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Cogdell Spencer Inc. Reports Fourth Quarter and Year End 2009 Financial Results
Date:3/10/2010

CHARLOTTE, N.C., Feb. 25 /PRNewswire-FirstCall/ --

  • Funds from Operations Modified (FFOM), excluding the non-recurring events summarized below, for fourth quarter 2009 was $7.9 million, or $0.16 per share and operating partnership unit.

  • Net income attributable to Cogdell Spencer Inc., excluding the non-recurring events summarized below, for fourth quarter 2009 was $1.0 million, or $0.02 per share.

  • FFOM, excluding the non-recurring events summarized below, for the year ended December 31, 2009 was $31.2 million, or $0.77 per share and operating partnership unit.

  • As of December 31, 2009, the Company had $25.9 million of unrestricted cash and $61.7 million available under its secured revolving credit facility for a total liquidity of $87.6 million, compared to $52.1 million for the same period last year, a 68.2% increase.

Cogdell Spencer Inc. (NYSE: CSA), a real estate investment trust (REIT) that invests in specialty office buildings, including medical offices and ambulatory surgery and diagnostic centers, and provides strategic planning and design and construction services for the medical profession, announces financial results for the quarter and year ended December 31, 2009.

Fourth Quarter 2009 Results

For the fourth quarter of 2009, Cogdell Spencer Inc. reports FFOM of $7.9 million, or $0.16 per share and operating partnership unit, excluding the $0.9 million net gain from the non-recurring events summarized below FFOM, including the non-recurring events summarized below was $8.8 million, or $0.17 per share and operating partnership unit.  During the same period in 2008, FFOM was $8.1 million, or $0.30 per share and operating partnership unit.  FFOM adds back to traditionally defined Funds from Operations (FFO) non-cash amortization of non-real estate related intangible assets associated with purchase accounting.

FFO for the fourth quarter of 2009 was $8.8 million, or $0.17 per share and operating partnership unit.  FFO, excluding the $0.9 million net gain from the non-recurring events summarized below was $7.9 million, or $0.16 per share and operating partnership unit.  During the same period in 2008, FFO was $5.7 million, or $0.21 per share and operating partnership unit.

Net income attributable to Cogdell Spencer Inc. for the fourth quarter of 2009 was $1.6 million, or $0.04 per share.  Net income attributable to Cogdell Spencer Inc. excluding the non-recurring events summarized below was $1.0 million, or $0.02 per share, for the fourth quarter of 2009.  During the same period in 2008, net income (loss) was ($1.0 million), or ($0.06) per share.

A reconciliation of net income (loss) to FFOM and FFO for the three months and year ended December 31, 2009 is set forth on page 13.

As of December 31, 2009, the Company's portfolio consisted of 62 consolidated wholly-owned and joint venture properties, comprising a total of approximately 3.4 million net rentable square feet.  The overall percentage of leased space at these 62 properties as of December 31, 2009, was 91.5%.  In addition, the Company has one wholly-owned property held for sale totaling 38,703 net rentable square feet, three unconsolidated joint venture properties comprising a total of approximately 0.2 million net rentable square feet and manages 45 properties for third party clients comprising a total of approximately 2.1 million net rentable square feet.

Results for the Year Ended December 31, 2009

FFOM for the year ended December 31, 2009 was $31.2 million, or $0.77 per share and operating partnership unit, excluding the ($102.3 million) net loss from the non-recurring events summarized below.  FFOM for the year ended December 31, 2009, including the non-recurring events summarized below, was ($71.1 million), or ($1.75) per share and operating partnership unit.  During the same period in 2008, FFOM was $29.4 million, or $1.22 per share and operating partnership unit.

FFO for the year ended December 31, 2009 was $28.4 million, or $0.70 per share and operating partnership unit, excluding the ($102.3) million net loss from the non-recurring events summarized below.  FFO for the year ended December 31, 2009, including the non-recurring events summarized below was ($73.9 million), or ($1.82) per share and operating partnership unit.  During the same period in 2008, FFO was $21.4 million, or $0.89 per share and operating partnership unit.

Net income attributable to Cogdell Spencer Inc. for the year ended December 31, 2009, was $12.6 million, or $0.38 per share, excluding the ($82.3) million net loss applicable to Cogdell Spencer Inc. from the non-recurring events summarized below.  Net income (loss) attributable to Cogdell Spencer Inc. including the non-recurring events summarized below was ($69.7 million), or ($2.14) per share, for the year ended December 31, 2009.  During the same period in 2008, net income (loss) was ($5.8 million), or ($0.37) per share.

A reconciliation of net income (loss) to FFOM and FFO for the year ended December 31, 2009 is set forth on page 13.

    
    
    
    
    Non-Recurring Events
                                              For the Three      For the 
                                               Months Ended     Year Ended 
                                           December 31, 2009 December 31, 2009
                                           ----------------- -----------------
                                                      (in thousands)
    
    Intangible asset impairment charges, net 
     of tax benefit                               $   -        $ (101,746)
    Debt extinguishment and interest rate 
     derivative expense, net of tax benefit           -            (1,520)
    Gain on settlement from 
     MEA Holdings, Inc. transaction                 4,905           4,905
    Impairment of real estate property 
     held for sale                                 (1,359)         (1,359)
    Strategic planning professional fees           (2,641)         (2,641)
                                                  --------     ----------- 
    Total non-recurring events                    $   905      $ (102,361)
                                                  --------     -----------  

During the year ended December 31, 2009, the Company recorded a pre-tax, non-cash intangible asset impairment charge of ($120.9 million) and the Company recognized a non-cash income tax benefit related to the charge of $19.2 million resulting in an after-tax impairment charge of ($101.7 million).  The charge was recorded during the first quarter of 2009.

During the year ended December 31, 2009, the Company repaid $50.0 million of the $100.0 million outstanding under the senior secured term loan agreement ("Term Loan").  In connection with this repayment, the Term Loan interest rate and financial covenants were amended.  As a result of the amendment, all unamortized Term Loan deferred finance costs and costs paid to the lenders that were party to the amendment were expensed.  The charge to debt extinguishment and interest rate derivative expense was approximately $0.9 million, before income tax benefit.  The Company recorded an income tax benefit of approximately $0.4 million related to this charge, resulting in an after-tax charge of approximately $0.5 million.  The charge was recorded during the second quarter of 2009.

The Company previously entered into a $100.0 million interest rate swap agreement that fixed the floating rate portion of the $100.0 million Term Loan.  Due to the repayment and the amendment to the Term Loan, approximately $1.6 million related to swap derivative hedge ineffectiveness was charged to debt extinguishment and interest rate derivative expense.  The non-cash charge represents the portion of the mark to market fair value liability of the interest rate swap agreement for which there are no more future interest payments under the Term Loan.  The Company recorded an income tax benefit of approximately $0.6 million related to this charge, resulting in an after-tax charge of approximately $1.0 million.  The charge was recorded during the second quarter of 2009.

The Company has not terminated the $100.0 million interest rate swap agreement.  The $100.0 million interest rate swap agreement is being used to fix the floating rate portion on $50.0 million outstanding on the Term Loan and $50.0 million outstanding under the secured revolving Credit Facility.

During the three months ended December 31, 2009, the final escrow release related to the MEA Holdings, Inc. ("MEA") acquisition occurred.  Pursuant to an agreement between the Company and the MEA Holdings, Inc. Seller Representatives, $5.0 million of the escrow was paid to the Company in consideration of full and final settlement of certain claims made by the Company in connection with the MEA transaction.  During fourth quarter 2009, the Company recorded other income of $4.9 million related to this settlement.

During the three months ended December 31, 2009, the Company reclassified the wholly-owned property Harbison Medical Office Building (formerly known as Baptist Northwest) as held for sale discontinued operations.  Related to this property, the Company recorded a non-cash impairment charge of ($1.4 million) in order to reduce the carrying value of the real estate property to its estimated net sale proceeds.

The Company's results for the three months ended December 31, 2009 includes costs associated with the Company's exploration of a range of strategic alternatives that included: an assessment of potential change of control transactions; asset dispositions and acquisitions; business and portfolio combinations; debt financings and refinancings.  The costs associated with this exercise totaled approximately $2.6 million and included fees for consultants, accountants, attorneys, and other service providers.   At this time, the Company is not engaged in any negotiation for a change of control transaction.  The Company does not intend to make further disclosures relating to any such transaction unless the Company enters into a definitive agreement.  

Capital Transactions

In October 2009, the Company obtained a $7.5 million mortgage note payable collateralized by the Randolph Medical Park, Lincoln/Lakemont Family Practice Center, and Northcross Family Physicians properties, all of which are located in Charlotte, North Carolina.  The mortgage note payable matures in October 2014, has a fixed interest rate of 7.00%, and requires monthly principal and interest payments based on a 20-year amortization.

In October 2009, the Company exercised its extension option for Methodist Professional Center I (located in Indianapolis, Indiana) mortgage note payable for a two year period.  Associated with this extension, the Company repaid $4.5 million of the $30.0 million outstanding principal.  The remaining $25.5 million balance on the mortgage note payable matures in October 2011, has an interest rate of LIBOR plus 1.30% (1.53% as of December 31, 2009), and requires monthly principal and interest payments based on a 30-year amortization.

In October 2009, the Company refinanced the MRMC MOB I (formerly known as Hanover Medical Office Building One), located in Richmond, Virginia, mortgage note payable.  The principal balance was increased from $4.7 million to $6.0 million and the $1.3 million additional proceeds were used for general corporate purposes.  The $6.0 million mortgage note payable matures in November 2014, has a fixed interest rate of 7.35%, and requires monthly principal and interest payments based on a 25-year amortization.

In November 2009, the Company refinanced the Health Park Medical Office Building (located in Chattanooga, TN) mortgage note payable, which was to mature on January 1, 2010.  The principal balance was reduced from $8.7 million to $7.0 million.   The $7.0 million mortgage note payable matures in December 2019, has a fixed interest rate of 7.50%, and requires monthly principal and interest payments based on a 25-year amortization.    

In December 2009, the Company began construction on a 4,630 square foot expansion to the wholly-owned Lancaster Rehabilitation Hospital (located in Lancaster, PA).  The $2.1 million expansion project is 100% pre-leased and scheduled for completion during second quarter 2010.  The Company obtained financing in the amount of $2.1 million from a construction loan which provides interest-only payments during the construction period at a rate of LIBOR plus 3.75% (3.98% as of December 31, 2009).  Upon the earlier of completion of construction or June 2010, the loan converts to an amortizing loan with monthly payments based on a 25-year amortization schedule.  The loan matures June 2014.

Build to Suit

In December 2009, the Company completed The Woodlands Center for Specialized Medicine building in Pensacola, Florida.  The 75,985 square foot facility marked the construction completion of the first fully integrated project for the Company.  The Company provided development, design/build (architectural, engineering and construction), and property management services on the medical office building and outpatient treatment center.  The three-story project is 100% leased by the physicians of Woodlands Medical Specialists.  The facility is a joint venture with the Company owning 40% and Gen-Ex Holdings, LLC (a group of local physicians) owning 60%.  

Dividend

On December 17, 2009, the Company announced that its Board of Directors had declared a quarterly dividend of $0.10 per share and operating partnership unit that was paid in cash on January 21, 2010 to holders of record on December 31, 2009.  The dividend covered the Company's fourth quarter of 2009.

Outlook

The Company's management team expects that FFOM per share and operating partnership unit for the year ending December 31, 2010, will be between $0.42 and $0.50.  A reconciliation of the range of projected net income (loss) to projected FFO and FFOM for the year ending December 31, 2010 is set forth below:

    
    
    
                                                 Guidance Range for the 
                                              Year Ending December 31, 2010
                                              -----------------------------
                                                   Low            High
                                                 -------        -------
    (In thousands, except per share and 
     operating partnership unit data)
      Net loss                                   $ (5,000) - - $ (1,000)
      Plus real estate related depreciation 
       and amortization                            27,000  - -   27,000
      Less noncontrolling interests in 
       real estate partnerships, before 
       real estate related depreciation 
       and amortization                            (2,000) - -   (2,000)
                                                 ---------      --------
         Funds from Operations (FFO)               20,000  - -   24,000
      Plus amortization of intangibles related
       to purchase accounting, net of 
       income tax benefit                           1,500  - -    1,500
                                                 ---------      --------
         Funds from Operations Modified (FFOM)   $ 21,500  - - $ 25,500
                                                 =========     =========
    
      FFO per share and unit - diluted             $ 0.39  - -   $ 0.47
      FFOM per share and unit - diluted            $ 0.42  - -   $ 0.50
    
      Weighted average shares and units 
       outstanding - basic and diluted             50,700  - -   50,700
    

Supplemental operating and financial data are available in the Investor Relations section of the Company's Web site at www.cogdell.com.  The reported results are unaudited and there can be no assurance that the results will not vary from the final information for the three months and year ended December 31, 2009.  In the opinion of management, all adjustments considered necessary for a fair presentation of these reported results have been made.

FFO is a supplemental non-GAAP financial measure used by the real estate industry to measure the operating performance of real estate companies.  FFOM adds back to traditionally defined FFO non-cash amortization of non-real estate related intangible assets associated with purchase accounting.  The Company presents FFO and FFOM because it considers them important supplemental measures of operational performance.  The Company believes FFO is frequently used by securities analysts, investors and other interested parties in the evaluation of REITs, many of which present FFO when reporting their results.  The Company believes that FFOM allows securities analysts, investors and other interested parties in evaluating current period results to results prior to the MEA Holdings, Inc. transaction.  FFO and FFOM are intended to exclude GAAP historical cost depreciation and amortization of real estate and related assets, which assumes that the value of real estate assets diminishes ratably over time.  Historically, however, real estate values have risen or fallen with market conditions.  Because FFO and FFOM excludes depreciation and amortization unique to real estate, gains and losses from property dispositions and extraordinary items, it provides a performance measure that, when compared year over year, reflects the impact to operations from trends in occupancy rates, rental rates, operating costs, development activities and interest costs, providing a perspective not immediately apparent from net income.  The Company computes FFO in accordance with standards established by the Board of Governors of NAREIT in its March 1995 White Paper (as amended in November 1999 and April 2002), which may differ from the methodology for calculating FFO utilized by other equity REITs and, accordingly, may not be comparable to such other REITs.  The Company adjusts the NAREIT definition to add back noncontrolling interests in consolidated real estate partnerships before real estate related depreciation and amortization.  Further, FFO and FFOM do not represent amounts available for management's discretionary use because of needed capital replacement or expansion, debt service obligations, or other commitments and uncertainties.  FFO and FFOM should not be considered as an alternative to net income (loss) (computed in accordance with GAAP) as an indicator of the Company's performance, nor are they indicative of funds available to fund its cash needs, including its ability to pay dividends or make distributions.  A reconciliation from GAAP net loss to FFO and FFOM is included as an attachment to this press release.  

Conference Call

Cogdell Spencer Inc. invites you to attend the Company's Fourth Quarter 2009 Conference Call on Friday, February 26, 2010 at 10:00 a.m. (Eastern Standard Time).  The number to call for this teleconference is (800) 860-2442 (domestic) or (412) 858-4600 (international), and no passcode is required.  In addition, the conference call can be accessed via the Internet at www.cogdell.com through the "Q4 2009 Cogdell Spencer Earnings Conference Call" link on the Investor Relations page.

A playback will be available until March 15, 2010.  To access the playback, please dial (877) 344-7529 (domestic) or (412) 317-0088 (international) and enter the passcode: 437310.  The replay can also be accessed via the Internet at www.cogdell.com through the "Q4 2009 Cogdell Spencer Earnings Conference Call" link on the Investor Relations page.

About Cogdell Spencer Inc.

Charlotte-based Cogdell Spencer Inc. (NYSE: CSA) is a fully-integrated, self-administered, and self-managed real estate investment trust that invests in specialty office buildings for the medical profession, including medical offices and ambulatory surgery and diagnostic centers.  The Company focuses on the ownership, delivery, acquisition, and management of strategically located medical office buildings and other healthcare related facilities in the United States of America.  The Company has been built around understanding and addressing the full range of specialized real estate needs of the healthcare industry.  Learn more about Cogdell Spencer Inc. and its subsidiaries at www.cogdell.com.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The forward-looking statements reflect the Company's views about future events and are subject to risks, uncertainties, assumptions and changes in circumstances that may cause actual results to differ materially. Factors that may contribute to these differences include, but are not limited to the following: our business strategy; our ability to comply with financial covenants in our debt instruments; our ability to obtain future financing arrangements; estimates relating to our future distributions; our understanding of our competition; our ability to renew our ground leases; changes in the reimbursement available to our tenants by government or private payors; our tenants' ability to make rent payments; defaults by tenants; customers' access to financing; delays in project starts and cancellations by customers; the timing of capital expenditures by healthcare systems and providers; market trends; and projected capital expenditures.

For a further list and description of such risks and uncertainties, see the reports filed by the Company with the Securities and Exchange Commission, including the Company's Form 10-K for the year ended December 31, 2008. Although the Company believes the expectations reflected in such forward-looking statements are based on reasonable assumptions, it can give no assurance that its expectations will be realized. The Company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

    
    
                                Cogdell Spencer Inc. 
                         Condensed Consolidated Balance Sheets 
                                    (In thousands)
                                     (unaudited)
    
                      Assets                      December 31,  December 31,
                                                     2009          2008
    Real estate properties:
      Operating real estate properties                $561,124  $527,710
      Less: Accumulated depreciation                   (93,247)  (68,764)
                                                       -------   -------
        Total operating real estate properties, net    467,877   458,946
      Construction in progress                          43,338    15,314
                                                        ------    ------
        Total real estate properties, net              511,215   474,260
                                                       -------   -------
    Cash and cash equivalents                           25,914    34,668
    Restricted cash                                      3,060    12,959
    Tenant and accounts receivable, net                 12,993    43,520
    Goodwill                                           108,683   180,435
    Trade names and trademarks                          41,240    75,969
    Intangible assets, net                              21,742    45,363
    Other assets                                        25,599    29,180
    Other assets -held for sale                          2,217     3,736
                                                         -----     -----
      Total assets                                    $752,663  $900,090
                                                      ========  ========
                          Liabilities and Equity
    
    Mortgage notes payable                            $280,892  $238,448
    Revolving credit facility                           80,000   124,500
    Term loan                                           50,000   100,000
    Accounts payable                                    15,293    22,775
    Billings in excess of costs and estimated
     earnings on uncompleted contracts                  13,189    17,025
    Deferred income taxes                               15,993    34,176
    Payable to prior MEA Holdings shareholders               -    18,002
    Other liabilities                                   47,312    59,860
    Other liabilities - held for sale                    2,204     2,310
                                                         -----     ----
      Total liabilities                                504,883   617,096
    
    Commitments and contingencies
    Equity:
      Cogdell Spencer Inc. stockholders' equity:
        Preferred stock, $0.01 par value; 
         50,000 shares authorized, none issued or 
         outstanding                                       -         -
        Common stock, $0.01 par value, 200,000 shares 
         authorized, 42,729 and 17,699 shares issued 
         and outstanding in 2009 and 2008, respectively    427       177
        Additional paid-in capital                     370,593   275,380
        Accumulated other comprehensive loss            (1,861)   (5,106)
        Accumulated deficit                           (164,321)  (77,438)
                                                       --------   -------
          Total Cogdell Spencer Inc.
           stockholders' equity                        204,838   193,013
      Noncontrolling interests:
        Real estate partnerships                         5,220     4,657
        Operating partnership                           37,722    85,324
                                                        ------    ------
          Total noncontrolling interests                42,942    89,981
                                                        ------    ------
    Total equity                                       247,780   282,994
                                                       -------   -------
      Total liabilities and equity                    $752,663  $900,090
                                                      ========  ========
    
    
     
    
                              Cogdell Spencer Inc.
                 Condensed Consolidated Statements of Operations
                    (In thousands, except per share amounts)
                                      (unaudited)
    
                                    For the Three Months    For the Year 
                                          Ended                Ended
                                    -------------------- -----------------
                                    Dec. 31,  Dec. 31,  Dec. 31,  Dec. 31, 
                                     2009      2008       2009      2008
                                    --------  --------  --------  --------
    Revenues:
      Rental revenue                 $20,375   $20,089   $79,486   $77,421
      Design-Build contract revenue 
       and other sales                30,016    78,726   143,416   253,596
      Property management 
       and other fees                    807       935     3,336     3,460
      Development management 
       and other income                   98       134     3,363       885
                                      ------   -------  --------   -------
         Total revenues               51,296    99,884   229,601   335,362
    
    Expenses:
      Property operating 
       and management                  8,021     7,920    31,810    31,065
      Design-Build contracts 
       and development 
       management                     21,388    67,112   113,961   214,019
      Selling, general,  
        and administrative            11,067     9,819    32,285    30,215
      Depreciation and  
       amortization                    7,470    11,706    34,502    44,879
      Impairment charges                   -         -   120,920         -
                                      ------   -------  --------   -------
         Total expenses               47,946    96,557   333,478   320,178
                                      ------   -------  --------   -------
    
    Income (loss) from operations 
     before other income (expense)     3,350     3,327  (103,877)   15,184
    
    Other income (expense):
      Interest and other income          164       239       620       922
      Gain on settlement 
       from MEA Holdings, Inc. 
       transaction                      4905         -      4905         -
      Interest expense                (5,123)   (6,428)  (21,711)  (25,017)
      Debt extinguishment 
       and interest rate 
       derivative expense                (10)       -     (2,511)        -
      Equity in earnings of 
       unconsolidated 
       partnerships                       10        4         15        22
                                      ------   -------  --------   -------
          Total other income (expense)   (54)   (6,185)  (18,682)  (24,073)
                                      ------   -------  --------   -------
    
    Income (loss) from continuing 
     operations before income tax 
     benefit (expense)                 3,296     (2,858)(122,559)   (8,889)
    
    Income tax benefit                    60      1,387   22,124     1,244
                                      ------    -------  --------   -------
    Net income (loss) from 
     continuing operations             3,356     (1,471)(100,435)   (7,645)
    
    Discontinued operations:
      Loss from discontinued operations  (41)       (34)    (168)     (212)
      Impairment of real 
       estate property                (1,359)         -   (1,359)        -
                                      ------    -------  --------   -------
        Total discontinued 
         operations                   (1,400)       (34)  (1,527)     (212)
                                      ------    -------  --------   -------
    
    Net income (loss)                  1,956     (1,505)(101,962)   (7,857)
    
    Net loss (income) attributable 
     to the noncontrolling 
     interest in:
       Real estate partnerships         (131)     (105)     (288)     (964)
       Operating partnership            (269)      568    32,522     3,048
                                      ------   -------  --------   -------
    Net income (loss) attributable 
     to Cogdell Spencer Inc.         $ 1,556   $(1,042) $(69,728)  $(5,773)
                                      ======   =======  ========   =======
    
    Per share data - basic and diluted
      Income (loss) from 
       continuing operations 
       attributable to Cogdell 
       Spencer Inc.                    $0.06    $(0.06)   $(2.10)   $(0.36)
      Loss from discontinued 
       operations attributable 
       to Cogdell Spencer Inc.        $(0.02)      $ -    $(0.04)   $(0.01)
                                      ------   -------  --------   -------
    Net income (loss) per share 
     attributable to Cogdell 
     Spencer Inc.                      $0.04    $(0.06)   $(2.14)   $(0.37)
                                      ======   =======  ========   =======
    
    Weighted average common 
     shares - basic and diluted       42,615    17,557    32,655    15,770
                                      ======   =======  ========   =======
    
    Net income (loss) attributable 
     to Cogdell Spencer Inc.:
      Income from continuing 
       operations, net of tax         $2,956   $(1,008) $(68,201)  $(5,561)
      Discontinued operations, 
       net of tax                     (1,400)      (34)   (1,527)     (212)
                                      ------   -------  --------   -------
    Net income (loss)                 $1,556   $(1,042) $(69,728)  $(5,773)
                                      ======   =======  ========   =======
    
    
    
    
    
    
                               Cogdell Spencer Inc.
                           Business Segment Reporting
                                 (In thousands)
                                   (unaudited)
    
    Three months ended 
    December 31, 2009: 
                                             Design-    Inter-   Unal-
                                              Build    segment located
                                  Property     and      Elimi-   and
                                 Operations Development nations Other Total 
                                 ------------------------------------------   
    Revenues:
      Rental revenue                $20,398    $ -    $(23)     $ - $20,375  
      Design-Build contract 
       revenue and other sales            - 42,310 (12,294)       -  30,016 
      Property management and 
       other fees                       807      -       -        -     807 
      Development management 
       and other income                   -    959    (861)       -      98 
                                     ------ ------ -------  -------  ------  
        Total revenues               21,205 43,269 (13,178)       -  51,296 
    
    Certain operating expenses: 
      Property operating and 
       management                     8,021      -       -        -   8,021 
      Design-Build contracts and 
       development management             - 30,069  (8,681)       -  21,388 
      Selling, general, and 
       administrative                     -  5,783     (23)       -   5,760 
                                     ------ ------ -------  -------  ------  
        Total certain operating 
         expenses                     8,021 35,852  (8,704)       -  35,169 
                                     ------ ------ -------  -------  ------   
                                     13,184  7,417  (4,474)       -  16,127 
    
    
    Interest and other income           137     20       -        7     164 
    Gain on settlement from MEA 
     Holdings Inc. transaction            -      -       -    4,905   4,905
    Corporate general and 
     administrative expenses              -      -       -   (5,307) (5,307)
    Interest expense                      -      -       -   (5,123) (5,123) 
    Debt extinguishment and interest 
     rate derivative expense              -      -       -      (10)    (10) 
    Benefit from income taxes 
     applicable to funds 
     from operations modified             -      -       -       41      41 
    Non-real estate related 
     depreciation and amortization        -   (199)      -      (59)   (258) 
    Earnings from unconsolidated 
     real estate partnerships, 
     before real estate related 
     depreciation and amortization       13      -       -        -      13 
    Noncontrolling interests 
     in real estate partnerships, 
     before real estate related 
     depreciation and amortization     (374)     -       -        -    (374) 
    Discontinued operations and 
     impairment from real estate 
     property, before real estate 
     related depreciation and 
     amortization                    (1,332)     -       -      (34) (1,366) 
                                     ------ ------ -------  -------  ------  
      Funds from operations 
       modified (FFOM)               11,628  7,238  (4,474)  (5,580)  8,812 
    
    Amortization of intangibles 
     related to purchase accounting, 
     net of income tax benefit          (42)    (7)      -       19     (30)
                                     ------ ------ -------  -------  ------  
    
      Funds from operations (FFO)    11,586  7,231  (4,474)  (5,561)  8,782 
    
    Real estate related 
     depreciation and 
     amortization, including 
     amounts in discontinued 
     operations                      (7,200)     -       -        -  (7,200) 
    Noncontrolling interests in 
     real estate partnerships, 
     before real estate related 
     depreciation and amortization      374      -       -        -     374
                                     ------ ------ -------  -------  ------   
    Net income (loss)                 4,760  7,231  (4,474)  (5,561)  1,956 
    Net income attributable 
     to the noncontrolling 
     interest in: 
      Real estate partnerships         (131)     -       -        -    (131) 
      Operating partnership               -      -       -     (269)   (269) 
                                     ------ ------ -------  -------  ------  
    Net income (loss) attributable 
     to Cogdell Spencer Inc.         $4,629 $7,231 $(4,474) $(5,830) $1,556
                                     ====== ====== =======  =======  ======
    
    
    
                                Cogdell Spencer Inc.
                             Business Segment Reporting
                                    (In thousands)
                                      (unaudited)
    
    Year ended 
    December 31,                Design-Build            Unallocated
    2009:              Property      and    Intersegment    and
                      Operations Development Eliminations  Other     Total
    
    
    Revenues:
      Rental revenue     $79,578       $ -      $ (92)     $ -        $79,486 
      Design-Build 
       contract revenue 
       and other sales       -       176,124  (32,708)       -        143,416
      Property management 
       and other fees      3,336         -        -          -          3,336
      Development 
       management 
       and other income      -         6,750   (3,387)       -          3,363
                             ---       -----   ------        ---        -----
        Total revenues    82,914     182,874  (36,187)       -        229,601
    
     Certain operating 
      expenses: 
       Property operating 
        and management    31,810         -        -          -         31,810
       Design-Build 
        contracts and 
        development 
        management           -       142,305  (28,344)       -        113,961
       Selling, general, 
        and administrative   -        20,541      (92)       -         20,449
       Impairment charges    -       120,920      -          -        120,920
                             ---     -------      ---        ---      -------
         Total certain 
          operating
          expenses        31,810     283,766  (28,436)       -        287,140
                          ------     -------  --------       ---      -------
                          51,104    (100,892)  (7,751)       -        (57,539)
    Interest and 
     other income            541          48      -           31          620 
    Gain on settlement
     from MEA Holdings
     Inc. transaction        -           -        -         4,905       4,905 
    Corporate general 
     and administrative 
     expenses                -           -        -       (11,836)    (11,836)
    Interest expense         -           -        -       (21,711)    (21,711) Debt extinguishment
     and interest rate 
     derivative expense      -           -        -        (2,511)     (2,511)
    Benefit from income 
     taxes applicable to 
     funds from operations 
     modified                -           -        -        20,356      20,356
    Non-real estate 
     related depreciation
     and amortization        -        (779)       -          (225)     (1,004)
    Earnings from 
     unconsolidated real
     estate partnerships,
     before real estate
     related depreciation
     and amortization         27       -          -           -            27
    Noncontrolling 
     interests in real 
     estate partnerships,
     before real estate 
     related depreciation 
     and amortization     (1,049)      -          -           -        (1,049)
    Discontinued operations 
     and impairment from 
     real estate property, 
     before real estate 
     related depreciation 
     and amortization     (1,253)      -          -          (137)     (1,390)
                          -------      ---        ---        -----     -------
      Funds from 
       operations modified 
       (FFOM)             49,370  (101,623)    (7,751)    (11,128)    (71,132)
    
    Amortization of 
     intangibles related 
     to purchase 
     accounting, net of 
     income tax benefit     (169)   (4,364)       -         1,768      (2,765)
                            -----   -------       ---       -----      -------
      Funds from 
       operations (FFO)   49,201  (105,987)    (7,751)     (9,360)    (73,897)
    
    Real estate related
     depreciation and 
     amortization, 
     including amounts 
     in discontinued 
     operations         (29,114)      -           -           -       (29,114)
    Noncontrolling 
     interests in 
     real estate 
     partnerships, 
     before real 
     estate related 
     depreciation 
     and amortization     1,049      -           -            -         1,049
                          -----      ---         ---          ---       -----
    Net income (loss)    21,136 (105,987)     (7,751)      (9,360)   (101,962)
    Net loss (income)
     attributable to 
     the noncontrolling 
     interest in:
      Real estate 
       partnerships        (288)     -           -            -          (288)
      Operating 
       partnership          -        -           -         32,522      32,522
                            ---      ---         ---       ------      ------
    Net income (loss)
     attributable to
     Cogdell Spencer
     Inc.               $20,848 $(105,987)   $(7,751)     $23,162    $(69,728) 
    
    
                              Cogdell Spencer Inc.
               Reconciliation of Net Income (Loss) to Funds from 
                          Operations Modified (FFOM) (1)
                 (In thousands, except per share and unit amounts)
                                 (unaudited)
    
                                     For the Three Months    For the Year 
                                             Ended               Ended
                                       Dec. 31, Dec. 31,   Dec. 31,  Dec. 31,
                                        2009     2008       2009      2008
    
    Net income (loss)                 $ 1,956 $ (1,505) $ (101,962) $ (7,857)
    Add:
      Real estate related 
       depreciation and amortization:
        Wholly-owned and consolidated 
         properties, including amounts 
         in discontinued operations     7,197    7,304      29,102    30,570
        Unconsolidated real estate 
         partnerships                       3        3          12        13
    Less:
      Noncontrolling interests in 
       real estate partnerships,
       before real estate related 
       depreciation and amortization     (374)    (111)     (1,049)   (1,346)
                                         -----    -----     -------   -------
    Funds from Operations (FFO) (1)     8,782    5,691     (73,897)   21,380
      Amortization of intangibles 
       related to purchase
       accounting, net of income 
       tax benefit                         30    2,390       2,765     7,983
                                          ---    -----       -----     -----
    Funds from Operations 
     Modified (FFOM) (1)              $ 8,812  $ 8,081   $ (71,132) $ 29,363
                                      =======  =======   ========== ========
    
    FFO per share and unit
     - basic and diluted               $ 0.17   $ 0.21     $ (1.82)   $ 0.89
    FFOM per share and unit
     - basic and diluted               $ 0.17   $ 0.30     $ (1.75)   $ 1.22
    
    Weighted average shares and 
     units outstanding 
     - basic and diluted              50,386    26,890      40,616    24,098
                                      ======    ======      ======    ======
    Non-recurring events:
      Gain on settlement from 
       MEA Holdings, Inc. 
       transaction                  $ (4,905)    $ -      $ (4,905)    $ -
      Impairment of real estate 
       property held for sale          1,359       -         1,359       -
      Strategic planning 
       professional fees               2,641       -         2,641       -
      Intangible asset impairment 
       charges, net of tax benefit       -         -       101,746       -
      Debt extinguishment and 
       interest rate derivative
       expense, net of tax benefit       -         -         1,520       -
      Restructuring and severance 
       charges, net of tax benefit       -         912         -       1,312
                                         ---       ---         ---     -----
    Impact of non-recurring events    $ (905)    $ 912   $ 102,361   $ 1,312
                                      =======    =====   =========   =======
    FFOM, excluding non-recurring 
     events                          $ 7,907   $ 8,993    $ 31,229  $ 30,675
                                     =======   =======    ========  ========
    FFOM, excluding non-recurring
     events per share and unit 
     - basic and diluted              $ 0.16    $ 0.33      $ 0.77    $ 1.27
    
    FFO is a supplemental non-GAAP financial measure used by the real estate 
    industry to measure the operating performance of real estate companies. 
     FFOM adds back to traditionally defined FFO non-cash amortization of non-real estate related intangible assets associated with purchase accounting. 
    The Company presents FFO and FFOM because it considers them important 
    supplemental measures of operational performance.  The Company believes 
    FFO is frequently used by securities analysts, investors and other 
    interested parties in the evaluation of REITs, many of which present FFO 
    when reporting their results.  FFO is intended to exclude GAAP historical 
    cost depreciation and amortization of real estate and related assets, 
    which assumes that the value of real estate assets diminishes ratably over 
    time.  Historically, however, real estate values have risen or fallen with 
    market conditions.  Because FFO excludes depreciation and amortization 
    unique to real estate, gains and losses from property dispositions and 
    extraordinary items, it provides a performance measure that, when compared 
    year over year, reflects the impact to operations from trends in occupancy 
    rates, rental rates, operating costs, development activities and interest 
    costs, providing a perspective not immediately apparent from net income.
    The Company computes FFO in accordance with standards established by the 
    Board of Governors of NAREIT in its March 1995 White Paper (as amended in 
    November 1999 and April 2002), which may differ from the methodology for 
    calculating FFO utilized by other equity REITs and, accordingly, may not 
    be comparable to such other REITs.  The Company adjusts the NAREIT 
    definition to add back noncontrolling interests in consolidated real 
    estate partnerships before real estate related depreciation and 
    amortization.  Further, FFO and FFOM do not represent amounts available 
    for management's discretionary use because of needed capital replacement 
    or expansion, debt service obligations, or other commitments and 
    uncertainties.  FFO and FFOM should not be considered as an alternative to 
    net income (loss) (computed in accordance with GAAP) as an indicator of 
    the Company's performance, nor are they indicative of funds available to 
    fund its cash needs, including its ability to pay dividends or make 
    distributions.
    

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