BED Bedford Property Inv

Bedford Property Investors, Inc. (NYSE:BED) today announced its financial results for the second quarter and six months ended June 30, 2005. Diluted earnings per share of common stock (EPS) for the second quarter of 2005 were $0.55, compared with diluted EPS of $0.30 achieved for the second quarter of 2004. EPS for the six months ended June 30, 2005 were $0.98 compared with $0.59 for the six months of 2004. Funds from operations (FFO) per share of common stock for the second quarter of 2005 were $0.43, compared with FFO per share of $0.76 achieved for the second quarter of 2004. FFO per share of common stock for the first six months of 2005 were $0.89, compared with FFO per share of common stock of $1.48 achieved in the first six months of 2004. Financial Results Net income available to common stockholders for the second quarter of 2005 increased by approximately $3,784,000 (78%) when compared with the second quarter of 2004. Net income available to common stockholders for the first six months of 2005 increased by approximately $5,934,000 (62%) when compared with the same period in 2004. These increases are mainly due to gains of approximately $9,095,000 and $16,239,000 realized from the sales of operating properties for the second quarter and first six months of 2005, respectively. Income from continuing operations (which excludes the operating results from properties sold and gains on sales) for the second quarter and the first six months of 2005 decreased $2,579,000 and $4,995,000, respectively, when compared to the same periods in 2004. These decreases are the result of the loss of net operating income from the property sales that occurred in 2004 and 2005, continued rental rate reductions on our lease renewals and re-leasing, declines in the operating portfolio occupancy, and increases in depreciation expense, primarily due to improvements of real estate and properties acquired and developed in 2004 and 2005. These decreases were partially offset by additional net operating income resulting from the property acquisitions and development undertaken in 2004. FFO for the second quarter of 2005 were approximately $6,810,000, compared to approximately $12,226,000 for the same period in 2004. FFO for the six months ended June 30, 2005 were approximately $14,057,000, compared to approximately $23,870,000 for the same period in 2004. FFO is a non-GAAP financial measurement used by real estate investment trusts to measure and compare operating performance and is generally defined as net income computed in accordance with GAAP, excluding extraordinary items and gains or losses from sales of property, plus depreciation and amortization of assets related to real estate, and after adjustments for unconsolidated partnerships and joint ventures. A reconciliation of our FFO to our net income available to common stockholders (the most directly comparable GAAP measure) is included in the financial data accompanying this press release. Property Operations As of June 30, 2005, we owned and managed approximately 7.5 million square feet of suburban office and industrial properties which consisted of 81 operating properties totaling approximately 6.9 million square feet and six development and rehabilitation projects totaling approximately 600,000 square feet. At quarter end our 7.5 million square foot portfolio was 80% occupied while our operating portfolio was 88% occupied. During the second quarter of 2005, we renewed and re-leased 451,294 square feet, or 82% of the expiring square footage of 550,053. The average change in rental rates (on a cash basis) in these new leases was a decrease of 16.0%. For the six months ended June 30, 2005, we renewed and re-leased 606,927 square feet, or 69% of the expiring square footage. The average change in rental rates (on a cash basis) in these new leases was a decrease of 14.7%. Property Acquisitions In the second quarter of 2005, we purchased a 1.31 acre parking lot for approximately $587,000 in Phoenix, Arizona. We purchased this lot, which is adjacent to one of our existing operating properties, to accommodate the parking needs of our tenants. Property Dispositions In the second quarter of 2005, we sold five operating properties in one transaction for $27,750,000. This sale consisted of two office and three R & D buildings totaling 182,186 square feet and generated a gain on sale of real estate investments of $9,095,000. During the six months ended June 30, 2005, we sold six operating properties in two transactions for a total of $43,550,000. These sales consisted of two office and four R & D buildings totaling 291,966 square feet and generated gains on sale of real estate investments of $15,989,000. In addition, we recorded a gain of $250,000 from funds released from escrow in the first quarter of 2005 in connection with a property sold in the fourth quarter of 2004. Stock Repurchase During the second quarter of 2005, we repurchased 178,363 shares of our common stock at an average cost of $21.81 per share. Of the 178,363 shares repurchased, 635 shares were repurchased from our employees who sold shares in settlement of their payroll taxes upon the vesting of their restricted stock. The remaining 177,728 shares were repurchased on the open market pursuant to our common stock share repurchase program. Since the inception of this repurchase program in November 1998, we have repurchased a total of 8,694,344 shares of our common stock at an average cost of $19.31 per share, which represents 38% of the shares of common stock outstanding at November 30, 1998. Company Information We are a self-administered equity real estate investment trust that acquires, develops, owns and operates multi-tenant suburban office and industrial properties in Arizona, California, Colorado, Nevada, Oregon and Washington. As of June 30, 2005, we had 478 tenants. We are traded on the New York Stock Exchange and the Pacific Exchange under the symbol "BED", and our website is www.bedfordproperty.com. Investors, analysts and other interested parties are invited to join our quarterly conference call on Tuesday, July 19, 2005 at 8:00 a.m. PDT. To participate, callers may dial 866-641-2830 and state ID#: 143428 and conference call leader Hanh Kihara, five minutes beforehand. Investors also have the opportunity to listen to the conference call live on the Internet at our website at www.bedfordproperty.com, under Investor Relations-Investor Overview, by clicking on the webcast icon. A telephonic replay of the call is available through August 19, 2005 at 800-642-1687, ID#: 143428. -0- *T BEDFORD PROPERTY INVESTORS, INC. CONSOLIDATED BALANCE SHEETS AS OF JUNE 30, 2005 AND DECEMBER 31, 2004 (Unaudited; in thousands, except share and per share amounts) June 30, December 31, 2005 2004(1) ------------ -------------- Assets Real estate investments: Industrial buildings $ 408,199 $ 417,613 Office buildings 345,541 332,695 Properties under development 19,701 29,716 Land held for development 12,666 13,529 ----------- ----------- 786,107 793,553 Less accumulated depreciation 94,117 85,436 ----------- ----------- 691,990 708,117 Operating properties held for sale, net - 8,293 ----------- ----------- Total real estate investments 691,990 716,410 Cash and cash equivalents 2,508 24,218 Accounts receivable, net 464 679 Notes receivable, net - 6,820 Other assets 42,848 45,356 ----------- ----------- Total assets $ 737,810 $ 793,483 =========== =========== Liabilities and Stockholders' Equity Bank loan payable $ 44,163 $ - Mortgage loans payable 316,588 351,335 Accounts payable and accrued expenses 7,773 13,135 Dividends payable 10,311 63,898 Other liabilities 12,406 14,657 ----------- ----------- Total liabilities 391,241 443,025 ----------- ----------- Stockholders' equity: Preferred stock, $0.01 par value; authorized 6,795,000 shares; issued none - - Series A 8.75% cumulative redeemable preferred stock, $0.01 par value; authorized and issued 805,000 shares at June 30, 2005 and December 31, 2004; stated liquidation preference of $40,250 38,947 38,947 Series B 7.625% cumulative redeemable preferred stock, $0.01 par value; authorized and issued 2,400,000 shares at June 30, 2005 and December 31, 2004; stated liquidation preference of $60,000 57,769 57,769 Common stock, $0.02 par value; authorized 50,000,000 shares; issued and outstanding 16,248,057 shares at June 30, 2005 and 16,325,584 shares at December 31, 2004 324 326 Additional paid-in capital 287,683 289,132 Deferred stock compensation (11,361) (10,114) Accumulated dividends in excess of net income (26,826) (25,700) Accumulated other comprehensive income 33 98 ----------- ----------- Total stockholders' equity 346,569 350,458 ----------- ----------- Total liabilities and stockholders' equity $ 737,810 $ 793,483 ============ =========== (1) The information in this column was derived from the Company's audited consolidated balance sheet for the year ended December 31, 2004. BEDFORD PROPERTY INVESTORS, INC. CONSOLIDATED STATEMENTS OF INCOME FOR THE THREE AND SIX MONTHS ENDED JUNE, 2005 AND 2004 (Unaudited; in thousands, except share and per share amounts) Three Months Six Months 2005 2004 2005 2004 ----------- ----------- ----------- ----------- Rental income $ 23,543 $ 23,276 $ 47,176 $ 46,023 Rental expenses: Operating expenses 4,872 4,082 9,404 7,731 Real estate taxes 2,931 2,598 5,939 5,176 Depreciation and amortization 7,246 6,550 14,658 12,670 General and administrative expenses 2,052 1,583 4,113 3,088 ----------- ----------- ----------- ----------- Income from operations 6,442 8,463 13,062 17,358 Other income (expense) Interest income 26 11 166 29 Interest expense (5,274) (4,701) (10,621) (9,785) ----------- ----------- ----------- ----------- Income from continuing operations 1,194 3,773 2,607 7,602 ----------- ----------- ----------- ----------- Discontinued operations: Income from discontinued operations 394 1,983 747 3,770 Gain on sale of operating properties 9,095 - 16,239 - ----------- ----------- ----------- ----------- Income from discontinued operations 9,489 1,983 16,986 3,770 ----------- ------------ ----------- ----------- Net income 10,683 5,756 19,593 11,372 Preferred dividends - Series A (881) (881) (1,761) (1,761) Preferred dividends - Series B (1,143) - (2,287) - ----------- ----------- ----------- ----------- Net income available to common stockholders $ 8,659 $ 4,875 $ 15,545 $ 9,611 =========== =========== =========== =========== Income per common share - basic: (Loss) income from continuing operations $ (0.05) $ 0.18 $ (0.09) $ 0.37 Income from discontinued operations 0.60 0.13 1.07 0.23 ----------- ----------- ----------- ----------- Net income available to common stockholders $ 0.55 $ 0.31 $ 0.98 $ 0.60 =========== =========== =========== =========== Weighted average number of shares - basic 15,764,606 15,838,442 15,800,793 15,898,655 =========== =========== =========== =========== Income per common share - diluted: (Loss) income from continuing operations $ (0.05) $ 0.18 $ (0.09) $ 0.36 Income from discontinued operations 0.60 0.12 1.07 0.23 ----------- ----------- ----------- ----------- Net income available to common stockholders $ 0.55 $ 0.30 $ 0.98 $ 0.59 =========== =========== =========== =========== Weighted average number of shares - diluted 15,795,296 16,059,299 15,858,864 16,181,870 =========== =========== =========== =========== BEDFORD PROPERTY INVESTORS, INC. CONSOLIDATED FUNDS FROM OPERATIONS FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2005 AND 2004 (in thousands, except share and per share amounts) Three Months Six Months 2005 2004 2005 2004 ----------- ----------- ----------- ----------- Net income available to common stockholders $ 8,659 $ 4,875 $ 15,545 $ 9,611 Adjustments: Depreciation and amortization: Continuing operations 7,246 6,550 14,658 12,670 Discontinued operations - 801 93 1,589 Gain on sale of operating properties (9,095) - (16,239) - ----------- ----------- ----------- ----------- Funds from Operations (FFO)(1) $ 6,810 $ 12,226 $ 14,057 $ 23,870 =========== =========== =========== =========== FFO per share - diluted $ 0.43 $ 0.76 $ 0.89 $ 1.48 =========== =========== =========== =========== Weighted average number of shares - diluted 15,795,296 16,059,299 15,858,864 16,181,870 =========== =========== =========== =========== (1) Although FFO is not a financial measure calculated in accordance with accounting principles generally accepted in the United States of America (GAAP), we believe that FFO is an appropriate alternative measure of the performance of an equity real estate investment trust (REIT). Presentation of this information provides the reader with an additional measure to compare the performance of equity REITs. FFO is generally defined by the National Association of Real Estate Investment Trusts as net income (loss) (computed in accordance with GAAP), excluding extraordinary items such as gains (losses) from sales of property, plus depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures. FFO as set forth in the table above has been computed in accordance with this definition. FFO does not represent cash generated by operating activities in accordance with GAAP; it is not necessarily indicative of cash available to fund cash needs and should not be considered as an alternative to net income (loss) as an indicator of our operating performance or as an alternative to cash flow as a measure of liquidity. Furthermore, FFO as disclosed by other REITs may not be comparable to our presentation. The most directly comparable financial measure calculated in accordance with GAAP to FFO is net income available to common stockholders. *T