Keystone Property Trust Releases Updated Third Quarter Results
Reflecting Changes Due to the Deferral of FASB Statement 150 WEST
CONSHOHOCKEN, Pa., Nov. 3 /PRNewswire-FirstCall/ -- Keystone
Property Trust today released updated financial results for the
third quarter of 2003 solely due to the Financial Accounting
Standard Board's ("FASB") October 29, 2003 announcement that
certain provisions of Statement of Financial Accounting Standard
No. 150, "Accounting for Certain Financial Instruments with
Characteristics of both Liabilities and Equity" ("FASB 150"),
related to the accounting for the minority interest of consolidated
subsidiaries with finite lives, will be indefinitely deferred. In
the Company's October 21, 2003 press release announcing third
quarter earnings, the Company had recorded a charge of $224,000 or
$0.01 per diluted share for the cumulative effect of an accounting
change related to this provision of FASB 150. Due to the revised
accounting treatment the Company has revised its third quarter
earnings, previously reported on October 21, 2003, to eliminate
this $224,000 charge. Accordingly, the Company is now reporting net
income allocated to common shareholders for the quarter of $3.8
million, or $0.17 per diluted share, as compared with a net loss of
$19.6 million, or $1.01 per diluted share, for the third quarter of
2002. Net income allocated to common shareholders for the nine
months ended September 30, 2003 was $12.4 million, or $0.57 per
diluted share, as compared with a net loss of $13.3 million, or
$0.70 per diluted share, for the nine months ended September 30,
2002. There was no change in the company's reported Funds from
Operations ("FFO") per share information as the amount originally
recorded due to the provisions of FASB 150 was reflected as the
cumulative effect of an accounting change. Established NAREIT
guidelines for the computation of FFO provide that the cumulative
effect of an accounting change is excluded from the calculation of
FFO for any reporting period. The accompanying financial results
for the third quarter and the nine months ended September 30, 2003
are an update to the press release of October 21, 2003 and reflect
the accounting treatment in accordance with the recent FASB
announcement on FASB 150. Keystone Property Trust, with
headquarters in West Conshohocken, Pennsylvania, is a fully
integrated real estate investment trust with a current portfolio of
127 properties, including properties under development, aggregating
31 million square feet in the Eastern half of the United States.
For more information, contact Aleathia M. Hoster at (212) 527-9900,
send email to or visit the Company website at
http://www.keystoneproperty.com/. This press release may contain
statements which constitute forward looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995,
including statements regarding the intent, belief or current
expectations of the Company, its trustees, or its officers with
respect to the future operating performance of the Company and the
result and the effect of legal proceedings. Investors are cautioned
that any such forward looking statements are not guarantees of
future performance and involve risks and uncertainties, and that
actual results may differ materially from those in the forward
looking statements as a result of various factors. Important
factors that could cause such differences are described in the
Company's periodic filings with the Securities and Exchange
Commission, including the Company's Form 10-K and quarterly reports
on Form 10-Q. For the three months For the nine months ended
September 30, ended September 30, (unaudited) (unaudited) 2003 2002
2003 2002 REVENUE: Rents $18,807 $21,517 $53,851 $63,295
Reimbursement revenue and other income 3,825 3,425 10,717 9,984
Total revenue 22,632 24,942 64,568 73,279 OPERATING EXPENSES:
Property operating expenses 1,060 1,876 3,521 5,549 Real estate
taxes 2,513 2,554 6,878 7,446 General and administrative 2,397
2,028 7,676 5,980 Employee termination costs - 930 - 930
Depreciation and amortization 5,641 5,021 15,772 15,575 Provision
for asset impairment - 30,200 - 30,200 Total operating expenses
11,611 42,609 33,847 65,680 Income (loss) before equity in income
from equity method investments, gains (losses) on sales of assets,
interest expense, distributions to preferred unitholders, minority
interest of unitholders in Operating Partnership, and discontinued
operations 11,021 (17,667) 30,721 7,599 Equity in income from
equity method investments 1,621 266 4,484 583 Gains (losses) on
sales of assets - - 3,221 (430) Interest expense 4,736 6,369 14,037
18,507 Income (loss) before distributions to preferred unitholders,
minority interest of unitholders in Operating Partnership, and
discontinued operations 7,906 (23,770) 24,389 (10,755)
Distributions to preferred unitholders (1,268) (1,424) (3,804)
(4,317) Minority interest of unitholders in Operating Partnership
(944) 6,092 (3,163) 3,987 Income (loss) from continuing operations
5,694 (19,102) 17,422 (11,085) Discontinued operations: Income from
discontinued operations - 86 - 323 Gain on disposition of
discontinued operations - 871 - 871 Minority interest - (235) -
(294) - 722 - 900 NET INCOME (LOSS) 5,694 (18,380) 17,422 (10,185)
NET INCOME ALLOCATED TO PREFERRED SHAREHOLDERS (1,940) (1,208)
(4,980) (3,083) NET INCOME (LOSS) ALLOCATED TO COMMON SHAREHOLDERS
$3,754 $(19,588) $12,442 $(13,268) EARNINGS PER COMMON SHARE -
BASIC: Income (loss) from continuing operations $0.17 $(1.05) $0.57
$(0.75) Discontinued operations - 0.04 - 0.05 Income (loss) per
Common Share - Basic $0.17 $(1.01) $0.57 $(0.70) WEIGHTED AVERAGE
COMMON SHARES - BASIC 21,798,811 19,489,288 21,656,634 18,845,599
EARNINGS PER COMMON SHARE - DILUTED: Income (loss) from continuing
operations $0.17 $(1.05) $0.57 $(0.75) Discontinued operations -
0.04 - 0.05 Income (loss) per Common Share - Diluted $0.17 $(1.01)
$0.57 $(0.70) WEIGHTED AVERAGE COMMON SHARES - DILUTED 27,617,792
19,489,288 27,424,617 18,845,599 As of: September 30, December 31,
2003 2002 (unaudited) BALANCE SHEET DATA: Real estate investments,
before accumulated depreciation $840,223 $677,127 Total assets
837,221 671,654 Total debt 426,625 325,796 Total liabilities
453,436 346,021 Minority interest in Operating Partnership 44,381
31,658 Convertible preferred units 52,892 52,892 Stockholders'
equity 286,512 241,083 For the three months For the nine months
ended September 30, ended September 30, (unaudited) (unaudited)
FUNDS FROM OPERATIONS (1): 2003 2002 (3) 2003 2002 (3) Net Income
(Loss) Allocated to Common Shareholders $3,754 $(19,588) $12,442
$(13,268) Income Allocated to Preferred Shareholders 1,940 797
4,980 2,672 Redeemable Preferred Stock Dividends (1,574) - (3,883)
- Minority Interest of Unitholders in Operating Partnership 944
(5,857) 3,163 (3,693) Distributions to Preferred Unitholders 1,268
1,424 3,804 4,317 (Gains) Losses on Sales of Assets - (871) (3,221)
(441) Depreciation and Amortization Related to Real Estate 5,641
4,895 15,772 15,538 Depreciation and Amortization Related to Joint
Ventures 443 206 1,198 546 Funds from operations $12,416 $(18,994)
$34,255 $5,671 Basic FFO per share $0.39 $(0.60) $1.08 $0.18
Diluted FFO per share $0.39 $(0.60) $1.08 $0.18 Diluted weighted
average shares and units (2) 31,854,559 31,409,399 31,661,384
31,235,134 Dividend paid per common share $0.330 $0.325 $0.980
$0.965 FFO dividend payout ratio 84.6% N/A 90.7% N/A (1) The
Company uses Funds from Operations ("FFO") as a non-GAAP
performance measure in addition to net income determined in
accordance with GAAP. FFO is a widely used measurement by investors
for evaluating the operating performance of an equity REIT.
Management believes that FFO is a useful disclosure as a non-GAAP
performance measure as historical cost accounting for real estate
assets, as required in accordance with GAAP, implicitly assumes
that the value of real estate assets diminishes predictably over
time as reflected through depreciation and amortization expenses.
The Company believes that the value of real estate assets does not
diminish predictably over time, as is assumed in GAAP accounting,
and instead fluctuates due to market and other conditions.
Accordingly, the Company believes FFO provides investors with
useful supplemental information about the Company's operating
performance because it excludes real estate depreciation and
amortization expense and also gains and losses from the sale of
depreciated real estate assets. However, FFO does not represent
cash generated from operating activities in accordance with GAAP
and it also does not consider the costs associated with capital
expenditures related to the Company's real estate assets. Also it
is not necessarily indicative of cash available to fund cash needs
and should not be considered as an alternative to net income (as
determined in accordance with GAAP) as an indicator of the
Company's operating performance or as an alternative to cash flow
from operating activities (as determined in accordance with GAAP)
as a measure of liquidity. NAREIT defines FFO as net income (loss)
computed in accordance with GAAP, excluding gains (or losses) from
sales of property, plus depreciation and amortization, and after
adjustments for unconsolidated partnerships and joint ventures.
Adjustments for unconsolidated partnerships and joint ventures are
calculated to reflect FFO on the same basis. Since 2000, NAREIT has
clarified the definition of FFO to include non-recurring events
(except for those that are defined as "extraordinary items" or
cumulative effects of accounting changes under GAAP) and the
results of discontinued operations. The Company has presented FFO
on a consistent basis for all periods presented. (2) Diluted
weighted average shares for 2003 and 2002, as shown above, include
convertible preferred shares and all common and preferred units in
the Operating Partnership, each on an as-converted basis. (3) FFO
reflects a $30.2 million charge in the third quarter of 2002 and a
$31.6 million charge for the nine months ended September 30, 2002
for asset impairment that was not added back to net income to
calculate FFO, as a result of recent guidance from the SEC and
NAREIT that impairment charges should not be added back in the
calculation of FFO. DATASOURCE: Keystone Property Trust CONTACT:
Aleathia M. Hoster of Keystone Property Trust, +1-212-527-9900, or
MEDIA: Michael Beckerman, +1-908-781-6420, , for Keystone Property
Trust Web site: http://www.keystoneproperty.com/
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