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Catellus Announces Second Quarter 2005 Results
SAN FRANCISCO, July 28 /PRNewswire-FirstCall/ -- Catellus Development
Corporation (NYSE:CDX) today reported earnings per fully diluted share ("EPS")
for the second quarter of 2005 of $0.25, as compared to $0.34 for the same
period in 2004. EPS for the six months ended June 30, 2005, was $0.56, as
compared to $0.65 for the same period in 2004.
Net income for the second quarter of 2005 was $26.2 million, as compared to
$35.3 million for the same period in 2004. Net income for the six months ended
June 30, 2005, was $59.5 million, as compared to $67.4 million for the same
period in 2004.
Second quarter net income includes a $6.8 million impairment charge related to
the expected sale of the Park Central office building in Dallas, Texas.
"Following the June 6 merger announcement, we have been working diligently with
ProLogis and have made significant progress toward the successful integration
and completion of the pending merger of our two firms, scheduled to close in
September," said Nelson C. Rising, chairman and CEO of Catellus. "In addition,
we are very pleased with the continued progress we have made during this period
in sourcing potential new development opportunities, leasing our existing
development, and marketing our four largest office properties."
Rental Portfolio
-- For the second quarter of 2005, net operating income ("NOI") was
$59.1 million, as compared to $60.1 million for the same period in
2004. For the first half of the year, NOI was $118.0 million, as
compared to $118.3 million for the same period in 2004 (see page 11 for
definition of NOI).
-- At June 30, 2005, the rental portfolio totaled 41.1 million square feet
and was 93.8 percent occupied, as compared to 94.7 percent at
March 31, 2005, and 95.7 percent at June 30, 2004.
-- Of the 41.1 million square feet of rental property, approximately
89.7 percent is industrial property that was 94.7 percent occupied at
June 30, 2005, as compared to occupancy rates of 95.7 percent at
March 31, 2005, and 96.6 percent at June 30, 2004.
-- Development properties completed and added to the rental portfolio
during the quarter include a 138,000 square foot expansion to an
industrial building in Grand Prairie, Texas, leased to an existing
tenant; a 348,000 square foot industrial facility at Stapleton Business
Park in Denver, Colorado; and 14,000 square feet of retail space at
Pacific Commons in Fremont, California. The buildings are 77 percent
preleased and represent a total investment of $20.3 million with a
projected return on cost of 11.4 percent.
-- In addition to the projected sale of Park Central in Dallas, Texas, the
company is under contract to sell South Bay Center in San Jose,
California for a projected gain on sale of $41.2 million. Both building
sales are expected to close in the third quarter of 2005. The company
is also negotiating a contract for sale of the Railway Exchange
Building in Chicago, Illinois and has begun marketing for sale the Gap
building at Mission Bay in San Francisco, California. In total, the
four office properties represent almost 1.8 million square feet of
space or over 57 percent of Catellus' total office portfolio.
Development and Investment Activity
-- At June 30, 2005, construction in progress in the company's Core
Segment (defined below) was 5.6 million square feet, of which
3.9 million square feet will be added to Catellus' rental portfolio
upon completion; 552,000 square feet of space is build-to-sell; 651,000
square feet of space is development for fee; and 527,000 square feet of
space is included in a joint venture.
-- For the 3.9 million square feet under construction that will be added
to Catellus' rental portfolio upon completion, the projected total cost
of development is $149.0 million. These buildings were 59 percent
preleased at quarter end and, when fully leased, are projected to yield
a return on cost of approximately 9.3 percent.
-- During the quarter, a 335,000 square foot industrial development at
Kaiser Commerce Center in Fontana, California was completed and sold.
-- As previously announced, during the quarter, 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. The
facility is under construction with completion projected to occur in
the fourth quarter of 2005.
- 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.
-- Subsequent to quarter end, Fort James Corporation, an affiliate of
Georgia Pacific Corporation, signed an eight-year lease for 935,000
square feet of industrial space at Quakertown Interchange Commerce
Center, in Quakertown, Pennsylvania. Construction completion is
projected to occur in the second quarter of 2006.
-- During the quarter, Catellus acquired land in Tracy, California,
entitled for 3.3 million square feet of commercial development, for
$7.2 million.
-- Subsequent to quarter end, Catellus, through a joint venture, acquired
land in Beaumont, California entitled for 2.9 million square feet of
commercial development, for $14 million.
-- Subsequent to quarter end, LG Electronics signed a ten-year lease for a
545,000 square foot industrial building currently under construction at
Kaiser Commerce Center in Fontana, California.
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 that Catellus 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,
historical tax effects prior to the REIT conversion, and accounting
charges 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 second quarter
of 2005 was $45.1 million, compared to $54.8 million for the same
period in 2004. FFO, including both segments as defined above, for the
first half of 2005 was $97.4 million, as compared to $101.3 million for
the same period in 2004.
-- Core Segment FFO for the second quarter of 2005 was $40.4 million,
including a $6.8 million charge for the impairment of Park Central, as
compared to $40.2 million for the same period in 2004. On a fully
diluted basis, Core Segment FFO per share for the second quarter of
2005 was $0.38, as compared to $0.39 for the same period in 2004. Core
Segment FFO for the first half of 2005 was $89.2 million, as compared
to $86.5 million for the same period in 2004. On a fully diluted
basis, Core Segment FFO per share for the first half of 2005 was $0.85,
as compared to $0.83 for the same period in 2004.
Third Quarter Dividend
-- In accordance with the merger agreement regarding timing of regular
quarterly dividends, the Board of Directors of Catellus declared a
regular cash dividend for the quarter ending September 30, 2005, of
$0.27 per share of common stock payable on August 31, 2005, to
stockholders of record at the close of business on August 16, 2005,
which coincides with the record and payment dates for ProLogis' third
quarter dividend.
Catellus Development Corporation (NYSE:CDX) will host a conference call on
Friday, July 29, 2005, at 9:00 AM Pacific Time (10:00 AM Mountain, 11:00 AM
Central, and Noon Eastern) to discuss second quarter results. Catellus will
release financial results for the second quarter on Thursday, July 28, 2005,
after the close of the day's trading on the New York Stock Exchange. To
participate in the conference call, dial 800-599-9816 (domestic) or 617-847-
8705 (international) and enter access code 40847749 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 August 12, 2005, at 888-286-8010
(domestic) or 617- 801-6888 (international) with the access code 35073125. The
webcast replay will be available to July 29, 2006 (or if the merger under the
definitive merger agreement between Catellus and ProLogis, which was announced
on June 6, 2005, is completed, to the date the merger is completed), from the
Investor Relations section of Catellus' website at http://www.catellus.com/ or
at http://www.streetevents.com/.
The second 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 41.1 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 news 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: failure to obtain the approvals of shareholders of Catellus
Development Corporation and ProLogis or to satisfy the other closing conditions
necessary for the consummation of the merger of Catellus with and into a
subsidiary of ProLogis; failure of the combined company in such merger to
achieve the successful integration of the operations of ProLogis and Catellus
or to realize the intended benefits of the merger; changes in the real estate
market or in general economic conditions, including a worsening economic
slowdown or recession; non-renewal of lease ants 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, and its report on Form 10-Q for the quarter ended
March 31, 2005, filed with the Securities and Exchange Commission ("SEC"), as
well as the preliminary joint proxy statement/prospectus that is part of the
registration statement on Form S-4 of ProLogis filed with the SEC on July 13,
2005.
Information contained in this news release is not a substitute for the
preliminary joint proxy statement/prospectus or, when filed with the SEC, the
definitive joint proxy statement/prospectus. SHAREHOLDERS AND INVESTORS ARE
URGED TO READ THE PRELIMINARY JOINT PROXY STATEMENT/PROSPECTUS AND, WHEN FILED
WITH THE SEC, THE DEFINITIVE JOINT PROXY STATEMENT/PROSPECTUS BECAUSE OF THEIR
IMPORTANT INFORMATION, INCLUDING DETAILED RISK FACTORS, ABOUT THE PROPOSED
MERGER OF CATELLUS DEVELOPMENT CORPORATION WITH AND INTO A PROLOGIS SUBSIDIARY
AND ABOUT CATELLUS, PROLOGIS AND THE COMBINED COMPANY. The preliminary joint
proxy statement/prospectus and, when filed with the SEC, the definitive joint
proxy statement/prospectus, as well as other documents filed by Catellus and/or
ProLogis with the SEC, are or will be available free of charge at the SEC's
website (http://www.sec.gov/) or by directing a request to Catellus Development
Corporation at 201 Mission Street, Second Floor, San Francisco, California,
94105, Attn.: Investor Relations, or by telephone at (415) 974- 4500, or by
email at ; or (if appropriate) to ProLogis at 14100, E. 35th Place, Aurora,
Colorado 80011, Attn.: Investor Relations, or by telephone at 800-820-0181.
Contacts:
Margan Mitchell Minnie Wright
Corporate Communications Investor Relations
415-974-4616 415-974-4649
CATELLUS DEVELOPMENT CORPORATION
CONSOLIDATED BALANCE SHEET
(In thousands)
(Unaudited)
June 30, December 31,
2005 2004
Assets
Properties $2,381,584 $2,316,289
Less accumulated depreciation (487,227) (490,409)
1,894,357 1,825,880
Other assets and deferred charges, net 206,377 224,932
Notes receivable, less allowance 236,170 329,758
Accounts receivable, less allowance 26,902 35,800
Assets held for sale 55,484 10,336
Restricted cash and investments 12,852 29,569
Cash and cash equivalents 61,265 252,069
Total $2,493,407 $2,708,344
Liabilities and stockholders' equity
Mortgage and other debt $1,208,835 $1,440,528
Accounts payable and accrued expenses 110,872 201,238
Deferred credits and other liabilities 284,187 286,780
Liabilities associated with assets
held for sale 81,891 88
Deferred income taxes 51,231 36,119
Total liabilities 1,737,016 1,964,753
Stockholders' equity
Common stock - 105,086 and 104,720 shares
issued, and 103,941 and 103,317 shares
outstanding at June 30, 2005 and
December 31, 2004, respectively 1,051 1,047
Paid-in capital 517,089 509,407
Unearned value of restricted stock and
restricted stock units (1,145 and 1,403
shares at June 30, 2005 and December 31,
2004, respectively) (21,474) (23,049)
Accumulated earnings 259,725 256,186
Total stockholders' equity 756,391 743,591
Total $2,493,407 $2,708,344
CATELLUS DEVELOPMENT CORPORATION
CONSOLIDATED STATEMENT OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2005 2004 2005 2004
Revenue
Rental revenue $74,725 $72,428 $148,924 $144,203
Sales revenue 31,990 7,299 65,134 44,990
Management, development and other
fees 3,250 758 10,794 2,457
109,965 80,485 224,852 191,650
Costs and expenses
Property operating costs (20,782) (18,092) (41,057) (36,932)
Cost of sales (20,141) (4,874) (43,036) (27,964)
Selling, general and administrative
expenses (13,234) (12,611) (25,524) (25,562)
Depreciation and amortization (17,587) (18,045) (35,505) (34,939)
(71,744) (53,622) (145,122) (125,397)
Operating income 38,221 26,863 79,730 66,253
Other income
Equity in earnings of operating
joint ventures, net 2,665 2,379 5,498 4,793
Equity in earnings of development
joint ventures, net 6,651 3,391 11,737 4,618
Gain on non-strategic asset sales -- 16,380 20 16,441
Interest income 8,883 2,461 17,778 5,238
Other 780 956 869 1,257
18,979 25,567 35,902 32,347
Other expenses
Interest expense (15,017) (15,314) (31,339) (29,627)
REIT transition costs -- (208) -- (420)
Other 158 (1,819) (1,340) (2,249)
(14,859) (17,341) (32,679) (32,296)
Income before income taxes and
discontinued operations 42,341 35,089 82,953 66,304
Income tax expense (9,246) (982) (17,394) (1,913)
Income from continuing operations 33,095 34,107 65,559 64,391
Discontinued operations, net of
income tax:
(Loss) gain from disposal of
discontinued operations (17) 398 716 2,014
(Loss) income from discontinued
operations (6,896) 829 (6,775) 1,020
Net (loss) gain from
discontinued operations (6,913) 1,227 (6,059) 3,034
Net income $26,182 $35,334 $59,500 $67,425
Income per share from continuing
operations
Basic $0.32 $0.33 $0.63 $0.63
Assuming dilution $0.31 $0.33 $0.62 $0.62
Income per share from discontinued
operations
Basic $(0.07) $0.01 $(0.06) $0.03
Assuming dilution $(0.06) $0.01 $(0.06) $0.03
Net income per share
Basic $0.25 $0.34 $0.57 $0.66
Assuming dilution $0.25 $0.34 $0.56 $0.65
Average number of common shares
outstanding - basic 103,912 103,023 103,832 102,933
Average number of common shares
outstanding - diluted 105,457 104,078 105,406 104,116
Dividends declared per share $0.27 $0.27 $0.54 $0.54
CATELLUS DEVELOPMENT CORPORATION
Reconciliation of Net Income to Funds from Operations
(In thousands, except per share data)
(Unaudited)
Three Months ended
June 30, 2005
Urban/Res.
Core & Other Consoli-
Segment Segment dated
Net income $21,552 $4,630 $26,182
Add depreciation 18,932 62 18,994
Less gain on rental property sales (51) -- (51)
FFO $40,433 $4,692 $45,125
FFO per share:
Basic $0.39 $0.04 $0.43
Assuming dilution $0.38 $0.05 $0.43
Average number of common shares
outstanding-basic 103,912 103,912 103,912
Average number of common shares
outstanding-diluted 105,457 105,457 105,457
Three Months ended
June 30, 2004
Urban/Res.
Core & Other Consoli-
Segment Segment dated
Net income $20,933 $14,401 $35,334
Add depreciation 19,632 181 19,813
Less gain on rental property sales (395) -- (395)
FFO $40,170 $14,582 $54,752
FFO per share:
Basic $0.39 $0.14 $0.53
Assuming dilution $0.39 $0.14 $0.53
Average number of common shares
outstanding-basic 103,023 103,023 103,023
Average number of common shares
outstanding-diluted 104,078 104,078 104,078
CATELLUS DEVELOPMENT CORPORATION
Reconciliation of Net Income to Funds from Operations
(In thousands, except per share data)
(Unaudited)
Six Months ended
June 30, 2005
Urban/Res.
Core & Other Consoli-
Segment Segment dated
Net income $51,402 $8,098 $59,500
Add depreciation 38,291 169 38,460
Less gain on rental property sales (540) -- (540)
FFO $89,153 $8,267 $97,420
FFO per share:
Basic $0.86 $0.08 $0.94
Assuming dilution $0.85 $0.07 $0.92
Average number of common shares
outstanding-basic 103,832 103,832 103,832
Average number of common shares
outstanding-diluted 105,406 105,406 105,406
Six Months ended
June 30, 2004
Urban/Res.
Core & Other Consoli-
Segment Segment dated
Net income $52,947 $14,478 $67,425
Add depreciation 37,882 365 38,247
Less gain on rental property sales (4,367) -- (4,367)
FFO $86,462 $14,843 $101,305
FFO per share:
Basic $0.84 $0.14 $0.98
Assuming dilution $0.83 $0.14 $0.97
Average number of common shares
outstanding-basic 102,933 102,933 102,933
Average number of common shares
outstanding-diluted 104,116 104,116 104,116
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 Six Months ended
June 30, June 30,
2005 2004 2005 2004
Rental revenue $74,725 $72,428 $148,924 $144,203
Property operating costs (20,782) (18,092) (41,057) (36,932)
Hotel operations, net
(included in "Other
income - Other") 515 -- 515 --
Equity in earnings of operating
joint ventures, net 2,665 2,379 5,498 4,793
Rental revenue from
discontinued operations 3,989 5,583 8,190 10,973
Property operating costs from
discontinued operations (2,048) (2,191) (4,073) (4,767)
Rental revenue less property
operating costs $59,064 $60,107 $117,997 $118,270
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/