization 1,632 1,320 4,339 3,845
Add: Amortization of Deferred Financing Costs 444 505 1,319 1,464
Add: Amortization of Corporate F,F&E 328 266 955 1,090
Less: Non-Incremental Capital Expenditures (9,407) (8,815) (29,565) (22,458)
Less: Straight-Line Rent (528) (859) (1,214) (1,543)
------------- ------------- ------------- -------------
FUNDS AVAILABLE FOR DISTRIBUTION ("FAD")(a) $ 33,193 $ 36,189 $ 92,697 $ 105,213
============= ============= ============= =============
THREE MONTHS ENDED NINE MONTHS ENDED
----------------------------- -----------------------------
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
2003 2002 2003 2002
------------- ------------- ------------- -------------
RECONCILIATION OF NET INCOME AVAILABLE TO
COMMON STOCKHOLDERS TO EBITDA (a) AND NOI (a)
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS $ 25,650 $ 23,186 $ 69,585 $ 68,154
Add: Interest Expense 23,925 23,810 71,717 66,514
Add: Depreciation and Amortization of Real Estate 20,852 19,056 59,527 56,352
Add: Preferred Dividends 5,044 5,044 15,132 18,388
Add: Redemption of Series B Preferred Stock (e) -- -- -- 3,707
Add: Income Allocated to Minority Interest 4,401 4,026 12,085 11,944
Add: Loss From Early Retirement of Debt (b) -- -- 1,466 888
Add: Amortization of Deferred Financing Costs 444 505 1,319 1,464
Add: Amortization of Corporate F,F&E 328 266 955 1,090
Add: Depreciation and Amortization of Real Estate - Joint
Ventures(d) 337 512 1,022 981
Less: Accumulated Depreciation/Amortization on Real Estate
Sold- Joint Ventures (d) (31) (705) (253) (976)
Less: Accumulated Depreciation/Amortization on Real Estate
Sold (10,485) -- (26,569) --
Less: Accumulated Depreciation/Amortization on Real Estate
Sold and Non-IIS Gains (Losses) -- (2,303) -- (14,528)
------------- ------------- ------------- -------------
EBITDA (a) $ 70,465 $ 73,397 $ 205,986 $ 213,978
Add: General and Administrative Expense 6,525 3,759 20,512 13,782
Less: Net Economic Gains (Losses) (15,993) (12,768) (39,376) (36,038)
Less: Equity in FFO of Joint Ventures (d) (568) (366) (1,474) (1,140)
------------- ------------- ------------- -------------
NET OPERATING INCOME ("NOI") (a) $ 60,429 $ 64,022 $ 185,648 $ 190,582
============= ============= ============= =============
WEIGHTED AVG. NUMBER OF SHARES/UNITS OUTSTANDING - BASIC 46,183 46,504 45,910 46,268
WEIGHTED AVG. NUMBER OF SHARES/UNITS OUTSTANDING - DILUTED 46,292 46,709 46,003 46,565
WEIGHTED AVG. NUMBER OF SHARES OUTSTANDING - BASIC 39,412 39,609 39,119 39,333
WEIGHTED AVG. NUMBER OF SHARES OUTSTANDING - DILUTED 39,521 39,814 39,212 39,630
PER SHARE/UNIT DATA:
FFO :
- Basic $ 0.88 $ 0.94 $ 2.51 $ 2.64
- Diluted $ 0.88 $ 0.94 $ 2.51 $ 2.62
Income from Continuing Operations Less Preferred Stock
Dividends and Redemption of Series B Preferred Stock
Per Weighted Average Common Share Outstanding:
- Basic $ 0.15 $ 0.31 $ 0.47 $ 0.62
- Diluted $ 0.15 $ 0.31 $ 0.47 $ 0.62
Net Income Available to Common Stockholders per Weighted
Average Common Share Outstanding:
- Basic $ 0.65 $ 0.59 $ 1.78 $ 1.73
- Diluted $ 0.65 $ 0.58 $ 1.77 $ 1.72
Dividends/Distributions $ 0.6850 $ 0.6800 $ 2.0550 $ 2.0400
FFO PAYOUT RATIO 77.7% 72.2% 81.8% 77.4%
FAD PAYOUT RATIO 95.3% 87.4% 101.8% 89.7%
BALANCE SHEET DATA (END OF PERIOD):
Real Estate Before Accumulated Depreciation $ 2,726,351 $ 2,710,946
Real Estate Held For Sale, Net 7,157 21,365
Total Assets 2,641,215 2,633,290
Debt 1,446,854 1,418,144
Total Liabilities 1,592,551 1,549,179
Stockholders' Equity and Minority Interest $ 1,048,664 $ 1,084,111
PROPERTY DATA (END OF PERIOD):
Total Properties 847 909
Total Gross Leasable Area (in sq ft) 58,780,535 61,595,043
Occupancy 87.7% 90.3%
(a) Investors in and analysts following the real estate industry utilize FFO,
NOI, EBITDA and FAD, variously defined, as supplemental performance
measures. While the Company believes net income available to common
stockholders, as defined by GAAP, is the most appropriate measure, it
considers FFO, NOI, EBITDA and FAD, given their wide use by and relevance to
investors and analysts, appropriate supplemental performance measures. FFO,
reflecting the assumption that real estate asset values rise or fall with
market conditions, principally adjusts for the effects of GAAP
depreciation/amortization of real estate assets. NOI provides a measure of
rental operations, and does not factor in depreciation/amortization and
non-property specific expenses such as general and administrative expenses.
EBITDA provides a further tool to evaluate the ability to incur and service
debt and to fund dividends and other cash needs. FAD provides a further tool
to evaluate ability to fund dividends. In addition, FFO, NOI, EBITDA and FAD
are commonly used in various ratios, pricing multiples/yields and returns
and valuation calculations used to measure financial position, performance
and value.
As previously announced, the Company simplified and revised its calculation
of FFO effective January 1, 2003. Accordingly, for the nine and three months
ended September 30, 2003, the Company calculated FFO to be equal to net
income available to common stockholders plus
depreciation/amortization/impairment on real estate minus accumulated
depreciation/amortization/impairment on real estate sold. For periods prior
to 2003, including the nine and three months ended September 30, 2002, the
Company calculated FFO to be equal to net income available to common
stockholders, excluding gains/losses from debt restructuring and sales of
depreciated property (other than Net Economic Gains (Losses) on sales of
properties related to the Company's Integrated Industrial Solutions TM
("IIS") activities), plus depreciation and amortization (other than
amortization of deferred financing costs, interest rate protection
agreements and corporate F,F&E) and after adjustments for unconsolidated
partnerships and joint ventures. Net Economic Gains (Losses) are calculated
by subtracting from gain on sale of real estate (calculated in accordance
with GAAP, including gains on sale of real estate classified as discontinued
operations) the recapture of accumulated depreciation/amortization on real
estate sold.
NOI is defined as revenues of the Company, minus property expenses such as
real estate taxes, repairs and maintenance, property management, utilities,
insurance and other expenses. NOI includes NOI from discontinued operations.
EBITDA is defined as NOI plus the equity in FFO of the Company's joint
ventures, which are accounted for under the equity method of accounting,
plus Net Economic Gains (Losses), minus general and administrative expenses.
EBITDA includes EBITDA from discontinued operations.
FAD is defined as EBITDA minus GAAP interest expense, minus preferred stock
dividends, minus straight-line rental income, plus restricted stock
amortization, minus non-incremental capital expenditures. Non-incremental
capital expenditures are building improvements and leasing costs required to
maintain current revenues.
FFO, NOI, EBITDA and FAD do not represent cash generated from operating
activities in accordance with GAAP and are not necessarily indicative of
cash available to fund cash needs, including the repayment of principal on
debt and payment of dividends and distributions. FFO, NOI, EBITDA and FAD
should not be considered as substitutes for net income available to common
stockholders (calculated in accordance with GAAP), as a measure of results
of operations, or cash flows (calculated in accordance with GAAP) as a
measure of liquidity. FFO, NOI, EBITDA and FAD as calculated by the Company
may not be comparable to similarly titled, but differently calculated,
measures of other REITs or to the definition of FFO published by NAREIT.
(b) Represents a loss from the early retirement of debt.
(c) In August 2001, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standard No. 144 "Accounting for the Impairment or
Disposal of Long-Lived Assets" ("FAS 144"). FAS 144 requires that the
operations and gain (loss) on sale of all properties sold subsequent to
December 31, 2001, that were not held for sale at December 31, 2001, and
properties that were classified as held for sale subsequent to December 31,
2001, be presented in discontinued operations. FAS 144 also requires that
prior periods be restated.
(d) Represents the Company's share of net income, depreciation/amortization of
real estate and accumulated depreciation/amortization on real estate sold
from the Company's joint ventures in which it owns minority equity
interests.
(e) In July 2003, the Securities and Exchange Commission (the "SEC") issued a
clarification on Emerging Issues Task Force ("EITF") Abstract, Topic No. D
42, "The Effect on the Calculation of Earnings per Share for the Redemption
or Induced Conversion of Preferred Stock" ("EITF 42"). This clarification of
EITF 42, states for the purpose of calculating the excess of (1) fair value
of the consideration to the holders of the preferred stock over (2) the
carrying amount of the preferred stock in the balance sheet, the carrying
amount of the preferred stock should be reduced by the issuance costs of the
preferred stock. This clarification is effective in the first fiscal period
ending after September 15, 2003 and requires prior periods presented to be
reclassified. Accordingly, the Company has reclassified net income available
to common stockholders and net income available to common stockholders per
share amounts for the nine months ended September 30, 2002 for the initial
issuance of the Company's 8.75%, $.01 par value, Series B Cumulative
Preferred Stock which the Company redeemed on May 14, 2002.
