Catellus Announces First Quarter 2004 Results

Catellus Announces First Quarter 2004 Results 


SAN FRANCISCO, April 29  /PRNewswire-FirstCall/ -- Catellus Development
Corporation  today reported earnings per fully diluted share ("EPS") for the
first quarter of 2004 of $0.31, compared to $0.23 for the same period in 2003. 
Net income for the first quarter of 2004 was $32.1 million, compared to $23.4
million for the same period in 2003.

"This is the first quarterly earnings report since we completed the
restructuring of our business to operate as a real estate investment trust, or
REIT," said Nelson C. Rising, chairman and CEO.  "The benefits of our election
of REIT status show up in this quarter's financial statements, with a
significantly reduced tax expense contributing to the 35 percent increase in
EPS."

"With the conversion behind us, and with an occupancy rate of 95.7 percent
supporting our income stream, we are well positioned to continue applying our
development skills to select opportunities in strategic distribution markets
throughout the country."

  Rental Portfolio

  -- For the first quarter of 2004, rental revenue less property operating
     costs, including equity in earnings from operating joint ventures and
     before adjustments for discontinued operations, was $58.2 million,
     compared to $57.7 million for the same period in 2003.
  -- At March 31, 2004, the rental portfolio totaled 40.0 million square
     feet, 90 percent of which is industrial property.  This represents a
     net increase of approximately 1.8 million square feet from
     December 31, 2003.
  -- The total rental portfolio's occupancy rate at quarter end was
     95.7 percent, compared to 95.2 percent at December 31, 2003, and
     93.9 percent at March 31, 2003.
  -- The industrial portfolio's occupancy rate at quarter end was
     96.4 percent, as compared to 96.1 percent at December 31, 2003, and
     94.4 percent at March 31, 2003.
  -- Development properties completed and added to the portfolio during the
     quarter included six industrial properties totaling more than 1.7
     million square feet: a 252,000 square foot facility in Winchester,
     Virginia; a 450,000 square foot warehouse in Fontana, California; two
     342,000 square foot buildings and a 296,000 square foot building in
     Atlanta, Georgia; and an 84,000 square foot building in Portland,
     Oregon.  The buildings are 100 percent leased and represent a total
     investment of $53.6 million with a projected return on cost of 9.9
     percent.
  -- During the quarter, one 52,000 square foot building was sold and one
     40,000 square foot building was acquired.
  -- As announced during the quarter, PepsiCo Beverages and Food executed a
     lease for 743,000 square feet of existing industrial space in Grand
     Prairie, Texas, including 451,000 square feet of renewal space and
     292,000 square feet of expansion space in an adjacent building.
  -- Also announced during the quarter, one of the country's leading
     retailers preleased a 758,000 square foot distribution facility, on
     which construction began in December of 2003, in Fontana, California.

  Development and Investment Activity

  -- At March 31, 2004, Core Segment construction in progress was
     2.9 million square feet, of which 1.9 million square feet in five
     buildings will be added to Catellus' rental portfolio upon completion,
     and one million square feet is development for fee. (See below for a
     definition of Core Segment.)
  -- For the 1.9 million square feet of space under construction that will
     be added to Catellus' rental portfolio upon completion, the projected
     total cost of development is approximately $73.0 million.  These
     buildings are 82 percent preleased and when fully leased are projected
     to yield a return on cost of approximately 10.8 percent.
  -- During the quarter, construction commenced on 406,000 square feet
     including a 348,000 square foot warehouse at Stapleton Business Center
     in Denver, Colorado, and 58,000 square feet of fully leased retail
     space at Pacific Commons, in Fremont, California.
  -- During the quarter, construction was completed on two
     build-to-suit-for-sale properties totaling 58,000 square feet at
     Pacific Commons, in Fremont, California.

  Urban, Residential & Other

  -- During the quarter, one land parcel at Santa Fe Depot, in San Diego,
     California, and two land parcels at Los Angeles Union Station were
     sold.  The last remaining land parcel at Santa Fe Depot is under
     contract.
  -- Substantially all of the remaining 108,000 acres of desert land are
     under contract, in multiple transactions that are scheduled to close in
     2004.

  Annual Meeting of Stockholders

  -- The 2004 Annual Meeting of Stockholders will be held in San Francisco,
     California, on May 4, 2004, at 9:00 a.m. local time, at the Palace
     Hotel.

  Supplemental Reporting Measure

  -- The company provides a supplemental performance measure of Funds From
     Operations ("FFO"), as defined by the National Association of Real
     Estate Investment Trusts ("NAREIT"), which Catellus believes provides a
     useful measure, along with GAAP net income, of its operating
     performance.
  -- Additionally, the company provides FFO in two segments:  Core Segment
     and Urban, Residential, and Other Segment.  The first segment, or Core
     Segment, reflects that part of Catellus' business it expects will be
     ongoing and central to its future operations.
  -- The second segment, or Urban, Residential, and Other Segment, reflects
     the company's urban and residential businesses, including residential
     lot development, urban development, and desert land sales, which the
     company intends to transition out of over time.  This segment also
     includes REIT conversion costs, certain of which will continue for
     three years.  These costs include third party costs, and the effects of
     the stock option exchange offer in 2003.
  -- In presenting FFO prior to beginning operations as a REIT (effective
     January 1, 2004), Catellus includes "hypothetical tax savings"
     (including the tax effects of the REIT conversion) that would have
     occurred had it been a REIT during the periods presented.
  -- FFO, including both segments as defined above, for the first quarter of
     2004 was $46.6 million, compared to $45.0 million for the same period
     in 2003.
  -- Core Segment FFO for the first quarter of 2004 was $46.3 million,
     compared to $38.7 million for the same period in 2003.  On a fully
     diluted basis, Core Segment FFO per share for the first quarter of 2004
     was $0.44, compared to $0.38 for the same period in 2003.



Catellus Development Corporation will host a conference call on Friday, April
30, 2004, at 9:00 AM Pacific Time (10:00 AM Mountain, 11:00 AM Central, and
Noon Eastern) to discuss the first quarter results.  To participate in the
conference call, dial 800-901-5241 (domestic) or 617-786-2963 (international)
and enter access code 50265470 prior to the beginning of the call.  Access the
live webcast of the conference call from the Investor Relations section of
Catellus' website at http://www.catellus.com/.  You may also access the live
webcast through http://www.streetevents.com/.  The telephonic replay will be
available through May 14, 2004, at 888-286-8010 (domestic) or 617-801-6888
(international) with the access code 54971122.  The webcast replay will be
available through April 30, 2005, from the Investor Relations section of
Catellus' website at http://www.catellus.com/ or at
http://www.streetevents.com/.

The first quarter 2004 Supplemental Financial Package will be available from
the Home Page and the Investor Relations section of our website at
http://www.catellus.com/.  These materials are also available by contacting
Investor Relations at 415-974-4500 or by sending an email to .

Catellus Development Corporation is a publicly traded real estate development
company that began operating as a real estate investment trust effective
January 1, 2004.  The company owns and operates approximately 40.0 million
square feet of predominately industrial property in many of the country's major
distribution centers and transportation corridors.  Catellus' principal
objective is sustainable, long-term growth in earnings, which it seeks to
achieve by applying its strategic resources:  a lower-risk/higher- return
rental portfolio, a focus on expanding that portfolio through development, and
the deployment of its proven land development skills to select opportunities
where it can generate profits to recycle back into its business.  More
information on the company is available at http://www.catellus.com/.

Except for historical matters, the matters discussed in this release are
forward-looking statements that involve risks and uncertainties.
Forward-looking statements include, but are not limited to, statements about
plans, opportunities, and development. We caution you not to place undue
reliance on these forward-looking statements, which reflect our current beliefs
and are based on information currently available to us. We do not undertake any
obligation to publicly revise these forward-looking statements to reflect
future events or changes in circumstances, except as may be required by law. 
These forward-looking statements are subject to risks and uncertainties that
could cause our actual results, performance, or achievements to differ
materially from those expressed in or implied by these statements. In
particular, among the factors that could cause actual results to differ
materially are:  changes in the real estate market or in general economic
conditions, including a worsening economic slowdown or recession; product and
geographical concentration; industry competition; availability of financing and
changes in interest rates and capital markets; changes in insurance markets;
discretionary government decisions affecting the use of land, and delays
resulting therefrom; changes in the management team; weather conditions and
other natural occurrences that may affect construction or cause damage to
assets; changes in income taxes or tax laws; liability for environmental
remediation and changes in environmental laws and regulations; failure or
inability of third parties to fulfill their commitments or to perform their
obligations under agreements; failure of parties to reach agreement on
definitive terms or to close transactions; increases in the cost of land and
construction materials and availability of properties for future development;
limitations on, or challenges to, title to our properties; risks related to the
financial strength of joint venture projects and co-owners; changes in policies
and practices of organized labor groups; shortages or increased costs of
electrical power; other risks inherent in the real estate business; and acts of
war, other geopolitical events and terrorists activities that could adversely
affect any of the above factors.  For further information, including more
detailed risk factors, you should refer to Catellus Development Corporation's
annual report on Form 10-K for the fiscal year ended December 31, 2003, filed
with the Securities and Exchange Commission.

   Contacts:
   Margan Mitchell             Minnie Wright
   Corporate Communications    Investor Relations
   415-974-4616                415-974-4649


                     CATELLUS DEVELOPMENT CORPORATION
                        CONSOLIDATED BALANCE SHEET
                              (In thousands)
                               (Unaudited)

                                               March 31,         Dec. 31,
                                                 2004              2003
  Assets
  Properties                                  $2,495,731        $2,498,015
  Less accumulated depreciation                 (457,741)         (446,872)
                                               2,037,990         2,051,143
  Other assets and deferred charges, net         309,632           292,312
  Notes receivable, less allowance               103,659           119,202
  Accounts receivable, less allowance             18,428            19,752
  Assets held for sale                            19,739             2,352
  Restricted cash and investments                 29,290            64,617
  Cash and cash equivalents                       44,623            45,931
  Total                                       $2,563,361        $2,595,309

  Liabilities and stockholders' equity
  Mortgage and other debt                     $1,332,731        $1,378,054
  Accounts payable and accrued expenses          137,505           157,036
  Deferred credits and other liabilities         299,694           291,530
  Liabilities associated with assets held
   for sale                                       19,641             2,296
  Deferred income taxes                           52,613            56,712
  Total liabilities                            1,842,184         1,885,628

  Stockholders' equity
  Common stock - 104,285 and 103,822 shares
   issued, and 102,991 and 102,724 shares
   outstanding at March 31, 2004 and
   December 31, 2003, respectively                 1,044             1,039
  Paid-in capital                                498,449           489,143
  Unearned value of restricted stock and
   restricted stock units (1,294 and 1,098
   shares at March 31, 2004 and December 31,
   2003, respectively)                           (24,816)          (22,720)
  Accumulated earnings                           246,500           242,219
  Total stockholders' equity                     721,177           709,681
  Total                                       $2,563,361        $2,595,309


                     CATELLUS DEVELOPMENT CORPORATION
                   CONSOLIDATED STATEMENT OF OPERATIONS
                  (In thousands, except per share data)
                               (Unaudited)

                                                     Three Months Ended
                                                          March 31,
                                                  2004               2003
  Revenue
    Rental revenue                               $76,143            $72,891
    Sales revenue                                 37,691              8,010
    Management, development and other fees         1,699              2,084
                                                 115,533             82,985
  Costs and expenses
    Property operating costs                     (21,207)           (19,150)
    Cost of sales                                (23,090)            (2,972)
    Selling, general and administrative expenses (12,951)            (9,891)
    Depreciation and amortization                (17,814)           (16,287)
                                                 (75,062)           (48,300)
        Operating income                          40,471             34,685
  Other income
    Equity in earnings of operating joint
     ventures, net                                 2,414              2,523
    Equity in earnings of development joint
     ventures, net                                 1,227              3,854
    Gain on non-strategic asset sales                 61              5,879
    Interest income                                2,777              1,917
    Other                                            301              1,157
                                                   6,780             15,330
  Other expenses
    Interest expense                             (15,533)           (16,540)
    REIT transition costs                           (212)            (1,558)
    Other                                           (430)                --
                                                 (16,175)           (18,098)

    Income before income taxes and discontinued
     operations                                   31,076             31,917

  Income tax benefit (expense)                      (931)           (11,571)
    Income from continuing operations             30,145             20,346
  Discontinued operations, net of income tax:
      Gain from disposal of discontinued
       operations                                  1,616              2,639
      Income from discontinued operations            330                426
          Net gain from discontinued operations    1,946              3,065
    Net income                                   $32,091            $23,411

    Income per share from continuing operations
        Basic                                      $0.29              $0.21
        Assuming dilution                          $0.29              $0.20
    Income per share from discontinued operations
        Basic                                      $0.02              $0.03
        Assuming dilution                          $0.02              $0.03
    Net income per share
        Basic                                      $0.31              $0.24
        Assuming dilution                          $0.31              $0.23

    Average number of common shares outstanding
     - basic                                     102,844             97,910
    Average number of common shares outstanding
     - diluted                                   104,031            100,599

    Dividends declared per share                   $0.27                $--


                     CATELLUS DEVELOPMENT CORPORATION
          Reconciliation of Net Income to Funds from Operations
                  (In thousands, except per share data)
                               (Unaudited)

                                                 Three Months ended
                                                   March 31, 2004

                                                      Urban/Res.
                                              Core     & Other
                                            Segment    Segment  Consolidated
  Net income                                $32,014      $77       $32,091
     Add depreciation                        18,250      184        18,434
     Less gain on rental property sales      (3,972)      --        (3,972)
  FFO                                       $46,292     $261       $46,553

  FFO per share:
      Basic                                   $0.45    $0.00         $0.45
      Assuming dilution                       $0.44    $0.01         $0.45

  Average number of common shares
   outstanding-basic                        102,844  102,844       102,844
  Average number of common shares
   outstanding-diluted                      104,031  104,031       104,031


                                                Three Months ended
                                                  March 31, 2003
                                                    Urban/Res.
                                             Core     & Other
                                            Segment   Segment  Consolidated
  Net income                                $17,077   $6,334     $23,411
     Add depreciation                        16,765       --      16,765
     Less gain on rental property sales      (4,388)      --      (4,388)
  FFO                                        29,454    6,334      35,788
     Hypothetical tax savings                 9,215       --       9,215
  FFO as adjusted for hypothetical tax
   savings                                  $38,669   $6,334     $45,003

  FFO as adjusted for hypothetical tax
   savings per share:
      Basic                                   $0.39    $0.07       $0.46
      Assuming dilution                       $0.38    $0.07       $0.45

  Average number of common shares outstanding
   - basic                                   97,910   97,910      97,910
  Average number of common shares outstanding
   - diluted                                100,599  100,599     100,599


                     CATELLUS DEVELOPMENT CORPORATION
                       (In thousands and unaudited)



Rental revenue less property operating costs (including the portion from
discontinued operations) and equity in earnings of operating joint ventures,
net (as reflected in the accompanying statements of operations).  Rental
revenue less property operating costs is commonly used by stockholders, company
management and industry analysts as a measurement of operating performance of
the company's rental portfolio and is calculated as follows:

                                                    Three Months ended
                                                         March 31,
                                                    2004              2003
   Rental revenue                                $76,143           $72,891
   Property operating costs                      (21,207)          (19,150)
   Equity in earnings of operating joint
    ventures, net                                  2,414             2,523
   Rental revenue from discontinued operations     1,022             1,837
   Property operating costs from discontinued
    operations                                      (209)             (439)
  Rental revenue less property operating costs   $58,163           $57,662


DATASOURCE: Catellus Development Corporation



CONTACT:  Margan Mitchell, Corporate Communications, [phone], or

Minnie Wright, Investor Relations, [phone], both of Catellus

Development Corporation



Web site:  http://www.catellus.com/ 

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