The Globe and Mail

Go to the Globe and Mail homepage

Jump to main navigationJump to main content

Globe Investor

News Sources

Take control of your investments with the latest investing news and analysis

Press release from Business Wire

Government Properties Income Trust Announces 2012 First Quarter Results

Tuesday, May 01, 2012

Government Properties Income Trust Announces 2012 First Quarter Results07:00 EDT Tuesday, May 01, 2012 NEWTON, Mass. (Business Wire) -- Government Properties Income Trust (NYSE: GOV) today announced its financial results for the quarter ended March 31, 2012. Results for the Quarter Ended March 31, 2012: Normalized funds from operations, or Normalized FFO, for the quarter ended March 31, 2012 were $25.2 million, or $0.54 per share, compared to Normalized FFO for the quarter ended March 31, 2011 of $19.5 million, or $0.48 per share. Net income was $13.1 million, or $0.28 per share, for the quarter ended March 31, 2012 compared to $10.3 million, or $0.25 per share, for the same quarter last year. GOV's weighted average number of common shares outstanding was 47.1 million and 40.5 million for the quarters ended March 31, 2012 and 2011, respectively. A reconciliation of net income determined according to U.S. generally accepted accounting principles, or GAAP, to funds from operations, or FFO, and Normalized FFO for the quarters ended March 31, 2012 and 2011 appears later in this press release. Recent Investment Activities: Since January 1, 2012, GOV has entered into agreements to acquire five properties for an aggregate purchase price of $61.5 million, including the assumption of $19.2 million of mortgage debt and excluding acquisition costs, as follows: In March 2012, GOV entered into an agreement to acquire two office properties located in Everett, WA with 111,908 rentable square feet. These properties are 100% leased to the State of Washington and occupied by the Department of Social and Health Services. The contract purchase price is $20.9 million, excluding acquisition costs. Also in March 2012, GOV entered into an agreement to acquire an office property located in Stockton, CA with 22,012 rentable square feet. This property is 100% leased to the U.S. Government and occupied by the Department of Immigration and Customs Enforcement. The contract purchase price is $8.2 million, excluding acquisition costs. In April 2012, GOV entered into an agreement to acquire an office property located in Albany, NY with 64,000 rentable square feet. This property is 100% leased to the State of New York and occupied by the Department of Agriculture. The contract purchase price is $8.5 million, excluding acquisition costs. Also in April 2012, GOV entered into an agreement to acquire an office property located in Madison, WI with 56,889 rentable square feet. This property is 100% leased to the State of Wisconsin and occupied by the Department of Administration. The contract purchase price is $23.9 million, including the assumption of $19.2 million of mortgage debt and excluding acquisition costs. These pending acquisitions are subject to GOV's satisfactory completion of diligence and other customary closing conditions; accordingly, GOV can provide no assurance that it will acquire these properties. Recent Financing Activities: In January 2012, GOV entered into a five year $350 million unsecured term loan. The loan matures on January 11, 2017, and is prepayable without penalty at any time. The term loan bears interest payable at LIBOR plus 175 basis points, subject to adjustment based on changes to GOV's senior unsecured debt ratings. GOV used the net proceeds of the term loan to repay amounts outstanding under its revolving credit facility and to fund general business activities. Conference Call: On Tuesday, May 1, 2012, at 1:00 p.m. Eastern Time, David Blackman, President and Chief Operating Officer, and Mark Kleifges, Treasurer and Chief Financial Officer, will host a conference call to discuss the first quarter 2012 results. The conference call telephone number is (800) 230-1074. Participants calling from outside the United States and Canada should dial (612) 288-0329. No pass code is necessary to access the call from either number. 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 11:59 p.m. Eastern Time on May 8, 2012. To hear the replay, dial (320) 365-3844. The replay pass code is 242633. A live audio webcast of the conference call will also be available in a listen only mode on GOV's website, which is located at www.govreit.com. Participants wanting to access the webcast should visit GOV's website about five minutes before the call. The archived webcast will be available for replay on GOV's website for about one week after the call. The recording and retransmission in any way of GOV's first quarter conference call is strictly prohibited without the prior written consent of GOV.Supplemental Data: A copy of GOV's First Quarter 2012 Supplemental Operating and Financial Data is available for download at GOV's website, www.govreit.com. GOV's website is not incorporated as part of this press release. Government Properties Income Trust is a real estate investment trust, or REIT, which owns properties located throughout the United States which are majority leased to the U.S. Government and other government tenants. As of March 31, 2012, GOV owned 71 properties with approximately 8.9 million rentable square feet. GOV is headquartered in Newton, Massachusetts. Please see the following pages for a more detailed statement of GOV's operating results and financial condition and for an explanation of our calculation of FFO and Normalized FFO.   GOVERNMENT PROPERTIES INCOME TRUSTCONDENSED CONSOLIDATED STATEMENTS OF INCOME, FUNDS FROM OPERATIONS ANDNORMALIZED FUNDS FROM OPERATIONS(amounts in thousands, except per share data)(unaudited)     Three Months Ended March 31,   2012     2011     Rental income $ 50,455   $ 39,228     Expenses Real estate taxes 5,533 4,457 Utility expenses 3,835 3,507 Other operating expenses 8,853 6,921 Depreciation and amortization 12,072 8,386 Acquisition related costs 49 829 General and administrative   3,039     2,343   Total expenses   33,381     26,443     Operating income 17,074 12,785   Interest and other income 8 15 Interest expense (including net amortization of debt premiums and deferred financing fees of $324 and $259, respectively) (4,023 ) (2,537 ) Equity in earnings of an investee   45     37     Income before income tax expense 13,104 10,300   Income tax expense   (45 )   (46 ) Net income $ 13,059   $ 10,254     Calculation of Funds from Operations (FFO) and Normalized FFO(1) Net income $ 13,059 $ 10,254 Plus: depreciation and amortization   12,072     8,386   FFO 25,131 18,640 Plus: acquisition related costs   49     829   Normalized FFO $ 25,180   $ 19,469     Weighted average common shares outstanding   47,052     40,501     Per common share Net income $ 0.28 $ 0.25 FFO $ 0.53 $ 0.46 Normalized FFO $ 0.54 $ 0.48   (1)We calculate Funds from Operations, or FFO, and Normalized FFO as shown above.FFO is calculated on the basis defined by The National Association of Real Estate Investment Trusts, or NAREIT, which is net income, calculated in accordance with GAAP, plus real estate depreciation and amortization.Our calculation of Normalized FFO differs from NAREIT's definition of FFO because we exclude acquisition related costs and loss on early extinguishment of debt, if any.We consider FFO and Normalized FFO to be appropriate measures of performance for a REIT, along with net income, operating income and cash flow from operating, investing and financing activities.We believe that FFO and Normalized FFO provide useful information to investors because by excluding the effects of certain historical amounts, such as depreciation expense, FFO and Normalized FFO can facilitate a comparison of operating performances between periods.FFO and Normalized FFO are among the factors considered by our Board of Trustees when determining the amount of distributions to our shareholders.Other factors include, but are not limited to, requirements to maintain our status as a REIT, limitations in our revolving credit facility agreement and the term loan agreement, the availability of debt and equity capital to us and our expectation of our future capital requirements and operating performance.FFO and Normalized FFO do not represent cash generated by operating activities in accordance with GAAP and should not be considered as alternatives to net income, operating income or cash flow from operating activities, determined in accordance with GAAP or as indicators of our financial performance or liquidity, nor are these measures necessarily indicative of sufficient cash flow to fund all of our needs.We believe that FFO and Normalized FFO may facilitate an understanding of our consolidated historical operating results.These measures should be considered in conjunction with net income, operating income and cash flow from operating activities as presented in our Condensed Consolidated Statements of Income and Condensed Consolidated Statements of Cash Flows.Other REITs and real estate companies may calculate FFO and Normalized FFO differently than we do.   GOVERNMENT PROPERTIES INCOME TRUSTCONDENSED CONSOLIDATED BALANCE SHEETS(amounts in thousands, except share data)(unaudited)     March 31,December 31,   2012     2011   ASSETS   Real estate properties: Land $ 224,674 $ 224,674 Buildings and improvements   1,130,610     1,129,994   1,355,284 1,354,668 Accumulated depreciation   (164,193 )   (156,618 ) 1,191,091 1,198,050   Acquired real estate leases, net 112,178 117,596 Cash and cash equivalents 9,275 3,272 Restricted cash 2,201 1,736 Rents receivable, net 26,472 29,000 Deferred leasing costs, net 3,073 3,074 Deferred financing costs, net 7,075 5,550 Other assets, net   11,882     10,297   Total assets $ 1,363,247   $ 1,368,575     LIABILITIES AND SHAREHOLDERS' EQUITY   Unsecured revolving credit facility $ - $ 345,500 Unsecured term loan 350,000 - Mortgage notes payable 94,826 95,383 Accounts payable and accrued expenses 18,438 20,691 Due to related persons 3,596 4,071 Assumed real estate lease obligations, net   10,482     11,262     477,342     476,907   Commitments and contingencies   Shareholders' equity: Common shares of beneficial interest, $.01 par value: 70,000,000 shares authorized, 47,090,791 and 47,051,650 shares issued and outstanding, respectively 471 471 Additional paid in capital 936,379 935,438 Cumulative net income 100,392 87,333 Cumulative other comprehensive income 76 77 Cumulative common distributions   (151,413 )   (131,651 ) Total shareholders' equity   885,905     891,668     Total liabilities and shareholders' equity $ 1,363,247   $ 1,368,575     WARNING CONCERNING FORWARD LOOKING STATEMENTS THIS PRESS RELEASE CONTAINS STATEMENTS WHICH CONSTITUTE FORWARD LOOKING STATEMENTS WITHIN THE MEANING OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 AND OTHER SECURITIES LAWS. ALSO, WHENEVER WE USE WORDS SUCH AS “BELIEVE”, “EXPECT”, “ANTICIPATE”, “INTEND”, “PLAN”, “ESTIMATE”, OR SIMILAR EXPRESSIONS, WE ARE MAKING FORWARD LOOKING STATEMENTS. THESE FORWARD LOOKING STATEMENTS ARE BASED UPON OUR PRESENT INTENT, BELIEFS OR EXPECTATIONS, BUT FORWARD LOOKING STATEMENTS ARE NOT GUARANTEED TO OCCUR AND MAY NOT OCCUR. OUR ACTUAL RESULTS MAY DIFFER MATERIALLY FROM THOSE CONTAINED IN OUR FORWARD LOOKING STATEMENTS AS A RESULT OF VARIOUS FACTORS. FOR EXAMPLE: THIS PRESS RELEASE DISCUSSES THE INTEREST TO BE PAID ON AMOUNTS OUTSTANDING UNDER OUR TERM LOAN. HOWEVER, ACTUAL ANNUAL COSTS UNDER OUR TERM LOAN WILL BE HIGHER THAN LIBOR PLUS A PREMIUM BECAUSE OF OTHER FEES AND EXPENSES ASSOCIATED WITH OUR TERM LOAN. THIS PRESS RELEASE STATES THAT WE HAVE ENTERED AGREEMENTS TO PURCHASE PROPERTIES. THESE TRANSACTIONS ARE SUBJECT TO VARIOUS TERMS AND CONDITIONS TYPICAL OF COMMERCIAL REAL ESTATE TRANSACTIONS. THESE TERMS AND CONDITIONS MAY NOT BE MET. AS A RESULT, SOME OR ALL OF THESE TRANSACTIONS MAY NOT OCCUR OR MAY BE DELAYED. THE INFORMATION CONTAINED IN OUR FILINGS WITH THE SECURITIES AND EXCHANGE COMMISSION, INCLUDING UNDER “RISK FACTORS” IN OUR PERIODIC REPORTS, OR INCORPORATED THEREIN, IDENTIFIES OTHER IMPORTANT FACTORS THAT COULD CAUSE OUR ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE STATED IN OUR FORWARD LOOKING STATEMENTS. OUR FILINGS WITH THE SECURITIES AND EXCHANGE COMMISSION ARE AVAILABLE ON ITS WEBSITE AT WWW.SEC.GOV. YOU SHOULD NOT PLACE UNDUE RELIANCE UPON OUR FORWARD LOOKING STATEMENTS. EXCEPT AS REQUIRED BY LAW, WE DO NOT INTEND TO UPDATE OR CHANGE ANY FORWARD LOOKING STATEMENTS AS A RESULT OF NEW INFORMATION, FUTURE EVENTS OR OTHERWISE. Government Properties Income TrustTimothy A. Bonang, 617-219-1440Vice President, Investor RelationsorElisabeth Heiss, 617-219-1440Manager, Investor Relations