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Catellus Announces First Quarter 2005 Results
SAN FRANCISCO, April 28 /PRNewswire-FirstCall/ -- Catellus Development
Corporation (NYSE:CDX) today reported earnings per fully diluted share ("EPS")
for the first quarter of 2005 of $0.32, as compared to $0.31 for the same
period in 2004. Net income for the first quarter of 2005 was $33.3 million, as
compared to $32.1 million for the same period in 2004.
"Our solid operating performance in the first quarter of 2005 was consistent
with our expectations. In addition, we continued our expansion into the
northeast with the acquisition of another strategically located land parcel
that sits one mile from the Newark airport and adjacent to the Port of
Elizabeth; we negotiated an option agreement with University of California to
ground lease the last remaining land parcel at Mission Bay in San Francisco;
and subsequent to the quarter, we signed two significant build-to-suit
transactions in suburban Chicago and Atlanta, which will add approximately 1.8
million square feet to our rental portfolio," remarked Nelson C. Rising,
chairman and CEO of Catellus.
Rental Portfolio
-- For the first quarter of 2005, net operating income ("NOI") was $58.9
million, as compared to $58.2 million for the same period in 2004 (see page 9
for definition of NOI).
-- At March 31, 2005, the rental portfolio totaled 40.6 million square feet and
was 94.7 percent occupied, unchanged from December 31, 2004, and as compared to
95.7 percent at March 31, 2004.
-- Of the 40.6 million square feet of rental property, approximately 90 percent
is industrial property that was 95.7 percent occupied at March 31, 2005, as
compared to 95.3 percent at December 31, 2004, and 96.4 percent at March 31,
2004.
-- Development properties completed and added to the rental portfolio during
the quarter include two retail buildings at Pacific Commons in Fremont,
California, totaling 103,000 square feet. The buildings are 90 percent
preleased and represent a total investment of $27.9 million with a projected
return on cost of 11.7 percent.
-- University of California signed an option agreement with Catellus to ground
lease approximately 9.65 acres at Mission Bay that are entitled for
approximately one million square feet of office and life science space. This
South of Channel site includes Parcels 36, 38, and 39 and is located
immediately south of the new 43-acre UC San Francisco's Mission Bay campus.
Upon commencement of the ground lease, the rent on the 99-year lease would be
included in Catellus' rental portfolio. Catellus is recognizing the option
payments, which are equivalent to the ground lease rent, in its core
operations.
Development and Investment Activity
-- At March 31, 2005, construction in progress in the company's Core Segment
(defined below) was 4.1 million square feet, of which 2.7 million square feet
will be added to Catellus' rental portfolio upon completion; 887,000 square
feet is build-to-sell; and 527,000 square feet is included in a joint venture.
-- For the 2.7 million square feet under construction that will be added to
Catellus' rental portfolio upon completion, the projected total cost of
development is $111.1 million. These buildings are 33 percent preleased and,
when fully leased, are projected to yield a return on cost of approximately
10.2 percent.
-- During the quarter, a 105,000 square foot industrial development at Kaiser
Commerce Center in Fontana, California, was sold.
-- At Pacific Commons' retail development, Catellus has signed Letters of
Intent on 65 percent of the 224,000 square foot Phase II. Construction on
Phase II is projected to commence in the third quarter of 2005. Total annual
rental income from Phase I and Phase II of Pacific Commons' retail component is
projected to be $13 million. The projected total cost of development,
including land, is $94 million, which is projected to yield a return on cost of
13.3 percent.
-- During the quarter, Catellus announced it acquired a land parcel entitled
for approximately one million square feet of industrial space in Elizabeth, New
Jersey, located one mile from the Newark Liberty International Airport and
immediately adjacent to the Port of Elizabeth. Catellus expects to demolish
existing structures and begin remediation at the site immediately, with the
first of several planned buildings, a 600,000 square foot distribution
warehouse facility, projected to be under construction by the second half of
2006.
-- Subsequent to quarter end, Catellus executed two build-to-suit transactions
in suburban Chicago and Atlanta that upon construction completion will add
approximately 1.8 million square feet of industrial space to the company's
rental portfolio. The two transactions consist of:
-- Clorox Sales Company, a division of Clorox Company, signed a lease for an
850,000 square foot build-to-suit distribution warehouse facility at
Internationale Centre South, in Minooka, Illinois. Construction is expected to
commence immediately with construction completion projected to occur in the
first quarter of 2006.
-- Quaker Sales and Distribution, a division of PepsiCo, signed a ten-year
lease for a 913,000 square foot build-to-suit distribution facility in Atlanta
at Douglas Hill Business Center. The facility is under construction with
completion projected to occur in the first quarter of 2006.
Urban, Residential and Other
-- During the quarter, a 47,600 square foot office building development was
completed and sold at Union Station in Los Angeles. Catellus developed the
building for the tenant who exercised a purchase option concurrently with the
building's completion.
-- In January 2005, a 7,500 square foot retail space was sold at Glassworks at
Mission Bay.
-- At March 31, 2005, remaining non-core assets included 36.5 acres of
development land at Los Angeles Union Station entitled for 5.2 million square
feet of space; Parkway and Serrano, two residential-community development joint
ventures in Sacramento, California; and cash flow from tax increment and profit
participation at Victoria-by-the-Bay, a completed residential development in
Hercules, California. The total net book value of the remaining non-core
assets is $49 million.
Annual Meeting of Stockholders
-- The 2005 Annual Meeting of Stockholders will be held in San Francisco,
California, on May 3, 2005, at 9:00 AM local time, at the Ritz Carlton Hotel.
Consistent with the company's practice of providing timely information to its
stockholders, voting results will be posted on the company's website,
http://www.catellus.com/, within two weeks following the Annual Meeting.
Supplemental Reporting Measure
-- Catellus provides Funds From Operations ("FFO") as a supplemental measure of
performance, in two segments: Core Segment and Urban, Residential and Other
Segment. Catellus believes that FFO, along with GAAP net income, provides a
useful measure of its operating performance.
-- 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, from which the company
has been transitioning since its March 2003 REIT conversion announcement. This
segment also includes REIT conversion costs-primarily accounting charges, which
will continue through 2006, relating to the November 2003 stock option exchange
offer. These costs also include third party costs, which have been
substantially recognized.
-- FFO, including both segments as defined above, for the first quarter of 2005
was $52.3 million, compared to $46.6 million for the same period in 2004. Core
Segment FFO for the first quarter of 2005 was $48.7 million, compared to $46.3
million for the same period in 2004. On a fully diluted per share basis, Core
Segment FFO for the first quarter of 2005 was $0.46, compared to $0.44 for the
same period in 2004.
Catellus Development Corporation will host a conference call on Friday, April
29, at 9:00 AM Pacific Time (10:00 AM Mountain, 11:00 AM Central, and Noon
Eastern) to discuss first quarter results. Catellus will release financial
results for the first quarter on Thursday, April 28, 2005, after the close of
the day's trading on the New York Stock Exchange. To participate in the
conference call, dial 800-561-2731 (domestic) or 617-614-3528 (international)
and enter access code 97873733 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 until May 13, 2005, at 888-286-8010 (domestic) or 617-801- 6888
(international) with the access code 56037162. The webcast replay will be
available to April 29, 2006, from the Investor Relations section of Catellus'
website at http://www.catellus.com/ or at http://www.streetevents.com/.
The first quarter 2005 Supplemental Financial Package will be available from
our 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 40.6 million
square feet of predominantly industrial property in many of the country's major
distribution centers and transportation corridors. Catellus' principal
objective is sustainable, long-term growth in shareholder value, 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 core 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; non-renewal
of leases by tenants or renewal at lower than expected rates; difficulties in
identifying properties to acquire and in effecting acquisitions on advantageous
terms and the failure of acquisitions to perform as we expect; our failure to
divest of properties on advantageous terms or to timely reinvest proceeds from
any such divestitures; our failure to qualify and maintain our status as a real
estate investment trust under the Internal Revenue Code; product and
geographical concentration; industry competition; availability of financing and
changes in interest rates and capital markets; changes in insurance markets;
losses in excess of our insurance coverage; discretionary government decisions
affecting the use of land, including the issuance of permits and acceptance of
the design and construction of infrastructure improvements, and delays
resulting therefrom; disputes related to and delays in the payment of bond
reimbursements for infrastructure costs; 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; actions by
taxing authorities, or necessary recalculations by the company, requiring
retroactive changes to the tax treatment of distributions to shareholders;
environmental uncertainties, including liability for environmental remediation
and changes in environmental laws and regulations; failure or inability of
parties or 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, co-owners, and owners for whom we
provide development services; changes in policies and practices of organized
labor groups; shortages or increased costs of electrical power; risks and
uncertainties affecting property development and renovation (including
construction delays and cost overruns); 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,
2004, 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, December 31,
2005 2004
---------- ----------
Assets
Properties $2,370,210 $2,316,289
Less accumulated depreciation (507,639) (490,409)
---------- ----------
1,862,571 1,825,880
Other assets and deferred charges, net 215,727 224,932
Notes receivable, less allowance 296,150 329,758
Accounts receivable, less allowance 30,720 35,800
Assets held for sale -- 10,336
Restricted cash and investments 12,867 29,569
Cash and cash equivalents 54,138 252,069
---------- ----------
Total $2,472,173 $2,708,344
========== ==========
Liabilities and stockholders' equity
Mortgage and other debt $1,255,104 $1,440,528
Accounts payable and accrued expenses 125,392 201,238
Deferred credits and other liabilities 299,431 286,780
Liabilities associated with assets held
for sale -- 88
Deferred income taxes 37,896 36,119
---------- ----------
Total liabilities 1,717,823 1,964,753
---------- ----------
Stockholders' equity
Common stock - 105,027 and 104,720 shares
issued, and 103,875 and 103,317 shares
outstanding at March 31, 2005 and
December 31, 2004, respectively 1,050 1,047
Paid-in capital 515,787 509,407
Unearned value of restricted stock
and restricted stock units (1,152
and 1,403 shares at March 31, 2005
and December 31, 2004, respectively) (24,018) (23,049)
Accumulated earnings 261,531 256,186
---------- ----------
Total stockholders' equity 754,350 743,591
---------- ----------
Total $2,472,173 $2,708,344
========== ==========
CATELLUS DEVELOPMENT CORPORATION
CONSOLIDATED STATEMENT OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
Three Months Ended
March 31,
2005 2004
-------- --------
Revenue
Rental revenue $78,357 $76,037
Sales revenue 33,144 37,691
Management, development and other fees 7,544 1,699
-------- --------
119,045 115,427
-------- --------
Costs and expenses
Property operating costs (22,256) (20,966)
Cost of sales (22,898) (23,090)
Selling, general and administrative
expenses (12,290) (12,951)
Depreciation and amortization (18,691) (17,716)
-------- --------
(76,135) (74,723)
-------- --------
Operating income 42,910 40,704
-------- --------
Other income
Equity in earnings of operating joint
ventures, net 2,833 2,414
Equity in earnings of development joint
ventures, net 5,086 1,227
Gain on non-strategic asset sales 20 61
Interest income 8,895 2,777
Other 89 301
-------- --------
16,923 6,780
-------- --------
Other expenses
Interest expense (17,573) (15,503)
REIT transition costs -- (212)
Other (1,498) (430)
-------- --------
(19,071) (16,145)
-------- --------
Income before income taxes and
discontinued operations 40,762 31,339
Income tax expense (8,148) (931)
-------- --------
Income from continuing operations 32,614 30,408
-------- --------
Discontinued operations, net of income tax:
Gain from disposal of discontinued
operations 736 1,616
(Loss) income from discontinued
operations (32) 67
-------- --------
Net gain from discontinued
operations 704 1,683
-------- --------
Net income $33,318 $32,091
======== ========
Income per share from continuing operations
Basic $0.31 $0.30
======== ========
Assuming dilution $0.31 $0.29
======== ========
Income per share from discontinued operations
Basic $0.01 $0.01
======== ========
Assuming dilution $0.01 $0.02
======== ========
Net income per share
Basic $0.32 $0.31
======== ========
Assuming dilution $0.32 $0.31
======== ========
Average number of common shares
outstanding - basic 103,750 102,844
======== ========
Average number of common shares
outstanding - diluted 105,301 104,031
======== ========
Dividends declared per share $0.27 $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, 2005
-------------------------------
Urban/Res.
Core & Other
Segment Segment Consolidated
-------- -------- ------------
Net income $29,850 $3,468 $33,318
Add depreciation 19,359 107 19,466
Less gain on rental property sales (489) -- (489)
-------- -------- ------------
FFO $48,720 $3,575 $52,295
======== ======== ============
FFO per share
Basic $0.47 $0.03 $0.50
======== ======== ============
Assuming dilution $0.46 $0.04 $0.50
======== ======== ============
Average number of common shares
outstanding-basic 103,750 103,750 103,750
======== ======== ============
Average number of common shares
outstanding-diluted 105,301 105,301 105,301
======== ======== ============
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
======== ======== ============
CATELLUS DEVELOPMENT CORPORATION
(In thousands and unaudited)
Net Operating Income (NOI) is defined as rental revenue less property
operating costs (including the portion from discontinued operations), and
includes equity in earnings of operating joint ventures, net (as
reflected in the accompanying statements of operations). We believe that
NOI provides useful information because stockholders, company management,
and industry analysts commonly use NOI as a measurement of operating
performance of a company's rental portfolio. NOI is calculated as
presented below.
Three Months ended
March 31,
--------------------------
2005 2004
-------- --------
Rental revenue $78,357 $76,037
Property operating costs (22,256) (20,966)
Equity in earnings of operating
joint ventures, net 2,833 2,414
Rental revenue from discontinued
operations 43 1,128
Property operating costs from
discontinued operations (44) (450)
-------- --------
Net operating income $58,933 $58,163
======== ========
DATASOURCE: Catellus Development Corporation
CONTACT: Margan Mitchell, Corporate Communications, +1-415-974-4616, or
Minnie Wright, Investor Relations, +1-415-974-4649, both of Catellus
Development Corporation
Web site: http://www.catellus.com/