Centerpoint (NYSE:CNT)
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CenterPoint Properties Trust (NYSE:CNT):
Highlights:
-- Third Quarter 2005 EPS Increased 36.5%, FFO Per Share
Increased 6.2%
-- 3.4 Million-Square-Foot Build-to-Suit for Wal-Mart Signed in
Third Quarter 2005
-- $261 Million of Total Investments Completed
-- Closed $114.0 Million Second Tranche of Portfolio Sale to JF
US Industrial Trust
-- Contracted to Sell 1.0 Million-Square-Foot Spec Development to
Georgia Pacific
-- Substantial Financial Capacity: 9.0 to 1 Debt Service
Coverage; 7.3 to 1 Fixed Charge Coverage
-- Healthy Leasing Activity: 75.2% of 2005 Lease Expirations and
56.6% of Total Inventory Addressed
-- Chicago Industrial Market Remains Active - YTD Gross
Absorption of 46.6 Million Square Feet
CenterPoint Properties Trust (NYSE:CNT) reported today that
earnings per share ("EPS") increased 36.5% in the third quarter 2005
to $0.86 from $0.63 for the same period in 2004. Net income available
to common shareholders increased 39.1% to $41.6 million from $29.9
million for the third quarter 2004.
Funds from operations ("FFO") per share increased 6.2% in the
third quarter 2005 to $0.69 (the middle of management's third quarter
2005 guidance range) from $0.65 for the same period in 2004.
CenterPoint defines FFO as: net income available to common
shareholders plus real estate depreciation and non-financing
amortization, inclusive of fee income and gain or losses on industrial
property sales (net of accumulated depreciation) of the Company and
its unconsolidated affiliates. See attached Reporting Definitions and
Reconciliation for further explanation of FFO.
CenterPoint tightened its annual guidance ranges for 2005 and
currently expects to report EPS in the range of $2.69 to $2.79 and FFO
per share in the range of $2.54 to $2.60. For the fourth quarter 2005,
the Company expects to report EPS in the range of $0.76 to $0.86 and
FFO per share in the range of $0.67 to $0.73.
"We more than doubled our development pipeline this past quarter,
which now totals about 5.5 million square feet. We have completed $261
million of total investments and have an additional $125 million of
acquisitions under contract, letter of intent or in negotiation.
Furthermore, we continue to make solid leasing progress and have
addressed more than 75% of 2005 expirations and 56% of our total
inventory," stated Mike Mullen, Chief Executive Officer.
"The 1.4-billion-square-foot Chicago industrial property market
remains active and we continue to exploit new 'value-added'
opportunities. The Wal-Mart build-to-suit is significant, not only in
development value, but also as an indicator of significant logistics
trends. Illinois' unparalleled transportation network is attracting
new companies to the region, which is the third largest container
'hub' in the world. Logistics efficiencies realized by locating in
Chicago will continue to fuel demand for industrial space and new
intermodal development in this region."
"There is considerable value in our 3,300-acre 'land bank' and
strategically located land remains a competitive advantage for
CenterPoint. Some of our major land parcels have more than doubled in
value over the last five years. We also continue to look at other
attractive parcels throughout metropolitan Chicago for investment."
Leasing Progress
Year-to-date, the Company has addressed 6.1 million square feet,
or 56.6% of total inventory, which includes 2005 expiries, beginning
year vacancy and acquired vacancy and expiries. Of 2005 expiries, the
Company has addressed 4.1 million square feet or 75.2% of beginning
year 2005 expirations. On total leasing activity, year-to-date rents
increased 7.7% on a straight-line basis and 1.3% on a cash basis.
Detailed portfolio activity is available on page 16 of the
Company's Supplemental Investor Package, which is posted in the upper
left hand corner of the investor relations page of the Company's
website, www.centerpoint-prop.com.
Excluding properties sold, the Company retained 93.7% of its
tenants. At the end of the third quarter, 86.2% of the Company's
in-service industrial portfolio is leased and occupied compared to
87.6% at the end of the second quarter 2005.
"We are making significant progress in processing our inventory,
including 2005 expiries. While vacancy slightly increased as a
percentage, this is the result of higher asset sales, which shrunk the
overall portfolio base. Looking ahead, 2006 lease expirations are
manageable and will allow us to focus on leasing up existing vacancy,"
remarked Sean Maher, Executive Vice President, Portfolio Operations.
"There is significant opportunity in leasing and we are optimistic in
light of solid market activity."
Strong Investment Pipeline
Year-to-date, CenterPoint and its affiliates have completed total
investments of $260.9 million. Of this total, CenterPoint completed
$232.3 million. Stabilized, these investments are expected to produce
a weighted average straight-line yield of 9.7% and a weighted average
initial cash yield of 9.2%. Third quarter 2005 investments included
the acquisition of five buildings totaling 772,245 square feet.
CenterPoint also purchased 226 acres of land for future development in
Lake County, Illinois along the I-94 corridor.
Jim Clewlow, Chief Investment Officer, noted, "Our franchise in
this market, and our focus on 'value-added' opportunities, has been
the key to identifying attractive acquisitions in a very competitive
environment. We have dealmakers covering every submarket of
metropolitan Chicago. Our investment officers are focused solely on
buying buildings and land where we can add value. We leverage a large
network of industrial brokers to help identify and facilitate these
transactions."
Development Pipeline Growing
CenterPoint and its affiliates currently have nine developments
under construction totaling 5.5 million square feet or $231.6 million.
Of this total, the Company's combined development projects under lease
are 98% occupied and are expected to produce a weighted average
straight-line yield of 10.4% and a weighted average initial cash yield
of 10.1%.
During the quarter, CenterPoint completed and delivered the
181,715-square-foot build-to-suit for Ta Chen at CenterPoint Business
Center - Gurnee in Gurnee, IL.
On August 30, CenterPoint signed a contract to develop a bulk
storage facility for Wal-Mart at CenterPoint Intermodal Center ("CIC")
in Elwood, Illinois. The facility will be comprised of two
distribution buildings of 1.6 million square feet and 1.8 million
square feet. The project has commenced with completion scheduled for
the second half of 2006. The transaction is structured as a 15-year
lease with purchase options.
Also in the third quarter, CenterPoint Properties contracted to
sell the 1.0 million-square-foot speculative development at CIC to
Georgia Pacific, a leading international manufacturer of tissue,
packaging, paper, building products and related chemicals. The new
distribution center for Georgia Pacific is a consolidation of three
smaller Midwest distribution facilities into a single large facility
at CIC, and will be completed and sold in the fourth quarter 2005.
Including the transactions above, approximately seven million
square feet of industrial buildings have been developed, or are under
construction, at CIC since the opening of the BNSF Railway Company's
intermodal facility in September 2002. This is ahead of CenterPoint's
original development projections.
"We signed 4.4 million square feet of deals this quarter at CIC.
Additionally, we continue to see strong demand at all of our eight
major business parks under development," commented Michael Murphy,
Senior Vice President, Development.
"The Lake County land purchased this quarter was the last parcel
in our 'land bank' that was still under option. We purchased the site
to exploit demand in the northern region of metropolitan Chicago and
specifically along Interstate 94 up to Milwaukee."
2005 Dispositions Complete or Under Contract
Year-to-date, CenterPoint and its affiliates have completed $452.0
million of dispositions. CenterPoint completed $404.4 million of the
total. Proceeds are redeployed into CenterPoint's large and expanding
pipeline of build-to-suit developments and investments.
Third quarter 2005 dispositions were highlighted by the sale of
$114.0 million of industrial buildings, part of the $392.7 million
phased portfolio sale previously announced on April 7, 2005. The ten
buildings sold in the third quarter total 2.8 million square feet and
are located in various submarkets of metropolitan Chicago. The assets
were sold to the venture created between the Company and JF US
Industrial Trust (ASX: JUICA). JF US Industrial Trust is managed by
James Fielding Funds Management Limited, part of the Mirvac Group.
CenterPoint retains a 5% promoted interest in the venture and is
managing the portfolio for fees. The remaining 25 buildings totaling
4.7 million square feet will be sold in approximately equal amounts in
the fourth quarter 2005 and the first quarter 2006.
Jim Clewlow noted, "The Chicago industrial property market remains
very liquid with strong demand from a variety of buyers. As a result,
cap rates remain at historic lows and we don't expect any near-term
movement."
Substantial Financial Capacity
At September 30, CenterPoint had $730.0 million of senior debt
outstanding producing a debt to total market capitalization of 24.0%.
For the third quarter 2005, debt service coverage was 9.0 to 1 and
fixed charge coverage was 7.3 to 1. Currently, CenterPoint's total
debt bears a weighted average interest rate of 5.2%.
"Our balance sheet remains strong and asset sales are funding our
large and expanding pipeline of investments. Our joint ventures are
available to support additional investment, broadening the Company's
share of the metropolitan Chicago investment market" stated Paul
Fisher, President and Chief Financial Officer. "Asset sales this year
also allowed us to repurchase $26 million of common shares at an
attractive price during the past two quarters."
CenterPoint Venture LLC
CenterPoint Venture LLC, a joint venture between CenterPoint
Properties and CalEast (a joint venture between CalPERS and LaSalle
Investment Management) acquires or develops, packages and sells
stabilized industrial property investment opportunities outside the
Company's more "value-added" investment focus.
CenterPoint Venture contributed EPS of $0.01 and FFO per share of
$0.02 year-to-date. As of September 30, 2005, assets in CenterPoint
Venture totaled $146.1 million.
In third quarter 2005, CenterPoint Venture acquired one building
totaling 300,128 square feet in Melrose Park, IL. It also sold a
164,536-square-foot building located in Milwaukee, WI.
Dividends
CenterPoint's Board of Trustees declared a fourth quarter 2005
dividend of $0.4275 per common share, to be paid November 2, 2005 to
shareholders of record October 20, 2005. On an annualized basis, this
equates to $1.71 per share for the year 2005.
The Board of Trustees also declared a dividend of $0.9375 per
share on its 7.50% Series B Convertible Cumulative Redeemable
Preferred Shares (NYSE:CNTPRB) to be paid December 29, 2005 to
shareholders of record December 15, 2005 and a dividend of $26.89 per
share of its Series D Preferred Shares to be paid December 15, 2005 to
shareholders of record December 1, 2005.
For the third quarter 2005, the Company's FFO payout ratio was
62%.
Chicago Industrial Market Active
Based on combined data from Colliers, Bennett & Kahnweiler
("CB&K") and The Polacheck Company, CenterPoint estimates gross
absorption in the 1.4-billion-square-foot market was 46.6 million
square feet for the first nine months 2005 compared to 37.0 million
square feet absorbed in the first nine months 2004. Market-wide
vacancy for the third quarter 2005 was approximately 9.0% compared to
8.9% last quarter.
Year-to-date, submarkets showing significant gross absorption
included the Southwest Suburbs, O'Hare, Fox Valley and Chicago South.
For the third quarter, submarkets showing the greatest gross
absorption include the Southwest Suburbs, DeKalb County and Fox
Valley.
Construction completions year-to-date 2005 totaled approximately
14.0 million square feet.
CenterPoint Properties Trust
CenterPoint is a publicly traded real estate investment trust
(REIT) and the largest industrial property company in the
1.4-billion-square-foot Chicago regional market. As of September 30,
2005, the Company owned approximately 38 million square feet and the
Company and its affiliates owned or controlled an additional 3,053
acres of land upon which approximately 44.1 million square feet could
be developed. The Company is focused on providing unsurpassed tenant
satisfaction and adding value to its shareholders through customer
driven management, investment, development and redevelopment of
warehouse, distribution, light manufacturing buildings and logistics
infrastructure. The first major REIT to focus on the industrial
property sector, CenterPoint has a total market capitalization of
approximately $3.0 billion.
Statements in this release which are not historical may be deemed
forward-looking statements under federal securities laws. There can be
no assurance that future results will be achieved and actual results
could differ materially from forecasts and estimates. Factors that
could cause actual results to differ materially are general business
and economic conditions, completion of pending acquisitions,
competitive market conditions, weather, pricing of debt and equity
capital markets and other risks inherent in the real estate business.
Such factors and others are listed in the Company's Form 10-K and
10-Qs.
An Investor conference call will be held Wednesday, October 26,
2005 beginning 1:00 p.m. CT, 2:00 p.m. ET. This call will be broadcast
live on www.centerpoint-prop.com . To listen to the webcast, your
computer must have either RealAudio or Media Player installed. If you
do not have either player, the CenterPoint website will have
instructions for installing one at the Pre-event System Test link. An
online replay will also be available approximately one hour after the
call. A replay of the call will be available after 5:00 p.m. CT on
Wednesday, October 26, 2005. The replay number is 888-266-2081,
passcode 631881.
Supplemental financial and operating information will be available
on the Company's website at www.centerpoint-prop.com after 7:00 p.m.
CT on October 25, 2005.
Financial Statements to Follow...
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CENTERPOINT PROPERTIES TRUST AND AFFILIATES
CONSOLIDATED BALANCE SHEETS
(in thousands)
September 30, December 31,
2005 2004
(Unaudited)
------------- -------------
Assets:
Investment in real estate:
Land $210,824 $233,326
Buildings 729,270 881,328
Building improvements 137,142 167,982
Furniture, fixtures, and equipment 26,445 26,130
Construction in progress 145,341 148,545
------------- -------------
1,249,022 1,457,311
Less accumulated depreciation (160,502) (183,770)
Real estate held for sale, net of
depreciation 170,758 49,210
Build-to-suit for sale costs, net
of deposits 11,415 12,414
------------- -------------
Net investment in real
estate 1,270,693 1,335,165
Cash and cash equivalents 3,968 1,496
Restricted cash 84,178 79,297
Tenant accounts receivable, net 29,148 36,949
Mortgage and notes receivable 13,055 75,089
Investment in and advances to
affiliate 12,151 14,202
Prepaid expenses and other assets 15,347 16,694
Deferred expenses, net 31,436 34,613
------------- -------------
$1,459,976 $1,593,505
============= =============
Liabilities and shareholders' equity
Mortgage notes payable and other
debt (1) $69,686 $73,109
Senior unsecured debt 450,000 550,000
Tax-exempt debt 142,150 118,900
Line of credit 68,200 131,500
Preferred dividend payable 1,568 254
Accounts payable 18,111 18,778
Accrued expenses 77,891 81,776
Rents received in advance and
security deposits 11,764 12,224
------------- -------------
839,370 986,541
------------- -------------
Shareholders' equity:
Preferred equity 108,937 110,687
Common equity 543,066 534,038
Treasury stock (26,099) -
Retained earnings (deficit) 9,322 (22,031)
Other comprehensive loss (5,575) (6,532)
Unearned compensation -
restricted shares (9,045) (9,198)
------------- -------------
620,606 606,964
------------- -------------
$1,459,976 $1,593,505
============= =============
(1) September 30, 2005 and December 31, 2004 balances includes non-
recourse TIF debt of $14,585 and $21,958, respectively
CENTERPOINT PROPERTIES TRUST AND AFFILIATES
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
Three Months Ended Nine Months Ended
September 30 September 30
----------------------- -----------------------
2005 2004 2005 2004
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
----------- ----------- ----------- -----------
Revenue:
Minimum rents $24,104 $18,451 $71,447 $49,331
Straight-line rents 1,131 713 1,992 1,270
Expense
reimbursements 7,839 5,936 23,784 17,963
Mortgage interest
income 276 261 976 978
Real estate fee
income 586 167 5,770 3,562
Build-to-suit for
sale revenue - - 27,226 -
----------- ----------- ----------- -----------
Total revenue 33,936 25,528 131,195 73,104
Expenses:
Real estate taxes 7,899 5,660 24,056 16,749
Property operating
and leasing 7,257 6,912 26,951 21,520
General and
administrative 3,233 2,797 10,608 7,186
Depreciation and
amortization 9,801 6,178 28,463 19,311
Build-to-suit for
sale construction
costs - - 25,719 -
Impairment of assets
held for sale 459 - 1,153 -
----------- ----------- ----------- -----------
Total expenses 28,649 21,547 116,950 64,766
----------- ----------- ----------- -----------
Other income/(expense)
Interest income 478 338 1,123 1,157
Interest expense (7,170) (8,844) (23,396) (23,675)
Amortization of
deferred financing
costs (878) (932) (2,815) (2,606)
----------- ----------- ----------- -----------
Total other
income/
(expenses) (7,570) (9,438) (25,088) (25,124)
----------- ----------- ----------- -----------
Income from continuing
operations before
income taxes and
equity in net income
of affiliate (2,283) (5,457) (10,843) (16,786)
(Provision for)
benefit from income
tax expense 388 281 2,481 707
Equity in net income
of affiliate (1) 477 683 765 1,466
Gain from sale of
equity interest - - - 5,851
----------- ----------- ----------- -----------
Income from continuing
operations (1,418) (4,493) (7,597) (8,762)
Discontinued operations:
Gain on sale, net of
tax (2) 39,950 26,570 90,934 35,687
Income from operations,
net of tax 4,273 8,201 15,690 38,816
----------- ----------- ----------- -----------
Income before gain on
sale of real estate 42,805 30,278 99,027 65,741
Gain on sale of real
estate, net of tax
(2) 374 - 1,028 177
----------- ----------- ----------- -----------
Net Income 43,179 30,278 100,055 65,918
Preferred dividends (1,572) (368) (4,763) (2,092)
----------- ----------- ----------- -----------
Net income available
to common shareholders $41,607 $29,910 $95,292 $63,826
=========== =========== =========== ===========
Basic and diluted EPS (3):
Income available to
common shareholders
from continuing
operations $(0.05) $(0.10) $(0.23) $(0.23)
Discontinued
operations 0.91 0.73 2.19 1.59
----------- ----------- ----------- -----------
Net income available
to common
shareholders $0.86 $0.63 $1.96 $1.36
=========== =========== =========== ===========
Distributions per
share (3) $0.428 $0.390 $1.283 $1.170
(1) Results of investments accounted on the equity basis include
CenterPoint Venture, LLC, Chicago Manufacturing Campus II, LLC,
Rochelle Development Joint Venture, CenterPoint James Fielding,
LLC
(2) For the quarter ended September 30, 2005 and 2004, gains
inclusive of build-to suit for sales are attributed to $161,418
and $99,023 of dispositions, respectively.
For the year ended September 30, 2005 and 2004, gains inclusive
of build-to-suit for sales are attributed to $404,378 and
$141,666 of dispositions, respectively.
(3) The per share amounts have been adjusted to reflect the
two-for-one stock split in June 2004.
CENTERPOINT PROPERTIES TRUST AND AFFILIATES
FUNDS ANALYSIS
(in thousands, except share data)
Three Months Ended Nine Months Ended
September 30 September 30
----------------------- -----------------------
2005 2004 2005 2004
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
----------- ----------- ----------- -----------
RECONCILIATION OF NET INCOME TO FUNDS FROM OPERATIONS
Funds from operations
=====================
Net income available
to common shareholders $41,607 $29,910 $95,292 $63,826
Add back/(deduct):
Depreciation and
amortization, net
of tax:
Continuing
operations 9,597 6,005 26,935 18,718
Discontinued
operations 150 3,841 5,138 11,022
Unconsolidated
affiliates 143 181 334 682
Accumulated
depreciation and
amortization of
intangibles on sold
industrial assets,
net of tax (17,007) (7,646) (33,892) (10,618)
----------- ----------- ----------- -----------
Funds from
operations $34,490 $32,291 $93,807 $83,630
=========== =========== =========== ===========
Funds from operations
per share $0.69 $0.65 $1.88 $1.72
=========== =========== =========== ===========
RECONCILIATION OF NET INCOME TO EBITDA
EBITDA
======
Net income available to
common shareholders $41,607 $29,910 $95,292 $63,826
Add back/(deduct):
Preferred dividends 1,572 368 4,763 2,092
Interest incurred,
net 6,692 8,506 22,273 22,518
Depreciation and
amortization 9,801 6,178 28,463 19,311
Amortization of
deferred financing
costs 878 932 2,815 2,606
Provision for income
taxes expense
(benefit) (388) (281) (2,481) (707)
Provision for income
taxes expense
(benefit) from gain
on sale - - - 112
Discontinued operations:
Interest incurred, net - - 338 -
Depreciation and
amortization 150 3,841 5,138 11,022
Provision for income
taxes expense
(benefit) from
operations (12) (22) 198 (69)
Provision for income
taxes expense
(benefit) from gain
on sale - - 640 234
----------- ----------- ----------- -----------
EBITDA $60,300 $49,432 $157,439 $120,945
=========== =========== =========== ===========
RECONCILIATION OF EBITDA TO
DEBT SERVICE COVERAGE & FIXED CHARGE COVERAGE RATIOS
EBITDA (A) 60,300 49,432 157,439 120,945
Interest incurred, net 6,692 8,506 22,273 22,518
Interest incurred, net
from discontinued
operations - - 338 -
----------- ----------- ----------- -----------
Debt service (B) $6,692 $8,506 $22,611 $22,518
=========== =========== =========== ===========
EBITDA to debt service
coverage ratio (A/B) 9.0 5.8 7.0 5.4
Debt service 6,692 8,506 22,611 22,518
Preferred dividends 1,572 368 4,763 2,092
----------- ----------- ----------- -----------
Fixed charge (C) $8,264 $8,874 $27,374 $24,610
=========== =========== =========== ===========
EBITDA to fixed charge
coverage ratio (A/C) 7.3 5.6 5.8 4.9
Annualized FFO return on common equity
======================================
FFO return on common
equity 25.4% 24.7% 23.0% 21.3%
Capitalized interest $2,274 $1,297 $6,558 $4,755
----------------------------------------------------------------------
Reconciliation of average shares outstanding
============================================
Basic Shares - GAAP 48,441,909 47,847,791 48,529,759 46,989,220
Add: Stock options/
grants - common
share equivalents 1,430,818 1,757,454 1,499,407 1,719,276
----------- ----------- ----------- -----------
Diluted shares -
GAAP/FFO 49,872,727 49,605,245 50,029,166 48,708,496
=========== =========== =========== ===========
CENTERPOINT PROPERTIES TRUST AND AFFILIATES
THIRD QUARTER 2005 EARNINGS RELEASE DEFINITIONS
Cash Yield is initial Net Operating Income, excluding straight line
rents, divided by total project cost, adjusted for tax increment
financing.
Debt Service Coverage is EBITDA divided by interest incurred, net.
Debt to Total Market Cap is total debt from the balance sheet divided
by the sum of total debt from the balance sheet plus the market value
of shares outstanding at the end of the period.
EBITDA stands for earnings before interest, income taxes, depreciation
and amortization. Management believes that EBITDA is helpful to
investors as an indication of property operations, because it excludes
costs of financing and non-cash depreciation and amortization amounts.
EBITDA does not represent cash flows from operations as defined by
GAAP, should not be considered by the reader as an alternative to net
income as an indicator of the Company's operating performance, and is
not indicative of cash available to fund all cash flow needs.
Investors are cautioned that EBITDA, as calculated by the Company, may
not be comparable to similarly titled but differently calculated
measurers for other REITs.
FFO Payout Ratio is dividends paid during the period divided into
Funds from Operations for that same period.
FFO Return on Common Equity is calculated as FFO divided by common
equity.
Fixed Charge Coverage is EBITDA divided by the total of interest
incurred, net and preferred dividends.
Funds From Operations (FFO) The National Associations of Real Estate
Investment Trust ("NAREIT") defines funds from operations ("FFO")
(April, 2002 White Paper) as net income excluding gains (or losses)
from sales of property, plus depreciation and amortization. NAREIT
adds, "management of each of its member companies has the
responsibility and authority to publish financial information that it
regards as useful to the financial community." Accordingly,
CenterPoint calculates FFO, inclusive of fee income and industrial
property sales (net of accumulated depreciation) of the Company and
its unconsolidated affiliates. The Company believes that FFO inclusive
of cash gains better reflects recurring funds because the disposition
of stabilized properties, and the recycling of capital and profits
into new "value added" investments, is fundamental to the Company's
business strategy.
Second Generation Costs include all capitalized costs incident to
leasing, operating or improving the company's portfolio excluding
costs budgeted at acquisition or initial development or costs expended
to materially increase the revenue potential of a property. Second
Generation Costs, deducted in calculating FAD, can include leasing
commissions and related costs, tenant specific improvements, or
improvements to land or buildings.
Straight-Line Yield is average NOI, divided by total project cost,
adjusted for tax increment financing.
Weighted Average Straight-Line Yield is calculated as the average NOI,
for the 12 months following stabilization, adjusted for TIF, divided
by total costs.
Weighted Average Initial Cash Yield is calculated as the total NOI,
excluding straight-line rents, for the 12 months following
stabilization, divided by total costs.
Weighted Average Interest Rate is the annual interest expense for the
current outstanding debt (most current interest rate X current debt
outstanding) divided into the current debt outstanding.
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